G.R. No. 145568 - Heirs of Tan, Sr. vs. Pollescas

This case is an appeal from the joint decision of the Court of Tax Appeals arising from two consolidated customs protests and appeals, identified as CTA Cases Nos. 3177 and 3178.
Both cases involve appellants challenging the additional customs duties and taxes assessed by the Collector of Customs, based on a re-appraisal conducted through an “alert notice.”

Factual Background – CTA Case No. 3177 (Refrigerating Machinery Spare Parts)

In July 1975, the S/S "Marchen Maersk" (Reg. No. 1069) arrived at the Port of Manila with a shipment consisting of 17 packages of refrigerating machinery parts.
Among the consigned items were fifteen (15) Model HGC 1000 compressors, initially valued at US$62.35 each as per the Consular Invoice.
An "alert notice" led the Collector of Customs to increase the value of each compressor to US$70.24, resulting in additional duties and taxes amounting to P459.00, as indicated by an official receipt dated July 8, 1975.
Petitioners protested this increased assessment in a letter dated July 22, 1975, contending that in the absence of an established published home consumption value, the assessment should rely on the value stated in the consular invoice.
A subsequent decision, rendered on April 14, 1978 by the Collector of Customs (relying on the “alert notice”), sustained the original re-appraisal and dismissed the protest, which was later appealed by the petitioner.

A shipment containing 11 carlons of Tecumseh compressors and spare parts arrived at the Port of Manila aboard the S/S "Traviata" (Reg. No. 905).
The shipment comprised various items:

Ten (10) units of Model YFTL open type compressors (initially valued at US$198.83, later revalued at US$223.81 each),
Five (5) valve assemblies (BNK 585-10, revalued from US$15.34 to US$20.17 each), and
Five (5) shaft seal kit assemblies (revalued from US$14.92 to US$19.21 each).

The Collector of Customs, upon re-appraising the home consumption value based on another “alert notice,” assessed additional duties, taxes, and a fine totaling P3,570.00 (as evidenced by the official receipt dated July 11, 1975).
Similarly to CTA Case No. 3177, the protest was made via a letter dated July 22, 1975, arguing that the absence of a published home consumption value necessitated using the consular invoice values, in accordance with paragraph 2, Section 201 of the Tariff and Customs Code (amended by Presidential Decree No. 34).
The Collector’s decision to rely solely on the “alert notice” was again contested, prompting an appeal filed on May 17, 1978.

In both cases, the central controversy arises from the re-appraisal of the dutiable value of imported goods based on “alert notices” rather than the values declared in the consular invoices.
Petitioners argued that without a published and established home consumption value, the customs assessment should strictly adhere to the consular invoice values, as mandated by law.
The legal provision at issue is Section 201 of the Tariff and Customs Code (as amended by Presidential Decree No. 34, now under PD No. 1464), which clearly stipulates that the dutiable value is based on the home consumption value declared in the consular invoice unless a reasonable doubt about the declared value exists.

Whether the Collector of Customs was correct in determining the home consumption value (and thereby the dutiable value) of the imported articles based on an “alert notice” rather than on the value declared in the consular invoice.
Whether the re-appraisal based on the “alert notice” met the statutory requirements of Section 201 of the Tariff and Customs Code, including the mandatory publication of home consumption values.
Whether the failure to disclose or present evidence of the “alert notice” during the customs proceedings violated the due process requirements applicable to administrative actions.