G.R. No. 160206 July 15, 2015
M/V “DON MARTIN” VOY 047 AND ITS CARGOES OF 6,500 SACKS OF IMPORTED RICE, PALACIO SHIPPING, INC., AND LEOPOLDO “JUNIOR” PAMULAKLAKIN, Petitioners, vs. HON. SECRETARY OF FINANCE, BUREAU OF CUSTOMS, AND THE DISTRICT COLLECTOR OF CAGAYAN DE ORO CITY, Respondents.

FACTS

Petitioner Palacio Shipping, Inc. owned the M/V Don Martin, a vessel engaged in coastwise trade. On January 25, 1999, it docked at Cagayan de Oro City carrying 6,500 sacks of rice consigned to petitioner Leopoldo “Junior” Pamulaklakin. Based on an intelligence report that the rice was smuggled, the Economic Intelligence and Investigation Bureau and Bureau of Customs seized the vessel and cargo. The District Collector of Customs issued a warrant of seizure and detention. The petitioners claimed the rice was locally produced and submitted documents including a Certificate of Ownership, Coastwise License, receipts, and NFA clearances. The District Collector ruled the rice was of foreign origin based on laboratory analysis showing grain length longer than typical Philippine varieties and ordered its forfeiture under the Tariff and Customs Code. The vessel was ordered released due to insufficient evidence for its forfeiture. The BOC Deputy Commissioner affirmed the rice forfeiture. The Secretary of Finance, on automatic review, reversed the vessel’s release, finding the vessel operator was the shipper of the smuggled goods. The petitioners filed a petition for review in the Court of Tax Appeals (CTA), which reversed the respondents’ decisions and ordered the release of the surety bonds posted for the vessel and cargo. The respondents appealed to the Court of Appeals (CA), arguing the CTA lacked jurisdiction over the rice forfeiture issue as the appeal to the CTA was limited to the vessel’s forfeiture. The CA reversed the CTA, reinstating the forfeiture of both the rice and the vessel. The petitioners sought review by the Supreme Court.

ISSUE

Whether the Court of Tax Appeals had jurisdiction to review the forfeiture of the 6,500 sacks of rice.

RULING

No. The Supreme Court affirmed the decision of the Court of Appeals. The Court held that the CTA did not acquire jurisdiction over the forfeiture of the rice cargo. The petitioners’ appeal to the CTA was specifically directed against the 3rd Indorsement of the Secretary of Finance dated May 11, 1999, which pertained only to the forfeiture of the carrying vessel. The decision of the BOC Deputy Commissioner dated April 19, 1999, which affirmed the forfeiture of the rice, had already become final and executory because the petitioners did not appeal it to the CTA within the 30-day reglementary period. Consequently, the CTA’s decision reversing the forfeiture of the rice was void for lack of jurisdiction. The Court further ruled that the rice, being of foreign origin without evidence of lawful entry, was correctly forfeited under Section 2530 of the Tariff and Customs Code. The vessel was also correctly forfeited because it was used unlawfully in the importation of prohibited articles (smuggled rice), and the owner failed to prove the lack of knowledge or negligence required under Section 2531 of the Code to prevent forfeiture.