AMDG
● In October 26, 1915, a BIR representative demanded plaintiff to pay which the latter did under
protest for P71.811
Petitioner v. Respondents
GR. No. L-11988 Date: April 4, 1918 Ponente: Malcolm, J. Procedural
● Plaintiff’s protest was grounded on them being an agriculturist and not a merchant thus
Key Words: Fishpond, Agriculture, Fishing, Merchant Created by: Amiel Ibarreta exempt from taxes imposed by Internal Revenue Law (IRL) upon the gross sales of merchants
● Collector of Internal Revenue (CIR) denied the protest and declared plaintiff a merchant
Topic: Legislative Intent ● Suit to recover P71.81 was instituted in Court of First Instance of the city of Manila against
defendant CIR. Honorable Jose Abreu favored plaintiff and ordered defendant to refund the
Short Ruling Statement
P71.81 with legal interest thereon from Nov. 26, 1915.
● Defendant appealed the decision.
ISSUES-HELD-RATIO
Petitioners Respondents
WHETHER FISH IS AN AGRICULTURAL PRODUCT AND EXEMPTED FROM MERCHANT’S TAX
Jacinto Molina: Owner of various fishponds James Rafferty (Collector of Internal Revenue)
(pesquerias) NO. PLAINTIFF IS A MERCHANT AND FISH ARE NOT AGRICULTURAL PRODUCTS
A. Agricultural Land
In Mapa v. Insular Government and Mercado v. CIR, agricultural land is used to distinguish
RECIT READY SUMMARY
such land from timber/mineral land
Plaintiff filed an appeal on the decision of the Court of First Instance, City of Manila to the
Supreme Court Congress didn’t give it a definition or the products of such land. But the land could be filled
The issue is Whether or not Fish is an agricultural product that is exempt from taxes under the up and any kind of crops raised thereon.
Internal Revenue Law
The Court held NO. Agriculture is different from Fishing and it is clear from the intent of the law It may be devoted to other agricultural purposes and using a fish pond is a use other than
that the legislature intended the Internal Revenue Code for farmers to encourage farming agricultural.
and not fishing.
B. Plaintiff is a Merchant
Disposition Lower Court’s judgment is reversed and the defendant is absolved of the In Internal Revenue Law, a merchant is a person engaged in the sale, barter, or exchange of
complaint. personal property of whatever character.
DOCTRINE
● Cite the doctrine or primary topic in the case and how the same is applied Plaintiff is a person engaged in the sale of fish. Where under the law only selling is enough
FACTS to be classified as a merchant.
Substantive
C. Fish
● Plaintiff Jacinto Molina, owner of many fish ponds in Bulacan municipality, Province of Bulacan
In Dr. CLG Gunther on the Study of Fishes, fish are [Link] animals 2. Living in water
● Plaintiff consigned to a commission merchant in Manila quantities of fish for P5,264.98 while 3. Breathe air dissolved in water through gills or branchiae 4. Heart has 1 ventricle and 1
commission merchant paid the merchant’s percentage and fixed taxes due under the Internal atrium 5. Limbs are modified to fins supplemented by unpaired median fins and 6. Skin is
Revenue law either naked or covered in scales, osseous plates, or bucklers
● However, Plaintiff hadn’t paid the merchant’s tax from August 1, 1904 - October 26, 1915.
Rather plaintiff had paid the real estate tax of the land where the fishponds are located.
1
Total internal-revenue tax on gross sum received for the 1st three-quarters of 1915
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D. Agricultural Products Circular No. 106. Such contemporaneous construction is respected by the courts when
1. Agriculture, defined by Webster, is the art or science of cultivating the placed upon a statute by the executive offices whose duty is to enforce it. Unless such
ground, including preparing the soil, planting the seeds, raising and interpretation is clearly wrong.
harvesting of crops, and rearing, feeding, and managing livestock.
F. Legislative Intent of Internal Revenue Law (Act No. 1189)
In this case, Although the ground is cultivated and soil is prepared, the fish It was enacted by the Philippine Commission, where they had in mind agriculture which is a
are not sown in the ground but rather consume products of the farm by concept similar to the United States. Thus in the US, the American Government created the
living and depending on water for life, only gets nourishment from marine Department of Agriculture while the Bureau of Fishers is under the Department of
plants which have no connection to the land Commerce. Thus Agriculture and Fishing are separate and distinct.
2. Another definition of agriculture is equivalent to husbandry, defined by Similarly in the Philippines, the Philippine Legislature was interested in establishing a
Webster, which is the business of a farmer, comprehending agriculture or Bureau of Agriculture where enumerating their functions the word fish or fisheries were
tillage of the ground, the raising, managing, and fattening of cattle and never included. Rather such words can be found in the Bureau of Science not Bureau of
other domestic animals, the management of the dairy and whatever the Agriculture, special laws which include the words fish or fisheries are unrelated to
land produces agricultural products.
In this case, the land can’t be said to produce fish nor that a farmer is The purpose of exempting agricultural products from taxation was to encourage farming
understood to be a fisherman. and not fishing. Thus where language is plain, subtle refinements which tinge words so as to
give them the color of a particular judicial theory are not only unnecessary but decidedly
Agricultural Products, in ordinary usage, is the yield of the soil such as corn, wheat, harmful. In this case, the intention is shown through the words which most directly and aptly
rye, and hay. In Mayor v. Davis, agricultural products include swine, horses, meat express the ideas they intend to convey (Gibbons v. Ogden).
cattle, sheep, manure cordwood, hay, poultry, vegetables, fruit, eggs, milk, butter,
and lard. BUT FISH IS NEVER INCLUDED.
Therefore, Plaintiff is not entitled to exemption under the Internal Revenue Law.
In this case, agriculture is different from fishing as fisheries are comparable to
primitive hunting rather than agriculture. Although Fisheries are connected or
related with the soil, are more concerned with the water where the fish live . If
fishing is farming then farming must be fishing which isn’t true. OTHER IMPORTANT CONCEPTS
Nature of Fishpond
Last consideration is the word grown, in the law agricultural products must be ● Land - erection of dikes, cleaned out, and deepened in bottom
“grown”, which is defined in Webster, to cause to grow, cultivate; to grow a crop, ● Caretakers - see that the fishponds don’t become damaged and regulate water entrance and
wheat, hops, or tobacco. Thus fish are not grown in fishponds, unlike natural exit in the floodgates
products of lands, rather they are retained by the construction of artificial dykes. In
● Fish - Bangus2; small fishes in a small compartment, surrounded by walls of earth, in the
other words fish are not grown as wheat, hops, or tobacco are grown.
fishery. Once grown to a size of a cigar, they are let loose into other compartments of the
fishery
E. Contemporaneous Construction of the Internal Revenue Law ● FIsh once grown to large fish - once the fish are large, the fisher is filled with water which will
The Attorney-General, in an opinion, held that the culture of the soil was the determining be renewed every so often to avoid killing the fish.
factor in considering what products are or are not agricultural products. ● Walls of fishery - constructed to preserve and retain the water and fishes inside. Constructed
from swampy lands and sometimes rice fields bounded by a river or the sea
Such opinion was concurred by the Governor-General and Acting Secretary of Finance
Justice who helped draft the law. And was published in the Bureau of Internal Revenue
2
Obtained from small fishes (semillas)
AMDG
● Food of Bangus - marine plants. Algae: cladophora, chaetomorpha, oscillatoria, oedogonium,
lyngbya, enteromorpha, and najas. Most algae float in the water.
Merchant
● Means a person engaged in the sale, barter, or exchange of personal property of whatever
character (Act No. 2399, sec. 40; Administrative Code sec. 1459)
Sales not subject to merchant’s tax
● Agricultural products when sold by producer or owner of the land where grown, whether in their
original state or not.
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