G.R. No. L-9549, December 21, 1957
MANILA TOBACCO ASSOCIATION, INC., plaintiff-appellant, vs. THE CITY OF MANILA, and M. SARMIENTO, in his capacity as City Treasurer of the City of Manila, defendants-appellees.

FACTS

The Manila Tobacco Association, Inc., composed of manufacturers and dealers in cigars, cigarettes, and other tobacco products, filed an action for declaratory relief assailing the validity of Ordinance No. 3634 of the City of Manila and its complementary regulations. The ordinance imposes a municipal tax on those engaging in business as wholesale dealers in general merchandise, defining “general merchandise” to include all articles subject to percentage taxes, graduated fixed taxes, and specific taxes, as well as poultry, livestock, fish, and other allied products. This ordinance amended a previous one (Ordinance No. 3420) which had expressly excluded articles subject to specific taxes. Since cigars and cigarettes are subject to specific taxes under the Internal Revenue Code, the amended ordinance affected the plaintiff’s business. The plaintiff argued that the City of Manila’s charter (Republic Act 409, Section 18, paragraph O) grants the power to tax dealers in general merchandise but that the term “general merchandise” does not include dealers in articles subject to specific taxes, like cigars. The trial court, presided by Judge Rafael Amparo, dismissed the case, prompting this appeal.

ISSUE

1. Whether the term “general merchandise” in the City Charter includes articles subject to specific taxes, thereby authorizing the City of Manila to tax wholesale dealers in cigars and cigarettes under Ordinance No. 3634.
2. Whether the implementing regulations correctly classify manufacturers who sell their products at wholesale at places other than their factories as “wholesale dealers” subject to the tax.

RULING

1. Yes. The Supreme Court affirmed the ordinary meaning of “general merchandise” as including all articles usually bought and sold in trade, either wholesale or retail. Cigars and cigarettes unquestionably fall under this category. The Court rejected the plaintiff’s argument that “general merchandise” should be limited to articles subject to fixed and percentage taxes, excluding those subject to specific taxes. The express inclusion of poultry and livestock in the charter’s definition was out of caution due to their nature as living objects, not because of their tax status under Section 188 of the National Revenue Code. If the Legislature intended to exclude articles subject to specific taxes, it would have done so explicitly, as it did in other laws like Commonwealth Act No. 472 . The City’s power to tax such goods is justified by its greater revenue needs for expanded services.
2. Yes. The Court upheld the regulation classifying manufacturers who conduct the business of selling their own products at wholesale at places other than their factories as “wholesale dealers.” Relying on Central Azucarera Don Pedro vs. City of Manila, the Court held that a manufacturer becomes a dealer if it carries on the business of selling its goods at a store or warehouse apart from its own manufactory. Therefore, the regulation is valid.
The order of dismissal is affirmed, with costs against the appellant.