Ker & Co., Ltd. Vs. Lingad L- 20871 April 30, 1971 Ponente: Fernando, J.

(Ria) Doctrine: Distinguish from contract of sale: the price paid in the transfer of an agreement or title is the essence of sale. If such transfer puts the transferee in the attitude of an owner and makes him liable to the transferor as a debtor for an agreed price it is a contract of sale. The essence of agency to sell is the delivery to an agent not as his property but as the property of the principal who remains the owner and had the right to control sales, fix price and terms and demand proceeds. Facts:Petitioner was assessed by then Commissioner of Internal Revenue Melencio R. Domigno the sum of 20, 272.33 as the commercial broker s percentage tax, surcharge and compromise penalty from July 1, 1949December 31, 1953. Petitioner requested its cancellation but such request was turned down. When the CTA reviewed it, it held the petitioner liable except for compromise penalty amounting to 500. The total liability now is 19, 772.33. Such liability arose from the contract of the petitioner with United States Rubber International. The petitioner is the distributor of the products of the said company. The shipment would cover products for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros and Mindanao except Davao. Petitioner was precluded from selling in other those mentioned places unless they secured consent to the company. There was a stipulation in the contract whereby the said company shall from time to tome consign to the distributor and the distributor will receive, accept and or hold upon consignment the products specified under the terms of this agreement in such quantities and in the judgment of the company may be successful in the solicitation and maintenance of business . All goods in consignment shall remain with the company until sold by petitioner but all sales made by the petitioner shall be in his name. it was further agreed that the contract does not constitute the petitioner the agent of the company for any purpose. The petitioner did have the right to assume authority that will bind the company. However under the stipulation in the contract the distributor can only sell it within the stipulated limits, that it merely receives, accepts and holds upon consignment the products which will remain in the custody of the company, that distributor shall promote the products, that the sales are subject to the approval of the company, that the company may ask for inventory any time and that after the termination of the agreement all goods held on consignment by petitioner for the account of the company until their disposition is provided by the latter. Issue: Whether or not the contract between Ker & Co. and United States Rubber International was that of an agency? Holding: Yes, all the circumstances are irreconcilably antagonistic to the idea of an independent merchant. Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers and terms of which were subject to the company s control, the relation between the company and the dealer is one of agency. Distinguish from contract of sale: the price paid in the transfer of an agreement or title is the essence of sale. If such transfer puts the transferee in the attitude of an owner and makes him liable to the transferor as a debtor for an agreed price it is a contract of sale. The essence of agency to sell is the delivery to an agent not as his property but as the property of the principal who remains the owner and had the right to control sales, fix price and terms and demand proceeds.