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Ker & Co. vs Lingad: Principal-Broker Ruling

Ker and Co. was assessed commercial broker's taxes by the CIR based on its relationship with US Rubber Co. Ker and Co. argued it was not a broker but a buyer. The Court of Tax Appeals ruled Ker and Co. was liable as a broker. The Supreme Court also found Ker and Co. was a broker/agent of US Rubber Co. because Ker and Co. could only sell US Rubber's products to certain entities and quantities without written consent, and sales were subject to US Rubber's approval and control over pricing and terms.

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86 views1 page

Ker & Co. vs Lingad: Principal-Broker Ruling

Ker and Co. was assessed commercial broker's taxes by the CIR based on its relationship with US Rubber Co. Ker and Co. argued it was not a broker but a buyer. The Court of Tax Appeals ruled Ker and Co. was liable as a broker. The Supreme Court also found Ker and Co. was a broker/agent of US Rubber Co. because Ker and Co. could only sell US Rubber's products to certain entities and quantities without written consent, and sales were subject to US Rubber's approval and control over pricing and terms.

Uploaded by

BerniceAnneAseñas-Elmaco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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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 brokers 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 companys control, the relationship between the company and
the dealer is one of agency.

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