El Dorado Oil Works

Vs.
The Collector of Internal Revenue
G.R.20101, July 12,1923

FACTS:

In this case, the plaintiff is a corporation organized and existing under the laws of the
State of California, with its principal office and place of business in the City of San
Francisco, engaged in the manufacture and sale of coconut oil,in that area. It is also
licensed to transact business in the Philippines, where it has resident agent engaged solely
in the purchase of copra.

It was alleged that plaintiff purchased copra from various merchants residing in the
Philippines , under the terms and conditions of which purchase the resident merchants
sold and consigned the copra to plaintiff f.o.b. Ship in Manila Bay..

That the defendant acting under the pretended authority of section 1459, levied and
assessed against the plaintiff a merchants tax, with surcharge, and penalty, claiming that
which it demanded from plaintiff’s resident purchasing agent in the Philippines under the
threat of as more severe penalty.

ISSUE:
Whether or not the plaintiff , a foreign corporation is subject to sales tax, under Philippine
law.

RULING:

Section 1459 of the Administrative Code of 1017 states that : WHEN FOREIGN
CORPORATION IS NOT SUBJECT TO “SALES TAX”. Where a corporation is
organized under the laws of the State of California, and is solely engaged there in the
manufacture and sale of coconut and other oils, and where although duly and licensed to
transact business in the Philippine islands, it has only resident purchasing agent in the
islands, and the resident agents purchases copra here under the terms of which the
resident merchants in the islands sell the copra to such a corporation F.O.B. Ship Manila
Bay, and where upon its delivery and resident merchants sign and execute all bills of
lading pertaining to the shipment, which is made to the corporation at San Francisco, and
where payment for the copra is made upon the presentation of the bills of lading, and
where the percentage tax of 1% is paid by the respective merchants before the shipment is
made, and where it is stipulated “ that plaintiff is not and never been engaged in the sale,
barter or exchange of personal property of any character whatsoever in the Philippine
Islands”, Held : Under such state of facts, that a foreign corporation is not subject to sales
tax under section 1459 of the Administrative Code of 1017.

The record in this case is conclusive that plaintiff never sold,bartered, exchanged or
consigned abroad” any copra within the meaning of section 1459 of Administrative Code.