G.R. No. 11988. April 04, 1918
JACINTO MOLINA, PLAINTIFF AND APPELLEE, VS. JAMES J. RAFFERTY, COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLANT.
FISHER, J.:
1918,[1] counsel for appellee presented a
petition for a rehearing. This petition was granted and oral argument of the
motion was permitted. Two of the members of the court, as constituted at the
time of the argument on the motion for a rehearing, were not present when the
case was first submitted and did not participate in the original decision.
Upon the facts, as correctly stated in the original majority decision, a
majority of the members of the court as now constituted is in favor, of setting
aside the original decision and affirming the judgment of the trial court.
Plaintiff contends that the fish produced by him are to be regarded as an
“agricultural product” within the meaning of that term, as used in paragraph
(c) of section 41 of Act No. 2339 (now section 1460 of the
Administrative Code of 1917), in forced when the disputed tax was levied, and
that he is therefore exempt from the percentage tax on merchants’ sales
established by section 40 of Act No. 2339, as amended.
The provision upon which the plaintiff relies reads as follows:
“In computing the tax above imposed transactions in the following commodities
shall be excluded: * * * (c) Agricultural products when sold by the
producer or owner of the land where grown, whether in their original state or
not.” (Act No. 2339, sec. 41.)
The same exemption, with a slight change in wording, is now embodied in
section 1460 of the Administrative Code of 1917.
The question of law presented by this appeal, as we view, is not whether fish
in general constitute an agricultural product, but whether fish produced as were
those upon which the tax in question was levied are an agricultural product.
As stated by Judge Cooley in his great work on taxation:
“The underlying principle of all construction is that the intent of the
legislature should be sought in the words employed to express it, and that when
found it should be made to govern, * * *. If the words of the law seem to be of
doubtful import, it may then perhaps become necessary to look beyond them in
order to ascertain what was in the legislative mind at the time the law was
enacted; what the circumstances were, under which the action was taken; what
evil, if any, was meant to be redressed; * * *. And where the law has
contemporaneously been put into operation, and in doing so a construction has
necessarily been put upon it, this construction, especially if followed for some
considerable period, is entitled to great respect, as being very probably a true
expression of the legislative purpose, and is not lightly to be overruled,
although it is not conclusive.” (Cooley on Taxation [Vol. 1]’ 3d. Ed., p.
450.)
The first inquiry, therefore, must relate to the purpose the Legislative had
in mind in establishing the exemption contained in the clause now under
consideration. It seems reasonable to assume that it was due to the belief on
the part of the law making body that by exempting agricultural products from
this tax the farming industry would be favored and the development of the
resources of the country encouraged. It is a fact, of which we take judicial
cognizance, that there are immense tracts of public land in this country, at
present wholly unproductive, which might be made fruitful by cultivation, and
that large sums of money go abroad every year for the purchase of food
substances which might be grown here. Every dollar’s worth of food which the
farmer produces and sells in these Islands adds directly to the wealth of the
country. On the other hand, in the process of distribution of commodities to the
ultimate consumer, no direct increase in value results solely from their
transfer from one person to another in the course of commercial transactions. It
is fairly to be inferred from the statute that the object and purpose of the
Legislature was, in general terms, to levy the tax in question, significantly
termed the “merchant’s tax,” upon all persons engaged in making a profit upon
goods produced by others, but to exempt from the tax all persons directly
producing goods from the land. In order to accomplish this purpose the
Legislature, instead of attempting an enumeration of exempted products, has
grouped them all under the general designation of “agricultural products.”
It seems to require no argument to demonstrate that it is just as much to the
public interest to encourage the artificial propagation and growth of fish as of
corn, pork, milk or any other food substance. If the artificial production of
fish is held not to be included within the exemption of the statute this
conclusion must be based upon the inadequacy of the language used by the
Legislature to express its purpose, rather than the assumption that it was
actually intended to exclude producers of artificially grown fish from the
benefits conferred upon producers of other substances brought into the store of
national wealth by the arts of husbandry and animal industry.
While we have no doubt that the land occupied by the ponds in which the fish
in question are grown is agricultural land within the meaning of the Acts of
Congress and of the Philippine Commission under consideration in the cases of
Mapa vs. Insular Government (10 Phil. Rep., 175) and others cited in the
original majority opinion, it does not seem to us that this conclusion solves
the problem. A man might cultivate the surface of a tract of land patented to
him under the mining law, but the products of such soil would not for that
reason, we apprehend, be any the less “agricultural products.” Conversely, the
admission that the land upon which these fishponds are constructed is not to be
classified as mineral or forest land, does not lead of necessity to the
conclusion that everything produced upon them is for that reason alone to be
deemed an “agricultural product” within the meaning of the statute under
consideration.
“Agriculture” is an English word made up of the Latin words “ager” a
field, and “cultura,” cultivation. It is defined by Webster’s New
International Dictionary as meaning in its broader sense, “The science and art
of the production of plants and animal useful to man * * * “
In Dillard vs. Webb (55 Ala., 468) it is held that the words
“agriculture” includes “the rearing, feeding, and managing of live stock.” The
same view was expressed in the case of Binzel vs. Grogan (67 Wis.,
147).
Webster defines “product” to be “anything that is produced, whether as the
result of generation, growth, labor, or thought * * *,” while “grow” is defined
in the Century Dictionary as meaning “to cause to grow; cultivate; produce;
raise * * *.”
While it is true that in a narrow and restricted sense agricultural products
are limited to vegetable substances directly resulting from the tillage of the
soil, it is evident from the definitions quoted that the term also includes
animals which derived their sustenance from vegetable growths, and are therefore
indirectly the product of the land. Thus it has been held that “The
product of the dairy and the product of the poultry yard, while it does not come
directly out of the soil is necessarily connected with the soil * * *” and is
therefore farm produce. (District of Columbia vs. Oyster, 15 D. C,
285.)
In the case of Mayor vs. Davis (6 Watts & Sergeant [Penn. Rep.],
269) the court said:
“Swine, horses, meat cattle, sheep, manure, cordwood, hay, * * * vegetables,
fruits, eggs, milk, butter, lard * * * are strictly produce of the farm * *
*”
Without attempting to further multiply examples, we think it may safely be
asserted that courts and lexicographers are in accord in holding that the term
“agricultural products” is not limited in its meaning to vegetable growth, but
includes everything which serves to satisfy human needs which is grown upon the
land, whether it pertain to the vegetable kingdom, or to the animal kingdom. It
is true that there is no decision which as yet has held that the fish grown in
ponds are an agricultural product, but that is no reason why we should not so
hold if we find that such fish fall within the scope of the meaning of the term.
Of necessity, the products of land tend constantly to multiply in number and
variety, as population increases and new demands spring up. In California there
are farms devoted to the growth of frogs for the market. In many places in North
America foxes and other animals usually found wild are reared in confinement for
their fur. In Japan land is devoted to the culture of the silkworm and the
growth of the plants necessary for the food of those insects. Bees are
everywhere kept for the wax and honey into which they convert the vegetable
growths upon which they depend. We think it is not doing violence to the term to
say that the frogs, fox pelts, raw silk, and honey which the land is made to
produce by those engaged in these occupations are “agricultural products” in the
same sense in which poultry, eggs, and butter have been held to be agricultural
products.
Now, if the purpose of agriculture, in the broader sense of the term, is to
obtain from the land the products to which it is best adapted and through which
it will yield the greatest return upon the expenditure of a given amount of
labor and capital, can it not be said that it is just as much an agricultural
process to enclose a given area of land with dykes, flood it with water, grow
aquatic plants in it, and feed fish with the plants so produced as to fence in
it and allow poultry to feed upon the plants naturally or artificially grown
upon the surface? In the last analysis the result is the same—a given area of
land produces a certain amount of food. In the one case it is the flesh of
poultry, in the other the flesh of fish. It has been agreed between the parties
that an important article of diet consumed by fish grown in a pond consists of
certain marine plants which grow from roots which affix themselves to the bottom
of the pond. In a real sense, therefore, the fish are just as truly a product of
the land as are poultry or swine, living upon its vegetable growths, aquatic or
terrestrial. Thus, land may truly be said to produce fish, although it is true
that the producer is not a fisherman. Neither is one who grows foxes for their
pelts a hunter. As contended by counsel, the inquiry is not whether fish in
general constitute an agricultural product, but whether fish artificially grown
and fed in confinement are to be so regarded. Honey produced by one who devotes
his land to apiculture might be so regarded, even if we were to admit that wild
honey gathered in the forest is not. Pigeons kept in domestication and fed by
the owner would fall within the definition. Wild pigeons obtained by a hunter
would not. Firewood gathered in a natural forest is not an agricultural product,
but firewood cut from bacauan trees planted for that purpose has been held to be
such a product, and its producer exempt from the merchant’s tax. (Mercado
vs. Collector of Internal Revenue, 32 Phil. Rep., 271.) Other
comparisons might be made, many of which will be found in the opinion in which
two of the members of the court expressed their dissent from the original
majority opinion, but enough have been given to make our position clear.
During the many years that the statute before us has been in existence, since
it first appeared, substantially in its present form, in section 142 of Act No.
1189, passed in 1904, no attempt has been made, until this case arose, to
construe it as not applying to fish grown in ponds, and much weight should be
given to this long continued administrative interpretation. The opinion of the
Attorney-General, cited by Justice Malcolm, will be found on examination to have
no bearing upon the present inquiry, as in that case the question was, not
whether fish grown and fed in ponds were agricultural products, but whether “* *
* fishermen, shell and pearl gatherers * * *” were liable to the
occupation tax. There is nothing in the opinion to indicate that the word
“fishermen” was used to mean men growing fish in ponds, and it must, therefore,
be assumed that it was used in its proper grammatical sense to designate persons
engaged in catching fish not artificially produced.
The decision in the case of The United States vs. Laxa (36 Phil.
Rep., 670) is not controlling, as the reasoning upon which it is based was not
concurred in by four members of the court. Furthermore, the Laxa case might be
distinguished from the one now under consideration, were it necessary to do so,
in that it has been stipulated in this case that fish cultivated in ponds
subsist largely upon aquatic plants which grow from roots which attach
themselves to the bottom of the pond, and are therefore in a real sense a
product of the land, while in the Laxa case the evidence was that they subsisted
solely upon free floating algae.
We are therefore of the opinion, and so hold, that the decision heretofore
rendered herein must be set aside, and the judgment of the lower court affirmed.
So ordered.
Arellano, C. J., Torres, and Johnson, JJ., concur.
Araullo, J., dissents.
[1] 37 Phil. Rep., 545.
CONCURRING OPINION
STREET, J., concurring:
At the original hearing, I became quite firmly convinced, as I supposed, that
the product of a fishery maintained in the manner shown in this case ought not
to be considered an agricultural product, within the meaning of the provision of
the Internal Revenue Law which exempts agricultural products from the merchant’s
tax. Upon fuller reflection, and further consideration of the arguments advanced
at the rehearing in favor of the other contention, I have come to the conclusion
that I was wrong. I therefore take this opportunity to recede from my former
position and to express my conformity with the opinion which now becomes the
opinion of the majority of the court.
My conformity with the opinion first written was based on the conviction that
the term “agricultural products,” as used in this statute, had reference to
articles produced by purely agricultural processes, more especially by the
tillage of the fields. As I now view the case, this conception of the meaning of
agricultural is too narrow. It must be admitted that poultry, eggs, pigs, and
other ordinary produce of farm and country are agricultural products within the
meaning of the statute; and no sufficient reason is discernible for excluding
fish produced under the conditions revealed in this case.
DISSENTING OPINION
CARSON, J., dissenting:
I dissent.
As I understand them, the contentions of counsel in support of the motion for
a rehearing and reconsideration are substantially identical with those adduced
in the briefs and the oral arguments when the case was originally submitted.
I have heard nothing which would lead me to modify my views or my vote when
the case was decided and the decision promulgated.
DISSENTING OPINION
MALCOLM, J., dissenting:
This case well illustrates how on the same facts, the same law, and the same
authorities, judges can arrive at diametrically opposed conclusions.
Take the facts. They are stipulated. The only difference is that possibly
unconsciously, in order to fortify the conclusion, the decision of the majority
on reconsideration would stress the point that an important article of diet
consumed by fish grown in a pond consists of certain marine plants which grow
from roots which affix themselves to the bottom of the pond, while the original
decision as well as the decision in the Laxa case,[1] possibly also in order to fortify their
conclusions, would stress the scientific fact that the food of the
bangus includes marine plants, that these algae are of seven classes,
that one of these plants is rooted, that some of the others are very loosely
attached to the ground but not rooted, and that generally the algae float on the
water.
Or take the law. The section in dispute is made up of a few simple words. In
reality, the meaning of the phrase, “agricultural products,” is only to be
ascertained. The primary duty of the court is, of course, to ascertain
legislative intention. But here again the two decisions radically differ. The
decision of the majority on reconsideration in a laudable endeavor to encourage
commercial development would make this the purpose of the law and would follow
this idea consistently to the end. On the other hand, the original decision
would start with the same presumption but finding that to so construe the law
would result in judicial amendment must then necessarily reach a different
result; if the Legislature had intended to exempt all classes of domestic
products which would include fish, it would undoubtedly have done so in plain
language.
Or take the authorities. The Supreme Court of Georgia (Davis vs.
Mayor [1879], 64 Ga., 128) would confine “agricultural products” to the yield of
the soil, as corn, wheat, rye, hay, etc,. Possibly this court was right. The
supreme courts of Alabama and Wisconsin (Dillard vs. Webb [1876], 55
Ala., 468; Binzel vs. Grogan [1886], 67 Wis., 147) would go further and
would include as “agricultural products” the rearing, feeding, and management of
live stock. In this construction, these courts may have been right for, as one
example, it is merely a matter of comparative profit to the farmer whether he
markets his corn in the ear or on the hoof in the shape of swine. The Supreme
Court of Pennsylvania (Mayor vs. Davis [1843], 6 W. & S., 269)
would go still further and would include as “agricultural products” swine,
horses, meat, cattle, sheep, manure, cord wood, hay, poultry, vegetables, fruit,
eggs, milk, butter, and lard, that is, domestic animals and products of the
farm. Possibly, this court was right. And now the Supreme Court of the
Philippine Islands in granting the motion for reconsideration would go even
further and would include in the term “agricultural products” frogs, foxes,
bees, pigeons, silkworms, silk, honey, and fish. Possibly, this court is right.
Try as I may, for I am gratified to have this the decision of the court, I
cannot bring myself to this view. Without giving way to the temptation to use
ironical and facetious language because of this result, let me merely make the
observation that where the limit will be reached is beyond my poor mind to
comprehend. Another court could very well instead of prolonging the examples ad
infinitum merely judicially repeal the word “agricultural” and include
everything which would fall under the word “products.”
My views and those of three other members of the court are fully set out in
the first decision. Restatement or reargument will avail nothing. Suffice it to
say that the argument on motion for reconsideration and the decision of the
majority have failed to convince me that fish—or to accede to the critical
suggestion of the majority—that fish produced as were those upon which the tax
in question was levied, are an agricultural product. The administrative ruling
of the Attorney-General, the decision of this court in United States
vs. Laxa ([1917], 36 Phil. 670), and the original decision in the
instant case should not be overturned by granting this motion.
[1] 36 Phil. Rep., 670.