CTA Case No. 3199 (Decision)

&.CP'UittC Ol Tn& tniLIPPV'tr.$ r.OURT 01r TAX ?PEALS 'I . ( POLYPHOSPHATES , INC. 1 Pe tit i oner , - .ve rsus - COMMISSIONER OF CUS TOMS , Respondent . X - .- - - .- .~ - ~ -X DE C I S I 0 N This is an appeal from the decision of t he Commi s sioner o f Customs dated December 12, 198 0 , affirm ing1 that. of the Col l ector of Customs of the~ Port. of Ba tan gas dated April 3, 1 979 dismissing pe:t:i t:.ioner w s Prote�s t No. 35-78. The facts are not. in dispute. It appe?lrs that petitioner is a domestic corporation with principal office at 851 Pasay Road, Makati , Metro Manila. It i mporte�d 3,545.953 metric tons of Phospho ric Ac id in bulk f rom Los Angeles, California, UaSeAo which anriv edl on June 13, 1978 at the: Por..t of Bata ngas on board the vessel M/T " Stolt Tenacity" . Petitioner's s urveyor, the Worldwide Marine & Cargo Corporation , however, reported t h~t the quantity of phosphoric acid discharged from t he said vessel to petitioner ' s shore storag;e tank was � 3,236 . 721 metric tons only , which was l ess by 309.232 me tric t .ons than that . shown in the vessel ' s mani fest. l

.. DECISION - CTA CASE NO. 3199 - 2- The home consumption value (HCV) ?f said importation which was declared by petitioner and as appearing in the bill of lading, commerc ial, and c onsular invoices is US $30 2.5S per metric ton. The .Collector of Customs however asse�ssed the subject importation based. on the HCV $382.84, pursuant:. to Customs Import Valuation and Classifi- cation Circular (CI VCC ) .No. 270-76 dated July 1, 1976, i ns t ead of t he home consumption value of US $302.55 at: the time of the arrival of said ship- ment , based on the 3,545.953 metric tons as shown � in the vessel's manifest instead of the quantity actually received by petitioner. Conse:quen tly, on July 27, 1978, peti t .ioner � filed with said Collector of Cust.oms a protest (Protest No. 35-78) _disputing, the assessment and collection of the total amount of P2,390,253.00 as duties, taxes and other charges on "the said ship- ment computed on the basis of US $382.84 per metric ton and 3,545.953 metr ic ton per manifest. It daimed that: the dutiable value of it:s shipment should have been based o n the home consumption value of US $302.5S . per metric ton as de:clared in all its i mportat ion papers and on 3,236.721 metric tons only as that 2

DECISION - CTA CASE NOs 3199 - .3 - was what was actua lly discharged fr om the vessel to pet:it.ione1i:'s shoe storage tanks, and, hence, en t i t:.le:d to a re:fund of an alleged excess. payment - of P663,564. 00 . On Ap1r:il 3, 1979, the Collector of Customs of the: Port of Batangas rendered a decision upholding the cor r ectness of the assessment. and collection of duties, taxes and other charges on petitionervs shipment amount ing to P2,390,253.00. On appea l , the respondent Commissioner of Cu stoms :rendered a decision on Decembe':r 12, 1 980, � affirming that of the Collector of Customs. of the Pert of Batangas.. Hence, this prese:nt rec<;>urse to this Court. The issues posed before us to be I"esolved are , to wit : (1) . Whether the correct basis of �t:he dutiable value of petitioner's ship- ment should be the home consumption value as published in CIVCC Noo 270- 76 dated July 1, 1976 in accordance with Se:ction 201 of the Tar iff and Cus.toms Code of the Philippines or t he home consumption value as stated in the bill of lading, commercial and consular in- voices; and (2) Whether t he correct basis of the customs duti'es, charges and taxe3 on aforestated shipment is the quantity , aS i ndicated in the VeSSel I S manifest, or quantity actually . d ischarg,ed from the -� carrying vessel to petitioner ' s shore storage t ank ; and c onsequently, 3

- - --- - - - DECISION - CTA CASE NO. 3199 - 4- (3) Whether or not petitioner i s entitled "to the refund of the additional cu9oms duties and taxes in the sum of P663,564. 00 it alleg,edly paid on the subject i mpo rtation. ' With re:spect to the first issue, petiti oner claims that there exist. no doubt that t he value of petitioner's shipment is that reflected in the bi l l of lading;, commercial and consular invoices ; hence, the basis f or determining the dutiable value of its shipment should be on the home consumption value of US $302.55 per metric ton as reflected in all its importation papers, the bill of lading, consular and commercial invoices, pursuant t�o Section 201 of the Tariff and Customs Code. We find the contentio n without merit. Section 201 of the Tariff and Customs Code reads as follows: "Section 201. Basis of Dut iable Va lueo- The dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the home consumption value or pr:ice (excluding internal excise: taxes, of same, like or similar articles as bought and sold or offered for sale freely in the usual wholes.ale quantities in the marke t s of the country from wher-e exported on the date of exportation to the Philippines, or whe r e there is none on such date, then on the home c ons umption value or price near-est to the date of exportation i ncluding the value of all containers , coverings and/or packings of any ~ind and all other costs, charges and expenses incident to placing the article in a condition ready for shipment to � the Philippines, pl us t en (10) per cent of such home c onsumption ' value or -price. 4

DECISION - CTA CASE NO. 3199 - 5- The home consumption value or price under t h is sec tion s hall be the value or price �declared in the consular, commercial, trade or sale s invo i c e.. Where t her.e ex.ist a reasonable doubt as to the value or price �of the i mported article declared in the entry , the correct dutiabl e value of the ar tic le shall be ascertained from the r eports of t he reve:n ue attac he or commercial attache (Foreign Trade Promo tion Attac he) pursuant to Repub lic Act Numbered Fifty-Fo~r Hundred and Sixty-Six or other Philippine diplomatic officexs and f r om su c h other infor mation that may be available to the Bureau of Customs. From the date thus gathere:d, the Com- missioner of Customs shall ascertain and establish the home consu mption values of arti c les exported to t he Philippine: and shall publish such lists ot values from time to time., � When the dutiable value provided f o r in the prec eding par agraphs cannot be ascert- ained f o r fa i l ure of the impo rter to pr oduce the documents me nti oned in t h e' second para- �. gJraph or where there� exists a reas onable doubt as to duti ab le value: of the i mported article declared in the entry, it shall be the domestic wholesale selling price of such or similar a r ti c le in Man ila or other principal mar.kets in the Philippi nes on the: date the duty becomes payable on the article under appraisement, in the usu�al wholesale quantities and in t he ordinary course of trade:, minus - (a) Twenty (20 ) per cent thereof �for expe nses and profits; and (b) Duties and taxes paid thereon. " From the aforequo~ed provision of Section 201 of the Tariff and Customs Code , i t is clear that the home: consumption value of the importe:d article shal l be the value or price declared i n the commercial , ,- il

DECISI ON - CTA CASE NO. 3199 - 6- consular, trade or sales i nvoice . Howe ver, the s ame provision state s th a t where there exist a reasonable doubt as to the correctness of the value or p ~ ice dec lared in the entry p a p e rs, t he correct du tiable value of t he article shall be ascertained fr om the repor t~ of t he Revenue Attache or Comme rc�ial Attache or other ~h ilippine diplomati c officers and from such o the r information that may be available to the Bureau o f Customs. An d fr om the data th u s gathered, the Commissioner of Customs shall ascertain and establi s h th& home consumption values of the � ar tic l es exported to the Philippines and shall pub- l ish such lists of valu es from time to t im~. (Nati onal Den tal Supply, Inc. vs. The Comm is sioner of Cus t.oms , CTA Case No. 2816 , June 29 , 1979, certi o rari de nied in G.R .. No. 512 36 , d ated January 1 8 , 1980 ; Procte r and Gamble Philippi ne Manu facturing Cor poration v s. Commissione r of Customs, CTA Case No. 2788 , February 27, 1 98 l o) While the r ule presc ribed by the law is that / the hom~ consumption.value of an i mport ed article shall be that value or price declared in the commercial, c onsular, trade or sales invoice, the same should not be appl ied in the case wher e the c orrectne ss of such v alue or price declared in the invoic:e is vitiate d 6

DECISION - CTA C~SE NO. 3199 - 7- by :teasonable doubto What should tllen be c on- si dered as the correct home consumption value, in suc h case, should be the value or. price ascertained by the Bureau of Customs from the reports of the Revenue Attache or Commercial Attache or other Philippine diplomatic officer s, and which val ue has been established and published by said Bureau from time: to time .. (Nationa l Dental Supply, supra.) In other words, the primary dutiable value of an imported art.icle is its horne consumption v a lue as declared in the importation papers. However, � when a reasonable doubt exists as to it s declared value, the basis should be the home consumption v a lue as published by the Commissioner of Custom~. In the in stant case, the actual home consumftion value of the subject article of US $302.55. per metr ic t on as reflected in the consular and commercial i nvoices and presented by petitioner is much lowe r than i ts published horne consumption value of US $382.24 unde r Customs Import Valuation and Classification Circular (C IVCC) ~o � � 270-7 6 . A reasonable doubt, therefore, exists as to the true home consumption value o r the price of the aforesaid imported goods _, He nce , the b as i s of the dutiable value of the imported goods should be the published home cons umption value 7

DECISION - CTA CASE NO. 3199 - 8- under said CIVCC No. 270 -76 purs uant to the afore- quoted parag.r::aph of Secti on 201 of the Tariff and Customs Code . � ~he law is clear and specific. It merely c al ls for applic ation as thus worded. Needless to say; t hat if Customs authorities were always bound by the invoi ce value , it is evident that they would be, to a consider able extent, at the mercy of f ore ign merchants and importers . (Lim Quim vs . Co ll . of Customs , 23 Phil. , 509 LI9.llf' ; The Coca-Cola Export Corporation vs . The Commissioner of Inter na l Revenue and Collector of Customs , Manila , L- 23604, Mar ch 15 , 1974 , 56 SCRA 5 ~ ) Beside s , the value of imported articles as fixed by t he Customs author ities in the discharge of their functi on of asse ss ing and collec ting the lawful revenue s ju s tly due on imported ar ti c les and c on firmed by the Customs Comm issioner is presumed to be correct anu therefore conclusive in the absence of fraud or illegallity or of an affirmative showin9 by the ... r otesting i ml?or ter that the customs author- i ties in fixing or assessing the value of the i mport- ation proceeded upvn a� wr ong. principle anC.. contrary to l aw ., The burden t hus rests upon the i mpo r ter disputing the customs valu~tion not only to prove the c ontrary and ove r come the pr e sumption of c orre c t nes s 8

DECISION �� CTA CASE NO. 3199 - 9- of the valuation but also t o show that the figures declared by him are in fact true and correcto (Coca- Cola Export Corporation vs. Commissioner of Internal ReverlUe and Collector of Customs I surra. With respect to the second issue , petitioner contends that the assessment of the Customs duties, taxes and charges, on petitioner ' s shipment based on the quantity of 3,545.953 metric tons as declared in the vessel ' s manifest is erroneous. It claims that the basis of assessment should have been on the q u antity of 3,236.721 1netric: tons alleged to be � actually discharg,eo from the carrying. vessel and received by it pursuant to Section 1701 of ~he . Tariff and Customs Code which provides that "duties wil l be assessed on the actual quantity imported, as shown by the return of weighers, g;augers, measurers, examiners, or appraisers, as the case may be." We find this contention untenableo The surveyor w S: report submitted by petitioner to the Collector of Customs i s self-serving to say the least. The veracity ' of said rep9rt is placed under serious doubt on the ground that this was never officially brought to the attention of the proper authorities i n t he Bureau of Customs. The report of Customs Examiner Oscar Boongaling show that he ma d G his

DECISION - CTA CASE NO e 3199 - 10 - first findings on June 13 , 1978 and on that same da te Re yn aldo M. Alejandro , registered marine and cargo surveyor of Worldwide Marine and Cargo Survey Corporation, was there present he havi ng, been hire'd by petitioner to s u ~ vey its cargo. Reyn aldo M. Alejandro performed his task until June 16 , 1978, on which date Custom s Examiner Boongali ng, made his final findi ng s of the weight of the article:s which was 3,545.918 M/T, as indicated by i nstrument reading after s ounding. It is quite unbelievable therefore that. surveyor Reynaldo Alejandro had � failed to contest or at least informed Customs Exam iner Boongal ing about the di screpanc y in his findings. (1v1e mo. to Collector, Port o f Batangas. dated March 28, 1979, pp. 43-44, BIR r ec.) In matt~er of abatement of taxes and duties, it is incumbent upon peti tioner to show proof satisfactory to +-hP. rollec to r that wt:he deficiency occurred be,fore arrival of the shipment in the Philippines before abatement and/or refund of the customs duties and " barges may be granted. The records show that petitioner's surveyor was. already aware that there was ah alleged deficiency in their shipment as early as June 16 , 1978, the date of the fin a l dischar ge of its shipment. On this date, the 10

DECI SION - CTA CASE NOe 319 9 - 11 - surveyo r shou ld h av e brought such oeficie~ncy to the atten tio n of the Customs Examine-r so that the la tter, afte:r convincing proof, c ould� hav.e~ certified s uch def ici ency to the� Col lecto r as r:eq u ir.ed under Section 170 3 of the Tar iff and Customs Code. In the instant case, neither t he report of the appraiser , nor the Customs Examiner on the shipment in ques:t ion shows that the quantity discharged from the~ vessel to pe~tit.i one r: s sho:re tank is le-s.s than 3,5.45..,953� metric ton as dec.lared in th e ~es.se:l' s . ma nife s t .� (Po 4.2, Cu stoms &:ec .) . MoreoveT, petitio n e r: had failed to reque~st the: pertinent amendment o~ t h e ma n ifest and re:lated documents as a condition f o r its entitlement to a refu nd pursuant t o the above�- sta ted Secti o n o f the Tar iff and Cus tom s: Co de, whi c h textually re a ds as follow.s: "Sec. 1703., Ab ateme:nt o r. Ref und f o r deficiency in Con te nts of Pack age s. - . If , upon opening any of p a rt of the co ntents thelieof, as called for by the Invoice shall be f ound to exist, such <!:'leficiency shall be. cer:tified u n de r penal ties of fals ifica t:ion or perjury, to the Colle~cto r or Appraise~; and upon the production of proof satisfactory to the Colle~tor showing; t hat the shor tas e oc:cu rred befo:re- the arrival of t h e: article in the Philippines, the pr:oper a batement or refund of the duty s h all be made. (J?.s a mende-d by P. D. No. 34.) ". With re:spect to the� third iss.ue , we will no l onger discuss it, it having be come moot ~ n d 11

DECISION - CTA CASE NO . 3199 - 12 - academic .. WHEREFORE , finding, no merit in the a ppeal, the a ppealed decision i s hereby af f irmed, with costa against petitioner. SO ORDERED e Que z.o n C i t y, Metro Man i la, Ja nu a i: y 3, 1 983o - WE CONCUR: � AMANTE ILLER Pres i ding Judg,e 12 'I