Bureau of Customs v. Court of Tax Appeals

[CA-G.R. SP No. 30580. January 4, 1994.] (C.T.A. Case No. 4402) THE BUREAU OF CUSTOMS and HON. SALVADOR M. MISON , petitioners , vs . HON. COURT OF TAX APPEALS and CAR'S MARITIME CORPORATION , respondents . D E C I S I O N IMPERIAL , J p : As correctly stated in the petition, this case involves a vessel with cargoes-in-transit, specially, BO MT of Electrode Wires which had to be unloaded because of emergency repairs which said vessel had to undergo. Due to non-availability of storage space at the Philippine Ports Authority's (PPA) warehouse at the Water front, said cargoes-in-transit were brought to a local warehouse. Subsequently, adverse reports reached the local representative of petitioners that subject cargoes or parts thereof were discovered being peddled in a nearby city. After an investigation, petitioner Commissioner of Customs issued a seizure order of the erring vessel. A hearing was conducted which, culminated in petitioner's decision to forfeit the vessel and its transit cargoes in favor of the government. An appeal to the Court if Tax Appeals resulted in the reversal of the decision of herein petitioner. Hence, this petition. The facts of the case as stated in the Commissioner's decision, quoted in the decision of the Court of Tax Appeals, object of the instant petition for review are as follows: "Briefly and chronologically stated, the facts of the case are as follows: "1. That on 20 March 1985, the vessel M/V 'Ocean Navigator' owned and operated by Carl's Maritime Corp., of Philippine registry, arrived at the Port of Dadiangas from Hong Kong via the Port of San Fernando. At 6:25 P.M. of that same day, the inward Foreign Manifest was submitted to the Customs boarding team, declaring the cargoes thereat as 50 MT of calcium phosphate and 150 MT of peanut meal, both consigned to Bibiana Farms and Mill Corporation of General Santos City. That also on the said day, a representative of the vessel's operator, one Arlene Fernandez, made a written request to the Port Collector to unload its supposed transit cargoes to permit the doing of repairs at the tank top of the vessel, before it could set sail to the alleged final destination, Brunei. The repair supposedly necessitated the temporary off-loading of the said thru cargoes as the said cargoes were placed on top of the site where the repair was supposedly to be undertaken. "2. That on the following day, 21 March, a supplemental cargo manifest, was submitted, declaring, the following as transit cargoes consigned to Sequin Trading of Brunei, to wit: 207 MT Cereal Grains, 207 MT Oil Meal by products, 80 MT Electrode Wires and 150 MT Calcium Phosphate. That also on even date, a letter of the operator's representative, was requesting that the adverted transit cargoes be transferred to the warehouses of Carcon Dev't Corp. and Bibiana Swine Farms, in Katanggawan, General Santos, supposedly in view of the unavailability of storage space at the PPA bodega at Market Wharf. "3. That the requests relative to the transit Cargoes were approved on 29 March, subject to the Filing of Special Permit to Transfer (SPT), conduction guarding and underguarding and posting of re-export bond with respect to the request for temporary off-loading. "4. That the transfer of one cargoes was effected from March 22 up to March 28; "5. That on 28 March, the assigned Customs Examiner, Bienvenido Lepardo rendered a report that there were no electrode wires found during the final examination he conducted, which findings was confirmed by Raymundo Sasuman, the assigned under-guard, in a report rendered on even date; "6. That on 29 March, Rosa Cuevas, the operator's representative informed customs authorities by letter, that one of the items in the through cargo manifest, the 4,000 boxes of electrode wires, was not in fact carried by the vessel as it was allegedly 'shot off' in HongKong due to schedule problems of the vessel. "7. That on or about 6 April by reason of derogatory information received by the District Collector of Customs of Davao, Customs authorities conducted investigations on alleged questionable sales and deliveries of electrode wires in different hardware stores in Davao City which reportedly originated from one of the two (2) warehouses where the transit cargoes were stored. "8. On 4 April, due to the adverse reports, the Port Collector of Dadiangas created an inventory team to conduct a physical count and inventory of the stored transit cargoes. The team subsequently submitted a report without any mention of the existence of the welding rods. "9. That a Warrant of seizure and Detention dated 15 April 1985, was issued for alleged violation of the pertinent provisions of the Customs Code as earlier adverted." The petition is without merit. First , contrary to the claim of the collector, Sub-port of Dadiangas in his Decision that the evidence tended to show that the company "Singuen Trading" in not registered, Singuen Trading supposed continues of the transit it cargo was fictitious that herein private respondent did not present any evidence to the contrary, it appears that private respondent was able to corroborate with real evidence the testimony of Carlito, President and General Manager of Carl's Maritime Corporation that there is a company by the name of "Sin Guen Trading Company", the actual consignee whose name was misspelled as "Sin Guen Trading even by the Manila Office of the Bureau of Customs in their inquiries with Brunei. Through a subsequent written communication contained in "Sin Guen Trading Company" stationary with, letter-head (Exhibit 23-A, Folder I) which letter was furnished the Bureau of Customs, the existence of said company was confirmed. Second , also contrary to the claim of the Commissioner, the necessity to make repairs on the subject vessel which necessitated the temporary off-loading of the cargoes in the sub-port of Dadiangas was established. Thus, the testimony of the Chief Engineer, Bernardino Manaba (Exhibit 3, Folder I-Exhibits) states that it was at his suggestion that a stop-over be made in San Fernando, La Union, for the reason that the vessel's bunker fuel had frozen and could not be used for engine consumption. Thus: "Q. On your way to Dadiangas from HongKong, and according to Captain JOSE D. LU, you recommended that the vessel should call at the Port of La Union. Is this true? "A. Yes, sir. "Q. What was your reason for making the suggestion? "A. Because our bunker fuel was frozen and we cold not use it for main engine consumption, we only had to resort (to) diesel fuel and could only last us until our nearest port, which is San Fernando, La Union. That is why I suggested that we refuel at La Union for additional diesel fuel." Furthermore, authority to repair the economizer was sought which required the off loading of the vessel's cargoes to facilitate the repair, to wit: "Q. Can you inform this investigator whether or not M/V 'Ocean Navigator' needed some repairs while the vessel was docked at Dadiangas? "A. Yes, sir. The steam economizer boiler has a puncture on its heating coil. In fact I have made a requests from the port Authorities to grant us to repeal said economizer, but it was turned down because of the time element needed. Second repair is to trace up the cause of not boiler being frozen. "Q. In your opinion, was the unloading of the entire cargoes necessary to undertake the repairs that you suggested? "A. As I said, the Port Authorities of Dadiangas disapproved of my requests to undertake some repairs of the economizer. So I suggested that it must be done on the dry docking. Anyway, we are due for dry docking this coming May. "Q. Will it not be practical and economical to just clear a way up to the place or part of the vessel to be repaired? "A. As far as the economizer is concerned, it is not necessary to clear way, but in tracking the fuel line coming from the tank which has cargoes on its tip, I need a clearance to give access to the tank top. "Q. Can you inform this investigator why it is necessary that the economizer should be repaired, when you were able to reach Dadiangas without using the economizer? "A. The economizer is a device to save diesel fuel. It takes the place of the boiler when the ship is at full speed and the boiler is shut off, and the economizer will be the one to give heating to the fuel. "xxx xxx xxx "Q. While at the Port of Dadiangas, was the needed repairs done? "A. Only the fuel line and the heating pipe to the tank was repaired. The economizer was not repaired because I needed the approval of PPA authorities before I can undertake the necessary repairs. "Q. After the repair of the fuel line and the heating pine, can you inform this investigator if the vessel can sail for the next port, which is Brunei? "A. Yes, sir. But at a great expense of diesel fuel." The unloading of the cargoes was approved by the Customs Authorities in Dadiangas subject underguarding of the cargoes pending their reloading back to the vessel. Request for transfer of the cargoes was also approved by Acting Deputy Collector of Customs of Dadiangas, Mauro Monjardin subject to a) filing of a Special Permit to Transfer (SPT); b) appointment of a Conduction Guard; c) continuous under guarding of the cargoes while at the port, and, d) posting of a re-export bond equivalent to 150% of the estimated duties and taxes, which foregoing requirements were complied with. Finally, the remaining question is whether the electrode wires listed in the "Supplemental Thru Inward Foreign Manifest" actually existed as part of the cargoes of M/V "Ocean Navigator" and were surreptitiously smuggled in Dadiangas, General Santos City. Considering the evidence on record, we find the findings and disquisition of the Court of Tax Appeals in its questioned decision to be well founded and hereby adopt the same, to wit: "The testimonies of Sergio Bautista and Jose Dilig of the Bureau of Customs, were the primary basis of the case of respondent. Sergio Bautista is alleged to be a member of the inventory team composed of Atty. Sanchez, Manuel Gulle, Aser Quinlantang, Benjamin Pante and Alamanza Binasing which conducted an inventory of cargoes at the Carcon Development Cooperation warehouse in the presence of Collector Jose Santos. He testified having seen welding rods in boxes among other things stored in said warehouse and that he executed a sworn statement about this before Jose Dilig. He allegedly retained one piece of electrode wire taken from Carcon Development Corporation which he submitted to captain Datumana Dilangalan, Davao ESS District Commander. "Jose Dilig was then Chief Investigator of the Davao Sector Command when he was dispatched on April 3, 1985 to go downtown Davao City to verify the information that some questionable cargoes were being delivered in the hardware stores there. According to his testimony (Tsn., pp. 335-349, Folder II, Tsn., pp. 312-334, Folder I), the information referred to a shipment of welding rods in the process of being unloaded at Sisa Hardware in Davao City. Welding rods were actually found by Jose Dilig being unloaded in that place at that time. He inquired from the driver, Ernesto Mata, and was told that the welding rods came from one of the warehouses at Bibiana Farms at General Santos City. Further verification led to the supposition that the welding rods must have originated from the alleged shipment of welding rods believed to have arrived with the M/V 'Ocean Navigator'. Subsequently, a warrant of seizure and detention was issued against Carlito Lim which was attempted to be served on April 16, 1985, but the warrant failed to be served as Collector Jose Santos had in the meantime already served a similar warrant on Carlito Lim. (Tsn., p. 334, Folder I). It happened, however, that the welding rods seized in Davao City were released soon after or on April 7, 1985 since it was feared by the seizing authorities that they may have held the articles for more than the 'prescribed period' and the be subjected to 'formal charges' (Tsn., p. 32., Folder I). "It seems to us that the testimony of Jose Dilig is inconclusive. The welding rods initially seized in Davao City were released before inventory of these welding rods can be made. The supposed link between the welding rods found in Davao City and the presumed cargo of welding rods by the M/V 'Ocean Navigator' appears to have been established by Jose Dilig without supplementary investigation of the Customs personnel Dadiangas (Tsn., pp. 314-315, Folder I). This added to the fact that Jose Dilig and company were not able to participate in the search of the Bibiana and Carcon warehouses, for as said, they failed to serve their warrant of seizure and detention. "In contract to the testimonies of Jose Dilig and Sergio Bautista, the following real evidence and testimonies of several people are offered by petitioner for its case: "1. Carlito Lim That he signed in blank the application of re-export bond and covering check on March 22, 1985 unaware that the cargo of electrode wires had been 'shut-off' in Hongkong. "2. Jose Lu Master of the subject vessel, who declared that having informed the ship's agent of the 'shut-off' by letter dated March 15, 1985 dispatched from San Fernando, La Union, he no longer deemed it necessary to delete from the Through Cargo Manifest the list pertaining to the welding rods. "3. Rosa B. Cuevas Who declared that when the fact of 'shut-off' was discovered in Dadiangas, she wrote letter of March 29, 1985 (Exhibit '15') to inform the Dadiangas Collector of Customs of such' fact. "4. The subsequent telegram dated July 12, 1985 of David Tong of Hongkong Customs making no mention of welding rods as forming part of the cargo of M/V 'Ocean Navigator' (Tsn., p. 179, Folder I). "5. Sworn statement of Douglas M Dokor that owning to bad weather in Hongkong during loading time and the consequent delay in the loading, they decided to 'shut-off' the cargo of electrode wires. This statement corroborate the testimony of Jose Lu. "6. Sworn statement of T. Calucin, Jr. of Bonnacord, Ltd., Hongkong, agents of the M/V 'Ocean Navigator' that the cargo of electrode wires was not loaded in said vessel. "7. Loreta L. Sevilla, Customs Administrative Assistant and Acting Customs Examiner, who was assigned to check the vessel, and testified that she did not find electrode wires as part of the cargoes discharged from the vessel. (Tsn., pp. 367-369, Folder II). "8. Claro Morales, assigned as conduction guard, who affixed his signature on the Boat Note and the Special Permit to Transfer which reflected the finding of Bienvenido Lepardo and Raymundo Sasuman that no electrode wires were found at the bodegas. He testified that he only saw the bags where he should have also seem boxes if there were electrode wires with the cargoes. "9. Bienvenido Lepardo, Customs Examiner, who inspected the warehouses where the cargoes were transferred and stated that the cargoes did not include electrode wires. "10. Raymundo Sasuman, Customs Assessor assigned as underguard, who declared that the cargoes he received from Claro Morales did not include electrode wires. "11. Exhibits '34' and '35' containing the reports of Atty. Aniceto Q. Sanchez Jr., Benjamin R. Pante, Aser Quilanting, members of the inventory team assigned by Collector Santos, showing that electrode wires were not part of the cargoes from M/V 'Ocean Navigator' stored at the Bibiana Farms and Carcon Development Corporation warehouses. "12. Rolando Balbon; employee of South Cotabato Integrated Port Services, who declared that he was present throughout the off-loading of the cargoes of M/V 'Ocean Navigator' and saw no items contained in boxes unloaded from the vessel. "An appreciation of Sergio Bautista's testimony leaves it also to be unreliable. A single piece of welding rod allegedly retrieved by Sergio Bautista from the bodega is so easily available that it can be taken from anywhere else. On cross-examination Sergio Bautista admitted that he was not a member of the April 10 inventory team for the warehouses. Thus: "Q. . . . please tell the Honorable Hearing Officer who were the members of the Team organized by Collector Jose Santos for that April 10, 1985 inventory? "xxx xxx xxx "A. Atty. Sanchez, Aser Quinlantang, Benjamin Pante and Alamanza Binasing. "The direct examination of Sergio Bautista states that he was part of an original inventory team formed before April 10, 1985 but this team was not able to enter the Bibiana Farm warehouse. Said initial testimony of Sergio Bautista also alleges that he was part of the second inventory team (of April 10, 1985) that went to the Carcon Development Corporation warehouse but as it had turned out Sergio Bautista wavered subsequently on this fact. We quote the additional proceedings on this point in the cross-examination of Sergio Bautista: "'Q. You also testified on direct examination as found on Page 21 TSN which I quote: "'A. It was like this, Sir, after we were told that the owner was not there on our on our first visit at the Bibiana Farms we went back to the office and Collector Santos withdrew our assignment as members of the inventory team, however, later one constituted another team and he instructed me to come along and we proceeded to the Bibiana Farms to conduct an inventory although at the Bibiana Farms he instructed me to stay in the office while the other members of the inventory team conducted an inventory in the Bodega. From there, we proceeded to our inventory and it was there where I participated in the inventory at the Bodega: "'You admit that there was another team formed by Collector Jose Santos for the April 10, 1985 Inventory? Do you admit that? Please tell the truth. "'A. Yes sir, there were already many. At first we were only few. "'Q. Who were the members of the second team organized as you said there are many? ATTY. CRIADOR "'That is already answered. "'Q. In your answer you mentioned Sanchez, Faura, Gulle and Binasing, do you remember that? "'A. Yes, sir. "'Q. and those were the persons forming the second team to conduct inventory on April 10, 1985? ATTY. CRIADOR "'That was answered before, the record will show that the witness mentioned Quinlantang and Pante, as we consult the records my statement will be confirmed.' "Added to the above record, the testimony of Collector Jose Santos exposes inconsistencies in the declarations of Sergio Bautista by revealing that since Sergio Bautista was already assigned as warehouseman at the Sarangani Agricultural Company warehouse, he was excluded as member even of the first team that was planned top be formed though an initial memorandum dated April 4, 1985 by Collector Santos. According to Collector Santos this initial memorandum was replaced on the same day by another memorandum also dated April 4, 1985 and which served as the basis for the inventories of the two Bodegas concerned. The inventories gave rise to the Inventory Reports both dated April 13, 1985, showing only Atty. Aniceto Q. Sanchez, Mr. Benjamin R. Pante and Mr. Aser Quilantang as having made the reports (Exhibits '34' and '35') Collector Jose Santos also presented in his testimony a copy of his office's Personnel Attendance Record Control showing that Sergio Bautista could not have been part of the inventory team that conducted the inventory at the Carcon Warehouse on April 10, 1985 since said record reveals that he did not report for work on that day (Tsn., p. 138, Folder I)." In view of the foregoing, the evidence for the petitioner are but surmises that cannot stand against the logically detailed version and evidence of private respondent of the case, and correctly found in the appealed decision of the Court of Tax Appeals. WHEREFORE, the Decision object of the petition is hereby AFFIRMED in full. SO ORDERED. Kapunan and Gutierrez, JJ ., concur.