2 food importers, Customs broker charged with smuggling

MANILA, Philippines - Officials of two food importers and a Customs broker were charged with smuggling and a slew of other crimes before the Department of Justice yesterday for allegedly importing rice without paying P300 million in taxes.

Accompanied by Finance Secretary Cesar Purisima, Customs Commissioner Joselito Alvarez said Plum Blossom Import-Export Food Corp. and Full Story Source Marketing have not been paying taxes for the past two years.

In the complaint, David Manuel Ubarde, Enrico de Castro, Rex Butuan and Edwin Benito were listed as incorporators of Plum Blossom, while Manolo Antonio Medel was named as the owner of Full Story.

Charged with officials of the two food importers was Customs broker Allan Gahon.

Alvarez also charged them with violating the Revised Penal Code for falsification of commercial documents; the Tariffs and Customs Code of the Philippines for failure to secure import permit, and for intentional and fraudulent misdeclaration.

Customs investigators found out that Medel is also an incorporator of Plum Blossom.

The offices of the two firms are reportedly just rooms apart in the same building.

They occupy a 10-square meter office.

Full Story is at room 316, while Plum Blossom is in room 328 on the third floor of a building in Escolta, Manila.

Gregorio Chavez, deputy Customs commissioner for revenue collection and monitoring group, has been tasked to look into the possible liability of Customs officials and personnel detailed at the Entry Processing Unit, Formal Entry Division and other units that facilitated the processing and release of the rice shipment. 

It appeared that the respondents tried to pass off the rice as mung beans since that is zero-rated in both Customs duties and Value Added Tax (VAT) under the ASEAN Free Trade Agreement.

Alvarez said the smuggling cases filed against the respondents only covered four import entry declarations involving 84 20-footer container vans that came in last June 17 and were released the next day.

“There is reason to believe that the technical smuggling activities of Plum Blossom Corp. and Full Story defrauded the government of over P300 million in duties and taxes,” he said.

However, Alvarez said they discovered that there had been records of previous transactions dating back to 2008 and 2009 that involved 102 entries of 2,400 containers.

“The shipment which came from either Vietnam or Thailand passed through either the Port of Manila or the Manila International Container Port,” he said.

Last June 22, the Bureau of Customs (BOC) filed multiple counts of smuggling against Gold Mind Trading proprietor Eduardo Ignacio Saguid and Quick Flo Trading owner Nestor Mendoza Ignacio.

Investigation showed that the respondents shared a common office address at Road 4, NDC Compound, Sta. Mesa, Manila.

Purisima said in the two cases, the perpetrators used small offices which they could easily shut down once their illegal businesses have been discovered.

“I ordered Commissioner Alvarez to set standards in accreditation,” he said. “There must be a relationship between the companies’ submitted financial statements and the amount of goods imported.”

“This would make it difficult for smugglers to open and close shop because we would also establish the track record of their companies,” he added.

Purisima gave Alvarez three months to fix the accreditation list.

“We believe that once we reduce smuggling we would reduce tax evasion because the goods not caught at the BOC, the likelihood is that they would not be caught for tax purposes because they would no longer be in the system,” he said.