CTA Case No. 7 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS MANILA SORI TRl.DING, thru its C�T � � � Ct>S.c; 1 0 . 7 representative, .82:11-CIO C. GO , etitioner, - versus - COI\ 11 I2GIO~R OF CUSTOI~E, Respondent . Y- - - - - - - - - - - - - - - - -x DECISION This is an appeal taken by the petitioner Soria Trading from the decision of the respondent Commissioner of Lustoms , affirming the de cision of the Collector of Customs for the Port of Manila, dated ~1arch 6, 1954, decreeing and ordering the for- feiture of the merchandise covered by Seizure Identification No . 1284 for alleged violation of the provisions of Section 1363 (m), 3, 4 and 5 of the Revised ~dministrative Code . In ordering the forfeiture of the merchandise in question, the Collector of Cust oms of r~:anila also gave as additional ground therefor the provisions of Exe cutive Order :No . 328, as implemented by Circular Letter No . 564, in relation to Section 1363 (f) of the Revised ' dministrative Code . On appeal, hovJever , the Com- missioner of Customs , follo\�Jing the ruling of the defunct Board of Tax Appeals in the case of Valencia vs . Commissioner of Cus- toms , B.T�� Case No. 169, December Z0 , 1953, overruled the view of the Collector of Customs with respect to the last ground . Since the decision of the r .:spondent Commissioner of Customs appealed from gives as sole ground for the order of seizure and forfeiture the provisions of Section 1363 (m-3), (m-4) and (m-5) of the Revised d.dministrative Code , vJe shall decide this case principally on this issue -- whether or not petitioner did in

DliCISIUH - C. T. h . Cl:�~ NO . 7 . - 2- fact violate the provisions in q~~stion as found by the respon- dent . Before proceeding any further, mention should be made of the fact that this cas'=' vJas one of those affected by the i'nter- regnum brought~bout by the abolition of the Board of Tax bppeals and the subsequent creation of this Court under Republic ct Jo . 1125 . It appears that on Lay 26 , 1954, the petitioner Soria Trading , pursuant to the provisions of Sections 1.38.3, 1884 and 1.385 of the hevised ....dministrative Code, filed 1Jith the Bureau of Curtoms a no' tice of appeal accompanied bJ' the corresponding filing fee from the decision of the Commissioner of Ctmtoms af- firming the decision of the. Collector of Gustoms of the ::ort of :r.. anila in feizure Identific8tion No . 1284 . After the petitioner had taken all the necessary steps to perfect its appeal �within the r glementary period , the Bureau of Cui�toms sent all the re- cords of the case to the Court of ?irst Instance of Lanila . The Cle-�'k of the Court of First Instance of Lanila , in anticipation of the enactment during the last regular session of Congress of Lepublic Act No . 1125, creating this Gourt and deprivinc; the Ce>urts of ~~irst Instance of jurisdiction to try on a_:JlJeal cases of such nature , refused to accept the papers and to docket the case . fter the approval of :"..epublic &ct No . 1125 , the Commis- sioner of Customs forvJarded to this Court the records of the case pursuant to the provisions of Section 7 of the aforesaid �ct . On July 27 , 1954, the petitioner Soria Trading filed a motion praying that this Court give due course to the appeal of this case upon a petition for review in accordance with the provisions of Republic� Act Ho . 1125 . By a resolution dated bucust 5, 1954, this Court granted the said motion and thE petitioner VJas allov'J~d to file

D~CI~ IO!:J - C. 'l' . � (; &:.. NO . 7 . - 3- its petition for review in proper form . In the meantime , and while this case r1as pending before this Court, the petitioner filed an urgent petition to file a bond to s.scure the release of its seized and forfeited merchan- dise , in pursuance �with the provisions of Section 11, Republic ct No . 1125 . It appearing , hov1ever , that the issue involved - in the appeal \~as -n-o-t--t-h-e--t-a-x--l-i-a-b-i-l-i-t-y- of ths petitioner , and following further the precedent established by the Supreme Court in its resolution of July 13 , 1954, in the case of Valencia vs . Commissioner of Customs , G.n. No . L- 7470 , the same vJas denied by this Court on S.eptember 3, 1954. hgain on September 8 , 1954, the petitioner filed another urgent petition to redeem �the merchandise in question pending the final outcome of its appeal based on the provisions of' Section 1388 of the :D.evised bdministrative Code . b.ltbough this Court , in a resolution dated September 28 , 1954, granted the last petition provided the petitioner pays to the Bu1�eau of Customs the actual market value of the said merchandise in the amount of 1?'8 , 226 . 00 , we assume that no rodemption v1as made as �we fail to find in the records of the case of any manifestation regarding this matter . Going into the merits of the appeal , we notice that after the issues Were joined 'V!itb the filing Of the resp0l1dent I S answer and the case was called for trial de .llQY.Q., the petitioner , instead of prcisenting evidence to prove the allegations contained in its petition for review , which were mostly denied by the respondent, simply ma�nifested to the Court that it �will just adopt the evidence presented during the hsaring held in the Bureau of Customs . The respondent ' s counsel did not object to the procedure suggested by petitioner and likewise submitted the case for decision based on

DLCISiuN - C�T � h . C'SE HO � 7 � - 4- the oral and docwnentary evidence presented during the seizure proceedings held before the Collector of Customs of i'.:anila . Con- sidering that no ne~ matters were taken up by the parties before this Court , and considering further that the petitioner did not dispute the findings of facts made by the respondent, VJe shall therefore adopt the facts as contained in the decision appealed from , which sre as follows : The record of this case shm,Js that the Soria 'l'rading imported from Hongkonc 33 cases of decora- tion li f;;ht bulbs which arrived ex 11.~.i'brJ~Ltl.!W 1, Re g . 1479 , on December 4 , 1953 . Upon examination by the customs examiner , they vwre found to contain Japanese manufactured sets of decoration light bulbs and loose pieces of bulbs . 'L'he former bear the mark 11Japan. 11 The latter bear no mark at all . Representative sam- ples of the irrportation were taken by the examiner and submitted for appraisal , the result of which is as follovJs : = 33 cases 2, 400 sets of 12, 540 bulbs weighing 1, 361 kilos net , valued at US ~v655 . 73 and de - clared under tariff paragraph 293 at US \~ . 15 a kilo or 25% ad valorem . Total duty paid --- 1, 361 kls . x :;;D . 15 kl. = us ~~204 . 15. - 2,247 sets , appraised at us;~ . 80 per set -- US~l . 797 . 60 Dutiable under tariff para- graph 190 (b) at 25% ad valorem . = Total duty collectible --- \;:1 ,797 .60 X 25% -------------- US $ 449 -40 9 , 900 pieces , bulbs appraised at US~?J . 25 321 . 75 48 . 26 per 100 pieces =--------------- us~ .Jutiablc under Tariff Par . 190(b) at 15% ad valorem . Total duty collectible --- ~321 . 75 x 15% =---------------- us~ Actual duty found ~pan appraisal ----------US~ 497 . 66 ctual duty paid - -------------------------_Usv 204 . 12_ DISGRlP . rcy :CJ DUTY -------- US.,., 29 3. 51 or i=" 587 .02 21 . 2� dvance sales tax at 7% ------------------- 638 .38 ADDITION DUTY AND 'I' ~ CTILL DliE ----

� DBCISIOl'J - C. T . A. CASE 1:0 . 7 . - 5- In its petition for rev:i.ev1 , the petitioner avers that the respondent erred in finding the petitioner guilty of having frau- dulently undervalued its goods without sufficient basis in evidence adduced during the investigation of the case before the Collector of Customs . But as shown above , and as correctly stated by the respondent, the declared value of the 33 cases is ~..-655 . 73 or 1 , 311. 46 while the total appraised value of the same is ?2, 124. 35 or an undervaluation of more than 44% . Furthermore, the said arti- cles were declared under tariff paragraph 293 at to . 15/kilo and customs duty in the amount of � 408 . 30 v~as paid . However , u.uon ex- amination , the same were found to be dutiable under tariff para- graph 190(a) and 190(b) and the claimant-appellant should have paid customs duty in the total amount of ~995 . 32 . i1.hile the petitioner contends that the said finding is arbi- trary , whimsical and devoid of reasonable basis , allee;ing that there vias J ;ood faith in ente ring and declarint; the value thereof , a peru- sal of the records of the case will readily show that no evidence YJas presented to prove this allegation . an examination of the mer- chandise having shown that there vias an undervaluation , it vvas in- cumbent ~)on the petitioner to prove the innocence of the articles . I.ioreover , this averment vla.s specifically denied by the respondent , thus placing it at issue , and the pet itioner, vJhen this case was called for hearing by this Court , should have proved its contention , spBcially so vvhen the records of the case cl ~arly disclose that there �was an undervaluation of' the merchandise in question . The only im- plicat ion which could be deduced from these circumstances is tha-t the petitioner acted fraudulently vJhen it undervalued its goods , thus depriving the Government of its lawful duties and revenues on such merchandise . rr

D3CI~'ION - C� T . is � Ca~:b: N0 � 7 . - 6- 'Jie at;ree vJUh the rEspondent that there is a wron[ful making of a false declaration of affidavit in that , wh".le the articles are declared to be wholly of the -Jroducts or manufactures of Hong- kong (L:xhibi ts "1" and 11 211 ) , th same vJere in fact and in truth products or manufactures' of Japan as indicated by the oark 11Japan 11 on the articles . The fact that th~; articles �were declared on :Cntry No . 80938 at a value much lower than vJhat they should have boen declared is so clear as to leave the impression that the claimant- appellant vJronr;fully made a i'alse declaration and d~livered a false affidavit attached to the invoice in open violation of Section 1363 (m) 3 and 4 of the f\.,,vised l.dministrative Code . -vfuile ther e a9pears as a part of the record a piece of paper which is marked as .Jxhibit 411 11 , purporting to S1 ow tnat the wor d 11Japan 11 appearing in some of the articles is the trade mark of an alleged manufacturer 1s product r.J.ade in nongkong , its due execution and authent i city have not been duly proven . b. VJitness by the name of Garidad Junyi , vJho claims to be the trea.surer of a certain J\'ietro Enterprises Corporation , purporting to bs the indentor of a sup- posedly Gre8t s:.astern Tr&.dinr; Gompan;y� , lnc . , of Hongkong , v~as pre - sented during the formal investication of the case brfore the Col- lector of Customs of Lanila to identify th>" signature apperring thereon , but her comuetency to identify such s~gnature has not been in the slichtest Vlay shown . Furthermore , a cursory readinc of the 2aid letter �will readily disclose that the Great Eastern Trading_Co . , Inc . , is not the manufacturer of the importation in question but only th~.; consignor . The same is true with respect to _..xhibit 111 11 which is nothing but sworn declarat::_on of a person who is not competent to testify on th~ contents thereof . Couse - quently , the genuiness of Lxhibi t 11 211 has .lOt been satisfcctorily

D:SCISIOH - C�T . A. Cb.s:2 _TO . 7 . - 7- shown . 'rhus , the conclusion is inevitable that the respondent did not err in finding the petitioner of not making in its entry , a full and candid disclosure of all the material facts in its pos- session bearing on th.. value and classification of the im:Jorted merchandise . \~BRL.EFOFE , finding no lef_;al justificaticm to disturb the findings and conclusion of the respondent Commissioner of Customs , the decision appealed from is hereby affirmed with cost against the petitioner Soria ~rading . SO OF.DEE.LD . hanila , Philippines , February 7 , 1955 . ~~~ residing Judge sso ciate Judge :UGUS,TO iv�� LUCI m concurs in a separate opinion .

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS MANILA / SORIA TRll.D ING , thru its representative, BENECIO C. GO , Petitioner , - versus - C.T. 8. CASE NO . 7 COI~!.HSclONER OF CUSTOI.:S, r~espondent . x- - - - - - - - - - - - - - - -x CONCURRING 0 INION I concur in the finding that there has been a via- �lation of section 1363 (m-3), (m-4) and (m-5) of the :.:evised bdministrative Code on the part of pet itioner am 1therefore , importation of Japanese made decoration light bulbs from the port of Hongkong is subject to seizure and forfeiture , as decided by the Collector of Customs of r.ianila and the r.=.spondent Commis- sioner of Customs in Ji::anila Sdzure Identification No . 1284. I take it that like other civil cases appealed to the Court of Appeals from the Courts of First Instance ( se ct ion 2, rule 53 Eules of Court in the Philippines) , v~hen a case is brought on appeal to this nevJly created Court from a decision of the Com- missioner of Customs or thtJ Collector of Internal l.evenue , the case is thrown wide open for review Gnd this Court, in the ex- ercise of it,s appellate jurisdiction, may affirm , reverse , or modify the decision appealed from . I believe that the respondent Commissioner of Cust oms should have sustained the decision of the Collector of Gust oms of Lanila not only on the ground that there has been a violation on the !3art of petiti oner of section 1363 (m-3), (m-4) and (m-5) of the Re vised Administrative Code , but also for violation of the t erms of the Philippina-sc~ Trade and financial .,.grecments and the pro- ( 0 y--

CO:JCtJRI>..ING 0 IIHON C�'1' � � � C&S.ct 1IJO . 7 . - 2- visions of Executive Order :tro . 328 , series of 1950 , as imple- mented by Customs Circular Letter ~io . 564 and in relation to section 1J6J (f) of the hevised dministrative Code . I agree vJith the dissenting opinion of the Honorable , Jud ge Jose~�� uerubin , in B . T . ~ . Case :{o . 169 entitled ''Romeo L . Valencia , etitioner vs . The Commissioner of Customs , Les- pondent , 11 wherein he said the follovdng: 11The controlling policy , on the part of our government , in limiting the kind of coods or commo- dities to be ir:1ported to the Philippinec as agreed u.coon in the Trade Agreement or treaty between Japan and the l'hilippines , is to protect our infant indus- tries from ruinous competition with cheap goods manu- factured in Japan . Ii1 order to implement said policy, Circular Letter No . 564 of the Commissioner of vustoms vJas issued in or::ler to stop the inflow of unlicensed Japanese goods to the hilippines thru the back door . To accept the argument of the pe titioner is tantamount to tolerating the circumvention of the treaty by the simple expedient of importint; Japanese go ods freely thru other countries , thus defeating the prime purpose and iicy of our c ove rnment in p rotecting our indus- tries from ruinous competition . 11 I , therefore , vote for the affirmance of the decision appealed from on the basis of the two grourrl s hereinabove given . j,_anila , February 7, 1955 � ..