G.R. No. L-12481; August 31, 1961
CO TUAN, petitioner, vs. THE CITY OF MANILA, respondent.

FACTS

Co Tuan owned a soap factory in Manila, for which he paid a manufacturer’s license fee under the city ordinance. He also maintained a separate retail store four blocks away from the factory, where he paid a retail license fee. City inspectors, examining the store’s books and invoices, discovered records of wholesale sales. Consequently, the City of Manila assessed Co Tuan a wholesale dealer’s tax, which he paid under protest. He then filed a suit for refund in the Court of First Instance of Manila, which ruled in his favor. The City appealed to the Court of Appeals, which reversed the lower court. The Supreme Court subsequently acquired exclusive jurisdiction for final review.
Co Tuan contended the wholesale transactions occurred exclusively at his factory and were covered by his manufacturer’s tax, arguing the invoices found at the store were merely kept there due to lack of factory space. He presented testimony and invoices stamped “Factory Sales/Tax Included” to support this. The City, however, presented evidence that the original invoices lacked these stamps and bore only the store’s address, asserting the wholesale sales were indeed conducted at the separate store location, making him liable for the wholesale dealer’s tax.

ISSUE

The primary issue is whether Co Tuan, a manufacturer who sells his own products at a store separate from his factory, is liable to pay the wholesale dealer’s tax imposed by the City of Manila.

RULING

The Supreme Court ruled against Co Tuan, upholding his liability for the wholesale dealer’s tax. The Court found his factual claim unsupported by the evidence. The original invoices lacked the “Factory Sales” stamp and bore only the retail store’s address, not the factory’s. This contradicted his testimony and suggested an attempt to retroactively characterize store sales as factory sales. Furthermore, some stamped invoices were for very small amounts inconsistent with typical wholesale transactions.
On the legal argument, the Court rejected Co Tuan’s claim that a manufacturer selling his own products is exempt from a dealer’s tax. It affirmed established doctrine, citing precedents like Cebu Portland Cement Co. vs. City of Manila, which holds that a manufacturer becomes a dealer subject to a separate tax if he carries on the business of selling his products at a store or warehouse apart from the place of manufacture. The separate store location constituted a distinct business activity. The Court also found no exemption under Section 18(o) of the City Charter, as that provision exempts only dealers already taxed under another specific dealer provision, not a manufacturer taxed under a different category. Therefore, the judgment of the Court of First Instance was reversed and Co Tuan’s complaint was dismissed. The decision of the Court of Appeals was declared null for lack of jurisdiction.