G.R. No. 8019 ; September 24, 1915
KUENZLE and STREIFF, plaintiffs-appellees, vs. THE INSULAR COLLECTOR OF CUSTOMS, defendant-appellant.

FACTS:
Plaintiffs-appellees Kuenzle and Streiff imported merchandise into the Philippine Islands from Antwerp, Belgium. The merchandise, however, was originally manufactured in Holland and Germany and subsequently imported into Belgium. The invoices presented to the Collector of Customs stated only the wholesale price at the place of manufacture and did not include the additional costs incurred for packing, shipping, and customs duties paid upon entry into Belgium. The Insular Collector of Customs, applying Rule 13 of the customs regulations in relation to Sections 16 and 18 of the Philippine Tariff Law of 1909, increased the invoice value of the goods by five percent (5%) to account for these additional costs for the purpose of assessing the ad valorem duty. The plaintiffs appealed this assessment to the Court of First Instance of Manila, which ruled in their favor, holding that the Collector of Customs had no authority to make such an increase. The Collector of Customs then appealed this decision to the Supreme Court.

ISSUE:
Whether the Collector of Customs has the authority to increase the invoice value of imported merchandise to include costs such as packing, shipping, and duties incurred in a country of transit (Belgium) when determining the dutiable wholesale market value at the point of exportation to the Philippines.

RULING:
Yes. The Supreme Court reversed the decision of the Court of First Instance and upheld the authority of the Collector of Customs.

The Court established the following principles governing the appraisement of imported merchandise:
1. It is the duty of the Collector of Customs to appraise or fix the value of imports for duty assessment.
2. The appraisal must be based on the wholesale market price at the place of exportation to the Philippine Islands.
3. If the merchandise is not exported directly from its point of manufacture, the costs of shipping, packing, and other charges incurred to bring the goods from the place of manufacture to the point of exportation must be added to the wholesale price at the place of manufacture to arrive at the correct dutiable value.
4. If the importer fails to declare these additional costs, the Collector of Customs is authorized to add a reasonable percentage to the wholesale price at the point of manufacture to cover such costs and ascertain the true wholesale market value at the point of exportation.

Applying these principles, the Court held that the costs of packing, shipping, and duties paid in Belgium were legitimate components of the merchandise’s value at the time of its export from Antwerp to the Philippines. Since the importer’s invoice did not reflect these costs, the Collector of Customs acted within his authority under the Tariff Law and implementing rules by adding a reasonable percentage (5%) to the invoice value to approximate the true dutiable value. No objection was raised regarding the reasonableness of the 5% increase.

Therefore, the judgment of the lower court was revoked.