Topic:

Broker

PACIFIC COMMERCIAL COMPANY V. ALFRED YATCO
July 20, 1939 Avancena, C.J.
The broker, unlike the commission merchant, has no relation with the thing he sells or buys. He is
merely an intermediary between the purchaser and the vendor.

Facts:
Pacific sold for the account of Victoria Milling Co. refined sugar up to the total amount of 1M. Pacific
received by way of commission 29K. Victoria Milling paid merchant sales tax in its capacity as
manufacturer and owner of the sugar sold. Likewise, Pacific paid tax also. There were two ways in which
Pacific made the sales of sugar after looking for purchasers and sending the purchase order to Victoria
Milling:

1) the purchase is made for the delivery of the sugar EX- WAREHOUSE – sugar is first deposited in the
warehouse of Pacific before delivery to the purchaser.
2) the purchase is made for the delivery EX-SHIP – Pacific would simply hand over the bill of lading to the
purchaser and collect the price
CFI of Manila: in the first case, Pacific acted as a commission
merchant; in the second case as a broker – ordered Yatco to return to Pacific the amount collected from
it by way of tax on the sale of sugar to be delivered EX-SHIP and denied prayer for return of amount paid
for the sales of sugar to be delivered EX-WAREHOUSE.

Issues:
1) WON there is double taxation – NO
2) WON Pacific acted as a commission merchant as to the sugar
delivered ex-warehouse – YES
3) WON Pacific acted as a mere commercial broker as to the
sugar delivered ex-ship – YES

Ruling:
1) There is no double taxation. Tax is not upon property or products, but upon occupation or industry.
2) A commission merchant is one engaged in the purchase or sale for another of personal property
which, for this purpose, is placed in his possession and at his disposal. He maintains a relation not only
with his principal and the purchasers or vendors, but also with the property which is the property which
is the subject matter of transaction. The deposit of the sugar in the warehouses of Pacific was made
upon its own account and at its own risk until it was sold and taken by the purchaser.
3) The broker has no relation with the thing he sells or buys. He is merely an intermediary between the
purchaser and the vendor. He acquired neither the possession nor the custody of the things sold. His
only office is to bring together the parties to the transaction. The sugar was shipped by Pacific at its
expense and risk until it reached its destination, where it was later taken ex-ship by the purchaser.
Pacific never had possession of the sugar at any time. The bill of lading sent to the broker was sent only
for the purpose of turning it over to the purchaser for the collection of the price. The sugar did not come
to its possession in any sense.