Yangco v. Insular Collector of Customs
REITERATIONFacts
The Antecedents: Petitioner Teodoro R. Yangco operated motor boats (Cavite, Bataan, Kababayan, Laguna) engaged in trade between Manila and various ports in Cavite, Bataan, Pampanga, and Laguna. He purchased imported fuel for these boats, on which import duties were paid. Procedural History: Petitioner filed drawback entries to claim a refund of import duties paid on the fuel, less 1%, as provided by Section 21 of the Philippine Tariff Act of 1909. Initially, the respondent Insular Collector of Customs allowed these claims and ordered verification. However, the respondent later suspended the service of inspectors and disapproved the refund claims, citing paragraph 3 of Customs Administrative Order No. 178. The Petition: Petitioner prayed for the declaration of nullity of paragraph 3 of Customs Administrative Order No. 178, for the respondent to allow drawbacks on imported fuel used in his vessels, and to process and refund the import duties paid.
Issue(s)
Whether paragraph 3 of Customs Administrative Order No. 178, which excludes bay and river boats from drawback benefits, is valid. Whether the boats operated by the petitioner are engaged in "coastwise trade" as contemplated by Section 21 of the Philippine Tariff Act of 1909.
Ruling
The judgment appealed from, which grants the petition, is affirmed. Paragraph 3 of Customs Administrative Order No. 178 is declared null and void insofar as it excludes bay and river boats from the drawback benefits provided by the Act of Congress of 1909. The amount to be refunded shall be determined in the liquidation to be ordered by the court.
Ratio Decidendi
On the validity of paragraph 3 of Customs Administrative Order No. 178 and the interpretation of "coastwise trade": The Court held that paragraph 3 of Customs Administrative Order No. 178, by excluding bay and river boats from drawback benefits, contravenes Section 21 of the Philippine Tariff Act of 1909. The term "coastwise trade" as used in Acts of Congress, and as construed by United States courts, has a definite meaning. It is used in contrast to foreign trade and means domestic trade between ports. This general and comprehensive meaning includes all vessels engaged in domestic trade between ports of the United States, and by extension, all vessels engaged in trade within the Philippine Islands. The subdivision of "bay and river boats" in Philippine laws for certain purposes does not alter this general interpretation given by Congress. Therefore, the administrative order's exclusion of these boats is an unlawful restriction not found in the law it seeks to implement. The Court emphasized that Congress is presumed to have used the words in its 1909 Act with the same meaning they have in its prior legislation as interpreted by the courts. Consequently, the administrative order's restrictive provision must be deemed null and void for violating the clear mandate of the Act of Congress. On the entitlement to drawback: The Court found that the petitioner's vessels, engaged in trade between Manila and various ports within the Philippine Islands, fall under the definition of vessels engaged in "coastwise trade" as provided in Section 21 of the Philippine Tariff Act of 1909. The exclusion attempted by Customs Administrative Order No. 178 was deemed invalid. The Court acknowledged that while the respondent alleged non-compliance with other provisions for drawback, the evidence showed compliance for a portion of the fuel. The exact amount to be refunded would be determined through a liquidation process ordered by the court, ensuring the petitioner receives the refund due under the law.
Main Doctrine
Customs Administrative Order No. 178, paragraph III, which excludes bay and river boats from the benefit of drawback on imported fuel used in their propulsion, violates Section 21 of the Philippine Tariff Act of 1909, as the term 'coastwise trade' in the Act of Congress is comprehensive and includes all domestic trade between ports, including bay and river trade.