CTA Case No. 2741 (Decision)

P. EPF. t.IC OF THE PllTLIPPINF-8 COliR'l; OF TAX APPEAL~ QUEZON CITY -� -��� J, � MACONDRAY & C0o 1 INC ., in its capacity as agent of the MS "TAI PING 11 1 Petitioner, - vers us - C . T . A. CASE NO . 2741 CO.tV'lMISSIONE::~ OF C.USTOMS ~ Respondent ,. X- - ~- - - - - - - - X DECI S I 0 N This is an a? peal from the decision of respondent Commissioner of Customs dated Septem- ber 2 , 19 7 5 a_lffir'ming the decision of the Co l- lector of Customs of Manila, imposing a fine of ?3 , 512 .. 00 on the MS "T.Z\I PING 11 . and/or its ship agent , petitioner ~~CONDRAY & CO. , INCo 1 for violation of Section 2523 of the Tari ff and Customs Code, as amended, v-rh ich reads as follows: Sec . 2523 o- Discrepancy Bet\v-een Actual and Declared �,,Jeight 'of Man ifested 1\rticleo-� If the gross weight of any art~cle or package described in the manifest exceeds by more than t\�1enty per centum the gross wei ght as declared in the manifest or bill of lading thereof ~ and the Collector shall be of the opinion that such discrepancy was due to the carelessness or incompetency of the master or pilot in command, owner or em-

DECISION CTA CASE NO o 2741 J - 2- ployee of the ves s el o r aircraft, a fine of not more than f i f t een Eer centum of the v a lue of t he pa8kage or a rticle in respect t o which the deficiency exists , may be imp osed upon the importing v essel or aircrafto" I t appears that on February 1, 1972 the ves - s el MS "TAI PING" arriv e d at t he P o r t of Man ila from Mont rea l, Can ada f �earrying and � dischargi n g therea t , amo n g others , 34 drums of steelskin me - tal worki ng c ompound under bill of lad in g No . M- 1. As dec l a r ed in the inward foreign manifest of said ves s el , the gro ss weight of said m~r chandise was o nly 1 , 004 k i los but upon� actual exami nation by the Bureau of Customs , the actual \�!eight thereof was fo!lnd to be 6, 242 kilos, or 5, 238 k i los more than the declared weight . This is admitted by petitioner in its l ett er dated February 21 , 19 7 2 . (p~ 2 , Customs records) Subsequently, an administrative c ase was ins tituted by the Collector of Customs a gainst the v esse l HS "T.A I P I NG " and it s s hip agent pe ti - tione r Macondray & Co o, Inc . for the d iscrepancy in ,.."eight�,. but the cha rge was for viol a tion of Section 1005 in r e lation to Section 2521 of the ., Tariff a n d Customs Code ..

� DECISI ONo- CT. ~ C~"'.>,.S E HO ~ 2741 ' - 3- On January 6, 1975, however, after proper Qearing, the Collector of Customs of Manila ren- dered a decision finding the MS 11 TAI PING" liable for violati on of Section 2523 of the ~ariff and Customs Code and orde red petitioner to pay an administrative fine of ~ 3~512 . 00 , r e presenting 15% of the total value of the imported article . On appeal , re s pondent Commissioner of Customs affirmed the decision of the Collector, holding petitioner liabl e for violation of Section 2523 of the Tariff and Customs Co de o Hence , the present recourse . As c orrectly stated by the petitioner in its memorandum, and concurre d with by the res- pendent, the only issue in this case is whether or not Section 2523 of the Tariff and Customs is viol ated., Petitioner contends that there is no vio- lation of Section 2523 of the Tc.riff and Cus- toms Code because the re is no proof that the discrepancy of more tha n 20% betweeri the dec- l a red weight and adtual \>lei ght of th e subject merchand ise wa s due to the cafelessne ss or in~

DECIS I ON CTA CASE NO . 2741 1 - 4- competency of the master in command, owner or employee o ~ the vesselo 1 H0 wever1 respondent claims t hat the discrepancy could only be at- tributed to the carelessness or incompetency of the maste r in command or employee of the I ves s el because he should have verified the correct and actual weight of the cargo and not merel~ reli e d or dep~nded on the decla- ration of the shipper~ The issue is not one of first impression. / In severa l cases ( see below), where th~ factual setting is similar to that in the instant c a se, this Court unequivocally held that under Section 2523 of the Tariff and Customs Code , the ascer- tainment or ve rification of the weight of the vessel ' s cargo at the port of loading is the d uty or obligation of the master, pilot, owner or empluyee of the ve s sel o ~hus , if the dis - crep ancy of more than 20% betT�.Je e n the declared weight and the actual weight of the impo r ted I article arose because of, or which could have 1 See Petitioner ' s memorandum~

DECISION CTA CASE NO o 2741 - 5- been avoided if it were not for , his failure or omission to perform this duty1 the inevitable conclusion i s that he is negligent or careless ltli thin the contemplation of the lawa In the following cases, this Court ruled: E , E o ZUELLIG , INC . v . COMMISSIONER OF CUSTOfv'lS CTA CM.SE NO . 23601 APRIL lOJ; 1975 ; MACONDR Y & CO ., INC . V o COMMIS- t!HONER OF CUSTOMS , . CTA CASE NQ . 2656, 2J.. JANUARY, 'J-977 . It is not Article 612 of the Code of Commerce wh ich dea l s with the duties of the captain of a vessel but Section 2523 of the Tariff and Customs Code that governs this case . U~der the latter law the fact that the captain of a vessel is not careless on the bases of his duties as enumerated in the Code of Commerce i s no defense against the penalty~ The law includes the carelessness of the owner or employee of the vesselo The explanation of the manager of the Shi?ping Division of petitioner to the effect th~t no ship- nina line in the Uni~ed States has facili - lie~ for checking the weight or contents of the goods shipped therefrom; that the weight of the cargo is declared by the shipper and any discrepancy in weight is beyond the control of the shipping com- pany is not a valid excuse . Accepting petitione r ' s explanation as a valid de- fense is virtually nullifying Section 2523 of the Tariff and Customs Code, brushing aside the provisions of Section 2523 of said Code as a dead l etter . Do ing busi ness in the Philippines, it behooves petitioner to abi de by our Customs laws and to ignore them is nothing short of gross carelessnessa It is an omission of the concern that one with ordinary prudence should have of the Custom s Laws of the country with which .it does business.

DECISION - CTA CASE NO . 2741 - 6- DELGADO SHIPPING AGENCI"SS , INC" v ., COMMISS IONER OF CUSTOMS , CTA CASE NO~ 2548 SEPT . 30, 1976 . � � � ~e see clearly that there was in this case a complete d isregard of the duty to find out whether there is a misdecla- ration in weight of the remnants, wh ich a master , a n employee,; or an experienced h a nd of the vessel responsibl e for this job, can eas ily detect by the simple exerci s e of ordi- nary cafe and prudence . ~n analysis of Sec- tion 2523 of t h e Tariff a nd Customs Code shmvs that it already grant s to master of ships a tolerable allowanc e i n we i ght discrep2n~y in the ship ' s cargo by not more than 20% of what i s declared in the manifest or bill of lading. In this case however, the allo1ed perc entage of tolerable discrepancy in wei~ht of 20% was far exceeded by 28 . 96% � � � � � or by more than 100% over the allowed per- centage of discrepancy in the la\v. �An d there was no evidence on record which would show an abnormal situation which might h<Jve brDught about the discrepancy in the port of loading. � � Fa i ling t us, we are qons - trained to hold that there was an unexcus~b l e laxity 1on the part of the master in ex3rcising the ordinary care and prudence in the commis- sion of exc essive disc repancy in the weight of a ship 1 s cargo ( t~xtile remnan t s ) penalized under Section 2523 of th2 Tari ff a n d Cu stoms Code ., t1i\CON;)RP..Y & CO ., INC . v., COM.:"'IISSIONE. OF CUSTOMS 1 CT NO . ~ ~ OCT . 31, 19 7 3 . From the foregoing stipulabion and lett e r , i t is plain that the shipping com~ pany accepted without questi on the shipper(s declaration as to the weight of the shipment � �� o o It did not bother itsel f to check i n any way f~asible u n der the circumstances the iveight dec l ared. It j ust brushed aside the /

DECISION CTA CASE ~O o 2741 - 7- provisions 6f Section a523 of our Ta- riff and Customs Code partly because of a shortage of scales in the port of loading � . � � Accepting peti - tioner's ters e explanation as a valid defense i s virtually nullifying Sec- tion 2523 of the Tariff and Customs Codeo It will provide the shipping company with a handy defense be cause it is \vell-nigh impossib le for our governme nt to verify the veraqity of the explanation., The least that can be said is tha t the explanation reve als a c areless disregard of Section 252 3 of the Tariff and Customs Code, an omission of its obligations under said Section by one with ordinary prudence~ (Under- lining supplied .) Petitioner next as sails the legal basis of the fine of F 3,512o00t which represents 15% of the total value of the imported article in ques- ~ion , arguing , that th e fine should have been based on the value in respect to which the de- ficiency exiits. As stated above , the discre- pancy in weight of the imported article is 5( 238 kilos or 11, 523 pounds . As appearing in the working sheet of the Bureau of Customs, which formed part of the Customs records , and on which - bas i s the fine of 'P 3,512.,00 imp osed by resp ondent was computed, the cost per pound of the article is US $O o27Q If the discrepancy in we ight is 11 , 523 pounds , the value in respect

', I � DECISION CTA CASE NO . 2741 - 8- to which the deficiency exists would therefore be �US $3,111.21. Reduced to pesos, which as appearing again in the workin~ sheet of the Bureau of Customs at that time was � 6c30 to a dollar, a nd which is also the basis of the com9utation of the fi ne i n question, the value of the article in respect to which the deficiency exists is ~ 19.600.00 . Fif- teen per ~ (15%) of !"19, 600.00 is orrly F 2, 940.00 and not P 3 , 512 oOO. S ince under Section 2523 of the Code, the "fine of not more than fifteen ~ cent i s based on the Value of the article in respect to which the deficiency exists" and not on the total value of the imported merchandise , the maxi- mum fine \.Vhich can be impo s ed upon petitioner is only P 2,940.,00o In this case, however, the Court finds no justification to impose the maximum penalty con- sidering that the carelessness or incompeten<Be here on th 2 part of the master, officer or em- ployee of the ves s el does not amount to willful negligence or gross incompetence~ Nonetheless, c onsidering that this case is already one of several cases brought to this Court involving the warne

DECISION - CTA C SE NOo 2741 - 9- pen lty imposed on the samG ship agent, a fine of l,SOOoOO is deemed just �and reasonableo ~ffiEREPORE, the decision appeale d from is HODIFI ED and the vessel MS T 11 I P ING 11 and/or petitioner herein are hereby ordered to pay to the Collector of Customs of Manila a fine of l,SOOoOO for violation of Sec tion 2523 o the Tariff and Customs Code o -a th costs against peti - tioner o S O ORD::~ B D .. Quezon City, February 3, l977o ) / Judge I CONCUR: ~ ~~':?.' ROAQUIN As sociate Judge