Carrara Marble Philippines, Inc. v. Commissioner of Customs

THIRD DIVISION [CA-G.R. SP No. 42976. May 16, 1997.] CARRARA MARBLE PHILIPPINES, INC. , petitioner , vs . COMMISSIONER OF CUSTOMS , respondents . D E C I S I O N AUSTRIA-MARTINEZ , J p : This is a petition for review filed by Carrara Marble Philippines, Inc. seeking the reversal and setting aside of the decision of the Court of Tax Appeals promulgated on May 7, 1996 in C.T.A. Case No. 5039. The relevant facts are as follows: On April 10, 1987, the Collector of Customs conducted a public auction sale of various articles duly declared abandoned after appropriate proceedings. Included in the sale was Lot 15 advertised as "15 tons more or less, of marble processing machine and grinding machine, rusty and in junk condition," stored at the Mina Amapola CY-CFS, Taguig, Metro Manila since 1979. Lot 15 was awarded to Engr. Franklin G. Policarpio as the highest bidder thereof, after payment of P61,250.00. On April 21, 1987, after Engr. Policarpio had taken delivery of said lot, he wrote the Collector of Customs informing him that the following items supposed to be part of Lot 15 were missing: a Special Circular Saw (for vertical and horizontal cutting of strips Model Block Tailor BK-1200 with switch gear and contractor control and reinforced main motor) and a Diamond Sawing Machine (Model TBS 500D, including switch gear cabinet with contractor for all motors). The missing machineries were later found installed in the compound of petitioner Carrara Marble Philippines, Inc., Lipa City, Batangas, true to the information furnished by Engr. Policarpio himself. Consequently, for alleged violations of Section 2536 (non-payment of duties and taxes) and Section 2530[e] (illegal removal of articles from the warehouse) of the Tariff and Customs Code (TCC), the aforesaid machineries were seized (per Warrant of Seizure and Detention dated May 29, 1991) from the compound of petitioner at Banay-banay, Lipa City. During the seizure and forfeiture proceedings, Carrara Marble Philippines, Inc. failed to present evidence of payment of duties and taxes on the subject machineries. In its defense, it claimed, that the machineries were purchased locally from a certain Jaina Perez as evidenced by two notarized deeds of absolute sale dated December 20, 1985 (for the trimming machine) and October 28, 1986 (for the high-speed block saw). Meanwhile, Engr. Policarpio intervened in said proceedings, claiming ownership over the subject machineries as the successful bidder in the public auction sale conducted by the Bureau of Customs wherein said machineries were part of Lot 15. In a letter dated November 14, 1991, petitioner offered to settle the case in accordance with Article 2307 of the TCC. However, said offer was refused by the District Collector of Customs on the ground that said articles were already auctioned off and awarded to Engr. Policarpio. Thereafter, the Collector of Customs on June 24, 1992, declared the machineries forfeited in favor of the government. Petitioner appealed from the Collector of Customs' decision to the Commissioner of Customs who, on July 2, 1993 affirmed said decision. From said Decision of the Commissioner of Customs, appeal by way of a petition for review was further taken by herein petitioner Carrara Marble Philippines, Inc. to the Court of Tax Appeals. Engr. Franklin Policarpio, as intervenor, also appealed the same decision of the Commissioner of Customs to the Tax Court, which was docketed as CTA Case No. 5057, and entitled "Engineer Franklin Policarpio vs. The Honorable Commissioner of Customs and Deputy Commissioner of Customs Licerio Evangelista". On May 7, 1996, the Tax Court rendered the herein assailed Decision which: 1) dismissed the petition for review filed by Carrara Marble Philippines, Inc.; 2) affirmed the authority of the Commissioner of Customs to seize the subject machinery; and 3) modified the Commissioner of Customs' decision to the extent that in lieu of forfeiture in favor of the government, it ordered the Commissioner of Customs to deliver the subject machinery to Engineer Franklin Policarpio, as the highest and winning bidder thereof in accordance with its decision in the related case of "Engr. Franklin Policarpio vs. The Hon. Commissioner of Customs" (CTA Case No. 5057). Hence, this petition for review of the decision of the Tax Court on the following grounds: "THE COURT OF TAX APPEALS ERRED IN AFFIRMING THE AUTHORITY OF THE COMMISSIONER OF CUSTOMS TO SEIZE THE SUBJECT MACHINERY FROM PETITIONER, CONSIDERING THAT: "I "THE BUREAU OF CUSTOMS HAD NO AUTHORITY TO SEIZE THE SUBJECT MACHINERY SINCE IT HAD ALREADY LOST ITS JURISDICTION OVER THE RES. "II "THE COURT OF TAX APPEALS ERRED IN NOT OVERTURNING THE REFUSAL OF THE COLLECTOR OF CUSTOMS, WHICH REFUSAL WAS AFFIRMED BY THE COMMISSIONER OF CUSTOMS, TO SETTLE THE CASE AMICABLY UNDER SECTION 2107 [should be 2307] OF THE TARIFF AND CUSTOMS CODE, CONSIDERING THAT THERE WAS NO FRAUD IN THE ACQUISITION OF THE SUBJECT MACHINERY AND THE IMPORTATION THEREOF IS NOT PROHIBITED NOR THE RELEASE OF "THE SUBJECT MACHINERY CONTRARY TO LAW." (Rollo, pp. 11-12) Petitioner maintains, first, that the Bureau of Customs no longer had authority to seize the subject machinery since it had already lost its jurisdiction over the res upon the termination of the importation. Petitioner argues that the importation was terminated upon the payment of the duties, taxes and other charges due on the machinery through the auction sale and the issuance of the legal permit for its withdrawal in accordance with Section 1202 of the TCC which provides as follows: "Section 1202. When importation begins and deemed terminated . Importation 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 , at a port of entry and the legal permit for withdrawal shall have been granted , or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs." There is no contest that the Bureau of Customs had already obtained payment of the tax liabilities on the machineries through the sale to Engr. Policarpio and that the legal permit for the withdrawal thereof has been issued to the latter. However, the Tax Court ruled that the subsequent loss of the machineries would result in the non-delivery of said items to Engr. Policarpio which would, in turn, inevitably create an obligation on the part of the government to refund the proportionate amount of the taxes paid. cdll The pertinent portion of the Decision reads: "The opinion of the petitioner that to allow the government to recover the articles after all the tax liabilities incidental to its importation have been "satisfied will constitute double recovery on the part of the government and therefore should not be allowed does not hold water because in the event that the government cannot recover the articles sold to the winning bidder, then it becomes incumbent on the part of the government as custodian of such properties to refund an amount equivalent to the value of the missing items. This will then constitute loss of revenues on the part of the government as in reality not all the tax liabilities have been satisfied because a portion of what has been paid by virtue of the auction sale will be given back to the winning bidder by the government. In this sense, the importation as legally defined by Section 1202 of the TCC has not yet been terminated. . . . "In the instant case, the loss of the items that were supposed to be awarded to Mr. Policarpio as the highest bidder has the effect of creating an obligation on the part of the government to refund to him an equivalent amount, which leaves a portion of the taxes and duties unpaid. In this regard, we cannot say that the importation has been terminated." (id., pp. 36-37) We support the stance of the Tax Court and find the petitioner's charge against the latter of "erroneously interpreting into Section 1202 something which is not provided therein" and "inserting a judge-made innovation" as unavailing. First of all, the contract of sale between Engineer Policarpio and the Bureau provides for a refund in the event of loss or non-delivery as follows: "TERMS AND CONDITIONS" "10. Unless otherwise indicated, the articles shall be offered for sale 'AS IS, WHERE IS' and the Bureau of "Customs gives no warranty as to their condition. Quantity, numbers, weight or measurement of the articles listed in Notice of Sale is subject to exact determination before delivery; in case any excess is discovered, a corresponding increase of bid price will be required, otherwise the excess will be withheld from the delivery, on the other hand should a shortage be discovered , a proportionate refund will be made ." (id, p. 61, emphasis supplied) In case a refund is made, it is as if the taxes, duties and charges on said articles remain unpaid, thus, importation cannot be deemed terminated. Secondly, by virtue of said sale, Engr. Policarpio is entitled to the possession of said items as the rightful owner thereof. Moreover, a careful perusal of the Tax Court's decision reveals that the Tax Court's affirmance of the authority of the Commissioner of Customs to seize the items was anchored primarily on Section 2530 of the TCC which petitioner lost sight of. Said section reads thus: "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 subject to forfeiture. "xxx xxx xxx "(e) 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 ; (emphasis ours) Based on the foregoing, the Tax Court ruled thus: "The facts of this case reveal that the subject pieces of machinery were part of Lot 15 which was sold in an auction sale to satisfy the unpaid taxes, duties and other charges. Such machineries were imported but later abandoned by Filipinas Marble in favor of the government. The fact that this shipment formed part of Lot 15 is undisputed by both parties to this case. Petitioner admitted this in its petition for review (page 11, CTA records under Discussion I of Petition), and was likewise adopted as true by the respondent in his answer (see paragraph no. 4 of answer, page 48 of CTA records), quoted hereunder are as follows: 'The abandoned shipment became lot 15 which was awarded in a public auction sale at P61,250.00 to Engineer Franklin Policarpio.' "So it remains undisputed that after the auction sale and before delivery to Mr. Policarpio, as the winning bidder, the subject articles were carted away mysteriously from customs custody and reappeared thereafter in the premises of herein petitioner. There is no question that before delivery of these items to Mr. Franklin Policarpio, these items were under the custody of the Bureau of Customs and when they were about to be handed over to Mr. Policarpio, the latter discovered the said items to be missing. The illegal withdrawal thereof from customs custody makes such subject articles forfeitable under Section 2530(e) of the Tariff and Custom Code . (id., pp. 35-36, emphasis ours) A perusal of the instant petition instantly reveals that the said facts remain undisputed. Verily, petitioner's main argument is premised on the sale of Lot 15 to Engr. Policarpio, of which the subject machineries were part of. Thus, the application of Section 2530 of the TCC suffices to give authority to the Commissioner of Customs to order the seizure of the goods. Thus, petitioner's arguments regarding the termination of importation and the loss of jurisdiction over the res do not serve to advance its cause. As to petitioner's claim that it is a buyer in good faith with no knowledge that said machineries were imported as proven by the two notarized deeds of sale, the Tax Court found that the petitioner failed to discharge its burden of proof in accordance with Section 2535 of the TCC which provides as follows; "SEC. 2535. Burden of Proof in Seizure and/or Forfeiture . In all proceedings taken for the seizure and/or forfeiture of any vessel, vehicle, aircraft, beast or articles under the provisions of the tariff and customs laws, the burden of proof shall lie upon the claimant : Provided, That probable cause shall be first shown for the institution of such proceedings and that seizure and/or forfeiture was made under the circumstances and in the manner described in the preceding sections of this Code." (emphasis ours) on account of the following circumstances: ". . . Records however show that the petitioner has not successfully explained by competent evidence how these items, admitted to be part of Lot 15, came to be in its possession. Petitioner presented two deeds of absolute sale (Exhibit "A" and "B", p. 218 to 220, CTA records), allegedly executed by the petitioner corporation as buyer and Jaina Perez as seller. Jaina Perez, the alleged seller, was never presented as a witness during the hearings of this case to testify on the alleged sale involving the two pieces of machinery, inspite of this Court's issuance of a subpoena for her appearance. The reason for this is that the subpoena was never served because the address of Jaina Perez, as appearing on the deeds of sale, does not "exist". Neither did petitioner present the notaries public who allegedly acknowledged these acts. Another significant factor which led this Court to conclude that the deeds of absolute sale are weak pieces of evidence are the dates appearing in these two contracts of sale purportedly reflecting the dates when these sales took place. Exhibit "A" corresponding to the sale of one of the items missing from Lot 15 was dated December 20, 1985 and the other deed of sale corresponding to the other item was dated October 28, 1986 (Exhibit "B"). We find these dates perplexing because the auction sale conducted by the Bureau of Customs for the same items was held only on April 10, 1987 as evidenced by the records of this case. How then can said items be sold to petitioner while the same were still in the custody of the Bureau of Customs at that time? From the time of its importation and subsequent abandonment by its importer to the time it was auctioned off on April 10, 1987, such items were in the possession and custody of the Bureau of Customs so it would have been legally impossible for a private person to sell the same items to any other entity." (id., pp. 37-39) On this point, petitioner argues that the ordinary rules of evidence apply and not Section 2535 of the TCC since the importation had terminated; and that the rule of evidence recognized in any forum is the presumption of regularity of notarial documents. Petitioner is in error. Section 2535 applies, since as we have ruled, the Bureau still had jurisdiction over the res. Even if were to apply the ordinary rules of evidence, it is settled that the rule on the probative value of notarized documents is not absolute. Notarized documents constitute only prima facie evidence of the facts which give rise to their execution and of the date of the latter (Bael vs. Intermediate Appellate Court, 169 SCRA 617); and may be nullified by other competent evidence (Palanca Chilianchin vs. Coquinco, G.R. No. L-1355 cited in Evidence, Francisco, R.J., 2nd Ed. 1994, p. 518). The factors above-cited by the Tax Court sufficiently overcome the presumption of regularity of the notarized documents of sale. Petitioner further maintains, that the case should have been settled in accordance with Section 2307 of the TCC upon its offer to do so, considering that the importation of the subject machinery is not absolutely prohibited and no fraud attended the importation of the same. We cannot see how petitioner can insist on a compromise when its main argument is premised on the successful sale of the subject machineries at public auction. Proceeding from its argument that the government has already been fully compensated by such sale, it necessarily follows that there is nothing more to settle and that the subject machineries must be delivered to the winning bidder. We shall not tarry on the last argument of petitioner that the Tax Court erred in not reversing the Bureau of Customs which has no authority or jurisdiction to pass upon the issue of ownership over the subject articles and to inquire into the validity of the title of petitioner to the subject articles. It is enough to say that after hearings duly conducted by the District Collector of Customs, the latter subjected the articles to forfeiture for violation of Section 2536 (non-payment of taxes and duties) and Section 2530 par. [e], for the unjustifiable removal of the subject articles from the warehouse without legal permit or authority powers which are well within its authority and jurisdiction. WHEREFORE, the petition for review is DISMISSED for lack of merit. SO ORDERED. Buena and Callejo, Sr . , JJ . , concur.