CTA Case No. 2553 (Decision)

REPUBLIC CF THE PHILIPPINES COURT OF TAX APPEAlS QUEZON CITY LINDA- MAR CORPORATION, C. T. A. CASE NO . 2553 Petitioner, - versus - GOMI1I:SSIONER OF CU3TOMS1 Respondent, X- - - - - - - - - - X DECISION This is an appeal from the decision of respondent Commissioner of Customs dated August 91 19731 affirming that of the Collector of Customs for the Part of Mariv eles, Bataan, the dispositive portion of which reads ax follows: "WHEREFORE, by virtue of the authority vested to this Office under the provisions of the Tariff and Customs Code, it is hereby ordered and decreed that an administrative fine in the amount of SIXTY- FIVE THOU3AND PESCS (P65 , 000. 00) based on the 15% of the value of the packages or articles in respect to which the deficiency exists be, as it is hereby declared imposei on the said vessel and/or its owner, without prejudice to the filing of a criminal case against the importer and/or the::: charterer should the evidence warrant . The imposable fine should be remitted to this Office within fifteen (15) days from receipt of this decision and failure to comply \dll subject the vessel to seizure pursuant to Sec- tion 2533 of the Tariff and Customs Code and the penal amount of the bond posted for the provisional release of the vessel shall be declared forfeited.'1 {See page 1 , CTA records . ) It appears that on Novemb~ 141 19701 the lo/S u~n danao Sea , a vessel owned by petitioner Linda-Mar Corpor- ation, was chartered by M. Bachini Trading, a. domestic firm, to carry its merchandise from Hongkong to :t-'f.ariveles, Bataan, with a stipll.ation that the charterer would assume rury lia-

DECISION - C. T.A . CASE NO . 2553 - 2- bilit,y for any violation of law arising from the said charter contract. On November 27, 1970, the M/V 1 Mindanao Seau� arrived from Hongkong and discharged at the port of Mariveles various articles consigned to M. Bachini Trading. Among other things, the cargo manifest of said vessel listed the following parti- culars : bB oL f Pack~es Content~ Gross Weight (KUop) M-1 45 ,Vermi c e l l i 1, 653 23 , 247 M-2 250 Old P..ags M-3 80 Metal Accessories, 2, 589 Pins, Chains and parts, Speaker parts M-4 350 Cheese Cakes 16, 670 M-5 10 Vermi c e l l i 3, 674 M-6 1 Bed cover sheet 124 M-7 59 Confectionary, 14, 645 Seeds , Vermicelli ~h--._ M-8 60 Battery, Radio parts 5, 937 M-9 30 Confectionary 2, 172 M-10 181 Metal parts, Fan parts, 9 , 500 Record pleyer parts,. Lamp tube M-ll JO Canned goods 1 1 1 662 Vermicelli 911 873 kgs . (pkgs. )- 1 , a)6 (Exh. 41 p. 96, Customs rec . ) On December 22, 1970, after investigation, Major Fell- cisimo G. lheiigan, head of the investigating t eam, submitted a report to the Chief of the Customs Intelligence and Inves- tigation Division (CIID) alleging the following discrepancies in regard to the weight of the vessel's cargo:

DECISION - C. T. A. CASE NO. 2553 -3- (1) .AS DEClARED .AS FOUND DISCREPANCY Vermicelli 61 327 kgs. 73, 800 kgs . 68, 473 kgs . Other various items 741 000 kgs o 851 000 kgs . ll, OOO kgs . (2) Unmanifested Item: ElectVi c Bread Toasters - 400 pes . (Seep. 95 , Customs reo . ) Petitioner was required to explain the alleged discre- pancies, but its explanation was fo'\llld unsatisfactory by the Collector of Customs who, on }~ch 291 1971, instituted ad- ministrative proceedings against the }o/'V 1o/dnda.nao Seau and petitioner herein for violation of Section 2523 of the Tariff and Customs Code o On the basis of said report of Major Unefiga.n of Dec- ember 221 1970, the Collector of Customs of l1ariveles ren- dered a decision dated January 19, 1972 imposing a fine of P65 , 000. 00 on the lo/V 1"Mi.ndanao Sea1t and/or petitioner "based on the 15% of the value of the packages or articles in respect to which the deficiency existstt as provided in Section 2523 of the Tariff and Customs Code. On appeal, said decision of the Collector was af~irmed by the Commissioner of Customs. Hence, the present appeal. The only issue posed for our consideration is whether or not the fine of fl65 1 000. 00 imposed in this case � by the Bureau of Customs is in accordance v.ri.th Section 2523 of the Tariff and Customs Code which provides: SEC. 2523 . pj.screpanoy Between Actual and Declared Weight of 1~fested Articl�. - If the gross weight of a:rry article or pack- age described in the manifest exceeds by more than twent~ 12m: centum, the gross weight as declared in the manifest or bill of lading thereof1 and the Collector shall be of opin- ion that such discr epancy was due to the care-

DECISION- C.T .A. CASE NO. 255.3 -4- lessness or incompetency of the master or pilot in command, owner or employee of the vessel or aircraft, a fine of not more than fifteen ~ centum of the value of the pack- age or article in respect to which the defi- ciency exists, mey be imposed upon the import- ing vessel or aircraft. In resisting the legality of the fine, petitioner first contends that the alleged more than 2($ discrepancy between the actual and declared weight of the manifested articles lacks legal and factual basis. Petitioner anchors this pre- tension on the theory that: (1) the articles in quest~on were not actually weighed by the customs examiners; {2) the gross weight of the Vermicelli, as declared in the manifest, is not only 6, 327 kilos but 371 376 kilos , to wit: CONTENI'S GROOS WEIGI?r Vermicelli 1 , 6.35 kilos Vermicelli Gonfectionary, 9,474 It seed, vermicelli 14, 61.5 u� Canned goods, vermicelli ll. 652 lt 371 376 kilos and (3) the discrepancy of 111 000 kilos between the dec- lared weight of 741 000 kilos and the actual weight of 85 1 000 in regard to llother various items" does not exceed 20% of the actual weight, Section 2523 of the Tariff and Customs Code imposes a fine of not more than fifteen ~ centum of the value of any article or package where the gross weight of such article or package exceeds by more than twenty ~ centum the gross weight thereof as declared in the manifest or bill of lading. for this penalty to be imposed, it is essential that the actual gross weight of the article or package be more than twenty ~ 2.~ of the gross weight thereof as declared

DECISION- G.T.A. CASE NO. 2553 -5- in the manifest or bill of lading and that the value of such article or package be established. There can be no legal basis for the imposition of a fine of not more than fifteen per centum of the value of the article or package if there is no evidence of such value. There is no question that there was a discrepancr.y of more than twenty per �2ntum in the gross weight of some pack- ages 1 but there is no evidence as to the value of said pack- ages. This point is, in fact, squarely raised in the peti- tion for review, paragraph 15 of which states: ltJ.5. The imposition of the fine of !165, 000.00 is arbitrary and done without any legal basis there being no satisfactory proof of actual discre- pancy and there being no proof at all presented of the value of the articles of w-hich the alleged dis- crepancy exists... (Emphasis supplied. ) While paragraph 15 of the petition for review, quoted above, was specifically denied in the answer (see Paragraph 4) 1 no evidence was presented, either during the administrative investigation in the Bureau of Customs or in the present pro- oeeding, regarding the value of the packages in respect of which there was a discrepancy in gross weight Di' more than twen- ty ~ centum. And neither the decision of the Collector of Customs of Mariveles nor the decision of the Commissioner of Customs has a.ny reference been made of the value of such pack- ages.. And to cap it all, respondent did not file a.ny memoran- dum to explain the failure to produce any evidence as to the value of said packages. IN VIEW OF THE FORIDOIID, we agree with counsel for petitioner that there is no legal basis for the imposition upon the vessel S/S 11i.ndanao. Sea and/or its ~er of the fine of F65,000.00 under Section 2523 of the Tariff and Customs

DECISION- CoT.A. CASE NO . 2553 - 6- Code. Accordingly, the decision appealed from is hereby reversed. SO CRDERED . Quezon City, Decanber 18, 1974. ~~~~ RO:MAN M. UMALI \ Presiding Judge 1-- -J L-~ RAMON L. AVAl'CEf~ Associate Judge