SIMEON ROQUE, PLAINTIFF AND APPELLANT, VS. JAMES J. RAFFERTY, AS COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLEE.

Paragraph 2 of section 106 of Act No. 2339 provides, among other things, that
“whenever the amount of raw materials received into any factory exceeds the
amount of manufactured or partially manufactured product on hand and lawfully
removed from the factory, plus waste removed or destroyed, and a reasonable
allowance for unavoidable loss in manufacture, the Collector of Internal Revenue
may assess and collect the tax due on the products which should have been
produced from the excess.”

The plaintiff for sometime prior to the commencement of the present action
was the owner of a tobacco factory in Betis, Guagua, in the Province of
Pampanga, P. I., and from time to time purchased large quantities of tobacco for
the purpose of manufacturing the same into chewing tobacco and cigarettes. When
the raw material was purchased, it was placed in a bodega within the
factory, and was removed therefrom as it was necessary for the purpose of
manufacturing it into chewing tobacco and cigarettes. From time to time a
representative of the Collector of Internal Revenue, for the purpose of
collecting the tax due on the manufactured product in accordance with section 69
of said Act No. 2339, took an account of the amount of raw material on hand
which had not been manufactured as above indicated. In the month of December,
1915, said representative made an invoice of the raw material purchased by the
plaintiff and the amount of material manufactured out of the same; found that
there was a difference, after making due allowance for unavoidable loss in
manufacture, waste, etc., of 1,797 kilos; and that the tax due on said amount,
had the same been manufactured, was the sum of P1,034.64. A demand for the
payment of said sum (P1,034.64) was made upon the plaintiff. He paid said amount
under protest, and now seeks to recover the same upon the theory that it had
been illegally collected.

The lower court found that the plaintiff had purchased 1,797 kilos of tobacco
more than he had accounted for; that the amount of tax which should have been
paid on said amount was P1,034.64; and that, therefore, the tax had been legally
collected and rendered a judgment dismissing the action, without any finding as
to costs. If that finding is in accordance with the facts, then the judgment of
the lower court should be affirmed.

In making the invoice the defendant allowed a loss of 2 per cent in the
drying of the tobacco. The appellant claims that that allowance was not
sufficient. The record contains no proof showing that 2 per cent was not a
reasonable allowance for that purpose. The appellant further attempts to show
that if there was a loss or shortage, he was not responsible for the same, for
the reason that a representative of the defendant was in constant charge of the
bodega in which the raw material was placed from time to time as it was
purchased. He further asserts that the representative of the defendant had the
only key for said bodega, and that no person could remove raw material
therefrom without the consent of said representative. The fact is that the
bodega was under the charge of a representative of the defendant; that
he had, so far as was known, the only key for the lock on a door leading into
the bodega. The proof shows, however, that the lock was an ordinary
lock; that the key was an ordinary key purchased in one of the tiendas
in the place where the bodega was located. The proof further shows,
however that it was possible for the raw material to be taken out of said
bodega without the consent or knowledge of the representative of the
defendant. That fact, taken in relation with Exhibit F which shows that upon the
taking of other invoices in said bodega, the plaintiff had been short
several times before in the quantity of tobacco which he should have had on
hand, makes the conclusion irresistible that the plaintiff is responsible for
the present shortage. Some of the shortages which were found existing on other
occasions were much larger than the shortage found to exist at the time
complained of in the present action.

Section 106 requires the manufacturers to keep books prescribed by the
Collector of Internal Revenue. Said books showed that the plaintiff should have
had on hand 33,267 kilos of raw material at the time of the invoice had he
manufactured none of said material. Said books further show that he manufactured
30,163 kilos. The Collector of Internal Revenue allowed 2 per cent for
unavoidable loss, or the amount of 1,307 kilos, making a total of 31,470 kilos.
The difference, therefore, between what he should have had and what he actually
had was the amount of 1,797 kilos, which was the shortage the defendant found to
exist at the time of the last invoice.

After a careful examination of the evidence adduced we are of the opinion
that none of the errors assigned were committed.

Therefore, the judgment of the lower court is hereby affirmed, with costs. So
ordered.

Arellano, C. J., Carson, Araullo, Street, and Malcolm, JJ.,
concur.