Commissioner of the Bureau of Customs v. Selective Timber Exports Philippines, Inc.

SPECIAL NINTH DIVISION [CA-G.R. SP No. 47643. October 11, 1999.] COMMISSIONER OF THE BUREAU OF CUSTOMS , petitioner , vs . SELECTIVE TIMBER EXPORTS PHILIPPINES, INCORPORATED , respondent . D E C I S I O N DACUDAO , J p : This petition for review under Rule 43 of the 1997 Rules of Civil Procedure seeks to annual and set aside the decision of the Court of Tax Appeals (CTA for short), dated March 2, 1998 in C.T.A. Case No. 5263, entitled "Selective Timber Exports Philippines, Inc. vs. Guillermo Parayno, as the Commissioner of the Bureau of Customs," which reversed the decision, dated June 15, 1995, of the Deputy Commissioner of Customs which ordered, in seizure proceedings, the forfeiture of the entire shipment of plywood of the respondent corporation. The facts, as found by the Court of Tax Appeals (CTA), are undisputed, thusly: "On November 21, 1994, a shipment of plywood imported by [herein respondent] from Malaysia arrived at the Port of Manila aboard the vessel M/V 'WAN LI,' Reg. No. P1D-1015, covered by Bill of Lading No. WLIMNL-01 and was consigned to Phil. Exporters Confederation, operator of Customs Common Bonded Warehouse No. M-1045, for the account of [herein respondent]. The shipment was declared under Entry No. 121811-94 as STC 584 Crates containing 495.459 cubic meters (M3) or (CMS) of plywood. "A day after, or on November 22, 1994, Mr. Jorge Salazar, president of the [respondent] company filed an Import Entry Declaration No. 10770663 under which he declared the shipment to be about 500 cubic meters of plywood with a value of US$760.00 per cubic meter. To be able to claim said shipments and to reflect that the shipment consisted of 584 crates with a volume/measurement of 495.459 cubic meters of plywood, [herein respondent] presented the Import Authority, dated September 1, 1994, issued by Phil. Exporters Confederation, the Certificate of Origin-ASEAN Preferential Trading Arrangements executed by the exporter, Borneo United Sawmills Sdn. Bhd:, and the SGS Clean Report of Findings No. MYS 013948, dated November 14, 1994. "Upon examination of the shipment, the Customs Intelligence and Investigation Service (CIIS) discovered that the 584 crates contained 1,038.35 cubic meters of plywood and not 495.45 cubic meters as declared by [herein respondent]. Thus, the CIIS theorized that there was a misdeclaration in the entry, hence, the District Collector of the Port of Manila issued a Warrant of Seizure and Detention of said shipments on January 19, 1995. "The case was heard before the said District Collector of Customs, after which the latter rendered a decision on the matter, the dispositive portion of which states: 'WHEREFORE, by virtue of the authority vested in me by law, it is hereby ordered and decreed that the 495.459 cubic meters of plywood be RELEASED in favor of the claimant, SELECTIVE, TIMBER EXPORT PHILS., INC., upon posting of a re-export bond and compliance with laws and regulations pertinent thereto while the excess shipment of 542.85 cubic meters be FORFEITED in favor of the government and be disposed of in the manner provided by law.' "On June 15, 1995, [herein petitioner] MODIFIED the decision of the District Collector and thereby ORDERED that the entire shipment be forfeited in favor of the government, the decretal portion of which is quoted hereunder: 'In view of the foregoing, the decision of the Collector of Customs, Port of Manila, releasing the declared 495.459 CMS of plywood in favor of the claimant upon posting of a re-export bond and forfeiting the excess shipment of 542.85 CMS of plywood in favor of the government is hereby MODIFIED, by ordering that the entire shipment shall be forfeited. 'The District Collector of Customs, POM is hereby instructed to dispose of the whole shipment in the manner provided for by law. LLphil 'SO ORDERED.' "Hence on July 4, 1995, [herein respondent] filed with this Court [of Tax Appeals] the instant petition for review. "In the course of trial, the declared shipment of 495.459 cubic meters of plywood were ordered by this Court [of Tax Appeals] RELEASED to [herein respondent] upon posting a surety bond in the amount of P14,434,180.62." 1 On March 2, 1998 the CTA rendered the now impugned decision, which found for the respondent, based essentially on its ratiocination that the misdeclaration of the respondent in its import entry regarding the dutiable volume of its imported plywood shipment was not characterized with intentional or actual fraud because said misdeclaration was attributable to the erroneous information provided by its supplier abroad. The decision reads in part: "Hence, only the excess shipment of 542.89 cubic meters (not the total shipment of 1,038.35 cubic meters that actually arrived) of plywood should be forfeited since these constitute the portion of the total/actual shipment which were misdeclared or undeclared which, according to Section 2503 of the Tariff and Customs Code shall be ipso facto forfeited in favor of the government and to be disposed of pursuant to the provision of the Code. "WHEREFORE, finding the petition meritorious, [herein petitioner's] decision is hereby set aside and the bond specifically Western Guaranty Corporation Bond No. G(16)00473, earlier posted for the release of the declared shipment of 495.459 cubic meters of plywood, by this means discharged, subject to the condition that the correct duties, taxes, fees, and other charges, thereon, if any, be paid to the Bureau of Customs." 2 On March 19, 1998, the petitioner moved for reconsideration 3 of the above judgment, but the same was denied by the CTA in a resolution dated April 17, 1998 4 Dissatisfied therewith, the petitioner comes to us in this petition for review. The respondent was ordered to file its comment to the petition, but failed to oblige. Hence, this Court in a resolution dated December 1, 1998, declared the instant petition for review submitted for decision without the respondent's comment. However, on March 1, 1999, We required the CTA to elevate to this Court the entire records of CTA Case No. 5263. In the present appeal, the petitioner faults the CTA decision on two points. Firstly, the petitioner contends that the CTA erred in holding that since the respondent had no prior knowledge of the overshipment, the respondent could not be penalized therefor. The petitioner argues that based on the explicit provision of Section 2503 of the Tariff and Customs Code, the respondent's misdeclared volume constitutes prima facie evidence of fraud penalized by said section. This is so because the discrepancy between the quantity that the respondent declared and the actual volume of its shipment amounted to about 109.565%. The petitioner assails the reliance of the CTA on the Farolan v. CTA 5 case, on the ground that, unlike in Farolan, in the present case the respondent committed actual, international fraud in the misdeclaration of the volume of the plywood shipment. More to the point, the petitioner asserts that the respondent's virtual defense of good faith is unavailing since seizure proceedings are directed toward the res , rather than the persona . Secondly, the petitioner maintains that the CTA erred in setting aside the petitioner's decision which ordered the forfeiture of the entire imported shipment of the respondent pursuant to Section 2530 of the Tariff and Customs Code. The petitioner posits that the importation involved in the case at bench was covered by only one entry declaration, hence, whatever disposition was to be done relative thereto should affect the whole shipment; and that besides, what is sought to be penalized herein was the wrongful exercise of the privilege to import or export. The petitioner also claims that allowing or permitting piecemeal forfeiture would establish a dangerous precedent, as this would embolden unscrupulous importers who, without the risk of losing so much for themselves, will be allowed to receive grossly excessive overshipments, whilst fraudulently misdeclaring in the entry the correct quantity and description. dctai We find merit in the petition. We are inclined to concur with the petitioner's contentions that the case at bench involved a case of fraudulent misdeclaration, and that the consequent penalty of total forfeiture imposed by the petitioner was legally sound and proper. As correctly pointed out by the Office of the Solicitor General, even conceding in gratia argumenti that the respondent did not commit constructive fraud, nevertheless it did commit actual fraud when it did not immediately inform, advise or notify the Bureau of Customs of the grossly misdeclared or undeclared volume of shipment. Given the clear import of the law and the attendant circumstances in this case, We find the evidence presented by the respondent, such as the Sales Invoice, 6 the Certificate of Origin under Preferential Trading Agreement, 7 the Bill of Lading, 8 and the report of the Societe Generale de Surveillance, documents purportedly describing the shipment as consisting of plywood STC 584 crates or 495.459 cubic meters, dismally insufficient to overturn the prima facie evidence of actual, intentional fraud. Moreover, the respondent's claim that no blame can be laid at its door because it merely faithfully restated the documents provided by the exporter, is utterly untenable. The actual, incontrovertible fact is that Exhibit "E" 9 palpably shows that on November 22, 1994, the exporter informed the respondent-consignee, by way of a fax message, of the gross overquantity in the volume of the shipment. Yet, for inexplicable reasons, the respondent took absolutely no concrete positive steps to immediately or promptly correct or rectify its import entry. For, indeed, in the Import Entry Declaration filed on November 22, 1994 by the petitioner's president, Mr. Jorge Salazar, he declared the shipment simply to be about 500 cubic meters of plywood, valued at $760.00 per cubic meter. Of course, We take note of the evasive and flip-flopping testimony of the witness of the respondent as to the date when the fax message actually arrived, thusly: "ATTY. SORIANO: "Q. Mr. Witness, you said that there was a fax message from the supplier? "A. Yes, Ma'am. "Q. Would you know when the fax message was delivered to you or to the Bureau? "JUDGE DE VEYRA: "Which is which? To you or to the Bureau? Of course to your company. "ATTY. SORIANO: "To your company first." "ATTY. SAUZ: "Of the Selective Timber Exports Philippines, Inc., Mr. Witness. "A. Sometime in November 20 or 21, 1994. "Q. When did the shipment arrive? "A. November 21. "Q. So would you say that the fax message came after the arrival of the shipment? "A. Yes, I suppose so, after the arrival." 10 In view of the foregoing inconsistent and clearly equivocal testimony of the witness, We hold that the date, November 22, 1994, as reflected in the fax message marked as Exhibit "E," is controlling. The documentary evidence commands greater probative value as opposed to the testimonial evidence which, in this case, was at best vague, tentative and evasive. Worse, the circumstances surrounding the timing of the fax message were clearly suspect, given the fact that the message was transmitted on the heels of the impending and imminent actual physical inspection of the shipment: whereas, based on the documents on record, the vessel S/S Wan Li, which transported the subject shipment, sailed from Malaysia as early as November 14, 1994. Simply put, from the time the vessel departed from Malaysia, the exporter had at least seven days to properly apprise or notify the respondent of the error, which information could, and might have been sent, through a fax machine and correspondingly received in a matter of seconds. Strangely and oddly enough, however, the fax message was sent and received only on November 22, 1994, or some eight days later, thereby generating the not at all unfounded impression and suspicion that the fax message was a mere afterthought, designed as an expedient and a convenient ruse or cover-up, for the fraudulent misdeclaration. For these reasons, the respondent cannot successfully interpose the jurisprudential shield in the Farolan case, as the facts therein do not completely square with those in the case at bench. In Farolan there was no basis to charge the importer with fraudulent misdeclaration, as its import entry was based entirely on the shipping documents; besides, in that case, it was not duly established that the importer had knowledge of any flaw in the said documents at the time the entry was filed; if at all, the wrongful making, or falsity, of the documents provided by the exporter in that case, could only be attributed to the latter. In contrast, in the present case, as above-explained, we find substantial, nay, almost incontrovertible evidence, that the respondent was, or had been fully aware, all along of the gross and glaring error and discrepancy in the import declaration. LLphil Indeed, the petitioner's imputation of fraud against the respondent rest upon implacable logic and sound reason, dictated by the actual, incontrovertible facts on record. We quote from the decision of the Commissioner of Customs "The overquantity was really ordered and intended for the [respondent] because it is against the law of nature and human experience for goods worth millions of pesos to find its way to the Philippines if not ordered to be imported by the consignee . This is the ratio decidendi in the case of 100,000 bags of diamonium phosphate under S.I. No. 79-79 (POM) which was forfeited in favor of the government despite the defense of misshipment." 11 Having reached the conclusion that there was indeed a fraudulent misdeclaration, in this case, we shall now turn to the issue of the proper penalty that ought to be meted out against the respondent, more specifically the respondent's importation of the 584 crates of plywood consisting of 1,038.35 cubic meters. Pertinent to this issue is Section 2503 of the Tariff and Customs Code, thusly: " Undervaluation, Misclassification and Misdeclaration in Entry . When the dutiable value of the imported 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 (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 be less by ten per cent (10%) than should be legally collected based on the correct tariff classification, or when the dutiable weight, measurement or quantity of imported article is found upon examination to exceed by ten per cent (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 more than 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, or quantity declared in the entry, and the actual value, weight, quantity, or measurement shall constitute a prima facie evidence of fraud penalized under Section 2530 of this Code : Provided, further, That any misdeclared or undeclared imported article/items found upon examination shall ipso facto be forfeited in favor of the Government to be disposed of pursuant to the provisions 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 (RA 7651, June 4, 1993)." (Emphasis supplied) Against this juridical backdrop, we hold that the manifest thrust of the taxing statutory provision is the total forfeiture of the misdeclared or undeclared shipment whenever fraud intervened. As worded, the law uses the term "misdeclared or undeclared", in the alternative, which means that the penalty of forfeiture is imposed upon imported articles which are either fraudulently misdeclared or fraudulently undeclared. Here, the declared volume of 495.459 cubic meters was fraudulently misdeclared while the excess of 542.85 cubic meters was fraudulently undeclared. This is a finding of fact which has been indubitably and conclusively established by the evidence on record. At whatever angle we view the matter, therefore, the instant case involves a fraudulent case of misdeclaration and/or fraudulent non-declaration of imported articles, in violation of the Tariff and Customs Code, warranting the sanction of total forfeiture. Withal, forfeiture cannot be avoided by the plea of good faith, as urged by the respondent, for forfeiture proceedings are in the nature of proceedings in rem, and directed against the res, and not the persona . 12 Undoubtedly, res or things, in contrast to persons, are not endowed with the natural faculty of belief, intellection or intention, which enter into consideration in a plea of good faith. Furthermore, the respondent's expedient and convenient argument of absence or lack of knowledge of any error, defect or infirmity in the statements in the import entry will not hold in forfeiture proceedings, not only because it is a defense personal to the importer himself, but also because under the Tariff and Customs Code, "declarations and statements contained in the Import Entry Permit are presumed to be true and correct under the penalties of falsification and perjury; descriptions in entries and other documents are admissions against interest and presumptively correct." 13 Section 1301 of the Tariff and Customs Code is precise on this point, thusly: " Persons Authorized to Make Import Entry . Imported articles must be entered in the customhouse at the port of entry within five (5) days from the date of discharge of the last package from the vessel either (a) by the importer, being holder of the bill of lading, (b) by a duly licensed customs broker acting under authority from a holder of the bill, or (c) by a person duly empowered to act as agent or attorney-in-fact for each holder: Provided, That the Collector may grant an extension of not more than five (5) days: Provided, further, That where the entry is filed by a party other than the importer, said importer shall himself be required to declare under oath and under the penalties of falsification or perjury that the declarations and statements contained in the entry are true and correct: Provided, finally, That such statements under oath shall constitute prima facie evidence of knowledge and consent of the importer of violation against applicable provisions of this Code should the importation turn out to be unlawful or irregular." Hence, the respondent cannot simply shift the blame of the erroneous or defective declaration in the import entry unto its supplier, over which our courts have no jurisdiction and cannot thus assert their coercive and punitive authority reason enough for such supplier to scornfully and contumaciously snap its fingers at our courts, which can only watch helplessly by, as right and justice are being systemically subverted. To sustain the respondent's stance is to put obedience to our customs and tariff laws at the mercy of the exporter or supplier, who, even as the latter disdainfully runs rings around those laws, blatantly act in conspiracy with the likes of respondent herein who pharisaically make an outward show of fealty to the same laws, while in fact ingeniously violating them. That would be legal suicide. That would be to furnish or equip the law with the very instrument of its own transgression and undoing. That would be to allow or permit indirectly what the law forbids or prohibits directly. And it is axiomatic that the law abhors an inconsistency. Violations of the customs and tariff laws are grave offenses which menace and shake the very structure and foundation of the economic life of our country because customs revenues and duties, as much as taxes, fees and other imports, are the very life-blood of our economy. Such violations must be suppressed with a firm and strong hand as they are committed with premeditated and calculated greed, cupidity and selfishness, with the use of various cunning contrivances and devices which the inventive mind of the criminally inclined never seem to run out of. Only when transgressors and violators of these laws are made to realize that they can break the law at the risk of forfeiting all the fruits of their fraudulent acts, and that this stiff penalty follows swiftly and certainly upon the commission of the offense, only then perhaps will such fraudulent importations abate. LLpr Thus it is that to all legal intents and purposes, the respondent has failed to overcome the prima facie evidence of knowledge, or scinter, that the shipment in question was fraudulently misdeclared. Needless to say, owing to the respondent's failure to overthrow this prima facie presumption, such presumed or construed knowledge has now attained a conclusive or jure et de jure character. On a final note: We find definitive merit in the petitioner's postulation that the fraudulently misdeclared or fraudulently undeclared shipment should be forfeited in its entirety on the ground that what is being penalized is the wrongful exercise of the privilege to import or export. A customs duty partakes of the nature of an excise tax which, in general, is a charge imposed upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation. As thus defined, any transgression of the exercise of the privilege justifies the very grievous penalty for the wrongful exercise thereof. In that context, we take the view that the CTA's decision to break the shipment into two, one to be forfeited in favor of the Government, and the other to be released to respondent, is virulently anathema to the nature of an excise tax, such as a customs duty. All told, We find that the CTA committed the reversible errors imputed to it. prLL WHEREFORE, premises considered, the decision appealed from is hereby VACATED AND SET ASIDE, and the June 15, 1999 decision of the Deputy Commissioner of Customs Licerio C. Evangelista is REINSTATED in toto . Accordingly, the surety bond in the amount of FOURTEEN MILLION FOUR HUNDRED THIRTY FOUR THOUSAND AND ONE HUNDRED EIGHTY PESOS AND SIXTY TWO CENTAVOS (P14,434,180.62), which was posted by the respondent for the release of the 495.459 cubic meters of plywood is ordered FORFEITED in favor of the Government of the Republic of the Philippines. Without costs. SO ORDERED. Valdez, Jr . and Umali, JJ ., concur. * Per Office Order No. 157-99-E dated September 27, 1999. 1. Rollo, pp. 51-54 2. Rollo, pp. 61-62 3. Records, pp. 138-140 4. Rollo, pp. 63-64 5. 217 SCRA 298 6. Principal Records, p. 21 7. Rollo, p. 31 8. Principal Records, p. 13 9. Rollo, p. 65 10. CTA TSN, July 10, 1996, pp. 35-36 11. Decision of Commissioner of Customs, p. 2, Rollo, p. 40; Emphasis supplied. 12. Vide: Vierneza v. Commissioner of Customs, 24 SCRA 394; Commissioner of Customs v. Manila Star Ferry, Inc., 227 SCRA 317; see also Commissioner of Customs v. Court of Tax Appeals, 138 SCRA 581; Vierneza v. Commissioner of Customs, 24 SCRA 394 13. Caltex (Philippines), Inc. v. Court of Appeals, 292 SCRA 273