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

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, cigarrettes 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.

The defendants opposed the request, asserted the City’s power to  tax and pleaded for dismissal of the complaint.

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

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.”

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 cigarrettes 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.

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 indentors, except those dealers who may be expressly subject to the payment of some other municipal tax, under the provisions of this section,”

“Dealers in general merchandise shall be classified as (a)  whole- sale dealers and (6)  classified into four main classes:* * *.”

“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.”

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 reference to poultry and livestock out of extreme caution¹  in a needless  effort to make comprehensive the scope of the term.

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 for their express mention lay in their very nature, the possibility that, as living or growing objects, they  might not be regarded  as merchandise.

And other articles subject to specific taxes—like cigars, matches 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 to tax granted to the City of Manila, it would have said so clearly, as it did  in  Commonwealth Act No. 472 when it ordered, the municipal councils shall have no power to impose “specific taxes,” nor taxes “on the business of * * * tobacco dealers etc.”   (Sees. 1 and 3)

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 for greater revenue, in view of  the City’s expanded  services and activities.

The other argument of  appellant runs along  this line: “Dealers  in general merchandise” are, ordinarily, merchants; merchants under the Internal Revenue  Code pay fixed  and percentage taxes; consequently “general merchandise” should mean articles subject to fixed and percentage taxes—not  those subject to specific taxes.   This process of reasoning does  not sound convincing²; in fact, it is inconclusive, for it does assert as 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.

Furthermore, appellant itself  admits to a difference between  “dealer” and “merchant” in the  light of internal revenue laws; and the City Charter speaks of “dealers.”

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 and sold in trade  (40 Corpus  Juris p. 641-642)  either wholesale or retail  (Bouvier’s  Law Dictionary Vol. II- 2195.)   Cigars and  cigarrettes are unquestionably of that kind; therefore dealers in cigars and cigarrettes are dealers in general  merchandise,  subject  to  tax  under  the  City Charter and the Ordinance.

A second point remains to be considered.  Implementing the Ordinance in question the City Treasurer issued  Regulations which provide, among other things, that “wholesale 2 One might as  well argue:  Merchants pay real  estate taxes; consequently “general  merchandise” means real estate 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”  *  * *.

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 on manufacturers.  It relies on Central Azucarera Don Pedro  vs. City of Manila8 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, that 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.

The order of dismissal is therefore affirmed with costs against appellant.

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

---

¹ See generally 82  Corpus Juris Secundum p. 670.