Calder & Co. v. United States
REITERATIONFacts
The Antecedents: Plaintiff Calder & Co. imported into the Philippine Islands forty-three pieces constituting an "oil mill complete" for working copra and other seeds into oil, along with a portable steam engine. In the importer's declaration, the steam engine was not declared as part of the "oil mill complete." Procedural History: The Collector of Customs classified the "oil mill complete" and the portable steam engine under "other machinery" (paragraph 257(b) of Act No. 2301), subject to a duty of $1 per 100 kilos, not less than 25% ad valorem. The plaintiff protested, contending the machinery should be classified under "agricultural machinery and apparatus for... preparing... other vegetable products of the Islands for the markets" (paragraph 245), subject to a lower duty. The Collector of Customs denied the protest, holding that a machine for extracting oil from coconuts creates a new article and is not machinery for preparing vegetable products for market. The Court of Customs Appeals reversed the Collector's decision, classifying the machinery under paragraph 245. The defendant, The United States, appealed to the Supreme Court. The Petition: The defendant appealed the decision of the Court of Customs Appeals, raising two questions: (1) whether the oil mill machinery should be classified under paragraph 245 as machinery for preparing vegetable products for market, and (2) whether the portable steam engine, not declared as part of the oil mill, should be classified under paragraph 245 or 257.
Issue(s)
Whether the forty-three pieces constituting an "oil mill complete" for working copra and other seeds into oil should be classified as "machinery and apparatus for preparing vegetable products of the Islands for the markets." Whether the portable steam engine, not declared as part of the "oil mill complete," should be classified under paragraph 245 or paragraph 257 of Act No. 2301.
Ruling
The judgment of the lower court is reversed, and the decision of the Collector of Customs is affirmed. The case is remanded to the Court of First Instance of the city of Manila with direction that a judgment be rendered in accordance with this decision.
Ratio Decidendi
On the classification of the oil mill machinery: The Court held that the forty-three pieces constituting an "oil mill complete for the working of coprax and other seeds into oil" should be classified under subdivision (b) of paragraph 257 of Act No. 2301, as "other machinery." The plaintiff's contention that this machinery is for "preparing vegetable products of the Islands for the markets" under paragraph 245 was rejected. The Court reasoned that the language of paragraph 245 distinguishes between machinery for "making of sugar" and machinery for "preparing" vegetable products. Extracting oil from copra or coconuts creates an entirely different article, not merely a prepared form of the original vegetable product. The Court provided analogies, stating that machinery for making flour from rice or beer from rice, or whisky from corn, would not be considered machinery for "preparing" those vegetable products for market because the end product is fundamentally different from the original. Therefore, the oil mill machinery does not fall under the specific category of preparing vegetable products for market as contemplated by paragraph 245. On the classification of the portable steam engine: The Court referred to its prior decision in Calder & Co. vs. The United States (5 Off. Gaz., 465), which had already determined that a portable steam engine should be classified under subdivision (b) of paragraph 257 of Act No. 2301. Therefore, this issue was resolved by precedent, placing the portable steam engine under the "other machinery" classification.
Main Doctrine
Machinery for extracting oil from copra and other seeds is classified as 'other machinery' under paragraph 257(b) of Act No. 2301, and not as machinery for 'preparing vegetable products of the Islands for the markets' under paragraph 245, as the process of oil extraction creates a new product distinct from the original vegetable matter.