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G.R. No. L-9549        December 21, 1957
MANILA TOBACCO ASSOCIATION, INC. vs. CITY OF MANILA, ET AL. -->

EN BANC

G.R. No. L-9549        December 21, 1957

MANILA TOBACCO ASSOCIATION, INC., Plaintiff-Appellant, vs. THE CITY OF MANILA, and M. SARMIENTO, in his capacity as City Treasurer of the City of Manila, Defendants-Appellees.

Rodegelio M. Jalandoni and Guillermo B. Blanco for appellant.
City Fiscal Eugenio Angeles and Assistant Fiscal Arsenio Nanawa for appellees.

BENGZON, J.:

Assailing the validity of Ordinance No. 3634 of the City of Manila and the Regulations complementary thereto, the plaintiff association composed of manufacturers of or dealers in cigars, cigarettes and other tobacco products filed this action for declaratory relief in the Manila Court of First Instance, asking for their annulment in so far as they affected its business activities.chanroblesvirtualawlibrary chanrobles virtual law library

The defendants opposed the request, asserted the City's power to tax and pleaded for dismissal of the complaint.chanroblesvirtualawlibrary chanrobles virtual law library

The Hon. Rafael Amparo, Judge, after hearing the parties dismissed the case. Wherefore this appeal perfected in due time.chanroblesvirtualawlibrary chanrobles virtual law library

The ordinance in question imposes a municipal tax on those "engaging in the business as wholesale dealer in general merchandise," and provides that "the term 'general merchandise' shall include all articles subject to the payment of percentage taxes, graduated fixed taxes and specific taxes. It shall also include poultry and livestock, fish and other allied products."chanrobles virtual law library

This ordinance amended Ordinance No. 3420 imposing the same tax, but expressly excluding from the definition of "general merchandise" all articles subject to the payment of specific taxes under the Internal Revenue Code. Inasmuch as cigars and cigarettes are subject to specific taxes, the amended ordinance necessarily touched the pockets of cigar dealers and merchants. Hence this suit, resting on the proposition that although the City of Manila has, by its charter (Republic Act 409, Sec. 18, par. O) power to tax dealers in general merchandise the term "general merchandise" does not include dealer in articles-like cigars-subject to specific taxes.chanroblesvirtualawlibrary chanrobles virtual law library

The text of such legislative authority reads as follows:

(o) To tax and fix the license fee on dealers in general merchandise, including importers and inventors, except those dealers who may be expressly subject to the payment of some other municipal tax under the provisions of this section.chanroblesvirtualawlibrary chanrobles virtual law library

Dealers in general merchandise shall be classified as (a) wholesale dealers and (b) classified into four main classes: . . .chanroblesvirtualawlibrary chanrobles virtual law library

For purposes of this section, the term "General Merchandise" shall include poultry and livestock, agricultural products, fish and other allied products.

Inviting particular attention to the last paragraph, the plaintiff association presents an argument which, in short, amounts to this: Except for this paragraph the word "general merchandise" would not have included poultry and livestock, etc.; the latter would not have been included, because they were exempt from the payment of taxes ordinarily paid by merchants (like percentage taxes) by virtue of Sec. 188 of the National Revenue Code; therefore other articles, exempt under sec. 188-like cigars-are not included within the scope of the word "general merchandise.".chanroblesvirtualawlibrary chanrobles virtual law library

The reasoning although clever, can not stand a separate examination of its component propositions. The first can not fully be accepted; poultry is "merchandise or personal property or whatever character." The Legislature might have made express to poultry and livestock out of extreme caution ¹ in a needless effort to make comprehensive the scope of the term.chanroblesvirtualawlibrary chanrobles virtual law library

However, admitting the validity of such proposition, we find no indication that poultry and livestock would have been excluded from the term simply because of section 188. Appellant quotes no authority to support such second proposition. The reason of their express mention lay in their nature, the possibility that, as living or growing objects, they might not be regarded as merchandise.chanroblesvirtualawlibrary chanrobles virtual law library

And other articles subject to specific taxes-like cigars, match]es and firecrackers-were not expressly included because there was no such possibility. If the Legislature had intended not to include articles subject to specific taxes in the power granted to the City of Manila, it would have said clearly, as it did in Commonwealth Act No. 472 when it declared the municipal councils shall have no power to impose "specific taxes," nor taxes "on the business of . . . tobacco dealers etc." (Secs. 1 and 3).chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner asks, why should cities like Manila be permitted to tax goods that other municipalities cannot tax? The answer is easy to find. The need of greater revenue, in view of the City's expanded services and activities. . .chanroblesvirtualawlibrary chanrobles virtual law library

The argument of appellant runs along this line:chanrobles virtual law library

"Dealers in general merchandise" are, ordinarily, merchants; merchants under the Internal Revenue Code pay fixed and percentage taxes; consequently "general merchandise" should mean article subject to fixed and percentage taxes-not those subject to specific taxes. This process of reasoning does not sound convincing ² ; in fact, it is inclusive, for it does not assert a premise-it cannot assert-that merchants do not pay specific taxes. Logically, from the two premises above stated the inference should be: dealers in general merchandise pay fixed and percentage taxes.chanroblesvirtualawlibrary chanrobles virtual law library

Furthermore, appellant itself admits to a difference between "dealer" and "merchant" in the light of internal revenue laws; and the City Charter of "dealers".chanroblesvirtualawlibrary chanrobles virtual law library

As a result we perceive no valid reason to bestow on the term "general merchandise," any other meaning than the ordinary one, which includes all articles usually bought sold in trade (40 Corpus Juris p. 641-642) either wholesale or retail (Bouvier's Law Dictionary Vol. II-2195.) Cigars and cigarettes are unquestionably of that kind; therefore dealers in cigars and cigarettes are dealers in general merchandise, subject to tax under the City Charter and the Ordinance.chanroblesvirtualawlibrary chanrobles virtual law library

A second point remains to be considered. Implementing the Ordinance in question the City Treasurer issued Regulations which provide, among other things, that "wholesale dealers" shall include "manufacturers in Manila who conduct the business of selling their own products at wholesale at places in the City other than their factories" . . .chanroblesvirtualawlibrary chanrobles virtual law library

This is erroneous, suggests the association, because "manufacturers" are not "dealers," "manufacturers of cigars" differ from "wholesale tobacco dealers"; and the Charter authorized no tax or manufacturers. It relies on Central Azucarera Don Pedro vs. City of Manila ³ wherein this Court held that the "mere fact that a manufacturer sells the sugar that it manufactures does not thereby make it a dealer in sugar." Precisely, the case also holds that such manufacturer becomes a dealer if he carries on the business of selling his goods or his products at a store or warehouse apart from his own shop or manufactory.chanroblesvirtualawlibrary chanrobles virtual law library

The order of dismissal is therefore affirmed with costs against appellant.chanroblesvirtualawlibrary chanrobles virtual law library

Paras, C.J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, and Felix, JJ., concur. chanrobles virtual law library

Endnotes:

1 See generally 82 Corpus Juris Secundum p. 670.

2 One night as well argue: Merchants pay real estate taxes; consequently "general merchandise" means real estate.

3 97 Phil., 627.