G.R. No. 208318, June 30, 2021
THE COMMISSIONER OF CUSTOMS AND THE UNDERSECRETARY OF THE DEPARTMENT OF FINANCE, PETITIONERS, VS. GOLD MARK SEA CARRIERS, INC., AS THE REGISTERED OWNER OF THE BARGE “CHERYL ANN,” RESPONDENT.

FACTS

OSM Shipping Phils., Inc. (OSM) entered into a Tow Hire Agreement with Fuel Zone Filipinas Corporation (Fuel Zone) for the barge “Cheryl Ann,” which was chartered by Fuel Zone from its registered owner, respondent Gold Mark Sea Carriers, Inc. (Gold Mark). The barge contained used oil for discharge in Manila. On August 23, 2006, OSM’s tugboat M/T Jacob 1 towed the barge from Palau to the Port of Surigao for an emergency stop due to low fuel, food provisions, and a mechanical problem. Although granted clearance to depart for repairs, the Philippine Coast Guard detained M/T Jacob 1 and the barge upon the District Collector’s request because the barge carried used oil without the required import permit. A Warrant of Seizure and Detention was issued against the barge and cargo, and a Supplemental Warrant was issued against the tugboat for violation of the Tariff and Customs Code. During seizure proceedings, only OSM participated; Gold Mark did not. The District Collector initially ordered the release of both vessels. However, the Customs Commissioner, affirmed by the Department of Finance Undersecretary, recommended the forfeiture of the barge, finding prima facie evidence of illegal importation as Gold Mark failed to rebut the violation. Gold Mark filed a petition with the Court of Tax Appeals (CTA)-Third Division, which ordered the barge’s release, applying the principle that the accessory (barge) follows the principal (tugboat) and noting the barge was a common carrier exempt from forfeiture. The CTA En Banc affirmed. The government petitioned, arguing the barge was used for illegal importation, the “accessory follows principal” principle was inapplicable, and the violation of environmental laws (Republic Act No. 6969) warranted forfeiture.

ISSUE

Did the Court of Tax Appeals En Banc commit reversible error when it declared that the barge “Cheryl Ann” was not involved in illegal importation?

RULING

Yes. The Supreme Court reversed the CTA En Banc. It held that importation begins when a vessel enters Philippine jurisdiction with the intent to unlade, and intent can be inferred from facts and circumstances. The evidence, including the Tow Hire Agreement and a MARINA special permit indicating Manila as the destination, clearly established the intent to unload the used oil in the Philippines without the required permit, constituting illegal importation. Gold Mark’s failure to participate in the seizure proceedings left the prima facie evidence unrebutted. The principle “the accessory follows the principal” was misapplied; the barge and tugboat had separate obligations, and the barge, carrying the prohibited cargo, was central to the violation. The Court also found the CTA En Banc disregarded relevant evidence that would have altered the outcome. Consequently, the forfeiture of the barge under Section 2530 of the Tariff and Customs Code was proper. The Court reinstated the orders for the seizure and forfeiture of the barge “Cheryl Ann.”