Title
Behn Meyer and Co., Ltd. vs. Collector of Customs
Case
G.R. No. 7987
Decision Date
Sep 11, 1913
Importer failed to correct consular invoice, comply with bond requirement; dutiable value based on export country (Hamburg), not manufacture (France).
assessment of duties
customs regulations
corrected consular invoice

Case Summary (G.R. No. 7987)

Factual Background

The plaintiff imported the fifty cases and presented an entry with a consular invoice appraised for duty at $1,291.15 in United States currency. The value stated in the consular invoice matched the value as appraised for duty and was also stated as the value in the consular invoice. The consular invoice bore the date Hamburg, August 29, 1907, and stated that the merchandise had been purchased by the importer from Arnold Otto Meyer of Hamburg. Although the shipment was shown as having been from Hamburg, the goods were described in the invoice as having been placed on board ship at the port of Antwerp, Belgium.

On the back of the consular invoice, the document declared that Arnold Otto Meyer was the agent of the purchaser, Behn, Meyer & Co., Limited, the importer. After the entry had been liquidated, the plaintiff filed a protest against the liquidation. The protest asserted a clerical error in the preparation of the consular invoice. The plaintiff claimed the person who prepared the invoice mistook the currency in the manufacturer’s invoice for Dutch florins and converted it into marks at the rate of 1.70 marks per florin. According to the protest, the prices in the manufacturer’s invoice were actually expressed in francs and should have been reflected as such.

In its protest, the plaintiff offered to produce a corrected consular invoice if necessary, and to obtain it from Europe without delay. The plaintiff, however, did not file the bond required by law and by customs regulations for the production of a corrected consular invoice.

After the protest and while the matter was pending in customs, a second consular invoice was presented, described as a correction of the first. It was issued at Antwerp, Belgium, and stated the currency in francs while naming Antwerp as the port of shipment. The customs authorities did not accept the second invoice as a correction because it was consulated in a different country by a different consul. The first consular invoice had been certified by the American consul in Hamburg, Germany, where—according to the first invoice—the goods were purchased by the importer.

Subsequently, a third consular invoice was filed as a substitute. This third invoice was issued at Hamburg, and dated April 22, 1908. It listed the currency as francs reduced to marks and named Hamburg as the port of shipment. Customs authorities did not accept the third invoice either. The Bureau of Customs reasoned that, in each of the three invoices, Arnold Otto Meyer appeared on the face of the documents as seller of the merchandise while simultaneously declaring himself to be the agent of the purchasers. The Bureau treated the invoices as irregular because Arnold Otto Meyer could not use a seller’s invoice and act in the dual capacity of seller and agent in the same transaction. The Bureau further stated that, if he was truly acting as agent for the purchasers, then each invoice was defective because no original invoice showing from whom he obtained the goods, from where he obtained them, and at what price, was attached to the invoice filed as required by Tariff Decision Circular No. 863. In addition, upon comparison with a French commercial invoice in the record, the Bureau found that the later documents were merely copies of the same commercial invoice and that the consulated copies did not reflect the value of the merchandise either at Antwerp or at Hamburg, the locations shown in the consular invoices.

Customs Decision and Trial Court Proceedings

Based on these findings, the Collector overruled the plaintiff’s protest. The Collector held that no corrected consular invoice had been presented as required by law, and that, because the later invoices were not in conformity, the appraiser’s return based on the invoice filed at the time of entry had to be accepted.

The plaintiff appealed to the Court of First Instance of the city of Manila. After hearing the case, the trial court reversed the Collector’s decision. It held that the Collector erred in accepting the appraiser’s return because it was based on an incorrect invoice.

The Applicable Statutory and Regulatory Framework

The decision discussed the operative provisions of the Act of Congress of June 10, 1890 (the Customs Administrative Act of the United States), particularly Sections 2, 3, and 4. These provisions required that invoices of imported merchandise be made out in the currency of the place or country from whence the importation was made, or, if purchased, in the currency actually paid therefor. The statute also required the invoices to contain a correct description and to be signed by the person owning or shipping the merchandise (if purchased) or by the manufacturer or owner (if obtained otherwise than by purchase), or by the duly authorized agent.

The statute further required that such invoices be produced at or before shipment to the United States consul (or the proper consular official) for the district where the merchandise was manufactured or purchased for export to the United States. The invoice had to be endorsed with a declaration signed by the purchaser, manufacturer, owner, or agent, stating that the invoice was correct and made at the place from which the merchandise was to be exported, and including the true time, place, person from whom it was purchased, and the actual cost and charges, consistent with the law. It also required a declaration regarding currency and prohibited furnishing different invoices for the merchandise.

Section 4 imposed an additional entry requirement for merchandise exceeding one hundred dollars in dutiable value. It prohibited admission to entry without a duly certified invoice or, where impracticable, a supporting affidavit showing why production of the certified invoice was impracticable. When entry was made by a statement in the form of an invoice, the Collector had to require a bond for the production of a duty-certified invoice.

The decision also relied on Section 20 of Act No. 355 (the Philippine Customs Administrative Act), which authorized the Insular Collector, in cases not provided for by the Philippine act or its regulations, to follow and apply the laws of the United States and treasury regulations in analogous cases, if consistent and practicable.

Issues Framed by the Parties’ Positions

The procedural dispute turned on whether the plaintiff could successfully impugn the duty assessment by seeking to rely on corrected invoices that were not accepted as valid corrections under the law and regulations, and without having filed the required bond. In substance, the case centered on customs valuation rules for ad valorem duties, the evidentiary and procedural weight of invoices presented at entry, and the legal effect of the plaintiff’s failure to comply with the bond requirement for production of a corrected consular invoice.

The Collector’s position was that the invoices presented by the plaintiff were irregular and defective, that no legally compliant corrected consular invoice had been produced, and that the appraiser’s return based on the original invoice filed at entry had to stand. The plaintiff’s position, accepted by the trial court, was that the Collector erred in accepting the appraiser’s return because the underlying invoice at entry was incorrect due to a clerical conversion error involving currency.

The Decision’s Analysis of Customs Valuation

The Court approached valuation through the lens of the statutory provisions governing ad valorem duties and the construction of “value” in customs laws. Sections 174 and 177 of Act No. 355 were invoked. Section 177 required that for merchandise subject to ad valorem duties or duties based on value, the duty be assessed on the actual market value or wholesale price of the merchandise as bought and sold in usual wholesale quantities at the time of exportation to the Philippine Islands in the principal markets of the country from whence imported. It also defined that “value” referred to the market value or wholesale price as defined in the statute.

Applying these principles, the Court held that the market value for tariff purposes had to be the value in the exporting country indicated by the consular invoice, rather than the alleged sale price in France where the plaintiff claimed the manufacturer sold the goods. Because the goods were imported from Hamburg, as shown by the consular invoice certified at Hamburg, and because the consular invoice at entry stated the purchase and exportation facts associated with Hamburg, the correct dutiable value had to be the value in Hamburg, not the value in Gien, France, where the plaintiff claimed the manufacturer would sell the goods.

The decision acknowledged testimony by Edward Plique, manager of the Comptoir Ceramique of Paris, regarding the nature of the factory prices reflected in a French commercial invoice. The Court nevertheless held that even if the French commercial invoice might be representative of market value in France, it did not establish the market value in Hamburg or Antwerp. The Court reasoned that if the goods were of French manufacture and had been taken to Antwerp or to Hamburg and sold there, then the price would necessarily reflect transportation costs, applicable duties and costs of placing the goods in the market ready for sale, and a reasonable profit. Thus, an invoice that did not show the value in the exporting market could not control the dutiable value required by the statutory standard.

Treatment of Customs Protests, Bonds, and Corrected Invoices

The Court placed heavy emphasis on the procedural consequences of failing to file the bond required to produce a corrected consular invoice. It pointed out that the value appearing on the invoice initially presented at the customhouse was accepted as the dutiable value. If that value was incorrect, the plaintiff had to treat the invoice as pro forma and file a bond to produce the correct consular invoice, pursuant to custo

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