UNITED STATES LINES, INC., PETITIONER, VS. COMMISSIONER OF CUSTOMS, RESPONDENT.

This is a petition for review of the decision of the Court of Tax
Appeals dated September 27, 1985, which affirmed the decision of respondent
Commissioner of Cus­toms dated April 5, 1984, imposing an administrative fine
of P10,000.00 against petitioner’s vessel, MV
“American
Venture”, for violation of Sec. 1005 of the Tariff and Customs Code as
amended, in relation to Sec. 2521 of the same Code.

On October 15, 1976,
the vessel “American Venture” arrived in Manila
from Hongkong.  Among the shipments on
board were cargoes consigned by the same shipper and from the same loading port
consisting of two (2) contai­ners which were described in the respective bills
of lading (B/L No. 38 and B/L No. 39) as follows:

“Shipper’s Load and Count”

1     Container
(Part) Cont. # 2020984

Seal  # 601-04725

38 cases 100% Cotton brushed denim broken twill”

1     Container           Cont. # 2101730

Seal  # 601-04707

40 Cases 100% Cotton Sulphur Dyed denim

Total: 
One Container Only

“Shipper’s Load and Count”

The aforestated information as furnished by the Shipper, was copied or entered into the vessel’s Inward Foreign
Manifest.  Upon opening of the containers
by the Bureau of Customs, it was discovered that a) Contai­ner No. USLU-202984
contained 34 cases of cotton denim instead of 38 cases and b) Container No.
USLU – 2101730 contained 44 cases of cotton denim instead of 40 cases.  The
total number of cases in the two containers was the same, however, to wit, 78 cases.  Having been informed of the differences
herein petitioner had the Manifest amended with the consent of the customs
authorities on November 3, 1976 to reflect the actual quantity of the cases
in each of the containers.  Subsequently,
the Collector of Customs instituted proceedings against herein petitioner for
alleged violation of Sec. 1005 in relation to Sec. 2521 of the Tariff and
Customs Code.  Not finding the
explanation of the herein petitioner satisfactory, the Collector of Customs
found petitioner guilty of violating said provisions of the Tariff and Customs
Code and ordered it to pay a fine of P10,000.00.  Appeal was made by the petitioner to the
Commissioner of Customs, who affirmed the said decision in toto.  Upon a petition to review the decision of the
Commissioner of Customs, the Court of Tax Appeals (CTA) affirmed the assailed decision.

In its petition for review before the Court of Tax Appeals,
petitioner assails the Commissioner of Customs, in disregarding Customs
Administrative Order (CAO) No. 8-75 particularly in not applying Sec. II-24
thereof and in not treating each container as the unit of cargo.  Acting on these issues, the Court of Tax
Appeals ruled that Customs Administrative Order No. 8-75 is irrelevant and
contrary to Sec. 1005 of the Tariff and Customs Code, We quote the tax
tribunal:

“Customs Administrative
Order (CAO) No. 8-75 simply defines the term “Shipper’s Load and Count”
without any further provisions or explicit explanation as to the scope of its
applicability.  While the concept may be
rele­vant in determining responsibility in case of injury or damage to the
cargo arising from loading, handling or movement of the cargo, the same cannot
positively, or even impliedly, be viewed as an exception to the provisions of
Sections 1005 and 2521 of the Tariff and Customs Code imposing a mandatory duty
on vessels from foreign ports to have on board true and accurate manifests of their
cargoes.  Besides, Customs Administrative
Order No. 8-75 is merely an administrative order and the same cannot certainly
modify or amend a law or statute like the Tariff and Customs Code, and defeat
the purpose of its enactment.” (p. 39, Rollo)

Petitioner now seeks before Us the
determination of the following issues:

1.  Whether or not CAO No.
8-75 is irrelevant and contrary to Sec. 1005 of the Tariff and Customs Code.

2.  Whether or not a
carrier of containerized cargo should be held liable for a fine under Sec. 2521
in rela­tion to Sec. 1005 of the Tariff and Customs Code upon a clerical error
imputable to the Shipper alone, and not discoverable by the carrier until after
examination by Customs of the importation.

3.  Whether or not
appellant had violated Sec. 1005 of the Tariff and Customs Code notwithstanding
that the total content of the two-container shipment in question (78 bales) is
exactly the same quantity (78 bales) of the merchandise described in the bills
of lading and the Inward Foreign Manifest.

Sec. II-24 of Customs Administrative Order No. 8-75 reads as
follows:

“Shipper’s ‘Load and Count’ – a container packed with cargo by
one shipper where the quantity, description and conditions of the cargo is the sole responsibility of the ship­per.” (underscoring for emphasis);

and quoted
hereunder are the relevant provisions of the Tariff and Customs Code:

“SEC. 1005.  – Every vessel from a foreign port must have
on board a complete manifest of all her cargo.

x x x                                      x
x x                                         x
x x

“Each manifest shall include the port of departure and the
port of delivery with the marks, numbers, quantity and description of the
packages and the names of the consignee thereof.

x x x                                      x x x                                         x x x

“A cargo manifest shall in no case be changed or altered after
entry of the vessel except by means of an amendment by the master, consignee
or agent thereof, under oath, and attached to the original manifest:  Provided, however, that after the invoice
and/or entry covering an importation have been received and recorded in the office of the Appraiser, no
amendment of the Manifest shall be allowed, except when it is obvious that a
clerical error or any other discrepancy has been committed in the preparation
of the manifest without any fraudulent intent, discovery of which could not
have been made until after examination of the importation has been
completed.” (Under­scoring supplied)

“SEC. 2521.  – Failure to Supply Requisite Manifests.  If any vessel or aircraft enters or departs
from a port of entry without submit­ting the proper manifests to the customs
author­ities, or shall enter or depart conveying unman­ifested cargo other than
as stated in the next preceding section hereof, such vessel or air­craft shall
be fined in a sum not less than ten thousand pesos (P10,000.00)
but not exceed­ing thirty thousand (P30,000.00) pesos.

“The same fine shall be imposed upon any arriving or departing
vessel or aircraft if the master or pilot in command shall fail to deliver or mail to the Commission on Audit a
true copy of the manifest of the incoming or outgoing cargo, as required by
law.”

It is petitioner’s contention that Sec. 24 of Customs
Administrative Order No. 8-75 was promulgated in line with the government
policy of encouraging containerization which results in the laudable
decongestion of ports of entry.  Such
arrangement has been sanctioned worldwide by international ports to cope up
with the ever-increasing volume of cargoes of the shipping industry.  Hence, the containerization system was
devised to facilitate the expeditious and economical loading, carriage and
unloading of cargoes.  Under this system,
the shipper loads his cargoes in a specially designed container, seals the container
and delivers it to the carrier for transporta­tion.  The carrier does not participate in the
counting of the merchandise for loading into the container, the actual loading
thereof nor the sealing of the container. 
Having no actual knowledge of the kind, quantity or condi­tion of the
contents of the container, the carrier issues the corresponding bill of lading
based on the declaration of the shipper. 
The bill of lading describes the cargo as a container simply and it
states the contents of the container either as advised by the shipper or
prefaced by the phrase “said to contain”.  Clearly then, the matter quantity,
description and conditions of the cargo is the sole responsibility of the
shipper.

The case at bar involves a situation intended pre­cisely to be
covered by Sec. 24 of CAO No. 8-75.  An
examination of said Customs Administrative Order in rela­tion to Sec. 1005 and
Sec. 2521 shows that containerized cargoes on “shipper’s Load and
Count” shipping arrangement are not required to be checked and inventoried
by the carrier at the port of loading or before said carrier enters the port of
unloading in the Philippines since it is the shipper who has the sole
responsibility for the quantity, description and condition of the cargoes
shipped in container vans, each container van considered as a unit of
transport.

Petitioner’s vessel, the “American Venture” faith­fully
complied with the requirements of Sec. 1005 of the Tariff and Customs
Code.  Said vessel submitted a complete
manifest of all her cargoes.  However
there was a slight error thru no fraudulent intent or negligence of the
vessel.  Said vessel relied on the
information in the bill of lading submitted by the shipper in making the
Manifest.  There was no way for the
vessel to discover until after the opening of the containers and the inven­tory
of their contents, that the first container contained 34 cases and the second
container contained 44 cases. 
Furthermore, noteworthy is the fact that Container No. 2020984 is
described expressly in both the bill of lading and the vessel’s manifest as a
“Part” of the goods con­tained in the second Container No. 2101730,
an important indication that the contents of Container No. 2020984 and
Container No. 2101730 are parts of the same importation coming from one and the
same shipper and destined to the same consignee and that in the examination of
contents for Customs purposes, the number of cases should be the total in the 2
containers, to wit 78 cases.

Considering therefore, that the total number of cases of cotton
denims as declared by the shipper in the manifest is 78 as borne on two
containers, and consi­dering the undisputed fact that the same total number of
78 cases of cotton denims were found by the Bureau of Customs on board
petitioner’s vessel, it is clear that the vessel’s Manifest reflects a complete
and substantially accurate statement of
the cargoes contained therein in accordance with the requirement of Sec. 1005
in relation to Sec. 2521 of the Tariff and Customs Code.  Accordingly, therefore, the imposition by
respondent-appellee of a fine of P10,000.00 upon
petitioner-appel­lant’s vessel allegedly for the failure of the latter to have
on board a complete manifest of
all her cargoes is patently baseless, unfair, inconsiderate, and illegal.  Besides the clerical error
cannot be attributed to the shipper.  Finally,
there was no financial loss for the government.

WHEREFORE, finding the instant
petition meritorious, the assailed decision of the Court of Tax Appeals
imposing a fine of P10,000.00 on petitioner’s vessel, M/V “American
Venture” for alleged violation of Sec. 1005 in relation to Sec. 2521 of
the Tariff and Customs Code, as
amended, is hereby REVERSED and SET
ASIDE.

SO ORDERED.

Fernan, (Chairman), Gutierrez, Jr., Padilla, Bidin, and Cortes, JJ., concur.