CTA Case No. 2706 (Decision)

HEPU8t,IC 0F TBE PBILIPPINEI COURT Of TAX APPEALS QUEZON CITY UNITED STATES LINES t INC . , in i t s capa city as owner of the SS 11 PIONEER MART " I Petitioner1 - versus - C. T.A . CASE NO . 2706 COMMISSIONER OF CUSTOMS, Respondent . X- - - - - - - - - - - - - X DECI S I 0 N Elevated on appeal by petitioner United States Lines, Inc~, in its capacity as owner of the SS 11 PIONEER MART 1 11 is the de ci sion of res:pondent Commis- sioner of Customs dated Apri l 29 1 1975, which affirmed that of the Collector of Cus t oms , Port of Manila , im- posing a fine of Pl2~ 7 47 .35 against the said vessel and/or petitioner for vi o lation of Section 2523 of t he Tariff and Cu stoms Code. The case has been submitted for dec ision on the basis of the pleadings and of the records of the Bure au of Customs . It appears that on Apri l 141 1968, the ss uPIO- NEER MART " with Registry No. 728, arrived at the Port of Mani la and disch~ged, among others, a cargo of thirty four (34) bales of cotton and rayon remnants covered by Bill of Lading Noo 196, and declared under Entry Noo 060797(6 8 ). Upon examination of the mer- chandise by a Cu s toms appraiser,. it was discovered

DECISION - C. T . A. CASE NO. 2706 - 2- that there was an excess weight of more than 20% of what was declared in the bill of lading and the mani- fest, in violation of Section 2523 of the Tariff and Customs Codeo Wherefore, a discrep ancy report was sent to the Chief, Law Division.of the Bureau of Cus- toms 1 recommending~ among others, that action be taken against the v essel for violation of Section 2523 of the Tariff and Customs Code . In a letter dated January 23, 1969, the Collector of Customs . informed petitioner that its vessel ss "PIO- NEER MART", which arrived at the Port of Manila on April 14�, 1968, conveyed and discharged fifty (50) bales of cotton and rayon remnants with an excess weight of more than 20% as declared in the manifest in violation of the law . Petitioner was therefore requested to ex- plain in writing within five (5) days from receipt of the .letter and show cause why no administrat ive fine should be imposed on the vessel for this violation; or if it so elects., the case would be formally investigated, in which case, petitioner was given the same period of five (5) days from receipt thereof to inform the Col- lector of such option; otherwise, failure to do so would be construed as a waiver of its right to be heard and the case would be decided accordingly . (p . 5, Customs r ecords.) rn r eply, petitioner advised the Collector of Customs on January 30 7 1969 11 that the weights appearing on the bills of lading are declared by the shipp ers

DECISION - C. T . A. CASE NOo 2706 ..... 3 - at the port of origin serve as the basis for manifes- ting the cargo . �� Further, cotton and rayon remnants are freighted on the measurement basis and therefore weights of these shipments become immaterial as far as freightage is concerned, and whatever weight is declared by the shipper is taken as the true and cor- rect weight of the cargo~ It follows that the vessel had not violated any Customs regulations . (p . 6, Cus- toms rec ocr::;ds . ) After proper notice, administrative proceeding was instituted against the SS 11 PIONEER MART 11 and the same was heard together with the c ase of the SS uTROU- BADOUR" . At the initial hearing thereof on October 2, 1969,. in which petitioner was duly represented, counsel for the government requested that he be allowed t o have the complaint amended for an error committed in the number of bales of the subgect shipment . Con- s equently, the Hearing Officer remanded the case to the Vessel Investigation Section of the Bu reau of cus - toms for the pr eparation of the appropriate chargeo (pp . 10-14, Customs records . ) Subsequently, on October 8 1 1969 the Collector of Customs sent an amended letter-complaint apprising petitioner virtually of the same violation as that contained in his letter dated January 23, .1969, except with respect to the number of bales of the merchandise

DECISION - C.T. A. CASE NOo 2706 4 which was reduced to thirty four (34) bales instead of fifty (50)o In the same letter, petitioner was also required to explain in writing within five (5) days from receipt thereof why no administrative fine should be imposed on the vessel; or if petitioner so elects, the case would be formally investigated, exer- cising its option within the same period of five (5) days; otherwise, petitioner's failure to do so would be construed as a waiver of its right to be heard and the case decided accordingly . (p. 9 , Customs records .) To this amended letter-complaint, petitioner failed to reply . On October 24, 1974, the Collector of Customs rendered a decision finding the SS "PIONEER MART" guilty of violatina Sec"tion 2523 of the Tariff and Customs Code and imposing an administrative fine of Pl2 , 747 o35 against the said vessel and/or its agent. The Collector of Customs found out that 11 there was a discrepancy of more than 20% between the gross weight of the subject importation and that of the declared weight thereof" ; and 11 this discrepancy can well be at~ributed to the carelessness of the official of the subject vessel who is in charge of the inward rna- nifest 1 s preparation . " (po 20, Customs records . ) Alleging that the decision of the Collector of Customs was rendered without giving petitioner an opportunity to present its evidence; the latter moved

I �I ' DECISION - C. T . A. CASE NO . 2706 5 to r econsider the said decisiono On December 3# 1 9 7 4 1 however, the Collector of Customs issued an order dis- missing the motion for reconsideration for want of merit . Consequently1 appe.al was made to respondent Commissioner of ~ustoms, who affirmed the decision of the Collector ~n his decision promulgated on April 29 , 1 975 ~ which discou r sed mainly on the issue of due pro- cess, the pertinent portion of which : The herein appellant contended that, "considering that the explanation required by the amended letter~complaint was the . same a s the explanation as in the original letter- complaint , respondent (now petitioner herein) did not reply . Since respondent did not reply to the amended letter-complaint, the original explanation should be considered by this Honorable Office as the explanation to the amended letter- complaint . This being the case, respondent should have been given an opportunity to present its evidence to prove its explanation o" The Collector of Customs was right in holding the view that : u x x x, the subject decision that is sought to be set aside by respondent is precisely predicated on the letter- answer of the herein respondent dated J anu ary 30 , 19691 whic h by its c1ear and unambiguous l anguage .does not require further evidence to prov e what is ex- p l ained therein . " Left with no other recourse, petitioner appealed to this Court . The issues for our determination are : (1) Whether or not Section 2523 of the Tariff and Customs Code was violated; and ( 2) Whether or not the fine imposed is

'�I' DECISION - C. T . A. CASE NO . 27 06 - 6- excessive and unreasonable . As regards the first issue, petitioner raises the following defenses : (a) That the weight of the c argo i s not required to be stated in the manifest under Section 1005 of the Tariff and Customs Codet and thus an erroneous dec laration of the weight of the shipment does not constitute any violation of the Customs Code; (b ) that there is no proof that the discrepancy i n weight was due to the carelessness or incompetency of the master, owner, officer or employee of the vessel ; and (c) that assuming that there was c arelessness or incompetency on the part of the master, owner, officer or employee of the vessel 1 the same should be excused because the weight appearing in the b i ll of l ading was dec lared by the shipper and the c argo was freighted on measurement basis and not on weight . In the recently decided case of United States Lines , Inc . vs. Commissioner of Customs, CTA Case Noo 2796 1 July 31 1 1978 , involving the same parties, under similar factual setting and with identical issues raised, this Court resolved the foregoing de- fense in this wise, to wit : "The question of whether, under Section 1005 of the Tariff and Customs Code, the weight of an imported article should be stated in the cargo manifest of vessels coming from a foreign port was squarely resolved in the affirmative in the case of Smith, Bell CoG, Inc . vso Commie - ('f/'

DECIS I ON - C. T . A. CASE NO. 2706 7 sioner of Customs . (CoT .A. Case No . 2396, April 30, 1973 . ) As inter preted and applied by this 9ourt in said case, the particulars or data required to be stated in the cargo manifest, under said Section 1005 of the Tariff and Customs Code, include the weight of the cargo . As a matter of fact, the Court, in making this interpretation, has made reference to the aforecited Section 2523 of the Code which imposes a fine for a dis- crepancy in weight of the cargo of over 20% of what was declared in the manifest or bill of lading. As to proof or evidence of the discre- pancy of more than 20% between the actual weight and declared weight of � the merchandise in question~ we find the appraisal report of the Customs appraiser dated October 29~ 1968, forming part of the Customs record, sufficient. (See Pu 2, Customs reco) For petitioner to overthrow the findinas of the Bureau of Customs as to the discrepancy in weight1 it should have presented countervailina evidence during the hearing beforethis Court to 'rebut said findinqs of the Bureau of Customso It cannot simply rely, to support its stand that there is no weight discrepancy# on bare allegationso More- over, petitioner admits in its memorandum that an amendment to the vessel's manifest was sub- mitted to , and was ap~roved by, the Bureau of Customs . Indeed, if there was no weight dis- crepancy in this case, why was an amendment as to the weight filed by petitioner still necessary? Likewise, the insistence by petitioner that there is no proof or evidence as to the care- lessness or incompetence of the master1 owner1 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 verification of the weight of the ship 1 s cargo at the port of loading is the duty or obligation o f the master, owner, pilot, officer or employee o f the vessel. Failinq in this duty, the conclusion is inevi- table that there is an unexcusable laxity on the part of the master, o ff icer or owner of the vessel in exercising the ordinary c 2re and pru- dence in avoiding the underdeclaratlion of the weight of the ship's cargo, penalized under said Section 2523. Doino business in the Philipp ines, it is the solemn obliqation of the

DECISION ..., C.T.A. CASE NO . 2706 - 8- master, pilot in command, owner or employee of the ves s el to abide by our customs laws and regulations o In other words, if the discrepancy of more than 20% between the dec- lared weight and actual weight of the imported article arose because of, and which could have been avoided if it were not for 1 .the failure or omission of the master, pilot in command, owner~ officer or employee of the vessel to perform his duty of ascertaining or verifying the weight of the cargo, . the inevitable con- clusion is that he is negligent or careless within the contemplation of the law (See Ci- tadel Lines, Inc . vs . Commissioner of Customs , CTA Case No. 2718, June 30 1 1978; Compania General de Tabacos de Filipinas vso Commissioner of Customs, CTA Case No4 2576 1 August 31 , 1977; Macondray & Co ., Inc . vs. Commissioner of Cus- toms~ CTA Case No . 2575 , April 6 1 1977 , Certio- rari denied in G. R. L- 47010 , October 7, 1977; Delgado Shipping Agencies, Inc . vs . Commissioner of Customs, CTA Case 2744 1 Februa ry 25 1 1977, ~rtiorari denied in G. R. L-47404 , May 5 , 1978; Delgado Shipping Ag e n cies, Inc . vs . Commissio ner of Customs , CTA Case No . 2685, February 15 1 1977; Macondray & Co ., Inc . vs. Commissioner of Cus- toms, CTA Case No . 2741 , February 3, 1977; Ma- condray & Co ., Inco VSo Commissioner of Customs~ CTA Case No o 2656, Januarv 21 1 1977 , certiorari denied in G. R. L-46287, June 20 1 1977; Delgado Shipping Agencies1 Inc . vs. Commissioner of Cus- tom.s , CTA Case No . 2548, September 30 1 1976 ; F . Eo Zuellig, Inco vs. Commissioner of Customs, CTA Case No . 2360~ April 10 , 1975 .) In this c ase, petitioner frankly admits that the weight dec lared in the bill of lading and the manifest was supplied by the shipper and same was simply relied upon by the carriero This evidently in- dicates that no actual verification or ascer- tainment of the weight of the cargo at the port of loading was made on the part of the vessel. Finally, it is no defense that the weight of the c argo declared in the manifest or bill of ladina was supplied and furnished by the shipper, and that the cargo in question was freighted on measurement basis and not on weighto As explicitly stated by this Court: 1 x x x that the weight of the cargo is declared by the shipper and any discrepancy in weight is beyond the control of the shipping company i s not a valid excuse. Accepting petitioner ' s explanation as a valid defense is virtually nullifying

DECISION - C.T.A. CASE NO . 2706 - 9- Section 2523 of the Tariff and Customs Code~ brushing aside the provisions of Section 2523 of the said Code as a dead letter. x x xo � (F o E. Zuellig,. Inc, vs . Commissioner of Cus- toms~ supra; see also Macondray & Co ., Inc . vso Commissioner of Customs, CTA Case No . 2656, January 21, 1977 1 Certiorari denied in G. Ro L-46287, June . 20, 1977; Delgado Shipping Agen- cies, Inc. vs . Commissioner of CUstoms, CTA Case No. 2744~ February 25, 1977, Certiorari denied in G.R. L-47 404 1 May 51 1978o) 1 Anent petitioner 1 s averment that the freightage on the subject shipment was made on a measurement basis, suffice it to state that freightage is merely the charge of compensation paid by the shipper or importer to the carrier, and is not a determinative factor in the assessment and imposition of duties and penalties on the im- ported goodso As aptly observed by the res- pondent, freightage is never a factor in deter- mining the responsibility of the vessel under Section 2523 of the Tariff and Customs Code.� (Macondray & Co., Inc . vso Commissioner of Cus- toms, CTA Case No . 2656# January 21 ., 1977, Cer- tiorari denied in G. R. Noo L-46287 1 June 20 1 1977; Delgado Shipping Agencies, Inc. VSo Com- missioner of Customs# CTA Case No. 2744~ Feb- ruary 25, 1977, Certiorari denied in G~R . L-47404, May 5, 1978; Delgado Shipping Agencies, Inc. vso Commissioner of Customs, CTA Case No. 2802 1 June 30.~ 1978.,)" We find no cogent reason to modify, much less depart from the conclusions reached in the above-cited case of United States Lines, Inc., as expressed in the above-quoted opinion of this Court there1 and thP same should resolve the identiaal issue. now brought before us in this proceedingo Apr~pos of the amount of the fine imposed, peti- tione~ contends that the sum of ~12,747.35 is excessive, unreasonable and confiscatory, considerinq that the duties and taxes on the subject shipment, which are based on value or 2� valorem1 have already been paid;

DEC I SION - C . ToA . CASE NO . 2706 10 - that the amendment to the manifest was promptly sub- mitted and approved by the Collector of Customs ; that assuming that there is negligence or incompetence in this case which is not excusable, it does not amount to willful negligence or grave incompetence; that the fine imposable should b e based on the value of the article in respect to which the deficiency exists and not on the total value of the whole shipment; and that this is the first violation committed by the SS "PIO- NEER MART . 11 In a c cordance with the provisions of Section 2523 of the Tariff and Customs Code , the rule on the com- putation of the fine is to the effect that na fine of not more than fifteen per centum of the value of the package or article in respect to which the deficiency exists" , and not on the total value of the imported merc handise1 may be imposed upon the importing vessel . (Macondray & Co o1 Inc o vs . Commissioner of Customs , CTA Case No . 2741 , February 3 , 1977 o) The record , however, shows that the computation of the fine im- posed by respondent was based on the t otal value of the merchandise . (See page 1 5 ~ Customs records, Memorandum dated December l Of 1968 of Appraiser Tan) . On the other hand, neither the records of the case show the value of the package in respect to which the deficiency exists nor has petitioner come up with the correct computation of the amount of the fine

DECISION - C. T . Ao CAS~ NOa 2 7 06 - 11 - which shoul d be imposed G Nonetheless, considerina that this is the first violation committed by the SS 11 PIONEER MART u; tne negligence or incompetence of the master, owner, officer or employee does not amount to willful negligence or gross incompetence; and the law allows latitude in the imposition of the fine , we deemed it just and reasonable to reduce the admi - nistrative fine imposed on the SS "PIONEER MART" and/ or petitioner United States Lines, Inc ., as owner of the vessel , to :1?4 , 000 . 00 (Delgado Shipp ing Agency vs . Commissioner of Customs 1 CTA Case No . 2729, June 16 ~ 19 7 8 ; Macondray & Co ., Inc o vs . Commissioner of Customs , CTA Case No . 2684 , April 24 , 1978 . ) WHEREFORE , the decision appealed from is MODIFIED , and the vessel SS 11 PIONEER MART 11 and/or petitioner herein are hereby ordered to pay to the Bureau of CUstoms the administrative fine of P4 , 000 o00 for violation of section 2523 of the Tariff and Customs Code o With costs . SO ORDERED . Quezon City , September 291 1978 . AMANTE Actin;)" Pre I CONCUR: I CON$~0AQUIN , tssociate Judge