PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION, PETITIONER-APPELLANT, VS. COMMISSIONER OF CUSTOMS, RESPONDENT-APPELLEE.

Appeal, by petitioner Procter & Gamble Philippine Manufacturing
Corporation, from a decision of
the Court of Tax Appeals,
affirming that of respondent Commissioner of Customs, which denied petitioner’s
claim for refund P1,434.00, paid as wharfage dues on
three (3) shipments of palm oil and coconut fatty alcohol unloaded at its private wharf.

Two issues are raised in this appeal, namely:  (1)
whether wharfage dues are collectible, under sections
2801 and 2802 of Republic Act No. 1937, on goods unloaded at private wharves;
and (2) if the first issue is decided in the affirmative, whether said wharfage dues are covered b the tax exemption provided in
Republic Act No. 901.

The first issue has
already been settled in the affirmative in L-22819, between the same parties,^[1] under substantially identical facts.  Speaking through Mr. Justice J.P. Bengzon, this Court held:

“At issue is whether or not Procter & Gamble is liable for
the payment of wharfage dues imposed in Section 2802
of the Tariff and Customs Code on the two shipments of caustic soda which were not unloaded on a Government wharf.

“Section 2802 of the Tariff and Customs Code has for its
origin Section 14 of the Philippine Tariff Act of 1909 which we quote
hereunder:

‘Sec. 14.  That there shall
be levied and collected upon all articles, goods, wares and merchandise except
coal, lumber, creosoted, and other pressure treated materials as well as other
minor forest products, cement, guano, natural rock asphalt, the minerals and
ores of copper, lead, zinc, iron, and- steel metals, refractory gold ores, and sugar molasses, the products of the
Philippines, exported through ports of entry of the Philippines, or shipped therefrom to the United States or any of its possessions,
a duty of one dollar per gross ton of one thousand kilos, as a charge for wharfage, irrespective of the port of destination or
nationality of the exporting vessel.  In
the case of logs, or flitches twelve inches square or
equivalent cross-sectional area, or over, a charge of thirty cents per cubic
meter shall be collected.

‘All articles, goods, wares, or
mer­chandise imported, exported, or
shipped in transit for the, use
of the Government of the United States,
or of that of the Philippines,
shall be exempt from the charge prescribed in this section.’

Section 14 imposed wharfage
dues only on export and were held to be payable although the subject
merchandise were loaded from a private wharf 1909 our legislators knew that there was no Government wharf existing
and it was found safe to assume that the Government intended to collect wharfage fees, even without the use of Government owned
wharves, in order to raise funds for the acquisition and construc­tion of
wharves throughout the islands.

“In 1955 Congress enacted Republic Act 1371, imposing in
Section 3 thereof wharfage dues on imports and
exports.  We quote Sec­tion 3 hereunder:

‘SEC. 3.  There shall be
levied, collected and paid on all articles imported or brought into the Philip­pines,
and on products of the Philippines, except coal, lumber, creosoted and other
pressure treated materials as well as
other minor forest products, cement, guano, natural rock asphalt, the minerals
and ores of base metals (e.g., copper, lead, zinc, iron, chro­mite,
manganese, magnesite and steel), and sugar molasses,
exported from the Philippines a charge of two pesos per gross metric ton as a
fee for wharfage: 
Provided, That in the case of logs, or flitches
twelve inches square or equi­valent cross-sectional area, or over, a charge of
sixty centavos per cubic meter shall be collected.  Provided, further, That such wharfage fee shall not levied on articles imported or
brought into the Philippines which are unloaded on private wharves.’

Interpreting Section 3, this Court stated
in Com­missioner of Customs vs. Superior Gas & Equipment Co. that the
intention of Congress was not to levy wharfage fee On
merchandise unloaded at places other than Government wharves or without making
use of pier facilities and the proviso exempting from the wharfage
fee all such imported merchandise makes this intention all the more evi­dent.

“Later, however, in 1957 Congress passed Re­public Act 1937,
Otherwise known as the Tariff and Customs Code which in Section 2802 thereof
provides for the payment of wharfage dues on imports
and exports. Section 2802 states:

‘SEC. 2802.  Schedule of
Dues.  – There shall be levied, collected and paid on all articles imported or brought into the
Philippines, and on products of the
Philippines except coal, lumber, creosoted and other pressure treated materials as well as other minor forest products, cement, guano,
natural rock asphalt, the minerals and ores of base metals (e.g., copper, lead,
zinc, iron, chromite, manganese, magnesite and steel), and sugar molasses, exported
from the Philippines, a charge of two pesos per gross metric ton as a fee for wharfage:  Provided,
That in the case of logs, or flitches twelve
inches square or equivalent cross-sectional area, or over, a charge of sixty
centavos per cubic meter shall he collected.’

Section 2802 is an almost verbatim copy of Section 3 of Republic Act 1371
minus the proviso –

‘x x x That:  such wharfage fee
shall not be levied on articles imported or brought into the Philippines
which are unloaded on private wharves.’

“Procter & Gamble maintains that the interpre­tation of wharfage dues in Commissioner of Customs v. Superior Gas
& Equipment Co., supra, that wharf­age dues are
compensation, on rental for the use of a wharf, and no wharfage
dues shall be collected where no Government wharf is used, shall be applied in
this case because Section 2802 of the Tariff and Customs Code, the law
applicable herein, was derived from Section 3 of Republic Aet
1371.  As a matter of fact, it adds,
Section 2801 of the Tariff and Cus­toms Code adopted the definition of ‘wharfage dues’ provided for in Section 1(b) of Republic Act
1371.

“On the other hand, the Commissioner of Cus­toms and the Court
of Tax Appeals are of the opinion that Section 2802 should be given an
interpretation different from that enunciated in Commissioner of Customs v.
Superior Gas 6 Equipment Co., supra, on Section 3 of Republic Act 1371 for the
reason that Section 2802, unlike Section 3, does not provide for an exemption
from wharfage dues on goods unloaded on private
wharves.  Counter to this argu­ment,
Procter & Gamble contends that the aforestated exemption clause is merely a surplusage and
therefore its presence in or absence from the law will not alter the meaning of
‘wharfage dues’. 
It moreover avers that
the Tariff and Customs Code, a codification of existing tariff and customs
laws, is presumed to have incorporated pertinent laws without change and any
modification introduced therein was merely to simplify the language of the law
but not to change its meaning.

“It should be noted that the Tariff and Customs Code levies
charges on the different activi­ties of a vessel engaged in foreign trade.  For coming to the Philippines
from a foreign port or for going to a foreign port from the Philippines,
one pays tonnage dues.  For entrance into
or de­parture from a port of entry, harbor fees are collected.  Wharfage dues
are assessed against the cargo
discharged by vessel engage in foreign trade. 
Berthing charges are levied on a vessel coming or mooring within
specified places or water, of a
port.

“A vessel ordinarily
enters a harbor and la anchor or
moors in a port to load, to unload or both. 
In doing so, the vessel derives benefit from port facilities provided
and maintained by Government.  For this
reason, they are in fairness made to contribute a share in said Government undertaking
by payment of berthing charges and harbor fees. 
Similarly, cargoes discharged to a Philippine port from a vessel engaged
in foreign trade derive benefit
from port facilities provided and maintained by the Government; said cargoes
should also share the cost of providing and keeping a safe port, in the form of
wharfage dues. 
Accordingly a vessel that anchors at Manila Bay to seek protection from
a storm is not charged wharfage dues the Bureau of
Customs, although it may have to harbor fees and berthing charges.  But when a vessel anchors at the Bay and
discharges or unloads its cargo, wharfage dues are
forthwith collected.  For, as stated,
said dues are assessed against the cargo discharged.  This is clear from the provision of the law
under which the assessment is based on the quantity, weight or measure of the
cargo received by the importer and/or discharged by such vessel.  And wharfage dues
on the cargo are dis­tinct from harbor fees or berthing charges on the vessel,
so much so that different sections of the law cover them.

“Since in the present case, the vessels in­volved called on port to unload, as they in fact did, some cargo, said cargo, having been
unloaded amidst the safety afforded by the port, is charge able with wharfage dues. 
Finally, Wharfage dues partake of the nature
of a tax which is collected by the Government to support its operation in
relation to customs affairs.”

Petitioner herein has not adduced any reason, and we find none,
to warrant a reversal or modification of the foregoing view, which is hereby
reiterated.

As regards the second
issue, section 1 of Republic Act No 901 reads:

“Any person, partnership, company or corporation who or which,
subsequent to the approval of this Act (June 20, 1953), shall engage in a new
and necessary industry shall be
entitled to exemp­tion until December thirty-one, nineteen hundred and
fifty eight from payment of all taxes
directly payable by such person, partnership, company or corporation in respect
to said industry x x
x.”

The issue hinges^[2]
on whether or not the phrase “all taxes,” as used in the above
provision.  embraces “wharfage dues.” Petitioner maintains that it does,
upon the theory that, according to American decisions, the word “tax”
when used alone includes customs levies or import entries, and that “customs”
are “taxes levied upon goods or merchandise imported or exported” or
“the duties, toll, tribute or tariff payable upon merchandise imported or
exported.”^[3]
The views set forth in said decisions and authorities are not, however,
controlling in the Philippines,
the laws of which must necessarily be construed in accordance with the intent of its own makers, as such intent may be deduced from the language of each law and the context of other local le­gislation
related thereto.

Our Constitution provides
that “the Congress x x x may
not deprive the Supreme Court x x x of its jurisdiction
to review, revise, reverse, modify or affirm on appeal certiorari, or writ of error x x
x final
judgments and decrees of
inferior courts” in, inter alia,
“all cases involving the legality of any tax, impost assessment, or toll, or any penalty imposed in relation thereto,”^[4] and
that “Congress may be law
authorize the President x x x
to fix x x x tariff rates,
import or export quotas, and tonnage and wharfage dues.”^[5] Thus, our fundamental law
distinguishes between taxes, on the one
hand, and “imposts” – that is to say, tariff rates or duties im­posed
for the importation of goods – on the other. 
Similarly, the Constitution does not consider “wharfage
dues” as part of “tariff rates” or customs duties.

And neither does our
Tariff and Customs Code.^[6] Cus­toms duties are governed by Book I,
Title I, of said Code, under the headings “tariff Law” and
“Import Tariff,” re­spectively, whereas wharfage
dues are collectible pursuant to Book II thereof, Title VII of said book, under
the cap­tion “Fees and Charges Collectible by the Bureau of Cus­toms.”
Indeed, said Code regards customs duties, taxes and wharfage
charges as three (3) distinct and separate concepts.  For instance, Section 1604 thereof provides:

“Treatment of fractions in the liquidation. – In determining the total amount of duties, taxes, surcharges, wharfage and/or other
charges to be paid on entries, a fraction of a peso less than fifty centavos
shall be disregarded, and a fraction of a peso amounting to fifty centavos or
more shall be considered as one peso.  In
case of overpayment or underpayment
of duties, taxes, surcharges, wharfage and/or other
charges paid on entries, where the amount involved is less than five pesos, no
refund or collection shall be made.”

Moreover, wharfage dues are charged, not for the use of any
wharf.  Like “harbor fees, berthing
charges, stor­age charges and the net income from the share of arrastre charges,” wharfage
fees are imposed to

“x x x
form a special fund to be known as ‘Port Works Fund,’ x x
x for the study, investigation, field surveys,
research, plann­ing, development, construction, improvement, maintenance, and
repair of ports, ports facilities and
port areas, warehouses, sheds and offices, buoys, lighthouses and other aides
to navigation including the purchase, maintenance, rental charges and
replacement of necessary equipment x x x.^[7]

Upon the other hand, revenue derived from
customs duties form part of the general funds of the Government.

Again, tariff rates on
customs duties are prescribed only for, goods imported into the Philippines,
whereas wharfage fees are “assessed against the
cargo of a ves­sel engaged in the foreign trade, based on the quantity, weight
or measure received and/or discharged from said vessel.”^[8] In fact, even in connection with
“taxes,” as distinguished from customs duties or charges for the im­portation
of foreign goods, this Court declared, in Plywood Industries, Inc. vs. Aranas,^[9] that the exemption prescribed in Republic
Act No. 901, is limited a) to “internal,
revenue” taxes b) Which are “directly
payable” in respect of a
new and necessary industry.  In that case
it was held that a domestic corporation engaged in the manufacture of plywood
panels and veneer sheets was not exempt from the payment of forest
charges for logs cut from a forest concession, even though said logs were ad­mittedly
necessary for the manufacture of plywood panels and veneer sheets.  We then reiterated our view in Collector of
Internal Revenue vs. Lacson,^[10] to the effect that:

“The exemption provided for in Republic Act No. 901 is limited
to those taxes directly payable by the manufacturer in respect to the
manufacture of veneer and plywood.  Forest
charges arising from the operation of a forest concession for the purpose of
obtaining lumber used in the manufacture of the plywood and veneer do not come
within the purview of the exemption.  While logs and lumber are necessary for the
manufacture of plywood, the operation
of the forest concession to obtain the required lumber is not
indispensable.  The manufacturer can get
his supply from the other forest
concessionaires who are liable
for forest charges, although it would be more profitable for it to operate its
own lumber mills and have its own forest concessions.

Similarly, assuming that palm oil and coconut fatty alcohol are
necessary for petitioner’s industry, it is not indispensable therefor that said products be imported.  Hence, the wharfage dues in question are not directly imposed upon said industry. 
Like the forest charges in­volved in the Plywood Industries case, the wharfage dues in question are, at best, an indirect
levy upon petitioner’s industry, and, hence, not covered by its exemption.  At any rate, it is obvious that
wharfage dues are not “internal revenue” taxes.

WHEREFORE, the decision appealed fro should be
as it is hereby affirmed, with costs against petitioner herein.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
Castro, and Angeles, JJ., concur.

^[1]
On April 27, 1967.

^[2]
On the assumption, made by the Commissioner of Customs, that petitioner has
been granted tax exemption under the provisions of Republic Act No. 901.

^[3]
Steward Machine Co. v. Davis, 301 U.S.
548, 81 L. ed. 1279; General Mut. Ins. Co. v. U.S.,
119 F. Supp., 353; and In re Rosenthal Bros., 235 F. 315.

^[4]
Article VIII, Sec. 2[2], Const. of the Phil.

^[5]
Article VI, Section 22[2] of the Constitution.

^[6]
Republic Act No. 1937.

^[7]
As provided in Act No. 3592, as amended by Commonwealth Act No. 130 and
Republic Acts Nos. 1216 and 2695.

^[8]
Section 2801 of Rep. Act no. 1937.

^[9]
L-16466, March 31, 1964.

^[10]
L-12945, April 29, 1960, 58
Off. Gaz. 889.