X -------------------------------------------------------------------------------------- X

SECOND DIVISION

DECISION
COMMISSIONER OFCUSTOMS, G.R. No. 183868

Petitioner,

Present:
MENDOZA, J.:

CARPIO, J., Chairperson,

In this petition for review on certiorari[1] under Rule 45, the
DE CASTRO,*
Commissioner of Customs (Commissioner), represented by the Office of the
- versus - PERALTA, 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
ABAD, and
his petition for review for his failure to file a motion for reconsideration before
MENDOZA, JJ. 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
MARINA SALES, INC.,
materials into the country for the purpose. In the past, the Bureau of
Respondent. Promulgated: Customs (BOC) assessed said type of importations under Tariff Heading H.S.
2106.90 10 with a 1% import duty rate.[3]
November 22, 2010
On March 6, 2003, Marinas importation, labeled as Import Entry No. C-
33771-03, arrived at the Manila International Container Port (MICP) on board On April 15, 2003, the VCRC directed Marina to appear in a deliberation
the vessel APL Iris V-111.Said Import Entry No. C-33771-03 consisted of a 1 on May 15, 2003 and to explain why its shipment under Import Entry No. C-
x 20 container STC with a total of 80 drums: (a) 56 drums of 225 kilograms 33771-03 should not be classified under Tariff Heading H.S. 2106.90 50 with
Sunquick Orange Concentrate; and (b) 24 drums of 225 kilograms of import duty rate of 7%.[8]
Sunquick Lemon Concentrate.[4] It was supported by the following
documents: (a) Bill of Lading No. APLU 800452452 dated February 2, On May 15, 2003, Marina, through its Product Manager Rowena T. Solidum
2003;[5] and (b) CO-RO Food A/S of Denmark Invoice No. 1619409 and Customs Broker Juvenal A. Llaneza, attended the VCRC deliberation
[6]
dated January 27, 2003. and submitted its explanation,[9] dated May 13, 2003, along with samples of
the importation under Import Entry No. C-33771-03.
Marina computed and paid the duties under Tariff Harmonized System On May 21, 2003, another importation of Marina arrived at the MICP
Heading H.S. 2106.90 10 at 1% import duty rate. 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
This time, however, the BOC examiners contested the tariff classification Sunquick Orange Concentrate; (b) 1 drum of 225 kilograms of Sunquick
of Marinas Import Entry No. C-33771-03 under Tariff Heading H.S. 2106.90 Tropical Fruit Concentrate; (c) 17 drums of 225 kilograms of Sunquick Lemon
10. The BOC examiners recommended to the Collector of Customs, acting as Concentrate; (d) 3 drums of 225 kilograms of Sunquick Ice Lemon
Chairman of the Valuation and Classification Review Committee (VCRC) of Concentrate; and (e) 4 drums of 225 kilograms Sunquick Peach Orange
the BOC, to reclassify Marinas importation as Tariff Heading H.S. 2106.90 50 Concentrate. The said importation was accompanied by the following
(covering composite concentrates for simple dilution with water to make documents: (a) Bill of Lading No. KKLUCPH060291 dated April 17,
beverages) with a corresponding 7% import duty rate. 2003;[10] and (b) CO-RO Foods A/S Denmark Invoice No. 1619746
The withheld importation being necessary to its business dated April 15, 2003.[11]
operations, Marina requested the District Collector of the BOC to release
Import Entry No. C-33771-03 under its Tentative Release Again, the BOC examiners disputed the tariff classification of Import Entry
System.[7] Marina undertook to pay the reclassified rate of duty should it be No. C-67560-03 and recommended to the VCRC that the importation be
finally determined that such reclassification was correct. The District Collector classified at Tariff Heading H.S. 2106.90 50 with the corresponding 7% duty
granted the request. rate.
 Entry No. C-67560-03 under Tariff Heading H.S. 2009 19 00 at 7% duty rate,
In order for Import Entry No. C-67560-03 to be released, Marina once again H.S. 2009.80 00 at 7% duty rate and H.S. 2009.90 00 at 10% duty rate.
[12]
signed an undertaking under the Tentative Release System.
Apparently not in conformity, Marina interposed a petition for review
In a letter dated July 7, 2003, the VCRC scheduled another deliberation before the CTA on February 3, 2004, which was docketed as CTA Case No.
requiring Marina to explain why Import Entry No. C-67560-03 should not be 6859.
classified under Tariff Heading H.S. 2106.90 50 at the import duty rate of
7%.[13] On October 31, 2007, the CTA Second Division ruled in favor
[18]
of Marina holding that its classification under Tariff Heading H.S. 2106.90
On July 17, 2003, Marina again attended the VCRC deliberation and 10 was the most appropriate and descriptive of the disputed importations.[19] It
submitted its explanation[14] dated July 17, 2003 together with samples in opined that Marinas importations were raw materials used for the
support of its claim that the imported goods under Import Entry No. C-67560- manufacture of its Sunquick products, not ready-to-drink juice concentrates
03 should not be reclassified under Tariff Heading H.S. 2106.90 50. as argued by the Commissioner.[20] Thus, the decretal portion of the CTA -
Second Division reads:
Thereafter, the classification cases for Import Entry No. C-33771-03 and
WHEREFORE, finding merit in petitioners Petition for Review,
Import Entry No. C-67560-03 were consolidated. the same is hereby GRANTED. Accordingly, the
Resolution/Decision dated November 13, 2003 of the
Valuation and Classification Review Committee of the Bureau
On September 11, 2003, as reflected in its 1st Indorsement, the VCRC of Customs is hereby SET ASIDE and petitioners importation
reclassified Import Entry No. C-33771-03 and Import Entry No. C-67560-03 covered by Import Entry Nos. C-33771-03 and C-67560-03 are
reclassified under Tariff Harmonized System Heading H.S.
under Tariff Heading H.S. 2106.90 50 at 7% import duty rate.[15]
2106.90 10 with an import duty rate of 1%.

On October 7, 2003, Marina appealed before the Commissioner SO ORDERED.

challenging VCRCs reclassification.[16]

The Commissioner disagreed and elevated the case to the CTA-En
In its 1st Indorsement of November 13, 2003,[17] the VCRC modified its Banc via a petition for review.[21]
earlier ruling and classified Marinas Import Entry No. C-33771-03 and Import

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.
SO ORDERED.[22]
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.
In his Memorandum,[24] the Commissioner submits the following issues for
resolution:
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. Division must be preceded by the filing of a timely motion for reconsideration
WHETHER THE CHALLENGED DECISION OF THE COURT or new trial with the Division. The word "must" clearly indicates the mandatory --
OF TAX APPEALS SECOND DIVISION HOLDING THAT not merely directory -- nature of a requirement.[32]
RESPONDENTS IMPORTATION ARE COVERED BY
IMPORT ENTRY NOS. C-33771-03 AND C-67560-03 ARE
CLASSIFIED UNDER TARIFF HARMONIZED SYSTEM The rules are clear. Before the CTA En Banc could take cognizance
HEADING H.S. 2106.90 10 WITH AN IMPORT DUTY RATE
of the petition for review concerning a case falling under its exclusive
OF ONE PERCENT (1%) IS NOT CORRECT.[25]
appellate jurisdiction, the litigant must sufficiently show that it sought prior
reconsideration or moved for a new trial with the concerned CTA
The Commissioner argues that the dismissal of his petition before the division. Procedural rules are not to be trifled with or be excused simply
CTA-En Banc is inconsistent with the principle of the liberal application of the because their non-compliance may have resulted in prejudicing a partys
[26]
rules of procedure. He points out that due to the dismissal of the petition, substantive rights.[33] Rules are meant to be followed. They may be relaxed
the government would only be collecting 1% import duty rate only for very exigent and persuasive reasons to relieve a litigant of an
[27]
from Marina instead of 7%. This, if sanctioned, would result in grave injustice not commensurate to his careless non-observance of the prescribed
[28]
injustice and unfairness to the government. rules.[34]

The Commissioner also contends that the testimony of Marinas expert At any rate, even if the Court accords liberality, the position of the
witness, Aurora Kimura, pertaining to Sunquick Lemon compound shows that Commissioner has no merit. After examining the records of the case, the
[29]
it could be classified as heavy syrup falling under the category of H.S. Court is of the view that the import duty rate of 1%, as determined by the CTA
[30]
2190.90 50 with a 7% import duty rate. Second Division, is correct.

The Court finds no merit in the petition. The table shows the different classification of Tariff import duties
relevant to the case at bar:
On the procedure, the Court agrees with the CTA En Banc that the TARIFF IMPORT COVERAGE
HEADING DUTY RATE
Commissioner failed to comply with the mandatory provisions of Rule 8,
H.S. 2106.90 10 1% Covers flavouring materials, nes., of kind
Section 1 of the Revised Rules of the Court of Tax Appeals[31] requiring that used in food and drink industries; other
the petition for review of a decision or resolution of the Court in food preparations to be used as raw
 material in preparing composite taste.[36] In other words, the concentrates, to be consumable, must have to
concentrates for making beverages
H.S. 2106.90 50 7% Covers composite concentrate for simple lose their original character. To quote the CTA Second Division:
dilution with water to make beverages Verily, to fall under the assailed Tariff Harmonized
H.S. 2009. 19 00 7% Covers orange juice, not frozen System Headings, petitioners (herein respondent) articles of
H.S. 2009.80 00 7% Covers juice of any other single fruit or importation, as fruit juices/mixtures, should not have lost its
vegetable original character, in spite of the addition of certain
standardizing agents/constituents. Contrary thereto, We find
H.S. 2009.90 00 10% Covers mixtures of juices
the subject importations categorized as non-alcoholic
composite concentrates to have apparently lost their original
The Commissioner insists that Marinas two importations should be character due to the addition of ingredients in such quantity
that the concentrated fruit juice mixture only comprises a small
classified under Tariff Heading H.S. 2106.90 50 with an import duty rate of percentage of the entire compound.
7% because the concentrates are ready for consumption by mere dilution
This was clearly explained by the VCRC in its
with water. subsequent Resolution/Decision (1st Indorsement) issued on
February 17, 2005 pertaining to subsequent similar
importations of petitioner, effectively correcting its findings in
The Court is not persuaded.
the assailed Resolution/Decision dated November 13, 2003
concerning the same party-importer, issues and articles of
As extensively discussed by the CTA Second Division, to fit into the importation,[37] to wit:

category listed under the Tariff Harmonized System Headings calling for a SUB-GROUP OBSERVATIONS/FINDINGS:
higher import duty rate of 7%, the imported articles must not lose its original
The classification issue was divided into two
character. In this case, however, the laboratory analysis of Marinas samples regimes. The era under the old Harmonized
yielded a different result.[35] The report supported Marinas position that the Commodity Description and Coding System, while the
other is the latest revised edition, the Asean
subject importations are not yet ready for human
Harmonized Tariff Nomenclature.
consumption. Moreover, Marinas plant manager, Rebecca Maronilla, testified
that the juice compounds could not be taken in their raw form because they The previous committee resolution was promulgated
technically not on the merit of the case but failure on
are highly concentrated and must be mixed with other additives before they the part of the importer to submit their position
could be marketed as Sunquick juice products. If taken in their unprocessed paper/arguments within the prescriptive period given
by the committee.
form, the concentrates without the mixed additives would produce a sour
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. SO ORDERED.
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]
FIRST DIVISION

CHEVRON PHILIPPINES, INC., G.R. No. 178759

Contrary to the Commissioners assertions, empirical evidence shows Petitioner,
that the subject importations would have to undergo a laborious method, as Present:

shown by its manufacturing flowchart[43] and manufacturing process,[44] to PUNO, C.J., Chairperson
achieve their marketable juice consistency. Accordingly, the 1% tariff import ,
CARPIO,
duty rate under Tariff Heading H.S. 2106.90 10 was correctly applied to the - v e r s u s - AUSTRIA-MARTINEZ,*
subject importations. CORONA and
LEONARDO-DE CASTRO, JJ.

In any case, the VCRC in its 1st Indorsement[45] of February 17, COMMISSIONER OF THE
2005 (a subsequent proceeding involving the same type of importation) BUREAU OF CUSTOMS,
Respondent. Promulgated:
rectified the disputed tariff reclassification rate. Thus, in Marinas succeeding
importations, the VCRC already adopted the 1% import duty rate as paid August 11, 2008
by Marina in the past. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

WHEREFORE, the petition is DENIED.

DECISION

CORONA, J.:
 The shipments were unloaded from the carrying vessels onto petitioners oil
This is a petition for review on certiorari[1] of the decision[2] and resolution[3] of
tanks over a period of three days from the date of their arrival. Subsequently,
the Court of Tax Appeals (CTA) en banc dated March 1, 2007 and July 5,
the import entry declarations (IEDs) were filed and 90% of the total customs
2007, respectively, in CTA EB Nos. 121 and 122 which reversed the decision
duties were paid. The import entry and internal revenue declarations (IEIRDs)
of the CTA First Division dated April 5, 2005 in CTA Case No. 6358.
of the shipments were thereafter filed on the following dates:
[4]
Petitioner Chevron Philippines, Inc. is engaged in the business of

importing, distributing and marketing of petroleum products in the

ENTRY PRODUCT ARRIVAL IED IEIRD
Philippines. In 1996, the importations subject of this case arrived and were NO. DATE
606-96 66,229,960 liters 3/8/1996 3/12/1996 5/10/1996
covered by eight bills of lading, summarized as follows: Nan Hai Crude Oil
ARRIVAL 604-96 6,990,712 liters 3/18/1996 3/26/1996 5/10/1996
PRODUCT DATE VESSEL Reformate
605-96 16,651,177 liters 3/21/1996 3/26/1996 5/10/1996
66,229,960 liters Ex MT FCCU Feed Stock
Nan Hai Crude Oil 3/8/1996 Bona Spray 600-96 236,317,862 liters 3/26/1996 3/28/1996 5/10/1996
6,990,712 liters Ex MT 601-96 Oman/Dubai Crude Oil
Reformate 3/18/1996 Orient Tiger 602-96
603-96
16,651,177 liters Ex MT 818-96 51,878,114 liters 4/10/1996 4/10/1996 6/21/1996
FCCU Feed Stock 3/21/1996 Probo Boaning Arab Crude Oil
236,317,862 liters
Oman/Dubai Ex MT
Crude Oil 3/26/1996 Violet The importations were appraised at a duty rate of 3% as provided under RA

51,878,114 liters Ex MT 8180[6] and petitioner paid the import duties amounting
Arab Crude Oil 4/10/1996 Crown Jewel[5]
to P316,499,021.[7] Prior to the effectivity of RA 8180 on April 16, 1996, the and documents on the same shipments. This prompted petitioner to seek the

rate of duty on imported crude oil was 10%. creation of a unified team to exclusively handle the investigation.[9]

Three years later, then Finance Secretary Edgardo Espiritu received a

On August 1, 2000, petitioner received from the District Collector of Customs
letter (with annexes) dated June 10, 1999 from a certain Alfonso A. Orioste
of the Port of Batangas (District Collector) a demand letter requiring the
denouncing the deliberate concealment, manipulation and scheme employed
immediate settlement of the amount of P73,535,830 representing the
by petitioner and Pilipinas Shell in the importation of crude oil, thereby
difference between the 10% and 3% tariff rates on the shipments. In
resulting in huge losses of revenue for the government.This letter was
response, petitioner wrote the District Collector to inform him of the pending
endorsed to the Bureau of Customs (BOC) for investigation on July 19,
request for the creation of a unified team with the exclusive authority to
1999.[8]
investigate the matter. Furthermore, petitioner objected to the demand for

On January 28, 2000, petitioner received a subpoena duces tecum/ad payment of customs duties using the 10% duty rate and reiterated its position

testificandum from Conrado M. Unlayao, Chief of the Investigation and that the 3% tariff rate should instead be applied. It likewise raised the defense

Prosecution Division, Customs Intelligence and Investigation Service (IPD- of prescription against the assessment pursuant to Section 1603 of the Tariff

CIIS) of the BOC, to submit pertinent documents in connection with the and Customs Code (TCC). Thus, it prayed that the assessment for deficiency

subject shipments pursuant to the investigation he was conducting thereon. It customs duties be cancelled and the notice of demand be withdrawn.[10]

appeared, however, that the Legal Division of the BOC was also carrying out In a letter petitioner received on October 12, 2000, respondent

a separate investigation. Atty. Roberto Madrid (of the latter office) had gone Commissioner of the BOC[11] stated that it was the IPD-CIIS which was

to petitioners Batangas Refinery and requested the submission of information 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 In a decision promulgated on April 5, 2005, the CTA First Division ruled that

Special Investigator III Nemesio C. Magno, Jr., issued a finding dated respondent was correct when he affirmed the findings of the IPD-CIIS on the

February 2, 2001 that the import entries were filed beyond the 30-day non- existence of fraud. Therefore, prescription was not applicable.

extendible period prescribed under Section 1301 of the TCC. They concluded Ironically, however, it also held that petitioner did not abandon the

that the importations were already considered abandoned in favor of the shipments. The shipments should be subject to the 10% rate prevailing at the

government. They also found that fraud was committed by petitioner in time of their withdrawal from the custody of the BOC pursuant to Sections

collusion with the former District Collector.[13] 204, 205 and 1408 of the TCC. Petitioner was therefore liable for deficiency

customs duties in the amount of P105,899,569.05.[17]

[14]
Thereafter, respondent wrote petitioner on October 29, 2001
Petitioner sought reconsideration of the April 5, 2005 decision while
informing it of the findings of irregularity in the filing and acceptance of the
respondent likewise filed his motion for partial reconsideration. Both motions
import entries beyond the period required by customs law and in the release
were denied in a resolution dated September 9, 2005.[18]
of the shipments after the same had already been deemed abandoned in
After both respondent and petitioner had filed their petitions for review
favor of the government. Petitioner was ordered to pay the amount
with the CTA en banc, docketed as CTA EB No. 121 and CTA EB No. 122,
of P1,180,170,769.21 representing the total dutiable value of the
respectively, the petitions were consolidated.
importations.[15]

In a decision dated March 1, 2007, the CTA en banc held that it was
This prompted petitioner to file a petition for review in the CTA First Division
the filing of the IEIRDs that constituted entry under the TCC. Since these
on November 28, 2001, asking for the reversal of the decision of
were filed beyond the 30-day period, they were not seasonably entered in
respondent.[16]
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 IEIR
D party after due notice, fails to file an entry within thirty (30)
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:
xxx xxx xxx
b. When the owner, importer, consignee or interested
 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.
xxx xxx xxx
(Emphasis supplied)

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.).
xxx xxx xxx
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 interpretation would have an absurd implication: the 30-day period applies
fifteen days which may not be extended within which to claim
his importation from the time he filed the import entry. Failure only to the IED while no deadline is specified for the submission of the IEIRD.
to file an import entry or to claim the imported articles within
the period prescribed under the proposed measure, such Strong issues of public policy militate against petitioners interpretation. It is
imported articles will be treated as abandoned and declared
as ipso facto the property of the government to be sold at the IEIRD which accompanies the final payment of duties and taxes.These
public auction.
duties and taxes must be paid in full before the BOC can allow the release of
Under this new procedure, Mr. Speaker, importers
will be constrained under the threat of having their the imported articles from its custody.
importation declared as abandoned and forfeited in favor
of the government to file import entries and claim their Taxes are the lifeblood of the nation. Tariff and customs duties are
importation as early as possible thus accelerating the
collection of duties and taxes. But providing for a non- taxes constituting a significant portion of the public revenue which enables
extendible period of 30 days within which to file an import
entry, an appeal of fifteen days within which to claim the the government to carry out the functions it has been ordained to perform for
imported article, the bill has removed the discretion of the
collector of Customs to extend such period thus minimizing the welfare of its constituents.[29] Hence, their prompt and certain availability
opportunity for graft. Moreover, Mr. Speaker, with these non-
extendible periods coupled with the threat of declaration of is an imperative need[30] and they must be collected without unnecessary
abandonment of imported articles, both the [BOC] and the
importer are under pressure to work for the early release of hindrance.[31] Clearly, and perhaps for that reason alone, the submission of
cargo, thus decongesting all ports of entry and facilitating the
release of goods and thereby promoting trade and the IEIRD cannot be left to the exclusive discretion or whim of the importer.
commerce.
We hold, therefore, that under the relevant provisions of the
Finally, Mr. Speaker, the speedy release of imported cargo
coupled with the sanctions of declaration of abandonment
TCC,[32] both the IED and IEIRD should be filed within 30 days from the date
and forfeiture will minimize the pilferage of imported cargo at
the ports of entry.[27] (Emphasis supplied) of discharge of the last package from the vessel or aircraft. As a result, the
The filing of the IEIRDs has several important purposes: to ascertain position of petitioner, that the import entry to be filed within the 30-day period
the value of the imported articles, collect the correct and final amount of refers to the IED and not the IEIRD, has no legal basis.
customs duties and avoid smuggling of goods into the country.[28] Petitioners
 below.[34] The finding of the lower court as to the existence or non-existence
THE EXISTENCE OF FRAUD
WAS ESTABLISHED 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

Petitioner also denies the commission of fraud. It maintains that it had
BOC. Both the CTA First Division and en banc agreed completely with this
no predetermined and deliberate intention not to comply with the 30-day
finding.
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 The evidence showed that petitioner bided its time to file the IEIRD so

original copies of the bills of lading and commercial invoices which its as to avail of a lower rate of duty. (At or about the time these developments

suppliers could send only after the latter computed the average monthly price were taking place, the bill lowering the duty on these oil products from 10% to

of crude oil based on worldwide trading. It claims that the BOC required these 3% was already under intense discussion in Congress.) There was a

original documents to be attached to the IEIRD. calculated and preconceived course of action adopted by petitioner purposely

to evade the payment of the correct customs duties then prevailing. This was
Petitioners arguments lack merit.
done in collusion with the former District Collector, who allowed the

Fraud, in its general sense, is deemed to comprise anything acceptance of the late IEIRDs and the collection of duties using the 3%

calculated to deceive, including all acts, omissions, and concealment declared rate. A clear indication of petitioners deliberate intention to defraud

involving a breach of legal or equitable duty, trust or confidence justly the government was its non-disclosure of discrepancies on the duties

reposed, resulting in the damage to another, or by which an undue and declared in the IEDs (10%) and IEIRDs (3%) covering the shipments.[36]

unconscionable advantage is taken of another.[33] It is a question of fact and It was not by sheer coincidence that, by the time petitioner filed its

the circumstances constituting it must be alleged and proved in the court IEIRDs way beyond the mandated period, the rate of duty had already been
 entry and passage free of duty or settlements of duties will,
reduced from 10% to 3%.Both the CTA Division and en banc found the after the expiration of one (1) year, from the date of the final
payment of duties, in the absence of fraud or protest or
explanation of petitioner (for its delay in filing) untruthful. The bills of lading compliance audit pursuant to the provisions of this Code, be
final and conclusive upon all parties, unless the liquidation of
and corresponding invoices covering the shipments were accomplished the import entry was merely tentative.[40]
immediately after loading onto the vessels.[37] Notably, the memorandum of a
THE IMPORTATIONS WERE
district collector cited by petitioner as basis for its assertion that original ABANDONED
IN FAVOR OF THE
copies were required by the BOC was dated October 30, 2002.[38] There is no
GOVERNMENT
showing that in 1996, the time pertinent in this case, this was in fact a

requirement.
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
More importantly, the absence of supporting documents should not
IED and IEIRD. Thus under Section 1801 in relation to Section 1301, when
have prevented petitioner from complying with the mandatory and non-
the importer fails to file the entry within the said period, he shall be deemed to
extendible period, specially since the consequences of delayed filing were
have renounced all his interests and property rights to the importations and
extremely serious. In addition, these supporting documents were not
these shall be considered impliedly abandoned in favor of the government:
conclusive on the government.[39] If this kind of excuse were to be accepted,
Section 1801. Abandonment, Kinds and Effect of. -
then the collection of customs duties would be at the mercy of importers.
xxx xxx xxx

Hence, due to the presence of fraud, the prescriptive period of the Any person who abandons an article or who fails to
claim his importation as provided for in the preceding
finality of liquidation under Section 1603 was inapplicable: paragraph shall be deemed to have renounced all his
interests and property rights therein.
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

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:
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
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
 the date of discharge of last package from the carrying vessel
Petitioner also avers that the importations could not be deemed impliedly or aircraft.

abandoned because respondent did not give it any notice as required by xxx xxx xxx
Section 1801 of the TCC: Due notice to the consignee/importer/owner/interested
party shall be by means of posting of a notice to file entry
Sec. 1801. Abandonment, Kinds and Effect of. - An at the Bulletin Board seven (7) days prior to the lapse of
imported article is deemed abandoned under any of the the thirty (30) day period by the Entry Processing Division
following circumstances: listing the consignees who/which have not filed the required
import entries as of the date of the posting of the notice and
xxx xxx xxx notifying them of the arrival of their shipment, the name of
the carrying vessel/aircraft, Voy. No. Reg. No. and the
b. When the owner, importer, consignee or interested respective B/L No./AWB No., with a warning, as shown by the
party after due notice, fails to file an entry within thirty (30) attached form, entitled:URGENT NOTICE TO FILE ENTRY
days, which shall not be extendible, from the date of discharge which is attached hereto as Annex A and made an integral
of the last package from the vessel or aircraft xxx (Emphasis part of this Order.
supplied)
xxx xxx xxx
Furthermore, it claims that notice and abandonment proceedings were
C. OPERATIONAL PROVISIONS
required under the BOCs guidelines on abandonment (CMO 15-94):
xxx xxx xxx
SUBJECT: REVISED GUIDELINES ON ABANDONMENT
C.2 On Implied Abandonment:
xxx xxx xxx
C.2.1 When no entry is filed
B. ADMINISTRATIVE PROVISIONS
C.2.1.1 Within twenty-four (24) hours
xxx xxx xxx
after the completion of
the boarding
B.2 Implied abandonment occurs when:
formalities, the Boarding
Inspector must submit
B.2.1 The owner, importer, consignee, interested party or his
the manifests to the Bay
authorized broker/representative, after due notice, fails to file
Service or similar office
an entry within a non-extendible period of thirty (30) days from
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
a certification 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
the URGENT 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.
xxx xxx xxx
 C.2.1.5 Upon receipt of the report, the
Collector of Customs importations. Fraud was established against petitioner; it colluded with the
shall issue an order to
the Chief, Auction and former District Collector. Because of this, the scheme was concealed from
Cargo Disposal
Division, to dispose of respondent. The government was unable to protect itself until the plot was
the
shipmentenumerated in uncovered. The government cannot be crippled by the malfeasance of its
the report prepared by
officials and employees. Consequently, it was impossible for respondent to
the Chief, Data
Monitoring Unit on the comply with the requirements under the rules.
ground that those are
abandoned and ipso
facto deemed the By the time respondent learned of the anomaly, the entries had
property of the
Government to be already been belatedly filed and the oil importations released and presumably
disposed of as provided
by law. used or sold. It was a fait accompli. Under such circumstances, it would have

xxx xxx xxx[44] (Emphasis supplied) been against all logic to require respondent to still post an urgent notice to file

entry before declaring the shipments abandoned.

We disagree. The minutes of the deliberations in the House of Representatives

Committee on Ways and Means on the proposed amendment to Section

Under the peculiar facts and circumstances of this case, due notice
1801 of the TCC show that the phrase after due notice was intended for
was not necessary. The shipments arrived in 1996. The IEDs and IEIRDs
owners, consignees, importers of the shipments who live in rural areas or
were also filed in 1996.However, respondent discovered the fraud which
distant places far from the port where the shipments are discharged, who are
attended the importations and their subsequent release from the BOCs
unfamiliar with customs procedures and need the help and advice of people
custody only in 1999. Obviously, the situation here was not an ordinary case
on how to file an entry:
of abandonment wherein the importer merely decided not to claim its

xxxxxxxxx
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.
xxx xxx xxx
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.
xxx xxx xxx
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.
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.
xxx xxx xxx
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)
xxxxxxxxx
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 15-94 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:
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 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.
 Sec. 1802. Abandonment of Imported Articles. An
Under the former Administrative Code, Act 2711,[47] Section 1323 of abandoned article shall ipso facto be deemed the property of
the Government and shall be disposed of in accordance with
Article XV thereof provides: the provisions of this Code.
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 The amendatory law, RA 7651, deleted the requirement that there
cases.
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
Thereafter, RA 1937[48] was enacted. Section 1801 thereof provides:
declaration before any abandonment of the articles becomes effective.
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 No doubt, by using the term ipso facto in Section 1802 as amended
when, from the action or omission of the interested party, an
intention to abandon can be clearly inferred. The failure of any by RA 7651, the legislature removed the need for abandonment proceedings
interested party to file the import entry within fifteen days or
any extension thereof from the discharge of the vessel or and for a declaration that the imported articles have been abandoned before
aircraft, shall be implied abandonment. An implied
ownership thereof can be transferred to the government.[50]
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. Petitioner claims it is arbitrary, harsh and confiscatory to deprive
Any person who abandons an imported article importers of their property rights just because of their failure to timely file the
renounces all his interests and property rights therein.
IEIRD. In effect, petitioner is challenging the constitutionality of Sections 1801

and 1802 by contending that said provisions are violative of substantive and
PD 1464[49] did not amend the provisions of the TCC on
procedural due process. We disallow this collateral attack on a presumably
abandonment. The latest amendment was introduced by Section 1802 of RA
valid law:
7651 which provides:
 We have ruled time and again that the constitutionality law. And that therefore, the proposed amendment
or validity of laws, orders, or such other rules with the force of particularly on the implied abandonment as framed here
law cannot be attacked collaterally. There is a legal will do away with the lengthy process of seizure
presumption of validity of these laws and rules. Unless a law proceedings and therefore, enable us to dispose of the
or rule is annulled in a direct proceeding, the legal shipments through public auction and other modes of disposal
presumption of its validity stands.[51] 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
Besides, considered to be government property.[53]

[a] law is deemed valid unless declared null and void x x x xxx xxx
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 CONCLUSION
in advance of the necessity of deciding it.[52]

Be that as it may, the intent of Congress was unequivocal. Our policy Petitioners failure to file the required entries within a non-extendible

makers wanted to do away with lengthy proceedings before an importation period of thirty days from date of discharge of the last package from the

can be considered abandoned: carrying vessel constituted implied abandonment of its oil importations. This

x x x x x x xxx means that from the precise moment that the non-extendible thirty-day period
MR. PARAYNO. Thank you, Mr. Chairman. The proposed
amendment to Section 1801 on the abandonment, kinds and lapsed, the abandoned shipments were deemed (that is, they became) the
effects. This aimed to facilitate, Mr. Chairman, the process by
which this activity is being acted upon at the moment. The property of the government. Therefore, when petitioner withdrew the oil
intention, Mr. Chairman, is for the Customs Administration to
be able to maximize the revenue that can be derived from shipments for consumption, it appropriated for itself properties which already
abandoned goods, and the problem that we are encountering
at the moment is that we have to go through a lengthy process belonged to the government. Accordingly, it became liable for the total
similar to a seizure proceedings to be able to finally declare
dutiable value of the shipments of imported crude oil amounting
the cargo, the abandoned cargo forfeited in favor of the
government and therefore, may be disposed of pursuant to
to P1,210,280,789.21 reduced by the total amount of duties paid amounting
Costs against petitioner.
to P316,499,021.00 thereby leaving a balance of P893,781,768.21.

SO ORDERED.
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.
SECOND DIVISION
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 COMMISSIONER OFCUSTOMS, G.R. No. 183868

are generally upheld by this Court, unless there is a clear showing of a Petitioner,

reversible error or an improvident exercise of authority. There is no such Present:

showing here.

CARPIO, J., Chairperson,

WHEREFORE, the petition is hereby DENIED. Petitioner Chevron

Philippines, Inc. is ORDERED to pay the amount of EIGHT HUNDRED DE CASTRO,*

NINETY THREE MILLION SEVEN HUNDRED EIGHTY ONE THOUSAND - versus - PERALTA,

SEVEN HUNDRED SIXTY EIGHT PESOS AND TWENTY-ONE CENTAVOS ABAD, and

(P893,781,768.21) plus six percent (6%) legal interest per annum accruing MENDOZA, JJ.
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.

MARINA SALES, INC., manufacturing arm in the Philippines. As such, Marina usually imports raw
Respondent. Promulgated: 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.
November 22, 2010
2106.90 10 with a 1% import duty rate.[3]

On March 6, 2003, Marinas importation, labeled as Import Entry No. C-

X -------------------------------------------------------------------------------------- X
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
DECISION
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
MENDOZA, J.: dated January 27, 2003.[6]

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
manufacture of Sunquick juice concentrates. It was appointed by CO-RO
Food A/S of Denmark, maker of Sunquick Juice Concentrates, to be its
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
in the 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 2003;[10] and (b) CO-RO Foods A/S Denmark Invoice No. 1619746
operations, Marina requested the District Collector of the BOC to release dated April 15, 2003.[11]
Import Entry No. C-33771-03 under its Tentative Release
System.[7] Marina undertook to pay the reclassified rate of duty should it be Again, the BOC examiners disputed the tariff classification of Import Entry
finally determined that such reclassification was correct. The District Collector No. C-67560-03 and recommended to the VCRC that the importation be
granted the request. classified at Tariff Heading H.S. 2106.90 50 with the corresponding 7% duty
rate.
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- In order for Import Entry No. C-67560-03 to be released, Marina once again
33771-03 should not be classified under Tariff Heading H.S. 2106.90 50 with signed an undertaking under the Tentative Release System.[12]
import duty rate of 7%.[8]
In a letter dated July 7, 2003, the VCRC scheduled another deliberation
On May 15, 2003, Marina, through its Product Manager Rowena T. Solidum requiring Marina to explain why Import Entry No. C-67560-03 should not be
and Customs Broker Juvenal A. Llaneza, attended the VCRC deliberation classified under Tariff Heading H.S. 2106.90 50 at the import duty rate of
[9]
and submitted its explanation, dated May 13, 2003, along with samples of 7%.[13]
the importation under Import Entry No. C-33771-03.
On May 21, 2003, another importation of Marina arrived at the MICP On July 17, 2003, Marina again attended the VCRC deliberation and
designated as Import Entry No. C-67560-03. It consisted of another 1 x 20 submitted its explanation[14] dated July 17, 2003 together with samples in
container STC with a total of 80 drums: (a) 55 drums of 225 kilograms of support of its claim that the imported goods under Import Entry No. C-67560-
Sunquick Orange Concentrate; (b) 1 drum of 225 kilograms of Sunquick 03 should not be reclassified under Tariff Heading H.S. 2106.90 50.
Tropical Fruit Concentrate; (c) 17 drums of 225 kilograms of Sunquick Lemon
Concentrate; (d) 3 drums of 225 kilograms of Sunquick Ice Lemon Thereafter, the classification cases for Import Entry No. C-33771-03 and
Concentrate; and (e) 4 drums of 225 kilograms Sunquick Peach Orange Import Entry No. C-67560-03 were consolidated.
Concentrate. The said importation was accompanied by the following
documents: (a) Bill of Lading No. KKLUCPH060291 dated April 17,
 On September 11, 2003, as reflected in its 1st Indorsement, the VCRC
reclassified Import Entry No. C-33771-03 and Import Entry No. C-67560-03
under Tariff Heading H.S. 2106.90 50 at 7% import duty rate.[15]
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%.

On October 7, 2003, Marina appealed before the Commissioner SO ORDERED.

challenging VCRCs reclassification.[16]

The Commissioner disagreed and elevated the case to the CTA-En

In its 1st Indorsement of November 13, 2003,[17] the VCRC modified its
Banc via a petition for review.[21]
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,
In its Resolution of April 11, 2008, the CTA En Banc dismissed the
H.S. 2009.80 00 at 7% duty rate and H.S. 2009.90 00 at 10% duty rate.
petition. The pertinent portions of the decision including the fallo read:
A careful scrutiny of the record of this case showed
Apparently not in conformity, Marina interposed a petition for review that petitioner failed to file before the Second Division the
required Motion for Reconsideration before elevating his case
before the CTA on February 3, 2004, which was docketed as CTA Case No. to the CTA En Banc.
6859.
Section 1, Rule 8 of the Revised Rules of the Court of
Tax Appeals provided for the following rule, to wit:
On October 31, 2007, the CTA Second Division ruled in favor
RULE 8
of Marina[18] holding that its classification under Tariff Heading H.S. 2106.90
PROCEDURE IN CIVIL CASES
10 was the most appropriate and descriptive of the disputed importations.[19] It
opined that Marinas importations were raw materials used for the SECTION 1. Review of Cases in the Court
en banc.- In cases falling under the exclusive
manufacture of its Sunquick products, not ready-to-drink juice concentrates appellate jurisdiction of the Court en banc, the
as argued by the Commissioner.[20] Thus, the decretal portion of the CTA - petition for review of a decision or resolution of
the Court in Division must be preceded by the
Second Division reads: filing of a timely motion for reconsideration or
new trial with the Division.
WHEREFORE, finding merit in petitioners Petition for Review,
the same is hereby GRANTED. Accordingly, the
Resolution/Decision dated November 13, 2003 of the
 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.
SO ORDERED.[22]
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.
In his Memorandum,[24] the Commissioner submits the following issues for
resolution:
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. Court is of the view that the import duty rate of 1%, as determined by the CTA
2190.90 50 with a 7% import duty rate.[30] Second Division, is correct.

The Court finds no merit in the petition. The table shows the different classification of Tariff import duties
relevant to the case at bar:
On the procedure, the Court agrees with the CTA En Banc that the TARIFF IMPORT COVERAGE
HEADING DUTY RATE
Commissioner failed to comply with the mandatory provisions of Rule 8, H.S. 2106.90 10 1% Covers flavouring materials, nes., of kind
Section 1 of the Revised Rules of the Court of Tax Appeals [31]
requiring that used in food and drink industries; other
food preparations to be used as raw
the petition for review of a decision or resolution of the Court in
material in preparing composite
Division must be preceded by the filing of a timely motion for reconsideration concentrates for making beverages
or new trial with the Division. The word "must" clearly indicates the mandatory -- H.S. 2106.90 50 7% Covers composite concentrate for simple
dilution with water to make beverages
not merely directory -- nature of a requirement.[32] 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
The rules are clear. Before the CTA En Banc could take cognizance vegetable
H.S. 2009.90 00 10% Covers mixtures of juices
of the petition for review concerning a case falling under its exclusive
appellate jurisdiction, the litigant must sufficiently show that it sought prior
The Commissioner insists that Marinas two importations should be
reconsideration or moved for a new trial with the concerned CTA
classified under Tariff Heading H.S. 2106.90 50 with an import duty rate of
division. Procedural rules are not to be trifled with or be excused simply
7% because the concentrates are ready for consumption by mere dilution
because their non-compliance may have resulted in prejudicing a partys
with water.
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
The Court is not persuaded.
injustice not commensurate to his careless non-observance of the prescribed
rules.[34]
As extensively discussed by the CTA Second Division, to fit into the
category listed under the Tariff Harmonized System Headings calling for a
At any rate, even if the Court accords liberality, the position of the
higher import duty rate of 7%, the imported articles must not lose its original
Commissioner has no merit. After examining the records of the case, the
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
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
human 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 us the step by step manufacturing process of petitioner and
System apparently subject article has lost its original even showed us the bottling and packaging of the finished
character as concentrated fruit juice drink to the product.
compounding ingredients which reduces the fruit
juices to 12% of the total compound.
Per observation of the undersigned, the imported
In view of the foregoing subject article is classifiable compounds (raw materials) are very sticky, the plant is clean
under Tariff Heading H.S. 2106.90 10 at 1% for and that the personnel of petitioner in the plant strictly
entries filed under the old regime. For those filed following the manufacturing process as presented in Annex A
under the new regime tariff heading AHTN 2106.90 and Annex B of this report.
51 at 1% where the item are specifically provided.
Upon questioning by the counsel for respondent, Mr.
RESOLUTION: To apply sub-group recommendation Domingo said that while the imported compounds (raw
which is to adopt H.S. 2106.90 10 at 1% for entries materials) can be mixed with water and may be drinkable, he
filed under the old regime and for those filed is not sure if the same is suitable for human
under the new regime, AHTN 2106.90 51 at 1% consumption. None of us dared to taste the sample of
where the item are specifically provided.[39] 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
To manufacture is to make or fabricate raw materials by hand, art or respondent requested for the marking of Label of Sunquick
machinery, and work into forms convenient for use.[40] Stated differently, it is Lemon (840 ml.), [Annex C], as Exhibit 1 for the respondent.[42]
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,
Contrary to the Commissioners assertions, empirical evidence shows
transforms said juice compounds, being raw materials, into a substance
that the subject importations would have to undergo a laborious method, as
suitable for human consumption. This is evident from the Commissioners
shown by its manufacturing flowchart[43] and manufacturing process,[44] to
Report[41] of Executive Clerk of Court II, CTA, Jesus P. Inocando, Jr., who
achieve their marketable juice consistency. Accordingly, the 1% tariff import
conducted an ocular inspection of Marinas manufacturing plant in Taguig
duty rate under Tariff Heading H.S. 2106.90 10 was correctly applied to the
City. Pertinent excerpts of the Commissioners Report are herein reproduced:
subject importations.
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
 In any case, the VCRC in its 1st Indorsement[45] of February 17, FIRST DIVISION
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
G.R. No. 165265 February 6, 2006
by Marina in the past.

WHEREFORE, the petition is DENIED.

MARIBEL B. JARDELEZA, Petitioner,

vs.
SO ORDERED.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION
Today is Thursday, November 23, 2017

CALLEJO, SR., J.:

Custom Search

search
This is a petition for review of the Decision1 of the Court of Appeals
(CA) in CA-G.R. CR No. 25912 affirming, on appeal, the decision of the
Regional Trial Court (RTC) of Pasay City, Branch 117, convicting Maribel B.
Jardeleza, the accused therein, of violating the Tariff and Customs Code That the entry of said 20.1 kilograms of imported assorted gold
(TCC) of the Philippines, as amended. 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
The Antecedents
she has anything to declare prior to the actual inspection of her luggage.2

The Information charging Jardeleza with violating the TCC was filed
The Case for the Prosecution
before the RTC of Pasay City on October 23, 1997. The accusatory portion of
the indictment reads:

On February 27, 1997, Lt. Aquilino Ancheta of the Customs Police at

the Ninoy Aquino International Airport (NAIA) issued an "alert order" directing
That on February 28, 1997, at the arrival area of the Ninoy Aquino
all customs policemen to monitor an alleged carrier of jewelry on board
International Airport in Paraaque, Metro Manila, and within the jurisdiction of
Philippine Airlines (PAL) Flight No. PR-502, scheduled to fly in from
this Honorable Court, the above-named Accused did, then and there, wilfully,
Singapore the next day.3 Special Customs Agent Antonio Fuentebella was
unlawfully and feloniously, bring or import into the Philippines in a fraudulent
assigned as Team Leader of X-Ray Operations,4 while Police Officer Rodrigo
and illegal manner a total of TWENTY POINT ONE (20.1) kilograms of
Raada was assigned as one of its members.5 The Customs Law
assorted gold jewelry with an estimated value of PESOS SEVEN MILLION
Enforcement Chief also directed the examiners to conduct rigid luggage
FIVE HUNDRED SIXTY-TWO THOUSAND TWO HUNDRED THIRTY-ONE
inspection of said crew members.6 Accordingly, customs operation police
POINT FIFTY CENTAVOS (7,562,231.50).
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
envelope25 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 report29 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
Memorandum30 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 2,979,021.50 and their dutiable value at 4,583,000.00.31
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 Affidavit33 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
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
Jardeleza further narrated that her retirement from PAL was
request was granted, and the three of them Nario, Fuentebella and Raada
approaching. She decided to invest in the jewelry business with her friend
helped carry her luggage to the examination room.43 There she opened her
Alberto, and she would get a percentage from the business venture.36 Her
luggage and, thereafter, a count was made of the jewelry items.44 While the
friend acquired assorted jewelries worth 2,000,000.00 and gave them to her
examination was being conducted, Deputy District Collector Buendia and
for transportation to the Philippines. The pieces of jewelry were placed inside
Atty. Mangaoang entered and they too witnessed the examination of her
the leatherette bags, which she, in turn, placed in her handbags. Albert also
baggage.45
gave her a list of the jewelry.37

After the inventory, pictures were taken.46 Later, Nario left but Atty.
According to Jardeleza, she knew that the jewelry items were taxable,
Mangaoang told her to come to her office at the NAIA Terminal 1
and that she was obliged to declare them in the Customs Declaration Form of
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 100,000.00 for
her and another 400,000.00 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 Memorandum54 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
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.
Other Evidence of the Prosecution
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
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 10,000.00 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 10,000.00 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.

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 (10,000.00), and to pay the costs.
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
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
Jardeleza appealed the decision to the CA, where she raised the
following principal issues:
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 assorted jewelries into the country without declaring them in the customs
CUSTOMS CODE OF THE PHILIPPINES BY CUSTOMS AUTHORITIES. 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
III
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.
ASSUMING THAT THE CHARGE AND THE PROOF CAN BE
LEGALLY PLACED UNDER THE PURVIEW OF SECTION 3601 OF THE
TCC, THE HONORABLE COURT A QUO ERRED IN CONVICTING THE
Jardeleza filed a motion for reconsideration of such ruling, which the
ACCUSED DESPITE LACK OF PROOF BEYOND REASONABLE
CA denied.
DOUBT.64

Petitioner now comes before this Court, alleging that (a) she was
On September 8, 2004, the CA rendered judgment affirming the
charged with violating Section 2505 of the TCC under the Information, and
decision of the RTC.
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
The appellate court ruled that, based on the material averments of the Section 3601, in relation to Section 2505, of the TCC.
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,
Petitioner maintains that, under the Information and the evidence
Jardeleza committed actual fraud when she brought 20.1 kilograms of taxable
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 charge cannot interchangeably be held to constitute the crime under any of
arriving person, including airline crew, who brings in dutiable articles without the other two provisions, as the laws cannot be mixed with one set of facts.
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
On the other hand, the CA ruled that under the Information, petitioner
failure was without fraud. She avers that the law specifically refers to
was charged of smuggling under Section 3601 of the TCC. She committed
"baggage declaration" and not to an import or export entry. In contrast,
actual fraud when she brought into the country 20.1 kilograms of taxable
Section 3601 of the TCC covers importing or bringing into the country, in a
assorted jewelries without declaring them to the Customs authorities as
fraudulent manner, any article, contrary to law, or one who assists in such
required by law. Worse, she expressly denied possession of said articles and
criminal act or receives, conceals, brings or sells or, in any way, helps in the
hid them surreptitiously. That she later disclosed the existence of said jewelry
transportation, concealment or sale of such article, knowing the same to have
or intended to pay their corresponding duties and taxes was merely an
been imported contrary to law. She insists that it refers to rampant smuggling
afterthought to avoid liability.
in any port in the Philippines 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 appellate court also declared that petitioner was caught in
The words "contrary to law" are descriptive of, and qualifies the word "article" flagrante delicto. When dutiable goods are omitted in a baggage declaration
and not to the manner of importation. In contrast, Section 3602 refers to the and the omission is not due to inadvertence or ignorance, it is deemed to be
filing of a false entry. 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
Petitioner asserts that Sections 2505, 3601 and 3602 of the TCC are
"article" to exempt her from the illegal importation. It cited the ruling of the
separate and distinct from one another, penalizing as they do different
RTC that the law considers any person who, contrary to law, imports any
offenses of smuggling. She insists that the facts constituting the filing of one
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 the Philippines
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.
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.
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 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.
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.
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
4,598,000.00 and the total taxes and duties at 2,379,021.02.
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. xxx87
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
 xxx
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.
xxx93
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.94
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;
Neither can petitioner rely on the memorandum of Cabugao to the
Customs District Commander on February 28, 1997, to wit:

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
Initial investigation showed that when SA I Antonio Fuentebella asked board flight PR-502 which came from Singapore;
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.
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;
Examination was therefore conducted by Customs Examiner Estelita
Nario and found inside three (3) leatherette envelopes approximately 20.1
kgs. [of] Assorted Jewelry.95
That, Ms. Maribel Jardeleza, PAL flight stewardess approached
Customs Examiner Estelita Nario for the usual examination of her baggages;

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 That, during the process of examination, Ms. Nario found black
the following in his affidavit: envelopes inside the lining of the hanger bag of Ms. Jardeleza, hence, the
examination was transferred to the interview room for rigid examination;
 EL GRECO SHIP MANNING AND G.R. No. 177188
MANAGEMENT CORPORATION,
Present:
That, found inside Ms. Maribel Jardelezas baggage were assorted Petitioner,
jewelry, placed inside three (3) black leatherette envelopes weighing more or
YNARES-SANTIAGO, J.,
less 20.1 kgs. (Gross).96 Chairperson,
AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

According to Nario, she sought the assistance of Fuentebella and NACHURA, and
Raada to bring petitioners hanger bag to the examination room only after
- versus - REYES, JJ.
petitioner requested her to continue the search of her belongings inside the
examination room to avoid embarrassment.97
Promulgated:

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack

December 4, 2008
of merit. Costs against petitioner.
COMMISSIONER OF CUSTOMS,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

SO ORDERED.

DECISION

THIRD DIVISION

CHICO-NAZARIO, J.:

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
[2]
Banc affirmed the Decision 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. T-2170.[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
Alarmed, the BOC and the Philippine Coast Guard coordinated with the
and Carillo posted the required bond, the 35,000 bags of rice were released
Philippine Air Force to find the missing vessel. On 8 November 2001, the
to them.[6]
BOC received information that M/V Criston was found in the waters
of Bataan sporting the name of M/V Neptune Breeze.[9]

The Legaspi District Collector held in abeyance the proceedings for the
forfeiture of M/V Criston and its cargo under Seizure Identification No. 06-
Based on the above information and for failure of M/V Neptune
2001 and Seizure Identification No. 06-2001-A pending the resolution by the
Breeze to present a clearance from its last port of call, a Warrant of Seizure
RTC of Civil Case No. T-2170. When the RTC granted the Motion to Dismiss
and Detention under Seizure Identification No. 2001-208 was issued
Civil Case No. T-2170 filed by the BOC, the Legaspi District Collector set the
against the vessel by the BOC District Collector of the Port of Manila.[10]
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
For the same reasons, the Legaspi District Collector rendered a
set. After a second notice of hearing was ignored by Glucer Shipping, the
Decision on 27 June 2002 in Seizure Identification No. 06-2001 and Seizure
prosecutor was allowed to present his witnesses.[7]
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, 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
In the meantime, El Greco, the duly authorized local agent of the
was allowed to proceed to another anchorage area to temporarily seek
registered owner of M/V Neptune Breeze, Atlantic Pacific Corporation, Inc.
shelter. After typhoon Manang had passed through Albay province, M/V
(Atlantic Pacific), filed with the Manila District Collector, in Seizure
Criston, however, failed to return to the Port of Tabaco and was nowhere to
Identification No. 2001-208, a Motion for Intervention and Motion to Quash
be found.[8]
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
[12]
Criston which had been involved in smuggling activities in Legaspi, Albay.
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
On 17 October 2005, the CTA Second Division rendered a
already acquired by the Port of Legaspi when
the said Port issued WSD S.I. No. 06-2001-A Decision[17] in CTA Case No. 6618 sustaining the 15 January 2003 Decision
and therefore, the Decision of the latter Port of the BOC Commissioner ordering the forfeiture of M/V Neptune
forfeiting the subject vessel supercedes the Breeze. Referring to the crime laboratory report submitted by the Philippine
Decision of that Port ordering its release.
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
Seeking the reversal of the Decision dated 15 January 2003 of the provisions of Section 2313 of the Tariff and Customs Code could buttress El
BOC Commissioner, El Greco filed a Petition for Review with the CTA which Grecos contention that the Order dated 11 March 2002 of the Manila District
was lodged before its Second Division as CTA Case No. 6618. El Greco Collector already became final and executory. The dispositive portion of the
averred that the BOC Commissioner committed grave abuse of discretion in Decision of the CTA Second Division reads:
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 WHEREFORE, premises considered, the present
Petition for Review is hereby DISMISSED. The Decision in the
was merely assuming the identity of M/V Neptune Breeze in order to evade
2nd Indorsement dated January 15, 2003 of then
liability since these were distinct and separate vessels as evidenced by their Commissioner Bernardo is hereby AFFIRMED.[18]
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
In a Resolution[19] dated 7 February 2006, the CTA Second Division
already became final and executory for failure of the BOC Commissioner to
denied the Motion for Reconsideration of El Greco for failure to present
act thereon within a period of 30 days in accordance with Section 2313 of the
issues that had not been previously threshed out in its earlier Decision.
Tariff and Customs Code.
 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]
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.
WHETHER OR NOT EL GRECO WAS DENIED OF ITS
RIGHT TO DUE PROCESS.

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
II.
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 WHETHER OR NOT M/V NEPTUNE BREEZE AND M/V
set aside unless it has been sufficiently shown that they are not supported by CRISTON ARE ONE AND THE SAME VESSEL.
evidence on record. The CTA En Banc thus disposed:

WHEREFORE, the instant petition is hereby III.

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]
 WHETHER OR NOT M/V NEPTUNE BREEZE IS QUALIFIED evidence which a reasonable mind might accept as adequate to justify a
TO BE THE SUBJECT OF FORFEITURE UNDER SECTION
2531 OF THE TARIFF AND CUSTOMS CODE. conclusion.[24]

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
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 the Philippines. 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. 06-2001-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
[26]
ruling complained of.
Although it was not able to participate in the proceedings in Seizure
Identification No. 06-2001 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;
xxxx
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;
xxxx
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 There is nothing in Section 2313 of the Tariff and Customs Code to
decision is reversed by the Commissioner, the decision of the
support the position of El Greco. As the CTA en banc explained, in case the
Commissioner shall be final and executory. However, if the
Collectors decision is affirmed, or if within thirty (30) days BOC Commissioner fails to decide on the automatic appeal of the Collectors
from receipt of the record of the case by the Decision within 30 days from receipt of the records thereof, the case shall
Commissioner no decision is rendered or the decision again be deemed automatically appealed to the Secretary of Finance. Also
involves imported articles whose published value is five million
working against El Greco is the fact that jurisdiction over M/V Neptune
pesos (P5,000,000.00) or more, such decision shall be
deemed automatically appealed to the Secretary of Breeze, otherwise known as M/V Criston, was first acquired by the Legaspi
Finance and the records of the proceedings shall be elevated District Collector; thus, the Manila District Collector cannot validly acquire
within five (5) days from the promulgation of the decision of the jurisdiction over the same vessel. Judgment rendered without jurisdiction is
Commissioner or of the Collector under appeal, as the case
null and void, and void judgment cannot be the source of any right
may be: Provided, further, That if the decision of the
Commissioner or of the Collector under appeal as the case whatsoever.[28]
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
Finally, we strongly condemn the ploy used by M/V Neptune Breeze,
decision of the Secretary of Finance, or of the Commissioner,
or of the Collector under appeal, as the case may be, shall assuming a different identity to smuggle goods into the country in a brazen
become final and executory. 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
In any seizure proceeding, the release of imported
department to curb the proliferation of smuggling syndicates in the country
articles shall not be allowed unless and until a decision of the
Collector has been confirmed in writing by the Commissioner which deserves no less than our full support.
of Customs. (Emphasis ours.)

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.
G.R. No. 181007, November 21, 2016
COMMISSIONER OF CUSTOMS, Petitioner, v. WILLIAM SINGSON AND
TRITON SHIPPING CORPORATION, Respondents.
DECISION
REYES, J.:
This appeal by Petition for Review on Certiorari1 under Rule 45 of the Rules
of Court seeks to reverse and set aside the Decision2 dated November 16,
2006 and the Resolution3 dated November 29, 2007 of the Court of Appeals
(CA) in CA-G.R. SP No. 83282 affirming the Decision4 dated November 18,
2003 and the Resolution5 dated March 22, 2004 of the Court of Tax Appeals
(CTA) in CTA Case No. 6406, which recalled and set aside the Warrant of
Seizure and Detention (WSD) issued against the vessel M/V Gypsy Queen
and its cargo of 15,000 bags of rice.chanroblesvirtuallawlibrary
The Facts
Triton Shipping Corporation (TSC) is the owner of M/V Gypsy Queen. The
vessel was loaded with 15,000 bags of rice shipped by Metro Star Rice Mill
(Metro, Star) of Bocaue, Bulacan and consigned to William Singson
(Singson). On September 5, 2001, the elements of the Philippine Navy (PN)
apprehended and seized the vessel and its entire rice cargo somewhere in
Caubayan Island, Cebu, for allegedly carrying suspected smuggled rice.6
During the inspection, the master of M/V Gypsy Queen presented the
following documents: (1) Master's Oath of Safe Departure dated August 14,
2001; (2) Coasting Manifest indicating that the vessel was loaded with 15,000
bags of rice with Metro Star of Bocaue, Bulacan as the shipper and Raybrig
Marketing of Cebu City/Singson as consignee; and (3) Roll Book showing
that the vessel was cleared by the Philippine Ports Authority (PPA), North
Harbor Office, Manila on August 14, 2001 and received by a certain PO3
Fernandez of the Philippine Coast Guard (PCG) in Manila.7
However, the PCG Station Commander in Manila, Jose G. Cabilo issued a
Certification stating that: (1) there was no vessel named M/V Gypsy Queen
that logged in or submitted any Master's Oath of Safe Departure on August
15, 2001; and (2) no personnel by the name of PO3 Fernandez of the PCG
was detailed at Pier 18, Mobile Team, on August 15, 2001.8 These matters
were then conveyed to the District Collector of Customs (DCC) by Captain
Alvin G. Urbi (Capt. Urbi), Commander, Naval Forces Central, PN in his letter
dated September 12, 2001. Thereafter, Special Investigator Alejandro M.
Bondoc of the Bureau of Customs (BOC) in Cebu, issued a memorandum
dated September 17, 2001 recommending the issuance of a WSD against the
vessel and the 15,000 bags of rice loaded therein.9
Accordingly, on September 18, 2001, the DCC of Port of Cebu, issued a
WSD against M/V Gypsy Queen and the 15,000 bags of rice for violating the
Tariff and Customs Code (TCC). Afterwards, forfeiture proceedings were
conducted where both parties submitted their respective evidence.10
On December 18, 2001, the DCC rendered a Decision11 in favor of TSC and
Singson (respondents) and ordered the release of M/V Gypsy Queen and the
said cargo on the ground that there was no evidence to establish a cause of
action, thus:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, and by virtue of the powers vested in
me by law, the [WSD] in the above[-]captioned case is hereby ordered
RECALLED and SET ASIDE. Accordingly, the subject 15,000 bags of rice
and the vessel "M/V GYPSY QUEEN" are ordered RELEASES [sic] to their
respective claimants or their duly authorized representative upon proper
identification and compliance with applicable laws, rules and regulations.12
On December 19, 2001, the DCC issued a 1st Indorsement of the said
decision and forwarded the entire records of the case to the Commissioner of
Customs (petitioner), through its Legal Service, BOC, Manila. On January 29,
2002, the BOC, Legal Service referred the decision of the DCC for approval
to the petitioner.13
On March 11, 2002, the petitioner issued the 2nd Indorsement14 reversing
and setting aside the decision of the DCC and ordered the forfeiture of M/V
Gypsy Queen and its cargo.
The respondents filed a motion for reconsideration of the said indorsement
but the same was denied. On March 12, 2002, the respondents filed a
petition for review15 with the CTA, and the petitioner submitted its
Comment16 on April 16, 2002.17
On November 18, 2003, the CTA reversed and set aside18 the 2nd
Indorsement issued by the petitioner and adopted the findings of the DCC. In
arriving at the said decision, the CTA found that the documents submitted by
the respondents were sufficient to prove that the 15,000 bags of rice
apprehended on board M/V Gypsy Queen were locally sourced and were the
same rice that were withdrawn from the National Food Authority (NFA) of
Zambales.19
Undaunted, the petitioner moved for reconsideration20 but it was denied;21
hence, it filed a petition for review22 under Rule 43 before the CA.
On November 16, 2006, the CA affirmed the CTA's decision on the
ratiocination that the certification issued by PCG Station Commander in
Manila cannot create a presumption that M/V Gypsy Queen was involved in
an illegal activity in violation of the TCC. The said certification standing alone
and by itself cannot prove the alleged violation of the TCC. The record clearly
showed that the vessel originated and sailed from Manila to Cebu and that
the 15,000 bags of rice on board the vessel were not imported but locally
purchased or sourced from NFA Zambales.23 More so, the CA expressly
pointed out that:chanRoblesvirtualLawlibrary
Furthermore, it is an undisputed fact that, on February 7, 2002, BOC Deputy
Commissioner Gil A. Valera wrote a letter to the [NFA] Administrator, Atty.
Anthony R. Abad, requesting confirmation of the genuineness and
authenticity of the NFA documents issued by NFA Zambales which were
submitted by the respondents in the forfeiture proceedings. On February 15,
2002, the NFA confirmed the authenticity and genuineness of the documents
as certified to by Manager Absalum R. Circujales, NFA, Iba, Zambales. It is unless it is shown that the lower courts committed gross error in the
well to note that petitioner failed to assail and rebut these pieces of evidence appreciation of facts.28
presented by respondents during the forfeiture proceedings which were
confirmed as genuine and authentic which showed that the rice withdrawn
from NFA Zambales were the same rice apprehended on board the vessel
M/V "Gypsy Queen."24 In the main, the petitioner argues that the 15,000 bags of rice were unlawfully
imported into the Philippines; hence, there was legal ground for the forfeiture
Disagreeing with the CA's decision, the petitioner filed a motion for of the rice and its carrying vessel. The petitioner solely rely its argument on
reconsideration25 which was also denied;26 hence, the petitioner now seeks the certification issued by the PCG Station Commander in Manila, which was
recourse to this Court via a petition for review on included in the parties' Joint Stipulation filed with the CTA, to
certiorari.chanroblesvirtuallawlibrary wit:chanRoblesvirtualLawlibrary

The Issue
The main issue in this case is whether or not the CA erred in affirming the
CTA's decision ordering the release of the 15,000 bags of rice and its
carrying vessel.27
1.3 That [Capt. Urbi], Commander, Naval Forces Central, [PN], in his letter to
the [DCC] of Cebu dated 12 September 2001, stated among others, that
verification made by his office with the Office of the Station Commander,
Coast Guard Station, Manila, show that there was no vessel named MV
"Gypsy Queen" that logged-in or submitted any Master's Oath of Safe
Departure on 15 August 2001. It also found that no personnel by the name
[of] PO3 Fernandez, PCG, was detailed at Pier 18, Mobile Team on said
date.29
This judicial admission, according to the petitioner, is more than enough to
establish that the rice shipment was illegally transported.30

Ruling of the Court

The petition is bereft of merit.
The Court adopts the above-mentioned findings of fact of both the CTA and
the CA. It is settled that the factual findings of the CTA, as affirmed by the
CA, are entitled to the highest respect and will not be disturbed on appeal
Clearly, this evidence does not suffice. The said certification is not sufficient
to prove that the respondents violated the TCC. A reading of the said
certification plainly shows that if there is something which was admitted, it is
nothing more than the fact that Capt. Urbi sent a communication to the DCC
of Cebu stating the information that he gathered from the PCG Station
Commander in Manila, and not the truthfulness or veracity of those
information.
The certification presented by the petitioner does not reveal any kind of
deception committed by the respondents. Such certification is not adequate
to support the proposition sought to be established which is the commission
of fraud. It is erroneous to conclude that the 15,000 bags of rice were
smuggled simply because of the said certification which is not conclusive and
cannot overcome the documentary evidence of the respondents showing that
the subject rice was produced and acquired locally.
Moreso, at the time the vessel and its cargo were seized on September 25,
2001, the elements of the PN never had a probable cause that would warrant
the filing of the seizure proceedings. In fact, the petitioner ordered the
forfeiture of the rice cargo and its carrying vessel on the mere assumption of
fraud. Notably, the 2nd Indorsement issued by the petitioner failed to clearly
indicate any actual commission of fraud or any attempt or frustration thereof.
The Court has constantly pronounced that the policy is to place no
unnecessary hindrance on the government's drive, not only to prevent
smuggling and other frauds upon Customs, but more importantly, to render
effective and efficient' the collection of import and export duties due the State
to enable the government to carry out the functions it has been instituted to
perform.31
Nonetheless, the TCC requires the presence of probable cause before any
proceeding for seizure and/or forfeiture is instituted. The relevant prov1s1on
governing the present case is Section 2535 which provides as
follows:chanRoblesvirtualLawlibrary
Sec. 2535. Burden of Proof in Seizure and/or Forfeiture. - In all proceedings
taken for the seizure and/or forfeiture of any vessel, vehicle, aircraft, beast or
articles under the provisions of the tariff and customs laws, the burden of
proof shall lie upon the claimant: Provided, That probable cause shall be first
shown for the institution of such proceedings and that seizure and/or
forfeiture was made under the circumstances and in the manner described in
the preceding sections of this Code.
Based on the afore-quoted provision, before forfeiture proceedings are
instituted, the law requires the presence of probable cause which rests on the
petitioner who ordered the forfeiture of the shipment of rice and its carrying
vessel. Once established, the burden of proof is shifted to the claimant.
Guided by the foregoing provision, to warrant the forfeiture of the 15,000
bags of rice and its carrying vessel, there must be a prior showing of probable
cause that: (1) the importation or exportation of the 15,000 bags of rice was
effected or attempted contrary to law, or that the shipment of the 15,000 bags
of rice constituted prohibited importation or exportation; and (2) the vessel
was used unlawfully in the importation or exportation of the rice, or in
conveying or transporting the rice, if considered as contraband or smuggled
articles in commercial quantities, into or from any Philippine port or place.32
Still, the petitioner contends that the probable cause was established by the
said certification that no vessel by the name of M/V Gypsy Queen logged in
or submitted a Master's Oath of Safe Departure on August 15, 2001.
This assertion is erroneous and irrational. It was heedless on the part of the
petitioner to institute forfeiture proceeding on the basis of that certification
alone. A review of the records of the case shows that there was no probable
cause to justify the forfeiture of the rice cargo and its carrying vessel. To
prove that the rice shipment was imported, the respondents submitted the
following pieces of evidence supporting the validity and regularity of the
shipment:chanRoblesvirtualLawlibrary
1. For the vessel:cralawlawlibrary Official Receipt No. 0703 issued by the Harbour Centre Port Terminal, Inc.
dated August 14, 2001 in the amount of P65,160.00, and another Official
Receipt evenly dated August 14, 2001 in the amount of P3,030.26 showing
that proper usage and other port charges upon the said cargo were duly paid
a) (Exhibits "10" and "11").

the Master's Oath of Safe Departure dated August 14, 2001 (Exhibits "G", "G- Besides, the records showed that the 15,000 bags of rice were of local origin,
1", and "G-2"); having been purchased from NFA Zambales pursuant to the Open Sale
Program of the NFA. The findings of fact of the CTA on this matter are
b) informative:chanRoblesvirtualLawlibrary

the Roll Book showing that M/V Gypsy Queen was cleared by the PPA, North
Harbor Office Manila on August 14, 2001 (Exhibits "P");
c)
Official Receipt No. 44191451 issued by the PPA for payment of port and
other charges upon the said vessel dated August 14, 2001 in the amount of
P3,300.00 (Exhibit "5"); and
d)
the Bill of Lading showing that the vessel loaded with 15,000 bags of rice
sailed from Manila to Cebu for the consignee, Ray Brig Marketing/Singson
(Exhibit "4").
2. For the cargo:cralawlawlibrary
Pursuant to the Open Sale Program of the NFA wherein the NFA would
openly sell its imported stocks to interested individual retailers and encourage
these retailers to buy the stocks in order that the older stocks can be
disposed of in the warehouses to accommodate the incoming imported rice,
Memorandum No. R03-140 No. 01-06-010 dated June 4, 2001 was issued by
the Regional Manager II of NFA endorsing to the NFA Manager of Zambales
the accredited individual retailers of NFA Nueva Ecija. Among the accredited
individual retailers were Jose Navarro and Emmanuel Jacinto. Emmanuel
Jacinto was able to buy from the open sale 7,000 bags of NFA rice. He
likewise purchased NFA rice from Jose Navarro and Manuel Sevilla, a retailer
from Bulacan. Emmanuel Jacinto then sold 17,000 bags of NFA rice to [Metro
Star]. The parties admit that all documents issued by the NFA Zambales,
relative to the said Open Sale Program such as the Certifications issued by
the NFA Zambales Senior Grains Operations Officer, the Official Receipts,
the NFA Authority to Issue and the NFA Warehouse Stocks Issue were duly
confirmed as genuine by then NFA Administrator R.A. Abad in his letter dated
February 15, 2002 to Customs Deputy Commissioner Gil Valera.

Subsequently, Metro Star sold 15,000 bags of rice to Raybrig Marketing

a) owned by [Singson] in the amount of P12,050,000.00. [Singson] is duly
registered to engage in Wholesaling/Importing Rice under Grains Business
License issued by the NFA. Emmanuel Jacinto testified that these 15,000
bags of rice were taken from the 17,000 bags of imported NFA rice sold by
him to [Metro Star]. It was Metro Star that delivered the 15,000 bags of NFA
rice sold from its warehouse in Bocaue, Bulacan to Manila for loading. It was
the charterer who arranged. for the shipment of the 15,000 bags of rice on
board MN "Gypsy Queen" from Manila to Cebu. The shipment of the said
15,000 bags of rice was covered by a Bill of lading with [Metro Star] of
Bulacan as Shipper and [Singson] of Raybrig Marketing in Cebu City as
Consignee. And M/V "Gypsy Queen" paid the proper charges and other fees
to the [PPA] in the amount of P3,030.00 as shown by Official Receipt No.
44191451 relative to said shipment.33 (Citations omitted)
From the foregoing, it is clear that the respondents had sufficiently
established that the 15,000 bags of rice were of local origin and there were
no other circumstances that would indicate that the same were fraudulently
transported into the Philippines. As such, the release of the rice cargo and its
carrying vessel is warranted.
WHEREFORE, the petition is DENIED. The Decision dated November 16,
2006 and the Resolution dated November 29, 2007 of the Court of Appeals in
CA-G.R. SP No. 83282 are AFFIRMED.
G.R. No. 195876, December 05, 2016
PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner, v.
COMMISSIONER OF CUSTOMS, Respondent.
DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and
set aside the 13 May 2010 Decision1 and the 22 February 2011 Resolution2
rendered by the Court of Tax Appeals (CTA) Former En Banc in C.T.A. EB
No. 472 which dismissed petitioner's petition, and accordingly affirmed with
modification as to the additional imposition of legal interest the 19 June 2008
Decision3 of the CTA Former First Division (CTA in Division) ordering
petitioner to pay the amount of P936,899,883.90, representing the total
dutiable value of its 1996 crude oil importation, which was considered as
abandoned in favor of the government by operation of law.
The Facts
The factual antecedents of the case are as follows:
On 16 April 1996, Republic Act (R.A.) No. 8180,4 otherwise known as the
"Downstream Oil Industry Deregulation Act of 1996" took effect. It provides,
among others, for the reduction of the tariff duty on imported crude oil from
ten percent (10%) to three percent (3%). The particular provision of which is
hereunder quoted as follows:
Section 5. Liberalization of Downstream Oil Industry and Tariff Treatment. - x
xx
b) Any law to the contrary notwithstanding and starting with the effectivity of
this Act, tariff shall be imposed and collected on imported crude oil at the rate
of three percent (3%) and imported refined petroleum products at the rate of
seven percent (7%), except fuel oil and LPG, the rate for which shall be the
same as that for imported crude oil Provided, That beginning on January 1,
2004 the tariff rate on imported crude oil and refined petroleum products shall
be the same: Provided, further, That this provision may be amended only by
an Act of Congress.
Prior to its effectivity, petitioner's importation of 1,979,674.85 U.S. barrels of
Arab Light Crude Oil, thru the Ex MT Lanistels, arrived on 7 April 1996 nine
(9) days earlier than the effectivity of the liberalization provision. Within a
period of three days thereafter, or specifically on 10 April 1996, said shipment
was unloaded from the carrying vessels docked at a wharf owned and
operated by petitioner, to its oil tanks located at Batangas City.
Subsequently, petitioner filed the Import Entry and Internal Revenue
Declaration and paid the import duty of said shipment in the amount of
P11,231,081.00 on 23 May 1996.
More than four (4) years later or on 1 August 2000, petitioner received a
demand letter5 dated 27 July 2000 from the Bureau of Customs (BOC),
through the District Collector of Batangas, assessing it to pay the deficiency
customs duties in the amount of P120,162,991.00 due from the
aforementioned crude oil importation, representing the difference between
the amount allegedly due (at the old rate often percent (10%) or before the
effectivity of R.A. No. 8180) and the actual amount of duties paid by petitioner
(on the rate of 3%).
Petitioner protested the assessment on 14 August 2000,6 to which the
District Collector of the BOC replied on 4 September 20007 reiterating his
demand for the payment of said deficiency customs duties.
On 11 October 2000,8 petitioner appealed the 4 September 2000 decision of
the District Collector of the BOC to the respondent and requested for the
cancellation of the assessment for the same customs duties.
However, on 29 October 2001,9 five years after petitioner paid the allegedly
deficient import duty' it received by telefax from the respondent a demand
letter for the payment of the amount of P936,899,885.90, representing the
dutiable value of its 1996 crude oil importation which had been allegedly
abandoned in favor of the government by operation of law. Respondent
stated that Import Entry No. 683-96 covering the subject importation had
been irregularly filed and accepted beyond the thirty-day (30) period
prescribed by law. Petitioner protested the aforesaid demand letter on 7
November 200110 for lack of factual and legal basis, and on the ground of
prescription.
Seeking clarification as to what course of action the BOC is taking, and
reiterating its position that the respondent's demand letters dated 29 October
2001 and 27 July 2000 have no legal basis, petitioner sent a letter to the
Director of Legal Service of the BOC on 3 December 2001 for said purpose.
On 28 December 2001,11 BOC Deputy Commissioner Gil A. Valera sent
petitioner a letter which stated that the latter had not responded to the
respondent's 29 October 2001 demand letter and demanded payment of the
amount of P936,899,885.90, under threat to hold delivery of petitioner's
subsequent shipments, pursuant to Section 150812 of the Tariff and Customs
Code of the Philippines (TCCP),13 and to file a civil complaint against
petitioner.
In reply thereto, petitioner sent a letter dated 4 January 200214 to the BOC
Deputy Commissioner and expressed that it had already responded to the
aforesaid demand letter through the letters dated 7 November 2001 and 3
December 2001 sent to respondent and to the Director of Legal Service of
the BOC, respectively.
On 11 April 2002, the BOC filed a civil case for collection of sum of money
against petitioner, together with Caltex Philippines, Inc. as co-party therein,
docketed as Civil Case No. 02103239, before Branch XXV, Regional Trial
Court (RTC), of the City of Manila.15
Consequently, on 27 May 2002, petitioner filed with the Court of Tax Appeals
(CTA) a Petition for Review, raffled to the Former First Division (CTA in
Division), and docketed as C.T.A. Case No. 6485, upon consideration that
the civil complaint filed in the RTC of Manila was the final decision of the
BOC on its protest.16
Respondent filed on 2 August 2002 a motion to dismiss the said petition
raising lack of jurisdiction and failure to state a cause of action as its grounds,
which the CTA in Division denied in the Resolution dated 17 January 2003.
Likewise, respondent's motion for reconsideration filed on 14 February 2003
was denied on its 16 June 2003 Resolution.17
Subsequently, respondent, through the Office of the Solicitor General, filed on
13 August 2003 before the Court of Appeals (CA) a Petition for Certiorari and
Prohibition with Prayer for the Issuance of a Temporary Restraining Order
and Writ of Preliminary Injunction, docketed as CA-G.R. SP No. 78563,
praying for the reversal and setting aside of the CTA in Division's Resolutions
dated 17 January 2003 and 16 June 2003.18
In the interim, respondent filed his Answer to the petition in C.T.A. Case No.
6485 on 20 October 2003 which reiterated the lack of jurisdiction and failure
to state a cause of action. Thereafter, trial on the merits ensued.
On 15 February 2007, the Former First Division of the CA dismissed
respondent's petition in CA-G.R. SP No. 78563. Similarly, respondent's
motion for reconsideration of the 15 February 2007 Decision was denied in its
24 July 2007 Resolution.19
The Ruling of the CTA in Division
In a Decision dated 19 June 200820, the CTA in Division ruled to dismiss the
Petition for Review on C.T.A. Case No. 6485 for lack of merit and accordingly
ordered petitioner to pay the entire amount of P936,899,883.9021
representing the total dutiable value of the subject shipment of Arab Light
Crude Oil on the ground of implied abandonment pursuant to Sections 1801
and 1802 of the TCCP.
Relevant thereto, the CTA in Division made the following factual and legal
findings: (a) that petitioner filed the specified entry form (Import Entry and
Internal Revenue Declaration) beyond the 30-day period prescribed under Aggrieved, petitioner appealed to the CTA Former En Banc by filing a Petition
Section 1301 of the TCCP;22 (b) that for failure to file within the aforesaid 30- for Review on 31 March 2009, under Section 3(b), Rule 8 of the 2005
day period, the subject importation was deemed abandoned in favor of the Revised Rules of the CTA, as amended, in relation to Rule 43 of the 1997
government in accordance with Sections 1801 and 1802 of the TCCP;23 (c) Rules of Civil Procedure, as amended, docketed as C.T.A. EB No. 472.
that petitioner's excuses in the delay of filing its Import Entry and Internal
Revenue Declaration were implausible24; (d) that since the government
became the owner of the subject shipment by operation of law, petitioner has
no right to withdraw the same and should be held liable to pay for the total The Ruling of the CTA Former En Banc
dutiable value of said shipment computed at the time the importation was
withdrawn from the carrying vessel pursuant to Section 204 of the TCCP;25
(e) that there was fraud in the present case considering that "the District
Collector, in conspiracy with the officials of Caltex and Shell acted without
In the 13 May 2010 Decision31, the CTA Former En Banc affirmed the CTA
authority or [with] abused (sic) [of] authority by giving undue benefits to the
in Division's ruling pertaining to the implied abandonment caused by
importers by allowing the processing, payment and subsequent release of the
petitioner's failure to file the Import Entry and Internal Revenue Declaration
shipments to the damage and prejudice of the government who, under the
within the 30-day period, and transfer of ownership by operation of law to the
law is already the owner of the shipments x x x;" thus, prescription under
government of the subject shipment in accordance with Sections 1801 and
Section 1603 of the TCCP does not apply herein;26 and (f) that the findings
1802, in relation to Section 13.01, of the TCCP, and with the pronouncements
of facts of administrative bodies charged with their specific field of expertise,
made in the Chevron case. Notably however, the ponente of the assailed
are afforded great weight by the courts; and in the absence of substantial
Decision declared therein that the existence of fraud is not controlling in the
showing that such findings are made from an erroneous estimation of the
case at bench and would not actually affect petitioner's liability to pay the
evidence presented, they are conclusive, and in the interest of stability of the
dutiable value of its imported crude oil, pertinent portion of which are quoted
government structure, should not be disturbed.27
hereunder for ready reference, to wit:

On 24 February 2009, the CTA in Division denied petitioner's Motion for

As regards the issue on the existence of fraud, it should be emphasized that
Reconsideration for lack of merit citing Section 5(b),28 Rule 6 of the 2005
fraud is not controlling in this case. Even in the absence of fraud, petitioner
Revised Rules of the CTA, as sole legal basis in considering the
Shell is still liable for the payment of the dutiable value by operation of law.
Memorandum dated 2 February 2001 issued by the Customs Intelligence &
The liability of petitioner Shell for the payment of the dutiable value of its
Investigation Service, Investigation & Prosecution Division (CIIS-IPD) of the
imported crude oil arose from the moment it appropriated for itself the said
BOC as evidence to establish fraud, and the case of Chevron Phils., Inc. v.
importation, which were already a property of the government by operation of
Commissioner of the Bureau of Customs,29 as the jurisprudential foundation
law. Absence of fraud in this case would not exclude petitioner Shell from the
therein.30
coverage of Sections 1801 and 1802 of the TCCP.32 (Emphasis supplied)

Furthermore, citing the case of Eastern Shipping Lines, Inc. v. Court of
Appeals and Mercantile Insurance Company, Inc.,33 the CTA Former En
Banc imposed an additional legal interest of six percent (6%) per annum on
the total dutiable value of P936,899,883.90, accruing from the date said
decision was promulgated until its finality; and afterwards, an interest rate of
twelve percent (12%) per annum shall be applied until its full satisfaction.34
Not satisfied, petitioner filed a motion for reconsideration thereof which was
denied in the assailed Resolution dated 22 February 2011.
Consequently, this Petition for Review wherein petitioner seeks the reversal
and setting aside of the aforementioned Decision and Resolution dated 13
May 2010 and 22 February 2011, respectively, and accordingly prays that a
decision be rendered finding: (a) that petitioner has already paid the proper
duties on its importation and therefore not liable anymore; and (b) that
petitioner is not deemed to have abandoned its subject shipment; or, in the
alternative, (c) that respondent's attempt to collect is devoid of any legal and
factual basis considering that the right to collect against petitioner relating to
its subject shipment has already prescribed.
In support of its petition, petitioner posits the following assigned errors:
I PROTECTION OF THE LAW, CONSIDERING:
THE CTA FORMER EN BANC ERRED WHEN IT HELD IN THE
QUESTIONED DECISION THAT PETITIONER PSPC IS DEEMED TO HAVE
IMPLIEDLY ABANDONED THE SUBJECT SHIPMENT AND, THUS, IS
LIABLE FOR THE ENTIRE VALUE OF THE SUBJECT SHIPMENT, PLUS
INTEREST, DESPITE THE FACT THAT SUCH CLAIM, IF ANY AT ALL, HAS
ALREADY PRESCRIBED, ESPECIALLY BECAUSE PETITIONER PSPC
DID NOT COMMIT ANY FRAUD.
II
THE CTA FORMER EN BANC ERRED WHEN IT FAILED TO RECOGNIZE
THAT THE GOVERNMENT DID NOT SUFFER ANY DAMAGE OR
REVENUE LOSS SINCE ALL TARIFF DUTIES IMPOSABLE ON THE
SUBJECT SHIPMENT WERE ALREADY PAID TO THE GOVERNMENT,
SUCH THAT TO ALLOW RESPONDENT COMMISSIONER TO RECOVER
THE ENTIRE VALUE OF THE SUBJECT SHIPMENT WOULD BE
CONFISCATORY AND AMOUNT TO UNJUST ENRICHMENT ON THE
PART OF THE GOVERNMENT.
III
THE CTA FORMER EN BANC ERRED WHEN IT CONSIDERED THE
SUBJECT SHIPMENT AS IMPLIEDLY ABANDONED, DEPRIVING
PETITIONER PSPC OF ITS RIGHT TO DUE PROCESS AND EQUAL
RESPONDENT COMMISSIONER DID NOT OBSERVE THE DUE NOTICE
REQUIREMENT UNDER SECTION 1801 OF THE TCCP OR COMPLIED
WITH THE RULES THAT BOC HAD PROMULGATED, WHICH DUE
NOTICE IS MANDATORY IN THE ABSENCE OF FRAUD AS HELD IN THE
CHEVRON CASE.
THE DUE NOTICE REQUIRED UNDER SECTION 1801 OF THE TCCP
ACTUALLY REFERS TO THE NOTICE TO FILE ENTRY FOR IMPORTED
ARTICLES AND NOT THE ARRIVAL THEREOF.
PETITIONER PSPC'S ADVANCE FILING OF ITS IED WHICH, BY LAW,
ALREADY CONSTITUTES A VALID AND EFFECTIVE IMPORT ENTRY
FORM, AND ITS CLEAR ACTUATIONS SHOWED AN INTENTION NOT TO
ABANDON THE SUBJECT SHIPMENT ESPECIALLY SINCE IT HAD
ALREADY FULLY PAID THE TARIFF DUTY DUE ON THE SHIPMENT IN
ADVANCE.
RESPONDENT COMMISSIONER DID NOT CONSIDER PETITIONER
PSPC'S REASONABLE AND JUSTIFIABLE REASONS FOR THE SLIGHT
DELAY IN FILING ITS IEIRD.
TO SUSTAIN THE CTA FORMER EN BANC IS TO TREAT PETITIONER
PSPC WORSE THAN SMUGGLERS AND COMMON CRIMINALS, AS TO
DEPRIVE IT OF ITS RIGHT TO EQUAL PROTECTION OF THE LAW.
IV
THE CTA [FORMER] EN BANC ERRED IN FAILING TO RECOGNIZE THAT
THE IMPOSITION OF A NINE HUNDRED THIRTY-SIX MILLION EIGHT
HUNDRED EIGHTY-NINE THOUSAND EIGHT HUNDRED EIGHTY-THREE
AND 90/100 PESOS (P936,889,883.90) PENALTY BY REASON OF
IMPLIED ABANDONMENT AGAINST PETITIONER PSPC, DESPITE ITS
FULL PAYMENT OF THE TARIFF DUTY DUE ON THE SHIPMENT AND
THE JUSTIFIABLE SLIGHT DELAY IN THE LATTER'S SUBMISSION OF
ITS IEIRD, IS IN VIOLATION OF INTERNATIONAL LAW UNDER THE
REVISED KYOTO CONVENTION.
V
THE CTA [FORMER] EN BANC ERRED IN FAILING TO RECOGNIZE THAT
THERE IS NO STATUTORY PROVISION EMPOWERING RESPONDENT
COMMISSIONER TO SUBSTITUTE ITS CLAIMS FOR THE ABANDONED
GOODS WITH THE VALUE THEREOF.
VI
THE CTA [FORMER] EN BANC GROSSLY MISAPPRECIATED THE FACTS
AND MISAPPLIED THE RULING OF THE HONORABLE COURT IN THE
CHEVRON CASE WHEN IT HELD THAT PRESCRIPTION IS NOT A
DEFENSE AND THAT THE NOTICE REQUIREMENT UNDER SECTION
1801 OF THE TCCP AND THE BOC'S OWN RULES AND REGULATIONS
DO NOT APPLY EVEN IN THE ABSENCE OF FRAUD. QUITE THE
CONTRARY, THE CHEVRON CASE CLEARLY RECOGNIZED THAT THE
PRESCRIPTIVE PERIOD OF THE FINALITY OF THE LIQUIDATION
UNDER SECTION 1603 OF THE TCCP IS A DEFENSE IN THE ABSENCE
OF FRAUD AND THE NOTICE REQUIREMENT WAS SET ASIDE DUE TO
THE FINDING OF FRAUD AGAINST CHEVRON. MOREOVER, UNLIKE IN
CHEVRON CASE WHERE THE HONORABLE COURT FOUND CHEVRON
TO HAVE BENEFITED FROM ITS DELAY AND WAS GUILTY OF FRAUD,
THE QUESTIONED DECISION AND RESOLUTION BOTH DID NOT FIND
FRAUD ON THE PART OF PETITIONER PRPC.35
Petitioner asseverates that: (a) in the absence of fraud, the right of
respondent to claim against petitioner, assuming there is any, has already
prescribed since an action involving payment of customs duties demanded
after a period of one (1) year from the date of final payment of duties shall not
succeed, relying on Section 1603 of the TCCP; (b) the alleged Memorandum
dated 2 February 2001 issued by the Investigation and Prosecution Division
(IPD) of the BOC, which served as the court a quo's basis in finding fraud on
the part of petitioner, was never presented, authenticated, marked, identified,
nor formally offered in evidence; hence, inadmissible and cannot be the basis
of any finding of fraud; (c) even if the Memorandum dated 2 February 2001 is
legally admitted in evidence, it still does not constitute clear and convincing
proof to establish any fraud on the part of petitioner since, unlike in the
Chevron case, it was entitled to avail of the reduced three percent (3%) rate
under R.A. No. 8180, which was already in effect as early as 16 April 1996;
thus, petitioner did not gain any undue advantage or benefit from its justifiable
delay in filing the Import Entry and Internal Revenue Declaration within the
30-day mandatory period; and (d) the evidence on record and the acts of
petitioner [filing of Import Entry Declaration (JED) and paying advance duties]
disclose honest and good faith on its part showing clear absence of any
fraudulent intent to evade the payment of the proper customs duties and
taxes due at the time of the entry of its imported crude oil in the
Philippines.36
Petitioner further argues that the government suffered or lost nothing when
petitioner filed its Import Entry and Internal Revenue Declaration thirteen (13)
days beyond the period allowed by law, considering that the former did not
lose any tax collection when petitioner had allegedly paid in advance the
amount of P71,923,285.00 for the regular tariff duty of 10% then prevailing,
notwithstanding its entitlement to the reduced 3% rate under RA No. 8180.
Consequently, by ordering petitioner to pay for the entire dutiable value
amounting to P936,899,883.90, the government shall be guilty of unjust
enrichment, and such would result to deprivation of property on the part of
petitioner without due process of law.37
Moreover, it is petitioner's contention that the principles enunciated in the
Chevron case were misapplied in the case at bench. It explained that the
reason for such ruling establishing the "ipso facto abandonment" doctrine
was because there was a finding of fraud on the part of Chevron, being the
importer. The existence of fraud was a critical and essential fact in the
disposition on the issues in the Chevron case that justified the goods to be
deemed impliedly abandoned in favor of the government. Corollarily, in the
absence of fraud, goods cannot be deemed impliedly abandoned and ipso
facto owned by the government arising from a mere delay in the submission
of the Import Entry and Internal Revenue Declaration, such as in the present
case. In other words, petitioner is convinced that the provisions of Sections
1801 and 1802 cannot be applied blindly which may cause goods to be
impliedly abandoned in favor of the government, without even recognizing the
peculiar circumstances of the case and without allowing the importer
(petitioner herein) to provide justifications for the delay in the submission of
its Import Entry and Internal Revenue Declaration. Allegedly, both notices to
the importer to file entry and for its failure to file an entry within the non--
extendible period of 30 days are essential before a shipment can be
considered impliedly abandoned. Otherwise, to do so would constitute
violation of the basic substantial constitutional rights of petitioner.
Petitioner explains that, in issuing Customs Administrative Order (CAO) No.
5-93 dated 1 September 1993 and Customs Memorandum Order (CMO) No.
15-94 dated 29 April 1994, respondent even recognized the significance of The submissions of the parties to this case bring to fore two timelines and the
the due notice requirement before any goods may be deemed impliedly consequences of the lapse of the prescribed periods. Petitioner appears to be
abandoned articles. Such notice purportedly refers to notice to file entry, and covered by Section 1801, in relation to Section 1301, which respectively
not notice of arrival as mistakenly interpreted by the CTA Former En Banc. states:
Thus, in the absence of such notice in the present case, there could have
been no implied abandonment in favor of the government of the said
imported crude oil by petitioner pursuant to Section 1801 of the TCCP.
Sec. 1801. Abandonment, Kinds and Effects of. - An imported article is
deemed abandoned under any of the following circumstances:

Lastly, petitioner believes that affirmance of the ruling a quo, would be

tantamount to a clear violation of international laws, i.e. the Revised Kyoto
Convention, which generally prohibit the imposition of substantial penalties (a) When the owner, importer, or consignee of the imported article expressly
for errors when there is no fraud or gross negligence on the part of an signifies in writing to the Collector of Customs his intentions to abandon; or
importer. Consequently, such current and reasonable trend in the
international and uniform application of customs rules and laws shows how
unreasonable, unjust, confiscatory, iniquitous and incongruent the disposition
made against petitioner in the instant case; hence, the very need to set aside
(b) When the owner, importer, consignee or interested party after due notice,
the assailed Decision and Resolution of the CTA Former En Banc in C.T.A.
fails to file an entry within thirty (30) days, which shall not be extendible, from
EB No. 472, in order to prevent the creation of a legal precedent which
the date of discharge of the last package from the vessel or aircraft, or having
contravenes State commitments.
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)
Respondent, on the other hand, counters that petitioner's failure to file its
Import Entry and Internal Revenue Declaration within the non-extendible
period of 30 days was fatal to its cause of action. Resultantly, the subject
Any person who abandons an article or who fails to claim his importation as
imported crude oil is deemed abandoned in favor of the government by
provided for in the preceding paragraph shall be deemed to have renounced
reason of such non-filing of the imported entries within said prescriptive
all his interests and property rights therein.
period.38

xxxx
Our Ruling
 absence of fraud or protest, be final and conclusive upon all parties, unless
the liquidation of the import entry was merely tentative. (Emphasis supplied)
Sec. 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 the date of discharge of the last package
from the vessel or aircraft either (a) by the importer, being holder of the bill of We rule that in this case, Section 1603 is squarely applicable. The finality of
lading, (b) by a duly licensed customs broker acting under authority from a liquidation which arises one (1) year after the date of the final payment of
holder of the bill or (c) by a person duly empowered to act as agent or duties, which is in this case 23 May 1996, renders inoperable the provisions
attorney-in-fact for each holder: Provided, That where the entry is filed by a of Section 1801.
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 Discussion
facie evidence of knowledge and consent of the importer of violations against
applicable provisions of this Code when the importation is found to be
unlawful.
At the outset, it bears emphasis that the determination of the issues
presented in this case requires a comprehensive assessment of the
pronouncements made in the case of Chevron Philippines, Inc. v.
Tersely put, when an importer after due notice fails to file an Import Entry and Commissioner of the Bureau of Customs;39 thus, we find it imperative to
Internal Revenue Declaration within an unextendible period of thirty (30) days reproduce hereunder the points there considered which are germane to the
from the discharge of the last package, the imported article is deemed controversy under review.
abandoned in favor of the government.

THE IMPORTATION WERE ABANDONED

Upon the other hand, respondent is covered in a manner likewise mandatory,
by the provisions of Section 1603 which states that: IN FAVOR OF THE GOVERNMENT

Sec. 1603. Finality of Liquidation. - When articles have been entered and The law is clear and explicit. It gives a non-extendible period of 30 days for
passed free of duty or final adjustment of duties made, with subsequent the importer to file the entry which we have already ruled pertains to both the
delivery, such entry and passage free of duty or settlement of duties will, after IED and IEIRD. Thus under Section 1801 in relation to Section 1301, when
the expiration of one year, from the date of the final payment of duties, in the 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. -
xxxx
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.
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.
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 tile 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.
After it was amended by RA 7651, there was an indubitable shift in language
as to what could be considered implied abandonment:
Section 1801. Abandonment, Kinds and Effect of. - An imported article is
deemed abandoned under any of the following circumstances:
When the owner, importer, consignee of the imported article expressly
signifies in writing to the Collector of Customs his intention to
abandon;ChanRoblesVirtualawlibrary
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 x x x.
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. It would be error on our part to continue applying the old law
despite the clear changes introduced by the amendment.40 (Emphasis and
underlining supplied)
Based on the foregoing, it appears that in the Chevron case, the Court simply
applied the clear provision of Section 1801(b), in relation to Section 1301, of
the TCCP, as amended, which categorically provides that mere failure on the
part of the owner, importer, consignee or interested party, after due notice, to
file an entry within a non-extendible period of 30 days from the date of
discharge of the last package (shipment) from the vessel, would mean that
such owner, importer, consignee or interested party is deemed to have
abandoned said shipment. Consequently, abandonment of such shipment
(imported article) constitutes renouncement of all his interests and property
rights therein.
It was observed that it is the law itself that considers an imported article
abandoned for failure to file the corresponding Import Entry and Internal
Revenue Declaration within the allotted time. No acts or omissions to
establish intent to abandon is necessary to effectuate the clear provision of
the law. Since Section 1801(b) does not provide any qualification as to what
may have caused such failure in filing said import entry within the prescriptive
period in order to render the imported article abandoned, this Court shall
likewise make no distinction and plainly apply the law as clearly stated.
Hence, upon the lapse of the aforesaid non-extendible period of 30 days,
without the required import entry filed by the importer within said period, its
imported article is therefore deemed abandoned.
Moreover, Section 1.802 of the same Code states to whom said abandoned
imported articles belong as a consequence of such renouncement by the
owner, importer, consignee or interested party. It provides:

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

ipso facto be deemed the property of the Government and shall be disposed
The rationale of strict compliance with the non-extendible period of 30 days of in accordance with the provisions of this Code.
within which import entries (IEIRDs) must be filed for imported articles are as
follows: (a) to prevent considerable delay in the payment of duties and taxes;
(b) to compel importers to file import entries and claim their importation as
early as possible under the threat of having their importation declared as x x x x (Emphasis supplied)
abandoned and forfeited in favor of the government; (c) to minimize the
opportunity of graft; (d) to compel both the BOC and the importers to work for
the early release of cargo, thus decongesting all ports of entry; (e) to facilitate
the release of goods and thereby promoting trade and commerce; and (f) to
In the Chevron case, we explained that the term "ipso facto" is defined as "by
minimize the pilferage of imported cargo at the ports of entry.41 The
the very act itself or "by mere act." Hence, there is no need for any
aforesaid policy considerations were significant to justify a firm observance of
affirmative act on the part of the government with respect to abandoned
the aforesaid prescriptive period.
imported articles given that the law itself categorically provides that said
articles shall ipso facto be deemed the property of the government. By using
the term "ipso facto" in Section 1802 of the TCCP, as amended by R.A. No.
7651,42 the legislature removed the need for abandonment proceedings and
for any declaration that imported articles have been abandoned before
ownership thereof can be effectively transferred to the government. In other
words, ownership over the abandoned imported articles is transferred to the
government by operation of law.
The rulings in Chevron was generously applied by CTA Former En Banc in
the present case. Thus:
Petitioner Shell's failure to file the required entries, within the prescribed non-
extendible period of thirty (30) days from the date of discharge of the last
package from the carrying vessel, constitutes implied abandonment of its oil
importation. This means, that from the precise moment that the non-
extendible thirty-day period had lapsed, the abandoned shipment was
deemed the property of the government. Therefore, when petitioner withdrew
the oil shipment for consumption, it appropriated for itself properties which
already belonged to the government. x x x
Petitioner Shell's contention that the belated filing of its import entries is
justified due to the late arrival of its import documents, which are necessary
for the proper computation of the import duties, cannot be sustained.
xxxx
The [CTA Former En Banc] cannot also accept such excuses, as the
absence of supporting documents should not have prevented petitioner Shell
from complying with the mandatory non-extendible period, since the law
prescribes an extremely serious consequence for delayed filing. If this kind of
excuse was to be accepted, then the collection of customs duties would be at
the mercy of importers, which our lawmakers try to avoid.
For all the foregoing, we rule that the late filing of the IEIRDs alone, which
constituted implied abandonment, makes petitioner Shell liable for the
payment of the dutiable value of the imported crude oil. x x x43 (Emphasis
supplied)
Since it is undisputed that the Import Entry and Internal Revenue Declaration
was belatedly filed by petitioner on 23 May 1996, or more than 30 days from
the last day of discharge of its importation counted from 10 April 1996, the
importation may be considered impliedly abandoned in favor of the
government. Petitioner argues that before Section 1802 can be applied and
the ipso facto provision invoked, the requirement of due notice to file entry
and the determination of the intent of the importer are essential in order to
consider the subject imported crude oil of petitioner impliedly abandoned in
favor of the government. It further asserts that, in the Chevron case, it was
conceded that as a general rule, due notice is indeed required before any
imported article can be considered impliedly abandoned, but Chevron's non-
entitlement to such prior notice was legally justified because of the finding of
fraud established against it, rendering it impossible for the BOC to comply
with the due notice requirement under the prevailing rules. Consequently, it is
petitioner's conclusion that such finding of fraud is indispensable in order to
waive the "due notice requirement," that would eventually consider the
subject imported crude oil impliedly abandoned in favor of the government.
In Chevron, we observed that:
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:
xxxx
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.
xxxx
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. I'm thinking of certain cases, Mr. Chairman, where
the owner might not have known. This is now on implied abandonment not
the express abandonment.
xxxx
HON. QUIMPO. Because I'm thinking, Mr. Chairman. I'm 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.
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.
xxxx
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. That's why we have a procedure in
the bureau whereby importers can file their entries even before the shipment
arrives in the country. (Emphasis supplied)
xxxx
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 entrv 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 15-94 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.44 (Emphasis and
underlining supplied)
Therefrom, it is without a doubt that the requirement of due notice
contemplated under Section 1801(b) of the TCCP, as amended, refers to the
notice to the owner, importer, consignee or interested party of the arrival of its
shipment and details thereof. The legislative intent was clear in emphasizing
the importance of said notice of arrival, which is intended solely to persons
not considered as knowledgeable importers, or those who are not familiar
with the governing rules and procedures in the release of importations. We as
much as said that the due notice requirement under Section 1801(b), do not
apply to knowledgeable importers, such as Chevron in the above-cited case,
for having been considered as one of the regular, large-scale and
multinational importers of oil and oil products, familiar with said rules and
procedures (including the duty and obligation of filing the IEIRD within a non-
extendible period of 30 days) and fully aware of the arrival of its shipment on
its privately owned pier or wharf in the Port of Batangas. Applying Chevron,
the decision assailed here said:
The due notice required under Section 1301 is the notice of the arrival of the
shipment. In this case, pursuant to the Chevron case, notice to petitioner
Shell is not required under the peculiar circumstances of the case. Petitioner
Shell, like Chevron, is a regular, large-scale and multinational importer of oil
and oil products, who falls under the category of a knowledgeable importer,
familiar with the governing rules and procedures in the release of
importations.
More importantly, petitioner Shell even admitted that it filed an application for
Special Permit to Discharge and paid the corresponding advance duties on
March 22, 1996 (Exhibits "K" and "P"),, which undeniably proved knowledge
on the part of petitioner Shell of the arrival of the shipment. Likewise, upon
arrival of the shipment, they were unloaded from the carrying vessels docked
at the wharf owned by petitioner Shell at Tabangao, Batangas City; thus,
petitioner Shell was fully aware that their importation had already arrived.45
(Emphasis supplied)
The foregoing having been said, we must with equal concern, go to the other
timeline which is provided for in Section 1603 of the TCCP, to wit:
Sec. 1603. Finality of Liquidation. - When articles have been entered and
passed free of duty or final adjustment of duties made, with subsequent
delivery, such entry and passage free of duty or settlement of duties will, after
the expiration of one year, from the date of the final payment of duties, in the
absence of fraud or protest, be final and conclusive upon all parties, unless
the liquidation of the import entry was merely tentative.
Petitioner insists that, in the absence of fraud, the right of respondent to claim
against it has already prescribed considering that an action involving the
entry and payment of customs duties involving imported articles demanded
after a period of one (1) year from the date of final payment of duties, shall
not succeed, pursuant to the clear provision of Section 1603. It therefore
contends that even if the subject imported crude oil of petitioner is by law
deemed abandoned by operation of law under Sections 1801(b), in relation to
Section 1301, of the Code, respondent's right to claim abandonment had
already lapsed since fraud is wanting in this case. On the other hand,
respondent counters that since there was a factual finding of fraud committed
by petitioner in the filing of its Import Entry and Internal Revenue Declaration
beyond the 30-day period prescribed under Section 1301 of the TCCP, the 1-
year prescriptive period under Section 1603 therefore does not apply.
At this point, it bears emphasis that in a petition for review on certiorari under
Rule 45 of the Rules of Court, only questions of law may be raised.46 The
Court is not a trier of facts and does not normally undertake the re-
examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of facts of the CA are conclusive
and binding on the Court47 and they carry even more weight when the CA
affirms the factual findings of the trial court.48 However, it is already a settled
matter that, the Court had recognized several exceptions to this rule, to wit:
(1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when in making its findings the Court of Appeals went
beyond the issues of the case, or its findings are contrary to the admissions
of both the appellant and the appellee; (7) when the findings are contrary to
the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioner's main and reply briefs are not disputed by
the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11)
when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would justify a different
conclusion.49

Records of this case reveal that the CTA in Division in its 19 June 2008
Decision50 made a pronouncement that there was indeed fraud committed
by petitioner based on the factual finding contained in the Memorandum
dated 2 February 2001 issued by Special Investigator II Domingo B. Almeda
and Special Investigator III Nemesio C. Magno, Jr. of the CIIS-IPD of the
BOC. Consequently, since such memorandum made such factual finding of
fraud against petitioner, the court a quo ruled that prescription does not set in
even if respondent's claim was made beyond the 1-year reglementary period.
Upon an assiduous review of the factual finding of fraud, we find petitioner's
contention meritorious. Hence, the instant case falls among the exceptions to
the general rule previously mentioned which would require this Court's
judicial prerogative to review the court a quo's findings of fact.
Generally, fraud has been defined as "the deliberate intention to cause
damage or prejudice. It is voluntary execution of a wrongful act, or a willful
omission, knowing and intending the effects which naturally and necessarily
arise from such act or omission.51 For fraud to exist, it must be intentional,
consisting of deception willfully and deliberately done or resorted to in order
to induce another to give up some right.52 It is never presumed and the
burden of proof to establish lies in the person making such allegation since
every person is presumed to be in good faith.53 To discharge this burden,
fraud must be proven by clear and convincing evidence.54 Also, fraud must
be alleged and proven as a fact where the following requisites must concur:
(a) the fraud must be established by evidence; and (b) the evidence of fraud
must be clear and convincing, and not merely preponderant. Upon failure to
establish these two (2) requisites, the presumption of good faith must prevail.
Section 3611(c) of the TCCP, as amended defines the term fraud as the
occurrence of a "material false statement or act in connection with the
transaction which was committed or omitted knowingly, voluntarily and
intentionally, as established by clear and convincing evidence." Again, such
factual finding of fraud should be established based on clear, convincing, and
uncontroverted evidence.
Relevant thereto, in the landmark case of Aznar v. Court of Tax Appeals,55
we explained the general concept of fraud as applied to tax cases in the
following fashion:
The fraud contemplated by law is actual and not constructive. It must be
intentional fraud, consisting of deception willfully and deliberately done or
resorted to in order to induce another to give up some legal right. Negligence,
whether slight or gross, is not equivalent to the fraud with intent to evade the
tax contemplated by the law. It must amount to intentional wrong doing with
the sole object of avoiding the tax. It necessarily follows that a mere mistake
cannot be considered as fraudulent intent, and if both petitioner and
respondent Commissioner of Internal Revenue committed mistakes in making
entries in the returns and in the assessment, respectively, under the inventory
method of determining tax liability, it would be unfair to treat the mistakes of
the petitioner as tainted with fraud and those of the respondent as made in
good faith.56 (Emphasis supplied)
In the case at bench, a perusal of the records reveals that there is neither any
iota of evidence nor concrete proof offered and admitted to clearly establish
that petitioner committed any fraudulent acts. The CTA in Division relied
solely on the Memorandum dated 2 February 2001 issued by the CIIS-IPD of
the BOC in ruling the existence of fraud committed by petitioner. However,
there is no showing that such document was ever presented, identified, and
testified to or offered in evidence by either party before the trial court.
Time and again, this Court has consistently declared that cases filed before
the CTA are litigated de novo, party-litigants must prove every minute aspect
of their cases.57 Section 8 of R.A. No. 1125,58 as amended by R.A. No.
9282,59 categorically described the CTA as a court of record. Indubitably, no
evidentiary value can be given to any documentary evidence merely attached
to the BOC Records, as the rules on documentary evidence require that such
documents must be formally offered before the CTA. Pertinent is Section 34,
Rule 132 of the Rules of Court which reads:
Section 34. Offer of evidence. - The court shall consider no evidence which
has not been formally offered. The purpose for which the evidence is offered
must be specified.
From the foregoing provision, it is clear that for evidence to be considered by
the court, the same must be formally offered. Corollarily, the mere fact that a
particular document is identified and marked as an exhibit does not mean that
it has already been offered as part of the evidence of a party. In Interpacific
Transit, Inc. v. Aviles,60 We had the occasion to make a distinction between
identification of documentary evidence and its formal offer as an exhibit. We
said that the first is done in the course of the trial and is accompanied by the
marking of the evidence as an exhibit while the second is done only when the
party rests its case and not before. A party, therefore, may opt to formally
offer his evidence if he believes that it will advance his cause or not to do so
at all. In the event he chooses to do the latter, the trial court is not authorized
by the Rules to consider the same.61
The Rule on this matter is patent that even documents which are identified
and marked as exhibits cannot be considered into evidence when the same
have not been formally offered as part of the evidence, but more so if the
same were not identified and marked as exhibits, such as in the present
case. An assay of the records reveals that the subject Memorandum dated 2
February 2001 was neither identified nor offered in evidence by respondent
during the entire proceedings before the CTA in Division. Consequently, this
is fatal to respondent's cause in establishing the existence of fraud committed
by petitioner since the burden of proof to establish the same lies with the
former alone.
As a matter of fact, even if the aforesaid documentary evidence was included
as part of the ROC Records submitted before the CTA in compliance with a
lawful order of the court,62 this does not permit the trial court to consider the
same in view of the fact that the Rules prohibit it. The reasoning forwarded by
the CTA in Division in its Resolution dated 24 February 2009, that the
apparent purpose of transmittal of the records is to enable it to appreciate
and properly review the proceedings and findings before an administrative
agency, is misplaced. Unless any of the party formally offered in evidence
said Memorandum, and accordingly, admitted by the court a quo, it cannot be
considered as among the legal and factual bases in resolving the controversy
presented before it.
By analogy, in Dizon v. CTA,63 this Court underscored the importance of a
formal offer of evidence and the corresponding admission thereafter. We
quote:
While the CTA is not governed strictly by technical rules of evidence, as rules
of procedure are not ends in themselves and are primarily intended as tools
in the administration of justice, the presentation of the BIR's evidence is not a
mere procedural technicality which may be disregarded considering that it is
the only means by which the CTA may ascertain and verify the truth of BIR's
claims against the Estate. The BIR's failure to formally offer these pieces of
evidence, despite CTA's directives, is fatal to its cause. Such failure is
aggravated by the fact that not even a single reason was advanced by the
BIR to justify such fatal omission. This, we take against the BIR.
Per the records of this case, the BIR was directed to present its evidence in
the hearing of February 21, 1996, but BIR's counsel failed to appear. The
CTA denied petitioner's motion to consider BIR's presentation of evidence as
waived, with a warning to BIR that such presentation would be considered
waived if BIR's evidence would not be presented at the next hearing. Again,
in the hearing of March 20, 1996, BIR's counsel failed to appear. Thus, in its
Resolution dated March 21, 1996, the CTA considered the BIR to have
waived presentation of its evidence. In the same Resolution, the parties were
directed to file their respective memorandum. Petitioner complied but BIR
failed to do so. In all of these proceedings, BIR was duly notified. Hence, in
this case, we are constrained to apply our ruling in Heirs of Pedro Pasag v.
Parocha:
A formal offer is necessary because judges are mandated to rest their
findings of facts and their judgment only and strictly upon the evidence
offered by the parties at the trial. Its function is to enable the trial judge to
know the purpose or purposes for which the proponent is presenting the
evidence. On the other hand, this allows opposing parties to examine the
evidence and object to its admissibility. Moreover, it facilitates review as the
appellate court will not be required to review documents' not previously
scrutinized by the trial court.
Strict adherence to the said rule is not a trivial matter. The Court in
Constantino v. Court of Appeals ruled that the formal offer of one's evidence
is deemed waived after failing to submit it within a considerable period of
time. It explained that the court cannot admit an offer of evidence made after
a lapse of three (3) months because to do so would ''condone an inexcusable
laxity if not non-compliance with a court order which, in effect, would
encourage needless delays and derail the speedy administration of justice."
Applying the aforementioned principle in this case, we find that the trial court
had reasonable ground to consider that petitioners had waived their right to
make a formal offer of documentary or object evidence. Despite several
extensions of time to make their formal offer, petitioners failed to comply with
their commitment and allowed almost five months to lapse before finally
submitting it. Petitioners' failure to comply with the rule on admissibility of
evidence is anathema to the efficient, effective, and expeditious dispensation
of justice. (Emphasis and underlining supplied)
Clearly therefore, evidence not formally offered during the trial cannot be
used for or against a party litigant by the trial court in deciding the merits of
the case. Neither may it be taken into account on appeal. Since the rule on
formal offer of evidence is not a trivial matter, failure to make a formal offer
within a considerable period of time shall be deemed a waiver to submit it.
Consequently, any evidence that has not been offered and admitted
thereafter shall be excluded and rejected.
Moreover, even if not submitted as a contention herein, We find it apropos to
rule that the CTA likewise cannot motu proprio justify the existence of fraud
committed by petitioner by applying the rules on judicial notice.
Judicial notice is the cognizance of certain facts which judges may properly
take and act on without proof because they already know them.64 Under the
Rules of Court, judicial notice may either be mandatory or discretionary.
Pertinent portions of Rule 129 of the Rules of Court provide as follows:
RULE 129
What Need Not Be Proved
Section 1. Judicial notice, when mandatory. - A court shall take judicial notice,
without the introduction of evidence, of the existence and territorial extent of
states, their political history, forms of government and symbols of nationality,
the law of nations, the admiralty and maritime courts of the world and their
seals, the political constitution and history of the Philippines, the official acts
of legislative, executive and judicial departments of the Philippines, the laws
of nature, the measure of time, and the geographical divisions.
Section 2. Judicial notice, when discretionary. - A court may take judicial
notice of matters which are of public knowledge, or are capable to
unquestionable demonstration, or ought to be known to judges because of
their judicial functions.
Section 3. Judicial notice, when hearing necessary. -During the trial, the
court, on its own initiative, or on request of a party, may announce its
intention to take judicial notice of any matter and allow the parties to be heard
thereon.
After the trial, and before judgment or on appeal, the proper court, on its own
initiative or on request of a party, may take judicial notice of any matter and
allow the parties to be heard thereon if such matter is decisive of a material
issue in the case.
xxxx
In relation thereto, it has been held that the doctrine of judicial notice rests on
the wisdom and discretion of the courts; however, the power to take judicial
notice is to be exercised by the courts with caution; care must be taken that
the requisite notoriety exists; and every reasonable doubt upon the subject
should be promptly resolved in the negative.65
As a general rule, courts are not authorized to take judicial notice of the
contents of the records of other cases, even when such cases have been
tried or are pending in the same court, and notwithstanding the fact that both
cases may have been tried or are actually pending before the same judge.66
However, this rule is subject to the exception that in the absence of objection
and as a matter of convenience to all parties, a court may properly treat all or
any part of the original record of the case filed in its archives as read into the
records of a case pending before it, when with the knowledge of the opposing
party, reference is made to it, by name and number or in some other manner
by which it is sufficiently designated.67 Thus, for said exception to apply, the
party concerned must be given an opportunity to object before the court could
take judicial notice of any record pertaining to other cases pending before it.
Such being the case, it would also be an error for the CTA in Division to even
take judicial notice of the subject Memorandum being merely a part of the
BOC Records submitted before the court a quo, without the same being
identified by a witness, offered in and admitted as evidence, and effectively,
depriving petitioner, first and foremost, an opportunity to object thereto.
Hence, the subject Memorandum should not have been considered by the
CTA in Division in its disposition.
It is well-settled that procedural rules are designed to facilitate the
adjudication of cases. Courts and litigants alike are enjoined to abide strictly
by the rules. While it is true that litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of
justice. Party litigants and their counsel are well advised to abide by, rather
than flaunt, procedural rules for these rules illumine the path of the law and
rationalize the pursuit of justice.68
The claim of respondent against petitioner has already prescribed
Since we have already laid to rest the question on whether or not there was
fraud committed by petitioner, the last issue for Our resolution is whether
respondent's claim against petitioner has already prescribed.
This Court rules in the affirmative.
There being no evidence to prove that petitioner committed fraud in belatedly
filing its Import Entry and Internal Revenue Declaration within the 30-day
period prescribed under Section 1301 of the TCCP, as amended,
respondent's rights to question the propriety thereof and to collect the amount
of the alleged deficiency customs duties, more so the entire value of the
subject shipment, have already prescribed. Simply put, in the absence of
fraud, the entry and corresponding payment of duties made by petitioner
becomes final and conclusive upon all parties after one (1) year from the date
of the payment of duties in accordance with Section 1603 of the TCCP, as
amended:
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 as well,
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. (Emphasis and
underscoring supplied)
The above provision speaks of entry and passage free of duty or settlements
of duties. Generally, in customs law, the term "entry" has a triple meaning, to
wit: (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.69 As explained in the Chevron case, it
specifically refers to the filing and acceptance of the Import Entry and Internal
Revenue Declaration of the imported article. Simply put, the entry of imported
goods at the custom house consists in submitting them to the inspection of
the revenue officers, together with a statement or description of such goods,
and the original invoices of the same, for the purpose of estimating the duties
to be paid thereon.70 The term "duty" used therein denotes a tax or impost
due to the government upon the importation or exportation of goods. It means
that the duties on imports signify not merely a duty on the act of importation,
but a duty on the thing imported. It is not confined to a duty levied while the
article is entering the country, but extends to a duty levied after it has entered
the country.71
Based on the foregoing definitions, it is commonsensical that the finality of
liquidation referred to under Section 1603 covers the propriety of the
submission and acceptance of the Import Entry and Internal Revenue
Declaration covering the imported articles being brought in the country for the
sole purpose of determining whether it is subject to tax or not; and if it is,
whether the computation of the tax or impost to be paid to the government
was properly made. These shall include, among others, the declarations and
statements contained in the entry, made under oath and under the penalties
of falsification or perjury that such declarations and statements contained
therein are true and correct, which shall constitute prima facie evidence of
knowledge and consent of the importer of violation against applicable
provisions of the TCCP when the importation is found to be unlawful.72
Indubitably, the matters which become final and conclusive against all parties
include the timeliness of filing the import entry within the period prescribed by
law, the declarations and statements contained therein, and the payment or
non-payment of customs duties covering the imported articles by the owner,
importer, consignee or interested party. Since the primordial issue presented
before us focuses on petitioner's non-compliance in filing its Import Entry and
Internal Revenue Declaration within a non-extendible period of 30 days from
the date of discharge of' the last package from the vessel, respondent may
only look into it within a limited period of one (1) year in accordance with the
above-quoted provision.
In the case at bench, it is undisputed that petitioner filed its IEIRD and paid
the remaining customs duties due on the subject shipment only on 23 May
1996. Yet, it was only on 1 August 2000, or more than four (4) years later,
that petitioner received a demand letter from the District Collector of
Batangas for the alleged unpaid duties covering the said shipment.
Thereafter, on 29 October 2001, or after more than five (5) years, petitioner
received another demand letter from respondent seeking to collect for the
entire dutiable value of the same shipment amounting to P936,899,855.90.
Consequently, applying the foregoing provision and considering that we have
determined already that there is no factual finding of fraud established herein,
the liquidation of petitioner's imported crude oil shipment became final and
conclusive on 24 May 1997, or exactly upon the lapse of the 1-year
prescriptive period from the date of payment of final duties. As such, any
action questioning the propriety of the entry and settlement of duties
pertaining to such shipment initiated beyond said date is therefore barred by
prescription.
Since time immemorial, this Court has consistently recognized and applied
the statute of limitations to preclude the Government from exercising its
power to assess and collect taxes beyond the prescribed period, and we
intend to abide by our rulings on prescription and to strictly apply the same in
the case of petitioner; otherwise, both the procedural and substantive rights
of petitioner would be violated. After all, prescription is a substantive defense
that may be invoked to prevent stale claims from being resurrected causing
inconvenience and uncertainty to a person who has long enjoyed the
exercise. Thus, symptomatic of the magnitude of the concept of prescription,
this Court has elucidated that:
The law prescribing a limitation of actions for the collection of the income tax
is beneficial both to the Government and to its citizens; to the Government
because tax officers would be obliged to act promptly in the making of
assessment, and to citizens because after the lapse of the period of
prescription citizens would have a feeling of security against unscrupulous tax
agents who will always find an excuse to inspect the books of taxpayers, not
to determine the latter's real liability, but to take advantage of every
opportunity to molest peaceful, law-abiding citizens. Without such legal
defense taxpayers would furthermore be under obligation to always keep
their books and keep them open for inspection subject to harassment by
unscrupulous tax agents. The law on prescription being a remedial measure
should be interpreted in a way conducive to bringing about the beneficient
purpose of affording protection to the taxpayer within the contemplation of the
Commission which recommend (sic) the approval of the law.73 (Emphasis
supplied)
Basic is the rule that provisions of the law should be read in relation to other
provisions therein. A statute must be interpreted to give it efficient operation
and effect as a whole avoiding the nullification of cognate provisions. Statutes
are read in a manner that makes it wholly operative and effective, consistent
with the legal maxim ut res magis valeat quam pereat.
This maxim applied, we read Sections 1301, 1801, and 1802, together with
Section 1603 of the TCCP. Thus, should there be failure on the part of the
owner, importer, consignee or interested party, after due notice of the arrival
of its shipment (except in cases of knowledgeable owners or importers), to
file an entry within the non-extendible period of 30 days from the date of
discharge of the last package (shipment) from the vessel, such owner,
importer, consignee or interested party is deemed to have abandoned said
shipment in favor of the government. As imperative, however, is the strict
compliance with Section 1603 of the TCCP, which should be read as we have
ruled. Any action or claim questioning the propriety of the entry and
settlement of duties pertaining to such shipment made beyond the 1-year
prescriptive period from the date of payment of final duties, is barred by
prescription. In the present case, the failure on the part of respondent to
timely question the propriety of the entry and settlement of duties by
petitioner involving the subject shipment, renders such entry and settlement
of duties final and conclusive against both parties. Hence, respondent cannot
any longer have any claim from petitioner. Sections 1301, 1801, and 1802 of
the TCCP have been rendered inoperable by reason of the lapse of the
period stated in Section 1603 of the same Code.
Indeed, if the prescriptive period of one year specified in Section 1603 of the
TCCP is not applied against the respondent, the reality that the shipment has
been unloaded from the carrying vessels to petitioner's oil tanks and that
import duty in the amount of P11,231,081.00 has been paid would be
obliterated by the application of the principle of deemed abandonment four
years after the occurrence of the facts of possession and payment, as a
consequence of which application, the petitioner would be made to pay the
government the entire value of the shipment it had as vendee of the shipper
already paid.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated 13
May 2010 and Resolution dated 22 February 2011 of the Court of Tax
Appeals Former En Banc in C.T.A. EB No. 472 are hereby REVERSED and
SET ASIDE on the ground of prescription.