[ G.R. No. 13975. March 31, 1919 ] 39 Phil. 876
[ G.R. No. 13975. March 31, 1919 ]
GUTIERREZ HERMANOS, PLAINTIFF AND APPELLEE, VS. THE INSULAR COLLECTOR OF CUSTOMS, DEFENDANT AND APPELLANT. D E C I S I O N
MALCOLM, J.:
This is an appeal by the Government from a judgment of the Court of First Instance of Manila, reversing the decision of the Insular Collector of Customs assessing customs duty in the amount of P46,296.28, because of certain repairs made in a foreign port on the steamship Magallanes, pursuant to the provisions of the Philippine Tariff Act of 1909. On March 14, 1916, Gutierrez Hermanos, the owners of the steamship MagaUanes, were required by the Philippine Customs authorities to have the tail shaft of the vessel renewed. One year later the owners were ordered to make certain other repairs upon the steamship. There is no question but that all of the repairs could have been effected in the Philippines, with the possible exception of the manufacture of the ,tail shaft. The vessel was taken to Hongkong and there had all of the repairs, including the installation of the tail shaft, done upon her at that port, at a cost of $71,694.52 Hongkong currency. Gutierrez Hermanos were made to pay an import duty of 50 per cent ad valorem upon the repairs made at the port of Hongkong upon the steamship Magallanes. The owners thereupon, through their attorneys, entered a protest before the Insular Collector of Customs, claiming exemption from duty by virtue of the provisions of paragraph 200, section 8, and paragraph 348, section 11, of the Philippine Tariff Act of 1909, and the decision of the Supreme Court in Fernandez Hermanos vs. Collector of Customs ([1915], 30 Phil., 50). The protest was overruled and denied. Following the filing of notice of appeal, the record was forwarded to the Court of First Instance of Manila in which the case came on for hearing. This court entered judgment condemning the Insular Collector of Customs to return to the plantiffs the amount in question without express finding as to costs. The sole assignment of error of the AttorneyGeneral, predicated on this judgment, is that the trial court erred in reversing the decision of the Insular Collector of Customs and ordering a refund of the customs duties in this The law to be construed with reference to the facts is that found in the following sections and paragraphs of the Philippine Tariff Act, namely:
“Sec. 8. That the rates of duties to be collected on articles, goods, wares, or merchandise imported into the Philippine Islands, or going into said Islands from the United States or any of its possessions except as otherwise provided in this Act, shall be as follows:
" 200. Boats, launches, lighters, and other water craft, set up or knocked down, imported into the Philippine Islands, and cost of repairs made in foreign countries to vessels, or to parts thereof, documented for the Philippine coastwise trade or plying exclusively in Philippine waters and for which repairs adequate facilities are afforded in the Philippine Islands, fifty per centum ad valorem. “Provided, That upon proof satisfactory to the Collector of Customs that adequate facilities are not afforded in the Philippine Islands for such repairs, the same shall be subject to the provisions of paragraph three hundred and fortyeight of this Act:” “Sec. 11. That the following articles shall be free of duty upon the importation thereof into the Philippine Islands upon compliance with regulations which shall be prescribed in accord with the provisions of each paragraph:
“348. Repairs to vessels documented in the Philippine Islands or regularly plying in Philippine waters, made in foreign countries, upon proof satisfactory to the collector of customs that adequate facilities for such repairs are not afforded in the Philippine Islands.”
The steamship owners, the protestants, contend, and the trial court agrees with this view, that the Supreme Court has clearly and without equivocation answered, in the case of Fernandez Hermanos vs. Collector of Customs, supra, all of the questions here involved. The Insular Collector of Customs in his decision, and the Attorney-General in his brief, onthe other hand, both attempt to differentiate the instant facts from those in the Fernandez Hermanos case. The case cited involved the assessment of import duties on certain repairs made at Hongkong on the steamer Islas Filipinas, those relating to the boilers being impossible to be effected in the Philippine Islands, while the others could have been made in the Islands. The court held that the repairs which a vessel undergoes should not be divided into two parts; so that if all of them cannot be made in the Philippine Islands then all of them can be made in a foreign port and come into the Philippine Islands free of duty. The syllabus to this decision, presumably written by the writer of the opinion, Justice Moreland, condenses the propositions established by the appellate court, as follows:
“The Philippine Tariff Act provides: That the following articles shall be free of duty upon the importation thereof into the Philippine Islands upon compliance with regulations which shall be prescribed in accord with the provisions of each paragraph: * * * 348. Repairs to vessels documented in the Philippine Islands or regularly plying in Philippine waters, made in foreign countries, upon proof satisfactory to the Collector of Customs that adequate facilities for such repairs are not afforded in the Philippine Islands/ Under that statute, Held: (1) Facilities are not adequate unless, when required, all of the repairs necessary for the safe, convenient and economical operation of the ship can be made by the use of such facilities. (2) If all of the repairs necessary for the safe, convenient and economical operation of the ship cannot be made in the Philippine Islands, then, if made in a foreign port, they may come into the Philippine Islands free of duty. (3) The repairs referred to in the statute are to be regarded as a whole; and the repairs made in a foreign port at one time to a single ship cannot be divided into (a) those which could have been made in the Philippine Islands and (6) those which could not, and duty levied on that portion which could have been made here.”
We are not disposed at this later date to discuss and resolve anew the questions presented in the Fernandez Hermanos case. We are, however, not inclined to extend principles which appear to have been carried to the utmost limit by this opinion so as to include thereunder cases that the law certainly did not contemplate. While the rights of the shipowner must not be neglected, so also must the public interest be protected. A Tariff Law intended to foster home industry must be permitted to serve its purpose. The two cases are not the same. In the Fernandez Hermanos case there was no dispute that it was impossible to effect certain of the repairs in the Philippine Islands. In the case at bar there is likewise no dispute that the Philippine Islands had adequate facilities for all of the repairs with the exception of the manufacture of the tail shaft. The Government insists, and we think it is established, that the job could have been completed in the Philippine Islands if the tail shaft had been obtained elsewhere. If the parts and pieces necessary for the repair of ships can be obtained in other ports and installed in the Philippine Islands the protective aims of the Tariff Law are fulfilled. If, however, a shipowner can on the slightest excuse have one small part made in a foreign port in order to have all the repairs made there, then the intent of the Legislature is frustrated. Some doubt has arisen as to whether or not a completed tail shaft or the materials which go to make it could have been exported from Hongkong to the Philippine Islands. There was offered certain testimony, against the objection of the Attorney-General, to show that the ordinances of Hongkong would not permit of the exportation of the material used in the construction of ships. This proof is neither convincing nor authoritative. Another phase of the Fernandez Hermanos case indicative of a difference between the facts in that case and those before us concerns the weight which the courts should give to the findings of the Insular Collector of Customs. The next to the last paragraph of the Fernandez Hermanos decision reads:
“The question of the control of the discretion of the Collector of Customs under the tariff law in determining whether or not there are adequate facilities in the Philippine Islands for the repair of a given ship is not involved in this case, inasmuch as it is admitted and the Collector has found that there were not adequate facilities in the Philippine Islands for the repair of the ship involved in the case, he declaring that some of the most important repairs could not be made here at all.”
The next to the last paragraph of the decision of the Insular Collector of Customs in the case before us reads:
“This Office is therefore of the opinion and so decides, that there were adequate facilities in the Philippine Islands for doing all of the repair job in question to the steamship Magallanes and that all the repairs done upon said vessels in Hongkong can not be admitted duty free merely upon the showing that a single piece or part, used in making such repairs, could not be manufactured in the Philippine Islands, in the absence of a showing to the effect that reasonable diligence had been used to obtain the part required.”
In the first case, therefore, the ruling of the Insular Collector of Customs was such as not to involve any reference to the home facilities for repairs, while in the second case he has made an express finding to the effect that upon proof satisfactory to him adequate facilities for the repairs are afforded in the Philippine Islands. In line with the repeated decisions of the courts, the confidence which the law imposes in the judgment of the Collector of Customs should not be unduly interfered with by the courts and the same shall be taken as prima facie controlling unless there is clear proof of abuse of discretion. Abuse of discretion by the Insular Collector of Customs is not established. We find the decision in the Fernandez Hermanos case not to be applicable to the facts before us. The ruling of the Insular Collector of Customs should be sustained. The protestants intimate that the duty levied was far in excess of that fixed by law. The Insular Collector of Customs and the Court of First Instance, in view of the turn which the case took, have had no opportunity to resolve such a protest. Reserving, therefore, to the plaintiff the right to challenge the amount of the duty, judgment is reversed and the decision of the Insular Collector of Customs on the protest shall stand, without special finding as to costs. So ordered. Arellano, C.J., Torres, Johnson, Avanceña, and Moir, JJ., concur.