CTA Case No. 2656 (Decision)

REPUHi,iC OF THE PIIII.IPP"l ~ E8 COURT OF TAX APPEALS QUEZON� CITY MACONDRAY & CO .~ INC ., as agent of the MS FERNBANK# Petition er,. versus - C . T . A. CASE NO o 2656 COMMISSIONER OF CUSTOMS# Respondent .. X- - - - ------X DECI S I 0 N This is an appeal from the decision of respondent Commissioner of Customs dated January 10~ 1975z imposing an administrative fine of P 7? 11 025,00 against the ves s el MS 11 Fernbank" and/ or its ship agent petitioner Macondray & co.# Inc. for violation of Section 25 23 of t he Tariff and Customs Code. On S epte mber 25~ 1969 the v es sel MS "Fe rnbank " arrived at the Port of Mani la from New York, conveying and discharging thereat a shipment of one hundred and ten (110) bales of cotton and rayon r emnants consigned to Judicor Commercialo The gro ss weight of the said mer- chandise as declared in the cargo manifest and bill of ladi ng was 59,938 l bs o but~ after an examination and actual weighing by a customs

DECISION CTA CASE NO . 2656 - 2- examiner. the total wei ght thereof was fo und to be 131~388 lbs � � or 71~450 lbs . more than the declare d weight . On Janua~y 22~ 1970, in a Jetter sent by the C,..., hief of the Law Division of the Bureau ' of Custo ms * petitioner was informed o f th e violation committed by the v essel under Section 2523 of the Tariff and Customs Code and was r equired to submit in writing it s explanation within f ive ( 5 ) days from recei pt thereof. In a reply da ted February 20~ 1970, peti- tioner, through counsel~ explained that the weight of the .cargo appearing on the manif es t a nd b ill of lad ing was furnis hed by the shipper; that the cargo was ~reighted on a measurement basis; and that the discrepancy bet ween the actual and declared v;e i ght 1 if any,. was not d ue to the c arelessness or incompetence of the master of the vessel or the ship 1 s agent but due to clerical e rroro The said explanation~ however~ was found unsatisfactory b y the Bureau of Cus- toms_ Conseque ntly~ administrative proceeding was instituted against the v es s el MS "Fernbank" wi th petitioner Macondray & Co . 1 Inco represe~ting

DECISION CTA CASE NO o 2656 r - 3- it as party-re spondent. On February 27J 1973" af t e r proper hear ing, the Collector of C ustom~ re ndered a decis ion im- pos ing a fine of "1?77,0 25 .,00 on the MS "Fernbank" and/or peti tioner herein for vio lation of Section 2523 of the Tariff and Customs Cod e 0 On January 101 1975l on appeal by petitioner, sai d decision of the Collector was affirmed by the Commissioner of Cu stoms o Hence J the present recourse., The issu e in thi s appeal i s whether or not � t he imposition of the admini s trative fine on the v ess el MS " Fe rnbank " a nd/or .petitioner here- in i s in accordance with the provi s ion of Section 2523 of the Tariff and Customs Co d e wh ich pro- vides as follows: Sec. 2523~ Discr e pancy Be t ween Actual and Decl ared Weight of Mani fested Artic le"- If the gross we i ght of any artic l e or package descr i bed in the manifest exc eeds by more than twenty per c entu m the gro ss we ight as declared in the manifest or bill of lad ing thereof, and the Collector shall be of opi- nion th a t such di~cr epan cy was d ue. to the carelessness or incompentency of the master or pilot in command, owner or employee of the v esse l or aircraft~ a fine of not more than fift een p e r c e ntum of the v a lue of the pac~age or article in respect to which the deficiency exists 1 may be imposed upon .the importing vessel or a ircra ftQ

DECISION - CTA CASE NO o 2656 - 4- The def e nses raised by pe~itioner against the propriety of the imposition of the fi ne may be summarized as foll ows~ (1) That the findings of the Bureau of Customs that the actual weight of the importation is 131~388 lbs. is not accurate and binding since there is no concrete proof thereof; and (2) That ev en asauming that there is a d iscrepancy of more than 20% between the declared weight and actual weight of the shipme nt, the same was not due to the care lessness or incom- petency of the captain, ma s terJ owner or employe e of the vessel because the declar~d we ight appearing on the bill of lading and the manifest was supplied by the s hipper; that .the shipment was freighted on a measurement basis; and that the duties of the captain or master of the vessel as defined under Article 612 of the Code of Commerce, and even under the Tariff and Customs Code~ do not obligate or require him to ascertain the weight of any particular cargoe Actually, the first objection of petitioner against the imposilion of the fine,which touches

DECISION CTA CASE NO. 2656 - 5- on a factual and evidentiary matter, is being . raised for the rirst time in its memorandum. I Such a defense has neither been raised before the Bureau of Customs nor in its appeal before this Court. Having agreed to the submission of this case~ the basis of the pleadings and c. Customs records , without even .offering / proof as to the t r uth o f its own allegations~ which were all denied by respondent; petitioner should not be allowed to raise such a defense. which invol ve a factual issue1 for the first time in its memorandum, after it had already submitted the case for decision. Petitioner should be considered to have waived the right to set up such an objection after the Bureau of Customs had already decided the case and after petitioner had litigated and submitted i ts appeal for resolution of this Courto Furthermore~ the decision of the Commis- sioner of Customs appeal ed to �this Court, and that of the Collectora state as a fact that the actual weight of the shipment in question~ after examination by customs examiner Lazaro Maliha~~ is 131~388 lbs . and this statement, of fact had ,

DECISION - CTA CASE NO . 2656 - 6- not been challenged or disputed by petitioner. be- fore r espondent or b~fore this Court. Since its petition for review admits1 in effect, the existence of a discrepangy between the declared weight and the actual weight of the subject importation (pars~ ! V, V; VI and VII) ; and the decision ap- pealed from states that the actual weight of . the importation / d:s 131.,. 388 lbs . , which decision forms � part of the petition for review as Annex "A" there.... �� I of; and petitioner merely disclaims liability there- from for reasons stated unde r paragraph �VII of its petition for review without offering proo f as to the truth thereof# and wh ich were all denied by respondent in his answer (par . 2); the fi nding of the Bureau of Customs that the actual we ight of the shipment in question is in fact 131.,.381 lbs.,~ which was not ques tioned by petitioner# must logically be binding upon it. At any rate, that the _a ctual weight of the subject importation.r as found b y the Bureau of Customs, is � 1 31, 388 lbs ., 1 .is supported by the ev idence., Customs EJ"am ine r Lazaro Ivla.lihan.t on questioning by Att~ Wilfredo T., Ivlanongdo1 counsel ~.

';' DECISION. - CTA CASE NOo 2656 � � - 7- for the Bureau of Customs1 testified to this fact., Q. And when you examined this shipment~ did you also place your findings on the ~ntry] AQ Yes~ Your Ho norv Q. Presenting to you this handwritten no- tation which was previously marked as Exhibit "C..... 2"r do you know whose nota- tions were these? � . A. I prepared it personally � Q. These were your notations? A. Yes., Q. N0 w in this notation there appears a figure which reads: 131,388 l bs �� what does this figure refer to? A. Your Honor~ we usually do not put the total weight when we prepare our re - port on the face of the entry because we belie ve that the machine which is being used in the computation will be much accurate and the total amount which is 131,388 lbs~~' is the total amount as being computed in the machine of the Liquidation or the Apprai sal. I think the 131J388 lbs . represents the total weight of the shipment in question. Atty . Manongdo : Re . May we requestl Y0 ur Honor ~ that this f igure 131~388 l bs o encircled and be marked as Exhibi t 11 D... 11 for the prosecution. HE RING OFFICER : Mark ito (see pp. 120-122, Customs rec.)

; DECISION - CTA c~sE NO . 2656 - 8- The testimony of Examiner Lazaro Malihan was cited by the Collector of Customs and the \ / Commissioner of Customs in their decisions1 to uit : "On the other hand, Examiner Malih~n te s tified that he made a physical e~amina tion of the entire shipment and weighed t'e same in . the scale in the presence of Qther� cus toms authorities and a representative of the consignee~ although, he said, he was" only taking down notes of the results o� h i s examination which he off i cially a. d finally ,transferred after the terminat~~~ of the same and . are reflected in the d~r sal portion of the yellow copy of the entry covering the shipmento Moreover1 he tes- tif i ed .that the total weight is 131 , 388 lbs . as against the declared weight of 59~ 593, or a di fference of 7lr450 lbs. which remains incontroverted . " (P . 2,. Decision of Comm . of Customs , p . 173 1 Customs rec .1 Annex "A" , petition, p. 6 1 CTA rec .; p .. 2 Decision of Collector of Customs. P� 1581 Customs rec .; underlining supplied.) And thi s statement of fact, as we have observed earlier, has not been di sputed by petitioner be- fore the said customs office rs or in its peti- tion �or review filed in this Court . Much is made, however, by p~titioner that the fine imposed under Section 2523 of the Tariff and Customs Code is penal in character so that i t was incumbent upon the government in the Bureau

, " DECISION - CTA. CA.3E NO . 2656 - 9- of Customs to have presented proof beyond reas on- able doubt that the ac tual weight of the shipment was in fac t l3lr38 8 l bs . It will be noted that the penalties provided by law in conne ction with the importation or exportation of articles are cl ass ified into (a) a~ministrative. and (b) cri- minal penalti e so The administrative penalties are: (a} the surcharges provided in Sections 2501 to 2504 of the Tariff and Customs Code ; (b) fine s provided in Sections 2505 to 2529 7 and (c) for- feitures provided in Sections 2530 and 2533 9 Section 2523 upon which the imposition o f the fine on petitioner is based falls under adininistra�tive penalties. The offenses for which specific cri- minal penal ties are provided are enumerated in Sections 2601 to 3609 of the Tari ff and Customs Code 9 Since the �fine imposed under Section 25 23 is not one of those offenses for which specific criminal penalties are provided as enumerated in Sections 360 1 to 3609# under the penal provisions of the Tariff and Customs Code, it is thus evident that the said f ine is not penal in characterQ As regards the contention of petitioner that the discrepancy is not due to the care les sness or

\ I I .. ~ECISION �. CTA CASE NO. 2656 T 10 - .. incompetence of the master~ owner, or emp loyee of the vessel because the weight declared in the bill of lading or manifest was supplied by the shippert and that under Section 612 of the Code of Commerce~ and even under the Tar i ff and Cus - toms Code~ the captain or master of the vessel is not r e quired to ascertain the weigh~ of the cargo,a similar i ssue was settled by this Court in the case of "F .. E . Zuelig1 Inc .. , in its capac ity as agent of the M/V "Hongkong Grace"# vs. Com- missioner of Customs"� CTA Case No. 2360~~' April 10, 1975~ wherein it was ruled that the fact that the captain of a vessel is not careless on th~ base s of his duties under the Code of Commerce is no defense against this penalty. Because of its controlling effect � � 6n the present case~< we will quote from the decision� � � � o On the other hand# petitioner claimed that the said dis crepancy is by no me ans attributable to the master or captain of the vessel because, under Ar- ticle 612 of the Code of Commerce l~sting the duties of the said official1 he is not required to ascertain the actual weight of the cargo of any particular shipper . Cons~quently , it is argued that neither carelessne ss nor incompetence can be imputed against the captain of the vessel "Hongkong Grace" to justify the imposition of �the penalty im- posed by the Tariff and Customs. Code,.

, I DECISION - CTA CASE NO . 2656 � - 11 .- It is not Article 612 of the Code of Commerce which deals with the duties of the captain of a vessel but Section 2523 of the Tariff and Customs Code that governs this case. Under the latter law the fact that the captain of a vessel is not careless on the bases of his duties as enu- merated in the Code of Commerce is no de- fense against the penalty . The law i n- cludes the carelessness of the owner or employee of the vesselo The explanation of the manager of the Shipping Division of petitioner to the effect that no ship- ping line in the United States has facili- ties f or checking the weight or contents / of the goodsshipped therefrom; that the Y weight of the cargo i s declared by the shipper and any discrepamcy in v-reight is beyond the control of the shipping company is not a valid excuse. Accepting peti- tionerts expl anation as a valid defense is virtually nullifying Section 2523 of the Tar if f and Cus t oms Code~ brus hing aside the prov~ons of Section 2523 of the said Code as a dead l etter o Doing business in the Philippines~ i t behooves petitioner to abide by our Customs laws and to ignore them is nothing short of gross carelessness . It is an omission of the concern that one with ordinary prudence should have of the Customs laws of the country with which it does busi- ness. (Underlining supplied .) Anent petitioner t s averment that the freightage of the subject shipment was made on a measurement basis, suffice it to state that freightage is ~erely the charge or compensation paid by the shipper or importer to the carrier, and is not a determinative factor in the asses sment and mmposition of duties and penalties on the imported goodso As aptly ob-

DECISION CTA CASE NOo 26 56 - 12 - ~e rved by the r esponde nt, freightage is never a factor in det ermining the r esponsibility o f the vessel under Section 2523 o f the Tariff and Cus- toms � code" Accordingly, s ince it has been established that there is a discrepancy of 71~ 4 50 l bs . bet- ween the declared we ight (59,9 38 lbs.) and the actua l weight (131~38 8 lbs.) of the subject im- portation, which discrepancy is obviously more than 20% of th e declared weight 1 and wh ich is attributable to the careles s ness or incompetence of the master, officer or empl o yee of the vessel because of his reliance solely on the declared weight furnished by the sh~pper an d failure to ' .take steps to ascertain and verify the correct we ight of th e cargo before transporting th e same , in utter disregard of his obligation imposed bp him b y the law~ the vessel MS "Fe rnbank " and/or its ship agent . are liabl e for the fine� of not more than 15% of the value o f sai d shipment pursuant to Section 2523 of the Tariff and Customs Code~ As determined b y the Bureau of Customsr the fine to be imposed f or the violation in this case is ~77f025900r and this is not bei n g questioned or fj;) -

\ DECISION CTA CASE NO o 2656 / - 13 - assailed by petitioner as erroneous or excessive . However, the law does not nece ssarily require t hat in violations of th is nature the p e nalty im~ posabl e s hould always be the max imumo Apparent ly the law allows l atitude in the determination of the amount of the fine as long as it will not exceed 15% of the value of the article in respect to which the d i screpancy exists . vJhile there is carelessness or inc ompetence here on the part of the maste r, officer or employe e of the vessel, the c ircumstances at hand, in our opinion~ do not warrant the conclusion that it amounted to will - ful neglige nce or gross incompete ncer justifying the imposition of the maximum penalty. Conse- quently, a fine of P l 5#ooo .oo is deemed just and reasonable under premises, considering that th~s is not the first case brought to this court in- volving the imposition of the same penalty on the same shi p agent. (Macondray & Coo, Inc., in the capacity as agent of the S/ S 11 Fernlake 11 vs. Com- missioner of Customs ~ CTA Case No~ 2428, October 31, 1973.) WHEREFORE , the decision appealed from is modi - fied and petitioner Macondray & co.# I nc. is hereby

DECISION - CTA CASE NO. 2656 - 14 - o rdered to pay to respondent Commissioner of Cus- toms the sum of P l5#000400 for violation of Section 2523 of t he Tariff and Customs Code. With costs ~gainst petitioner o SO ORDEREDo Quezon City, January 21, 1977. ~c ting Pre iding Judge I CONCUR: r �