The Asiatic Petroleum Company (Ltd.) v. The Insular Collector of Internal Revenue

Summary

This landmark taxation case addressed the interpretation of tax exemption provisions in early Philippine internal revenue law. The Asiatic Petroleum Company challenged the Collector's demand for internal revenue tax on mineral oils that were sold but not delivered before Act No. 2432 took effect on January 1, 1915. The central legal issue was whether 'disposed of' in the tax exemption provision meant merely 'sold' or required both 'sold and delivered.' The Supreme Court En Banc ruled that 'disposed of' should be interpreted in its commercial sense to mean 'sold,' reasoning that the Legislature would have used 'sold and delivered' if that was the intended meaning. The Court emphasized that binding contracts of sale exist when parties agree on the thing and price, regardless of payment or delivery. This decision established important precedent for interpreting tax exemption provisions and recognized commercial customs in legal interpretation, affirming that the company was exempt from paying tax on previously sold goods.