Marjorie Allen Ligsay

BSCA 3rd Year

1. ANTONIO
CHUA,
JR. and CARLOS
CARILLO(Petitioners)
VS. COMMISSIONER TITUS VILLANUEVA, DISTRICT COLLECTOR
MARCIAL LOPEZ, Bureau of Customs
Facts: On 23 September 2001, the vessel M/V Criston carrying the shipment
consisting of thirty-five thousand (35,000) bags of rice from the Port of Manila
docked at the Port of Tabaco, Albay. The rice was shipped to petitioners Antonio
Chua, Jr. and Carlos Carillo by their supplier in Manila and to be paid upon
delivery thereof to Tabaco, Albay. Upon the arrival of the said vessel, Acting Port
Collector Rosalino L. Maravillo immediately conducted the usual Verification
Order and/or Hold Order based on the documents submitted. At about ten oclock
in the morning of the same day, then Commissioner of Customs Titus Villanueva,
who had been earlier informed by the NCR-Central Luzon Philippine Coast
Guard that M/V Criston was never given any departure clearance by the said
office, issued a verbal instruction to then District Collector Atty. Marcial F. Lopez
to issue immediately a WSD against M/V Criston and its cargo. Since it was a
Sunday, District Collector Lopez instructed his Deputy District Collector Atty.
Winston B. Florin to issue a WSD[against the vessel and its rice cargo.
Issues:
a.) Is Warrant of Seizure and Detention (WSD), issued by the District Collector of
Custom valid?
b.) Is actions of the respondents Bureau of Customs officers illegal?
Decision:
a.)-Collector of Customs shall issue WSD upon determination of probable cause
of violation of customs law.
-The Collector of Customs sitting in seizure and forfeiture proceedings has
exclusive jurisdiction to hear and determine all questions touching on the seizure
and forfeiture of dutiable goods.
b.) -Even if the seizure by the Collector of Customs were illegal, which has yet to
be proven, we have said that such act does not deprive the Bureau of Customs of
jurisdiction thereon.
- Petitioners filed a Motion for Reconsideration dated 21 March 2002 which was also
denied by the trial court in an Order dated 5 April 2002.
-The instant Petition is DENIED for lack of merit. The decision of the Court of
Appeals dated 26 December 2002 is AFFIRMED.

2.

M/V "DON MARTIN" VOY 047 AND ITS CARGOES OF 6,500 SACKS OF IMPORTED RICE,
PALACIO SHIPPING, INC., AND LEOPOLDO "JUNIOR" PAMULAKLAKIN, Petitioners, v. HON.
SECRETARY OF FINANCE, BUREAU OF CUSTOMS, AND THE DISTRICT COLLECTOR OF
CAGAYAN DE ORO CITY, Respondents.

Facts : Petitioner Palacio Shipping, Inc. (Palacio) was the owner of the M/V Don
Martin, a vessel of Philippine registry engaged in coastwise trade. On January 25,
1999, the M/V Don Martin docked at the port of Cagayan de Oro City with its
cargo of 6,500 sacks of rice consigned to petitioner Leopoldo "Junior"
Pamulaklakin (Pamulaklakin). According to the petitioners, the vessel left
Calbayog City on January 24, 1999 loaded with the 6,500 sacks of rice purchased
in
Sablayan,
Occidental
Mindoro.
Based on an intelligence report to the effect that the cargo of rice being unloaded
from the M/V Don Martin had been smuggled, the Economic Intelligence and
Investigation Bureau (EIIB), with the assistance of the Bureau of Customs (BOC),
apprehended and seized the vessel and its entire rice cargo on January 26,
1999.The District Collector of Customs in Cagayan de Oro City then issued a
warrant of seizure and detention pursuant to Section 2301 of the Tariff and
Customs Code of the Philippines (TCCP).
At the hearing on the seizure, the petitioners represented that the vessel was a common
carrier; and that the 6,500 sacks of rice had been locally produced and acquired.10 In
substantiation, they submitted several documents
On March 24, 1999, District Collector of Customs Marietta Z. Pacasum rendered her
ruling whereby she concluded that in the absence of a showing of lawful entry into the
country the 6,500 sacks of rice were of foreign origin and thus subject to seizure and
forfeiture for violation of Section 2530 (f) and (1) No. 1 of the TCCP, as amended; that
the presentation of the supporting documents by the claimants was a strategy to conceal
the true nature and origin of the rice cargo in order to mislead the Customs authorities
into believing that the rice was locally produced and locally purchased; and that
considering that the evidence to support the seizure and forfeiture of the carrying vessel
was insufficient, the release of the vessel was to be ordered
The results of the Laboratory Analysis of samples of the subject rice by the NFA and the
Philippine Rice Institute reveal that the grain length is unusually long with 7.2 mm. for
both Orion and Platinum 2000 rice samples as compared to the grain length of most
Philippine Varieties which ranges from 5.8 to 6.9 mm. only. It was also found out that
rice with grain length of more than 7.0 mm. are more common in the countries of Brazil,
Bolivia, Guatamala and Thailand, (Exhibit "J-3" and "K-l"), although the said imported
variety
could
be
purchased
locally
through
the
NFA.
Furthermore, it also appears that some white sacks/containers were marked with Premium
Rice whereas per Philippine Grains Standardization, yellow color is for premium while
white
color
is
for
ordinary
rice.
(Exhibit
I).

On the basis of the above findings, it can be safely concluded that the 6,500 sacks of rice
subject of this proceedings are of foreign origin and therefore subject to seizure and
forfeiture for violation of Section 2530 (f) and (1) no. 1 of the TCCP, as amended, in the
absence of showing of its lawful entry into the country. The presentation of the
supporting documents by respondents/claimants was a strategy to conceal the true nature
and origin of the cargoes and to mislead the Customs Authorities into believing that
subject rice are locally produced and locally purchased. Hence, said documents have no
probative value whatsoever insofar as the subject cargoes are concerned.
Section 2530 provides: Property Subject to Forfeiture Under Tariff and Customs Law. x x
(L) Any article sought to be imported or exported:
1. Without going through a Customhouse, whether the act was consummated,
frustrated or attempted.
Since the subject rice was established to be of the imported variety and considering that
the said cargoes are not covered by proper import documents, the importation of the same
fall
squarely
on
the
above
quoted
provision
of
the
TCCP.
With respect to the carrying vessel, MV "DON MARTIN", which is a common carrier,
no evidence sufficient enough to warrant its forfeiture in favor of the government was
presented to satisfy the provision of Section 2530 paragraph a and k of the TCCP. On the
other hand, respondent/claimant was able to show proof to defeat a forfeiture decree, by
presentation of pertinent documents relative to the following requirements, :
1. That the owner is engaged in the business for which the conveyance is generally
used
2. That the owner is financially in a position to own such conveyance and
3. That the vessel has not been used for smuggling at least twice before. (Exhibit 1
& 2) in compliance with the provision of Section 2531 of the TCCP.
WHEREFORE, in light of the foregoing and by virtue of the authority vested in the
undersigned under Section 2312 of the Tariff and Customs Code of the Philippines, as
amended, it is hereby ordered and decreed that the 6,500 sacks of imported rice subject of
this seizure proceedings be, as they are hereby decreed forfeited in favor of the
Government of the Republic of the Philippines to be disposed of in the manner provided
by law. It is further ordered and decreed that the carrying vessel MV "DON
MARTIN" be released to the owner/claimant and be cleared for its next destination, for
insufficiency
of
evidence.
Pamulaklakin appealed, but BOC Deputy Commissioner Emma M. Rosqueta, in her

decision dated April 19, 1999, upheld District Collector Pacasum, holding thusly:
This Office is convinced that the 6,500 sacks of rice subject matter of this case are of
foreign growth and origin. No evidence of lawful entry of the said rice into the country as
well as payment of duties and taxes has been presented, hence, the said cargo is liable to
forfeiture under Section 2530 (a), (f) and (I) - 1 of the Tariff and Customs Code.
WHEREFORE, the decision of the District Collector of Customs, Port of Cagayan de
Oro, ordering the forfeiture of the 6,500 sacks of rice discharge (sic)/ seized from the
M/V "DON MARTIN" is AFFIRMED. It is further ordered and decreed that the said rice
be
immediately
disposed
of
in
accordance
with
law.
Meanwhile, the order to release the vessel, being adverse to the interest of the
Government, was elevated to the Secretary of Finance for automatic review pursuant to
Section 2313 of the TCCP. In his 3rd Indorsement dated May 11, 1999, then Secretary of
Finance Edgardo B. Espiritu reversed the order for the release of the vessel based on the
finding that "the operator of the vessel is the shipper of the smuggled goods. 14
Consequently, on June 21, 1999, the petitioners brought a petition for review in the CTA
(CTA Case No. 5890) to seek the nullification of the May 11, 1999 3 rd Indorsement of the
Secretary of Finance,15and to obtain the release of the rice shipment and the vessel.16
Pending the resolution of the appeal, the CTA issued its resolution dated November 8,
1999 ordering the release of the vessel and the rice cargo upon the petitioners' filing of
GSIS Surety Bond 032899 and GSIS Surety Bond 032900 in the respective amounts of
P5,550,000.00
and
P6,682,000.00
in
favor
of
the
BOC.17
On May 22, 2001, the CTA rendered its decision in favor of the petitioners, disposing
thusly:
IN LIGHT OF ALL THE FOREGOING, the decisions of the Respondents are
herebyREVERSED and SET ASIDE. Accordingly, the GSIS Surety Bonds in the total
amount of PI2,232,000.00, which were earlier posted by Petitioners for the release of the
subject cargo of rice and its carrying vessel are hereby ORDERED RELEASED for
reasons
aforestated.
No
costs.

After the CTA denied the Motion for Partial Reconsideration on August 30, 2001,20 the
respondents appealed to the CA, reiterating that the CTA did not acquire jurisdiction over
the issue of the forfeiture of the 6,500 sacks of rice.21
The petitioners countered that the April 19, 1999 decision of BOC Deputy Commissioner
Rosqueta did not yet attain finality because they had been belatedly furnished a copy of

it; and that the respondents raised the issue of jurisdiction only after receiving the adverse
decision
of
the
CTA.

On July 29, 2003, the CA promulgated its assailed decision,24 disposing:

WHEREFORE, finding merit in the instant petition, the same is GIVEN DUE
COURSE. The Decision and the Resolution of the Court of Tax Appeals ordering the
release of the 6,500 sacks of rice and its carrying vessel M/V "Don Martin"
is REVERSED and SET ASIDE and the same is hereby ORDERED forfeited in favor
of
the
Government.
Costs
against
private
respondents.
On September 25, 2003, the CA denied the petitioners' Motion for Reconsideration .
Issues:
(1)Is there jurisdiction of the CTA on the forfeiture of the 6,500 sacks of rice?
(2) Is there propriety of the forfeiture of the 6,500 sacks of rice and its carrying
vessel?
Decision:
1. The CTA had jurisdiction to resolve the issue on the
forfeiture of the 6,500 sacks of rice and of the vessel
At the time of the filing on June 21, 1999 in the CTA of the petition for
review,28 the jurisdiction of the CTA was defined and governed by Section 7 of
Republic Act No. 1125 (An Act Creating the Court of Tax Appeals), which
relevantly
states:
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive
appellate jurisdiction to review by appeal, as herein provided.
2. Decisions of the Commissioner of Customs in cases involving liability for
customs duties, fees or other money charges; seizure, detention or release of
property affected fines, forfeitures or other penalties imposed in relation thereto or
other matters arising under the Customs Law or other law or part of law
administered
by
the
Bureau
of
Customs
The

TCCP

contained

counterpart

provision

that

reads:

Section 2402. Review by Court of Tax Appeals. - The party aggrieved by a ruling
of the Commissioner in any matter brought before him upon protest or by his
action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in
the manner and within the period prescribed by law and regulations.
Unless an appeal is made to the Court of Tax Appeals in the manner and within
the period prescribed by laws and regulations, the action or ruling of the
Commissioner shall be final and conclusive.

Conformably with the foregoing provisions, the action of the Collector of

Customs was appealable to the Commissioner of Customs, whose decision was
subject to the exclusive appellate jurisdiction of the CTA, whose decision was in
turn
appealable
to
the
CA.29
Nonetheless, the respondents contend that the petitioners did not appeal the April
19, 1999 decision of BOC Deputy Commissioner Rosqueta on the forfeiture of
the 6,500 sacks of rice; and that in accordance with Section 11 of R.A. No. 1125
the decision consequently became final and executory 30 days from their receipt
of
the
decision.
The

respondents'

contention

is

bereft

of

merit.

The April 19, 1999 decision of BOC Deputy Commissioner Rosqueta on the
forfeiture of the 6,500 sacks of rice would become final and immutable if the
petitioners did not appeal it in the CTA within 30 days from receipt thereof. Such
period of appeal was expressly set in Section 11 of R.A. No. 1125, which
relevantly
declares:
Section 11. Who may appeal; effect of appeal. Any person, association or
corporation adversely affected by a decision or ruling of the Collector of Internal
Revenue, the Collector of Customs or any provincial or city Board of Assessment
Appeals may file an appeal in the Court of Tax Appeals within thirty days after
the receipt of such decision or ruling.
2.
The 6,500 sacks of rice were not
Into
the
Philippines;
hence,
there
was
for the forfeiture of the rice and its carrying vessel

unlawfully imported
no
legal
ground

In resolving the issue whether the rice shipment constituted smuggling or

unlawful
importation,
the
CTA
observed
that

[I]n order that a shipment be liable (to) forfeiture, it must be proved that fraud has
been committed by the consignee/importer to evade the payment of the duties
due. This is clear under Section 2530 (1) and (1) of the TCCP. To establish the
existence of fraud, the onus probandi rests on the Respondents who ordered the
forfeiture of the shipment of rice and its carrying vessel M/V "DON MARTIN."
The Special and Affirmative Defenses of the Respondents generally averred that
the subject 6,500 bags of rice are of imported variety which are not covered by
proper import documents, hence should be declared forfeited in favor of the
government.

We do not agree. The said ratiocination of Respondents did not clearly indicate
any actual commission of fraud or any attempt or frustration thereof. As defined,
actual or intentional fraud consist of deception wilfully and deliberately done or
resorted to in order to induce another to give up some right (Hon Farolan, Jr. vs.
Court of Tax Appeals, 217 SCRA 293). It must amount to intentional wrong-doing
with the sole object of avoiding the tax. (Aznar vs. Court of Tax Appeals, 58
SCRA
543).
The circumstances presented by the Respondents in their Answer do not reveal to
us any kind of deception committed by Petitioners. Such circumstances are
nothing more than mere half-baked premises that fail to support the proposition
sought to be established which is the commission of fraud in accordance with
Section
2530
(f)
and
(1)
of
the
TCCP,
as
amended.
To warrant forfeiture, Section 2530(a) and (f) of the TCCP requires that the
importation must have been unlawful or prohibited. According to Section 3601 of
the TCCP: "[a]ny person who shall fraudulently import or bring into the
Philippines, or assist in so doing, any article, contrary to law, or shall receive,
conceal, buy, sell, or in any manner facilitate the transportation, concealment, or
sale of such article after importation, knowing the same to have been imported
contrary
to
law,
shall
be
guilty
of
smuggling."41
Was the rice cargo the product of smuggling or unlawful importation?
The resolution of this query requires the re-examination of the evidence.
Ordinarily, the Court, not being a trier of facts, does not do the re-examination,
but in view of the conflicting conclusions reached by the CTA and the CA on the
matter, the Court should review and re-assess the evidence in order to resolve the
issues
submitted
in
this
appeal.42
after
careful
review,
the
Court
upholds
the
CTA.
To warrant the forfeiture of the 6,500 sacks of rice and the carrying vessel, there
must be a prior showing of probable cause that the rice cargo was
smuggled.43 Once probable cause has been shown, the burden of proof is shifted
to
the
claimant.44
The M/V Don Martin and its cargo of rice were seized and forfeited for allegedly
violating Section 2530 (a), (f), (k) and (1), paragraph (1), of the TCCP,
Section 2530. Properly Subject to Forfeiture Under Tariff and Customs Laws. Any vehicle, vessel or aircraft, cargo, articles and other objects shall, under the
following
conditions,
be
subject
to
forfeiture

a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully
in the importation or exportation of articles or in conveying and/or transporting
contraband or smuggled articles in commercial quantities into or from any
Philippine port or place. The mere carrying or holding on board of contraband or
smuggled articles in commercial quantities shall subject such vessel, vehicle,
aircraft or any other craft to forfeiture; Provided, That the vessel, or aircraft or any
other craft is not used as duly authorized common carrier and as such a carrier it is
not
chartered
or
leased;
k. Any conveyance actually being used for the transport of articles subject to
forfeiture under the tariff and customs laws, with its equipage or trappings, and
any vehicle similarly used, together with its equipage and appurtenances
including the beast, steam or other motive power drawing or propelling the same.
The mere conveyance of contraband or smuggled articles by such beast or vehicle
shall be sufficient cause for the outright seizure and confiscation of such beast or
vehicle, but the forfeiture shall not be effected if it is established that the owner or
the means of conveyance used as aforesaid, is engaged as common carrier and not
chartered or leased, or his agent in charge thereof at the time has no knowledge of
the
unlawful
act;
1.
Any
article
sought
to
be
imported
or
exported:
(1) Without going through a customhouse, whether the act was consummated,
frustrated
or
attempted;
Conformably with the foregoing, therefore, the respondents should establish
probable cause prior to forfeiture by proving: (1) that the importation or
exportation of the 6,500 sacks of rice was effected or attempted contrary to law, or
that the shipment of the 6,500 sacks of rice constituted prohibited importation or
exportation; and (2) that the vessel was used unlawfully in the importation or
exportation of the rice, or in conveying or transporting the rice, if considered as
contraband or smuggled articles in commercial quantities, into or from any
Philippine
port
or
place.
A review of the records discloses that no probable cause existed to justify the
forfeiture
of
the
rice
cargo
and
the
vessel.
To prove that the rice shipment was imported, rice samples were submitted to and
examined by the Philippine Rice Research Institute (PRRI), which, however,
could not reach a definitive conclusion on the origin of the rice shipment, and
even deemed itself inadequate to reach such conclusion, opining that: "It is
premature to conclude though that your samples are indeed imported, by simply
relying on the grain length data. More thorough analyses need to be done." PRRI

explained:
We are sorry to inform you, however, that our institute does not have the
capability yet to identify local milled rice from imported ones. Routine grain
quality analysis in our institute only includes: grain size and shape, % chalky
grains, % amylose, % protein, gel consistency, gelatinization temperature, and
cooked rice texture. Based on experience, these parameters are not reliable
enough to be used as criteria in identifying local from imported cultivars.
The results of the laboratory analyses of the rice samples were rendered by the
PRRI and the NFA only on February 4, 1999 and February 5, 1999,
respectively.48 It is clear, therefore, that the evidence offered by the respondents to
establish that the 6,500 sacks of rice were smuggled or were the subject of illegal
importation was obtained only after the forfeiture of the 6,500 sacks of rice had
been
effected
on
January
26,
1999.
Moreover, there is no question that the proof of the rice being smuggled or the
subject of illegal importation was patently insufficient. Although the rice samples
from the shipment dominantly bore foreign rice characteristics as compared with
the Philippine varieties, the PRRI itself opined that further analysis was necessary
to turn up with a more concrete result. But no additional analysis was made. There
was also no proof to establish that the petitioners had been responsible for the
mislabelling in the packaging of the rice shipment, or that the mislabelling had
been intentionally done to evade the payment of customs duties.
With the absence of the first and second conditions, the M/V Don Martin must be
released.
WHEREFORE,
the
Court GRANTS the
petition
for
review
on certiorari; REVERSES and SETS ASIDE the decision promulgated on July
29, 2003 by the Court of Appeals in CA-G.R. SP No. 66725;RE INSTATES the
decision rendered on May 22, 2001 by the Court of Tax Appeals; RELEASES and
DISCHARGES GSIS Surety Bond 032899 and GSIS Surety Bond 032900 in the
total amount of P12,232,000.00; and CONSIDERS this case CLOSED AND
TERMINATED, without pronouncement on costs of suit.
3.
THE COMMISSIONER OF CUSTOMS & THE DISTRICT
COLLECTOR
OF
CUSTOMS
FOR
THE
PORT
OF
ILOILO, Petitioners, v. NEW
FRONTIER
SUGAR
CORPORATION, Respondent.
Facts:
Petitioners are the duly appointed Commissioner of Customs, and the District
Collector of Customs for the Port of Iloilo. Respondent, on the other hand, is a
domestic corporation with office address at the 9 th floor of Rufino Center Bldg.,
6784 Ayala Avenue, Makati City. It is duly registered with the Board of

Investments on a non-pioneer status and has been granted incentives to modernize

and rehabilitate its sugar mill under Certificate of Registration No. 93-452 dated
28
January
1994.
On 25 September 1995, a contract of sale covering 15,000 metric tons of Thailand
raw sugar was entered into by and between Ms. Margarita Chua Sia, buyer and
President of respondent, and Osumo Nishihara of Maruha Corporation, a Japan
based trading company, for and in behalf of the seller, Taiyo (U.K.) Limited.
On 3 October 1995, respondent applied with the United Coconut Planters Bank
for a letter of credit for the above transaction and was issued L/C No. 95-61574-7
on 5 October 1995 after the payment of the advance import duty of
P64,315,388.00.
In the meantime, said shipment of raw cane sugar arrived at the Port of Iloilo on 4
October 1995 on board the vessel M/V ALTAIR SS, Voyage No. 60, under Bill of
Lading No. 1. Upon request of the respondent, the shipment was allowed by
petitioner District Collector (Collector) to be discharged and transferred to its
bodega
at
Calinog,
Iloilo
under
certain
conditions.4cralawred
On 6 December 1995, Director Ray M. Allas of the Customs and Intelligence &
Investigation Service (CIIS) issued Alert Order No. ACI/120695/09 on the subject
shipment declaring that it violated Joint Order No. 1-91 for lack of Clean Report
of Findings (CRF). Thus, a Warrant of Seizure and Detention (WSD) against the
shipment was recommended for violation of said Joint Order, in relation to
Section 2530(f) of the Tariff and Customs Code of the Philippines
(TCCP).5cralawred
On 22 December 1995, respondent wrote the petitioner Collector explaining that
its lack of CRF should not be construed as intentional there being good faith on its
part in complying with the requirements for the issuance of the Import Advice
Note (IAN). Further, respondent explained that Taiyo (U.K.) Limited was aware
of the Societe Generale de Surveillance (SGS) pre-shipment inspection
requirements and instructed its agent in Thailand to allow an authorized third
party, United Asia Supplier Co. Ltd. (United Asia), to inspect the samples of
sugar. Respondent likewise clarified that they were not advised by the seller that
the sugar ordered was initially shipped-out to China and that the Thailand agent
failed to advise it of the SGS pre-shipment inspection under the impression that
the previous inspection and testing made by United Asia would suffice. 6cralawred
In view thereof, respondent requested for the tentative release of the shipment on
the ground that the SGS pre-shipment inspection was not undertaken due to
miscommunication and it was without intention to circumvent the Comprehensive

Import Supervision Scheme (CISS). Petitioner Collector approved such request

and the shipment was thereafter tentatively released. The CIIS however opposed
the tentative release insisting that respondent was not able to prove that its failure
to obtain a CRF was unintentional. Petitioner Commissioner of Customs
(Commissioner) then directed the petitioner Collector to resolve the opposition of
the CIIS. It was found out that the failure to secure CRF was due to the fault of
the shipper and it was unintentional on the part of respondent; hence, there was no
need
to
issue
a
WSD.7cralawred
Upon respondents issuance and submission of a post-dated guarantee/security
check in the amount of P234,998,950.90, petitioner Collector recommended to the
petitioner Commissioner that the imposition of penalty be dispensed with unless
the SGS will not issue the required CRF. Petitioner Commissioner then created a
three-man hearing body to resolve the issue on whether the lack of CRF was
intentional or not, as ordered in Customs Special Order No. D-03-96 dated 16
January
1996.8cralawred
Pending said hearing, SGS-Manila Liaison Office issued on 18 January 1996 CRF
No. THL017904 covering the subject shipment. Eventually, the three-man hearing
body issued a Resolution dated 15 February 1996, the dispositive portion of
which is quoted hereunder as follows:
WHEREFORE, in view of the foregoing and subject to the approval of the
Commissioner of Customs, the District Collector of Customs, Port of Iloilo, is
hereby ordered to initiate a seizure proceeding against the security/guarantee put
up by NSFC (respondent herein) to secure the tentative release of the subject
shipment for the imposition of appropriate penalty pursuant to CAO No. 4-94 and
the collection of proper duties, taxes, penalties and other charges.9
Afterwards, the aforesaid Resolution was approved by the petitioner
Commissioner with the following handwritten modifications:
1. First demand for payment of penalty as instructed in the Commissioners
Memorandum dated 17 January 1996, i.e. payment of 20% penalty of the landed
cost for failure to undergo the pre-shipment inspection at the Port of exportation;
and
2. Upon failure by the importer to pay the penalty within (10) days from receipt of
demand, proceed against the security/guarantee by initiating a seizure proceeding
against the same and deposit immediately the guarantee in accordance with law in
order to protect the interest of the government.10
Respondent filed a Motion for Reconsideration of the said Resolution but the
same was denied on 27 March 1996. Then, on 29 March 1996, petitioner
Collector sent a demand letter to respondent for the payment of the twenty percent
(20%) penalty within ten (10) days from its receipt, which the latter actually
received on 3 April 1996. However, without waiting for the lapse of the ten-day

grace period, the Bureau of Customs of the Port of Iloilo immediately deposited
the security check on 2 April 1996, prompting respondent to order for a stop
payment
of
said
check.
Consequently, petitioner Collector demanded from respondent the payment of
penalty indicated in the subject Resolution amounting to P41,858,550.00.
Likewise, the subsequent shipment of 9,948,615 metric tons of raw sugar by
respondent was withheld by petitioner Collector for the purpose of being sold at
public
auction
to
cover
for
the
20%
penalty.
Thereafter, on 10 April 1996, respondent filed a Petition for Review with prayer
for the issuance of a Writ of Preliminary Injunction and/or Temporary Restraining
Order (TRO) before the CTA, docketed as C.T.A. Case No. 5347.
Issue:
1.) Is the respondent has violated paragraph 12 of Joint Order No. 1-91, in
relation to paragraph (f), Section 2530 of the TCCP, as amended, for failure to
submit the subject raw cane sugar shipment to pre-shipment inspection and to
present the corresponding CRF?
2.) Is the respondent indeed violated said provision, the question of the imposition
of the 20% penalty pursuant to CAO No. 4-94, on respondents subject shipment?
Decision:
1.)

We

find

the

petition

unmeritorious.

Prefatorily, in accordance with the pertinent customs laws at the time of the
arrival of the subject shipment of this case, it must be pointed out that importers,
such as respondent herein, are duty-bound to comply with the provisions of the
CISS, implemented by Joint Order No. 1-91,23particularly as to the requirement of
a pre-shipment inspection of the quality, quantity, and price of the imports coming
into the Philippines to be conducted at the country of export. Notably, the preshipment inspection was intended to prevent the possibility of the undervaluation,
misdeclaration, and overvaluation of imports shipped to our country which may
defraud
the
Philippine
Government
of
revenues.24cralawred
The aforesaid scheme aims to ensure the quality and quantity specifications of
consignments, and achieved through advance cargo clearance and supplying the
countrys Bureau of Customs with accurate information about the quality and
specification of bulk and break bulk cargo.25 In other words, the pre-shipment
inspection requirement simply helps the Governments around the world in
protecting their import revenues, facilitate trade, and minimize the risk of illegal
imports.26cralawred
Thereafter, upon inspection and determination that the subject shipment is in
order, a corresponding CRF shall be issued by the SGS. Only then may the

imports be allowed in our country for release, after compliance with other equally
significant requirements, such as but not limited to, filing of import entry and
payment
of
duty.
In the case at bench, it is apropos to look into the allegation that, as stated in Alert
Order No. A/CI/120695/09, respondent violated Joint Order No. 1-91, which
implements the CISS, particularly paragraph 12 thereof, to wit:
No Custom Entry shall be filed or accepted or any shipment released in respect of
any goods which require a CRF as provided for by this Joint Order where the
Importer is unable to produce to the Bureau of Customs the authenticated
customs copy of the CRF. With or without fault on the part of the importer,
such goods shall be subject to automatic seizure by the Bureau of Customs. The
Seller is therefore warned against the shipment of goods which have not been
inspected or for which a CRF has not been issued. (Emphasis supplied)
Petitioners argue that the above-quoted provision should be read in relation to
paragraph (f), Section 2530 of the TCCP, as amended, quoted hereunder 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:
f. Any article of prohibited importation or exportation, the importation or
exportation of which is effected or attempted contrary to law, and all other
articles which, in the opinion of the Collector, have been used, are or were
intended to be used as instrument in the importation or exportation of the former.
(Emphasis supplied)
Records of the case reveal that, at the time of the arrival of the shipment of
respondents raw cane sugar, it did not have the required CRF. Such lack of CRF
was due to failure to undergo the needed pre-shipment inspection from its place of
exportation. As a result thereof, pursuant to paragraph 12 of Joint Order No. 1-91,
read in conjunction with Section 2530(f) of the TCCP, as amended, petitioners
assert that respondents shipment of raw cane sugar shall be subject to automatic
seizure.
The phrase shall be subject to automatic seizure is not, however, an
unrestrained mandate. It is not a roving commission to dispense with the
procedural due process of seizure proceedings. This is the particular provision
clearly expressed in Sections 2301 and 2303 of the TCCP, as amended, which say
Sec. 2301. Warrant for Detention of Property-Cash Bond. Upon making any
seizure, the Collector shall issue a warrant for the detention of the property;
and if the owner or importer desires to secure the release of the property for
legitimate use, the Collector shall, with the approval of the Commissioner of

Customs, surrender it upon the filing of a cash bond, in an amount to be

fixed by him, conditioned upon the payment of the appraised value of the
article and/or any fine, expenses and costs which may be adjudged in the
case: Provided, That such importation shall not be released under any bond
when there is a prima facie evidence of fraud in the importation of article:
Provided, further, That articles the importation of which is prohibited by law shall
not be released under any circumstance whatsoever: Provided, finally, That
nothing in this section shall be construed as relieving the owner or importer from
any criminal liability which may arise from any violation of law committed in
connection with the importation of the article. 27 (Emphasis supplied)
Sec. 2303. Notification to Owner or Importer. The Collector shall give the
owner or importer of the property or his agent a written notice of the seizure
and shall give him an opportunity to be heard in reference to the delinquency
which
was
the
occasion
of
such
seizure.
Applying the foregoing principles herein, paragraph 12 of Joint Order No. 191 should be read in relation to Sections 2301 and 2303 of the TCCP, as amended,
in order to effectuate the purposes of which they were enacted, particularly as to
the procedural requirements set forth in conducting seizure proceedings. Thus, in
the 19 June 1998 Decision in C.T.A. Case No. 5347, the CTA correctly articulated
that a WSD is a condition precedent, before any seizure proceeding can be
formally initiated. It therefore emphasized the constitutionally enshrined right to
procedural due process of any person, natural or juridical, under investigation
especially if it will cause the person his/its life or property. As previously
mentioned, the above-quoted sections clearly laid down the mandatory procedures
to be observed in a seizure case, to wit: (1) that a WSD must first be issued upon
making any seizure; and (2) that a written notice of such seizure must be served
upon the owner or importer or his agent. Failure to comply with the foregoing
procedural requirements would negate the propriety of having the subject
shipment of respondent seized and forfeited in favor of the Government in all
cases. Hence, even if the phrase subject to automatic seizure was used under
paragraph 12 of Joint Order No. 1-91, the same must be construed together and
harmonized with other related provision of law, i.e. Sections 2301 and 2303 of the
TCCP, as amended, in order to form a uniform system of jurisprudence on seizure
proceedings.
Likewise, it would be improvident not to state at this juncture that the subject
shipment could not be deemed liable for seizure or even forfeiture on the ground
of violation of Section 2530(f) of the TCCP, as amended, for it must be proven
first that fraud has been committed by or there was bad faith on the part of the
importer/consignee to evade payment of the duties due and demandable.

Time and again, and consistently, this Court has ruled that the onus probandi to
establish the existence of fraud is lodged with the Bureau of Customs which
ordered the forfeiture of the imported goods. Fraud is never presumed. It must be
proved. Failure of proof of fraud is a bar to forfeiture. The reason is that
forfeitures are not favored in law and equity.29 The fraud contemplated by law
must be intentional fraud, consisting of deception willfully and deliberately done
or resorted to in order to induce another to give up some right. 30 Absent fraud, the
Bureau of Customs cannot forfeit the shipment in its favor.
Significantly, based on the records of the present case, it was determined during
the administrative proceedings before the petitioner Collector, that there was no
intentional circumvention of the said CISS requirement on the part of respondent
because the failure to subject the shipment to SGS pre-shipment inspection was
purely attributable to the fault of the shipper; hence, respondent acted in good
faith. In other words, since there was no deliberate circumvention of the CISS, the
same therefore cannot be recommended for seizure and/or forfeiture. As a matter
of fact, pursuant to CMO No. 9-95, it was no other than the petitioner Collector
who recommended and thereafter allowed that the subject shipment be tentatively
released, and that the imposition of the penalty against it be dispensed with unless
the SGS will not issue the required CRF.31 These factual circumstances further
strengthened the position taken by respondent that it had indeed sufficiently
proven its claim of good faith on the non-production of CRF, which likewise
established lack of fraudulent intent to evade payment of duties on its part.
Clearly, petitioners failure to comply with the procedural requirements set forth
under the applicable provisions of the TCCP, as amended, in pursuing for the
seizure of the subject shipment under paragraph 12 of Joint Order No. 1-91, was
fatal to their cause.
2.) The aforesaid 20% penalty being collected by petitioners against respondent
was based on the imposition under CAO No. 4-94, 32 particularly Part II (C)(C.1)
thereof, which reads:
SUBJECT:

Schedule of fines to be imposed in the settlement of seizure

cases pending hearing pursuant to Section 2307 of the
Tariff and Customs Code, as amended by Executive Order
No. 38.

xxxx

II.

SCHEDULE OF FINES

In the settlement of seizure cases pending hearing, where

settlement thereof is allowed under the existing laws and
regulations, the following schedule of fines for the
corresponding violations are hereby provided:

xxxx

C. ONLY VIOLATION IS LACK OF SGS CLEAN

REPORT OF FINDINGS (CRF)

C.1 First Violation - - - - - - - - - - - - - - - - - - - - 20%

Relevant thereto, Section 2307 of the TCCP, as amended, provides:

Sec. 2307. Settlement of Case by Payment of Fine of Redemption of Forfeited
Property. Subject to approval of the Commissioner, the district collector
may while the case is still pending, except when there is fraud, accept the
settlement of any seizure case provided that the owner, importer, exporter, or
consignee or his agent shall offer to pay to the collector a fine imposed by him
upon the property, or in case of forfeiture, the owner, exporter, importer or
consignee or his agent shall offer to pay for the domestic market value of the
seized article. The Commissioner may accept the settlement of any seizure case
on
appeal
in
the
same
manner.
Clearly from the foregoing, the law presupposes a pending seizure proceeding
legally initiated against the shipment intended to be seized in accordance with the
pertinent provisions of the TCCP, as amended. Absence of such pending
proceeding against respondents shipment renders CAO No. 4-94 and Section
2307 inapplicable in the present case. Consequently, there would be no legal basis
to hold the subject shipment liable for the aforesaid 20% penalty on the sole
ground
of
lack
of
CRF.
Accordingly, this Court hereby adopts the factual and legal findings of the CTA in
its 19 June 1998 Decision,33 pertinent portions of which are quoted hereunder as
follows:
It is to be readily observed that the aforequoted subject of said CAO pertains to
fines imposed on seizure cases. Inasmuch as the instant case has not been put

under a valid seizure as adverted to above, the imposition of the 20% penalty
under CAO 4-94 is outright improper and without legal basis. The problem with
[petitioners] is that in its desire to give more teeth to the administrative
requirement for the production of a Clean Report of Findings (CRF) from the
SGS, it overlooked one fundamental principle in law that no fine, surcharge,
forfeiture or any penalty may be imposed except in pursuance of a provision of
law. In the instant case, the closest provision [petitioners] could cite is [S]ection
2307 of the Tariff and Customs Code as implemented by CAO 4-94, without
realizing that the same pertains only to seizure cases. Under the provisions
imposing fine found in Sections 2505 to 2529 of the same Code, not one pertains
to non-production of CRF. The Secretary of Finance, Secretary of Trade and
Industry and the Governor of the Central Bank in issuing the Joint Order No. 191, which serves as the basis of the requirement for the production of a CRF, did
not provide for the imposition of fine or other penalties maybe because they
realize that the imposition of penalties is a legislative prerogative.
The non-production of CRF by itself does not give rise to any penalty but may
serve as a basis to hold and to investigate the particular shipment which may lead
to findings of undervaluation, misdeclaration or misclassification for which the
law provides the corresponding penalty such as surcharge, fine or forfeiture under
Sections 2503, 2530-2536 of the TCC[P]. These offenses were not shown in the
records of the case. On the contrary, there was this finding by the [petitioners] that
the non-production of the CRF was not intentional. The mistake or error was
found to be committed by the supplier without prior knowledge on the part of the
[respondent]. In fact, a CRF was later on produced and the discrepancy was not
enough to constitute undervaluation under Sections (sic) 2503 of the said Code.
The [respondent] was only required by the [petitioners] to pay additional duties
and taxes corresponding to the difference of 4.79% in valuation.34
Lastly, granting arguendo that this Court considers applying the provisions of
CAO No. 4-94 in the present case, we find that substantial compliance by
respondent in the provisions of CMO No. 9-95 has rendered the issue on the
imposition
of
the
20%
penalty
for
lack
of
CRF
moot.
CMO No. 9-95 categorically provides the revised procedures on the tentative
release of shipments lacking the required CRF. Its objectives are as follows: (1) to
avoid delays in the processing and releasing of shipments arising from the lack of
SGS-CRF in relation to Joint Order No. 1-91, as amended; (2) to further facilitate
trade and provide adequate security to government revenue; and (3) to enable the
prompt collection of revenue due the government.35 Simply put, the aforesaid
Order provides a remedy for importers or consignees who have failed to undergo
their shipments to pre-shipment inspections under the CISS which arrived in the
country and entered in a customs house without the requisite CRF. More
importantly, Part V(1), Step 5 of CMO No. 9-95 clearly states that the processing

of the SGS-CRF by the SGS affiliate in the country of exportation shall be

deemed as if inspection has taken place and that the issuance of the SGS-CRF
shall
be
done
by
SGS-Manila
Liaison
Office.
Verily, it was proper for the CTA and CA to rule that the subsequent issuance of
the CRF over respondents subject shipment pursuant to the provisions of CMO
No. 9-95 substantially complied and satisfied the mandatory inspection and
corresponding CRF required under paragraph 12 of Joint Order No, 1-91.
Therefore, the subsequent issuance of the CRF on 18 January 1996 cleared the
shipment from the alleged automatic seizure and 20% penalty imposable under
CAO No. 4-94. The eventual issuance of the required CRF covering respondents
shipment had indeed cured all deficiencies; thus, leaving petitioners no right
whatsoever in demanding for the value of the guarantee/security check previously
issued by respondent for the sole purpose it was made.
Parenthetically, this Court finds no abusive or improvident exercise of authority
on the part of the CTA. Since there is no showing of gross error or abuse on the
part of the CTA, and its findings are supported by substantial evidence which
were thoroughly considered during the trial, there is no cogent reason to disturb
its findings and conclusions and they carry even more weight when the CA
affirms
its
factual
and
legal
findings.
WHEREFORE, the petition is hereby DENIED for lack of merit. No costs.
4.
THE BUREAU OF CUSTOMS (BOC) and THE ECONOMIC
INTELLIGENCE AND INVESTIGATION BUREAU (EIIB), petitioners, vs.
NELSON OGARIO and MARK MONTELIBANO, respondents.
Facts: On December 9, 1998, Felipe A. Bartolome, District Collector of Customs

of Cebu, issued a Warrant of Seizure and Detention [1] of 25,000 bags of rice,
bearing the name of "SNOWMAN, Milled in Palawan" shipped on board the M/V
"Alberto," which was then docked at Pier 6 in Cebu City. The warrant was issued
on the basis of the report of the Economic Intelligence and Investigation Bureau
(EIIB), Region VII that the rice had been illegally imported. The report stated that
the rice was landed in Palawan by a foreign vessel and then placed in sacks
marked "SNOWMAN, Milled in Palawan." It was then shipped to Cebu City on
board the vessel M/V "Alberto." Forfeiture proceedings were started in the
customs office in Cebu, docketed as Cebu Seizure Identification Case No. 17-98.
On December 10, 1998, respondent Mark Montelibano, the consignee of the sacks
of rice, and his buyer, respondent Elson Ogario, filed a complaint for injunction
(Civil Case No. CEB-23077) in the Regional Trial Court of Cebu City.
PRAYER

WHEREFORE, Premised on the foregoing, it is most respectfully prayed before

this Honorable Court that a restraining order or temporary injunction be
immediately issued prohibiting the defendants from holding plaintiffs abovementioned goods. That it is further prayed that a restraining order or temporary
injunction be issued prohibiting the defendants from barring the unloading and
loading activities of the plaintiffs laborers. Further, the plaintiffs prayed that the
warrant of seizure and detention issued by the Collector of Custom[s] dated
December 9, 1998 be quashed and no public auction sale of the same should be
conducted by any government agency or authority.
It is further prayed that after due hearing, judgment be rendered:
1.) Making the restraining order and/or preliminary injunction permanent.
2.) Ordering the defendants jointly to pay exemplary or corrective damages to the
plaintiff[s] in the amount of One Hundred Thousand Pesos (P100,000.00)
Such other relief which are just and demandable under the circumstances are also
prayed for.
The 25,000 bags of rice were ordered returned to respondents upon the
posting by them of an P8,000,000.00 bond.
Petitioners BOC and EIIB moved for a reconsideration, but their motion was
denied by the RTC in its order dated January 25, 1999. [5] In the same order, the
RTC also increased the amount of respondents bond to P22,500,000.00.
On certiorari to the Court of Appeals, the resolution and order of the RTC were
sustained.
Accordingly, on April 26, 1999, upon motion of respondents, the RTC ordered the
sheriff to place in respondents possession the 25,000 bags of rice.
Meanwhile, in the forfeiture proceedings before the Collector of Customs of Cebu
(Cebu Seizure Identification Case No. 17-98), a decision was rendered, the
dispositive portion of which reads:
WHEREFORE, by virtue of the authority vested in me by law, it is hereby
ordered and decreed that the vessel M/V "Alberto"; the 25,000 bags of rice brand
"Snowman"; and the two (2) trucks bearing Plate Nos. GCC 844 and GHZ 388
are all FORFEITED in favor of the government to be disposed of in the manner
prescribed by law while the seven (7) trucks bearing Plate Nos. GFX 557; GFX
247; TPV 726; GBY 874; GVE 989; and GDF 548 are RELEASED in favor of
their respective owners upon proper identification and compliance with pertinent
laws, rules and regulations. Chief
Since this decision involves the release of some of the articles subject matter of
herein case which is considered adverse to the government, the same is hereby
elevated to the Commissioner of Customs for automatic review pursuant to
Republic Act 7651.
The District Collector of Customs found "strong reliable, and convincing
evidence" that the 25,000 bags of rice were smuggled. Said evidence consisted of
certifications by the Philippine Coast Guard, the Philippine Ports Authority, and
the Arrastre Stevedoring Office in Palawan that M/V "Alberto" had never docked
in Palawan since November, 1998; a certification by Officer-in-Charge Elenita

Ganelo of the National Food Authority (NFA) Palawan that her signature in NFA
Grains Permit Control No. 00986, attesting that the 25,000 bags of rice originated
from Palawan, was forged; and the result of the laboratory analysis of a sample of
the subject rice by the International Rice Research Institute (IRRI) stating that the
sample "does not compare with any of our IRRI released varieties."
Respondent Montelibano did not take part in the proceedings before the District
Collector of Customs despite due notice sent to his counsel because he refused to
recognize the validity of the forfeiture proceedings.
Issue:
Is the Regional Trial Court has jurisdiction to enjoin forfeiture proceedings in
the Bureau of Customs?
Decision:
The Warrant of Seizure and Detention issued by the Bureau of Customs
cannot divest this court of jurisdiction since its issuance is without legal
basis as it was anchored merely on suspicion that the items in question
were imported or smuggled. It is very clear that the defendants are bereft
of any evidence to prove that the goods were indeed imported or smuggled
that is why the plaintiffs have very vigorously protested against the seizure
of cargoes by the defendants. In fact, as revealed by defendants counsel,
the Warrant of Seizure and Detention was issued merely to shift the
burden of proof to the shippers or owners of the goods to prove that the
bags of rice were not imported or smuggled. However, the court feels this
is unfair because the settled rule is that he who alleges must prove the
same. Besides, at this time when our economy is not good, it would be a
[dis]service to the nation to use the strong arm of the law to make things
hard or difficult for the businessmen.[4]
The 25,000 bags of rice were ordered returned to respondents upon the posting by them
of an P8,000,000.00 bond.
Petitioners BOC and EIIB moved for a reconsideration, but their motion was denied by
the RTC in its order dated January 25, 1999.[5] In the same order, the RTC also increased
the amount of respondents bond to P22,500,000.00. On certiorari to the Court of
Appeals, the resolution and order of the RTC were sustained.[6]
Accordingly, on April 26, 1999, upon motion of respondents, the RTC ordered the sheriff
to place in respondents possession the 25,000 bags of rice.
Meanwhile, in the forfeiture proceedings before the Collector of Customs of Cebu (Cebu
Seizure Identification Case No. 17-98), a decision was rendered, the dispositive portion
of which reads:

WHEREFORE, by virtue of the authority vested in me by law, it is hereby

ordered and decreed that the vessel M/V "Alberto"; the 25,000 bags of rice
brand "Snowman"; and the two (2) trucks bearing Plate Nos. GCC 844
and GHZ 388 are all FORFEITED in favor of the government to be
disposed of in the manner prescribed by law while the seven (7) trucks
bearing Plate Nos. GFX 557; GFX 247; TPV 726; GBY 874; GVE 989;
and GDF 548 are RELEASED in favor of their respective owners upon
proper identification and compliance with pertinent laws, rules and
regulations. Chief
Since this decision involves the release of some of the articles subject
matter of herein case which is considered adverse to the government, the
same is hereby elevated to the Commissioner of Customs for automatic
review pursuant to Republic Act 7651.[7]
The District Collector of Customs found "strong reliable, and convincing evidence" that
the 25,000 bags of rice were smuggled. Said evidence consisted of certifications by the
Philippine Coast Guard, the Philippine Ports Authority, and the Arrastre Stevedoring
Office in Palawan that M/V "Alberto" had never docked in Palawan since November,
1998; a certification by Officer-in-Charge Elenita Ganelo of the National Food Authority
(NFA) Palawan that her signature in NFA Grains Permit Control No. 00986, attesting that
the 25,000 bags of rice originated from Palawan, was forged; and the result of the
laboratory analysis of a sample of the subject rice by the International Rice Research
Institute (IRRI) stating that the sample "does not compare with any of our IRRI released
varieties."
Respondent Montelibano did not take part in the proceedings before the District Collector
of Customs despite due notice sent to his counsel because he refused to recognize the
validity of the forfeiture proceedings.[8]
On April 30, 1999, petitioners filed the present petition for review on certiorari of the
decision of the Court of Appeals, dated April 15, 1999, upholding the resolution of the
RTC denying petitioners motions to dismiss. They contend that:
I. SINCE THE REGIONAL TRIAL COURT OF CEBU CITY DOES
NOT HAVE JURISDICTION OVER THE SUBJECT MATTER OF THE
INSTANT CONTROVERSY, AND THE BUREAU OF CUSTOMS HAD
ALREADY EXERCISED EXCLUSIVE ORIGINAL JURISDICTION
OVER THE SAME, THE COURT OF APPEALS SERIOUSLY ERRED
IN SUSTAINING THE EXERCISE BY THE TRIAL JUDGE OF
JURISDICTION OVER THE CASE BELOW AND IN AFFIRMING
THE TRIAL JUDGES RESOLUTION DATED JANUARY 11, 1999
AND ORDER DATED JANUARY 25, 1999 IN CIVIL CASE NO. CEB23077. Esmsc

II. SINCE RESPONDENTS HAVE NOT EXHAUSTED ALL THE

ADMINISTRATIVE REMEDIES PROVIDED FOR BY LAW, THE
COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE
TRIAL JUDGES DENIALS OF PETITIONERS SEPARATE MOTIONS
TO DISMISS AND MOTIONS FOR RECONSIDERATION.[9]
There is no question that Regional Trial Courts are devoid of any
competence to pass upon the validity or regularity of seizure and forfeiture
proceedings conducted by the Bureau of Customs and to enjoin or
otherwise interfere with these proceedings. The Collector of Customs
sitting in seizure and forfeiture proceedings has exclusive jurisdiction hear
and determine all questions touching on the seizure and forfeiture of
dutiable goods. The Regional Trial Courts are precluded from assuming
cognizance over such matters even through petitions of certiorari,
prohibition or mandamus.
It is likewise well-settled that the provisions of the Tariff and Customs
Code and that of Republic Act No. 1125, as amended, otherwise known as
"An Act Creating the Court of Tax Appeals," specify the proper fora and
procedure for the ventilation of any legal objections or issues raised
concerning these proceedings. Thus, actions of the Collector of Customs
are appealable to the Commissioner of Customs, whose decision, in turn,
is subject to the exclusive appellate jurisdiction of the Court of Tax
Appeals and from there to the Court of Appeals.
The rule that Regional Trial Courts have no review powers over such
proceedings is anchored upon the policy of placing no unnecessary
hindrance on the governments drive, not only to prevent smuggling and
other frauds upon Customs, but more importantly, to render effective and
efficient the collection of import and export duties due the State, which
enables the government to carry out the functions it has been instituted to
perform.
Even if the seizure by the Collector of Customs were illegal, which has yet
to be proven, we have said that such act does not deprive the Bureau of
Customs of jurisdiction thereon. Esmmis
Respondents cite the statement of the Court of Appeals that regular courts still retain
jurisdiction "where, as in this case, for lack of probable cause, there is serious doubt as to
the propriety of placing the articles under Customs jurisdiction through seizure/forfeiture
proceedings."[11] They overlook the fact, however, that under the law, the question of
whether probable cause exists for the seizure of the subject sacks of rice is not for the
Regional Trial Court to determine. The customs authorities do not have to prove to the
satisfaction of the court that the articles on board a vessel were imported from abroad or
are intended to be shipped abroad before they may exercise the power to effect customs

searches, seizures, or arrests provided by law and continue with the administrative
hearings.[12] As the Court held in Ponce Enrile v. Vinuya:[13]
The governmental agency concerned, the Bureau of Customs, is vested
with exclusive authority. Even if it be assumed that in the exercise of such
exclusive competence a taint of illegality may be correctly imputed, the
most that can be said is that under certain circumstances the grave abuse
of discretion conferred may oust it of such jurisdiction. It does not mean
however that correspondingly a court of first instance is vested with
competence when clearly in the light of the above decisions the law has
not seen fit to do so. The proceeding before the Collector of Customs is
not final. An appeal lies to the Commissioner of Customs and thereafter to
the Court of Tax Appeals. It may even reach this Court through the
appropriate petition for review. The proper ventilation of the legal issues
raised is thus indicated. Certainly a court of first instance is not therein
included. It is devoid of jurisdiction.
It is noteworthy that because of the indiscriminate issuance of writs of injunction, the
Supreme Court issued on June 25, 1999 Administrative Circular No. 07-99 to all judges
of lower courts entitled re: exercise of utmost caution, prudence, and judiciousness in
issuance of temporary restraining orders and writs of preliminary injunction. The circular
states in part:
Finally, judges should never forget what the Court categorically declared
in Mison v. Natividad (213 SCRA 734, 742 [1992]) that "[b]y express
provision of law, amply supported by well-settled jurisprudence, the
Collector of Customs has exclusive jurisdiction over seizure and forfeiture
proceedings, and regular courts cannot interfere with his exercise thereof
or stifle or put it to naught."
The Office of the Court Administrator shall see to it that this circular is
immediately disseminated and shall monitor implementation thereof.
STRICT OBSERVANCE AND COMPLIANCE of this Circular is hereby
enjoined.
WHEREFORE, the temporary restraining order issued on May 17, 1999 is hereby made
permanent. The decision, dated April 15, 1999, of the Court of Appeals is REVERSED
and Civil Case No. CEB-23077 in the Regional Trial Court, Branch 5, Cebu City is
DISMISSED.
5. Customs intercepts prohibited and regulated drugs at the Ninoy Aquino
International Airport (NAIA)
Facts: Collaborative efforts of Customs Police, NAIA Assessment Division,
Philippine Drug Enforcement Agency (PDEA) and Philippine Food and Drug

Authority (FDA) has led to the capture of these drugs which include: 100,000
200mg tablets of Cytotec; 31,014 10mg tablets of Valium; 2,700 10mg of Xolnox;
24,000 10mg tablets of Ritalin; 27,492 tablets of Alprazolam; and 7,000 10 mg
tablets of Ambin. Coming from India and Pakistan, these parcels arrived in
Manila in May 24, July 05, and July 15 of 2015, respectively. Declared as
Pharmaceutical Drugs and Medicines, and Misoclear Tablets, the parcels were
found to contain drugs that are either prohibited or regulated. Collector of
Customs issued WSD against the shipment.
Issue: Is the action of the Collector to seize the article is correct?

Legal Basis in Violation to TCCP

-These parcels are believed to have violated Section 101(k) or Prohibited Importations
- Section 2530 or Property Subject to Forfeiture under Tariff and Customs Laws of the
Tariff and Customs Code of the Philippines (TCCP) as amended; RA 9711 FDA or
Food and Drug Act of 2009; and RA 9165 or the Comprehensive Dangerous Drugs Act of
2002
- Violated Section 2503 or Undervaluation, Misclassification and Misdeclaration in Entry
Decision :
The collector of Customs is correct based in the legal basis in violation to TCCP.
and the decision of Collector of Customs is ordering the forfeiture of the prohibited drugs
discharge (sic)/ seized is AFFIRMED. It is further ordered and decreed that the said
prohibited drugs be immediately disposed of in accordance with law.

.
6. Customs captures P3.4M worth of grossly undervalued sodium cyanide
Facts:
Two twenty footer (220) container shipment arrived at the
Mindanao Container Terminal Sub port on the 3rd of September 2015
containing imported chemicals used in gold mining. Its supporting documents
have shown that the shipments came from Korea and consigned to a local
mining company located in Brgy. Poblacion Trento, Agusan Del Sur.
-

EG Deputy Commissioner Ariel F. Nepomuceno alerted the shipment

containing 720 drums of sodium cyanide on the 10th of September 2015,

prompting the immediate examination of said shipment in accordance with

Customs laws, and rules and regulations.
-

Customs officials discovered that the imported chemicals were grossly

undervalued. The bureaus Import and Assessments Service (IAS)
provides that the correct value of the shipment is $2.08/kg., instead of the
declared $0.30/kg.

Trivia:
The imported sodium cyanide is commonly used in gold mining to
separate gold from other low-grade ores.
Legal Basis in Violation to TCCP:
- Pursuant to the recommendation of EG, the District Collector of Port of Cagayan de Oro
already issued a Warrant of Seizure and Detention (WSD) on the 22nd of October 2015.
Said WSD was issued against the shipment for violation of Section 2503 (or
Undervaluation, Misclassification and Misdeclaration in Entry)
- in relation to Section 2530 (Property Subject to Forfeiture Under Tariff and Customs
Laws) of the Tariff and Customs Code of the Philippines, as amended, which constitute a
prima facie evidence of fraud under said Code.
Decision: The decision of Collector of Customs is in favor to government
because the importer has violated the tariff and customs law.

7.

BOC captures 3,000 pieces of used TV sets from South Korea

Facts: - Almost 3,000 television sets from South Korea consigned to AB Wee
Enterprise (AB Wee) and Ankwon Trading Copr. (Ankwon) were seized by
officials of the BOC in four (4) batches of 140 container van that arrived at the
Manila International Container Port (MICP) in May and June 2015.

-The first two (2) shipments, each containing 690 pieces and 691 pieces of TV sets and
the second two (2) shipments, each contains 602 pieces, have a total estimated value of
six million pesos (6M).
- EG Officer on case communicated with the Department of Natural and Environment
Resources Environmental Management Bureau (DENR-EMB) on the status of said
importers and received confirmation letters stating that one (1) of the importers holds an
expired Import Clearances while the other one (1) is not even a registered importer and
therefore has no Import Clearance Certificate. Hence, Deputy Commissioner
Nepomuceno issued the appropriate Alert Orders.
Legal Basis in Violation to TCCP:

-Led by Deputy Commissioner Ariel F Nepomuceno of the BOC Enforcement Group

(EG), Customs police served the Warrants of Seizure and Detention against two (2) local
consignees for violation of DENR DAO 2013-22 (Lack of Import Permit) and Section
2530 of the Tariff and Customs Code of the Philippines, as amended
Decision:
The MICP District Collector, following the efforts exerted by the EG, has already issued
three (3) WSD and ordered the EG to seize the used television sets and turn-over the
same to the custody of the Auction and Cargo Disposal Division at MICP.
8. BOC takes into custody P145 million worth of luxury vehicles
Facts: Commissioner Alberto Lina officially brings to court charges against
smugglers of fourteen (14) units of grossly undervalued luxury vehicles that
entered the Port of Batangas in two (2) batches on July 10 and 18 of 2015.
The shipments from United Arab Emirates (UAE), Hongkong and Japan include: Brand
New Ferrari 458 Speciale, 2015 Brand New Mercedez Benz G63 AMG, 2015 Brand New
Toyota Prado, Brand New Mc Laren MP4-12C OR 650S, Brand New Toyota Land
Cruiser GXR Bullet Proof, 2015 Brand New Land Rover Defender 90, Brand New Land
Rover Range Rove, 2015 Brand New Mecedes Benz CLK DTM AMG, Brand New
Toyota Land Cruiser GX V8 Sport, and 2015 Brand New Mercedes Benz C63 AMG.
Charges were filed against MONACAT TRADING, owner/proprietor, ROLANDO A.
CUEVAS, with office address at Unit 2, Matic Building, National Highway, Canlalay,
Bian City, Laguna and residential address at 2915 Calia Street, Elvinda Village, San
Pedro City Laguna; MERMELINDA C. DELACRUZ, Manager, MONACAT
TRADING; FLAVIANO B. DELA CRUZ, licensed customs broker of MONACAT
TRADING, for knowingly, intentionally and fraudulently misdeclaring and grossly
underdeclaring the true and correct values of these luxury vehicles.
Also charged in this case are five (5) officials and employees of the BOC Port of
Batangas, namely Acting Assessor ELOISA P. SUAREZ, Acting COOIII MARICEL A.
MANGUIAT, COOIII NORALYN T. ASARIA, Acting COOV ARACELI JASA, and
Actinf COOV BENJAMIN G. MANALO, JR., for blindly processing the declaration on
the subject Import Entries and several John Doe/s and Jane Doe/s who directly and/or
indirectly participated and who are instrumental to the said smuggling.
Legal basis in violation to TCCP:
Sec. 2317 Governments right of Compulsory Acquisition
Sec. 2530 Property Subject to Forfeiture under Tariff and Customs Laws
Sec. 2503 Undervaluation, Misclassification and Misdeclaration in entry

Decision :
This prompted Deputy Commissioner Ariel F. Nepomuceno, Enforcement Group (EG), to
issue Alert Orders against the said shipment. Pursuant to said Alert Orders, Customs
Examiners of the Port of Batangas conducted an examination in the presence of the
Officers on case, Alexander A. Ugay and Doy de Castro, BOC Enforcement and
Security Service (ESS).
On August 10, 2015, Acting District Collector Ernesto P. Benitez forwarded the forgoing
Spot Check/100% Examination Reports to the Office of the Deputy Commissioner,
Assessment and Operations Coordinating Group (AOCG), BOC. On the same date, ESS
Officers on case, submitted their Memorandum stating the violations found against the
subject motor vehicles.