CTA Case No. 2692 (Decision)

'" ,,...... .,.. ... ....~~-------�-.u.~~ HEPlifii.IC OF HI& l'!IILJPP[NitS COURT 0? TAX APPE..\LS QUEZON CITY DELGADO SHIPPING AGEKCIES, INC., Petitioner, - versus - C ~ T.A . CASE NO. 2692 � CCt�U�'iiSS IGN ER CF CU~TCI'-'lS 1 Respondent. X- - - - - - - - - - - - - - - X DECI S I 0 N This is a petition for review of the decision of respondent Commissioner of Customs, dated April 22, 1975, imposing a fine of P30,502.00 on the vessel SS I "SOKO MARU 11 and/or its local ship a g ent Delgado Ship- ping Agencies , Inc., herein petitioner, f or violation of Section 2523 of the Tariff and Customs Code, as amended, which reads as follows: SEC. 2523o Discrepancy Betw ~ en Actual and Declared We i ght 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 lading thereof, and the Collector shall �be of - opinion that such discrepancy was due to the c urelessness 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 exis t s, may be imposed u pon the importing vessel or aircraft. The r e cords shc�.-.r that the SS " SuKO fA.J->.RU " arrived at the Port of Mani la on June 29, 1969, under Registry Noo 1247, and discharged thereat, among other cargoes, 238

DECISION - CTA CASE NO. 2692 - 2- 34 bales of assorted textile remnants, consigned to Bahaghari Marketing and covered by Bill of Lading No. KM-9. The gross weight of said article as declared in the bill of lading was 14,178 lbs., but upon exa- mination by a customs examiner, it was found that the actual weight was 61,186 lbs., or a discrepancy of 47,008 lbs. In other words, the actual gross weight exceeded by more than 300% the declared weight . of the merchandiseo Consequently, in a letter dated September 23, 1969 , the Collector of Customs, Port of Manila, informed pe- titioner of the violation committed by the vessel of Section 2523 of the Tariff and Customs Code, and required it to explain in writing why no administrative fine should be imposed upon the said vessel. In a reply dated November 19, 1969, petitioner , through its counsel, explained that t he weight of the shipment and its mea- surement were furnished by the shipper, and the vessel, . relying on the sa. id information , stated in the bill of lading and in the ma nif est the data as furnished; that the same weight and measurement were stated in the delivery permit; and that the shipment, being by its nature capable of absorbing moisture and/or water, may have so absorbed such elements that must have ~esulted in increase of weight. On January 7, 197 5, after insti tu�ting administrative �

DECISION - CTA CASE NO. 2692 - 3- proceedings against the vessel, the Collector of Customs rendered a decision imposing an administrative fine of P3 0,50 2 .00 against the SS "SOKO MARU 11 and/or its local agent, petitioner Delgado Shipping Agencies, Inc., for � violation of Section 2523 of the Tariff and Customs Code, as amended. On appeal, res pond ent Commissioner of Cus- toms, in his decision dated Ap ril 22, 1975, affirmed in toto the Collector's decision. Hence, the present rec o urse. The parties submitted this case for decision on the basis of the pleadings and the records of the Bureau of Customs, presenting the principal issue of whether or not the vessel SS "SOKO Kl\.RU" and/or its ship agent, petitioner herein, are liable for the fi ne for violation of Section 2523 of the Tariff and customs Code, as amended. In support of its defense that neither it nor the vessel is liable for the fine, petitioner presented these arguments: (1) that there is no proof that the discrepancy in weight of the subject cargo was due to the carelessness or incomp etency of the master, owner, officer or employee of the vessel; (2) the weight dec- lared in the bill of lading and the manifest was based on the information furnished by the shipper; (3) the master, owner, officer or employee of the vessel is not required under the law to check or verify the correct

DECISION - CTA CASE NO. 2692 - 4- weight of the cargo; (4) since the customs duties on the subject importation is based on the value (ad valorem) the discrepancy in weight will not amount to smuggling or evasion of revenues due the government. Petitioner further asserts (for the first time in its memorandum) that the amount of the fine (~30,502.00) imposed by the Bureau of Customs has no legal basis since it is allegedly based on the total value of the 61,186 lbs. and not on the value of the discrepancy. This case is not one of first impression. In the case of United States Lines, Inc. vs. Commissioner of Customs, CTA Case No . 2796, July 31, 1978, this Court ruled: Likewise, the insistence by petitioner that there is no proof or evidence as to the carelessness 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 verifica- tion of the weight of the ship's cargo at the port of loading is the duty or obligation of the master, owner, pilot, of f icer or employee of the vessel. Failing in this dutyt the conclusion is inevitable that there is an unexcusable laxity on the part of the master, officer or 0\mer of the vessel in exercising the ordinary care and prudence in avoiding the underdeclaration of the weight of the ship's cargo, penalized under said Section 2523. Doing business in the Philippines, it is the solemn obligation of the master, pilot in command, 0\vner or employee of the vessel to abide by our customs laws and regulations. In other words, if the discrepancy of more than 20% between the declared weight and actual weight of the imported article arose because of, and which could have been avoided if it were 2 �ll

DECISION - CTA CASE NO. 2692 - 5- not for, the failure or omission of the mas- ter, pilot in command, owner, officer or employee of the vesselto perform his dut y o f ascertaining or verifying tbe vleight of the cargo, the inevitable conclusion is that he is negligent or careless within the con- templation of the law. (~ee Citadel Lines? Inc . vs. Commissioner of Customs, CTA Case No. 2718, June 301 1978; Compania General de Tabacos de Filipinas vs. Commissioner of Cus- toms, CTA Case No. 2576, April 6, 1977, Cer- tiorari denied in G.R . L- 47010, October ~ 1977; Delgado Shipping Agencies, Inc. v s. Commissioner of Customs. CTA Case 2744, Feb- ruary 25, 1977, Certiorari denied in G.R. L-47404t May 5~ 1978; Delgado Shipping Agen- cies, Inc. v s . Commissioner of Customs ,. CTA Case No. 2685, February 15, 1977; Macondray & co., Inc � . vs . Com~issioner of Customs, CTA Case No. 2741 , February 3 , 1977t Macondray & Co., Inc e vs. Commiss ioner of Customs, CTA Case No. 26 56 1 January 21, 1977 , ~tiorari denied in G.R . L- 46287 , June 20, 1977; Del- gado Shipping Age ncies , Inc. vs. Co~minsioner o f Customs , CTA Case ~o. 2548 , September 30 ~ 1976; F. E. Zuellig ~ Inc. vs . Commi ssioner of Cust oms ~ CTA Case No. 2360, April 10, 19 7 5.) In this case, petitioner frankly admits that the weight declared in the bill ot lading and the ~an ifes t was suppl ied by the shipper and same was simply relied upon by the c arrier. This evidently indicates that no actual veri- fication or ascertainment of the weight of the c argo at the port of loading was made on the part of the vessel. Then 1n the � more recent case of Commissioner of Customs vs. Court of Tax Appealsand Delgado Ship- ping Agencies, Inco , in its capacity as agent of the s~ " Eurybates" , G. R. No. L-49462, June 29 , 197 9, where the f a cts a nd issues involv ed are identical to those in the case at bar, the Supreme Court held : X X XXX XXXXX XXXXX ') 1 ') f. ' -

DECISION - CTA CASE NO. 2692 - 6- ~1. Section 2523 of the Tariff and Customs Code~authorizes the imposition of the admi- nistrative fine in the sum of ~26,575.00 im- posed by petitioner. The two ~equisites there- in provided1 namely, (1) that the actual gross weigh exceed by more than twenty per centum the declared gross tveight and ( 2) that the discrepancy is due to carelessness or incompe- tency of the master, ovmer or employee of the vessel, were duly found by petitioner commis- sioner, as well as by respondent court, to be present in the instant case. The discrepancy in the declared gross weight of the cargo (13 , 272 lbs.) and its actual weight (66,579 lbs.) is so grave that it constitutes per se evidence of willful ne9l igence or gross incompetence. The actual gross weight of the shipment exceeded by more than four hundred (400%) percent its declared weight, whereas the statute allows a discrepancy of not more than twenty (20%) percent. In other wo rds~ the discrepancy of 53,307 lbs. (underdeclared weight exceeded by more than twenty (20) times the 20% discrepancy (2,654 . 4 ) lbs. or 20% of the declared weight of 13,272 lbs. allowed by the law. 2. Here, the Collector of Customs as af- firmed by petitioner Commissioner of Customs, in accordance \V'i th authority given them by the cited codal provision, duly exercised the dis- l/nsec. 2523. Discrepancy Bet\veen Actual and Declared Weight of Manifested Articleo - - If the gross wei Qht of any article or package described in the manifest exceeds by more than twenty per centum the gross weight as declared in the manifest or bill of lading thereof, and the Collector shall be of the opi- nion 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 importing vessel or aircraft." (Emphasis supplied).

DECISION - CTA CASE NO. 2692 - 7- cretion and authority vested in them by impos- ing the maximum fine due to the gross under- declarationo Without a showing of grave abuse of discretion on the part o f said officials, the said fine should be allowed to stand. Ap- plying by analogy the principles of penal law~ the gross underdeclaration (by ' more than 400%) aggravated respondent�s offense and no mitiga- t ing circumstance having been sho~n by respon- dent, petit_oner correctly imposed the maxi- mum fine and there is no valid justification for respondent court � s arbi tr�ary reduction of the fine to a mere P6~000oOO. 3o The clear purpose of the codal pro- vision requiring vessels to declare the correct weight of thelr cargo is to curb smuggling due to such . underdeclarationso Hence~ imposing the maximum fine on vessels which grossly fail to comply with the obligation to declare the true weight of their cargo promotes the spirit and purpose of the law, since imposing a minimum fine would only embolden would-be smugglers and foster gross negligence on the part of the mas- t er o f the vessel as in this ~se in checking the true weight of the cargoo Respondent 0 s claim that there could be no evasion of duties here since textile remnants are imposed duties ad valorem or on the bpsis of the dutiable value of the merchandise irrespective of the weight is untenableq since an undcrdeclaration o f the we i ght o f the remnants by more than 40~/o would make i t much easier to underdeclare the dutiable val ~e of the remnants. 4 0 Moreover, the Solicitor General's sub- mission in his brief on behalf of petitioner commissioner that respondent court "should have taken cognizance of the fact that a string of cases .have peen filed with it, either already decided or pending decision6 involving similar v iolations committed by the same shipping agent, the private respondent herein~ such as c.T.A. Cases Noso 2729� 2539, 2548, 2802 6 2793~ not to include similar cases still pending with the Bureau of Customs~ namely: Customs Cases Nos . 77-31~ 77-32~ 77-33 7 75-21 1 75-65q 75~65A~ 75-04, which circumstance indubitably establishes 'habituality' in the commission of the same offense and, on this basis� the maximum fine provided for by law should rightly be imposed, .. appears to be well taken. The existence of such numerous cases of similar violations having ') l 1 f.w tL.

__ _____ ---- ,..... ........, DECIS I ON - CTA CASE NO. 2692 - 8- been dec ided against respondent or pending decision against it has not been denied by r espondent in its comment. 5 0 Finally, contrary to respondent's contention, the vessel's master, owner or employees are duty bound under the cited codal section under pain of the penalty of fine therein provided to check and verify the correct weight of the cargo or shipment so as to pre- vent a misdeclaration or underdeclaration of weight. The vessel master's discharge of such obligation imposed by law to properly determine and verify the weight of cargos carried by it is certainly pertinent to and important for the proper assessment of the collectible customs duties and taxes, and is not a burdensome task in the present era of containerized cargos. As ruled by respondent court itself in its decision: 11 ~ve find peti tio,qer � s conten- tion without merit. ~he issue in this case and the arguments raised are not of first impression. In the case of International Harvester Mac- leod, Inc. , etc. vs. Commissioner of Customs, C.T. A. Case No. 2698, Novem- ber 25, 1977, this Court held as follows: At this juncture, it is hardl y necessary to add that under Section 2523 of the Ta- riff and Customs Code, the declaration, ascertainment or verification of the correct weight of the cargo at the port of loading is the duty or ob- ligation of the master, pilot, ot�mer, officer or employee of the vesselo If he omits or dis- regards this duty and a puniDh- able discrepancy between the declared weight and actual weight of the cargo exists, the inG evitable conclusion is that he is negligent or careless . (See Delgado Shipping Agencies, Inc. vs. Commissioner of Qustoms, C.T.A . Case No . 2685, Feb . 15 , 1977; Macondray & Co., Inc . vs .

---"'-=' " - - - - - - � - - - -� DECISION CTA CASE NO. 2692 - 9- Commissioner of Customs, C.T.A. Case No. 2741, Feb. 31 1977; Ma- condray & ~o., Inc. vs. Cowmis- sioner of Customs, C.T.A. Case No. 2656, January 21~ 1977 and cases cited therein.) Similarly, if in the exercise or performance of this duty, he is negligent or careless resulting in the commis- sion of excessive discrepancy in the weight of the ship's cargo penalized under the law, care- lessness or incompetency is, none- theless, imputable to him. Thus, ~n the case of Delgado Shipping Agencies, Inc. vso Corn- missioner of Customs, C.T.A. Case Noo 2685, February 15, 1977, cer- t iorari denied, G.R. L-46262, July 6, 1977, this Court ruled: And as to petitioner's insis- tence of proof on the part of r es- pondent of the neglig ence or care- lessness of the master, owner or em- ployee of the vessel, suffice it to say, additionally, that this Court has already unequivocaLly ruled that under Section 2523 o f the Code, the ascertainment or ver~ficatio~ of the weight of the ship's cargo at the port of loading is the duty or obli- gation of the master, pilot, owner or employee of the vessel. Failing thus, the conclusion seems to be in- evitable that there is an unexcusable laxity on the� part of the master or 0\vner in exercising the ordinary care and prudence in the commission of excessive discrepancy in the weight of the ship's cargo penalized under the law. Doing business in the Philippines, it behooves the master or owner of a vessel to abide by our customs laws and regulations and to ignore them is nothing short of gross carelessness or incompetence. 11 As to the amount of the fine, we are not in a position to sustain the mere assertion of petitioner 216

DECISION CTA CASE NO. 2692 - 10 - that it has been erroneously computed or determined by the Bureau of Customs. Petitioner submitted this case on the basis of the pleadings and the Customs records, and nowhere has the issue on the correctness and reasonableness of the amount of the fine been raised. To impugn the correctness of the amount of the fine, it is not enough for petitioner to simply allege for the first time in its memorandum that the same has been wrongly computed or d~t e rmined b y the Bureau of Customs. This question must not only be raised in the petition fo r r eview, or during the hear- ing of the case, but more importantly, evidence should be adduced to support the correctness o f the claim. Failing on this, and without the f acts, data and in- formation in the customs records appropriate and ne- cessary to determine the correct amount of the fine, the Court will have to apply the presumption that the computation by the Bureau of Customs is correct and in accor d a~ce wi t h law. And neither can this Court jus tify the reduction / of the maximum f i ne imposed by the Commissioner of Customs in this caseo For like in the above-cited ca se of Commissioner of Customs vs. Court of Tax Appeals andDelgado Shipping Agencies, Inc., supra, the facts and issues of -v;h i ch are almost identical with the present case, the d i scre pancy between the

. ..... ---�-------- -� - ����� -- - .. ............ -- " ~--------- DEC IS I ON CTA CASE NO. 2692 - 11 - dec l a red weight o f the importatio n (14,178 lbs. ) and i t s a c tual weight (61,186 lbs .), or a difference of mo re than 300%, 11 is so grave that it con stitutes per ~ evidenc e of will ful negligence or gross incompe- tenc e . 11 Fu rthermo re , it has not been positi vely sho wn by peti t ioner that the Co llector an d the Com- mis sioner of Customs have gravely abused their dis- cretio n and authority in imposing the max i mum fine a nd t hat there is, � in this case, a mitigating c irc umstanc e . WHEREFORE, the decision o f res p on d ent Commiss i one r o f Cu stoms is affirmed and the ves s el ss 11 SOKO MARU" a n d/or its local ship agent petit i oner Delgado Shi ppi ng Agencies, Inc., are hereby ordered to pay to the Burea u o f Customs within thirty (30 ) days from t he date th i s decision becomes final and executory the fine of P30, 502 . 00. With costs ag ainst peti t i one r . SO ORDERED Quezon Ci ty , Metro Manila, J uly 30, 1979. ~~ AMAN: j7lLLER � Acting Presid i ng Judge I CONCUR: v ...._ //Y ;..., 'C. L.C.'-; - CONSTANTE CL~ ROAQUIN Associate Ju9-ge 2,18