A-28860, NOVEMBER 2, 1929, 9 COMP. GEN. 180

A-28860: Nov 2, 1929

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THE INSULAR COLLECTOR OF CUSTOMS RULED THAT AS THE ARTICLES COVERED BY THE INVOICES ARE NOT THE PRODUCT OR MANUFACTURE OF THE UNITED STATES. THEY ARE SUBJECT TO THE CUSTOMS DUTIES AUTHORIZED TO BE IMPOSED BY THE PHILIPPINE GOVERNMENT. IN HIS LETTER OF TRANSMITTAL THE PAYMASTER GENERAL OF THE NAVY REQUESTS "THAT A DECISION BE OBTAINED ON THE QUESTION WHETHER PROVISIONS SHIPPED BY THE NAVY TO THE PHILIPPINE ISLANDS FOR THE USE OF THE NAVY ARE SUBJECT TO CUSTOMS DUTY.'. THAT: THE PROVISIONS ITEMIZED ON THE INCLOSED PUBLIC BILLS ARE PRIMARILY FOR ISSUE TO NAVAL VESSELS. A PART ARE FOR TRANSFER TO THE COMMISSARY STORE FOR SALE TO SUCH PERSONS AS ARE AUTHORIZED BY REGULATIONS TO PURCHASE GOODS FROM NAVY COMMISSARY STORES.

A-28860, NOVEMBER 2, 1929, 9 COMP. GEN. 180

PHILIPPINE ISLANDS - CUSTOMS DUTIES ON UNITED STATES SHIPMENTS THE PAST PRACTICE OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT IN ALLOWING CLAIMS FOR THE AMOUNT OF CUSTOMS DUTIES IMPOSED BY THE PHILIPPINE GOVERNMENT ON GOODS OR MERCHANDISE IMPORTED INTO THE PHILIPPINE ISLANDS BY THE UNITED STATES GOVERNMENT FOR ITS OWN USE OF ANY OF ITS INSTRUMENTALITIES, INCLUDING GOODS AND MERCHANDISE FOR SALE IN GOVERNMENT COMMISSARIES, MUST BE DISCONTINUED PENDING A DECISION BY THE SUPREME COURT OF THE UNITED STATES SUSTAINING THE LEGALITY OF SUCH CHARGES OR FURTHER LEGISLATION BY THE CONGRESS WITH RESPECT THERETO.

DECISION BY COMPTROLLER GENERAL MCCARL, NOVEMBER 2, 1929:

THE PAYMASTER GENERAL OF THE NAVY HAS FORWARDED TO THIS OFFICE FOR PREAUDIT FOUR VOUCHERS STATED IN FAVOR OF THE BUREAU OF CUSTOMS, MANILA, P.I., AGGREGATING $6,448.23, REPRESENTING THE AMOUNT OF CUSTOMS DUTIES LEVIED BY THE INSULAR COLLECTOR OF CUSTOMS OF THE PHILIPPINE ISLANDS ON GOODS FORWARDED BY THE NAVY DEPARTMENT FROM THE UNITED STATES FOR USE OF THE NAVY DEPARTMENT OF THE UNITED STATES AT NAVY YARDS AND NAVAL STATIONS IN THE PHILIPPINE ISLANDS.

THE INSULAR COLLECTOR OF CUSTOMS RULED THAT AS THE ARTICLES COVERED BY THE INVOICES ARE NOT THE PRODUCT OR MANUFACTURE OF THE UNITED STATES, WITHIN THE MEANING OF THE EXEMPTION CLAUSE IN SECTION 301 OF THE TARIFF ACT OF SEPTEMBER 21, 1922, 42 STAT. 934, THEY ARE SUBJECT TO THE CUSTOMS DUTIES AUTHORIZED TO BE IMPOSED BY THE PHILIPPINE GOVERNMENT.

IN HIS LETTER OF TRANSMITTAL THE PAYMASTER GENERAL OF THE NAVY REQUESTS "THAT A DECISION BE OBTAINED ON THE QUESTION WHETHER PROVISIONS SHIPPED BY THE NAVY TO THE PHILIPPINE ISLANDS FOR THE USE OF THE NAVY ARE SUBJECT TO CUSTOMS DUTY.' HE STATES, FURTHER, THAT:

THE PROVISIONS ITEMIZED ON THE INCLOSED PUBLIC BILLS ARE PRIMARILY FOR ISSUE TO NAVAL VESSELS, BUT A PART ARE FOR TRANSFER TO THE COMMISSARY STORE FOR SALE TO SUCH PERSONS AS ARE AUTHORIZED BY REGULATIONS TO PURCHASE GOODS FROM NAVY COMMISSARY STORES. CUSTOMS DUTIES PAID ON SUCH COMMODITIES ARE INCLUDED IN THE ISSUE PRICE TO ALL NAVAL ACTIVITIES AND ARE TAKEN INTO CONSIDERATION IN DETERMINING THE PRICE PLACED ON SUCH ARTICLES SOLD IN THE COMMISSARY STORES. * *

AS BEARING ON THE GENERAL QUESTION HERE PRESENTED, THE PAYMASTER GENERAL REFERS TO THE COMMENTS MADE IN THE OPINION OF THE COURT OF CLAIMS, DATED APRIL 2, 1928, CASE OF ASIATIC PETROLEUM CO. V. UNITED STATES, 65 CT.CLS. 100/112, AS FOLLOWS:

THE PURPOSE OF THE STATUTE PROVIDING FOR CUSTOMS DUTIES ON IMPORTATIONS INTO THE PHILIPPINE ISLANDS WAS TO PROVIDE REVENUE FOR THE USE OF THE PHILIPPINE GOVERNMENT, FOR THE PROTECTION AND PARTIAL SUPPORT OF WHICH THE UNITED STATES HELD ITSELF RESPONSIBLE, IT IS INCONCEIVABLE THAT CONGRESS IN THE ENACTMENT OF THE SAID STATUTE SHOULD HAVE INTENDED THAT THE UNITED STATES WOULD BE REQUIRED TO PAY DUTY ON ITS OWN OIL IMPORTED INTO THE PHILIPPINE ISLANDS, FOR ITS OWN USE, IN SUPPLYING ITS NAVY VESSELS USED IN THE PROTECTION OF THE PHILIPPINE GOVERNMENT, AS WELL AS FOR THE MAINTENANCE OF ITS OWN MILITARY AND NAVAL ESTABLISHMENTS IN THE NATIONAL DEFENSE. * * *

WITH RESPECT TO SECTION 301 OF THE TARIFF ACT OF SEPTEMBER 21, 1922, UNDER WHICH THE INSULAR COLLECTOR OF CUSTOMS CONCLUDED THAT THE ARTICLES WERE DUTIABLE, IT IS SUFFICIENT TO SAY THAT SAID SECTION IS MERELY A RECIPROCAL PROVISION APPLICABLE TO IMPORTS GENERALLY AS BETWEEN THE UNITED STATES AND THE PHILIPPINE ISLANDS AND MAKES NO REFERENCE TO IMPORTS OWNED BY AND FOR THE USE OF EITHER OF SAID GOVERNMENTS.

PURSUANT TO THE AUTHORITY CONTAINED IN ARTICLE IV, SECTION 3, CLAUSE 2, OF THE CONSTITUTION OF THE UNITED STATES, GRANTING THE CONGRESS AUTHORITY TO MAKE ALL NEEDFUL RULES AND REGULATIONS RESPECTING THE TERRITORIES OR OTHER PROPERTY BELONGING TO THE UNITED STATES, THE CONGRESS HAS ENACTED VARIOUS LAWS FOR THE GOVERNMENT OF THE PHILIPPINE ISLANDS, WHICH TERRITORY HAS BEEN HELD TO BE AN INSULAR POSSESSION OF THE UNITED STATES. SEE LAWRENCE V. WARDELL, 273 FED.REP. 405, AND UNITED STATES V. HIENSZEN AND COMPANY, 206 U.S. 370-392. HENCE THE UNITED STATES IS THE SOVEREIGN AND THE PHILIPPINE ISLANDS THE DERIVATIVE GOVERNMENT. AS IT IS FUNDAMENTAL THAT A DERIVATIVE GOVERNMENT MAY NOT TAX ITS SOVEREIGN, THERE IS NO AUTHORITY FOR THE PHILIPPINE GOVERNMENT TO IMPOSE A CUSTOMS DUTY, WHICH IS A TAX, ON PROPERTY OF THE UNITED STATES IMPORTED INTO THE PHILIPPINE ISLANDS FOR THE USE OF THE UNITED STATES GOVERNMENT, UNLESS PROVIDED FOR IN EXPRESS TERMS OR BY NECESSARY IMPLICATION IN SOME STATUTE ENACTED BY THE CONGRESS OF THE UNITED STATES FOR GOVERNING THE PHILIPPINE ISLANDS. WISCONSIN CENTRAL RAILROAD COMPANY V. PRICE COUNTY, 133 U.S. 496, 504. SEE ALSO PANHANDLE OIL COMPANY V. STATE OF MISSISSIPPI, 277 U.S. 218, AND CASES THEREIN CITED.

THE ACT OF MARCH 3, 1905, 33 STAT. 928, 973, AUTHORIZED THE PHILIPPINE GOVERNMENT TO IMPOSE CUSTOMS DUTIES AND INTERNAL-REVENUE TAXES, BUT THERE WAS LISTED THEREIN, UNDER THE HEAD OF ARTICLES FREE OF DUTY:

385. SUPPLIES IMPORTED BY THE UNITED STATES GOVERNMENT FOR ITS USE OR THAT OF ITS SUBORDINATE BRANCHES, OR BY THE INSULAR GOVERNMENT FOR ITS USE OR THAT OF ITS SUBORDINATE BRANCHES.

THE ACT OF AUGUST 5, 1909, 36 STAT. 130, ESTABLISHED NEW TARIFF RATES FOR THE PHILIPPINE GOVERNMENT, BUT DID NOT REPEAT THE FORMER EXEMPTION CLAUSE, AND THE ACT OF AUGUST 29, 1916, 39 STAT. 545, IN DELEGATING AND CONFERRING CERTAIN LEGISLATIVE AUTHORITY UPON THE PHILIPPINE GOVERNMENT, LIKEWISE DID NOT INCLUDE THE FORMER EXEMPTION CLAUSE.

THE COMPTROLLER OF THE TREASURY HELD THAT THE EFFECT OF THE OMISSION IN THE 1909 STATUTE WAS TO AUTHORIZE THE PHILIPPINE GOVERNMENT TO IMPOSE CUSTOMS DUTIES ON SUPPLIES IMPORTED INTO THE PHILIPPINE ISLANDS BY THE UNITED STATES FOR ITS OWN USE, STATING IN DECISION OF NOVEMBER 8, 1912, 19 COMP. DEC. 267, 269, AS FOLLOWS:

THE PRESENT PHILIPPINES TARIFF ACT OF AUGUST 5, 1909 (36 STAT. 130), UNLIKE THE PRECEDING ACT OF MARCH 3, 1905 (33 STAT. 973), OMITS TO INCLUDE IN ITS FREE LIST SUPPLIES IMPORTED BY THE UNITED STATES GOVERNMENT FOR ITS USE, AND FURTHER CONTAINS AN EXPRESS REPEAL PROVISION OF INCONSISTENT EXISTING LAWS (SEC. 27, 36 STAT. 177, 178). UNDER THIS ACT NO EXCEPTION IS BEING MADE IN FAVOR OF THE UNITED STATES GOVERNMENT, SUPPLIES IMPORTED BY IT FOR ITS USE BEING TREATED BY THE PHILIPPINES CUSTOMS AUTHORITIES THE SAME AS OTHER IMPORTS, UNLESS EXCEPTED BY SUBSEQUENT STATUTE. (SEE 17 COMP. DEC. 701; 16 ID. 146; 52 MS. COMP. DEC. 390, JAN. 24, 1910; 20 OPIN.ATTY.GEN. 314; 29 OPIN.ATTY.GEN., JUNE 8, 1912, P. 448; FORTIFICATIONS ACT OF MAR. 4, 1911, 36 STAT. 1343.

THIS RULE HAS SINCE BEEN FOLLOWED BY THE ACCOUNTING OFFICERS AND NO QUESTION RAISED AS TO THE AVAILABILITY OF APPROPRIATED FUNDS FOR THE PAYMENT OF CUSTOMS DUTIES IMPOSED BY THE PHILIPPINE GOVERNMENT ON IMPORTATIONS BY THE ARMY AND NAVY OF SUPPLIES FOR THEIR ON USE. IT IS UNDER THIS RULE AND PRACTICE THAT THE INSTANT VOUCHERS IN FAVOR OF THE BUREAU OF CUSTOMS, MANILA, P.I., HAVE BEEN PRESENTED FOR PAYMENT. IN AN OPINION BY THE ATTORNEY GENERAL OF THE UNITED STATES DATED JUNE 8, 1912, 29 OP.ATTY.GEN. 442-450, IT WAS HELD (QUOTING FROM THE SYLLABUS) THAT---

GOODS IMPORTED INTO THE PHILIPPINE ISLANDS FOR THE USE OF THE ARMY OF THE UNITED STATES ARE NOT SUBJECT TO THE STAMP TAX IMPOSED BY SECTION 284 OF ACT NO. 355 OF THE PHILIPPINE COMMISSION AS AMENDED, AS IT IS BEYOND THE COMPETENCY OF THE PHILIPPINE GOVERNMENT TO LEVY A TAX ON ARTICLES IMPORTED FOR THE USE OF THE UNITED STATES GOVERNMENT.

IN SAID OPINION THE EFFECT OF THE CHANGE IN THE CONTROLLING STATUTE WAS CONSIDERED AS FOLLOWS:

SOME POINT IS MADE OF THE FACT THAT THE TARIFF ACT OF THE PHILIPPINE COMMISSION OF SEPTEMBER 17, 1901 (WHICH WAS RATIFIED BY THE ACT OF CONGRESS OF MARCH 8, 1902, 32 STAT. 541), AND THE TARIFF ACT OF CONGRESS OF MARCH 3, 1905 (33 STAT. 928, 973), EXPRESSLY INCLUDED IN THEIR RESPECTIVE FREE LISTS SUPPLIES IMPORTED FOR THE USE OF THE UNITED STATES GOVERNMENT, WHILE THE TARIFF ACT PASSED BY CONGRESS AUGUST 5, 1909 (36 STAT. 130), CONTAINED NO SUCH PROVISION. BUT WHILE THE OMISSION OF THIS PROVISION FROM THE LATTER ACT MIGHT POSSIBLY BE HELD TO IMPLY AN INTENTION ON THE PART OF CONGRESS TO LEVY DUTIES UPON GOODS IMPORTED INTO THE PHILIPPINE ISLANDS FOR THE USE OF THE GOVERNMENT OF THE UNITED STATES (20 OP.314) (ALTHOUGH UPON THIS POINT I EXPRESS NO OPINION), IT IS FAR FROM IMPLYING A GRANT OF AUTHORITY TO THE PHILIPPINE GOVERNMENT TO LEVY A TARIFF OR OTHER TAX UPON SUCH ARTICLES.

THERE IS ALSO FOR CONSIDERATION IN CONNECTION WITH THE INFERENCE TO BE DRAWN FROM THE OMISSION IN THE LATER STATUTES OF THE EXPRESS EXEMPTION IN FAVOR OF UNITED STATES PROPERTY, THE PRINCIPLE OF STATUTORY CONSTRUCTION STATED IN SAVINGS BANK V. UNITED STATES, 19 WALL. 227, PAGE 239, THAT THE UNITED STATES IS NOT TO BE CONSIDERED AS BOUND BY A STATUTE UNLESS IT BE NAMED THEREIN BY SPECIAL AND PARTICULAR WORDS. SEE ALSO COOK COUNTY NATIONAL BANK V. UNITED STATES, 107 U.S. 451.

DURING THE LAST FEW YEARS THERE HAS SEVERAL TIMES BEEN PRESENTED TO THIS OFFICE FOR CONSIDERATION THE QUESTION OF THE AVAILABILITY OF APPROPRIATED FUNDS FOR PAYMENT OF COMPULSATORY CHECKING AND ARRASTRE CHARGES IMPOSED BY THE PHILIPPINE GOVERNMENT, THROUGH THE MANILA TERMINAL CO., (INC.), ON GOODS AND MERCHANDISE DELIVERED INTO THE PHILIPPINE ISLANDS FOR THE USE OF THE ARMY AND NAVY. SEE DECISION OF SEPTEMBER 10, 1925, AS AMENDED SEPTEMBER 26, 1925, AND AFFIRMED MAY 11, 1926, AUGUST 22, 1927, JANUARY 24, 1928, AND MAY 22, 1929. A-7578. WHILE NEITHER OF THE CHARGES WAS CONSIDERED TO BE A TAX, THEY CONSTITUTED COMPULSATORY CHARGES FOR SERVICES, AND IT WAS HELD THAT APPROPRIATED FUNDS WERE NOT AVAILABLE FOR THE PAYMENT THEREOF, FOR THE REASON THAT A COMPULSATORY CHARGE WAS REPUGNANT TO THE RELATIONSHIP BETWEEN THE SOVEREIGN GOVERNMENT OF THE UNITED STATES AND TNE DERIVATIVE GOVERNMENT OF THE PHILIPPINE ISLANDS. WAS FINALLY SUGGESTED THAT, IF IT WAS DESIRED TO CONTINUE PAYMENT OF SUCH CHARGES, THE MATTER BE SUBMITTED TO THE CONGRESS WITH A VIEW TO OBTAINING LEGISLATIVE AUTHORITY THEREFOR. SO FAR THE CONGRESS HAS NOT GRANTED AUTHORITY FOR THE PAYMENT THEREOF.

THE AVAILABILITY OF APPROPRIATED FUNDS FOR PAYMENT OF CUSTOMS DUTIES IMPOSED BY THE PHILIPPINE GOVERNMENT ON FEDERAL IMPORTATIONS INTO THE PHILIPPINE ISLANDS IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR WOULD APPEAR EVEN MORE DOUBTFUL, PARTICULARLY IN VIEW OF THE INFERENCE TO BE DRAWN FROM THE ATTORNEY GENERAL'S OPINION HEREINBEFORE QUOTED AND THE OPINION OF THE COURT OF CLAIMS IN THE ASIATIC PETROLEUM COMPANY CASE, SUPRA. ACCORDINGLY, I AM CONSTRAINED TO HOLD THAT THE PAST PRACTICE OF THE ACCOUNTING OFFICERS IN ALLOWING CLAIMS FOR AMOUNT OF CUSTOMS DUTIES IMPOSED BY THE PHILIPPINE GOVERNMENT ON GOODS OR MERCHANDISE IMPORTED INTO THE PHILIPPINE ISLANDS BY THE UNITED STATES GOVERNMENT FOR ITS OWN USE OR ANY OF ITS INSTRUMENTALITIES, INCLUDING THE NAVY, MUST BE DISCONTINUED PENDING A DECISION BY THE SUPREME COURT OF THE UNITED STATES SUSTAINING THE LEGALITY OF SUCH CHARGES OR FURTHER LEGISLATION BY THE CONGRESS WITH RESPECT THERETO.

IN SO FAR AS SUCH DUTIES ARE CONCERNED, NO DISTINCTION MAY OR WILL BE MADE BETWEEN GOODS AND MERCHANDISE IMPORTED INTO THE PHILIPPINE ISLANDS FOR THE DIRECT USE OF THE UNITED STATES GOVERNMENT OR ITS INSTRUMENTALITIES, AS IN THIS INSTANCE FOR NAVY VESSELS, AND GOODS AND MERCHANDISE IMPORTED FOR SALE IN GOVERNMENT COMMISSARIES. WITH RESPECT TO THE NAVY COMMISSARIES, REFERENCE IS MADE TO THE ACT OF MARCH 3, 1909, 35 STAT. 768, PROVIDING AS FOLLOWS:

* * * SUCH STORES AS THE SECRETARY OF THE NAVY MAY DESIGNATE MAY BE PROCURED AND SOLD TO OFFICERS AND ENLISTED MEN OF THE NAVY AND MARINE CORPS, ALSO TO CIVILIAN EMPLOYEES AT NAVAL STATIONS BEYOND THE CONTINENTAL LIMITS OF THE UNITED STATES AND IN ALASKA, UNDER SUCH REGULATIONS AS THE SECRETARY OF THE NAVY MAY PRESCRIBE: * * *

IN DECISION OF THIS OFFICE DATED MARCH 14, 1929, A-23280, WHEREIN WAS CONSIDERED THE LEGALITY OF STATE GASOLINE TAX ON GASOLINE FURNISHED TO NAVY COMMISSARIES, IT WAS STATED, AFTER QUOTING THE ABOVE STATUTE, AS FOLLOWS:

IT HAS BEEN HELD THAT A COMMISSARY, OR POST EXCHANGE, ENGAGED IN SELLING ARTICLES TO THE MILITARY PERSONNEL WAS NOT SUBJECT TO THE PAYMENT OF A TAX BY THE UNITED STATES ON RETAIL LIQUOR DEALERS, DUGAN V. UNITED STATES, 34 CT.CLS. 458. SEE ALSO 6 OP.ATTY.GEN. 577, WHEREIN IT WAS CONCLUDED THAT PERSONNEL IN THE EMPLOY OF THE UNITED STATES RESIDING IN THE LIMITS OF THE ARMY CAMP AT HARPERS FERRY WERE NOT SUBJECT TO A STATE TAX AND OTHER OBLIGATIONS OF THE CITIZENS OF THE STATE OF VIRGINIA. SEE ALSO 7 OP.ATTY.GEN. 628; FORT LEAVENWORTH RAILROAD COMPANY V. LOWE, 114 U.S. 536; AND WESTERN UNION TELEGRAPH COMPANY V. CHILES, 214 U.S. 274. THESE DECISIONS AND OPINIONS APPEAR TO BE BASED ON THE GROUND THAT THE STATES, HAVING SURRENDERED JURISDICTION OVER UNITED STATES PROPERTY USED AS NAVAL RESERVATIONS, ETC., WERE WITHOUT AUTHORITY TO APPLY THEIR LAWS WITHIN THE RESERVATIONS.

THE EXACT POINT WHETHER THE STATES MAY TAX THE GASOLINE SOLD TO THE UNITED STATES FOR RESALE IN NAVY COMMISSARIES TO OFFICERS, ENLISTED MEN, AND OTHERS OF THE NAVY FOR THEIR PRIVATE AND PERSONAL USES APPEARS NOT TO HAVE BEEN DECIDED IN THE COURTS, AND THE SECRETARY OF THE NAVY STATED IN LETTER OF FEBRUARY 1, 1929, THAT:

"IN MY OPINION THERE IS NO REASON TO DOUBT THAT THE DECISION OF THE SUPREME COURT IN THE PANHANDLE OIL COMPANY CASE WAS CORRECTLY APPLIED IN YOUR ACTION OF JUNE 13, 1928, SUPRA, DISALLOWING THE CLAIM NOW IN QUESTION. IF YOU ADHERE TO THAT ACTION, THE INTEREST OF THE UNITED STATES WILL BE SAFEGUARDED AND AT THE SAME TIME THE MEANS WILL BE AVAILABLE TO THE CLAIMANT AND THE STATE, SHOULD EITHER SO DESIRE, TO SECURE A FURTHER JUDICIAL DECISION UPON THE EXACT POINT INVOLVED, * * *.'