COMMISSIONER OF CUSTOMS, PETITIONER, VS. COURT OF TAX APPEALS AND DELGADO SHIPPING AGENCIES, INC., IN ITS CAPACITY AS AGENT OF THE SS “EURYBATES”, RESPONDENTS.

The Court sets aside as grave abuse of discretion the res­pondent
court’s reduction of the maximum administrative fine of P26,575.00
imposed by petitioner Commissioner to a practically token fine of
P6,000.00.  The actual gross
weight of the shipment exceeded by more than 400% its declared weight,
whereas the customs code allows a discrepancy only of not more than 20%.  The underdeclaration is so gross that it
constitutes per se evidence of willful negligence or gross incompetence
on the part of the ves­sel’s master and there is no valid justification for an
arbitrary reduction of the fine justly imposed.

The records show that on July
16, 1969, the vessel SS “EURYBATES” arrived at the port
of Manila and discharged thereat 72
bales of textile remnants consigned to Balin Commercial of Manila and covered
by a bill of lading.  The gross weight of
said merchandise as declared in the bill of lading was 13,272 lbs., but
it was reported after examination and appraisal that the actual weight
was 66,579 lbs. or a discrepancy of 53,307 lbs. 
Hence, the actual gross weight of the merchandise exceeded by more than
400% the declared weight.

Respondent Delgado Shipping Agencies, Inc., in its capacity as
agent of the vessel, was accordingly required by the Bureau of Customs to show
cause why an administrative fine of P26,575.00 on the vessel should not be
imposed, which is the maximum fine that can be imposed against the vessel under
Section 2523 of the Tariff and Customs Code. 
After hearing, the Collector of Customs ren­dered his decision of October 17, 1974 finding the vessel
SS “EURYBATES” liable under the cited section of the Tariff and
Customs Code and ordering respondent Delgado Shipping Agencies, Inc. as its
agent to remit the said fine within ten days from finality of the
decision.  On appeal, petitioner
Commissioner of Customs in his decision dated February 19, 1976 affirmed that of the Collector of
Customs.

Said respondent appealed the petitioner’s decision to respondent
Court of Tax Appeals.  In its decision of
August 25, 1978, respondent
court affirmed the findings of petitioner commissioner and found that the
vessel did violate Section 2523 of the Tariff and Customs Code.  Nevertheless, respondent court reduced the
fine imposed against private respondent from P26,575.00
to P6,000.00 on the basis of its opinion that “it does not appear that the
negligence or incompetence of the master, owner, officer or employee of the
vessel amounts to willful negligence or gross incompetence, and considering
further that the law allows a latitude in the imposition of the fine.  To our mind, the reasonable fine to be
imposed against said vessel is P6,000.00.”

Hence, this petition of February 9, 1979 filed by petitioner
Commissioner of Customs to set aside such reduction of the fine on the ground
that respondent court gravely abused its discretion when it so reduced the
administrative fine by more than 75% from P26,575.00 to P6,000.00.  Upon receipt of respondents’ comment and
petitioner’s reply, the Court granted due course to the petition and,
dispensing with the filing of briefs or memoranda, declared the case submitted
for decision per its Resolution of June
20, 1979.

The Court finds that respondent court did act with grave abuse of
discretion when it reduced the administrative fine notwithstanding the gross
misdeclaration of the weight of the manifested merchandise and therefore grants
the petition.

1.  Section 2523 of the
Tariff and Customs Code^[1]
authorizes the imposition of the administrative fine in the sum of P26,575.00 imposed by petitioner.  The two requisites therein provided, namely,
(1) that the actual gross weight exceed by more than twenty per cen­tum the
declared gross weight and (2) that the discrepancy is due to carelessness or
incompetency of the master, owner or employee of the vessel, were duly found by
petitioner commissioner, 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
negligence 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 words, 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 affirmed by petitioner Commissioner of Customs, in accordance with
authority given them by the cited codal provision, duly exercised the
discretion and au­thority vested in them by imposing the maximum fine due to
the gross underdeclaration.  Without a
showing of grave abuse of discretion on the part of said officials, the said
fine should be allowed to stand. 
Applying by analogy the principles of penal law, the gross
underdeclaration (by more than 400%) aggravated respondent’s offense and no
mitigating circumstance having been shown by respondent, petitioner correctly
imposed the maximum fine and there is no valid justification for respondent
court’s arbitrary reduction of the fine to a mere P6,000.00.

3.  The clear purpose of the
codal provision requiring vessels to declare the correct weight of their cargo
is to curb smuggling due to such underdeclarations.  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 master of the vessel as in this case in checking the true
weight of the cargo.  Respondents’ claim
that there could be no evasion of duties here since textile remnants are
imposed duties ad valorem or on the basis of the dutiable value of the
merchandise irrespective of the weight is untenable, since an underdeclaration
of the weight of the remnants by more than 400% would make it much easier to
underdeclare the dutiable value of the remnants.

4.  Moreover, the Solicitor
General’s submission in his brief on behalf of petitioner commissioner that
respondent court “should have taken cognizance of the fact that a string
of cases have been filed with it, either already decided or pending decision,
involving similar violations committed by the same shipping agent, the private
respondent herein, such as C.T.A. Cases Nos. 2729, 2539, 2548, 2802, 2793, not
to include similar cases still pending with the Bureau of Customs, namely:  Customs Cases Nos. 77-31, 77-32, 77-33,
75-21, 75-65, 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 been decided against respondent or
pending decision against it has not been denied by respondent in its comment.

5.  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 prevent 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:

“We find petitioner’s contention without merit.  The issue in this case and the arguments
raised are not of first impression.  In
the case of International Harvester Macleod, Inc., etc. vs. Commissioner of
Customs, C.T.A. Case No. 2698, November
25, 1977, this Court held as follows:

At this juncture, it is hardly necessary to add that under Section
2523 of the Tariff and Customs Code, the declaration, ascertainment or
verification of the correct weight of the cargo at the port of loading is the
duty or obligation of the master, pilot, owner, officer or employee of the
vessel.  If he omits or disregards this
duty and a punishable discrepancy between the declared weight and actual weight
of the cargo exists, the inevitable conclusion is that he is negligent or
careless.  (See Delgado Shipping Agencies,
Inc. vs. Commissioner of Customs, C.T.A. Case No. 2685, Feb. 15, 1977;
Macondray & Co., Inc. vs. Commissioner of Customs, C.T.A. Case No. 2741,
Feb. 3, 1977; Macondray & Co., Inc. vs. Com­missioner 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 commission of ex­cessive discrepancy in the weight of the ship’s cargo
penalized under the law, care­lessness or incompetency is, nonetheless,
imputable to him.

Thus, in the case of Delgado Shipping Agencies, Inc. vs.
Commissioner of Customs, C.T.A. Case No. 2685, Feb­ruary 15, 1977, certiorari denied, G.R.
L-46262, July 6, 1977, this
Court ruled:

And as to petitioner’s insistence of proof on the part of
respondent of the neg­ligence or carelessness of the master, owner or employee
of the vessel, suffice it to say, additionally, that this Court has already
unequivocably ruled that under Section 2523 of the Code, the ascertainment or
verification of the weight of the ship’s cargo at the port of loading is the
duty or obligation of the master, pilot, owner or employee of the vessel.  Failing thus, the conclusion seems to be
inevitable that there is an unexcusable laxity on the part of the master or
owner 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.”

ACCORDINGLY, judgment is hereby rendered modifying the
decision of respondent court by set­ting aside the reduction in fine therein
granted and reinstating the administrative fine of P26,575.00 imposed in
petitioner commissioner’s decision.

Makasiar, Fernandez, Guerrero, De Castro, and Melencio-Herrera, JJ.,
concur.

^[1] “Sec. 2523. 
Discrepancy Between Actual and Declared Weight
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
manifest or bill of lading thereof, and the Collector shall be of the opinion
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).