Blackgold Integrated Sales v. Court of Tax Appeals

EIGHTH DIVISION [CA-G.R. SP No. 63266. November 23, 2004.] BLACKGOLD INTEGRATED SALES & PARANAGA INTERNATIONAL , petitioners , vs . COURT OF TAX APPEALS, HON. SECRETARY OF FINANCE and DEPUTY COMMISSIONER EMMA R. ROSQUETA , respondents . D E C I S I O N VALDEZ , JR ., J p : This is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure of the Resolution 1 dated January 11, 2001 issued by the Court of Tax Appeals denying the motion for reconsideration 2 dated September 22, 2000, the dispositive portion of which reads: "IN THE LIGHT OF ALL THE FOREGOING, the decision of Respondent Deputy Commissioner Emma M. Rosqueta forfeiting the entire cargo of Petitioners, consisting of 5,500 MT of sugar, in favor of the government is hereby AFFIRMED in toto . Accordingly, the GSIS surety Bond in the amount of P31,500,000.00, which was posted by Petitioners for the release of the said cargo is hereby ORDERED FORFEITED in favor of the government of the Republic of the Philippines. No costs. "SO ORDERED." 3 The facts of the case, as summarized by the Office of the Solicitor General, are as follows: "On September 23, 1998, M/V "J RUBY", a vessel of Panamanian registry arrived in the Port of San Fernando, Poro Point, La Union from Spiracha, Thailand, with subject cargo of 5,500 metric tons (MT) of raw sugar consisting of 110,000 bags each of 50 kilos. "Captain Edgardo Evangelio, the master of the said vessel, failed to present the Bill of Lading of said "cargo" to Customs Officer Lloyd Camangeg, when the latter went on board the said vessel. The former merely presented, among other documents, the manifest of all the cargo laden on board, which did not specify the consignees of the same. The manifest merely indicated "TO ORDER/NOTIFY PARTY." "Two days later, or on September 25, 1998, the Commissioner of the Economic Intelligence and Investigation Bureau (EIIB) informed the Customs Office at San Fernando, La Union that the subject importation lacked the necessary Sugar Regulatory Administration (SRA) clearance and that the carrying vessel is not listed in the SRA Schedule of Sugar Importation by Vessel/Importer which means that "J RUBY" did not have authority to transport the sugar. "On October 1, 1998, an Amended Cargo Manifest was submitted specifying that the consignee of the 500 metric tons of said cargo was BLACKGOLD INTEGRATED SALES and that the consignee of the other 5,000 metric tons of same cargo was PARANAGA INTERNATIONAL, herein Petitioners. "On October 8, 1998, Warrants of Seizure and Detention were issued by then District Collector of Customs, Antonio P. Aguilar, Port of San Fernando, La Union, against the vessel and its cargo for violation of Sections 1004, 2519, 2534 and 2530 (a) and (k), Sections 2530 (f)(1-5), and 101(k), of the Tariff and Customs Code of the Philippines (TCCP), as amended, in relation to SRA rules and regulations . "The said seizure case was heard before the District Collector of Customs, Port of San Fernando, La Union (SFLU), acting on behalf of the District Collector of Customs, Port of SFLU, rendered a decision on the above seizure cases, ordering the release of the subject vessel and cargo, the decretal portions of which states, to wit: "WHEREFORE, premises considered, this office hereby lifts, as they are hereby lifted, the Warrants of Seizure and Detention against the 5,500 MT Raw Sugar subject of SI No. SFLU 02-98 and the vessel MV "J RUBY" subject of SI No. SFLU 01-98. This office, however, finds the MV "J RUBY" liable for fine pursuant to Section 2519 of the Tariff and Customs Code , as amended, and hereby orders the owner/s or agent/s thereof to pay the sum of FIVE THOUSAND PESOS (P5,000.00), Philippine Currency. xxx xxx xxx * "SO ORDERED." "On December 4, 1998, Deputy Commissioner Emma M. Rosqueta, acting in behalf of the Commissioner, of the Bureau of Customs (Bureau for brevity) manifested (sic; should be modified) the above decision to the effect that the subject vessel be released but the subject cargo be forfeited in favor of the government, thus: WHEREFORE, the decision of the District Collector of Customs in the above-entitled cases is modified. The 5,500 MT (100,000) bags sugar subject of SI No. 02-98 be, as they are hereby, FORFEITED in favor of the Government of the Republic of the Philippines, the same to be disposed of in accordance with law. The MV "J RUBY", be as it is hereby released to the Claimant upon proper identification and compliance with all other legal requirements, but said vessel is, however, imposed a fine of P5,000.00. xxx xxx xxx ** "SO ORDERED." "Consequently, on January 6, 1999, Petitioners filed with this Court the instant Petition or Review. "In a Resolution dated March 16, 1999, the subject shipment consisting of 5,500 metric tons of sugar was ordered released by this Court (sic, should be Court of Tax Appeals) to Petitioners, after the latter posted a GSIS Surety Bond in favor of the Bureau of Customs in the amount of P31,500,000.00 (see pages 254 to 255, CTA records). "On June 1, 2000, the parties submitted the case for decision sans the presentation of their respective evidence on the ground that the issues involved are purely legal. "In assailing the legality of the forfeiture, petitioners principally contend that the Commissioner/Deputy Commissioner of the Bureau has no jurisdiction to review the decision of the District Collector of Customs, Port of San Fernando, La Union on the ground that the value of the subject importation is more than FIVE MILLION PESOS (P5,000,000.00), thus the decision of the District Collector adverse to the government is automatically appealable to the Secretary of Finance and not to the Commissioner in accordance with Section 223132 (sic) of the TCCP, as amended by RA 7651 in relation to Sections 9 & 10 of the Customs Administrative Order No. 9-93 (CAO 9-93) . Petitioners concluded that the decision of Respondent Deputy Commissioner Rosqueta is null and void and can never become final and executory, and that their right to file the instant case with this Court has not yet prescribed, hence, cannot be dismissed due to lack of jurisdiction. "Moreover, they alleged that since in the instant case the Secretary of Finance failed to act on the automatic appeal within thirty (30) days from receipt of the records of the case on December 7, 1998, the decision of the District Collector of Customs of San Fernando, La Union, which ordered the release of the subject vessel and cargo, became final and executory on January 6, 1999 by virtue (of) Section 10 of CAO 9-93 , which states that "if within thirty (30) days from receipt of the records of the proceedings by the Secretary of Finance, no decision is rendered by him, Commissioner's or the Collector's decision under appeal as the case may be, shall become final and executory." "Petitioners likewise argued, that assuming, without admitting that the Deputy Commissioner Rosqueta of the Bureau has jurisdiction to review the Collector's decision, her decision should be reversed on the ground that the same is arbitrary and was issued with grave abuse of discretion. They said that the portion of the decision of the Deputy Commissioner which states that "the allegation that the 5,000 MT (100,000 bags) sugar is a through shipment is untenable" that "this Office cannot subscribe to the theory that amendment of the manifest in this case is a matter of right," are findings grounded entirely on speculations, surmises or conjectures, for reasons hereunder enumerated, thus: 1) The government prosecutors failed to prove commission of any fraud or misrepresentation on the consignee. 2) Fraud cannot be presumed and that the same must be proved by clear and convincing evidence. 3) Petitioner Paranaga did not violate any provision of the Tariff and Customs Code. 4) Absence of SRA clearance is not one of the grounds for forfeiture under Section 2530 TCCP . 5) RA 8178 removed the quantitative import restrictions on sugar, hence, the non-production of SRA clearance by itself does not give rise to the imposition of penalty of forfeiture. 6) Petitioner Blackgold had complied with all the requirements for the importation of sugar, and that 7) Considering that the Deputy Commissioner applied Section 2531 TCCP in resolving the issue in favor of the vessel, it goes without saying that Section 2530 (a) and (k) of the same Code is not applicable under the premises and conclusively, sugar is not a contraband. . . .. Thus, not only the vessel should be released, the shipment of sugar must likewise be released for there is nothing in fact and in law which tend to support the proposition arrived at by the Deputy Commissioner of Customs. "In her Answer, Respondent Rosqueta prayed for the dismissal of the case on the reason that the decision sought to be nullified has become final and executory in view of the provision of Section 2313, Tariff and Customs Code (TCC), as amended by RA 7651 . "Respondent Rosqueta argued that the contention of petitioners, that "the Commissioner/Deputy Commissioner does not have jurisdiction to review an adverse decision of the Collector if the value of the importation is P5,000,000.00 or more as in this case allegedly because what is provided by law is that the Collector's adverse decision involving said amount is automatically appealable to the Secretary of Finance, is a misreading of the law. She said that the cited provisions of Section 2313 TCCP as amended by RA 7651 and Section 10 of CAO 9-93 speak of review by the Commissioner. Thus, she concluded that it is inconceivable that the Commissioner would be deprived of his authority to review decisions of the Collector who is his subordinate. Furthermore, she stated that Petitioners are estopped from raising the issue of jurisdiction, as they speculated on the outcome of the case before the Commissioner and that they raised the issue of lack of jurisdiction only after they received the adverse decision. "Respondent Rosqueta asseverates that the allegation of petitioners that only the 500 MT of sugar was intended for the Philippines while the 5,000 MT of sugar was to be brought to Indonesia is untenable as it is an importation into the Philippines which began from the moment the vessel "M/V RUBY" entered the jurisdiction of this country with the intent to unload, thus the subject 5,000 MT of sugar is not a through cargo or for foreign transshipment. Neither can the same qualify for re-exportation under Section 2103 of the TCCP . "Respondent did not agree with the allegation of petitioners that the amendment of the manifest is a matter of right. She pointed out that the vessel arrived with the cargoes to be discharged at Poro Point, hence, its manifest stated that the cargoes were destined for Poro Point. As the vessel was not proceeding to Indonesia, there was no basis in amending its manifest. Moreover, she said, that amendment to the manifest is not a matter of right because a ship's manifest is the first safeguard against smuggling and must be complete in all aspects, citing Section 1205, TCCP and the case of Macondray and Co . vs . Commissioner of Customs, 62 SCRA 427 . Respondent also questioned the absence of a "through or transit cargo manifest" if the real intention was to tranship the cargo ( Section 1004 and 1008, TCCP ). Likewise, she argued that Respondent does not have to prove fraud because the burden of proof in seizure and forfeiture proceedings lies upon the claimant. "As regards the other points raised by petitioners, respondent counters that the 5000 MT sugar was imported without the SRA clearance, hence, imported contrary to law pursuant to Section 2530 (f) of TCCP . By subsequently making it appear that the cargo was for transhipment to Indonesia and not an importation into the Philippines, Petitioners tried to avoid seizure, avoid the filing of entry, and further avoid payment of duties and taxes, which constitute a ground for forfeiture under Section 2530(l) of the TCCP . Furthermore, she said that it appearing that the 500 MT sugar, being claimed by petitioner BLACKGOLD INTEGRATED SALES, was used as an escort, conduit, or decoy in facilitating the illegal importation and discharge of the other 5,000 MT of sugar, and considering further that the same was not entered through a customhouse in violation of Section 2530(l) of the TCCP , the same is liable for forfeiture. Finally, she argued that the release of the vessel is not a valid argument to release also the sugar, as the grounds for the release of the vessel are grounds which cannot be made to apply on the cargoes." 4 In their petition for review, petitioners Blackgold Integrated Sales and Paranaga International assigned the following errors: "A. THE HONORABLE COURT ERRED WHEN IT RULED THAT THE COMMISSIONER/DEPUTY COMMISSIONER OF CUSTOMS HAS JURISDICTION TO REVIEW THE DECISION OF THE COLLECTOR OF CUSTOMS INVOLVING IMPORTED ARTICLES WHOSE PUBLISHED VALUE IS FIVE MILLION PESOS (P5,000,000.00) OR MORE. "B. THE HONORABLE COURT ERRED WHEN IT AFFIRMED IN TOTO THE DECISION OF THE DEPUTY COMMISSIONER FORFEITING THE ENTIRE CARGO OF PETITIONERS CONSISTING OF 5,500 MT OF SUGAR AND, THUS, ORDERING THE FORFEITURE OF THE GSIS SURETY BOND IN THE AMOUNT OF P31,500,000.00 POSTED BY THE PETITIONERS FOR THE RELEASE OF THE SAID SUGAR IN FAVOR OF THE GOVERNMENT." 5 Section 2313 of the Tariff and Customs Code (TCC), as amended by R.A. 7651 , in part pertinently states that: "xxx xxx xxx. "If in any seizure proceedings, the Collector renders a 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 receipt of the records of the case. If 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 (5,000,000.00) 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 decision is rendered, the decision of the Secretary of Finance under appeal, as the case may be, shall become final and executory. "In any seizure proceedings, 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 ( R . A . 7631 , June 04, 1993)." Sections 9 & 10 of the CAO-9-93 also state: "Sec. 9. Automatic review by the Commissioner on action or decision of the Collector of Customs adverse to the government . Action or decision of the Collector adverse to the government shall be automatically reviewed by the Commissioner. "The records of the case involving decision/action of the Collector of Customs, adverse to the government shall be elevated within five (5) days from the promulgation of the decision of the Collector of Customs. "From receipt of the records of the case, the Commissioner of Customs shall render a decision on the automatic review within thirty (30) days. "The decision of the Commissioner of Customs reversing the adverse decision of the Collector of Customs, on automatic review, shall be final and executory." "Sec. 10. In case the Commissioner of Customs affirms the adverse decision of the Collector of Customs, the records of the proceedings shall be elevated to the Secretary of Finance within five (5) days from promulgation of the decision by the Commissioner of Customs. "In case the Commissioner of Customs fails to render a decision on automatic review on the adverse decision of the Collector of Customs within thirty (30) days from receipt of the records the case shall be deemed automatically appealed to the Secretary of Finance. The records of the proceedings shall be elevated by the Commissioner of Customs to the Secretary of Finance within five (5) days after the lapse of thirty (30) days review period. If the adverse decision of the Collector of Customs is affirmed by the Secretary of Finance, the affirmed decision shall become final and executory. "If the value of the imported article under seizure is P5,000,000.00, or more, the adverse decision of the Collector of Customs shall be deemed automatically appealed to the Secretary of Finance. "If within thirty (30) days from receipt of the records, the proceedings by the Secretary of Finance, no decision is rendered by him, the Commissioner's or the Collector's decision under appeal as the case may be, shall become final and executory." 6 The Office of the Solicitor General aptly summarizes the relevant rules: 1. If in any seizure proceeding, the Collector renders a decision adverse to the Government, the decision shall be automatically reviewed by the Commissioner. 2. If the Collector's decision that is adverse to the government is reversed by the Commissioner, the decision of the Commissioner shall be final and executory. There are three (3) exceptions to this general rule, thus. a) If the Commissioner affirms the adverse decision of the Collector. b) If the Commissioner fails to render a decision within thirty (30) days from receipt of the records. c) If the Commissioner reverses the Collector's decision that is adverse to the government and the decision involves imported articles whose published value is five million pesos (P5,000,000.00) or more. 7 In these three (3) exceptions, the decision of the Commissioner or the Collector of Customs as the case may be shall be deemed automatically appealed to the Secretary of Finance. The OSG continues by saying that the only instance when a decision of the Collector of Customs is deemed automatically appealed to the Secretary of Finance is when the Commissioner does not render a decision within thirty (30) days from receipt of the records. 8 Which is not, however, the situation obtaining in this case at bar since the Commissioner, through his Deputy, timely reversed the Decision of the District Collector in La Union on December 4, 1998. Furthermore, as keenly observed likewise by the OSG, the title of Section 2313 , which is Review by Commissioner , that is cited by petitioners connotes that the Commissioner of Customs has jurisdiction to review an adverse decision of the Collector even if the published value of the importation is five million pesos (P5,000,000.00) or more. 9 The Court of Tax Appeals did not, therefore, commit any reversible error in ruling, thus: "All the aforequoted provisions speak of review by the Commissioner, thus, to follow the above contention of Petitioners would deprive the former of his authority to review and rectify errors committed by his subordinates. In Section 2313 TCCP , second paragraph , the word decision , in the phrase "or the decision involves imported articles whose published value is Five Million (P5,000,000.00) or more, shall be deemed automatically appealed to the Secretary of Finance . . .", refers to the decision of the Commissioner and not the Collector's decision. In other words, if the Collector's decision which is adverse to the government is reversed by the Commissioner, as in the case at bar, the decision of the latter shall not become final and executory as the same is deemed automatically appealed to the Secretary of Finance in view of the published value of the importation. Section 2313 TCCP must be construed to mean that all decisions of the Collector of Customs adverse to the government, with regard to any seizure proceeding, regardless of the value of the importation, must be automatically reviewed by the Commissioner. Hence, if the Collector's decision is reversed by the Commissioner the latter's decision shall be final and executory, except, if his (Commissioner) decision involves imported articles whose published value is P500,000,000.00 or more, in which case the same shall be subject to an automatic review by the Secretary of Finance. . . . Thus, We rule that the questioned decision of the Deputy Commissioner is not null and void for lack of jurisdiction. As stated earlier the Commissioner has the authority to review the Collector's decision adverse to the government, even if the amount of the importation is P5,000,000.00 or more. "In the case at bar, it was undisputed that the Deputy Commissioner, acting in behalf of the Commissioner, had rendered a decision reversing the decision of the Collector. Considering that it was not disputed that the value of the subject importation was more than P5,000,000.00, the decision of the Deputy Commissioner is deemed automatically appealed to the Secretary of Finance. Since it was claimed by Petitioners that the records of the case were forwarded to the Secretary of Finance on December 7, 1998 (p. 573, docket), and considering that the same was not acted upon by the latter, the decision of the Deputy Commissioner became final and executory, thirty (30) days thereafter or on January 6, 1999. From this date Petitioners have 30 days to file an appeal with this Court in accordance with Section 11 of RA 1125 (The Law Creating the Court of Tax Appeals) , stated below, in relation to Section 2402 of the TCCP . Thus, since the instant Petition for Review was filed with this Court on January 6, 1999, We rule that the right of Petitioners to interpose this appeal before this Court has not yet prescribed. Evidently, the allegations of Respondent that her decision was already final and executory before the filing of the instant petition is bereft of merit as the said decision is still subject to an automatic appeal to the secretary of Finance." 10 The petitioners also assail the order of forfeiture of the entire cargo consisting of 5,500 MT of sugar and, thus, ordering the forfeiture of the GSIS surety bond in the amount of P31,500,000.00 posted by them in favor of the government for the release of the said sugar. The order of forfeiture is correct for petitioners failed to discharge their burden of proof. As aforestated, they point to the respondent as the party who should bear the burden. Which is wrong. The rule is that there must be a probable cause before forfeiture proceeding is instituted. And, after probable cause is established, the claimant of the cargo has the burden of evidence to overcome the probable cause. Section 2535 of the Tariff and Customs Code provides: "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 provision 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 section of this Code ." We agree with the Solicitor General that the fact that it is clear from the provision of the law that mere intent to unload is sufficient to commence an importation. And "intent", being a state of mind, is rarely susceptible of direct proof, but must ordinarily be inferred from the facts and therefore can only be proved by unguarded expression, conduct and circumstances generally. 11 Since it is clear from the facts and records of the case that the entire shipment subject of this proceeding had been intended to be discharged in the Philippines, as in fact it was unloaded, it appears that: (1) petitioners have the intention to evade payment of customs duties and taxes; and (2) petitioners are guilty of illegal importation warranting the penalty of forfeiture pursuant to Section 2530, paragraphs (f) and (I) of the Tariff and Customs Code of the Philippines . Probable, cause having been shown, it is incumbent upon petitioners to prove that their allegations are correct and that the respondents' assertions were wrong. Petitioners must prove by substantial evidence that the 5,000 MT of sugar was not illegally imported by petitioner PARANAGA INTERNATIONAL and that the other 500 MT of sugar was not used "as an escort, conduit or decoy" in facilitating the illegal point. Records of this case show that petitioners failed to support their allegations. Instead, petitioners simply submitted this case for decision on the basis of the pleadings and the records. 12 WHEREFORE, the instant petition is hereby DENIED for lack of merit and the appealed Decision of the Court of Tax Appeals is AFFIRMED. Costs against petitioners. SO ORDERED. Enriquez, Jr. and Roxas , JJ ., concur. Footnotes 1. Annex "B". * As in many other cases before this, herein petitioners also committed the mistake of primarily assailing the Resolution which denied their motion for reconsideration instead of the main Decision. 2. Annex "A", Ibid ., p. 27. 3. Footnote 1, supra ., at p. 44. Copied from the Resolution of the CTA dated January 11, 2001. Page of the dispositive portion of the Court of Tax Appeals' Decision (Annex "A") is missing. * The portion omitted by the OSG reads: "Let copies of this Decision be furnished all persons and offices concerned for their information and guidance." (See Rollo , p. 75) ** The portion omitted by the OSG reads: "Let copies of this Decision be furnished all persons and offices concerned for their information and guidance." (See Rollo , p. 83) 4. Rollo , pp. 106-114. 5. Ibid ., p. 7. 6. Ibid ., pp. 116-117. 7. Rollo , p. 117. 8. Ibid ., p. 118. 9. Supra . 10. Footnote 2, supra ., pp. 38-40. 11. Feeder International Line, PTE, Ltd. vs. Court of Appeals , 197 SCRA 842 (1991). 12. Ibid ., pp. 119-120.