THE ASIATIC PETROLEUM COMPANY (PHILIPPINE ISLANDS), LTD., PLAINTIFF AND APPELLANT, VS. WENCESLAO TRINIDAD, COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLEE.

The complaint alleges that the plaintiff is a
foreign corporation, duly licensed to transact business in the
Philippine Islands, domiciled in the City of Manila, and therein engaged
in the business of selling petroleum products. The defendant is the
duly appointed and acting Collector of Internal Revenue of the
Philippine Islands. The Asiatic Petroleum Company (Straits Settlements),
Limited, is a foreign corporation, affiliated with the plaintiff,
engaged in the business of selling and transporting petroleum products
in the Straits Settlements; that the Johnson-Pickett Rope Company is a
domestic corporation engaged in the business of manufacturing rope in
the City of Manila; that between October 1, 1917, to June 1, 1921, the
Asiatic Petroleum Company (Straits Settlements), Limited, purchased from
the Johnson-Pickett Rope Company rope of the total value of
P363,709.37, which rope from time to time, as required, was delivered by
the rope company upon instructions of the plaintiff on board vessels
owned or controlled by the Asiatic Petroleum Company (Straits
Settlements), Limited, plying between Manila and Singapore; that the
bills of lading and other shipping documents were signed by the
plaintiff; that it paid for the rope for and on account of the Asiatic
Petroleum Company (Straits Settlements), Limited; that the rope company
paid the 1 per cent merchant’s tax provided for under section 1459 of
Act No. 2711; that about July 25, 1921, the defendant made a demand upon
the plaintiff for the payment of P3,637.09, together with the penalty
of ?909.27, claiming that it was liable as a merchant for a sales tax
under the provisions of section 1459; that to protect its interest and
to avoid further penalties, plaintiff paid the amount under protest, and
prays judgment for P4,546.36, with interest and costs. For answer, the
defendant denies all of the material allegations of the complaint, and,
as a special defense, alleges that the plaintiff is a merchant, and that
it consigned rope abroad to the value of P363,709.37, and that the tax
was collected and paid under protest, and prays that the complaint be
dismissed.

The parties made the following agreed statement of facts:

“The parties hereto have agreed, and do agree, that the following
facts shall be considered as having been proven in the above cause:

“I. Plaintiff is a foreign corporation, duly licensed to transact
business in the Philippine Islands, domiciled therein in the City of
Manila, and engaged therein in the business of selling petroleum
products. Defendant is the duly appointed and acting Collector of
Internal Revenue of the Philippine Islands. The Asiatic Petroleum
Company (Straits Settlements), Limited, is a foreign corporation,
affiliated with the plaintiff, engaged in the business of selling and
transporting petroleum products in the Straits Settlements. The
Johnson-Pickett Rope Company is a corporation organized under the laws
of the Philippine Islands, and engaged in the business of manufacturing
rope in the City of Manila.

“II. During the period from October 1, 1917, to June 1, 1921, The
Asiatic Petroleum Company (Straits Settlements), Limited, purchased from
the said Johnson-Pickett Rope Company rope of the total* value of three
hundred sixty-three thousand seven hundred and nine pesos and
thirty-seven centavos (P363,709.37), which said rope was from time to
time, as required by the said The Asiatic Petroleum Company (Straits
Settlements), Limited, delivered by the said Johnson-Pickett Rope
Company, upon the instruction of the plaintiff, on board vessels owned
or controlled by said The Asiatic Petroleum Company (Straits
Settlements), Limited, plying between Manila and Singapore. The bills of
lading and other shipping documents covering the said shipments were
signed by the plaintiff, and plaintiff paid said manufacturers for the
said rope for the account of said The Asiatic Petroleum Company (Straits
Settlements), Limited.

“III. The said Johnson-Pickett Rope Company paid to defendant the one
per cent merchant’s tax levied on said sales by virtue of section 1459
of Act No. 2711.

“IV. On or about the 25th day of July, 1921, the defendant, under the
alleged authority of section 1459 of Act No. 2711, made demand upon
plaintiff for the payment of a tax of three thousand six hundred and
thirty-seven pesos and nine centavos (P3,637.09) on the sales and
shipments of rope made as set out in paragraph II hereof, together with a
penalty of nine hundred and nine pesos and twenty-seven centavos
(P909.27) for delay in payment, a total of four thousand five hundred
and forty-six pesos and thirty- six centavos (P4,546.36).

“V. Plaintiff, on or about the 29th day of July, 1921, to avoid
further penalties and forfeitures for non-payment, paid to defendant,
under written protest, the said sum of four thousand five hundred and
forty-six pesos and thirty-six centavos (P4,546.36) demanded by
defendant. The defendant on or about the 3d day of August, 1921,
overruled and denied plaintiff’s protest, and refused, and still refuses
to return the said sum of four thousand five hundred and forty-six
pesos and thirty-six centavos (P4,546.36) to the plaintiff.”

Upon which the case was tried and submitted, and judgment rendered in
favor of the defendant, from which the plaintiff appeals, claiming that
“the trial court erred in holding that the shipments of rope were
consignments abroad made by the plaintiff,” in rendering judgment for
the defendant, and in overruling plaintiff’s motion for a new trial.

JOHNS, J.:

The question involved is the construction of section 1459 of the Administrative Code, which, among other things, provides:

“Percentage tax on merchants’ sales.—All merchants not
herein specifically exempted shall pay a tax of one per centum on the
gross value in money of the commodities, goods, wares, and merchandise
sold, bartered, exchanged, or consigned abroad by them, such tax to be
based on the actual selling price or value of the things in question at
the time they are disposed of or consigned. * * *

” ‘Merchant,’ as here used, means a person engaged in the sale,
barter, or exchange of personal property of whatever character. * * *”

The agreed statement of facts recites that the plaintiff is a foreign
corporation, domiciled in the City of Manila, “and engaged there in the
business of selling petroleum products.” That “the Asiatic Petroleum
Company (Straits Settlements), Limited, is a foreign corporation,
affiliated with the plaintiff, engaged in the business of selling and
transporting petroleum products in the Straits Settlements.” That
between October 1, 1917, to June 1, 1921, the Asiatic Petroleum Company
(Straits Settlements), Limited, purchased from the rope company the rope
in question, which, upon the instructions of plaintiff, was delivered
by the rope company on board the vessels owned or controlled by the
Asiatic Petroleum Company (Straits Settlements), Limited, plying between
Manila and Singapore. That “the bills of lading and other shipping
documents covering the said shipment were signed by the plaintiff, and
it paid the manufacturers for the rope for the account of said The
Asiatic Petroleum Company (Straits Settlements), Limited.”

Section 1459 is entitled “Percentage tax on merchants’ sales,” and
specifically provides that all merchants not otherwise exempt shall pay a
tax on all goods, wares, and merchandise sold, bartered, exchanged, or
consigned abroad by them. It also provides that “merchant,” as here
used, means a person engaged in the sale, barter, or exchange of
personal property of whatever character.

The complaint alleges and the agreed statement of facts admits that
the plaintiff is engaged in the selling of petroleum products in the
Philippine Islands. Hence, it must follow that the plaintiff is a
merchant and is doing business as a merchant within the Philippine
Islands, as the word is defined by section 1459. It is also stipulated
that the bills of lading and other shipping documents of the rope were
signed by the plaintiff, which paid the manufacturers of the rope for
and on account of the Asiatic Petroleum Company (Straits Settlements),
Limited, and section 1459 provides for the payment of a “percentage tax
on merchants’ sales” of one per cent, by all merchants on the gross
value in money or any goods, wares, and merchandise “sold, bartered,
exchanged or consigned abroad by them.” The plaintiff, being a merchant,
as the word is defined in the Act, and having consigned the rope abroad
and signed the bills of lading and other shipping documents, it must
follow that it is liable for the tax. The Act defines the word
“merchant,’ and when the fact is once established that a person is a
merchant within the meaning of the Act, he is liable for the merchant’s
tax for any goods, wares, and merchandise sold, bartered, exchanged, or
consigned abroad by him. The plaintiff, having alleged and admitted that
it is engaged in the selling of petroleum within the Philippine
Islands, it is a merchant within the meaning of the word as defined in
the Act, and the fact that it is a merchant makes it liable for the tax
in question. The judgment of the lower court is affirmed, with costs. So
ordered.

Araullo, C. J., Street, Malcolm, Avancena, and Romualdez, JJ., concur.

CONCURRING

OSTRAND, J.:

I concur. There are, however, certain statements in the decision of
the court which might possibly lead to the conclusion that only the
merchants who sell their wares in the Philippine Islands are merchants
within the meaning of section 1459 of the Administrative Code, and I
therefore feel justified in drawing attention to the fact that such is
not the view of the majority of the members of the court, if I have
correctly interpreted their votes.

The statute makes no distinction between local and foreign merchants. If
a person engages in “the sale, barter or exchange of personal
property,” he is a merchant as the term is defined in the section
mentioned and there is not a word in the statute to indicate that in
order to be considered such a merchant he must sell, barter, or exchange
within the Philippine Islands. But if the merchant, be he
foreign or be he local, sells merchandise in the Philippine Islands, he
must pay the percentage tax on the sales so made, and if he consigns
merchandise abroad from the Philippine Islands he must pay the
percentage tax on the consignment. Neither the local nor the foreign
merchant is required to pay the tax on consignments made abroad nor on
sales there consummated. Such is the plain language of the statute and
we can only give it a different interpretation by reading into it
non-existent provisions, or by doing violence to the language.

DISSENTING

JOHNSON, J.:

The judgment appealed from should be revoked. Laws affecting commerce
should be construed so as to aid and not hinder the commerce of the
country.