G.R. No.

L-8506 August 31, 1956

CELESTINO CO & COMPANY, petitioner, vs.
COLLECTOR O INTERNAL RE!EN"E, respondent.
FACTS:
Celestino Co & Company is a duly registered general copartnership doing business under the trade name
of "riental Sash Factory".
From !"#$ to !"%! it paid percentage ta&es of ' per cent on the gross receipts of its sash, door and
(indo( factory, in accordance (ith section !)$ of the *ational +evenue Code imposing ta&es on sale of
manufactured articles.
,o(ever in !"%- it began to claim liability only to the contractor.s / per cent ta& 0instead of ' per cent1
imposable upon contracts for piece of (or23as opposed to the '4 ta& on sales3claiming that they do not
manufacture ready5made doors for the public but only upon special order of the customers.
under section !"! of the same Code6 and having failed to convince the 7ureau of 8nternal +evenue, it
brought the matter to the Court of Ta& Appeals, (here it also failed.
The conclusion that counsel (ould li2e the court to deduce from these fe( e&hibits is that the riental
Sash Factory does not manufacture ready5made doors, sash and (indo(s for the public but only upon
special order of its select customers. 9etitioner claims that it does not manufacture ready5made sash,
doors and (indo(s for the public and that it ma2es these articles only special order of its Customers.
Appellant invo2es Article !#$' of the *e( Civil Code to bolster its contention that in filing orders for
(indo(s and doors according to specifications, it did not sell, but merely contracted for particular pieces
of (or2 or "merely sold its services".
Said article reads as follo(s:
A contract for the delivery at a certain price of an article (hich the vendor in the ordinary course of his
business manufactures or procures for the general mar2et, (hether the same is on hand at the time or
not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his
special order, and not for the general mar2et, it is contract for a piece of (or2.
8ssue: :* Celestion & Co is a contractor. :* the business of manufacturing sash, doors and
(indo(s upon special order of customers fall under the category enumerated in the +evenue Code. :*
petitioner could be ta&ed (ith lesser strain and more accuracy as seller of its manufactured articles.
Ta& imposed: :* !"! or !)$ of the revenue code.
+uling: ;ven if (e (ere to believe petitioner.s claim that it does not manufacture ready5made sash, doors
and (indo(s for the public and that it ma2es these articles only special order of its customers, that does
not ma2e it a contractor (ithin the purvie( of section !"! of the national 8nternal +evenue Code.
1. N#$%
,o(ever the court did not believe that petitioner company (ould ta2e, as in fact it has ta2en, all the
trouble and e&pense of registering a special trade name for its sash business and then orders company
stationery carrying the bold print "Oriental Sash Factory 0Celestino Co & Company, 9rop.1 "-$ +aon St.
<uiapo, =anila, Tel. *o. //>'$, Manufacturers of all kinds of doors, windows, sashes, furniture, etc. used
season- dried and kiln-dried lumber, of the best quality workmanships" solely for the purpose of supplying
the needs for doors, (indo(s and sash of its special and limited customers.
As a general rule, sash factories receive orders for doors and (indo(s of special design only in particular
cases but the bul2 of their sales is derived from a ready5made doors and (indo(s of standard si?es for the
average home.
&. I'(o$%
=oreover, as sho(n from the investigation of petitioner.s boo2 of accounts, during the period from @anuary
!, !"%- to September />,
!"%-, it sold sash, doors and (indo(s (orth 9!)),'%#.$".The court found it difficult to believe that this
amount (hich runs to si& figures (as derived by petitioner entirely from its fe( customers (ho made
special orders for these items.
3. "')%* t+% *%,%'u% Co)%, -t )o%s 'ot .-t -'to t+% (#t%go*/ s0%(-.-%)
There are no less than fifty occupations enumerated in the aforesaid section of the national 8nternal
+evenue Code subAect to percentage ta& and after reading carefully each and every one of them, the court
cannot find under (hich the business of manufacturing sash, doors and (indo(s upon special order of
customers fall under the category of "road, building, navigation, artesian (ell, (ater (or2ers and other
construction (or2 contractors" are those (ho alter or repair buildings, structures, streets, high(ays, se(ers,
street rail(ays railroads logging roads, electric lines or po(er lines, and includes any other (or2 for the
construction, altering or repairing for (hich machinery driven by mechanical po(er is used.
The percentage ta& imposed in section !"! of our Ta& Code is generally a ta& on the sales of services, in
contradiction (ith the ta& imposed in section !)$ of the same Code (hich is a
ta& on the original sales of articles by the manufacturer, producer or importer.
The fact that the articles sold are manufactured by the seller does not e&change the contract from the
purvie( of section !)$ of the *ational 8nternal +evenue Code as a sale of articles.
1. T+% O*-%'t#2 S#s+ #(to*/ )o%s 'ot+-'g $o*% t+#' s%22 t+% goo)s t+#t -t $#ss-0*o)u(%s o*
+#3-tu#22/ $#4%s5 s#s+, 0#'%2s, $ou2)-'gs, .*#$%s, (utt-'g t+%$ to su(+ s-6%s #') (o$3-'-'g t+%$
-' su(+ .o*$s #s -ts (usto$%*s $#/ )%s-*%.
The Factory accepts a Aob that reBuires the use of e&traordinary or additional eBuipment, or involves
services not generally performed by it5it thereby contracts for a piece of work 3 filing special orders
(ithin the meaning of Article !#$'. The orders herein e&hibited (ere not sho(n to be special. They
(ere merely orders for (or2 3 nothing is sho(n to call them special reBuiring e&traordinary service of
the factory.

The fact that the sash products are made only upon the order of the customers does *T change the
nature of the establishment. Timing is not the controlling factor but the nature of the (or2 done. They
habitually ma2e sash products and can easily duplicate and mass5produce the same. The bul2 of their
sales come from standard ready5made products3special orders are the e&ception and come only
occasionally. 8f the goods are manufactured specifically upon special order of the customer and reBuires
e&traordinary service, then that (ould be the time (hen it can be classified as piece of (or2. 7ut such is
not the case here. riental Sash is clearly a m