COMMISSIONER OF CUSTOMS, PETITIONER, VS. COURT OF TAX APPEALS AND CAMPOS RUEDA CORPORATION, RESPONDENTS.

Petitioner Commissioner of Customs seeks a reversal of the
Decision of respondent Court of Tax Appeals*
in CTA Case No. 2830 entitled “Campos Rueda Corporation, Petitioner, vs.
The Hon. Commissioner of Customs, Respondent” wherein respondent Court
ordered petitioner to refund to private respondent Campos Rueda Corporation the
customs duties the latter had overpaid on three of its importations.

The essential facts are not in controversy, the main issue being
one of law.

1)  Campos Rueda Corporation
(Respondent Company, for short), ordered tungsol flashers from the United
States.  One shipment, worth $10,812.20,
arrived in Manila on November 1, 1973 for which it filed the corresponding
Import Entry.

Another shipment of the same article, worth $18,220.10, arrived
in Manila on February 12, 1974 with Respondent Company again filing the
necessary Import Entry.

The invoice and declared unit price was $0.66 for the two
importations.  However, the Bureau of
Customs re-appraised the two shipments at the rate of $1.08 per piece based on
an “Alert Notice” sent by Finance Attaches abroad.  Respondent Company paid the increased taxes
and duties amounting to P18,591.00 and P52,226.00 for the respective shipments,
but filed Manila Protests Nos. 9274 and 9275 claiming a refund of said amounts.

2)  Respondent Company also
ordered sealed beams from the United States. 
The merchandise worth $18,964.54 arrived in Manila on March 31, 1974 for
which the corresponding Import Entry was filed. 
The invoice price of the merchandise was $0.908 per piece but the
Collector of Customs of Manila re-appraised it to $1.35 a piece based on an
“Alert Notice” received from Finance Attaches abroad.  Again, Respondent Company paid the increased
duties and taxes amounting to P67,525.00 but filed at the same time Manila
Protest No. 9287 for refund of the excess paid.

From the denial of the Protests by the Collector of Customs,
Respondent Company appealed to the Commissioner of Customs, which affirmed in
toto the consolidated Decision appealed from on the ground that
“Alert Notices are sent by Finance Attaches in their official capacity as
such officials, aware of their bounden duty to keep the Department of Finance
abreast with the current prices of commodities for the imposition of correct
amount of duties and taxes on taxable importations.”

Respondent Company elevated the case to respondent Court of Tax
Appeals which, on March 19, 1985, rendered judgment finding that petitioner had
violated Section 201 of the Tariff and Customs Code, and ruling:

“As to petitioner’s claim for tax refund, the same cannot be
passed upon by the Court because there is nothing in the records to show that
petitioner had filed its written claim for refund thereof with the Commissioner
of Internal Revenue and that the latter was made a party to this case.

” x        x        x

“In view of the foregoing, and since there is no controversy
between the parties as to the computation of the customs duties sought to be
refunded, only that amount of overpaid customs duties should be refundable to
petitioner.

“Wherefore, the appealed decision is modified.  Respondent is hereby ordered to grant the
refund of overpaid customs duties to petitioner Campos Rueda Corporation.  Without pronouncement as to costs.

“SO ORDERED.”

Hence, petitioner’s recourse to this instance.

The issue posed is whether or not the re-appraisal made by the
Commissioner of Customs was in accordance with Section 201 of the Tariff and
Customs Code of the Philippines (RA No. 1937), as amended by PD Nos. 34 and
1464.

Section 201 of the Tariff and Customs Code reads:

“Section 201.  Basis
of Dutiable Value – The dutiable value of an imported article subject to an
ad valorem rate of duty shall be based on the home consumption value or price
(excluding internal excise taxes) of same, like or similar articles, as bought
and sold or offered for sale freely in the usual wholesale quantities in the
ordinary course of trade, in the principal markets of the country from where
exported on the date of exportation to the Philippines, or where there is none
on such date, then on the home consumption value or price nearest to the date
of exportation including the value of all containers, coverings and/or packings
of any kind and all other costs, charges and expenses incident to placing the
article in a condition ready for shipment to the Philippines, plus ten (10) per
cent of such home consumption value or price.

“The home consumption value or price under this section shall
be the value or price declared in the consular, commercial, trade or sales
invoice.  Where there exists a reasonable
doubt as to the value or price of the imported article declared in the entry,
the correct dutiable value of the article shall be ascertained from the reports
of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache)
pursuant to Republic Act Numbered Fifty-four hundred and sixty-six or other
Philippine diplomatic officers and from such other information that may be
available to the Bureau of Customs.

“From the data thus gathered, the Commissioner of Customs
shall ascertain and establish the home consumption values of articles exported
to the Philippines and shall publish such lists of values from time to time.

“When the dutiable value provided for in the preceding
paragraphs cannot be ascertained for failure of the importer to produce the
documents mentioned in the second paragraph, or where there exists a reasonable
doubt as to dutiable value of the imported article declared in the entry, it
shall be the domestic wholesale selling price of such or similar article in
Manila or other principal markets in the Philippines on the date the duty
becomes payable on the article under appraisement, in the usual wholesale
quantities and in the ordinary course of trade, minus –

“(a) Twenty
(20) per cent thereof for expenses and profits; and

“(b) Duties and
taxes paid thereon.”

Clearly, the dutiable
value of an imported article is based on the home consumption value or price as
declared in the consular, commercial, trade or sales invoice.  But where there is a reasonable doubt, the
correct dutiable value shall be ascertained from the reports of the Revenue
Attache or Commercial Attache and from such other information that may be
available to the Bureau of Customs.  Also
required by the statute is the publication from time to time of the lists of
the home consumption values.

In the corresponding
Import Entries, Respondent Company quoted the prices of the imported
merchandise as declared in the consular invoices and as required by Section
201.  Reasonable doubt regarding the
declarations was not shown to have existed such that recourse to reports from
commercial attaches or other information became necessary.  Neither was there compliance with the
requirement in Section 201 regarding publication of the lists of dutiable
values of imported articles from time to time. 
The re-appraisal made by the Bureau of Customs was based on “Alert
Notices” received from Finance Attaches abroad, which, however, were not
disclosed, neither to Respondent Company nor to respondent Court.  As respondent Court had bewailed:

“In the case at bar, it is worthy to state that the
respondent’s re-appraisal of the subject shipments or articles imported were
based on the alleged piece of document known as “Alert Notice” which
was not even presented by respondent to the Court.  At any rate, assuming that there really is
such a document and the same was received by the Commissioner of Customs, the
fact is that the records do not show from what data the alleged alerted value
was taken, and how the Commissioner of Customs ascertained and established the
home consumption value of the imported articles and/or merchandise and when and
where such alerted value was published as required by law.  Under these circumstances,
the re-appraisal made by respondent is clearly not in accordance with the
provisions of Section 201 of the Tariff and Customs Code”.

While it is true that
appraisers of the Bureau of Customs are given ample leeway in determining the
correct customs duties under Section 1405 of the Tariff and Customs Code^[1],
Section 201 of the same Code, which prescribes the criteria for the
determination of the dutiable values of imported articles, has not been
complied with.  What is more,
administrative proceedings are not exempt from the operation of due process
requirements one of which is that a finding by an administrative tribunal
should be supported by substantial evidence presented at the hearing or at
least contained in the records or disclosed to the parties affected.^[2]
In this case the “Alert Notices” on which petitioner based its
re-appraisal were not disclosed during the proceedings before the Bureau of
Customs nor presented in evidence before respondent Court.  The re-appraisal made by petitioner,
therefore, can be faulted with arbitrariness in disregard of the standard of
due process to which all governmental action should conform to impress upon it
the stamp of validity.

WHEREFORE, the Petition for Review on Certiorari is
denied, and the appealed judgment is hereby affirmed.  No costs.

SO ORDERED.

Yap, (Chairman), Paras, Padilla, and
Sarmiento, JJ., concur.

*
Penned by Associate Judge Constante C. Roaquin and concurred in by Presiding
Judge Amante Filler and Associate Judge Alex Z. Reyes.

^[1]
“Sec. 1405.  Proceedings and Report of
Appraisers.-  Appraisers shall, by all
reasonable ways and means, ascertain, estimate and determine the value or price
of the articles as required by law, any invoice or affidavit thereto or
statement of cost, or of cost of production to the contrary notwithstanding,
and after revising and
correcting the reports of the examiners as they may judge proper, shall report in writing on the face of the entry the value so determined,
irrespective of whether such value is equal, higher or lower than the invoice and/or
entered value of the articles.

x x x “

^[2]
Air Manila, Inc. vs. Balatbat, L-29064, April 29, 1971, 38 SCRA 489-90.