Inchausti vs Cromwell

 20 Phil. 345 October 16, 1911

Facts:

Inchausti is engaged in the business of buying and selling wholesale hemp on commission. It is customary to sell hemp in bales which are made by compressing the loose fiber by means of presses, covering two sides of the bale with matting, and fastening it by means of strips of rattan; that the operation of bailing hemp is designated among merchants by the word “prensaje.” In all sales of hemp by Inchausti, the price is quoted to the buyer at so much per picul, no mention being made of bailing. It is with the tacit understanding that the hemp will be delivered in bales. The amount depends under the denomination of “prensaje” or the baled hemp. CIR made demand in writing upon Inchausti for the payment of the sum of P1,370.68 as a tax of one third of one per cent on the sums of money mentioned as aggreagate sum collected as prensaje or the baled hemp. Inchausti paid upon protest, contending that the collected amount is illegal upon the ground that the said charge does not constitute a part of the selling price of the hemp, but is a charge made for the service of baling the hemp.

Issue:

Whether or not the baled hemp constitutes a contract of sale

Ruling:

Yes, the baled hemp constitutes a contract of sale. In the case at bar, the baled form before the agreement of sale were made and would have been in existence even if none of the individual sales in question had been consummated. The hemp, even if sold to someone else, will be sold in bales. When a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for piece of work. It is otherwise when the article is made pursuant to agreement. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or modification of it is made at the defendant’s request, it is a contract of sale, even though it may be entirely made after, and in consequence of, the defendant’s order for it.