Commissioner of Customs vs. Gold Mark Sea Carriers, Inc.

A vessel chartered or leased to transport contraband is subject to forfeiture under Section 2530 of the Tariff and Customs Code notwithstanding its status as a common carrier, because the exemption for common carriers from forfeiture applies only to vessels that are neither chartered nor leased, without distinction as to the type of charter agreement.

OSM Shipping Phils., Inc. entered into a Tow Hire Agreement with Fuel Zone Filipinas Corporation to transport used oil on the barge "Cheryl Ann" from Palau for discharge in Manila. Fuel Zone had chartered the barge from its registered owner, Gold Mark Sea Carriers, Inc. On August 23, 2006, while being towed by OSM's M/T Jacob 1, the vessels stopped at the Port of Surigao for emergency repairs and provisions. The Philippine Coast Guard detained both vessels upon discovery that the barge contained used oil without the required importation permit from the Department of Environment and Natural Resources.

• The Towing Arrangement: OSM Shipping Phils., Inc. agreed to tow a barge containing used oil from Palau to Manila for Fuel Zone Filipinas Corporation. The barge "Cheryl Ann" was chartered by Fuel Zone from Gold Mark Sea Carriers, Inc., the registered owner.
• The Stop at Surigao: On August 23, 2006, while being towed by OSM's M/T Jacob 1, the vessels stopped at the Port of Surigao for emergency bunkering, allegedly due to low fuel and food provisions and mechanical problems. OSM obtained clearance from the Surigao City Immigration Officer, Bureau of Quarantine, and other agencies to depart for Manila or Cebu for repairs.
• Seizure: The Philippine Coast Guard detained both the tugboat and the barge upon the request of the District Collector of the Port of Surigao, based on a report that the barge contained prohibited used oil cargo without the required importation permit. A Warrant of Seizure and Detention was issued against the barge and cargo, and a Supplemental Warrant was issued against M/T Jacob 1 for violation of Section 2530 of the TCCP.
• Seizure Proceedings: During the proceedings, the parties agreed that the cases against the tugboat and barge would proceed separately. Only OSM participated in the proceedings; Gold Mark did not participate despite notice.
• Administrative Rulings: The District Collector initially dismissed the warrants and ordered release of the vessels. However, the Commissioner of Customs reversed this and recommended forfeiture of the barge, finding prima facie evidence of illegal importation. The Department of Finance affirmed this recommendation.
• CTA Proceedings: The CTA Third Division granted Gold Mark's petition for review, ordering the barge's release on the ground that it was merely an accessory to the principal tugboat and that no illegal importation was proven. The CTA En Banc affirmed, additionally ruling that the barge remained a common carrier exempt from forfeiture under Section 2530(a) of the TCCP and that the government's invocation of Republic Act No. 6969 came too late.

• Illegal Importation: The government maintained that Gold Mark failed to rebut the prima facie evidence of illegal importation, having presented no controverting evidence during the forfeiture proceedings showing the necessary permits to import used oil. The Charter Agreement and MARINA special permit both indicated Manila as the destination, proving intent to unload in the Philippines.
• Accessory Follows Principal Inapplicable: Petitioner argued that the principle "accessory follows the principal" does not apply because the tugboat and barge had separate obligations under their respective agreements; if anything, the barge was the principal as it carried the higher-valued property.
• RA 6969 Violation: The government contended that Gold Mark knew of the violation of Republic Act No. 6969 (Toxic Substances and Nuclear Wastes Control Act), as evidenced by OSM's payment of a fine to the Pollution Adjudication Board, and thus could not claim ignorance or fault the government for raising this theory belatedly.

• Lack of Intent: Gold Mark argued that the barge was merely an accessory to the principal tugboat and that there was no evidence of intent to defraud the government or commit illegal importation. The barge was forced to enter Surigao only because the tugboat needed emergency repairs.
• Common Carrier Exemption: Respondent maintained that the barge remained a common carrier despite the Charter Agreement, and that time or voyage charters do not convert a common carrier into a private carrier, thus exempting it from forfeiture under Section 2530(a) of the TCCP.
• Belated Theory: Gold Mark argued that the government's theory regarding the malum prohibitum character of the offense under RA 6969 was raised for the first time only on motion for reconsideration and was therefore barred.

• Forfeiture of Chartered Vessel: Whether the CTA En Banc committed reversible error in declaring that the barge "Cheryl Ann" was not involved in illegal importation and was exempt from forfeiture.
• Applicability of RA 6969: Whether the government was barred from raising the violation of Republic Act No. 6969 as a basis for forfeiture.

• Forfeiture of Chartered Vessel: The CTA En Banc committed reversible error. The barge was subject to forfeiture under Section 2530(a) and (k) of the TCCP because it was used in the illegal importation of used oil. The Charter Agreement and MARINA permit established that the cargo was destined for discharge in the Philippines, constituting intent to import without the required permits. The exemption under Section 2530(a) for common carriers applies only to vessels that are neither chartered nor leased; the law makes no distinction between types of charter agreements. Having been leased to transport the undocumented cargo, the barge lost its exempt status.
• Applicability of RA 6969: The government was barred from raising the malum prohibitum character of the offense under RA 6969 for the first time on motion for reconsideration, as a party cannot change its theory of the case or cause of action at that stage.

• Commencement of Importation: Importation begins when the carrying vessel enters the jurisdiction of the Philippines with intention to unlade therein, and is deemed terminated only upon payment of duties and legal permit for withdrawal. Mere intent to unload consummates importation.
• Inference of Intent: Intent to import, being a state of mind, is rarely susceptible of direct proof and must ordinarily be inferred from the facts, unguarded expressions, conduct, and attendant circumstances.
• Forfeiture of Chartered Common Carriers: Under Section 2530(a) and (k) of the TCCP, a vessel used in the unlawful importation of articles is subject to forfeiture. The exemption for common carriers applies only if the vessel is not chartered or leased, without distinction as to the type of charter agreement (time or voyage).
• Substantial Evidence in Forfeiture: Forfeiture proceedings require merely substantial evidence—such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
• Belated Theories: A party cannot change its theory of the case or cause of action on appeal or motion for reconsideration; judgments that adjudicate matters not heard by the parties are irregular and extrajudicial.

• "Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein."
• "Thus, mere intent to unload into the Philippines consummates importation."
• "Intent, being a state of mind, is rarely susceptible of direct proof, but must ordinarily be inferred from the facts, and therefore, can only be proved by unguarded expressions, conduct, and attendant circumstances."
• "When the law does not distinguish, neither should the court."
• "So long as the vessel is leased or chartered, it is no longer exempt from forfeiture under Section 2530(a) and (k)."

• Feeder International Line, Pte., Ltd. v. Court of Appeals, 274 Phil. 1143 (1991) — Established the standard of substantial evidence in forfeiture proceedings and the rule that intent must be inferred from attendant circumstances.
• Commissioner of Internal Revenue v. Philex Mining Corp., G.R. No. 230016, November 23, 2020 — CTA factual findings are generally final and binding unless the CTA disregarded relevant facts that would alter the outcome.
• 7107 Islands Shipping Corp. v. Secretary of Finance, G.R. No. 215051, September 30, 2020 — Importation begins when the carrying vessel enters jurisdiction with intention to unlade.
• Saint Louis University, Inc. v. Olairez, G.R. No. 197126, January 19, 2021 — When the law does not distinguish, courts should not distinguish.
• Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, 535 Phil. 481 (2006) — A party cannot change its theory of the case on appeal or motion for reconsideration.

• Section 1202, Tariff and Customs Code of the Philippines (TCCP) — Defines when importation begins (when carrying vessel enters jurisdiction with intention to unlade) and when it is deemed terminated.
• Section 2530(a) and (k), TCCP — Provides for the forfeiture of vessels used in unlawful importation and exempts common carriers only if they are not chartered or leased.
• Republic Act No. 6969 — The Toxic Substances and Nuclear Wastes Control Act of 1990; invoked belatedly by the government and not applied.

M. Lopez, Rosario, J. Lopez, and Perlas-Bernabe (who wrote a separate concurring opinion).