THE COMMISSIONER OF CUSTOMS, PETITIONER, VS. FARM IMPLEMENT AND MACHINERY COMPANY, RESPONDENT.

This is an appeal by the Commissioner of Customs from a decision of the
Court of Tax Appeals, the dispositive part of which reads as follows:

“Wherefore,
the decision of the Commissioner of Customs is hereby reversed. We
decree the cancellation of Surety Bond No. C-54/7744 of the South Sea
Surety & Insurance Co., Inc. in the amount of P12,483.77 which was
filed for the release of the shipment in question. Without
pronouncement as to costs.”

The main facts are set forth in the decision appealed from in the following language:

“The
petitioner has appealed from the decision of the Commissioner of
Customs affirming the decision of the Collector of Customs of the Port
of Manila, which ordered the forfeiture in favor of the Republic of the
Philippines of thirty-four (34) packages containing sotanghon for
alleged violation of Central Bank Circular No. 44, in relation to
Section 1363 (f) of the Revised Administrative Code.

“The
records of the case show that the shipment in question arrived at the
Port of Manila on board the S.S. ‘Hai Meng’, Reg. No. 947, from
Hongkong on July 23, 1954. It was consigned to the Farm Implement &
Machinery Co., declared in Customs Entry No. 59908 (Exhibit ‘6’) duly
accompanied with consular invoice No. 1407 (Exhibit ‘5’), commercial
invoice No. 03906 of Etta Trading Co., Hongkong, and Central Bank
release certificate Ref. No. 54/3837 (Exhibits ‘B’ & ‘4’). The
shipment is described as ’34 Pkgs. containing 12,000 kilos cereal’, and
for purposes of the commodity classification of the Central Bank was
classified by petitioner as falling under ‘Commodity Code No.
040802-NEC.’

“Upon examination of the shipment by a customs
officer, it was found to be ‘sotanghon’ and was classified as
‘vermicelli’ under Commodity Code No. 040804-UI, for which reason it
was seized. Pending the seizure proceedings, the shipment was released
to petitioner upon the filing of Surety Bond No. C-54/7744 of the South
Sea Surety & Insurance Co., Inc. in the amount of P12,483.77. After
due hearing, the Collector of Customs of Manila, on April 14, 1955
determined that the merchandise in question was subject to forfeiture
for alleged violation of Central Bank Circular No. 44, in relation to
Section 1363 (f) of the Revised Administrative Code, and therefore
ordered the forfeiture of the aforesaid bond in favor of the Republic
of the Philippines. On appeal, the decision of the Collector of Customs
of Manila was affirmed in toto on March 12, 1956 by the Commissioner of Customs. From this decision, petitioner filed the instant petition for review.

“The
only issue here is whether or not the thirty-four (34) packages of
‘sotanghon’ in question properly falls under Commodity Code No. 040802
(NEC) of the Statistical Classification of Commodities of the Central
Bank implementing Central Bank Circulars Nos. 44 and 45, as claimed by
petitioner, or under Commodity Code No. 040804 (UI), as claimed by the
Government.”

Respondent herein contends,
and the Court of Tax Appeals held, that the merchandise in question
falls under Commodity Code No. 040802-NEC, reading: “Groats semolina
and cereals; flaked, pearled or prepared in a manner not elsewhere
specified (including prepared breakfast foods)”.

However, appellant maintains that “sotanghon” comes under Commodity Code No. 040804-UI, which we quote:

“Macaroni, spaghetti, noodles, vermicelli and similar preparations.”

particularly the last part thereof, namely, “similar preparations.”

The terms used in the foregoing classifications are defined in Webster’s International Dictionary as follows:

“Groats—dried
grain, hulled and often broken or drushed, cracked fragments of wheat
larger than grits; in oats, the edible portion of the kernel.

“Semolina—the purified middlings of durum or other hard wheat, used for
macaroni and similar edible paste; sezing or course middlings.

“Cereal—1) any gross yielding forinaceous seeds suitable for food, as
wheat, maize, rice, etc; also, the seeds or grain so produced either in
their original state or commercially middlings. 2) A prepared foodstuff
of grain, as oatmeal or flaked corn used especially with milk or cream
as a breakfast food.

“Macaroni—a kind of paste, composed chiefly of wheat flour, dried in the form of slender tubes.

“Spaghetti—a variety of alimentary paste made in cords of small diameter, but larger than vermicelli and solti (not tubular as in macaroni).

“Vermicelli—a variety of alimentary paste made in cords of smaller diameter than spaghetti.

“Noodle—an alimentary paste shape in ribbon form and usually made with egg.”

Moreover, Francisco A. Soliven, Chief of the Food Technology Division,
Institute Science, testified that “Sotanghon” is a worm like food
product made of glutinous rice which should be classified as
“vermicelli.” Indeed, it is a kind of alimentary paste made in cords,
thus being a preparation similar to macaroni, spaghetti, noodle and
vermicelli, falling under Commodity Code No. 04084-UI, not Commodity
Code No. 040802-NEC.

It is urged, however, that macaroni,
spaghetti, noodle and vermicelli are made of materials other than those
used in “sotanghon”. This circumstance does not detract, however, from
the fact that the latter is similar to the former, not only in its
appearance and manner of preparation, but, also, in the use thereof.
Conversely, “sotanghon” differs from the merchandise specified in
Commodity Code No. 040802-NEC, in appearance and manner of preparation,
as well as in the use thereof. The only thing in common between both is
the fact that the basic material in “sotanghon” is cereal, but so is
the basic material of macaroni, spaghetti, noodle and vermicelli, which
fall under Commodity Code No. 040804-UI. Besides, for a cereal to come
under Commodity Code No. 040802-NEC, it must be “flaked, pearled or
prepared in a manner not elsewhere specified (including prepared
breakfast)”, whereas “sotanghon” is prepared in the manner specified in
Commodity Code No. 040804-UI.

Appellee next argues that
Commodity Code No. 040802-NEC was amended on August 2, 1956, to read
“cereal paste (macaroni, spaghetti, noodle, vermicelli, suatanghon
and similar preparations)” and that the express mention therein of
“sotanghon” indicates that the same was not included in this
classification prior to said date. Such pretense is untenable, for said
explicit mention by amendment does not negate the implied inclusion of
“sotanghon” prior thereto, as testified to by said Mr. Soliven. In
fact, as early as 1954, the legal counsel for the Central Bank had
opined that “sotanghon” may be classified under said Commodity Code No.
040804-UI, and the record before us strongly suggests that the
aforementioned amendment in 1956 had for its purpose, not to cure an
omission, but to leave no room for doubt that “sotanghon” falls under
such class.

Wherefore, the decision appealed from is hereby
reversed, and that of the Commissioner of Customs affirmed, with costs
against respondent Farm Implement and Machinery Company. It is so
ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Barrera, and Gutierrez David, JJ., concur.
Reyes, J.B.L., and Endencia, JJ., took no part.