IRINEO FACUNDO, PLAINTIFF AND APPELLANT, VS. JUAN POSADAS, JR., ACTING COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLEE.

After
formal pleas, plaintiff alleges that on July 21, 1923, the defendant,
as Acting Collector of Internal Revenue, unlawfully assessed and
demanded of him P1,519.26, claiming that it was a merchant’s sales tax
and surcharge, which plaintiff should pay on certain sales alleged to
have been made by the plaintiff to W. Kauffeldt for the second quarter
of the year 1923. Plaintiff contends that no sales were made by him to
Kauffeldt at any time, and that he was merely an employee of Kauffeldt,
acting as manager of his provincial agents, with an annual salary of
P7,500. That on January 21, 1924, plaintiff paid the amount under
protest. That the defendant refused to return the money and that the
assessment was illegal, and that the payment should be refunded, for
which plaintiff prays a corresponding judgment.

For answer,
the defendant admits the receipt of the money and alleges that during
the year 1923, the plaintiff acted as a commission merchant with an
establishment of his own for the keeping and disposal of goods, in
which sales or exchanges were made, and in disposing of the copra to
the amount of P81,025.03 in favor of Kauffeldt & Company. That on
such amount the defendant levied, assessed and collected the P1,519.26
in question, which was paid under protest. Wherefore, defendant prays
that the complaint be dismissed, with costs.

The case was tried upon the following agreed statement of facts made on July 19, 1924:

“Now
come the parties to the above entitled case, and hereby submit same to
this Honorable Court for decision on the following agreed statement of
facts:

“I. That the plaintiff is of legal age and a
resident of the City of Manila; and the defendant is the duly
appointed, qualified and acting Collector of Internal Revenue of the
Philippine Islands;

“II. That the plaintiff at all of the
times referred to in the complaint herein and for sometime previous
thereto was, and now is, a duly licensed commission merchant and
commercial broker;

“III. That on June 7, 1923, the
plaintiff was appointed by W. Kauffeldt manager of his copra purchasing
agencies, the letter of appointment to that effect containing the
following statements: ‘Your duties will be to supervise and manage all
the provincial agencies according to my instructions. You are to take
full and complete charge of all the accounts which my agencies may
render in delivering their copra here in Manila.’

“IV.
That all the employees of the above mentioned provincial agencies have
been appointed by the plaintiff with the consent and by authority from
W. Kauffeldt. Said employees received their salaries from W. Kauffeldt
through the plaintiff, and are responsible to said plaintiff as
representative of said W. Kauffeldt. Said employees received
instructions from the plaintiff as representative of said W. Kauffeldt
who defrayed all the expenses of storage and delivery of the copra
purchased by the agencies. The provincial agencies secured advances
from W. Kauffeldt thru the plaintiff for those purchases and the
plaintiff supervised the weighing and checking of all copra delivered
directly to the warehouse of said W. Kauffeldt. The latter credited the
plaintiff with the value of copra received in Kauffeldt’s warehouse and
debited plaintiff with the money given to him (by Kauffeldt) for
distribution among the provincial agencies. The copra buyers dealt with
the plaintiff as representative of Kauffeldt, and they have been
instructed by the plaintiff to buy copra for and in the name of W.
Kauffeldt and to deliver same direct to the latter in Manila,” except
as to paragraph V, which reads in part as follows:

“During
the second quarter of the year 1923, W. Kauffeldt, thru the plaintiff
by means of the copra buyers specified below, bought copra, the amount
and values of which are as follows:”

A
statement is then made of nine different names as buyers and of their
respective towns and provinces, and the number of sacks of copra bought
and of their value, amounting to P61,025.03.

“VI.
That the defendant, Collector of Internal Revenue, on July 21, 1923,
assessed, levied, and demanded from the plaintiff the sum of one
thousand five hundred nineteen pesos and twenty-six centavos
(P1,519.26) as internal revenue taxes—together with 25 per cent
surcharge for delay in payment—on the transactions specified in
paragraph V hereof, which sum the plaintiff on January 21, 1924, paid
to the defendant under protest.

“VII. The plaintiff has
demanded from the defendant the refund of the amount mentioned in the
preceding paragraph, but the defendant refused and still refuses to
make the refund.

“VIII. That, with the approval of the
court, it is hereby agreed that the plaintiff shall have fifteen days
from the filing of this agreed statement of facts within which to file
his memorandum, and the defendant likewise fifteen days after receiving
copy thereof within which to file his reply.”

And the following supplemental statement made July 23, 1924:

“I.
That for discharging the duties set forth in paragraphs III and IV of
the principal agreed statement of facts, the plaintiff was paid by W.
Kauffeldt an annual salary of P7,500, payable annually, but with the
privilege of withdrawing a portion thereof at any time of the year.

“II.
That W. Kauffeldt has sold to other persons the copra mentioned in
paragraph V of the principal agreed statement of facts and duly paid
the internal revenue percentage tax on such sale.

“It is
therefore prayed that the additional facts hereinabove stated be taken
into consideration by this Honorable Court in deciding the above
entitled case.”

August 25, 1924, judgment
was rendered for the plaintiff. August 27, 1924, the defendant filed a
motion for a reconsideration. On September 2, 1924, the court rendered
judgment for the defendant. September 22, 1924, plaintiff’s motion for
a new trial was overruled, resulting in this appeal, in which plaintiff
makes the following assignment of errors:

“I.
The lower court erred in not finding that the plaintiff was a mere
employee of W. Kauffeldt and was not acting as a commission merchant or
commercial broker in effecting the transactions between W. Kauffeldt
and his provincial agencies.

“II. The lower court erred in
finding that the plaintiff sold to W. Kauffeldt the copra for which
sale the tax in question was paid under protest.

“III.
The lower court erred in finding that the plaintiff had an
establishment for the keeping and disposal of the copra of which sales
were effected.

“IV. The lower court erred in not finding
that W. Kauffeldt was the sole possessor and user of the establishment
where the copra, bought by the provincial agents under the supervision
of the plaintiff, was kept and disposed of.”

JOHNS, J.:

It will be noted that it is stipulated that on June 7, 1923, the
plaintiff was appointed by Kauffeldt as manager of his copra purchasing
agents as follows:

“Your duties will be to
supervise and manage all the provincial agencies according to my
instructions. You are to take full and complete charge of all the
accounts which my agencies may render in delivering their copra here in
Manila.”

That all of the employees of such
provincial agencies were appointed by the plaintiff with the consent
and authority of Kauffeldt, and that they received their salaries from
Kauffeldt and are responsible to plaintiff as the representative of
Kauffeldt. That such employees received their instructions from the
plaintiff as representative of Kauffeldt “who defrayed all the expenses
of storage and delivery of the copra purchased by the agencies.” That
they secured advances from Kauffeldt, through the plaintiff, for any
purchases which they made, and that the plaintiff “supervised the
weighing and checking of all copra delivered directly to the warehouse
of said W. Kauffeldt.” That Kauffeldt credited the plaintiff with the
value of the copra received in Kauffeldt’s warehouse, and charged
plaintiff with the money given to him “for distribution among the
provincial agencies.” The copra buyers dealt with the plaintiff as
representative of Kauffeldt, and they were instructed by the plaintiff
to buy copra for and in the name of W. Kauffeldt and “to deliver same
direct to the latter in Manila.”

It is also stipulated that
the plaintiff was paid by Kauffeldt an annual salary of P7,500, and
that Kauffeldt has sold the copra so purchased, and that he has paid
“the internal revenue percentage tax on such sale.”

Under
such stipulated facts, it clearly appears that, as to all of the
transactions in question, the plaintiff was acting as the agent and
representative of Kauffeldt. In legal effect that Kauffeldt had
provincial agencies to purchase copra throughout the islands, and that
when the copra was purchased by such agencies, it was shipped direct to
and placed in, Kauffeldt’s warehouse. That in truth and in fact, the
plaintiff never purchased any copra. That his duties were confined and
limited to the supervision and control of Kauffeldt’s agents, and to
the supervision of the weighing and checking of the copra purchased by
such provincial agencies, all of which was “delivered directly to the
warehouse of said W. Kauffeldt.” All of the copra was purchased “for
and in the name of W. Kauffeldt,” and delivered directly to him in
Manila. In other words, all the copra in question was bought in the
name of Kauffeldt and paid for with his money, and was shipped direct
to him in Manila, and was stored in his warehouse and in his own name.
All that plaintiff did was to supervise the actions and conduct of the
provincial agencies of Kauffeldt and to supervise the weighing and
checking of the copra and to pay for it with Kauffeldt’s money, for
which he received an annual salary of P7,500 to be paid for by
Kauffeldt.

In the final analysis, in all of such
transactions, the plaintiff was acting for, and representing, Kauffeldt
as his agent, and plaintiff never bought or sold any copra to Kauffeldt
or any one else. All parties knew and understood that in all of such
transactions, the plaintiff was acting for, and representing Kauffeldt,
the purchaser of the copra from the provincial agencies and the real
party in interest, and it is stipulated that the copra was “delivered
directly to the warehouse of said W. Kauffeldt.”

The lower court changed its decision on the strength of the opinion of this court in Lee Chan Lam vs. Trinidad, G. R. No. 21590.^[1]
There is a marked legal distinction between the facts of the two cases.
Here, it is stipulated that the copra purchased by the provincial
agents for Kauffeldt was delivered directly to his warehouse, and there
is no evidence that the plaintiff had an establishment of his own “for
the keeping and disposal of goods of which sales or exchanges are
effected,” or that plaintiff kept or disposed of any goods or that he
effected any exchanges.

For aught that appears in the
record, it was an ordinary business transaction in which the plaintiff
acted for, and represented, Kauffeldt and where all of the copra
purchased, through the provincial agencies, was delivered directly to
Kauffeldt’s warehouse and there is no claim that there was any sham or
pretense in their dealings with each other. Neither is there any
evidence that in any of such dealings, the plaintiff was acting as a
commission merchant.

The judgment of the lower court is
reversed, and one will be entered here for the plaintiff as prayed for
in his complaint, without costs. So ordered.

Johnson, Malcolm, Villamor, Ostrand, and Romualdez, JJ., concur.