G.R. No. 201716 - Abundo Sr. vs. Commission on Elections

This is an appeal from a decision of the Court of First Instance of Manila.
The case involves MUNOZ & CO. (plaintiff company/appellee) versus John S. Hord, Collector of Internal Revenue (defendant/appellant).
The action arose from the payment, under protest, of internal-revenue taxes demanded by the Collector under sections 139 and 140 of Act No. 1189.

Several provincial dealers in agricultural products shipped produce (including hemp, copra, and other commodities) on commission to the plaintiff company.
The plaintiff, acting as agent and on commission, sold these agricultural products to various exporters for a total value of P155,409; these goods were subsequently exported out of the Philippine Islands.

Acted as agent for certain provincial correspondents by receiving consignments of agricultural products on commission.
Purchased goods, wares, and merchandise for these correspondents amounting to P7,917.
Shipped the purchased items to the intended provincial recipients, charging a commission intended merely to reimburse the loss of time and trouble in facilitating the transactions.

On demand by the Collector of Internal Revenue, the plaintiff paid, under protest, a tax computed as one-third of one per cent on:

The total value of the agricultural products sold for commission and exported (P155,409).
The total value of the purchases made for provincial correspondents (P7,917).

The tax was imposed under the authority of sections 139 and 140 of Act No. 1189.

The trial court ruled in favor of the plaintiff company.
It held that there was no legal authority under the cited provisions of Act No. 1189 to require payment of taxes on the transactions in question.
Judgment was entered for the plaintiff for the recovery of the sums paid and the costs of the action.

The trial court erred in holding that goods sold by the plaintiff to exporters were not “sold for domestic consumption” as defined in section 139, thereby making the tax unauthorized.
The court erred in holding that the purchase of merchandise for others, coupled with a commission for facilitating shipment, did not render the plaintiff a merchant under section 140, thus justifying the tax imposition.
The trial court’s judgment in favor of the plaintiff was erroneous.
The motion to set aside the judgment and grant a new trial, on the ground that the judgment was contrary to law and the evidence insufficient, was wrongly denied.

The characterization of the taxes as occupation taxes not imposed directly on goods.
The contention that every sale within the Philippine Islands, irrespective of subsequent exportation, constitutes a sale “for domestic consumption.”
The assertion that the activities of purchasing on commission effectively amounted to a sale, thereby rendering the plaintiff a merchant subject to the tax.

Appellant further referenced the specific language and exempted classes contained in Act No. 1189 (sections 139, 140, and 142).

Whether the sale of goods by the plaintiff company to exporters, evidenced by signed certificates and actual exportation, may be treated as a sale for domestic consumption under section 139 of Act No. 1189.
Determining the legislative intent of the export limitation, particularly its effect on taxing transactions where goods were intended for export but participated in an initial commercial transaction within the islands.

Whether the plaintiff, acting as a commission merchant in purchasing and shipping goods on behalf of provincial correspondents, qualifies as a “merchant” under section 140.
Whether such commission-based transactions, which essentially are sales on the plaintiff company’s own account, are subject to the imposed tax.

Whether the taxes imposed under sections 139 and 140 of Act No. 1189 are constitutionally and legally valid given that the goods, though ultimately exported, were subjected to domestic commercial transactions prior to export.
Whether the imposition of the tax as applied to multi-stage transactions (i.e., successive sales, barters, or exchanges) results in a double or multiple taxation of a single commodity.

Whether the trial court erred in the factual findings and in interpreting the relevant statutory provisions.
Whether the evidence was sufficient to justify the trial court’s decision favoring the plaintiff company, and if not, whether a new trial should be granted.