G.R. No. L-7618; March 27, 1913
MARIANO UY CHACO SONS, plaintiff-appellant, vs. THE INSULAR COLLECTOR OF CUSTOMS, defendant-appellee.

FACTS

Mariano Uy Chaco Sons imported white lead into the Philippines directly from the United States. The white lead was manufactured in a bonded warehouse in the U.S. from pig lead imported from Spain. No duty was paid on the pig lead upon its importation into the U.S., as the manufacturer availed of Section 23 of the U.S. Tariff Law of 1909, which allowed duty-free importation of foreign materials for manufacture provided the finished product is exported. The Collector of Customs assessed duty on the white lead upon its entry into the Philippines. The importer appealed, contending the article should be admitted free of duty under Section 5 of the U.S. Tariff Law and Section 12 of the Philippine Tariff Law of 1909, both of which granted free entry to articles, the growth, product, or manufacture of the United States, upon which no drawback of customs duties had been allowed, when shipped directly.

ISSUE

Whether white lead, manufactured in the United States under bond from duty-free imported foreign raw materials, is entitled to free entry into the Philippine Islands as a product of the United States under the applicable tariff laws.

RULING

No. The Supreme Court affirmed the judgment of the Court of First Instance, confirming the Collector of Customs’ decision. The Court held that the white lead was not entitled to free entry. While Section 12 of the Philippine Tariff Law of 1909 (the current law) generally provides for free entry of articles of U.S. growth, product, or manufacture, the Court interpreted the law in light of the legislative intent. The Court reasoned that Congress, in enacting the free entry provisions, contemplated articles of genuine domestic U.S. origin, not articles manufactured from foreign materials under bond solely for export. Allowing such bonded manufactured articles free entry would discriminate between American manufacturers and provide an avenue for dutiable articles to enter the Philippines without payment, contrary to the revenue purposes of the tariff law. The pig lead lost its identity and any potential claim to free entry (had it been imported directly) when it was manufactured into white lead. The condition of the article at the time of importation into the Philippines governs, and here it was a manufactured product not intended to be covered by the free entry provisions for products of the United States.