G.R. No. L-10113; November 22, 1915
ROMULO MERCADO, plaintiff-appellee, vs. THE COLLECTOR OF INTERNAL REVENUE, defendant-appellant.

FACTS:
On April 25, 1912, the Collector of Internal Revenue demanded and collected from Romulo Mercado the sum of P29.85 as a tax on bakawan firewood. The firewood was cut by Mercado from bakawan plants grown on his own mangrove swamp land in Sexmoan, Pampanga, and sold in Manila. Mercado paid the tax under protest and subsequently filed a formal protest with the Collector, which was denied. He then filed a complaint in the Court of First Instance of Manila, arguing that the levy and collection of the tax were illegal. Mercado contended that raising bakawan was an agricultural labor, making the firewood an agricultural product, and that as an agriculturist, he was exempt from the tax under the Internal Revenue Law (Act No. 1189). The Collector of Internal Revenue, through the Attorney-General, admitted most facts but denied that raising bakawan constituted genuine agricultural labor. The trial court ruled in favor of Mercado, ordering the refund of the tax collected. The Collector appealed.

ISSUE:
Whether bakawan firewood, produced from plants cultivated and gathered by the plaintiff on his land, is an agricultural product, thereby exempting the plaintiff, as an agriculturist, from the payment of the tax on its sale under subsection (a) of section 142 of Act No. 1189.

RULING:
Yes. The Supreme Court affirmed the judgment of the lower court. The Court held that the cultivation of bakawan constitutes genuine agricultural labor. The evidence established that bakawan is raised on mangrove swamps which require clearing, preparation, and periodic weeding. The plants are cultivated from seeds or sprouts and cared for over a period of seven to nine years before being harvested. This process is analogous to the cultivation of other recognized agricultural products like rice or sugar cane. Consequently, bakawan firewood is an agricultural product, not a forest product gathered from wild trees. The plaintiff, as the owner of the land where the bakawan was planted and harvested, is an agriculturist within the meaning of Act No. 1189. As such, he is exempt from the payment of the business tax on the sale of products from his own production under subsection (a) of section 142. The Collector of Internal Revenue was ordered to return the sum of P29.85 to the plaintiff.