SECOND Division
|
COMMISSIONER OF CUSTOMS, Petitioner, - versus - MARINA
SALES, INC., Respondent. |
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G.R. No. 183868 Present: CARPIO, J., Chairperson, DE CASTRO,* PERALTA, ABAD, and MENDOZA, JJ. Promulgated: November 22, 2010 |
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D E C I S I O N
MENDOZA, J.:
In this petition for review on certiorari[1]
under Rule 45, the Commissioner of Customs (Commissioner), represented
by the Office of the Solicitor General (OSG), assails the April 11, 2008
Resolution[2] of
the Court of Tax Appeals En Banc (CTA-En Banc), in C.T.A. E.B. No. 333,
dismissing his petition for review for his failure to file a motion for reconsideration
before the Court of Tax Appeals Division (CTA-Division).
Respondent Marina Sales, Inc. (Marina)
is engaged in the manufacture of Sunquick juice concentrates. It was appointed by CO-RO Food A/S of
On
This
time, however, the BOC examiners contested the tariff classification of
The
withheld importation being necessary to its business operations,
On
On
On
Again,
the BOC examiners disputed the tariff classification of Import Entry No.
C-67560-03 and recommended to the VCRC that the importation be classified at
Tariff Heading H.S. 2106.90 50 with the corresponding 7% duty rate.
In
order for Import Entry No. C-67560-03 to be released,
In
a letter dated
On July 17, 2003, Marina again attended
the VCRC deliberation and submitted its explanation[14]
dated July 17, 2003 together with samples in support of its claim that the
imported goods under Import Entry No. C-67560-03 should not be reclassified
under Tariff Heading H.S. 2106.90 50.
Thereafter, the classification cases
for Import Entry No. C-33771-03 and Import Entry No. C-67560-03 were
consolidated.
On
On
In its 1st Indorsement of
Apparently not in conformity,
On
WHEREFORE,
finding merit in petitioner’s Petition for Review, the same is hereby GRANTED. Accordingly, the Resolution/Decision dated
SO
ORDERED.
The Commissioner disagreed and elevated the case to the CTA-En
Banc via a petition for review.[21]
In its Resolution of
A careful scrutiny of the record of this
case showed that petitioner failed to file before the Second Division the
required Motion for Reconsideration before elevating his case to the CTA En
Banc.
Section 1, Rule 8 of the Revised Rules of
the Court of Tax Appeals provided for the following rule, to wit:
RULE 8
PROCEDURE IN CIVIL CASES
SECTION 1. Review of Cases in the Court
en banc.- In cases falling under the exclusive appellate jurisdiction of the
Court en banc, the petition for review of a decision or resolution of the Court
in Division must be
preceded by the filing of a timely motion for reconsideration or new trial with the Division.
In statutory construction, the use of the
word “must” indicates that the requirement is mandatory. Furthermore, the word “must” connote an
imperative act or operates to simply impose a duty which may be enforced. It is true the word “must” is sometimes
construed as “may” – permissive – but this is only when the context requires
it. Where the context plainly shows the
provision to be mandatory, the word “must” is a command and cannot be construed
as permissive, but must be given the signification which it imparts.
It is worthy to note that the Supreme
Court ruled that a Motion for Reconsideration is mandatory as a precondition to
the filing of a Petition for Review under Rule 43 of the Rules of Court.
WHEREFORE, applying by analogy the above
ruling of the Supreme Court and taking into consideration the mandatory
provision provided by Section 1 of Rule 8 of the Revised Rules of the Court of
Tax Appeals and considering further that petitioner did not file a Motion for
Reconsideration with the Second Division before elevating the case to the Court
En Banc, which eventually deprived the Second Division of an opportunity to
amend, modify, reverse or correct its mistake or error, if there be,
petitioner’s Petition for Review is hereby DISMISSED.
SO ORDERED.[22]
The Commissioner sought reconsideration of the disputed
decision, but the CTA En Banc issued a denial in its
Hence, this petition.
In his Memorandum,[24] the
Commissioner submits the following issues for resolution:
A.
WHETHER THE DISMISSAL BY THE COURT OF TAX
APPEALS’ EN BANC OF PETITIONER’S PETITION BASED ON MERE TECHNICALITY WILL
RESULT IN INJUSTICE AND UNFAIRNESS TO PETITIONER.
B.
WHETHER THE CHALLENGED DECISION OF THE
COURT OF TAX APPEALS’ SECOND DIVISION HOLDING THAT RESPONDENT’S IMPORTATION ARE
COVERED BY IMPORT ENTRY NOS. C-33771-03 AND C-67560-03 ARE CLASSIFIED UNDER
TARIFF HARMONIZED SYSTEM HEADING H.S. 2106.90 10 WITH AN IMPORT DUTY RATE OF
ONE PERCENT (1%) IS NOT CORRECT.[25]
The
Commissioner argues that the dismissal of his petition before the CTA-En Banc is
inconsistent with the principle of the liberal application of the rules of
procedure.[26] He points out that due to the dismissal of the
petition, the government would only be collecting 1% import duty rate from
The
Commissioner also contends that the testimony of Marina’s expert witness,
Aurora Kimura, pertaining to Sunquick Lemon compound shows that it could be
classified as “heavy syrup”[29]
falling under the category of H.S. 2190.90 50 with a 7% import duty rate.[30]
The Court
finds no merit in the petition.
On the
procedure, the Court agrees with the CTA En Banc that the Commissioner failed
to comply with the mandatory provisions of Rule 8, Section 1 of the Revised
Rules of the Court of Tax Appeals[31]
requiring that “the
petition for review of a decision or resolution of the Court in Division must be preceded by the filing of a timely motion for reconsideration or new
trial with the Division.” The
word "must" clearly indicates the mandatory -- not merely directory
-- nature of a requirement.”[32]
The rules
are clear. Before the CTA En Banc could
take cognizance of the petition for review concerning a case falling under its
exclusive appellate jurisdiction, the litigant must sufficiently show that it
sought prior reconsideration or moved for a new trial with the concerned CTA division. Procedural rules are not to be trifled with or be excused
simply because their non-compliance may have resulted in prejudicing a party’s
substantive rights.[33]
Rules are meant to be followed. They may be relaxed only for very exigent and
persuasive reasons to relieve a litigant of an injustice not commensurate to
his careless non-observance of the prescribed rules.[34]
At any rate, even if the Court
accords liberality, the position of the Commissioner has no merit. After examining the records of the case, the Court
is of the view that the import duty rate of 1%, as determined by the CTA Second
Division, is correct.
The table
shows the different classification of Tariff import duties relevant to the case
at bar:
|
TARIFF
HEADING |
IMPORT DUTY
RATE |
COVERAGE |
|
H.S. 2106.90
10 |
1% |
Covers flavouring materials, nes., of kind used in
food and drink industries; other food preparations to be used as raw material
in preparing composite concentrates for making beverages |
|
H.S. 2106.90
50 |
7% |
Covers composite concentrate for simple dilution
with water to make beverages |
|
H.S. 2009. 19
00 |
7% |
Covers orange juice, not frozen |
|
H.S. 2009.80
00 |
7% |
Covers juice of any other single fruit or
vegetable |
|
H.S. 2009.90
00 |
10% |
Covers mixtures of juices |
The
Commissioner insists that
The Court
is not persuaded.
As
extensively discussed by the CTA Second Division, to fit into the category
listed under the Tariff Harmonized System Headings calling for a higher import
duty rate of 7%, the imported articles must not lose its original character. In this case, however, the laboratory analysis
of
Verily, to fall
under the assailed Tariff Harmonized System Headings, petitioner’s (herein
respondent) articles of importation, as fruit juices/mixtures, should not have
lost its original character, in spite of the addition of certain “standardizing
agents/constituents.” Contrary thereto,
We find the subject importations categorized as “non-alcoholic composite
concentrates” to have apparently lost their original character due to the
addition of ingredients in such quantity that the concentrated fruit juice
mixture only comprises a small percentage of the entire compound.
This was
clearly explained by the VCRC in its subsequent Resolution/Decision (“1st
Indorsement”) issued on February 17, 2005 pertaining to subsequent similar
importations of petitioner, effectively correcting its findings in the assailed
Resolution/Decision dated November 13, 2003 concerning the same party-importer,
issues and articles of importation,[37] to
wit:
SUB-GROUP
OBSERVATIONS/FINDINGS:
The
classification issue was divided into two regimes. The era under the old Harmonized Commodity
Description and Coding System, while the other is the latest revised edition,
the Asean Harmonized Tariff Nomenclature.
The previous
committee resolution was promulgated technically not on the merit of the case
but failure on the part of the importer to submit their position
paper/arguments within the prescriptive period given by the committee.
Importer
submitted samples of subject shipment for laboratory analysis to Philippine
Customs laboratory to validate the veracity of product information given by the
supplier and to determine the correct tariff classification.
Xxx xxx xxx
Based on the
report of the Laboratory Analysis, compound is made up to water 57.9%, Invert
Sugar 34.34%, Citric Acid 2.94%, Vitamin C (Ascorbic Acid) 105 mg.
Since the item
is compound which is composed of water, sugar, concentrated juice, flavourings,
citric acid, stabilizer, preservatives, vitamins C and colouring to produce
beverage ready to drink. Consequently the concentrated citrus
juice has lost its original character due to the fact that it comprises only
12% of the total compound.[38]
Items (fruit
juices) classifiable under HS 2009 are fruit juices generally obtained by pressing
fresh, healthy and ripe fruit. Per item
4 of the Explanatory Notes to the Harmonized Commodity Description and Coding
System apparently subject article has lost its original character as
concentrated fruit juice drink to the compounding ingredients which reduces the
fruit juices to 12% of the total compound.
In view of the
foregoing subject article is classifiable under Tariff Heading H.S. 2106.90 10
at 1% for entries filed under the old regime.
For those filed under the new regime tariff heading AHTN 2106.90 51 at
1% where the item are specifically provided.
RESOLUTION: To
apply sub-group recommendation which is to adopt H.S. 2106.90 10 at 1% for entries filed under the old
regime and for those filed under the new regime, AHTN 2106.90 51 at 1% where
the item are specifically provided.[39]
To
“manufacture” is to “make or fabricate raw materials by hand, art or machinery,
and work into forms convenient for use.”[40]
Stated differently, it is to transform by any process into another form
suitable for its intended use.
On our ocular inspection of the
manufacturing plant of petitioner, Ms. Solidum and Mr. Domingo showed us the
sample of the imported compounds (raw materials), showed to us the step by step
manufacturing process of petitioner and even showed us the bottling and
packaging of the finished product.
Per observation of the undersigned, the
imported compounds (raw materials) are very sticky, the plant is clean and that
the personnel of petitioner in the plant strictly following the manufacturing
process as presented in Annex A and Annex B of this report.
Upon questioning by the counsel for
respondent, Mr. Domingo said that while the imported compounds (raw materials)
can be mixed with water and may be drinkable, he is not sure if the same is
suitable for human consumption. None of
us dared to taste the sample of imported compounds (raw materials) diluted in
water. The imported compounds (raw
materials) mixed with water produces bubbles on top of the mixture, not like
the one that has gone through the manufacturing process. Counsel for respondent requested for the
marking of Label of Sunquick Lemon (840 ml.), [Annex C], as Exhibit 1 for the
respondent.[42]
Contrary to
the Commissioner’s assertions, empirical evidence shows that the subject
importations would have to undergo a laborious method, as shown by its
manufacturing flowchart[43]
and manufacturing process,[44]
to achieve their marketable juice consistency.
Accordingly, the
1% tariff import duty rate under Tariff Heading H.S. 2106.90 10 was correctly
applied to the subject importations.
In any
case, the VCRC in its 1st Indorsement[45]
of
WHEREFORE, the
petition is DENIED.
SO ORDERED.
JOSE
CATRAL
Associate Justice
WE CONCUR:
ANTONIO T.
CARPIO
Associate Justice
Chairperson
TERESITA J.
LEONARDO-DE CASTRO DIOSDADO M.
PERALTA
Associate Justice Associate Justice
ROBERTO A.
ABAD
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second
Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
*
Designated as additional member in lieu of Associate Justice Antonio Eduardo B.
Nachura per Raffle dated November 22, 2010.
[1] Rollo, pp. 112-145.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31] A.M. No. 05-11-07-CTA.
[32] Dangan-Corral v. Commission on Elections,
G.R. No. 190156,
[33] Systra
Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 176290,
September 21, 2007, 533 SCRA 776, 780, citing Galang v. Court of Appeals,
G.R. No. 76221, July 29, 1991, 199 SCRA 683, 689.
[34] Galang
v. Court of Appeals, G.R. No. 76221,
[35] Rollo, pp. 468-470.
[36]
[37]
Emphasis supplied.
[38]
Emphasis supplied.
[39] Rollo, pp. 691-692. Emphasis and underscoring
supplied.
[40]
Bouvier’s Law Dictionary, Vol.
II, p. 2086
[41] Rollo, pp. 411-412.
[42]
[43]
[44]
[45]