A CEBU-BASED rice importer, cleared of smuggling allegations by a tax court, is now considering legal action after claiming massive financial losses and damage to its reputation.
The case pits a business claiming it followed the rules against a government effort to enforce a tough new anti-smuggling law, raising questions about the cost of enforcement errors.
On Tuesday, Oct. 21, 2025, over 20,000 sacks of rice that belonged to Mixed-Load Distribution Network Inc. (MLDNI), a sister company of River Valley Distribution Inc. (RVDI), were released from a National Food Authority warehouse in Cebu City. This followed a Court of Tax Appeals (CTA) ruling that lifted a seizure order, confirming the rice was lawfully imported and all taxes were paid. The seizure, which occurred in July at RVDI’s warehouse in Talisay City, had sparked accusations of smuggling against the firm.
The new anti-smuggling law
The seizure was executed by the Criminal Investigation and Detection Group (CIDG) 7 under the authority of Republic Act 12022, the Anti-Agriculture Economic Sabotage Law.
Authorities alleged the rice, valued at over P10 million, was smuggled from Pakistan and Vietnam and exceeded the threshold for economic sabotage. Police claimed MLDNI submitted documents for only 6,000 of the more than 20,500 sacks found. This enforcement reflects a national priority to stop agricultural smuggling.
Cost of the seizure
For the importer, the stakes were high. RVDI and MLDNI said the disruption caused losses of up to P40 million. Jhonelle Estrada Tan-Kit, lead counsel for RVDI, said several clients pulled out due to the controversy.
An initial inspection of the released rice also revealed physical damage. At least 160 sacks, worth about P320,000, were damaged by rain and had developed mold during transport or storage.
Kit called the entire event a “mistaken enforcement action.”
“Protecting the market from smuggling is a noble good, but it must never come at the expense of law-abiding, tax-paying businesses,” Kit said. “It marks the end of months of disruption, reputational harm, and operational paralysis caused by a mistaken enforcement action.”
A case of alleged procedural lapses
RVDI’s legal team argues the case highlights the dangers of enforcing new laws without clear guidelines.
“The CIDG insisted the rice was undocumented despite full compliance,” said Jade Seit, RVDI’s Cebu-based counsel. “What this case revealed is that enforcement went ahead without the rules of engagement or implementing guidelines required by law.”
The counsels also raised concerns that the seizure operation failed to verify the rice’s ownership.
SunStar Cebu sought comment from CIDG 7 during the rice transfer, but was told only authorized personnel from Camp Crame could speak on the matter.
What the court decided
The CTA ultimately sided with the importer. In a resolution promulgated Oct. 7, the CTA Second Division lifted the seizure order.
The Bureau of Customs confirmed that RVDI and MLDNI had imported millions of kilograms of rice through the ports of Cebu and Dumaguete. The court stated: “With the payment of duties and taxes not only proved... but, in fact, admitted by applicant, the policy of the State to prevent smuggling of agricultural products finds no application here anymore.”
What happens next
With the rice now being transferred back to the company’s licensed facility, RVDI is mulling its next move.
Kit confirmed the company is “studying possible legal steps” for the financial losses and reputational damage it suffered, though she declined to name potential respondents. The case now serves as a significant test of how the new Anti-Agriculture Economic Sabotage Law will be implemented. / DPC