The Bureau of Customs (BOC) has recommended the sale through public auction of a sunken cargo ship seized by the agency seven years ago in Bataan for carrying smuggled unlicensed firearms estimated to be worth about P25 million at that time.
The BOC has thus far paid P26.5 million to the Radial Golden Marine Services just to safeguard and maintain this sunken vessel since its seizure in 2009.
In his memorandum to Finance Secretary Carlos Dominguez III, BOC Commissioner NicanorFaeldon said the public auction of the M/V Captain Ufuk H8EH, a cargo ship of Panamanian registry, abides by the provisions of Republic Act No. 10863 or the Customs Modernization and Tariff Act (CMTA) of 2016, which provides three modes of disposing goods seized by the Bureau.
Under Section 1141 of the CMTA, forfeited goods for disposition may be either be donated to another government agency, declared for official use by the Bureau after the approval of the DOF Secretary or “sold at public auction within 30 days after a 10-day notice posted at a public place at the port where the goods are located and published electronically or in a newspaper of general circulation.”
Faeldon’s memo also cited special provisions of the 2016 General Appropriations Act (GAA), which states that motor transport equipment and other articles forfeited or abandoned in favor of the government shall be sold at public auction by the DOF upon recommendation of the BOC Commissioner.
BOC Deputy Commissioner Arturo Lachica, who chairs the Bureau’s Negotiated Sale Committee, has recommended to Faeldon the disposition of the sunken vessel through a negotiated sale “at the soonest possible time.”
Lachica pointed out that, “With respect to the Special Crewing Contract between this Bureau and Radial Golden Marine Services, this Bureau has been paying and continues to pay Radial Golden Marine Services a monthly fee of P331,500 for the vessel’s safeguarding and maintenance.”
“As of date, this Bureau has paid Radial Golden Marine an aggregate amount of Twenty Six Million Five Hundred Twenty Thousand Pesos,” Lachica said.
This proposed public auction of the M/V Captain Ufuk H8EH is the latest in the series of BOC attempts to dispose of the vessel, which was seized on August 20, 2009 after it was found loaded with five boxes containing 50 pieces of Pindad SS-1 rifles and other high-powered firearms worth about P25 million.
The ship has been docked at Manila Bay since the confiscation under the Bureau’s custody. It sank on July 17, 2016 after water seeped through a hole on the ship.
From an initial floor price of P98.9 million when the ship was seized by a BOC team led by lawyer Elvira Cruz in Mariveles, Bataan on August 20, 2009, its value, as of 2015, went down by more than 400 percent to only P21.5 million, according to a Development Bank of the Philippines (DBP) estimate.
The Maritime Industry Authority (MARINA) pegged its current price at $493,450, equivalent in pesos to roughly the same estimate made by the DBP.
DBP’s and MARINA’s separate estimates were done before the cargo ship sank earlier this month.
In his memo to Dominguez, Faeldon noted that public auction is also among the modes enumerated by the Commission on Audit (COA) in Circular No 89-296 (s.1989) but a “sale through negotiation” may be resorted to for justifiable reasons or as demanded by the exigencies of the service.
“Considering the current state of the vessel, we recommend that the public auction be conducted anew pursuant to the provisions of the CMTA, GAA 2016, and COA Circular No. 89-296,” Faeldon said in his memo.
A warrant of seizure and detention was issued by then Customs Collector Cruz against the vessel immediately after it was seized when its ship captain failed to present any inward cargo manifest and other pertinent documents required by the BOC.
The seizure order and subsequent decision forfeiting the seized ship in favor of the government was contested by La Plata Trading but this was later overruled by Cruz.
A public auction of the seized ship was first conducted at the Port of Manila on March 8, 2010 but it failed because there were no bidders.
Another auction was conducted two days later but it again failed, prompting Cruz to recommend a negotiate sale.
A negotiated sale was conducted on April 1, 2011, but this did not push through after the buyer, Jason Mfg. Phils (represented by a Mr. Virgilio Torres), failed to pay the guarantee cash deposit for the purchase of the vessel, which he offered to buy for P30 million.
Another negotiated sale was conducted in December 2011, after which the committee in charge of opening the sealed bids awarded the sale to Anastacio Go, who offered P15,150,000 for the vessel.
On May 19, 2014, the DOF, however, denied the negotiated sale in a memorandum issued to the Customs Commissioner on the grounds that “there are serious misgivings as to the valuation of the subject vessel as well as its actual condition as of date.”
The DOF also directed the BOC to hire an independent expert to determine the physical condition or seaworthiness of the ship and any required repairs, including its history, and other events leading to the negotiated sale.
The BOC tapped the MARINA, DBP and the Land Bank of the Philippines (LandBank) to conduct a valuation of the ship.
A notice of negotiated sale for the ship was published anew by the BOC in two newspapers on April 27, 2016.
The negotiated sale commenced on May 19, 2016 in which Ingredient Management Asia Inc. submitted an offer of P17 million. But this sale fell through after the firm failed to pay the required guarantee cash deposit.