Sec. 1204. Liability of Importer for Duties. — Unless relieved by laws or regulations, the liability for duties, taxes, fees and other charges attaching on importation constitutes a personal debt due from the importer to the government which can be discharged only by payment in full of all duties, taxes, fees and other charges legally accruing. It also constitutes a lien upon the articles imported which may be enforced while such articles are in custody or subject to the control of the government.

Pilipinas Shell v RP (BoC) (2008)

Facts: - Shell was assigned to Tax Debit Memos and Tax Credit Certificates by various entities.

o This assignment was approved by the BOI and the One Stop Shop Inter-Agency Tax Credit Center.

o Some of these TCCs were used by Shell to pay for its taxes and import duties for the period of 1997-8. The BoC accepted such payment.

- 3 Nov. 1999: Subsequently, DOF Sec informed Shell that the TDMs and TCCs were fraudulently issued. They had to be CANCELLED.

o He also asked that Shell pay the value of the cancelled TCCs. - Shell’s Defense: We acted in good faith – we followed the procedure laid down by the one

stop shop. o BoC still demanded payment. o 23 Dec 1999: Shell filed a formal protest, which the BoC did not act upon. o The question of legality of cancellation was raised to the CTA.

- 3 Apr 2002: BoC then filed a complaint for Collection with the RTC Manila. o “Fraudulent TCCs!”o Shell’s answer: RTC has no jurisdiction. The case of cancellation of TCCs is still

pending with the CTA. As such, assessment was not final. And as per Yabes v Flojo, RTC only acquires jurisdiction when the assessment becomes final and incontestable.

o RTC still ordered Shell to file an answer. -

Issue: W/N RTC should have dismissed the collection case and transferred it to the CTA

Held: No. Subject matter falls within the jurisdiction of the RTC. The filing of a collection case was a proper remedy.

- An assessment or liquidation by the BoC attains finality and conclusiveness one year from the date of the final payment of duties except when:

o There was fraud.o There is pending protest. o The liquidation of import entry was merely tentative.

None of the exceptions apply to the case at bar. - Assessment in the case at bar had long become final and incontestable.- Pursuant to Yabes, BoC HAD a right to file a collection case.

o Legal Basis: Sec. 1204: “liability for duties…on importation…constitutes a personal debt” “…constitutes a lien upon the articles imported which may be enforced while such articles are in the custody … of the government”

o Import duties must be paid in full, fyi. - Since the BoC already released the goods, the lien over such was extinguished.

o The only way BoC could enforce the payment was by filing a collection case against Shell.

Intra-Strata Assurance Corp v RP (BoC) (2008)

Facts:- 1974: Grand Textile imported various textile products from different countries. - These products were transferred to Customs Bonded Warehouse No. 462. - The BoC computed its customs duties and to secure the payment of these obligations

pursuant to Sec. 1904 of the TCCP, IntraStrata and Philhome each issued general warehousing bonds in favor of the BoC.

o Provision: Goods shall be withdrawn from the warehouse on payment of legal customs duties.

- UH OH. WITHOUT PAYMENT, Grand Textile withdrew the imported goods from storage. - BoC demanded payment from (1) Grand Textile and (2) Intra-strata and Philhome. - All 3 failed to pay. - RTC held (1) and (2) liable to pay. CA affirmed the decision.

Issue: W/N the withdrawal of the stored goods without notice to them as sureties released them from any liability

Held: No. A surety is released from its obligation when there is a material alteration of the contract in connection A surety is not released by a change in the contract which does not have the effect of making its obligation more onerous. In this case, the withdrawal by Grand Textile does not make the obligation more onerous.

The lack of consent of Interstrata and Philhome in the withdrawal is a matter between them and their Principal, Grand Textile. It is a matter outside the concern of the government whose interest as creditor-obligee in the importation transaction is the payment by the importer-obligor of the duties due before the importation process is concluded.

OLD Sec. 1301. Persons Authorized to Make Import Entry. — Imported articles must be entered in the customhouse at the port of entry within fifteen days from date of discharge of the last package from the vessel either (a) by the importer, being holder of the bill of lading, (b) by any other holder of the bill of lading in due course, (c) by a customs broker acting under authority from a holder of the bill, or (d) by a person duly empowered to act as agent or attorney-in-fact for such holder: Provided, That the Collector may grant an extension of not more than fifteen days.

NEW 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)

Chevron v Commissioner of BoC (2008)

Facts:- 1996: Chevron imported petroleum products covered by 8 bills of lading.

o Earliest March 8 1996 – April 10 1996- Shipments were unloaded from the carrying vessels onto Chevron’s oil tanks over a period 3

days from arrival.- Import Entry Declarations (IEDs) were filed and 90% of the total customs duties were paid.

Filed March-April 1996.

- Import Entry and Internal Revenue Declarations were thereafter filed. Filed May-June 1996. - Importations were appraised ata duty rate of 3% as provided by the Downstream Oil

Deregulation Act effective April 16, 1996. o Prior to such Act, rate of duty was 10%.

- June 10, 1999: Someone told the DOF Sec that Chevron (and shell) was guilty of concealment, manipulation and scheming in the importation of crude oil. The government was losing huge amounts of revenue.

- An investigation was initiated by the BoC. - 1 Aug 2000: Chevron received a demand letter from the Collector of Customs of Batangas

o Demanding payment for difference between the 10% and 3% tariff rates on the shipments.

- Chevron objected. It’s the 3%, not the 10%, that should be applied. Please cancel the assessment for deficiency.

- The Inspection and Prosecution Division issued a finding that o The import entries were filed beyond the 30-day non-extendible period prescribed

under Sec 1301 of the TCCP. As such, the importations were considered abandoned in favor of the

government.o Fraud was committed by Chevron in collusion with the former District Collector.

- Because of the findings, the BoC once again sent a demand letter to Chevron. - Chevron then filed a petition for review in the CTA first division asking for reversal.

o Ruling: There was fraud. Prescription was not applicable. Chevron did not abandon shipments. 10% was the prevailing rate at the time of thei removal of the goods from the custody of the BoC.

- CTA En Banc Ruling: “entry” means filing of IEIRDs. These were filed beyond the 30-day period and therefore, deemed abandoned. There’s fraud – intent to evade higher rate.

ISSUE: W/N entry under Sec. 1301 refers to IED or IEIRD

HELD: It refers to BOTH. Strong issues of public policy militate against Chevron’s interpretation that it is only the IED that matters – Chevron has no legal basis. Duties and taxes must be paid in full before the BOC can allow the release of the imported articles from its custody. Both must be filed within 30 days from date of discharge of last package from the vessel/aircraft. No more extensions.

Was there fraud? Yes, it was established. Chevron took its time in filing the IEIRD to avail of the lower rate of duty. They knew that it was during that time that the Congress was deliberating over the lowering of the duty on oil products. They colluded with the District Collector who accepted the IEIRDs even if filed late.

What does entry really mean? (1) docs filed at customs house(2) submission and acceptance of docs (3) procedure of passing goods through customs house

What does “entered” mean?Sec. 205 – Imported articles shall be deemed entered in the Phils for consumption when the specified entry form is properly filed and accepted.

What operative act constitutes entry of imported articles at the port of entry?The filing and acceptance of the specified entry form together with other docs.

What is the purpose of the IED?Basis for payment of advance duties on importations. This is the provisional entry.

What is the purpose of IEIRD?Evidences the final payment of duties and taxes. This is considered the regular consumption entry. Specifically: (1) ascertain value of imported articles (2) collect correct and final amount of customs duties and (3) avoid smuggling

It is the IEIRD which accompanies the final payment.

Effect of filing late IEIRD?Products are deemed abandoned in favor of the government.

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.

Commissioner of Customs v PhilPhos (2004)

Facts: - Philphos is engaged in the manufacture and prod of fertilizers for domestic and international

distribution. o Based in Leyte Industrial Development Estateo Registered with the Philippine Export Zone Authority

- To make fertilizer, Philphos has to purchase fuel for its machineries. o Their fuel was secured domestically from local distributors Petron.

- Where does Petron get their fuel? o Petron imports. Petron pays the duties the BOC and ad valorem and specific taxes to

the BIR.- Where is the fuel brought?

o To the Leyte Industrial Development Estate – remember it’s registered with PEZA

- Does Philphos pay for anything other than the purchase price of the petroleum products?o Yes, Petron bills them for the customs duties imposed – built into the selling price.

- From Oct 1991- June 1992, Philphos made several purchases for petroleum products used directly or indirectly in the manufacture of the fertilizer.

o Philphose indirectly paid customs duties.

- As such, Philphos wanted a refund for the duties it paid during that period. o Basis: Since the base of Philiphos is inside a tax export processing zone, it is entitled

to certain tax incentives. o Claim denied by the BoC. CTA allowed the claim and ordered issuance of a TCC in

Philphos’ favor. The CA affirmed the CTA’s decision. Basis of CTA and CA: Sec. 17(1) EPZA/PEZA Law. Commissioner’s argument: since subject products, made by seller Petron,m

had already been finally terminated – all future claims for refund are thus barred. Sec. 18(1) should apply.

- To set the record straight, there is no dispute as to the amount – only the LEGAL BASIS FOR EXEMPTION.

Issue: what is the basis of Philphos’ exemption from customs duties, if any?

Held: Sec. 17(1)

SEC. 17. Tax Treatment of Merchandise in the Zone. – (1) Except as otherwise provided in this Decree, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise or used whether directly or indirectly in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the following provisions of law to the contrary notwithstanding. (emphasis supplied)

This covers petroleum supplies used, directly or indirectly, by Philphos to facilitate its production of fertilizers, subject to the minimal requirement that these supplies are brought into the zone. The supplies are not subject to customs and internal revenue laws and regulations nor to local tax ordinances.

BoC Commissioner’s arguments must fail – especially the point that importation was deemed terminated and that termination barred any future claim.

Even our recent ruling in Nestle Philippines, Inc. v. Court of Appeals, to the effect that the claim for refund of customs duties in protestable cases may be foreclosed by the failure to file a written protest, is not apropos in the case at bar because petitioner therein was not a duly registered enterprise under the EPZA Law and thus not entitled to the exemptions therein

What is the prescriptive period which a duly registered enterprise should observe in applying for a refund when registered under EPZA?Don’t apply solutio indebiti Civil Code provisions.

Sec. 1708. Claim for Refund and Mode of Payment. — All claims for refund of duties shall be made in writing, and forwarded to the Collector to whom such duties are paid, who upon receipt of such claim shall verify the same by the records of his office, and if found to be correct and in accordance with law, shall certify the same to the Commissioner with his recommendation together with all necessary papers and documents. Upon receipt by the Commissioner of such certified claim he shall cause the same to be paid if found correct.

Nestle Phils v CA (2001)Facts

- Nestle is engaged in the importation of milk and milk products for processing, distribution and sale in the Phils.

- Jul – Nov 1984: 16 separate importations of milk and milk products from different countries. - Nestle was assessed customs duties and advance sales taxes by the Collector of Customs of

Manila (separately) on the basis of the published Home Consumption Value indicated in the BoC revision orders.

o Nestle paid by filed a protest before the Manila Customs Collector Alleged that the Collector applied the higher HCV in determining the duties.

- 14 Oct 1986: Nestle formally filed a claim for refund of allegedly overpaid advance sales taxes of the 16 importations. This was filed with the BIR.

- 15 Oct 1986 (note: still within 2 year prescriptive period under the NIRC for claiming a refund): Nestle filed a Petition for Review with the CTA.

o Ruled in favor of Nestle. Ordered BIR to refund. - What about the alleged overpaid customs duties? Their protest cases were still left with the

Manila Customs Collector. o The latter never rendered a decision, even after almost 6 years since Nestle paid

under protest.

o Nestle immediately filed a petition for review with the CTA, even without a ruling from the Collector and Customs Commissioner, just to keep it from going stale.

o This was dismissed for want of jurisdiction. MR also denied. o Nestle appealed to the CA (Rule 45, Rules of Court)

CA Ruling: CTA’s jurisdiction is not concurrent with the appellate jurisdiction of the Commissioner of Customs since no ruling yet. Neither does Nestle fall into any of the recognized exceptions.

- Nestle said: o Refunds are based on solution indebiti – that prescribes in 6 years.

Pendency of its protest cases before the Manila Customs Collector did not interrupt the running of the prescriptive period under the aforesaid provision of law.

o Overpayment of customs duties had been duly established and resolved with finality when the CTA ruled on the advance sales taxes.

AST were computed using wrong ACV. These are the taxes imposed on the same 16 milk importations.

Issue: W/N claim for refund was properly made

Held: No. 1708 clearly states that all claims for refund of duties shall be made in writing and forwarded to the Collector to whom such duties are paid, who, upon receipt of such claim, shall verify the same by the records of his Office. If the claim is found correct and in accordance with law, the Collector shall certify the same to the Commissioner with his recommendation together with all necessary papers and docs.

"Customs duties" is 'the name given to taxes on the importation and exportation of commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign country. Any claim, for refund of customs duties, therefore, take the nature of tax exemptions that must be construed strictissimi juris against the claimants and liberal]y in favor of the taxing authority. This power of taxation being a high prerogative of sovereignty, its relinquishment is never presumed. Any reduction or diminution thereof with respect to its mode or its rate must be strictly construed, and the same must be couched in clear and unmistakable terms in order that it may be applied.

Thus, any outright award for the refund of allegedly overpaid customs duties in favor of petitioner on its subject sixteen (16) importations is not favored in this jurisdiction unless there is a direct and clear finding thereon. The fact alone that the tax court, in C.T.A Case No. 4114, has awarded in favor of the petitioner the refund of overpaid Advance Sales Tax involving the same sixteen (16) importations does not in any way excuse the petitioner from proving its claims for refund of alleged over payment of customs duties. We have scrutinized the decision rendered by the tax court C.T.A. Case No. 4114 and found no clear indication therein that the tax court has ruled on petitioner's claims for alleged overpayment of customs duties.

In the present case, there is no factual showing that the collection of the alleged overpaid customs duties was more than what is required of the petitioner when it made the aforesaid separate importations. There is no factual finding yet by the government agency concerned that petitioner is indeed entitled to its claim of overpayment and, if true, for how much it is entitled. It bears stress that in determining whether or not petitioner is entitled to refund of alleged overpayment of customs duties, it is necessary to determine exactly how much the Government is entitled to collect as customs duties on the importations. Thus, it would only be just and fair that the petitioner-taxpayer and the Government alike be given equal opportunities to avail of the remedies under the law to contest or defeat each other's claim and to determine all matters of dispute between them in one single case.19 If the State expects its taxpayers to observe fairness and honesty in paying their taxes, so must it apply the same standard against itself in refunding excess payments, if truly proven, of such taxes. Indeed, the State must lead by its own example of honor, dignity and uprightness.

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.

RV Marzan Freight v CA (2004)

Facts: - RV Marzan Freight owned and operated a customs-bonded warehouse located at the

Bachrach Corp.o This is where they accepted all forms of goods and merchandise for storage and

safekeeping. - Philfire issued an insurance policy in favor of RV Marzan covering the (1) warehouse and (2)

stocks in trade of every kind and description usual to the warehouse operations of the Assured and other interest that may appear – while contained in the Bachrach Bldg.

- 12 April 1989: rawmats consigned to the Shiela’s Mfg (garment biz) arrived in the Phils from Taiwan.

o The vessel used to ship it was owned by Sea-Land Serviceo The rawmats were supplied by Tricon Enterprises. o Tax treatment: ordinary import taxeso Not immediately released to Shiela’s Mfg. o Shiela’s Mfg failed to file requisite import entry and failed to claim the cargo.

- 24 July 1989: Sea-Land authorized RV Marzan to take delivery of the container of rawmats consigned to Shiela’s for stripping and safekeeping.

- The Int’l Container Terminal Services requested BoC for authority to clear storage areas of cargoes which have been abandoned by their owners or seized by the BoC.

o This included the cargo of Shiela’s Mfg. - The District Collector issued a notice to Shiela’s re: the various overstaying cargo.

o 15 days from notice to file entry of the cargoes without prejudice to the right of the consignees to redeem articles pursuant to 1801 of TCCP within prescribed period therein.

o If no entry filed, cargoes would be deemed abandoned and sold at public auction. o Notice was posted on the Bulletin Board but no separate notice sent to Shiela’s –

reason: address unkwnn. - Memo was issued by the BOC informing the Chief for Auction and Cargo Disposal Division

that the declaration of abandonment in the aforestated proceedings had become f & e. o Cargoes should be inventoried and sold at public auction.

- BUT BEFORE AUCTION COULD BE ACCOMPLISHED, THE WAREHOUSE CONTIANING SHIPMENT WAS BURNED!!!!!

o Goodbye rawmats ! o Philfire paid Php12M.

- 19 Mar 1991: Shiela’s sent a letter to RV Marzan demanding payment of the value of the goods.

o RV Marzan rejected demands. o Petitioner executed a “Release of Claim and Hold Harmless Undertaking”.

- After more than 2 years from arrival of the cargo in the Phils, Shiela’s filed a complaint for damages before the RTC Pasig against RV Marzan. They wanted RV Marzan and Philfireto pay for the avalue of the goods.

o Goods were stored in RV Marzan’s warehouse due to problems it (RV Marzan)

encountered with BoCo Goods were stored in the bonded warehouse of RV Marzano Shiela’s demanded that the goods be released but RV Marzan refused

- RV Marzan’s defense:o No privity of contract between them and Shiela’s. o Shiela’s not a real party in interest. o Good were received from the BoC under an AO covering forfeited and abandoned

cargoes. o Before the fire, Shiela’s violated the TCCP and failed to pay the corresponding taxes. o Government owned the cargo, not shiela’s. o Fire is a fortuitous event.

- Philfire’s defense – no contractual obligation to Shiela’s. - RTC ruling: RV marzan solely liable.

ISSUE: W/N RTC had jurisdiction to review and declare ineffective the declaration of the District Collector of Customs in Abandonment Proceedings that the subject shipment was abandoned cargo and that government became the owner thereof.

HELD: Yes. The action of Shiela’s Mfg was one of collection of value of cargo gutted by fire while under the custody of RV Marzan, in prep for sale at public auction by BoC. The core issue re: who owned the cargo was indicated in the pleadings. - Allegations in the pleadings determine the jurisdiction. - Character of relief sought, irrespective of w/n plaintiff is entitled to recover upon all or some

of the claims accorded therein.

ISSUE: W/N goods were already abandoned that at the time of the fire, Shiela’s Mfg was no longer the owner of said goods.

Held: Sec. 1801 states that abandonment is implied when, from the action or omission of the interested party to file the import entry within 5 days or an extension thereof from the discharge of the vessel or aircraft. If entry has been filed, goods are deemed abandoned if interested party fails to file claim within 5 days thereafter or extension of not more than 5 days. If not complied with, the party is deemed to have renounced all his interests and property rights.

SEC. 1802. Abandonment of Imported Articles.- The owner or importer of any articles may, within ten days after filing of the import entry, abandon to the Government all or a part of the articles included in an invoice, and, thereupon, he shall be relieved from the payment of duties, taxes and all other charges and expenses due thereon: Provided, That the portion so abandoned is not less than ten per cent of the total invoice and is not less than one package, except in cases of articles imported for personal or family use. The articles so abandoned shall be delivered by the owner or importer at such place within the port of arrival as the Collector shall designate, and upon his failure to so comply, the owner or importer shall be liable for all expenses that may be incurred in connection with the disposition of the articles.

Abandoned articles shall be subject to sale under conditions provided by Sec. 2601 TCCP.

This declaration of abandoned proceedings is found by the Court to be ineffective. Under the law, notice of the proceedings of abandonment was not given to the consignee or the plaintiff herein or his agent. The consignee in this case being known, should have been notified of the abandonment of his property in favor of the government and that he should have been given a chance at a public hearing to present evidence and to be heard with respect to the cargo subject of abandonment. This is part of due process.

Sec. 2301. Warrant for Detention of Property-Cash Bond. — Upon making any seizure, the Collector shall issue a warrant for the detention of the property; and if the owner or importer desires to secure the release of the property for legitimate use, the Collector shall, with the approval of the Commissioner of Customs, surrender it upon the filing of a cash bond, in an amount to be fixed by him, conditioned upon the payment of the appraised value of the article and/or any fine, expenses and costs which may be adjudged in the case: Provided, That such importation shall not be released under any bond when there is a prima facie evidence of fraud in the importation of article: Provided, further, That articles the importation of which is prohibited by law shall not be released under any circumstance whatsoever: Provided, finally, That nothing in this section shall be construed as relieving the owner or importer from any criminal liability which may arise from any violation of law committed in connection with the importation of the article.

Asian Terminals v Bautista-Ricafort (2006)

Facts: - RA 8506 took effect on Feb 22, 1998:

o Sec. 1. Unlawful for any person to import, cause the importation of, register, cause the registration of, use or operate any vehicle with its steering wheel right hand side thereof xxx

- Tabuelog et al are duly licensed importers of vehicles. - They imported 72 2nd-hand right-hand drive buses from Japan.

o Manila District Collector impounded the vehicles and ordered them stored at the warehouse of Asian Terminals.

Asian Terminals is a customs-bonded warehouse under the custody of the Aviation and Cargo Regional Division.

o The same collector also issued Warrants of Distraint against the shipment. He set the sale at public auction on 10 Sep 1998.

- On Oct 28, 1998. DOJ Sec issued an Opinion stating that the shipments loaded and exported at the port of origin before 22 Feb 1998 were not covered by RA 8506 UNLESS loaded and imported after said date.

- The importers thereafter filed a complaint with RTC Paranaque for replevin o Asian Terminals: importation of right hand drive vehicles are not prohibited

provided that conversion kits are included. o RTC granted writ of replevin on a Php12m bond

- Chief of Customs Police and other customs police prevented sheriff from taking custody of the vehicles.

o Why? District Collector of Customs had jurisdiction over the vehicles. - Eventually, District Collector agreed to transfer custody of the vehicles to the RTC on the

condition that the required taxes, dues and other charges be paid. – Approved by commissioner.

o The importers filed an Omnibus Motion seeking reconsideration of the rtC order granting Asian Terminals’ plea for writ of replevin.

o ATI filed a 3rd party claim over the shipment alleging that it had a lien over the vehicles.

- CA rendered judgment: RTC has no juris over complaint filed by the Importers. The Collector sitting in seizure and forfeiture proceedings had the exclusive juris to hear and determine all questions relating on the seizure and forfeiture of dutiable goods.

o RTC can’t review, CTA can.

ISSUE: W/N trial court acted in accordance with the TCCP

HELD: yes! - Sec 602: TCC provides that BoC shall exercise exclusive juris over seized and forfeited cars.

o BoC shall supervise and control customs law and all other laws, etc, import and export cargoes

- Sec 2301: Collector is empowered to make a seizure of cargoes and issue a receipt for detention thereof.

o Upon seizure: Collector shall issue a warrant for detention. o If owner/importer wants it released - it has to be for legitimate use and a cash bond

must be filed.- Sec 2350 – What kind of property can be subject of forfeiture?

o The cars in the case at bar fall under “any article the importation or exportation of which is effected or attempted contrary to law or any article or prohibited importation or exportation, and all other articles which in the opinion of the Collector have been used, are, were entered to be used as instruments in the importation of exportation of the former.

- Jao Ruling: RTC has no competence to pass upon validity or regularity of seizure and forfeiture proceedings conducted by the BoC.

o Collector of Customs has exclusive juris to hear and determine all questions touching on the seizure and forfeiture of dutiable goods.

o RTC are precluded from assuming cognizance over such matters, even through petitions of certiorari, prohibition, mandamus

- Case at bar: Collector had already seized the vehicles and set sale at public auction. o RTC should have dismissed the petition for replevin at the outset. o By granting the plea of the importers for the seizure of vehicles and the transfer of

custody to court

It bears stressing that the forfeiture of seized goods in the Bureau of Customs is a proceeding against the goods and not against the owner. It is in the nature of a proceeding in rem, i.e., directed against the res or imported articles and entails a determination of the legality of their importation. In this proceeding, it is, in legal contemplation, the property itself which commits the violation and is treated as the offender, without reference whatsoever to the character or conduct of the owner.

In fine, the initial orders of the RTC granting the issuance of the writ of replevin and its implementation are void. While it is true that the District Collector of Customs allowed the release of the vehicles and the transfer thereof to the custody of the RTC upon the payment by the private respondents of the required taxes, duties and charges, he did not thereby lose jurisdiction over the vehicles; neither did it vest jurisdiction on the RTC to take cognizance of and assume jurisdiction over the petition for replevin. As very well explained by the Office of the Solicitor General, the District Collector of Customs agreed to transfer the vehicles to the custody of the RTC since the latter had ordered the arrest of those who would obstruct the implementation of the writ. The District Collector of Customs had yet to resolve whether to order the vehicles forfeited in favor of the government, in light of the opinion of the Secretary of Justice that, under RA No. 8506, the importation was illegal.

Commissioner of BoC v CTA (2009)Facts

- Las Islas Filipinas Food owned a warehouse catering to food manufacturers. o Condition for its establishment: import allocation from the Sugar Regulatory

Administration every time it imported sugar for its clients. - PPOC, a Thai company, appointed Las Islas as its exclusive offshore trading, storage and

transfer facility in the Phils for its local and foreign transshipment operations. o Ten 20-foot containers of refined sugar to Las Islas.

- 24 April 2004: PPOC’s sugar arrived in Manila. o Las islas failed to present an import allocation from the SRA shipment became

subject to an Alert Order. - July 2004: a decree of abandonment was issued due to Las Islas’ failure to file an import

entry. - Collector of Customs issued a warrant of seizure and detention in view of the SRA’s advice

that no import allocation had been granted to Las Islas. - Las Islas and PPOC moved to quash the decree of abandonment

o Motion Denied – filed outta time.- After reviewing evidence, BoC Commish found that Las Islas and PPOC were not informed of

the abandonment proceedings. o 4 Feb 2005: Commish set aside decree of abandonment. o Commish ordered institution of proceedings for seizure and forfeiture.

- RP instituted proceedings for seizure and forfeiture of the sugar importation.o Reason: instituted proceedings for seizure and forfeiture of the sugar.

- Las Islas’ response: the sugar was merely transshipped while PPOC was looking for a buyer in the int’l market. No import allocation necessary.

- Collectors Held: because LIFFC did not secure an import allocation, shipment was an illegal importation. Sugar forfeited in favor of gov’t!

o Commish affirmed! - Las Islas and PPOC appealed to the CTA contending that Commish erred. Import alloc from

SRA is really unnecessary!!! - Las Islas then filed a motion to release cargo for exportation upon filing of Surety Bond.

o Commish opposed – Sec. 2301 – “such importation shall not be released under any bond when there is prima facie evidence of fraud in the importation of the article”

We can’t release the sugar cos Las Islas had no import allocation from las Islas – prima facie evidence of fraud!

- Subsequent reso: CTA granted motion and ordered release of shipment subject to Las Islas’ filing of a continuing surety bond.

o Las islas was ordered to comply within 10 dayso BUT UH OH – release was held in abeyance for months because las islas and ppoc

failed to comply. - Commish still sought annulment of the resos.

ISSUE: W/N CTA committed gad when it disregarded Sec. 2301 and ordered release of Las Islas’ shipment of refined sugar.

HELD: Yes.

Section 2301 of the TCCP states that seized articles may not be released under bond if there is prima facie evidence of fraud in their importation. Fraud is a "generic term embracing all multifarious means which human ingenuity can devise and which are resorted to by one individual to secure an advantage and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated." Since fraud is a state of mind, its presence can only be determined by examining the attendant circumstances.

Under Section 1202 of the TCCP, importation takes place when merchandise is brought into the customs territory of the Philippines with the intention of unloading the same at port.An exception to this rule is transit cargo entered for immediate exportation.

None of the requisites above was present in this case. While respondents insist that the shipment was sent to the Philippines only for temporary storage and warehousing, the bill of lading clearly denominated "South Manila, Philippines" as the port of discharge. This not only negated any intent to export but also contradicted LIFFC’s representation. Moreover, the shipment was unloaded from the carrying vessel for the purpose of storing the same at LIFFC’s warehouse. Importation therefore took place and the only logical conclusion is that the refined sugar was truly intended for domestic

consumption.

Furthermore, while respondents insisted that an import allocation was unnecessary, they filed an application, albeit belatedly, in the SRA for the shipment of refined sugar. Respondents’ web of conflicting statements and actuations undoubtedly proves bad faith, if not outright fraud.

All things considered, pursuant to Section 2301 of the TCCP, the shipment of refined sugar should not be released under bond.

Sec. 2308. Protest and Payment upon Protest in Civil Matters. — When a ruling or decision of the Collector is made whereby liability for duties, fees, or other money charge is determined, except the fixing of fines in seizure cases, the party adversely affected may protest such ruling or decision by presenting to the Collector at the time when payment of the amount claimed to be due the Government is made, or within thirty days thereafter, a written protest setting forth his objections to the ruling or decision in question, together with the reasons therefor. No protest shall be considered unless payment of the amount due after final liquidation has first been made.

Sec. 2309. Protest Exclusive Remedy in Protestable Case. — In all cases subject to protest, the interested party who desires to have the action of the Collector reviewed, shall make a protest, otherwise, the action of the Collector shall be final and conclusive against him, except as to matters correctible for manifest error in the manner prescribed in section one thousand seven hundred and seven hereof.

CJH Devt v BIR (2008)

Facts- Proc 420 issued by FVR proclaimed that a portion of Camp John Hay would be treated as a

Special Economic Zone. o Sec. 3 Same incentives as Subic SEZ like

Exemption from payment of local and national for biz inside the SEZ Operation of SEZ as a special customs territory providing for tax and duty

free imports of rawmats, capital and equpt- BIR issued RR 12-97.- BoC issued Customs AO 2-98. - Sec. 3 wad declared unconsti but other rules were to be implemented.

o Became final when Court en banc denied the MR through a resolution dated 29 Mar 05

- While MR was pending, the OCT of Baguio sent a demand letter stating that since Sec. 3 is null and void, please settle rpt on real estate.

- BoC also demanded duties and taxes on imports made by CJH from 1998 – 2004. - CJH questioned the retroactive application by the VOC. Claimed that assessment was null

and void because it violated the non-retro principle under TCCP

In an Order dated 28 June 2005, the RTC dropped the City of Baguio as a party to the case. The remaining parties were required to submit their respective memoranda. On 14 October 2005, the RTC rendered its assailed order. It held that the decision in G.R. No. 119775 applies retroactively because the tax exemption granted by Proclamation No. 420 is null and void from the beginning. The RTC also ruled that the petition for declaratory relief is not the appropriate remedy. A judgment of the court cannot be the proper subject of a petition for declaratory relief; the enumeration in Rule 64 is exclusive. Moreover, the RTC held that Commonwealth Act No. 55 (CA No. 55) which proscribes the use of declaratory relief in cases where a taxpayer questions his tax liability is still in force and effect.

First: is the remedy of Declaratory Relief proper?

CA 55 has not been repealed – it’s still in effect. Plus the proper s/m of a DR is a deed, will, contract,

other written instrument or construction of a statute or ordinance. - Camp John Hay hinges its petition on the demand letter or assessment sent to it by the BoC

but the demand letter is not really the s/m of the petition.

Issue: w/n decision in GR 119776 has a retro effect.

Held: NO. court decisions are not proper court subject matter.

Commish v Oilink

Facts- 1991 – 1994: URC imported oil products into the country. - 1996: Oilink was incorporated for dealing with oil and gas and their refinements and by-

products at wholesale and retail of petroleum- URC and Oilink had interlocking directors when Oilink started its business. - To expedite transfer of the operator’s name for the Customs bonded Warehouse, then

operated by URC, URC’s VP and GM sent a letter to manifest that URC and Oilink had the same board of directors and that oilink was 100% owned by URC

- Manila District Collector formally demanded payment for taxes and duties on its oil imports. Another demand for VAT, special duties, excise taxes.

- URC challenged the inconsistencies of the demands. - Commish directed that URC pay = special duties, VAT, Excise Taxes that it had failed to pay

upon the release of the 17 shipments.

Sec. 2402. Review by Court of Tax Appeals. — The party aggrieved by a ruling of the Commissioner in any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulations.

Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and conclusive.

Pilipinas Shell v COC (2009)

Facts- 1997-1998: Shell settled its liabilities for cutoms using TCCs transferred to it by several BOi-

registered companies. - Transfers of said TCCs to shell were processed by the transfeors BOI ref’d companies and

were eventually approved by the one stop shop inter agency tax credit drawback center o DOF, BIR, BOC, BOI

- TCCs were discovered to be fraudulently secured by the original grantees (not shell) so they had to be cancelled.

- Centers Nov 3 letter: informed shel it was cancelling the TCC- Shells Nov3 letter (ooh same day – Center didn’t know): reasons why it shouldn’t be

cancelled. o Center did not act on this. Instead they sent another letter to Shell requiring it to

replace the amount equivalent to the amount of the cancelled TCCs o A lot of back and forth.

- 3 years later: atty Valera – deputy commissioner for revenue collections monitoring group formally demanded from shell payment of the amounts corresponding to the listed TCCs that the center had previously cancelled.

o Signed only found by atty Valera - Shell eventually filed with the CTA a petition for review questioning the BoC Collection efforts

for lack of legal and factual basis o Commish filed MTD – shell filed beyond 30-day period

- CTA ruled in favor of Shell o Collection letters were only signed by Atty. Valera not the Commish

- We resolve to DENY Shells petition; the present case does not involve a tax protest case within the jurisdiction of the CTA to resolve.

The parties argue over which act serves as the decision of the respondent that, under the law, can be the subject of an appeal before the CTA, and from which act the 30-day period to appeal shall be reckoned. Shell insists it should be the filing of the collection suits as this was indicative of the finality of the respondents action. The respondent, on the other hand, claims, it should be the earlier act of sending the collection letters where the respondent finally indicated his resolve to collect the duties due and demandable from Shell. Section 7 of RA No. 1125, as amended, states:

Sec. 7. Jurisdiction. The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal xxx;

xxx xxx xxx4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention, or release or property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs; These decisions of the respondent involving customs duties specifically refer to his decisions on administrative tax protest cases, as stated in Section 2402 of the Tariff and Customs Code of the Philippines (TCCP): Section 2402. Review by Court of Tax Appeals. The party aggrieved by a ruling of the Commissioner in any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulations. Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and conclusive. [Emphasis supplied.]A tax protest case, under the TCCP, involves a protest of the liquidation of import entries. A liquidation is the final computation and ascertainment by the collector of the duties on imported merchandise, based on official reports as to the quantity, character, and value thereof, and the collectors own finding as to the applicable rate of duty; it is akin to an assessment of internal revenue taxes under the National Internal Revenue Code where the tax liability of the taxpayer is definitely determined. In the present case, the facts reveal that Shell received three sets of letters:

a. the Centers November 3 letter, signed by the Secretary of Finance, informing it of the cancellation of the TCCs; b. the respondents November 19 letter requiring it to replace the amount equivalent to the amount of the cancelled TCCs used by Shell; andc. the respondents collection letters issued through Atty. Valera, formally demanding the amount covered by the cancelled TCCs.

None of these letters, however, can be considered as a liquidation or an assessment of Shells import tax liabilities that can be the subject of an administrative tax protest proceeding before the respondent whose decision is appealable to the CTA. Shells import tax liabilities had long been computed and ascertained in the original assessments, and Shell paid these liabilities using the TCCs transferred to it as payment. It is even an error to consider the letters as a reassessment because they refer to the same tax liabilities on the same importations covered by the original assessments. The letters merely reissued the original assessments that were previously settled by Shell with the use of the TCCs. However, on account of the cancellation of the TCCs, the tax liabilities of Shell under the original assessments were considered unpaid; hence, the letters and the actions for collection. When Shell went to the CTA, the issues it raised in its petition were all related to the fact and efficacy of the payments made, specifically the genuineness of the TCCs; the absence of due process in the enforcement of the decision to cancel the TCCs; the facts surrounding the fraud in originally securing the TCCs; and the application of estoppel. These are payment and collection issues, not tax protest issues within the CTAs jurisdiction to rule upon. We note in this regard that Shell never protested the original assessments of its tax liabilities and in fact settled them using the TCCs. These original assessments, therefore, have become final, incontestable, and beyond any subsequent protest proceeding, administrative or judicial, to rule upon.

In light of our conclusion that the present case does not involve a decision of the respondent on a matter brought to him as a tax protest, Atty. Valeras lack of authority to issue the collection letters and to institute the collection suits is irrelevant. For this same reason, the injunction against Atty. Valera cannot be invoked to enjoin the collection of unpaid taxes due from Shell. 

Sec. 2503. Undervaluation and Misdeclaration in Entry. — When the value of the imported articles shall be so declared and entered that the duties, based on the declaration of the importer on the face of the entry, would be less by twenty per centum than should be legally collected, or when the dutiable weight measurement or quantity of imported articles is found upon examination to exceed by ten per centum or more, the entered weight, measurement or quantity, a surcharge may, in the discretion of the Collector be collected from the importer in an amount not less than the difference between the full duty and the duty based upon the declaration of the importer, nor more than five times of such difference: Provided, That in cases where the Collector decides to waive imposition of any surcharge in excess of one hundred pesos in any entry, his action shall be subject to review by the Commissioner.

DOF Sec. v Oro Maura (2009)

Facts - 24 Nov 1992: MARINA authorized import of 1 unit vessel – M/V Haruna

o under a bareboat charter o 5 years from its actual delivery to the charterer o under a bareboat charter

- Original parties wereo Haruna Maritime thru Mr Yoji of Panamao Glory Shipping Lines (the charterer) thru Mr. Guerrero (proprietor/manager)

- 1992: DOF – 1st indorsement – allowed the temporary registration of MV Haruna and its tax and duty-free release to Glory Shipping

o subject to conditions imposed by Marina - BOC required Glory Shipping to post a bond = 150% of the duties

o Conditioned on re-exportation of the vesselo No case to extend beyond the year 1999

- So GSL posted the bond. o Condition: re-export of the vessel within 1 year from Mar 22, 1993

o Condition: in case of default, pay customs duty, tax and charges - 22 Mar 1993: M/V Haruna arrived at the Port of Mactan

o Import Entry No. 120-93 dutiable value = Php6.1m and est. customs duty Php 1.3m

- one year later – GSL’s re-export bond expired. - 2 months after: GSL sent a letter of guarantee to collector guaranteeing re-export bond.

o If not, it’d pay duties and taxes.BUT WHOA WHOA WHOA – GSL NEVER COMPLIED. Collector of Mactan then assessed its customs duties and other charges.

- Demand letters, demand demand demand. - GSL FAILED TO PAY

What the Mactan Port Collector didn’t know: - GSL had already offered to sell the M/V Haruna to the Oro Maura Shipping.

o OM was in the process of applying for Authority to Import the vessel with Marina on 21 Oct 1994:

PEG ACQUISITION COST: Php1.1m - Marina granted the request – peg acquisition cost is reasonable.

Haruna and GSL sold M/V Haruna to Oro Maura WITHOUT informing or notifying the Collector of the Port of Mactan!!!

Kariton and Company representing the respondent inquired with DOF if it could pay the duties and taxes due on the vessel.

- Kariton knew that the vessel was acquired by GSL through a bareboat charter and was previously authorized by the DOF to be released under a re-export bond.

- Letter was referred to the Commish

Kariton filed import entry at the port of Manila on behalf of Oro Maura.

Mactan Port Collector discovered the M/V Haruna had been sold to Oro Maura. - He then sent Oro Maura a demand letter. - OM failed to pay- Collector instituted seizure proceedings against the vessel for violation of Sec. 2530 par 1

subpar 1 to 5 of the TCCP.

In his Sept 1998 Decision, Mactan Port Collector ordered the forfeiture of the vessel in favor of the Gov’t. AFTER DISCOVERING FRAUD!!!!

Cebu District Collector reversed Mactan Port Collector’s decision. - Even if there is fraud in the sale of the vessel, there was no proof the Oro Maura was a party.

DOF Sec sought review with the CA.

Issue: W/N the DOF Sec can order a re-assessment of the M/V Haruna

Held: Yes!

Mactan Port Collector’s Finding: Oro Maura defrauded the BOC of the proper customs duty. Cebu District Collector’s Ruling: no fraud on Oro Maura’s part - Affirmed by Commish, CTA, CA

DOF agrees that ok fine, no fraud. But wanted a reassessment of the dutiable value of the vessel based on the ORIGINAL entered value, without allowance for depreciation.

The CTA and the CA overlooked and misinterpreted factual circumstances that, had they been brought to light and properly considered, would have changed the outcome of the case. There was fraud that deprived the State of the Customs Duties properly due to it.

Four phasesFirst – original tax and duty-free entry of the MV Haruna when GSL filed Import Entry with the Mactan Port Collector.

- Original price was Php5m.- dutiable value of 6m, estimated customs duty 1.3m- allowed on the basis of a 1 year re-entry bond which lapsed and was not renewed.- Demand letters proved ineffective as no customs duties were paid. - Vessel in Phils.

Second – GSL offered to sell the vessel to Oro Maura in Oct 1994- OM applied for authority to import- Proposed acquisition cost: Php1.1m – after only 19 months; 80% drop. - Marina granted the request based on that amount, taking depreciation into account.

Bad faith in between – GSL, instead of paying in accordance with its commitment, simply turned around and disregarded the Mactan Port Collector’s demand letters. Just sold the vessel.

More bad faith – OM KNEW the status of the vessel. It asked for authority to import when the vessel was already in the Phils. It paid the purchase price without even notifying the Mactan Port Collector.

Third – OM asked the DOF if it could pay the duties and taxes on the vessel, KNOWING FULLY WELL the vessels history of entry into the country. The value they declared was Php1.1m – the lower appraisal secured from Marina. Taxes due were assessed to be Php150k.

- Again, after payment of the Php150k, no notice was given in this 3 rd phase to the Mactan Port as the Port that allowed entry of the vessel into the country and which had existing demand letters for customs duties and charges on the vessel.

Fourth – Mactan Port Collector acted after learning of the sale of the vessel to OM. He instituted the seizure proceedings.

Fantastic things that happened: FRAUD! From 5m original price the selling price dropped to 1.1m – an 80% drop in 19 months. From 1.3m customs due Php150k

Why didn’t the lower courts notice this? Because they disregarded the records of the original entry of the vessel through the Mactan Port.

Sec 2503 on Undervaluation of Entry applies in the case. An undervaluation of MORE THAN 30% b/w the value, weight, measurement, qty declared in the entry vs actual value, etc. = prima facie evidence of fraud. CASE AT BAR 80% drop.

OM never explained the glaring disparity to overturn the prima facie finding of fraud. GSL Is in the shipping business – it must have known the standard prices of vessels. Why then did it propose an extraordinarily low price?

Note also: nowhere in the TCCP does it state that the depreciated value of an imported item can be used as basis to determine an imported item’s dutiable value. Note also: Estoppel does not lie against the government or any of its agencies arising from unauthorized or illegal acts of public officers.

Did OM participate? Yes! 4 phases + their acknowledgment to the DOF that MV Haruna conditionally entered the country under a re-export bond. They should have known that this original entry was subject to specific conditions, among them, the obligation to guarantee the re-export of the vessel within a given period, or otherwise to pay the customs duties on the vessel. It should have known of the conditions to pay the customs duties on the vessel. Should have also known the conditions of the

vessels release under the re-export bond and of the state of GSL status of compliance.

Case at bar is an Incomplete Importation because duties had not been paid.

Since there is fraud, Manila Port Collector’s assessment cannot become final and conclusive.

The Php150k payment of OM did not extinguish the lien which was worth Php1.2m (original importation)

Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. — Any vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be subject to forfeiture:

a. Any vessel or aircraft, including cargo, which shall be used lawfully in the importation or exportation of articles into or from any Philippine port or place except a port of entry; and any vessel which, being of less than thirty tons capacity shall be used in the importation of articles into any Philippine port or place except into a port of the Sulu sea where importation in such vessel may be authorized by the Commissioner, with the approval of the department head.

b. Any vessel engaging in the coastwise trade which shall have on board any article of foreign growth, product or manufacture in excess of the amount necessary for sea stores, without such article having been properly entered or legally imported.

c. Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to the arrival of the importing vessel or aircraft at her port of destination.

d. Any part of the cargo of a vessel or aircraft arriving from a foreign port which is unladen before arrival at the vessel's or aircraft's port of destination and without authority from the proper customs official; but such cargo shall not be forfeited if such unlading was due to accident, stress of weather or other necessity and is subsequently approved by the Collector.

e. Any article which is fraudulently concealed in or removed from any public or private warehouse under customs supervision.

f. Any article of prohibited importation or exportation, the importation or exportation of which is effected or attempted contrary to law, and all other articles which, in the opinion of the Collector, have been used, are or were intended to be used as instrument in the importation or exportation of the former.

g. Unmanifested article found on any vessel or aircraft, if manifest therefor is required.

h. Sea stores or stores for aircraft adjudged by the Collector to be excessive, when the duties assessed by the Collector thereon are not paid or secured forthwith upon assessment of the same.

i. Any package of imported article which is found by the examining official to contain any article not specified in the invoice or entry, including all other packages purportedly containing imported articles similar to those declared in the invoice or entry to be the contents of the misdeclared package, provided the Collector is of the opinion that the misdeclaration was caused with fraudulent intent.

j. Boxes, cases, trunks, envelopes and other containers of whatever character used as receptacles or as devices to conceal article which is itself subject to forfeiture under the customs and tariff laws or which is so designed as to conceal the character of such article.

k. Any beast actually being used for the conveyance of article subject to forfeiture under the customs and tariff laws with its equipage or trappings, and any vehicles similarly used, together with its equipage and appurtenances, including the beast, team or other motive power drawing or propelling

the same; but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid or his agent in charge thereof at the time, has no knowledge of the unlawful act.

l. Any money or thing of value offered as a bribe or for the purpose of exerting improper influence over a customs official or employee.

m. Any article sought to be imported or exported: (1) Without going through a customhouse, whether the act was consummated, frustrated or attempted; (2) By failure to mention to a customs official, articles found in the baggage of a person arriving from abroad. (3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article.

(4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article.

(5) Through any other fraudulent practice or device by means of which such articles was entered through a customhouse to the prejudice of the government.

RP v CTA and AGFHA (2001)

12 Dec 1992: a shipment of bales of textile gray cloth arrived at the Manila Port on board S/S ACX Daisy.

- Shipping agent FIL-JAPAN- Accdg to the Inward Foreign Manifest: Consigned to GQ Garments. - Accdg to the Clean Report Findings: Consigned to AGFHA

FIL-JAPAN sought to correct the name by amending the IFM. The amended IFM (GQ to AGFHA) was submitted to the Manila Port. The Manila Port indorsed it to Customs Intel, which placed the shipment under Hold Order.

- Ground: GQ was a fictitious firm. - Action: forfeiture proceedings

AGFHA Inc filed a motion for intervention contending that AGFHA is the lawful owner and actual consignee of the subject shipment. A draft decision ordering the lifting of the hold order/seizure and detention warrant of the shipment was made by the Customs Collector. Deputy commish rejected the draft decision.

Ruling of Customs Collector: Don’t release the goods! Suspicious that it took more than a month before the alleged error in the consignee was discovered. Plus other suspicious things.

District Collector of Customs ordered forfeiture of the shipment. - AGFHA appealed but the same was dismissed.

AGFHA filed PetRev with the CTA questioning the forfeiture of the bales of textile cloth. - CTA granted the petition and ordered the release of the goods to AGFHA.

Commish challenged the CTA ruling in the CA.

CA dismissed the appeal for lack of merit. BoC has failed to satisfy its burden of proving fraud on the part of the importer or consignee.

Sec. 2530(f) and (1) 3-5 of the TCCP prove that in order that a shipment be liable to forfeiture, it must

be proved that fraud has been committed by the Importer/Consignee to evade payment of the duties due. To establish the existence of fraud, the burden of proof is on the part of the BoC who ordered the forfeiture of the subject shipments. BoC findings do not reveal any kind of deception.

CA assigned the error (GQ instead of AGFHA) to FIL-JAPAN.

BoC instituted PetRev for CA’s decision.

Requisites for forfeiture of goods under Sec 2530(f) in relation to (1) (3-5) of the TCCP are:(a) (1) wrongful making by the owner, importer, exporter, consignee of any declaration or

affidavit or (2) wrongful making or delivery by the same person of any invoice, letter or paper – all touching on the importation or exportation of merchandise

(b) falsity of such declaration, affidavit, invoice, letter or paper and(c) intention on the part of the importer/consignee to evade payment of the duties due

ISSUE: w/n there was fraud in this case

HELD: Commish asserts that all of these requisites are present in this case. It contends that it did not presume fraud, rather the events positively point to the existence of fraud. AGFHA, Inc., on the other hand, maintains that there has only been an inadvertent error and not an intentional wrongful declaration by the shipper to evade payment of any tax due.

The resolution of this issue would entail a reevaluation of the attendant circumstances, a matter that cannot be freely undertaken by this Tribunal. It has been a settled rule that the Supreme Court is not a trier of facts. Findings of the appellate court are generally binding and cannot be disturbed by this Court unless it is sufficiently shown that there has been no evidence on record to support such findings.

The assessment made by the appellate court carry even more weight when it is consistent with that of the trial court. Consonantly, the factual determination of the Court of Tax Appeals, when supported by substantial evidence, will not be reversed on appeal unless it is clear that the said court has committed gross error in the process. The Collector of Customs, Court of Tax Appeals and the Court of Appeals are unanimous in concluding that no fraud has been committed by private respondent in the importation of the bales of cloth. The records do appear to sustain this conclusion.

Fraud must be proved to justify forfeiture. It must be actual, amounting to intentional wrong-doing with the clear purpose of avoiding the tax. Forfeiture is not favored in law nor in equity. Mere negligence is not equivalent to the fraud contemplated by law. What is here involved is an honest mistake, not even directly attributable to private respondent, which will not deprive the government of its right to collect the proper tax. The conclusion of the appellate court, being consistent with the evidence on record and not contrary to law and jurisprudence, hardly can be overturned by this Court.

El Greco Ship Manning v Commish of Customs (2008)

Facts- 23 Sept 2001: M/V Criston docked at the Port of Albay. Operated by Glucer Shipping.

o 35k bags of imported riceo consigned to Chua and Carilloo payable upon delivery

- BOC Commish ordered issuance of a warrant of seizure and detention.o Left manila without necessary clearance from Coast Guard.

- Later, another warrant of seizure was issued to include the vessel M/V Criston. - Chua and Carillo filed before the RTC a petition for prohibition with TRO assailing authority of

District Collectors to issue such warrants. o TRO granted upon filing of bond.

o After bond was filed, the 35k bags of rice were released. - Seizure hearing was set but vessel operator Glucer failed to appear. - Meanwhile: M/V Criston was berthing at the Albay Port, under the custody of the BoC.

o There was a typhoon so they allowed the ship to be transferred to seek temporary shelter.

o After the typhoon, vessel nowhere to be found. o Eventually, it was spotted in Bataan with a new name: Neptune Breeze.

Seized again! Violating Sec 2530 (a), (f), (k)- El Greco (authorized local agent of Neptune Breeze) filed with the Manila District Collector a

Motion for Intervention and MTQ of Seizure Detention.o Claim: M/V Neptune Breeze was different from the M/V Criston. o Collector granted the motion for lack of PC that Neptune was the same as Criston.

- Auto review by BoC Commish: Reverse collectoor’s order. Ordered forfeiture of the M/V Neptune Breeze.

Issue: W/N M/V Criston is the same as M/V Neptune Breeze.

HELD: It is, as found by the CTA En Banc. There is overwhelming evidence to prove. Same serial number of engines and generators. Glucer didn’t appear – strange considering they were about to lose property of enormous value.

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.

Issue: W/N forfeiture order over the M/V Neptune Breeze is valid

Note: 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.

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.

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 and shall be punished with:

"1. A fine of not less than fifty pesos 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 the Tariff and Customs 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 the Tariff and Customs 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 the Tariff and Customs 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 the Tariff and Customs 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 proceeding 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.

"When, upon trial for a 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.

Remigio v SB (2002)

Facts- 15 Aug 1988: HK to MNL; S/S Norsund – shipment of one 40-foot container van

o consigned to borham tradingo 25 mt of sodium bicarbonate = 25k kgs

- Remigio was a customs broker. o He filed with the Manila Port Collector an IEIRD covering the shipment.

- Sevilla, a customs examiner conducted an examination of the van on the same day.o 1000 bags of 25kg sodium bicarb.

o Reco: subject to PCCI clearance and magna scale weighing.- PCCI clearance was granted. Sevilla forwarded the IEIRD papers to the Customs Principal

Examiner forwarded to appraisers group.- Imported paid 23k in duties.- 3pm same day: Customs Collector allowed container van to leave customs area to be

delivered to Borham Trading. o BUT BENJIE KHO OF THE SPECIAL OPS GROUP INTERCEPTED THE VAN AND

BROUGHT IT TO CAMP AGUINALDO. - SETTING: CAMP AGUI: FINDINGS

o Only 185 bags sodium bicarb. The rest were random shit. JOGGING PANTS to TIRES. o Then they figured out that Borham Trading was non-existent!!!

- Infos were then filed against customs examiner and customs broker Remigio for violation of Sec 3604 (d) and (e) and Sec 3602 in relation Sec 3601 (4) TCCP.

o Felonious entrees of the imported shipment in the Import Entry. False examination.o Assessment made: 23k. Correct assessment: 1.6M!!!!

SB Ruling: Remigio Guilty. But liable also under 3407 – any person who files an entry shall be liable for SMUGGLING if ostensible owner… is fictitious and shipment is found to be unlawful. If violator is a customs broker, his license shall also be revoked.

Issue: w/n Remigio was guilty of 3602 wrt 3601 tccp

SB is partially wrong because Sec. 3407 did not exist during the time of shipment. Ahahaha. Only introduced in 1993. Note: no retro effect.

Sec. 3602. Various fraudulent practices against customs revenue.- Any person who

(1) 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, - by any means of any false or fraudulent practice whatsoever, or knowingly effects any entry

of goods, wares or merchandise, o at less than true weight or measures thereof or o upon a false classification as to quality or value, or

- by the payment of less than the amount legally due, or

(2) knowingly and willfully - files any false or fraudulent entry or claim for the payment of drawback or refund of duties

upon 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 willful act or omission,

shall, for each offense, be punished in accordance with the penalties prescribed in the preceding section.

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.

Petitioner Remigio did not make or attempt to make an entry of imported articles by means of any false or fraudulent invoice, declaration, affidavit, letter, paper, or by means of any false statement, verbal or oral, or by means of any false or fraudulent practice whatsoever. In fact, it was the given address of the consignee Borham Trading that the Sandiganbayan found to be fictitious

In the instant case, there is no evidence to show that the owner, importer or consignee in question, BORHAM TRADING is fictitious. The only evidence introduced was the report of an investigator that the address of the consignee appearing in the entry, the bill of lading and the packing list cannot be located. The investigator himself testified that Borham Trading was registered with the Bureau of Domestic Trade; that a Letter of Credit covering the shipment was opened with the Metropolitan Bank and the shipping documents, i.e., the bill of lading, the packing list were all in the name of Borham Trading at its given address. (as contemplated by 3407’s last par)

While the investigator testified that at the time of the investigation the address of Borham Trading could not be located at Harvard Street, Quezon City, the investigator did not bother to check whether there was any change in the numbers of the buildings at Harvard Street.Accused Erwin C. Remigio, as customs broker, prepared the entry covering the shipment based on the bill of lading, the invoice, the packing list, letter of credit, the import entry declaration and the Central Bank Release Certificate. The given address of Borham Trading was at 37 Harvard Street, Quezon City. There was nothing in the documents to show that there was anything amiss in the shipment or the covering documents. A customs broker is not required to go beyond the documents presented to him in filing an entry on the basis of such documents.

Accused Remigio did not fraudulently assist in the importation of any article contrary to law nor facilitated its transportation, knowing the same to have been imported contrary to law. All accused Remigio did was to prepare the import entry based on the shipping and other documents required by the Bureau of Customs and file the same. – Fraud must be actual, not constructive.

The liability for smuggling is provided in Section 3601, which in the instant case has not been proved.

Rimorin v People (2003)

FactsAs per OSG

- 12 Oct 1979: Metrocom Intel/Sec Group received info that syndicates were engaged in smuggling activities somewhere in Port Area, manila.

o Stake out time! Watch out a for a specific cargo truck bound for malabon, registered in the name of Teresita Estacio.

- A cargo truck was intercepted. There was also a car chase because a Toyota following the truck made a sharp U-Trun!

o Truck: 305 cases of blue seal/UNTAXED CIGS. :/ o Car: firearms … and Sergeants without mission orders.

As per Rimorin – accused policeman- R was assigned at Manila Int’l Airport. - He met a man named Leonardo aka Boy who asked him for assistance occasionally.

o They gave each other rice. Nghh. - One day, Boy came and requested that he accompany him to Divi to haul household fixtures.

o R met Boy’s friends, some of whom were policemen. o R also found it strange that the route it was taking was not going to Divi and they

made a stop for random loading of goods. - and then Boy decided to not go to Divi that day. - Then the Metrocom checkpoint/stake out.

- Rimorin claims that he did not see the Metrocom men open their truck. They were hauled later to Camp Crame. There he asked: Whats this? But a certain Barrameda, while pointing to a truck different from what they used, told them thats the reason why youll be jailed. So he thought they were being framed up. It was only two to three days later that he saw the alleged smuggled cigarettes

at the office of the MISG when it was presented by the investigator. They were not present when these alleged smuggled cigarettes were taken from the truck they rode in.

Issue 1: w/n necessary to present seized goods to prove corpus delicti.

Held 1: no. to prove corpus delicti, it is sufficient for prosecution to be able to show that (1) a certain fact has been prove – say a person has died or a building has been burned and (2) a particular person is criminally responsible for the act.

Even a single witness’ uncorroborated testimony, if credible, may suffice to prove it and warrant a conviction therefore. Even circumstantial evidence is ok. Plus the testimonies given by the public officers are given credence, especially since there is a presumption of regularity.

Issue 2: W/N Rimorin knew cargo being transpo’d was illegal

Held 2:

3601: When, upon trial for a violation of this section, the defendant is shown to have or 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.

The prosecution competently established that (1) the 305 cases of untaxed blue seal cigarettes discovered inside the cargo truck were fraudulently imported; and (2) petitioner was in control of the truck when it transported the cargo on October 15, 1979. Petitioner was unable to satisfactorily explain his possession of the untaxed cigarettes, which the MISG agents seized from him and his co-accused. Rather, he feigns ignorance of the true nature of the cargo, a claim which the RTC and the CA found incredible:Now on the explanations of Police Sgt. Rimorin of Pasay City Police Force and Pat. Rieta of Kawit Police Force, riders in the loaded cargo truck driven by Boy. Their claim that they did not have any knowledge about the cargo of blue seal cigarettes is

not given credence by the court. They tried to show lack of knowledge by claiming that along the way, Boy and Gonzalo Vargas left them behind at a certain point for snacks and picked them up later after the cargo had been loaded. The Court cannot see its way through how two policemen, joining Boy in the dead of the night, explicitly to give him and his goods some protection, which service would be paid, yet would not know what they are out to protect. And neither could the Court see reason in Boys leaving them behind when he was going to pick up and load the blue seal cigarettes. Boy knew the risks. He wanted them for protection, so why will he discard them? How so unnatural and so contrary to reason.Issue 3: W/n in the sale of the seized cargo, notice to Rimorin was required

Held 3: No.

Rieta v People (2004)

Facts:OSG – same facts as previous case.

Rieta’s Story:- Rieta was a policeman in Kawit. - Rieta met Boy after Boy figured in an accident. - Boy would visit Rieta at the station. He learned Boy was a bizman hauling slippers, fish and

veggies from Divi to Cavite.- Sometimes, Rieta would accompany him on biz trips. - 15 Oct 1979: one particular biz trip.

o Went to cartimar on a jeep. o Boy left him at a gas station because Boy will get the cargo truck they’ll use.o When he returned, boy had companions, including Rimoroin. o They were on their way to Divi when he let Boy know that he was very hungry.o So boy dropped him and rimorin off at a small resto. o Boy said he’d come back for them after going to the Port Area.

The Metrocom soldiers did not find anything from their bodies. Thereafter, they (Rieta, Rimorin and Gonzalo) were ordered by the Metrocom soldiers to transfer to a jeep. While they were aboard the jeep, he overheard from the Metrocom soldiers that their driver was able to escape. Likewise, they were also informed by the Metrocom soldiers that the cargo truck was loaded with blue seal cigarettes. The cargo truck was not opened in their presence, nor were the contents thereof shown to them upon their apprehension. From the time he boarded the cargo truck in Cartimar until he and Sgt. Rimorin alighted to take their snacks, up to the time they were apprehended by the Metrocom soldiers, he had not seen a pack of

blue cigarette in the cargo truck. He did not notice whether the Metrocom soldiers opened the cargo truck. At Camp Crame, he was investigated without the benefit of counsel, but, nonetheless, he executed and signed a statement because as far as he was concerned he has done nothing wrong. He was detained at Bicutan for more than a year.

There is no merit, either, in the claim of petitioner that the prosecution failed to prove the nonpayment of the taxes and duties on the confiscated cigarettes. There is an exception to the general rule requiring the prosecution to prove a criminal charge predicated on a negative allegation, or a negative averment constituting an essential element of a crime. In People v. Julian-Fernandez, we held:"Where the negative of an issue does not permit of direct proof, or where the facts are more immediately within the knowledge of the accused, the onus probandi rests upon him. Stated otherwise, it is not incumbent upon the prosecution to adduce positive evidence to support a negative averment the truth of which is fairly indicated by established circumstances and which, if untrue, could readily be disproved by the production of documents or other evidence within the defendant's knowledge or control. For example, where a charge is made that a defendant carried on a certain business without a license x x x, the fact that he has a license is a matter which is peculiar[ly] within his knowledge and he must establish that fact or suffer conviction."28(Emphasis supplied)The truth of the negative averment that the duties and specific taxes on the cigarettes were not paid to the proper authorities is fairly indicated by the following circumstances that have been established: (1) the cargo truck, which carried the contraband cigarettes and some passengers including petitioner, immediately came from the 2nd COSAC Detachment; (2) the truck was intercepted at the unholy hour of 4:00 a.m.; (3) it fitted the undisclosed informer's earlier description of it as one that was carrying contraband; and (4) the driver ran away. Hence, it was up to petitioner to disprove these damning circumstances, simply by presenting the receipts showing payment of the taxes. But he did not do so; all that he could offer was his bare and self-serving denial.