G.R. No. L-8467; June 28, 1957
HASSARAM DIALDAS AND LACHMI HASSARAM, petitioners-appellants, vs. MARIANO PERDICES, as City Mayor of Dumaguete City, respondent-appellee.

FACTS

On January 20, 1954, petitioners, alien merchants, paid their business taxes and licenses for the year for their retail business, the “Cebu Department Store,” in Cebu City. Due to failing business conditions, they decided to transfer the business to Dumaguete City. They secured a permit from the respondent Mayor of Dumaguete, found a location, and informed the Cebu City Treasurer, who authorized the transfer and annotated it on their tax receipt (Exhibit “A”) on June 8, 1954. They then closed the Cebu store and shipped the goods to Dumaguete. On June 11, 1954, they paid the municipal license in Dumaguete and began operating. However, on June 12, 1954, the Mayor informed them, citing a telegram from the Executive Secretary, that their permit would be revoked effective June 20, 1954, unless the President vetoed the Nationalization Bill ( Republic Act No. 1180 , the Retail Business Act), as the directive prohibited new licenses for aliens and disallowed the opening of branches or transfer of business requiring a new license. Subsequently, the City Treasurer of Dumaguete refused to accept further tax payments from petitioners without written authorization from the Mayor, who refused to provide it. Facing the closure of their Dumaguete store, petitioners filed an action in the Court of First Instance seeking a declaration of their rights under Republic Act No. 1180 and a writ of preliminary injunction. The trial court ruled against petitioners, holding their Dumaguete store was a new business not existing on May 15, 1954, and thus not within the exception under the Act, and that any closure order by the Mayor would be valid.

ISSUE

Whether petitioners, alien merchants who were actually engaged in the retail business prior to the approval of Republic Act No. 1180 and who transferred their existing business from one city to another, are entitled to continue operating in the new location under the exception provided in the Act and in accordance with Section 199 of the Internal Revenue Code.

RULING

Yes. The Supreme Court reversed the trial court’s decision. Petitioners, as aliens actually engaged in retail business before the Act’s approval, are entitled under Section 1 of Republic Act No. 1180 to continue their business until death or voluntary retirement. Their closure of the Cebu store was not a voluntary retirement but a transfer due to business conditions. Section 199 of the Internal Revenue Code, which allows a business for which the privilege tax has been paid to be removed to another place without additional tax during the tax term, was not repealed by Republic Act No. 1180 . The transfer, authorized and annotated on their tax receipt, was legal. Therefore, the Dumaguete store is not a “new business” or an “additional store or branch” prohibited by the last paragraph of Section 1 of the Act, but a continuation of their existing enterprise. Petitioners are entitled to engage in retail business in Dumaguete City, secure the corresponding license, and pay the due taxes. The preliminary injunction was made permanent, enjoining the Mayor from closing the store and ordering him to issue the corresponding license.