G.R. No. L-31776-78 - Commissioner of Customs vs. Manila Star Ferry, Inc.

On June 12, 1966, the S/S Argo, tugboat Orestes, barge-lighter UN-L-106, and two wooden bancas were intercepted by a patrol boat of the Philippine Navy along the Explosives Anchorage Area of Manila Bay.
The patrol boat caught the crew of the S/S Argo unloading foreign-made goods onto the UN-L-106, which was being towed by the Orestes and escorted by the bancas.

Private respondents included Manila Star Ferry, Inc. and United Navigation & Transport Corporation, domestic corporations engaged in the lighterage business and operators/owners of the tugboat and barge-lighter respectively.
Ceaba Shipping Agency, Inc. acted as the local shipping agent for Chiat Lee Navigation Trading Co. of Hongkong, owner and operator of the ocean-going vessel S/S Argo.

The vessels were apprehended on allegations of smuggling foreign-made cigarettes, assorted ladies’ wear, clothing material, and plastic bags without proper manifest and declaration required at a port of entry.
Seizure and forfeiture proceedings were initiated before the Collector of Customs based on alleged violations of Sections 2530 (a), (b) and (c) of the Tariff and Customs Code.

The Collector of Customs issued a consolidated decision on December 27, 1966, declaring forfeiture of the vessels and watercraft in favor of the government.
All respondents, except the owner of the two bancas, appealed the decision, with the Commissioner of Customs affirming the Collector’s decision on February 1, 1967.
The matter was elevated to the Court of Tax Appeals (C.T.A. Cases Nos. 1836, 1837, and 1839). In a consolidated decision dated September 30, 1969, the C.T.A. modified the Commissioner’s decision by ordering payment of fines – P5,000.00 each for Manila Star Ferry, Inc. and United Navigation & Transport Corporation, and P10,000.00 for Ceaba Shipping Agency, Inc.

On February 7, 1978, the Commissioner of Customs filed a Motion to Allow Sale of the S/S Argo citing its deteriorating condition and depreciation in value as it congested the Cavite Naval Base where the vessel was berthed.
After the Court granted the motion, respondent Ceaba filed an urgent motion to modify the sale method, requesting a negotiated sale instead of a public sale.
By resolution dated May 12, 1978, the Court allowed Ceaba to sell the S/S Argo subject to the condition of first paying a fine of P10,000.00 and depositing the sale proceeds in an interest-bearing trust account.
Subsequently, a manager’s check in the amount of P10,000.00 payable to the Commissioner of Customs was delivered and accepted as security for the proceedings.
The S/S Argo was eventually sold for P125,000.00 to Severino Caperlac, with the proceeds later subject to a charging lien amounting to P315,000.00 in favor of respondent Ceaba’s attorneys.

Section 2530(a) of the Tariff and Customs Code imposes forfeiture on any vessel used unlawfully in importation or exportation of articles into or from any Philippine port or place, except a port of entry.
Section 2530(c) covers vessels used to transfer cargo unladen in contravention of the law before arrival at the designated port of destination.
Although the S/S Argo was caught unloading smuggled goods, it was not forfeited because the Port of Manila was considered a port of entry under Section 2530(a). Instead, the vessel was subjected to a fine for failure to supply the requisite manifest under Section 2521.
In contrast, the tugboat Orestes and barge-lighter UN-L-106 were subject to forfeiture under Section 2530(c) since they were used to transfer the unmanifested cargo at a location that was not the port of destination.

Whether the S/S Argo, having been apprehended for unloading foreign goods at the Port of Manila, should be subjected to forfeiture or merely to a fine based on the statutory exception for vessels in a port of entry as provided in Section 2530(a) of the Tariff and Customs Code.
Whether the barge-lighter UN-L106 and tugboat Orestes, which were engaged in transferring cargo contrary to legal requirements, appropriately fall under the forfeiture provision of Section 2530(c).

Whether the term “port of entry” should be interpreted narrowly as it appears in Section 2530(a), thereby exempting the S/S Argo from forfeiture, or should be construed to mean “port of destination” as argued by the Commissioner of Customs.
Whether legislative intent supports the plain language of the statute favoring the former interpretation.

Whether the findings of fact by the Collector of Customs and the Court of Tax Appeals should be given conclusive weight and be considered binding in light of the absence of any showing of irregularity or arbitrariness.