THIRD DIVISION

GR. 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.
ROMERO, J.:

FACTS:

Bagong Buhay declared importation of 80 bales of screen (mosquito net) of 500 rolls with gross
weight of 12,777kg valued at $3,750. The Bureau of Customs 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 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 bales of 20 rolls or total 1,600
rolls. It was re-appraised and the value at 37,560. Furthermore the customs official determined the
shipment as made of synthetic woven fabric classified under Tariff heading 50.04-B subject to 100% ad
valorem. 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; therefore they elevated said case with CTA which reversed the
decision of BOC saying that there was no fraud thus forfeiture was not valid. Moreover the materials of
the goods were polyethylene plastics subject to 35% ad valorem. Chemistry result obtained from BOC
laboratory. CTA ordered the release of the shipment and payment of proper duties and taxes. Customs
Commissioner asked for the reconsideration from CTA but it was denied. BB filed for a petition to release
with SC but was denied. After several motions; arguing that the questioned goods exposed to natural
elements that could damage, SC ordered release. Consequently private 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) Whether or not the shipment in question is subject to forfeiture under Sec. 2530-M subparagraphs (3,
4, 5) of the Tarrif and Customs Code
2) Whether or not 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) Whether or not the Collector of Customs may be held liable for the yards of screen net lost

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.