G.R. No. L-12687; August 27, 1918
THE ASIATIC PETROLEUM COMPANY (LTD.), plaintiff-appellant, vs. THE INSULAR COLLECTOR OF INTERNAL REVENUE, defendant-appellant.

FACTS:
The Insular Collector of Internal Revenue compelled the Asiatic Petroleum Company to pay the internal revenue tax under Section 17 (paragraph 72a) of Act No. 2432 on all mineral oils it had on hand on January 1, 1915, regardless of whether the oils had been sold prior to that date. The tax was paid under protest. The plaintiff contended that the tax was illegal because the law exempted oils “disposed of to consumers or persons other than manufacturers or wholesale dealers, prior to January 1, 1915.” The plaintiff had sold certain oils before January 1, 1915, but these had not yet been delivered to the buyers. The issue centered on whether such oils were “disposed of” within the meaning of the law, thereby exempting them from the tax.

ISSUE:
Whether mineral oils sold but not delivered prior to January 1, 1915, were “disposed of” under Section 17 of Act No. 2432 , thus exempting them from the internal revenue tax.

RULING:
Yes. The Supreme Court held that the phrase “disposed of” in Act No. 2432 should be interpreted in its commercial sense, not as requiring both sale and delivery. A sale is perfected under the Civil Code once there is agreement on the object and price, even without payment or delivery. The Court reasoned that the Legislature intended the term “disposed of” to mean a binding contract of sale, as later affirmed by Act No. 2445, which addressed pre-existing contracts obligating a party to furnish taxed articles. Therefore, the oils sold before January 1, 1915, were “disposed of” and exempt from the tax. The judgment of the lower court was affirmed.