Parayno Jr. v. Ouano

SPECIAL EIGHTH DIVISION [CA-G.R. SP No. 44999. February 5, 1998.] HON. GUILLERMO L. PARAYNO JR., in his capacity as COMMISSIONER OF CUSTOMS , petitioner , vs . MANUEL B. OUANO , respondent . D E C I S I O N MONTOYA , J p : This Petition for review seeks to set aside the Decision and Resolution of the Court of Tax Appeals dated March 24, 1997 and July 8, 1997, respectively. It appears that on February 6, 1988, Keiichi Aoki, a staff representative of the Overseas Economic Cooperation Fund (OECF) of Japan in the Philippines brought into the country a motor vehicle described as a Nissan Pathfinder 2400 Patrol, Model 1988 with Engine No. ZZ4140621 and Chassis No. WNUDZI-002617. On February 9, 1988, Japanese Embassy Consul Akihito Fusoya sent a letter requesting the Protocol for Privilege and Immunities Director of the Department of Foreign Affairs for the duty-free entry of the vehicle which request was granted. Thereafter, a verification of Payment stamped "exempted" was issued and the vehicle was registered with the Land Transportation Office (LTO) in Diliman per Certificate of Registration No. 1945324 dated March 23, 1988. On October 1, 1990, Aoki sold the vehicle to Felix A. Lacambra, Jr. of 1312 A. San Diego St., Sampaloc, Manila for Four Hundred Thirty Five Thousand Pesos (P435,000.00) by virtue of Deed of Sale of Motor Vehicle. The Deed of Sale described the motor vehicle as: "Make Nissan Serial No. WNUDZI-002617 Model 1988 Motor No. ZZ4-140621 Type Patrol Jeep Plate No. OEV-15756" On October 12, 1990, Felix Lacambra, Jr. sent a letter to the Finance Secretary in the following tenor: "This is in connection with one (1) unit motor vehicle, a 1988 Nissan, which was (sic) the undersigned bought from Mr. Keiichi Aoki of the OECF-Japan 3rd Flr. Corinthian Plaza, Paseo de Roxas, Makati, Metro Manila. May I request from your good office that I be allowed to pay Customs Taxes and Duties on such automobile. Attached herewith is (1) the duplicate original of the deed of sale (2) the Note Verbale of the Department of Foreign Affairs and (3) xerox copies of Certificate of Registration." On October 18, 1990 an Informal Import Declaration and Entry was filed with Felix A. Lacambra, Jr. appearing as importer/consignee, Dominador Morales as broker/representative and the declarant unknown, has signature being illegible. It describes the article as a "1987 Nissan". Upon those facts, Customs Examiner O. Gotladera examined the vehicle and appraised the duties and taxes thereon at P49,500.00. Thereafter, Felix Lacambra, Jr. paid the said amount so that Certificate of Payment No. 138917 was issued to him. Then, Felix Lacambra, Jr. displayed the vehicle for sale at 45 Automart. When the vehicle was placed on display there for sale, respondent Manuel Ouano saw the vehicle and inquired about its documentation and papers. The representatives of 45 Automart, Managers Nilo Pazcoguin and Sammy Tan showed him the Certificate of Payment for the corresponding duties and taxes. Convinced of the veracity of the document, Manuel Ouano decided to buy the vehicle and so, a Deed of Sale was executed by Felix A. Lacambra, Jr. as seller and respondent Manuel Ouano as buyer. The Deed of Sale describes the vehicle as follows: cdlex "MAKE NISSAN PATHFINDER MODEL 1988 TYPE 2400 Patrol Jeep SERIAL NO. WNUDZI-002617 MOTOR NO. ZZ4-140621 PLATE NO. OEV-15756 FILE 4PE-6632" On November 26, 1990, the vehicle was registered with the Diliman LTO and the vehicle's registration was renewed annually until 1994 when the Land Transportation Office required respondent to secure a Customs Clearance pursuant to E.O. No. 90. Subsequently, a compromise deficiency tax of P200,000.00 was assessed on the vehicle of respondent by Customs Examiner Severino Esplana. Protesting the deficiency assessment, respondent Manuel Ouano wrote a letter to the Commissioner of Customs explaining the reasons why he should not be held to pay for the compromise tax of P200,000.00 on the vehicle and requesting the latter to issue the customs clearance for the vehicle as required by E.O. No. 90. On May 31, 1994, petitioner wrote back respondent demanding payment of the compromise tax. In reply, respondent reiterated his request for exemption from paying the compromise tax. But, on July 21, 1994, petitioner again demanded that respondent pay the deficiency compromise tax. On the same date, respondent Manuel Ouano filed a petition for review with prayer to suspend payment and to suspend the issuance of a warrant of seizure and detention before the Court of Tax Appeals, docketed as CTA Case No. 5134. A decision was rendered in the case by the Court of Tax Appeals on May 24, 1997 setting aside the compromise assessment of P200,000.00 against respondent and permanently enjoining the issuance of a warrant of seizure and detention against the subject vehicle. Petitioner's Motion for Reconsideration having been denied, he filed this petition for review on the lone issue of: "WHETHER THE COURT OF TAX APPEALS ERRED IN HOLDING THAT FRAUD DID NOT EXIST AS TO JUSTIFY THE ISSUANCE OF WARRANT OF SEIZURE AND DETENTION AGAINST THE SUBJECT VEHICLE FOR MISDECLARATION AND UNDERPAYMENT OF TAXES." We find no merit in this petition. Petitioner argues that respondent committed fraud by misdeclaring in the Informal Import Declaration and Entry and in the Certificate of Payment the true year model of the car from 1988 to 1987 and the true piston displacement from 2400 cc. to 2,000 cc. This misdeclaration according to petitioner led the customs examiners and appraisers to assess and collect the much lower amount of P49,500.00 on the vehicle. We do not agree with petitioner's contention. The Informal Import Declaration and Entry shows Felix A. Lacambra, Jr. as the Importer/Consignee, Dominador Morales as the Broker/Representative and an unknown declarant whose signature is illegible. While it does show the description of the vehicle as a 1987 Nissan, it does not show on its face that Felix A. Lacambra, Jr. was the one who filled up the form or that he was the one who supplied its entries. At the back of the form are found the following handwritten entries: "One (1) Unit 1987 Nissan Patrol Pick-Up 4 cylinder Chassis # WNYD21002617 Engine # ZZ4-140621W K/W 2009 kgs. P/D 2000 c.c. Accessories Tools, jack, spare tire with rim, AM/FM Radio DATE EXAMINED 10-18-90 PLACE MICP SIGNATURE OF EXAMINER illegible PRINTED NAME O. GOTLADERA" From these entries, it may be gleaned that Examiner O. Gotladera examined the vehicle himself. Respondent is correct in saying that "these officers are presumed to have regularly performed their respective duties under Section 3(m) of Rule 131 of the Rules of Court". Felix A. Lacambra, Jr. is not guilty of fraud. As a matter of fact, aware of his duties to have the imported vehicle he bought from an exempted importer assessed for taxation purposes, he wrote a letter to the Secretary of the Department of Finance, dated October 12, 1990 requesting the latter to allow him to pay customs taxes and duties for a 1988 Nissan motor vehicle he bought from Aoki. Together with his letter is a copy of the Deed of Sale of a Motor Vehicle stating therein the year model of the vehicle as "1988". Aside from this letter request, he has not submitted any other document which would support the alleged intent of defrauding the government. We agree with respondent when he said that petitioner failed to prove the attendance of fraud in Felix A. Lacambra, Jr.'s dealings with the Department of Finance and Bureau of Customs personnel. Fraud may be defined as the voluntary execution of a wrongful act, or a willful commission, knowing and intending the effects which naturally and necessarily arise from such act or omission. ( Legaspi Oil Co ., Inc . vs . Court of Appeals , 224 SCRA 213 ) In cases decided by the Supreme Court, it has been held that fraud is intentional and never presumed. ( Aznar vs . Court of Tax Appeals , 58 SCRA 519 ). Failure of proof of fraud is a bar to forfeiture. The reason is that forfeitures are not favored in law and equity. ( Yu Phi Kim vs . Amparo , 86 Phil . 441 , 446 ) The Court of Tax Appeals' discussion on the matter of fraud is satisfactory. We quote portions thereof in affirmation: "Notwithstanding the failure of the respondent to prove its case, we nonetheless consider it appropriate, for the sake of legal clarity, to examine the evidence obtaining as submitted by the petitioner. An analysis of the Informal Import Declaration and Entry form of the subject vehicle with Entry No. LP-242-90 (Annex "E" of the petition) would reveal that only the description of the vehicle as a 1987 Nissan was declared, the finding that the vehicle is a 1987 Nissan Patrol Pick-Up with a 2,000 cc. piston displacement and a dutiable value of $3,900.13 was, on the face of the document (rear portion), arrived at solely by the examiner concerned, in the person of Mr. O. Gotladera. From the above. We submit that it is incorrect for the respondent to state that since the description of the subject vehicle and the value thereof was misdeclared, there was fraud attending its liquidation (Exh. A-1, supra). For one, the importer of said vehicle, Mr. Kaiichi Aoki, being a staff representative of Overseas Economic Cooperation Fund (O.E.C.F.) of Japan in the Philippines, was exempt from duties and taxes the same having been granted a Tax Exempt Status per Certificate of Payment "Exempted" No. 094410A, dated March 3, 1988. xxx xxx xxx Mr. Lakambra, Jr. did not declare any value in the Informal Import Declaration and Entry No. LP-242-90. Thus to accuse anyone of them of misdeclaration would be rather unjustified. Added to this, it is an acknowledged fact that the Customs Bureau uses a red or blue book as a reference material in the valuation of motor vehicles coming from abroad. The taxes and duties paid by Mr. Lakambra, Jr. were therefore duly ascertained from said book despite the alleged misdeclaration. Secondly, the value of the subject vehicle and the corresponding duties and taxes paid thereon were made by the concerned examiner, appraiser and the assessor of the respondent. Being public officers, the presumption is that their official duties, as regards the liquidation of the import entry, were regularly performed (Section 3(m), Rule 131, Revised Rules of Court). Respondent does not cast any doubt on the actions of its officers involved, hence, the presumption remains unrebutted." After a review of the documents presented, we find that the Court of Tax Appeals did not err in holding that fraud did not exist as to justify the issuance of a warrant of seizure and detention against the subject vehicle for misdeclaration and underpayment of taxes. WHEREFORE, this Petition is hereby DISMISSED. LexLib SO ORDERED. * Demetria and Cosico, JJ . , concur. Footnotes * Acting Third Member vice J. Magtolis who is on leave.