Lawyer Allan Contado, head of the NBI task force, said they acted on the complaint of one Reiner Wermer against district collector Emerito Villaruz.
Villaruz allegedly received P29,000 in marked money supposedly for the release of five BMW cars, from NBI agents who posed as Wermers business partners, at the Bureau of Customs office here.
"The government is seriously taking its campaign against corrupt officials and this should serve as a stern warning to all," Contado said.
Witnesses said Villaruz was escorted out of his office in handcuffs and was brought to the NBI office in Olongapo City for investigation.
During interrogation, Villaruz denied the extortion charges, saying it was Wermer who attempted to bribe him for refusing to process what he described to be the "highly anomalous" importation of the five BMWs.
He claimed that Wermer allegedly requested him to lower the taxes and duties due on the luxury vehicles.
Villaruz was also quoted as saying during the investigation at the office of lawyer Hernan Castro, local NBI head, that he even asked Wermer to pay directly to the Customs designated government bank after the completion of tax assessment by the Customs appraisal officer based on blue book value and not on the price that "he (Wermer) is asking me."
NBI chemist Eddie Purificando said Villaruz tested positive for ultraviolet powder.
Villaruz, in a radio interview later in the afternoon, also denied the charges, and said he was already out on bail.