FIRST DIVISION
G.R. No. 160206, July 15, 2015
M/V "DON MARTIN" VOY 047 AND ITS CARGOES OF 6,500 SACKS OF IMPORTED RICE, PALACIO SHIPPING, INC., AND LEOPOLDO "JUNIOR" PAMULAKLAKIN, Petitioners, v. HON. SECRETARY OF FINANCE, BUREAU OF CUSTOMS, AND THE DISTRICT COLLECTOR OF CAGAYAN DE ORO CITY, Respondents.
D E C I S I O N
BERSAMIN, J.:
This case involves the seizure and forfeiture of the rice cargo and its carrying vessel on the ground that the rice cargo had been smuggled.
- Certificate of Ownership - to prove that Palacio Shipping, Inc. is the owner of M/V "Don Martin",
- Coastwise License - to prove that Palacio Shipping, Inc. is duly licensed to engage in coastwise Trading and as such, is a common carrier and is financially capable to engage in shipping business;cralawlawlibrary
- Mintu Rice Mill Official Receipt No. 2753 dated January 18, 1999 - to prove that the origin of the rice is Sablayan, Occidental Mindoro and also to show that the rice is of regular mill and not smuggled;cralawlawlibrary
- NFA, Sablayan, Occidental Mindoro Clearance - to show that the bags of rice purchased under Exhibit "3" has been cleared for shipment by the National Food Authority of Sablayan, Occidental Mindoro;cralawlawlibrary
- Old NFA License of Godofredo Mintu
5-A - Renewal of the NFA License of Godofredo Mintu expiring May 31, 1999 - to show that the purchased rice came from a duly licensed Grains Trader;cralawlawlibrary- NFA License of Florentino J. Palacio, owner of the EMP Commercial, the shipper - to prove that the shipper is a duly Licensed NFA wholesaler;cralawlawlibrary
6-1 Renewal Receipt for NFA License for Fiscal Year 1998-1999;cralawlawlibrary- NFA Clearance of Catbalogan, Western Samar — to prove that the cargo of M/V "DON MARTIN" was cleared for Cagayan de Oro City;cralawlawlibrary
7-1 PPASeal
7-2 Coast Guard Seal
7-3 Page 2 of NFA Clearance- Bill of Lading - to prove that the cargo was duly covered with a Bill of Lading, a requirement in coastwise shipping;cralawlawlibrary
- Coasting Manifest - to prove that the cargo of rice was duly reflected in its manifest - also a requirement for coastwise shipping;cralawlawlibrary
- Birth Certificate and photo of Leopoldo "Junior" Pamulaklakin
10-A Residence Certificate of Leopoldo "Junior" Pamulaklakin - to prove that the consignee is a living person and not fictitious person.
10-B Picture of Leopoldo "Junior" Pamulaklakin - to prove that the consignee is a living person and not a fictitious person.11
The results of the Laboratory Analysis of samples of the subject rice by the NFA and the Philippine Rice Institute reveal that the grain length is unusually long with 7.2 mm. for both Orion and Platinum 2000 rice samples as compared to the grain length of most Philippine Varieties which ranges from 5.8 to 6.9 mm. only. It was also found out that rice with grain length of more than 7.0 mm. are more common in the countries of Brazil, Bolivia, Guatamala and Thailand, (Exhibit "J-3" and "K-l"), although the said imported variety could be purchased locally through the NFA.
Furthermore, it also appears that some white sacks/containers were marked with Premium Rice whereas per Philippine Grains Standardization, yellow color is for premium while white color is for ordinary rice. (Exhibit I).
On the basis of the above findings, it can be safely concluded that the 6,500 sacks of rice subject of this proceedings are of foreign origin and therefore subject to seizure and forfeiture for violation of Section 2530 (f) and (1) no. 1 of the TCCP, as amended, in the absence of showing of its lawful entry into the country. The presentation of the supporting documents by respondents/claimants was a strategy to conceal the true nature and origin of the cargoes and to mislead the Customs Authorities into believing that subject rice are locally produced and locally purchased. Hence, said documents have no probative value whatsoever insofar as the subject cargoes are concerned.Section 2530 provides: Property Subject to Forfeiture Under Tariff and Customs Law. x x xSince the subject rice was established to be of the imported variety and considering that the said cargoes are not covered by proper import documents, the importation of the same fall squarely on the above quoted provision of the TCCP.
(L) Any article sought to be imported or exported:
- Without going through a Customhouse, whether the act was consummated, frustrated or attempted.
With respect to the carrying vessel, MV "DON MARTIN", which is a common carrier, no evidence sufficient enough to warrant its forfeiture in favor of the government was presented to satisfy the provision of Section 2530 paragraph a and k of the TCCP. On the other hand, respondent/claimant was able to show proof to defeat a forfeiture decree, by presentation of pertinent documents relative to the following requirements, viz:WHEREFORE, in light of the foregoing and by virtue of the authority vested in the undersigned under Section 2312 of the Tariff and Customs Code of the Philippines, as amended, it is hereby ordered and decreed that the 6,500 sacks of imported rice subject of this seizure proceedings be, as they are hereby decreed forfeited in favor of the Government of the Republic of the Philippines to be disposed of in the manner provided by law. It is further ordered and decreed that the carrying vessel MV "DON MARTIN" be released to the owner/claimant and be cleared for its next destination, for insufficiency of evidence.
- That the owner is engaged in the business for which the conveyance is generally used;cralawlawlibrary
- That the owner is financially in a position to own such conveyance and
- That the vessel has not been used for smuggling at least twice before. (Exhibit 1 & 2) in compliance with the provision of Section 2531 oftheTCCP.
x x x x
SO ORDERED.12ChanRoblesVirtualawlibrary
This Office is convinced that the 6,500 sacks of rice subject matter of this case are of foreign growth and origin. No evidence of lawful entry of the said rice into the country as well as payment of duties and taxes has been presented, hence, the said cargo is liable to forfeiture under Section 2530 (a), (f) and (I) - 1 of the Tariff and Customs Code.
WHEREFORE, the decision of the District Collector of Customs, Port of Cagayan de Oro, ordering the forfeiture of the 6,500 sacks of rice discharge (sic)/ seized from the M/V "DON MARTIN" is AFFIRMED. It is further ordered and decreed that the said rice be immediately disposed of in accordance with law.
x x x x
SO ORDERED.13ChanRoblesVirtualawlibrary
IN LIGHT OF ALL THE FOREGOING, the decisions of the Respondents are hereby REVERSED and SET ASIDE. Accordingly, the GSIS Surety Bonds in the total amount of PI2,232,000.00, which were earlier posted by Petitioners for the release of the subject cargo of rice and its carrying vessel are hereby ORDERED RELEASED for reasons aforestated. No costs.
SO ORDERED.18
WHEREFORE, finding merit in the instant petition, the same is GIVEN DUE COURSE. The Decision and the Resolution of the Court of Tax Appeals ordering the release of the 6,500 sacks of rice and its carrying vessel M/V "Don Martin" is REVERSED and SET ASIDE and the same is hereby ORDERED forfeited in favor of the Government. Costs against private respondents.
SO ORDERED.25
A.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING THE SUBJECT ARTICLES FORFEITED IN FAVOR OF THE GOVERNMENT CONSIDERING THAT RICE SHIPMENT WAS PRODUCED AND PURCHASED LOCALLY.B.
WHETHER OR NOT THE FACTUAL DETERMINATION OF THE COURT OF TAX APPEALS CAN BE REVERSED BY THE COURT OF APPEALS DESPITE THE FACT THAT THE DECISION OF THE TAX COURT IS SUPPORTED BY SUBSTANTIAL EVIDENCE.27
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided.
x x x x
2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected fines, forfeitures or other penalties imposed in relation thereto or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs
x x x x
Section 2402. Review by Court of Tax Appeals. - The party aggrieved by a ruling of the Commissioner in any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulations.
Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and conclusive.
Section 11. Who may appeal; effect of appeal.— Any person, association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling.
x x xChanRoblesVirtualawlibrary
A.
IN DECLARING THAT THE SUBJECT VESSEL M/V "DON MARTIN" BE FORFEITED IN FAVOR OF THE GOVERNMENT FOR VIOLATION OF SECTION 2530 (a) and (k) (sic) THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES.B.
IN DECLARING THAT THE SUBJECT CARGO OF RICE BE FORFEITED IN FAVOR OF THE GOVERNMENT DESPITE THE TESTIMONIAL AND DOCUMENTARY EVIDENCE OF PETITIONERS INDISPUTABLY SHOWING THAT THE SAME WAS PRODUCED AND ACQUIRED LOCALLY.31
Once a court acquires jurisdiction over a case, it has wide discretion to look upon matters which, although not raised as an issue, would give life and meaning to the law. Indeed, the Rules of Court recognize the broad discretionary power of an appellate court to consider errors not assigned.
x x x x
Thus, an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors in the appeal in these instances: (a) grounds not assigned as errors but affecting jurisdiction over the subject matter; (b) matters not assigned as errors on appeal but are evidently plain or clerical errors within contemplation of law; (c) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing on the issue submitted which the parties failed to raise or which the lower court ignored; (e) matters not assigned as errors on appeal but closely related to an error assigned; and (f) matters not assigned as errors on appeal but upon which the determination of a question properly assigned, is dependent.34 (Emphasis supplied)ChanRoblesVirtualawlibrary
xxx [I]n order that a shipment be liable (to) forfeiture, it must be proved that fraud has been committed by the consignee/importer to evade the payment of the duties due. This is clear under Section 2530 (1) and (1) of the TCCP. To establish the existence of fraud, the onus probandi rests on the Respondents who ordered the forfeiture of the shipment of rice and its carrying vessel M/V "DON MARTIN."
x x x x
The Special and Affirmative Defenses of the Respondents generally averred that the subject 6,500 bags of rice are of imported variety which are not covered by proper import documents, hence should be declared forfeited in favor of the government.
We do not agree. The said ratiocination of Respondents did not clearly indicate any actual commission of fraud or any attempt or frustration thereof. As defined, actual or intentional fraud consist of deception wilfully and deliberately done or resorted to in order to induce another to give up some right (Hon Farolan, Jr. vs. Court of Tax Appeals, 217 SCRA 293). It must amount to intentional wrong-doing with the sole object of avoiding the tax. (Aznar vs. Court of Tax Appeals, 58 SCRA 543).
The circumstances presented by the Respondents in their Answer do not reveal to us any kind of deception committed by Petitioners. Such circumstances are nothing more than mere half-baked premises that fail to support the proposition sought to be established which is the commission of fraud in accordance with Section 2530 (f) and (1) of the TCCP, as amended.
x x x x
The Court is in total acquiescence with the argument of Petitioners that it is non sequitur to conclude that the subject rice was imported simply because its grain length is more common in other foreign countries. Firstly, the said laboratory analysis by both the NFA and Philippine Rice Research Institute are not conclusive. In fact, the Head of the Rice Chemistry and Food Science Division of the Philippine Rice Research Institute, Mr. James Patindol, admitted that it is premature to conclude that the samples are indeed imported by simply relying on the grain length (Annex "H"). Secondly, these inconclusive findings do not and cannot overcome the documentary evidence of Petitioners that show that said rice was produced, milled and acquired locally. And thirdly, at the time the vessel M/V "DON MARTIN" and its cargo of rice were seized on 26 January 1999, the agents of the EIIB and the Bureau of Customs never had a probable cause that would warrant the filing of the seizure proceedings. The Government agents only made their inquiries about the alleged smuggling only three (3) days after the seizure. This is a gross violation of Section 2535 in relation to Section 2531 of the Tariff and Customs Code of the Philippines x x x.39
Section 2530. Properly Subject to Forfeiture Under Tariff and Customs Laws. - Any vehicle, vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be subject to forfeiture:
a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the importation or exportation of articles or in conveying and/or transporting contraband or smuggled articles in commercial quantities into or from any Philippine port or place. The mere carrying or holding on board of contraband or smuggled articles in commercial quantities shall subject such vessel, vehicle, aircraft or any other craft to forfeiture; Provided, That the vessel, or aircraft or any other craft is not used as duly authorized common carrier and as such a carrier it is not chartered or leased; x x x
x x x x
f. Any article the importation or exportation of which is effected or attempted contrary to law, or any article of prohibited importation or exportation, and all other articles, which, in the opinion of the Collector have been used, are or were entered to be used as instruments in the importation or exportation of the former; x x x
x x x x
k. Any conveyance actually being used for the transport of articles subject to forfeiture under the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used, together with its equipage and appurtenances including the beast, steam or other motive power drawing or propelling the same. The mere conveyance of contraband or smuggled articles by such beast or vehicle shall be sufficient cause for the outright seizure and confiscation of such beast or vehicle, but the forfeiture shall not be effected if it is established that the owner or the means of conveyance used as aforesaid, is engaged as common carrier and not chartered or leased, or his agent in charge thereof at the time has no knowledge of the unlawful act;cralawlawlibrary
1. Any article sought to be imported or exported:
(1) Without going through a customhouse, whether the act was consummated, frustrated or attempted; x x x.
x x x x
xxx We are sorry to inform you, however, that our institute does not have the capability yet to identify local milled rice from imported ones. Routine grain quality analysis in our institute only includes: grain size and shape, % chalky grains, % amylose, % protein, gel consistency, gelatinization temperature, and cooked rice texture. Based on experience, these parameters are not reliable enough to be used as criteria in identifying local from imported cultivars.
The samples submitted to us are indica types. This further complicates the identification since our local cultivars are indica types as well. However, based on our initial analysis, we noticed that the grain length of your samples is unusually long. It is 7.2 mm for both Orion and Platinum 2000. Milled rice grain length of most Philippine varities (sic) usually ranges from 5.8 to 6.9 mm only. We seldom encounter local cultivars with milled rice grain length of more than 7.0 mm. I tried to browse the Handbook on Grain Quality of World Rices (by Juliano and Villareal, 1993) and I found out that cultivars with grain length above 7.0 mm are more common in the countries of Brazil, Bolivia, Guatemala, and Thailand. It is premature to conclude though that your samples are indeed imported, by simply relying on the grain length data. More thorough analyses need to be done.45 (Emphasis supplied)
xxx per Philippine Grains Standardization Program there was a mislabelling of the rice stocks samples confiscated by Economic Intelligence and Investigation Bureau (EIIB) last January 27, 1999 unloaded from MV Don Martin at Cagayan de Oro City port.
Observed defeciencies (sic) are as follows:
- Some white sacks/containers were marked with Premium Rice (per PGS yellow color is for premium variety while white color is for ordinary rice).
- No information available on the quality parameters such as classification, grade, milling degree, date of milling and its miller/packer on all containers used (with logo, Platinum 2000 and Orion).
(1) The vessel is "used unlawfully in the importation or exportation of articles into or from" the Philippines;cralawlawlibrary
(2) The articles are imported to or exported from "any Philippine port or place, except a port of entry"; or
(3) If the vessel has a capacity of less than 30 tons and is "used in the importation of articles into any Philippine port or place other than a port of the Sulu Sea, where importation in such vessel may be authorized by the Commissioner, with the approval of the department head."58
Endnotes:
1Rollo, pp. 45-57; penned by Associate Justice Mariano C. Del Castillo (now a Member of the Court) with Associate Justice Cancio C. Garcia (later Presiding Justice, and a Member of the Court/retired/deceased) and Associate Justice Eloy R. Bello, Jr. (retired) concurring.
2 Id. at 59.
3 Id. at 60-72.
4 Id. at 73-74.
5 Id. at 46, 60-61.
6 Id. at 61.
7 Id. at 14.
8 Id. at 78.
9 Section 2301. Warrant for Detention of Properly - Cash Bond. - Upon making any, seizure, the Collector shall issue a warrant for the detention of the property; and if the owner or importer desires to secure the release of the property for legitimate use, the Collector shall, with the approval of the Commissioner of Customs, surrender it upon the filing of a cash bond, in an amount to be fixed by him, conditioned upon the payment of the appraised value of the article and/or any fine, expenses and costs which may be adjudged in the case: Provided, That such importation shall not be released under any bond when there is prima facie evidence of fraud in the importation of the article: Provided, further, That articles the importation of which is prohibited by law shall not be released under any circumstance whomsoever, Provided, finally, That nothing in this section shall be construed as relieving the owner or importer from any criminal liability which may arise from any violation of law committed in connection with the importation of the article (R.A. 7651, June 04, 1993).
10Rollo, p. 78.
11 Id. at 78-79.
12 Id. at 79-80.
13 Id. at 77.
14 Id. at 75.
15 CTA rollo, p. 2.
16 Id. at 15.
17 Id. at 99-100.
18Rollo, pp. 71-72.
19 CTA rollo, pp. 165-175.
20Rollo, pp. 184-185.
21 CA rollo, pp. 7-33.
22 Id. at 174-177.
23 Id. at 198.
24 Supra note 1.
25 Id. at 56-57.
26Rollo, p. 59.
27 Id. at 19.
28 CTA rollo, p. 1.
29 Jao v. Court of Appeals, G.R. No. 104604, October 6, 1995, 249 SCRA 35, 43.
30 CTA rollo, pp. 178-179.
31 Id. at 19.
32 Id. at 12-15.
SEC. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. - Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the following conditions be subjected to forfeiture:
a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the importation or exportation of articles or in conveying and/or transporting contraband or smuggled articles in commercial quantities into or from any Philippine port or place. The mere carrying or holding on board of contraband or smuggled articles in commercial quantities shall subject such vessel, vehicle, aircraft, or any other craft to forfeiture: Provided, That the vessel, or aircraft or any other craft is not used as duly authorized common carrier and as such a carrier it is not chartered or leased;cralawlawlibrary
x x x x
k. Any conveyance actually being used for the transport of articles subject to forfeiture under the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used, together with its equipage and appurtenances including the beast, steam or other motive power drawing or propelling the same. The mere conveyance of contraband or smuggled articles by such beast or vehicle shall be sufficient cause for the outright seizure and confiscation of such beast or vehicle but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid, is engaged as common carrier and not chartered or leased, or his agent in charge thereof at the time, has no knowledge of the unlawful act; x x x x
x x x x
34Comilang v. Burcena, G.R. No. 146853, February 13, 2006, 482 SCRA 342, 349.
35 See Commissioner of Internal Revenue v. Toledo Power Company, G.R. No. 183880, January 20 2014, 714 SCRA 292..
36 See Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 124043, October 14, 1998 298 SCRA 83, 91.
37Rollo, pp. 53-54.
38Heirs of Carlos Alcaraz v. Republic, G.R. No. 131667, July 28, 2005, 464 SCRA 280, 294-295.
39Rollo, pp. 68-71.
40 Id. at 53-56.
41 See also Section 3514, TCCP; Jardeleza v. People, G.R. No. 165265 February 6, 2006 481 SCRA 638, 661.
42 See Heirs of Antonio Feraren v. Court of Appeals (Former 12th Division), G.R. No. 159328, October 5, 2011, 658 SCRA 569, 574-575. 43 Section 2535 of the TCCP states:
43 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.
44 Carrara Marble Philippines, Inc. v. Commissioner of Customs, G.R. No. 129680, September 1, 1999, 313 SCRA 453, 461.
45 CTA rollo (Folder 2), Exhibit "K-l".
46 Id. Exhibit "J-3".
47 Id. Exhibit "I".
48 Id. Exhibits "I" "J-3", and "K-1".
49 Id. Exhibit "3".
50 Id. Exhibit "2".
51Commissioner of Customs v. Borres, 106 Phil. 625 (1959).
52 Section 802 of the TCCP further provides that every vessel used in the Philippine waters, not being a transient of foreign registry, shall be registered in the Bureau of Customs.
53 CTA Rollo (Folder 2), Exhibit "1-1"
54 Sections 906 to 909. TCCP.
55 CTA Rollo (Folder 2), Exhibits "8" to "9".
56 SEC. 102. Prohibited Importations.
The importation into the Philippines of the following articles is prohibited:
1. Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons of war, and parts thereof, except when authorized by law.
2. Written or printed articles in any form containing any matter advocating or inciting treason, or rebellion, insurrection, sedition or subversion against the Government of the Philippines, or forcible resistance to any law of the Philippines, or containing any threat to take the life of, or inflict bodily harm upon any person in the Philippines.
3. Written or printed articles, negatives or cinematographic film, photographs, engravings, lithographs, objects, paintings, drawings or other representation of an obscene or immoral character.
4. Articles, instruments, drugs and substances designed, intended or adapted for producing unlawful abortion, or any printed matter which advertises or describes or gives directly or indirectly information where, how or by whom unlawful abortion is produced.
5. Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical devices used in gambling or the distribution of money, cigars, cigarettes or other articles when such distribution is dependent on chance, including jackpot and pinball machines or similar contrivances, or parts thereof.
6. Lottery and sweepstakes tickets except those authorised by the Philippine Government, advertisements thereof, and lists of drawings therein.
7. Any article manufactured in w hole or in part of gold, silver or other precious metals or alloys thereof, the stamps, brands or marks or which do not indicate the actual fineness of quality of said metals or alloys.
8. Any adulterated or misbranded articles of food or any adulterated or misbranded drug in violation of the provisions of the "Food and Drugs Act".
9. Marijuana, opium, poppies, coca leaves, heroin or any other narcotics or synthetic drugs which are or may hereafter be declared habit forming by the President of the Philippines, or any compound, manufactured salt, derivative, or preparation thereof, except when imported by the Government of the Philippines or any person duly authorised by the Dangerous Drugs Board, for medicinal purposes only.
10. Opium pipes and parts thereof, of whatever material. All other articles and p arts thereof, the importation of which is prohibited by law o r rules and regulations issued by competent authority.
57Jardeleza v. People, supra note 41, at 661.
58 El Greco Ship Manning and Management Corporation v. Commissioner of Customs, G.R. No 177188 December 4, 2008, 573 SCRA 70, 85.