TCC Complilation Jan 14 2012

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Taxation Law 2 Page 1 of 28

Tariff and Customs Law Prof. Lucenario

Rieta v. People, G.R. No. 147817, 12 Aug. 2004

Facts:Felicisimo Rieta, together with six (6) co-accused, werecharged of smuggling various brands of cigarettes in violationSection 3601 of the Tariff and Customs Code.

It appears that on 12 October 1979, Col. Panfilo Lacsonobtained information that certain syndicated groups togetherelements of the Phil. Constabulary, were engaged in smugglingactivities somewhere in the Port Area in Manila. Thus, Col.Lacson posted themselves within the vicinity of theConstabulary Off-Shore Anti-Crime Battalion (COSAC)detachment at the Port Authority, Manila. At around 4:00AM, agreen cargo truck and light brown Toyota Corona came out ofthe COSAC detachment. Col. Lacson gave the order tointercept the cargo truck. After a brief chase, the accused wereapprehended carrying 305 cases of blue seal or untaxedcigarettes together with various firearms.

As their defense, the accused claimed that Metrocom soldiersframed them by planting the cases of blue seal cigarettes intheir vehicles. Moreover, they argued that the evidence seizedin the operation was inadmissible as the accused were arrestedwithout a warrant and by virtue of an arrest and seizure order(ASSO) which had been declared and invalid by the SupremeCourt.

Issues:1. Whether or not the accused were properly convicted for

the crime of smuggling or illegal importation; and2. Whether or not the cigarettes seized are admissible as

evidence.

Held:1st issue: YES

Tariff and Customs Code; Smuggling and Illegal

Importation; Non-payment of taxes is a negativeallegation It is not incumbent on the prosecution to prove

that taxes were unpaid on the cigarettes. It is not incumbentupon the prosecution to adduce positive evidence tosupport a negative averment the truth of which is fairlyindicated by established circumstances and which, ifuntrue, could readily be disproved by the production ofdocuments or other evidence within the defendants

knowledge or control.

The fact that taxes were unpaid for the cigarettes seized wereduly proven by the following circumstances: (1) the cargo truck,which carried the contraband cigarettes and some passengersincluding petitioner, immediately came from the 2nd COSACDetachment; (2) the truck was intercepted at the unholy hourof 4:00 a.m.; (3) it fitted the undisclosed informers earlierdescription of it as one that was carrying contraband; and (4)the driver ran away. Hence, it was up to petitioner to disprovethese damning circumstances, simply by presenting thereceipts showing payment of the taxes. But he did not do so;all that he could offer was his bare and self-serving denial.

Tariff and Customs Code; Smuggling and IllegalImportation; Requisites In order that a person may bedeemed guilty of smuggling or illegal importation under theforegoing statute three requisites must concur:

(1) that the merchandise must have been fraudulently orknowingly imported contrary to law;

(2) that the defendant, if he is not the importer himself, musthave received, concealed, bought, sold or in any mannerfacilitated the transportation, concealment or sale of themerchandise; and

(3) that the defendant must be shown to have knowledgethat the merchandise had been illegally imported.

Tariff and Customs Code; Smuggling and IllegalImportation; Presumption If the defendant, however, isshown to have had possession of the illegally importedmerchandise, without satisfactory explanation, such possessionshall be deemed sufficient to authorize conviction. Persons

found to be in possession of smuggled items are presumed tobe engaged in smuggling, pursuant to the last paragraph of


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Section 3601 of the Tariff and Customs Code. The burden ofproof is thus shifted to them. To rebut this presumption, it isnot enough for petitioner to claim good faith and lack ofknowledge of the unlawful source of the cigarettes. He shouldhave presented evidence to support his claim and to convincethe court of his non-complicity.

2nd issue: YES

Criminal Procedure; Search and Seizure; Arrest andSeizure Order as operative fact Petitioner contends thathis arrest by virtue of Arrest Search and Seizure Order (ASSO)No. 4754 was invalid, as the law upon which it was predicated-- General Order No. 60, issued by then President Ferdinand E.Marcos -- was subsequently declared by the Court, in Taada v.Tuvera, to have no force and effect. Thus, he asserts, anyevidence obtained pursuant thereto is inadmissible inevidence.

We do not agree. In Taada, the Court addressed the possibleeffects of its declaration of the invalidity of various presidentialissuances. Whatever was done while the legislative or theexecutive act was in operation should be duly recognized andpresumed to be valid in all respects. The ASSO that was issuedin 1979 under General Order No. 60 -- long before our Decisionin Taada and the arrest of petitioner -- is an operative factthat can no longer be disturbed or simply ignored.

Criminal Procedure; Search and Seizure; CustomsSearch The search and seizure of goods, suspected to havebeen introduced into the country in violation of customs laws, isone of the seven doctrinally accepted exceptions to theconstitutional provision against unreasonable searches andseizures. Under the Tariff and Customs Code, a search, seizureand arrest may be made even without a warrant for purposes ofenforcing customs and tariff laws. Without mention of the needto priorly obtain a judicial warrant, the Code specifically allowspolice authorities to enter, pass through or search any land,

enclosure, warehouse, store or building that is not a dwellinghouse; and also to inspect, search and examine any vessel or

aircraft and any trunk, package, box or envelope or any personon board; or to stop and search and examine any vehicle, beastor person suspected of holding or conveying any dutiable orprohibited article introduced into the Philippines contrary to law.

Garcia v. Executive Secretary, G.R. No. 101273, 3 July

1992

Facts:On 27 November 1990, the President issued Executive Order(E.O.) No. 438 which imposed an additional 5% ad valorem taxon imported products including crude oil and other oil products.This was followed by E.O. No. 443 on 3 January 1991 whichincreased the 5% ad valorem tax to 9%. On 15 August 1991,the President issued E.O. No. 475 which reduced the 9% advalorem tax to 5%, except on crude oil and other oil productswhich continued to be subject to the 9% rate. On 23 August1991, the President issued E.O. No. 478 which imposed aspecial duty of 0.95/liter of crude oil and 1.00/liter of importedoil products.

Petitioner filed an action for certiorari, prohibition andmandamus claiming that E.O. Nos. 475 and 478 violate ArticleVI, Section 24 of the 1987 Constitution which provide that allrevenue and tariff bills shall originate exclusively in the Houseof Representatives.

Issue: Whether or not the President has the power to issue E.O.Nos. 475 and 478.

HELD: YES.

Tariff and Customs Law; Flexible Tariff Clause; Power ofthe President Notwithstanding Article VI, Section 24 of the1987 Constitution, the authority of the President to issue E.O.Nos. 475 and 478 is amply justified by Article VI, Section 28(2)of Constitution which provides that Congress may, by law,authorize the President to fix within specified limits, and

subject to such limitations and restrictions as it may impose,


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tariff ratesand other duties and imposts within the frameworkof the national development program of the Government.

The law, which authorized the President to issue such EOs isthe Tariff and Customs Code. Sec. 104 of which provides that[t]he rates of duty herein provided or subsequently fixed

may be revised by the President upon recommendation of theNational Economic Development Authority.

On the other hand, Sec. 401 of the same Code states that [i]nthe interest of national economy, general welfare and/ornational securitythe President, upon recommendation of theNational Economic Development Authority is herebyempowered (1) to increase, reduce or remove existingprotective rates of import duty(3) to impose an additionalduty on all imports not exceeding 10% ad valorem whenevernecessary.

Tariff and Customs Law; Nature of Tariff Rates There isno merit in the contention that the authority so granted underthe aforecited provisions can be exercised only to pursue localprotectionism. The Court took judicial notice of the fact that theBureau of Customs, as the agency responsible foradministering the Tariff and Customs Code, is one of theprincipal generators of revenue. Tariff rates function like taxesin that they are frequently imposed for both revenue-generating and regulatory purposes. Thus, the exercise of theauthority to fix tariff rates/customs duties cannot be limited toprotection of local industries, inasmuch as they are alsocommonly imposed on articles/goods which are not locallyproduced. In such cases where no local industries are to beprotected, tariff rates/customs duties are imposed to generaterevenue or deter importations.

Executive Secretary v. Southwing Heavy Industries, Inc.,G.R. No. 164171, 20 February 2006

Facts:

On 12 December 2002, President Gloria Macapagal-Arroyo,through Executive Secretary Alberto G. Romulo, issuedExecutive Order (EO) No. 156 which prohibited the importationof used vehicles subject to certain exceptions enumeratedtherein. The validity of the said prohibition contained in thesaid EO was questioned in three (3) actions for declaratory

relief before Branch 72 of the Regional Trial Court of OlongapoCity on the ground that it constitutes an unlawful usurpation oflegislative power and that it violates the mandate of RepublicAct (R.A.) No. 7227 which allows the free flow of goods andcapital within the Subic Freeport.

The RTC rendered judgment in all three (3) cases declaring thequestioned provision of EO No. 156 unconstitutional. A petitionfor certiorari was filed before the Court of Appeals (CA) whichwas however, denied. Thus, the present recourse.

Issues:1. Whether or not EO No. 156 is invalid.

Held: YES

Administrative Law; Exercise of Quasi-legislative Power;Requisites for Validity of Administrative Issuance To bevalid, an administrative issuance, such as an executive order,must comply with the following requisites:

(1) Its promulgation must be authorized by thelegislature;(2) It must be promulgated in accordance with theprescribed procedure;(3) It must be within the scope of the authority given bythe legislature; and(4) It must be reasonable.

Tariff and Customs Law; Flexible Tariff Clause; Power ofthe President There are explicit constitutional and statutorypermission authorizing the President to ban or regulateimportation of articles and commodities into the country.

Under Article VI, Section 28(2) of the 1987 Constitution,Congress may, by law, authorize the President to fix within


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specified limits, and subject to such limitations and restrictionsas it may impose, tariff rates, import and export quotas,tonnage and wharfage dues, and other duties or imposts withinthe framework of the national development program of theGovernment.

Under Section 401 of the Tariff and Customs Code, thePresident is authorized to prohibit the importation of anycommodity in the interest of national economy, general welfareand/or national security. Under Articles 4 and 7(12) of E.O. No.226 or the Omnibus Investments Code, the President has thepower to approve or reject the prohibition on the importation ofany equipment or raw materials or finished products.Moreover, under R.A. No. 8800, otherwise known as the SafetyMeasures Act, the Secretaries of the Department of Trade andIndustry (DTI) and the Department of Agriculture, in theircapacity as alter egos of the President, may impose safeguardmeasures, which include, inter alia, modification or impositionof any quantitative restriction on the importation of a productinto the Philippines

Tariff and Customs Law; Flexible Tariff Clause; WhenExecutive Issuance Invalid; Ultra Vires Act To be valid,an administrative issuance must not be ultra vires or beyondthe limits of the authority conferred. It must not supplant ormodify the Constitution, its enabling statute and other existinglaws, for such is the sole function of the legislature which theother branches of the government cannot usurp.

Tariff and Customs Law; Flexible Tariff Clause; WhenExecutive Issuance Invalid ; As applied to case In theinstant case, the subject matter of the laws authorizing thePresident to regulate or forbid importation of used motorvehicles, is the domestic industry. EO 156, however,exceeded the scope of its application by extending theprohibition on the importation of used cars to the Freeport,which RA 7227, considers to some extent, a foreign territory.The domestic industry which the EO seeks to protect is

actually the "customs territory" which is defined as "theportion of the Philippines outside the Subic Bay

Freeport where the Tariff and Customs Code of thePhilippines and other national tariff and customs lawsare in force and effect."

The proscription in the importation of used motor vehiclesshould be operative only outside the Freeport and the inclusion

of said zone within the ambit of the prohibition is an invalidmodification of RA 7227. Indeed, when the application of anadministrative issuance modifies existing laws or exceeds theintended scope, as in the instant case, the issuance becomesvoid, not only for being ultra vires, but also for beingunreasonable.

Tariff and Customs Law; Flexible Tariff Clause; WhenExecutive Issuance Invalid; Unreasonable There is nodoubt that the issuance of the ban to protect the domesticindustry is a reasonable exercise of police power. Theproblem, however, lies with respect to the application of theimportation ban to the Freeport. The Court finds no logic in theall encompassing application of the assailed provision to theFreeport which is outside the customs territory. As long as theused motor vehicles do not enter the customs territory, theinjury or harm sought to be prevented or remedied will notarise. The application of the law should be consistent with thepurpose of and reason for the law. Ratione cessat lex, et cessatlex. When the reason for the law ceases, the law ceases. It isnot the letter alone but the spirit of the law also that gives itlife. To apply the proscription to the Freeport would not servethe purpose of the EO. Instead of improving the generaleconomy of the country, the application of the importation banin the Freeport would subvert the avowed purpose of RA 7227which is to create a market that would draw investors andultimately boost the national economy.

Southern Cross Cement Corp. v. Phil. CementManufacturers Corp., G.R. No. 158540, 8 July 2004, 434SCRA 65

Facts:


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On 22 May 2001, the Department of Trade and Industry (DTI)received an application from Phil. Cement Manufacturers Corp.(Philcemcor) seeking the imposition of provisional anddefinitive safeguard measures against the importation of grayPortland cement. After preliminary investigation, the DTIimposed provisional measures and directed the Bureau of

Customs (BOC) to implement the same. Thereafter, a formalinvestigation was conducted to determine the necessity ofimposing definitive measures. The Tariff Commissionrecommended the denial of the application for definitivesafeguard measures considering that the elements of seriousinjury or the threat of serious injury were absent. The DTISecretary, however, disagreed with the findings of theCommission and requested for a legal opinion from theSecretary of Justice (SOJ) as to his options on acting on therecommendation of the Commission. The SOJ opined thatSection 13 of the Safeguard Measures Act (SMA) precludes theDTI Secretary of discretion in reviewing the Commissionsfindings. Accordingly, the DTI Secretary denied the application.

Aggrieved, Philcemcor filed a petition for certiorari, prohibition,and mandamus with the Court of Appeals (CA) seeking theinjunction of the implementation of the decision of the DTISecretary. The CA then held that the DTI Secretary is notbound by the factual findings of the Tariff Commission sincesuch findings are merely recommendatory and they fall withinthe ambit of the Secretary's discretionary review. Thus, the CAremanded the case to the DTI Secretary for furtherproceedings.

Southern Cross then filed a petition for review on certiorariquestioning the judgment of the CA. In the meantime, the DTISecretary found that the local cement industry suffered lossesdue to the importation of Portland cement and therefore issueda new Decision granting the application for the imposition ofdefinitive safeguard measures.

Issues:

1. Whether or not the CA properly took cognizance ofPhilcemcors petition in view of Section 29 of the SMA

which provides that any ruling of the DTI Secretary maybe elevated for review to the Court of Tax Appeals;

2. Whether or not the Tariff Commissions factualdetermination is binding on the DTI Secretary.

Held:

1st issue: YES

Court of Tax Appeals; Nature It is not difficult to divinewhy the legislature singled out the CTA as the court with jurisdiction to review the ruling of the DTI Secretary inconnection with the imposition of a safeguard measure. TheCourt has long recognized the legislative determination to vestsole and exclusive jurisdiction on matters involving internalrevenue and customs duties to such a specialized court. By thevery nature of its function, the CTA is dedicated exclusively tothe study and consideration of tax problems and hasnecessarily developed an expertise on the subject. At the sametime, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a case should be clearlyconferred and should not be deemed to exist on mereimplication.Statutory Construction; Non-retroactivity of statutes; R.A. No.9282

Court of Tax Appeals, Appellate Jurisdiction; Under theSMA Under Section 29 of the SMA, there are three requisitesto enable the CTA to acquire jurisdiction over the petition forreview contemplated therein:

(i) there must be a ruling by the DTI Secretary;(ii) the petition must be filed by an interested party

adversely affected by the ruling; and(iii)such ruling must be in connection with the imposition of

a safeguard measure. The first two requisites areclearly present. The third requisite deserves closerscrutiny.

Court of Tax Appeals, Appellate Jurisdiction; Under the

SMA; As applied to case Where the DTI Secretary decidesnot to impose a safeguard measure, it is the CTA which has


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jurisdiction to review his decision. The position of therespondents is untenable as it vests the power of judicialreview of the DTI Secretarys ruling into two different courts,depending on whether or not it imposes a safeguard measure.The Court has consistently refused to sanction split jurisdictionas it is anathema to the orderly administration of justice. The

power of the DTI Secretary to adopt or withhold a safeguardmeasure emanates from the same statutory source, and itboggles the mind why the appeal modality would be such thatone appellate court is qualified if what is to be reviewed is apositive determination, and it is not if what is appealed is anegative determination. In deciding whether or not to impose asafeguard measure, provisional or general, the DTI Secretarywould be evaluating only one body of facts and applying themto one set of laws. The reviewing tribunal will be called upon toexamine the same facts and the same laws, whether or not thedetermination is positive or negative.

Moreover, a plain reading of Section 29 of the SMA reveals thatCongress did not expressly bar the CTA from reviewing anegative determination by the DTI Secretary nor conferred onthe Court of Appeals such review authority. The clear text ofthe law is that the CTA is vested with jurisdiction to review theruling of the DTI Secretary "in connection with the impositionof a safeguard measure." Had the law been couched instead toincorporate the phrase "the ruling imposing a safeguardmeasure," then respondent's claim would have indisputablemerit. Undoubtedly, the phrase "in connection with" not onlyqualifies but clarifies the succeeding phrase "imposition of asafeguard measure."

Finally, the Court is precluded from favoring an interpretationthat would cause inconvenience and absurdity. InterpretatioTalis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et

Absurdum. Adopting the respondents' position favoring theCTA's minimal jurisdiction would unnecessarily lead to illogicaland onerous results. Indeed, it is illiberal to assume thatCongress had intended to provide appellate relief to rulings

imposing a safeguard measure but not to those declining toimpose the measure.

2nd Issue: YES

Tariff and Customs Law; Imposition of SafeguardMeasure; Requisites All in all, there are two conditionprecedents that must be satisfied before the DTI Secretary may

impose a general safeguard measure. First, there must be apositive final determination by the Tariff Commission that aproduct is being imported into the country in increasedquantities (whether absolute or relative to domesticproduction), as to be a substantial cause of serious injury orthreat to the domestic industry. Second, in the case of non-agricultural products the Secretary must establish that theapplication of such safeguard measures is in the publicinterest.

Tariff and Customs Law; Imposition of Safeguard

Measure; Functions of the Tariff Commission vis--visthe DTI Secretary The SMA establishes a distinct allocationof functions between the Tariff Commission and the DTISecretary. The plain meaning of Section 5 shows that it is theTariff Commission that has the power to make a "positive finaldetermination." This power, which belongs to the TariffCommission, must be distinguished from the power to imposegeneral safeguard measure properly vested on the DTISecretary. The distinction is vital, as a "positive finaldetermination" clearly antecedes, as a condition precedent, theimposition of a general safeguard measure. At the same time,a positive final determination does not necessarily result in theimposition of a general safeguard measure. Under Section 5,notwithstanding the positive final determination of the TariffCommission, the DTI Secretary is tasked to decide whether ornot that the application of the safeguard measures is in thepublic interest.

Section 5 plainly evinces legislative intent to restrict the DTISecretary's power to impose a general safeguard measure bypreconditioning such imposition on a positive determination by

the Tariff Commission. Such legislative intent should be givenfull force and effect, as the executive power to impose


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definitive safeguard measures is but a delegated power thepower of taxation, by nature and by command of thefundamental law, being a preserve of the legislature.

Tariff and Customs Law; Imposition of SafeguardMeasure; Measures that may be imposed The safeguard

measures which the DTI Secretary may impose under the SMAmay take the following variations, to wit: (a) an increase in, orimposition of any duty on the imported product; (b) a decreasein or the imposition of a tariff-rate quota on the product; (c) amodification or imposition of any quantitative restriction on theimportation of the product into the Philippines; (d) one or moreappropriate adjustment measures, including the provision oftrade adjustment assistance; and (e) any combination of theabove-described actions. Except for the provision of tradeadjustment assistance, the measures enumerated by the SMAare essentially imposts, which precisely are the subject of

delegation under Section 28(2), Article VI of the 1987Constitution.

Tariff and Customs Law; Safeguard Measures Act;Power of the Tariff Commission; Determination Tobetter comprehend Section 13, note must be taken of thedistinction between the investigatory and recommendatoryfunctions of the Tariff Commission under the SMA.

The word "determination," as used in the SMA, pertains to thefactual findings on whether there are increased imports intothe country of the product under consideration, and onwhether such increased imports are a substantial cause ofserious injury or threaten to substantially cause serious injuryto the domestic industry. The SMA explicitly authorizes the DTISecretary to make a preliminary determination, and the TariffCommission to make the final determination. The distinction isfundamental, as these functions are not interchangeable. TheTariff Commission makes its determination only after a formalinvestigation process, with such investigation initiated only ifthere is a positive preliminary determination by the DTI

Secretary under Section 7 of the SMA. On the other hand, theDTI Secretary may impose definitive safeguard measure only if

there is a positive final determination made by the TariffCommission.

Tariff and Customs Law; Safeguard Measures Act;Power of the Tariff Commission; Recommendation Incontrast, a "recommendation" is a suggested remedial

measure submitted by the Tariff Commission under Section 13after making a positive final determination in accordance withSection 5. The Tariff Commission is not empowered to make arecommendation absent a positive final determination on itspart. Under Section 13, the Tariff Commission is required torecommend to the [DTI] Secretary an "appropriate definitivemeasure." The Tariff Commission "may also recommend otheractions, including the initiation of international negotiations toaddress the underlying cause of the increase of imports of theproducts, to alleviate the injury or threat thereof to thedomestic industry and to facilitate positive adjustment to

import competition.

Tariff and Customs Law; Safeguard Measures Act;Power of the Tariff Commission; Determination vis--visRecommendation The recommendations of the TariffCommission, as rendered under Section 13, are not obligatoryon the DTI Secretary. Nothing in the SMA mandates the DTISecretary to adopt the recommendations made by the TariffCommission. In fact, the SMA requires that the DTI Secretaryestablish that the application of such safeguard measures is inthe public interest, notwithstanding the Tariff Commission'srecommendation on the appropriate safeguard measure basedon its positive final determination. The non-binding force of theTariff Commission's recommendations is congruent with thecommand of Section 28(2), Article VI of the 1987 Constitutionthat only the President may be empowered by the Congress toimpose appropriate tariff rates, import/export quotas and othersimilar measures. It is the DTI Secretary, as alter ego of thePresident, who under the SMA may impose such safeguardmeasures subject to the limitations imposed therein. A contraryconclusion would in essence unduly arrogate to the Tariff

Commission the executive power to impose the appropriatetariff measures. That is why the SMA empowers the DTI


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Secretary to adopt safeguard measures other than thoserecommended by the Tariff Commission.

Unlike the recommendations of the Tariff Commission, itsdetermination has a different effect on the DTI Secretary. Onlyon the basis of a positive final determination made by the Tariff

Commission under Section 5 can the DTI Secretary impose ageneral safeguard measure. Clearly, then the DTI Secretary isbound by the determination made by the TariffCommission.

Tariff and Customs Law; Safeguard Measures Act;Power of the Tariff Commission The DTI Secretary doesnot have the power to review the findings of the TariffCommission for it is not subordinate to the Department ofTrade and Industry ("DTI"). It falls under the supervision, not ofthe DTI nor of the Department of Finance (as mistakenly

asserted by Southern Cross), but of the National EconomicDevelopment Authority, an independent planningagency of the government of co-equal rank as the DTI.As the supervision and control of a Department Secretary islimited to the bureaus, offices, and agencies under him, the DTISecretary generally cannot exercise review authority overactions of the Tariff Commission. Neither does the SMAspecifically authorize the DTI Secretary to alter, amend ormodify in any way the determination made by the TariffCommission. The most that the DTI Secretary could do toexpress displeasure over the Tariff Commission's actions is toignore its recommendation, but not its determination.

Tariff and Customs Law; Safeguard Measures Act; Policyof Restrictive Imposition of Safeguard Measurespursuant to the GATT Finally, if this arrangement drawn upby Congress makes it difficult to obtain a general safeguardmeasure, it is because such safeguard measure is theexception, rather than the rule. The Philippines is obliged toobserve its obligations under the GATT, under whoseframework trade liberalization, not protectionism, is laid down.

FEEDER INTERNATIONAL LINE vs. CA (May 31, 1991)

A vessel owned by Feeder anchored at Iloilo withoutnotifying customs officials. Upon inspection, authorities foundout that the vessel was cleared for Zamboanga but not forIloilo. The Commissioner of Customs, CTA and CA found Feederguilty illegal importation and its cargo of 1,100 metric tons of

gas oil and 1,000 metric tons of fuel oil was forfeited inaccordance with the TCC. Feeder appealed.

1. WON forfeiture improper because guilt was not provedbeyond reasonable doubt? NO

Proceedings for the forfeiture of goods illegallyimported are not criminal in nature since they do notresult in the conviction of the wrongdoer nor in theimposition upon him of a penalty, proof beyondreasonable doubt is not required in order to justify the

forfeiture of the goods.

In this case, the degree of proof required is merelysubstantial evidence which means such relevantevidence as a reasonable mind might accept asadequate to support a conclusion.

2. WON there was an illegal importation committed, or atleast an attempt thereof, which would justify a forfeitureof the subject vessel and its cargo? YES

Section 1202 of the TCC provides that importationbegins when the carrying vessel or aircraft enters thejurisdiction of the Philippines with intention tounload therein.

Mere intention may commence importation andsuch intent was proved by substantial evidence inthis case. It was evident that the vessel did notanchor at Iloilo for repairs:

a. considering that the vessel came from

Singapore, the route to Zamboanga wasshorter and Iloilo lies further north. It is not


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logical for the sailing vessel to travel alonger distance to get the necessaryrepairs.

b. it did not notify the Iloilo port or Customsauthorities of its arrival and the master ofthe vessel did not file a marine protest until

12 days after it had anchored, despite thesupposed urgency of the repairs needed

c. the required ship's and shipping documentswere not on board except the clearancefrom Singaporean port officials clearing thevessel for Zamboanga

d. that the barge and the tugboat werecontracted by Consignee Far East Synergyto load the cargo of the vessel into theawaiting barge and to discharge the sameto Manila

Judgment affirmed.

COMMISSIONER OF CUSTOMS vs. MILWAUKEEINDUSTRIES CORPORATION (December 9, 2004)

Milwaukee is domestic corporation engaged in theimportation of steel billets. In February 1994, InspectorPastoriza issued Boat Notes on the entire shipment authorizingits transfer, with the instruction that the same should be"under guard" by the Bureau of Customs, and that the "guardremain in continuous duty until released by CustomsAuthorities or upon presentation of a Valid Delivery Permit orPDIG." Thus, the cargo was loaded and transported to thewarehouse of Milwaukee, the consignee, in Apalit, Pampanga.

Upon investigation, authorities found that the shipmentwas transported without an Import Entry having been filed andwithout payment of the duties and taxes and a warrant ofseizure and detention was issued. Upon payment of aroundP10M for taxes, the Commissioner, on March 17, 1994,instructed its Special Assistant, Atty. Aaron Redubla, to accept

the payment and to process the release of the shipment.

Notwithstanding the Bureau of Customs' acceptance ofrespondent's full payment of duties and taxes, District CollectorBrillo still proceeded with the seizure and forfeitureproceedings. He rendered a Decision holding that "a violationof Section 2530 (f) and (l) - 3, 4 and 5 of the TCC wascommitted from the time the shipment was discharged from

the vessel and taken to the warehouse of the consigneewithout legal documentation as required by laws andregulations for the same and without payment of duties andtaxes due thereon.

CTA reversed this decision, hence this appeal.

1. WON the shipment in question was released torespondent from the custody of the Customsauthorities and not merely transferred torespondent's warehouse? MERELY TRANSFERRED

It is expressly provided in the Boat notes that thedischarge of the cargo was under guard and theguard to remain in continuous duty untilreleased by Customs proper authorities.Thegoods were merely transferred to the warehouse butwas not released from the custody of the Bureau.In its MR, the Commissioner even admitted thatcustoms guards were posted at petitioner's

premises in Apalit, Pamoanga, thereby showing thatrespondent never released the shipment to

petitionerThe transfer was by virtue of a permit issued bycustoms.

2. WON Milwaukee failed to comply with the customsrequirements to justify the seizure and forfeiture ofthe shipment? NO

Milwaukee complied with the requirements fortermination of importation according to Sec 1202:

"SECTION 1202. When Importation Begins andDeemed Terminated. Importation begins when thecarrying vessel or aircraft enters the jurisdiction of

the Philippines with intention to unladetherein. Importation is deemed terminated upon


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payment of the duties, taxes and other chargesdue upon the articles, or secured to be paid, at aport of entry and the legal permit for withdrawalshall have been granted, or in case said articlesare free of duties, taxes and other charges, until theyhave legally left the jurisdiction of the customs."

Requirements are:a. payment of the duties, taxes and other

charges due &-I t is undisputed that Milwaukees payment ofthe customs duties and taxes on the shipmentwas duly accepted by the Bureau of Customs.OR was issued.

b. legal permit for withdrawal shall havebeen granted

- The on March 17, 1994 order of releaseupon payment of taxes and duties on theshipment is a sufficient legal permit for theofficial release of the shipment transferredto respondent's warehouse.

Judgment affirmed.

Secretary of Finance vs. Oro Maura Shipping LinesJuly 15, 2009

FACTS:MARINA authorized Glory Shipping Lines importation of thevessel MV Haruna with the Collector of the Port of Mactan. Thevessel then had a declared dutiable value of P6,171,092.00 andthe estimated customs duty was P1,296,710.00. It was allowedconditional entry on the basis of a re-export bond.

After the re-export bond expired, it sent a Letter of Guaranteeto the Collector guaranteeing to renew the bond, otherwise, itwould pay the duties and taxes on said vessel. Glory ShippingLines never complied with its Letter of Guarantee; neither did itpay the duties and taxes and other charges due on the vesseldespite repeated demands made by the Collector of the Port ofMactan. Unknown to the Collector, Glory Shipping Lines had

already offered to sell the vessel to Oro Maura Shipping Lines(respondent).

MARINA granted the respondents importation of the vesselbased on the proposed acquisition cost of P1,100,000.00,taking depreciation into account. The Collector of the Port ofManila accepted the declared value of the vessel and assessedduties and taxes amounting to P149,989.00, which the

respondent duly paid.

After discovering that the vessel had been sold to therespondent, the Collector of the Port of Mactan sent therespondent a demand letter for the unpaid customs duties andcharges of Glory Shipping Lines. When the respondent failed topay, the Collector of the Port of Mactan instituted seizureproceedings against the vessel for violation of Section 2530(1), subpar. (1) to (5) of the Tariff and Customs Code of thePhilippines (TCCP).

The Collector of the Port of Mactan ordered the forfeiture of thevessel in favor of the Government, after finding that both GloryShipping Lines and the respondent acted fraudulently in thetransaction. The Cebu District Collector reversed the decisionconcluding that while there appeared to be fraud in the sale ofthe vessel, there was no proof that the respondent was a partyto the fraud. The Commissioner of Customs affirmed thedecision of the Cebu District Collector.

The Secretary of Finance affirmed the Commissionersrecommendation, but ordered a re-assessment of the vesselbased on the entered value, without allowance fordepreciation. CTA granted Petition for Review thus affirmingthe previous decision of the Commissioner of Customs. The CAaffirmed the findings of the CTA.

ISSUE 1: Whether the respondent was an innocentpurchaser

HELD: NoWhen respondent Oro Maura requested for authorization toimport the same vessel after a span of only 19 months whenGlory Shipping Lines filed for importation (the declared value


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was then P6,171,092.00), the respondent proposed anacquisition cost of only P1,100,000.00. In a little over a yearand a half, the declared value of the vessel decreasedby P5,000,000.00, or an astonishing 80% of its original price.Equally fantastic is the change in the customs duties, taxesand other charges due which fell from P1,296,710.00 in March

1993 to P149,989.00 in January 1995, all because of the sale,the new application by the vendee, and the change in the Portwhere the assessment and collection were made.

The 80% drop alone is already aprima facie evidence of fraud(Section 2503, TCCP).Significantly, the respondent never explained the considerabledisparity between the dutiable value declared by GloryShipping Lines and the dutiable value it declared differenceof P5,000,000.00 so as to overturn or contradict thisprimafacie finding of fraud. The exercise of due diligence alone

would have alerted it to Glory Shipping Lines acquisition costand the vessels declared value at its first entry. Therespondent, being in the shipping business, should have knownthe standard prices of vessels and that the value it proposed toMARINA is extraordinarily low compared to the vesselsoriginally declared valuation.

Neither can the respondent hide behind the excuse that thevessels dutiable value at P1,100,000.00 was approved byMARINA via the Authority to Import, taking into considerationthe vessels depreciation brought about by its ordinary wearand tear. In the first place, nowhere in the TCCP does it statethat the depreciated value of an imported item can be used asthe basis to determine an imported items dutiable value(Section 201).Even assuming that the depreciated value of the vessel can beconsidered in determining the vessels dutiable value, still, wefind that the decrease of 80% from the original price after thepassage of only 19 months cannot be believed and thus shouldnot be accepted.Assuming further that MARINA merely committed a mistake inapproving the vessels proposed acquisition costatP1,100,000.00, and that the Collector of the Port of Manila

similarly erred, we reiterate the legal principle that estoppelgenerally finds no application against the State when it acts torectify mistakes, errors, irregularities, or illegal acts, of itsofficials and agents, irrespective of rank.This principle is particularly true when it comes to thecollection of taxes.

The government cannot and must not be estopped particularlyin matters involving taxes. Taxes are the lifeblood of the nationthrough which the government agencies continue to operateand with which the State effects its functions for the welfare ofits constituents. Thus, it should be collected withoutunnecessary hindrance or delay (CIR v CTA).

There was an original but incomplete importation by GloryShipping Lines that the respondent could not have simplydisregarded proceeds from knowledge of the vessels historyand the application of the relevant law. In this respect,Section 1202 of the TCCP provides:

Importation begins when the carrying vessel or aircraft entersthe jurisdiction of the Philippines with intention to unladetherein. Importation is deemed terminated uponpayment of the duties, taxes and other charges dueupon the articles, or secured to be paid, at a port of entryand the legal permit for withdrawal shall have beengranted, or in case said articles are free of duties, taxes andother charges, until they have legally left the jurisdiction of the

customs.

In order for an importation to be deemed terminated, thepayment of the duties, taxes, fees and other charges of theitem brought into the country must be in full. For as long as theimportation has not been completed, the imported itemremains under the jurisdiction of the BOC. From theperspective of process, the importation that originally startedwith Glory Shipping Lines was therefore never completed andterminated, so that the respondents present importation ismerely a continuation of that original process.


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ISSUE 2: WON a lien in favor of the government and againstthe vessel exists

HELD:Yes

The finding of fraud leads us to conclude that the assessment

of the Collector of the Port of Manila cannot become final andconclusive pursuant to:

Section 1603, Finality of Liquidation Whenarticles have been entered and passed free ofduty or final adjustments of duties made, withsubsequent delivery, such entry and passage freeof duty or settlements of duties will, after theexpiration of one (1) year, from the date of thefinal payment of duties, in the absence offraud or protest or compliance audit pursuant tothe provisions of this Code, be final and conclusive

upon all parties, unless the liquidation of theimport entry was merely tentative.

Without the renewal of the vessels re-export bond, theobligation to pay customs duties, taxes and other charges onthe importation in the amount of P1,296,710.00 arose andattached to the vessel. This lien was never paid by GloryShipping Lines, thus it continued to exist even after the vesselwas sold to the respondent.

Section 1204 of the TCCP in this regard states:

Section 1204, Liability of Importer for Duties Unlessrelieved by laws or regulations, the l iability for duties, taxes,fees and other charges attaching on importation constitutes a

personal debt due from the importer to the governmentwhich can be discharged only by payment in full of all duties,taxes, fees and other charges legally accruing. It alsoconstitutes a lien upon the articles imported which may beenforced while such articles are in custody or subject to thecontrol of the government.

As defined by Blacks Law Dictionary, a lien is a claim orcharge on property for payment of some debt, obligation or

duty. In this particular instance, the obligation is a tax lien thatattaches to imported goods, regardless of ownership.

Consequently, when the respondent bought the vessel fromGlory Shipping Lines on December 2, 1994, the obligation topay the BOC P1,296,710.00 as customs duties had already

attached to the vessel and the non-renewal of the re-exportbond made this liability due and demandable. The subsequenttransfer of ownership of the vessel from Glory Shipping Lines tothe respondent did not extinguish this liability.

While it is true that the respondent had already paid thecustoms duties assessed by the Collector of the Port of Manila,this payment did not have the effect of extinguishing the liengiven the tax lien that had attached to the vessel and the factthat what had been paid was different from what was owed.From the point of amount alone, the customs duties paid to theCollector at the Port of Manila only amounted to P149,989.00,while the lien which had attached to the vessel based on theunpaid assessment by the Collector of the Port of Mactanamounted to P1,296,710.00.

Dispositive: CA decision reversed; Finance Secretarys 4th

Indorsement reinstated w/ modification.

Chevron v. Commissioner of the Bureau of Customs (GRNo. 178759, 11 August 2008)1

Corona,J:

In 1996, several petroleum oil shipments of Chevron arrived,covered by eight bills of lading. The shipments were unloadedfrom the carrying vessels onto Chevrons tanks. Subsequently,the import entry declarations (IEDs) were filed, and 90% ofcustoms duties were paid. The import entry and internalrevenue declarations (IEIRDs) of the shipments, however, weredated almost 2 months later than the dates for IEDs; the IEDs

1 Leighton Sotto


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dates were from 3/12/1996 to 4/10/1996, while thecorresponding IEIRDs were from 5/10/1996 to 6/21/1996.

(Note: Petitioner bided its time to file the IEIRD so as to avail ofa lower rate of duty. Because at or about the time thesedevelopments were taking place, the bill lowering the duty on

these oil products from 10% to 3% was already under intensediscussion in Congress.)

The importations were appraised at a duty rate of 3% asprovided under RA 8180. Prior to the effectivity of RA 8180 onApril 16, 1996, the rate of duty on imported crude oil was 10%.

The Finance Secretary received a tip from Alfonso Orioste,which revealed the deliberate concealment and manipulationscheme of Chevron and Shell. The BoC found that Chevronmanipulated the dates of the IERID to pay a lower rate of duty.

The BoC then assessed Chevron a deficiency amounting toP73.5M. In addition, because Chevron did not enter theimported articles in the customhouse within a non-extendibleperiod of 30 days from the date of discharge from the vessel,the BoC deemed the imported goods as impliedly abandonedunder Sec. 1801 of the TCC.

With its appeals at the BoC having been denied, Chevron fileda petition for review with the CTA. The CTA dismissedChevrons petition, holding that it was the filing of the IEIRDsthat constituted entry under the TCC. Chevron committed fraudwhen it failed to file the IEIRD within the 30-day period with theintent to "evade the higher rate."

Issue: Whether "entry" under Section 1301 in relation toSection 1801 of the TCC refers to the IED or the IEIRD.

Held: Entry in Sections 1301 and 1801 of the TCC refers toboth the IED and the IEIRDUnder Section 1301 of the TCC, imported articles must beentered within a non-extendible period of 30 days from thedate of discharge of the last package from a vessel. Otherwise,

the BOC will deem the imported goods impliedly abandonedunder Section 1801. Thus:

Section 1301. Persons Authorized to Make Import Entry.- Imported articles must be entered in the customhouseat the port of entry within thirty (30) days, which shall

not be extendible from date of discharge of the lastpackage from the vessel or aircraft either (a) by theimporter, being holder of the bill of lading, (b) by a dulylicensed customs broker acting under authority from a holderof the bill or (c) by a person duly empowered to act as agent orattorney-in-fact for each holder x x x

Section 1801. Abandonment, Kinds and Effect of. - An importedarticle is deemed abandoned under any of the followingcircumstances:xxx

b. When the owner, importer, consignee or interested partyafter due notice, fails to file an entry within thirty (30)days, which shall not be extendible, from the date ofdischarge of the last package from the vessel or aircraft,or having filed such entry, fails to claim his importation withinfifteen (15) days, which shall not likewise be extendible, fromthe date of posting of the notice to claim such importation.(Emphasis supplied)

The term "entry" in customs law has a triple meaning. Itmeans (1) the documents filed at the customs house; (2) thesubmission and acceptance of the documents and (3) theprocedure of passing goods through the customs house.

Boac v. People, G.R. No. 180597, 7 Nov. 2008 mereflagging of vehicle does not constitute search

Facts: Raul Basilio Boac, Ramon Betuin Golong, Cesar Fantone

Beltran, Roger Alcantara Basadre, and Benjamin

Castaneda Alfonso are members of the PNP-CIDG


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Charged with violation of Sec. 2203 in relation to Sec.3612 of the Tariff and Customs Code--- without lawfulauthority or delegation from the Collector of Customs,flag down, search and seize three (3) container vansconsigned to Japan Trak surplus (Kakiage Surplus) onJuly 7, 2004.

The said vans were said to be allowed to be brought tothe warehouse of the consignee and the actual searchwas done the day after; No contrabands were foundupon inspection

The Sandiganbayan ruled IFO the Republic, against theaccused.

Issue: WON there was a violation of the tariff and customsCode.

Held: No. The petition is meritorious. Petitioners should beacquitted of the charge.

1. It is very clear that the search was not done bypetitioners but by the Customs Police. Petitioners did notseize anything nor arrested anybody. They merelyobserved the search which they requested to beundertaken to check for contrabands. Notably, theconsignee did not file any complaint against petitioners(the collector of Customs filed the case).

2. The act of flagging down the vehicles is not among thoseproscribed by Sec. 2203 of the Tariff and Customs Code.

Mere flagging down of the container vans is notpunishable under the said law.

The jurisdiction of the Commissioner of Customs is clearly withregard to customs duties. Should the PNP suspect anything, itshould coordinate with the BOC and obtain the writtenauthority from the Collector of Customs in order to conductsearches, seizures, or arrests. Coordination is emphasized inthe laws. While it is an admitted fact that there was no suchcoordination initiated by the PNP-CIDG in this instance,nevertheless, petitioners cannot be convicted under the Tariff

and Customs Code since there is no evidence that they didactually search the container vans.

Rieta v. People, supra

Salvador v. People, GR No. 146706, July 15, 2005

Facts:

On 03 June 1994, a Special Mission Group from the PAF SpecialOperations Squadron conducted routine surveillanceoperations at the Manila Domestic Airport to check on reportsof alleged drug trafficking and smuggling being facilitated bycertain PAL personnel. The group was ordered to keep closewatch on Airbus 300 parked inside the airport. At around11:30pm, three (3) persons had boarded the Airbus 300. Theteam did not move, but continued its surveillance. At 12:15 amthe team leader reported that these 3 persons haddisembarked with their abdominal areas bulging and then

boarded an airplane tow truck with its lights off. At the LimaGate of the Domestic Airport, the team blocked and stoppedthe tow truck. The passengers of the truck were asked toalight. The team leader approached Aurelio Mandin whoseuniform was partly open, showing a girdle. Then, a packagewrapped in brown packaging tape fell. Suspecting that thepackage contained smuggled items, the leader yelledPositive! and the rest of the team surrounded petitioner andhis two co-accused who surrendered without a fight. The teamsearched their bodies and found that the 3 were wearinggirdles beneath their uniforms, all containing packets wrappedin packaging tape. The team confiscated the packets andbrought all the accused to the PAFSECOM Office.

Issue: Whether or not the search and seizure was valid.

Held: YES.

Criminal Procedure; Search and Seizure; Exceptions Itis well-settled that there are privileged areas where searchesand seizures may lawfully be effected sans a search warrant. These recognized exceptions include: (1) search of movingvehicles; (2) search in plain view; (3) customs searches; (4)


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waiver or consented searches; (5) stop-and-frisk situations; and(6) search incidental to a lawful arrest.

Criminal Procedure; Search and Seizure; CustomsSearch In the present case, it should be noted that thespecial mission of the PAF operatives was to conduct a

surveillance operation to verify reports of drug trafficking andsmuggling by certain PAL personnel in the vicinity of theairport. In other words, the search was in the nature of acustoms search. As such, the team properly effected thesearch and seizure without a search warrant since it exercisedpolice authority under the customs law. Law enforcers who aretasked to effect the enforcement of the customs and tariff lawsare authorized to search and seize, without a search warrant,any article, cargo or other movable property when there isreasonable cause to suspect that the said items have beenintroduced into the Philippines in violation of the tariff and

customs law. They may likewise conduct a warrantless searchof any vehicle or person suspected of holding or conveying thesaid articles, as in the case at bar.

Commissioner of Customs v. Court of Tax Appeals, No.L-31733, September 20, 1985, 138 SCRA 581 nature offorfeiture proceeding proceeding in rem

Facts:

Jose Pascual is the registered owner of the M/B "MariaVictoria-P", a motor boat of 63.25 gross tonnage dulylicensed by the Bureau of Customs to engage incoastwise trade

Jose Pascual claimed that his vessel was supposed to beused in fishing but that it failed to return after going outto sail; he said it was missing and worried that it mighthave been used illegally.

Jose Joloc, captain of the vessel, claimed that they wereindeed supposed to go fishing but someone whom he

knew asked him if he could load some fishes for P20K;

he agreed but when they got to the where that personsaid the fishes were, armed men met them and at gunpoint, he was forced to load the blue seal cigaretteswhich allegedly belong to one Datu Jacob of Jolo, Sulu.

On December 16, 1963, the said vessel was

apprehended by the elements of the Philippine Navy fivemiles off the coast of Naic, Cavite for carrying untaxed105 cases and 90 parks of Salem cigarettes and 414cases of Union cigarettes.

The authorities turned over the vessel, its crew and itscargo of blue seal cigarettes to the Small Craft Unit ofthe Philippine Navy for disposition. Thereafter, SeizureIdentification Case Nos. 8006 and 8006-A against thevessel and the cargo of blue seal cigarettes,respectively, were instituted before the Collector ofCustoms.

For failure of anybody to claim ownership over thecigarettes, the same were forfeited in favor of theGovernment.

Issue: WON the motor boat M/B "Maria Victoria-P" is subject toforfeiture under the Tariff and Customs Code, particularlyparagraphs (a) and (b) of Section 2530

Held: YES

1. Pursuant to the aforesaid provision, the vessel is clearlysubject to forfeiture in favor of the Government.

Forfeiture proceedings are in the nature of proceedings in remand are directed against the res. The fact that privaterespondent has allegedly no actual knowledge that M/B "MariaVictoria-P" was used illegally does not render the vesselimmune from forfeiture. This is so because the forfeitureproceedings in this case was instituted against the vessel itself.Private respondent's defense that he has no actual knowledgethat the vessel was used illegally is personal to him but cannotabsolve the vessel from liability of forfeiture.


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Valera v. Office of the Ombudsman27 February 2008

FACTS: Petitioner Atty. Gil Valera was appointed DeputyCommissioner of Customs in July 2001, and filed in the RTC ofManila, for and on behalf of the Bureau of Customs, a collection

case with prayer for the issuance of a writ of preliminaryattachment for the collection of P37,195,859.00 in unpaidduties and taxes against Steel Asia Manufacturing Corporation(SAMC), which utilized fraudulent tax credit certificates in thepayment of its duties.

A writ of preliminary attachment was issued against SAMC andwas duly implemented - the raw materials, finished productsand plant equipment of SAMC were subsequently attached.Valera and SAMC entered into a compromise agreementwherein the latter offered to pay on a staggered basis through

thirty (30) monthly equal installments the P37,195,859.00duties and taxes sought to be collected in the civil case.

The Director of the Criminal Investigation and Detention Groupof the Philippine National Police, subsequently filed a letter-complaint against petitioner with the Ombudsman, forcompromising the case against the SAMC without properauthority from the Commissioner of the Bureau of Customs inviolation of Section 2316 TCCP (Authority of the Commission tomake Compromise) and without the approval of the President,in violation of Executive Order No. 156 and Executive Order No.38, with such acts of Atty. Valera causing undue injury to thegovernment by having deprived the government of its right tocollect the legal interest, surcharges, litigation expensesand damages and gave the Steel Asia unwarranted benefits,violative of Sections 3(e) and (g) respectively of RA 3019.

Further investigation disclosed that Atty. Gil A. Valera whilebeing a Bureau of Customs official directly and indirectly hadfinancial or pecuniary interest in the CACTUS CARGOESSYSTEMS a brokerage whose line of business or transaction, in

connection with which, he intervenes or takes part in his officialcapacity by way of causing the employment of his brother-in-

law, Ariel Manongdo, thus, violating 3(h) of RA 3019 and RA6713 and Section 4, RA 3019 as against Ariel Manongdo.

Investigation also disclosed that on April 21, 2002 Atty. Gil A.Valera traveled to Hongkong with his family without properauthority from the office of the President in violation of

Executive Order No. 298 (foreign travel of governmentpersonnel) dated May 19, 1995, thus, he committed anadministrative offense of Grave Misconduct.The Office of the Ombudsman Special Prosecutor Villa-Ignaciomade the finding that by entering into the compromiseagreement, petitioner may have made concessions that maybe deemed highly prejudicial to the government, i.e., waiver ofthe legal interest and the penalty charges imposed by law, aswell as the virtual exoneration of SAMC of its fraudulent act ofusing spurious tax credit certificates.

Respondent Deputy Ombudsman issued a Decision finding thepetitioner administratively liable for grave misconduct anddecreeing his dismissal from the service, with all the accessorypenalties appertaining thereto, based on the following charges:

(i) compromising the case against SAMC in Civil Case No. 01-102504 before Branch 39, RTC Manila, without proper authorityfrom the Commissioner of the Bureau of Customs in violation ofSection 2316 of the Tariff and Customs Code, and without theapproval of the President in violation of Section 4(d) ofExecutive Order (E.O.) No. 156 as amended by E.O. No. 38;

(ii) causing the employment of his brother-in-law with theCactus Cargoes Systems, Inc. whose principal businessinvolves transactions with the Bureau of Customs in violation ofSection 3(d) of Republic Act (R.A.) No. 3019;[13] and

(iii) traveling to Hongkong without conforming with theguidelines on the application to travel abroad for privatepurposes of public officials.

On petition for review, the CA found enough evidence tosubstantiate the second and third charges and affirmed the


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decision of respondent Deputy Ombudsman finding petitionerguilty of grave misconduct.

ISSUE1: WON petitioner could validly compromise the caseagainst SAMC without prior authorization from theCommissioner of Customs in violation of Section 2316 of the

Tariff and Customs Code, and without prior approval of thePresident

HELD: No

Section 2401 of the TCCP covers the matter of the institutionand filing of civil and criminal actions by customs officers,which is subject to the approval of the Commissioner if filed forthe recovery of duties or the enforcement of any fine, penaltyor forfeiture under the Code. It does not cover the compromiseof such civil or criminal actions, while Section 2316 is the

provision that deals with such a situation. The latter iscategorical in providing an encompassing scope for the strictconditions for any compromise, including any case arisingunder this code or other laws or part of laws enforcedby the Bureau of Customs involving the imposition offines, surcharges and forfeitures unless otherwisespecified by law.

The SC held that the adoption of petitioners interpretation ofthese provisions would result in absurdity that could not havebeen intended by Congress since following his logic, the

Commissioner of Customs has to actively participate and seekthe approval of the Secretary of Finance in compromisingadministrative collection cases; whereas, customs officerswithout even seeking authority from the Commissioner orapproval from the Secretary of Finance can proceed to bargainoff much larger collection cases in courts.

E.O. No. 156, as amended by E.O. No. 38, created a SpecialTask Force to investigate and prosecute the irregularitiesrelative to the "tax credit scam" committed at the center of theDepartment of Finance and to recover and collect revenues lost

by the government through the "scam." Section 4(d) thereofprovides:

Section 4. Powers, Duties and Functions. The Task Force shallhave the following powers, duties and functions:

x x x

d) To recommend the settlement of cases for approval of thePresident, subject to appropriate rules on the settlement ofclaims by the government;

E.O. No. 156, as amended by E.O. No. 38, is clear in itsrequirement that in cases involving tax credit scams thefavorable recommendation for approval by the SpecialTask Force and the approval by the President of theRepublic are both required. The approval by the Chairmenof the Special Task Force is still subject to approval of the

President. Prior presidential approval is the highest form ofcheck and balance within the Executive branch of governmentand cannot be satisfied by mere failure of the President toreverse or reprobate the acts of subordinates. To sanctionotherwise would be to ask the Court to reward passivity andrender nugatory the fundamental safeguard required under thelaw.

The SC found lamentable the utter disregard of the legalrequirements for entering into a compromise displayed bypetitioner, further aggravated by the fact that there were

already sufficient properties of SAMC that were attached in thesaid case to satisfy not only the principal amount owed but alsothe penalties, surcharges and interests.

Fundamental it is in law that taxes being the lifeblood of thegovernment,such must be continuously replenished andcarefully preserved and no public official should maintain astandard lower than utmost diligence in keeping our revenuesystem flowing. It is not for any government official to deem itwithin his complete control to let precious blood flow to theprivate sphere where it would have been rightfully and lawfullycollected by the public through the government.


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Persons appointed to the revenue collection agencies of thegovernment, like petitioner, ought to live up to the stricteststandards of honesty and integrity in the public service andmust at all times be above suspicion. Because of the nature oftheir office, the officials and employees of the Bureau of

Customs should serve as the primary role models in the faithfulobservance of the constitutional canon that public office is apublic trust. The totality of petitioners acts constitutes flagrantdisregard of established rules constitutive of grave misconduct.

Dispositive: Petition denied; CA Decision affirmed.

Pilipinas Shell Petroleum Corporation v. Republic, GR No.161953, March 6, 2008, 547 SCRA 701 collection mayproceed while awaiting resolution of CTA case; protest

Proton Pilipinas Corporation v. Republic, GR No. 165027,October 16, 2006, 504 SCRA 528 government need not waitfor results of the criminal proceedings in Sandiganbayan beforecollecting customs duties and taxes

Bureau of Customs v. Peter Sherman, et. al., GR No.190487, April 13, 2011

Facts:Mark Sensing Philippines, Inc. (MSPI) caused the importation of

finished bet slips and thermal papers from June 2005 to January 2007, without paying duties or taxes. Hence, theBureau of Customs (petitioner) filed, under its Run After TheSmugglers (RATS) Program, a criminal complaint before theDepartment of Justice against the agents of MSPI for violatingSection 3601 vis--vis Sections 2530 (f) and (l) 5 and 101 (f) ofthe Tariff and Customs Code of the Philippines, as amendedand R.A. No. 7916.

The State Prosecutor found probable cause and accordinglyrecommended the filing of Information against them.Respondents filed a petition for review before the Secretary of

Justice during the pendency of which the Information was filedon April 11, 2009 before the Court of Tax Appeals (CTA). TheSecretary of Justice reversed the State Prosecutors Resolutionand accordingly directed the withdrawal of the Information.Petitioners motion for reconsideration having been denied, itelevated the case by certiorari before the Court of Appeals.

In the meantime, the prosecutor filed a Motion to WithdrawInformation with Leave of Court before the CTA, which grantedthe withdrawal of, and accordingly dismissed the Information. Amotion for reconsideration was filed by the petitioner. The CTAissued a Resolution merely noting without action said motion.

Hence, this petition.

Issue: WON BOCs participation in criminal and civil aspects ofthe case is limited to that of a witness.

Held: Yes

The prosecution of crimes pertains to the executivedepartment of the government whose principal power andresponsibility is to insure that laws are faithfully executed.Corollary to this power is the right to prosecute violators.

All criminal actions commenced by complaint or informationare prosecuted under the direction and control of publicprosecutors. In the prosecution of special laws, the exigencies

of public service sometimes require the designation of specialprosecutors from different government agencies to assist thepublic prosecutor. The designation does not, however, detractfrom the public prosecutor having control and supervision overthe case.

As stated in the Resolution, the CTA noted without actionpetitioner's motion for reconsideration. By merely notingwithout action petitioner's motion for reconsideration, the CTAdid not gravely abuse its discretion because it is the publicprosecutor who has control and supervision over the cases.The participation in the case of a private complainant,


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like petitioner, is limited to that of a witness, both inthe criminal and civil aspect of the case.

CIR v. La Suerte Cigar and Cigarette Factory, GR No.144942, June 28, 2011

Facts: In its 2000 Resolution, the Supreme Court denied thePetition for Review on Certiorari submitted by theCommissioner of Internal Revenue for non-compliance with theprocedural requirement of verification explicit in Sec. 4, Rule 7of the 1997 Rules of Civil Procedure and because the appealwas not pursued by the Solicitor General. When the motion forreconsideration filed by the petitioner was denied, petitionerfiled the present motion seeking a clarification on the supposeddiscrepancy between the pronouncement of this Courtrequiring the participation of the Office of the Solicitor Generaland the pertinent provisions of the Tax Code allowing legal

officers of the Bureau of Internal Revenue (BIR) to institute andconduct judicial action for and in behalf of the Government.

Issue: WON the legal officer of the BIR is authorized toinstitute appeal proceedings (as distinguished fromcommencement of proceeding) without the participation of theSolicitor-General.

Held: NO. The institution or commencement before a propercourt of civil and criminal actions and proceedings arisingunder the Tax Reform Act which shall be conducted by legal

officers of the Bureau of Internal Revenue is not in dispute. Anappeal from such court, however, is not a matter of right. Sec.220 of the Tax Reform Act must not be understood asoverturning the long-established procedure before this Court inrequiring the Solicitor-General to represent the interest of theRepublic. This court continues to maintain that it is theSolicitor-General who has the primary responsibility to appearfor the government in appellate proceedings. Thispronouncement finds justification in the various laws definingthe Office of the Solicitor-General, beginning with Act No. 135,which took effect on 16 June 1901, up to the presentAdministrative Code of 1987. Sec. 35, Chapter 12, Title III, Book

IV of the said code outlines the powers and functions of theOffice of the Solicitor General which includes, but not limitedto, its duty toa. Represent the Government in the Supreme Court and theCourt of Appeals in all criminal proceedings; represent theGovernment and its officers in the Supreme Court, the Court of

Appeals, and all other courts or tribunals in all civil actions andspecial proceedings in which the Government or any officerthereof in his official capacity is a party.b. Appear in any court in any action involving the validity ofany treaty, law, executive order, or proclamation, rule orregulation when in his judgment his intervention is necessaryor when requested by the Court.

Commissioner of Customs v. Court of Tax Appeals, Las

Islas Filipinas Food Corporation and PAT-PRO OverseasCo., Ltd., GR Nos. 171516-17, Resolution dated February 13,2009, 579 SCRA 289 administrative remedies - posting ofbond

GST Philippines, Inc. v. Commissioner of Customs & Sec.

of Finance, CTA EB No. 449, June 15, 2009 effect of failure to

protest

Subic Bay Metropolitan Authority v. Rodriguez, GR No.

160270, April 23, 2010, 619 SCRA 176 BOC has exclusive

original jurisdiction in seizure and forfeiture proceedings

ASIAN TERMINALS V. BAUTISTA-RICAFORT (GR No.166901, Oct 27, 2006)2

Callejo,J:

Sometime in April and May 1998, Noel Tabuelog, et al.imported 72 secondhand right-hand drive buses from Japan.

2 Leighton Sotto


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The importation of right-hand vehicles without conversion kitswere prohibited under RA 8506, the District Collector ofCustoms impounded the said shipment of vehicles, andordered them stored at the warehouse of the Asian Terminals,Inc. (ATI), a customs-bonded warehouse. Conformably withSection 2607 of the Tariff and Customs Code, the District

Collector of Customs issued Warrants of Distraint against theshipment and set the sale at public auction on September 10,1998.The importers filed a complaint with the RTC of Paraaque,against the Sec. of Finance and Customs Commissioner forreplevin with prayer for the issuance of a writ of preliminaryand mandatory injunction and damages. The RTC granted theapplication for a writ of replevin on a bond of PhP 12M.Issue: Whether the RTC may pass upon the validity of seizureand forfeiture proceedings conducted by the BOCHeld: No. RTCs are devoid of any competence to pass upon the

validity or regularity of seizure and forfeiture proceedingsconducted by the Bureau of Customs and to enjoin orotherwise interfere with these proceedings. It is the Collector ofCustoms, sitting in seizure and forfeiture proceedings, who hasexclusive jurisdiction to hear and determine all questionstouching on the seizure and forfeiture of dutiable goods. TheRegional Trial Courts are precluded from assuming cognizanceover such matters even through petitions of certiorari,prohibition or mandamus.The rule that Regional Trial Courts have no review powers oversuch proceedings is anchored upon the policy of placing no

unnecessary hindrance on the governments drive, not only toprevent smuggling and other frauds upon Customs, but moreimportantly, to render effective and efficient the collection ofimport and export duties due the State, which enables thegovernment to carry out the functions it has been instituted toperform.

Ponce Enrile v. Vinuya, No. L-29043, January 30, 1971,37 SCRA 381 RTC has no jurisdiction to entertain areplevin suit involving an article subject of customsseizure and forfeiture proceeding.

Facts:

Collector of Customs of the Port of Manila issued awarrant of seizure and detention against the Cadillac carinvolved in this case, the owner-claimant being a certain

Rodolfo Ceadoza, as the taxes and duties had not beenpaid

Rodolfo Ceadoza, had sold such car to one FranciscoDee from whom respondent Vinuya acquired the same.

Under claim that he was aggrieved by such seizure anddetention of the car in question, Vinuya filed a complaintfor replevin in the sala of Judge WALFRIDO DE LOSANGELES, presiding judge of Branch IV, Court of FirstInstance of Rizal (sitting at Quezon City).

After filing a bond of P60,000.00 an ex-parte order wasissued on April 19, 1967 by respondent Judge directing aspecial sheriff to take possession of the Cadillac car inquestion.

On the very same day respondent Judge likewise gavedue course to the complaint for replevin and requiredpetitioners to file their answer.

Issue: WON Judge de los Angeles is vested with jurisdiction toentertain a complaint for replevin filed by Vinuya, for therecovery of a Cadillac car, subject of a seizure and forfeiture

proceeding.Held: NO.

1. The prevailing doctrine is that the exclusive jurisdictionin seizure and forfeiture cases vested in the Collector ofCustoms precludes a court of first instance fromassuming cognizance over such a matter.

2. Section 2303 of the Tariff and Customs Code clearlyindicates the intention of the law to confine in theBureau of Customs the determination of all questionsaffecting the disposal of property proceeded against in aseizure and forfeiture case. The judicial recourse of the


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property owner is not in the Court of First Instance but inthe Court of Tax Appeals, and only after exhaustingadministrative remedies in the Bureau of Customs.

3. The Bureau of Customs, is vested with exclusiveauthority. Even if it be assumed that in the exercise ofsuch exclusive competence a taint of illegality may becorrectly imputed, the most that can be said is thatunder certain circumstances the grave abuse ofdiscretion conferred may oust it of such jurisdiction. Itdoes not mean however that correspondingly a court offirst instance is vested with competence when clearly inthe light of the above decisions the law has not seen fitto do so.

Bureau of Customs v. Ogario, GR No. 138081, March 30,2000

Facts:On 09 December 1998, the District Collector of Customs ofCebu issued a Warrant of Seizure and Detention of 25,000 bagsof rice, bearing the name of SNOWMAN, Milled in Palawan.According to the Economic Intelligence and InvestigationBureau (EIIB), the rice was landed in Palawan by a foreignvessel and then placed in sacks marked SNOWMAN, Milled inPalawan. It was then shipped to Cebu City on board the vesselM/V Alberto. Thereafter, forfeiture proceedings werecommenced. Aggrieved, the respondents filed a complaint for

injunction with the RTC of Cebu City and prayed for theissuance of the Warrant of Seizure and Detention.

The RTC ruled in favor of respondents and ordered the returnof the goods. Meanwhile, in the forfeiture proceedings beforethe Collector of Customs, a decision was rendered ordering thegoods forfeited in favor of the government.

Issue:Whether or not the RTC has jurisdiction to determine theprobable in a seizure case

Held: NO

Tariff and Customs Law; Lack of Jurisdiction of RTCs toDetermine Probable Cause in Customs Cases RTCs aredevoid of any competence to pass upon the validity orregularity of seizure and forfeiture proceedings conducted bythe BOC and to enjoin or otherwise interfere with these

proceedings. The Collector of Customs sitting in seizure andforfeiture proceedings has exclusive jurisdiction to hear anddetermine all questions touching on the seizure and forfeitureof dutiable goods. The Regional Trial Courts are precluded fromassuming cognizance over such matters even through petitionsfor certiorari, prohibition or mandamus.

Tariff and Customs Law; Lack of Jurisdiction of RTCs toDetermine Probable Cause in Customs Cases; Rationale The rule that RTCs have no review powers over suchproceedings is anchored upon the policy of placing no

unnecessary hindrance on the governments drive, not only toprevent smuggling and other frauds upon Customs, but moreimportantly, to render effective and efficient the collection ofimport and export duties due the State, which enables thegovernment to carry out the functions it has been instituted toperform.

Even if the seizure by the Collector of Customs were illegal,such act does not deprive the BOC of jurisdiction thereon.

TOMAS CHIA vs. ACTING COLLECTOR OF CUSTOMS

(September 26, 1989)

Acting on a letter-request, Collector issued Warrants of Seizureand Detention of assorted electronic and electrical equipmentand other articles illegally imported into the Philippines by asyndicate and offered for sale in Tom's Electronics and SonyMerchandising stores in Quiapo. A raid was conducted and theauthorities seized articles on which customs duties allegedlyhad not been paid. Chia filed petition for certiorari assailingthat validity of the warrants.


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WON there was a violation of under Section 3 of the Bill ofRights of the 1973 Constitution (not having been issued by ajudge)? NOSec 3. The right of the people to be secured in their persons,houses, papers and effects against unreasonable searches andseizures of whatever nature and for any purpose shall not be

violated, and no search warrant or warrant of arrest shall issueexcept upon probable cause to be determined by the judgeorsuch other responsible officer as may be authorized bylaw after examination under oath or affirmation of thecomplainant and the witnesses he may produce, andparticularly describing the place to be searched, and thepersons or things to be seized.

1. The Collector of Customs was "a responsible officerauthorized by law" to issue the warrants, under Sections2208 and 2209 of the TCC.

SEC. 2208. RIGHT OF POLICE OFFICER TO ENTERINCLOSURE For the more effective discharge of hisofficial duties, any person exercising the powers hereinconferred, may at any time enter, pass through orsearch any land or inclosure or any warehouse, store orother building, not being a dwelling house.A warehouse, store or other building or inclosure usedfor the keeping or storage of articles does not become adwelling house within the meaning hereof merely byreason of the fact that a person employedSEC. 2209.- SEARCH OF A DWELLING HOUSE. A

dwelling house may be entered and searched only uponwarrant issued by a Judge of the court or such otherresponsible officers as may be authorized by law,upon sworn application showing probable cause andparticularly describing the place to be searched and theperson or thing to be seized.

2. Warrant was even unnecessary since under Section2536 of the TCC, goods can be seized without a searchand seizure warrant when they (the goods) are openlyoffered for sale or kept in storage in a store.SEC. 2536. SEIZURES OF OTHER ARTICLES-TheCommissioner of Customs and Collector of Customs

and/or any other customs officer, with the priorauthorization in writing by the Commissioner, maydemand evidence of payment of duties and taxes onforeign articles openly offered for sale or kept in storage,and if no such evidence can be produced, such articlesmay be seized and subjected to forfeiture proceedings:

Provided, however, that during such proceedings theperson or entity from whom such articles have beenseized shall be given the opportunity to prove or showthe source of such articles and the payment of dutiesand taxes thereon.

3. Lastly, Chia did not exhaust his administrative remedies,so his recourse to the SC was premature.Upon effecting the seizure of the goods, the Bureau ofCustoms acquired exclusive jurisdiction not only over thecase but also over the goods seized for the purpose ofenforcing the tariff and customs laws.

The proper remedy is that a party dissatisfied with the decisionof the Collector may appeal to the Commissioner of Customs,whose decision is appealable to the Court of Tax Appeals. Thedecision of the Court of Tax Appeals may be elevated to theSupreme Court for review.

El Greco Ship Manning and Management Corp. v.Commissioner of Customs

4 December 2008

FACTS: A Warrant of Seizure and Detention was issued by the

Legaspi District Collector for the 35,000 bags of imported riceshipped by M/V Criston on the ground that it allegedly left thePort of Manila without the necessary clearance from thePhilippine Coast Guard. Since the warrant merely covered thecargo, but not the M/V Criston which transported it, anotherwarrant was subsequently issued particularly for the saidvessel.

The 35,000 bags of rice were consequently released to theconsignees, Antonio Chua Jr. and Carlos Carillo, after the twohave posted the P31,450,000.00 bond required by the RTC ofTabaco, Albay. Meanwhile, as M/V Criston was under the


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custody of the Bureau of Customs of the Province of Albay, thevessel was allowed to temporarily transfer to anotheranchorage area in order to prevent any damage which could becaused by typhoon Manang. However, M/V Criston failed toreturn to the Port of Tabaco after Manang had passedthrough the area, and was thereafter found in the waters of

Bataan sporting the name M/V Neptune Breeze.

The BOC District Collector of the Port of Manila issued aWarrant of Seizure and Detention against M/V Neptune Breezein view of the vessels failure to present a clearance from itslast port of call. The Legaspi District Collector subsequentlyordered the forfeiture of M/V Criston (M/V Neptune Breeze),and its cargo, for violating Section 2530 (a), (f) and (k) of theTCCP.El Greco filed a Motion for Intervention and Motion to Quashwith the Manila District Collector asserting that M/V Neptune

Breeze was a foreign registered vessel owned by AtlanticPacific Corporation, Inc. and different from M/V Criston. TheManila District Collector ruled in favor of El Greco for lack ofprobable cause showing that M/V Nuptune Breeze is the samevessel known as M/V Criston.

The abovementioned ruling by the Manila District Collector wasreversed by BOC when the latter ruled that M/V NeptuneBreeze and M/V Criston were one the same and that theLegaspi District Collector had already acquired prior jurisdictionover the vessel. El Greco sought the reversal and accordingly

filed a Petition for Review with the CTA claiming that M/VCriston is entirely different from M/V Neptune Breeze the twohave different and separate Certificates of Registry, and thatthe decision of the Manila District Collector already becamefinal and executory in view of the BOC Commissioners failureto act thereon within the 30-day period required under Section2313 of the tariff and Customs Code.

The 2nd Division of the CTA denied the Petition and held thatboth vessels were indeed one and the same by giving credenceto the crime laboratory report submitted by the PhilippineNational Police which indicated that the M/V Criston and M/V

Neptune Breeze have similar serial numbers in their respectiveengines and generators.

The CTA En Banc dismissed the Petition for Review filed by ElGreco for lack of merit.

ISSUE 1: WON there is substantial evidence that M/V Neptuneis the same as M/V CristonHELD: YES

The Supreme Court sustained the findings of the CTA En Banc,taking judicial notice of the fact that along with the grosstonnage, net tonnage, length and breadth of the vessel, theserial numbers of its engine and generator are the necessaryinformation identifying the vessel: (i)n as much the same way,the identity of a land motor vehicle is established by its uniquemotor and chassis numbers. It is, thus, highly improbable that

two totally different vessels would have engines andgenerators bearing the very same serial numbers; and the onlylogical conclusion is that they must be one and the samevessel.

The SC further said that the failure of the supposed operator toappear before the Legaspi District Collector is surprising sinceit is highly unfathomable for a purported owner to ignoreproceedings for the seizure of its vessel since it risks the loss ofa property of enormous value. While the foreign registration ofM/V Neptune Breeze proves that it was registered in a foreign

country, it does not render impossible the conclusionsconsistently reached by the Legaspi District Collector, the CTASecond Division, the CTA En Banc, and the SC that M/VNeptune Breeze was the very same vessel used in the condu

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