Ker and Co., LTD vs Lingad

 GR No. L-20871 April 30, 1971

Facts:

CIR assessed the sum of P20,272.33 as the commercial broker’s percentage tax, surcharge, and compromise penalty against Ker & Co. Ker and Co. requested for the cancellation of the assessment and filed a petition for review with the Court of Tax Appeals. The CTA ruled that Ker and Co is liable as a commercial broker. Ker has a contract with US rubber. Ker is the distributor of the said company. Ker was precluded from disposing the products elsewhere unless there has been a written consent from the company. The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion of the Company.

Issue:

Whether the relationship of Ker and Co and US rubber was that of a vendor- vendee or principal-broker

Ruling:

The relationship of Ker and Co and US rubber was that of a principal-broker/ agency. Ker and Co is only an agent of the US rubber because it can dispose of the products of the Company only to certain persons or entities and within stipulated limits, unless excepted by the contract or by the Rubber Company, it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company, every effort shall be made by petitioner to promote in every way the sale of the products and that sales made by petitioner are subject to approval by the company. Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the company’s control, the relationship between the company and the dealer is one of agency.