Philippine Button Corporation v. Jr

VILLA-REAL, J.:

This is an taken by the plaintiff Philippine Button Corporation from the judgment of the Court of First Instance of Manila absolving the defendant, Juan Posadas, Jr., Collector of Internal Revenue of the Philippine Islands, from the complaint in which the plaintiff corporation prayed that the defendant be ordered to reimburse it in the sum of P14,400.10 paid by it under protest as internal revenue tax on several button shipments made by its local manager to its office in New York, United States of America, on the ground that said corporation is not a "merchant" within the meaning of the law, and that the shipment of said merchandise is not a consignment. The appellant company assigns the following alleged errors as committed by the lower court in the judgment appealed from, to wit: (1) The lower court erred in admitting the second amended answer of May 4, 1926; (2) the lower court erred in dismissing plaintiffs complaint and in failing to render judgment in favor of plaintiff and against defendants as prayed for in plaintiff' complaint.

The necessary and relevant facts for the solution of the questions raised in the present appeal appear in the following agreement: Come now plaintiff and defendant, by their respective undersigned attorneys, and hereby stipulate that the facts in the above-entitled case are as follows: 1. That the plaintiff is a foreign corporation duly organized and existing under and by virtue of the laws of the State of New York, United States of America, duly licensed to the business in the Philippine Islands, maintaining in the City of Manila a branch and factory in charge of its resident manager, John L. Headington, and that defendant, Juan Posadas, Jr., is now and at all times mentioned herein was the duly appointed, qualified and acting Collector of Internal Revenue for the Philippine Islands; 2. That plaintiff is now and at all times mentioned herein was a holder of a merchants' privilege tax-receipt; 3.

That plaintiff is engaged in the Philippine Islands during all the times mentioned in the complaint until the present time, in purchasing, by its resident manager, raw trochas, shells, manufacturing said sells into buttons in its Manila factory, and after the finished buttons are manufactured, said buttons are by the plaintiffs resident manager shipped to plaintiff in New York, where they are sold or otherwise disposed of by the plaintiff; 4. That plaintiff, at its factory in Manila, employs several hundred Filipino workmen and Filipino workwomen and has there set up machinery and paraphernalia for the conversion of raw shells into buttons, plaintiff's investment in plant and machinery being several hundred thousand pesos and its monthly payroll amounting to several thousand pesos; 5. That the defendant, in his capacity as Collector of Internal Revenue and under the pretend authority of section 1459 of the Administrative Code, 1917, demanded and collected from the plaintiff a tax of one per centum (1%) of the gross value of the buttons directly shipped and sent by the plaintiff in Manila, through its resident manager, John L. Headington, to its head office in New York City, United States of America, from the year 1922 up to and until the first quarter of the year 1923; and the plaintiff, through its head resident manager, John L.

Headington, involuntarily and to avoid the exaction of penalties for non-payment, paid to the defendant Juan Posadas, Jr., as Collector of Internal Revenue, under protest, on the ground, among others, that plaintiff does not come within the provisions of section 1459 of the Administrative Code of 1917, and, therefore, is not subject to the tax levied thereunder, taxes in the amounts and on the dates following: Date Quarter and year Amount paid Feb. 15, 1923 Fourth quarter, 1922 ............... P788.24 Apr.

18, 1923 First Quarter, 1923 .................. 895.44 6. That the defendant, in his capacity as Collector of Internal Revenue and under the presented authority of section 1459, of the Administrative Code of 1917, and Act No. 3065, in connection with Act No. 3183, demanded and collected from the plaintiff a tax of one and one-half per centum (1 ½ %) on the gross value of the buttons directly shipped and sent by the plaintiff in Manila, through its resident manager, John L. Headington, to its head office in New York City, United States of America, from the second quarter of the year 1923 up to and until the first quarter of the year 1925; and the plaintiff, through its said resident manager, John L. Headington, involuntarily and to avoid the exaction of penalties for non-payment, paid to the defendant, Juan Posadas, Jr., as Collector of Internal Revenue, under protest, on the ground, among others, the plaintiff does not come within the provisions of Act No. 3065, as amended by Act No. 3183, and, therefore, is not subject to the tax levied thereunder taxes in the amounts and on the following: Date Quarter year Amount paid July 17, 1923 Second quarter, 1923 .................

P1,227.15 Oct. 17, 1923 Third quarter, 1923 ..................... 1,223.23 Jan.

7, 1923 Fourth quarter .............................. 1,857.27