Facts:

• Zacarias Corella is the appellant; the Administrator of Internal Revenue is the appellee.
• The case originated in Cagayan, with a decision from the Court of First Instance on June 20, 1940.
• Corella sold newspapers and magazines, including "La Vanguardia," "Tribune," "Herald," "Graphic," and "Banawag."
• He did not purchase these publications but received them from publishing houses in Manila for sale.
• Corella employed young boys to sell the publications, charging a fixed price set by the publishers.
• He earned a commission of three centavos (₱0.03) per copy sold, sharing half with the young sellers.
• Corella was assessed a tax of ₱124.24, which he paid under protest.
• The lower court classified him as a merchant under Article 1459 of the Revised Administrative Code, stating he was engaged in selling personal property.
• Corella contested this classification, claiming he was merely an agent or broker.

Issue:

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Ruling:

• The Supreme Court ruled in favor of Zacarias Corella, reversing the lower court's decision.
• The Court determined that Corella was not a merchant but an agent or broker.
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Ratio:

• The Court's reasoning focused on the nature of Corella's activities.
• Corella did not purchase the newspapers and magazines for resale; he acted solely as an agent for the publishing houses.
• He was required to return any unsold copies, indicating he did not assume ownership risks.
• His earnings were limited to a commission, reinforcing his role as an agent.
• Under Article 1459 of the Revised Administ...continue reading