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[ GR No. 25846, Dec 24, 1926 ]



49 Phil. 811

[ G.R. No. 25846, December 24, 1926 ]





Plaintiff alleges that he is a resident of the City of Manila, and that the defendant is the Collector of Internal Revenue; that on November 4, 1918, he was appointed employee for Dona Marcelina O. Viuda de Monasterio from San  Jose, formerly  Province of Ambos  Camarines, under a written instrument known in  the  record as Exhibit A; that under the terms of  his appointment, and during the  years 1918 and 1922, he received from his employer chattels and goods to be sold in Manila which in fact were sold  under instructions from his employer;  that in the sale of the merchandise in  question, plaintiff acted as a mere employee with a fixed compensation, and always disclosing the name of his employer in all of the transactions; that during such period, and as  such employee,  and under the instructions of  his   employer,  plaintiff   sold  goods  amounting  to P217,436.74, on all  of  which  the  merchant's percentage tax, due and payable under  section  1459 of the Administrative Code of 1917, was paid by the employer, without even a demand for its payment; that  the defendant,  claiming to act under section 1459, and on October 11,1922, levied and assessed the following taxes upon the plaintiff:  Fixed C-1 taxes for  1918-1922, P10; 1  per cent  tax on gross sales, P2,174.37; and 25 per cent surcharge on  last item for  delinquency  thereof,  P543.59,  making  a  total  of P2,727.96, less  P240 which was erroneously  paid, leaving a balance of P2,427.96,  and that defendant demanded the payment of such taxes and penalties;  that in view of such demand,  and for  fear  of other penalties, plaintiff paid such taxes under a written protest, which was  overruled, and notwithstanding the  demand, defendant refuses to return the money, and plaintiff prays for a corresponding judgment.

For answer the defendant  makes a general and specific denial of all of the material  allegations  of the  complaint, and as a special defense alleges:

"That from the fourth quarter of  the year 1918 to the first quarter of the year 1922,  both inclusive, the plaintiff effected transactions as  a commission merchant, the internal revenue fixed and percentage taxes on which, plus the 25  per  cent surcharge  for  delinquency,   amounted  to P2,427.96,  which was paid by  the plaintiff to the defendant."

And prays that the complaint be dismissed. At the trial, the parties stipulated upon the  following facts:
"Come now the parties to the above-entitled case and hereby agree and stipulate that the following are facts pertinent to the issues involved in the case, and that they may be considered by the court as proven, without the production of evidence for that  purpose.  It is understood, however, that this shall not be construed so as to preclude either party from producing legally admissible evidence of other facts that may  be deemed by either party and the court to be pertinent  to the case.

"I. That the plaintiff is of legal age and resident of the City of Manila, and  the  defendant is the duly  appointed and qualified Collector of Internal Revenue.

"II.  That the plaintiff at all of the times referred to in the complaint was not and is not a holder of a merchant's or commission merchant's privilege tax-receipt, but was a holder of  a commercial  broker's tax-receipt  during the years 1919 to 1922, inclusive.

"III. That by virtue of a  document executed on January 22,  1919,  before  notary public Leonard S.  Goddard,  a regular partnership was organized as shown by the Articles of Copartnership  contained  in  document  hereto attached and made a part hereof, marked Exhibit A.

"IV. That on November 4,1918, the plaintiff  was authorized to act under  the terms  and conditions embodied in a special power of attorney, copy of which is attached hereto and marked Exhibit B.

"V. That the plaintiff acting under the power of attorney above-mentioned sold goods  belonging to Dona Marcelina O, Viuda de Monasterio during the period from the  fourth quarter of 1918 to the first quarter of  1922 to the value of P217,436.74.

"VI. That the defendant under the authority of sections 1457, 1458, and 1459 of the Administrative Code of 1917 did on October 11, 1922, levy and assess the following taxes upon the plaintiff: Fixed merchants'  taxes for 1918-1922, P10; 1 per cent tax on gross sales, P2,174.37; and  25 per cent surcharge on last  item  for delinquency thereof P543.59; or a total of P2,727.96, minus P240,  which were paid by  the plaintiff, for effecting said transactions, as commercial  broker's taxes,   leaving  a  net balance  of P2,427.96, which  amount the plaintiff paid under protest on March 17,  1923.

"VII. That the plaintiff has demanded from the defendant the refund of the amount paid and mentioned in the preceding paragraph, but the said defendant refused and still refuses to make the refund."
Each party reserving the right, in his own discretion, to introduce any other testimony which might be legally admissible.

The lower  court rendered judgment in favor  of  the plaintiff for the full amount  of plaintiff's claim, without interest or costs.

On appeal the defendant assigns the following errors:
"The trial court erred:

"I. In finding, or  concluding that  the plaintiff and the defendant agreed during the trial that the former was not a merchant provided with the license required by law, and that he was merely  a commercial broker.

"II. In applying  the doctrine laid down in  Facundo versus Posadas (23 Off.  Gaz., pp. 1749-1751) to the present case.

"III.  In holding that the plaintiff,  in selling the  goods belonging to Dona Marcelina  O. Vda.  de Monasterio, acted not as a commission merchant but merely as an 'apoderado asalariado' (a salaried agent).

"IV. In refusing to grant the defendant's  motion for  a new trial, and in entering judgment in favor of the  plaintiff and against the defendant."

It is admitted that a  merchant's sales tax on all of the goods sold by  the plaintiff was levied and paid in full by Dona Marcelina O. Viuda de Monasterio.

The question now presented  is whether or not plaintiff was doing business as a merchant, and, as such  should pay a sales tax on the same goods.

The record  is conclusive that Dona Marcelina O. Viuda de Monasterio was  the sole and exclusive owner of the goods sold, and that the plaintiff was her agent and legal representative  in the selling of the goods, and that  there was never but  one sale; that the plaintiff did not take the goods from Dona Marcelina O. Viuda de Monasterio on consignment.   Neither did  he take them on commission. It is also conclusive that at all times in the selling of the goods, plaintiff never claimed to act or represent himself, and that all of such transactions were made in the  name of, and for and on behalf of, his principal, who paid him a salary of P300 per month for his services, and that plaintiff did not have  or receive any other  compensation.  It is also stipulated that during all of the times alleged, the plaintiff was  the holder of a commercial  broker's tax receipt, and  that his  principal personally  paid the full amount of the  sales  tax on all of the goods which were alleged to have been sold by the plaintiff as a merchant.

In their respective briefs, respective counsel have cited numerous  previous   decisions   of  this  court  construing section  1459,  and the  meaning  of  the  word  "merchant" as it is used in that  section.

Without analyzing or seeking to distinguish them, we hold, upon the facts  in this case, that in the making of the alleged sales, plaintiff made  them as the  agent and representative  of his principal, and that the goods which he sold belonged  to, and were  the property  of, his principal, and that the sales which plaintiff made were made by him as agent for his principal, and that in the making of  them, he was not a merchant within the meaning of section  1459; that in the making of such sales, plaintiff received a salary of P300 per month from his principal in full compensation for his services; that he did not receive or handle the  goods on commission or consignment,  and that any  sale which he made of the goods  was the sale of his principal, and that but one sale was ever made of the goods in question, and that was the  sale made by his  principal, through the plaintiff as her agent; that  plaintiff having once paid the sales tax in full on all of such sales, the Government  is not  entitled to collect a double sales tax  on  one sale only of the same goods.

The judgment of the lower court is  affirmed, without costs.  So ordered.

Avanceña,  C. J., Street, Malcolm, Villamor, Ostrand, and  Romualdez, JJ., concur.