CTA Case No. 2790 (Decision)

I ftEPUBLIC OF THE PBILIPPUifl~ COURT OF ~ TAX APPEALS QUEZON CITY CITADEL LINES , INC . 1 in its C. T . A. CASE NO . 2 790 c apac ity as agent of the SS 11 ~1>JAKO MARU 11 ~ Petitioner , - v ersus - COMMISSIONER OF CUSTOMS , Respondento X- - - - - - - - - - - - - X DE CI S I 0 N This is an appeal from the decision of the Com- mi ssioner of Cus�toms , affirming that of the Collector of Customs and in holding the vessel ss "Wako Maru" l i able for an administrative fine of ~3 1 000 . 00 for viol ation of Section 1005, in relation to Section 252 1 of the Tariff and Customs Code, for failure to submit a proper ~ complete and accurate manifest of its cargo . It appears that on September 22 , 1971 , the vessel SS nwako Maru 11 arrived at the Port of Manila carrying, among other c argoes , thirty (30) Steel Tandrums of Foss 221 7 marine corrosion inhibitor, under Bill of Lading No o M-7 4 , shown as weighing 400 kgs . in the inward manifesto After finding that the said cargo actually weighed 1 1 020 kgs ., instead of 400 kgs . as shown in the ship 1 s manifes t, the Collector of Cu stoms re- quired petitioner to explain why the said cargo was not properly and accurately manifested in violation of Section 1005, in relation to Section 2521 , of the . .....-......- '..._~ \ ~/ ,. " I

DECISION - CTA CASE NO . 2790 - 2- Tariff and Customs Code of the Philippines , as amended . In a letter dated October 1 , 1971, peti tioner ' s Operations Manager explained that the freight of the c argo was based on measurement basis and that the mis- take with respect to the cargoes r weight as shown in the manifest was due to typographical error committed at the port of origin; that the amendment of the inward manifest was made to reflect the correct weight of the cargo ; and that, lastly1 the correct taxes and duties were paid by the consignee . Finding these explanations unsatisfactory, res- pondent filed ;dministrative Case No . V- 64 0/7 1 and notified petitioner to appear and that failure on the part of the latter shall be construed as a waiver of its right tc be heardo (Exh . 2, p . 8 , Customs rec . ) Petitioner failed to appear on the scheduled date of hearing o The case was submitted for resolution, and on August 12 1 1975 , a decision was rendered by the Collector of Customs finding the vessel SS 11 Wako Maru" l iable for an administra-tive fine of P3 , 000 . 00 (P . 9_-r lO , Customs rec . ) Not in accord with the decision of the Collector of Customs , petitioner appealed to the Com- missioner of Customs who affirmed the decision of the former o Hence , this present petition for review . The sole issue in this con-troversy is whether or not the imposition of the fine of 1?3 1 000 . 00 on the vessel SS " Wako Maru 11 is in accordance with the pro-

DECISION - CTA CASE NO . 2790 - 3- visions of Section 1505 , in relation to Section 2521 , of the Tariff and Customs Code . Petitioner contends that the cargo in question was properly manifested and, therefore, the vessel SS 11 Wako Maru" c annot be held liable for violation of Section l005 r in relation to Section 2521 1 of the Tariff and Customs Codeo It argues that under the provisions of Section 1005 , it does not require that the gross weight of the cargo be placed in the manifest; and that in order for the cargo to be considered properly mani- fested , there must be information showing the marks , numbers , quantity and description of the goods and the person to whom it is consigned . Finally1 petitioner argues tha t the error commi tted in reflecting the gross weight of the c argo does not render the manifest in- a c cur ate or inc omplete, and in order to be liable 'for a fine unde r Section 1005 , the vessel must have com- mitted, which petitioner asserts the vessel never com- mitted, any of the following acts , to wit : (1) That said vessel entered or depart ed from a port of entry or departure , respectively, without submitting the proper manifest thereof to the customs authorities ; (2) that there was entry or departure by the vessel conveying thereon unmanifested c argo ; or (3) that there was a failure on�the part of the ship to deliver or mail to the Audi-tor General a true copy of the mani- fest of the incoming and outgoing cargo .

DECISION CTA CASE NO . 27 90 - 4- Respondent, on the other hand, contends that ~t is mandatory for every vessel from a foreign port to have on board ship a complete and accurate, manifest of ail her cargo, and in order to be con- sidered accurate, the manifest must describe all the cargo which must necessarily � include the correct weight thereof . Thus , for not having manifested the correct weight of the subject shipment, respondent considered the said cargo not to have been properly and accurately manifested and that to allow a vessel to state merely that its cargo consists of boxes or cartons etc ., without indicating the correct weight thereof , will thus encourage smugglinq . The contentions and arguments of the part~es notwithstandinq , this Court~ however , notes that there is error in litigating and deciding this case under Section 2521 , in relation to Section 1005, of the Tariff and Customs Code . We think that the proper law involved in tthis case is Section 2523 of the same Codeo This is so because there was in this case an inward manifest filed or submitted to the Bureau of Customs with respect to �the cargo consistinq of 30 Steel Tandrums of Foss inhibitors. The important fact is that the weight of the cargo was manifested at 400 kgs 9 or 880 lbs. weight instead of its actual weight of 1,020 kgs. or 2,244 lbs. Thru simple mathematical computation1 it can be seen that t h e discrep ancy in ,.

DECISION - CTA ~ASE NO . 2790 - 5- weight of the cargo in question, which is 620 kgso or 1~364 lbs.t is 61% of the actual weight, or exceeds by more than 20% of the weight as declared in the manifest, in violation of said-Section 2523 ; and that due to the apparent carelessness or incompetency of its master or pilot in command, owner or employee , therefore, the v essel ss " vvako Maru" is subject to a fine of not more than 15% of the value of the cargo with respect to which the deficiency exists ,. Section 2523 of the Tariff and Customs Code applicable in this case provides as follows: SEC . 2523o Dis crepancy Between Actual and Declared Weight of Manifested Article .- If the gross weight of any article or package described in the manifest exceeds by more than twenty per centum the gross weight as declared in the mani- fest or bill of ladina thereof 1 and the Collector shall be of opinion that such discrepancy was due to the carelessness or incompetency of the master or pilot in command, owner or employee of the vessel or aircraft, a fine of not more than fifteen per centum of the value of the package or article in respect to which the deficiency exists~ may be imposed upon the importinq vessel or aircraft . In a recently decided case of United States Lines, Inco vso Commissioner of Customs, CTA Case No. 2 7 96 1 July 31, 19781 applying aforecited Section 2523, stated thus: uThe question of whether� under Section 1005 of the Tariff and Customs Code, the weight of an imported article should be stated in the c argo manifest of vessels coming from a foreign port was squarely resolved in the affirmative in the case of Smith, Bell Co., Inc. vs. Commis- sioner o� Customs 4 (c. T . A. Case No. 2 396, April 301 1973o) As interpreted and applied (~

DECISION CTA CASE NO. 2790 6- by this Court in said case, the particulars or data required to be stated in the cargo manifest, under said Section 1005 of the Tariff and Customs Code, include the weight ef the cargo. As a matter of fact, the Court, in making this interpretation, has made reference to the aforecited Section 2523 of the Code which imposes a fine �or a dis- crepancy in weight of the cargo of over 20% of what '"'as declared in the manifest or bill of lading. As to proof or evidence of the discre- pancy of more than 20% between the actual weight and declared weight of the merchandise in question, we fin d the appraisal report of th~ Customs appraiser dated October 29, 1968 1 forming part of the Customs record, sufficient. (See p4 2, Customs rec .) ~or petitioner to overthrow the findinas of the Bureau of Customs as to the discrepancy in weight, it should have presented countervailing evidence durinq the hearing before this Court to rebut said findinas of the Bureau of Customs. It cannot simply rely, to support its stand that there is no weight discrepancy, on bare allegations. More- over, petitioner admits in its memorandum that an amendment to the vesselis manifest was sub- mitted to, and was ap~roved by, the Bureau of Customsp Indeed, if there was no weight dis- crepancy in this case~ why was an amendment as to the weight filed by petitioner still necessary? Likewise, the insistence by petitioner that there is no proof or evidence as to the care- lessness or incompetence of the master, owner~ officer or employee of the vessel is untenable. This court has consistently ruled that under Section 2523 of the Tariff and Customs Code~ the ascertainment or verification of the weight of the shipts' cargo at the port of loadina is the duty or obligation of the master, owner, pilot, officer or employee of the vessel . Failina in this duty, the conclusion is inevi- table that there is an unexcusable laxity on the part of the master, officer or owner of the vessel in exercising the ordinary care and pru- dence in avoiding the underdeclaration of the weight of the ship's c argo, penalized under said Section 2523 . Doing business in the Philippines, it is the solemn obligation of the master, pilot in command, owner or 'employee of the vessel to abide by our customs laws

DECISION ... CTA CASE NO . 2790 - 7- and regulations. In other words~ if the discrepancy of more than 20% between the dec- lared weight and actual weight of the imported article arose because of, and which could have been avoided if it were not for , the failure or omission of the master~ pilot in command� owner, officer or employee of the vessel to perform his duty of ascertaining or verifying the weight of thP. cargo~ the inevitable con- clusion is that he is negliqent or careless within the contemplation of the law. (See Ci- tadel Lines, Inco vs. Commissioner of Customs* CTA Case No a 2718~ June 30 1 1978; Compania General de Tabacos de Filipinas vso Commissioner of Customs , CTA Case No . 25 76 1 August 31~ 1977; Macondray & Co o1 Inc 9 vs . Commissioner of Cus- toms# CTA Case Noa 2575 1 April 6~ 1977 1 Certio- rari denied in G. R. L-47010 1 October 7 1 1977; Delgado Shippinq Agencies, Inc . vs . Commissioner of CUstoms , CTA Case 2744 , February 25 1 i977, Certiorari denied in G. R. L- 47404, May 5 1 1978; Delgado Shippinq Agencies, Inc . vs. Commissioner of Customs, CTA Case No . 2685 1 February 15 1 1977; Mac ondray & Co ., Inc . vs . Commissioner of Cus - toms, CTA Case No . 2741 1 February 3~> 1977; Ma - condray & Co . 1 Inc. vs . Commissioner of Customs, CTA Case No ~ 26561 January 21 , 1977 1 Certiorari denied in G. R. L-46287 1 June 20, 1977; Delgado Shipping Agencies , Inc . vs . Commissioner of Cus- toms , CTA Case No . 25481 September 301. 1976; F.Eo Zuell i q , Inc ~ vs . Commissioner of Customs, CTA Case No . 2360 1 April 101 1975o) Jrn this c ase, petitioner frankly admits that the weight declared in the bill of ladina and the manifest was supplied by the shipper and same was simply relied upon by the carriero This evidently in- dic ates that no actual verification or ascer- tainment of the weight of the cargo at th~ port of loadinq was made on the part of the vesselo Finally, it is no defense that the weight of the cargo declared in the manifest or bill of lading was supplied and furnished by the shipper, and that the cargo in question was freighted on measurement basis and not on weight. As explicitly stated by this Court: 1 x x x that the weight of the cargo is declared by the shipper and any discrepancy in weight is beyond the control of the shipping company is not a valid excuse. Acceptinq petitioner rs explanation as a valid defense is virtually nullifying Section 2523 of the Tariff and Customs Code, brushina aside the provisions of Section 2523 (tJ! ~

DECISION - CTA CASE NO . 2790 - 8- bf the said Code as a dead letter . x x x . 1 (F9 E . Zuellig, Inco vs. Commissioner of Cus- tomsr supra; see also Macondray & Coo 1 Inco vs. Commissioner of Customs, CTA Case Noo 2656, January 21 1 1977 , Certiorari denied in G.R . L- 46287 1 June 20 , 1977; Delgado Shipping Agen- cies, Inco vso Commissioner of Customs , CTA Case No . 2744 1 February 25 1 1977, Certiorari denied in G.R . L-47404, May 5 1 1978o) 1Anent petitioner's averment that thP. freightage on the subject shipment was made on a measurement basis, suffice it to state that freightage is merely the charge of compensation paid by thP v shipper or importer to the carrier, and is not a determinative factor in the assessment and imposition of duties and penalties on the im- ported good s . As aptly observed by the res- pondent, freightage is never a factor in deter - . mining the responsib ility of the vessel under Section 2523 of the Tariff and Customs Codeo' (Macondray & Co. , Inco vs. Commissioner of Cus- toms, CTA Case Noo 26561 January 21, 1977, Cer- tiorari denied in G. R . No . L-46287~ June 20, 1977; Delgado Shipping Agencies , Inc . vs . Com- missioner of Customs, CTA Case No . 2744 , Feb- ruary 25, 1977, Certiorari denied in G.R. L-474041 May 5, 1978; Delgado Shipping Agencies, Inc. vso Commissioner of Customs, CTA Case No. 2802 1 �June 30,. 1978.)U We find no legal basis to depart from the holdinq of this Court in said case which is identical to the case at bar . The records of the parties, however1 do not show the value in Philippine Currency or in Dollars of the weight discrepancy of 620 kgso or 1,364 lbso However, this Court is convinced that the negligence or incompetence of the master, owner,. officer or employee of the vessel SS "Wako Maru" does not amount to willful negligence or gross incompetence, and that the law allows a l a titude in the imposition of the fineo A minimal fine, to our mind, of ~1,500.00 (tf' y') ~-

DECISION - CTA CASE NO . 27 90 - 9- i s just and reasonable to impose against petitioner under the circumstanceso vlliEREFORE , the decision of the Commissioner of Customs appealed from is hereby modified, and the v essel SS "Wako Maru" and/or petitioner Citadel Lines , Inco are hereby ordered to pay the fine of Pl 1 500 for violation of Section 2523 of the Tariff and Cus- toms Codeo With costs against petitioner . SO ORDERED �. Quezon City , September 201 1978. � ROAQUIN I CONCUR : 't;:N~~ . Actina Presiding Judge