Olsen V Aldanese

Olsen v.
Aldanese
Facts
Walter E. Olsen & Co., Inc. (petitioner) is a duly licensed domestic corporation
with its principal office and place of business in the city of Manila and
engaged in the manufacture and export of cigars made of tobacco grown in
the Philippine Islands.
The defendant, Vicente Aldanese, is the Insular Collector of Customs, and the
defendant, W. Trinidad, is the Collector of Internal Revenue of the Philippine
Islands.
Large quantities of tobacco are grown in the provinces of La Union,
Pangasinan, and other provinces of the Philippine Islands which are
manufactured by the petitioner and by other cigar factories of the Philippines
into wholesome and sanitary long filler and short filler cigars.
o Machine made short filler cigars of sanitary, wholesome and excellent
quality are manufactured by petitioner from a blend of tobacco grown
in the provinces of Cagayan, Isabela, Nueva Vizcaya, La Union, and
Pangasinan.
Petitioner applied to the Collector of Internal Revenue for a certificate of
origin to the Insular Collector of Customs for a consignment of 10,000 cigars
manufactured by it from tobacco grown and produced in the Philippine
Islands, which was then and there offered for export to the United States, and
was submitted for inspection and the issuance of the proper certificate of
origin.
Petitioner alleged that the consignment was packed and stamped as required
by the regulations contained in Administrative Order No. 35, and in all things
and respects complied with the requirements of the Act of Congress of
October 3, 1913, and with the Act No. 2613 of the Philippine Legislature (after
the elimination of the void portions of Act No. 2613 and of the Administrative
Order which the petitioner sought to be declared unconstitutional in this
case)
The Collector of Internal Revenue refused to issue such certificate of origin
"on the ground that said cigars were not manufactured of long filler tobacco
produced exclusively in the provinces of Cagayan, Isabela or Nueva Vizcaya."
Notwithstanding the refusal, the petitioner applied to the Insular Collector of
Customs for the certificate of origin, but the officer refused to issue such
certificate "on the ground that the petitioner had not obtained and presented
with the application the certificate of the said respondent Collector of Internal
Revenue."
By reason of such refusal, the petitioner claims that it was deprived of the
right of exporting the cigars to the United States and therefore prays for a
peremptory writ of mandamus.
Petitioner assails the constitutionality of the ff:
o Clause B of section 6 of Act No. 2613 which empowers the Collector of
Internal Revenue to establish rules defining the standard and the type of
leaf and manufactured tobacco which may be exported into the United
States.
o Section 7 which provides:
"No leaf tobacco or manufactured tobacco shall be exported from the
Philippine Islands to the United States until it shall have been inspected by
the Collector of Internal Revenue, etc.,"
o Section 11 which requires the certificate of origin of the Collector of
Internal Revenue to show that the tobacco to be exported is standard, and
which limits the required certificate of origin to be standard
o Section 9 of Administrative Order No. 35, which limits the exportation into
the United States of Philippine cigars to those manufactured from long
filler tobacco exclusively the product of the provinces of Cagayan, Isabela,
or Nueva Vizcaya.
Pertinent Laws (which petitioner cited in his complaint)

The petitioner alleges in his complaint that under the Tariff Act, it had the
legal right to export from the Philippine Islands into the United States cigars
which it manufactured from tobacco grown in the Philippine Islands.
The Philippine Legislature enacted Law No. 2613 entitled "An Act to improve
the methods of production and the quality of tobacco in the Philippines and to
develop the export trade therein.
The Collector of Internal Revenue promulgated Administrative Order No. 35,
known as "Tobacco Inspection Regulations.
The petition then quotes sections 1 and 8 of article 1 of the Constitution of
the United States, and section 10 of the Act of Congress of August 29, 1916,
known as "The Jones Law," which provides as follows:
o "That while this Act provides that the Philippine Government shall have the authority to
enact a Tariff Law the trade relations between the Islands and the United States shall
continue to be governed exclusively by laws of the Congress of the United States."
Issue: WoN Sections 6, 7, and 11 of Act No. 2613 of the Philippine Legislature, and
section 9 of the "Tobacco Inspection Regulations," promulgated by Administrative
Order No. 35 are unconstitutional
YES
On the power of the Collector of Internal Revenue

It must be conceded that the authority of the Collector of Internal Revenue to
make any rules and regulations must be founded upon some legislative act,
and that they must follow and be within the scope and purview of the act.
As provided in section 6 of Act No. 2613, the power of the Collector of Internal
Revenue to make rules and regulations is confined to the making of rules and
regulations for the classification, marking, and packing of tobacco, and that
such power is further limited to the making of such rules for the classification,
marking, and packing of tobacco as may be necessary to secure leaf tobacco
of good quality and its handling under sanitary conditions.
o The power is further limited "to the end that leaf tobacco be not mixed,
packed, and marked as of the same quality when it is not of the same
class and origin."
o Hence, it must follow that any rules or regulations which are not within
the scope of the Act are null and void.
Clause B of Section 6
Clause B provides:
"To establish from time to time adequate rules defining the standard and the .type of leaf and
manufactured tobacco which may be exported to the United States, as well also as the manner in
which standard tobacco for export, whether it be leaf tobacco or manufactured tobacco, shall be
packed. Before establishing the rules above specified, the Collector of Internal Revenue shall give
due notice of the proposed rules or amendments to those interested and shall give them an
opportunity to present their objections to such rules or amendments."
Clause B of section 6 should be construed with, and is limited by, the terms
and provisions of clause A.
Here, again, the Legislature has not defined what shall be the standard or the
type of leaf or manufactured tobacco which may be exported to the United
States, or even specified how or upon what basis the Collector of Internal
Revenue should fix or determine the standard. All of that power is delegated
to the Collector of Internal Revenue.
Section 9 of AO 35
Assuming, without deciding, that the Legislature could delegate such power,
the "rules and regulations" promulgated should be confined to, and limited
by, the power conferred by the legislative act. Among other things, section 9
of the rules and regulations, promulgated by Administrative Order No. 35,
provides:
To be classed as standard, cigars must be manufactured under sanitary conditions from good,
clean, selected tobacco, properly cured and seasoned, of a crop which has been harvested at
least six months, exclusively the product of the provinces of Cagayan, Isabela, or Nueva Vizcaya.
The cigars must be well made, with suitable spiral wrapper and with long filler from which must
have been removed all stems, dust, scraps, or burnt tobacco; net weight of cigars to be not less
than five kilograms per thousand * * *. By color is meant the color of the wrapper and not the
filler * * *.
"In passing on the quality of cigars, the article will be required to come up to a high standard as
to workmanship, burn, aroma, and taste. The actual price at which the cigars are sold will also be
given due weight, and when it is found that cigars are sold at such a low price that the cost of
production with materials of the quality required in these regulations leaves no reasonable
margin of profits, such fact may be considered as corroborative evidence in determining whether
the cigars in question are standard."
Analyzing the power conferred, it will be found that the provisions of the
legislative act are not limited to the provinces of Cagayan, Isabela, or Nueva
Vizcaya, or to any province, and that there is no limitation as to the place
where the tobacco should be grown in the Philippine Islands.
The only power conferred is to establish general and local rules for the
classification, marking, and packing of tobacco and the standard and the type
of tobacco which may be exported to the United States.
Neither the Collector of Internal Revenue nor the Legislature itself has any
power to discriminate in favor of one province against another in the
production of tobacco or of any other product of the Islands.
o The purpose and intent of the Legislature was that a proper standard of
the quality of tobacco should be fixed and defined, and that all of those
who produce tobacco of the same standard should have equal rights
and opportunities.
o It was never intended that a standard should be fixed which would limit
the manufacture of cigars for export to certain provinces of the Islands,
or that the tobacco produced in one province should be measured by
another and different standard than the tobacco produced in any other
province.
o That would amount to discrimination and class legislation, which, even
the Legislature, would not have the power to enact.
o Again, the legislative Act does not say anything about the "filler," or
whether it should be short or long. Neither does it say anything about
the weight of the cigar. It is a matter of common knowledge that
standard cigars are of different sizes, weights, and lengths, and that
the purity and standard of the cigar does not depend upon either.

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Olsen v.

Pertinent Laws (which petitioner cited in his complaint)

On the power of the Collector of Internal Revenue

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