G.R. No. 25846, December 24, 1926
JUAN CAMAHORT, plaintiff-appellee, vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.

Ponente: JOHNS, J.

FACTS

Juan Camahort was appointed as a salaried employee/agent (apoderado asalariado) of Doña Marcelina O. Viuda de Monasterio under a special power of attorney. From 1918 to 1922, he sold goods belonging exclusively to his principal in Manila, acting in her name and for her account. He received a fixed monthly salary of P300 as his sole compensation and did not take the goods on consignment or commission. His principal, Doña Marcelina, paid the merchant’s sales tax on these goods under the Administrative Code of 1917. However, the Collector of Internal Revenue, Juan Posadas, Jr., assessed and levied fixed merchant’s taxes and a 1% tax on gross sales against Camahort personally for the same transactions, plus a 25% surcharge for delinquency. Camahort paid the assessed amount under protest and sued for its refund.

ISSUE

Whether Juan Camahort, acting as a salaried agent selling his principal’s goods in the principal’s name, is considered a “merchant” under Section 1459 of the Administrative Code of 1917 and is thus liable to pay the percentage tax on the gross sales he effected.

RULING

NO. The Supreme Court affirmed the lower court’s judgment ordering the refund of the taxes paid by Camahort. The Court held that Camahort was not a “merchant” within the meaning of the tax law. He acted merely as an agent and legal representative of the owner of the goods. The sales he made were the sales of his principal, Doña Marcelina, who was the sole owner of the goods and who had already paid the corresponding sales tax. There was only one sale of the goods, and the government is not entitled to collect a double sales tax on a single transaction. Since Camahort sold the goods as a salaried agent, without taking them on commission or consignment, and always in the name of his principal, he was not engaged in business as a merchant subject to the tax.