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

This is a petition for review of the decision of the Court of Tax
Appeals in C.T.A. Case No. 2829 entitled “Campos Rueda Corporation,
Petitioner, v. The Honorable Commissioner of Customs, Respondents”
reversing the decision of the Commissioner of Customs dismissing the protest of
private respondent Campos Rueda Corporation.

The facts of the case as taken from the decision of respondent
court and which are not disputed are as follows:

Private respondent Campos Rueda Corporation (Campos Rueda, for
brevity) imported 46 cartons (consisting of 27,000 pieces) of Tungsol
flashers. Before the goods arrived at
the port of Manila, Campos Rueda filed with the Collector of Customs of Manila
a request for value information for the declaration of the imported flashers under
Tariff Heading No. 85.09 of the Tariff and Customs Code at 30% ad valorem duty,
for classification purpose. The Customs
appraiser however, re-classified the goods under Tariff Heading No. 85.19 of
the Tariff and Customs Code at 50% ad valorem.

When the goods arrived at the port of Manila on February 12, 1974
on board S/S “Luna Maersk” under Bill of Lading No. CFS-9, Campos
Rueda immediately filed Customs Import Entry and Internal Revenue Declaration
No. 0103185 under Entry No. 26867 under Tariff Heading No. 85.19 of the Tariff
and Customs Code at 50% ad valorem but, under protest. On March 26, 1974, it paid P134,377.00 as
duties and taxes on the goods, also under protest. On April 4, 1974, it filed a timely protest against the
re-classification resulting in the payment of additional customs duty of
P26,258.00 and advance sales tax of P2,297.00
or a total difference of P28,555.00. Campos Rueda prayed for the refund of the said difference (pp. 27-28, Rollo).

On October 11, 1974, the Collector of Customs dismissed the
protest. The decision was appealed by
Rueda Campos to the Commissioner of Customs, which affirmed the dismissal on
July 30, 1976. The decision of the
Commissioner of Customs was then appealed to the Court of Tax Appeals which
modified the Commissioner’s decision on July 28, 1980 by ordering the refund to
private respondent Campos Rueda of the sum
of P26,258.00 but denying the
refund of the advance sales tax of P2,297.00 on the ground of failure to
file a written claim for refund thereof
and to make the Commissioner of Internal Revenue a party thereto. The dispositive portion of the decision
reads:

“WHEREFORE, the decision appealed from is modified. Respondent Commissioner of Customs is hereby
ordered to refund petitioner the sum of P26,258.00. Without pronouncement as to costs.”

Not satisfied with the decision of the Court of Tax Appeals, the
Commissioner of Customs, represented by the Office of the Solicitor General,
filed this petition for review on November 28, 1980 (p. 17, Rollo).

The only issue for resolution in this petition is the correct
classification of the imported Tungsol flashers, i.e., whether they should fall
under Tariff Heading No. 85.09 at 30% ad valorem or under Tariff Heading No.
85.19 at 50% ad valorem, both under the Tariff and Customs Code.

Tariff Heading No. 85.09 of the Tariff and Custom Code provides:

“85.09. Electrical
lighting and signalling equipment and electrical windscreen wipers, defrosters
and demisters, for cycles or motor vehicles — ad val. 30%.”

On the other hand, the same Code provides under Tariff Heading
No. 85.19:

“85.19. Electrical apparatus for making and breaking
electrical circuits, for the protection of electrical circuits, or for making
connections to or in electric circuits (for example, switches, relays, fuses,
lighting arresters, surge suppressors, plugs, lamp-holders and junction boxes);
resistors, fixed or variable (including potentiometers), other than heating
resistors, printed circuits, switch boards (other than telephone switchboards) and
control panels:

Petitioner contends that the imported flashers should be
classified under Tariff Heading No. 85.19. The documents covering the importation of the goods show that they are
“electrical lighting and signalling parts.” Hence, being parts only
of a whole signalling equipment, the flashers by themselves cannot function as
a signalling equipment. The imported
article can be considered merely as electrical apparatus for making and
breaking electrical circuits falling under Tariff Heading No. 85.19 of the
Tariff and Customs Code.

In its brief, private respondent Campos Rueda Corporation, on the
other hand, contends that the imported flashers should be classified under
Tariff Heading No. 85.09. Private
respondent contends that the subject importations are electrical apparatus used
on motor vehicles for signalling purposes, that is, to signal right or left
hand turn by means of electrical flashers in front and at the rear of motor
vehicles.

In finding for private respondent, respondent Court of Tax
Appeals found:

“Here in the case at bar, the evidence adduced by petitioner,
both oral and documentary, and the records of the Bureau of Customs pertaining
to this case on the basis of which respondent submitted this case for decision,
definitely establish the fact that the general purpose or predominating use to
which Tungsol Products (flashers) are applied or employed, and for which
petitioner imported them, is precisely as electrical equipment for signalling
purposes for motor vehicles; that is, to signal or indicate a right or left
hand turn by means of electrical flashes in front and at the rear of motor
vehicles. The import entry and internal
revenue declaration of the shipment (p.10, Customs records; Exh. “F”,
pp. 16-17, CTA records); consular invoice of merchandise NY65075E (pp. 12-13,
Customs records; Exh. “D,” p. 14, CTA records); bill of lading (p.16,
Customs records); commercial invoice of merchandise issued by E.B. Schwinger
& Company (p. 18, Customs records; Exh. “C”, p.13, CTA records);
Prudential Bank and Trust Company’s advice of letter of credit (p. 19, Customs
records); E.B. Schwinger Philippines firm order (p.20, Customs records; Exh.
“B”, p. 11, CTA records); order of payment dated March 2, 1974 issued
by the Bureau of Customs (p.22, Customs records; Exh.”G”, p.18, CTA
records); and Central Bank Official Receipt No. 287240 dated March 26, 1974
(p.23, Customs records; Exh. “H”, p.18, CTA records), all show that
the Tungsol Products (flashers) are electrical lighting and
signalling parts; and petitioner imported them as electrical
apparatus to be used on motor vehicles for signalling purposes, to signal a
right or left turn by means of electrical flashes in front and at the rear of
motor vehicles. (pp. 24-26, Customs
records.) This is confirmed and corroborated by the testimony of petitioner’s
purchasing manager and the brochure (or literature) of the Tungsol Product
issued by the manufacturer, Wagner Electric Corporation, 1 Summer Avenue,
Newark, New Jersey, U.S.A., describing the uses – FOR AUTOMOTIVE DIRECTION
SIGNALS–HAZARD WARNING CONDITION ALERT AND ACCESSORY APPLICATIONS – and
operating principles, performance characteristics, manufacturing standards,
mechanical specifications, application specifications and effect of circuit
conditions, which are all indicative of its use and adaptability as electrical
lighting and signalling apparatus for motor vehicles. Absolutely no proof whatsoever
was presented by respondent to
controvert or dispute the evidence adduced by petitioner that the Tungsol
flashers in question are electrical apparatus for use on motor vehicles for
lighting or signalling purposes. (pp.32-34, Rollo)

In the case of La Compaña General de Tobacos de Filipinas v.
United States, 8 Phil.438, it was
ruled that:

“The general purpose for which an article is used must govern
the assessment of duty; any other rule would lead to confusion and
injustice. It is the general use to
which articles are chiefly adopted and for which they are chiefly used that
determine their character within the meaning of the Tariff laws. It is the predominating use to which
articles are generally applied or used that determines their character for the
purpose of fixing the duty, and not the specific or special use which any
particular importer may make of the articles imported (Hartranft v. Langfeld,
125 U.S., 128).

In the Explanatory Notes to the 1950 text of the Brussels
Nomenclature upon which our tariff law was based, the following appears under
Tariff Heading No. 85.09:

“85.09. Electrical
lighting and signalling equipment and electrical windscreen wipers, defrosters
and demisters for cycles or motor vehicles — ad val. 30%.”

“This heading covers
electrical apparatus and appliances specialised for use on cycles or motor
vehicles for lighting or signalling purposes” (p. 2155, Commentaries on
the Tariff and Customs Code of the Philippines, Vol. 111, 1984 Fourth and
Revised Edition, Montano A. Tejam).

“Subject to the general provisions regarding the
classification of parts, parts of the goods of the present heading are also
classified here” (p. 2155, Ibid).

Parts of machines, apparatus of appliances which are suitable for
use solely or principally with a particular kind of machine or with a number of
machines falling within a specific heading, as a rule, are to be classified
with the machines in the same heading (See Montano A. Tejam, Commentaries on
the Revised Tariff and Customs Code of the Philippines, p. 1140, Vol. II, 1984
Revised Edition). There being a clear
showing that the subject imported flashers are to be used solely and
principally to signal or indicate a right or left hand turn in front and at the
rear of motor vehicles, they should be classified under Tariff Heading No. 85.09 as electrical lighting and
signalling equipment.

It is also noted that petitioner had, on two occasions in the
past, classified and assessed customs duties on similar imported Tungsol
Flashers under Tariff Heading No. 85.09 (p. 35, Rollo). On January 25, 1974, then Acting Collector
of Customs Rolando G. Geotina issued the circular classifying 12V Flasher for
Motor Vehicles under Tariff Heading No. 85.19 of the Tariff and Customs Code
reasoning that:

“x x x

“For being imported alone, subject
article cannot be properly deemed as electrical signalling equipment for motor
vehicle but should be treated more as a device for closing or opening an
electrical circuit. (emphasis supplied)

“x x x.”

The respondent Court of Tax Appeals opined, and We agree, that:

“The Tariff Law employs the words ‘electrical lighting and
signalling equipment x x x for motor vehicles’ – without more, and respondent admits that the Tungsol flashers in
question are electrical lighting and signalling equipment for motor vehicles. Nothing there speaks of ‘for being imported
alone,’ an article falling under Tariff Heading No. 85.09 as electrical
apparatus for use on motor vehicles for lighting and signalling purposes shall
be treated as a device for making and breaking electrical
circuits under Tariff Heading No. 85.19. Where the law does not provide that an article imported for
electrical lighting and signalling equipment for motor vehicles falling under
Tariff Heading No. 85.09, if imported alone, shall be
classified under Tariff Heading No. 85.19 as ‘electrical apparatus for making
and breaking electrical circuits,’ that provision should not be read into the
law.”

ACCORDINGLY, the petition for review is DENIED. The questioned decision of respondent Court
of Tax Appeals is AFFIRMED.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Grino-Aquino, JJ., concur.