G.R. No.

42204 January 21, 1993

HON. RAMON J. FAROLAN, JR., in his capacity as o!!ission"r o# usto!s,
petitioner,
vs.
O$R% OF %A& A''(AL) an* +AGONG +$HA, %RA-.NG, respondents.
The Solicitor General for petitioner.
Jorge G. Macapagal counsel for respondent.
Aurea Aragon-Casiano for Bagong Buhay Trading.

ROM(RO, J.:
This is a petition for review on certiorari which seeks to annul and set aside the decision of
the Court of Tax Appeals dated December 27, 17! "CTA Case #o. 2!$% reversin& the
decision of the Commissioner of Customs which affirmed the decision of the Collector of
Customs.
1
The undisputed facts are as follows'
(n )anuar* +$, 172, the vessel ,-, ./acific 0awk. with 1e&istr* #o. 17$ arrived at the /ort
of 2anila carr*in&, amon& others, 3$ bales of screen net consi&ned to 4a&on& 4uha* Tradin&
"4a&on& 4uha*%. ,aid importation was declared throu&h a customs broker under 5ntr* #o.
3671872 as 3$ bales of screen net of 7$$ rolls with a &ross wei&ht of 12,777 kilo&rams valued
at 9+,77$.$$ and classified under Tariff 0eadin& #o. +.$684 of the Tariff and Customs Code
2
at +7: ad valorem. ,ince the customs examiner found the sub;ect shipment reflective of the
declaration, 4a&on& 4uha* paid the duties and taxes due in the amount of /11,+7$.$$ which
was paid throu&h the 4ank of Asia under (fficial 1eceipt #o. $!2737 dated <ebruar* 1, 172.
Thereafter, the customs appraiser made a return of dut*.
Actin& on the stren&th of an information that the shipment consisted of .mos=uito net. made
of n*lon dutiable under Tariff 0eadin& #o. 62.$2 of the Tariff and Customs Code, the (ffice of
the Collector of Customs ordered a
re8examination of the shipment. A report on the re8examination revealed that the shipment
consisted of 3$ bales of screen net, each bale containin& 2$ rolls or a total of 1,6$$ rolls.
3
1e8appraised, the shipment was valued at 9+7,76$.$$ or 91$.17 per *ard instead of 9.$77
per *ard as previousl* declared. <urthermore, the Collector of Customs determined the
sub;ect shipment as made of s*nthetic "pol*eth*lene% woven fabric classifiable under Tariff
0eadin& #o. 71.$!84 at 1$$: ad valorem. Thus, 4a&on& 4uha* Tradin& was assessed
/272,6$$.$$ as duties and taxes due on the shipment in =uestion.
4
,ince the shipment was
also misdeclared as to =uantit* and value, the Collector of Customs forfeited the sub;ect
shipment in favor of the &overnment.
/
/rivate respondent then appealed the decision of the Collector of Customs b* filin& a petition
for review with the Commissioner of Customs. (n #ovember 27, 172 the Commissioner
affirmed the Collector of Customs.
0
/rivate respondent moved for reconsideration but the
same was denied on )anuar* 22, 17+.
1
<rom the Commissioner of Customs, private respondent elevated his case before the Court of
Tax Appeals. >pon review, the Court of Tax Appeals reversed the decision of the
Commissioner of Customs. ?t ruled that the Commissioner erred in imputin& fraud upon
private respondent because fraud is never presumed and thus concluded that the forfeiture of
the articles in =uestion was not in accordance with law. 2oreover, the appellate court stated
that the imported articles in =uestion should be classified as .pol*eth*lene plastic. at the rate
of +7: ad valorem instead of .s*nthetic "pol*eth*lene% woven fabric. at the rate of 1$$: ad
valorem based upon the results conducted b* the 4ureau of Customs @aborator*.
Conse=uentl*, the Court of Tax Appeals ordered the release of the said article upon pa*ment
of the correspondin& duties and taxes. "C.T.A. Case #o. 2!$%.
2
Thereafter, the Commissioner of Customs moved for reconsideration. (n #ovember 1,
177, the Court of Tax Appeals denied said motion for reconsideration.
9
(n Au&ust 2$, 176, private respondent filed a petition askin& for the release of the
=uestioned &oods which this Court denied. After several motions for the earl* resolution of
this case and for the release of &oods and in view of the fact that the &oods were bein&
exposed to the natural elements, we ordered the release of the &oods on )une 2, 136.
Conse=uentl*, on )ul* 26, 136, private respondent posted a cash bond of /1!,!!+.+6 to
secure the release of 6! bales
10
out of the 3$ bales
11
ori&inall* delivered on )anuar* +$,
172. ,ixteen bales
12
remain missin&.
/rivate respondent alle&es that of the 1!+,!7! *ards "6! bales% released to 4a&on& 4uha*,
onl* 116,7$ *ards were in &ood condition and the 26,7$! *ards were in bad condition.
Conse=uentl*, private respondent demands that the 4ureau of Customs be ordered to pa* for
dama&es for the !+,$7$ *ards
13
it actuall* lost.
14
0ence, this petition, the issues bein&A a% whether or not the shipment in =uestion is sub;ect to
forfeiture under ,ection 27+$82 subpara&raphs "+%, "!% and "7% of the Tariff and Customs
CodeA b% whether or not the shipment in =uestion falls under Tariff 0eadin& #o. +.$684
"should be +.$284% of the Tariff and Customs Code sub;ect to ad valorem dut* of +7:
instead of Tariff 0eadin& #o. 71.$!84 with ad valorem of 1$$: and c% whether or not the
Collector of Customs ma* be held liable for the !+,$7$ *ards actuall* lost b* private
respondent.
,ection 27+$, para&raph m, subpara&raphs "+%, "!% and "7% states'
,ec. 27+$. Property Su!ect to "orfeiture #nder Tariff and Customs $a%. B An* vehicle, vessel
or aircraft, car&o, article and other ob;ects shall, under the followin& conditions be sub;ected to
forfeiture'
xxx xxx xxx
m. An* article sou&ht to be imported or exported.
xxx xxx xxx
"+% (n the stren&th of a false declaration or affidavit or affidavit executed b* the
owner, importer, exporter or consi&nee concernin& the importation of such
articleA
"!% (n the stren&th of a false invoice or other document executed b* the owner,
importer, exporter or consi&nee concernin& the importation or exportation of
such articleA and.
"7% Throu&h any other practice or device contrary
to la% b* means of which such articles was entered throu&h a custom8house to
the pre;udice of &overnment. "5mphasis supplied%.
/etitioner contends that there has been a misdeclaration as to the =uantit* in rolls of the
shipment in =uestion, the undisputed fact bein& that the said shipment consisted of 1,6$$ rolls
and not 7$$ rolls as declared in the import entr*. Ce a&ree with the contention of the
petitioner. ?n declarin& the wei&ht of its shipment in an import entr*, throu&h its customs
broker as 12,777 kilo&rams when in truth and in fact the actual wei&ht is 1+,6$$ kilo&rams, an
apparent misdeclaration as to the wei&ht of the =uestioned &oods was committed b* private
respondent. 0ad it not been for a re8examination and re8appraisal of the shipment b* the
Collector of Customs which *ielded a difference of 32+ kilo&rams, the &overnment would
have lost revenue derived from customs duties.
Althou&h it is admitted that indeed there was a misdeclaration, such violation, however, does
not warrant forfeiture for such act was not committed directl* b* the owner, importer, exporter
or consi&nee as set forth in ,ection 27+$, para&raph m, subpara&raph "+%, and-or "!%.
?n defense of its position den*in& the commission of misdeclaration, private respondent
contends that its import entr* was based solel* on the shippin& documents and that it had no
knowled&e of an* flaw in the said documents at the time the entr* was filed. <or this reason,
private respondent believes that if there was an* discrepanc* in the =uantit* of the &oods as
declared and as examined, such discrepanc* should not be attributed to 4a&on& 4uha*.
1/
/rivate respondentDs ar&ument is persuasive. >nder ,ection 27+$, para&raph m,
subpara&raphs "+% and "!%, the re=uisites for forfeiture are' "1% the wron&ful makin& b* the
owner, importer, exporter or consi&nees of an* declaration or affidavit, or the wron&ful makin&
or deliver* b* the same persons of an* invoice, letter or paper B all touchin& on the
importation or exportation of merchandiseA and "2% that such declaration, affidavit, invoice,
letter or paper is false.
10
?n the case at bar, althou&h it cannot be denied that private respondent caused to be
prepared throu&h its customs broker a false import entr* or declaration, it cannot be char&ed
with the wron&ful makin& thereof because such entr* or declaration merel* restated faithfull*
the data found in the correspondin& certificate of ori&in,
11
certificate of mana&er of the
shipper,
12
the packin& lists
19
and the bill of ladin&
20
which were all prepared b* its
suppliers abroad. ?f, at all, the wron&ful makin& or falsit* of the documents above8mentioned
can onl* be attributed to 4a&on& 4uha*Ds forei&n suppliers or shippers.
Cith re&ard to the second re=uirement on falsit*, it bears mentionin& that the evidence on
record, specificall*, the decisions of the Collector of Customs and the Commissioner of
Customs, do not reveal that the importer or consi&nee, 4a&on& 4uha* Tradin& had an*
knowled&e of an* falsit* on the sub;ect importation.
,ince private respondentDs misdeclaration can be traced directl* to its forei&n suppliers,
,ection 27+$, para&raph m, subpara&raphs "+% and "!% cannot find application.
Appl*in& subpara&raph "7%, fraud must be committed b* an importer-consi&nee to evade
pa*ment of the duties due.
21
Ce support the stance of the Court of Tax Appeals that the
Commissioner of Customs failed to show that fraud had been committed b* the private
respondent. The fraud contemplated b* law must be actual and not constructive. ?t must be
intentional fraud, consistin& of deception willfull* and deliberatel* done or resorted to in order
to induce another to &ive up some ri&ht.
22
As explained earlier, the import entr* was prepared
on the basis of the shippin& documents provided b* the forei&n supplier or shipper. 0ence,
4a&on& 4uha* Tradin& can be considered to have acted in &ood faith when it relied on these
documents.
/roceedin& now to the =uestion of the correct classification of the =uestioned shipments,
petitioner contends that the same falls under Tariff 0eadin& #o. 71.$! bein& a .s*nthetic
"pol*eth*lene% woven fabric.. (n the other hand, private respondent contends that these fall
under Tariff 0eadin& #o. +.$6 "should be +.$2%, havin& been found to be made of
pol*eth*lene plastic.
0eadin& #o. +.$2 of the Tariff and Customs Code provides'
+.$2 B /ol*merisation and copol*merisation products "for example, pol*eth*lene,
pol*tetrahaloeth*lene, pol*isobut*lene, pol*st*rene, pol*vin*l chloride, pol*vin*l acetate,
pol*vin*l chloroacetate and other pol*vin*l derivatives, pol*acr*lic and pol*methacr*lic
derivatives, coumaroneindene resins%.
The principal products included in this headin& are'
"1% Polymeri&ation products of ethylene or its sustitution derivatives, particularl* the halo&en
derivatives.
5xamples of these are pol*eth*lene, pol*tetrafluro8eth*lene and pol*chlorotrifluro8eth*lene.
Their characteristic is that the* are translucent, flexible and li&ht in wei&ht. The* are used lar&el*
for insulatin& electric wire.
23
(n the other hand, Tariff 0eadin& #o. 71.$! provides'
71.$!. B Coven fabrics of man8made fibers "continuous% includin& woven fabrics of monofil or
strip of headin& #o. 71.$1 or 71.$2.
This headin& covers %oven farics "as described in /art E?F ECF of the General 5xplanator* #ote
on ,ection H?% made of yarns of continuous man-made fiers, or of monofil or strip of headin&
71.$1 and 71.$2A it includes a ver* lar&e variet* of dress fabrics, linin&s, curtain materials,
furnishin& fabrics, t*re fabrics, tent fabrics, parachute fabrics, etc.
24
"5mphasis supplied%
To correctl* classif* the sub;ect importation, we need to refer to chemical anal*sis submitted
before the Court of Tax Appeals. 2r. #orberto I. 2anuel, an Anal*tical Chemist of the 4ureau
of Customs and an Assistant to the Chief of the Customs @aborator*, testified that a chemical
test was conducted on the sample
2/
and .the result is that the attached sample submitted
under 5ntr* #o. 3671 was found to be made %holly of Polyethylene plastic..
20
A similar result conducted b* the Adamson >niversit* Testin& @aboratories provides as
follows'
The submitted sample, bein& insoluble in 1$: sodium carbonateA h*drochloric acid, &lacial
acetic acid, toluene, acetone, formic acid, and nitric acid, does not belon& to the man8made
fibers, i.e., cellulosic and al&inate ra*ons, pol* "vin*l chloride%, pol*acr*lonitrile, copol*mer or
pol*ester silicones includin& Dolan, Dralon, (rlin, /A#, 1edon, Courtelle, etc., Tar*lene, DacronA
ut it is a type of plastic not possessing' the properties of the man-made fiers.
21
"5mphasis
supplied%
Conse=uentl*, the Court of Tax Appeals, rel*in& on the laborator* findin&s of the 4ureau of
Customs and Adamson >niversit* correctl* classified the =uestioned shipment as
pol*eth*lene plastic taxable under Tariff 0eadin& #o. +.$2 instead of s*nthetic "pol*eth*lene%
woven fabric under Tariff 0eadin& 71.$!, to wit'
Chile it is true that the findin& and conclusion of the Collector of Customs with respect to
classification of imported articles are presumptivel* correct, *et as matters that re=uire
laborator* tests or anal*sis to arrive at the proper classification, the opinion of the Collector must
*ield to the findin& of an expert whose opinion is based on such laborator* test or anal*sis
unless such laborator* anal*sis is shown to be erroneous. And this is especiall* so in this case
where the test and anal*sis were made in the laborator* of the 4ureau of Customs itself. ?t has
not been shown wh* such laborator* findin& was disre&arded. There is no claim or pretense that
an error was committed b* the laborator* technician. ,i&nificantl*, the said findin& of the Chief,
Customs @aborator* finds support in the .15/(1T (< A#A@J,?,. submitted b* the Adamson
>niversit* Testin& @aboratories, dated ,eptember 21, 166.
22
(n the third issue, we opine that the 4ureau of Customs cannot be held liable for actual
dama&es that the private respondent sustained with re&ard to its &oods. (therwise, to permit
private respondentDs claim to prosper would violate the doctrine of soverei&n immunit*. ,ince
it demands that the Commissioner of Customs be ordered to pa* for actual dama&es it
sustained, for which ultimatel* liabilit* will fall on the &overnment, it is obvious that this case
has been converted technicall* into a suit a&ainst the state.
29
(n this point, the political doctrine that .the state ma* not be sued without its consent,.
cate&oricall* applies.
30
As an unincorporated &overnment a&enc* without an* separate
;uridical personalit* of its own, the 4ureau of Customs en;o*s immunit* from suit. Alon& with
the 4ureau of ?nternal 1evenue, it is invested with an inherent power of soverei&nt*, namel*,
taxation. As an a&enc*, the 4ureau of Customs performs the &overnmental function of
collectin& revenues which is definitel* not a proprietar* function. Thus, private respondentDs
claim for dama&es a&ainst the Commissioner of Customs must fail.
C0515<(15, the decision of the respondent Court of Tax Appeals is A<<?125D. The
Collector of Customs is directed to expeditiousl* re8compute the customs duties appl*in&
Tariff 0eadin& +.$2 at the rate of +7: ad valorem on the 1+,6$$ kilo&rams of pol*eth*lene
plastic imported b* private respondent.
,( (1D515D.