Kutangbato Conventional Trading Multi-Purpose Cooperative vs. Commissioner of Internal Revenue

DECISION

THE FACTS

Petitioner Kutangbato' Conventional Trading Multi Purpose Cooperative (KCTMPC) is a duly. registered cooperative, with the Cooperative Development Authority (CDA), ° with offices in the Autonorhous Region in’ Muslim Mindanao (ARMM) under ‘Republic Act (R.A.) No. -9054, otherwise known: as the Expanded and Amended Organic Act of the ARMM. Hh wes | issued a "Grains Business License “to engage in retailing, wholesaling, . warehousing and importing,” by the Nationa Food Authority (NFA) on June 27, 2002, subject to the issuance of. NFA permit per transaction.“ On the other hand, ° respondent is the head of ‘the. Department of * Finance (DOF) primarily responsible for the sound and efficient management i of, the financial resources of the Government, its subdivisions, agencies and © instrumentalties; and vested with the power to review the decisions of the Commissioner of the Bureau of Customs (BOC), as provided under Section 2313 of the Tariff and Customs Code of the Philippines (TCCP). ‘ Qn April 15, 2002, July 15, 2002, and December 26, 2002, petitioner allegedly wrote to the Department of Trade and Industry-ARMM (DTI-ARMM) requesting for the issuance of a speciak authority/permit to engage in conventional trading via the Labuan - Malaysia - Singapore - Rolloc, Maguindanao route. Thus, in the Letters dated May 3, 2002; July 31, 2002;

October 15, 2002; and January 8, 2003,° Regional Cabinet Secretary Ishak ime > Certificate of Registration No. RN-1347-KEO issued on March 23, 1994, Exhibit “A”, Docket D.

883.

a Docket, p. 884; and Exhibit “1” for the respondent, Docket; p. 1178.

wu Exhibits “2”; “2-b”; “2-c”; “2-d”, for respondent Docket, pp. 1179, £1814, 1182, and 1183, respectively.

fr woe 4 ee License No. L38L00103-02, CN 1438-4-03953; Common exhibits: Exhibit’ “<3 for the peftioner, Common.exhibits: Exhibits “D”, “E”, “F” and “G”, for petitioner, Docket, pp. 886-889, respectively, , At oo ‘ DECISION _ .

yO “Mastura of the DTI-ARMM wrote petitioner that the DTLARMM has no objection for the latter to engage in conventional trading of products such as grains, tires, construction_materials, used vehicles, and used clothing.® Likewise, petitioner allegedly wrote the Department of Agriculture and Fisheries-ARMM (DAF- _ARMM) on May 17, 2002 and requested the granting of authority or permit to: undertake conventional trading of rice in the ARMM with neighboring countries. ‘In reply thereto, Regional Secretary Nasar A. Salmani wrote the Letter dated May 20, 2002, ™ that the DAF-ARMM has no objection for the cooperative to engage in conventional trading of rice within the Autonomous Region and with the neighboring countries, subject to coordination with/clearance from the DTI-ARMM.® : ‘After the first importation of 3,640 bags of rice from Labuan, Malaysia by petitioner, through its, team leaders, on November 10, 2002,° Collector of Customs Rudy M. Amistad requested comments/recommendations from the NFA Maguindanao Provincial Office, Cotabato City, as regards the letter of petitioner. On November 11, 2002, Provincia! Manager Kitem P. Kadatuan of _ the NFA Maguindao Provincial Office, Cotabato City, replied ‘to Collector of Customs Rudy M. Amistad, the pertinent portion is quoted hereunder, to wt “With the above communications, the complete Informal Import Declaration and Entry from the Department of Finance — Bureau of Customs, Port of Parang as well as the Official Receipts of Duties and Taxes paid that has to be presented to NFA, Maguindanao Provincial Office, and considering that . Kutangbato Conventional Trading Multi-Purpose Cooperative is an NFA licensed. grains business enterprise with importing © Paragraphs 3.4, 3.5, 3. 6 and 3.7, Admissions, Joint Stipulation of Facts and Issues (JSF), pp. 5- 6, Docket, pp. 457- 458, Exhibits “D”, “E”, “F” and “G”, Docket, Pp. 886- 889. ‘7 Par, 3.8; Admissions, JSFI, Docket, p. 458. ® Exhibit ‘Ef, Docket, p. 890.

° Paragraph 1.1, Statement of Facts, JSFI, Docket, p. 453.

- license, and for as long as all thé requirements relative thereto are duly submitted said importation of conventional goods is deemed in order."° Subsequently, petitioner, through its team leaders, again importe from Labuan, Malaysia, ‘on the following dates: on December 15, 2002, bags; on January 3, 2003, 4,157 bags of rice; on January 24, 2003, bags; and’on January 26, 2003, 41,000 bags."

“On January 30, 2003, the combined .elements ,of the, Philippine d rice 5,233 9,071

Coast

Guard (PCG), the Presidential Security Group (PSG), the Customs Police (Batangas) and the Customs Intelligence and Investigation Service (cls) intercepted in Batangas Bay, a’ shipment of 29,796 bags of rice on- -boatd MV Nossa: Senhora de Fatima, which were declared as ‘corn ais Peti claimed ownership over the said shipment of rice." Consequently the District Gollector of Customs of the 4th Col District, Batangas, issued a Warrant of Seizure and Detention (Bate " Seizure |dentification No. 02. 03) on January 31, 2003, 13 against the ‘seventy.

tioner ection angas three (73) container vans loaded with imported rice on board the vessel MV ‘Nossa Senhora De Fatima for alleged violation of Section 2530 (f), (a), (I-1), “(-3) to (1-5) of the TCCP, as amended. And on April 4, 2003, District Collector of Customs Edward P. Dela Cuesta rendered his Decision ordering the release of the 73 containers to petitioner. He concluded as follows: | 9 Annex “F”, Petition for Review, Docket, p. 32.

'\ Paragraphs 1.2; 1.3; 1.4; and 1.5, Statement of Facts, JSFI, Docket, pp. 453-454. '? Paragraph 1.7, Statement of Facts, JSFI, Docket, p. 454.

_ Page 6 of 42

wherein import entries were filed, processed and the duties and |: taxes collected. This fact was testified under oath by no less/: _ than Collector Rudy Amistad of the Subport of Parang, Cotabato'.

who equivocally declared that the seized cargo of rice loaded in _73 Container Vans, being part of the entire shipment of the) claimant, had’ been processed through his Office. He identified): the authenticity, genuineness and affirmed the veracity of the): particulars ‘indicated in all the Import entries and, Bureau of. Customs Official Receipts pertaining to the payments made in) ' the aforesaid transaction. - ey ee ee E e Thus, upon release of the cargo from Cotabato Customhouse, the aspect of importation is deemed terminated:

and ceased to exist, the goods having left the jurisdiction of Customs ipso facto entered ‘the regular commerce of the country. Undeniably, when the questionable cargo left the local Port,.. Polloc, Cotabato ‘bound for Manila, there was no importation involved ‘and the said transaction was in the nature _ of transport of local commodity and beyond the ambit of the above-mentioned provisions of the TCCP, as amended.

On the alleged ‘misdeclarations/misclassifications’ when | . the seized cargo.was declared as ‘corn-grits’ instead of rice, the):

‘misdeclarations/misclassifications’ in the B/Ls and: Coasting Manifest do not militate against the subject shipment. It is, elementary that misdeclaration exist only in the Import Entry, and before payment of assessable taxes and duties is made which may not hold true in the case at bar. Section 2503 of the/* TCCP, as amended, is very. precise on the matter, which | provides that:

' ‘Sec. 2503. Undervaluation, Misclassification and Misdeclaration in Entry, When the dutiable value of the articles shall be so declared and entered that the duties, based on the declaration of the importer on the face of the ENTRY would be less by ten percent (10%) than’ should be legally collected, or when the imported articles shall be so described and entered that the duties based on the importer’s description on the face of the entry would less by ten percent (10%) than should be legally collected based on the tariff classification, of when the dutiable weight, measurement or quantity of imported articles is found. upon examination to exceed by ten percent (10%) or more than the entered weight, measurement or . quantity, a surcharge shall be collected from the importer in an amount of not less than the difference between the full duty. and the estimated duty based ‘upon the declaration of the importer,.. nor, ar, as 4d

DECISION

C,T.A. CASE NO. 7028 ‘Page 7 of 42 twice of such difference: Provided, That an undervaluation, misdeclaration in weight, measurement or quantity of more. than thirty percent (30%) -between the value, weight, measurement shall Constitute a prima , facie evidence of fraud penalized under Section 2530 of -this Code. Provided, further, That any misdeclaréd or undeclared imported aarticles/items found upon examination shall ipso facto be forfeited in favor of the Government to be disposed pursuant to the provision of this Code.

When ._ the undervaluation, misdescription, ‘ -misclassification or misdeclaration in the import entry is ‘intentional, the importer shall be subject, to penal provision under Section 3602 of this Code (R.A. 7651, June 04, 1993). (Emphasis supplied) Verily, the misdeclaratian/misclassification contemplated |; - by the above cited provision refers to that made in the ENTRY. |: Such was outlawed so as to prevent the commission of fraud |. ‘against the government, as the assessment of payable duties |: _ and taxes is based on the declaration made in the entry, the): entry should contain the correct,and accurate declaration of|' _ items being entered in the Philippine taxing jurisdiction. This is |; not the circumstances prevailing in the instant case as there is |: no necessity in filing an entry covering the subject shipment, the | same being.a local/domestic shipment and does ‘not involve |:

importation, | On the second issue, it'has been proven that claimant). authority to):

‘import/clearance by the proper government offices liké the DTI):

KCTMPC, . has . been’ granted appropriate and the Department of Agriculture and Fisheries by virtue of the i devolved powers and functions, mandated by R.A. 9054 and the | Grains Business License by the NFA from the time they brought into the country the goods in question, which goes to show the propriety and legitimacy .of. their business in conventional trading. !n addition; claimant likewise has been granted Grains .Business License .by the NFA Administrator’ in so far as). ‘retailing, wholesaling, warehousing and importing’ of rice as aj: registered cooperative is concerned, ‘subject to issuance of NFA):

permit per transaction’ as well as the NFA (Region XiIl)) ‘Moreover, the!:

Certification of Requirement | Compliance.

Provincial Manager, NFA, issued to the Collector of Parang, Cotabato a certification to the ‘effect that for as long as the). i are submitted, said |:

importation of conventional goods is deeméd in order. On ‘this | ‘ requirements relative thereto are duly score, KCTMPC relied on the acts made by the Regional). ;

Manager of NFA. Being a government official, his act could Paw Beer et ee

DECISION

C.T.A. CASE NO, 7028 -

Page & of 42

“ . existing laws, the Regional Government shall regulate ' ‘Indonesia, Malaysia, Brunei,. The goods-or items that - i bartered or counter-traded goods shall not be sold elsewhere in ‘trade arrangement spelled out in Section 31 of R.A. 9054, it is _ Presented, this Office finds no sufficient ground to engender a Jaw, it is hereby ordered and decreed that the 73 Container. Vans loaded with rice, subject of S|. No. 02 be RELEASED F construed to have been performed regularly and properly. Th presumption that official duty has been regularly performed ha not been disputed. (Rule 131, Sec. 3, par. M).

w-Oo At this juncture, it is worthwhile to quote Section 31 of R.A. 9054, which strengthens the Organic Act that created the Autonomous Region in Muslim Mindanao. :

Section 31. Barter and Counter-Trade. Subject to traditional barter trade and ‘counter-trade with are bartered or counter-traded with the said countries shall’ not be sold elsewhere ir the country without payment of appropriate customs or import duties. The Department of Finance shall, in Consultation with the Regional government, promulgate the rules to govern barter and counter-trade within six (8) months from the approval of this Organic Act. (Underscoring ours).

Besides the aforecited provision of law, it is clear that the country without payment of duties and taxes. In the present case, it is evident that the 73 container vans loaded with imported rice has already paid its duties and taxes, and therefore, said goods can,be sold elsewhere in the country by its owner-claimant KCTMPC, " .

; lt may be added, in passing, that in order to obviate the possible recurrence of similar incident in the future, and to insure the smooth implementation of barter trade and counter;

respectfully submitted that appropriate Rules and Guidelines should be drafted and. promulgated by the concerned Departments and government agencies the soonest time possible. oo | After a careful and judicious evaluation of the evidence well-founded belief that the ‘73 Container Vans containing imported rice is liable to forfeiture under the aforementioned. provisions of law. Accordingly, the release from customs. custody of the seized cargo, upon lifting of the Warrant of Seizure and Detention issued against the goods is proper and appropriate under the circumstances.

\

WHEREFORE, by virtue of the authority vested in me by hd * Customs, Legal Service Director lll, Atty. Damian M. Placido, Jr. of the the claimant Kutang Bato Conventional Trading Multi-Purpose « Cooperative after proper identification.

Let a copy of this Decision be furnished all the parties | — concerned for their information: and guidance. ~ « ”

_ Page 10 of 42

~ Lading and the Coasting Manifest with the cooperation of Harbor ‘ link and NNG. Since the said malfeasance is no longer th | ' province of the Bureau, the proper government authority should; institute the necessary criminal action in regard to the foregoing. | ~

RECOMMENDATION:

APPROVE the Decision and order the lifting of the WSD issued against the seized shipment of rice and its release i favor of the intervenor Kutang Bato Conventional Trading Multiw Purpose Cooperative after proper identification. The foregoin is without prejudice to any criminal action which may be instituted against the said cooperative, Harbor Link and NNG, and any administrative action against the Collector and othe personnel involved for possible violations of applicable Customs rules and regulations.

|f in accord, attached is the indorsement prepared by th Service. elevating the,case to the Department of Finance for th Honorable Secretary's review of the same.

( Signed )

ATTY. DAMIAN M. PLACIDO, JR. | Director III,

~ Legal Service’”®

In the Disposition Form dated August 28, 2003"° for the Commissioner of Customs, OIC-Legal Service Atty. Liza Sebastiari-Torres of the B Customs also recommended the approval of the Decision dated April _of the District Collector, Port of Batangas and the order lifting the W Seizure and Detention (WSD).

On October 3, 2003,' then Commissioner of Customs, | $ n i g u uireau of 4, 2003 arrant of

Antonio

\:

Bernardo, finding the lifting of the WSD to be meritorious, gave due course to * the Decision of the District Collector, Port of Batangas, and indorsed the case

Ab

folder of Batangas S. |. No. 02-03 by way of ‘st Indorsement to the ree ah 'S Paragraph 23, Exhibit “V”, Docket, pp. 1050-1051. he Exhibit “QQ”, Docket, pp. 1094-1095.

os

-C.T.A. CASE NO. 7028 of Finance for automatic review pursuant to R.A. No. 7651. 7 The case was received by the Department of Finance on October 6, 2003."° folder i } | ( :

i - In the 2nd Indorsement dated October 29, 2003", Undersecretaly Ma.

Gracia M. Pulido-Tan returned the case folder of Batangas S.1. No. 02-03 to the Bureau of Customs for explanation of/comments on several findings of facts. the Commissioner: “submitted his’ réquired explanation’ to’ the ssues raised therein by way of the 3rd Indorsement dated November 14, 20037 and - returned the case folder of Batangas S.1. No. 02-03. The Department of Finance received the 3rd Indorgement and case folder on Novembe 2003.

In the 4th Indorsement dated November 21, 2003, Undersecreta ‘Gracia M., Pulido- Tan rendered her decision, “the decretal portion of reads:

“WHEREFORE, the Decision dated 04 April 2003 is} hereby REVERSED; and: the Bureau ordered to expeditionally, | ’ detérmine the ‘possible violations ,of, applicable custgms rules 7 and regulations,’ and institute such actions, criminal or) n2i f otherwise, against the persons found to be responsible.

er 20, ry Ma.

which Said Decision was released on December 15, 2003 as testified upon by petitioner's witness, Ma. Carmen Nepacina, Records Officer V of the Central Records and Management Division of the Department of Firfance : during the hearing held on November 16, 2008" "’ Paragraph 1.11, Statement of Facts, JSFI, Docket, p. 455. '8 TSN, November 16, 2005, p. 13.

'® Common Exhibit, Exhibit “x” for petitioner, Docket, pp. 850-850-a; Exhibit “4” for res Docket, pp. 1203-1204.

° Exhibit Y, Docket, pp 1053-1056.

pondent, 2) Common’ Exhibit, Exhibit “Z” for petitioners Docket, pp. 1059-1062; Exhibit “5” for refpondent, Docket, pp. 1205-1208.

*2 TSN, November 16, 2005, p. 27.

1 At oo

C,T.A. CASE NO. 7028 ‘ Thereafter, Atty. Reynaldo V. Umali, Special Assistant, Bureau of Customs, issued the 5th ndorsement returning to the District Collector of Customs, Port of Batangas for appropriate action, the case folder of Batangas S.1. No. 02-03, inviting. attention to the 4th Indorsement dated November 21, 2003 of Undersecretary Grace Pulido-Tan, which is self-explanatory.”

On January 23, 2004, petitioner fled its Motion | for Execution before the.

Bureau’ of Customs, Port of Batangas. This Motion was, in turn, indofsed by » the District’ Collector of Batangas to the Commissioner of Customs by way of 6th Indorsement.4, Then BOC Commissioner Bernardo referred the matter to the BOC Legal Service Director, for comment and/or appropriate action, by way: of 7°. Indorsement dated March 8, 2004, 26 Thereafter the Commissioner of Customs reférred petitioner's Motion for Execution to the e Office of respondent’ Secretary of Finance (Attention: USEC Ma. Gracia M.

Pulido- Tan), for its information and disposition, through the 8th Indorsement dated March 17, 2004.28 The. Department of Finance received the 8th indorsement and petitioner's Motion on March 19, 2004.

Respondent Secretary of Finance, through Undersecretary Ma. Gracia M. Pulido-Tan, responded to the Commissioner of Customs by way of 9th Indorsement dated April 1,:2004, Undersecretary Pulido-Tan instructed the BOC to strictly abide by and comply with the. 4th Indorsement dated bE.

November 21, 2003 and further directed as follows:

“This Department Having acted on the case as 15 expressed. in its 2" and a’ Indorsement of which Movant appears to my 33 Annex FF, Docket, p. 216. ~ yo cy te 4 Exhibit “NN”, Docket, pp, 1084-1087. ;

> Annex'JJ; Docket, p. 222. \ 26 Annex KK, Docket, p. 223.

al

C:T.A. CASE NO. 7028 been notified through the 3 indorsement of the Commissioner | , and the 5" indorsement of Special Assistant Reynaldo V. Umali, | -Movant’s allegation that the Decision of the District Collector has become final and executory should not be taken by the ©: Bureau at face value. Any question of Movant on the matter must by raised by him in the proper court and not the Bureau nor this Department. It is this Bureau’s function to implement our 4" Indorsement.

For strict compliance.”” r The 9th Indorsement was released on April 23, 2004.7" Consequently, petitioner filed a Motion for Reconsideration which was denied by way of a Resolution dated June 16, 2004.and received by petitioner on July 5, 2004 .

Thus, on August 3, 2004, petitioner filed the present Petition. i ‘In the Comment/Answer, filed on October 25, 2004, respondent argues that: | | ‘4 the: rice shipment is subject to seizure and forfeiture for |. violation of Section 2530 (f), (g) and (|-3) to (1-5) of the Tariff |; and Customs:.Code of the Philippines, , 4 the seizure and detention of the .rice shipment ‘by’ police . authorities was lawfully conducted; .

3. the power to review consists in the thorough evaluation of | 9 the records; and

4. the decision of the Batangas Port District Collector, | notwithstanding: its affirmance by the Commissioner of) Customs, has not become final and executory.

' While the case was pending trial, petitioner filed a “Motion to Release Goods Under Bond” on October 19, 20047°, while respondent filed an :

Opposition thereto on December 10, 2004.°° The Court granted the ar |

SS

27 Exhibit “EE”, Docket, p. 1064. ;

28 TSN, November 16, 2005, p. 30.

29 Docket, pp. 281-283. ae ta by ey 20 Docket? pp. 300-306. — “DECISION 4 C.T.A. CASE NO. 1028 Iw

Page 14 of 42

motion in a Resolution dated December 21, 2004°', and subsequently, respondent's Motion for Reconsideration ¢ ‘said ‘Resolution was denied by this Court in a Resolution dated April 18, 2005.”

"Trial on the merits ensued. The parties presented their respective

I

testimonial and documentary evidence and, filed their, respective Memoranda: on January 26, 2007 for the respondent, ‘by way of registered mail and received: by this Court on ‘February 1, 2007**; and on February 13, 2007 for the petitioner. ** Prior thereto however, the Resolutions dated December 21, 2004 and April 18, 2005 were assailed by the respondent before the Supreme Court by . way of a Petition for Certiorari under Rule 65 of the 1997 Rules of Civil i » Procedure, docketed as G.R. No. 168137 entitled Secretary of the Department of Finance vs. Court of Tax Appeals, Second Division, et.al...

Considering that said petition was given due course by the Highest Court in its Resolution dated January 16, 2006, and considering further that the complete records (CTA Original Docket-927 pagés, Customs’ Records-375 pages in folders, and transcripts of stenographic notes) of this case were ordered elevated to the First Division of the Supreme Court in its letter dated July 13, 2006, this Court, in deference to the Highest Court, issued a Resolution dated fl ¢ February 4, 2008 holding this case in abeyance until the original records thereof are returned to this Court for the complete resolution of the present case. , * 3! Docket, pp. 329-330.

Docket, pp. 481-484. . | 3 Docket, pp. 1223-1249. ‘ : ' 4 Docket, pp. 1252-1264.

a)

In a Letter dated March 10, 2008, this Court, acting through its Executive Clerk of Court Ill of the Second Division, Atty. Jesus’ P. Inocando, Jr., requested for the withdrawal of the original records of this case to render a . decision subject to substitution of certified true copies of the same, if deemed - necessary. Subsequently, the Third Division of the Supreme Court issued a Resolution dated March 17, 2008 granting said request:® and consequently, ‘this Court received the complete records of this case from the Supreme Court on May 8, 2008. ot ae . | Hence, this Decision.

THE ISSUES

The parties stipulated on the following issues for the Court’s consideration:

“4. Whether the rice shipment in question is subject to forfeiture ” for violation of paragraphs (f), (g) (L-3 to L-5), Section 2530 of the TCCP, as amended.

2. Whether the 9th Indorsement of the Secretary of Finance was rendered within the reglementary period allowed by law.”

Petitioner's Arguments:

Petitioner maintains that the seized goods are not subject to forfeiture because the rice shipment from Cotabato to.Manila no longer falls within the ambit of importation since taxes and duties had already been paid. Misdeclaration and undervaluation can allegedly happen only when goods enter the Philippines for the first time. The proper informal entry declarations were filed and processed in the Port of Parang where the shipment amen > Docket, p. 1269.

*° Docket, p. 1270.

fe and the importer was required to submit an import declaration that also: served as a gate pass when the goods were released from customs custody. | When the goods entered the local port of Batangas, no import deciaratign was required as the goods have allegedly changed its complexion after paymnent of taxes and duties and have become part of domestic trade. Hence, the subject

Cn

_ rice shipment is allegedly not subject to seizure and forfeiture under Section 2530 of the TCCP. | i According to petitioner, the subject importation was under the alispices i of the Autonomous Region in Muslim Mindanao (ARMM) whose organic act is enumerated by Republic ‘Act No. 9054;: otherwise known as “An Act to \ Strengthen and Expand the . Organic Act for the Autonomous Region ‘in Muslim Mindanao”, Amending for the purpose Republic 6734, entitled “An Act cl Providing For the Autonomous Region in Muslim Mindanao (ARMM as amended. And petitioner cannot allegedly be faulted for relying on the | ; | authority granted by various government agencies in this transaction, in | pursuit of the National Government's program relative to the Brunei- Indonesia — Malaysia —Phils — East Asia Grown Area (BIMP- EAGA) implemented under t the ARMM'’s Organic Act. — More importantly, petitioner stresses that respondent was not able to prove fraud in.the alleged importation of the ‘subject cargo of rice. Since this particular petition involves forfeiture, fraud is allegedly never presumed and o failure to prove fraud is a bar to forfeiture, | On the contrary, petitioner was ;

allegedly able to show utmost good faith in this importation transaction..

* With respect to the second issue, pelitioner posits ‘that several months lapsed before respondent rendered a Decision by way of a 9th Indorsement " . C.T.A. CASE NO. 7028 The shipments under issue, were imported from Labuan, Malaysia b " te etwee n | Noverhber 2002 and January 2003. Upon its seizure in. January 2003 a the Port of Batangas, the hearing of the warrant of seizure and detention was « decided on April 4, 2003. The case folder was elevated for automatic to the Legal Service Division who reviewed and evaluated the case review for the Commissioner, The favorable review was completed by the Legal Service only on July 4, 2003 by way ofa Disposition Form or commonly referre to as the DF. Again, the DF was allegedly subjected to another review Deputy Commissioner for’ Revenue » Monitoring who gave his a by the ie pproval sometime August 2003. From the moment of seizure on January 31, 2003 to the approval of the Commissioner on October 3, 2003, a total period of 10 months had allegedly lapsed considering that the cargo is rice properly classified as a a perishable commodity.

Hence, under Section 2313 of the TCCP, the decisions of the C;

and Commissioner of Customs became final and executory.

t i

Respondent’s Counter-arguments:

I

ollector Respondent submits that under Section 14202 of the TCCP, as long as importation has not been terminated, the imported goods remain under the custody and jurisdiction of the Bureau of Customs. In the present case, the . imported goods remain under the custody and jurisdiction of the Bu

I

feau ‘of Customs as petitioner failed to show that legal permit for the withdrawal of the subject importations had been granted. Granting that the Bureau of C lost custody and jurisdiction over the tice shipment, the Bureau of ¢ ustoms -ustoms a) a) yy regained the same after the rice shipment, was intercepted at the a) e ie

DECISION

C.T.A. CASE NO. 7028 | Page 18 of 42 oo ‘ Bay by the combined elements of PCG, PSG, Customs Police of Batangas, and CIIS. | | Oo | ‘Respondent further claims that there were clear Violations of the TCP and therefore subject to seizure and forfeiture. First, petitioner has no: clear license to undertake the importation of rice thereby making the rice shipment contrary to law. Second, the rice shipment.was misdeclared as corn grits. Third, there is a strong indication that petitioner was just being uged as dummy or conduit for Agro Farm, Las Buenas Farm and SCC Farm, entities which had also laid claim to the rice shipment in question, to facilitate the smuggling of the rice shipment into the country. Fourth, the rice shipment was imported not by petitioner but’ by its members who do not-possess any authority or license therefore, and in volumes beyond what is legally allowed. Fifth, the carrying vessel M/V Nossa Senhora de Fatima deviated is route and docked at the Batangas Port | : ‘ As regards the authority: of the PCG and ‘PSG to intercept wi Nossa Senhora de Fatima in search of. itlegal cargo; respondent avers that they were acting in close coordination and cooperation with the Customs Police of a Batangas who, by the nature of their functions under Sections 2203 i 2210 . of the TCCP, are authorized to enforce tariff and customs laws.

I

Anent the 4th Indorsement of Undersecretary Pulido- Tan, which [ ' petitioner assails for having expanded the scope of ,issues under, review,- i

Ip

‘ ars respondent counters that Undersecretary Pulido-Tan, acting for the Secretary of Finance, exercises - control and supervision over the ‘Commissioner of Customs and District Collectors nationwide. She, therefore, has the power op |

- DECISION

of Customs and District Collector concerned. : ' ' forfeiture under Section 2530 of the Page 19 of 42 ».

approve, modify or even reverse the action ordecision of the Commissioner The Decision of the Batangas Port District Collector, which) {s || was affirmed by the Commissioner of Customs, has allegedly not become fing and executory. The thirty (30)-day period provided under Section 2313 ‘o the TCCP should be considered merely as directory. Ample considerations must | of the case.

THE COURT'S RULING

First. Issue; Is the rice shipment ; ' imported by ‘petitioner subject to Te CP?

ot j 1 -also be-given to the exigencies and limitations of human effort and complexity.

In Carrara Marble Philippines, Inc. vs. , Commissioner of, Customs,” the Supreme Court held that the Tariff and Customs law subjects to forfeiture any article which is removed contrary to law from any pyplic or private warehouse under customs supervision, or released irregularly . f subject to seizure and forfeiture. It reads:

“SECTION 2530... Property Subject to Forfeiture: Under Tariff and Customs Law. — Any vehicle, vessel or: aircraft, cargo, article and other objects shall, under the following conditions be subjected to forfeiture:

{

a. Any vehicle, vessel or ‘aircraft, including Cargo, which, ‘shall be used unlawfully in the importation or exportation of, articles or in conveying and/or transporting contraband or from '. Customs custody. Section 2530 of ‘the TCCP enumerates the properties * smuggled articles in commercial quantities into or from any Philippine port or place. The mere carrying or jholding on board pf contraband ar smuggled articles in commercial quantities, shall subject such vessel, vehicle, aircraft or any other craft ¥ 8 GR. Nos 129680, September 1, 1999. )

ay a) *

DECISION

C.T.A, CASE NO. 7028

- Page 20 of 42

’ forfeiture; Provided, That the vessel, or aircraft or any other craft carrier it is not chartered or leased; .

“without such article having been properly entered or legally the same;

i | | 1 \ i i is not used as duly authorized common carrier and as such a.

i b, Any vessel engaging in the coastwise which shall. have on board any article, of foreign growth, produce, oF, manufacture in excess of the amount necessary for sea steres, imported;

c. Any vessel or aircraft into which shall be transferred: cargo unladen contrary to law prior to the arrival of the importing . vessel or aircraft at her port of destination;

d. Any part of the cargo, stores or supplies of a vessel or aircraft arriving from a foreign port which is unladen before: ’

bo arrival at the vessel's or: aircraft's port of destination and without, authority from the customs officials; but such cargo, ship of: aircraft stores and supplies shall not be forfeited if such unlading:

was due to accident, stress of weather or other necessity and is, subsequently approved by the Collector; :

* —@. Any article which is fraudulently concealed in or removed contrary to law from any public or private warehouse,’ - container yard or container: freight station under customs.

supervision;

f. Any article the importation or exportation 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; r

g. Unmanifested article found on any vessel o| aircraft if manifest therefore is required;

h. Sea stores or aircraft stores adjudged by the Collecto to be excessive, when the. duties assessed by the Collector thereon are not paid or secured forthwith upon assessment of =

i. ‘Any package of imported article which is found by the examining official to contain .any article not specified in the invoice or entry, including all other packages ‘purportedly L..

aad . ;

t ’ * at containing imported articles: similar to those declared in the. . invoice or.entry to be the contents of the misdeclared package; . : Provided, That the Collector is of the opinion that the ‘ misdeclaration was contrary to law; . be x * i " DECISION Page 21 of 42 oO ot ;

1

j. Boxes, cases, trunks, envelopes and other containers | of whatever character used as receptacles or as device to. conceal! article which is itself subject to forfeiture under the tariff - and customs !aws or which is so designed: as to conceal the character of such articles; :

k. Any conveyance actually being used, for, the transport) of articles subject to forfeiture under the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used, | - together with its’ equipage and appurtenances including: the beast, steam or other motive power drawing or propelling the same, The mere conveyance of contraband or smuggled articles by such beast or vehicle shall be sufficient cause for the outright seizure and confiscation of. such beast or vehicle, but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid, is engaged as'' common carrier and not chartered or leased, or his agent in) - charge thereof at the time, has no knowledge of the unlawful act; " .

* ® I. Any article sought to be imported or exported.

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

(2) By failure to mention to a custéms official, articles found in the baggage of a person arriving from abroad;

- .(3) On.the strength of a false declaration or affidavit executed by the owner, importer, exporter or consignee concerning the importation of such article;

(4) On the strength of a false invoice or other document exécuted by the owner, importer, exporter or consignee concerning the importation or exportation of such article; and

(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.” (Emphasis ou) A ane ou ‘the Philippines. : ie _ Philippines (TCCP) is Section 1202, which reads:

' DECISION C.T.A. CASE NO. 7028 i;

Page 22 of 42 . I ‘For the above-quoted Section to apply, there must be an unlawful . importation or deliberate possession of illegally imported goods. Its therefore ' \ po.

necessary that this Court determines whether or not, the importation of the | subject shipment of rice has been terminated upon its entry at the port of Polloc, Cotabato, prior to the time that It was loaded on board MV ‘Nossa Senhora de Fatima’, an inter-island vessel destined to another local port in le boot too 4 cr en or ' The pertinent provision of the Tariff and Customs Code of the “SECTION 1202.. When. Importation Begins and) Deemed Terminated. — \mportation begins when the carrying). ' vessel or aircraft enters the jurisdiction of the Philippines with) ‘intention to unlade therein: Importation is deemed terminated) upon payment of the duties, taxes and other charges due upon/!

the articles, or secured to be paid, ata port of-entry and the!

, legal permit for withdrawal sHall_ have been granted, or in gase said articles are-free of duties, taxes and other charges, until: they have fegally left the jurisdiction of the ‘customs.”

(Underscoring Ours)

Based on the foregoing legal pravision, importation begins upoh, entry of the vessel or aircratt carrying ‘the imported articles into Philippine jurisdiction and- the unloading of the same therein, while importation is deemed terminated, either upon payment of appropriate duties, taxes and other charges imposed upon the imported articles at a port of entry and the legal permit to withdraw the same having been granted for goods sujet to duties, taxes and other charges; or, upon legally leaving the jurisdiction of the customs i in case of articles that are free of duties, taxes and other charges “Respondent contends that even assuming arguendo that the proper customs duties and taxes had been paid on the subject shipment, my a} petitioner failed to show that the legal permit for the withdrawal of the same -had been granted. And assuming further that the legal permit far the withdrawal of subject shipment had been granted | and the same had {been 4 brought out of the customs area thereby rendering the Bureau of Ciistoms to have lost custody and jurisdiction over r nevertheless, when the rice shipment was intercepted at the Batangas Bay by the combined elements of ‘the Philippine Coast Guard (PCG), the Presidential Security Group PS6) the Customs Police (Batangas), and the Customs Intelligence and investigation Service (CIIS); the Bureau of Customs, allegedly effectively regained custody and jurisdiction over the same citing the case of Papa v. Mago.” - - The Court does not agree with respondent's position. f A careful scrutiny of the evidence presented in this’ case reveals that the importation was validly terminated. The five (5) shipments of rice Were shipped and imported from Labuan, Malaysia by, petitioner, and these were cleared by the Bureau of Customs when these were unloaded at Pollog Port, * in Cotabato. Petitioner's import entries and pertinent documents were filed and processed; duties and taxes were accordingly assessed and collected: and the rice shipments were duly released from the Customs’ ctstody.

Thereafter, the Bureau of Customs lost jurisdiction over them. | As the Supreme Court explained, importation refers to bringing of goods from abroad into the country. It begins when the .carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to unlade therein and is deemed terminated upon payment of the duties, taxes, and al other charges due upon the articles or-secured to be paid at a port of entry - 39.99 SCRA 857, (1968). me ea ee yh ' At DECISION .

C.T.A. CASE NO. 7028 OO .

Page 24 of 42 oe : iF and the legal permit for withdrawal shall have been granted, or until they have legally left the jurisdiction of the Bureau of Customs.° f Contrary to respondent's contention thatpetitioner failed to show that it was granted a_ legal permit for the withdrawal of rice shipments, ithe , ms uncontroverted fact is that the appropriate officer of the Bureau of Cust ) allowed petitioner to withdraw the subject rice shipment. This was testified _upon by petitioner's witness, Collector Pedro Quinones of the Bureau. of ' 7 Customs, Sub-port of Parang, Cotabato City, by way of Judicial Affidavit, '- during the hearing held on September 49, 2005,"" to wit:*? | “Q: Do you know Kutangbato Conventional Trading Multi- Purpose Cooperative, the Petitioner in this case?

A: When | was still the Deputy Collector for Operations, KCTMPC imported several items. ‘The previous Collector Mr. Rudy Amistad and | would discuss and coordinate the status and processing the documents of their importation.

| have personal knowledge about their transactjons with the Bureau of Customs. | know that KCTMPC is engaged in conventional trading under the auspices of the Autonomous Region of Muslim Mindanao operating within «|

the Brunei Indonesia Malaysia Philippines — East Asia

. Growth Area (BIMP-EAGA).: They: imported. assorted |).

articles such as rice, noodles, jars, coffee, towels and other items from Labuan, Malaysia. I Q: When did KCTMPC import these articles? i A: There were five importations made from November 2002 |: up to January 2003.

—Q: How many bags of rice did they import? | i “+a: For the first shipment, they brought in 3,640 bags. For] the second shipment, they brought in 5,233 bags. For’. the third shipment, they brought in 4,157 bags. For the: . fourth shipment, they brought in 9,071 bags. For the last), shipment they brought in 11,000 bags for a grand total of}:

33,100 bags. jw , 40 General ‘Travel Service, Ltd. vs. David, et al., No. L-19259, September 23, 1966; Llamado Vs. a Commissioner of Customs, No. L-28809, May 16, 1983. - p Minutes of hearing held on September 19, 2005,'Docket, p. 803. in Exhibits “PP” to “PP-5-A”, Docket, pp.¥1 088-1093. .

ru

QQ:

A:

' | i

I

What documents did you require. KCTMPC to submit; upon arrival of their importations? .

We required ‘the importer to submit the vessel inward). foreign manifest, bill of lading, commercial invoice, |: packing list, Certificate of Registration, NFA Grains :. Business License, the NFA letter dated November 11,|: 2002, DTI Importation Commodity Clearance,);: Department of Agriculture and Fisheries Clearance, | payment of Customs taxes and duty. The most important document is the Inforrnal Import Declaration and Entry)

XXX _ XXX XXX »

Why is the Informal Import Declaration and Entry important?

For reasons of administrative facility and because th : cooperative has many members, we required the.

1.

{ Cooperative Team Leaders to fill out this Customs form, individually so that it will be easier to identify what items, belonged to whom. It will be easier for the Bureau because the same IIDE serves as.a gate pass during the physical release. Alsq, in order that the taxes and duties’ can be assessed correctly against the cooperative. * | 1 Why did the team leaders appear as consignees in the (IDE?

When the barter trade was still active around the 80's, the Bureau used the same system where the team leaders. appeared. The purpose is that the small entrepreneur can join the business without their going to Labuan, Malaysia. So we merely followed the old system because | we found the processing faster and more convenient ' _ instead of transacting with the members individually. | Did the Cooperative comply with all the requirements.

set by the Tariff Code for a valid importation? F The Port personnel. at the Bureau of Customs:

Cotabato were satisfied that all the requirements were met as ‘in fact we allowed the release. The Collection reports were forwarded to the Commissioners office in Manila.

. i equivalent to the termination of the importation? Section 1202: of the Tariff Code explains’ that. upon payment of duties, taxes at the port of entry, and the ' ‘Was the release of the goods to the Cooperative 1.

» granted, the importation. is deemed terminated. The, - = i i legal permit for withdrawal of the shipment have “hy ou 4) mo _ DECISION -C.T.A, CASE NO. 7028 aa . Page 26 of 42 : . in |:

IDE serves as 5 the gate pass while the payment of the: | taxes and duties serves as _a permit to.withdraw the ' goods. After payment, the articles are now integrated | into the local commerce. | 4 Q: Are you aware that the’ 20 bags of rice per member ’ - . allocation were exceeded?

‘At No sir. | Know that there are 53 Team Leaders ‘and every, team can have 28 members or even more. The cooperative has at least a thousand members. 4 : Q: One of the documents yau identified is Exhibit B, the NFA Grains License, Is the importation of rice one of the allowed activity? 7 A: Yes sir. Importation is allowed. ! ;

And what was’ the basis in allowing the Cooperative to . m, import rice? [ t OA These are the Department of Agriculture and Fisheries no ne objection letter dated May 20, 2002, Department of Trade and Industry importation clearances as well as the letter ‘oe from the National Food Authority dated November 14, 7 ' . 2002. (Exhibits C, D, E, F, G, H) [i ; Q: How much taxes and duties were paid by the Cooperative . - for the total shipment?

: A! The Bureau of Customs Official Receipts ‘for a tota a, amount of P9,147,174.00 were. paid. These can be seen in Exhibits J,.L, N, P and R.

Q: You also identified a‘document pre-marked as Exhibit $ . . the Hold Order 005-2003 from the Bureau of customs Sy, Narth Harbor. What is this document all about. toe A: The Cooperative shipped out 10 container loads of ice that were held at Manila. They complained to us why the shipment was being held when taxes had been paid sa called up Collector De La Cuesta to explain that the rige came from our port., ra vy Q: Have the containers been released? ; A: | do not know what happened to the cargo after the hol ‘ order was issued. because it is: outside our jurisdiction, (Emphasis and underscoring Ours)

OQ TT

so During cross-examination, witness Quinones “antec: WA 2 a4 ““ TSN, September 19, 2005, pp. 22-26. , _ C.T.A. CASE NO, 7028

—Q:

A!

So, it is not true that the IIDE is the gate pass for the physical release of the goods? —_ Yes, sir, this is also the form that they will use for the release of the goods if they pay already‘ the duties: and taxes. This will coincide with the OR. I So, you agree with me when I say that it is the legal permit for the withdrawal of the goods? _ in our Port, sir; we usually do this.

But is this practice being observed in the other Ports of _ the Customs throughout the Philippines or just in your:

Port?

i ij | f | '

I

rf | t i t | a) You know, sir, because our Port is very different from| other ports, because we are under the autonomous, region, we process the sale as it is before. When they file. their Informal Import Declaration Entry, then, we process! we assess. And after they pay the duties and taxes, we issue OR; then, we release the goods.

Is that practice allowed under the Tariff and Customs | Code of the Philippines? i Yes, sir. That is what we have been doing since before. |:

But why is it not being observed in the other Ports in the Bureau of Customs?

i” But: you know, sir,: after doing this, we submit all the . documents. We copy furnish to our District and to the "Commissioner of Customs., We are, giving copies. , fe:

ae

We

XXX XXX XXX

[Qe

You also mentioned, Mr. Witness, that the payment of th customs’ duties and taxes serve as the permit to withdraw the shipment. Am { correct?

Yes, sir. , r in other words, the gate pass which is the IIDE and the payment of customs’ duties and taxes serving as a permit are two different things? - r This Informal Import Entry, “your Honor, we cannot:

release the goods with this document only. We release 1 the goods after payment of the duties and taxes with the official ar, DECISION oo .

_ Page 28 of 42

JUSTICE CASTANEDA: |

May | ask this clarificatory question? . !

What you are saying is that, the import Entry together | with the payment of the duties and taxes will serve as | the gate pass for the release of the goods? ae COLLECTOR QUINONES., :

é Yes, your Honors.” ee me 7

-- (Emphasis Ours)

The Court does not agree with respondent's argument that the Bureau _of Customs regained jurisdiction and custody of the imported goods by citing | Papa vs. Mago, et al.™* as jurisprudence. In the said’ case, the Supreme Court found that the importation was not validly terminated as there was no payment of duties and taxes. ‘The Supreme Court ruled:”

“xxx, As long as the importation has not been terminated: .the imported goods remain under the jurisdiction of the Bureau: of Customs. Importation is deemed terminated only upon: the payment of the duties, taxes and other charges upon, w the articles, or secured to be paid, at the port of entry and. the legal permit for withdrawal Shall have been granted, © The payment of the duties, taxes, fees and other charges: must be in full. a .

i” a)

XXX XXX XXX

Even if it be granted, arguendo, that after the goods in question had been brought out of the customs area the Bureau — ” of Customs had lost jurisdiction over the same, nevertheless, when said goods were intercepted at the Agrifina Circle on . November. 4, 1966~ by members of the Manila Police Department, acting under directions and orders of their Chief;

- Ricardo G. Papa, who had been formally deputized by the. . Commissioner of Customs, the Bureau of Customs had - regained jurisdiction and custody of the goods. Section 1206 of | the Tariff and Customs Code imposes upon the Collector of Customs the duty to hold possession of all imported 7 articles upon which duties, taxes, and other charges have . é not been paid or secured to be paid, and to dispose of the re 44 No, L-27360, February 28, 1968.

+

Page 29 of 42

’ 4 Informal Import Declaration and Entry or I{DEs marked’ as Exhibits’ “1”, “1-1 to’ 1-24”; “Kr

DECISION ~

C.T.A, CASE NO. 7028 _ same according to law. The goods in question, therefore, were 7 under the custody and at the disposal of the Bureau of Customs - at the time the petition ‘for mandamus, dgcketed as Civil Case No. 67496, was’filed in the Court of First Instance of Manilason November 9, 1966. The Court of First Instance of Manila, therefore, could not. exercise jurisdiction over said goods even if the warrant of seizure and detention of the goods for the purposes of the seizure and forfeiture proceedings had not yet been issued by the Collector of Customs.” (Emphasis Ours) _ In the instant case, the Court finds that the subject importations were | appropriately terminated upon payment by petitioner of the corresponding customs duties. and taxes, and the subsequent release of the goods by the Bureau of Customs. The Court takes note of the importance of the Various Informal Import Declaration and Entry or IIDE, identified by petitioner's witness, Collector Pedro Quinones, who also said that the same served on!

s the gate pass during the physical release of the imported articles. Further, he said that'the payment of the taxes and duties, evidenced by the Bureau of ” ~ | Customs Official Receipts (which he also identified in his Judicial Aff served as the permit to withdraw the subject imported articles.*° The Court, likewise, does not agree with respondent that the rice idavit) ‘I shipments were smuggled for lack of proof that petitioner had “NFA permit per transaction”. Enlightening is the testimony of Secretary Ishak V. Mastura on _this point during the hearing held on January 30, 2006.*° We quote: | ““Q: What is the ARMM? t A: Congress passed Republic Act No. 9054 entitled ‘An act to Strengthen and Expand the Organic Act for the, Autonomous Region in Muslim Mindanao, Amending for, the purpose Republic Act No. 6734, entitled An Act,

Providing for the’ Autonomous Region in Muslim)

K-30”, “M”, “M-1 to M-23”, “O”, “O-1 to 0-30”, “Q”, “Q-1 to Q-15”;Bureau of Customs, Receipts marked as Exhibits “J”, “L”, «NP? SR? ic Minutes of the hearing held on January 30, 2006, and Exhibit “SS” Docket, p. 841.

t “K-1 to

Official

~” Government (ARG) and a plebiscite was conducted on . . itis superior to all other laws with regard to the grant of 22 "of Marawi voted to be included in the other four provinces Mindanao (ARMM), as Amended. Rep. Act 9054 advances the ‘constitutional grant of autonomy by detailing the powers of the Autonomous Regional August of 2001 wherein the Province of Basilan and City composing the ARMM namely, Maguinddnao, Lanao del Sur, Sulu and Tawi-Tawi. No amendments may be made to the Organic Act without conducting a plebiscite hence autonomy and Its powers.

What is Regional Autonomy?

Regional autonomy refers to the granting of basic internal government powers to the people of a particular area or region with least control and supervision from the central government. The objective of the autonomy of the autonomy system is to permit determined’ groups, with a common tradition and ~— shared social-cultural characteristics, to develop freely their ways of life and heritage, exercise their rights, and be in charge of their own business.

In the Philippine setting, ‘regional autonomy implies the, cultivation of more positive means for national integration. It would remove the sense of alienation among the Muslims, increase their trust in the government and pave the way for the’ unhampered implementation of devolution. A necessary prerequisite of autonomy is decentralization. . * Could you please enlighten the Honorable Court on the | concept of Decentralization?

Decentralization is a decision by the central government authorizing its subordinates to exercise. authority in certain areas. It involves decision making by sub-national) | units. It is typically a delegated power, wherein a larger:

government.chooses to delegate certain authority to local! .

governments.

. ‘ i.

Decentralization comes in two forms - deconcentration :

and devolution, Deconcentration is administrative in;

nature; it involves - the transfer of functions or the delegation of authority and responsibility from the national office to the regional offices.

Devolution, on the other hand, connotes political) decentralization, or the transfer of powers, ¥

UW

development programs in the region through a process of". .

ou

OU

DECISION

C.T.A, CASE NO. 7028

_ Page 3'1 of 42

PO

"steady flow of commodities from producing : and/or}, marketing centers to areas in short supply, among others. |:

' ‘particularly in its autonomy. been lumped tagether with | constitutional mandate for the ARMM ‘is found in the responsibilities, and resources for’ the performance of | certain functions from the central government to the local |.

government - units. This is a more liberal form of| decentralization since there is an actual transfer of powers and responsibilities. It aims to grant greater autonomy to local government units in cognizance of their right to self government, to make them self reliant, and to” improve their administrative and technical capabilities. The ARMM government ‘has been in some aspects other local government units and that is why the chapter on local autonomy in the Constitution.

Has there been devolution of powers in the DTI-ARMM? Yes sir, Executive Order No, 481 dated September 24, 1991 manifest an unmistakable case.

XXX XXX XXX

In what other areas of responsibility of ARMM has the devolution been effected? | - In the Department of Agriculture by way of Executive Order No. 460 dated May 17, 1991. In the Department of Labor and Employment, Local Government, Tourism, Environment and Natural Resources, Social Welfare and Development, Science and Technology (E.O. No. 425), For Public Works ‘and ‘Highways (E.O. No. 426), Department of Education, .Culturé and Sports (E.O. No, | 459).

What are your duties and Responsibilities as Regional |:

Secretary ofthe DTI?) oY Executive Order No, 481 enumerates the powers and functions of, the DTI under the original E.O. No, 133 series of 1987 that have been transferred to the ARG. Briefly, we’ plan, implement and coordinate activities of the government related to trade, industry and investments |, within the ARMM; formulate and implement programs to};

strengthen industries adversely affected by the economic | attaining financial’ viability; promote domestic trade, | marketing ,and distributions to ensure the economic and Do you know Kutangbato Conventional Trading Multi i Purpose oh (KCTMPC for short), the Petitioner |;.

in this case?

ae ‘crisis, particularly those that have a good probability of |

DECISION

| C-T.A. CASE NO, 7028 | | | : : | “Page 32 of 42

A

oe Yes sir. The Chairman Mr. Orlando Badoy wrote a letter, to me on Apri! 15, 2002 requesting for a special authority/permit for the cooperative to engage inj! conventional trading via the Brunei-Indonesia-Malaysia | Philippines (BIMP) route. | .

Did you act on the letter request?

Yes sir. | issued a no-objection letter allowing the cooperative to engage in conventional trading of products such as- grains, tires, construction materials, used) clothings and used vehicles. i

XXX XXX XXX :

What was your authority behind the issuance of the letter,, permit to Kutangbato? | ‘The Department of Agriculture of the Autonomous||:

Region in Muslim Mindanao had already granted the request of KTMPC to allow them to conduct, conventional trading and importation of rice from): BIMP-EAGA.. As the regulatory body in. the Autonomous) Regional. Government tasked with setting and.

implementing regional policies on conventional. trading, particularly the traditional ‘barter trading’ with neighboring BIMP-EAGA countries as authorized under the Organic.

Act, we granted permit to the KTMPC to engage in) conventional trading not. only in rice but also other, commodities and trade goods coming from BIMP-EAGA, The policy of the ARMM with:'regard to the traditional ' ‘barter trading’, which is actually conventional trading with neighboring countries.such as Malaysia and Indonesia, is | to be lenient and allow such trading because this type o trading has been in existence for centuries and part of:

Moro culture of the region. As long as the traders pay, customs and duties to the appropriate government, agencies such as the Bureau of Customs, we encourage : traders to formalize their trading ‘and their legal existence , by going through the ARMM government agencies in} order to defeat the bane of smuggling. !f we do not allow. them to engage in conventional trading with neighboring |: countries they tend to go underground and continue - smuggling. By facilitating the trading formally through the t ARMM government agencies we are actually able to. monitor those engaged in trading and allow thé collection, of revenues by the Bureau of Customs, a portion of which | revenues goes to the ARMM government through: appropriation: by. the “Department of Budget ands. ».. Management (DBM). The more revenues the Bureau of!: Customs collects the more the ARMM gets as its share f x =.

yo a)

DECISION ¢

Page 33 of 42 ;

its appropriation from the DBM. With regard to most | importation of goods, the Bureau of Customs in the . ARMM usually respect our autonomy but once’ the goods enter the Philippine territory they become domestic goods so Bureau of Customs is in charge of reconciling _ national government policy with regional government |: '- policy. If the Bureau of Customs does not allow the goods to enter we don't have control. ovér the Bureau of | Customs actions in’ this regard since the Bureau of || - Customs has not yet been devolved to the ARMM.*”" |

(Emphasis Ours)

In“dispensing with the requirement of NFA permit to import rice, Secretary Ishak V. Mastura of the DTI-ARMM, on cross-examination,, said . thus:*® “@: But you will agree with me that, rice being a regulated | , commodity, there is a need for the importer to secure an r import permit or clearance from the NFA being the! regulatory agency? : r A: The Department of Agriculture ARMM stands in the place of the NFA in the Autonomous Region in Muslim | Mindanao as to whether or not the assertion will be), recognized by the National Government thru the Bureau : of Customs. That is the outlook of Customs. But we talk) to them and tell them that you have to respect our autonomy but if in some way, the Customs become) _ stricter, they don't recognize the context of the situation? | ,..or they don’t.recognize our authority, then, we might even file a case against them, for example, td recognize the}: - authority of the ARMM because we want to enrich} jurisprudence, precisely, that is one of our advocacies. || That we have to enrich the jurisprudence so that we will know what kind of autonomy we really have whether or} not that extends to:situations like where we are now.) That is why, | really make it a point to come also to this) hearing because it will contribute a lot to determining)' « what our autonomy is.

Q: in other words, it is ;your opinion that ,;whenever an). importer imports: rice into ARMM, a permit*from the NFA is no longer necessary as long as they get a permit from. | the Department of “ore .

‘ Exhibits “SS” to “SS-1”, Docket, pp. 1107-1110. TSN, January 30, 2006, pp. 46-48. . : « ‘ ’ Accordingly, this Court shall not depart from such findings.

A: In the eyes of the ARMM, yes, we will assert that there is no need for them: to obtain any Permit from the NFA, although, as you know, NFA is a corporate authority. So, we assert that DAF ARMM has control and has powers with regard to agricultural products in the Autonomous Region in Muslim Mindanao.’ f (Emphasis Ours) . | . ol There is no iota of evidence that will show customs duties vals | were not fully paid and that the rice “shipments were irregularly re sased.

' Even the appropriate government agencies, such as the Bureau of ‘Customs, the DTI-ARMM, the DAF-ARMM, .found petitioner's documents in order and ‘the customs duties and taxes due from the -importations duly) paid.

_It is a well- established. principle that findings of fact by an administrative board or agency or official, following a: ‘hearing, are binding, & upon the courts and will not be disturbed except where the board, agency and/or official(s) have - gone beyond their statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to their it iy { duty or with grave abuse of discretion,**. i . Moreover, this Court recognizes the peculiarities attending the instant case. Involved herein is the. autonomous character of Muslim Mindanao, | ly

One

of the purposes why ARMM was established is to provide the Autonomous 7 Region a_ basic structure of government within the framework of the Constitution and national sovereignty and the territorial integrity ° f the !

he, 49 y . . be Lianga Bay Logging, Co., Inc. vs. Hon, Manuel Lopez Enage, In His Capacity As Presiding Judge of Branch It of the Court of First Instance of Agusan and Ago Timber Corporation, No. L- 30637, July 16, 1987.

al

A)

._ C.T.A. CASE NO. 7028

Republic of the Philippines.’ °° The Regional Government has the power to _ regulate traditional barter trade and counter-trade with Indonesia, Malaysia, or Brunei; and goods or ‘items bartered or counter-traded, with said counties .

. t shall not be sold elsewhere in the country “without payment of dopropriat customs or import duties.°" As testified to by Secretary Ishak V. Mastura and Collector Peat ~ Quinones, the Regional Government encourages the people in the Autonomous Region to legally transact business or trade with the end ven of collecting customs duties, and taxes and defeat the rampant smugalng of goods into ARMM. Thefe was, and still is, a cooperative and collective effort between and among the government agencies in the ARMM to facilitate the processing of papers, to collect the correct amount of duties and taxes, and to immediately release goods. Clearly, these purposes have been served. ;

As this Court finds that the importations of the ‘subject shipments ‘were validly terminated, Section 2530 of the TCCP cannot be applied. For hae imported goods or articles to be forfeited under Section 2530 (f) and (I-3) to (I- 5) of the TCCP, the following elements must be present: (a) the wrongful making by the owner, importer, exporter or consignee of any declaration or affidavit, or the wrongful making or delivery by the. same person of any invoice, letter or paper — ail. touching on the importation or exportation of merchandise; (b) the falsity of such declaration, affidavit, invoice, letter K .

3 ) ‘ a . be.

°° Section 2, Article I, R.A. No. 6734 (An Act Providing For An Organic Act For The Autonomous 51 Region In Muslim Mindanao).

Section 31, Article XII, R.A. No. 9054 (An Act To Strengthen and Expand The Organic Act] For The Autonomous ‘Region In Muslim Mindanao, Amending For The Purpose Republic Act No. 6734, Entitled An Act Providing For The Autonomous Region In Muslim Mindanao”, A’s Aimended).

| rrading,

DECISION ~

C.T.A. CASE NO. 7028 . i

Page 36 of 42 Is

paper; and (c) an intention on the part of the importer/consignee to evade the

Hl

be i payment of the duties due.”

AS held i in Farolan, Jr, vs. Court of Tax Appeals and Bagong Buhay 53 fraud must be committed by an Importer/consignes ‘to qvade payment of the duties due. The. fraud muist be actual, consisting of - deception willfully and deliberately done or resorted to in order to induce ~ another to give up some right. In the case at bench, petitioner did not commit Second ‘issue: | Was the. 9th - ; allowed by law.

fraud as there was no intention to evade payment of customs duties due,” i in For being irrelevant and immaterial to this case, this Court shall not % delve upon the truthfulness of the declaration made on the documents relating to the coastwise trading of the subject rice shipment, nor shall it look into the © liability of petitioner, if any, in the alleged untruthful, statements or misrepresentations in the local bill of lading and cargo manifesto fot the shipment of rice. to other local port because this matter involves coastwise trading, not importation. . ; | » i 1

Indorsement of the Secretary of '

Finance dated April 1, 2004 rendered within — the reglementary period . . Upon perusal of the contents of the 9" Indorsement, this Court finds that the same is not the Decision contemplated under Section 2313 of the -TCCP, which is required to be rendered within the thirty (30) day reglementary period’ "because it merely orders the implenientation of the 4" indorgement [ . ry at dated November 21, 2003. “Thus, it is agtiually the 4" Indorsement) “men °2 Republic of the Philippines, represented by the Commissioner of Customs vs. The Court: of Tax a Appeals and Agfha, Incorporated, G.R. No. 139050, October 2, 2001. : ; G.R, No. 42204, January 21, 1993. vt ‘ ?

‘J

’ Page 37 of 42

DECISION

C.T.A: CASE NO. 7028 1:

reversed the Decision of the Commissioner of Customs favorable to petitioner pertaining to the subject rice shipments in this case. With this clarification, the Court shali determine the timeliness of the Decision rendered by the Secretary of Finance, through Undersecretary Ma.

¢ Gracia M. Pulido-Tan, denominated as the 4"" Indorsement. The focal provision is: Section 2313 of the TCCP, quoted as follo IS! .

, “SECTION 2313. Review of’ Commissioner. ‘-- The» person aggrieved by the decision or ‘action of the Collector in any matter presented upon protest or by his action in any case. of seizure may, within fifteen (15) days after notification on, . writing by the Collector of his actions or decisions, file a written). notice to the Collector .with a copy furnished to the - Commissioner of his intention to appeal the action or decision of |. the Collector to the Commissioner. Thereupon: the Collector shall forthwith transmit all the records of the proceedings to the ‘ Commissioner, who shall approve, modify or reverse the action; or decision of the Collector and take such steps and make such; orders as may be necessary ‘to give effect to his decision:

° Provided, That when an appeéal-is filed beyond the period herein’. prescribed, the same shall be deemed dismissed. | ¥€ lf in any seizure proceedings, the Collector renders ay decision adverse to the Government, such decision shall be. automatically reviewed by the Commissioner and the records of, the case elevated within five (5) days from the promulgation of the decision of the Collector. The Commissioner shall render a decision on the automatic appeal within thirty (30) days from receipts of the records of the case. lf the Collector's decision is‘ reversed by the Commissioner, the decision of the» Commissioner shall be final and executory. However, if the Collector's decision is affirmed, or if within thirty (30) days from. receipt of the record of the case by the Commissioner no: decision is ‘rendered.or the decision involves imported articles whose published value is five million pesos (P5,000,000) or _ more, ‘such decision shall be deemed automatically appealed to: the Secretary of Finance and the records of the proceedings: . ' | shall be elevated within. five (5) days from the promulgation of ,the decision of the Commissioner or of the Collector under’ appeal, as the case may be; Provided, further, That if the: decision of the Commissioner or of the Collector under: ° - appeal, as the case may be, is affirmed by the Secretary of Finance, or if within thirty (30) days from receipt of the: ° ‘records of the proceedings by the Secretary of Finance, no.

DECIS

C.T.A _ appeal, as the case may be, shall become final and’ -

ION

. CASE NO, 7028 ' Page 38 of 42 |

I

| | decision is rendered,’ the decision of the Secretary of Finance, or of the Commissioner, or of the Collector under .’ executory. 4 7 In any seizure proceeding, the release of imported © articles shall not be allowed unless and until a decision of the: Collector has been confirmed in writing by the Commissioner of Customs.” (Emphasis Ours) r \ The above- quoted section of the TCCP provides that the adverse Decision under review by the Secretary of Finance shall become final and executory if, within thirty (30) ‘days from receipt of the record of the case, no decision is rendered or.the adverse Decision is affirmed.

pe Relevant thereto is the Supreme Court ruling in Philippine . {:

Association of Free Labor Unions, et al. vs. Secretary of Labor, 54 that:

* to be directory only as to ‘the time, ‘and not mandatory, unless: :

_that the designation. of the time was intended as a limitation’ which nature.

* when’ “When a statute specifies the time at or within which ait act'is to be done by a public officer or body, it is generally held.

time is of the essence ‘of the things to be done, or the: language of the statute contains negative words, or shows :

of power, authority or right.” (Emphasis Ours) Clearly, the general rule is that when a law provides fora period within an act must be done, compliance with said period is merely directory in However, compliance to such period becomes mandatory in. ‘cases the law considers the period as material, or its language contains negative words, or such period: was intended to limit the power, authority or right of the person or entity to act thereof. ! a Applying the foregoing provision and jurisprudence in the instant case, this Court rules that the Decision dated November 21, 2003 (4"" Indorsément) 54 GR.No. 1-22228, February 27,1969. © sa ce te ee

Py

DECISION .

Page 390f42 issued by the Secretary of Finance, acting through Undersecretary Pulido- Tan, was rendered beyond the thirty (30)- day reglementary period, which is considered as mandatory in nature being a limitation on the power andlor - authority ‘of the Secretary of Finance’ to review’ thé ‘ décision’ of. the Commissioner of the Bureau of Customs pursuant to Section 2313 of the

Vt

i iy -TCCP.

- As can be gleaned from the records, the case folder was received by the Department of Finance on October 6, 2003. Hence, the Secretaty of ‘Finance had until November 5, 2003 within which to render his decision, dtherwise, the decision under automatic review shall becoma final and ~ executory. While it is true that ‘Undersecretary Pulido-Tan made her 2nd Indorsement dated October 29, 2003 requiring explanation | offeomments on some matters by the Commissioner of Customs, and the ease folder was returned to the BOC, it was only, on November 21, 2003 when the Decision (4th Indorsement) was issued, way beyond the thirty (30)- “day period reckoned from October 6, 2003. Thus, the Decision of the BOC Commissioner ated October 3, 2003 under automatic review by the Secretary of Finance, became final and executory by operation of law. In effect, it is as if no decisioniwas timely rendered by the Secretary of Finance within the period mandated under . Section 2313 of the TCCP.

Consequently, the 9"" Indorsement dated April 1, 2004 which orders the ° implementation of the Decision dated November 21, 2003 (4"" Indorsement), and all other subsequent acts/indorsements made by the Secretary of Finance, through its authorized officers, including the Resolution dated June 16, 2004, are hereby considered as acts made beyond respondent's van 4) contraversy.”°

C.T.A. CASE NO, 7028 | * and therefore cannot be lawfully implemented. Again, this-is premised on the fact that the Decision of the BOC Commissioner dated October 3, 2003, which affirmed the findings of the District Collector, Port of Batangas, in the Decision dated ‘April 4, 2003, and ordered the lifting of the WSD,- ‘became final and 1 t ae executory by operation of law. . : , This’ Court ‘cannot assume that Section 2313, even Section. 2316 of the TCCP was deliberately intended to become meaningless and to be treated as a dead letter. Sound public Polley demands that, at the risk of occasional errors, judgments of : courts as. well as administrative tribunals should become final at some definite date fixed by law.®® Public interest . requires that by the very nature of things there must be an end to/a legal fi i

Py

' te

WHEREFORE, the instant Petition for Review is hereby GRANTED.

Accordingly, the 9th Indorsement dated April 1, 2004 and the Resolution - dated June 16, 2004, which merely implements the 4in Indorsement of the respondent Secretary of Finance, having been issued beyond the reglementary period allowed by law, are hereby ANNULLED and SET ASIDE. | The: Decisions. of the District Collector and Commissioner. of the Bureau of Customs lifting the Warrant of Seizure and Detention against the. subject importation are hereby declared final and executory gi 2 5 * Antique Sawmill, Inc. ys. Zayco, GR. No. L-20051, May 30, 1966.

oi of the Philippine Islands vs. Del Rosario ‘and Tiangco, G.R. No. 30874, December 26, | 4

DECISION

. CTA, CASE NO. 7028

’ Page 41 of 42

' SO ORDERED.

WE CONCUR:

Bawe Chee, a (With Dissenting Opiftion) UANITO C. CASTANEDA, OLGA PALANCA-ENRIQUEZ

Associate Justice « _ _ Associate Justice

ATTESTATION oe 1 attest that the conclusions in the above Decision were reached in consultation before the: case was assigned to the writer of the opinion of the ie Court's Division.

Mane: CASTARED SO”

Associate Justice | :

Chairperson

A)

the writer of the opinion of the Court,

DECISION a

C.T.A. CASE NO. “7028 , Page 42 of 42 .

CERTIFICATION

Pursuant to Article VII, Section 13 of the Constitution, and the Division Chairperson’ Attestation, it is héreby certified that the conclusions in the ao above Decision were reached in consultation before the case was assigned to

Qc

ERNESTO yD. ACQSTA

Presiding Justice

y

REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals

QUEZON CITY

_ SECOND. DIVISION KUTANGBATO CONVENTIONAL C.T.A. CASE NO, 7028 | ‘TRADING MULTI PURPOSE - | :

COOPERATIVE, . Members:

Petitioner, — = CASTANEDA, JR., Chairperson UY,and - PALANCA-ENRIQUEZ, i -versus- :

- Promulgated:

THE SECRETARY OF THE. AUG 0 6 2008 - DEPARTMENT OF FINANCE, . !

"Respondent. CL lish an.

Yi wren enn e ence nnn meee cence nnn nen nenn nnn mens nx _ DISSENTING OPINION i PALANCA-ENRIQUEZ, J.: | | With all due respect, I find it difficult-to agree with the majority that the rice importations of petitioner are not subject to forfeiture under ;

Section’ 2530 of the T. ariff and Customs: Code ‘for ‘the’ following ’ ratiocinations: (AZ i:

C.T.A, Case No. 7028 se a ;

Dissenting Opinion

*

Petitioner’s_ Importations_of

At the outset, record shows that petitioner’s importations of rice , Rice are Contrary to Law - were made on the basis of the following authorities/permits:

Grains Business License issued by the National Food Authority (“NFA”) on June 27, 2002. Said authority allows petitioner to engage in “Retailing/Wholesaling/Warehousing/Importing xxx

‘Subject to Issuance of NFA Permit Per Transaction’”

(Exhibit “B”);

Letter dated May 20, 2002 issued by the Department ‘of Agriculture and Fisheries-. Autonomous Region in - Muslim Mindanao (“DAF-ARMM”), _ granting petitioner authority/permit to undertake conventional trading of rice in the ARMM (Exhibit “H”). In said “Letter dated May 20, 2002, the Department of ‘Agriculture however stated that as long as petitioner’s goods are on a limited scale and in order. to address the acute economic distress of the inhabitants of the region, and pursuant to the general welfare powers of the ARMM and the equitable preferential rights of its inhabitants, as provided in the.Organic Act, the Department has no objection to petitioner’s engaging in conventional trading of rice within the autonomous region with the neighboring countries. However, the Department has also provided that all trading activities should be subject to coordination with/clearance from the Department of. Trade and Industry-ARMM;

Lettet dated May 3, 2002 issued by the Department of _ Trade and Industry (“DTI”)-ARMM granting _ Petitioner. special authority/permit to ‘engage in tit im i i i t pe i :

i ,

Ligh

a ow C.T.A. Case No. 7028,

’ Dissenting Opinion

* From the foregoing, it is clear that the NFA license granted | to - petitioner to engage in the importation of rice is subject to the “issuance Conventional Trading via the Labuan-Malaysia- Singapore-Polloc, Maguindanao route (Exhibit “D”);

“ Letter dated July 31,.2002 issued by the DTI -ARMM ‘granting petitioner importation commodity clearance for ARMM use, within 120 days from date of issue (Exhibit “E”);

Letter dated October 15, 2002 issued by DTI- ARMM granting petitioner importation | commodity clearance for ARMM use, within 120 days from the date of issue (Exhibit “F’”), and Letter: dated January 8, 2003 issued by the DTI- ARMM granting petitioner importation commodity clearance for compliance, within 120 days frdm date of . issue (Exhibit “G”"). Petitioner’s importation clearance was, however, conditioned on petitioner’s limited nature of trading, such a as 20 bags of rice, per cooperative member. | v4 at of NFA permit per transaction”.

Examination of the records, however, shows that petitioner failed | to pbtain NFA permits for its subsequent 4mportations of rice on the | .

1 following dates: December 15, 2002 for a total of 5,233 bags; J anuary 3, 2003 for a total of 4, 157 bags; January 24, 2003 for a total of 9,071 ba and January 26, 2003 for a total of 11, 00 bags

Dissenting Opinion - E

authority granted by the DAF-ARMM, allowing petitioner to engage in - conventional trading of rice within the autonomous region with ibe the Department of Trade and Industry-ARMM” (Exhibit “H”).

‘DTI- ARMM, requesting for a special authority/permit to engage in.

C,T.A. Case No. 7028. , 4 But petitioner asserts, to which. the majority concurs, that ithe requirement , of the NFA permit ‘was dispensed with, in view of the neighboring countries, With due respect to the majority, I do not agree that the DAF- { ARMM permit dispenses with the necessity of securing NFA permit for every importation of petitioner.

First, the Letter dated May 20, 2002 issued by the DAF- ARMM, invoked by petitioner as the authority/permit to undertake conventioha trading of rice in the. ARMM, provides that “xxx as long as petitioner S goods are on a limited scale xxx the Department has no objection "to petitioner’s engaging in conventional trading of rice, within the autonomous region with the neighboring countries” (Exhibit “H”). Further, the letter states: “However, the: Department has also provided that: all trading activities should be subjected to coordination with/clearance from | ‘Thus, ‘in a Letter dated December 26 » 2002, petitioner wrote a the i is

E

im m4 Be po 4) C.T.A. Case No. 7028 | es 5 Dissenting Opinion . to a .

conventional trading via the Labuan-Malaysia-Singapore-Polloc, Maguindanao route. In a Letter dated. January 8, 2003, DTI- ARMM issued to petitioner an importation commodity clearance, conditioned ¢ on “petitioner’s limited nature of trading, ‘such as “20 bags of rice per , - cooperative member”, F bh:

From the foregoing grants of authority/permit to petitioner) to engage on conventional trading/importation, issued by the DAF -ARMM i: ' and DTI- ARMM, it is clear that petitioner" s importation must be ona . | i!

limited scale, and subject to 20 bags of rice, per cooperative member. | :

I

However, examination of the Informal Import Declarations aid ‘Entries (“IIDEs”) of petitioner’s importations of rice shows that the | importations exceeded the limitation provided: on a limited scale ad baps of rice, per cooperative member. 0 - On successive dates: December 15, 2002, January 3, 2003, January |:

24, 2003 and January 26, 2003, petitioner made unlimited importations: of 20 tice for 5,233 bags, 4;157 bags 9,071 ‘bags, and 11,000 bags, respectively" (Exhibits “K” to “K. 30”, “M” fa, “Me 23”, ‘o" ° ta. “0-30”, and “O” to “0. 15° ' The frequency of said importétions, w which ag d three times in a: month, wit .

‘huge volume/quantity cannot be consideieg gh.a limited scale.

9 at C.T.A. Case No, 7028

Dissenting Opinion

Furthermore, the Informal Import Declarations Entries reveal that petitioner imported more than 20 bags of rice, per cooperative member, ‘as shown below:

‘ Date Dec. 15, 2002 Dec. 15, 2002 Dec, 15, 2002 Dec. 15, 2002 Dec. 15, 2002 _ Dec. 15, 2002 Jan. 2, 2003 Jan. 2, 2003 Jan, 2, 2003 Jan. 24, 2003 Jan. 24, 2003 Jan. 24, 2003 Jan. 24, 2003 Jan. 24, 2003 Jan. 24, 2003 Jan, 24, 2003 Jan. 24, 2003.

Jan 26, 2003 Jan, 26, 2003 Jan. 26, 2003 Jan, 26, 2003 Jan, 26, 2003 Jan. 26, 2003 Jan. 26, 2003 - Jan. 26, 2003 Jan. 26, 2003 Jan. 26, 2003 Jan, 26, 2003 . Jan. 26, 2003 - Jan, 26, 2003

Entry

No.

050-02 052-02 053-02 054-02 055-02 056-02 021-03 023-03 024-03 048-03 049-03 050-03 051-03 052-03 053-03 054-03 055-03 056-03 057-03 058-03 059-03 060-03 061-03 062-03 066-03 067-03 068-03 069-03 070-03 071-03 No.

of Quantity

members of

Rice/Bags

205 , * 210.

215 205 210 - 208 | 190 150 186 700 750 695 750 650 700 — 690 640 ~ 680 ‘700 ‘650 680:

680:

700, | 650 °° 700 680 680 750 780 720 |

Allowed Excess

per

Permit

200 200 200 200 200 200 20 20 20 600 600 600 . 600 600 600 600 600 600 @ 600 - 600 600 600 600.

600 600 600 600 600 600 600 5 sacks 10 sacks 15 sacks 5 sack 10 sacks 8 sacks 170 sacks 130 sacks 166 sacks .100 sacks 150 sacks 95 sacks 150 sacks 50 sacks 100 sacks _ 90 sacks 40 sacks 80 sacks 100 sacks 50 sacks 80 sacks 80 sacks 100 sacks 50 sacks 100 sacks 80 sacks 80 sacks 150 sacks 180 sacks 120 sacks 26"

“KE 27”

“K-2 8”

o.. 29”

“K- 30”

“M-20?

“M-22”

M-23"

“0-28” “O- 24?

‘ “O- -25” “C- 26 33 al @ ah

*OC- -28”

“0-29?

“O-30”

“Qo “Q- 1Po* “Q- 2?

"Q@ 37.

“Qa

*Q- 6":

“Q- 10”

“Q- 11”

“Q- 12”

“Q-13.,

*Q- 14P

“Q- Is”

Pa

ad C.T.A. Case No. 7028. ne ;

- Dissenting Opinion i :

From the * foregoing, clearly, . petitioner violated the very.

| jo hj i 7 bo 1 i 7 authority/permit granted to it by the above eovernmentt agericiés, whi ch according to petitioner, said authorities/permits were in lieu of the “NIA it by the NEA on June 27,, 2002 (Exhibit “B”). Having infringed the conditions provided in said authorities/permits granted, petitioner ry t importations of rice were made in contravention of law.

Second, notwithstanding said authorities/permits issued by the o bas [ Po permit per transaction”, required by the Grains Business License issued, DAF-ARMM and DTI- ARMM, petitioner is required to obtain NBA permit for its every importation of rice, specifically, on December 15, same is mandated by the Grains Business License dated June 27, ay « 2002, January 3, 2003, January 24, 2003, and January 26, 2003. the

A

02 issued by the NFA to petitioner, to wit: “Subject to issuance of NFA Permit Per Transaction”. PD. 1770 provides that NFA shall have the power to “import/export or cause the importation of fy '. products/commodities and/or raw " materials, equipment and facilities needed in the manufacture/processing of food commodities, as may) determined ‘by the Council, and as approved by the President of the Philippines” (Section 7 (c) thereof). Since NFA has the power to cause tl od be 1c 4 C.T.A, Casé No. 7028

Dissenting Opinion

importation of food products, such as rice, it necessarily has the power to grant authority/permit to | import” rice and to impose limitations/conditions on said authority/permit granted. Moreover, while rice is not a prohibited commodity, it is‘ nevertheless a regulated commodity under Section 7 of Circular 1389 of the Bangko Sentral Pilipinas. Accordingly, its importation requires clearance/permit from appropriate | government agencies, which in this gase,. is the NEA, pursuant ¢ to PD 1770, ° " It cannot be argued by petitioner that ‘under RA 9054, otherwise Known as “An Act To Strengthen anid Expand The Organic Act For i He “Autonomous Region In Muslim Mindanao, Amending For the Purpose Republic Act No. 6724, Entitled ‘An Act Providing For the Autonomous Region In Muslim Mindanao’,, As Amended”, petitioner.is no longer 4 required to obtain NFA permit for its every importation of rice. Section 31 of RA 9054 provides:

“SEC. 31. Barter and Counter Trade. - Subject to existing laws, the Regional Government should regulate traditional barter trade. and counter-trade with Indonesia, Malaysia, or Brunei. The goods or items that are bartered or counter-traded with the said countries shall not be sold elsewhere in the country without payment of appropriate customs or import duties. The Department of Finance shall, the 1 , iy / i u if i ii rl '

I

i ls

I

1 a 1 i C.T.A. Caise No, 7028

_ Dissenting Opinion

in consultation with the Regional Government, promulgate the rules to govern barter and counter-trade within six (6) months from the approval of this Organic Act.”

Pursuant to RA 9054, the Regional Government (ARMM) shall regulate the traditional barter trade and counter-trade with Indonesia, » Malaysia and Brunei, subject to existing laws. Considering that Section 31 of RA 9054 categorically provides _ the Regional Government regulation, of the ‘traditional barter trade counter-barter trade with the neighboring countries is “subject to existing laws”, then the Regional Government must regulate the traditional barter trade, taking into consideration the existing laws. Said “existing law - having no qualification/limitation to those pertaining only to the Regional | Government, the rule i in statutory construction dictates that they pertain fo existing laws enforced i in the Republic of the Philippines, This, therefore, includes the above-mentioned PD 1 770... ; !

e ‘ ue “* Od Since in the NFA license/permit issued to petitioner, importation of rice is “subject to: NFA permit per transaction” petitioner’s every importation of rice is, therefore, subject to/a separate/specific NFA. permit. Thus, petitioner is duty bound to comply with said condition by obtaining NFA license, not necessarily with wk.

H|

that and 29

Ss

its {!

‘ -C.T.A. Case No. 7028 ee 10

’ Dissenting Opinion :

National Government, but with the Regional Government, as mandated by Section 31 of RA 9054. ‘Petitioner’ s failure to secure the NFA per 7 - for its importation of rice on December 15, 2002, January 3, 2003, t OS January 24, 2003, and January 26, 2003, therefore, contravened the _ condition provided in its NFA: permit dated June 27, 2002. - | re i Accordingly, while. imported rice _ may not be considered “merchandise of prohibited importation”, they themselves fall within the | al other category of merchandise imported ‘ ‘contrary to law”, because regulations issued pursuant to “custom law” forms part thereof. The ef “custom law” includes not only the provisions of said law proper, but algo 7 any regulations made pursuant thereto, like the Central Bank crus which also have the force and effect of law (Santiago, Tariff and Customs \ Code Annotated, 2000 ed. pp. 178-179). Consequently, violations of thege circulars.come within the purview of the Tariff and Customs Code, Section 2530 (), which authorizes the: forfeiture of “any ‘articles th “oO | :

’ importation or exportation of which is effected or attempted contrary to law” (Gonzalo Sy Trading vs. Central Bank, 70 SCRA 588). :

On those bases alone, petitioner’s importation of rice is subject to’ i ‘forfeiture under Section 2530 (f) of the Tariff and Customs Code.

"Committed by Petitioner _in Importation of Rice. — | : | ;

First, examination of the Bills of Lading Nos. COTT-602-14950 1, “documents. Hence, petitioner decided to use comerits : as the deseriptip ’ on * C.1.A, Casé No, 7028 - | i Dissenting Opinion i.

There_are Badges of Fraud me . .

Connection: ___ with the . ;

| COTT-60Z-1499502, COTT-602- 1499503, COTT-60Z-1499504, and COTT-602-1499505 (Exhibits “FR” to “FR-4”) shows that there are misdeclarations of the rice shipments, as corngrits. Petitioner’s witnes Orlando Badoy, admitted that indeed petitioner declared the rice | as corngrits. He, however, explained that said scheme was resorted to by he, 1 . \ 1 petitioner because of the previous experience of its shipment having bee he ft seized at the North Harbor, despite the correct declaration in the shippini tl of the cargo, so as not to suffer the same problem as in their other a shipments (Exhibit “TT"), Said reasoning, however, of petitioner, is but shallow excuse. Notwithstanding petitioner's explanation, the fact remains that in its bills of lading in transporting the subject rice from te ue

ABT

8 n port of Cotabato to ‘the port of Manila petitioner misdeclared its sHiee shipments as corngrits. Ae ile |

Al

, Dissenting Opinion Guard Batangas, testified that only 54 container vans, instead of 93, ve petitioner’s witnesses are contradictory. Petitioner’s witness, Orlando - entities regularly ship comerits from Cotabato to Manila (Exhibit “TT"), - “(Commander Paiton”), former Station . Commander, Philippine Cop C.T.A. Case No. 7028 Se | 2 “ of Second, petitioner underdeclared the number of container vans; in . . ' ' i the bills of lading and coasting manifest. Commander Tranquilino Paiton

Sg

Ws

ct 7 ;

listed in the coasting manifest of the inter-island vessel, MV Noss - Senhora de Fatima. - | | [i Third, the designation of entities, such as Agro Farni, Beri Fars nD Las Buenas Farm, SCC Farm, and/Harbour Link Transport, Inc. :

‘s consignees in ‘the bills of lading (Exhibits: “FF” to “pRg’ ’), has ‘not been i sufficiently explained by petitioner. Instead, the testimonies of Badoy, testified that petitioner used the names Las Buenas Farm/AL1, i i SCC Farm/HLTI, Beri Farm/HLTI, and Agro Farmv/HLTI, because he | was informed by Alex Bacquial General Manager of HLTI, that sald On the other hand, petitioner’s witness Alex Bacquial, testified that the | .

"names of those consignees: were. merely supplied by the chairman of aay a petitioner (TSN, dated 13 Feb. 2003, p. 34). In those bills of lading, petitioner ah i ~ C.T.A. Case No. 7028 a 7 ‘ 13 Dissenting Opinion.

f ‘was not named’ as importer- consignee, but merely. intervened,, as the redl- ry party-in-interest. | Fourth, Commander Paiton testified that there was violation of the route of the vessel stated i in the Master’ s Oath of Safety Departure. The i a tf vessel came from Polloc, Cotabato, destined to Manila, not to Batangas.

With such route, the vessel will not pass by Batangas Bay Area, unless * ie i there is typhoon, which at that time there was none, Said deviation in the route of the carrying vessel and unloading of the shipment in the Port of ‘ Batangas, was made without prior notice of entry or clearance from the customs authorities.

The foregoing circumstances are indicative of badges of fraud jon the part of petitioner. Though, this Court is aware that fraud contemplated by law is actual and not constructive, this Court is also cognizant of the j doctrine that fraud, being a state of mind, need not be proven by direct _ evidence, but may be inferred from the circumstances of the case (Republic | "ys, Gonzales, 13 SCRA 641).

The majority, however, opined that the enumerated circumstances n ee are not relevant and material to the forfeiture proceeding provided :

: Section 2530 of the T ariff and Customs Code, in as much as the ’ al

_ « Dissenting Opinion

C.T.A. Case No. 7028 14 importation was already terminated in ‘the instant case when the above- mentioned circumstances were: committed. With due respect, I do not ' | agree, ‘In the case of Carrara Marble Philippines, Inc. vs. Commissioner of Customs, 313 SCRA 462-463, the Supreme Court ruled: . | _ “Contrary to the CTA’s rationale for sanctioning the forfeiture, importation was terminated after Policarpio signed Gate Pass No. 5136. on 10 April, 1987 evidencing | withdrawal of Lot No. -15 from customs custody. Importation is deemed terminated upon payment of duties, taxes and other charges due or secured to be paid upon the articles at the port of entry, and upon the grant of legal permit ‘for withdrawal; or in case said articles are free of duties; taxes and other charges, until they have legally left the jurisdiction of the customs. The forfeiture of the subject machineries however, is not dependent on whether or not the importation was terminated; rather it is premised on the illegal withdrawal of goods from.Customs custody.

* Thus, .regardless of the termination of importation, Customs authorities may validly seize goods which, for all intents and purposes, still belong to the government. This is so because forfeiture takes effect immediately upon the commission of the offense. The forfeiture of the subject machineries, therefore, retroacted (sic) to the date they were illegally ‘withdrawn from Customs custody. The government’s:right to recover the machineries proceeds from its right as lawful, owner and possessor thereof upon | abandonment by Filipinas Marble.’ ‘Such’ right may be | 1 asserted no matter into whose hands the property may have | come, and the condemnation when obtained avoids all j intermediate alienations, To sanction petitioner’s possession -of the property would be to close our eyes to acts of defraudation practiced upon the government.”

: C.T,A. Case No. 7028 " - 15 machinery is not dependent on whether or not the importation wes | terminated; rather it is premised on the illegal withdrawal of goods from ‘Customs authorities may validly seize goods which, for all intents ad . purposes, still belong. to the government, This is so because forfeitre _ if said imported rice was already enrouted in a coastwise trading. Algo, Bureau of Customs on the basis of a legal permit for withdrawal. | Dissenting Opinion co .

i Pursuant to the foregoing - ruling, forfeiture: of the sbi Customs custody. ._Thus, regardless of the termination of importation, | i takes effect immediately upon the commission of the offense. The ‘i i forfeiture of the subject machineries, therefore, retroacted to the date they | ij.

were illegally withdrawn from Customs custody. l In the present case, the subject rice were imported contrary to law.

Thus, forfeiture of the said importations takes effect immediately upon : y commission of the offense, that is, upon. entering of the subject rice the territorial. jurisdiction ‘of the Philippines. _Thus, | notwithstanding e petitioner*s payment of the duties and taxes of the subject rice at the Bureau of Customs, Polloc. Port, the same may still be validly seized even 1 | petitioner failed to show proof that said rice was removed from the te

I

A)

C,T.A. Case No. 7028 - ‘16

Dissenting Opinion * - ‘

Second Isste

The second. issue is whether the > Decision dated November 2, * 2003 issued by the Secretary of Finance, acting thru Undersecretary Ma.

i

Lj

Gracia M, Pulido- Tan, was “rendered beyond the 30- -day relent 7 period. . . ae i "Records show that.on October 6, 2003, the date relied upon ty petitioner, as the reckoning period of the counting of the 30-day perio, :

1 was the date when the Department of Finance, Revenue Office, Customs | | | and Tariff Division, received the case folder of Batangas SI. No, 02-03 (Exhibit “W"), Iti is not the date when the Secretary of Finance, or in ths .

case, Undersecretary Pulido-Tan herself received said case folder.

ia.

Section 2313 of the Tariff and Customs Code specifically provides that . the reckoning date, of the 30-day period shall be from the time of the “receipt “of. records of proceedings by the Secretary of Finance?.

pa ' . Petitioner failed to establish that on the same date, October 6, 2003, the Secretary of Finance, or in this case, Undersecretary Pulido-Tan received j i the records of this case. Hence, October 6, 2003 cannot be considered 4s the reckoning period for the counting of the 30-day period.

~ * C.T.A. Case No. 7028 7 | 0 Dissenting Opinion | . ;

Moreover, records show that after the receipt on October 6, 2003: of iM the case folder of Batangas S.I,, No. 02-03 by the Department of Finance, | | i Revenue Office, Customs and Tariff Division, on October 29, 2003, said case folder was again returned to the Commissioner of Customs, when ‘ the latter was required to comment on Undersecretary Pulido-Tan/s . . ' 'y i- .

' findings contained in the 2™ Indorsement (Exhibit “X"),, Hence, during the time when the case folder of this case was not within the custody of Undersecretary Pulido-Tan, ‘and the comment of the Commissioner of Customs has not yet been received, Undersecretary Pulido-Tan cannot be a “expected and is not obliged by law to render a decision, as the case has * not yet been considered submitted. for decision. . Due ‘process demands i that the other party must be given 2 an opportunity to explain its side betaye the case is s deemed submitted for decision and a decision i is, rendered dn the matter under review. Technically, in the present case, it was only i November 14, 2003, when the Commissioner of Customs returned ihe case folder to the Department of Finance, ‘together with his explanations if.

3" Indorsement) (Exhibit “Y”), to Undersecretary Pulido-Tan’s findings in her 2" Indorsement that the 30-day period to decide under Section 2313 he of the Tariff and Customs Code commenced to run. It was, therefore, al

A

C.T.A. Case No. 7028 OS 1B

Dissenting Opinion

only on » November 14, 2003, that the case was deemed submitted fe decision. Hence, Undersecretary Pulido-Tan has until December M 2003 within which to decide the case.. The Decision dated November 24 vy 2002 (4™ Indorsement) having been rendered before December 14, 2003 is, therefore, well within the 30-day reglementary period, Further, it is my humble view that Section 2313 of the Tariff and i Customs Code, which requires the Secretary of Finance to render: the .

décision ‘within 30 days from the receipt of the records of the proceedings, is merely directory. | :

Strictly speaking, the review. by the Secretary of Finance of the decision of the Commissioner of Customs is not a Judicial review, since the Secretary of Finance holds an executive and not a judicial ote (Southern Cross Cement Corporation VS. Cement Manisfticturers Associatian of Ihe Philippines, 465 SCRA 579). The Collector of Customs, Commissioner | of Customs and Secretary of F inance are all part of the executive branch, If | ’ the Collector of Customs rules against the government, the executive cannot very well bring suit in courts against itself On the other hand, if fa .

de private person is aggrieved by the decision of the Collector. of Customs be he can have proper recourse before the courts, which now would | a) C.T.A. Case No. 7028 | ts | 19 oa troy yea

Dissenting Opinion

called upon to exercise judicial review over the action of the executive branch. , Since the automatic review by the Secretary of Finance of the decision of the BOC Commissioner adverse to the government is not the 't | i | judicial r review contemplated ’y la, the rule that the period prescribed by law to appeal a decision is ; mandatory cannot be applied, With more reason that’ the period to ‘render a decision over said appeal cannot jbe enforced strictly against the reviewing body. Thus, the majority view that | ‘the Decision dated October 3, 2003 of the BOC Commissioner under automatic review by the Secretary of Finance had already become final re

I

ihe and executory ‘for failure ‘of the ‘Secretary of Finance to render the fe | Decision within the 30-day reglementary period cannot be sustained. i Finally, the general rule is, when a statute specifies the time at, pr within which an act is to be done by a public officer or body, it jis _ generally held to be directory only as to time, and not mandatory, unless time is of the essence of the things to be done, or the language of the statute contains negative words, or r shows that the designation of the tithe was intended as a limitation of power, authority or right (Philippine Association of Free Labor Unions, et, al vs. Secretary of Labor, 27 SCRA 4). 7 Consistent with the general rule and taking into consideration the GTA. Case No. 7028 20 “Dissenting Opinion — | o complexity. of the issues involved i in: the instant case, the. 30- “day. pera a.

for the Secretary of Finance to decide the instant case, ‘is: merely he directory, Well-settled is the rule that when the higher consideration of justice SO- demands, technical rules: may be relaxed, This’ ‘ideal becotites SSA oe SI , | a -all the more imperative when: non-compliance is not intended. for delay (Lee ys. Couit of Appeals, 496 SCRA 692). Consequently, ‘the'9"" Iridorsement © | ee dated April 1, 2004, which. orders the implementation of the Decision

Hee

dated November 21, 2003 (a [ndorsement) and: all other see ore acts/indorsements rendered , by the Secretary of. Finance, as well as the | | o . resolution dated June .16, 2004, cannot be considered acts rendered beyond the respondent’s authority,. and are, therefore, valid and legally “ . enforceable. Dos ° | . l a _ WHEREFORE, premises considered, I vote .to DISMISS he "instant Petition for Review -and to: AFFIRM the Decisions of i 4 ‘ Undersecretary of Finance dated November 21, 2003 and April 1, 2004." taeda Bf | | onan PALANCA-ENRIQUEZ,

Associate Justice

7 4 a ( i “ i t oo : &

REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals |

QUEZON CITY

- KUTANGBATO CONVENTIONAL _ C.T.A, CASE.NO, 7028 | Sih 4

TRADING MULTI’ PURPOSE _~ / |

COOPERATIVE, . ee | ‘ Petitioner, ° 7" - CASTANEDAIR, Chairperson.

ee | PALANCA- ENRIQUEZ, ua P| ~Vversus- i.

I Nis

| Promulgated:

“|THE SECRETARY OF. .THE aye 0 6 2008 i ee - DEPARTMENT OF FINANCE, ps par ae “Respondent. a Se goo te at i PALANCA-ENRIQUEZ, J.;

With all due respect, I find it difficult to: agree with the majority Be that the-rice importations of petitioner are not subject to forfeiture under .

» Section 2530. of the Tariff and Customs Code for the following ~ ratiocinations: (A - re | | i!

wl oY rant i!

= \:

b93 i ; . i” at , i;

Petitioner's Importations_o , Rice are Contrary £ o Law - At. the outset, record shows. thay petitioner's importations of Tite cy were made on the basis of the following authorities/permits:

is Cag Business License iccueil by. the National Food fe . Authority (*"NFA”) on June 27, 2002. . Said. authority tee . ~ allows, _ petitioner. . to _ engage me eee we “Retailing/Wholesaling/ Warehyusinedineeniie Subject to Issuance of NFA. Permit Per Tranahetion' oe Beeeibie URN):

7 “Letter. dated: May 20, 2002. issued by the Department | ee

of Agriculture and Fisheries: Autonomous Region in |)

Muslim . “Mindanao... (“DAF-ARMM”), granting =|) ‘petitioner authority/permit to undertake. conventional olives: «.-trading. of rice: in the ARMM (Exhibit. en"). Tn said © © jk “Letter dated May 20, 2002, the Department. of tee, _ Agriculture. however stated: that as long as petitioner’ es | ee goods are.on a limited scale and in order to address. the acute economic distress of the inhabitants of the Tegion, and pursuant to the general welfare powers of the ARMM and the equitable preferential rights of its -. inhabitants, as provided..in the Organic. Act, the _. Department has no, Objection to petitioner's engaging in conventional trading of rice within the autonomous "region with the neighboring countries. However, the || Department has also provided that all trading activities.

should be subject to coordination. with/clearanée from the Department of Trade and Industry-ARMM;

st Lettet dated May. 3, 2002 ifuaed by the Department of wi Trade: Industry © (“DTI”)-ARMM granting + petitioner oe authority/permit ° ‘to “engage - ine Bo) CTA, Cape No. 7028 ‘ ~ Dissenting Opinion | ee Converitianal Trading via the Labuan-Malaysia- |. a _Singapore-Polloc, -Maguindanao route (Exhibit *D"), ‘granting. petitioner importation. commodity. clearance for ARMM use, within 120 “ays from. ‘aflle of issue isi as i j 4” Teves dated July 31, 2002 issued by. the DTI- ARMM. |

Litt “E Ys

ee Letter dated October 15, 2002 issued by DTI- ARMM | 2 "granting petitioner importation ‘commodity clearance | " for ARMM use, within 120 days from. the date of ;

% | . issue (Exhibit “F"); and Ee = » id 6. Letter: dated January 8, 2003 issued by the DTI- | ieee ~ ARMM. granting petitioner importation. commodity j Boe clearance for compliance, within 120 days from date | = |. _ of issue (Exhibit. “G"), Petitioner’s: importation |. 4 4 clearance was, however,. ‘conditioned on. petitioner’ sf;

. oy ~ + limited nature of trading, such as 20. bags of rice, per Di ' 4 cooperative. member.” oe a “Te 2 eo From the foregoing, it is clear that the NFA license. granted to Be. nstitiensd 6 engage in the importation, of rice is subject to the “issue | of NFA permit per transaction”. moe — i ; ' ie Examination of the records, however; shows that petitioner: failed :

He

i to pbtain NEA permits for its subsequent femmes of rice on the ; i: following dates: December 15, 2002 for a total of 5 1233 bags; January 3, * 2003 for a total of 4,157 bags; January 24, 2003 for a total of 9,071 ba : and d January 26, 2003 for a total of 11 (000 bags.

700 Tere ee ee, “ ee every importation of petitioner. f C.T.A, Case No. 7028, |

_ Dissenting Opinion : {

But petitioner asserts, to which. the majority concurs, that the requirement , of the NFA permit ‘was. dispensed with, in view of the mee authority granted by. the DAF-ARMM, allowing petitionér. to engage in a conventional trading of rice within the autonomous. region with the he neighboring Gountries, Be ey tee Te Hes,

B

® fe First, the Letter dated May 20, 2002 issued by. the DAF-ARMM, inyoked by petitioner as the authority/permit-to undertake conyentighal , a - petitioner's engaging in conventignal trading of rice, _ Tei the autonomous region with the neighboring countries” (Exhibit “H”).. Pt ~ the Department of Trade and Industry-ARMM” (Exhibit “H1”) This,'in a Letter dated December 26, 2002, petitioner wrote tat h cc _DTI-ARMM, requesting for a special authority/permit -to engage i with due respect to the majority, ‘I do not agree that the DAF- ‘ARMM permit dispenses with the ngorssity of rhe NFA. permit for cE trading of rice.in the ARMM, provides that “xxx as long’as potitionsr’s - goods are ona ‘limited scale RR. the: Department has no objection io a the letter ‘states: However, the. Department has also provided that all trading activities should be subjected to coordination with/clearance from + @.T.A, Case No. 7028 | , 4 Dissenting Opinion ar OS ne *. conventional trading ' via the Labuan-Malaysi- Singapore Pole -Maguindanao route, In. a Letter dated. January 8, 2003, DTI- “ARMA issued to petitioner an importation, somenodiy clearance, conditioned on ‘petitioner's, limited nature of trading, such-§ as “20 bags-of rice ‘per : cooperative member", cae . ie F ©. From the. foregoing grants of quthotity/permit to petitioner, to % *_. engage.on conventional trading/importation, issued by the DAF-ARMM _ and DTI-ARMM, ‘itis clear that petitioner’s importation, must be ofa . limited seale, and subject to 20’ bags of rice, per cooperative member.

However, examination of the Informal Import Declarations ahd = * | Entries (“IDEs”) of petitioner's importations of rice shows thatthe =| : importations exceeded the limitation provided: on a limited scale and 20 | hai of rice, per cooperative pippivae On successive dates: December. 15, 2002, January 35 2003, Jenin za 24, 2003 and January 26, 2003, petitions made unlimited importation of “ } ti a tice for 5,233 bags, 4,157 bags, 9,071 — and i ,000 bags, reapscdylly (:

I

8 Bxhibits “K" to = 30”, “MM” to “M-23", “0” 10 “0-30”, and “Q" to “Q- 15"), | ¢ 2 ©. The frequency of said i importations, which is three times in a.month, with | ‘huge volume/quantity cannot be considered on a limited scale, _ Uh CTA, Case No. 7028 a “6 _ +. Dissenting Opinion BD 3s, Furthermore,..the Informal Import Declarations Entries reveal. that. petitioner imported more than 20 bags of riee, per cooperative member, as shown below: ;

Allowed . Excess Exhibit per :

Permit | my bE No. of Quantity members of.

| Entry

Date

: No. , Dec. 15, 2002 Dec.

Des.

Dec..

‘Dec.

Dec.

15, 2002.

15, 2002 15, 2002:

15, 2002:

15, 2002 Jan. 2, 2003 .

~. Jan. 2, 2003 Jan. 24, 2003 Jan, 24, 2003 Jan, 24, 2003 Jan,.24, 2003.

Jan, 24, 2003.

Jan, 26, 2003 Jan, 26, 2003 -Jan, 26, 2003 . . Jan, 26, 2003.

bi Jan. 26, 2003 Jan, 26, 2003° Jan. 26, 2003 Jan, 26, 2003 - - Jan. 24, 2003, Jan, 24, 2003 052-02 053-02 054-02 055-02 056-02 021-03 "023-03 024-03, 048-03' 049-03.

050-03 051-03 - 052-03 054-03 055-03 056-03 058-03 «.

059-03 060-03 061-03 062-03.

066-03 067-03 068-03 069-03 205° ‘ 210.

215 205 210 208 190 150 186 700 750 695 750 650.

700 690 640 680 700- 650 680 - "700, »' 700 680 680 750 | 780 mot 720 | 200 ..

200 200 200 200 200 600, 600 ‘600 °° 600 600 | 600 -600 600 5 sacks 10 sacks 15 sacks

Ssack —

10 sacks 8 sacks 170 sacks 130 sacks 166 sacks 100 sacks | 150 sacks 95 sacks 150 sacks 50 sacks 100 sacks - _ 90 sacks — 40 sacks 80 sacks.

100 sacks.

50 satks ..

80 sacks | 80 sacks" 100 sacks 50 sacks - "100 'sacks 80 sacks 80 sacks 150 sacks 180 sacks .

120 sacks

O-20%

“K. 2 » ;

oSK-2 if %K.2 M. 23 “M- -23" *O-23, 99:

“0-24?

“0.27?

“O-28”.

s6ey2?

1.37):

‘Qa ¥Q- 6?

ae at

Q- 4

ae 1.

TC cc LT aaa, iv aaa eae | >. . ¢ ¥, GTA. Case No. 7028 —— 7 | ig $. ——- Dissenting Opinion 7 ‘Z 4 ie /-From ge foregoing, clearly, petitioner violated the Mi 7 authority/permit granted to it by the above goveimment apericies, which - acoording to petitiones, said authorities/petmits were. in liew of the “NFA a: peimt per transaction”, required by. the Grains Business License ss L ; ee it by the NFA on. Tune, amy 2002 Ceshibit ‘B’), Having infringed the bs: conditions provided in said euhorities/permits erated petitions’: es importations of rice were made i in contravention of: law.

He

a fi 13 7 aa ‘Second, “notwithstanding said. -alithorties/permits issued. _ H ie | i : ' DAP-ARMM. and. DTI- ARMM,. Petitioner is. required. to obtain. NBA : = | 4g | permit for dis every importation of rice, est cia 288 ! q 2002, January 3, 2003, » January 24, 2003, and January 26, 2003, The 7 7 3 ‘same is mandated. by the Grains Business License. dated June 27, ‘ae a : 4 issued by the NFA to petitioner, to wit “Subject to issuance of NF PA .

e ; Permit Por Transaction”, PDI 770 provides that NFA shall have t the 4 : power sto. importlexport or: cause. the importation of ip a an | q : prodiwia/coninidditi and/or raw snéterial equipment and cli : ag J : iE ] u 8 needed in the mannfictreprocesing of food commodities, as may he determined by the Council, and as approved mil the President of He ie CTA. Case No. 7028 . 8 %: ©. Dissenting Opinion - oo B, grant aythority/permit to import tice and’ to _hhnpose he : : imitationseonditisns on said. authority/permit granted. Moreover, while a a rice is ‘not a prohibited commodity, it is nevertheless a regulated us a commodity under Seetion i of Cirewlar 1389 of the Bangko Sentral 8 - | } = : . ‘ Pilipinas, Accordingly, its importation. requires sfeerentel pesmi from appropriate government agencies; which ‘i in‘ this case, is. the NFA, cae ee “pursuant toPD1770, * - It cannot be argued by petitioner that under RA 9054, otherwise i . known as “An Act To Strengthen and. Expang The Organic Act For th ie | Autonomous Region In. Muslim Mindanao, Amending. For the Purpo he Republic Act No. 6 724, Entitled ‘An Act Providing For the: Autonome Region In Muslim: Mindanao’, _ As Amended”, petitioner is. no Tonge ~ Tequired to obtain NFA permit for its every importation of rige, il Seetion 3] of RA 9054 provides: | if *SEC.°31. . Barter and, Counter Trade, - Simjent to. |i existing laws, the Regional Government. should regulate || traditional - barter trade, and, counter-trade. with Indonesia, ||. Malaysia, or Brunei. ‘The goods or items that are bartered or | a -counter-traded with the said countries shall not be sold || elsewhere in the country without payment of appropriate | aed customs or import duties, The » Department of Finance. shall, if , boy | C,T;A, Case No, 7028 BO on -. Dissenting Opinion . a : I | | in consultation with the Regional Government, promulgate the. rules to govern barter and counter-trade within six (6) | - montlis from the approval of this Organic Act.” Pursuant to RA 9054, the Regional Government (ARMM) shall Matai anid Brunei subject t6 existing laws. 7 Considering that Section 31 of RA 9054 cnleupiivally provides fie the Regional Government regulation of the ‘traditional barter trade and counter-barter trade with the neighboring countries is “subject to exists ; laws”, , then the Regional Government must regulate the traditional bate re Caen | - trade, taking into consideration the existing laws. Said ‘ ‘existing laws” haying no qualification/timitation to those pertaining only to the Regi .

Government, the rule i in statutory construction dictates that they pertain) to ¥ ; exiting laws enforced i in the Republig of the Philippines, This, therefére, inelydes the above-mentioned PD 1770. as | oe | a on Since i in the NFA license/permit issued to petitioner, its importation of rice is. “subject / to NEA: permit Per transaction’ petitioner’ S- every, importation of ries is, therefore, subject to}!

separate/specific NFA permit, Thus, petitioner is duty bound to comply 7 tlw with said condition by. obtaining NFA license, not necessarily with the.

© Dissenting Opinion

(ire importation or. exportation of which i is effected or suena cana Me ervnme =

Co

i National Government, but with the Regional Government, as. mandated by Seotion 31 of Rd 9054, Petitioner Ss. failure to secure the NF is pera ae:

id:

tye tor its importation of rice on December 15, 2002, January 3, 2008, January 24, 2003, and. January 26, 2003, therefore, contravened i | sn condition provided in its NEA permit dated June. 21, 2002, om . | _ Aécordingly, while: imported rice may “not | be consider: a oe : ‘metchandise of prohibited importation”, “they temselves fall within the other ‘category, of ‘merchandise, imported “contrary to law”, becauige ie regulations issued pursuant to “aston law" forms part thereof. The term ——g “custom law" includes not only the provisions of said law proper, but algo may: regulations maide pursuant thereto, ike. the. Central Bank circularg, - whic also have the force and effect of law (Santiago, Tariff and Custeins aaa Code Anneited 2000 ed., pp. 178-1 79),. Consequently, violations of these Rel { { circulars -come within the purview of the Tariff and Customs Code, 7 { Section 2530 (@), which authorizes the forfeiture of “any: articles the i 9) —_= z law” ” (Gonzalo Sy q rading VS, Central Bank 70 SCRA 388).

On those bases alone, petitioner’ S impértation of rice is subject ta forfeiture under Section 2530 (f) of the Tariff and Customs Code.

<< ; i i” ~_. C.T,A, Case No, 7028 > Mn ~~ Dissenting Opinion os . || ° . ; .

There are Badges of Fraud - Ho, ; ‘a Committed -by Petitioner in | bE ; . i

Connection: with __the

dmpor: tation of Rice. a a «| First, examination of the Bills of Fading Nos, COTT-602; 14954, wong COTT-602Z-1499502, COTT-60Z71499503, COTT-60Z-1499504, ade COTT-60Z-1499505 (Exhibits “FF” to “FF-4") shows that there. are ‘ 4 : t : : . ~ | misdeclarations of the rice shipments, as corngrits. Petitioner’s witness, Orlando Badoy,. admitted that indeed. petitioner declared. the. rice «© comgrits.” He, however, explained that said scheme was resorted to - petitioner because of the previous experience of its shipment having be a S- == —— ii seized at the North Harbor, despite the correct declaration i in the shippir

Boia)

documents, ‘Hence, petitioner decided to use corhgrits as. the P ddsaaminl of the cargo, 0) as not to suffer. the same problem as in their oth By: pire (Exhibit “TT"), Said reasoning, however, of ptitone, is s but ~ shallow excuse. _ Notwithstanding petitioner’ s explanatign, the fact a ‘remains that i in its bills of’ lading | in transporting the subject rice from the i _ port of Cotabato to ‘the port ‘of Manila, petitioner misdeclared its ate ‘@ “shipments as comgrits. pre mo, 1 i a Hi:

er aie | | { i ' j <>

Ad

ei eee a |e Secon petitioner underdeclared the number of container vans fp whe “the bills of lading and Coasting mignifest. ‘Commander Tranquilino Paild he.

Commander Paiton”), — Station Commander, Philippine Cofst .

- Guard Batangas, testified that only 54 container vans, instead of 93, were Za ee “Tisted in the. coasting manifest’ of the inter-island. vessel MV. Nosta ee - Third, the designation of entities, such as Agro Farni, Beri F ai, : Daa. Buenas: Farm, ‘SCC Farm, and/Harbour Link Transport, Inc. aS.

: consignees in the bills of lading: Exhibits "FR" to “FR”; has not be Wee sufficiently explained _ by petitioner, Instead, the _ testimonies pion «sis are sonia Vy: +» Petitioner” 's witness, Orlando

S

pet)

A

= i *O.

ne foam “ - ‘O a ws

Bev)

'Q

Q

= & a e_ ae tg =

Bo)

— 5 ie.

a [o} mae a ae bof) ad “on - et a eis 6 aeulaly si corr from Cotabato. to Manila ci “om. | o a] S.

D-

Rok

—— = a

Q*

= =.

eS) “SL:

-f eg ©

Q

=.

te 5} 2° >, n 2 =

Ba

ra) w “A a oO 3d eo

S)

re)

Q

a ze oo oO wn =, corm ‘O pu 2 5s i =e

O

-CTA.CaseNo.7028 13 Dissenting Opinion. e 4 7 ae was not named as. importer-consignee, but merely, intervened, as the rel _partyn-nterest ¢ tg % vessel came Gat Polloe, Cotabato, destined to Maniia, not to ee i

| I

With such route, the vessel will not pass by Batangas Bay Area, unlts there is typhoon, whieh at that time there was hone, Said deviation i in th ' 4 + route of the carrying vessel. and unloading of the shipment i in. the Port - Batangas, was made without prior notice of entry or clearance from the - customs authorities, eS , The foregoing circumstances are indicative of. dass of aud | doctrine that fraud, — a state. of mind, need not be proven by. i L. “ ‘evidence, butt may be inferred an the cireurisianees of the case (Repu os VS, ‘Gonzales, AH SCRA eel) are not relevant and seit to ,the. forfeiture proceeding. -peoviaslh Setion 2530 of. ihe Tariff and Customs Code, in as much. as | the C.T,A, Case No. 7028

« Dissenting Opinion -

agree, Ih the case of Carrara Marble Philippines, Inc, vs, Cémimntasion i Custams, ‘313 SCRA 462- 463, the Supreme Court suled:

. “Contrary to the CTA’s rationale for carting the forfeiture, importation. was terminated. after Policarpio signed Gate Pass No, RO sc aca 1987 evidencing - withdrawal... of _ Lot' ‘15 from customs — custody, Importation is deemed. vatiinaee upon payment of. duties, taxes and other charges .due or secured to be paid. upon the. articles. at. the. port of entry, and upon the. grant ef legal. permit’ for withdrawal; or in case. said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs, The forfeiture of the subject — machineries however, is not dependent on whether or not the..

importation was terminated; rather it is premised on the 7 illegal withdrawal of goods from Customs custody.

Thus, regardless of the termination of importation, Customs authorities may validly.seize goods. which, ‘for all intents and purposes, still belong.to the government. This is. ‘so because forfeiture takes effect immediately upon the commission of the offense. The forfeiture of ‘the subject machineries, therefore, retroacted (sic) to the date. they were illegally “withdrawn from Customs... custody. - ite. ". government’s right to recovet the machineries proceeds from : its right as lawful. owner, and. possessor. thereof upon || abandonment by Filipinas Marble.’ ‘Such’ right ‘may. be asserted no matter into whose hands the property. may have:

come, and the. condemnation when obtained. avoids. all aaa: intermediate. alienations. To sanction petitioner’ S possession. «of the property. would be -to. close “eur. eyes to -acts. of Ee defraudation. practiced upon: the gayerpment, Pa;

bo :

4 ¥ ¢ 7 iinportation, was, already terminated inthe. instant ease. when the. above: we | ae mentioned sircumstances were committed, With due respect, I do. NOt.

P+, CTA, Case No..7028 a aan Opinion "Pursuant ‘to. the foregoing ruling, forfeiture of . the subg te machinery. ds: not dependent on wiaiier or not ‘the. importation we oF terminated; rather it is “premised on the illegal withdrawal of goods fp | | : ; Customs. custody, ‘Thus, regardless of the termination of; imporatigy, q Fa Customs authorities may validly seize goods which, for al intents ah ;

purposes, still belong to- the government, This is so becaljse forfeit takes offeat ‘immediately upon the commission of the offense. The forfeiture of the aubject machineries, therefore, retroacted to the date they were. illegally withdrawn from Customs custody. a | | ;

In the present case, the subject rice. were imported contrary to law.

Thos, forfeiture: of the said. importations takes effect ‘immediately upon ‘@ commission of the offense, that is, pon entering of the subject rice the territorial jurisdiction | of the Philippines, Thus, gti oe . petitioner’ s payment of the duties and taxes of the subject rice at the Bureau of Customs, Polloc Port, the same may still be validly seized even — : it f said imported tice was. already enrouted i ina’ coastwise c trang Alt Be petitioner file ‘ show proof that said, rice was rem ame Hl from 4 — ‘Ss ? CTA, Case No, 7028 | .

© Dissenting Opinion © Dy

_ The second. issue is. s whether the Decision Axi’ November 2, 3 2003 issued by the Secretary of Faunce: acting thru Undersecretary M Me. Gracia. M. ‘PulidosTan, was vrendered Keon the 30- -day reglementay . E prio. a | , a i | i. a be 1 a " Records show. that_on October 6,, 2003, the date relied. upon by . | petitioner, as the reckoning period of the counting of the 30-day periot, was the date when the Pepartment: of Finance, Revenue Office, Custoits ama Tariff Division, received the case: falder of Batangas SI. No, 02-3 i (exhib “W’), lt. is not the date when the Secretary of Finance, or in in this ae case, © Undersecretary Pulido-Tan. herself received said case folder 4 { Section 2313 of the Tariff and Customs Code specifically provides. shi | the reckdning date, of the 30-day period shall be from the time of the | a aE a “receipt “of records of proceedings by the Secretary of Finanog i Petitioner failed to. establish that on the. same date, October, 6, 2003, tl Secretary of Finance, or in this case,. Undersecretary Pulido-Tan receive sd w the records. of this ease. Hence, October 6, 2003 cannot be considered a { i i i % the reckoning period for the counting of the 30-day period,

Ferrier

| ee eld CLA, Case No. 7028 - Wy ey _ Dissenting Opinion ol. : a . an ‘the ¢ case folder af Batangas Sl, No 02:03 by the Depaitment of Finan ee, ee Revenue Oftce Customs sai Cavite Division, on October 29, 2003, said ; 3 the later was. required | :to eminent on Undersecretary Pulido. Tas)

Wee

i : Findings contained in the an Indorsement. eit m9, Hence, during a Underseereiary Pulido. Tan, bind the. comment ‘of the Commissfoner = Customs has not vel been received, Under secretary Pulido-Tan cannot be hot yet. been considered submitted. for. decision, ‘Dué process, ited ji i that the other party must be given an opportunity to explain its side before .

he case is s deemed submitted for decision and. a decision i is ‘rendered pn the matter under review. Technically, i in the present case, it was only an ‘November 14, 2003, when the Commissioner of Customs. returned te ase folider to the Department of Finance, ‘together with his explanatio 7 6 Indorsement Exhibit “Y"), to Undersecretary Pulido-Tan’s findings j f the Tariff and Customs Code commenced to run, " was, therefor oo vet reer rds show that after the receipt on October 6, 3003 of ! i “case folder was. : again. retumed to the Commissioner of Customs, whe ge PE tne when the case. folder oe this case was not within the custody ‘of # * is ee Dissenting Opinion © only on November 14, 2003, that the case was deemed submitted : decision. “Henne; Underseoretary Pulido-Tan has until December | i a ig, iteeotiee well within the 30- day reglementary period, ay!

ii:

ty.

Further, it is my humble view that Section 2313 of the Tariff a and Customs. Cade, : “which requires the Secretary of. Finance to render te ns decision “within 30. “days. from the. “reesipt of” the records. of the { by _ proceedings, is merely directory. . : - | . ie - Strictly speaking, the review, by the Secretary of Finance of the decision of the Commissioner of Customs is not a india review, since tho Seoreary of Finance holds an 1 executive and not a indicat off ;

Gouthern rae Cement Corporation y VS. era Manisficturers Associatign of t .

Philippines, 465 SCRA 579). The Collector of Customs, Cominissioner | | " Customs and EERE of. Finance are all part of the executive branch, I ty Customs rules ‘against ‘the government, the. -executiy cs sannot very. we bing suit in courts against itself. On. the other hand, if aes C.T.A, Case No, 7028 | :

Dissenting Gpinian -

a ' oe a) ee "Since the automatic. review by the Secretary of Finance of. fhe i dated @ciatien 3, 2003 “of the BOC. Commissioner unr he cot e : called wnat to exercise judicial review over the action of the excoutie a , decision. of the BOC Commissioner adverse to the government is. ‘not. the juga review. contemplated, by la, the rule that the ci peered of by lw to ‘appeal @. decision i is mandatory cannot be gpicds With or : reason ‘that the period to render a. decision over said appeal cannot | save enforced trict against the reviewing body, Thus, the majority view. dh Automatic review by. the Secretary of Finance had. already become final. ee and ‘executory for failure of the: Secretary of Finance to render. the | Decision within the 30-day reglementary period cannot ree aca t Finally, the general rule j is, when a statute specifies the time at, within Which an ‘act is. to be done by’ a public officer or “body, it general held to be directory only as. to time, said not mandatory, unless 7 a 1 time i is ‘of. ike essence of mR things to be done, or the language of the oe was ‘intended as idicasauale of power, authority or right (Philipp I,

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i 5 statute contains negative = or. shows that the desighation of the ti ie:

ney dated April ty: 2004, witich. orders the implementation of the. Decisi c T Ae Case No, 7028 . Dissenting Opinion , : ” came ley af f the issues. s involved in. ihe, instant case,. the 30- a a eae all the n more: e imperative when aececttiiincs is not intended for i eee f (lee YS. Cow of Appeals, 496 SCRA 692). Consequently, the ot indorsem nt * i dated } November ai, 2003 @ Indorsement) and all other a subacait ost acs/indorsements rendered by the. Secretary of Finance, as well as the Ee a = “resolution dated ‘June . 16, 2004, cannot be. considered acts rendered beyond the respondent’s authority, and are, therefore, valid and legally snfarceable, | | [ 4 I.

WHEREFORE, pee considered, I vote to DISMISS . OLGA DALANCAEMUDE _ o an ra Associate Justice neal