G.R. No. 25224, August 31, 1926
R.M. ROBLES, plaintiff-appellee, vs. THE INSULAR COLLECTOR OF CUSTOMS, defendant-appellant.

FACTS

R.M. Robles, representing Standard Import, Inc., imported two packages of dry goods declared as plain cotton textile but identified as “organdies.” The goods were embroidered with artificial silk. The Insular Collector of Customs classified the imported articles under Paragraph 146 of the Philippine Tariff Act of 1909 (which imposes a 50% ad valorem duty on manufactures where silk, artificial silk, or imitation silk is the component material of chief value) and assessed duties accordingly. Robles protested, contending the goods should be classified under Paragraph 98(d) in relation to Rule 9 (which imposes the duty applicable to the base textile plus a 30% surtax for embroideries). The parties stipulated that: (1) the textiles are embroideries; (2) they are embroidered with artificial silk; and (3) the plaintiff desired to settle the legal question of classification even assuming the artificial silk was the component material of chief value. The Court of First Instance of Manila ruled in favor of Robles, ordering a refund of the excess duties paid. The Insular Collector appealed.

ISSUE

Whether the imported embroidered textiles should be classified for tariff purposes under Paragraph 146 (as a manufacture where artificial silk is the component material of chief value) or under Paragraph 98(d) and Rule 9 (as embroidered textiles subject to a surtax).

RULING

The Supreme Court AFFIRMED the decision of the Court of First Instance. The imported goods were properly classified as embroidered textiles under Paragraph 98(d) and Rule 9, not under Paragraph 146.

The Court held that the stipulation of facts only established that the goods were embroideries and that they were embroidered with artificial silk. It did not stipulate that artificial silk was the “component material of chief value” of the entire article, which is the essential condition for applying Paragraph 146. The third part of the stipulation was merely an agreement to argue the legal question based on a hypothetical assumption, not an admission of fact. Since the Collector of Customs failed to prove that artificial silk was the component material of chief valuea fact essential to his classificationthe default classification governing the admitted facts (embroidered textiles) under Rule 9 must apply. Therefore, the duty should be based on the underlying textile (presumably cotton) plus the 30% embroidery surtax.