1. WHEN SALE IS MADE HERE. — Where it appears that the plaintiff is a "manufacturer and merchant doing business in the Philippine Islands," and that at its place of business in Manila it took and accepted listed orders from different persons for the sale and purchase of machinery and materials, which it instructed and authorized its agent in the City of New York to purchase "to fill the orders for plaintiff’s account for manufacturers there, pursuant to the instructions from such agent manufactured such machinery and materials, and shipped them from the United States to the City of Manila, where they were delivered to the purchasers, such acts and facts make and constitute a sale of the machinery and materials in question by the plaintiff to its customers within the meaning of section 1459 of the Administrative Code.
2. WHEN SALE IS COMPLETE. — Within the meaning of that section, as it relates to article 1450 of the Civil Code, a sale is perfected and binding between the vendor and vendee when they have agreed upon the thing to be sold and the price, in particular where the merchandise and materials are later delivered by the vendor to the vendee, pursuant to the contract of sale and purchase.
3. WHEN MERCHANT IS NOT EXEMPT FROM SALES TAX. — Where the plaintiff, a domestic corporation, manufacturer, and merchant, took and accepted orders for the sale and purchase of machinery and materials at its office in the City of Manila, which sales were consummated by the delivery of such machinery and materials for and on account of the plaintiff to its customers in the Philippine Islands, the fact that such machinery and materials were manufactured in the United States for and on account of the plaintiff does not exempt it from the payment of the sales tax as defined and specified in section 1459 of the Administrative Code.
STATEMENT
Plaintiff is a domestic corporation, with its principal office and place of business in the City of Manila, and the defendant is the Collector of Internal Revenue.
Plaintiff alleges that during the years 1926 and 1927 it sold in the United States, in the City of New York, certain machineries and materials to different corporations amounting in the aggregate to P191,161.08. Then follows a statement as to whom the property was sold and the amount of the sales. It is then alleged that the defendant, claiming that the sales were made by the plaintiff in the Philippine Islands, and pretending to act under sections 1458 and 1459 of the Administrative Code, the first as amended by section 2 of Act No. 2892 and section 1 of Act No. 3074, and the second as it relates to Act No. 3243, levied and assessed, and demanded the payment from the plaintiff, as a merchant’s sales tax and surcharge on the amount of such sales, for the 1 1/2 per cent tax amounting to P2,867.42, and the 25 per cent surcharge amounting to P716,86. That October 4, 1928, and to avoid distraint of its goods and the payment of further fines and penalties, the plaintiff, under a written protest that such tax was illegal, paid the defendant the amount of P3,584.28. That on October 9, 1928, the defendant overruled plaintiff’s protest and refused to refund the money.
For a second cause of action the plaintiff alleges that on and between May 31, 1927, and September 30, 1928, it sold in the same City of New York, and in the City of Honolulu, Territory of Hawaii, machineries and materials amounting to P83,506.31. Then follows a list of the persons to whom the property was sold and the amount of sales. That on October 23, 1928, plaintiff was required to pay, and under protest did pay, taxes thereon amounting to P1,565.74. That of that amount P1,252.59 was for 1 1/2 per cent sales tax, upon which P313.15 was the 25 per cent surcharge. That the defendant overruled plaintiff’s protest and refused to refund this money, and it prays for judgment for both of said amounts, with interest and costs.
For answer the defendant admits the allegations of paragraphs 1, 3, 4, 5, 6, 8 and 9, and denies the allegations made in paragraphs 2 and 7, of the complaint, and as a special defense alleges that all of the sales mentioned in the complaint were made in the Philippine Islands, and that the taxes thereon were collected in accordance with law, and prays that plaintiff’s complaint be dismissed, with costs.
The case was tried and submitted on an agreed statement of facts, the material portions of which are as follows:
jgc:chanrobles.com.ph"I. That the plaintiff is and was, during all the times hereinafter mentioned, a corporation duly organized and existing under and in virtue of the laws of the Philippine Islands, with its principal place of business in the City of Manila, Philippine Islands, and also a manufacturer and merchant doing business in the Philippine Islands; and that the defendant is the Collector of Internal Revenue of the Philippine Islands.
"II. That on October 4th, 1928, this plaintiff, pursuant to a previous demand made by the Collector of Internal Revenue, involuntarily, under duress and written protest, and for the sole purpose of avoiding penalties and distraint, paid the defendant the sum of P3,584.28, as merchant’s sales tax of 1 1/2 per cent and 25 per cent surcharge incident to late payment thereof alleged to be due on the transactions described in the subsequent paragraphs under this first cause of action. A true copy of said written protest, marked Exhibit A, is hereunto annexed and hereby made a part hereof.
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"IV. That the tax so demanded by the defendant, and paid by the plaintiff under protest, consisted of the 1 1/2 per cent sales tax amounting to P2,867.42, and 25 per cent surcharge thereon amounting to P716,88, on orders for machinery and materials received and accepted by the plaintiff in the Philippine Islands during the years 1926 and 1927, aggregating P191,161.08, and made up as follows:
chanrob1es virtual 1aw library1926
Compañia General de Tabacos de Filipinas P17,168.00
Cebu Portland Cement Co. 4,130.76
Do 15,123.72
Pampanga Sugar Mills 82,407.64
Do 54,800.00
1927
Benguet Consolidated Mining Co 2,338.96
Cebu Portland Cement Co 10,000.00
Benguet Consolidated Mining Co 5,192.00
Total 191,161.08
"V. (a) That of the orders listed in the preceding paragraph, that relating to Compañia General de Tabacos de Filipinas was placed with the and accepted by the plaintiff in the latter’s place of business in Manila, Philippine Islands, on April 7, 1926, and was executed by the plaintiff by causing its agent in the City of New York, the Honolulu Iron Works Company, to purchase the machinery and materials to fill the same for plaintiff’s account from manufacturers thereof in he United States of America. These manufacturers, acting under instructions from said plaintiff’s agent, thereunto duly authorized, shipped said materials from the various points of manufacture thereof in the United States to the City of Manila, taking shipping documents from the carriers to the order of themselves, notify Earnshaws Docks & Honolulu Iron Works, Manila, P .I. These shipping documents were thereupon, under instructions from the plaintiff, endorsed in blank and delivered to said plaintiff’s agent in New York by said manufacturers, against payment by said agent of the agreed purchase price for account of the plaintiff herein, and said agent thereupon, in turn, endorsed in blank and delivered said shipping documents, in New York, to the agent of said Compañia General de Tabacos de Filipinas in New York, against payment in said city of the purchase price agreed upon in said order, amounting to $8,584, U. S. currency, or P17,168, Philippine currency. The above-mentioned shipment was made under an insurance policy taken out by and in the name of the manufacturers, The United States Steel Products Company of New York, payable, in case of loss, to the order of the United States Steel Products Company of New York, and said policy was endorsed and delivered to the plaintiff’s agent in New York, and to the agent of the Compañia General de Tabacos de Filipinas there, in the same way and at the same time as the other shipping documents, as above cited."cralaw virtua1aw library
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Like stipulations are made as to the Cebu Portland Cement Company, and Pampanga Sugar Mills for the year 1926, and the Benguet Consolidated Mining Company, and the Cebu Portland Cement Company for the year 1927. Then follows a stipulation of the alleged sales amounting to P83,506.31, in which as to the sales to Oliver Brothers, it is stipulated:
chanrob1es virtual 1aw libraryx x x
"III. (1) That of the orders listed in the preceding paragraph, that relating to Oliver Bros., Inc., was placed with and accepted by the plaintiff in its place of business in the City of Manila, and was executed by the plaintiff by causing its agent in the City of New York, the Honolulu Iron Works Company, to purchase the machinery and materials to fill the same for plaintiff’s account from manufacturers thereof in the United States of America. The manufacturers, acting under instructions from said plaintiff’s agent, shipped and forwarded said materials to Oliver Bros., Inc., in the City of New York, where the latter paid the purchase price, amounting to $38.50, U. S. currency, or P77, Philippine currency, to plaintiff’s agent there.
"(2) That the order of the Jolo Power Company was placed with and accepted by plaintiff in the latter’s place of business in Manila, Philippine Islands, and was executed by the plaintiff by causing its agent in the City of New York, the Honolulu Iron Works Company, to purchase the machinery and materials to fill the same for plaintiff’s account from manufacturers thereof in the United States of America. Plaintiff’s agent shipped said materials from the City of New York to the City of Manila, said plaintiff’s agent taking shipping documents front he carriers to the order of the plaintiff. The shipping documents, together with the insurance policy taken out by and in the name of plaintiff’s agent, payable, in case of loss, to the assured or order, and endorsed in blank by said assured, were forwarded by the plaintiff’s agent direct to the plaintiff at Manila."
cralaw virtua1aw libraryx x x
Like stipulations are made as to the sales to other parties aggregating to P83,506.31.
Exhibits A, B, C, and D, showing the correspondence as to the demands for payments, and the payment under protest, and the refusal to refund, are made part of the stipulation of facts.
From a judgment for the defendant, plaintiff appealed and claims that:
jgc:chanrobles.com.ph"The lower court erred in holding that the sales here in question are subject to the merchant’s sales tax, and in not ordering the refund of the tax paid by the plaintiff to the defendant."