Cruz, Merchant & Co. v. Insular Collector of Customs
REITERATIONFacts
The Antecedents: Cruz, Merchant & Co., Inc. (plaintiff) protested the collection of P1,000 as customs duty on 25,000 empty jute sacks imported from San Francisco, California. These sacks were manufactured abroad, had been previously imported into the Philippines with duty paid, were sent to America as copra covering, returned empty to Manila, and subsequently sent again with copra to San Francisco. Procedural History: The protest was overruled by the Insular Collector of Customs. The Court of First Instance, reviewing the ruling, sustained the protest and ordered the return of the P1,000. The Insular Collector of Customs appealed this decision. The Petition: The Insular Collector of Customs appealed the decision of the Court of First Instance, arguing that the customs duty was legally collected.
Issue(s)
Whether the reimportation of empty jute sacks, previously imported and exported, is subject to customs duties. Whether the jute sacks in question fall under the exemption for "coverings and holdings" under Section 11, paragraph 351 of the Philippine Tariff Law of 1909.
Ruling
The Supreme Court revoked the judgment of the Court of First Instance, held the tax collection legal, and absolved the Insular Collector of Customs from the complaint.
Ratio Decidendi
On the issue of whether the reimportation of empty jute sacks is subject to customs duties: The Court held that under Section 8 of the Philippine Tariff Law of 1909, articles of foreign produce or manufacture are dutiable upon each importation, even if previously exported from the Philippine Islands. The law explicitly states that articles subject to duties, which are imported and then exported, shall be subject to duties upon their subsequent reimportation. This principle is supported by precedents in the United States, which treat reimportation as a new importation subject to duties. The jute sacks, being of foreign manufacture and having been reimported, are therefore subject to the customs duty. On the issue of whether the jute sacks fall under the exemption for "coverings and holdings": The Court ruled that the exemption provided in Section 11, paragraph 351 of the Tariff Law refers to coverings and holdings used as such at the time of importation. The jute sacks in question were imported empty and were sent upon a bill of lading, not as coverings containing merchandise at the time of their reimportation. Therefore, they do not qualify for the exemption. The Court distinguished this case from the Visayan Refining Co. vs. Insular Collector of Customs, where the drums reimported contained oil and were thus considered holdings within the meaning of the exception.
Main Doctrine
Reimportation of articles of foreign origin, even if previously imported and exported, are subject to customs duties upon each importation, as they are considered new importations, unless they fall under specific exemptions like coverings used as such at the time of importation.