G.R. No. 42204 January 21, 1993
HON. RAMON J. FAROLAN, JR., in his capacity as Commissioner of Customs, petitioner, vs. COURT OF TAX APPEALS and BAGONG BUHAY TRADING, respondents.

FACTS

On January 30, 1972, the vessel S/S “Pacific Hawk” arrived at the Port of Manila carrying 80 bales of screen net consigned to Bagong Buhay Trading. The importation was declared under Entry No. 8651-72 as 80 bales of screen net, 500 rolls, gross weight 12,777 kilograms, valued at $3,750.00, and classified under Tariff Heading No. 39.06-B (should be 39.02-B) at 35% ad valorem. Duties and taxes of P11,350.00 were paid. Upon re-examination prompted by information that the shipment was “mosquito net” made of nylon, it was found that the shipment consisted of 1,600 rolls (not 500) with a weight of 13,600 kilograms (not 12,777) and was re-appraised at $37,560.00. The Collector of Customs classified the goods as synthetic (polyethylene) woven fabric under Tariff Heading No. 51.04-B at 100% ad valorem, assessed additional duties and taxes of P272,600.00, and ordered the forfeiture of the shipment for misdeclaration of quantity and value. The Commissioner of Customs affirmed this decision. The Court of Tax Appeals reversed, ruling that no fraud was imputable to Bagong Buhay and that the goods should be classified as “polyethylene plastic” under Tariff Heading No. 39.02 at 35% ad valorem, ordering their release upon payment of correct duties. The Commissioner of Customs filed this petition. Pending resolution, 64 bales were released to Bagong Buhay upon posting a cash bond, with 16 bales missing and a portion of the released bales in bad condition, leading Bagong Buhay to claim damages.

ISSUE

1. Whether the shipment is subject to forfeiture under Section 2530(m), subparagraphs (3), (4), and (5) of the Tariff and Customs Code.
2. Whether the shipment falls under Tariff Heading No. 39.02-B (35% ad valorem) or Tariff Heading No. 51.04-B (100% ad valorem).
3. Whether the Collector of Customs may be held liable for the yards of material lost by private respondent.

RULING

1. NO, the shipment is not subject to forfeiture. While there was a misdeclaration as to quantity and weight, the requisites for forfeiture under Section 2530(m)(3) and (4) are not met. The wrongful making of a false declaration or document must be by the owner, importer, exporter, or consignee. Here, the import entry was prepared by Bagong Buhay’s customs broker based on shipping documents (certificate of origin, packing lists, bill of lading) provided by its foreign suppliers. The falsity, therefore, is attributable to the foreign suppliers, not Bagong Buhay, which had no knowledge of the discrepancy. Regarding subparagraph (5), which requires a practice or device contrary to law to the prejudice of the government, fraud must be actual and intentional. The Commissioner failed to prove that Bagong Buhay committed intentional fraud, as it acted in good faith relying on the supplier’s documents.
2. The shipment is properly classified under Tariff Heading No. 39.02 as “polyethylene plastic” subject to 35% ad valorem duty, not under Heading No. 51.04 as “woven fabrics of man-made fibers.” This classification is based on the chemical analysis from the Bureau of Customs Laboratory, which identified the material as “polyethylene plastic” and found it was not woven but consisted of “extruded polyethylene film” with “no weaving texture.” The Court of Tax Appeals correctly relied on this technical evidence over the visual inspection of customs examiners.
3. NO, the Collector of Customs cannot be held liable for the lost yards. A claim for damages against the Bureau of Customs is a suit against the state. The Bureau of Customs, as an unincorporated government agency performing the sovereign function of revenue collection (taxation), enjoys immunity from suit under the doctrine of state immunity from suit without its consent. Therefore, Bagong Buhay’s claim for damages must fail.
The decision of the Court of Tax Appeals is AFFIRMED. The Collector of Customs is directed to re-compute the customs duties applying Tariff Heading 39.02 at 35% ad valorem on the 13,600 kilograms of polyethylene plastic.