Genato Commercial Corporation v. Insular Collector of Customs
REITERATIONFacts
The Antecedents: Genato Commercial Corporation (plaintiff-appellant), a domestic corporation, entered into contracts with the United States Navy to supply frozen butter and veal. Pursuant to these contracts, the plaintiff imported 1,000 cases of frozen butter and 520 kilos of veal from Australia into the port of Manila. Procedural History: The Insular Collector of Customs assessed and collected import duties amounting to P3,097.16 on these goods under the Philippine Tariff Act of 1909. The plaintiff protested this assessment, arguing that commodities imported for the use of the United States Army and Navy are not dutiable. The Insular Collector of Customs overruled the protest. The plaintiff then filed its protest with the Court of First Instance of Manila. The Petition: The plaintiff appealed to the Supreme Court after the Court of First Instance of Manila ruled in favor of the Insular Collector of Customs, contesting the liability of a local merchant who imports food supplies from a foreign country and sells them to the United States Navy for the payment of customs duties.
Issue(s)
Whether food supplies imported from a foreign country by a local merchant for sale to the United States Navy are subject to customs duties under the Philippine Tariff Act of 1909.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance of Manila, holding that the plaintiff, Genato Commercial Corporation, is liable for the payment of customs duties on the imported frozen butter and veal delivered to the United States Navy. The judgment was affirmed, with costs against the appellant.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Philippine Tariff Act of 1909 specifically mandates that duties be levied on all articles entering the jurisdiction unless otherwise provided. The Court observed that the preceding Tariff Act of 1905 explicitly included U.S. Government supplies in its 'free list,' but the 1909 Act deliberately omitted this provision. Applying the principle of legislative intent, the Court concluded that Congress intended to remove the exemption to protect local Philippine and American industries from foreign competition. The Court further reasoned that the butter and veal belonged to the private corporation at the time of importation; the mere fact that a private person does business with a federal instrumentality like the U.S. Navy does not grant that person immunity from taxation. Citing the need for 'contemporaneous construction,' the Court noted that the Bureau of Customs had consistently held such goods dutiable for over twenty years without legislative or judicial interference. Consequently, the tax was not an impermissible interference with federal functions but a valid exercise of authority under an Act of Congress designed to encourage domestic trade.
Main Doctrine
Goods imported into the Philippine Islands by a merchant and delivered to the United States Navy are dutiable under the Philippine Tariff Act of 1909, as the omission of a provision for the free entry of governmental supplies in the 1909 Act, unlike the 1905 Act, indicates a legislative intent to subject such importations to customs duties, thereby protecting local merchants and industries.