THE UNITED STATES, PLAINTIFF AND APPELLEE, VS. SIXTO LAXA, DEFENDANT AND APPELLANT.

Two causes were instituted against the defendant Sixto Laxa in the Court of
First Instance of Pampanga, recorded respectively under Nos. 1697 and 1698, and
were commenced by complaints entered by the fiscal which, respectively, read as
follows:

“The undersigned charges Sixto Laxa with a violation of article 169, in
connection with section 45, subsection (p), of Act No. 2339, as
amended, committed as follows:

“That the said accused Sixto Laxa, on and prior to the 23d day of April,
1915, in the municipality of Sexmoan, Pampanga, P. I., did, willfully,
unlawfully and criminally, and without previously having paid for the proper
license, engage in the sale of fish—a business subject to the payment of
one-third of one per cent on the gross cash value of the sales. An act committed
with violation of law.

“The undersigned fiscal charges Sixto Laxa with a violation of section 169
(a) in connection with sections 39 and 40, of Act No. 2339, committed
as follows:

“That the said accused, Sixto Laxa, being a fish merchant, did, on and prior
to April 23, 1915, in the municipality of Sexmoan, Pampanga, P. I., willfully,
unlawfully and criminally, fail to make within the period prescribed by law the
return of the receipts or earnings of his business, for the purpose of the
payment of one-third of one per cent of his sales, said business being, as it
was, subject to said tax. An act committed with violation of
law.”

The defendant plead not guilty in both said cases, and, these having been
tried jointly, he admitted the following facts:

“That, since 1901, he has been the owner of three fisheries in the pueblo of
Sexmoan, Pampanga; that, during the season for the catching of the fish raised
in these ponds, he sells said fish to the buyers who go in quest thereof to said
ponds and does not sell them in the market; that he also sells some of said fish
in the market, through means of his children or servants who go there for this
purpose; that he never has refused to pay any tax whatever, and that if he has
not paid the one here in question, it is because he believes it is not and never
has been included by the new Internal Revenue Law, nor by Act No. 1189; that,
during all that time, even since the enactment of said Act, he has never been
required to pay said tax, except on the present occasion when it is demanded of
him in accordance with Act No. 2339; and that, for the same reason above stated,
to wit, that he has not believed himself to be included by the provisions of Act
No. 1189, he has made no payment either for a license or for
taxes.”

On November 4, 1915, at the conclusion of the trial, the court rendered
judgment in each of said two cases, found the defendant guilty of the respective
violations of law charged in the two complaints, and sentenced him, for each
violation, to pay a fine of P10 or, in case of insolvency, to suffer the
corresponding subsidiary imprisonment, to pay the required tax and the costs of
trial. From these judgments the defendant appealed and alleged that the lower
court erred: (1) In not considering the fish, that are products of the land, as
agricultural products; (2) in considering as a merchant, dealer, or tradesman
the owner of a piece of land used as a fishpond, who sells on the land itself or
at such pond the products (fish) of said land or pond; (3) in declaring the
defendant not to be comprised within the exemptions contained in sections 40 and
41 of Act No. 2339; (4) in finding the defendant guilty of the violations
charged; and (5) in sentencing the defendant to pay a fine of P10, or, in case
of insolvency, to suffer subsidiary imprisonment, and also to pay the tax
imposed and the costs of trial.

All the appellant’s arguments to show that the first alleged error was
committed are founded on the facts, as stated in his brief, that this Supreme
Court has in various decisions set down the principle that fish ponds are deemed
agricultural land; that in the case of Mercado vs. Collector of
Internal Revenue (32 Phil. Rep., 271) this court decided that mangrove-swamp
lands, which are precisely the land on which fishponds are constructed, are
lands of an agricultural character, and that the trees or products of such lands
should likewise be considered products of agricultural lands. In order to make
his arguments convincing, appellant explains in his brief how the fisheries in
these Islands are constructed and prepared, or, better said, makes an
explanation relative to the lands intended for fishponds, the placing therein of
young fish for the purpose of their development and reproduction, and the care
and proper feeding of the fish to keep them from dying; and finally, he states
that there is no transformation of any kind, for it is little fish known by the
name of bañgus that are let into the fishponds and from them the fish bañgus are
taken by their owner and offered for sale.

In the first place an inexact assertion is made in the first assignment of
error, in affirming that fish are products of the land. In order that they may
be deemed to be such,it would be necessary that between the fish and the land
there be a relation such that, by reason and by means thereof, the fish could
exist and reproduce themselves, or, what amounts to the same, that the fish be
related to the soil of the land used as a fishery or live off of some product of
the land itself; and this relation does not exist, for, as the appellant himself
says, and also the Attorney-General, the fish raised in the fishponds feed on
the moss, verdure or pond-skum that grows in the water. These fish can live,
develop and reproduce themselves in the same manner wherever they have such kind
of food, which is not found solely and exclusively in fishponds.

Products of the land or the ground are those things that spontaneously sprout
and grow in it, or that sprout and grow therein through means of labor. In this
case are the grasses, the bushes or shrubs and the trees that spontaneously
sprout in the land, or the plants that are planted in the land and are
cultivated in it, producing wood, cereals or other kinds of articles for food or
for some purpose of commerce or industry.

“The products of an estate are the things that are produced by means of
labor, or that are of spontaneous growth, and the products of his own estate are
those produced by the owner or cultivator thereof.” (State vs. Kennedy,
S. E., 47.)

As the fish that are raised, developed and reproduced in the fishponds or
fisheries cannot be deemed products of the land, much less may they be said to
be agricultural products.

In the second place, it is true that among the several decisions cited by the
appellant in his brief, in that of Santiago vs. Insular Government (12
Phil. Rep., 593) it was held that the doctrine established in the case of
Mapa vs. Insular Government (10 Phil. Rep., 175) was adhered to, in the
sense that fish ponds are considered to be agricultural lands; but, for the
proper understanding of that finding, account must be taken of what the Supreme
Court said in its decision in the case of Mapa vs. Insular Government
(supra). In that case, in view of the fact that in sections 13 and 15
of the Act of Congress of July 1, 1902, no express definition of the phrase
“agricultural lands” was given, they referring solely to timber or mineral
lands, this court, interpreting section 13 of said Act, which provides that “the
Government shall classify according to its agricultural character and
productiveness, and shall immediately make rules and regulations for the lease,
sale, or other disposition of the public lands other than timber or mineral,”
held that in said Act of Congress there is to be found a definition of the
phrase “agricultural public lands,” and that the phrase “agricultural lands,”
“as used in Act No. 926 means those public lands acquired from Spain which are
not timber or mineral lands;” and as in the said case of Mapa vs. Insular
Government (supra) the question at issue concerned a tract of land that
was neither timber nor mineral land, the court declared it to be comprised
within the classification of agricultural land. It had been uninterruptedly, for
more than twenty years, in the possession of the petitioner and his ancestors as
owners and had been used during the said period as fishponds, nipa lands, and
salt deposits.

But in the same decision just cited this court said that “the land in
question in this case, which is used as a fishery, could be filled up and any
kind of crops raised thereon.” So that this court did not precisely classify the
land concerned in the case of Mapa vs. Insular Government
(supra) as agricultural land because it was used as a fishpond or was a
fishery, or better said, on account of the very nature of the land, but because
it considered the land to be included in the classification given in the Act of
Congress in distinguishing agricultural from timber and mineral lands, with the
understanding that all public lands acquired by Spain, that were neither mineral
nor forest lands, fell within the definition of agricultural lands, as this
phrase is used in Act No. 926. It is in this sense, then, that we must
understand the finding made by this court in the case of Santiago vs.
Insular Government (supra), that it adhered to the doctrine established
in the case of Mapa vs. Insular Government, (supra), holding that
fishponds are agricultural lands.

In the third place, in the case of Mercado vs. Collector of Internal
Revenue (32 Phil. Rep., 271), thi$ court made the following
statements:

“1. Mangrove swamps are agricultural lands.—It has
been expressly held by the courts of these Islands that mangrove swamps are
agricultural, not mineral or forest land. (Mapa vs. Insular Government,
10 Phil. Rep., 175; Montano vs. Insular Government, 12 Phil. Rep., 572.)

“2. Internal Revenue Law; Tax on firewood; ‘Bakawan.’—The raising of
the plant or shrub known locally as bakawan, and the gathering of its
trunk and branches for firewood and for trading purposes in the pueblos of these
Islands constitute a genuine agricultural labor, as the sowing, planting,
harvesting and preparation of other strictly agricultural products which require
land cultivated and cared for similar to that required for raising bakawan for
firewood, and therefore the owner of a mangrove swamp used for raising bakawan
for firewood is a genuine and lawful agriculturist.”

In said decision no reference whatever is made to fishponds or fisheries. The
sole issue raised in the suit, as stated therein, was whether firewood produced
from bakawan which was planted or which grew on the plaintiff’s land,
is an agricultural product in the sense that the owner thereof who cuts it for
sale may be termed an agriculturist within the meaning of this word as used in
the Internal Revenue Law (Act No. 1189), and, consequently, whether he is exempt
from the payment of the taxes levied on the traffic of firewood; and said land
was classified as agricultural land, thus differentiating it from mineral and
forest lands, in accordance with the legal doctrine laid down in the case of
Mapa vs. Insular Government; and mentioning firewood produced from
bakawan planted on said land, we said that it was an agricultural
product of this kind of land, that is, we referred to what, as aforestated,
should be considered as a genuine product of the land, to wit, the shrub called
bakawan planted thereon.

In the decision above cited it was not said that mangrove swamp lands are
precisely those where fishponds are constructed, as the appellant states in his
brief in mentioning the principle laid down therein. In rendering that decision
no consideration at all was given to the fact that mangrove swamp land might, by
reason of its natural conditions, serve as fishponds or fisheries; so that the
legal doctrine established in said decision and which is above transcribed is
absolutely inapplicable to the case at bar, in so far as relates to any
deduction therefrom that the fish that are reproduced and raised on mangrove
swamp lands, converted into fisheries, are agricultural products. On the
contrary, what is to be deduced from said doctrine is that, when mangrove swamp
lands are converted into fisheries and are not used for the planting of the
plant or shrub known in this country by the name of bakawan—the
cultivation of which constitutes a genuine agricultural labor—said land ceases
by its nature to be agricultural land and the fish that are raised and
reproduced thereon cannot be considered as agricultural products.

Though the mangrove swamp lands, by their special conditions, to wit, their
proximity to the sea or to rivers, or because of their liability to overflow,
are adequate for the construction thereon of fishponds or fisheries, from the
moment they cease to be used for the planting or the cultivation of
bakawan or other shrubs intended for domestic use, as for firewood, or
which are the subjects of traffic or trade, and when such lands, by means of
excavations made therein, are converted into fishponds in the manner mentioned
in the appellant’s brief, by placing therein young fish for the purpose of their
development and reproduction, the fish hatched in said ponds being in time
offered for sale by their owner—without all this being the direct result of the
tillage and cultivation of the land, consisting in the preparation of the soil,
the planting of the seed of those shrubs or of any kind of plants or vegetables
whatsoever— then certainly said lands cease to be agricultural lands.

“Agriculture, as defined by Webster, is the art or science of cultivating the
ground, including the harvesting of crops, and rearing and management of live
stock.” (Binzel vs. Groban, 29 N. W., 895.)

“It (farming) is understood to mean the business of cultivating land, or
employing it for the purposes of husbandry.” (In re Drake, 114 Fed.
Rep., 229.)

And consequently neither can the fish grown, raised, and developed on these
lands converted into fishponds or fisheries, be considered agricultural
products.

“The common parlance of the country, and the common practice of the country,
have been to consider all those things as farming products or agricultural
products which had the situs of their production upon the farm, and
which were brought into condition for the uses of society by the labor of those
engaged in agricultural pursuits, as contra-distinguished from manufacturing or
other industrial pursuits.” (District of Columbia vs. Oyster, 54 Am.
Rep., 275.)

The lower court, therefore, did not commit the first error assigned by the
appellant in his brief, in not considering as agricultural products the fish
raised or reproduced in fishponds.

The defendant-appellant having admitted that the fish raised in the three
ponds owned by him in the pueblo of Sexmoan, Pampanga, are sold by him, some of
them at the ponds themselves and others .in the market, it is unquestionable
that he is engaged in the sale of fish and, under this concept, is a merchant,
pursuant to the provisions of Act No. 2339 and those of the Administrative Code,
approved February 24, 1916, and for the purposes of the respective tax.

Section 40 of said Act No. 2339, after providing that all merchants not
specifically exempted by said Act shall pay the tax therein specified, says:
“Merchant, as here used, means a person engaged in the sale, barter, or exchange
of personal property of whatever character,” and this same definition is found
in section 1614 of the Administrative Code. So then, contrary to the erroneous
opinion of the defendant-appellant, it is not necessary that the person who
sells such property should previously have bought it, in order that he may be
considered a merchant, for the purposes of the law.

The language of the Act is clear and positive and can be given no other
construction than that which from time to time has been given to it by the
administrative officials in their enforcement of said Act, in harmony with the
opinion of the Attorney-General transmitted by the Governor-General and Acting
Secretary of Finance and Justice, on April 23, 1906, to the Collector of
Internal Revenue, and mentioned by the Attorney-General in his brief; and this
construction is accordant with the doctrine established by the courts:

“A merchant is one who traffics, or who buys and sells goods or commodities.
He would be a merchant if his business consisted in buying without selling, and
he might be a merchant by simply selling.” (In re Cameron Town Mut.
Fire, Lightning & Windstorm Ins. Co., 96 Fed. Rep., 756.)

“Every person who keeps for sale and sells any kind of article at a fixed
price, is a merchant.” (Washburn vs. City of Oshkosh, 19 N. W.,
364.)

The defendant, then, being deemed under the law a merchant, and not being
comprised, for the purposes of the tax prescribed in said section 40 of Act No.
2339 (which is the same provision contained in section 1614 of the
Administrative Code) within the cases of exemption referred to by said two
sections and by section 41 of the same Act No. 2339 and by section 1615 of the
Administrative Code, it is evident that, by failing to make the return mentioned
in section 39 of said law which corresponds to the aforementioned section 1614
of the said Code, he has incurred the punishment provided in section 169 of Act
No. 2339, which is the same as that of section 2710 of the Administrative Code
now in force. Therefore the lower court did not commit the errors Nos. 2, 3, 4,
and 5, assigned by the appellant in his brief, except, with respect to these
last two errors, in so far only as regards the finding of the defendant’s guilt
and the sentence imposed upon him in case No. 1698 for the violation of law that
was the subject of the complaint in that case.

In the complaint that originated the proceedings against the defendant in
case No, 1697, he was charged with a violation of section 169, in connection
with section 45, subsection (p) of Act No. 2339, as amended, for having
engaged in the sale of fish—a business subject to the payment of one-third of
one per cent of the gross cash receipts from sales—without his having previously
paid the proper license.

Said section 45, subsection (p), of Act No. 2339, specifies the sum
of P8 as the fixed tax on business, that shall be collected from peddlers of
merchandise traveling from place to place, except peddlers of food stuffs and
those whose stock in trade amounts to less than P50 in value.

The facts were admitted by the defendant at the trial that he was accustomed
to sell to purchasers of fish who were wont to go to his respective fishponds
but not to sell them in the market, the fish raised in the three fisheries that
he owned in the pueblo of Sexmoan, Pampanga, and that he also used to sell some
of the said fish in the market, through means of his children or his servants
who were in the habit of going there for that purpose.

It appears, therefore, that the defendant did not commit the violation of
which he was charged in the complaint that originated case No. 1697, of section
45, subsection (p), of Act No. 2339—which is the same provision
contained in section 1619, subsection (p), of the Administrative
Code—because he was not a peddler of merchandise traveling from place to place,
to whom said section refers. The trial court therefore erred in finding the
defendant guilty of said alleged violation, and in sentencing him accordingly in
the judgment rendered in said case No. 1697.

Finally, no failure to observe uniformity in the tax system of these Islands
is committed, nor is there established any difference or inequality whatever
prohibited by the Constitutional Bill of the Philippines, by the fact that,
while the owners of fish ponds pay a land tax, five times greater, as the
defendant-appellant says, than other land-owners, they are required to pay, in
addition, another tax for the sale of their products.

In the first place, there is uniformity of taxation when the taxes are levied
equally upon the persons or the property comprised or classified in each taxable
group, in accordance with the manner in which the classification be made for the
purposes of taxation, by the Legislature, which has this power as incidental to
the principal power of levying taxes, in accordance with and in relation to the
system adopted for the creation and fixing of taxes. In the case at bar, the tax
on real estate and that of a certain per cent upon merchants have been
established within the general uniform system; fisheries are subject to the
first tax, and merchants to the second. The defendant-appellant, as a fishpond
owner and merchant, is in the same conditions as other owners of fishponds and
other merchants in these Islands, in respect to the payment of the respective
tax. In the second place, the land tax paid by the owners of fishponds, that is,
the tax on real estate, is different from the tax levied upon them as merchants,
for the very reason that each of these taxes has a separate and distinct origin;
one is a tax upon property, while the other, that is, the tax of a certain per
cent upon merchants, is a tax on the occupation in which such merchants are
engaged.

In this connection the citation made by the Attorney-General in his brief,
taken from the decision in the case of Bell’s Gap R. R. Co. vs.
Commonwealth of Pennsylvania (134 U. S. 232, 10 Sup. Ct. 533; 33 L. Ed., 892) is
to the purpose: “The provision in the XIV amendment, that no State shall deny to
any person within its jurisdiction the equal protection of the laws, was not
intended to prevent a State from adjusting its system of taxation in all proper
and reasonable ways. It may, if it chooses, exempt certain classes of property
from any taxation at all, such as churches, libraries and the property of
charitable institutions. It may impose different specific taxes upon different
trades and professions, and may vary the rates of exercise upon various
products; it may tax real estate and personal property in a different manner; it
may tax visible property only, and not tax securities for payment of money; it
may allow deductions for indebtedness, or not allow them. All such regulations,
and those of like character, so long as they proceed within reasonable limits
and general usage, are within the discretion of the State Legislature, or the
people of the State in framing their Constitution.”

Said Internal Revenue Law is not, therefore, unconstitutional in so far as it
fixes the tax which must be paid by those who, as merchants, sell fish obtained
from their fishponds or fisheries, while liable at the same time to the payment
of the proper land tax.

For the foregoing reasons, we affirm, the judgment appealed from, rendered in
case No. 1698, with the costs against the defendant-appellant, and we reverse
the judgment, also appealed from, rendered in case No. 1697, and freely absolve
the defendant therefrom, with the costs of both instances de officio.
Let a certified copy of this decision be attached to the record in said case No.
1697. So ordered.

Torres, J., concurs.

Moreland, Trent, and Carson, JJ., concur in the
result.