Case Summary (G.R. No. L-19337)
Importations, Bonds, and Export Conditions
In 1957, Asturias Sugar Central imported two shipments of jute bags (44,800 and 75,200 bags, respectively). Both shipments entered the Philippines free from customs duties and special import taxes, contingent upon the posting of re-exportation and special import tax bonds. These bonds required the exportation of the imported jute bags within one year of importation to maintain the exempt status from duties and taxes.
Facts Concerning Exportation and Payment of Duties
Of the total 120,000 jute bags imported, only 33,647 were exported within the one-year period prescribed by the bonds. The remaining 86,353 bags were exported after the expiration of the one-year limit but within three years from importation. The petitioner’s request for a one-week extension of one of the bonds was denied. Subsequently, the Collector of Customs required payment of customs duties and special import tax amounting to ₱28,629.42 for the late-exported jute bags. The petitioner paid this amount under protest and sought a refund or, alternatively, a drawback.
Legal Issue on the Extension of Export Period
The principal legal issue is whether the Commissioner of Customs, under the Philippine Tariff Act of 1909 (the applicable law at the time), had the discretion to extend the one-year period within which the jute bags must be exported under the bond conditions.
Statutory and Administrative Framework
Section 23 of the Philippine Tariff Act of 1909 mandated that certain containers must be exported or have duties paid within one year of importation, but it did not expressly provide for extensions. The Bureau of Customs issued Administrative Orders No. 389 (1940) and No. 66 (1948) to clarify that bonds for re-exportation of containers, including jute bags, are valid for 12 months without extension. These administrative rulings reflect long-standing and uniform policy treating the one-year export period as non-extendible.
Judicial Respect for Administrative Construction
Given the absence of prior judicial interpretation, the Court applied the doctrine of judicial respect for administrative construction. This doctrine posits that courts give considerable weight to an administrative agency’s consistent and contemporaneous interpretation of a statute it is charged to enforce. The Court found the Bureau of Customs’ interpretation controlling, noting Congress’s failure to amend section 23 when it enacted the Tariff and Customs Code in 1957—thus implying legislative acquiescence to the non-extendibility policy.
Interpretation of the One-Year Export Period and Force Majeure Claims
The Court held that the one-year export period is mandatory and non-extendible. The petitioner’s argument that fortuitous events such as typhoons, floods, and labor picketing justified failure to export on time was rejected. The Court noted lack of evidence substantiating that these events prevented timely export and observed that these events occurred prior to or at the commencement of the export period. Furthermore, even if the extension were granted, the petitioner failed to export all delayed bags within the requested extension.
Scope of Administrative Order Relating to "Containers"
The petitioner contended that jute bags were not covered under the phrase “cylinders and other containers” in Customs Administrative Order No. 389. The Court rejected this argument, holding that the statutory term “containers” is general and inclusive, with enumerations serving only as examples. The administrative order therefore reasonably included jute bags within the category of containers subject to the one-year export requirement.
Claims for Drawback under the Tariff and Customs Code
The petitioner alternatively sought a refund by way of drawback under section 106(b) of the Tariff and Customs Code, which allows a drawback equal to duties paid on imported materials exported within three years. The Court distinguished this drawback provision from section 105(x), which grants full exemption from duties if exportation occurs within one year and the importer posts a bond. The Court emphasized that these provisions provide two mutually exclusive options:
- Full exemption by exporting within one year under bonded conditions (section 105[x]); or
- Payment
Case Syllabus (G.R. No. L-19337)
Nature of the Case and Procedural Background
- The case involves a petition for review by Asturias Sugar Central, Inc. against the decision of the Court of Tax Appeals dated November 20, 1961.
- The Court of Tax Appeals denied the petitioner’s claim for recovery of P28,629.42, customs duties and special import tax paid under protest.
- The petitioner alternatively sought recovery of the amount minus one percent by way of drawback under section 106(b) of the Tariff and Customs Code.
- The petitioner is engaged in sugar production and used jute bags as containers for sugar exports.
- Two importations of jute bags were made in 1957:
- First shipment of 44,800 bags entered January 8, 1957 under entry 48, released free of duties on bond conditioned on export within one year.
- Second shipment of 75,200 bags entered February 8, 1957 under entry 243, also on bond with similar conditions.
- Of the total 120,000 jute bags imported, only 33,647 bags were exported within the one-year period.
- The remaining 86,353 bags were exported after the one-year period but within three years.
- Petitioner requested a one-week extension of the bond period on February 6, 1958 citing typhoons, floods, railroad picketing, and vessel delays.
- The Commissioner of Customs denied the extension in April 1958.
- The Collector of Customs of Iloilo demanded payment of duties for the unexported bags on March 17, 1958, which the petitioner paid under protest.
- Petitioner’s claim for refund and drawback was ultimately denied by the Collector of Customs, Commissioner of Customs, and Court of Tax Appeals.
Issues Presented for Resolution
- Whether the Commissioner of Customs has discretion to extend the one-year exportation period under section 23 of the Philippine Tariff Act of 1909 (and later section 105(x) of the Tariff and Customs Code).
- Whether force majeure and fortuitous events justify failure to export within the prescribed period.
- Whether "jute bags" fall within the category of “containers” as defined by customs regulations.
- Whether the petitioner is entitled to a refund by way of drawback under section 106(b) of the Tariff and Customs Code after failure to comply with section 105(x).
Statutory and Regulatory Framework
- Section 23, Philippine Tariff Act of 1909 (superseded by section 105(x) of the Tariff and Customs Code), requires exporters to post a bond conditioned on exportation or payment of duties within o