G.R. No. 119322 - Commissioner of Internal Revenue vs. Court of Appeals

OSM Shipping Phils., Inc. (OSM) entered into a Tow Hire Agreement with Fuel Zone Filipinas Corporation to tow the barge “Cheryl Ann,” loaded with used oil, from Palau for discharge in Manila.
Fuel Zone chartered the barge from Gold Mark Sea Carriers, Inc. (Gold Mark), the registered owner.

On August 23, 2006, M/T Jacob 1 towed the barge to the Port of Surigao for emergency bunkering and mechanical repair. Necessary clearances to depart were initially granted by immigration and quarantine authorities.
The Philippine Coast Guard, at the District Collector’s request, detained both vessels for carrying used oil without an import permit. Warrant of Seizure and Detention S.I. No. 01-2006 was issued for the barge and its cargo; S.I. No. 01-2006-A for the tugboat.

OSM participated in the forfeiture proceedings, Gold Mark did not. On December 18, 2006, the District Collector dismissed the warrants and ordered release of both vessels, subject to Commissioner approval.
On April 13, 2007, Commissioner Napoleon L. Morales modified the order, recommending forfeiture of the barge for prima facie violation of Section 2530, Tariff and Customs Code (TCCP). The Department of Finance and Commissioner of Customs issued successive indorsements directing forfeiture.

Gold Mark filed a petition for review with CTA Third Division (CTA Case No. 7671). On February 17, 2011, CTA Third Division granted it relief, ordering the barge released for lack of evidence of intent to defraud or illegally import. Government’s motion for reconsideration was denied on August 23, 2011.
On appeal, CTA En Banc (Decision December 20, 2012; Resolution June 17, 2013) affirmed, holding the barge was a common carrier accessory to the tugboat, thus exempt from forfeiture under Section 2530(a). Government’s petition for reconsideration was denied.

The Commissioner of Customs and Undersecretary of Finance petitioned before the Supreme Court, contesting CTA En Banc’s ruling and asserting Gold Mark failed to rebut prima facie evidence of illegal importation and was not exempt as a chartered vessel.
A temporary restraining order was issued on Supreme Court Resolution August 14, 2013; respondent failed to file a comment.

Whether the CTA En Banc committed reversible error by declaring that the barge “Cheryl Ann” was not involved in illegal importation and was exempt from forfeiture.