Said act No. 355, enacted February 6, 1902, is entitled "An act to constitute the Customs Service of the Philippine Archipelago and to provide for the administration thereof." It establishes (section 2) an executive branch to be known as the Customs Service," and provides (section 3) that its general duties, powers, and jurisdiction shall embrace, inter alia:

"6. The collection or securing of the lawful revenue from importations of dutiable merchandise and from the exportation of dutiable merchandise and from tonnage dues, wharf charges, and such others as may, from time to time, be duly established.

"8. The collection of the duties, dues, fees, fines, and penalties, accruing under the laws relating to customs, navigation, and commerce, by sea."

After numerous sections providing for an executive organization, for documenting vessels, for entry of vessels, for landing of cargoes, for clearance of vessels, for coastwise trade, for entry of imported merchandise, for examination and appraisal of merchandise, for the liquidation of duties, for bonded warehouses, for transportation in bond, for withdrawals from bond, Chapter XXII of the act, under the title "Stamps," provides, as amended:

"SEC. 284. The following papers shall not be issued, received, granted, or in any manner recognized by any customs officer unless there shall be affixed thereto a lawful customs stamp or stamps of the Philippine Islands, representing the value in Philippine currency as follows:

For each foreign clearance.

For each foreign entrance__.

For each coast wise clearance (to be charged

at ports of entry only):

P4.00

4.00

For each inward coastwise manifest (to be
charged at ports of entry only):

For vessels up to 75 tons, net‒‒‒‒‒
For vessels from 75 to 125 tons, net_.
For vessels from 125 to 200 tons, net
For vessels from 200 to 300 tons, net__
For vessels from 300 tons, net, and up-

P0.40

1.00

2.00

3.00

For each original withdrawal entry----
For each entry for immediate transporta-
tion in bond

.40

1.00

For each original free entry, except free
entries of stores for Government use, ex-

.40

1.00

For each original bond

1.00

1.00 "

ceeding 20 in value__.

For each original certificate_

For each copy of official document.

The original act had the following addition to section 284:

"Until due provision can be made for printing a supply of customs stamps, the insular collector is authorized to make requisition upon the collector of internal revenue of these islands for a sufficient number of internal-revenue stamps, which shall first be stamped across their face with the word "Customs," and then kept for sale by customs officers for use in compliance with the provisions of this section. The funds accruing from the sale of the internalrevenue stamps so used and sold for customs purposes, and from the sale of all customs stamps, shall be regularly deposited as customs collections. These stamps shall be in lieu of the internal-revenue stamps heretofore used on the above-mentioned customs documents."

But this provision has been dropped from the act evidently because the necessity for it no longer exists.

It is under the provision, supra, "for each original import entry exceeding 50 in value, 1.00," that the payment now in question is demanded for the entry of United States goods for the use of the Army of the United States.

With your letter you inclose a copy of an opinion by the attorney general of the Philippine Islands holding, first, that the above charge is not a "tax," but is merely a reimbursement for services performed; second, that, if it be a "tax," it is, nevertheless, within the competency of the Philippine Commission, even in its application to property of the United States imported for Government purposes. I have given the opinion of the attorney general of the Philippine Islands that very careful consideration to which it is justly entitled, and I regret to say that I am unable to concur with it in either of its holdings.

1. I have already held in the case of the President's Automobile (28 Op. 604, 608) that, if the payments demanded be merely fees intended to cover the expenses attendant upon an execution of the laws, they do not come within the rule forbidding taxation of Federal property or agencies. Whether such payments are a tax or are merely an expense-covering charge is a question upon which the opinion of the attorney general of the Philippine Islands is entitled to great respect, and especially so since there does not appear to be any decision of the supreme court of the islands construing this portion of the act. Nevertheless, it is impossible to escape the conclusion that what is provided for in said section 284 is a stamp tax pure and simple. It is contained in an act providing the machinery and prescribing the rules for the collection of customs dues. Its schedule of charges does not seem to vary according to or be measured by the amount of trouble or labor involved in issuing the papers concerned, but, on the contrary, wherever comparison is possible it seems to be based on quantities, as a tax naturally would be. Thus the clearance charges vary with the tonnage of the vessels, as do the charges for inward coastwise manifests. The charges for entries, both export, import, and free, are based on a minimum valuation, though the trouble and labor involved can not be dependent on such a circumstance. The

clause contained in the original act in regard to the temporary use of internal-revenue stamps (which, though repealed, may still be considered in arriving at the purpose of the legislation), which provides that the funds accruing from the sale of all customs stamps shall be regularly deposited as customs collections, shows that the commission did not understand that the revenues from these stamps differed from any other customs revenues. A reading of the whole act, with a consideration of the position of this chapter on "Stamps " in the general scheme, and its relation to the other provisions of the act, can not fail to convince the mind that (to use the language of the Supreme Court of the United States in Nicol v. Ames, 173 U. S. 509, 519), "the tax is in effect a duty or excise laid upon the privilege, opportunity or facility" of doing commercial business at the various ports in the Philippine Islands.

66

The only argument advanced by the attorney general of the Philippine Islands to show that these payments are expense-covering charges and not taxes is that the provisions of the original section 284 of act No. 355 are subject to the exemptions prescribed by section one hundred and thirty-five of this act "; that said section 135 divided vessels engaged in the coastwise trade into two classes, those engaged in the general trade of the archipelago, and those small craft trading only within a particular section of the islands; and that the latter class are not "required to pay fees prescribed by chapter twenty-two of this act," which is section 284, supra. It is, apparently, the word "fees" which seems important, if not decisive, to the attorney general of the Philippines. But the substance of the thing and not the name given is what determines the question, tax or no tax (28 Op. 604, 607, 610, and cases there cited). And, in the very instance referred to, the fact that vessels engaged generally in the coasting trade must purchase stamps, while small craft making point-to-point voyages need not, shows that it is a tax we are dealing with, since the labor of making out papers, etc., would be the same in both cases, but the reason for levying the tax evidently would not.

2. It is, of course, admitted by the attorney general of the Philippines that a State can not tax the property or agencies of the United States, but he makes an interesting distinction between the position, relative to the United States, of a State and that of the Philippine Islands. He says:

66* * * such limitation is not applicable to the government of the Philippine Islands, as the relations between the Philippine Government and the Federal Government are wholly different from those existing between the latter and the State Governments. The legislative authority of the States is not a grant of powers to the States, but is derived from the people, and is only limited by those powers conferred by the States upon the Federal Government by the Constitution; and 'where powers are conferred upon the General Government, the exercise of the same powers by the States is impliedly prohibited, wherever the intent of the grant to the National Government would be defeated by such exercise. On this ground it is held that the States can not tax the agencies or loans of the General Government;' * * * (Cooley's Const. Limit., 6th Ed., 28). The legislative authority of the Philippine Government resides primarily in Congress, which has granted legislative power to the Philippine Government in general terms, subject to specific limitations, and such legislative power is exercised by the Philippine Government in its capacity as the representative of Congress, which has reserved the power to annul such legislative acts. No questions of supremacy between two governments is involved; therefore, there would appear to be no limitation upon the power of the Philippine Government to require customs stamps to be affixed by the Federal Government, as the Philippine Commission or legislature, in requiring such customs stamps to be affixed, acts as a legislative agency to whom Congress has delegated the exercise of legislative powers in the Philippine Islands as territory belonging to the United States."

The principle which forbids one State to tax the property or agencies of another is thus forcibly stated by Mr.