In a decision dated May 6, 2009, Finance Undersecretary for Revenue Operations and Legal Group Estela Sales denied the motion for reconsideration filed by 7,101 Islands Shipping Corp. of Esteban Tajanlangit, who allegedly owns M/V 7,107 Islands Cruise (formerly known as M/V Coco Explorer 2) and ordered the forfeiture of the vessel.
Records showed that the cruise ship entered the Port of Batangas without any import entry and under the guise of having it repaired. Section 105 (g) of the Tariff and Customs Code of the Philippines (TCCP) allows duty free importation of "articles brought into the Philippines for repair, processing or reconditioning to be re-exported upon completion of the repair, processing or reconditioning…"
However, documents showed that the vessel was actually brought into the country to deliver it to the buyer in the person of Mr. Tajanlangit. "And for almost two years now, the vessel remains in the country, operating as a cruise ship around Boracay, Coron, and Subic, without a single centavo paid for customs duties," Undersecretary Sales pointed out.
She noted that 7,107 Islands Shipping Corp. which owned the cruise ship had also been trying to look for ways to avoid the payment of duties and taxes on the importation of the vessel by registering with the Philippine Economic Zone Authority (PEZA) and the Subic Bay Metropolitan Authority (SBMA).
However, PEZA had certified that it didn't grant any import permit to the shipping company and that even if any was issued, the exemption can only be availed of for future importations. The company only applied for PEZA registration on September 2008 after the vessel has already been subject of forfeiture proceedings.
Its SBMA Certificate of Registration and Tax Exemption, meanwhile, only granted the exemption of duties and taxes on importation of raw materials, capital equipment, and household and personal items for use solely within the Subic Bay Freeport Zone.
"Without a doubt, this fraudulent course of action is obviously adopted by the claimant as a scheme to camouflage its dubious intention to smuggle the vessel into the country to the prejudice of the government," Undersecretary Sales said.