CTA Case No. 2627 (Decision)

IU!:t-UBLIO Ol' TB8 i"nJLIPPI"';t!._ O!)URT OF TAX APPEALS f.'H ta.(l" ('J1"V CARLOS A. GO THONG & CO., Pe'ti t .ioner , / - versus - C.T.A. CASE NO. 2627 COMMISSIONER OF CUSTOMS Respondent:. &- - - - - - ~ - - - - - X DEC I S I 0 N The lone question tendered for resolution in this appeal is v1hether or not. the vessel M/V "Dona Rita" of petitioner Carlos A. Go Thong & Company is liable for t :he administrative fine of :EilO,OOO.OO imposed by res- pendent Commiss.ioner of Customs for conveying unmani- tested articles consisting of contraband blue seal cigarettes in violation of Section 907, in relation to Section 2521, of the Tariff and Customs Code, as amended, the pertinent portions of which re:ad: "Sec. 907. ~nife.st Required Upon Depar- ture From Port Of En try. - . Prior to depar- ture from a port of entry, the master of a vessel licensed for the coastwise trade shall make out and subscribe duplicate manifests of the whole of the cargo x x x, specifying in the cargo manifes.ts the marks and numbers of packages, the port of destination and the names of the: consignee, t;ogether with such information as may be required, x x x � He shall deliver such manifests to the Collector 3 7 ()

DECISION - CTA CASE NO. 2627 - 2- of Customs or other customs official duly authorized, before whom he shall swear to the best of his knowledg.e and belief, in respect to the carg,o manifests, that the goods therein described, if foreig.n, were imported legall y and that the duties, taxes. and other charges thereon have been paid or secured to be paid, x x x. Thereupon, the' Collector of Customs or customs offi- cial shall certify the same on the man i - fest, the original of which he shall re- turn to the master with a permit specifying. thereon, generally, the lading on board such vessel, and authorizing him to proc eed to his port of destination, retaining the duplicate s." "Sec. 2521. Failure to Supply Requisite M~nifests.- . If any vessel x x x enters or departs from a port of entry without submit- ting the proper manifests to the customs authorities, or shall enter or depart con- veying unmanifested cargo x x x, such vessel x x x shall be fined in the amount not exceed- ing ten thousand pesos. XXX XXX XXX The Collecto.~: of Customs of the~ port of Cebu, who had original jurisdiction of the case, imposed a fine of ~10,000.00 against the vessel, but reduced it, on a motion for reconsideration, to ~sfooo.oo. A resort to respondent Commissioner of Customs resulted in the restoration of the fine to ~10,000.00 to put more teeth, according to respondent, to the law on smuggling and to further deter the vessel M/V "Dona Rita" from commit- ting similar offense in the future. Hence, the~ present recourse. As borne out by the petition for review filed by 37 7

DECISION - CTA CASE NO. 2627 - 3- petitioner and the records of the Bureau of Customs bearing on this case, the following are the uncontro- verted fact.s that gave rise to the present: controversy: Petitioner is a partnership regist:.e~ed and exist- ing under the laws of the Philippines with main office at Cebu City. It is the owner and operator of M/V "Dona Rita", an interisland vessel calling. at various ports, among others, ports of Dadiangas, Cotabato, Zamboanga and Cebu. On March 26, 1973 1 M/V "Dona Rita" arrived in the port of Cebu coming from Cotabato. Upon arrival, the vessel was searched by a combined team of customs police and coast guards for contraband articles. The sear c h yielded 562 reams of blue seal cigarettes which were later on seized. These articles were found hidden in the hatch of the vessel. For conveying unmanifested articles consisting of contraband blue seal cigarettes in violation of Section 907, in relation to Section 2521, of the Tariff and Customs Code, as amended, the Collector of Customs of the port of Cebu imposed an administrative fine of PlO,OOO.OO ag.ainst the M/V "Don�a Rita". On a motion for reconsideration, the Collector of Customs however modified his decision by reducing the fine to PS,OOO.OO, but respondent Commissioner of Customs re-imposed the 37 8

DECISION - CTA CASE NO. 2627 - .4 - administrative fine of ~10,000.00 when the case was appealed to him . In assailing the government's right to impose the administrative fine aforesaid, petitioner avers that it had no knowledge of the unlawful act of its vessel in carrying on board smuggled blue seal ciga- rettes. Petitioner argues that it has exercised extra- ordinary diligence over the officers and crew members to the extent of dismissing those suspected and found involved in smuggling activities. In brushing aside this stand of petitioner, how- ever, respondent maintains that petitioner is unable to stop its employees on board the vessel M/V "Dona Rita" from the commission of smuggling. The warning issued by petitioner is not effective, and it is hard to believe that responsible officers on board the vessel wouldl fail to notice the bulk of 562 reams of untaxed blue seal cigarettes being loaded o~ board the vessel. Indeed, the issue involved herein is not one of first impression. In Campania Maritima vs. Acting Com- missioner of Customs, CTA Case No. 2577, February 28, 1978, where the factual setting is similar to that in the case at bar, this Court, citing cases decided by it and the Supreme Court, unequivocally sustained the Government's right to impose an administrative fi ne on 37 .

---------- DECISION - CTA CASE NO. 2627 - ,5 - a vessel carrying unmanifested cargo in violation of Section 907, in relation to Section 2521, of the Tariff and Customs Code, notwithstanding the defense of lack of knowledge of the owner of the vessel or his agents in charge thereof of the prohibited act., in the follow- ing wise: "At any rate, it is felt that peti- tioner's defense of lack of knowledge must yield to the spirit and policy of the law, and thus, must be rejected. Section 907 of the Tariff and Customs Code, as hereto- fore quoted, uses the word "shall" in re- quiring, cargoes to be manifested, which is an imperative and mandatory obligation on the part of the master of the vessel. There is no exception provided in Section 907. Neither is there an exception provided in Section 2521, imposing a penalty of a fine, nor under Section 2530 which imposes the penalty of forfeiture of the unmanifested cargo. To recogni~e and accept, therefore, the defense of lack of knowledg.e on the part of the vessel's officers or its owner as a valid and exculpatory defense, would be reading into the law an exception, there- by rendering nugatory and ineffective the language of the statute and disregarding its purposes and objectives." / We find no cogent and valid reason to modify, much less depart, from the conclusion reached in Campania ~aritima, as expressed in the above-quoted opinion of the Court there, and the same should therefore resolve the identical problem now brought before us in this proceeding. Accordingly, the decision of respondent Commissioner of Customs must be sustained, and the 38 0

'\ DECISION - CTA CASE NO. 2627 - 6 �- vessel M/V "Dona Rita" and/or its owner and operator petitioner herein Carlos A. Go Thong & Company are hereby ordered to pay to the Bureau of Customs the fi ne of ~10,000.00 for violation of Section 907, in relation t:o Section 2521, of the Tariff and Customs Code, as amended. WHEREFORE, the judgment under review is hereby affirmed, wi t:h the costs of this instance ag,ainst pet i t~ione r � SO ORDERED. Quezon City, Metxo Manila, September 21, 1982. WE CONCUR: .- CO~~AN~E � ROAQUIN 1 .SSOCla t:e Judg,e ~&> Associate Judge ~� 38 l