Oquiñena & Company v. Jose Muertegui

Summary

This Supreme Court case involved a commercial dispute between commission agents Oquiñena & Co. and their principals Muertegui & Aboitiz over liability for internal revenue tax payments. From 1908-1910, defendants shipped hemp and copra to plaintiffs for commission sale under a verbal agreement where defendants would pay shipping and sale expenses. Plaintiffs charged defendants P3,120.81 for internal revenue tax on commission sales. The Supreme Court reversed the lower court's judgment favoring plaintiff, holding that the tax on commission merchants is an occupation tax separate from the tax on goods sold. Under the Internal Revenue Law, both parties had distinct tax obligations. The Court applied Civil Code provisions on error in consent, finding defendants' initial acceptance of the charges was void due to plaintiff's failure to specify the nature of the tax being charged. This created a mutual error that invalidated consent, making the collection improper and establishing an obligation to restore what was unduly paid.