G. R. No. L-8255. July 11, 1957

Bugsuk Lumber Company, Inc.,  a  domestic corporation with field office  at  Balabak,  Palawan, and principal office at 703 San  Fernando, Binondo, Manila,  “was  organized to:

(a)  Comprar y  vender maderas y  para dedicarse, en general  :i toda clase de negoeios sobre maderas;
(To buy and sell lumber and to engage In general, in any kind of business concerning lumber) ;
(b)  Solicitor  del Gobierno o adquirir, en la  forma permitia por la ley, concessiones madereras si  el negoeio asi lo exige;
(To apply  from the Government  or to acquire  in any manner permitted by law, lumber concessions  if  the business  would  so require) ;
(c)  Aserrar maderas y comprar trozos de madera,  en caso de que el negocio  de  la eorporacion lo  exija;  y
(To saw  lumber and to buy logs,  in ease the  business of the corporation would  so demand; and)
(d)  Hacer  toda  clase de nogoews  relacionados  directa o indi rectamente con  los fines  para los euales se ha  creado  esta corporacion (Exhibit “A”),
(To make all kinds of  business that may be directly or  indirectly  in line  with  the  purposes for which this corporation has been  created).

In  1951 and during  the 1st, 2nd and 3rd quarters  of 1952, the Bugsuk Lumber Company made sales  of lumber to several firms  including  Pio Barreto & Sons,  Inc., Go- tamco & Sons, Co.,  Basilan  Lumber  Co., Dy Pac & Co.,  Inc., Central  Sawmill, Woodart Inc.,  Felipe  Yupangeo  & Sons, Inc.,  Jacinto  Music Store  and  P. E.  Domingo  & Co.,  Inc. (Exhibits B to  B-23).

On October 10, 1952, the Office of the  Treasurer of the City of  Manila  sent  a demand to  the Company for the payment of the  amount of P544.50  for  license  fees corresponding  to the years 1951 and 1952, and  P40.00 for the necessary mayor’s  permit,  on  the ground  that said business firm  was found  to  be  engaged in  the  sales  of timber  products without  first securing  the  required  licenses  and permits  pursuant to  City  Ordinances  Nos. 3420, 3364 and 3000.   (Exhibit  C).  The Company  must have  refused  or failed to pay said  imposts because  on June  11, 1953, the City Fiscal of Manila filed a complaint against the Bugsuk Lumber  Co., Inc.,  with  the  Municipal Court  of Manila alleging, among  others, that  defendant Company sold at wholesale to different lumber  dealers in Manila  during the  1st, 2nd, 3rd  and  4th  quarters  of

1951 and the 1st, 2nd and 3rd quarters of 1952 different kinds of lumber for which it should have paid a quarterly license tax of P40.00 or a total of F280.00 as provided by Ordnance No. 3000, as amended; that during the 2nd, 3rd and 4th quarters of 1951 and the 1st, 2nd, 3rd and 4th quarters of 1952, defendant Company sold  at  retail to different firms lumber for which it should have  paid a total amount  of P215.00 for license fees and the mayor’s permit of P20.00; that despite repeated demands, defendant Company  refused and failed to  pay  the same  and therefore,  prayed  that judgment  be  rendered  ordering the defendant  Company to pay  the  City  of Manila the amount of P584.50  representing license fees and mayor’s permit fees, with legal interests thereon and surcharges and for such  other relief  as may be deemed just and equitable  in the premises.

Defendant Bugsuk Lumber Co., Inc., filed an answer on October 12, 1953, contesting plaintiff’s allegation that it sold  lumber at wholesale  transactions  because what  it actually sold were  unprocessed  logs;  neither  did it sell at retail because the timbers were delivered directly from the vessel to the lumber dealers,  and set up the affirmative defenses that the Bugsuk Lumber Company was essentially a producer, having no lumber yard of  any  kind in Manila or elsewhere, nor kept a store where lumber or logs could be sold, and that its products  (logs)  were  sold directly from  the lumber concession to  the  dealers in Manila; that as such producer, it had paid the taxes required by law such  as the ordinary  Timber  License  fee, Privilege tax (producer), sales tax, forestry charges,  reforestation fees, residence taxes, and the municipal licenses in Bugsuk, Palawan; that the taxes in the form of license and permit fees sought to  be collected  by the  City would  constitute double  taxation,  and  prayed  for  the dismissal  of the complaint.

The  record shows that the Municipal Court of Manila rendered judgment  in favor of  plaintiff  and defendant Company appealed the case to the Court of First Instance of Manila based practically in the  same arguments.  On July 18, 1954, the Court of First Instance rendered decision holding that  the  Company  sold  logs  to  various firms in wholesale and retail transactions and although  defendant had  no store or lumber yard in  the City, this fact alone cannot  destroy the findings  of the inspector  of the City Treasurer’s Office  that it sold logs  to different  buyers, in Manila; that the  imposition  of  the taxes in question did. not  constitute  double taxation  and  that. the  municipal taxes sought to be collected  by the City authorities were not  excessive and, consequently,  ordered  the  defendant Company to  pay  the  sum of P584.50 plus legal interests and  costs.

From this  decision, therein  defendant took the  matter to this Court and in  this instance  alleged that  the lower Court erred:

1.   In holding that appellant is a wholesale dealer and.not a producer within the meaning of the tax ordinance;
2.   In  holding that appellant  is a  retail  dealer  and  not a producer within the meaning of the tax  ordinance; and
3.   In  holding that appellant  is liable under the  municipal or dinances  imposing taxes  in wholesale  and retail dealers  because defendant is not a dealer but a producer.

We could see from the foregoing set  of  facts that the only question at  issue  in  this  case is whether  or not appellant,  maintaining   a   principal  office  in   Manila, receiving  orders for  its  products  and  accepting  in  said office payments thereto, can be considered a dealer in this City and is, therefore, subject  to the payment  of the license tax and permit fees in  question.

Appellant  does  not dispute the power of the Municipal Board  of  the City of Manila to  enact Ordinance No.  3000 requiring wholesale and retail  dealers to secure and pay the  mayor’s  permit annually,  neither does  it contest the validity  of  Ordinance  No.  3364  which  contains   the following provision:

“Group  2.  Retail dealers  in  new  (not’ yet used)  merchandise, which dealers are  not yet subject to the payment of any municipal tax, such  as; (1)  Retail  dealers in General Merchandise and (2) retail dealers exclusively engaged in the sale of electrical supplies; sporting goods;  office  equipment and materials;  rice; textile including’ knitted  wares;  hardwares, including  glasswares;  cooking utensils and’ consttaction material;  papers;  books including’ stationery:”  (Ordinance  No.  3364);

nor of Ordinance No. 3420  which provides:

“SEC. 1. Municipal Tax  on wholesalers in General Merehandise.— There shall be paid by  every person, firm or corporation  engaging  in business  as wholesale dealer in general merchandise, a municipal tax based on wholesales, or on  the receipts of exchange value of goods sold, exchanged  or transferred, in accordance with the following:”   (Ordinance No. 3420.)

A dealer has been  defined as:

A dealer, in the common acceptation and, therefore, in the  legal meaning of the  word, is  not one who buys to keep or makes to sell, but one  who  buys  to sell  again; the middleman between the producer and  the  consumer of  the commodity  (In  re  Hemming, 51 F. 2d 850).

It has been said that a dealer stands immediately  between the producer and the consumer, and  depends for his profit, not upon the labor  he bestows on his commodities, but upon the skill and  foresight  with which  he  watches  the markets (State vs.  J. Watts Kearny &  Sons,  160 So. 77).

In  the  light  of the above  definitions, appellant certainly does  not  fall within the common and ordinary acceptation of the word “dealer”  for  there”  is  no controversy  as to the fact  that what appellant sold was the produce  of its concession  in  Palawan.’  Even conceding1,  therefore,  that the lumber  which appellant  disposed of comes within  the connotation  of ‘construction  materials”  (Group  2,  Ordinance No. 3364)  and of the term  “general merchandise” (used in  Ordinances Nos.  3364  and  3420),;  which  was, defined as:

“All articles  subject  to the   payment of percentage  taxes or graduated  fixed taxes, but not articles subject to the payment of specific taxes under  the provisions  of the Internal Revenue Code. It shall also include poultry,  livestock, fish and other  allied products” (Ordinance No. 3420).

We  see no  reason  why  a producer or manufacturer selling its own  produce  or  manufactured  goods  would  be considered a dealer just to  make it  liable for the corresponding dealer’s tax,  as is the  case in the instant appeal.

Appellee, however,  in asserting that appellant Company is a dealer relied  on  the case of Atlantic Refining Co.  vs. Van Valkenburg, 265 Pa. 456;  109 A. 208, wherein it was held that the term dealer includes “one  who carries  on the  business  of   selling- goods, wares  and merchandise manufactured by him at a store or  warehouse apart  from his own  manufactory“, and it  was  the  contention of the City Fiscal that the office  at 703 San  Fernando, Binondo, Manila,  where appellant  received  orders   and receipted payment  for  such  orders is actually a store.

Appellant  admittedly maintained said  principal  office but  averred  that  it  was  used merely  to  facilitate the payment  cf the tax obligations of  said Company, to receive orders  of its timber produce  and  accept  payments therefor,  and not for any purpose connected  with the business  of buying” and selling.  Did the fact that appellant received orders of its goods  and accepted  payments thereto in said office make such office a store?

Lexicographers  defined a store as:

Any  plate where  goods  are kept for  sale,  whether by  wholesale  or retail;  a shop (Webster’s  New  International  Dictionary, 2nd ed., p. 248G).

Any  place  where  goods  are deposited  and  sold  by one engaged in buying  and  selling . them  (Black’s  Law  Dictionary,  4th ed., p. 1589). It was also said that:

A  store  is any place where goods are kept for  sale  or sold, whether by wholesale or  retail  (Standard Oil Co. vs. Green.,  34 F. Supp. 30).  It also applies to  a building  or  room in which goods of  any  kind  or in  which goods,  wares and  merchandise are kept for sale, or to any building” used for the sale  of  goods  of any  kind  (Jackson. V.  Lane,  59 A. 2d  662;  3 42 N. J.  Eq. 193).

It could be seen  that  the placing of an order for goods and  the making  of payment  thereto  at a principal  office does  not transform  said  office into  a  store,  for it is a necessary element that there must also  be goods or wares stored  therein  or on display, and provided  also that  the firm or person  maintaining that office is actually engaged in the  business  of buying and selling.  These  elements are wanting in the  case  at bar for  it needs  no further clarification that the principal office alluded to as a  store only  serves to  facilitate the  transactions  relative  to  the sale of its  produce, but does not act  as a dealer or intermediary between  its field office and  its customers.

We may further  add that this matter  was already passed upon by this  Court when,  through  Mr. Justice  Alejo Labrador, it held that:

“It  may be admitted  that the manufacturer becomes a dealer if he carries on the business  of  selling goods or the products manufactured  by  him  at  a store  or  warehouse  apart from his  own shop or manufactory.  But plaintiff-appellee  did not carry  on the business of selling sugar  at  stores or at  its warehouses.  It entered  into the contracts of  sale at its central office in Manila  and made  deliveries of the sugar sold  from its  warehouses.  It does not appear that  the  plaintiff  keeps stores at its  warehouses  and engages in selling sugar in  said stores.  Neither does it  appear that any one  who desires to purchase sugar from  it may .go to the warehouses  and  there purchase  sugar.   All that  it  does  was to sell  the sugar it manufactured; it does  not  open  stores for the sale of  such  sugar. Plaintiff-appellee  did not,  therefore, engage  in  the  business of  selling  sugar”.  (Central  Azucarera de Don Pedro vs. City of Manila  et al., 97 Phil., 627).

Wherefore,  the  decision appealed  from   is  hereby  reversed  and  appellant declared exempt from the liabilities sought to be charged against it  under the provisions of the aforementioned ordinances, without pronouncement as to costs.   It is so ordered.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes,  A,, Bautista,  Labrador,  Conception,  Reyes,  J.  B  L.,  and Endencia, JJ., concur.