CITY OF MANILA, PLAINTIFF AND APPELLANT, VS. FORTUNE ENTERPRISES, INC., DEFENDANT AND APPELLEE.

From the judgment of the Court of First Instance of Manila, dismissing
the plaintiff’s complaint in Civil Case No. 31431, the City of Manila
interposed, directly to this Court, the instant appeal on issues of law.

This action was instituted by the plaintiff city, seeking to recover
from the defendant, Fortune Enterprises, Inc., the sum of P3,060.00,
representing the license fees, mayor’s permit fees, and surcharges for
the businesses of auto supplies, battery charging and upholstery, for
the periods therein contested, imposed pursuant to Ordinances Nos.
3338, 2989, 2678 and 3000 of the City of Manila.

The facts are well-stated in the decision of the court below.

Prior to 1953 up to November, 1954, the defendant had engaged in the
business of automobile repairing, with its office and shop located at
the corner of Echague and P. Casal Streets, Manila. For said repair
business, the company paid all taxes, license fees, and mayor’s permit
fees required by the National Government and by the City Government of
Manila.

When a customer brought a car or vehicle for repair,
the defendant would inquire from him the repairs to be done and would
make a list thereof in a job list, and if materials were needed to be
used, the defendant would ask the car-owner whether the same would be
supplied by him or by the defendant. The latter did not carry a stock
of automobile spare parts in its establishment for sale to the public.
It secured the necessary spare parts by buying them from different
automobile supply stores in the City. And every time the defendant
installed said automobile spare parts, it was always in connection with
a job order. For its auto repair business, the company paid the
corresponding contractor’s tax of 3% on its gross receipts including
labor and materials.

In connection also with its auto repair
shop, the defendant has a battery charging unit for the exclusive use
of its customers, but the same was not allowed to be used without any
repair job to be done. The upholstering, when needed by a customer, was
done by outside contractors. Hence, if a customer wanted a new set of
seat covers, the defendant arranged the matter with an outside
contractor, who is not included in the defendant’s payroll nor
regularly employed by it. However, the defendant usually advanced the
money to the outside contractor for the purchase of the required
upholstering materials from outside, which accounts for their cast
being included in the receipts of payment issued by the defendant to
its customers. Defendant does not carry a stock of upholstering
materials for sale to its customers or to the public.

In
this appeal, the appellant, City of Manila, urges the reversal of the
lower court’s opinion that the appellee, Fortune Enterprises, Inc., may
not be regarded as a retail dealer of automobile spare parts under the
foregoing statement of facts, and that, likewise, it may not be held
liable for the payment of the necessary license fees and mayor’s permit
fees for its battery charging and upholstering services.

We find no error in the judgment appealed from. In Manila Press, Inc. vs.
Sarmiento, etc., 99 Phil., 31; 53 Off. Gaz. (1) 98, this Court,
resolving the issue of whether or not the plaintiff, a printing
company, should be considered as a retail dealer in paper, stationeries
and book supplies in so far as the same were used by it in performing
its printing jobs for its customers, held:

“*
* * There is no question that as to books, papers, stationeries and
office supplies on which no printing work was performed,
plaintiff-appellant merely acted as a retail dealer, subject to tax
under Group 2. But when it printed on such papers, stationeries and
office supplies the names of its customers, it acted merely as a
printer and the receipts from them for the stationeries and office
supplies on which customers’ names were printed were not receipts for
the sales of a retail dealer, but receipts of a printer. In doing the
work, plaintiff-appellant’s principal service was that of a printer,
and not that of a retail dealer. The value of the printing work done is
considerably more than that of the material used for the printing, and
although there is also a sale of the paper and material on which the
printing job is done, this a mere incident of the service, the nature
of the transaction being determined by the principal purpose, which is
that of the printing and not of the incidental sale. This is the
consensus of authority.”

The foregoing
ruling brings out the point that where something is done as a mere
incident to, or as a necessary consequence of, the principal business,
it is not ordinarily taxed as an independent business in
itself; and that what is usually taken as essential is the main
activity in which the taxpayer is engaged. All the various transactions
tending to better accomplish the principal end in view must be treated
as merely incidental to the principal purpose of the business, in the
absence of circumstances evidencing a different intent.

In Standard Vacuum Oil Co. vs. Antigua, 96 Phil., 909; 51 Off. Gaz., 2405, we likewise held:

“When
a person or company is already taxed on its main business, it may not
be further taxed for doing something or engaging in an activity or work
which is merely a part of, incidental to and is necessary to its main
business.”

In this case, we cannot consider the appellee, besides being engaged in the auto repair
business, as having gone into the business of retailing auto supplies,
battery charging and upholstery. It does not appear that the appellee
company carries or keeps in stock auto spare parts and other supplies
for sale or as likewise a part of its regular business. Upon the other
hand, the records disclose that said spare parts or supplies are merely
procured from different automobile spare parts dealers around the city
where the customers prefer it that way and do not wish to secure them
themselves, and only when said materials are needed in connection with
the repairing job to be done by it. It is not even shown that the
company charges an extra profit for the spare parts used or needed in
the repair. If at all, the appellee was merely buying the required
materials for and in behalf of its customers. Of course, “dealing” is
not incompatible with agency, but it has a persuasive effect in
negating the fact that the appellee has regularly engaged in that
business as to come within the term “dealer” under the taxing
ordinances in question.

For similar reasons, the appellee
may not be considered as having engaged also in the business of battery
charging. In maintaining the battery charging unit in question, it
appears that the same was not allowed to be used unless as a part of a
repair service. As regards the upholstering business, it is not
disclosed that the appellee actually engages in it. On the contrary, it
was satisfactorily established that whenever a customer required an
upholstering job, the same was done by outside contractors, but that
the money is only advanced by the appellee, more as a matter of
convenience to its customers, which in a way also tends to promote its
goodwill.

That the materials were itemized as separate
charges does not evidence an intent to supply them as a separate
transaction, since the itemization served to allay any suspicion of the
customers that they were being overcharged for the materials thus
supplied.

With the foregoing conclusions, it is unnecessary for us to dwell further into the other issues raised in the appeal.

Wherefore, the judgment of dismissal appealed from is hereby affirmed. No costs.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia, Barrera, and Gutierrez David, JJ., concur.