The Bureau of Customs (BOC) has announced its decision to forfeit in favor of the Philippine government a P583.58-million aircraft of Skyjet after the leisure airline failed to pay import duties and taxes on the aircraft.
This is despite a motion for reconsideration filed by Skyjet operator Magnum Air, Inc. with the BOC Legal Service on June 5. In its motion, the airline operator asked that the forfeiture order, handed down by the BOC on May 18, 2018, be set aside and the seizure warrant lifted, claiming, among others, that “no actual and intentional fraud attended the importation” of the aircraft.
In a press conference on July 16, Customs Commissioner Isidro Lapeña said BOC Ninoy Aquino International Airport (NAIA) forfeited the aircraft “after finding that its importation was attended with fraud and for being used in commercial flights since its importation without payment of customs duties and taxes.”
BOC NAIA district collector Carmelita Talusan said Magnum has been using the aircraft for flights since 2014 until its alert early in 2017.
On March 15, 2017, Talusan, who was then BOC Port of Subic district collector, requested from the Office of the Commissioner a written authorization to demand evidence of payment of duties and taxes on Magnum’s BAe 146-100 aircraft, pursuant to Section 224 (Power to Inspect and Visit) of the Customs Modernization and Tariff Act (CMTA).
Talusan said BOC was earlier informed by the Subic Bay Metropolitan Authority (SBMA), which has jurisdiction over Subic Bay Freeport and which gave Magnum accreditation status as locator, that Magnum’s accreditation as locator in the Freeport had expired in 2014, which meant its privilege of duty- and tax-free importation no longer applied. Magnum had not renewed its accreditation with SBMA since then, Talusan noted.
BOC Subic tried to locate the aircraft, later found in NAIA in Pasay.
Timeline of events
On March 28, 2017, BOC issued a letter of authority and a mission order to BOC Special Studies and Project Development Committee’s (SSPDC) Noel Besar to inspect the aircraft and demand evidence of payment of duties and taxes.
Besar, through SSPDC chairman James Layug, recommended issuing a warrant of seizure and detention (WSD) against the aircraft for failing to present proof of payment.
On May 24, 2017, BOC NAIA issued the WSD for Magnum’s alleged violation of Sections 224, 400 (Goods to be Imported through Customs Office), 401 (Importations Subject to Goods Declaration), and 405 (Liability of Importer for Duties and Taxes) in relation to Section 113 (Decision and Ruling) of the CMTA.
NAIA’s Law Division on August 23, 2017 then requested from BOC Subic the certified true copies of the formal entry and other documents pertaining to the importation of the aircraft. In response, BOC Subic issued a certification attesting that no such import entry was filed by Magnum.
On March 19, 2018, Magnum, through its counsel, submitted its position paper seeking to lift the WSD while insisting that no actual or intentional fraud was committed in importing the aircraft, and offering to pay the correct duties and taxes due, but without penalty.
On March 28, 2018, assigned government prosecutor Atty. Christopher Inducil submitted his comment/opposition to Magnum’s position paper, appealing for the forfeiture, supporting the argument that importation of the aircraft was fraudulent.
On May 18, 2018, BOC NAIA issued the forfeiture order; Magnum on June 5 submitted its motion for reconsideration.
P90.5M in duties
According to BOC, the aircraft’s duties and taxes amount to P90.515 million, excluding penalties. Talusan said BOC will still compute penalties incurred based on the aircraft’s flying time.
In a statement, Magnum explained that while the aircraft was “legally admitted upon first importation as shown by documents submitted to the BOC seizure proceedings, the present management has long submitted its willingness to settle any tax and duty obligation that may be legally due on the subject aircraft.”
It noted that as early as December 2016, as a result of internal compliance audits conducted by the new management on the company’s operations, the company communicated with the BOC Subic “its willingness to voluntarily disclose and settle any tax and duty obligation due with regard to the subject aircraft.”
It added, “The effort was made notwithstanding the lack of knowledge and participation by the new owners on the misdeeds of the previous management.”
Magnum reiterated its “support to the government’s efforts to improve the BOC and address irregularities” and that it is “committed to correcting the previous management’s erroneous practices and has proceeded to strictly comply with all applicable regulatory laws and regulations.”
The airline said it is willing to comply with any lawful decision that may arise from the seizure proceeding and will continue to pursue the criminal case filed against the previous management for all its erroneous acts.
Talusan acknowledged that Magnum had previously offered to settle the duties and taxes.
‘There was fraud’
BOC NAIA Law Division chief Atty. Marlon Agaceta, however, said that under the CMTA, “settlement of seizure cases can only be done if there is no attendant fraud in the importation.”
In the Magnum case, he said, “it was indeed shown that there was fraud.”
“Magnum [has] engaged the aircraft in commercial flights without filing an entry and enjoined the use of the aircraft and in fact benefited from it…without paying or guaranteeing the payment of duties and taxes,” Agaceta noted.
He added that Magnum’s position that its new management had no knowledge that the former management committed erroneous acts was “immaterial” since forfeiture cases may progress regardless of the owner of the shipment.
Asked about the possible outcome of the case, Agaceta said BOC could make final the decision to forfeit the aircraft and auction it, unless Magnum can refute the customs agency’s findings of fraud.
Agaceta added that should the Legal Service recommend to the customs commissioner to approve the recommendation of forfeiture, Magnum still has “another remedy in the Court of Tax Appeals.”
Asked if Magnum can join the bidding if BOC decides to auction the aircraft, Agaceta said there is no prohibition against doing so and “it is as if they are buying their own aircraft.”
Meanwhile, Talusan said BOC continues to underguard the aircraft to make sure it stays in the hangar pending final resolution of the case.
