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Jun 25, 2008

G.R. No. 135253, Dec. 9, 2004

  • When importation of goods is legally terminated


On November 5, 1993, respondent Milwaukee Industries Corporation (Milwaukee) obtained a commercial letter of credit from FEBTC for the importation of 11,985 pieces of secondary steel billets. The shipment arrived in the Philippines on February 1, 1994 and a supervisor from Milwaukee’s customs broker, Schmitz Transport and Brokerage Corporation, presented to the customs inspector a Permit to Discharge Shipside. Pursuant to this, the customs inspector authorized the discharge of the cargo, but ordered that the same be “under continuous guarding.”

Later, it was found that the shipment was transported without an Import Entry having been filed and without payment of the duties and taxes due thereon. The District Collector of Customs of the Port of Manila thus issued a warrant of seizure and detention. Prior to the return of the warrant, Alfredo Gloria, Milwaukee’s consultant, sent a letter to the Commissioner of Customs, attaching therewith the required Import Entry document covering the shipment and two checks, representing full payment of duties and taxes due, which checks were accepted.

Notwithstanding the BOC’s acceptance of respondent’s full payment of duties and taxes, District Collector still proceeded with the seizure and forfeiture proceedings, eventually issuing an order declaring the shipment “forfeited in favor of the Government….”

The Commissioner of Customs affirmed the decision. CTA ruled otherwise. Hence, this appeal.


  • Whether or not the shipment was released to respondent from the custody of the Customs authorities and not merely transferred to respondent’s warehouse
  • Whether or not respondent failed to comply with the customs requirements to justify seizure and forfeiture of the shipment


The Supreme Court found that the transfer of the shipment was by virtue of the Boat Notes issued by Customs Inspector Jimmy Pastoriza. He made a specific instruction in the Boat Notes that the shipment should be “under continuous guarding” by the Customs guard “until released by the Customs authorities,” obviously because the customs duties and taxes due thereon have not yet been paid. Clearly, the physical and legal custody over the shipment remained with the Customs authorities.

The order of release of the shipment came about only after Alfredo Gloria presented to petitioner the import entry document covering the shipment and the two checks as full payment of the duties and taxes due thereon. The payment was duly accepted by the Bureau. Hence, this legally terminated the importation of goods or articles as provided under Sec. 1202, TCC.


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