Farolan v CTA

Facts:
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Bagong Buhay (BB) declared importation of 80 bales of screen (or mosquito) net of
500 rolls with gross weight of 12,777kg valued at $3750.00. The Bureau of Customs
(BoC) applied 35% ad valorem tax (according to Tariff and Custom Code) for said
goods, which Bagong Buhay paid P11,350.
Acting on the strength of an information that the shipment consisted of mosquito net
made of nylon dutiable under another Tariff classification, the Office of Collector of
Customs ordered a re-examination of the shipment. It found out that the shipment
consisted of 80 bales, each bale of 20 rolls or total of 1,600 rolls. It was re-appraised
and valued at $37,560.00. Furthermore the Customs official determined the shipment
as made of synthetic (polyethylene) woven fabric classified under Tariff Heading
50.04-B subject to 100% ad valorem.
The Customs also forfeited and seized the shipment in favor of the government
believing that the prior wrong declaration constituted fraud on the part of BB
BB appealed with BoC but was denied. Tried to reconsider but denied as well.
BB elevated his case with Court of Tax Appeals. CTA reversed BoC saying that their
was no fraud thus forfeiture was not valid. Moreover the material of the goods were
polyethylene plastic subject to 35% ad valorem. Chemistry results obtained from BoC
Laboratory. CTA ordered release of the shipment and payment of proper
duties/taxes.
Customs Commissioner asked for reconsideration from CTA but it was denied. BB
filed for a petition to release goods with SC but was denied. After several motions;
arguing that the questioned goods exposed to natural elements that could damage,
SC ordered release. Consequentlyprivate respondent posted a cash bond of
P149,443.36 to secure the release of 64 bales out of the 80 bales originally
delivered. Sixteen bales remain missing.
Private respondent alleges that of the 143,454 yards (64) bales) released to Bagong
Buhay, only 116,950 yards were in good condition and the 26,504 yards were in bad
condition. Consequently, private respondent demands that the Bureau of Customs be
ordered to pay for damages for the 43,050 yards it actually lost.

Issues:
1) WON the shipment in question is subject to forfeiture under Sec. 2530-M
subparagraphs (3, 4, 5) of the Tarrif and Customs Code
2) WON the shipment falls under Tariff classification 39.02 (polyethylene plastic) taxed
at 25% ad valorem, and not 51.04 (synthetic polyethylene woven fabric) at the rate of
100%
3) WON the Collector of Customs may be held liable for the yards of screen net lost
Court Ruling
1) NO. The shipment is not subject to forfeiture because Bagong Buhay did not commit
fraud in declaring the wrong amount of goods because such entry or declaration
merely restated faithfully the data found in the corresponding certification and
packing lists which were all prepared by its suppliers abroad. If, at all, the wrongful
making or falsity of the documents can be attributed to the foreign suppliers or
shippers. Bagong Buhay acted in good faith in declaring the amount of shipment.
2) NO. Chemical analysis submitted before the CTA was referred to. BoC chemical
analysis showed that the sample of material was found to be made wholly of
polyethylene plastic. A similar test was done by the Adamson University Laboratories,
and found that: submitted sample was polyethylenebut it is a type of plastic not
possessing the properties of the man-made fibers.

3) NO. Full quote from case: Bureau of Customs cannot be held liable for actual
damages that the private respondent sustained with regard to its goods. Otherwise,
to permit private respondents claim to prosper would violate the doctrine of
sovereign immunity. Since it demands that the Commissioner of Customs be ordered
to pay for actual damages it sustained, for which ultimately liability will fall on the
government, it is obvious that this case has been converted technically into a suit
against the state.
On this point, the political doctrine that the state may not be sued without its
consent, categorically applies. As an unincorporated government agency without
any separate juridical personality of its own, the Bureau of Customs enjoys immunity
from suit. Along with the Bureau of Internal Revenue, it is invested with an inherent
power of sovereignty, namely, taxation. As an agency, the Bureau of Customs
performs the governmental function of collecting revenues which is definitely not a
proprietary function. Thus, private respondents claim for damages against the
Commissioner of Customs must fail.