CTA Case No. 2747 (Decision)

-- J cJ ' DELG DO SHIPPING l\GENCIES , INC. and CITADEL LINES , I NC. , in their capacity as shipagents of the SS "EUF:YBATES" ' Petitioners , - versus - C. T . A� C SE l\D . 2747 CCMtv1ISSIONER CF CUSTOMS , Respondent . X- - - - - - - - - - - - - X DE C I S I 0 N Appeal by petitioners Delgado Shipping Agenci es , Inc ., and Citadel Lines , Inc ., in their c apacity as shipagents of the SS 11 Eurybates", from two separate decisions of respondent Commissioner of customs in customs Case No. 75-7 2 and Customs Case No . 75-73 both dated September 2 , 1975 , im- posing upon the SS 11 EurybC~tes 11 and/or its ship agents administrative fines of ?40 , 088 . 00 and 28,940. 00, respectively , for violation of Sec� tion 2523 of the Tariff and cust oms Code , in rela- tion to Se ction 2521 cf the same Code o Petitioners are corporations duly organized and existing under the laws of the Philippines . The Delgado Shipping Age ncies, Inc o, was the ship agent of the vessel SS 11 Eurybates'1 at the time cf the alleged violation of the law, while the Citadel Lines , Inc .g is the ship agent of the vessel at

DECISION - C.I. A. CASE NO . 2747 T - 2- pres ent o On or about November 13 , 1969, the SS 11 Eurybates 11 arrived at the Port of Manila and discharged thereat � among other cargoes, two shipments of assorted textile remnants with their corresponding weights declared in the bills of lading as follows : ( 1) 86 bales of assorted textile remnants consigned to Jose Ligon, covered by Bill of Lading No. 99 , De cl ~red Weight ~~~49 1bs. (p. 1, Customs Case No . 75-72, customs Rec .. ) ( 2) 62 bales of assorted textile remnants also consigned to Jose Ligon , covered by Bill of Lading No. 97. Declared weight: 24 1 6~7 (p. 1, Cust oms Case No. 75-73, Customs Rec.) Upon examination of the said mer chandise by the cu stoms authorities concerned , it was discovered that said shipments actually weighed 78,587 lbs. amd 55 , 615 lbs., respectively, whi ch are more than 20';6 of the corresponding weights declared in the Bi ll s of Lading. (pp~ 1, 2~ 3 , Customs Cases Nos. 75-73 & 73-7 2 , Cust oms rec.) On Mar c h 5, 1970, the Bureau of Custorrs , thru the Chief of the Law Division , sent a letter

DECISION - C. T. A. CASE f\0 . 2~47 ' - 3- dated Mar c h 5 , 1970, to petitioner De l gado Ship- ping Agenc ies , Inc ., informing it that the SS "Eurybates" had disc harged c argoes with an exc ess in weights of m o~e than 20% of what had been dec- l ared in the bills of lading , and requiring it t o e xpl-ain in writing within fi ve (5) days from re- c eipt thereof and show c ause why no administrativ e ' fines should be imp osed on the v essel for violation of Section 2523 of the Tariff and Customs Code , or to inform the Bureau of Customs , within the same period , if it prefers to have the c ase formall y i nvestigat ed ; otherwise , its failure to do so woul d be construed as a waiver of the right to be he~rd and the case de c ided accordingly. (pp . l l , 12 , Customs Cases No~ . 75- 73 & 73-72 , Customs Rec .) Howev er , despite the lapse of the period stated in the said letter , petitioner Delgado Sh i pping Agenc ies , Inc., did not bother to ex- pl ain its side of the case . Thus , two ad~ihis trativ e cases , Administrative Ca s e No . V- 554-70 ( Customs Case No . 75- 72) and Administrative Case No . 555-70 (customs Case No . 75-73) ; were insti- tuted against petitioneri , which were deemed sub- mitted for dec ision by the Colle c tor of Customs on the basis of the re c ords .

DECISION - C.T . A. CASE NO o ~47 - 4- On February 41 1975, the Collector of Customs rendered a decision in Administrative Case Noo V- 554 -70 finding the SS "Eurybates" and/or its local agent Delgado Shipping Agencies , Inc. , liable for an administrative fine of P40 1 088.00 in regard to the excess in weight of the 86 bales of assorted textile remnants, and another decision in Administrative Case N0 o V- 555-70, likewise holding the same vessel and/or its local agent liable for a fine of P28 1 940~00 with respect to the excess in weight of the 62 bales of assorted textile rem- nants, for violation of Section 2523 of the Tariff and Customs Code. Resort to respondent Commis- sioner of Customs in both instances having proved unavailing,petitioner appealed to this Court~ For resolution is the lone question of whether or not the ss 11 Eurybates 11 and/or its ship agents , petitioners herein~ are liable for the administrative fines for violation of Section 2523 of the Tariff and Customs Code. It must be noted that petitioners have sub- mitted this case for decision on the basis of the records of the �Bureau of Customs bearing on the case and on the pleadings~ No trial therefore was con- ducted by the Court on the merits of the case . The parties were, however, allowed to file their res- pective memorandum in support of their positions.

DECISION- c . ~ .A . CASE NO. 2947 Section 2523 of the Tariff and Customs Code reads as follows: Section 252 3. Discrepancy Between Actual and Declared ~~ight of Manifested Articleo - 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 lading thereof, and the Collector shall be of opinion that such discrepancy was due to the carelessness or incompetency of the master or pilot in command1 owner or employee of the ves ~ sel or aircraft, a fine of not more than fifteen per centum of the value of the package or article in respect to ~hich the deficiency exists1 may be imposed upon the importing vessel or a ircraft. Under paragraph IX of their petition for review~ petitioners assail the decisions of res - pondent Commissioner of Customs as contrary to law and the evidence for the following reasons : 1. Petitioners were deprived of their right to due process inasmuch as the Collector of Customs failed to con- duct a hearing and petitioners were not given a chance to exp1~~n the alleged weight discrepancy; 2Q There is no evidence on record to prove the alleged discrepancies in weight ; 3. There is no evidence on record to show that the discrepancies in weight were due to the carel,essness1 negligence,. incompetence or fault of the master; 4o The master had no participation whatsoever in the declaration of weight of the shipments , and freight we re based on measurement~ not weight ; and

DECISION ...., C . T . A. CASE NO . 294 7 - 6- S o In any event1 the administrative fines imposed against the vessel are exces ~ sive1 unjust and confiscator y . (Pp . 3- 4e Paragraph IX, Petition for Review, C . T . A ~ Rec . ) I n specifically denying these all egations of petitioners, respondent under paragraph 2 of his ans\�ler avers "that the Collector of Customs re- quired the petitioner to explain in writing why no action should be taken against petitioner for violation of Section 2523 of the Tariff and Cus- toms Code, but petitioner did not submit any ex- p l anation ; that the decision of the Collector ~ based on documentary evidence, that is, the dis- crepancy report duly prepared by the examiner and the appraiser who passed upon the shipment ; that i n petitioner ' s notice of appeal requesting the Commissioner to review their case# the issue of l ack of heari ng was never raised; and thatr there- fore ~ petitioner cannot now raise this issue for the f i rst time on appeal . " And by way of special and aff i rmative de- fenses 1 ,respondent in his answer alleges that : 1 . On November 13 , 1969 , the S/S "Eurybates 11 unloaded at the P 0 rt of Manila, 8 6 bal es of assorted textile remnants , declared to weigh 351 549 lbs . but actually weighing 78 , 587 l bs . or a difference of 43~038 lbsQ ;

DECISION C . T . A. CASE NO . 294 7 - 7- 2" Also in the same vessel .3/ S "Eurybates" were 62 bal es of textil e materia l s likewi se con- signed to Jose Ligo n~ decla re d a s we i gh i ng 24 1 6 77 l bs . but, upon actual exami nation1 was found to weigh 557 615 lbs . or a difference of 301 938 l bs " The difference of 43 1 038 lbs . in the first case, and 30.938 l bs . in the second case, between the dec- lared and the actua l weights is more than 20% of the declared weights, hence, there is a violation of Section 2523 of the Tariff and Customs Code ; 3 . There is no merit to petitioner ' s con- tention that the vessel had no opportunity to pass upon the weight of the shipment, because as this H0 norable Court has held in a s i mi l ar case : 11 Ac cepting petitioner 1 s terse exp l a - nati ons as a valid defense i s virtual ly nul- l ifying Section 2523 of the Tariff and Cus - toms Code o It wi l l provide the shipping company with a handy defense because it i s well - neigh impossible for our govern~ me nt to verify the veracity of the expla - nation . The least that can be said is that the exp l anation reveals a c areless d i sre..... gard of Section 2523 of the Tariff and Customs Code. an omission of the concern of its obligations under said Section by one of ordinary prudence ., " (Macondra.y & Co .,, Inc . as agent of the M/ S "Fernlake " vs . Commissioner of Customs, C. T . A. Case No ~ 2428# Oct . 31 , 1973 j 3 . The amount of the fine imposed is legal and just considering that Sec tion 2523 expl icitly provides for a fine of "not more than fifteen per

DECISION - C. T. . C SE NG . 2947 - 8- centum of the value of the r) ackage in r es1) ect to which the deficiency exists. 11 Since petitioners prriyed for judgment on the pleadirigs without offering proof as to the truth of their own allegations , and - with- out giving respondent an opport unity to intro- duce evidence , petitioners must be understood to have admitted the truth of all the afore- said allegations d respondent , and to have rested their motion for judgment on these allegations taken together with such of their own as are admitted in the p l eadings o (Bauermann vs. Cas~ s, 10 Phil . 386; Evangelista vs. DelaRosa , et al.,, 76 Phil . 115) Petitioner ' s p osition calls to mind the case of Delgado Shipping \gencies , Inc ., in its c ap city as agent of the SS "Euryb~tes" vs o Commissioner of customs , C.I.A . Case 2685 p February 15 , 1977 , certiorari denied, L- 46262 , July 6, 1977 , the factual setting and issue of whi ch, including the p arties , are on all fours with the case at bar , and where this Court dis- posed of thP same charges ~nd contenti ons in clear and unequivocal terms , in the following wise: To begin �1i th , as stated above , peti- tioner submitted this case for decision on the basis of the p leadings and of the re- cords of the Bureau of ustoms. No trial ( \

DECI3ION - C . T . A. CASE NO . 294 7 - 9- I on the merits was conducted by this Court. One who prays for judgment on the pleadings without o ff eri ng proof as to the trut h of his own allegations, a nd without giving the oppos ing party an opportunity to intro- duce evidenc e ( must be understood to admit the truth of all the material and relevant allegations of t he opposing partyt and to res t his motion for judgment on these alle- gations taken together with such of his own as are admitted in the pleadings . (Bauermann v s . Casas~ 10 Phil o 386 ; Evangelista vs. De la Rosa1 et al . , 76 Phil. 11 5) Peti- tioner mu s t be understood to have admitted therefore the truth of the following material and relevant allegations of r espondent found in his answer that : 1 . Petitioner cannot now be heard to complain of the non- observ ance of due process in thi s case. 2. The decision of respondent appealed from is amply supported by the undisputed fa c t that there was actually a discrepancy of weight between the actual and declared weight of t he cargoes exceeding the allowable 20% . Furthermore1 under Section 2523 of the Tariff and Customs Code1 responsibility is lodged not only on the ma s ter or pilot of the vessel for the d isc repancy between the actual and declared weight of the mani- f est e d articles, but also on the owner or employee of the vessel. It is~ therefore, incumbent upon these persons to see to it that no discrepancy beyond the allowable limit of 20% exists . 3~ Petiti one r shou ld know the exact weight of the cargoes brought into the country by its vessel. 4q Petitione r is presumed to know _the Customs laws of the country to which the goods or cargoes its vessel carries are des- tined for unloading . At any rate t as already shown above , and stated in the decision appealed from, which is Annex "A" of the petition for re- view~ t he Collector of Customs of Manila, thru the Chief of the Law Division of the Bureau of Customs , sent petitioner on Octo- ber 131 1969 a l etter informing it of the

DECISION - ~ C . T . A. CASE NO . 294 7 - 10 - violation committed b y its vessel~ S/S "EURYBATES" . The said letter.,. whi c h states in detail the discrepancies between the ac tual and declared weights of the shipments under consideration as found by the customs examiner~ required peti - tioner to explain in writing within five (5) days from receipt theneof and show cause why no administrative fine should be imposed on the vessel 9 Petitioner "was likewise granted an alternative option to elect a formal investigation thereon , which option mu~t be exercised wi thin the same period of time stated in the aforesaid letter, otherwise, the same shall be construed as a wa iver of petitioner 1 s right to be heard and the case will be decided accordingly. 11 In spite of the lapse of the period stated in the said letter, petitioner failed and conti- nued to fail to comply therewith . Since the proceedings before the Court of Tax Appeals is a trial de novo.r and if peti..... tioner desired to present evidence in ad- dition to those already filed in the Cus- toms records forwarded to this Court, it could have done so (C. F . Sharp & Co . Inco vs . Commissioner of Customs , No . L - 23803~ February 26 1 1968 1 22 SCRA 760) 1 petit~oner � a nnot now compl a i n that : � l o It. was not afforded due process of law. 2 .. It cannot be held liable because respondent has not presented competent proof that the discrepancy between the actual and declared �Height of subject cargoes was more than 20% ... 3 u There is no proof on record pre- sented by respondent to show that the al- leged \veight discrepancy of more than 20% was due to the care lessness or incompetenc y of the master or pil ot in command4

DECISION ,_ C . T . A. CASE NO . 294 7 - 11 ~ 4 . The subj ec t bi l l of lading covering the subj ect c argoes reflec ts the correc t weight so that any erroneous weight decl arati on was merel y the result of a c leric a l or typographical error o 5 . The imposition of the fines is unj ust 1 unreasonabl e and confiscatory. ~e find no cogent reason to modify , much l ess depart from the principl es laid down in the Delgado Shipping riqencies case, as expressed in the above- quoted opinion of this Court there, and the same should resolve the identi cal problems now beought before us in t his appea l. By opting t o submi t thi s c ase for decision on the pleadi ngs and Cus- toms records , petiti oner cannot now deny the trut h of the findings of facts of the Bureau of Customs and the al l egations of respondent Commissioner of Cus toms in his answer . (See also Campania General de Tabac os de Filipi nas vs . Commissioner of Cus- toms t CTA Case No . 2555 , December 181 19 7 5 ; Macon - dray & Co ., Inc . vs o Commissioner of Customs , CTA Case No . 26 56 r January 21 , 1971 .) Co nsequentl y r it c annot val idly be asserted by petit ioner that it was denied of due process and the discrepancies i n weight s of the subject shipments are not supported by evi dence .

DECISION - C . T . A. CASE NO . 294 7 - 12 - Anent petitioner l s pretenses that there is no evidence on record to show that the dis- crepancies in weights were due to the careless~ ness 1 negligence or incompetence or fault of the master , owner or employee of the vesse l ~ and that the master had no participation whatsoever in the declared weights of the shipments, this Court1 in the Delgado Shipping Agenc ies case, supraL has likewi se unequivocaful y rul ed that under Sec- tion 2523 of the Code 1 the ascertainment or veri~ fication of the weight of the ship ' s cargo at the port of loading is the duty or obligation of the master~ pilot , ow-ner or employee of the vesseL, Failing thus 1 the conclusion seems to be inevitable that there is an unexcusable laxity on the part of the master or owner in exercising the ordinary car e and prudence in the commission of exc essive di screpancy i n the weight of a ship ' s cargo penalized under the law o Doing business in the Philippinesp it behooves the master or owner of a vessel to abide by our Customs la\vs and regulations and to ignore them is nothing short of gross careless- ness or incompetence. (See also Macondray & Co . , Inc . vs. Commissioner of Customs , CTA Case No. 2741~ /

DECISION C . T . A. CASE NO . 2947 ~ 13 - February 3, 1977 ; Macondray & Co. Inc . vs . Commissioner of Customs , CTl Case N0 .. 2656 , January 21 ~ 1977; F . ~ . Zuelig, Inc. vs . Com- missioner of Customs , CTA Case No . 2360, Apr il 1 0 , 197 5 ; De l gado dhipp ing Agencies , Inc ~ vs. Commissioner of Customs , CTA Case No . 2548 1 September 30, 1976.) Rel ative to the fines imposed by the Bureau of Customs, it is observed that toe amounts seemed to have been based on the total value of the ship- ments in question . We hav e a l ready ruled that the fine of not more than fifteen per c entum Ihmposed for viol ation of Section 252 3 pf the Tariff and Customs Code should be based on ''the value of the package or artic l e in respect to which the deficiency exists", in accordance with the express provision of the law. (See Ma c ondray & Co ., Inc . vs . Commissioner of Customs , CTA Case Noo 274 1, supra 7 De l gado Shipping Agencies , Inc . vs. �Com- missioner of Customs ~ CTA Case N0 � 2685 , February 15~ 1977 .) However , there being no evidence presented in the instant case as to which of the bales of the assorted textile remnants in respect to which the deficiencies exist, fifteen per c e nt of the value of the discrepancy between the ac tual

DECISION - C. T . A. CASE NO . 2947 - 14 - and declared wei ghts of t he s ub j e ct shipments would b e P21,445 . 52 as regards the 86 bales and Pl51 423 . 37 with respect to the 62 baleso (p . 21 Customs records of Customs Case No . 75-7 2 ; p . 21 Customs records of Customs Case No . 75-7 3 0 ) Nonetheless, consirlering the circumstances of this case1 the Court finds no compelling rea- son to impose the maximum penalty because the negligence or incompetence of the master1 owner, officer or emp l oyee of the vessel does not seem to amount to willful negligence or gross incom- petence . Accordingly , a total fine of ~2o;ooooOO i s deemed just and reasonable for the discrepancies in the weights o f the two shipments of assorted textile remnants : ~12~~00 ~00 with respect to the 8 6 bales and P8 , ooo . oo as regards ~he 62 bales . NHEREFORE 1 the appealed decision is here- by MODIFI ED and the Vessel SS "Eurybates 11 and/or �petitioners herein as shipagents of the vessel

DECISION - C . T . Ao CASE NO . 2947 ... 15 - � are ordered t o p ay to the Bureau of Customs a total fine of P20 ~ ooo . oo for violation of Sec t ion 2523 of the Tariff and Cus t oms Code . With c osts . SO ORDEREDo Quezon City1 April 51 - 1978 . AMANTE ILLER Acting Presiding Judge ,? I CONCUR: / ,/ c~MAomN ~Associate Judge I