Conscious possession is required before the smuggling presumption applies; mere recovery from a cabin is not enough.

In prosecutions for concealed contraband, the statutory presumption of smuggling arises only after the prosecution first proves conscious possession by the accused. Mere recovery of gold bars from concealed spaces accessible from a cabin did not by itself establish knowledge or control, and excluded material could not be used to bridge that gap. The material against one accused amounted only to suspicion and an unproven invitation to fetch gold, while letters not shown to be his own statements were not admissible against him absent a conspiracy charge. The convictions under the Foreign Exchange Regulation Act and the Sea Customs Act were set aside.

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Issues: (i) Whether the material on record proved that Obispo Reyes was connected with the concealed gold bars and liable under the Foreign Exchange Regulation Act and the Sea Customs Act; (ii) Whether the concealment of gold bars in Enrique Sanao's cabin established his conscious possession so as to attract the statutory presumption under the Sea Customs Act.

Issue (i): Whether the material on record proved that Obispo Reyes was connected with the concealed gold bars and liable under the Foreign Exchange Regulation Act and the Sea Customs Act.

Analysis: The evidence against the appellant consisted only of an invitation to a crew member to accompany him to fetch gold and letters found in his cabin suggesting some other business. The invitation did not show that he actually brought gold into the ship, and the letters were not his own statements. In the absence of a charge of conspiracy, the contents of those letters could not be treated as evidence against him under the Evidence Act. Mere suspicion, without definite proof of participation, was insufficient.

Conclusion: The charge against Obispo Reyes was not proved and the conviction could not stand.

Issue (ii): Whether the concealment of gold bars in Enrique Sanao's cabin established his conscious possession so as to attract the statutory presumption under the Sea Customs Act.

Analysis: Although the gold bars were found in secret compartments accessible from the cabin, the prosecution was required first to prove conscious possession before the presumption under Section 178A of the Sea Customs Act could arise. The evidence that might have supported conscious possession was excluded, and the mere recovery of the bars from concealed places in the cabin did not by itself establish that the appellant knew of or controlled them.

Conclusion: Conscious possession was not proved against Enrique Sanao and the presumption under Section 178A could not be invoked.

Final Conclusion: The convictions and sentences under the Foreign Exchange Regulation Act and the Sea Customs Act were set aside, and both appellants were directed to be released forthwith.

Ratio Decidendi: In prosecutions for concealed contraband, the statutory presumption of smuggling arises only after the prosecution first proves conscious possession of the goods by the accused; suspicion or mere recovery from a place under access is not enough, and evidence not legally admissible against an accused cannot establish guilt.

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