CTA Case No. 2828 (Decision)

~~~PUBLIC OF T HE PHIUPPINU _; )U T OF TAX APPEALS UEZON ClTY CAr1POS RUEDA CORPORATION� C. T . A. CASE NO. 2828 Pe tit ione r, - - v e rsus THE HONORABLE COMM ISSIONER OF CUSTOHS X - - .. - - - ----- - Respondent. JC DE CI S I 0 I n t his petition for review o f the decision of respondent Commissioner of Customs dated July 30� 1976 in Customs Case No. 76-35-C affirming the deci- ... sion of the Co l lector of Customs of Manila dismissing Manila Protest No. 9288, petitioner Campos Rueda \ Co r poration seeks t h e refund of the sum of P21.183.00 representing overpaid customs duty and advance sales tax on one shipment of GE sealed bea m lamps. There is no serious dispute b e t ween the parties as to the esse ntial facts involved in the i nstant case. The controv ersy involves purely a question of law. As established by the evidence and narrated in petitioner's memorandum (pp. 210-212 , CTA r ecords). the und i sputed facts may be summarized as f ollows: 1. That on November�13, 1973, petitioner placed an orde for 1 6800 p ieces of GE s eal ed beams amount- ing to c & F US $18 , 115.00 to the General El e ctric of Glendale, Ne Ye u.s.A . through the General Electric Phi lippines , Inc.� 181

DECISION - CTA CASE NO. 2828 - 2- 2. Petitioner o pened a l ett e r of cred it No. F-4702-73 to cover t he cos ts of the said importations . 3. On March 6, 1974, the Gene ral Electric ~o. finally sold to the petitioner t he above import ed items p e r its invoice No. 82735 for US $18�'64 8 54 o r at the price of $0 9 08 per piece. 4 . On March 14, 1 974, the Consulate General of the Phi lippines in New York issued consular in- voice No. 48023 for the aforesaid imported goods. �.s. The above imported goods a rrived at the port of Manila via S/S 11Trade 16W-" Trade V/Rafael Semmes" unde r bill of lading No. 993-328720 on March 31, ~974. 6. That on Apri l 1, 1974� petitioner filed with t he Collector of Customs a request for value/ classification No. 00011216 for t he approval of the unit price the c orrespond ing Home Consumption Value (HCV) for duty va lue purposes. 7 . That the above request was denied and the imported goods were re-appraised at us $1.35 per piece as the Home Consumption Value, al legedly based on the alert notice received from the Finance Attache abroad. 8 That on April 30, 19749 petitioDer fi led Import Entry & Internal Revenue Declaration No. -r; ' : 0103-196 under Entry No . 38 051/74 for the a bove 182

DECISION CTA CASE NO . 2828 - 3- imported goods at the alerted price of $1~35 per piece with the tota l DUTY AND TAX AMOUNTI NG TO 9. The petitione r paid this tax amounting to P67.525. 00 u nder protest on May 7� 1974 as evidenced by Customs Order of Payment No. 298158 and Central Bank Offic ial Re ceipt No. 313104 . 10. That beca use of the re-appraisal of the un it price of the impqFted items from $0 .908 to $1.35. per pi ece all egedly bas e d o n the alert not i ce by t he Finance Attache� petitioner was made to pay an a dditional duty of Pl5.657.00 and add itional ad- vance sales tax of P5.526.00 or a total duty and tax ' 11. The petitioner filed a formal protes t with the Collector of Customs on May 17� 1 974 ag ains t the aforesaid r e-app~sal o f the i mported goods. who o n October 16. 1974� without conducting any hearing dis - missed the a fo resai d protest alleg e dly f o r lack of merit. 12. On November 20. 1974� the petitioner appealed the decision of the Coll ector of Cus t oms to the Hono rable Comm issioner of Cu stoms. who. on July 30, 1978 issued an order affi rming the d e cision of the Collector o f Cust oms . This d e cision of the Honor able Commissioner of Customs is n ow the subject 183

DECISI ON - CTA CASE NO . 282 8 - 4- of this p etitione 13. In its answer to t he petition, r espondent inte rpos ed the d efense t ha t t he duty that mus t be paid by petitioner shoul d be based on the "Ale rt Notice " sen t b y the Phil ippine Comme rcial Attache. Howe v e r. respondent fai led to present in the trial of this case any ale rt notice. The only i ssue posed f or resolution in t h e instant appeal is the d etermi nation of the basis of the d utiabl e v a l ue of the sh ipmen t of GE s ealed beam lamps f o r purpos e s of the assessme nt a nd col- � lection of duties and t axes due thereon. The parties a r e not in dispute on the compu- tati on of the customs duty and internal revenue tax ( advance sal es tax) p ayab le by, or t he a mount r efund- able to, petitioner as the case may b e . As stated earlie r, because of the r e-appr a i sal of the unit price of th e i mpo rted item f r om US$0 . 908 to US$1 .35 per p iece based on an alleged alert notice from the Philippine finance attache at San Francisco, California, petitione r was made to pay by the Bu r eau of Customs an additional customs duty of ~15.657.00 a rid add itional advance sales tax o f ~5,526 . 00. The app lic2bl e p rovision of law on �the d eter- mination of the basis of the dutiable value of an i mpo rte d ar-t i cle is Sect ion 201 of t he Tariff and 184

DECISION CTA CASE NO. 2828 - 5- Customs Code, as amended ey_ Presidential Decree No . 34 ~ now Section 20 1 also of Presidential Decree No . 1 464 otherwi se known as the 11Tariff and Cus toms Code of 1978", which states that: Sec. 201. Basis of Dutiable Value.- The dutiable value o f an imported article subject to an ad valor em rate of duty shall be based on the home consumption value o r price (exclud ing internal e xcise t axes ) o f same, like or similar articles , as bought and sold or offered f o r sale freely in the usual wholesale quantities in the ordinary course of trade, in the principal markets < of the country from where exported o n t he ,date of exportation to the Phil ippines, or wher e there is none on such date, then on - the h ome consumption v alue or price neare s t � to the date of exportat ion including the value of all containers, coverings and/or packings of any kind and all other costs, charges and expenses incident to plac ing t h e 'article in a condition ready for s hipment to the Philippines, plus ten (10) per c ent o f such home c o nsumption value or price. / The home consumption value or price under this section shall be the value or p r i ce declared in t he consular, commercial , trade or sales invoice . Where there exists a reasonable doubt as to the value or price of the import ed article declared in the entry,. the correct dutiable value of t he article shall be ascertained from the re- ports of th e Revenue Attache or Comme rcia l Attache (Foreign Trade Promotion Attache), pursuant to Republic Act Numbe red Fifty- four hundred and s ixty-six or other Phil ip- pine diplomatic offic ers and from such other informat ion that may be available to the Bure a u of Cu stoms . From the data thus gathered, the Com- missioner of Cus toms shall ascertain and establish the home consumption val ues of articl es exported to the Philippi nes and s hall publish such lists of values from time to time. 185

DECISION - CTA CASE NO. 282 8 - 6- ~'ihen th e d utiable v a lue p ro vided f o r in the precedi ng paragraph s c a nnot be ascertained for failure of the im- porter to produce the doc uments mentioned in the second paragraph, or where there ex ists a reasonable doubt as to dutiable value of the imported article dec lared � i n t he entry, it shall be the domestic wholesale selling price o f such or simila r arti cle in Manila or other principal mar- kets in t he Philippines on the date the duty becomes payable on the a rticle under a p prais e ment, in the us ual wholesal e quantities and i n the ordinar y course of trade, minus {a) Twenty (20) per cent ther eof for expenses and pro fits; and (b) Dutie s and t axes pa id thereon . ... The provi sions of the applicable law c learly and unequivocally state that t he dutiable v a l ue of an im'�port ed artic l e subject t o an a d valorem r ate of duty, like the s hipment in question, is based on its home con sumption value or price (excluding in- ternal exc i se taxes), as freely offered for sale in t h e us ual wholesa le quantities in the ordina ry course of trade, in t he p rincipal markets of the c ountry from where exported o n t he dat.e of export- ation to the Philippines , i ncluding the value o f all container s, cove rings and/or packings and incidental expenses to placing the article for sh ipme nt, pl u s ten {1 0 ) per ~ of such home con sumption value. And the home c o nsump tion v a ue or price i s the value o r pri ce declared in the cons ular . 186

DECISION - CTA CASE NO. 2828 - 7- commercial, t rade or sales invoice . Where the re exists a reasonabl e doubt as to t he value or price o f the i mported a rticle declared in the entry, the correc t dutiable value of t he a rticle should be ascertained from the reports of the Revenue Attach e or Commercia l Attach e, p ur suant to Republic Act No 5 466 or other Ph ilippine diplomatic officers and from such other i nf ormation th a t ma y be avail- able. The Commissioner of Cus toms is required how- eve r � to publis h from time to t ime the home consumption values of art icles exported to t he Philippines as � ascertained and established from the data gathered � .In t he instant case . the price f or which t he General Electric co. of Glendale, N.Y., USA, off ered to sell to petitione r t he 16. 800 pieces of GE sealed be am lamps wa s US$ 0 .908 per pi ece , l ess 5% tr ade dis- count, or a n estimated total selling price of US$18 .11 5.00 c & F Man i la, including ocean freight and forwa rding charges. (Exh. 11 B" � PP� 10-11� CTA record s.) The commercial invoice of the s h ipment (Invoi ce No . 082735) dated Marc h 6� 1 9 74 sl)m'<'s that the General Electric co. of Glendale finally sold to petitioner t he 1 6,800 GE sealed beam lamps a t the P.rice of US$0 908 � per pie c e8 (Exh. e~c", p p. 12- 1 3, CTA rec o r ds. ) And as decl ared in the c on s ular invo ice of merchandise . NY 48023 F, dated March 14 � 187

1 ! DECIS I ON CTA CASE NO . 2828 8 1974, c ertifi ed to by the Philippine Consulate General, Sa n Francisco, California, t he p r ice of the GE sealed beam l a mps is US$14 ,491 . 58 0 l es s t r ade discount , or US$0. 908 per p i e c et that is. a t otal p rice of US$18,964 . 54 , includ ing s hipping expenses. (Exh . " D11 , PP� 15-16, erA reco r ds . ) Since the prov i s i on o f the l aw applicable i s c l ea r and specific that the " home c o nsumption value " upon which the dutiable value of an imported article should be based is t he value or pr ice declared in t he co n sular, co~~erc ial, t r ade or sales i n v oi c e , . the home consumption v alue of the 16,800 pieces of GE s e ~ l ed beam lamps should the r efore be US$ 18, 964 . 54 o r US $0 .9 08 per piece . The l aw seems clear and mand atory. It me rely calls for appli c ation as worded . Given h owever that t here existed a r easonab le doubt on the part of the Bure au o f Customs as t o the correct val ue or price o f the shipmen t of GE sealed beam l amps decl ared by petitione r , was the r e- appzasal of such importation made by the s aid Bureau at US$1 . 35 pe r piece a s the home c orisumption v alu e b ased on a supposedly "A lert Notice " f urnished by th~ Phi lippine Finance Attache a t Sa n�F r ancis co , California , USA , pro per ? As stated ea r lier, the s ame appl icable statute pr ovides that, i n such case, 188

DE C I SION CTA CASE NO. 2828 - 9- the correct dutiable v alue of the impo rted articl 2 ' shall be ascertained from the reports of the Rev enue Attache or Commercial Attache (Foreign Trade Pro motion At tache) , pursuant to Republic Ac t No . 5466 �. ( or other Phi lippine diplomatic officers and from such other informa tion t hat may be available to the Bureau of Customs. From the data thus gathered, the Commissioner of Customs shall ascert ain a nd establish the home consumption value of the article exported t o the Philippines and shall publish such l ist of value f r om time to t ime. Here, in the c ase at bar. the valuation of the shipment of petitione r of GE sealed beam lamps was based on an alleged "Alert No t ice " , not on the p ub - lished value the reof as required by law. As stat ed by respondent Commissione r of Customs i n his memo- randurn : "Petitioner's declared price of $0 . 908 per piece was denied and a re-appraisal of the imported item was made by the Bureau of Customs placing the same at US$ 1 .3 5 per piece as the Horne Co nsumption Value . This re-appr aisal was based on the alert notice received from the Philippine Finance Attache at San Francisco, California, u.s . A. by the Bureau of Customs . .. (p . 22 8 , . CTA reco r ds .) And as to peti- tioneres contention "that such notice was not s upported by doc umentary proofs such as Quotation of pri ce l ists, 189

,I .I DECIS ION CTA CASE NO . 2828 - 1 0 -~ prices of previous importations of i denti cal or simi l ar goods, . me aning established va lue, and pric e s of such goods a s publ ished, mean ing publ i shed value" , respondent merel y avers that "While there are no p ric e lists of s ubj ect imported sea l ed beam lamps as e s tabl i s hed o r publ ished, t he same was evalua t ed by the Bureau of Customs b ased o n the Al erted value" . (pp. 228-229, CTA re c o r d s.) I As a ma t ter of fact , t he records of th e c ase do no t show, as req uired by l aw, f rom what dat a the a l l eg e d " a le rted v alue " wa s ga thered, h ow the Com- mii~i o n e r of ~u stoms asce r ta i ned and estab l ished t he h yme c onsumpti o n v a l ue o f the imported arti c le, and where and when was such alerted v alue published. And while respondent was given ample time d ur i ng t he hearing of this case before this Court to produce or present as evidence s uch " aler ted value" or "alert no t ice" wh i ch was the basis of the r e-appraisal of the shipment under consideration, no such alert notice or val ue, or evidence thereof, was presented or offered by respondent. " The bare averment of respondent that the bas i s of re-appr aisal of subject s hipment i s the "Alert Notice" furnished by the Philippine finance attache at S an F r ancisco, Californ~a, unaccompanie d by adequat e evidence as to t he exist ence o f such notice, the basis of t he value o r price stat ed 190

DECIS ION CTA CASE NO. 282 8 - 11 - therein, as wel l as the publication thereof suggests as contended by peti t ioner, that t here was no such alert notice or value. Clear ly, there f ore, th e ~asis of the re-appraisal of the dutiable value of peti- tioner 1 s shipmen t of GE sea led beam lamps was not i n accordance with the provisions of Section 201 of the Tariff and Customs Code. There being no fidelity to what are required by the legal provisions applicable, this Court could not look with approval on the re-appraisal by the Bureau of Cus toms of petitioner 1 s imported GE sealed � beam lamps based on an alleged "Alerted value 11 at US$1.35 per piece. and t he assessment and collection of Pl51 657.00 as additional customs d uty and P5,526.00 as additional a dvance sale s tax on pe titioner 's im- portation. Whe r e , a s here, t here is no adherence to the language of the stat ute, there is no bas is for the assertion t ha t there exists a reasonable doubt as to the value or p ric e of the imported GE sealed beam lamps declared in t h e entry. Considering the mandate of the law that the home consumption value or price shall be the val ue or price declared in the consular, commercial, trade or sales invoic e , and the official character of these invoices; c e rtified to as correct by the Philippine Consul at the port of origi n ; and there being no reasonable ground to 191

DECI S I ON CTA CASE NO . 2828 - 12 ~� deny to t hese documents the faith o r credenc e normal ly due thereto, the home consumpt ion value dec l ared in the commercial and consular invo i ce s� of merchandise, as we l l a~ the supp l ier ' s sales i nvoice of the shipment in question, should be the basis of the & t iabl e value of the imported GE sealed beam lamps. v (Commissioner of Custo ms vs . Celdran, L-234 2 5, Febru ary 26, 1968, 22 SCRA 74 3 . ) The language of the law, which expresses a def inite and sensible meani ng , i s the safest guide as to the statutory policy, to wh i ch compliance is d u e � � Proct er & Gamble Philippine Manufacturing (See Corpo r a.t i on vs. Commissioner of Customs, CTA Case No. 27 88, February 27, 1981.) The pronouncements in Bell Ho bart Manufacturing Inco r po r ated vs . Commissioner of Customs , CTA Ca ses Nos . 2750, 2751, 2752 and 2753, March 10, 1978; Procter & Gamble Philippine Manufacturing Corpo- r ation vs . Commissioner of I nternal Reven u e , CTA Ca s e No . 2357 , May 9, 1978; Hiap Hong Tr ading co. , Inc. v s . Al fredo Pi o de Roda , Jr. , CTA Case No . 2804 , Jun e 27 , 1 980 1 which were sub ~ equently affirmed and rea ff i r med i n other c ases , the latest of which is Procter & Gamble Philipp ine Ma nu f a ctur i ng Corporation vs . Commissioner of Customs, CTA Cas e No . 2788 , February 27, 1981 1 are controll ~ ng i n t he case at 192

DECISION CTA CASE NO . 2828 - 13 - baro We quote fro m Bell Hobart and Procter & Gamble : ~ 11 Nonetheles s. assumi ng argu~ tha t there e xists a r easonable doubt as to the va lue or price of t he import ed trich loro- c arbanilide declared in the consular, com mercial and sales invoice s. as we l l as in the entry. and the cor�ect d utiable value of the a rti e e s h ould be ascertained fr om the re ports of the Revenu e Attach e, Com- me rcial Attache ( ~o r eign Trade Promotion Attache) or other Philippine diplomatic office r s and f rom such other information that may be available to the Bureau of Customs. pursuant to Section 201 of the Tariff and ~ust oms Code, as amended by President ial De cre e No. 34 , as all eged by respondent, it is to be stressed that the Commissione r o f Customs is requi r ed by la\>.' to pub l ish such list of va lues from time to t ime. He does n ot only have to ascertain � and establish the horne cons umpti on v alue, ( but must also p ublish such lists of v a l ues from t ime to time . Publ ic policy would se em to require that importers be informed in advance of t he home consumption v alues . or information values. of a rt i cles exported to the Philip- pines. This would prevent uncertainty. let alone the exercise of purely personal dis- cre t io n. specially on the part of cu s toms appraisers, in the matter of the ascertain- ment and determination of the price or value of i mpo rted articles. Furthe rmo r e, if importers are i nfor med in advance of the home consumption values or information / values of articles exported to the Philip- pines, t hey can propP.rly d e c lare the dutiable values of their shipments and thus avoid the heavy pena ltie s i mposed f o r rn i sdeclaration, if not d elays in t he release of goods from customs custody which entail lose of ti me , money and energy." Accordingly, the home cons umption va lue or price as bas i s of the dutiable value of the ship- me nt o f GE sealed be am lamps consigned to petitioner 193

DECISION CTA CASE NO. 2828 - 14 - and declared under �Entry No. 38051-74. Reg. No. 935� which arrived in Manila on March 31� 1974, should be at US$0.908 per p i ece as stated in the commercial � .. invoice and cons u lar invoice of merchand ise. The protest of petitioner against the assessment and collection of additional customs duty and advance sales tax on its shipmen t of GE sealed beam lamps is there for e meritorious. We note howsver that with regard to the claim for refund of the amount of ~5 ,526 .00 as additional advance sales tax paid by petitioner on re-apprai sal of the subjec t shipment~ the same can not be passed ' upon by the Court in view of the fact that nothing in the records show that petitioner had filed its written cla im for re fund t hereo f with the Commis sioner of Internal Revenue a nd that the latter was made a party to this case. Without satisfying these juris- dictional requirements provided i n Section 306 (now Section 292) of the National Internal Revenue Code� which in the instant case are lack ing, the same is fatal to the claim of petitioner for the refund of the overpaid advance sales tax on t he importation in question. (Wi se & Company vs. Commissioner of Customs, CTA Case No. 2717, December 29 1 1977; see also resolution dated January 15, 1979. certiorari denied in G.R. No. L-51242, March 7, 1980; National 194

."'"'� :U E C I S I O N CTA r.ASE NO. 2828 - 15 - Dental 5upply Incorporated vs. Commissioner of C usto~, CTA Case No. 2826, ~ unA 30, 19 80 ; r.amoos Ru eda r.orpo- ration vs. Co~missioner of Customs, CTA Case No . � 2829, . July 28, 1980: .T ardine Davies, Inc. vs. Cornraiss :1 onPr o f Customs, CTA Case No. 2634. October 16, 1980; Procter & Gamble Philippine Manuf actu ring r.ornoration vs. Com- � missioner of Customs, CTA Case No. 2788, ~ebruary 27, 1981.) ~here be ing no controversy between thP parties . that the additional amo 11 nt of P15,657.00 assessed a,nd collActed from petitionAr represents additional customs du~y because of the re- appraisal of its shipment of GF. sea��lPd bPam l a mps at US$1.35 per piece, only said amount of ~15,657$00 is refundable to petitioner. \"JH't:'REFOOF., the decision appealPcl from is modif ied as indicated in the above opinion of the Court. Res- pondent Commissione r of Customs is hereby ordered to refund t o petitioner Campos Rueda Corporation the amount of P15,657.oo. ~ithout pronouncement as to costs. SO ORDERED. Quezon ~ity, Metro Manila, h ugust 15, 1984. ~'IE CONCUR: RO'"A' QUIN J udge ~~ -�� X '-' . REY � Associate J ge 195