MADELO, Ginalyn G.

2014-0465

VICTORIAS MILLING CO., INC. vs. OFFICE OF THE PRESIDENTIAL ASSISTANT FOR LEGAL
AFFAIRS and PHILIPPINE PORTS AUTHORITY
G.R. No. 73705 August 27, 1987

FACTS:

On April 28, 1981, the Iloilo Port Manager of Philippine Ports Authority (PPA) wrote Victorias Milling
requiring it to (1) have its tugboats and barges undergo harbor formalities, (2) pay entrance/clearance fees
as well as berthing fees effective May 1, 1981, (3) secure a permit for cargo handling operations at its Da-
an Banua wharf, and (4) remit 10% of its gross income for said operations as the government's share.

To these demands, Victorias Milling sent two letters wherein it maintained that it was exempt from
paying PPA any fee or charge because: (1) the wharf and its facilities were built and installed in its land; (2)
repair and maintenance thereof were solely paid by it; (3) even the dredging and maintenance of the Malijao
River Channel from Guimaras Strait up to said private wharf were being done by its equipment and
personnel; (4) at no time had the government ever spent a single centavo for such activities; and (5) the
wharf was being used mainly to handle sugar purchased from district planters pursuant to existing milling
agreements.

Victorias Milling filed a petition before the Court of Tax Appeals (CTA) but it was dismissed on the
ground that it had no jurisdiction. The CTA recommended that the appeal be addressed to the Office of the
President (OP). Victorias Milling elevated the case to the Supreme Court (SC) but it was likewise denied.
Thereafter, it appealed to the OP but it was denied on the ground that the appeal was filed beyond the
reglementary period. Hence, the instant petition.

Victorias Milling maintained and submitted that there was no basis for the PPA to assess and
impose the dues and charges it was collecting since the wharf was private, constructed and maintained at
no expense to the government, and that it existed primarily so that its tugboats and barges would ferry the
sugarcane of its Panay planters.

ISSUE:

Whether or not the requirement to remit 10% of its gross income for its arrastre and stevedoring
operations is valid

RULING:

Yes. The requirement to remit 10% of its gross income for its arrastre and stevedoring operations
is valid.

Section 6B-(ix) of the Presidential Decree No. 857 authorized the PPA "To levy dues, rates, or
charges for the use of the premises, works, appliances, facilities, or for services provided by or belonging
to the Authority, or any organization concerned with port operations." This 10% government share of
earnings of arrastre and stevedoring operators is in the nature of contractual compensation to which
a person desiring to operate arrastre service must agree as a condition to the grant of the permit to operate.

As correctly stated by the Solicitor General, the fees and charges PPA collects are not for the use
of the wharf that petitioner owns but for the privilege of navigating in public waters, of entering and leaving
public harbors and berthing on public streams or waters.