Commissioner of Internal Revenue v.

AGFHA Incorporated
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the February
25, 2009 Decision1 of the Court of Tax Appeals En Banc (CTA-En Banc), in CTA EB Case No. 136,
which affirmed the October 18, 2005 Resolution 2 of its Second Division (CTA-Second Division), in CTA
Case No. 5290, finding petitioner, the Commissioner of Customs (Commissioner), liable to pay
respondent AGFHA Incorporated(AGFHA) the amount of US$160,348.08 for the value of the seized
shipment which was lost while in petitioners custody.

WHEREFORE, the instant petition is hereby DENIED DUE COURSE and DISMISSED for lack of merit.
Accordingly, the Commissioner of Customs is hereby ordered to effect the immediate release of the
shipment of AGFHA, Incorporated described as "2 x 40" Cont. No. NYKU-6772906 and NYKU-6632117
STA 197 Bales of Textile Grey Cloth" placed under Hold Order No. H/CI/01/2293/01 dated 22 January
1993.
No costs.
SO ORDERED.

On December 12, 1993, a shipment containing bales of textile grey cloth arrived at the Manila
International Container Port (MICP). The Commissioner, however, held the subject shipment because
its owner/consignee was allegedly fictitious. AGFHA intervened and alleged that it was the owner
and actual consignee of the subject shipment.On September 5, 1994, after seizure and forfeiture
proceedings took place, the District Collector of Customs, MICP, rendered a decision 3 ordering the
forfeiture of the subject shipment in favor of the government.
AGFHA filed an appeal. On August 25, 1995, the Commissioner rendered a decision 4 dismissing On
November 4, 1996, the CTA-Second Division reversed the Commissioners August 25, 1995 Decision
and ordered the immediate release of the subject shipment to AGFHA. The dispositive portion of the
CTA-Second Division Decision5 reads:
WHEREFORE, in view of the foregoing premises, the instant Petition for Review is hereby GRANTED.
Accordingly, the decision of the respondent in Customs Case No. 94-017, dated August 25, 1995,
affirming the decision of the MICP Collector, dated September 5, 1994, which decreed the forfeiture
of the subject shipments in favor of the government, is hereby REVERSED and SET ASIDE.
Respondent is hereby ORDERED to effect the immediate RELEASE of the subject shipment of goods
in favor of the petitioner. No costs.
SO ORDERED.
On November 27, 1996, the CTA-Second Division issued an entry of judgment declaring the abovementioned decision final and executory.6
Thereafter, on May 20, 1997, AGFHA filed a motion for execution.
In its June 4, 1997 Resolution, the CTA-Second Division held in abeyance its action on AGFHAs
motion for execution in view of the Commissioners appeal with the Court of Appeals (CA), docketed
as CA-G.R. SP No. 42590 and entitled "Commissioner of Custom v. The Court of Tax Appeals and
AGFHA, Incorporated."
On May 31, 1999, the CA denied due course to the Commissioners appeal for lack of merit in a
decision,7 the dispositive portion of which reads:

Thereafter, the Commissioner elevated the aforesaid CA Decision to this Court via a petition for
review oncertiorari, docketed as G.R. No. 139050 and entitled "Republic of the Philippines
represented by the Commissioner of Customs v. The Court of Tax Appeals and AGFHA, Inc."
On October 2, 2001, the Court dismissed the petition.8
On January 14, 2002, the Court denied with finality the Commissioners motion for reconsideration of
its October 2, 2001 Decision.
On March 18, 2002, the Entry of Judgment was issued by the Court declaring its aforesaid decision
final and executory as of February 5, 2002.
In view thereof, the CTA-Second Division issued the Writ of Execution, dated October 16, 2002,
directing the Commissioner and his authorized subordinate or representative to effect the immediate
release of the subject shipment. It further ordered the sheriff to see to it that the writ would be
carried out by the Commissioner and to make a report thereon within thirty (30) days after receipt of
the writ. The writ, however, was returned unsatisfied.
On July 23, 2003, the CTA-Second Division received a copy of AGFHAs Motion to Show Cause dated
July 21, 2003.
Acting on the motion, the CTA-Second Division issued a notice setting it for hearing on August 1,
2003 at 9:00 oclock in the morning.
In its August 13, 2003 Resolution, the CTA-Second Division granted AGFHAs motion and ordered the
Commissioner to show cause within fifteen (15) days from receipt of said resolution why he should
not be disciplinary dealt with for his failure to comply with the writ of execution.
On September 1, 2003, Commissioners counsel filed a Manifestation and Motion, dated August 28,
2003, attaching therewith a copy of an Explanation (With Motion for Clarification) dated August 11,
2003 stating, inter alia, that despite diligent efforts to obtain the necessary information and
considering the length of time that had elapsed since the subject shipment arrived at the Bureau of
Customs, the Chief of the Auction and Cargo Disposal Division of the MICP could not determine the
status, whereabouts and disposition of said shipment.

Consequently, AGFHA filed its Motion to Cite Petitioner in Contempt of Court dated September 13,
2003. After a series of pleadings, on November 17, 2003, the CTA-Second Division denied, among
others, AGFHAs motion to cite petitioner in contempt for lack of merit. It, however, stressed that the
denial was without prejudice to other legal remedies available to AGFHA.
On August 13, 2004, the Commissioner received AGFHAs Motion to Set Case for Hearing, dated April
12, 2004, allegedly to determine: (1) whether its shipment was actually lost; (2) the cause and/or
circumstances surrounding the loss; and (3) the amount the Commissioner should pay or indemnify
AGFHA should the latters shipment be found to have been actually lost.
On May 17, 2005, after the parties had submitted their respective memoranda, the CTA-Second
Division adjudged the Commissioner liable to AGFHA. Specifically, the dispositive portion of the
resolution reads:
WHEREFORE, premises considered, the Bureau of Customs is adjudged liable to petitioner AGFHA,
INC. for the value of the subject shipment in the amount of ONE HUNDERED SIXTY THOUSAND
THREE HUNDRED FORTY EIGHT AND 08/100 US DOLLARS (US$160,348.08). The Bureau of Customs
liability may be paid in Philippine Currency, computed at the exchange rate prevailing at the time of
actual payment, with legal interests thereon at the rate of 6% per annum computed from February
1993 up to the finality of this Resolution. In lieu of the 6% interest, the rate of legal interest shall be
12% per annum upon finality of this Resolution until the value of the subject shipment is fully paid.
The payment shall be taken from the sale or sales of the goods or properties which were seized or
forfeited by the Bureau of Customs in other cases.
SO ORDERED.9
On June 10, 2005, the Commissioner filed his Motion for Partial Reconsideration arguing that (a) the
enforcement and satisfaction of respondents money claim must be pursued and filed with the
Commission on Audit pursuant to Presidential Decree (P.D.) No. 1445; (b) respondent is entitled to
recover only the value of the lost shipment based on its acquisition cost at the time of importation;
and (c) taxes and duties on the subject shipment must be deducted from the amount recoverable by
respondent.
On the same day, the Commissioner received AGFHAs Motion for Partial Reconsideration claiming
that the 12% interest rate should be computed from the time its shipment was lost on June 15, 1999
considering that from such date, petitioners obligation to release their shipment was converted into
a payment for a sum of money.
On October 18, 2005, after the filing of several pleadings, the CTA-Second Division promulgated a
resolution which reads:
WHEREFORE, premises considered, respondent Commissioner of Customs "Motion for Partial
Reconsideration" is hereby PARTIALLY GRANTED. The Resolution dated May 17, 2005 is hereby

MODIFIED but only insofar as the Court did not impose the payment of the proper duties and taxes
on the subject shipment. Accordingly, the dispositive portion of Our Resolution, dated May 17, 2005,
is hereby MODIFIED to read as follows:
WHEREFORE, premises considered, the Bureau of Customs is adjudged liable to petitioner AGFHA,
INC. for the value of the subject shipment in the amount of ONE HUNDRED SIXTY THOUSAND THREE
HUNDRED FORTY EIGHT AND 08/100 US DOLLARS (US$160,348.08), subject however, to the
payment of the prescribed taxes and duties, at the time of the importation. The Bureau of Customs
liability may be paid in Philippine Currency, computed at the exchange rate prevailing at the time of
actual payment, with legal interests thereon at the rate of 6% per annum computed from February
1993 up to the finality of this Resolution. In lieu of the 6% interest, the rate of legal interest shall be
12% per annum upon finality of this Resolution until the value of the subject shipment is fully paid.
The payment shall be taken from the sale or sales of the goods or properties which were seized or
forfeited by the Bureau of Customs in other cases. Petitioner AGFHA, Inc.s "Motion for Partial
Reconsideration" is hereby DENIED for lack of merit. Consequently, the Commissioner elevated the
above-quoted resolution to the CTA-En Banc.
On February 25, 2009, the CTA-En Banc promulgated the subject decision dismissing the petition for
lack of merit and affirming in toto the decision of the CTA-Second Division. On March 18, 2009, the
Commissioner filed his Motion for Reconsideration, but it was denied by the CTA-En Banc in its April
13, 2009 Resolution. Hence, this petition.
ISSUE
Whether or not the Court of Tax Appeals was correct in awarding the respondent the amount of
US$160,348.08, as payment for the value of the subject lost shipment that was in the custody of the
petitioner.
In his petition, the Commissioner basically argues two (2) points: 1] the respondent is entitled to
recover the value of the lost shipment based only on its acquisition cost at the time of importation;
and 2] the present action has been theoretically transformed into a suit against the State, hence, the
enforcement/satisfaction of petitioners claim must be pursued in another proceeding consistent
with the rule laid down in P.D. No. 1445.
He further argues that the basis for the exchange rate of its liability lacks basis. Based on the
Memorandum, dated August 27, 2002, of the Customs Operations Officers, the true value of the
subject shipment is US$160,340.00 based on its commercial invoices which have been found to be
spurious. The subject shipment arrived at the MICP on December 12, 1992 and the peso-dollar
exchange rate was P20.00 per US$1.00. Thus, this conversion rate must be applied in the
computation of the total land cost of the subject shipment being claimed by AGFHA or P3,206,961.60
plus interest.
The Commissioner further contends that based on Executive Order No. 688 (The 1999 Tariff and
Customs Code of the Philippines), the proceeds from any legitimate transaction, conveyance or sale

of seized and/or forfeited items for importations or exportations by the customs bureau cannot be
lawfully disposed of by the petitioner to satisfy respondents money judgment. EO 688 mandates
that the unclaimed proceeds from the sale of forfeited goods by the Bureau of Customs (BOC) will be
considered as customs receipts to be deposited with the Bureau of Treasury and shall form part of
the general funds of the government. Any disposition of the said unclaimed proceeds from the sale
of forfeited goods will be violative of the Constitution, which provides that "No money shall be paid
out of the Treasury except in pursuance of an appropriation made by law." 11
Thus, the Commissioner posits that this case has been transformed into a suit against the State
because the satisfaction of AGFHAs claim will have to be taken from the national coffers. The State
may not be sued without its consent. The BOC enjoys immunity from suit since it is invested with an
inherent power of sovereignty which is taxation.
To recover the alleged loss of the subject shipment, AGFHAs remedy here is to file a money claim
with the Commission on Audit (COA) pursuant to Act No. 3083 (An Act Defining the Condition under
which the Government of the Philippine Island may be Sued) and Commonwealth Act No. 327 (An
Act Fixing the Time within which the Auditor General shall render his Decisions and Prescribing the
Manner of Appeal therefrom, as amended by P.D. No. 1445). Upon the determination of State
liability, the prosecution, enforcement or satisfaction thereof must still be pursued in accordance
with the rules and procedures laid down in P.D. No. 1445, otherwise known as the Government
Auditing Code of the Philippines.
On the other hand, AGFHA counters that, in line with prevailing jurisprudence, the applicable pesodollar exchange rate should be the one prevailing at the time of actual payment in order to preserve
the real value of the subject shipment to the date of its payment. The CTA-En Banc Decision does
not constitute a money claim against the State. The Commissioners obligation to return the subject
shipment did not arise from an import-export contract but from a quasi-contract particularly solutio
indebiti under Article 2154 of the Civil Code. The payment of the value of the subject lost shipment
was in accordance with Article 2159 of the Civil Code. The doctrine of governmental immunity from
suit cannot serve as an instrument for perpetrating an injustice on a citizen. When the State violates
its own laws, it cannot invoke the doctrine of state immunity to evade liability. The commission of an
unlawful or illegal act on the part of the State is equivalent to implied consent.
THE COURTS RULING
The petition lacks merit.
The Court agrees with the ruling of the CTA that AGFHA is entitled to recover the value of its lost
shipment based on the acquisition cost at the time of payment.
In the case of C.F. Sharp and Co., Inc. v. Northwest Airlines, Inc. the Court ruled that the rate of
exchange for the conversion in the peso equivalent should be the prevailing rate at the time of
payment:

In ruling that the applicable conversion rate of petitioner's liability is the rate at the time of payment,
the Court of Appeals cited the case of Zagala v. Jimenez, interpreting the provisions of Republic Act
No. 529, as amended by R.A. No. 4100. Under this law, stipulations on the satisfaction of obligations
in foreign currency are void. Payments of monetary obligations, subject to certain exceptions, shall
be discharged in the currency which is the legal tender in the Philippines. But since R.A. No. 529
does not provide for the rate of exchange for the payment of foreign currency obligations incurred
after its enactment, the Court held in a number of cases that the rate of exchange for the
conversion in the peso equivalent should be the prevailing rate at the time of
payment.12 [Emphases supplied]
Likewise, in the case of Republic of the Philippines represented by the Commissioner of Customs v.
UNIMEX Micro-Electronics GmBH,13 which involved the seizure and detention of a shipment of
computer game items which disappeared while in the custody of the Bureau of Customs, the Court
upheld the decision of the CA holding that petitioners liability may be paid in Philippine currency,
computed at the exchange rate prevailing at the time of actual payment.
On the issue regarding the state immunity doctrine, the Commissioner cannot escape liability for the
lost shipment of goods. This was clearly discussed in the UNIMEX Micro-Electronics GmBH decision,
where the Court wrote:
Finally, petitioner argues that a money judgment or any charge against the government requires a
corresponding appropriation and cannot be decreed by mere judicial order.
Although it may be gainsaid that the satisfaction of respondent's demand will ultimately fall on the
government, and that, under the political doctrine of "state immunity," it cannot be held liable for
governmental acts (jus imperii), we still hold that petitioner cannot escape its liability. The
circumstances of this case warrant its exclusion from the purview of the state immunity doctrine.
As previously discussed, the Court cannot turn a blind eye to BOC's ineptitude and gross
negligence in the safekeeping of respondent's goods. We are not likewise unaware of its
lackadaisical attitude in failing to provide a cogent explanation on the goods'
disappearance, considering that they were in its custody and that they were in fact the
subject of litigation. The situation does not allow us to reject respondent's claim on the
mere invocation of the doctrine of state immunity. Succinctly, the doctrine must be fairly
observed and the State should not avail itself of this prerogative to take undue
advantage of parties that may have legitimate claims against it.
In Department of Health v. C.V. Canchela & Associates, we enunciated that this Court, as the staunch
guardian of the people's rights and welfare, cannot sanction an injustice so patent in its face, and
allow itself to be an instrument in the perpetration thereof. Over time, courts have recognized with
almost pedantic adherence that what is inconvenient and contrary to reason is not allowed in law.
Justice and equity now demand that the State's cloak of invincibility against suit and liability be
shredded.1awphi1

Accordingly, we agree with the lower courts' directive that, upon payment of the necessary customs
duties by respondent, petitioner's "payment shall be taken from the sale or sales of goods or
properties seized or forfeited by the Bureau of Customs."
WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos. 75359 and 75366 are
hereby AFFIRMED with MODIFICATION. Petitioner Republic of the Philippines, represented by the
Commissioner of the Bureau of Customs, upon payment of the necessary customs duties by
respondent Unimex Micro-Electronics GmBH, is hereby ordered to pay respondent the value of the
subject shipment in the amount of Euro 669,982.565. Petitioner's liability may be paid in Philippine
currency, computed at the exchange rate prevailing at the time of actual payment.
SO ORDERED.14 [Emphases supplied]
In line with the ruling in UNIMEX Micro-Electronics GmBH, the Commissioner of Customs should pay
AGFHA the value of the subject lost shipment in the amount of US$160,348.08 which liability may be
paid in Philippine currency computed at the exchange rate prevailing at the time of the actual
payment.
WHEREFORE, the February 25, 2009 Decision of the Court of Tax Appeals En Banc, in CTA EB Case
No. 136, isAFFIRMED. The Commissioner of Customs is hereby ordered to pay, in accordance with
law, the value of the subject lost shipment in the amount of US$160,348.08, computed at the
exchange rate prevailing at the time of actual payment after payment of the necessary customs
duties.
SO ORDERED.

16,651,177 liters Ex MT
FCCU Feed Stock 3/21/1996 Probo Boaning
236,317,862 liters
Oman/Dubai Ex MT
Crude Oil 3/26/1996 Violet
51,878,114 liters Ex MT
Arab Crude Oil 4/10/1996 Crown Jewel[5]
The shipments were unloaded from the carrying vessels onto petitioners oil tanks over a period of
three days from the date of their arrival. Subsequently, the import entry declarations (IEDs) were
filed and 90% of the total customs duties were paid. The import entry and internal revenue
declarations (IEIRDs) of the shipments were thereafter filed on the following dates:
ENTRY

PRODUCT

ARRIVAL
DATE

IED

IEIRD

66,229,960 liters

3/8/1996

3/12/1996

5/10/1996

3/18/1996

3/26/1996

5/10/1996

3/21/1996

3/26/1996

5/10/1996

3/26/1996

3/28/1996

5/10/1996

4/10/1996

4/10/1996

6/21/1996

NO.
606-96

Nan Hai Crude Oil

604-96

6,990,712 liters
Reformate

605-96

16,651,177 liters
FCCU Feed Stock

600-96

236,317,862 liters

601-96

Oman/Dubai Crude Oil

602-96
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
Chevron Philippines vs. Commissioner of Customs
This is a petition for review on certiorari [1] of the decision[2] and resolution[3] of the Court of Tax
Appeals (CTA) en banc dated March 1, 2007 and July 5, 2007, respectively, in CTA EB Nos. 121 and
122 which reversed the decision of the CTA First Division dated April 5, 2005 in CTA Case No. 6358.
Petitioner Chevron Philippines, Inc.[4] is engaged in the business of importing, distributing
and marketing of petroleum products in the Philippines. In 1996, theimportations subject of this case
arrived and were covered by eight bills of lading, summarized as follows:
ARRIVAL
PRODUCT DATE VESSEL

603-96
818-96

51,878,114 liters
Arab Crude Oil

The importations were appraised at a duty rate of 3% as provided under RA 8180 [6] and petitioner
paid the import duties amounting to P316,499,021.[7] Prior to the effectivity of RA 8180 on April 16,
1996, the rate of duty on imported crude oil was 10%.
Three years later, then Finance Secretary Edgardo Espiritu received a letter (with annexes)
dated June 10, 1999 from a certain Alfonso A. Orioste denouncing the deliberate concealment,
manipulation and scheme employed by petitioner and Pilipinas Shell in the importation of crude oil,
thereby resulting in huge losses of revenue for the government.This letter was endorsed to the
Bureau of Customs (BOC) for investigation on July 19, 1999.[8]

66,229,960 liters Ex MT
Nan Hai Crude Oil 3/8/1996 Bona Spray
6,990,712 liters Ex MT
Reformate 3/18/1996 Orient Tiger

On January 28, 2000, petitioner received a subpoena duces tecum/ad testificandum from Conrado M.
Unlayao, Chief of the Investigation and Prosecution Division, Customs Intelligence and Investigation
Service (IPD-CIIS) of the BOC, to submit pertinent documents in connection with the subject
shipments pursuant to the investigation he was conducting thereon. It appeared, however, that the

Legal Division of the BOC was also carrying out a separate investigation. Atty. Roberto Madrid (of the
latter office) had gone to petitioners Batangas Refinery and requested the submission of information
and documents on the same shipments. This prompted petitioner to seek the creation of a unified
team to exclusively handle the investigation.[9]
On August 1, 2000, petitioner received from the District Collector of Customs of the Port of Batangas
(District Collector) a demand letter requiring the immediate settlement of the amount
of P73,535,830 representing the difference between the 10% and 3% tariff rates on the
shipments. In response, petitioner wrote the District Collector to inform him of the pending request
for the creation of a unified team with the exclusive authority to investigate the matter. Furthermore,
petitioner objected to the demand for payment of customs duties using the 10% duty rate and
reiterated its position that the 3% tariff rate should instead be applied. It likewise raised the defense
of prescription against the assessment pursuant to Section 1603 of the Tariff and Customs Code
(TCC). Thus, it prayed that the assessment for deficiency customs duties be cancelled and the notice
of demand be withdrawn.[10]
In a letter petitioner received on October 12, 2000, respondent Commissioner of the
BOC[11] stated that it was the IPD-CIIS which was authorized to handle the investigation, to the
exclusion of the Legal Division and the District Collector.[12]
The IPD-CIIS, through Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio
C. Magno, Jr., issued a finding dated February 2, 2001 that the import entries were filed beyond the
30-day non-extendible period prescribed under Section 1301 of the TCC. They concluded that the
importations were already considered abandoned in favor of the government. They also found that
fraud was committed by petitioner in collusion with the former District Collector. [13]
Thereafter, respondent[14] wrote petitioner on October 29, 2001 informing it of the findings
of irregularity in the filing and acceptance of the import entries beyond the period required by
customs law and in the release of the shipments after the same had already been deemed
abandoned in favor of the government. Petitioner was ordered to pay the amount
of P1,180,170,769.21 representing the total dutiable value of the importations. [15]
This prompted petitioner to file a petition for review in the CTA First Division on November 28, 2001,
asking for the reversal of the decision of respondent.[16]
In a decision promulgated on April 5, 2005, the CTA First Division ruled that respondent was correct
when he affirmed the findings of the IPD-CIIS on the existence of fraud. Therefore, prescription was
not applicable. Ironically, however, it also held that petitioner did not abandon the shipments. The
shipments should be subject to the 10% rate prevailing at the time of their withdrawal from the
custody of the BOC pursuant to Sections 204, 205 and 1408 of the TCC. Petitioner was therefore
liable for deficiency customs duties in the amount of P105,899,569.05.[17]
Petitioner sought reconsideration of the April 5, 2005 decision while respondent likewise
filed his motion for partial reconsideration. Both motions were denied in a resolution dated
September 9, 2005.[18]

After both respondent and petitioner had filed their petitions for review with the CTA en
banc, docketed as CTA EB No. 121 and CTA EB No. 122, respectively, the petitions were
consolidated.
In a decision dated March 1, 2007, the CTA en banc held that it was the filing of the IEIRDs
that constituted entry under the TCC. Since these were filed beyond the 30-day period, they were
not seasonably entered in accordance with Section 1301 in relation to Section 205 of the
TCC. Consequently, they were deemed abandoned under Sections 1801 and 1802 of the TCC. It also
ruled that the notice required under Customs Memorandum Order No. 15-94 (CMO 15-94) was not
necessary in view of petitioners actual knowledge of the arrival of the shipments. It likewise agreed
with the CTA Divisions finding that petitioner committed fraud when it failed to file the IEIRD within
the 30-day period with the intent to evade the higher rate. Thus, petitioner was ordered to pay
respondent the total dutiable value of the oil shipments amounting to P893,781,768.21.[19]Hence this
petition.
There are three issues for our resolution:
1.

whether entry under Section 1301 in relation to Section 1801 of the TCC refers
to the IED or the IEIRD;

2.

whether fraud was perpetrated by petitioner and

3.

whether the importations can be considered abandoned under Section 1801.

ENTRY IN SECTIONS 1301 AND 1801 OF THE

TCC REFERS TO BOTH THE IED AND IEIRD

Under Section 1301 of the TCC, imported articles must be entered within a non-extendible period of
30 days from the date of discharge of the last package from a vessel.Otherwise, the BOC will deem
the imported goods impliedly abandoned under Section 1801. Thus:
Section 1301. Persons Authorized to Make Import Entry. - Imported
articles must be entered in the customhouse at the port of entry within
thirty (30) days, which shall not be extendible from date of discharge of
the last package from the vessel or aircraft either (a) by the importer, being
holder of the bill of lading, (b) by a duly licensed customs broker acting under
authority from a holder of the bill or (c) by a person duly empowered to act as
agent or attorney-in-fact for each holder: Provided, That where the entry is filed by
a party other than the importer, said importer shall himself be required to declare
under oath and under the penalties of falsification or perjury that the declarations
and statements contained in the entry are true and correct: Provided, further, That
such statements under oath shall constitute prima facie evidence of knowledge
and consent of the importer of violation against applicable provisions of this Code
when the importation is found to be unlawful. (Emphasis supplied)
Section 1801. Abandonment, Kinds and Effect of. - An imported article is deemed
abandoned under any of the following circumstances:

b. When the owner, importer, consignee or interested party after due

notice, fails to file an entry within thirty (30) days, which shall not be
extendible, from the date of discharge of the last package from the
vessel or aircraft, or having filed such entry, fails to claim his importation within
fifteen (15) days, which shall not likewise be extendible, from the date of posting
of the notice to claim such importation. (Emphasis supplied)
Petitioner argues that the IED is an entry contemplated by these sections. According to it, the
congressional deliberations on RA 7651 which amended the TCC to provide a non-extendible 30-day
period show the legislative intent to expedite the procedure for declaring importations as
abandoned. Filing an entry serves as notice to the BOC of the importers willingness to complete the
importation and to pay the proper taxes, duties and fees. Conversely, the non-filing of the entry
within the period connotes the importers disinterest and enables the BOC to consider the goods as
abandoned. Since the IED is a BOC form that serves as basis for payment of advance duties on
importation as required under PD 1853, [20] it suffices as an entry under Sections 1301 and 1801 of
the TCC.[21]
We disagree.
The term entry in customs law has a triple meaning. It means (1) the documents filed at the
customs house; (2) the submission and acceptance of the documents and (3) the procedure of
passing goods through the customs house.[22]
The IED serves as basis for the payment of advance duties on importations whereas the
IEIRD evidences the final payment of duties and taxes. The question is: was the filing of the IED
sufficient to constitute entry under the TCC?
The law itself, in Section 205, defines the meaning of the technical term entered as used in
the TCC:
Section 205. Entry, or Withdrawal from Warehouse, for Consumption.
- Imported articles shall be deemed entered in the Philippines for
consumption when the specified entry form is properly filed and
accepted, together with any related documents regained by the provisions of this
Code and/or regulations to be filed with such form at the time of entry, at the port
or station by the customs official designated to receive such entry papers and any
duties, taxes, fees and/or other lawful charges required to be paid at the time of
making such entry have been paid or secured to be paid with the customs official
designated to receive such monies, provided that the article has previously arrived
within the limits of the port of entry.
Clearly, the operative act that constitutes entry of the imported articles at the port of entry
is the filing and acceptance of the specified entry form together with the other documents required
by law and regulations. There is no dispute that the specified entry form refers to the IEIRD. Section
205 defines the precise moment when the imported articles are deemed entered.
Moreover, in the old case of Go Ho Lim v. The Insular Collector of Customs,[23] we ruled that
the word entry refers to the regular consumption entry (which, in our current terminology, is the
IEIRD) and not the provisional entry (the IED):

It is disputed by the parties whether the application for the special

permit. Exhibit A, containing the misdeclared weight of the 800 cases of eggs,
comes within the meaning of the word "entry" used in section 1290 of the Revised
Administrative Code, or said word "entry" means only the "original entry and
importer's declaration." The court below reversed the decision of the Insular
Collector of Customs on the ground that the provisions of section 1290 of the
Revised Administrative Code refer to the regular consumption entry and not
to a provisional declaration made in an application for a special permit, as the
one filed by the appellee, to remove the cases of eggs from the customhouse.
This court is of the opinion that certainly the application, Exhibit A, cannot
be considered as a final regular entry of the weight of the 800 cases of eggs
imported by the appellee, taking into account the fact that said application sought
the delivery of said 800 cases of eggs "from the pier after examination," and the
special permit granted, Exhibit E, provided for "delivery to be made after
examination by the appraiser." All the foregoing, together with the circumstance
that the appellee had to file the regular consumption entry which he bound himself
to do, as shown by the application, Exhibit A, logically lead to the conclusion that
the declaration of the weight of the 800 cases of eggs made in said application, is
merely a provisional entry, and as it is subject to verification by the customhouse
examiner, it cannot be considered fraudulent for the purpose of imposing a
surcharge of customs duties upon the importer.[24] (Emphasis supplied)
The congressional deliberations on House Bill No. 4502 which was enacted as RA
7651[25] amending the TCC lay down the policy considerations for the non-extendible 30-day period
for the filing of the import entry in Section 1301:
MR. JAVIER (E.).
Under Sections 1210[26] and 1301 of the [TCC], Mr. Speaker, import
entries for imported articles must be filed within five days from the date of
discharge of the last package from the vessel. The five-day period, however, Mr.
Speaker, is subject to an indefinite extension at the discretion of the
collector of customs, which more often than not stretches to more than three
months, thus resulting in considerable delay in the payment of duties and
taxes.
This bill, Mr. Speaker, seeks to amend Sections 1210 and 1301 by
extending the five-day period to thirty days, which will no longer be
extendible, within which import entries must be filed for imported
articles. Moreover, to give the importer reasonable time, the bill prescribes a
period of fifteen days which may not be extended within which to claim his
importation from the time he filed the import entry. Failure to file an import entry
or to claim the imported articles within the period prescribed under the proposed

measure, such imported articles will be treated as abandoned and declared

as ipso facto the property of the government to be sold at public auction.
Under this new procedure, Mr. Speaker, importers will be constrained
under the threat of having their importation declared as abandoned and
forfeited in favor of the government to file import entries and claim their
importation as early as possible thus accelerating the collection of
duties and taxes. But providing for a non-extendible period of 30 days within
which to file an import entry, an appeal of fifteen days within which to claim the
imported article, the bill has removed the discretion of the collector of Customs to
extend such period thus minimizing opportunity for graft. Moreover, Mr. Speaker,
with these non-extendible periods coupled with the threat of declaration of
abandonment of imported articles, both the [BOC] and the importer are under
pressure to work for the early release of cargo, thus decongesting all ports of
entry and facilitating the release of goods and thereby promoting trade and
commerce.
Finally, Mr. Speaker, the speedy release of imported cargo coupled with the
sanctions of declaration of abandonment and forfeiture will minimize the
pilferage of imported cargo at the ports of entry.[27] (Emphasis supplied)
The filing of the IEIRDs has several important purposes: to ascertain the value of the
imported articles, collect the correct and final amount of customs duties and avoid smuggling of
goods into the country.[28] Petitioners interpretation would have an absurd implication: the 30-day
period applies only to the IED while no deadline is specified for the submission of the IEIRD. Strong
issues of public policy militate against petitioners interpretation. It is the IEIRD which accompanies
the final payment of duties and taxes.These duties and taxes must be paid in full before the BOC can
allow the release of the imported articles from its custody.
Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting a
significant portion of the public revenue which enables the government to carry out the functions it
has been ordained to perform for the welfare of its constituents. [29] Hence, their prompt and certain
availability is an imperative need [30] and they must be collected without unnecessary hindrance.
[31]
Clearly, and perhaps for that reason alone, the submission of the IEIRD cannot be left to the
exclusive discretion or whim of the importer.
We hold, therefore, that under the relevant provisions of the TCC, [32] both the IED and IEIRD
should be filed within 30 days from the date of discharge of the last package from the vessel or
aircraft. As a result, the position of petitioner, that the import entry to be filed within the 30-day
period refers to the IED and not the IEIRD, has no legal basis.
THE EXISTENCE OF FRAUD
WAS ESTABLISHED
Petitioner also denies the commission of fraud. It maintains that it had no predetermined
and deliberate intention not to comply with the 30-day period in order to evade the payment of the
10% rate of duty. Its sole reason for the delayed filing of IEIRDs was allegedly due to the late arrival

of the original copies of the bills of lading and commercial invoices which its suppliers could send
only after the latter computed the average monthly price of crude oil based on worldwide trading. It
claims that the BOC required these original documents to be attached to the IEIRD.
Petitioners arguments lack merit.
Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including
all acts, omissions, and concealment involving a breach of legal or equitable duty, trust or
confidence justly reposed, resulting in the damage to another, or by which an undue and
unconscionable advantage is taken of another. [33] It is a question of fact and the circumstances
constituting it must be alleged and proved in the court below. [34] The finding of the lower court as to
the existence or non-existence of fraud is final and cannot be reviewed here unless clearly shown to
be erroneous.[35] In this case, fraud was established by the IPD-CIIS of the BOC. Both the CTA First
Division and en banc agreed completely with this finding.
The evidence showed that petitioner bided its time to file the IEIRD so as to avail of a lower
rate of duty. (At or about the time these developments were taking place, the bill lowering the duty
on these oil products from 10% to 3% was already under intense discussion in Congress.) There was
a calculated and preconceived course of action adopted by petitioner purposely to evade the
payment of the correct customs duties then prevailing. This was done in collusion with the former
District Collector, who allowed the acceptance of the late IEIRDs and the collection of duties using
the 3% declared rate. A clear indication of petitioners deliberate intention to defraud the
government was its non-disclosure of discrepancies on the duties declared in the IEDs (10%) and
IEIRDs (3%) covering the shipments.[36]
It was not by sheer coincidence that, by the time petitioner filed its IEIRDs way beyond the
mandated period, the rate of duty had already been reduced from 10% to 3%.Both the CTA Division
and en banc found the explanation of petitioner (for its delay in filing) untruthful. The bills of lading
and corresponding invoices covering the shipments were accomplished immediately after loading
onto the vessels.[37] Notably, the memorandum of a district collector cited by petitioner as basis for
its assertion that original copies were required by the BOC was dated October 30, 2002.[38] There is
no showing that in 1996, the time pertinent in this case, this was in fact a requirement.
More importantly, the absence of supporting documents should not have prevented
petitioner from complying with the mandatory and non-extendible period, specially since the
consequences of delayed filing were extremely serious. In addition, these supporting documents
were not conclusive on the government.[39] If this kind of excuse were to be accepted, then the
collection of customs duties would be at the mercy of importers.
Hence, due to the presence of fraud, the prescriptive period of the finality of liquidation
under Section 1603 was inapplicable:
Section 1603. Finality of Liquidation. When articles have been entered
and passed free of duty or final adjustments of duties made, with subsequent
delivery, such entry and passage free of duty or settlements of duties will, after

the expiration of one (1) year, from the date of the final payment of duties, in the
absence of fraud or protest or compliance audit pursuant to the provisions of this
Code, be final and conclusive upon all parties, unless the liquidation of the import
entry was merely tentative.[40]

Section 1801. Abandonment, Kinds and Effect of. - An imported article

is deemed abandoned under any of the following circumstances:
a. When the owner, importer, consignee of the imported article expressly signifies
in writing to the Collector of Customs his intention to abandon; or

THE IMPORTATIONS WERE ABANDONED

IN FAVOR OF THE GOVERNMENT
The law is clear and explicit. It gives a non-extendible period of 30 days for the importer to file the
entry which we have already ruled pertains to both the IED and IEIRD. Thus under Section 1801 in
relation to Section 1301, when the importer fails to file the entry within the said period, he shall be
deemed to have renounced all his interests and property rights to the importations and these shall
be considered impliedly abandoned in favor of the government:
Section 1801. Abandonment, Kinds and Effect of. Any person who abandons an article or who fails to claim his
importation as provided for in the preceding paragraph shall be deemed to have
renounced all his interests and property rights therein.

b. When the owner, importer, consignee or interested party after due notice, fails
to file an entry within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from the vessel or aircraft
xxxx
From the wording of the amendment, RA 7651 no longer requires that there be other acts or
omissions where an intent to abandon can be inferred. It is enough that the importer fails to file the
required import entries within the reglementary period. The lawmakers could have easily retained
the words used in the old law (with respect to the intention to abandon) but opted to omit them. [43] It
would be error on our part to continue applying the old law despite the clear changes introduced by
the amendment.
NOTICE WAS NOT NECESSARY UNDER
THE CIRCUMSTANCES OF THIS CASE

According to petitioner, the shipments should not be considered impliedly abandoned because none
of its overt acts (filing of the IEDs and paying advance duties) revealed any intention to abandon the
importations.[41]
Unfortunately for petitioner, it was the law itself which considered the importation
abandoned when it failed to file the IEIRDs within the allotted time. Before it was amended, Section
1801 was worded as follows:
Sec. 1801. Abandonment, Kinds and Effect of. Abandonment is express
when it is made direct to the Collector by the interested party in writing and it
is implied when, from the action or omission of the interested party, an
intention to abandon can be clearly inferred. The failure of any interested
party to file the import entry within fifteen days or any extension thereof from the
discharge of the vessel or aircraft, shall be implied abandonment. An implied
abandonment shall not be effective until the article is declared by the Collector to
have been abandoned after notice thereof is given to the interested party as in
seizure cases.
Any person who abandons an imported article renounces all his interests
and property rights therein.[42]
After it was amended by RA 7651, there was an indubitable shift in language as to what could be
considered implied abandonment:

Petitioner also avers that the importations could not be deemed impliedly abandoned because
respondent did not give it any notice as required by Section 1801 of the TCC:
Sec. 1801. Abandonment, Kinds and Effect of. - An imported article is
deemed abandoned under any of the following circumstances:
b. When the owner, importer, consignee or interested party after due
notice, fails to file an entry within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from the vessel or
aircraft xxx (Emphasis supplied)
Furthermore, it claims that notice and abandonment proceedings were required under the
BOCs guidelines on abandonment (CMO 15-94):
SUBJECT: REVISED GUIDELINES ON ABANDONMENT
B.

ADMINISTRATIVE PROVISIONS

B.2 Implied abandonment occurs when:

B.2.1 The owner, importer, consignee, interested party or his authorized
broker/representative, after due notice, fails to file an entry within a nonextendible period of thirty (30) days from the date of discharge of last package
from the carrying vessel or aircraft.

Due notice to the consignee/importer/owner/interested party shall be by

means of posting of a notice to file entry at the Bulletin Board seven (7)
days prior to the lapse of the thirty (30) day period by the Entry Processing
Division listing the consignees who/which have not filed the required import
entries as of the date of the posting of the notice and notifying them of the
arrival of their shipment, the name of the carrying vessel/aircraft, Voy. No. Reg.
No. and the respective B/L No./AWB No., with a warning, as shown by the attached
form, entitled:URGENT NOTICE TO FILE ENTRY which is attached hereto as Annex A
and made an integral part of this Order.
C.

OPERATIONAL PROVISIONS

C.2 On Implied Abandonment:

C.2.1 When no entry is filed
C.2.1.1 Within twenty-four (24) hours after the completion of the boarding
formalities, the Boarding Inspector must submit the manifests to the Bay Service or
similar office so that the Entry Processing Division copy may be put to use by said office as
soon as possible.
C..2.1.2 Within twenty-four (24) hours after the completion of the unloading of
the vessel/aircraft, the Inspector assigned in the vessel/aircraft, shall issue
acertification addressed to the Collector of Customs (Attention: Chief, Entry Processing
Division), copy furnished Chief, Data Monitoring Unit, specifically stating the time and date
of discharge of the last package from the vessel/aircraft assigned to him. Said certificate
must be encoded by Data Monitoring Unit in the Manifest Clearance System.
C.2.1.3 Twenty-three (23) days after the discharge of the last package from the
carrying vessel/aircraft, the Chief, Data Monitoring Unit shall cause the printing of
theURGENT NOTICE TO FILE ENTRY in accordance with the attached form, Annex A
hereof, sign the URGENT NOTICE and cause its posting continuously for seven (7)
days at the Bulletin Board for the purpose until the lapse of the thirty (30) day
period.
C.2.1.4 The Chief, Data Monitoring Unit, shall submit a weekly report to the Collector of
Customs with a listing by vessel, Registry Number of shipments/ importations which shall
be deemed abandoned for failure to file entry within the prescribed period and with
certification that per records available, the thirty (30) day period within which to file the
entry therefore has lapsed without the consignee/importer filing the entry and that the
proper posting of notice as required has been complied with.

C.2.1.5 Upon receipt of the report, the Collector of Customs shall issue an order to the
Chief, Auction and Cargo Disposal Division, to dispose of the shipmentenumerated in
the report prepared by the Chief, Data Monitoring Unit on the ground that those are
abandoned and ipso facto deemed the property of the Government to be disposed of as
provided by law.
We disagree.
Under the peculiar facts and circumstances of this case, due notice was not necessary. The
shipments arrived in 1996. The IEDs and IEIRDs were also filed in 1996.However, respondent
discovered the fraud which attended the importations and their subsequent release from the BOCs
custody only in 1999. Obviously, the situation here was not an ordinary case of abandonment
wherein the importer merely decided not to claim its importations. Fraud was established against
petitioner; it colluded with the former District Collector. Because of this, the scheme was concealed
from respondent. The government was unable to protect itself until the plot was uncovered. The
government cannot be crippled by the malfeasance of its officials and employees. Consequently, it
was impossible for respondent to comply with the requirements under the rules.
By the time respondent learned of the anomaly, the entries had already been belatedly
filed and the oil importations released and presumably used or sold. It was a fait accompli. Under
such circumstances, it would have been against all logic to require respondent to still post an urgent
notice to file entry before declaring the shipments abandoned.
The minutes of the deliberations in the House of Representatives Committee on Ways and
Means on the proposed amendment to Section 1801 of the TCC show that the phrase after due
notice was intended for owners, consignees, importers of the shipments who live in rural areas or
distant places far from the port where the shipments are discharged, who are unfamiliar with
customs procedures and need the help and advice of people on how to file an entry:
MR. FERIA. 1801, your Honor. The question that was raised here in the last hearing was whether
notice is required to be sent to the importer. And, it has been brought forward that we can dispense
with the notice to the importer because the shipping companies are notifying the importers on the
arrival of their shipment. And, so that notice is sufficient to . . . sufficient for the claimant or
importer to know that the shipments have already arrived.
Second, your Honor, the legitimate businessmen always have . . . they have their agents
with the shipping companies, and so they should know the arrival of their shipment.
HON. QUIMPO. Okay. Comparing the two, Mr. Chairman, I cannot help but notice that in the
substitution now there is a failure to provide the phrase AFTER NOTICE THEREOF IS GIVEN
TO THE INTERESTED PARTY, which was in the original. Now in the second, in the
substitution, it has been deleted. I was first wondering whether this would be necessary in
order to provide for due process. Im thinking of certain cases, Mr. Chairman, where
the owner might not have known. This is now on implied abandonment not the express
abandonment.

HON. QUIMPO. Because Im thinking, Mr. Chairman. Im thinking of certain situations where
the importer even though, you know, in the normal course of business sometimes they fail
to keep up the date or something to that effect.

Sec. 1802. Abandonment of Imported Articles. - An abandoned article

shall ipso facto be deemed the property of the Government and shall be
disposed of in accordance with the provisions of this Code. (Emphasis supplied)

THE CHAIRMAN. Sometimes their cargoes get lost.

HON. QUIMPO. So just to, you know . . . anyway, this is only a notice to be sent to them
that they have a cargo there.
MR. PARAYNO. Your Honor, I think as a general rule, five days [extendible] to another five
days is a good enough period of time. But we cannot discount that there are some
consignees of shipments located in rural areas or distant from urban centers
where the ports are located to come to the [BOC] and to ask for help particularly
if a ship consignment is made to an individual who is uninitiated with customs
procedures. He will probably have the problem of coming over to the urban
centers, seek the advice of people on how to file entry. And therefore, the five
day extendible to another five days might really be a tight period for some. But
the majority of our importers are knowledgeable of procedures. And in fact, it is in
their interest to file the entry even before the arrival of the shipment. Thats why we have a
procedure in the bureau whereby importers can file their entries even before the shipment
arrives in the country.[45] (Emphasis supplied)
Petitioner, a regular, large-scale and multinational importer of oil and oil products, fell under
the category of a knowledgeable importer which was familiar with the governing rules and
procedures in the release of importations.
Furthermore, notice to petitioner was unnecessary because it was fully aware that its
shipments had in fact arrived in the Port of Batangas. The oil shipments were discharged from the
carriers docked in its private pier or wharf, into its shore tanks. From then on, petitioner had actual
physical possession of its oil importations. It was thus incumbent upon it to know its obligation to file
the IEIRD within the 30-day period prescribed by law. As a matter of fact, importers such as
petitioner can, under existing rules and regulations, file in advance an import entry even before the
arrival of the shipment to expedite the release of the same. However, it deliberately chose not to
comply with its obligation under Section 1301.
The purpose of posting an urgent notice to file entry pursuant to Section B.2.1 of CMO 1594 is only to notify the importer of the arrival of its shipment and the details of said shipment. Since
it already had knowledge of such, notice was superfluous. Besides, the entries had already been
filed, albeit belatedly. It would have been oppressive to the government to demand a literal
implementation of this notice requirement.
AN
ABANDONED
ARTICLE
SHALL IPSO FACTO BE
DEEMED
THE
PROPERTY OF THE GOVERNMENT
Section 1802 of the TCC provides:

The term ipso facto is defined as by the very act itself or by mere act. Probably a closer
translation of the Latin term would be by the fact itself. [46] Thus, there was no need for any
affirmative act on the part of the government with respect to the abandoned imported articles since
the law itself provides that the abandoned articles shall ipso factobe deemed the property of the
government. Ownership over the abandoned importation was transferred to the government by
operation of law under Section 1802 of the TCC, as amended by RA 7651.
A historical review of the pertinent provisions of the TCC dispels any view that is contrary to
the automatic transfer of ownership of the abandoned articles to the government by the mere fact of
an importers failure to file the required entries within the mandated period.
Under the former Administrative Code, Act 2711, [47] Section 1323 of Article XV thereof
provides:
Sec. 1323. When implied abandonment takes effect Notice An implied
abandonment shall not take effect until after the property shall be declared by the
collector to have been abandoned and notice to the party in interest as in seizure
cases.
Thereafter, RA 1937[48] was enacted. Section 1801 thereof provides:
Sec. 1801. Abandonment, Kinds and Effect of. Abandonment is express
when it is made direct to the Collector by the interested party in writing and it is
implied when, from the action or omission of the interested party, an intention to
abandon can be clearly inferred. The failure of any interested party to file the
import entry within fifteen days or any extension thereof from the discharge of the
vessel or aircraft, shall be implied abandonment. An implied abandonment shall
not be effective until the article is declared by the Collector to have been
abandoned after notice thereof is given to the interested party as in seizure cases.
Any person who abandons an imported article renounces all his interests
and property rights therein.
PD 1464[49] did not amend the provisions of the TCC on abandonment. The latest
amendment was introduced by Section 1802 of RA 7651 which provides:
Sec. 1802. Abandonment of Imported Articles. An abandoned article
shall ipso facto be deemed the property of the Government and shall be disposed
of in accordance with the provisions of this Code.

The amendatory law, RA 7651, deleted the requirement that there must be a declaration by
the Collector of Customs that the goods have been abandoned by the importers and that the latter
shall be given notice of said declaration before any abandonment of the articles becomes effective.
No doubt, by using the term ipso facto in Section 1802 as amended by RA 7651, the
legislature removed the need for abandonment proceedings and for a declaration that the imported
articles have been abandoned before ownership thereof can be transferred to the government. [50]
Petitioner claims it is arbitrary, harsh and confiscatory to deprive importers of their property
rights just because of their failure to timely file the IEIRD. In effect, petitioner is challenging the
constitutionality of Sections 1801 and 1802 by contending that said provisions are violative of
substantive and procedural due process. We disallow this collateral attack on a presumably valid
law:
We have ruled time and again that the constitutionality or validity of laws,
orders, or such other rules with the force of law cannot be attacked collaterally.
There is a legal presumption of validity of these laws and rules. Unless a law or
rule is annulled in a direct proceeding, the legal presumption of its validity stands.
[51]

Besides,
[a] law is deemed valid unless declared null and void by a competent
court; more so when the issue has not been duly pleaded in the trial court. The
question of constitutionality must be raised at the earliest opportunity. xxx The
settled rule is that courts will not anticipate a question of constitutional law in
advance of the necessity of deciding it.[52]
Be that as it may, the intent of Congress was unequivocal. Our policy makers wanted to do
away with lengthy proceedings before an importation can be considered abandoned:
x x x x x x xxx
MR. PARAYNO. Thank you, Mr. Chairman. The proposed amendment to Section
1801 on the abandonment, kinds and effects. This aimed to facilitate, Mr.
Chairman, the process by which this activity is being acted upon at the
moment. The intention, Mr. Chairman, is for the Customs Administration to be able
to maximize the revenue that can be derived from abandoned goods, and the
problem that we are encountering at the moment is that we have to go through a
lengthy process similar to a seizure proceedings to be able to finally declare the
cargo, the abandoned cargo forfeited in favor of the government and therefore,
may be disposed of pursuant to law. And that therefore, the proposed
amendment particularly on the implied abandonment as framed here
will do away with the lengthy process of seizure proceedings and
therefore, enable us to dispose of the shipments through public auction and other
modes of disposal as early as possible.

THE CHAIRMAN. In other words, Commissioner, therell be no need for a

seizure in the case of abandonment because under the proposed bill its
considered to be government property.[53]
CONCLUSION
Petitioners failure to file the required entries within a non-extendible period of thirty days
from date of discharge of the last package from the carrying vessel constituted implied
abandonment of its oil importations. This means that from the precise moment that the nonextendible thirty-day period lapsed, the abandoned shipments were deemed (that is, they became)
the property of the government. Therefore, when petitioner withdrew the oil shipments for
consumption, it appropriated for itself properties which already belonged to the
government. Accordingly, it became liable for the total dutiable value of the shipments of imported
crude oil amounting to P1,210,280,789.21 reduced by the total amount of duties paid amounting
to P316,499,021.00 thereby leaving a balance of P893,781,768.21.
By the very nature of its functions, the CTA is a highly specialized court specifically created
for the purpose of reviewing tax and customs cases. It is dedicated exclusively to the study and
consideration of revenue-related problems and has necessarily developed an expertise on the
subject. Thus, as a general rule, its findings and conclusions are accorded great respect and are
generally upheld by this Court, unless there is a clear showing of a reversible error or an improvident
exercise of authority. There is no such showing here.
WHEREFORE, the petition is hereby DENIED. Petitioner Chevron Philippines, Inc.
is ORDERED to pay the amount of EIGHT HUNDRED NINETY THREE MILLION SEVEN HUNDRED
EIGHTY ONE THOUSAND SEVEN HUNDRED SIXTY EIGHT PESOS AND TWENTY-ONE CENTAVOS
(P893,781,768.21) plus six percent (6%) legal interest per annum accruing from the date of
promulgation of this decision until its finality. Upon finality of this decision, the sum so awarded shall
bear interest at the rate of twelve percent (12%) per annum until its full satisfaction.
X -------------------------------------------------------------------------------------- X
Commissioner of Customs vs. Marina Sales
In
this
petition
for
review
on certiorari[1] under
Rule
45,
the
Commissioner
of
Customs (Commissioner), represented by the Office of the Solicitor General (OSG), assails the April
11, 2008 Resolution[2] of the Court of Tax Appeals En Banc (CTA-En Banc), in C.T.A. E.B. No. 333,
dismissing his petition for review for his failure to file a motion for reconsideration before the Court
of Tax Appeals Division (CTA-Division).
Respondent Marina Sales, Inc. (Marina) is engaged in the manufacture of Sunquick juice
concentrates. It was appointed by CO-RO Food A/S of Denmark, maker of Sunquick Juice
Concentrates, to be its manufacturing arm in the Philippines. As such, Marina usually imports raw
materials into the country for the purpose. In the past, the Bureau of Customs (BOC) assessed said
type of importations under Tariff Heading H.S. 2106.90 10 with a 1% import duty rate. [3]

On March 6, 2003, Marinas importation, labeled as Import Entry No. C-33771-03, arrived at the
Manila International Container Port (MICP) on board the vessel APL Iris V-111.Said Import Entry No.
C-33771-03 consisted of a 1 x 20 container STC with a total of 80 drums: (a) 56 drums of 225
kilograms Sunquick Orange Concentrate; and (b) 24 drums of 225 kilograms of Sunquick Lemon
Concentrate.[4] It was supported by the following documents: (a) Bill of Lading No. APLU 800452452
dated February 2, 2003;[5] and (b) CO-RO Food A/S of Denmark Invoice No. 1619409 dated January
27, 2003.[6]
Marina computed and paid the duties under Tariff Harmonized System Heading H.S. 2106.90 10 at
1% import duty rate.
This time, however, the BOC examiners contested the tariff classification of Marinas Import Entry No.
C-33771-03 under Tariff Heading H.S. 2106.90 10. The BOC examiners recommended to the Collector
of Customs, acting as Chairman of the Valuation and Classification Review Committee (VCRC) of the
BOC, to reclassify Marinas importation as Tariff Heading H.S. 2106.90 50 (covering composite
concentrates for simple dilution with water to make beverages) with a corresponding 7% import duty
rate.
The withheld importation being necessary to its business operations, Marina requested the District
Collector of the BOC to release Import Entry No. C-33771-03 under its Tentative Release System.
[7]
Marina undertook to pay the reclassified rate of duty should it be finally determined that such
reclassification was correct. The District Collector granted the request.
On April 15, 2003, the VCRC directed Marina to appear in a deliberation on May 15, 2003 and to
explain why its shipment under Import Entry No. C-33771-03 should not be classified under Tariff
Heading H.S. 2106.90 50 with import duty rate of 7%. [8]
On May 15, 2003, Marina, through its Product Manager Rowena T. Solidum and Customs Broker
Juvenal A. Llaneza, attended the VCRC deliberation and submitted its explanation, [9] dated May 13,
2003, along with samples of the importation under Import Entry No. C-33771-03.
On May 21, 2003, another importation of Marina arrived at the MICP designated as Import Entry No.
C-67560-03. It consisted of another 1 x 20 container STC with a total of 80 drums: (a) 55 drums of
225 kilograms of Sunquick Orange Concentrate; (b) 1 drum of 225 kilograms of Sunquick Tropical
Fruit Concentrate; (c) 17 drums of 225 kilograms of Sunquick Lemon Concentrate; (d) 3 drums of
225 kilograms of Sunquick Ice Lemon Concentrate; and (e) 4 drums of 225 kilograms Sunquick
Peach Orange Concentrate. The said importation was accompanied by the following documents: (a)
Bill of Lading No. KKLUCPH060291 dated April 17, 2003;[10] and (b) CO-RO Foods A/S Denmark
Invoice No. 1619746 dated April 15, 2003.[11]
Again, the BOC examiners disputed the tariff classification of Import Entry No. C-67560-03 and
recommended to the VCRC that the importation be classified at Tariff Heading H.S. 2106.90 50 with
the corresponding 7% duty rate.

In order for Import Entry No. C-67560-03 to be released, Marina once again signed an undertaking
under the Tentative Release System.[12]
In a letter dated July 7, 2003, the VCRC scheduled another deliberation requiring Marina to explain
why Import Entry No. C-67560-03 should not be classified under Tariff Heading H.S. 2106.90 50 at
the import duty rate of 7%.[13]
On July 17, 2003, Marina again attended the VCRC deliberation and submitted its
explanation[14] dated July 17, 2003 together with samples in support of its claim that the imported
goods under Import Entry No. C-67560-03 should not be reclassified under Tariff Heading H.S.
2106.90 50.
Thereafter, the classification cases for Import Entry No. C-33771-03 and Import Entry No. C-6756003 were consolidated.
On September 11, 2003, as reflected in its 1 st Indorsement, the VCRC reclassified Import Entry No. C33771-03 and Import Entry No. C-67560-03 under Tariff Heading H.S. 2106.90 50 at 7% import duty
rate.[15]
On October 7, 2003, Marina appealed before the Commissioner challenging VCRCs reclassification.[16]
In its 1st Indorsement of November 13, 2003,[17] the VCRC modified its earlier ruling and
classified Marinas Import Entry No. C-33771-03 and Import Entry No. C-67560-03 under Tariff
Heading H.S. 2009 19 00 at 7% duty rate, H.S. 2009.80 00 at 7% duty rate and H.S. 2009.90 00 at
10% duty rate.
Apparently not in conformity, Marina interposed a petition for review before the CTA on February 3,
2004, which was docketed as CTA Case No. 6859.
On October 31, 2007, the CTA Second Division ruled in favor of Marina[18] holding that
classification under Tariff Heading H.S. 2106.90 10 was the most appropriate and descriptive of
disputed importations.[19] It opined that Marinas importations were raw materials used for
manufacture of its Sunquick products, not ready-to-drink juice concentrates as argued by
Commissioner.[20] Thus, the decretal portion of the CTA - Second Division reads:
WHEREFORE, finding merit in petitioners Petition for Review, the same is hereby
GRANTED. Accordingly, the Resolution/Decision dated November 13, 2003 of the
Valuation and Classification Review Committee of the Bureau of Customs is hereby
SET ASIDE and petitioners importation covered by Import Entry Nos. C-33771-03
and C-67560-03 are reclassified under Tariff Harmonized System Heading H.S.
2106.90 10 with an import duty rate of 1%.
SO ORDERED.

its
the
the
the

The Commissioner disagreed and elevated the case to the CTA-En Banc via a petition for review.[21]
In its Resolution of April 11, 2008, the CTA En Banc dismissed the petition. The pertinent portions of
the decision including the fallo read:
A careful scrutiny of the record of this case showed that petitioner failed to file
before the Second Division the required Motion for Reconsideration before
elevating his case to the CTA En Banc.
Section 1, Rule 8 of the Revised Rules of the Court of Tax Appeals provided for the
following rule, to wit:
RULE 8
PROCEDURE IN CIVIL CASES
SECTION 1. Review of Cases in the Court en banc.- In cases
falling under the exclusive appellate jurisdiction of the Court en
banc, the petition for review of a decision or resolution of the
Court in Division must be preceded by the filing of a
timely motion for reconsideration or new trial with the
Division.
In statutory construction, the use of the word must indicates that the requirement
is mandatory. Furthermore, the word must connote an imperative act or operates
to simply impose a duty which may be enforced. It is true the word must is
sometimes construed as may permissive but this is only when the context requires
it. Where the context plainly shows the provision to be mandatory, the word must
is a command and cannot be construed as permissive, but must be given the
signification which it imparts.
It is worthy to note that the Supreme Court ruled that a Motion for Reconsideration
is mandatory as a precondition to the filing of a Petition for Review under Rule 43
of the Rules of Court.
WHEREFORE, applying by analogy the above ruling of the Supreme Court and
taking into consideration the mandatory provision provided by Section 1 of Rule 8
of the Revised Rules of the Court of Tax Appeals and considering further that
petitioner did not file a Motion for Reconsideration with the Second Division before
elevating the case to the Court En Banc, which eventually deprived the Second
Division of an opportunity to amend, modify, reverse or correct its mistake or error,
if there be, petitioners Petition for Review is hereby DISMISSED.

A.WHETHER THE DISMISSAL BY THE COURT OF TAX APPEALS EN BANC OF

PETITIONERS PETITION BASED ON MERE TECHNICALITY WILL RESULT IN INJUSTICE
AND UNFAIRNESS TO PETITIONER.
B.WHETHER THE CHALLENGED DECISION OF THE COURT OF TAX APPEALS SECOND
DIVISION HOLDING THAT RESPONDENTS IMPORTATION ARE COVERED BY IMPORT
ENTRY NOS. C-33771-03 AND C-67560-03 ARE CLASSIFIED UNDER TARIFF
HARMONIZED SYSTEM HEADING H.S. 2106.90 10 WITH AN IMPORT DUTY RATE OF
ONE PERCENT (1%) IS NOT CORRECT.[25]
The Commissioner argues that the dismissal of his petition before the CTA-En Banc is
inconsistent with the principle of the liberal application of the rules of procedure. [26] He points out
that due to the dismissal of the petition, the government would only be collecting 1% import duty
rate from Marina instead of 7%.[27] This, if sanctioned, would result in grave injustice and unfairness
to the government.[28]
The Commissioner also contends that the testimony of Marinas expert witness, Aurora
Kimura, pertaining to Sunquick Lemon compound shows that it could be classified as heavy
syrup[29] falling under the category of H.S. 2190.90 50 with a 7% import duty rate. [30]
The Court finds no merit in the petition.
On the procedure, the Court agrees with the CTA En Banc that the Commissioner failed to
comply with the mandatory provisions of Rule 8, Section 1 of the Revised Rules of the Court of Tax
Appeals[31] requiring that the petition for review of a decision or resolution of the Court in
Division must be preceded by the filing of a timely motion for reconsideration or new trial with the
Division. The word "must" clearly indicates the mandatory -- not merely directory -- nature of a requirement. [32]
The rules are clear. Before the CTA En Banc could take cognizance of the petition for review
concerning a case falling under its exclusive appellate jurisdiction, the litigant must sufficiently show
that it sought prior reconsideration or moved for a new trial with the concerned CTA
division. Procedural rules are not to be trifled with or be excused simply because their noncompliance may have resulted in prejudicing a partys substantive rights. [33] Rules are meant to be
followed. They may be relaxed only for very exigent and persuasive reasons to relieve a litigant of
an injustice not commensurate to his careless non-observance of the prescribed rules. [34]
At any rate, even if the Court accords liberality, the position of the Commissioner has no
merit. After examining the records of the case, the Court is of the view that the import duty rate of
1%, as determined by the CTA Second Division, is correct.
The table shows the different classification of Tariff import duties relevant to the case at
bar:
TARIFF HEADING

IMPORT
RATE

H.S. 2106.90 10

1%

Covers flavouring materials, nes., of kind used in food and

drink industries; other food preparations to be used as raw
material in preparing composite concentrates for making
beverages

H.S. 2106.90 50

7%

Covers composite concentrate for simple dilution with

water to make beverages

The Commissioner sought reconsideration of the disputed decision, but the CTA En Banc issued a
denial in its July 14, 2008 Resolution.[23] Hence, this petition.

DUTY

COVERAGE

H.S. 2009. 19 00

7%

Covers orange juice, not frozen

H.S. 2009.80 00

7%

Covers juice of any other single fruit or vegetable

H.S. 2009.90 00

10%

Covers mixtures of juices

The Commissioner insists that Marinas two importations should be classified under Tariff
Heading H.S. 2106.90 50 with an import duty rate of 7% because the concentrates are ready for
consumption by mere dilution with water.
The Court is not persuaded.
As extensively discussed by the CTA Second Division, to fit into the category listed under
the Tariff Harmonized System Headings calling for a higher import duty rate of 7%, the imported
articles must not lose its original character. In this case, however, the laboratory analysis of Marinas
samples yielded a different result. [35] The report supported Marinas position that the subject
importations are not yet ready for human consumption. Moreover, Marinas plant manager, Rebecca
Maronilla, testified that the juice compounds could not be taken in their raw form because they are
highly concentrated and must be mixed with other additives before they could be marketed as
Sunquick juice products. If taken in their unprocessed form, the concentrates without the mixed
additives would produce a sour taste. [36] In other words, the concentrates, to be consumable, must
have to lose their original character. To quote the CTA Second Division:
Verily, to fall under the assailed Tariff Harmonized System Headings,
petitioners (herein respondent) articles of importation, as fruit juices/mixtures,
should not have lost its original character, in spite of the addition of certain
standardizing agents/constituents. Contrary thereto, We find the subject
importations categorized as non-alcoholic composite concentrates to have
apparently lost their original character due to the addition of ingredients in such
quantity that the concentrated fruit juice mixture only comprises a small
percentage of the entire compound.
This was clearly explained by the VCRC in its subsequent
Resolution/Decision (1st Indorsement) issued on February 17, 2005 pertaining to
subsequent similar importations of petitioner, effectively correcting its findings in
the assailed Resolution/Decision dated November 13, 2003 concerning the same
party-importer, issues and articles of importation,[37] to wit:
SUB-GROUP OBSERVATIONS/FINDINGS:
The classification issue was divided into two regimes. The era under the
old Harmonized Commodity Description and Coding System, while the
other is the latest revised edition, the Asean Harmonized Tariff
Nomenclature.

The previous committee resolution was promulgated technically not on

the merit of the case but failure on the part of the importer to submit
their position paper/arguments within the prescriptive period given by
the committee.
Importer submitted samples of subject shipment for laboratory analysis
to Philippine Customs laboratory to validate the veracity of product
information given by the supplier and to determine the correct tariff
classification.
Xxx xxx xxx
Based on the report of the Laboratory Analysis, compound is made up
to water 57.9%, Invert Sugar 34.34%, Citric Acid 2.94%, Vitamin C
(Ascorbic Acid) 105 mg.
Since the item is compound which is composed of water, sugar,
concentrated juice, flavourings, citric acid, stabilizer, preservatives,
vitamins C and colouring to produce beverage ready to
drink. Consequently the concentrated citrus juice has lost its
original character due to the fact that it comprises only 12% of
the total compound.[38]
Items (fruit juices) classifiable under HS 2009 are fruit juices generally
obtained by pressing fresh, healthy and ripe fruit. Per item 4 of the
Explanatory Notes to the Harmonized Commodity Description and
Coding System apparently subject article has lost its original character
as concentrated fruit juice drink to the compounding ingredients which
reduces the fruit juices to 12% of the total compound.
In view of the foregoing subject article is classifiable under Tariff
Heading H.S. 2106.90 10 at 1% for entries filed under the old
regime. For those filed under the new regime tariff heading AHTN
2106.90 51 at 1% where the item are specifically provided.
RESOLUTION: To apply sub-group recommendation which is to adopt
H.S. 2106.90 10 at 1% for entries filed under the old regime
and for those filed under the new regime, AHTN 2106.90 51 at
1% where the item are specifically provided.[39]

To manufacture is to make or fabricate raw materials by hand, art or machinery, and work
into forms convenient for use.[40] Stated differently, it is to transform by any process into another

form suitable for its intended use. Marina, as the manufacturing arm of CO-RO Food A/S of Denmark,
transforms said juice compounds, being raw materials, into a substance suitable for human
consumption. This is evident from the Commissioners Report [41] of Executive Clerk of Court II, CTA,
Jesus P. Inocando, Jr., who conducted an ocular inspection of Marinas manufacturing plant in Taguig
City. Pertinent excerpts of the Commissioners Report are herein reproduced:
On our ocular inspection of the manufacturing plant of petitioner, Ms.
Solidum and Mr. Domingo showed us the sample of the imported compounds (raw
materials), showed to us the step by step manufacturing process of petitioner and
even showed us the bottling and packaging of the finished product.

Per observation of the undersigned, the imported compounds (raw

materials) are very sticky, the plant is clean and that the personnel of petitioner in
the plant strictly following the manufacturing process as presented in Annex A and
Annex B of this report.
Upon questioning by the counsel for respondent, Mr. Domingo said that
while the imported compounds (raw materials) can be mixed with water and may
be drinkable, he is not sure if the same is suitable for human consumption. None of
us dared to taste the sample of imported compounds (raw materials) diluted in
water. The imported compounds (raw materials) mixed with water produces
bubbles on top of the mixture, not like the one that has gone through the
manufacturing process. Counsel for respondent requested for the marking of Label
of Sunquick Lemon (840 ml.), [Annex C], as Exhibit 1 for the respondent. [42]
Contrary to the Commissioners assertions, empirical evidence shows that the subject
importations would have to undergo a laborious method, as shown by its manufacturing
flowchart[43] and
manufacturing
process,[44] to
achieve
their
marketable
juice
consistency. Accordingly, the 1% tariff import duty rate under Tariff Heading H.S. 2106.90 10 was
correctly applied to the subject importations.
In any case, the VCRC in its 1st Indorsement[45] of February 17, 2005 (a subsequent
proceeding involving the same type of importation) rectified the disputed tariff reclassification
rate. Thus, in Marinas succeeding importations, the VCRC already adopted the 1% import duty rate
as paid by Marina in the past.
WHEREFORE, the petition is DENIED.
X -------------------------------------------------------------------------------------- X
Jardeleza vs. People
This is a petition for review of the Decision [1] of the Court of Appeals (CA) in CA-G.R. CR No. 25912
affirming, on appeal, the decision of the Regional Trial Court (RTC) ofPasay City, Branch 117,
convicting Maribel B. Jardeleza, the accused therein, of violating the Tariff and Customs Code (TCC)
of the Philippines, as amended.

The Antecedents
The Information charging Jardeleza with violating the TCC was filed before the RTC of Pasay City
on October 23, 1997. The accusatory portion of the indictment reads:
That on February 28, 1997, at the arrival area of the Ninoy Aquino International
Airport in Paraaque, Metro Manila, and within the jurisdiction of this Honorable
Court, the above-named Accused did, then and there, wilfully, unlawfully and
feloniously, bring or import into the Philippines in a fraudulent and illegal manner a
total of TWENTY POINT ONE (20.1) kilograms of assorted gold jewelry with an
estimated value of PESOS SEVEN MILLION FIVE HUNDRED SIXTY-TWO THOUSAND
TWO HUNDRED THIRTY-ONE POINT FIFTY CENTAVOS (P7,562,231.50).
That the entry of said 20.1 kilograms of imported assorted gold jewelry into the
country was made by the above-named Accused by hiding said jewelry inside a
hanger bag and, thereafter, by not declaring it in the Customs Declaration form
and, likewise, by verbally denying that she is carrying said items by answering NO
when asked by Bureau of Customs if she has anything to declare prior to the actual
inspection of her luggage.[2]
The Case for the Prosecution
On February 27, 1997, Lt. Aquilino Ancheta of the Customs Police at the Ninoy Aquino International
Airport (NAIA) issued an alert order directing all customs policemen to monitor an alleged carrier of
jewelry on board Philippine Airlines (PAL) Flight No. PR-502, scheduled to fly in from Singapore the
next day.[3] Special Customs Agent Antonio Fuentebella was assigned as Team Leader of X-Ray
Operations,[4] while Police Officer Rodrigo Raada was assigned as one of its members. [5] The Customs
Law Enforcement Chief also directed the examiners to conduct rigid luggage inspection of said crew
members.[6] Accordingly, customs operation police officers prepared to conduct the surveillance
operations.
On February 28, 1997, Customs Examiner Estelita Nario was assigned in the arrival area at
the NAIA, Lane 1, which was exclusively for crew members of incoming passenger planes, including
flight attendants and stewardesses.
Jardeleza, a flight stewardess of PAL Flight No. PR 502, approached Lane 1 for baggage
checking at about 1:00 p.m. to 2:00 p.m. She had two pieces of hand-carried luggage a black bag
and black hanger (zipper) bag.[7] She approached Nario to have the bags examined, and showed the
Customs Declaration Form she had accomplished and signed. [8] Raada was about two feet away.
[9]
Fuentebella was inspecting the baggage of the incoming passengers.[10]
Nario asked Jardeleza if she had anything to declare, and the latter replied, No. Nario checked
Jardelezas Customs Declaration Form, and found that nothing was written or marked on the form.

[11]

Nario then checked the black hand-carried bag, and found that it contained Jardelezas personal
belongings.[12] Nario next told Jardeleza to place her hanger bag on top of the examination table and
to open it for inspection.[13]
Jardeleza complied and opened her hanger bag. Nario unzipped the bag and found some clothes
inside.[14] Nario proceeded to unzip the interior pockets of the bag and found three black leatherette
envelopes,[15] each measuring about one foot by a little over one foot, no more than three inches
thick. Nario opened one of the leatherette envelopes and found Bosch spark plug brochures stacked
inside.[16] As she emptied the envelope of its contents, she felt something bulging (matambok)
beneath
the
lining.[17] She
slipped her hand into the opening and found pieces of jewelry. [18]
Nonplussed, Jardeleza stopped Nario. She placed her hands on the envelope and the hand
that held it, looked Nario in the eye, and requested that she be brought inside the examination room
at the arrival area because there were media people and law enforcers close by. [19] To keep Jardeleza
from being embarrassed, Nario relented. [20] Fuentebella and Raada helped Jardeleza carry her
handbags to the examination room.
Once inside, Nario placed the three leatherette envelopes on the table. Deputy Collector for
Passenger Services Rodolfo Buendia and Chief of the Legal and Investigation Staff Atty. Lourdes
Mangaoang had been alerted of the incident. The envelopes were opened and their contents
examined in the presence of Buendia and Atty. Mangaoang. Pictures of the bags, [21] including the
examination, were taken.[22] Nario removed the brochures from the leatherette envelopes. While she
saw nothing else inside, she noticed the bulge beneath the lining. She tried to look for an opening
until she saw that it was already partially detached. She slipped her hand through the detached
portion and retrieved a pack of light brown paper which, when opened, revealed several pieces of
jewelry.[23]
Nario opened the second leatherette envelope, [24] and also found brochures. When she emptied the
envelope of its contents, she noticed a similar bulging beneath the lining. Once opened, she
discovered gold earrings wrapped in a light brown paper. An inspection of the third leatherette
envelope[25] yielded pieces of gold rings hidden beneath the lining. Nario placed the jewelry back in
the envelopes and placed her signature thereon. [26]
Nario prepared Held-Baggage Receipt No. 16592, [27] where she listed the pieces of jewelry found in
Jardelezas bags, including their gross weight. She signed the receipt and gave a copy to
Jardeleza. Nario then turned over the jewelry to the Customs In-Bound Room. [28] The receipt was duly
noted by Buendia. Nario then prepared and signed a report [29] to the district collector, recommending
that the seized jewelries be confiscated for violation of Sections 3601 and 3602, in relation to
Section 2505 of the TCC.
When apprised of the foregoing, Atty. Luis Adviento, the District Commander of the Customs Police,
ordered that Jardeleza be brought to the Legal and Investigation Staff for investigation.

Aurelio B. Cabugao of the Legal and Investigation Staff of the Customs Police Division investigated
the case and submitted a Memorandum[30] to the Customs Police Director which was duly noted by
Atty. Mangaoang. He reported that based on initial investigation, Fuentebella had asked Jardeleza if
she had anything to declare, she replied that she was carrying taxable items and asked that they
proceed to the Baggage Extension Office. He also recommended that a seizure and detention order
of the jewelry be issued pursuant to Section 2505 of the TCC.
Alma Duplito, a customs jewelry appraiser, assessed the value of the jewelry at P2,979,021.50 and
their dutiable value at P4,583,000.00.[31]
On March 31, 1997, Cabugao submitted his Final Report on the investigation. He stated that
Jardeleza did not declare the assorted jewelries and recommended that charges be filed against her
for violation of Sections 3601 and 3602, in relation to Section 2505, of the TCC. [32] On April 30, 1997,
Nario executed her Affidavit[33] relative to the incident.
The Case for the Accused
For her part, Jardeleza testified that she had been with PAL for 23 years. She was assigned to
domestic flights during her first year, and in the succeeding years, to international flights. [34] She
knew
the
policy
of
the
Bureau of Customs regarding the exclusive lane through which arriving airline crew members have
to pass. She also knew the policy requiring a 100% examination of all pieces of baggage carried by
them.[35]
Jardeleza further narrated that her retirement from PAL was approaching. She decided to invest in
the jewelry business with her friend Alberto, and she would get a percentage from the business
venture.[36] Her friend acquired assorted jewelries worth P2,000,000.00 and gave them to her for
transportation to the Philippines. The pieces of jewelry were placed inside the leatherette bags,
which she, in turn, placed in her handbags. Albert also gave her a list of the jewelry.[37]
According to Jardeleza, she knew that the jewelry items were taxable, and that she was
obliged to declare them in the Customs Declaration Form of the Customs Bureau. [38] When PAL Flight
No. PR-502 landed from Singapore, she was carrying three pieces of baggage: a shoulder bag, a
traveling bag and a hanger bag.[39] Her hanger bag contained jewelry items, but she did not declare
them in the Customs Declaration Form because they were numerous and could not be
accommodated in the tiny form. As she was completely aware of the two Customs policies, she
readily told Nario (in the presence of two other customs people one of whom was Fuentebella), about
the taxable items she was carrying. [40] Fuentebella approached her and asked what was inside her
bag. She readily answered that they were jewelry items. [41]
Jardeleza then requested that her bags be examined inside the examination room to avoid the
mischievous eyes of press people.[42] Her request was granted, and the three of them Nario,
Fuentebella and Raada helped carry her luggage to the examination room. [43] There she opened her
luggage and, thereafter, a count was made of the jewelry items. [44] While the examination was being

conducted, Deputy District Collector Buendia and Atty. Mangaoang entered and they too witnessed
the examination of her baggage.[45]
After the inventory, pictures were taken.[46] Later, Nario left but Atty. Mangaoang told her to come to
her office at the NAIA Terminal 1 basement. [47] When she reached the office, she saw a man in front
of the computer whom Atty. Mangaoang introduced as Aurelio Cabugao, the assigned investigator on
the case. While peeping through the screen, she saw the name of a certain Fuentebella. [48] Curiously,
they left Cabugao alone in the room.[49]
According to Jardeleza, Atty. Mangaoang demanded P100,000.00 for her and another P400,000.00
for the rest of the Customs people involved. She told Atty. Mangaoang that she did not have that
kind of money.[50] When she told Atty. Mangaoang that she would think it over, [51] she was asked to
write the following phone numbers on a piece of paper a girl had given her: 912-7845 in the
bedroom, and 913-3670 in the living room. She was also instructed to call if she had the money.
[52]
Then, at about 7:00 p.m., after some six hours, the Customs people allowed her to go home. [53]
Jardeleza adduced in evidence the Memorandum [54] of Cabugao dated February 28, 1997 to the
District Commander; the 1st Indorsement of Atty. Louie Adviento of said report to the District
Collector of Customs;[55] and the Warrant of Seizure and Detention Order issued on March 25,
1997 by the Customs District Collector.[56]
Daniel Aquino, a customs police at the NAIA, testified that he discovered the affidavit of Fuentebella
dated February 28, 1997 in the computer files in Atty. Mangaoangs office, where Fuentebella stated
that Jardeleza admitted to him that she was carrying taxable items. He also read the April 30,
1997 Affidavit of Fuentebella and noticed that Jardelezas admissions contained in the February 28,
1997 Affidavit were not stated therein. [57] On cross-examination, Aquino admitted that said
affidavits/computer files were not signed by the supposed officers.[58]

After Jardeleza had been apprehended, Customs Deputy Collector for Passenger Services
Rodolfo Buendia told her, Attorney, 1.5 million ang panggastos dyan. She clarified that Buendia has
since been separated from the service. She further revealed that the 1.5 million offer was reiterated
by Ding Villanueva, a Customs broker. Atty. Estelita Diaz, the hearing officer in the seizure case, also
offered her P10,000.00 not to file the case. Ramon Tan, an intelligence officer of the Bureau of
Immigration and Deportation, also approached her and said, Pwede ba nating aregluhin ang kaso ni
Jardeleza, may panggastos ito. One of the men under her, Daniel Aquino, asked for Jardelezas
passport, but Aurelio Cabugao, the investigator, refused to hand it over. The passport was later
stolen from her office. Carlota Gabriel approached her sometime in March, and informed her that
Atty. Sancho Almeda might handle the case. She was also asked if the seizure case could be settled.
[61]

Atty. Mangaoang further testified that there were other people in the office when Deputy Collector
Buendia tried to bribe her, but they were not within hearing distance; when Ding Villanueva told her
that there was 1.5 million for the boys, they were alone. She also claimed that Atty. Diaz offered
the P10,000.00 to her at the arrival area. While she did not charge, she filed an administrative case
against Atty. Diaz before the Office of the Ombudsman. Jardeleza herself, in turn, charged her (Atty.
Mangaoang) before the same office.[62] Cabugao executed an affidavit corroborating, in part, Atty.
Mangaoangs testimony.
The Ruling of the Trial Court
On December 15, 2000, the trial court rendered judgment convicting the accused of
violating Section 3601 of the TCC, as amended. The fallo of the decision reads:
WHEREFORE, this court hereby finds accused MARIBEL B. JARDELEZA guilty
beyond reasonable doubt of the crime of SMUGGLING as defined under Section
3601 of the Tariff and Customs Code of the Philippines.

Atty. Estelita Diaz, who was designated as Hearing Officer in the NAIA Lane Division during the
period from 1988 to 1997, testified on the need for customs examiners to follow the procedure laid
down in Memorandum Order (MO) No. 40, Series of 1957, and reiterated in MO No. 53, Series of
1958, of the Bureau of Customs.

Accordingly, said accused is hereby sentenced to suffer an indeterminate

imprisonment of EIGHT (8) YEARS and ONE (1) DAY, as minimum, to TWELVE (12)
YEARS, as maximum, to pay a fine of TEN THOUSAND PESOS (P10,000.00), and to
pay the costs.

Other Evidence of the Prosecution

The entire jewelry subject of this case which weighs TWENTY POINT TEN (20.10)
KILOGRAMS are hereby forfeited in favor of the State. The record shows that these
pieces of jewelry are now in the custody of the Bureau of Customs of
the Philippines. Said bureau may now dispose of them in accordance with law. [63]

Atty. Mangaoang denied Jardelezas accusation of bribery. She testified that she was at her office at
the basement of the NAIA in the afternoon of February 28, 1997 when Atty. Adviento (who was at the
arrival area) called her because somebody had been apprehended for bringing in jewelry. She then
proceeded to the interview room at the arrival area, where she met Jardeleza, a PAL stewardess who
told her and Adviento that there were still pieces of jewelry on the plane. She instructed the Customs
Police to search the plane, but the search yielded negative results. [59] She insisted
that she never demanded any money from Jardeleza or from anyone, and that it was the first time
she had met the woman.[60]

The trial court gave credence and probative weight to the collective testimonies of the witnesses for
the prosecution. It rejected the defense of the accused that her importation of the jewelry was not
absolutely or unqualifiedly prohibited by law.
The Proceedings in the Court of Appeals

I.

THE HONORABLE COURT A QUO ERRED IN CONVICTING THE ACCUSED UNDER

SECTION 3601 OF THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES (TCC)
WHEN THE FACTS ALLEGED BOTH IN THE INFORMATION AND THOSE SHOWN
BY THE PROSECUTION CONSTITUTE THE OFFENSE PUNISHABLE UNDER
SECTION 2505 OF THE TCC, OF WHICH THE ACCUSED WAS ACQUITTED.

II.

ASSUMING MOREOVER THAT THE CHARGE AND PROOF ARE COVERED UNDER
SECTION 3601 OF THE TCC, THE HONORABLE COURT A QUO ERRED IN
DISREGARDING CUSTOMS MEMORANDUM ORDER NOS. 40 AND 53 AND THE
ADMINISTRATIVE CONSTRUCTION PLACED UPON THE PERTINENT PROVISIONS
OF THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES BY CUSTOMS
AUTHORITIES.

Petitioner maintains that, under the Information and the evidence adduced by the prosecution, she
was charged and found guilty of violating Section 2505 of the TCC. She avers that the provision
specifically refers to an arriving person, including airline crew, who brings in dutiable articles without
declaring the same in the customs declaration, and that for failing to make such declaration or to
mention the same verbally may result in the seizure of the baggage and articles, unless it can be
satisfactorily explained that such failure was without fraud. She avers that the law specifically refers
to baggage declaration and not to an import or export entry. In contrast, Section 3601 of the TCC
covers importing or bringing into the country, in a fraudulent manner, any article, contrary to law, or
one who assists in such criminal act or receives, conceals, brings or sells or, in any way, helps in the
transportation, concealment or sale of such article, knowing the same to have been imported
contrary to law. She insists that it refers to rampant smuggling in any port in thePhilippines without
the filing of an import or export entry, and is called swing. Petitioner points out that the law does not
speak of any entry or baggage declaration. Section 3601 is general in its scope, while Section 2505
is special and applies only to a criminal case following under it. The words contrary to law are
descriptive of, and qualifies the word article and not to the manner of importation. In contrast,
Section 3602 refers to the filing of a false entry.

III.

ASSUMING THAT THE CHARGE AND THE PROOF CAN BE LEGALLY PLACED
UNDER THE PURVIEW OF SECTION 3601 OF THE TCC, THE HONORABLE
COURT A QUOERRED IN CONVICTING THE ACCUSED DESPITE LACK OF PROOF
BEYOND REASONABLE DOUBT.[64]

Petitioner asserts that Sections 2505, 3601 and 3602 of the TCC are separate and distinct
from one another, penalizing as they do different offenses of smuggling. She insists that the facts
constituting the filing of one charge cannot interchangeably be held to constitute the crime under
any of the other two provisions, as the laws cannot be mixed with one set of facts.

Jardeleza appealed the decision to the CA, where she raised the following principal issues:

On September 8, 2004, the CA rendered judgment affirming the decision of the RTC.
The appellate court ruled that, based on the material averments of the Information,
Jardeleza was charged with violating Section 3601 of the TCC. It affirmed the RTC ruling that the
prosecution mustered the requisite quantum of evidence to prove her guilt beyond reasonable
doubt. According to the CA, Jardeleza committed actual fraud when she brought 20.1 kilograms of
taxable assorted jewelries into the country without declaring them in the customs declaration form
as required by law. Moreover, she denied having said articles in her possession and hid them
beneath the lining of the leatherette envelopes in her hanger bag. The appellate court affirmed the
trial courts finding that Jardeleza smuggled the jewelry items into the country, and that such
importation was contrary to law. It also ruled that the inconsistencies attributed to the testimonial
and documentary evidence of the prosecution were minor and peripheral.
Jardeleza filed a motion for reconsideration of such ruling, which the CA denied.
Petitioner now comes before this Court, alleging that (a) she was charged with violating
Section 2505 of the TCC under the Information, and that the prosecution adduced evidence to prove
her liability; hence, her conviction for violation of Section 3601 of the TCC is erroneous; and (b) the
prosecution failed to prove her guilt beyond reasonable doubt for violation of Section 3601, in
relation to Section 2505, of the TCC.

On the other hand, the CA ruled that under the Information, petitioner was charged of
smuggling under Section 3601 of the TCC. She committed actual fraud when she brought into the
country 20.1 kilograms of taxable assorted jewelries without declaring them to the Customs
authorities as required by law. Worse, she expressly denied possession of said articles and hid them
surreptitiously. That she later disclosed the existence of said jewelry or intended to pay their
corresponding duties and taxes was merely an afterthought to avoid liability.
The appellate court also declared that petitioner was caught in flagrante delicto. When dutiable
goods are omitted in a baggage declaration and the omission is not due to inadvertence or
ignorance, it is deemed to be fraudulent. The appellate court declared that to warrant her acquittal,
petitioner must prove that in carrying the subject jewelry, her act was innocent and done without
intent to defraud. It further declared that petitioner could not stretch the phrase contrary to law as
descriptive of the word article to exempt her from the illegal importation. It cited the ruling of the
RTC that the law considers any person who, contrary to law, imports any article as guilty of
smuggling without regard to whether the article itself is absolutely or qualifiedly prohibited. The CA
declared that the crime sought to be punished by this law is the act of importing or bringing into
thePhilippines any article contrary to law; it does not concern itself with the nature of the article so
imported or brought in.[65]
The CA maintained that petitioners interpretation of Sections 2505 and 3602 of the law is
untenable. It pointed out that Section 2505 speaks of failure to declare baggage which can be seized
and be released only to its owner upon payment of the taxes and duties unless such failure was
attended by fraud. On the other hand, Section 3602 lays down the various acts of importation, entry

or exportation of articles considered as fraudulent. In short, Section 2505 pertains to compliance

with a requirement in declaring a baggage, Section 3602 enumerates the fraudulent acts in
smuggling, while Section 3601 prescribes the penalty therefor. The appellate court stated that these
three provisions are harmonized into one interpretation and application befitting the circumstances
in the case at bench.
For its part, respondent People of the Philippines, through the Office of the Solicitor General, avers
that there is no question that petitioner brought into the country 20.1 kilograms of assorted gold
jewelries
which
she
placed inside three black leatherette envelopes and contained in the baggage she personally
carried. What made the act punishable under Section 3601 of the TCC was her failure to declare the
items in the Customs Declaration Form as required under Section 2505 of the TCC, thus, making
petitioners act contrary to law. In other words, the phrase contrary to law refers to the petitioners
act, and not to dutiable goods brought into the country. [66]
The Ruling of the Court
The petition has no merit.
The contention of petitioner that Section 2505 of the TCC defines a crime is not correct. Title No. VI,
Part 4, Section 2505 of the TCC reads:
SEC. 2505. Failure to Declare Baggage. Whenever any dutiable article is found in
the baggage of any person arriving within the Philippines which is not included in
the baggage declaration, such article shall be seized and the person in whose
baggage it is found may obtain release of such article, if not imported contrary to
any law, upon payment of treble and appraised value of such article plus all duties,
taxes and other charges due thereon unless it shall be established to the
satisfaction of the Collector that the failure to mention or declare said dutiable
article was without fraud.
Nothing in this section shall preclude the bringing of criminal action against the
offender.
A person arriving in the Philippines with baggages containing dutiable articles is bound to declare
the same in all respects. [67] In order to meet the convenience of the travelers, a simple and more
expeditious method of customs clearance is provided for baggages occupying the passage therein
for goods imported in the regular manner.[68] Official entry forms and forms of baggage declaration
are supplied to the passengers to be filled before the customs officer. [69] The traveler has the burden
of carrying forward items that have to be declared before examination of the cargo has
begun. Adequate reporting of dutiable merchandise being brought into the country is absolutely
necessary to the enforcement of customs laws, and failure to comply with those requisites is as
condemnable as failure to pay customs fees. [70]

The provision is Part 4 of Title VI, Section 2505, of the TCC which enumerates the
administrative penalties in the form of surcharges, fines and forfeitures imposed by law on imported
dutiable goods. It does not define a crime. It merely provides, inter alia, for the administrative
remedies which can be resorted to by the Bureau of Customs when seizing the dutiable articles
found in the baggage of any person arriving in the Philippines which is not included in the
accomplished baggage declaration submitted to the customs authorities, and the administrative
penalties that such person must pay for the release of such goods if not imported contrary to law.
Any administrative penalty that may be imposed on the person arriving in the Philippines with
undeclared dutiable articles is separate from and independent of the criminal liability for smuggling
under Section 3601 of the TCC and for violation of other penal provisions in the TCC. The criminal
liability of such person can only be determined in the appropriate criminal proceedings, prescinding
from the outcome in any administrative case that may have been filed and disposed of by the
customs authorities.[71] Indeed, the second paragraph of Section 2505 provides that nothing in this
Section shall prevent the bringing of criminal action against the offender for smuggling under
Section 3601 of the TCC.
Section 3601 of the TCC provides:
Sec. 3601. Unlawful Importation. Any 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.
The last paragraph of said provision reads:
When, upon trial for violation of this section, the defendant is shown to have had
possession of the article in question, possession shall be deemed sufficient
evidence to authorize conviction unless the defendant shall explain the possession
to the satisfaction of the court: Provided, however, That payment of the tax due
after apprehension shall not constitute a valid defense in any prosecution under
this section.
Smuggling is penalized as follows:
1. A fine of not less than fifty pesos nor more than two hundred pesos and
imprisonment of not less than five days nor more than twenty days, if the
appraised value, to be determined in the manner prescribed under this Code,
including duties and taxes, of the article unlawfully imported does not exceed
twenty-five pesos;
2. A fine of not less than eight hundred pesos nor more than five thousand pesos
and imprisonment of not less than six months and one day nor more than four
years, if the appraised value, to be determined in the manner prescribed under

this Code, including duties and taxes, of the article unlawfully imported exceeds
twenty-five pesos but does not exceed fifty thousand pesos;
3. A fine of not less than six thousand pesos nor more than eight thousand pesos
and imprisonment of not less than five years and one day nor more than eight
years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported is more
than fifty thousand pesos but does not exceed one hundred fifty thousand pesos;
4. A fine of not less than eight thousand pesos nor more than ten thousand pesos
and imprisonment of not less than eight years and one day nor more than twelve
years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported exceeds
one hundred fifty thousand pesos;
5. The penalty of prision mayor shall be imposed when the crime of serious
physical injuries shall have been committed and the penalty of reclusion
perpetua to death shall be imposed when the crime of homicide shall have been
committed by reason or on the occasion of the unlawful importation.
In applying the above scale of penalties, if the offender is an alien and the
prescribed penalty is not death, he shall be deported after serving the sentence
without further proceedings for deportation; if the offender is a government official
or employee, the penalty shall be the maximum as hereinabove prescribed and
the offender shall suffer an additional penalty of perpetual disqualification from
public office, to vote and to participate in any public election.
Thus, in contrast to Section 2505, Section 3601 of the TCC is a penal provision. It defines the crime
of smuggling and provides compound penalties of graduated fine and imprisonment based on the
appraised values of the imported articles to be determined in the manner provided in the TCC. There
is no conflict between Section 2505 and Section 3601. In point of fact, the two sections and Section
3602 complement each other.

The phrase contrary to law in Section 3601 qualifies the phrases imports or brings into
the Philippines and assists in so doing, and not the word article. The law penalizes the importation of
any merchandise in any manner contrary to law. [73]
The word law includes regulations having the force and effect of law, meaning substantive or
legislative type rules as opposed to general statements of policy or rules of agency, organization,
procedures or positions. An inherent characteristic of a substantive rule is one affecting individual
rights and obligations; the regulation must have been promulgated pursuant to a congressional
grant of quasi-legislative authority; the regulation must have been promulgated in conformity to with
congressionally-imposed procedural requisites. [74]
Importation consists of bringing an article into the country from the outside. [75] The crime of unlawful
importation is complete, in the absence of a bona fide intent to make entry and pay duties when the
prohibited article enters Philippine territory.[76] Importation is complete when the taxable, dutiable
commodity is brought within the limits of the port of entry. Entry through a customs house is not the
essence of the act.[77]
Section 3602 of the TCC, on the other hand, provides:
Sec. 3602. Various Fraudulent Practices Against Customs Revenue. Any person
who makes or attempts to make any entry of imported or exported article by
means of any false or fraudulent invoice, declaration, affidavit, letter, paper or by
any means of any false statement, written or verbal, or by any means of any false
or fraudulent practice whatsoever, or knowingly effects any entry of goods, wares
or merchandise, at less than the true weight or measures thereof or upon a false
classification as to quality or value, or by the payment of less than the amount
legally due, or knowingly and wilfully files any false or fraudulent entry or claim for
the payment of drawback or refund of duties upon the exportation of merchandise,
or makes or files any affidavit, abstract, record, certificate or other document, with
a view to securing the payment to himself or others of any drawback, allowance or
refund of duties on the exportation of merchandise, greater than that legally due
thereon, or who shall be guilty of any wilful act or omission shall, for each offense,
be punished in accordance with the penalties prescribed in the preceding section.

Section 3601 of the TCC was designed to supplement the existing provisions of the TCC against the
means leading up to smuggling, which might render it beneficial by a substantive and criminal
statement separately providing for the punishment of smuggling. The law was intended not to
merge into one and the same offense all the many acts which are classified and punished by
different penalties, penal or administrative, but to legislate against the overt act of smuggling
itself. This is manifested by the use of the words fraudulently and contrary to law in the law.

The provision enumerates the various fraudulent practices against customs revenue, such
as the entry of imported or exported articles by means of any false or fraudulent invoice, statement
or practice; the entry of goods at less than the true weight or measure; or the filing of any false or
fraudulent entry for the payment of drawback or refund of duties.

Smuggling is committed by any person who: (1) fraudulently imports or brings into the
Philippines any article contrary to law; (2) assists in so doing any article contrary to law; or (3)
receives, conceals, buys, sells or in any manner facilitate the transportation, concealment or sale of
such goods after importation, knowing the same to have been imported contrary to law. [72]

The fraud contemplated by law must be intentional fraud, consisting of deception, willfully
and deliberately dared or resorted to in order to give up some right. [78] The offender must have acted
knowingly and with the specific intent to deceive for the purpose of causing financial loss to another;
even false representations or statements or omissions of material facts come within fraudulent

intent.[79] The fraud envisaged in the law includes the suppression of a material fact which a party is
bound in good faith to disclose. Fraudulent nondisclosure and fraudulent concealment are of the
same genre.[80]
Fraudulent concealment presupposes a duty to disclose the truth and that disclosure was not made
when opportunity to speak and inform was present, and that the party to whom the duty of
disclosure as to a material fact was due was thereby induced to act to his injury. [81] Fraud is not
confined to words or positive assertions; it may consist as well of deeds, acts or artifice of a nature
calculated to mislead another and thus allow one to obtain an undue advantage.
The term entry in Customs law has a triple meaning. It means (1) the documents filed at
the Customs house; (2) the submission and acceptance of the documents; and (3) the procedure of
passing goods through the Customs house.[82] Customs declaration forms or customs entry forms
required to be accomplished by passengers of incoming vessels or passenger planes are envisaged
in the section.
There is thus no conflict between Sections 2505, 3601 and 3602 of the TCC. In point of fact, the
three provisions complement each other.
The bare fact that, under the second paragraph of the Information, petitioner is alleged to
have imported the jewelry into the country by, inter alia, not declaring it in the customs declaration
form, it cannot thereby be concluded that she was being charged of a crime under Section 2505 of
the TCC. The acts alleged therein are descriptive of the fraudulent manner petitioner imported her
jewelries into the country. Petitioner was mandated to indicate in the Customs Declaration Form that
she had jewelry in her possession to be imported into the country valued at more than
US$350.00. Worse, when asked by Nario if she had goods or articles to declare, she spontaneously
answered No. Petitioners intentional concealment or nondisclosure that she had such jewelry items
in the leatherette bags constituted fraud under Sections 3601 and 3602 of the TCC, aimed at
depriving the government of customs revenue.
Insisting on her acquittal, petitioner asserts that the People failed to prove her guilt for
smuggling beyond reasonable doubt because she readily admitted to Nario that the first leatherette
envelope contained jewelry even before its lining was opened, and that she also admitted to Raada
that her hanger bag contained jewelry before Nario discovered the said items. Petitioner maintains
that her contention is buttressed by the affidavit of Nario, [83] the February 28, 1997 Memorandum of
Cabugao to the District Commander,[84] and the affidavit executed by Raada.[85]
We are not persuaded. The rule is that in all criminal prosecutions, the prosecution is
burdened to prove the guilt of the accused beyond reasonable doubt. In this case, the burden of the
prosecution was complied with, as it was able to prove that petitioner possessed the jewelry in
question when Nario examined her luggage. Under the last paragraph of Section 3601 of the TCC,
such evidence shall be deemed sufficient evidence to authorize conviction. The burden was then
shifted to petitioner, the accused below, to explain her possession to the satisfaction of the
court. The last paragraph of Section 3601 reads:

When, upon trial for violation of this section, the defendant is shown to
have had possession of the article in question, possession shall be deemed
sufficient evidence to authorize conviction unless the defendant shall explain the
possession to the satisfaction of the court: Provided, however, That payment of the
tax due after apprehension shall not constitute a valid defense in any prosecution
under this section.[86]
Petitioner admitted her possession of the jewelries and that she brought the same
from Singapore. She declared that she and her business partner Albert acquired the same for their
business. The trial court did not believe her claim of having spontaneously informed Nario that she
had jewelries in her handbag, and ruled that, contrary to law, she fraudulently imported the
jewelries into the country. Thus, the trial court found her guilty as charged, with its illuminating
findings and encompassing ratiocinations which we find are based on the evidence on record:
But the incriminating evidence that tops them all is the manner the accused
attempted to smuggle her jewelry to this country. Accused testified that it was she
herself who placed and arranged the jewelry inside three leatherette bags, which
she placed inside her hanger bag. Nario showed this court just exactly how the
accused arranged her things inside her hanger bag when she inspected it. The
jewelry was securely hidden in a place not meant to be seen by anybody but the
accused.
The hanger bag was stuff[ed] with accuseds clothing. But it has pockets in the
interior the contents of which are not visible to the eyes unless the pockets, which
are secured shut by zippers are opened. When the pockets were unzipped only
then did the three black leatherette envelopes come to view. When one of the
leatherette envelopes was removed from one of the pockets and opened, the
viewer is given the impression that all that it contained were commercial
brochures as nothing else can be seen, if the viewer is merely content with using
her sense of sight. Even after all the brochures are removed from the envelope,
the viewer sees only an empty space, if she uses only sight. But the brochures
turned out to be mere decoys to lull the viewer into believing that there is nothing
more to see and the inspection should stop at that point. But Nario, the inspector,
did not only use her sense of sight. She noticed that even after the envelope was
emptied of its contents, it was still heavy and she felt something bulging
(matambok) beneath the synthetic fabric that serves as its lining. She looked for a
gap in the lining by tracing its borders with her hands until she came upon a part
where the stitches were undone or deliberately broken, thereby creating a secret
pocket. She slipped her hand into the secret pocket to retrieve the bulging thing
that was hidden in it. This bulging thing turned out to be objects wrapped in a
sturdy light brown paper flattened out by pressure. When the wrapper was
opened, pieces of gold jewelry came into view. The two other leatherette bags
yielded one pack of gold jewelry each. Both packs were securely hidden in exactly
the same manner as the first. Alma Duplito, a Customs appraiser, appraised the

dutiable value of the jewelry at P4,598,000.00 and the total taxes and duties
at P2,379,021.02.
The ingenuity with which accused tried to conceal from view her jewelry shattered
all her pretensions of having declared or even just an intention to declare them for
proper assessment of the corresponding customs duties and taxes. On the
contrary, her stacking the envelope with worthless commercial brochures as
decoys to confuse or divert the attention of the Customs inspectors and her
deliberate breaking of the stitches of the lining of the bags to create a secret
pocket in which to hide and conceal from view her jewelry are unmistakable
badges of an intention to spirit them away into this country in violation of its
customs and tariffs law. In this sense, it is a direct evidence of the crime of
smuggling. xxx[87]
As gleaned from his decision, the Presiding Judge of the trial court was able to observe, at close
range, the demeanor and conduct of Nario when she testified. He was convinced of her honesty and
found her testimony credible:
Nario impresses this court as an honest witness compared with the manner
accused testified. Thus, this court finds it easy to believe Narios steadfast
testimony that accused did not declare her jewelry, than accuseds claim that she
did. Besides, credence to the narration of the incident and presumption of
regularity in the performance of duty are given to public officers in the absence of
contrary evidence (see People vs. Marcos, 212 SCRA 748). [88]
No witness who came forward to testify is in a better position to state what the
accused did than Estelita Nario. Accused herself declared that it was Nario who
checked her baggages.Nario testified that the first thing she did when accused
presented to her baggage for inspection was to ask her if she has anything to
declare, and accused said No. She noted that accuseds response tallied with her
Customs Baggage Declaration (Exh. F). There was not an instance prior to the
discovery of the jewelry, Nario stressed, that the accused declared before her,
even verbally, that she had jewelry items with her. [89]
In contrast, the trial court gave no credence and probative weight to petitioners testimony and her
claim that she divulged to Nario, Fuentebella, Cabugao and Raada that she was carrying dutiable
jewelry before Nario examined her handbag:
Accused cannot take refuge under Cabugaos Memorandum (Exh. 1) which tends to
show that a certain SA I Antonio Fuentebella allegedly revealed that accused
admitted that she was carrying taxable items. This evidence is hearsay because
Cabugao gathered this piece of information from Fuentebella who did not testify.
Besides, Cabugao clarified that it was Nario, the examiner, who had direct contact
with the accused, not he or Fuentebella. When he investigated Nario on March 1,
1997, she told him, Inamin na pagkatapos buksan ang bagahe.

If accused really declared the jewelry she was bringing to the Customs inspectors,
there would have been no fuss over it and that day would have passed, for her and
the customs people, uneventfully. But the ensuring scene as she herself described
after her baggage was inspected belies her claim. Several media reporters took
interest in the conduct of the inspection of her baggage. Later, Atty. Lourdes
Mangaoang, who is the Chief of the Legal Investigation Unit, even Customs Deputy
Collector for Passenger Services Rodolfo Buendia, were called in to get a piece of
the action. The furor that her jewelry generated even prompted Atty. Mangaoang
and the Customs people to hide her from the press and prevented from being
photographed by them.This certainly could not be the scene when a passenger is
caught smuggling highly dutiable items. Everybody seems interested to dip their
hands and try to get a piece of the pie.[90]
The CA affirmed the trial courts findings on appeal, as well as its calibration of the testimony of the
witnesses. Jurisprudence has it that the findings of facts of the trial court, which the CA affirmed on
appeal, are conclusive on this Court unless it can be shown that cogent facts and circumstances of
substance were misunderstood or misinterpreted which, if considered, would alter or reverse the
outcome of the case.[91] Indeed, as aptly stated by the Supreme Court of Missouri in Creamer v.
Bivert:[92]
xxx We well know there are things of pith that cannot be preserved in or shown by
the written page of a bill of exceptions. Truth does not always stalk bodily forth
naked, but modest withal, in a printed abstract in a court of last resort. She oft
hides in nooks and crannies visible only to the minds eye of the judge who tries
the case. To him appears the furtive glance, the blush of conscious shame, the
hesitation, the sincere or the flippant or sneering tone, the heat, the calmness, the
yawn, the sigh, the candor or lack of it, the scant or full realization of the solemnity
of an oath, the carriage and mien. The brazen face of the liar, the glibness of the
schooled witness in reciting a lesson, or the itching overeagerness of the swift
witness, as well as honest face of the truthful one, are alone seen by him. In short,
one witness may give testimony that reads in print, here, as if falling from the lips
of an angel of light, and yet not a soul who heard it, nisi, believed a word of it; and
another witness may testify so that it reads brokenly and obscurely in print, and
yet there was that about the witness that carried conviction of truth to every soul
who heard him testify. Therefore, where an issue in equity rests alone on the
credibility of witnesses, the upper court may with entire propriety rest somewhat
on the superior advantage of the lower court in determining a fact. xxx [93]
If petitioner had no intention to fraudulently import the jewelries and defraud the government of the
duties/taxes due thereon, she should have indicated in the Customs Declaration Form that she was
carrying jewelries valued at more than US$350.00, and accomplished the Customs Entry Form.
Petitioner failed to do so. She even deliberately concealed her possession of the jewelries, and told
Nario that she had nothing to declare. Even as petitioner realized that the discovery of the jewelry
items was inevitable, she merely requested Nario to continue with her examination of the
leatherette envelopes in the examination room, beyond the prying eyes of the media. In fine,

petitioner was more concerned with her exposure to the media than her liabilities for violation of the
TCC; such was her mindset.
Petitioner cannot evade criminal liability for her claim that when Nario was about to unzip the
leatherette envelopes and discover the jewelries contained therein, she told Nario and Raada that
she imported jewelries. Petitioner made her revelation to avoid being embarrassed, as there were
media in the area where Nario and Raada discovered that she had imported the jewelries which she
did not declare in the Customs Declaration Form. To paraphrase Justice Oliver Wendell Holmes,
petitioner cannot get rid of the duty of declaring the jewelries to the customs examiner by hiding the
jewelries in the leatherette envelopes covered by brochures and beneath the lining of the
envelopes. She cannot purge herself of the consequences of her fraud even by confessing when she
saw that she was on the point of being discovered or, as might have been found, after she had been.

That, found inside Ms. Maribel Jardelezas baggage were assorted jewelry, placed
inside three (3) black leatherette envelopes weighing more or less 20.1
kgs. (Gross).[96]
According to Nario, she sought the assistance of Fuentebella and Raada to bring petitioners hanger
bag to the examination room only after petitioner requested her to continue the search of her
belongings inside the examination room to avoid embarrassment. [97]
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs
against petitioner.
X -------------------------------------------------------------------------------------- X
El Greco Ship Manning vs. Commissioner of Customs

[94]

Neither can petitioner rely on the memorandum of Cabugao to the Customs District Commander
on February 28, 1997, to wit:
Initial investigation showed that when SA I Antonio Fuentebella asked from crew
members if they have anything to declare, a crew member later known [as]
Maribel B. Jardeleza admitted that she was carrying taxable items, and asked that
they proceed to the Baggage extension room.
Examination was therefore conducted by Customs Examiner Estelita Nario and
found inside three (3) leatherette envelopes approximately 20.1 kgs. [of] Assorted
Jewelry.[95]
It must be stressed that petitioner failed to present Fuentebella as her witness. The
information allegedly relayed by Fuentebella to Cabugao is thus hearsay evidence, barren of
probative weight. Moreover, Fuentebella alleged the following in his affidavit:
That, I am employed as Special Agent I at the Bureau of Customs, and presently
assigned at the Arrival Area, as Team Leader, X-Ray Operations;
That, on February 27, 1997, an Alert Order was issued by the District Commander,
directing us to monitor an alleged courier of assorted jewelry on board
flight PR-502 which came fromSingapore;
That, X-Ray operations were conducted on baggage from flight PR-502, but proved
negative. At the same time, surveillance operations were conducted on all
passengers and flight crew members;
That, Ms. Maribel Jardeleza, PAL flight stewardess approached Customs Examiner
Estelita Nario for the usual examination of her baggages;
That, during the process of examination, Ms. Nario found black envelopes inside
the lining of the hanger bag of Ms. Jardeleza, hence, the examination was
transferred to the interview room for rigid examination;

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner El Greco Ship Manning and Management Corporation (El Greco), seeking to
reverse and set aside the Decision [1] of the Court of Tax Appeals (CTA) En Banc dated 14 March
2007 in C.T.A. EB No. 162. In its assailed Decision, the CTA En Banc affirmed the Decision[2] dated 17
October 2005 of the CTA Second Division in CTA Case No. 6618, ordering the forfeiture of the vessel
M/V Criston, also known as M/V Neptune Breeze, for having been involved in the smuggling of
35,000 bags of imported rice.
The factual and procedural antecedents of this case are as follows:
On 23 September 2001, the vessel M/V Criston docked at the Port of Tabaco, Albay, carrying a
shipment of 35,000 bags of imported rice, consigned to Antonio Chua, Jr. (Chua) and Carlos Carillo
(Carillo), payable upon its delivery to Albay. Glucer Shipping Company, Inc. (Glucer Shipping) is the
operator of M/V Criston.[3]
Upon the directive of then Commissioner Titus Villanueva of the Bureau of Customs (BOC), a Warrant
of Seizure and Detention, Seizure Identification No. 06-2001, was issued by the Legaspi District
Collector, on 23 September 2001 for the 35,000 bags of imported rice shipped by M/V Criston, on
the ground that it left the Port of Manila without the necessary clearance from the Philippine Coast
Guard. Since the earlier Warrant covered only the cargo, but not M/V Criston which transported it, a
subsequent Warrant of Seizure and Detention, Seizure Identification No. 06-2001-A, was issued
on 18 October 2001 particularly for the said vessel. The BOC District Collector of the Port
of Legaspithereafter commenced proceedings for the forfeiture of M/V Criston and its cargo
under Seizure Identification No. 06-2001-A and Seizure Identification No. 06-2001, respectively. [4]
To protect their property rights over the cargo, consignees Chua and Carillo filed before the Regional
Trial Court (RTC) of Tabaco, Albay, a Petition for Prohibition with Prayer for the Issuance of Preliminary
Injunction and Temporary Restraining Order (TRO) assailing the authority of the Legaspi District
Collectors to issue the Warrants of Seizure and Detention and praying for a permanent injunction
against the implementation of the said Warrants. Their Petition was docketed as Civil Case No. T2170.[5]

After finding the Petition sufficient in form and substance and considering the extreme
urgency of the matter involved, the RTC issued a 72-hour TRO conditioned upon the filing by Chua
and Carillo of a bond in the amount of P31,450,000.00, representing the value of the goods. After
Chua and Carillo posted the required bond, the 35,000 bags of rice were released to them. [6]
The Legaspi District Collector held in abeyance the proceedings for the forfeiture of M/V Criston and
its cargo under Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A pending
the resolution by the RTC of Civil Case No. T-2170. When the RTC granted the Motion to Dismiss Civil
Case No. T-2170 filed by the BOC, the Legaspi District Collector set the hearing of Seizure
Identification No. 06-2001 and Seizure Identification No. 06-2001-A. A notice of the scheduled
hearing of the aforementioned seizure cases was sent to Glucer Shipping but it failed to appear at
the hearing so set. After a second notice of hearing was ignored by Glucer Shipping, the prosecutor
was allowed to present his witnesses.[7]
In the meantime, while M/V Criston was berthing at the Port of Tabaco under the custody of the BOC,
the Province of Albay was hit by typhoon Manang. In order to avert any damage which could be
caused by the typhoon, the vessel was allowed to proceed to another anchorage area to temporarily
seek shelter. After typhoon Manang had passed through Albay province, M/V Criston, however, failed
to return to the Port of Tabaco and was nowhere to be found.[8]
Alarmed, the BOC and the Philippine Coast Guard coordinated with the Philippine Air Force to find
the missing vessel. On 8 November 2001, the BOC received information that M/V Criston was found
in the waters of Bataan sporting the name of M/V Neptune Breeze.[9]
Based on the above information and for failure of M/V Neptune Breeze to present a
clearance from its last port of call, a Warrant of Seizure and Detention under Seizure Identification
No. 2001-208 was issued against the vessel by the BOC District Collector of the Port of Manila.[10]
For the same reasons, the Legaspi District Collector rendered a Decision on 27 June 2002 in
Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A ordering the forfeiture of
the M/V Criston, also known as M/V Neptune Breeze, and its cargo, for violating Section 2530 (a), (f)
and (k) of the Tariff and Customs Code.[11]
In the meantime, El Greco, the duly authorized local agent of the registered owner of M/V
Neptune Breeze, Atlantic Pacific Corporation, Inc. (Atlantic Pacific), filed with the Manila District
Collector, in Seizure Identification No. 2001-208, a Motion for Intervention and Motion to Quash
Warrant of Seizure Detention with Urgent Prayer for the Immediate Release of M/V Neptune
Breeze. El Greco claimed that M/V Neptune Breeze was a foreign registered vessel owned by Atlantic
Pacific, and different from M/V Criston which had been involved in smuggling activities in Legaspi,
Albay.[12]
Acting favorably on the motion of El Greco, the Manila District Collector issued an Order [13] dated 11
March 2002 quashing the Warrant of Seizure and Detention it issued against M/V Neptune Breeze in
Seizure Identification No. 2001-208 for lack of probable cause that the said vessel was the same one

known as M/V Criston which fled from the jurisdiction of the BOC Legaspi District after being seized
and detained therein for allegedly engaging in smuggling activities. According to the decretal part of
the Manila District Collectors Order:
WHEREFORE, pursuant to the authority vested in me by law, it is hereby
ordered and decreed that the Warrant of Seizure and Detention issued thereof be
Quashed for want of factual or legal basis, and that the vessel M/V Neptune Brreze
be released to [El Greco] after clearance with the Commissioner of Customs,
proper identification and compliance with existing rules and regulations pertinent
in the premises.
On automatic review by BOC Commissioner Antonio Bernardo, the Order dated 11 March
2002 of the District Collector of the Port of Manila was reversed after finding that M/V Neptune
Breeze and M/V Criston were one and the same and that the Legaspi District Collector had already
acquired prior jurisdiction over the vessel. The Decision dated 15 January 2003 of the BOC
Commissioner, contained in his 2nd Indorsement[14] to the Manila District Collector, decreed:
Respectfully returned to the District Collector, POM, the within case folders in POM
S. I. No. 2001-208, EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION,
Claimant/Intervenor, with the information that the Decision of that Port in the
aforesaid case is hereby REVERSED in view of the following reasons:
1. Subject vessel MV NEPTUNE BREEZE and MV CRISTON are one and the
same as shown by the vessels documents retrieved by the
elements of the Philippine Coast Guard from MV CRISTON during
the search conducted on board thereof when the same was
apprehended in Tabaco, Albay, indicating therein the name of
the vessel MV NEPTUNE BREEZE, the name of the master of the
vessel a certain YUSHAWU AWUDU, etc. These facts were
corroborated by the footage of ABS-CBN taken on board the
vessel when the same was subjected to search.
2. Hence, prior jurisdiction over the said vessel was already acquired by
the Port of Legaspi when the said Port issued WSD S.I. No. 062001-A and therefore, the Decision of the latter Port forfeiting
the subject vessel supercedes the Decision of that Port ordering
its release.
Seeking the reversal of the Decision dated 15 January 2003 of the BOC Commissioner, El
Greco filed a Petition for Review with the CTA which was lodged before its Second Division as
CTA Case No. 6618. El Greco averred that the BOC Commissioner committed grave abuse of
discretion in ordering the forfeiture of the M/V Neptune Breeze in the absence of proof that M/V
Neptune Breeze and M/V Criston were one and the same vessel. [15] According to El Greco, it was
highly improbable that M/V Criston was merely assuming the identity of M/V Neptune Breeze in order
to evade liability since these were distinct and separate vessels as evidenced by their Certificates of

Registry. While M/V Neptune Breeze was registered in St. Vincent and the Grenadines[16] as shown in
its Certificate of Registry No. 7298/N, M/V Criston was registered in the Philippines.Additionally, El
Greco argued that the Order dated 11 March 2002 of the Manila District Collector already became
final and executory for failure of the BOC Commissioner to act thereon within a period of 30 days in
accordance with Section 2313 of the Tariff and Customs Code.
On 17 October 2005, the CTA Second Division rendered a Decision [17] in CTA Case No.
6618 sustaining the 15 January 2003 Decision of the BOC Commissioner ordering the forfeiture of
M/V Neptune Breeze. Referring to the crime laboratory report submitted by the Philippine National
Police (PNP) stating that the serial numbers of the engines and the generators of both M/V Criston
and M/V Neptune Breeze were identical, the CTA Second Division concluded that both vessels were
indeed one and the same vessel. The CTA Second Division further ruled that nothing in the
provisions of Section 2313 of the Tariff and Customs Code could buttress El Grecos contention that
the Order dated 11 March 2002 of the Manila District Collector already became final and
executory. The dispositive portion of the Decision of the CTA Second Division reads:
WHEREFORE, premises considered, the present Petition for Review is
hereby DISMISSED. The Decision in the 2nd Indorsement dated January 15,
2003 of then Commissioner Bernardo is hereby AFFIRMED.[18]
In a Resolution[19] dated 7 February 2006, the CTA Second Division denied the Motion for
Reconsideration of El Greco for failure to present issues that had not been previously threshed out in
its earlier Decision.
Undaunted, El Greco elevated its case to the CTA En Banc through a Petition for Review,
docketed as C.T.A. EB No. 162, this time lamenting that it was being deprived of its property without
due process of law. El Greco asserted that the CTA Second Division violated its constitutional right to
due process when it upheld the forfeiture of M/V Neptune Breeze on the basis of the evidence
presented before the Legaspi District Collector in Seizure Identification No. 06-2001 and Seizure
Identification No. 06-2001-A, of which El Greco was not notified and in which it was not able to
participate.[20]
In its Decision[21] promulgated on 14 March 2007, the CTA En Banc declared that the CTA
Second Division did not commit any error in its disquisition, and dismissed the Petition of El Greco
in C.T.A. EB No. 162 for lack of merit. According to the CTA En Banc, the appreciation and calibration
of evidence on appeal (from the ruling of the BOC) lies within the sound discretion of its Division, and
the latters findings and conclusions cannot be set aside unless it has been sufficiently shown that
they are not supported by evidence on record. The CTA En Banc thus disposed:
WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the
assailed Decision promulgated on October 17, 2005 and Resolution dated February
7, 2006 of the Second Division of this Court, are hereby AFFIRMED. [22]
Without filing a Motion for Reconsideration with the CTA, El Greco already sought recourse
before this Court via this Petition for Review on Certiorari, raising the following issues:

I.
II.
III.

WHETHER OR NOT EL GRECO WAS DENIED OF ITS RIGHT TO

PROCESS.
WHETHER OR NOT M/V NEPTUNE BREEZE AND M/V CRISTON ARE
AND THE SAME VESSEL.
WHETHER OR NOT M/V NEPTUNE BREEZE IS QUALIFIED TO BE
SUBJECT OF FORFEITURE UNDER SECTION 2531 OF THE TARIFF
CUSTOMS CODE.

DUE
ONE
THE
AND

The primordial issue to be determined by this Court is whether M/V Neptune Breeze is one
and the same as M/V Criston which had been detained at the Port of Tabaco, Albay, for carrying
smuggled imported rice and had fled the custody of the customs authorities to evade its liabilities.
El Greco insists that M/V Neptune Breeze and M/V Criston are not the same vessel. In
support of its position, El Greco again presents the foreign registration of its vessel as opposed to
the local registration of M/V Criston.
The CTA En Banc, however, affirming the findings of the CTA Second Division, as well as the
Legaspi District Collector, concluded otherwise.
We sustain the determination of the CTA En Banc on this matter.
Well-entrenched is the rule that findings of facts of the CTA are binding on this Court and
can only be disturbed on appeal if not supported by substantial evidence. [23]Substantial evidence is
that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.[24]
A review of the records of the present case unveils the overwhelming and utterly significant
pieces of evidence that more than meets the quantum of evidence necessary to establish that M/V
Neptune Breeze is the very same vessel as M/V Criston, which left the anchorage area at Legaspi,
Albay, without the consent of the customs authorities therein while under detention for smuggling
35,000 bags of imported rice.
The crime laboratory report of the PNP shows that the serial numbers of the engines and
generators of the two vessels are identical. El Greco failed to rebut this piece of evidence that
decisively identified M/V Neptune Breeze as the same as M/V Criston. We take judicial notice that
along with gross tonnage, net tonnage, length and breadth of the vessel, the serial numbers of its
engine and generator are the necessary information identifying a vessel. In much the same way, the
identity of a land motor vehicle is established by its unique motor and chassis numbers. It is, thus,
highly improbable that two totally different vessels would have engines and generators bearing the
very same serial numbers; and the only logical conclusion is that they must be one and the same
vessel.
Equally significant is the finding of the Legaspi District Collector that all the documents
submitted by M/V Criston were spurious, including its supposed registration in thePhilippines. In a

letter dated 14 March 2002, Marina Administrator Oscar M. Sevilla attested that M/V Criston was not
registered with the Marina.
Finally, Customs Guard Adolfo Capistrano testified that the features of M/V Criston and M/V
Neptune Breeze were similar; while Coast Guard Commander Cirilo Ortiz narrated that he found
documents inside M/V Criston bearing the name M/V Neptune Breeze. These testimonies further
fortified the conclusion reached by the Legaspi District Collector that M/V Criston and M/V Neptune
Breeze were one and the same.
We also take note that the purported operator of M/V Criston, Glucer Shipping, was a total
no-show at the hearings held in Seizure Identification No. 06-2001 and Seizure Identification No. 062001-A before the Legaspi District Collector. Despite being sent several notices of hearing to its
supposed address, Glucer Shipping still failed to appear in the said proceedings. It becomes highly
unfathomable for an owner to ignore proceedings for the seizure of its vessel, risking the loss of a
property of enormous value.
From the foregoing, we can only deduce that there is actually no Glucer Shipping and no
M/V Criston. M/V Criston appears to be a mere fictional identity assumed by M/V Neptune Breeze so
it may conduct its smuggling activities with little risk of being identified and held liable therefor.
We cannot give much credence to the self-serving denial by El Greco that M/V Neptune
Breeze is not the same as M/V Criston in light of the substantial evidence on record to the
contrary. The foreign registration of M/V Neptune Breeze proves only that it was registered in a
foreign country; but it does not render impossible the conclusions consistently reached by the
Legaspi District Collector, the CTA Second Division and the CTA en banc, and presently by this Court,
that M/V Neptune Breeze was the very same vessel used in the conduct of smuggling activities in
the name M/V Criston.
Neither can we permit El Greco to evade the forfeiture of its vessel, as a consequence of its
being used in smuggling activities, by decrying denial of due process.
In administrative proceedings, such as those before the BOC, technical rules of procedure
and evidence are not strictly applied and administrative due process cannot be fully equated with
due process in its strict judicial sense. [25] The essence of due process is simply an opportunity to be
heard or, as applied to administrative proceedings, an opportunity to explain one's side or an
opportunity to seek reconsideration of the action or ruling complained of. [26]
Although it was not able to participate in the proceedings in Seizure Identification No. 062001 and Seizure Identification No. 06-2001-A before the Legaspi District Collector, it had ample
opportunity to present its side of the controversy in Seizure Identification No. 2001-208 before the
Manila District Collector. To recall, full proceedings were held before the Manila District Collector in
Seizure Identification No. 2001-208. Even the evidence presented by El Greco in the latter
proceedings fails to persuade. The only vital evidence it presented before the Manila District
Collector in Seizure Identification No. 2001-208 was the foreign registration of M/V Neptune

Breeze. It was still the same piece of evidence which El Greco submitted to this Court. Even when
taken into consideration and weighed against each other, the considerably sparse evidence of El
Greco in Seizure Identification No. 2001-208 could not successfully refute the substantial evidence in
Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A that M/V Neptune Breeze
is the same as M/V Criston.
Moreover, the claim of El Greco that it was denied due process flounders in light of its
ample opportunity to rebut the findings of the Legaspi District Collector in Seizure Identification No.
06-2001 and No. 06-2001-A before the CTA Second Division in CTA Case No. 6618 and the CTA En
Banc in C.T.A. EB No. 162, and now before this Court in the Petition at bar. Unfortunately, El Greco
was unable to make full use to its advantage of these repeated opportunities by offering all possible
evidence in support of its case. For example, evidence that could establish that M/V Neptune Breeze
was somewhere else at the time when M/V Criston was being held by customs authority at the Port
of Legaspi, Albay, would have been helpful to El Grecos cause and very easy to secure, but is
glaringly absent herein.
After having established that M/V Neptune Breeze is one and the same as M/V Criston, we
come to another crucial issue in the case at bar, that is, whether the order of forfeiture of the M/V
Neptune Breeze is valid.
The pertinent provisions of the Tariff and Customs Code read:
SEC. 2530. Property Subject to Forfeiture Under Tariff and Customs Law. 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;
f. Any article, the importation or exportation of which is effected or attempted
contrary to law, or any article of prohibited importation or exportation,
and all other articles which, in the opinion of the Collector, have been
used, are or were intended to be used as instruments in the importation
or exportation of the former;
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 of 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.

The penalty of forfeiture is imposed on any vessel engaged in smuggling, provided that the
following conditions are present:
(1) The vessel is used unlawfully in the importation or exportation of articles into or from
the Philippines;
(2) The articles are imported to or exported from any Philippine port or place, except a port
of entry; or
(3) If the vessel has a capacity of less than 30 tons and is used in the importation of articles
into any Philippine port or place other than a port of the Sulu Sea, where importation in such vessel
may be authorized by the Commissioner, with the approval of the department head." [27]

There is no question that M/V Neptune Breeze, then known as M/V Criston, was carrying
35,000 bags of imported rice without the necessary papers showing that they were entered lawfully
through a Philippine port after the payment of appropriate taxes and duties thereon. This gives rise
to the presumption that such importation was illegal.Consequently, the rice subject of the
importation, as well as the vessel M/V Neptune Breeze used in importation are subject to forfeiture.
The burden is on El Greco, as the owner of M/V Neptune Breeze, to show that its conveyance of the
rice was actually legal. Unfortunately, its claim that the cargo was not of foreign origin but was
merely loaded at North Harbor, Manila, was belied by the following evidence - the Incoming Journal
of the Philippine Coast Guard, Certification issued by the Department of Transportation and
Communications (DOTC) Port State Control Center of Manila, and the letter dated 4 October 2001
issued by the Sub-Port of North Harbor Collector Edward de la Cuesta, confirming that there was no
such loading of rice or calling of vessel occurring at North Harbor, Manila. It is, therefore,
uncontroverted that the 35,000 bags of imported rice were smuggled into the Philippines using M/V
Neptune Breeze.

We cannot give credence to the argument of El Greco that the Order dated 11 March 2002
of the Manila District Collector, finding no probable cause that M/V Neptune Breeze is the same as
M/V Criston, has already become final and executory, thus, irreversible, pursuant to Section 2313 of
the Tariff and Customs Code. According to said provision:

SEC. 2313. Review of Commissioner. The person aggrieved by the

decision or action of the Collector in any matter presented upon protest or by his
action in any case of seizure may, within fifteen (15) days after notification in
writing by the Collector of his action or decision, file a written notice to the
Collector with a copy furnished to the Commissioner of his intention to appeal the
action or decision of the Collector to the Commissioner. Thereupon the Collector
shall forthwith transmit all the records of the proceedings to the Commissioner,
who shall approve, modify or reverse the action or decision of the Collector and
take such steps and make such orders as may be necessary to give effect to his
decision: Provided, That when an appeal is filed beyond the period herein
prescribed, the same shall be deemed dismissed.
If in any seizure proceedings, the Collector renders a decision adverse to
the Government, such decision shall be automatically reviewed by the
Commissioner and the records of the case elevated within five (5) days from the
promulgation of the decision of the Collector. The Commissioner shall render a
decision on the automatic appeal within thirty (30) days from receipts of the
records of the case. If the Collectors decision is reversed by the Commissioner, the
decision of the Commissioner shall be final and executory. However, if the
Collectors decision is affirmed, or if within thirty (30) days from receipt of
the record of the case by the Commissioner no decision is rendered or the
decision involves imported articles whose published value is five million pesos
(P5,000,000.00) or more, such decision shall be deemed automatically
appealed to the Secretary of Finance and the records of the proceedings shall
be elevated within five (5) days from the promulgation of the decision of the
Commissioner or of the Collector under appeal, as the case may be: Provided,
further, That if the decision of the Commissioner or of the Collector under appeal
as the case may be, is affirmed by the Secretary of Finance or if within thirty (30)
days from receipt of the records of the proceedings by the Secretary of Finance, no
decision is rendered, the decision of the Secretary of Finance, or of the
Commissioner, or of the Collector under appeal, as the case may be, shall become
final and executory.
In any seizure proceeding, the release of imported articles shall not be
allowed unless and until a decision of the Collector has been confirmed in writing
by the Commissioner of Customs. (Emphasis ours.)
There is nothing in Section 2313 of the Tariff and Customs Code to support the position of El
Greco. As the CTA en banc explained, in case the BOC Commissioner fails to decide on the automatic
appeal of the Collectors Decision within 30 days from receipt of the records thereof, the case shall
again be deemed automatically appealed to the Secretary of Finance. Also working against El Greco
is the fact that jurisdiction over M/V Neptune Breeze, otherwise known as M/V Criston, was first
acquired by the Legaspi District Collector; thus, the Manila District Collector cannot validly acquire
jurisdiction over the same vessel. Judgment rendered without jurisdiction is null and void, and void
judgment cannot be the source of any right whatsoever.[28]

Finally, we strongly condemn the ploy used by M/V Neptune Breeze, assuming a different
identity to smuggle goods into the country in a brazen attempt to defraud the government and the
Filipino public and deprive them of much needed monetary resources. We further laud the efforts of
the Commissioner of the Customs Bureau and the other executive officials in his department to curb
the proliferation of smuggling syndicates in the country which deserves no less than our full support.

WHEREFORE, in view of the foregoing, the instant Petition is DENIED. The Decision
dated 17 October 2005 and Resolution dated 7 February 2006 of the Court of Tax Appeals En Banc in
CTA EB No. 172 are AFFIRMED. Costs against the petitioner.
SO ORDERED.