COMMISSIONER OF CUSTOMS vs. MARINA SALES, INC.
November 22, 2010
Respondent Marina Sales, Inc. (Marina) is engaged in the manufacture of Sunquick juice concentrates. Marina usually imports
raw materials into the country for the purpose. In the past, the Bureau of Customs (BOC) assessed said type of importations under
Tariff Heading H.S. 2106.90 10 with a 1% import duty rate.
On March 6, 2003, Marinas importation, consisting of a total of 80 drums of Sunquick Orange Concentrate; and of Sunquick
Lemon Concentrate, of which Marina computed and paid the duties under Tariff Harmonized System Heading H.S. 2106.90 10 at 1%
import duty rate, was contested by the BOC examaminers. The BOC examiners recommended to the Collector of Customs, acting as
Chairman of the Valuation and Classification Review Committee (VCRC) of the BOC, to reclassify Marinas importation as Tariff Heading
H.S. 2106.90 50 (covering composite concentrates for simple dilution with water to make beverages) with a corresponding 7% import
duty rate.
On September 11, 2003 the VCRC reclassified Marina's imported goods under Tariff Heading H.S. 2106.90 50 at 7% import
duty rate. Marina appealed before the Commissioner challenging VCRCs reclassification. The VCRC modified it's ruling and
classification but Apparently not in conformity, Marina interposed a petition for review before the CTA. The CTA Second Division ruled
in favor of Marina holding that its classification under Tariff Heading H.S. 2106.90 10 was the most appropriate and descriptive of the
disputed importations. It opined that Marinas importations were raw materials used for the manufacture of its Sunquick products,
not ready-to-drink juice concentrates as argued by the Commissioner. The Commissioner disagreed and elevated the case to the CTA-
En Banc via a petition for review. The CTA En Banc dismissed the petition stating that petitioner failed to file before the Second Division
the required Motion for Reconsideration before elevating his case to the CTA En Banc as required under Section 1, Rule 8 of the
Revised Rules of the Court of Tax Appeals
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.
Hence, this petition.
ISSUES: WHETHER THE DISMISSAL BY THE COURT OF TAX APPEALS EN BANC OF PETITIONERS PETITION BASED ON MERE TECHNICALITY
WILL RESULT IN INJUSTICE AND UNFAIRNESS TO PETITIONER.
WHETHER THE CHALLENGED DECISION OF THE COURT OF TAX APPEALS SECOND DIVISION HOLDING THAT RESPONDENTS
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.
HELD: The Supreme 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 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. Procedural rules are not to be
trifled with or be excused simply because their non-compliance may have resulted in prejudicing a partys substantive rights. 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.
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 Commissioner insists that Marinas two importations should be classified under Tariff Heading H.S. 2106.90 50 with an
import duty rate of 7% because the concentrates are ready for consumption by mere dilution with water. 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 Marinas samples yielded a different result. The report supported Marinas position that the subject
importations are not yet ready for human consumption. Moreover, Marinas plant manager, Rebecca Maronilla, testified that the juice
compounds could not be taken in their raw form because they are highly concentrated and must be mixed with other additives before
they could be marketed as Sunquick juice products. If taken in their unprocessed form, the concentrates without the mixed additives
would produce a sour taste. In other words, the concentrates, to be consumable, must have to lose their original character.
To manufacture is to make or fabricate raw materials by hand, art or machinery, and work into forms convenient for use.
Stated differently, it is to transform by any process into another form suitable for its intended use. Marina, as the manufacturing arm
of CO-RO Food A/S of Denmark, transforms said juice compounds, being raw materials, into a substance suitable for human
consumption.
Contrary to the Commissioners assertions, empirical evidence shows that the subject importations would have to undergo a
laborious method, as shown by its manufacturing flowchart and manufacturing process, 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
