Philippine Sugar Centrals Agency vs. The Insular Collector of Customs

The Government may levy and collect wharfage dues on goods exported through a port of entry even when loaded from a privately owned wharf, where the charge is a revenue measure historically intended to fund the acquisition and construction of government port facilities, as evidenced by the law's enactment at a time when no government wharves existed, its continuous administrative construction for over two decades, and legislative acquiescence.

The Philippine Sugar Centrals Agency acted as representative and attorney-in-fact of the Ma-ao Sugar Central Company, a domestic corporation that had built, owned, and maintained a wharf on foreshore public land at Pulupandan, Occidental Negros, leased from the Government. Pulupandan was declared a port of entry by Act No. 3106 on March 17, 1923. The wharfage dues in question were assessed under section 14 of the Philippine Tariff Act of 1909, which authorized the levy of $1 per gross ton on articles exported through ports of entry "as a charge for wharfage." The provision traced its lineage to section 16 of the original Customs Tariff of November 15, 1901, enacted by the Philippine Commission, which imposed seventy-five cents per gross ton "as a charge for wharfage and for harbor dues," and was reenacted by Congress in 1905 and amended in 1909, with the words "and for harbor dues" omitted from the latter.

In May 1926, the Philippine Sugar Centrals Agency, acting as representative and attorney-in-fact of the Ma-ao Sugar Central Company, shipped 5,124,416 gross kilos of centrifugal sugar from Pulupandan, Occidental Negros, aboard the steamship Hannover, consigned to the United States. The sugar was loaded through a wharf built, owned, and maintained solely by the Ma-ao Sugar Central Company on foreshore public land at Pulupandan, leased to the corporation by the Government of the Philippine Islands. Pulupandan had been declared a port of entry by Act No. 3106 on March 17, 1923, and on January 19, 1925, the Legislature appropriated P750,000 for improvements at the port, including the construction of a wharf, breakwaters, sea walls, and harbor dredging.

The collector of customs of the collection district of Iloilo assessed and collected wharfage dues on the sugar at P2 per thousand gross kilos, totaling P10,248.84, pursuant to section 14 of the Philippine Tariff Act of 1909. The plaintiff paid the amount under protest, but the protest was overruled by the acting collector of customs of Iloilo on May 8, 1926. An appeal to the Insular Collector of Customs followed, which confirmed the acting collector's decision on May 20, 1926.

The parties submitted the case to the Court of First Instance of Manila upon a stipulation of facts. The trial court, presided by Judge Simplicio del Rosario, ruled that the law did not permit the Government to collect wharfage dues on products loaded from private wharves, revoked the decision of the Insular Collector of Customs, and ordered the return of the money collected, without costs. The Insular Collector of Customs appealed to the Supreme Court, assigning as error the lower court's declaration that the plaintiff was not bound to pay wharfage duty where the wharf used did not belong to the Government, its order to return the sum collected, and its refusal to grant a new trial.

• Government's Authority to Collect Wharfage: The appellant (Insular Collector of Customs) argued that the Government had the legal right to collect the duty of $1 per gross ton "as a charge for wharfage" upon all articles exported through ports of entry of the Philippine Islands, regardless of whether the goods were loaded from a government-owned or privately owned wharf, because the charge was a revenue measure authorized by Act of Congress.
• Lower Court Errors: The appellant assigned three errors: (1) the lower court erred in declaring that the plaintiff was not bound to pay wharfage duty where the wharf used did not belong to the Government; (2) the lower court erred in ordering the return of P10,248.84 instead of dismissing the complaint with costs; and (3) the lower court erred in not granting a new trial.

• Private Wharf Exemption: The appellee (Philippine Sugar Centrals Agency) contended that because the sugar was loaded from a private wharf built, owned, and maintained solely by the Ma-ao Sugar Central Company, and not from a Government wharf, the Government had no legal right to levy and collect the duty "as a charge for wharfage," since wharfage is by definition a charge for the use of a wharf.

• Wharfage Dues on Private Wharves: Whether the Government of the Philippine Islands can legally collect a duty of $1 per gross ton as a charge for wharfage on goods exported through a port of entry where the goods are loaded from a privately owned wharf.

• Wharfage Dues on Private Wharves: Yes. The Government is entitled to collect the wharfage dues even when goods are loaded from a private wharf, the charge being a revenue measure intended to fund the construction and maintenance of government port facilities, as established by the law's history, long-standing administrative construction, and legislative acquiescence.

• Wharfage Dues on Private Wharves: The Court examined the legislative history of the wharfage charge, tracing it from section 16 of the original Customs Tariff of 1901—enacted by the Philippine Commission under authority of the President of the United States—through its reenactment by Congress in 1905 and the Philippine Tariff Act of 1909. When the law was first enacted in 1901, the Government of the Philippine Islands did not own or operate any pier or wharf, a fact that must have been known to the Commission that enacted the law. The two oldest government piers, Nos. 3 and 5, were not opened until 1910; prior to that, export cargoes were brought by lighters to vessels anchored in Manila Bay. Notwithstanding the absence of government wharves, the wharfage tax was continuously levied and collected from 1901 to the time of the decision. The Court found it fair to assume that revenues from the charge funded the construction of government wharves in principal ports of entry, including the recently constructed Pier 7 in Manila at a cost of approximately P12,979,824.99. The tax was paid without protest for twenty-six years, and the first challenge to the law's constitutionality reached the Court only in Compañia General de Tabacos vs. Collector of Customs (46 Phil., 8), decided in 1924, where validity was sustained; the specific question of private wharf usage was not there decided because the stipulated facts did not show whether the articles had passed through a government wharf. The present case was the first and only one raising the question. The Court applied the doctrine of contemporaneous administrative construction: where officers charged with executing a law have uniformly given it a particular construction, acquiesced in for a long time, courts will follow that construction unless it clearly and manifestly appears to be wrong. The legislature's failure to repeal or amend the law despite long-standing administrative construction was deemed a potent argument in favor of sustaining that construction. The omission from the 1909 Act of the words "and for harbor dues"—which appeared in the 1901 and 1905 laws—indicated that Congress did not intend the charge as a tonnage duty but as a wharfage charge. The Court concluded that the money derived from the wharfage charge should be used, deemed, and treated as a trust fund for the purpose of acquiring and constructing government wharves, and that the construction urged by the plaintiff would overthrow the entire system by which millions had been collected and expended for government wharf construction, including the planned wharf at Pulupandan.

• Contemporaneous Administrative Construction — Where officers charged with executing a law have uniformly given it a particular construction, and that construction has been acquiesced in and acted upon for a long time, it is a contemporary exposition of the statute which courts will follow unless it clearly and manifestly appears to be wrong. The legislature is presumed to be cognizant of such construction, and after long continuance without legislative dissent, courts are warranted in adopting it. Applied to sustain the Government's collection of wharfage dues on goods loaded from private wharves, where the charge had been continuously levied for twenty-six years without protest and Congress had not repealed the law.
• Statutory Construction — Surrounding Facts and Conditions — In ascertaining the purpose or intention of a statute, courts may look to the history of its terms, the surrounding circumstances at the time of enactment, the mischief to be remedied, and the cause or necessity which induced the law. Applied to determine that the wharfage charge was intended as a revenue measure for port facility construction, given that no government wharves existed when the law was first enacted in 1901.
• Wharfage vs. Tonnage Dues — Wharfage is a charge or rent for the temporary use of a wharf, distinct from a duty of tonnage, which is a tax on a vessel for the privilege of entering a port. The omission of the words "and for harbor dues" from the 1909 Act indicated that the charge was not intended as a tonnage duty but as a wharfage charge, supporting the conclusion that Congress intended a revenue measure for port facility funding rather than a port-entry tax on vessels.

• "The practical construction given to a doubtful statute by the department or officers whose duty it is to carry it into execution is entitled to great weight and will not be disregarded or overturned except for cogent reasons, and unless it is clear that such construction is erroneous." — Quoted from Sutherland on Statutory Construction; articulates the doctrine of contemporaneous administrative construction that the Court applied to sustain the Government's long-standing interpretation of the wharfage charge.
• "We are forced to the conclusion that it was the purpose and intent of the act in question to give the Government of the Philippine Islands authority to levy and collect such a duty of $1 per gross ton, and that the money derived from such sources should be used, deemed and treated as a trust fund, for the purpose of acquiring and constructing wharves by the Government of the Philippine Islands." — States the Court's ultimate conclusion on the purpose of the wharfage charge and the trust-fund character of the revenues collected.
• "The long acquiescence in its construction and the far reaching effect of such a decision makes it imperative for this court to sustain the law, if there are any reasonable grounds upon which it can be done." — Captures the Court's deference to long-standing administrative practice and its reluctance to overturn a construction that had shaped government fiscal policy for over two decades.

• Compañia General de Tabacos vs. Collector of Customs, 46 Phil., 8 — Previously sustained the constitutionality of the wharfage law but did not decide the question of private wharf usage because the agreed statement of facts did not establish whether the articles had passed through a government wharf. Decided April 7, 1924.
• Molina vs. Rafferty, 38 Phil., 167 — Cited for the doctrine that contemporaneous administrative construction of a statute, especially if followed for a considerable period, is entitled to great respect and is not lightly to be overruled, quoting Cooley on Taxation.
• In re Allen, 2 Phil., 630 — Cited for the principle that courts will give weight to the contemporaneous construction placed upon a statute by executive officers charged with enforcing it, and will ordinarily be controlled thereby unless clearly erroneous.
• Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet Company vs. Board of Trustee of the Town of Catlettsburg, Kentucky, 26 Law ed., 1169 — U.S. Supreme Court case cited for the distinction between wharfage charges and tonnage taxes, and for the principle that a municipality may exact reasonable compensation for the use of its wharves without infringing constitutional provisions concerning tonnage taxes.
• Parkersburg and Ohio River Transportation Company vs. City of Parkersburg, 27 Law ed., 584 — U.S. Supreme Court case cited for the definition of wharfage as a charge for the use of a wharf, distinct from a duty of tonnage, and for the principle that wharfage charges are determined by the terms of the ordinance or regulation imposing them.

• Section 14, Philippine Tariff Act of 1909 — Imposed a duty of $1 per gross ton on articles, goods, wares, or merchandise exported through ports of entry of the Philippine Islands or shipped to the United States "as a charge for wharfage," with an exemption for articles for the use of the Government. The Court construed this as authorizing collection even on goods loaded from private wharves, based on the law's history and long-standing administrative construction.
• Section 16, Customs Tariff of November 15, 1901 — The original provision imposing seventy-five cents per gross ton "as a charge for wharfage and for harbor dues," enacted by the Philippine Commission when no government wharves existed. The 1909 Act omitted the words "and for harbor dues," which the Court found significant in determining that the charge was not intended as a tonnage duty.
• Act No. 3106 — Declared Pulupandan a port of entry of the Philippine Islands on March 17, 1923, establishing the jurisdictional basis for the collection of wharfage dues at that location.

Avanceña, C.J., Street, Malcolm, Villamor, Ostrand, and Villa-Real, JJ., concurred.

• Justice Johns — Johns argued that wharfage charges are by definition charges made by the owner of a wharf against persons who use it, and that the Government cannot collect wharfage from the owner of a private wharf for the use of his own wharf. He cited numerous authorities holding that no wharfage charges can be collected where the party collecting furnishes no wharf facilities, including Sweeny vs. Lizzie E., City of Shreveport vs. Red River & Coast Line, Packet Co. vs. Keokuk, New Orleans vs. Wilmot, and Dubuque vs. Stout. Johns contended that the record contained nothing supporting the majority's assertions that the tax had been continuously collected since 1901 or that government wharves were constructed from such revenues, and that the collection on exported goods amounted to an export tax prohibited by the Jones Law. He further argued that the majority's discussion of tonnage dues was irrelevant, as no question concerning tonnage dues was raised by the record.