cta_decision CTA Case No. 1112311123 2026-07-23

Magic Glow Liquid Solutions Inc. Represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio Bureau of Customs

CTA Form No. 8 111111111111 1111111111 1111111111111111111111111111111111111111 111111111111111111 23-000132-0059 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE NO. 11123 MAGIC GLOW LIQUID SOLUTIONS INC., represented by: NEIL IAN D. PARENTELA, Petitioner, - versus - NOTICE OF DECISION COMMISSIONER BIENVENIDO Y. RUBIO, BUREAU OF CUSTOMS, Respondent. To: SOLICITOR GENERAL MENARDO I. GUEVARRA ASST. SOL. GEN. NYRIAM SUSAN 0. SEDILLO-HERNANDEZ SENIOR STATE SOLICITOR JOSE ANTONIO H. BLANCO OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legazpi Village, Makati City HON. BIENVENIDO Y. RUBIO Commissioner of Customs Office of the Commissioner BUREAU OF CUSTOMS G/F, OCOM Bldg., 16th Street South Harbor, Port Area, Manila ATTY. MELISSA G. AGUINALDO BUREAU OF CUSTOMS Appellate Division, Legal Service South Harbor, Port Area, Manila SHERYL C. SANTOS-CENTENO LAW OFFICE 3rd Floor, Salud Building, Gen. Hizon Avenue Sto. Rosario, City of San Fernando, Pampanga GREETINGS: You are hereby notified by these presents that on July 23, 2026, a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, July 24, 2026.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION MAGIC GLOW LIQUID CTA CASE NO. 11123 SOLUTIONS INC., represented by: NEIL Members: IAN D. PARENTELA, BACORRO-VILLENA, Acting Chairperson, and Petitioner, CUI-DAVID, JJ. -versus- COMMISSIONER BIENVENIDO Y. RUBIO, Promulgated: -~- BUREAU OF;~~~~!~;. ,JUL 23 2026 ~ ~~~offJ} J{ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J{ DECISION CUI-DAVID, J.: Before this Court is a Petition for Review1 assailing the Decision dated December 1, 20222 (assailed Decision) and the Resolution dated March 9 , 2023,3 (assailed Resolution) , and seeking the quashal of the Warrant of Seizure and Detention (WSD) dated July 12, 2022. Petitioner likewise seeks the return of the seized goods, allegedly valued at P80 ,000 .00. THE PARTIES Petitioner Magic Glow Liquid Solutions Inc. (Magic Glow) is a corporation duly organized and e]{isting under the laws of the Philippines,4 with its principal office located at Golden Sun 999 Industrial Park, Block 15, Lot 5 , Barangay San Pablo, San tl Docket - Vol. I, pp. 6- 20. 2 BOC Records, pp. 46--60. 3 /d. at 12-21. 4 Docket - Vol. II, p. 539, Amended Joint Stipulations ofFacts and Issues (Amended JSFI), Summary of Admitted Facts, par. I; 590, Pre-Trial Order, Ill. Admitted Facts and Stipulation of Facts, par. I.

DECISION CTA Case No . 11123 Magic Glow Liquid Solutions Inc ., represented by: Neil Ian D. Parentela v. Commission er Bienvenido Y. Rubio, Bureau of Customs x-------------------------------------------------------------- -------------------x Simon, Pampanga,s where its warehouse is also located.6 Neil Ian D. Parentela (Parentela) is petitioner's duly authorized representative for purposes of filing this case.7 Respondent is the duly appointed Commissioner of the Bureau of Customs (BOC), who is sued in his official capacity. THE FACTS AND PROCEEDINGS A Letter of Authority (LOA), bearing Reference No. 06-09- 060-2022, was issued by the Commissioner of Customs (COC) and implemented through Mission Order (MO) No. 06-09-2022- 337 .8 On July 18, 2022, petitioner received a WSD dated July 12, 2022, directing the seizure of the subject articles and their turnover to the BOC's Auction and Cargo Disposal Division.9 On July 22, 2022, petitioner, through counsel, filed a Motion to Quash the WSD together with an Entry of Appearance, dated July 18, 2022.10 On December 6, 2022, petitioner received a copy of the assailed Decision dated December 1, 2022, ordering the forfeiture in favor of the government of the seized items found in Warehouses Block 10, Lot 18 (B10 L18) and Block 15, Lot 5 (B15 L5), located at Golden Sun 999 Industrial Park, DelaPaz, San Simon, Pampanga. 11 The dispositive portion of the assailed Decision reads: WHEREFORE, by virtue of the authority vested in me by law, it is hereby ordered and decreed th a t the seized items stored at Warehouses BlO Ll8 and Bl5 L5 located at Golden Sun 999 Industrial Park, Dela Paz, San Simon, Pampanga be FORFEITED in favor of the government to be disposed of in the manner provided for by law, to wit: /d. at 607, Exhibit "P-2" , Amended Articles of Incorporation . /d. at 539, Amended Joint Stipulations of Facts and Issues (Amended JSFI), Summary of Admitted Facts, par. 3; 590, Pre-Trial Order, III. Adm itted Facts and Stipulation of Facts, par. 3. /d. at 539, Amended Joint Stipulations of Facts and Issues (Amended JSFI), Summary of Admitted Facts, par. 2; 590, Pre-Trial Order, III. Admitted Facts and Stipulatio n of Facts, par. 2. /d. at 539, Amended Joint Stipulations of Facts and Issues (Amended JSFI), Summary of Admitted Facts, par. 4; 590, Pre-T rial Order, III. Adm itted Facts and Stipulation of Facts, par. 4. /d. at 539, Amended Join t Stipulations of Facts and Issues (Amended JSFI), Summary of Admitted Facts, par. 5; 590, Pre-Trial Order, III. Admitted Facts and Stipulation of Facts, par. 5. 10 /d. at 539, Amended Joint Stipulations of Facts and Issues (Amended JSFI), Summary of Admitted Facts, par. 6; 590, Pre-Trial Order, II I. Admi tted Facts and Stipulation of Facts, par. 6. 11 !d. at 539-540, Amended Joint Stipulations ofFacts and Issues (Amended JSFI), Summary of Admitted Facts, par. 7; 590, Pre-Trial Order, III. Adm itted Facts and Stipulation of Facts, par. 7.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs x--------- ------ -- ------------ -------- --- -- ---------------------------------------x respondent a non-extendible period of thirty (30) days from June 1, 2023, or until July 1, 2023, to file an Answer. 1s On July 3, 2023, respondent filed his Answer (Re: Petition for Review dated April 5, 2023). 19 On July 12, 2023, respondent transmitted the BOC Records consisting of 133 pages.2o On July 13, 2023, the Court noted respondent's Answer (Re: Petition for Review dated AprilS, 2023) and referred the case to the Philippine Mediation Center-Court of Tax Appeals (PMC- CTA) for mediation.21 On�August 23, 2023, the Court received PMC-CTA Form No. 6 - No Agreement to Mediate, stating that the parties decided not to submit their case to mediation.22 Consequently, a Notice of Pre-Trial Conference23 was issued on September 6, 2023, setting the case for pre-trial on November 9, 2023.24 Petitioner's Pre-Trial Briefwas filed on November 6, 2023,25 while respondent's Pre-Trial Brief was filed on November 8, 2023. 26 During the Pre-Trial Conference on November 9, 2023, the Court directed the parties to submit their Joint Stipulation of Facts and Issues (JSFI) within twenty (20) days.27 On December 1, 2023, the parties filed by electronic mail (email) a Motion for Approval of Joint Stipulations.2B Finding the submission non-compliant with its Order dated November 9, 2023, the Court directed the parties to file an amended JSFI within ten (10) days from notice. 29 Thereafter, the parties filed, by email and registered mail, their Motion for Approval ofAmended Joint Stipulations of Facts and Issues3o on January 23, 2024 and January 31, 2024, 18 /d. at 28 1, Notice of Resolution. 19 /d. at 282- 287. 20 /d. at 30 I. 21 /d. at 298, Notice of Resolution. 22 !d. at 305. 23 /d. at 309-311 . 24 !d. at 308, Resolution dated August 31 , 2023. 25 !d. at 3 12-323. 26 !d. at 47 1-485. 27 Docket - Vol. II, pp. 526--528, Order. 28 /d. at 53 1- 533. 29 /d. at 537, Resolution dated January 9, 2024. 30 /d. at 539-547, 55 1- 559.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Pa ren tela v. Commissioner Bien ven id o Y. Rubio, Bureau of Custom s Pa ge 5 of 22 x----- ------------------------------------ ------------- -------- ------------- ------x respectively. The Court granted the motion.31 Accordingly, the Amended Joint Stipulations of Facts and Issues was approved, and the pre-trial was deemed terminated.32 On March 6, 2024, the Pre-Trial Order33 was issued. During trial, petitioner presented the testimony of its sole witness , Mr. Parentela.34 Thereafter, petitioner was given fifteen (15) days, or until March 15, 2024 , to file a Formal Offer of Evidence (FOE) , while respondent was given 10 days from receipt thereof to file comment.35 On March 14, 2024 , petitioner filed a Formal Offer of Documentary Evidence.36 Respondent filed his Comment on Petitioner's Formal Offer ofEvidenc&7 on March 26, 2024. On May 27 , 2024, the Court gave petitioner a period of five (5) days from notice to submit the duly marked exhibits, after which its Formal Offer of Documentary Evidence would be deemed submitted for resolution. 38 In compliance, petitioner filed on June 3, 2024 a Manifestation,39 submitting the duly mark ed exhibits. On September 6, 2024, the Court admitted all of petitioner's exhibits and set the case for the presentation of respondent's witness , Intelligence Officer (IO) Dominic L. Garcia (Garcia) , initially on October 17, 2024.40 The hearing, however, was cancelled and reset to November 13, 2024. 41 Respondent's presentation of evidence proceeded on January 23, 2025 .42 Respondent presented IO Garcia.43 Respondent orally offered Exhibits "R-1" to "R-11". The Court admitted respondent's Exhibits "R-1" to "R-5" and Exhibits "R-9" to "R- 11 ." However, the Court denied admission of Exhibits "R-6" to "R-8." ~ 31 /d. at 575, Resolution dated February 28, 2024. 32 !d. 33 /d. at 586-597. 34 Docket- Vol. I, pp. 324-330, Exhibit " P-7", Amended Judicial Affidavit. 35 Docket- Vol. II , pp. 577-579, Minutes of the hearing held on March 5, 2024; 58 1-582, Order dated March 5, 2024. 36 !d. at 598-603. 37 /d. at 646-649, 652-655. 38 /d. at 663-664, Resolution. 39 !d. at 668-675. 40 /d. at 686-687, Resolution. 41 !d. at 690, Notice of Resetting dated October 14, 2024. 42 /d. at 702-703, Reso lution dated January 20, 2025. 43 Docket - Vol. I, pp. 452-459, Exhibit " R-1 2", Judicial Affidavit of Dominic L. Garcia.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Burea u of Customs x---------------------------------------------------------------------------------x Under Section 7(a)(4) of Republic Act (RA) No. 1125, as amended by RA No. 9282, the Court of Tax Appeals (CTA) has exclusive appellate jurisdiction to review decisions of the COC in cases involving seizure or forfeiture of property: SEC. 7 . Jurisdiction. - The CTA shall exercise: a . Exclusive appellate jurisdiction to review by appeal, as herein provided: 4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs[.] (Emphasis supplied) This jurisdictional grant is echoed in Section 3(a)(4), Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA). 54 In forfeiture cases, an aggrieved party may appeal the decision of the District Collector to the COC within 15 days from receipt thereof. Thereafter, a party adversely affected by the decision of the COC may seek judicial review before this Court by filing a Petition for Review within 30 days from receipt of the assailed decision or ruling. The governing provisions are Sections 1126 and 1136 of the CMTA, in relation to Sections 3(a) and 4(a), Rule 8 of the RRCTA, which provide: SEC . 1126. Appeal to the Commissioner. - In forfeiture cases, the person aggrieved by the decision of a District Collector may, within fifteen (15) days or five (5) days in case of perishable goods, from receipt of the decision, file a written notice of appeal, together with the required appeal fee to the District Collector, furnishing a copy to the Commissioner. The District Collector shall immediately transmit all the records of the proceedings to the 54 SEC. 3. Cases within the jurisdiction ofthe Court in Division.- The Court in Division shall exercise: (a) Exclusive origi nal or appellate jurisdiction to review by appeal the follow ing: (4) Decisions of the Commissioner of Customs in cases involvin g liabil ity for customs duties, fees o r other money charges, seizure, detention or release of property affected, fi nes, forfeitures or other penalties in relati on thereto, o r other matters arising under the Customs Law or other laws administered by the Bureau of Customs[. ] (Emphasis s u p p lied)

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Paren tela v. Commissioner Bien venido Y. Rubio, Bureau of Customs Page 1 1 of 22 X---------------------------------------------------------------------------------X petitioner filed its Notice of Appeal56 and Memorandum of Appeal57 before the COC on December 16, 2022 . The appeal was subsequently resolved by the COC through the assailed Resolution, a copy of which petitioner received on March 13, 2 0 2 3 . 58 Pursuant to Section 1136 of the CMTA, in relation to Sections 3(a) and 4(a) , Rule 8 of the RRCTA, petitioner had 30 days from receipt of the assailed Resolution, or until April 12, 2023, to file a Petition for Review before this Court. The records further show that petitioner filed the instant Petition for Review on April 12, 2023, well within the reglementary period. Accordingly, this Court validly acquired jurisdiction over the present case. The LOA, MO, and WSD were validly issued and complied with the CMTA and its implementing issuances. Petitioner assails the validity of the LOA, MO , and WSD , arguing that these issuances were vague and failed to sufficiently identify the warehouse to be inspected, the goods to be searched and seized, and the particular violation allegedly committed. The contention lacks merit. Section 224 of the CMTA expressly authorizes the COC, or customs officers duly authorized in writing by the COC , to demand proof of p ayment of duties and taxes on imported goods openly offered for sale or kept in storage. Should the interested party fail to produce such pr oof within 15 days from demand, the goods may be s eized and subjected to forfeiture proceedings, thus: SEC. 224. Power to Insp ect and Visit.- The Commission er or any customs officer wh o is auth orized in writing by the Commissioner, m ay dem and eviden ce of payment of du ties a nd t axes on imported goods openly for sale or kept in s torage. In the event that the interested party 56 BOC Records, pp. 23- 26. ff'.__/ 57 !d. at 27- 35. 58 Docket - Vol. I, p. 7, Petition for Review, T imeliness of the Petition, par. I; BOC Records, p. 8, LBC Express, Inc. Official Receipt No. PRTO12 1863 with tracking number 1272 0036 4 181.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs Page 12 of22 X---------------------------------------------------------------------------------X fails to produce such evidence within fifteen (15) days, the goods may be seized and subjected to forfeiture proceedings: Provided) That during the proceedings, the interested party shall be given the opportunity to prove or show the source of the goods and the payment of duties and taxes thereon: Provided) further) That when the warrant of seizure has been issued but subsequent documents presented evidencing proper payment are found to be authentic and in order, the District Collector shall, within fifteen (15) days from the receipt of the motion to quash or recall the warrant, cause the immediate release of the goods seized, subject to clearance by the Commissioner: Provided) finally) That the release thereof shall not be contra ry to law. (Emphasis supplied) Corollary thereto, Customs Administrative Order {CAO) No . 10-2020,59 which implements, among others, Section 224 of the CMTA, defines and regulates the concept of "constructive customs custody." Under Section 3.5 thereof, constructive customs custody exists when, after an inventory conducted pursuant to a Letter of Authority (LOA) , customs officers and the owner of the goods enter into a written agreement that the goods shall not be removed or disposed of pending the resolution of the issue of whether the proper duties and taxes have been paid.60 Complementing this prov1s1on, Section 5 of CAO No. 10-2020 provides that, upon lawful demand by the COC or an authorized customs officer, the owner or possessor of imported goods is given 15 days within which to present and establish: {a) proof of payment of the correct duties and taxes or exemption therefrom; {b) proof of local purchase and payment of the correct duties and taxes by the original importer; or {c) proof that the goods were locally produced or manufactured. During such period, the goods are placed under constructive customs custody. Should the interested party fail to produce the required evidence within 15 days, the goods become subject to se1zure and forfeiture proceedings.61 ~ 59 Seizure and Forfeiture Proceedings and Appeals Process, May II , 2020. 60 SEC. 3. Definition of Terms. For purposes of th is CAO, the fol lowing terms are defined accordingly: 3.5. Constructive Customs Custody- shall re fer to the situatio n where, fall ing short of physical seizure or possession, the Customs Officers a nd the owne r of the goods enter into a written agreement after the inventory to the effect that the goods, subj ect of a Letter of Authority (LOA), shall not be removed or disposed of pending disposition or resolution on the issue of whether proper payment of duties and taxes has been made. 6 1 SEC. 5. Seizure and Forfei/Ure ofImported Goods Pursuant to the Commissioner 's Power to Inspect and Visit. - The Comm issioner or any customs o ffi cer who is authorized in writing by the Commissioner, may demand ev idence of payment of duties and taxes on imported goods openly for sale or kept in storage.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ia n D. Pa ren tela v. Commission er Bien ven ido Y. Rubio, Bu reau of Customs x---------------------------------------------------------------------------------x CAO No. 10-2020 further recognizes that, even after the issuance of a Warrant of Seizure and Detention (WSD) , seized goods may still be released under certain circumstances. In particular, the claimant may avail of voluntary payment of duties and taxes, provided that proof of local purchase is presented. Absent such proof, the claimant is presumed to be the importer of the goods in his possession, subject to the conditions and exceptions provided under the Order.62 In the present case, the inspection that led to seizure was carried out pursuant to a valid LOA and MO, both of which were issued and signed by then Customs Commissioner Rey Leonardo B. Guerrero on June 8, 2022. Following the inventory of the goods found in Warehouse B15 LS, petitioner was required to submit proof of payment of duties and taxes within 15 days; but petitioner failed to do so. Thereafter, the District Collector validly issued the WSD and conducted hearings prior to forfeiture. While petitioner assails the LOA and MO for their alleged lack of specificity, neither the CMTA nor CAO No. 03-201963 requires an LOA64 or an M065 to enumerate every item suspected of having been imported without payment of duties v and taxes, or to identify the specific offense at the time of inspection. Rather, these issuances serve to authorize customs officers to conduct inspections and to demand proof of payment 5. 1. Presentation of the Proof of Payment of Duties and Taxes within the fifteen ( 15)-day period. During the said period, the goods shall be placed under Constructive Customs Custody provided that the same may be released if any of the following documents are presented and veri fied: 5.1. 1. Proof of payment of correct duties and taxes or proof of exemption from payment of duties and taxes; 5. 1.2. Proof of local purchase and payment of correct duties and taxes by the original importer; or 5.1.3. Proof that the goods were locally produced or manufactured. In the event that the interested party fails to produce such evidence with in the said fifteen ( 15)-day period, the goods shall be seized and subjected to fo rfeiture proceedings. 62 SEC. 5. Seizure and Forfeirure oflmporred Goods Pursuant to rhe Commissioner's Power to Inspect and Visit.- 5.2. A Warrant of Seizure and Detention has been issued. 5.2. 1. The goods seized may be released to the owner under the follow ing circumstances: d. Voluntary payment of duties and taxes, provided that claimant presented a proof of local purchase. If the owner cannot present proof of local purchase, it is presumed that he is the importer of the goods in his possession. However, if the owner can overcome such presumption provided that all the conditions stated in Section 14.4 of this Order are complied with, the goods may be released provided that an offer to settle the case by payment of the redemption value of the goods shall have been made and accepted. 63 Customs Jurisdiction and Exercise of Police Authority, April I, 2019. 64 /d. , 3.18. Letter of Authority (LOA) - shall refer to a written authorization signed by the Comm issioner of Customs in the exercise of the power to visit and inspect premises and goods, identi fY ing the C ustoms Officers authorized to demand evidence of payment of duties and taxes on imported goods openly offered for sale or kept in storage 65 /d., 3. 19. Mission Order (MO) - shall refer to the written directive or order issued by the Commissioner of Customs or other Customs Officer authorized in writing by the Commissioner, to carry out specific instructions given to any Customs Officer, or any deputized officer who must be a government employee holding regular plantilla position.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc. , represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs x---------------------------------------------------------------------------------x houses, without a judicial warrant and affirmed the BOC's jurisdiction over goods where importation remained incomplete. In this case, petitioner failed to demonstrate the lawful termination of the importation. Accordingly, the BOC properly exercised jurisdiction over the subject goods. Petitioner's main defense-that the items in Warehouse B 15 L5 are locally sourced or long-owned-demands documentary substantiation within the 15-day period under Section 224 of the CMTA or through voluntary payment procedures recognized in Section 5 of CAO No. 10-2020 where proof of local purchase or payment of correct duties and taxes is unavailable. The record shows that petitioner failed to submit valid receipts or proof of payment of duties and taxes within the prescribed period, prompting the issuance of the WSD and eventual forfeiture. Indeed, petitioner's bare assertion of local purchase, unsupported by competent documentary evidence such as official receipts or proof of tax payment, failed to rebut the imported nature of the goods in question. The forfeiture of the subject goods was proper under Section 224, instead of Section 1113, of the CMTA. Section 224 operates independently from fraud-based seizure provisions unde r Section 111 371 of the CMTA. For 71 SEC. 1113. Property Subject to Seizure and Forfeiture. - Property that shall be subject to seizure and forfeiture include: (a) Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the importation or exportation of goods or in conveying or transporting smuggled goods in commercial quantiti es into or from any Philippine port or place. The mere carrying or holding on board of smuggled goods in commercial quantities shall subj ect such vehicle, vessel, aircraft, or any other craft to forfeiture: Provided, That the vehicle, vessel, aircraft or any other craft is not used as a common carrier which has been chartered or leased for purposes of conveying or transporting persons or cargo; (b) Any vessel engaging in the coastwise trade which shall have on board goods of fo reign growth, produce, or manufacture in excess of the amount necessary for sea stores, without such goods having been properly entered o r legally imported; (c) Any vessel or aircraft into which shall be transferred cargo un loaded contrary to law prior to the arrival of the im porting vessel or aircraft at the port of destination; (d) Any part of the cargo, stores, or supplies of a vessel or aircraft arri ving from a foreign port which is unloaded befo re arrival at the vessel's or aircraft's port of destination and witho ut authority fro m the customs officer; but such cargo, ship, or aircraft stores and supplies shall not be forfeited if such unloading was due to accident, stress of weather, or other necessity and is subsequently approved by the Di strict Co llector; (e) Goods which are fraudulently concealed in or removed contrary to law fro m any public or private warehouse, container yard, or container freig ht station under customs supervision;

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc. , represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs Page 16 of22 x-------------------- ---------- ------ ---- -----------------------------------------x forfeiture to attach under Section 224, it is sufficient that imported goods are found openly offered for sale or stored and that the possessor fails to present proof of payment of duties and taxes within the period prescribed by law. This construction is consistent with CAO No. 10-2020, which expressly recognizes forfeiture in such circumstances. Requiring proofof fraud would unduly circumscribe the preventive and regulatory nature of the customs police power72 under the CMTA, as implemented by CAO No. 03-2019. As earlier discussed, Section 224 of the CMTA empowers the COC and customs officers authorized in writing to inspect business premises and demand proof of payment of duties and taxes on imported goods openly offered for sale or kept in storage. Upon the failure of the interested party to produce such proof within 15 days from lawful demand, the goods may be seized and subjected to forfeiture proceedings. This authority is consistent with the long-recognized scope of customs police power in furtherance of revenue protection and the suppression of smuggling. In Mago,73 the Supreme Court upheld the authority of customs officers exercising police powers to conduct searches and seizures in the enforcement of v customs laws and categorically held: (f) Goods, the importation or exportation of which are effected or attempted contrary to law, or any goods of prohibited importation or exportation, and all other goods which, in the opinion of the District Collector, have been used, are or were entered to be used as instruments in the importation or the exportation of the former; (g) Unmanifested goods found on any vessel or aircraft if manifest therefor is required; (h) Sea stores or aircraft stores adjudged by the District Collector to be excessive, when the duties and taxes assessed by the District Collector thereon are not paid or secured forthwit h upon assessment of the same; (i) Any package of imported goods which is fou nd upon examination to contain goods not specified in the invoice or goods declaration including all other packages purportedly containing imported goods similar to those declared in the invoice or goods declaration to be the contents of the misdeclared package; U) Boxes, cases, trunks, envelopes, and other containers of whatever character used as receptacle or as device to conceal goods which are subject to forfeiture under this Act or which are so designed as to conceal the character of such goods; (k) Any conveyance actually used for the transport of goods subject to forfeiture under this Act, with its equipage or trappings, and any vehicle sim ilarly used, together with its equipment and appurtenances. The mere conveyance of smuggled goods by such transport vehicle shall be sufficient cause for the outright seizure and confiscation of such transport vehicle but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid, is engaged as common carrier and not chartered or leased, or that the agent in charge thereof at the time, has no knowledge of the unlawful act; and (I) Goods sought to be imported or exported: ( I) Without going through a customs office, whether the act was consummated, fru strated, or attempted; (2) Found in the baggage of a perso n arriving from abroad and undeclared by such person; (3) Through a false declaration or affid avit executed by the owner, importer, exporter, or consignee concerning the importation of such, goods; (4) On the strength of a false invoice or other document executed by the owner, importer, exporter, or consignee concerning the importation or exportation of such goods; or (5) Through any other practice or device contrary to law by means of which such goods entered through a c ustoms office to the prejudice of the government. 72 See Commissioner ofCustoms v. Makasiar, et a/., G.R. No. 79307, August 29, 1989 [Per J. Cortes, Third Division). 73 Papa v. Mago, G.R. No. L-27360, February 28, 1968 [Per J. Zald ivar, En Bane).

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs Page 17 of22 x---------------------------------------------------------------------------------x It is our considered view, therefore, that except in the case of the search of a dwelling house, persons exercising police authority under the customs law may effect search and seizure without a search warrant in the enforcem ent of customs laws. Although Mago was decided under the former Tariff and Customs Code, its underlying rationale remains applicable under the CMTA. Indeed, Section 219 of the CMTA expressly authorizes persons exercising customs police authority to enter, pass through, and search warehouses, stores, buildings, and other non-dwelling premises. Thus, the doctrine recognized in Mago is not only consistent with, but is substantially reflected in, the current customs framework. Moreover, forfeiture proceedings are proceedings in rem, directed against the goods themselves. 74 Consequently, the burden of proof rests upon the claimant to establish the lawful importation and payment of duties and taxes, or that the goods are locally produced or validly acquired with their duties and taxes duly paid.75 This principle is now codified in Section 112376 of the CMTA and has been consistently applied in jurisprudence.77 Again, petitioner's claims of local purchase and local manufacture are unsupported by documentary evidence. First, the delivery receipts78 and sales invoices79 do not comply with the invoicing requirements prescribed by lawso and 74 The Commissioner ofCustoms v. Manila Star Ferry, Inc.. G.R. Nos. 31776-78, October 2 1, 1993 [Per J. Quiason, First Division]; Acting Commissioner ofCustoms v. Court ofTax Appeals, G.R. No. 62636, April 27, 1984 [Per J. Melencio-Herrera, First Division]. 75 See Agriex Co. , Ltd. v. Villanueva, G.R. No. 158 150, September I 0, 2014 [Per J. Bersamin, First Division]; Carrara Marble Philippines, Inc. v. Commissioner ofCustoms, G.R. o. 129680, September I , 1999 [Per C .J. Davide, Jr., First Div ision]. 76 SEC. 1123. Burden ofProofin F01jeiture Proceedings. - In all proceed ings for the forfeiture of any vehicle, vessel, aircraft, or goods under this Act, the burden of proof shall be home by the claimant. 77 Bureau ofCustoms v. Devanadera, G.R. No. 193253, September 8, 20 15 [Per J. Peralta, En Bane]; Agriex Co., Ltd. v. Villanueva. G. R. No. 158 150, September I0, 20 14 [Per J. Bersamin, First Division] 78 Docket- Vol. II, p. 63 1, Exhibit "P-5" ; BOC Records, p. 63 . 79 Docket- Vol. II, pp. 632-641 , Exhibit " P-5-A" to " P-5-J"; BOC Records, pp. 64-73. 80 Sections 113, 237(A) & 238 of the N IRC of 1997, as amended, state: SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. - (A) Invoicing Requirements. - A VAT-registered person shall issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties and for every sale, barter or exchange of services: Provided. That a digital sales or commercial invoice shall be issued for every sale, barter, or exchange of digital services made by a VAT-registered nonresident digital serv ice provider. (B) Information Contained in the VAT Invoice. - The following information shall be indicated in the VAT invoice: ( I ) A statement that the seller is a VAT-registered person, followed by the seller's Taxpayer's Id entification Number; (2) The total amount which the purchaser pays or is obligated to pay to the seller w ith the indication that such amount includes the value-added tax: Provided, That:

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Custom s X---------------------------------------------------------------------------------X the pertinent regulations81 of the Bureau of Internal Revenue. They do not contain the required details such as the seller's � j (a) The amount of the tax shall be shown as a separate item in the invoice; Jff (b) If the sale is exempt from value-added tax, the term VAT-exempt sale shall be written or printed on the invoice; (c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed on the invoice. (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero- rated or VAT exempt, the invoice shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sa le shall be shown on the invoice: Provided, That the seller may issue separate invoices for the taxable, exempt, and zero-rated components of the sale. (3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and (4) In the case of sales in the amount of One thousand pesos {Pl,OOO) or more wh ere th e sale or transfer is made to a VAT-registered perso n, the name, address and Taxpayer Identification Number of the purchaser, customer or client. (Emphasis supplied) SEC. 237. Issuance of Sales or Commercia/Invoices.- (A) Issuance. - All persons subject to an internal revenue tax shall, at the pointlof each sale and transfer of merchandise or for services rendered valued at Five hundred pesos (Php500.00) or more, issue duly registered sale or commercial invoices, showing the name, Taxpayer Identification Number, date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided, That the amount herein stated shall be adjusted to its present values every three (3) years using the consumer price index, as published by the Philippine Statistics Authority: Provided, further, That the seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction: Provided, however, That if the sales amount per transaction is below the threshold, the seller will issue one ( I) invoice for the aggregate sales amount for such sales at the end of the day: Provided, further, That the aggregate sales amount at the end of the day is at least Five hundred pesos (Php500.00): Provided, finally, That VAT-registered persons shall issue duly registered sale or commercial invoices regardless of the amount of the sale and transfer of merchandise or for services rendered." (Emphasis supplied) SEC. 238. Printing ofSales or Commercia/Invoices. - All persons who are engaged in business shall secure free of charge from the Bureau of Internal Revenue an authority to print sales or commercial invoices before a printer can print the same. No authority to print sales or commercial invoices shall be granted unless the invoices to be printed are serially numbered a nd shall show, among other things, the name, Taxpayer Identific ation Number and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner . (Emphasis supplied) 81 Section 4.113- 1 of Revenue Regulations No. 16-2005 (Consolidated Value-Added Tax Regulations of2005) states: SEC. 4.1 13-1 . Invoicing Requirements. - (A) A VAT-registered person shall issue:- ( I) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice'' or VAT official receipt. All purchases covered by invoices/receipts other than VAT lnvoice/V AT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt.- The following information shall be indicated in VAT invoice or VAT official receipt: ( I) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: (a) The amount of tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from VAT, the term "VAT-exempt sale" shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt. the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by : Neil Ian D. Parentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs x---------------------------------------------------------------------------------x Taxpayer Identification Number (TIN), VAT registration status, and the required VAT breakdown. As such, they cannot be considered valid sales or commercial invoices issued in the ordinary course of business. Second, the delivery receipts do not indicate the complete names and addresses of the sender and recipient. More importantly, by their very nature, delivery receipts merely acknowledge the transfer or delivery of goods; they do not establish ownership, purchase, or payment. They are not substitutes for official receipts or duly compliant sales invoices and, therefore, have no evidentiary value in establishing a legitimate or local acquisition. Third, even assuming that the documents reflect actual transactions, they do not sufficiently establish that the goods were locally manufactured or acquired from domestic sources. Neither do they negate the possibility that the goods were unlawfully imported. Absent competent proof of local purchase or local manufacture, such as official receipts,B2 petitioner failed to (3) In the case of sales in the amount of one thousand pesos (P I,OOO.OO) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in ( I) and (2) of this Section. 82 TSN, Nei l Ian D. Parentela, March 5, 2024, pp. 18- 20: PRESIDING JUSTICE ROMAN G. DEL ROSARIO: You were saying that the raw materials that were confiscated from petitioner were actually purchased from certain Pacheco Trading. Do you remember that? Yes. Please answer. MR. NEIL IAN D. PARENTELA: A. Yes, Your Honors. PRESIDING JUSTICE ROMAN G. DEL ROSARIO: And your proofof purchase would be the Delivery Receipts. Is that it? MR. NEIL IAN D. PARENTELA: A. Yes, Your Honors. PRESIDING JUSTICE ROMAN G. DEL ROSARIO: So, there is no Official Receipt? MR. NEIL IAN D. PARENTELA: A. No, Your Honors. PRES IDING JUSTICE ROMAN G. DEL ROSARIO : Is it a regular practice in your office, j ust to purchase, supposedly, without demanding for a receipt, rather, an Official Receipt? MR. NEIL IAN D. PARE TELA: Actually. Your Honors. our product is not yet out in the market. so. we are still purchasing some samples para ma-check po, kung okay po. PRESIDING JUSTICE ROMAN G. DEL ROSARIO:

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc., represented by: Neil Ian D. Pa rentela v. Commissioner Bienvenido Y. Rubio, Bureau of Customs x----- ----------- ---- -------------------- -------------- --------- ------------------x discharge the burden of proof imposed upon claimants 1n forfeiture proceedings under Section 1123 of the CMTA. Petitioner's failure to establish the local origin of the goods, or to present proof of payment of the corresponding duties and taxes, left unrebutted the basis for the seizure and forfeiture proceedings initiated under Section 224 of the CMTA. Hence, the Court finds petitioner's reliance on defective and non- compliant sales invoices and delivery receipts misplaced. Not only are these documents non-compliant with applicable invoicing requirements, but they are also insufficient to prove lawful acquisition, local manufacture, or payment of the proper duties and taxes. As such, they cannot overcome the presumption of regularity accorded to customs seizure and forfeiture proceedings. Petitioner's reliance on constitutional protections against unreasonable searches and seizures is misplaced. As discussed, the Supreme Court in Mago recognized the validity of warrantless customs searches of warehouses and other non- dwelling premises in the enforcement of customs laws. Here, the inspection was conducted pursuant to a duly issued LOA and MO and was undertaken within the scope of the customs officers' lawful authority. Consequently, the inspection and the ensuing seizure and forfeiture proceedings cannot be deemed violative of petitioner's constitutional rights. In fine, petitioner failed to present competent and credible evidence establishing the lawful acquisition, local manufacture, or lawful importation of the seized goods. Accordingly, the Court finds no factual or legal basis to disturb the seizure andy No. We are talking here ofa purchase. When there is a purchase, ord inarily, there is a confirmation of payment and that is by way ofan Official Receipt. A Delivery Receipt (Inaudib le) supposedly the receipt of goods but wi thout payment. Meaning, it is possible that the items covered by the Delivery Receipt could have been returned and there was actually no purchase after al l. So, other than the Delivery Receipts, there is any other document to confirm that there was an actual purchase of your materials from Pacheco Trading. MR. NEIL IAN D. PARENTELA: A. As of now, Your Honors, our purchasing staff is the one who purchase the material. So, I am not the one who (Interrupted). PRESIDING JUSTICE ROMAN G. DEL ROSARIO: So, you have no idea? MR. NEIL IAN D. PARENTELA: 1\. Yes. I have no idea. PRESIDING JUSTICE ROMAN G. DEL ROSARIO: Yes. But the point is you are trying to establish something here. And if you have no idea, then, in other words, you are not able to confirm the actual purchase. Anyway, thank you for that.

DECISION CTA Case No. 11123 Magic Glow Liquid Solutions Inc. , represen ted by: Neil Ian D. Parentela v. Commission er Bienvenido Y. Ru bio, Bureau of Customs Page 22 of22 x---------------------------------------------------------------------------------x CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Special First Division Acting Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. L.~~--- MA. BELEN M. RINGPIS-LIBAN Presiding Justice

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