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VOL. 227, OCTOBER 21, 1993 317

Commissioner of Customs vs. Manila Star Ferry, Inc.

*
G.R. Nos. 31776-78. October 21, 1993.

THE COMMISSIONER OF CUSTOMS, petitioner, vs.

MANILA STAR FERRY, INC., UNITED NAVIGATION &
TRANSPORT CORPORATION, CEABA SHIPPING
AGENCY, INC., and THE COURT OF TAX APPEALS,
respondents.

Taxation; Tariff and Customs Code; Penalty of forfeiture is

imposed on any vessel engaged in smuggling if the conditions
enumerated in Section 2530(a) are compresent.—The penalty of
forfeiture is imposed on any vessel, engaged in smuggling if the
conditions enumerated in Section 2530(a) are compresent. These
conditions are: (1) The vessel is “used unlawfully in the
importation or exportation of articles into or from” the
Philippines; (2) The articles are imported or exported into or 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

_______________

* FIRST DIVISION.

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318 SUPREME COURT REPORTS ANNOTATED

Commissioner of Customs vs. Manila Star Ferry, Inc.

port of the Sulu Sea, where importation in such vessel may be

authorized by the Commissioner, with the approval of the
department head.”

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Same; Same; Same; A vessel engaged in smuggling “in a port

of entry” cannot be forfeited.—Section 2530(a) in unmistakable
terms provides that a vessel engaged in smuggling “in a port of
entry” cannot be forfeited. This is the clear and plain meaning of
the law. It is not within the province of the Court to inquire into
the wisdom of the law, for indeed, we are bound by the words of
the statute. Neither can we put words in the mouths of the
lawmakers. A verba legis non est recedendum.
Same; Same; Same; Same; Forfeiture proceedings are
proceedings in rem.—Forfeiture proceedings are proceedings in
rem (Commissioner of Customs v. Court of Tax Appeals, 138
SCRA 581 [1985] citing Vierneza v. Commissioner of Customs, 24
SCRA 394 [1968] and are directed against the res. It is no defense
that the owner of the vessel sought to be forfeited had no actual
knowledge that his property was used illegally. The absence or
lack of actual knowledge of such use is a defense personal to the
owner himself which cannot in any way absolve the vessel from
the liability of forfeiture.

PETITION for review of the consolidated decision of the

Court of Tax Appeals.

The facts are stated in the opinion of the Court.

     The Solicitor General for petitioner.
     Tañada, Vivo & Tan for private respondents.
     Valentino G. Castro & Associates for CEABA.

QUIASON, J.:

This is a petition for review under Rule 44 of the Revised

Rules of Court filed by the Commissioner of Customs to set
aside the consolidated Decision dated September 30, 1969
of the Court of Tax Appeals in C.T.A. Cases Nos. 1836,
1837 and 1839, modifying his decision by ordering only the
payment of a fine, in lieu of the forfeiture of private
respondents’ vessels used in the smuggling of foreign-made
cigarettes and other goods.
Private respondents Manila Star Ferry, Inc. and the
United Navigation & Transport Corporation are domestic
corporations engaged in the lighterage business and are
the owners and operators, respectively, of the tugboat
Orestes and the barge-
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Commissioner of Customs vs. Manila Star Ferry, Inc.

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lighter UN-L-106. Private respondent Ceaba Shipping

Agency, Inc. (Ceaba) is the local shipping agent of the
Chiat Lee Navigation Trading Co. of Hongkong, the
registered owner and operator of the S/S Argo, an ocean-
going vessel.
On June 12, 1966, the S/S Argo, the Orestes and the
UN-L-106, as well as two wooden bancas of unknown
ownership, were apprehended for smuggling 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 in the act of unloading foreign-made
goods onto the UN-L-106, which was towed by the Orestes
and escorted by the two wooden bancas. The goods
consisted of 330 cases of foreign-made cigarettes, assorted
ladies’ wear, clothing material and plastic bags, all of
which were not manifested and declared by the vessel for
discharge in Manila. No proper notice of arrival of the S/S
Argo was given to the local customs authorities.
Thereafter, seizure and forfeiture proceedings were
separately instituted before the Collector of Customs for
the Port of Manila against the S/S Argo (Seizure
Identification Case No. 10009, Manila) and its cargo (S.I.
No. 10009-C, Manila), the Orestes (S.I. No. 10009-A,
Manila), the UN-L-106 (S.I. No. 10009-B, Manila) and the
two bancas (S.I. No. 10009-D, Manila), charging them with
violations of Section 2530 (a), (b) and (c) of the Tariff and
Customs Code. Criminal charges were likewise filed
against the officers and crew of said vessels and watercraft.
In the seizure and forfeiture proceedings, the Collector
of Customs rendered a consolidated decision dated and
December 27, 1966, declaring the forfeiture of said vessels
and watercraft in favor of the Philippine government by
virtue of Section 2530 (a) and (b) of the Tariff and Customs
Code.
All respondents therein, except the owner of the two
wooden bancas, separately appealed the consolidated
decision of the Collector of Customs for the Port of Manila
to the Commissioner of Customs. In his Decision dated
February 1, 1967, the Acting Commissioner of Customs
found the Collector’s decision to be in order and affirmed
the same accordingly.
The same respondents separately elevated the matter to
the Court of Tax Appeals (C.T.A. Cases Nos. 1836, 1837
and 1839), which in a consolidated decision dated
September 30, 1989, substantially modified the decision of
the Commissioner of Customs,

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320 SUPREME COURT REPORTS ANNOTATED

Commissioner of Customs vs. Manila Star Ferry, Inc.

stating thus:

“IN VIEW OF THE FOREGOING, the Manila Star Ferry, Inc.,

petitioner in C.T.A. Case No. 1836, and the United Navigation &
Transport Corporation, petitioner in C.T.A. Case No. 1837, are
each hereby ordered to pay a fine of five thousand pesos
(P5,000.00) and Ceaba Shipping Agency, Inc., petitioner in C.T.A
Case No. 1839, a fine of ten thousand pesos (P10,000.00), within
thirty days from the date this decision becomes final” (Rollo, p.
100).

It is this decision of the Court of Tax Appeals that is being

questioned by the Commissioner of Customs before this
Court.
On February 7, 1978, petitioner filed a Motion to Allow
Sale of the Vessel (S/S Argo), informing this Court that the
said vessel was deteriorating and depreciating in value,
and was congesting the Cavite Naval Base where it was
berthed. Petitioner prayed that it be allowed to sell the S/S
Argo at the best possible price. The Court granted
petitioner’s motion.
An Urgent Motion for Modification was filed by
respondent Ceaba, praying that it, instead of petitioner, be
allowed to sell the S/S Argo through a negotiated sale and
not a public sale. In a resolution dated May 12, 1978, this
Court granted respondent Ceaba’s motion, ordering it,
however, to first pay the fine of P10,000.00 stated in the
decision of the Commissioner of Customs and then “deposit
the proceeds of the sale with a reputable commercial bank
in an interest-bearing account in trust for whosoever will
prevail in the cases at bar” (Rollo, p. 317). A manager’s
check in the amount of P10,000.00 was made payable to the
Commissioner of Customs and was delivered by respondent
Ceaba to the Cashier of the Supreme Court. In the
Resolution of July 9, 1978, this payment was accepted,
subject to the Court’s decision in the case (Rollo, p. 327).
The S/S Argo was sold, with this Court’s approval, for
P125,000.00 to one Severino Caperlac. The proceeds were
subjected to a charging lien of respondent Ceaba’s
attorneys in the amount of P315,000.00 (Rollo, p. 402).
The petition for review posits the theory that the subject
vessels and watercraft were engaged in smuggling, and
that the S/S Argo should be forfeited under Section 2530(a),
while the barge UN-L-106 and tugboat Orestes should be

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forfeited under Section 2530(c) of the Tariff and Customs

Code.
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Commissioner of Customs vs. Manila Star Ferry, Inc.

Section 2530(a) and (c) of said law reads as follows:

“Sec. 2530. Property Subject to Forfeiture under Tariff and

Customs Laws.—Any vessel or aircraft, cargo, articles and other
objects shall, under the following conditions, be subject to
forfeiture:

(a) Any vessel or aircraft, including cargo, which shall be used

unlawfully in the importation or exportation of articles
into or from any Philippine port or place except a port of
entry; and any vessel which, being of less than thirty tons
capacity shall be used in the importation of articles into
any Philippine port or place except into a port of the Sulu
Sea where importation in such vessel may be authorized
by the Commissioner, with the approval of the department
head.
x x x      x x x      x x x
(c) Any vessel or aircraft into which shall be transferred
cargo unladen contrary to law prior to the arrival of the
importing vessel or aircraft at her port of destination.”

The penalty of forfeiture is imposed on any vessel, engaged

in smuggling if the conditions enumerated in Section
2530(a) are compresent.
These conditions are:

(1) The vessel is “used unlawfully in the importation or

exportation of articles into or from” the Philippines;
(2) The articles are imported or exported into or 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.”

There is no question that the vessel S/S Argo was

apprehended while unloading goods of foreign origin onto
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the barge UN-L-106 and the tugboat Orestes, without the

necessary papers showing that the goods were entered
lawfully through a port of entry and that taxes and duties
on said goods had been paid. The claim that the S/S Argo
made an emergency call at the Port of Manila for
replacement of crew members and had to stop at the
Explosives Anchorage Area because it was carrying nitric
acid, a dangerous cargo, cannot be upheld much less given
credence by this Court. The facts found by the Court of Tax

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Commissioner of Customs vs. Manila Star Ferry, Inc.

Appeals are in consonance with the findings of the

Collector of Customs, and the Commissioner of Customs.
Absent a showing of any irregularity or arbitrariness, the
findings of fact of quasi-judicial and administrative bodies
are entitled to great weight and are conclusive and binding
on this Court. (Feeder International Line, Pte., Ltd v.
Court of Appeals, 197 SCRA 842 [1991]; Jaculina v.
National Police Commission, 200 SCRA 489 [1991]).
Moreover, the Collector of Customs in S.I. No. 10009-C,
Manila, ordered on July 28, 1966 the forfeiture of the
subject cargo after finding that they were, in truth and in
fact, smuggled articles (Rollo, p. 7). Respondent Ceaba did
not appeal from said order and the same has become final.
In its decision, the Court of Tax Appeals held that while
the S/S Argo was caught unloading smuggled goods in
Manila Bay, the said vessel and the goods cannot be
forfeited in favor of the government because the Port of
Manila is a port of entry (R.A. 1937, Sec. 701).
The Commissioner of Customs argues that the phrase
“except a port of entry” should mean “except a port of
destination,” and inasmuch as there is no showing that the
Port of Manila was the port of destination of the S/S Argo,
its forfeiture was in order.
We disagree.
Section 2530(a) in unmistakable terms provides that a
vessel engaged in smuggling “in a port of entry” cannot be
forfeited. This is the clear and plain meaning of the law. It
is not within the province of the Court to inquire into the
wisdom of the law, for indeed, we are bound by the words of
the statute. Neither can we put words in the mouths of the
lawmakers. A verba legis non est recedendum.
It must be noted that the Revised Administrative Code
of 1917 from which the Tariff and Customs Code is based,
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contained in Section 1363(a) thereof almost exactly the

same provision in Section 2530(a) of the Tariff and
Customs Code, including the phrase “except a port of
entry.” If the lawmakers intended the term “port of entry”
to mean “port of destination,” they could have expressed
facilely such intention when they adopted the Tariff and
Customs Code in 1957. Instead of amending the law,
Congress reenacted verbatim the provision of Section
1363(a) of the Revised Administrative Code of 1917.
Congress, in the very same Article 2530 of the Tariff and
Customs Code, used the term

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Commissioner of Customs vs. Manila Star Ferry, Inc.

“port of destination” in subsections (c) and (d) thereof. This

is a clear indication that Congress is aware of the
distinction between the two wordings.
It was only in 1972, after this case was instituted, when
the questioned exception (“except a port of entry”) in
Section 2530 (a) of the Tariff and Customs Code was
deleted by P.D. No. 74.
Nevertheless, although the vessel cannot be forfeited, it
is subject to a fine of not more than P10,000.00 for failure
to supply the requisite manifest for the unloaded cargo
under Section 2521 of the Code, which reads as follows:

“Sec. 2521. Failure to Supply Requisite Manifests.—If any vessel

or aircraft enters or departs from a port of entry without
submitting the proper manifest to the customs authorities, or
shall enter or depart conveying unmanifested cargo other than as
stated in the next preceding section hereof, such vessel or aircraft
shall be fined in a sum not exceeding ten thousand pesos.”
x x x      x x x      x x x

The barge-lighter UN-L-106 and the tugboat Orestes, on

the other hand, are subject to forfeiture under paragraph
(c) of Section 2530 of the Tariff and Customs Code. The
barge-lighter and tugboat fall under the term “vessel”
which includes every sort of boat, craft or other artificial
contrivance used, or capable of being used, as a means of
transportation on water (R.A. No. 1937, Sec. 3514). Said
section 2530(c) prescribes the forfeiture of any vessel or
aircraft into which shall be transferred cargo unladen
contrary to law before the arrival of the vessel or aircraft at
her port of destination. Manila was not the port of

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destination, much less a port of call of the S/S Argo, the

importing vessel. The S/S Argo left Hongkong and was
bound for Jesselton, North Borneo, Djakarta and Surabaja,
Indonesia; and yet it stopped at the Port of Manila to
unload the smuggled goods onto the UN-L-106 and the
Orestes.
Forfeiture proceedings are proceedings in rem
(Commissioner of Customs v. Court of Tax Appeals, 138
SCRA 581 [1985] citing Vierneza v. Commissioner of
Customs, 24 SCRA 394 [1968] and are directed against the
res. It is no defense that the owner of the vessel sought to
be forfeited had no actual knowledge that his property was
used illegally. The absence or lack of actual knowledge of
such use is a defense personal to the owner himself which

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Commissioner of Customs vs. Manila Star Ferry, Inc.

cannot in any way absolve the vessel from the liability of

forfeiture (Commissioner of Customs v. Court of Appeals,
supra; U.S. v. Steamship “Rubi”, 32 Phil. 228, 239 [1915]).
WHEREFORE, the consolidated Decision dated
September 30, 1969 of respondent Court of Tax Appeals in
CTA. Cases Nos. 1836, 1837 and 1839 is MODIFIED as
follows: (1) that the S/S Argo through respondent Ceaba
Shipping Agency, Inc. is ordered to pay a fine of
P10,000.00, to be satisfied from the deposit of the same
amount by respondent Ceaba to the Cashier of this Court
per Resolution of July 9, 1978; (2) that the Cashier of this
Court is ordered to release the said amount for payment to
the Commissioner of Customs, within thirty (30) days from
the date this decision becomes final; and (3) the tugboat
Orestes and the barge-lighter UN-L-106 of respondents
Manila Star Ferry, Inc. and the United Navigation &
Transport Corporation respectively, are ordered forfeited in
favor of the Philippine Government.
SO ORDERED.

          Cruz (Chairman), Grino-Aquino, Davide, Jr. and

Bellosillo, JJ., concur.

Consolidated decision modified.

Note.—Authority to determine the amount of fine

impossable under Section 2533, Tariff and Customs Code is
lodged in the Collector of Customs and the Commissioner of

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Customs and not either in the Court of Tax Appeals or the

Supreme Court (Commissioner of Customs vs. Court of Tax
Appeals, 188 SCRA 61).

——o0o——

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