Facts:

The case involves The Asiatic Petroleum Company (Philippine Islands), Ltd. as the plaintiff and appellant, and Wenceslao Trinidad, the Collector of Internal Revenue, as the defendant and appellee. The events leading to the case took place between October 1, 1917, and June 1, 1921, in the City of Manila, where the plaintiff, a foreign corporation duly licensed to operate in the Philippines, was engaged in selling petroleum products. The Asiatic Petroleum Company (Straits Settlements), Limited, an affiliated foreign corporation, was involved in selling and transporting petroleum products in the Straits Settlements. During the specified period, the Asiatic Petroleum Company (Straits Settlements), Limited purchased rope valued at P363,709.37 from the Johnson-Pickett Rope Company, a domestic corporation. The rope was delivered upon the plaintiff's instructions to vessels owned or controlled by the Asiatic Petroleum Company (Straits Settlements), Limited, which operated between...

Facts:

1. Parties Involved:

   • Plaintiff: The Asiatic Petroleum Company (Philippine Islands), Ltd., a foreign corporation licensed to transact business in the Philippines, engaged in selling petroleum products in Manila.
   • Defendant: Wenceslao Trinidad, the Collector of Internal Revenue of the Philippine Islands.
   • Affiliated Entity: The Asiatic Petroleum Company (Straits Settlements), Ltd., a foreign corporation engaged in selling and transporting petroleum products in the Straits Settlements.
   • Other Entity: Johnson-Pickett Rope Company, a domestic corporation manufacturing rope in Manila.

2. Transactions:

   • Between October 1, 1917, and June 1, 1921, the Asiatic Petroleum Company (Straits Settlements), Ltd., purchased rope worth P363,709.37 from the Johnson-Pickett Rope Company.
   • The rope was delivered on vessels owned or controlled by the Asiatic Petroleum Company (Straits Settlements), Ltd., plying between Manila and Singapore.
   • The plaintiff signed the bills of lading and other shipping documents and paid for the rope on behalf of the Asiatic Petroleum Company (Straits Settlements), Ltd.

3. Taxation:

   • The Johnson-Pickett Rope Company paid a 1% merchant's tax under Section 1459 of Act No. 2711.
   • On July 25, 1921, the defendant demanded P3,637.09 (1% tax) and a penalty of P909.27 from the plaintiff, claiming the plaintiff was liable as a merchant for the sales tax.
   • The plaintiff paid the amount under protest to avoid further penalties.

4. Agreed Statement of Facts:

   • The plaintiff is a merchant engaged in selling petroleum products in the Philippines.
   • The plaintiff signed shipping documents and paid for the rope on behalf of the Asiatic Petroleum Company (Straits Settlements), Ltd.
   • The defendant collected the tax under protest, and the plaintiff sought a refund.

Issue:

1. Whether the plaintiff, as a merchant, is liable for the 1% sales tax under Section 1459 of Act No. 2711 for the consignment of rope abroad.
2. Whether the plaintiff's actions (signing bills of lading and paying for the rope) constitute consignment abroad, making it liable for the tax.

Ruling:

The Supreme Court ruled in favor of the defendant, affirming the lower court's decision. The plaintiff, being a merchant engaged in selling petroleum products in the Philippines, was liable for the 1% tax on the consignment of rope abroad under Section 1459 of Act No. 2711.

Ratio:

1. Definition of "Merchant":

   • Section 1459 defines a "merchant" as a person engaged in the sale, barter, or exchange of personal property. The plaintiff, being engaged in selling petroleum products, qualifies as a merchant under this definition.

2. Tax Liability:

   • The law imposes a 1% tax on the gross value of goods sold, bartered, exchanged, or consigned abroad by merchants.
   • The plaintiff's actions (signing bills of lading, paying for the rope, and facilitating its shipment) constituted consignment abroad, making it liable for the tax.

3. No Exemption for Affiliated Entities:

   • The fact that the rope was purchased by an affiliated entity (Asiatic Petroleum Company (Straits Settlements), Ltd.) does not exempt the plaintiff from tax liability, as it acted as the consignor in the transaction.

4. Statutory Interpretation:

   • The statute does not distinguish between local and foreign merchants. Any person engaged in the sale, barter, or exchange of personal property is subject to the tax if they consign goods abroad.

5. Concurring Opinion:

   • Justice Ostrand clarified that the statute applies to all merchants, regardless of whether they sell within or outside the Philippines. The tax applies to consignments made abroad from the Philippines.

6. Dissenting Opinion:

   • Justice Johnson dissented, arguing that laws affecting commerce should be construed to aid, not hinder, commerce. However, the majority upheld the plain language of the statute.