INCHAUSTI & CO., Plaintiff-Appellant,
ELLIS CROMWELL, Collector of Internal Revenue, Defendant-Appellee.
G.R. No. 6584. October 16, 1911.
Inchausti & Co. is engaged in the business of buying and selling at wholesale hemp, both for its own account and on commission. The operation of of baling hemp is designated among merchants by the word ‘prensaje.’ Inchausti, in all its sales of hemp, quoted the price to the buyer at so much per picul, no mention being made of baling. The company in accordance with the custom mentioned in paragraph V hereof, collected and received, under the denomination of ‘prensaje,’ from purchasers of hemp sold by the said firm for its own account, in addition to the price expressly agreed upon for the said hemp, sums aggregating P380,124.35 and collected for the account of the owners of hemp sold by the plaintiff firm in Manila on commission, and under the said denomination of ‘prensaje,’ in addition to the price expressly agreed upon for said hemp, sums aggregating P31,080. Inchausti has always paid to Ellis Cromwell, in the office of the Collector of Internal Revenue the tax collectible upon the selling price expressly agreed upon for all hemp sold but has not, until compelled to do so, paid the said tax upon sums received from the purchaser of such hemp under the denomination of ‘prensaje.’ Ellis Cromwell, in his capacity as Collector of Internal Revenue, made demand in writing upon the plaintiff firm for the payment within the period of five (5) days of the sum of P1,370.68, the amount collected from purchasers of hemp under the denomination of ‘prensaje.’ Inchausti paid for such demand under protest but Cromwell still refuses to return such amount.
The contention of the defendant was that the said charge made under the denomination of “prensaje” is in truth and in fact a part of the gross value of the hemp sold and of its actual selling price, and that therefore the tax imposed by section 139 of Act No. 1189 lawfully accrued on said sums, that the collection thereof was lawfully and properly made and that therefore the plaintiff is not entitled to recover back said sum or any part thereof; and that the defendant should have judgment against plaintiff for his costs.
1. Whether the price for the contract of sale should include the charge made under the denomination of “prensaje”
2. Whether there exists a contract of sale.
The Supreme Court stated that there can be no question that, if the value of the hemp were not augmented to the amount of P1.75 per bale by said operation, the purchaser would not pay that sum. If one buys a bale of hemp at a stipulated price of P20, well knowing that there is an agreement on his part, express or implied, to pay an additional amount of P1.75 for that bale, he considers the bale of hemp worth P21.75. It is agreed, as we have before stated, that hemp is sold in bales. Therefore, baling is performed before the sale. The purchaser of hemp owes to the seller nothing whatever by reason of their contract except the value of the hemp delivered. That value, that sum which the purchaser pays to the vendee, is the true selling price of the hemp, and every item which enters into such price is a part of such selling price. By force of the custom prevailing among hemp dealers in the Philippine Islands, a purchaser of hemp in the market, unless he expressly stipulates that it shall be delivered to him in loose form, obligates himself to purchase and pay for baled hemp. Whether or not such agreement is express or implied, whether it is actual or tacit, it has the same force. After such an agreement has once been made by the purchaser, he has no right to insist thereafter that the seller shall furnish him with unbaled hemp. It is undoubted that the vendees, in the sales referred to in the case at bar, would have had no right, after having made their contracts, to insist on the delivery of loose hemp with the purpose in view themselves to perform the baling and thus save 75 centavos per bale. It is unquestioned that the seller, the plaintiff, would have stood upon his original contract of sale, that is, the obligation to deliver baled hemp, and would have forced his vendees to accept baled hemp, he himself retaining among his own profits those which accrued from the process of baling. The Court stated that the distinction between a contract of sale and one for work, labor, and materials, is tested by the inquiry whether the thing transferred is one not in existence and which would never have existed but for the order of the party desiring to acquire it, or a thing which would have existed and been the subject of sale to some other person, even if the order had not been given. Further, when a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor. It is otherwise where the article would not have been made but for the agreement; and where the article ordered by the purchase is exactly such as the vendor makes and keeps on hand for sale to anyone, and no change or modification of it is made at the vendee’s request, it is a contract of sale even though it be entirely made after and in consequence of the vendee’s order for it. Furthermore, the Court defined “price.” The word “price” signifies the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration f or the fixing of the price put to the debit of the vendee and agreed to by him.