GENERAL TRAVEL SERVICE, LTD., PETITIONER AND APPELLANT, VS. EDILBERTO Y. DAVID, PERSONALLY AND AS COLLECTOR OF CUSTOMS OF THE MANILA INTERNATIONAL AIRPORT, RESPONDENT AND APPELLEE.

General Travel Service versus David

The Case

This is a petition for prohibition and mandamus filed by General Travel Service, a limited partnership organized under the laws of the British Crown Colony of Hongkong, against Edilberto Y. David, personally and as Collector of Customs of the Manila International Airport. The petitioner sought to stop the Collector from unloading, opening, inspecting, and seizing eight packages that had arrived at the Manila airport and to compel their reshipment to the airport of origin. The case matters because it fixes the moment when importation begins under the Tariff and Customs Code, defines the breadth of the Collector's power to seize goods covered by false declarations, and marks the boundary between the regular courts and the Court of Tax Appeals in customs seizure cases.

Procedural History

The petition was filed before the Court of First Instance of Rizal, which dismissed it and denied the motion for amendment substituting the alleged real owners as petitioners. The petitioner appealed to the Supreme Court, assigning as errors the lower court's holdings that the packages were imported, that the respondent could seize and hold them for unpaid duties, that the respondent had authority to determine the fact of importation subject only to appeal to the Commissioner of Customs and the Court of Tax Appeals, and that the amendment was improper.

Facts

On August 25, 1961, an SAS plane and a KLM plane from Bangkok arrived at the Manila International Airport carrying eight big packages owned by the petitioner. The packages had been brought from Hongkong via Bangkok. Local representatives of the two airlines objected to their unloading, explained that the packages had been mistakenly brought to the Philippines, and asked that they be returned to the airport of origin. The respondent nevertheless ordered the packages unloaded, and when the petitioner learned of his intention to open, inspect, and inventory them, its counsel wrote him on August 28, 1961, requesting immediate reshipment. By the time the case was heard, all the packages had been opened, rendering the prayer for preliminary injunction moot.

The respondent answered that he did not order the unloading; the airline employees did so voluntarily because the packages bore the names of consignees with Manila addresses, as shown by the cargo manifests. The packages were declared in the manifests and air waybills as containing frozen goods intended for Manila, but examination showed highly dutiable articles in commercial quantities, such as transistors, clocks, sweaters, watches, and fountain pens, not specified in the declarations. Seizure proceedings were thus instituted for violation of the Tariff and Customs Code and of Central Bank circulars.

The respondent further claimed that he had jurisdiction over all matters arising from the enforcement of tariff and customs laws in his district, subject to review by the Commissioner of Customs and then the Court of Tax Appeals, and that the petitioner, not being organized under Philippine law and not being the consignee or shipper, had no legal capacity to sue. The alleged real owners, T.H. Leung, David Todd, Peferlia Roberts, and R.B. Henson, moved to substitute themselves as petitioners, but the lower court denied the motion.

Issues

• Whether or not the eight packages were imported into the Philippines within the meaning of the customs laws.
• Whether or not the respondent Collector had the right to seize and hold the packages until the duties and taxes due thereon were paid.
• Whether or not the respondent had authority to determine whether the packages had been imported, his ruling being appealable only to the Commissioner of Customs and then to the Court of Tax Appeals.
• Whether or not the lower court erred in denying the motion for amendment substituting the alleged real owners as petitioners.

Applicable Provisions

Section 1202 of the Tariff and Customs Code defines when importation begins and ends:

Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to unload therein and is deemed terminated upon payment of the duties, taxes, and other charges due upon the articles, or secured to be paid at a port of entry and the legal permit for withdrawal shall have been granted, or until they have legally left the jurisdiction of the customs.

This provision supplies the test for the first issue, since the packages arrived at the Manila airport on a vessel or aircraft that entered Philippine jurisdiction with the declared intention to unload them there.

Section 2530 of the same Code, paragraphs (i), (m)-3, and (m)-4, makes articles subject to forfeiture:

A package or article is subject to forfeiture if it is found by the examining official to contain any article not specified in the invoice or entry, provided the Collector is of the opinion that the misdirection was caused with fraudulent intent; or if it was sought to be imported on the strength of a false declaration or affidavit, or a false invoice or other document, executed by the owner, importer, exporter or consignee concerning the importation.

This provision is the basis for the seizure proceedings, because the packages were declared as frozen goods but contained highly dutiable articles in commercial quantities.

Ruling

On the first issue, the Court held that the packages were imported. It was undisputed that they arrived at the Manila International Airport on August 25, 1961, and the cargo manifests and air waybills showed that they were destined for the Philippines. Under Section 1202, importation begins when the carrying aircraft enters Philippine jurisdiction with the intention to unload therein, and the respondent was therefore justified in treating the packages as imported.

On the second issue, the Court held that the respondent had the right to seize and hold the packages. The Collector's duties include assessing and collecting lawful revenues from imported articles and preventing and suppressing smuggling and other frauds upon the customs. He is authorized to effect searches and seizures, and it is his duty to make seizure of any article subject to forfeiture. Since there was indubitable proof of wrongful declaration, it was clearly within his power to order seizure and forfeiture. The Court distinguished the case from United States versus Chua Loy, where there was no evidence of intention to import.

On the third issue, the Court held that the respondent had authority to determine whether the packages had been imported. The airlines' notice of wrong shipment and request for reshipment did not overcome the convincing objective evidence of importation, and it was within the respondent's authority to decide whether that notice was sufficient. The Court was not prepared to say that he committed a grave abuse of discretion correctible by prohibition, or failed to perform a duty enjoined by law so as to be subject to mandamus, for otherwise the exercise of the powers of the Bureau of Customs to prevent smuggling could easily be frustrated. The remedy of the petitioner was appeal to the Commissioner of Customs and then to the Court of Tax Appeals, which has exclusive appellate jurisdiction to review the Commissioner's action in seizure and confiscation cases, to the exclusion of the Court of First Instance.

On the fourth issue, the Court affirmed the denial of the motion for amendment, sustaining the lower court's ruling that the original petitioner is an entity separate and apart from the persons named in the amended petition.

Doctrine

Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to unload therein, and it is deemed terminated only upon payment of the duties, taxes, and other charges due, or upon securing their payment and obtaining the legal permit for withdrawal, or until the articles have legally left the jurisdiction of the customs. The Collector of Customs may seize and hold articles subject to forfeiture when they are found to contain articles not specified in the invoice or entry, or when they are sought to be imported on the strength of a false declaration, and his determination of the fact of importation is not correctible by prohibition or mandamus absent grave abuse of discretion. The Court of Tax Appeals has exclusive appellate jurisdiction to review the Commissioner of Customs in seizure and confiscation cases, to the exclusion of the Court of First Instance.

Disposition

The Supreme Court affirmed the decision of the lower court dismissing the petition, with costs against the appellant.

Remember This

Memorize the rule that importation begins the moment the carrying vessel or aircraft enters Philippine jurisdiction with the intention to unload, and ends only upon payment of duties and lawful withdrawal or upon the goods legally leaving the customs jurisdiction. Examiners use this case to test the definition of importation under Section 1202, the Collector's power to seize goods covered by false declarations, and the exclusive appellate jurisdiction of the Court of Tax Appeals over seizure and confiscation cases.