G.R. No. 18316 ; September 23, 1922
LUZON STEVEDORING COMPANY, plaintiff-appellee, vs. WENCESLAO TRINIDAD, Collector of Internal Revenue, defendant-appellant.

FACTS

The Luzon Stevedoring Company, a corporation engaged in the stevedoring business in Manila, paid under protest the sum of P2,422.81 as a percentage tax assessed by the Collector of Internal Revenue under Section 1462 of Act No. 2711 (the Administrative Code). The Collector levied the tax on the ground that the company was a “contractor” subject to the tax on gross receipts. The company filed an action to recover the amount, arguing it was not a contractor within the meaning of the law. The trial court ruled in favor of the company. The Collector appealed.

ISSUE

Whether the Luzon Stevedoring Company is a “contractor” as the term is used in Section 1462 of Act No. 2711, and therefore subject to the percentage tax on its gross receipts.

RULING

No. The Supreme Court affirmed the trial court’s decision, holding that the Luzon Stevedoring Company is not a contractor within the limited and restricted meaning of the term in Section 1462. The Court adopted the definition that a “contractor” is one who, in the pursuit of an independent business, undertakes to do specific work for others, using his own means and methods without being controlled as to the petty details, and represents the will of his employer only as to the result, not the means. The evidence showed that the company’s stevedoring work was performed under the direct supervision and control of the ship’s officers, who were responsible for the cargo and the manner of loading/unloading. The company’s laborers were under the direct control of the ship’s officers during the work, leaving no discretion to the company. Therefore, the tax was illegally collected and must be refunded.