[G.R. Nos. 62554-55. September 2, 1992.

REPUBLIC BANK, Petitioner, v. COURT OF TAX APPEALS AND THE

COMMISSIONER OF INTERNAL REVENUE, Respondents.

Asisteo S. San Agustin for Petitioner.

SYLLABUS

1. TAXATION; DOUBLE TAXATION DEFINED; NOT PRESENT WHEN ONE IS A

PENALTY AND THE OTHER IS A TAX; CASE AT BAR. — The wisdom of this is not the
province of the Court. It is clear from the statutes then in force that there was no double taxation
involved — one was a penalty and the other was a tax. At any rate, We have upheld the validity
of double taxation. (Double taxation: when the same person is taxed by the same jurisdiction for
the same purpose. [San Miguel Brewery, Inc. v. City of Cebu 43 SCRA 275, 280]) The payment
of 1/10 of 1% for incurring reserve deficiencies (Section 106, Central Bank Act) is a penalty as
the primary purpose involved is regulation, while the payment of 1% for the same violation
(Second Paragraph, Section 249, NIRC) is a tax for the generation of revenue which is the
primary purpose in this instance. Petitioner should not complain that it is being asked to pay
twice for incurring reserve deficiencies. It can always avoid this predicament by not having
reserve deficiencies. Petitioner’s case is covered by two special laws — one a banking law and
the other, a tax law. These two laws should receive such construction as to make them harmonize
with each other and with the other body of pre-existing laws. (Commissioner of Customs v. Esso
Standard Eastern, Inc., 66 SCRA 113, 120)

2. ID.; RESERVE DEFICIENCY TAX; QUESTION ON THE COMPUTATION MUST BE

RAISED AT THE EARLIEST STAGE. — Corollary issue raised by petitioner bank, is the
question on how the respondent Commissioner computed reserve deficiency taxes considering
that Sec. 249, NIRC, speaks of computation of what it calls penalty on a per month basis while
the Central Bank Act provides for the computation of the penalty on a per day basis. It claims
that respondent Commissioner never informed them of the details of these assessments,
considering the same involve complex and tedious computations. It is too late in the day for
petitioner to raise this matter for Us to resolve. The grounds alleged by the petitioner in its
motion for reconsideration of the Commissioner’s assessments are the very same grounds raised
in these petitions. Petitioner did not ask the Commissioner to explain how it arrived in computing
these reserve deficiency taxes. Neither did petitioner raise this question before the Court of Tax
Appeals.

3. ID.; ID.; LETTER OF INSTRUCTION NO. 1330; CONDONATION OF PENALTIES AND

OTHER SANCTIONS; COVERAGE; NOT APPLICABLE IN CASE AT BAR. — petitioner
bank in its brief mentions that in Letter of Instruction No. 1330 issued by President Marcos on
June 6, 1983, the Central Bank was ordered to assist petitioner by way of full condonation of all
penalties and other sanctions of whatever kind, nature and description, as of the date they
become due, on its legal reserve deficiencies. Consequently, petitioner insists that it is now
exempted from what it claims are the penalties imposed by the second paragraph of Section 249,
NIRC. A careful study of said LOI reveals that it was issued with respect to petitioner bank’s
(thereafter renamed Republic Planters Bank) role in the government’s sugar production and
procurement program as the financial arm of the sugar industry when the Philippine Sugar
Commission (PHILSUCOM), created by virtue of P.D. 388 1974), bought the petitioner bank
from the Roman family. The petition at bar involves the assessments for the years 1969 and
1970. This LOI definitely does not cover the years 1969 and 1970 as it was issued only on June
6, 1983 and covers the period when PHILSUCOM bought the then ailing Republic Bank from
the Roman family and renamed it the Philippine Planters Bank to be used as its financial conduit
for the sugar industry. Therefore, even on the thesis that the payment made (Second paragraph,
Section 249, NIRC) is a penalty, this "penalty" for 1969 and 1970 can not be condoned as said
LOI does not cover it.

DECISION

NOCON, J.:

Petitioner Republic Bank appeals the decision of public respondent Court of Tax Appeals dated
September 30, 1982 dismissing its Petition for Review, thereby affirming public respondent
Commissioner of Internal Revenue’s assessment for petitioner’s reserve deficiency taxes
inclusive of 25% surcharge for the taxable years 1969 and 1970 in the amounts of P1,325,768.82
and P1,953,132.67, respectively.

The antecedent facts as briefly summarized by the Solicitor General are as follows: jgc:chanrobles.com.ph

"On 14 September 1971, respondent Commissioner assessed petitioner the amount of

P1,060,615.06, plus 25% surcharge in the amount of P265,153.76, or a total of P1,325,768.82, as
1% monthly bank reserve deficiency tax for taxable year 1969. chanrobles lawlibrary : rednad

"In a letter dated 6 October 1971, petitioner requested reconsideration of the assessment which
respondent Commissioner denied in a letter dated 26 February 1973.

"On 5 April 1973, respondent Commissioner assessed petitioner the amount of P1,562,506.14,
plus 25% surcharge in the amount of P390,626.53, or a total of P1,953,132.67, as 1% monthly
bank reserve deficiency tax for taxable year 1970.

"In a letter dated 16 May 1973, petitioner requested reconsideration of the assessment which
respondent Commissioner denied in a letter dated 6 May 1974.

"Petitioner contends that Section 249 of the Tax Code is no longer enforceable, because Section
126 of Act 1459, which was allegedly the basis for the imposition of the 1% reserve deficiency
tax, was repealed by Section 90 of Republic Act 337, the General Banking Act, and by Sections
100 and 101 of Republic Act 265.
"On 28 March 1973, petitioner filed a petition for review with the Tax Court, docketed as C.T.A.
Case No. 2506, contesting the assessment for the taxable year 1969. On 3 July 1974, a similar
petition, docketed as C.T.A. Case No. 2618. was filed contesting the assessment for the taxable
year 1970.

"The cases, involving similar issues, were consolidated. After hearing, the Tax Court rendered a
decision dated 30 September 1982 dismissing the petitions for review and upholding the validity
of the assessments.

"Still not satisfied, petitioner filed this petition for review." 1

Petitioner urges that the issue to be resolved in this petition is: jgc:chanrobles.com.ph

"WHETHER SECTION 249 OF THE TAX CODE WHICH PROVIDES THAT ‘THERE
SHALL BE COLLECTED UPON THE AMOUNT OF RESERVE DEFICIENCIES
INCURRED BY THE BANK . . . AS PROVIDED IN SECTION ONE HUNDRED TWENTY-
SIX OF ACT NUMBERED ONE THOUSAND FOUR HUNDRED AND FIFTY-NINE (THE
CORPORATION LAW) . . . ONE PER CENTUM PER MONTH’ HAS BEEN RENDERED
INOPERATIVE BY THE REPEAL OF THE AFORESAID REFERRED PROVISION, I.E.,
SECTION ONE HUNDRED TWENTY-SIX OF THE CORPORATION LAW." 2

The second paragraph of Section 249 of the Tax Code of 1970 (C.A. No. 466 as amended by
Rep. Act No. 6110) invoked by the respondent Commissioner in making the assessments
provides that: jgc:chanrobles.com.ph

"There shall be collected upon the amount of reserve deficiencies incurred by the bank, and for
the period of their duration, as provided in section one hundred twenty-six of Act Numbered one
thousand four hundred and fifty-nine, as amended by Act Numbered three thousand six hundred
and ten, one per centum per month."  chanrobles virtual lawlibrary

which paragraph was based on Sec. 26 of R.A. 337, the General Banking Act, and Sections 100,
101, and 106 of R.A. 265, the Central Bank Act, all providing for the reserve requirements on
banking operations, while Section 126 of Act No. 1459 (The Corporation Law), as amended by
Art. 3610, reads: jgc:chanrobles.com.ph

"SEC. 126. Whenever the reserve as defined in the last preceding section of any commercial
banking corporation shall be below the amount required in that section such commercial banking
corporation shall not diminish the amount of such reserve by making any new loans or discounts,
or declare any dividend out of its profits until the required proportion between the aggregate
amount of its deposits and its reserve has been restored. Reserve deficiencies shall be penalized
at the rate of one per centum per month upon the amount of the deficiencies and for the periods
of their duration in accordance with the regulation to be issued by the Bank Commissioner. The
penalty assessed shall be collected by the Collector of Internal Revenue in accordance with the
rules, regulations and procedure to be determined by him. In the case of any commercial banking
corporation whose reserve is continuously deficient for a period of thirty days, the business of
such corporation may be wound up by the Bank Commissioner in accordance with section
sixteen hundred and thirty-nine of Act numbered twenty-seven hundred and eleven, as amended,
known as the Administrative Code" 3

According to petitioner, Section 126 has been expressly repealed by Section 90 of the General
Banking Act (R.A. No. 337), to wit: chanrobles law library : red

"Sec. 90. Sections one hundred seventy-five to one hundred eighty-three and one hundred ninety-
nine to two hundred seventeen of the Code of Commerce, as amended, section one hundred three
to one hundred forty-six and one hundred seventy-one to one hundred ninety of Act Numbered
fourteen hundred and fifty-nine, as amended; Acts Numbered Thirty-one hundred and fifty-four
and Thirty-five hundred and twenty, and all laws or parts thereof, including those parts of special
charters of the Philippine National Bank and other banking institutions in the Philippines which
are inconsistent herewith, are hereby repealed.

Both petitioner and public respondent agree that: jgc:chanrobles.com.ph

". . . The requirement on the maintenance of bank reserves, previously found in Section 126 of
Act 1459 (The Corporation Law), remained prescribed, after its repeal, in —

a. Sec. 26, RA 337 4 — subjecting the deposit liabilities of commercial banks including the
Philippine National Bank to the reserve requirements and other conditions prescribed by the
Monetary Board in accordance with the authority granted to 1t under the Central Bank Act.

b. Sec. 100, RA 265 5 — requiring banks to maintain reserves against their deposit liabilities;

c. Sec. 101, RA 265 6 — authorizing the Monetary Board to prescribe and to modify the
minimum reserved ratios applicable to each class of peso deposits;

d. Sec. 106, RA 265 7 — imposing a penalty of 1/10 of 1% for violation of the Banking Law." 8

As petitioner Republic sees it, Section 249 of the Tax Code (CA 466) can no longer be enforced
as the basis for which the tax is to be computed under Section 126, Act. 1459, is no longer in
force. The Central Bank Act (R.A. 265), specifically Sections 100, 101, 105 and 106, by
providing for a whole new set of rules in regard to reserve requirements and reserve deficiencies
of banks clearly show that it was the legislative intent to remove the regulation of the operations
of banks under the ambit of the Corporation Law (Art. 1459) and to place them under the
purview of Central Bank Act (R.A. No. 265) and the General Banking Act (R.A. 337).

Public respondents disagree and state that Section 249 of the then Tax Code (CA 466) is deemed
to have ipso facto incorporated by reference the new legislations on bank reserves after the
repeal of Section 126, Act. 1459.

Petitioner Republic argues then that in case of a reserve deficiency, the violating bank would be
liable at the same time for a tax of 1% a month (Second paragraph, Section 249, NIRC) payable
to the Bureau of Internal Revenue as well as a penalty of 1/10 of 1% a day (Section 106, Central
Bank Act) payable to the Central Bank. They argue that: jgc:chanrobles.com.ph
"As we examine the second paragraph of Section 249 of the Tax Code, we find nothing therein
which says that such imposition is a tax rather than a penalty. It merely states that ‘there shall be
collected . . . as provided in Section one hundred twenty six of Act Numbered one thousand four
hundred and fifty-nine . . . one per centum per month.’ On the contrary, the provision referred to
(Section 126 of Act 1459) states that ‘. . . reserve deficiencies shall be penalized at the rate of
one per centum per month . . . the penalty assessed shall be collected by the Collector of Internal
Revenue’. It would be wrong, therefore, to say that the imposition in Section 249 of the Tax
Code is a tax, not a penalty, because taken in the context of the referred statute, it is really a
penalty. Such imposition was provided in the Tax Code and payable to the Collector of Internal
Revenue simply because at that time there was yet no Central Bank Act and General Banking
Act nor a Monetary Board of Central Bank to regulate the operation of banks." 9

After a careful consideration of the facts of the case and the pertinent laws involved, We vote to
deny the petition. chanrobles.com:cralaw:red

Firstly, we would like to state that We find unfortunate petitioner’s act of quoting out context the
questioned provision in the Tax Code. Petitioner alleged that the second paragraph of Section
249 of the Tax Code "merely states" that there "shall be collected . . . as provided in Section one
hundred twenty one of Act numbered one thousand four hundred and fifty nine . . . one per
centum per month." cralaw virtua1aw library

If petitioner had been candid and honest enough, it would have stated under what title and
chapter of the Tax Code the second paragraph of Section 249 falls. As it then stood, the law
stated:chanrob1es virtual 1aw library

x        x       x

TITLE VIII — MISCELLANEOUS TAXES

"Sec. 249. Tax on Banks . . .

"There shall be collected upon the amount of reserve deficiencies incurred by the bank, and for
the period of their duration, as provided in section one hundred twenty-six of Act numbered one
thousand four hundred and fifty-nine, as amended by Act Numbered Three thousand six hundred
and ten, one per centum per month, . . . (As amended by Rep. Act No. 6110)" 10

Clearly, the law states a tax is to be collected.

As the law stood during the years the petitioner was assessed for taxes on reserve deficiencies
(1969 & 1970), petitioner had to pay twice — the first, a penalty, to the Central Bank by virtue
of Section 106 for violation of Secs. 100 and 101. all of the Central Bank Act and the second, a
tax, to the Bureau of Internal Revenue for incurring a reserve deficiency.

As correctly analyzed by the petitioner and public respondents, the new legislations on bank
reserves merely provided the basis for computation of the reserve deficiency of petitioner bank.
Petitioner submits that it was not the legislative intention that banks with reserve deficiencies
would pay twice as the Tax Code (CA 466, as amended by P.D. 69) enacted on January 1, 1973
did not contain said questioned provision.

While petitioner might have a point, the wisdom of this legislation is not the province of the
Court. 11 It is clear from the statutes then in force that there was no double taxation involved —
one was a penalty and the other was a tax. At any rate, We have upheld the validity of double
taxation. 12 The payment of 1/10 of 1% for incurring reserve deficiencies (Section 106, Central
Bank Act) is a penalty as the primary purpose involved is regulation, 13 while the payment of
1% for the same violation (Second Paragraph, Section 249, NIRC) is a tax for the generation of
revenue which is the primary purpose in this instance. 14 Petitioner should not complain that it is
being asked to pay twice for incurring reserve deficiencies. It can always avoid this predicament
by not having reserve deficiencies. Petitioner’s case is covered by two special laws — one a
banking law and the other, a tax law. These two laws should receive such construction as to
make them harmonize with each other and with the other body of pre-existing laws. 15

Dura lex sed lex!

II

Corollary to this issue raised by petitioner bank, is the question on how the respondent
Commissioner computed reserve deficiency taxes considering that Sec. 249, NIRC, speaks of
computation of what it calls penalty on a per month basis while the Central Bank Act provides
for the computation of the penalty on a per day basis. It claims that respondent Commissioner
never informed them of the details of these assessments, considering the same involve complex
and tedious computations.

It is too late in the day for petitioner to raise this matter for Us to resolve.16 The grounds alleged
by the petitioner in its motion for reconsideration of the Commissioner’s assessments are the
very same grounds raised in these petitions. Petitioner did not ask the Commissioner to explain
how it arrived in computing these reserve deficiency taxes. Neither did petitioner raise this
question before the Court of Tax Appeals.

Be that as it may, respondent Commissioner explained in compliance with Our Resolution of

December 17, 1984, that: chanrobles.com : virtual law library

"3. The reserve deficiency tax amounting to P1,325,768.82 and P1,953,132.67, including
surcharge, was computed on the basis of the monthly averages of reserve deficiencies using
figures on daily reserve deficiencies as appearing in DSE Form No. 1 duly accomplished by the
bank, required to be filed regularly with the Department of Supervision and Examination of the
Central Bank . . ." 17

Thus, what the respondent commissioner did was just to add up all the daily reserve deficiencies
— as stated by petitioner itself in DSE Form No. 1 which it submitted to the Central Bank — for
one month, divide such total by the number of banking days in a month to get the average
monthly reserve deficiency. For example, for January, 1970, the total daily average of reserve
deficiencies being P175,228.031.73, the monthly average was obtained by dividing said figure
by 21 banking days to get P8,344,196.75. The tax rate applied was 1% to get the reserve
deficiency tax of P83,441.97. 18 Obviously, the respondent commissioner could not apply the
tax rate of 1% on the daily reserve deficiency as the law (Second paragraph, Sec. 249, NIRC)
calls only for a monthly computation. Mathematically, this is the right procedure in obtaining the
monthly average of the daily reserve deficiencies.

As can be, seen, even if petitioner had validly raised said issue, the respondent Commissioner
merely followed the law to the letter.

III

Lastly, petitioner bank in its brief mentions that in Letter of Instruction No. 1330 issued by
President Marcos on June 6, 1983, 19 the Central Bank was ordered to assist petitioner by way of
full condonation of all penalties and other sanctions of whatever kind, nature and description, as
of the date they become due, on its legal reserve deficiencies. Consequently, petitioner insists
that it is now exempted from what it claims are the penalties imposed by the second paragraph of
Section 249, NIRC.

A careful study of said LOI reveals that it was issued with respect to petitioner bank’s (thereafter
renamed Republic Planters Bank) role in the government’s sugar production and procurement
program as the financial arm of the sugar industry when the Philippine Sugar Commission
(PHILSUCOM), created by virtue of P.D. 388 1974), bought the petitioner bank from the Roman
family.

The LOI itself states that: chanrob1es virtual 1aw library

x        x       x

"WHEREAS, IN PURSUIT OF THE GOVERNMENT’S SUGAR PRODUCTION AND

PROCUREMENT PROGRAM, REPUBLIC PLANTERS BANK INCURRED OVERDRAFTS
IN ITS CLEARING ACCOUNT WITH THE CENTRAL BANK IN VIEW OF THE
LATTER’S INABILITY TO EFFECT SUBSTANTIAL REGULAR LOAN RELEASES THRU
ITS REDISCOUNTING WINDOW DUE TO CERTAIN CONSTRAINTS ON DOMESTIC
CEILINGS RESULTING IN THE DEPOSIT RESERVE DEFICIENCIES AND
CORRESPONDING IMPOSITION OF PENALTIES FOR RESERVE DEFICIENCIES;

"WHEREAS, CONSIDERING THE MAGNITUDE OF THE AMOUNT OF THE RESERVE

PENALTIES WHICH MAY AFFECT ITS VIABILITY AND IN ORDER TO RATIONALIZE
THE SITUATION, IT IS IMPERATIVE THAT REPUBLIC PLANTERS BANK BE GIVEN
APPROPRIATE RELIEF FROM ITS PRESENT PREDICAMENT BROUGHT ABOUT
PRIMARILY BY THE IMPLEMENTATION OF THE GOVERNMENT’S SUGAR
PRODUCTION AND PROCUREMENT PROGRAM AND NOT BY REASON OF ANY
MISMANAGEMENT OR UNSOUND BANKING PRACTICE ON THE OPERATION OF
THE BANK." 20

The petition at bar involves the assessments for the years 1969 and 1970. This LOI definitely
does not cover the years 1969 and 1970 as it was issued only on June 6, 1983 and covers the
period when PHILSUCOM bought the then ailing Republic Bank from the Roman family and
renamed it the Philippine Planters Bank to be used as its financial conduit for the sugar industry.
Therefore, even on the thesis that the payment made (Second paragraph, Section 249, NIRC) is a
penalty, this "penalty" for 1969 and 1970 can not be condoned as said LOI does not cover it. chanrobles law library : red

WHEREFORE, premises considered, the petition is denied with costs against petitioner.

SO ORDERED.

Narvasa, C.J., Padilla and Regalado, JJ., concur.

Melo, J., took no part.

Endnotes:

1. Rollo, pp. 132-133.

2. Rollo, pp. 113(d) to 113(e).

3. Rollo, p. 113-b.

4. Sec. 26. The deposit liabilities of commercial banks including the Philippine National
Bank, shall be subject to the reserve requirements and other conditions prescribed by
the Monetary Board in accordance with the authority granted to it under the provisions
of the Central Bank Act.

5. Sec. 100. Reserve Requirements. — In order to control the volume of money created
by the credit operations of the banking system, banks operating in the Philippines shall
be required to maintain reserves against their deposit liabilities. The required reserves
of each bank shall be proportional to the volume of its deposit liabilities and shall
ordinarily take the form of a deposit in the Central Bank of the Philippines;
nevertheless, the Monetary Board may, whenever circumstances warrant, permit the
maintenance of part of the required reserve in the form of assets other than peso
deposits with the Central Bank. Reserve requirements shall be applied to all banks
uniformly and without discrimination.

6. Sec. 101. Required reserves against peso deposits. — The Monetary Board is
authorized to prescribe and modify the minimum reserve ratios applicable to each class
of peso deposits; Provided, however, That such ratios shall not be less than five per
cent (5%) or more than twenty-five per cent (25%) for time and savings deposits, and
shall not be less than ten per cent (10%) or more than fifty per cent (50%) for demand
deposits.

Notwithstanding the provisions of the preceding paragraph of this section, the Monetary
Board may, in periods of inflation, prescribe higher reserve ratios, but not exceeding
100 per cent, for any further increase in the deposits of each bank above the amounts
outstanding on the date on which the bank is notified of the requirement.

Whenever the reserve requirements established by the Monetary Board place any bank
under obligation to maintain minimum reserves in excess of twenty-five per cent (25%)
of its total time or savings deposits, or in excess of fifty per cent (50%) of its total
demand deposits, the Central Bank may pay interest on said excess at a rate which
shall not be higher than the Bank’s lower rediscount rate.

7. Sec. 106. Reserve deficiencies. — Whenever the reserve position of any bank,
computed in the manner specified in the preceding section of this Act, is below the
required minimum, the bank shall pay the Central Bank one-tenth of one per cent (1/10
of 1%) per day on the amount of the deficiency; Provided, however, that banks shall
ordinarily be permitted to off set any reserve deficiency occurring on one or more days
of the week with any excess reserves which they may hold on other days of the same
week and shall be required to pay the penalty only on the average daily deficiency
during the week. In cases of abuse, the Monetary Board may deny any bank the
privilege of offsetting reserve deficiencies in the aforesaid manner.

If a bank chronically has a reserve deficiency, the Monetary Board may limit or prohibit
the making of new loans or investments by the bank and may require that part of all
the net profits of the bank be assigned to surplus.

8. Rollo, pp. 103-104.

9. Rollo, p. 113 (i).

10. 1970 National Internal Revenue Code, p. 193.

11. Republic v. Bacus, 176 SCRA 376, 384.

12. Double taxation: when the same person is taxed by the same jurisdiction for the
same purpose. (San Miguel Brewery, Inc. v. City of Cebu, 43 SCRA 275, 280).

13. Progressive Development Corporation v. Quezon City, 172 SCRA 629, 635.

14. Ibid.

15. Commissioner of Customs v. Esso Standard Eastern, Inc., 66 SCRA 113, 120.

16. Matienza v. Servidad 107 SCRA 276, 283. .

17. Rollo, p. 165.

18. Rollo, p. 166.

19. Rollo, pp. 123-124.

20. Rollo, p. 123.

G.R. No. L-24265 December 28, 1979

PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION, plaintiff-appellant,

vs.
THE MUNICIPALITY OF JAGNA, PROVINCE OF BOHOL, defendant-appellee.

Picazo, Agcaoili, Santayana, Reyes & Tayao for appellant.

Joel P. Tiangco and Jesus N. Borromeo for appellee.

MELENCIO-HERRERA, J.:

A direct appeal by plaintiff company from the judgment of the Court of First Instance of Manila,
Branch VI, upholding the validity of Ordinance No. 4, Series of 1957, enacted by defendant
Municipality, which imposed "storage fees on all exportable copra deposited in the bodega within the
jurisdiction of the Municipality of Jagna Bohol.

Plaintiff-appellant is a domestic corporation with principal offices in Manila. lt is a consolidated

corporation of Procter & Gamble Trading Company and Philippine Manufacturing Company, which
later became Procter & Gamble Trading Company, Philippines. It is engaged in the manufacture of
soap, edible oil, margarine and other similar products, and for this purpose maintains a "bodega" in
defendant Municipality where it stores copra purchased in the municipality and therefrom ships the
same for its manufacturing and other operations.

On December 13, 1957, the Municipal Council of Jagna enacted Municipal Ordinance No. 4, Series
of 1957, quoted hereinbelow:

AN ORDINANCE IMPOSING STORAGE FEES OF ALL EXPORTABLE COPRA

DEPOSITED IN THE BODEGA WITHIN THE JURISDlCTI0N OF THE
MUNICIPALITY OF JAGNA BOHOL.

Be it ordained by the Municipal Council of Jagna Bohol, that:

SECTION 1. Any person, firm or corporation having a deposit of exportable copra in

the bodega, within the jurisdiction of the Municipality of Jagna Bohol, shall pay to the
Municipal Treasury a storage fee of TEN (P0.10) CENTAVOS FOR EVERY
HUNDRED (100) kilos;

SECTION 2. All exportable copra deposited in the bodega within the Municipality of
Jagna Bohol, is part of the surveillance and lookout of the Municipal Authorities;

SECTION 3. Any person, firm or corporation found violating the provision of the
preceding section of this Ordinance shall be punished by a fine of not less than TWO
HUNDRED (P 200.00) PESOS, nor more than FOUR HUNDRED (P400.00) PESOS,
or an imprisonment of hot less than ONE MONTH, nor more than THREE MONTHS,
or both fines and imprisonment at the discretion of the court.

SECTION 4. This Ordinance shall take effect on January 1, 1958.

 APPROVED December 13,1957.

(Sgd.) TEODORO B. GALACAR Municipal Mayor  1

For a period of six years, from 1958 to 1963, plaintiff paid defendant Municipality, allegedly under
protest, storage fees in the total sum of 1142,265.13, broken down as follows:

Procter & Gamble Trading Co. Procter & Gamble Philippine Manufacturing Corp.

19
58 5, _  
0 _
7 _
2. _
1 _
3 _
_
_
_
_
_

195 7, _  
9 0 _
7 _
6. _
0 _
0 _
_
_
_
_
_

196 9, _  
0 9 _
5 _
0. _
0 _
0 _
_
_
_
_
_

196 7, _  
1 8 _
3 _
0. _
0 _
0 _
_
 _
_
_
_

196 3, P  
2 6 5,
4 2
8. 7
0 9.
0 0
0

196 _ P  
3 _ 3,
_ 4
_ 1
_ 0.
_ 0
0

  P P  
3 8,
3, 6
5 8
7 9.
6. 0
1 0
3

  T   P
O 4
T 2,
A 2
L 6
C 5.
L 1
AI 3 
2
M

On March 3, 1964, plaintiff filed this suit in the Court of First Instance of Manila, Branch VI, wherein it
prayed that 1) Ordinance No. 4 be declared inapplicable to it, or in the alter. native, that it be
pronounced ultra-vires and void for being beyond the power of the Municipality to enact; and 2) that
defendant Municipality be ordered to refund to it the amount of P42,265.13 which it had paid under
protest; and costs.

For its part, defendant Municipality upheld its power to enact the Ordinance in question; questioned
the jurisdiction of the trial Court to take cognizance of the action under section 44(h) of the Judiciary
Act in that it seeks to enjoin the enforcement of a Municipal Ordinance; and pleaded prescription and
laches for plaintiff's failure to timely question the validity of the said Ordinance.
After the parties had agreed to submit the case for judgment on the pleadings, the trial Court upheld
its jurisdiction as well as defendant Municipality's power to enact the Ordinance in question under
section 2238 of the Revised Administrative Code, otherwise known as the general welfare clause,
and declared that plaintiff's right of action had prescribed under the 5-year period provided for by
Article 1149 of the Civil Code.

In this appeal, plaintiff interposes the following Assignments of Error:

THE TRIAL COURT ERRED IN HOLDING THAT ORDINANCE NO. 4, SERIES OF

1957, ENACTED BY THE DEFENDANT MUNICIPALITY OF JAGNA BOHOL, IS A
VALID, LEGAL AND ENFORCEABLE ORDINANCE AGAINST THE PLAINTIFF.

II

THE TRIAL COURT ERRED IN HOLDING THAT PAYMENT OF THE TAX UNDER
ORDINANCE NO. 4, SERIES OF 1957 WAS NOT DONE UNDER PROTEST.

III

THE TRIAL COURT ERRED IN HOLDING THAT THE ACTION OF THE PLAINTIFF
TO ANNUL AND TO DECLARE ORDINANCE NO. 4, SERIES OF 1957 OF THE
DEFENDANT HAS ALREADY PRESCRIBED.

IV

AND, FINALLY, THE TRIAL COURT ERRED IN NOT HOLDING ORDINANCE NO.
4. SERIES OF 1957 ULTRA-VIRES AND VOID AND IN NOT ORDERING THE
REFUND OF TAXES PAID THEREUNDER.  3

It is plaintiff's submission that the subject Ordinance is inapplicable to it as it is not engaged in the
business or trade of storing copra for others for compensation or profit and that the only copra it
stores is for its exclusive use in connection with its business as manufacturer of soap, edible oil,
margarine and other similar products; that the levy is intended as an "export tax" as it is collected on
"exportable copra' , and, therefore, beyond the power of the Municipality to enact; and that the fee of
P0.10 for every 100 kilos of copra stored in the bodega is excessive, unreasonable and oppressive
and is imposed more for revenue than as a regulatory fee.

The main question to determine is whether defendant Municipality was authorized to impose and
collect the storage fee provided for in the challenged Ordinance under the laws then prevailing.

The validity of the Ordinance must be upheld pursuant to the broad authority conferred upon
municipalities by Commonwealth Act No. 472, approved on June 16, 1939, which was the prevailing
law when the Ordinance was enacted (Procter & Gamble Trading Co. vs. Municipality of Medina, 43
SCRA 130 11972]). Section 1 thereof reads:

Section 1. A municipal council or municipal district council shall have the authority to
impose municipal license taxes upon persons engaged in any occupation or
business, or exercising privileges in the municipality or municipal district, by requiring
them to secure licenses at rates fixed by the municipal council, or municipal district
 council, and to collect fees and charges for services rendered by the municipality or
municipal district and shall otherwise have power to levy for public local purposes,
and for school purposes, including teachers' salaries, just and uniform taxes other
than percentage taxes and taxes on specified articles.

Under the foregoing provision, a municipality is authorized to impose three kinds of licenses: (1) a
license for regulation of useful occupation or enterprises; (2) license for restriction or regulation of
non-useful occupations or enterprises; and (3) license for revenue.   It is thus unnecessary, as
4

plaintiff would have us do, to determine whether the subject storage fee is a tax for revenue
purposes or a license fee to reimburse defendant Municipality for service of supervision because
defendant Municipality is authorized not only to impose a license fee but also to tax for revenue
purposes.

The storage fee imposed under the question Ordinance is actually a municipal license tax or fee on
persons, firms and corporations, like plaintiff, exercising the privilege of storing copra in a bodega
within the Municipality's territorial jurisdiction. For the term "license tax" has not acquired a fixed
meaning. It is often used indiseriminately to designate impositions exacted for the exercise of
various privileges. In many instances, it refers to revenue-raising exactions on privileges or
activities. 
5

Not only is the imposition of the storage fee authorized by the general grant of authority under
section 1 of CA No. 472. Neither is the storage fee in question prohibited nor beyond the power of
the municipal councils and municipal district councils to impose, as listed in section 3 of said CA No.
472. 6

Moreover, the business of buying and selling and storing copra is property the subject of regulation
within the police power granted to municipalities under section 2238 of the Revised Administrative
Code or the "general welfare clause", which we quote hereunder:

Section 2238. General power of council to enact ordinances and make regulations.

— The municipal council shall enact such ordinances and make such regulations, not
repugnant to law, as may be necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall seem necessary and proper to
provide for the health and safety, promote the prosperity, improve the morals, peace,
good order, comfort, and convenience of the municipality and the inhabitants thereof,
and for the protection of property therein.

For it has been held that a warehouse used for keeping or storing copra is an establishment likely to
endanger the public safety or likely to give rise to conflagration because the oil content of the copra
when ignited is difficult to put under control by water and the use of chemicals is necessary to put
out the fire.  And as the Ordinance itself states, all exportable copra deposited within the municipality
7

is "part of the surveillance and lookout of municipal authorities.

Plaintiff's argument that the imposition of P0.10 per 100 kilos of copra stored in a bodega within
defendant's territory is beyond the cost of regulation and surveillance is not well taken. As
enunciated in the case of Victorias Milling Co. vs. Municipality of Victorias, supra.

The cost of regulation cannot be taken as a gauge, if the municipality really intended
to enact a revenue ordinance. For, 'if the charge exceeds the expense of issuance of
a license and costs of regulation, it is a tax'. And if it is, and it is validly imposed, 'the
rule that license fees for regulation must bear a reasonable relation to the expense of
the regulation has no application'.
Municipal corporations are allowed wide discretion in determining the rates of imposable license fees
even in cases of purely police power measures. In the absence of proof as to municipal conditions
and the nature of the business being taxed as well as other factors relevant to the issue of
arbitrariness or unreasonableness of the questioned rates, Courts will go slow in writing off an
Ordinance.   In the case at bar, appellant has not sufficiently shown that the rate imposed by the
8

questioned Ordinance is oppressive, excessive and prohibitive.

Plaintiff's averment that the Ordinance, even if presumed valid, is inapplicable to it because it is not
engaged in the business or occupation of buying or selling of copra but is only storing copra in
connection with its main business of manufacturing soap and other similar products, and that to be
compelled to pay the storage fees would amount to double taxation, does not inspire assent. The
question of whether appellant is engaged in that business or not is irrelevant because the storage
fee, as previously mentioned, is an imposition on the privilege of storing copra in a bodega within
defendant municipality by persons, firms or corporations. Section 1 of the Ordinance in question
does not state that said persons, firms or corporations should be engaged in the business or
occupation of buying or selling copra. Moreover, by plaintiff's own admission that it is a consolidated
corporation with its trading company, it will be hard to segregate the copra it uses for trading from
that it utilizes for manufacturing.

Thus, it can be said that plaintiff's payment of storage fees imposed by the Ordinance in question
does not amount to double taxation. For double taxation to exist, the same property must be taxed
twice, when it should be taxed but once. Double taxation has also been defined as taxing the same
person twice by the same jurisdiction for the same thing.   Surely, a tax on plaintiff's products is
9

different from a tax on the privilege of storing copra in a bodega situated within the territorial
boundary of defendant municipality.

Plaintiff's further contention that the storage fee imposed by the Ordinance is actually intended to be
an export tax, which is expressly prohibited by section 2287 of the Revised Administrative Code, is
without merit. Said provision reads as follows:

Section 2287 ...

It shall not be in the power of the municipal council to impose a tax in any form
whatever upon goods and merchandise carried into the municipality, or out of the
same, and any attempt to impose an import or export tax upon such goods in the
guise of an unreasonable charge for wharfage use of bridges or otherwise, shall be
void.

xxx xxx xxx

We have held that only where there is a clear showing that what is being taxed is an export to any
foreign country would the prohibition come into play.  When the Ordinance itself speaks of
10

"exportable" copra, the meaning conveyed is not exclusively export to a foreign country but shipment
out of the municipality. The storage fee impugned is not a tax on export because it is imposed not
only upon copra to be exported but also upon copra sold and to be used for domestic purposes if
stored in any warehouse in the Municipality and the weight thereof is 100 kilos or more.  11

Thus finding the Ordinance in question to be valid, legal and enforceable, we find it unnecessary to
discuss the ascribed error that the Court a quo erred in declaring that appellant had not paid the
taxes under protest.
However, we find merit in plaintiff's contention that the lower Court erred in ruling that its action has
prescribed under Article 1149 of the Civil Code, which provides for a period of five years for all
actions whose periods are not fixed in that Code. The case of Municipality of Opon vs. Caltex
Phil.,   is authority for the view that the period for prescription of actions to recover municipal license
12

taxes is six years under Article 1145(2) of the Civil Code. Thus, plaintiff's action brought within six
years from the time the right of action first accrued in 1958 has not yet prescribed.

WHEREFORE, affirming the judgment appealed, from, we sustain the validity of Ordinance No. 4,
Series of 1957, of defendant Municipality of Jagna Bohol, under the laws then prevailing.

Costs against plaintiff-appellant.

SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez, Guerrero and De Castro, JJ., concur.

#Footnotes

1 Pp. 7-8, Annex "A", Record on Appeal.

2 P. 4, Record on Appeal.

3 Pp. 3-4, Brief for Plaintiff-Appellant.

4 Victorias Milling Co., Inc. vs. The Municipality of Victorias, Province of Negros
Occidental, 25 SCRA 192 (1968), citing Cu Unjieng vs. Patstone, 42 Phil. 818
(1922).

5 Victorias Milling Co., Inc. vs. Municipality of Victorias, Negros Occidental, supra.

6 Uy Matiao & Co., Inc. vs. The City of Cebu, et al., 93 Phil. 300 (1953).

7 Uy Matiao & Co., Inc. vs. The City of Cebu, et al., supra.

8 Northern Phil. Tobacco Co. vs. Municipality of Agoo, 31 SCRA 304, (1970);
Victorias Milling Co. vs. Municipality of Victorias, supra; San Miguel Brewery Inc. vs.
City of Cebu. 43 SCRA 275. (1972).

9 Victorias Milling Co. vs. Municipality of Victorias, supra .

10 Procter & Gamble Trading Co. vs. Municipality of Medina, supra.

11 Uy Matiao & Co., Inc. vs. The City of Cebu, et al., supra.

12 SCRA 755 (1968), citing Puyat vs. The City of Manila, 7 SCRA 970 (1963).
G.R. No. L-31156 February 27, 1976

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,

vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees.

Sabido, Sabido & Associates for appellant.

Provincial Fiscal Zoila M. Redona & Assistant Provincial Fiscal Bonifacio R Matol and Assistant
Solicitor General Conrado T. Limcaoco & Solicitor Enrique M. Reyes for appellees.

MARTIN, J.:

This is an appeal from the decision of the Court of First Instance of Leyte in its Civil Case No. 3294,
which was certified to Us by the Court of Appeals on October 6, 1969, as involving only pure
questions of law, challenging the power of taxation delegated to municipalities under the Local
Autonomy Act (Republic Act No. 2264, as amended, June 19, 1959).

On February 14, 1963, the plaintiff-appellant, Pepsi-Cola Bottling Company of the Philippines, Inc.,
commenced a complaint with preliminary injunction before the Court of First Instance of Leyte for
that court to declare Section 2 of Republic Act No. 2264.  otherwise known as the Local Autonomy
1

Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances

Nos. 23 and 27, series of 1962, of the municipality of Tanauan, Leyte, null and void.

On July 23, 1963, the parties entered into a Stipulation of Facts, the material portions of which state
that, first, both Ordinances Nos. 23 and 27 embrace or cover the same subject matter and the
production tax rates imposed therein are practically the same, and second, that on January 17,
1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed to the Manager
of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce compliance by the latter of the
provisions of said Ordinance No. 27, series of 1962.

Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies
and collects "from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo
for every bottle of soft drink corked."   For the purpose of computing the taxes due, the person, firm,
2

company or corporation producing soft drinks shall submit to the Municipal Treasurer a monthly
report, of the total number of bottles produced and corked during the month.  3

On the other hand, Municipal Ordinance No. 27, which was approved on October 28, 1962, levies
and collects "on soft drinks produced or manufactured within the territorial jurisdiction of this
municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume
capacity."   For the purpose of computing the taxes due, the person, fun company, partnership,
4

corporation or plant producing soft drinks shall submit to the Municipal Treasurer a monthly report of
the total number of gallons produced or manufactured during the month.  5

The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.'

On October 7, 1963, the Court of First Instance of Leyte rendered judgment "dismissing the
complaint and upholding the constitutionality of [Section 2, Republic Act No. 2264] declaring
Ordinance Nos. 23 and 27 legal and constitutional; ordering the plaintiff to pay the taxes due under
the oft the said Ordinances; and to pay the costs."

From this judgment, the plaintiff Pepsi-Cola Bottling Company appealed to the Court of Appeals,
which, in turn, elevated the case to Us pursuant to Section 31 of the Judiciary Act of 1948, as
amended.

There are three capital questions raised in this appeal:

1. — Is Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory

and oppressive?

2. — Do Ordinances Nos. 23 and 27 constitute double taxation and impose

percentage or specific taxes?

3. — Are Ordinances Nos. 23 and 27 unjust and unfair?

1. The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter
of right to every independent government, without being expressly conferred by the people.   It is a
6

power that is purely legislative and which the central legislative body cannot delegate either to the
executive or judicial department of the government without infringing upon the theory of separation
of powers. The exception, however, lies in the case of municipal corporations, to which, said theory
does not apply. Legislative powers may be delegated to local governments in respect of matters of
local concern.   This is sanctioned by immemorial practice.   By necessary implication, the legislative
7 8

power to create political corporations for purposes of local self-government carries with it the power
to confer on such local governmental agencies the power to tax.   Under the New Constitution, local
9

governments are granted the autonomous authority to create their own sources of revenue and to
levy taxes. Section 5, Article XI provides: "Each local government unit shall have the power to create
its sources of revenue and to levy taxes, subject to such limitations as may be provided by law."
Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere
of the legislative power to enact and vest in local governments the power of local taxation.

The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense,
would not suffice to invalidate the said law as confiscatory and oppressive. In delegating the
authority, the State is not limited 6 the exact measure of that which is exercised by itself. When it is
said that the taxing power may be delegated to municipalities and the like, it is meant that there may
be delegated such measure of power to impose and collect taxes as the legislature may deem
expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy
the State has not deemed wise to tax for more general purposes.   This is not to say though that the
10

constitutional injunction against deprivation of property without due process of law may be passed
over under the guise of the taxing power, except when the taking of the property is in the lawful
exercise of the taxing power, as when (1) the tax is for a public purpose; (2) the rule on uniformity of
taxation is observed; (3) either the person or property taxed is within the jurisdiction of the
government levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice
and opportunity for hearing are provided.   Due process is usually violated where the tax imposed is
11

for a private as distinguished from a public purpose; a tax is imposed on property outside the State,
i.e., extraterritorial taxation; and arbitrary or oppressive methods are used in assessing and
collecting taxes. But, a tax does not violate the due process clause, as applied to a particular
taxpayer, although the purpose of the tax will result in an injury rather than a benefit to such
taxpayer. Due process does not require that the property subject to the tax or the amount of tax to
be raised should be determined by judicial inquiry, and a notice and hearing as to the amount of the
tax and the manner in which it shall be apportioned are generally not necessary to due process of
law. 
12

There is no validity to the assertion that the delegated authority can be declared unconstitutional on
the theory of double taxation. It must be observed that the delegating authority specifies the
limitations and enumerates the taxes over which local taxation may not be exercised.   The reason is
13

that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation,
in general, is not forbidden by our fundamental law, since We have not adopted as part thereof the
injunction against double taxation found in the Constitution of the United States and some states of
the Union.  Double taxation becomes obnoxious only where the taxpayer is taxed twice for the
14

benefit of the same governmental entity   or by the same jurisdiction for the same purpose,   but not
15 16

in a case where one tax is imposed by the State and the other by the city or municipality.  17

2. The plaintiff-appellant submits that Ordinance No. 23 and 27 constitute double taxation, because
these two ordinances cover the same subject matter and impose practically the same tax rate. The
thesis proceeds from its assumption that both ordinances are valid and legally enforceable. This is
not so. As earlier quoted, Ordinance No. 23, which was approved on September 25, 1962, levies or
collects from soft drinks producers or manufacturers a tax of one-sixteen (1/16) of a centavo for
.every bottle corked, irrespective of the volume contents of the bottle used. When it was discovered
that the producer or manufacturer could increase the volume contents of the bottle and still pay the
same tax rate, the Municipality of Tanauan enacted Ordinance No. 27, approved on October 28,
1962, imposing a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume
capacity. The difference between the two ordinances clearly lies in the tax rate of the soft drinks
produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked; in Ordinance No.
27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The
intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was
intended as a plain substitute for the prior Ordinance No. 23, and operates as a repeal of the latter,
even without words to that effect.   Plaintiff-appellant in its brief admitted that defendants-appellees
18

are only seeking to enforce Ordinance No. 27, series of 1962. Even the stipulation of facts confirms
the fact that the Acting Municipal Treasurer of Tanauan, Leyte sought t6 compel compliance by the
plaintiff-appellant of the provisions of said Ordinance No. 27, series of 1962. The aforementioned
admission shows that only Ordinance No. 27, series of 1962 is being enforced by defendants-
appellees. Even the Provincial Fiscal, counsel for defendants-appellees admits in his brief "that
Section 7 of Ordinance No. 27, series of 1962 clearly repeals Ordinance No. 23 as the provisions of
the latter are inconsistent with the provisions of the former."

That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage or
a specific tax. Undoubtedly, the taxing authority conferred on local governments under Section 2,
Republic Act No. 2264, is broad enough as to extend to almost "everything, accepting those which
are mentioned therein." As long as the text levied under the authority of a city or municipal ordinance
is not within the exceptions and limitations in the law, the same comes within the ambit of the
general rule, pursuant to the rules of exclucion attehus and exceptio firmat regulum in cabisus non
excepti   The limitation applies, particularly, to the prohibition against municipalities and municipal
19

districts to impose "any percentage tax or other taxes in any form based thereon nor impose taxes
on articles subject to specific tax except gasoline, under the provisions of the National Internal
Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a
set ratio between the amount of the tax and the volume of sale of the taxpayer imposes a sales tax
and is null and void for being outside the power of the municipality to enact.   But, the imposition of
20

"a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft
drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a
percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce
(whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft
drinks is considered solely for purposes of determining the tax rate on the products, but there is not
set ratio between the volume of sales and the amount of the tax. 21

Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified
articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and
cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel
oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs.   Soft
22

drink is not one of those specified.

3. The tax of one (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all
softdrinks, produced or manufactured, or an equivalent of 1-½ centavos per case,   cannot be
23

considered unjust and unfair. 24 an increase in the tax alone would not support the claim that the tax
is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in
determining the reates of imposable taxes. 25 This is in line with the constutional policy of according
the widest possible autonomy to local governments in matters of local taxation, an aspect that is
given expression in the Local Tax Code (PD No. 231, July 1, 1973). 26 Unless the amount is so
excessive as to be prohibitive, courts will go slow in writing off an ordinance as unreasonable. 27
Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if the purpose
of the law to further strengthen local autonomy were to be realized. 28

Finally, the municipal license tax of P1,000.00 per corking machine with five but not more than ten
crowners or P2,000.00 with ten but not more than twenty crowners imposed on manufacturers,
producers, importers and dealers of soft drinks and/or mineral waters under Ordinance No. 54,
series of 1964, as amended by Ordinance No. 41, series of 1968, of defendant
Municipality,   appears not to affect the resolution of the validity of Ordinance No. 27. Municipalities
29

are empowered to impose, not only municipal license taxes upon persons engaged in any business
or occupation but also to levy for public purposes, just and uniform taxes. The ordinance in question
(Ordinance No. 27) comes within the second power of a municipality.

ACCORDINGLY, the constitutionality of Section 2 of Republic Act No. 2264, otherwise known as the
Local Autonomy Act, as amended, is hereby upheld and Municipal Ordinance No. 27 of the
Municipality of Tanauan, Leyte, series of 1962, re-pealing Municipal Ordinance No. 23, same series,
is hereby declared of valid and legal effect. Costs against petitioner-appellant.

SO ORDERED.

Castro, C.J., Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma, Aquino and
Concepcion, Jr., JJ., concur.

Separate Opinions

 
FERNANDO, J., concurring:
The opinion of the Court penned by Justice Martin is impressed with a scholarly and comprehensive
character. Insofar as it shows adherence to tried and tested concepts of the law of municipal
taxation, I am only in agreement. If I limit myself to concurrence in the result, it is primarily because
with the article on Local Autonomy found in the present Constitution, I feel a sense of reluctance in
restating doctrines that arose from a different basic premise as to the scope of such power in
accordance with the 1935 Charter. Nonetheless it is well-nigh unavoidable that I do so as I am
unable to share fully what for me are the nuances and implications that could arise from the
approach taken by my brethren. Likewise as to the constitutional aspect of the thorny question of
double taxation, I would limit myself to what has been set forth in City of Baguio v. De Leon. 1

1. The present Constitution is quite explicit as to the power of taxation vested in local and municipal
corporations. It is therein specifically provided: "Each local government unit shall have the power to
create its own sources of revenue and to levy taxes subject to such limitations as may be provided
by law.   That was not the case under the 1935 Charter. The only limitation then on the authority,
2

plenary in character of the national government, was that while the President of the Philippines was
vested with the power of control over all executive departments, bureaus, or offices, he could only . It
exercise general supervision over all local governments as may be provided by law ...   As far as
3

legislative power over local government was concerned, no restriction whatsoever was placed on the
Congress of the Philippines. It would appear therefore that the extent of the taxing power was solely
for the legislative body to decide. It is true that in 1939, there was a statute that enlarged the scope
of the municipal taxing power.   Thereafter, in 1959 such competence was further expanded in the
4

Local Autonomy Act.   Nevertheless, as late as December of 1964, five years after its enactment of
5

the Local Autonomy Act, this Court, through Justice Dizon, in Golden Ribbon Lumber Co. v. City of
Butuan,   reaffirmed the traditional concept in these words: "The rule is well-settled that municipal
6

corporations, unlike sovereign states, after clothed with no power of taxation; that its charter or a
statute must clearly show an intent to confer that power or the municipal corporation cannot assume
and exercise it, and that any such power granted must be construed strictly, any doubt or ambiguity
arising from the terms of the grant to be resolved against the municipality." 7

Taxation, according to Justice Parades in the earlier case of Tan v. Municipality of Pagbilao,  "is an
8

attribute of sovereignty which municipal corporations do not enjoy."   That case left no doubt either
9

as to weakness of a claim "based merely by inferences, implications and deductions, [as they have
no place in the interpretation of the power to tax of a municipal corporation."   As the conclusion
10

reached by the Court finds support in such grant of the municipal taxing power, I concur in the result.
2. As to any possible infirmity based on an alleged double taxation, I would prefer to rely on the
doctrine announced by this Court in City of Baguio v. De Leon.   Thus: "As to why double taxation is
11

not violative of due process, Justice Holmes made clear in this language: 'The objection to the
taxation as double may be laid down on one side. ... The 14th Amendment [the due process clause)
no more forbids double taxation than it does doubling the amount of a tax, short of (confiscation or
proceedings unconstitutional on other grouse With that decision rendered at a time when American
sovereignty in the Philippines was recognized, it possesses more than just a persuasive effect. To
some, it delivered the coup justice to the bogey of double taxation as a constitutional bar to the
exercise of the taxing power. It would seem though that in the United States, as with us, its ghost, as
noted by an eminent critic, still stalks the juridical stage. 'In a 1947 decision, however, we quoted
with approval this excerpt from a leading American decision: 'Where, as here, Congress has clearly
expressed its intention, the statute must be sustained even though double taxation results.  12

So I would view the issues in this suit and accordingly concur in the result.

 
Separate Opinions
FERNANDO, J., concurring:

The opinion of the Court penned by Justice Martin is impressed with a scholarly and comprehensive
character. Insofar as it shows adherence to tried and tested concepts of the law of municipal
taxation, I am only in agreement. If I limit myself to concurrence in the result, it is primarily because
with the article on Local Autonomy found in the present Constitution, I feel a sense of reluctance in
restating doctrines that arose from a different basic premise as to the scope of such power in
accordance with the 1935 Charter. Nonetheless it is well-nigh unavoidable that I do so as I am
unable to share fully what for me are the nuances and implications that could arise from the
approach taken by my brethren. Likewise as to the constitutional aspect of the thorny question of
double taxation, I would limit myself to what has been set forth in City of Baguio v. De Leon. 1

1. The present Constitution is quite explicit as to the power of taxation vested in local and municipal
corporations. It is therein specifically provided: "Each local government unit shall have the power to
create its own sources of revenue and to levy taxes subject to such limitations as may be provided
by law.   That was not the case under the 1935 Charter. The only limitation then on the authority,
2

plenary in character of the national government, was that while the President of the Philippines was
vested with the power of control over all executive departments, bureaus, or offices, he could only . It
exercise general supervision over all local governments as may be provided by law ...   As far as
3

legislative power over local government was concerned, no restriction whatsoever was placed on the
Congress of the Philippines. It would appear therefore that the extent of the taxing power was solely
for the legislative body to decide. It is true that in 1939, there was a statute that enlarged the scope
of the municipal taxing power.   Thereafter, in 1959 such competence was further expanded in the
4

Local Autonomy Act.   Nevertheless, as late as December of 1964, five years after its enactment of
5

the Local Autonomy Act, this Court, through Justice Dizon, in Golden Ribbon Lumber Co. v. City of
Butuan,   reaffirmed the traditional concept in these words: "The rule is well-settled that municipal
6

corporations, unlike sovereign states, after clothed with no power of taxation; that its charter or a
statute must clearly show an intent to confer that power or the municipal corporation cannot assume
and exercise it, and that any such power granted must be construed strictly, any doubt or ambiguity
arising from the terms of the grant to be resolved against the municipality." 7

Taxation, according to Justice Parades in the earlier case of Tan v. Municipality of Pagbilao,  "is an
8

attribute of sovereignty which municipal corporations do not enjoy."   That case left no doubt either
9

as to weakness of a claim "based merely by inferences, implications and deductions, [as they have
no place in the interpretation of the power to tax of a municipal corporation."   As the conclusion
10

reached by the Court finds support in such grant of the municipal taxing power, I concur in the result.
2. As to any possible infirmity based on an alleged double taxation, I would prefer to rely on the
doctrine announced by this Court in City of Baguio v. De Leon.   Thus: "As to why double taxation is
11

not violative of due process, Justice Holmes made clear in this language: 'The objection to the
taxation as double may be laid down on one side. ... The 14th Amendment [the due process clause)
no more forbids double taxation than it does doubling the amount of a tax, short of (confiscation or
proceedings unconstitutional on other grouse With that decision rendered at a time when American
sovereignty in the Philippines was recognized, it possesses more than just a persuasive effect. To
some, it delivered the coup justice to the bogey of double taxation as a constitutional bar to the
exercise of the taxing power. It would seem though that in the United States, as with us, its ghost, as
noted by an eminent critic, still stalks the juridical stage. 'In a 1947 decision, however, we quoted
with approval this excerpt from a leading American decision: 'Where, as here, Congress has clearly
expressed its intention, the statute must be sustained even though double taxation results.  12

So I would view the issues in this suit and accordingly concur in the result.
Footnotes
1 "Sec. 2. Taxation. — Any provision of law to the contrary notwithstanding, all
chartered cities, municipalities and municipal districts shall have authority to impose
municipal license taxes or fees upon persons engaged in any occupation or
business, or exercising private in chartered cities, municipalities and municipal
districts by requiring them to secure licenses at rates fixed by the municipal board or
city council of the city, the municipal council of the municipality, or the municipal
district council of the municipal district to collect fees and charges for service
rendered by the city, municipality or municipal district; to regulate and impose
reasonable for services rendered in connection with any business, profession
occupation being conducted within the city, municipality or municipal district and
otherwise to levy for public purposes, just and uniform taxes, licenses or fees:
Provided, That municipalities and municipal districts shall, in no case, impose any
percentage tax on sales or other taxes in any form based thereon nor impose taxes
on articles subject to specific tax, except gasoline, under the provisions of the
National Internal Revenue Code: Provided, however, That no city, municipality or
municipal district may levy or impose any of the following:

(a) Residence tax;

(b) Documentary stamp tax;

(c) Taxes on the business of any newspaper engaged in the printing and publication
of any newspaper, magazine, review or bulletin appearing at regular interval and
having fixed prices for subscription and sale, and which is not published primarily for
the purpose of publishing advertisements;

(d) Taxes on persons operating waterworks, irrigation and other public utilities except
electric light, heat and power;

(e) Taxes on forest products and forest concessions;

(f) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa

(g) Taxes on income of any kind whatsoever;

(h) Taxes or fees for the registration of motor vehicles and for the issuance of all
kinds of licenses or permits for the driving thereof;

(i) Customs duties registration, wharfage on wharves owned by the national

government, tonnage and all other kinds of customs fees, charges and dues;

(j) Taxes of any kind on banks, insurance companies, and persons paying franchise
tax:

(k) Taxes on premiums paid by owners of property who obtain insurance directly with
foreign insurance companies; and
(i) Taxes, fees or levies, of any kind, which in effect impose a burden on exports of
Philippine finished, manufactured or processed products and products of Philippine
cottage industries.

2 Section 2.

3 Section 3.

4 Section 2.

5 Section 3.

6 Cooley, The Law of Taxation, Vol. 1, Fourth Edition, 149-150.

7 Pepsi-Cola Bottling Co. of the Phil., Inc. vs. City of Butuan, L-22814, August 28,
1968, 24 SCRA 793-96.

8 Rubi v. Prov. Brd. of Mindoro, 39 Phil. 702 (1919).

9 Cooley, ante at 190.

10 Idem at 198-200.

11 Malcolm, Philippine Constitutional Law, 513-14.

12 Cooley ante at 334.

13 See footnote 1.

14 Pepsi-Cola Bottling Co. of the Phil. Inc. vs. City of Butuan, 1, 2S 1 4, August 28,
1968, 24 SCRA 793-96. See Sec. 22, Art. VI, 1935

Constitution and Sec. 17 (1), Art. VIII, 1973 Constitution.

15 Commissioner of Internal Revenue v. Lednicky L- 18169, July 31, 1964, 11 SCRA

609.

16 SMB, Inc. v. City of Cebu, L-20312, February 26, 1972, 43 SCRA 280.

17 Punzalan v. Mun. Bd of City of Manila, 50 O.G. 2485; manufacturers Life Ins. Co.
v. Meer, 89 Phil. 351 (1951).

18 McQuillin. Municipal Corporations, 3rd. Ed., Vol. 6, at 206.-210.

19 Villanueva v. City of Iloilo, L-26521, December 28, 1968, 26 SCRA 585-86; Nin
Bay Mining Co. v. Mun. of Roxas, Palawan, L-20125, July 20, 1965, 14 SCRA 663-
64.

20 Arabay, Inc. v. CFI of Zamboanga del Norte, et al., L-27684, September 10, 1975.
21 SMB, Inc. v. City of Cebu, ante, Footnote 16.

22 Shell Co. of P.I. Ltd. v. Vaño, 94 Phil. 394-95 (1954); Sections 123-148, NIRC; RA
No. 953, Narcotic Drugs Law, June 20, 1953.

23 Brief, defendants-appellees, at 14. A regular bottle of Pepsi-Cola soft drinks

contains 8 oz., or 192 oz. per case of 24 bottles; a family-size contains 26 oz., or 312
oz. per case of 12 bottles.

24 See Pepsi-Cola Bottling Co. of the Phil., Inc. v. City of Butuan, ante, Footnote 14,

where the tax rate is P.10 per case of 24 bottles; City of Bacolod v. Gruet, L-18290,
January 31, 1963, 7 SCRA 168-69, where the tax is P.03 on every case of bottled
Coca-Coal.

25 Northern Philippines Tobacco Corp. v. Mun. of Agoo, La Union, L-26447, January

30, 1971, 31 SCRA 308.

26 William Lines, Inc. v. City of Ozamis, L-350048, April 23, 1974, 56 SCRA 593,
Second Division, per Fernando, J.

27 Victorias Milling Co. v. Mun. of Victorias, L-21183, September 27, 1968, 25 SCRa
205.

28 Procter & Gamble Trading Co. v. Mun. of Medina, Misamis Oriental, L-29125,
January 31, 1973, 43 SCRA 133-34.

29 Subject of plaintiff-appellant's Motion for Admission and consideration of Essential

Newly Dissevered Evidence, dated April 30, 1969.

FERNANDO, J.

1 L-24756, October 31, 1968, 25 SCRA 938.

2 Article XI, Section 5 of the present Constitution.

3 Article VII, Section 10 of the 1935 Constitution.

4 Commonwealth Act 472 entitled: "An Act Revising the General Authority of
Municipal Councils and Municipal District Councils to Levy Taxes, Subject to Certain
Limitations."

5 Republic Act No. 2264.

6 L-18534, December 24,1964,12 SCRA 611.

7 Ibid, 619. Cf. Cuunjieng v. Potspone, 42 Phil. 818 (1922); De Linan v. Municipal
Council of Daet, 44 Phil. 792 (1923); Arquiza Luta v. Municipality of Zamboanga, 50
Phil. 748 (1927; Hercules Lumber Co. v. Zamboanga, 55 Phil. 653 (1931); Yeo Loby
v. Zamboanga, 55 Phil. 656 (1931); People v. Carreon, 65 Phil. 588 (1939); Yap Tak
Wing v. Municipal Board, 68 Phil. 511 (1939); Eastern Theatrical Co. v. Alfonso 83
Phil. 852 (1949); De la Rosa v. City of Baguio, 91 Phil. 720 (I!)52); Medina v. City of
Baguio, 91 Phil. 854 (1952); Standard-Vacuum Oil Co. v. Antigua, 96 Phil. 909
(1955); Municipal Government of Pagsanjan v. Reyes, 98 Phil. 654 (1956), We Wa
Yu v. City of Lipa, Phil. 975 (1956); Municipality of Cotabato v. Santos, 105 Phil. 963
(1959).

8 L-14264, April 30, 1963, 7 SCRA 887.

9 Ibid, 892.

10 Ibid.

11 L-24756, October 31, 1968, 25 SCRA 938.

12 Ibid, 943-944.
G.R. No. L-26521      December 28, 1968

EUSEBIO VILLANUEVA, ET AL., plaintiff-appellee,

vs.
CITY OF ILOILO, defendants-appellants.

Pelaez, Jalandoni and Jamir for plaintiff-appellees.

Assistant City Fiscal Vicente P. Gengos for defendant-appellant.

CASTRO, J.:

Appeal by the defendant City of Iloilo from the decision of the Court of First Instance of Iloilo
declaring illegal Ordinance 11, series of 1960, entitled, "An Ordinance Imposing Municipal License
Tax On Persons Engaged In The Business Of Operating Tenement Houses," and ordering the City
to refund to the plaintiffs-appellees the sums of collected from them under the said ordinance.

On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license
tax fees as follows: (1) tenement house (casa de vecindad), P25.00 annually; (2) tenement house,
partly or wholly engaged in or dedicated to business in the streets of J.M. Basa, Iznart and Aldeguer,
P24.00 per apartment; (3) tenement house, partly or wholly engaged in business in any other
streets, P12.00 per apartment. The validity and constitutionality of this ordinance were challenged by
the spouses Eusebio Villanueva and Remedies Sian Villanueva, owners of four tenement houses
containing 34 apartments. This Court, in City of Iloilo vs. Remedios Sian Villanueva and Eusebio
Villanueva, L-12695, March 23, 1959, declared the ordinance ultra vires, "it not appearing that the
power to tax owners of tenement houses is one among those clearly and expressly granted to the
City of Iloilo by its Charter."

On January 15, 1960 the municipal board of Iloilo City, believing, obviously, that with the passage of
Republic Act 2264, otherwise known as the Local Autonomy Act, it had acquired the authority or
power to enact an ordinance similar to that previously declared by this Court as ultra vires, enacted
Ordinance 11, series of 1960, hereunder quoted in full:

AN ORDINANCE IMPOSING MUNICIPAL LICENSE TAX ON PERSONS ENGAGED IN

THE BUSINESS OF OPERATING TENEMENT HOUSES

Be it ordained by the Municipal Board of the City of Iloilo, pursuant to the provisions of
Republic Act No. 2264, otherwise known as the Autonomy Law of Local Government, that:

Section 1. — A municipal license tax is hereby imposed on tenement houses in accordance

with the schedule of payment herein provided.

Section 2. — Tenement house as contemplated in this ordinance shall mean any building or
dwelling for renting space divided into separate apartments or accessorias.

Section 3. — The municipal license tax provided in Section 1 hereof shall be as follows:

I. Tenement houses:

(a) Apartment house made of strong materials P20.00 per door p.a.
 (b) Apartment house made of mixed materials P10.00 per door p.a.

II Rooming house of strong materials P10.00 per door p.a.

Rooming house of mixed materials P5.00 per door p.a.

III. Tenement house partly or wholly engaged in or dedicated to

business in the following streets: J.M. Basa, Iznart, Aldeguer,
Guanco and Ledesma from Plazoleto Gay to Valeria. St. P30.00 per door p.a.

IV. Tenement house partly or wholly engaged in or dedicated to

business in any other street P12.00 per door p.a.

V. Tenement houses at the streets surrounding the super market

as soon as said place is declared commercial P24.00 per door p.a.

Section 4. — All ordinances or parts thereof inconsistent herewith are hereby amended.

Section 5. — Any person found violating this ordinance shall be punished with a fine note
exceeding Two Hundred Pesos (P200.00) or an imprisonment of not more than six (6)
months or both at the discretion of the Court.

Section 6 — This ordinance shall take effect upon approval.

ENACTED, January 15, 1960.

In Iloilo City, the appellees Eusebio Villanueva and Remedios S. Villanueva are owners of five
tenement houses, aggregately containing 43 apartments, while the other appellees and the same
Remedios S. Villanueva are owners of ten apartments. Each of the appellees' apartments has a door
leading to a street and is rented by either a Filipino or Chinese merchant. The first floor is utilized as
a store, while the second floor is used as a dwelling of the owner of the store. Eusebio Villanueva
owns, likewise, apartment buildings for rent in Bacolod, Dumaguete City, Baguio City and Quezon
City, which cities, according to him, do not impose tenement or apartment taxes.

By virtue of the ordinance in question, the appellant City collected from spouses Eusebio Villanueva
and Remedios S. Villanueva, for the years 1960-1964, the sum of P5,824.30, and from the appellees
Pio Sian Melliza, Teresita S. Topacio, and Remedios S. Villanueva, for the years 1960-1964, the
sum of P1,317.00. Eusebio Villanueva has likewise been paying real estate taxes on his property.

On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a complaint, and an amended
complaint, respectively, against the City of Iloilo, in the aforementioned court, praying that Ordinance
11, series of 1960, be declared "invalid for being beyond the powers of the Municipal Council of the
City of Iloilo to enact, and unconstitutional for being violative of the rule as to uniformity of taxation
and for depriving said plaintiffs of the equal protection clause of the Constitution," and that the City
be ordered to refund the amounts collected from them under the said ordinance.

On March 30, 1966,1 the lower court rendered judgment declaring the ordinance illegal on the
grounds that (a) "Republic Act 2264 does not empower cities to impose apartment taxes," (b) the
same is "oppressive and unreasonable," for the reason that it penalizes owners of tenement houses
who fail to pay the tax, (c) it constitutes not only double taxation, but treble at that and (d) it violates
the rule of uniformity of taxation.

The issues posed in this appeal are:

1. Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double
taxation?

2. Is the City of Iloilo empowered by the Local Autonomy Act to impose tenement taxes?

3. Is Ordinance 11, series of 1960, oppressive and unreasonable because it carries a penal
clause?

4. Does Ordinance 11, series of 1960, violate the rule of uniformity of taxation?

1. The pertinent provisions of the Local Autonomy Act are hereunder quoted:

SEC. 2. Any provision of law to the contrary notwithstanding, all chartered cities,
municipalities and municipal districts shall have authority to impose municipal license taxes
or fees upon persons engaged in any occupation or business, or exercising privileges in
chartered cities, municipalities or municipal districts by requiring them to secure licences at
rates fixed by the municipal board or city council of the city, the municipal council of the
municipality, or the municipal district council of the municipal district; to collect fees and
charges for services rendered by the city, municipality or municipal district; to regulate and
impose reasonable fees for services rendered in connection with any business, profession or
occupation being conducted within the city, municipality or municipal district and otherwise to
levy for public purposes, just and uniform taxes, licenses or fees; Provided, That
municipalities and municipal districts shall, in no case, impose any percentage tax on sales
or other taxes in any form based thereon nor impose taxes on articles subject to specific tax,
except gasoline, under the provisions of the National Internal Revenue Code; Provided,
however, That no city, municipality or municipal district may levy or impose any of the
following:

(a) Residence tax;

(b) Documentary stamp tax;

(c) Taxes on the business of persons engaged in the printing and publication of any
newspaper, magazine, review or bulletin appearing at regular intervals and having fixed
prices for for subscription and sale, and which is not published primarily for the purpose of
publishing advertisements;

(d) Taxes on persons operating waterworks, irrigation and other public utilities except electric
light, heat and power;

(e) Taxes on forest products and forest concessions;

(f) Taxes on estates, inheritance, gifts, legacies, and other acquisitions mortis causa;

(g) Taxes on income of any kind whatsoever;

(h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of
licenses or permits for the driving thereof;

(i) Customs duties registration, wharfage dues on wharves owned by the national
government, tonnage, and all other kinds of customs fees, charges and duties;
 (j) Taxes of any kind on banks, insurance companies, and persons paying franchise tax; and

(k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign
insurance companies.

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall
have authority to suspend the effectivity of any ordinance within one hundred and twenty
days after its passage, if, in his opinion, the tax or fee therein levied or imposed is unjust,
excessive, oppressive, or confiscatory, and when the said Secretary exercises this authority
the effectivity of such ordinance shall be suspended.

In such event, the municipal board or city council in the case of cities and the municipal
council or municipal district council in the case of municipalities or municipal districts may
appeal the decision of the Secretary of Finance to the court during the pendency of which
case the tax levied shall be considered as paid under protest.

It is now settled that the aforequoted provisions of Republic Act 2264 confer on local governments
broad taxing authority which extends to almost "everything, excepting those which are mentioned
therein," provided that the tax so levied is "for public purposes, just and uniform," and does not
transgress any constitutional provision or is not repugnant to a controlling statute. 2 Thus, when a tax,
levied under the authority of a city or municipal ordinance, is not within the exceptions and limitations
aforementioned, the same comes within the ambit of the general rule, pursuant to the rules
of expressio unius est exclusio alterius, and exceptio firmat regulum in casibus non excepti.

Does the tax imposed by the ordinance in question fall within any of the exceptions provided for in
section 2 of the Local Autonomy Act? For this purpose, it is necessary to determine the true nature
of the tax. The appellees strongly maintain that it is a "property tax" or "real estate tax," 3 and not a
"tax on persons engaged in any occupation or business or exercising privileges," or a license tax, or
a privilege tax, or an excise tax.4 Indeed, the title of the ordinance designates it as a
"municipal license tax on persons engaged in the business of operating tenement houses," while
section 1 thereof states that a "municipal license tax is hereby imposed on tenement houses." It is
the phraseology of section 1 on which the appellees base their contention that the tax involved is a
real estate tax which, according to them, makes the ordinance ultra vires as it imposes a levy "in
excess of the one per centum real estate tax allowable under Sec. 38 of the Iloilo City Charter, Com.
Act 158."5.

It is our view, contrary to the appellees' contention, that the tax in question is not a real estate tax.
Obviously, the appellees confuse the tax with the real estate tax within the meaning of the
Assessment Law,6 which, although not applicable to the City of Iloilo, has counterpart provisions in
the Iloilo City Charter.7 A real estate tax is a direct tax on the ownership of lands and buildings or
other improvements thereon, not specially exempted, 8 and is payable regardless of whether the
property is used or not, although the value may vary in accordance with such factor. 9 The tax is
usually single or indivisible, although the land and building or improvements erected thereon are
assessed separately, except when the land and building or improvements belong to separate
owners.10 It is a fixed proportion11 of the assessed value of the property taxed, and requires,
therefore, the intervention of assessors.12 It is collected or payable at appointed times, 13 and it
constitutes a superior lien on and is enforceable against the property 14 subject to such taxation, and
not by imprisonment of the owner.

The tax imposed by the ordinance in question does not possess the aforestated attributes. It is not a
tax on the land on which the tenement houses are erected, although both land and tenement houses
may belong to the same owner. The tax is not a fixed proportion of the assessed value of the
tenement houses, and does not require the intervention of assessors or appraisers. It is not payable
at a designated time or date, and is not enforceable against the tenement houses either by sale or
distraint. Clearly, therefore, the tax in question is not a real estate tax.

"The spirit, rather than the letter, or an ordinance determines the construction thereof, and the court
looks less to its words and more to the context, subject-matter, consequence and effect.
Accordingly, what is within the spirit is within the ordinance although it is not within the letter thereof,
while that which is in the letter, although not within the spirit, is not within the ordinance." 15 It is within
neither the letter nor the spirit of the ordinance that an additional real estate tax is being imposed,
otherwise the subject-matter would have been not merely tenement houses. On the contrary, it is
plain from the context of the ordinance that the intention is to impose a license tax on the operation
of tenement houses, which is a form of business or calling. The ordinance, in both its title and body,
particularly sections 1 and 3 thereof, designates the tax imposed as a "municipal license tax" which,
by itself, means an "imposition or exaction on the right to use or dispose of property, to pursue a
business, occupation, or calling, or to exercise a privilege." 16.

"The character of a tax is not to be fixed by any isolated words that may beemployed in the
statute creating it, but such words must be taken in the connection in which they are used
and the true character is to be deduced from the nature and essence of the subject." 17 The
subject-matter of the ordinance is tenement houses whose nature and essence are
expressly set forth in section 2 which defines a tenement house as "any building or
dwelling for renting space divided into separate apartments or accessorias." The Supreme
Court, in City of Iloilo vs. Remedios Sian Villanueva, et al., L-12695, March 23, 1959,
adopted the definition of a tenement house18 as "any house or building, or portion thereof,
which is rented, leased, or hired out to be occupied, or is occupied, as the home or residence
of three families or more living independently of each other and doing their cooking in the
premises or by more than two families upon any floor, so living and cooking, but having a
common right in the halls, stairways, yards, water-closets, or privies, or some of them."
Tenement houses, being necessarily offered for rent or lease by their very nature and
essence, therefore constitute a distinct form of business or calling, similar to the hotel or
motel business, or the operation of lodging houses or boarding houses. This is precisely one
of the reasons why this Court, in the said case of City of Iloilo vs. Remedios Sian Villanueva,
et al., supra, declared Ordinance 86 ultra vires, because, although the municipal board of
Iloilo City is empowered, under sec. 21, par. j of its Charter, "to tax, fix the license fee for,
and regulate hotels, restaurants, refreshment parlors, cafes, lodging houses, boarding
houses, livery garages, public warehouses, pawnshops, theaters, cinematographs,"
tenement houses, which constitute a different business enterprise,19 are not mentioned in the
aforestated section of the City Charter of Iloilo. Thus, in the aforesaid case, this Court
explicitly said:.

"And it not appearing that the power to tax owners of tenement houses is one among those
clearly and expressly granted to the City of Iloilo by its Charter, the exercise of such power
cannot be assumed and hence the ordinance in question is ultra vires insofar as it taxes a
tenement house such as those belonging to defendants." .

The lower court has interchangeably denominated the tax in question as a tenement tax or an
apartment tax. Called by either name, it is not among the exceptions listed in section 2 of the Local
Autonomy Act. On the other hand, the imposition by the ordinance of a license tax on persons
engaged in the business of operating tenement houses finds authority in section 2 of the Local
Autonomy Act which provides that chartered cities have the authority to impose municipal license
taxes or fees upon persons engaged in any occupation or business, or exercising privileges within
their respective territories, and "otherwise to levy for public purposes, just and uniform taxes,
licenses, or fees." .

2. The trial court condemned the ordinance as constituting "not only double taxation but treble at
that," because "buildings pay real estate taxes and also income taxes as provided for in Sec. 182 (A)
(3) (s) of the National Internal Revenue Code, besides the tenement tax under the said ordinance."
Obviously, what the trial court refers to as "income taxes" are the fixed taxes on business and
occupation provided for in section 182, Title V, of the National Internal Revenue Code, by virtue of
which persons engaged in "leasing or renting property, whether on their account as principals or as
owners of rental property or properties," are considered "real estate dealers" and are taxed
according to the amount of their annual income. 20.

While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National
Internal Revenue Code as real estate dealers, and still taxable under the ordinance in question, the
argument against double taxation may not be invoked. The same tax may be imposed by the
national government as well as by the local government. There is nothing inherently obnoxious in the
exaction of license fees or taxes with respect to the same occupation, calling or activity by both the
State and a political subdivision thereof. 21.

The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate
taxes and the tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-
settled rule that a license tax may be levied upon a business or occupation although the land or
property used in connection therewith is subject to property tax. The State may collect an ad valorem
tax on property used in a calling, and at the same time impose a license tax on that calling, the
imposition of the latter kind of tax being in no sensea double tax.22.

"In order to constitute double taxation in the objectionable or prohibited sense the same
property must be taxed twice when it should be taxed but once; both taxes must be imposed
on the same property or subject-matter, for the same purpose, by the same State,
Government, or taxing authority, within the same jurisdiction or taxing district, during the
same taxing period, and they must be the same kind or character of tax." 23 It has been shown
that a real estate tax and the tenement tax imposed by the ordinance, although imposed by
the sametaxing authority, are not of the same kind or character.

At all events, there is no constitutional prohibition against double taxation in the Philippines. 24 It is
something not favored, but is permissible, provided some other constitutional requirement is not
thereby violated, such as the requirement that taxes must be uniform."25.

3. The appellant City takes exception to the conclusion of the lower court that the ordinance is not
only oppressive because it "carries a penal clause of a fine of P200.00 or imprisonment of 6 months
or both, if the owner or owners of the tenement buildings divided into apartments do not pay the
tenement or apartment tax fixed in said ordinance," but also unconstitutional as it subjects the
owners of tenement houses to criminal prosecution for non-payment of an obligation which is purely
sum of money." The lower court apparently had in mind, when it made the above ruling, the
provision of the Constitution that "no person shall be imprisoned for a debt or non-payment of a poll
tax."26 It is elementary, however, that "a tax is not a debt in the sense of an obligation incurred by
contract, express or implied, and therefore is not within the meaning of constitutional or statutory
provisions abolishing or prohibiting imprisonment for debt, and a statute or ordinance which
punishes the non-payment thereof by fine or imprisonment is not, in conflict with that
prohibition."27 Nor is the tax in question a poll tax, for the latter is a tax of a fixed amount upon all
persons, or upon all persons of a certain class, resident within a specified territory, without regard to
their property or the occupations in which they may be engaged. 28 Therefore, the tax in question is
not oppressive in the manner the lower court puts it. On the other hand, the charter of Iloilo
City29 empowers its municipal board to "fix penalties for violations of ordinances, which shall not
exceed a fine of two hundred pesos or six months' imprisonment, or both such fine and
imprisonment for each offense." In Punsalan, et al. vs. Mun. Board of Manila, supra, this Court
overruled the pronouncement of the lower court declaring illegal and void an ordinance imposing an
occupation tax on persons exercising various professions in the City of Manilabecause it imposed a
penalty of fine and imprisonment for its violation. 30.

4. The trial court brands the ordinance as violative of the rule of uniformity of taxation.

"... because while the owners of the other buildings only pay real estate tax and income
taxes the ordinance imposes aside from these two taxes an apartment or tenement tax. It
should be noted that in the assessment of real estate tax all parts of the building or buildings
are included so that the corresponding real estate tax could be properly imposed. If aside
from the real estate tax the owner or owners of the tenement buildings should pay apartment
taxes as required in the ordinance then it will violate the rule of uniformity of taxation.".

Complementing the above ruling of the lower court, the appellees argue that there is "lack of
uniformity" and "relative inequality," because "only the taxpayers of the City of Iloilo are singled out
to pay taxes on their tenement houses, while citizens of other cities, where their councils do not
enact a similar tax ordinance, are permitted to escape such imposition." .

It is our view that both assertions are undeserving of extended attention. This Court has already
ruled that tenement houses constitute a distinct class of property. It has likewise ruled that "taxes are
uniform and equal when imposed upon all property of the same class or character within the taxing
authority."31 The fact, therefore, that the owners of other classes of buildings in the City of Iloilo do
not pay the taxes imposed by the ordinance in question is no argument at all against uniformity and
equality of the tax imposition. Neither is the rule of equality and uniformity violated by the fact that
tenement taxesare not imposed in other cities, for the same rule does not require that taxes for the
same purpose should be imposed in different territorial subdivisions at the same time. 32 So long as
the burden of the tax falls equally and impartially on all owners or operators of tenement houses
similarly classified or situated, equality and uniformity of taxation is accomplished. 33 The plaintiffs-
appellees, as owners of tenement houses in the City of Iloilo, have not shown that the tax burden is
not equally or uniformly distributed among them, to overthrow the presumption that tax statutes are
intended to operate uniformly and equally.34.

5. The last important issue posed by the appellees is that since the ordinance in the case at bar is a
mere reproduction of Ordinance 86 of the City of Iloilo which was declared by this Court in L-
12695, supra, as ultra vires, the decision in that case should be accorded the effect of res judicata in
the present case or should constitute estoppel by judgment. To dispose of this contention, it suffices
to say that there is no identity of subject-matter in that case andthis case because the subject-matter
in L-12695 was an ordinance which dealt not only with tenement houses but also warehouses, and
the said ordinance was enacted pursuant to the provisions of the City charter, while the ordinance in
the case at bar was enacted pursuant to the provisions of the Local Autonomy Act. There is likewise
no identity of cause of action in the two cases because the main issue in L-12695 was whether the
City of Iloilo had the power under its charter to impose the tax levied by Ordinance 11, series of
1960, under the Local Autonomy Act which took effect on June 19, 1959, and therefore was not
available for consideration in the decision in L-12695 which was promulgated on March 23, 1959.
Moreover, under the provisions of section 2 of the Local Autonomy Act, local governments may now
tax any taxable subject-matter or object not included in the enumeration of matters removed from the
taxing power of local governments.Prior to the enactment of the Local Autonomy Act the taxes that
could be legally levied by local governments were only those specifically authorized by law, and their
power to tax was construed in strictissimi juris. 35.

ACCORDINGLY, the judgment a quo is reversed, and, the ordinance in questionbeing valid, the
complaint is hereby dismissed. No pronouncement as to costs..

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,Fernando and Capistrano,
JJ., concur..

Footnotes

1
 The record discloses that the delay caused in the lower court was due to the loss of the
original record while the same was in the possession of the late Judge Perfecto Querubin.
The record was later reconstituted under Judge Ramon Blanco..

 Nin Bay Mining Co. vs. Mun. of Roxas, Prov. of Palawan, L-20125, July 20, 1965, per
2

Concepcion, J.: .

"Neither the plaintiff nor the lower court maintains that the subject matter of the
ordinance in question comes under any of the foregoing exceptions. Hence, under
the rule - "expressio unius est exclusio alterius", the ordinance should be deemed to
come within the purview of the general rule. Indeed, the sponsor of the bill, which
upon its passage became Republic Act No. 2264, explicitly informed the House of
Representatives when he urged the same to approve it, that, under its provisions,
local governments would be "able to do everything, excepting those things which are
mentioned therein." ..." .

C.N. Hodges vs. The Mun. Board of the City of Iloilo, et al., L-18276, Jan. 12, 1967,
per Castro, J.: .

"... Heretofore, we have announced the doctrine that the grant of the power to tax to
chartered cities under section 2 of the Local Autonomy Act is sufficiently plenary to
cover "everything, excepting those which are mentioned therein," subject only to the
limitation that the tax so levied is for "public purposes, just and uniform" (Nin Bay
Mining Co. vs. Mun. of Roxas, Prov. of Palawan, G.R. No. L-20125, July 20, 1965).
There is no showing, and we do not believe it is possible to show, that the tax levied,
called by any name - percentage tax or sales tax - comes under any of the specific
exceptions listed in Section 2 of the Local Autonomy Act. Not being excepted, it must
be regarded as coming within the purview of the general rule. As the maxim goes,
"Exceptio firmat regulum in casibus non excepti." Since its public purpose, justness
and uniformity of application are not disputed, the tax so levied must be sustained as
valid." (Re: Ordinance imposing a tax on sales or real estate property situated in the
City of Iloilo, of 1/2% of 1% of the contract price or consideration.).

Ormoc Sugar Co., Inc. vs. Mun. Board of Ormoc City, et al., L-24322, July 21, 1967,
per Fernando, J.: .
 "In a number of decisions starting from City of Bacolod v. Gruet, L-18290, Jan. 31,
1963, to Hodges vs. Mun. Board, L-18276, Jan. 12, 1967, such broad taxing
authority has been implemented and vitalized by this Court.

"... The question before this Court is one of power. From and after June 19, 1959,
when the Local Autonomy Act was enacted, the sphere of autonomy of a chartered
city in the enactment of taxing measures has been considerably enlarged.

"... In the absence of a clear and specific showing that there was a transgression of a
constitutional provision or repugnancy to a controlling statute, an objection of such a
generalized character deserves but scant sympathy from this Court. Considering the
indubitable policy expressly set forth in the Local Autonomy Act, the invocation of
such a talismanic formula as "restraint of trade" without more no longer suffices,
assuming it ever did, to nullify a taxing ordinance, otherwise valid." [Re: Ordinance
imposing tax on all productions of centrifugal sugar (B-sugar) locally sold or sold
within the Phil., at P.20 per picul, etc.].

3
 "Taxes on property are taxes assessed on all property or on all property of a certain class
located within a certain territory on a specified date in proportion to its value, or in
accordance with some other reasonable method of apportionment, the obligation to pay
which is absolute and unavoidable and it is not based upon any voluntary action of the
person assessed. A property tax is ordinarily measured by the amount of property owned by
the taxpayer on a given day, and not on the total amount owned by him during the year. It is
ordinarily assessed at stated periods determined in advance, and collected at appointed
times, and its payment is usually enforced by sale of the property taxed, and, occassionally,
by imprisonment of the person assessed." (51 Am. Jur. 57) .

"A "real estate tax" is a tax in rem against realty without personal liability therefor on
part of owner thereof, and a judgment recovered in proceedings for enforcement of
real estate tax is one in rem against the realty without personal liability against the
owner." (36 Words and Phrases, 286, citing Land O'Lakes Dairy Co. vs. Wadena
County, 39 N. W. 2d. 164, 171, 229 Minn. 263).

4
 "The term "license tax" or "license fee" implies an imposition or exaction on the right to use
or dispose of a property, to pursue a business, occupation, or calling, or to exercise a
privilege." (33 Am. Jur. 325-v26) .

"The term "excise tax" is synonymous with "privilege tax", and the two are often used
interchangeably, and whether a tax is characterized in the statute imposing it as a
privilege tax or an excise tax is merely a choice of synonymous words, for an excise
tax is a privilege tax." (51 Am. Jur. 62, citing Bank of Commerce & T. Co. vs. Senter,
149 Tenn. 569, 260 SW 144) .

"Thus, it is said that an excise tax is a charge imposed upon the performance of an
act, the enjoyment of a privilege, or the engaging in an occupation." (51 Am. Jur.
61) .

5
 "SEC. 38. Annual tax and penalties. Extension and remission of the tax. -- An annual tax of
one per centum on the assessed value of all real estate in the city subject to taxation shall be
levied by the city treasurer..." .
6
 Commonwealth Act No. 470 -- "SECTION 1. Title of this Act. - This Act shall be known as
the Assessment Law. `.

`SEC. 2. Incidence of real property tax. -- Except in chartered cities, there shall be
levied, assessed, and collected an annual ad valorem tax on real property, including
land, buildings, machinery and other improvements not hereinafter specially
exempted.".

7
 Com. Act 158, sections 28 to 53.

8
 Com. Act 158, sec. 29.

9
 51 Am. Jur. 53: "An ad valorem property tax is invariably based upon ownership of
property, and is payable regardless of whether the property is used or not, although of
course the value may vary in accordance with such factor." .

10
 "Real estate, for purposes of taxation, includes all land within the district by which the tax is
levied, and all rights and interests in such land, and all buildings and other structures affixed
to the land, even though as between the landlord and the tenant they are the property of the
tenant and may be removed by him at the termination of the lease." (51 Am. Jur. 438) Sec.
31 of Com. Act 158 provides: "When it shall appear that there are separate owners of the
land and the improvements thereon, a separate assessment of the property of each shall be
made." .

 Sec. 38 of Com. Act 158 provides: "An annual tax of one per centum on the assessed
11

value of all real estate in the city subject to taxation shall be levied by the city treasurer." .

12
 Secs. 28 to 34, Com. Act 158.

 Sec. 38 of Com. Act 158 provides: "All taxes on real estate for any year shall be due and
13

payable on the first day of January and from this date such taxes together with all penalties
accruing thereto shall constitute a lien on the property subject to such taxation." .

 Sec. 38 of Com. Act 158 provides: "Such lien shall be superior to all other liens, mortgages
14

or incumbrances of any kind whatsoever, and shall be enforceable against the property
whether in the possession of the delinquent or any subsequent owner, and can only be
removed by the payment of the tax and penalty.".

 62 C.J.S. 845; Manila Race Horse Trainers Assn. vs. De la Fuente, L-2947, Jan. 11, 1951,
15

88 Phil. 60.

16
 51 Am. Jur. 59-60; 33 Am. Jur. 325-326..

17
 51 Am. Jur. 56, citing Eyre v. Jacob, 14 Gratt (Va.) 422; 73 Am. Dec. 367.

18
 Webster's New International Dictionary, 2nd Ed., p. 2601.

 City of Iloilo vs. Remedios Sian Villanueva, et al., L-12695, March 23, 1959: "As may be
19

seen from the definition of each establishment hereunder quoted, a tenement house is
different from hotel, lodging house, or boarding house. These are different business
enterprises. They have been established for different purposes.
20
 National Internal Revenue Code: .

"SEC. 182. Fixed taxes. -- On business ...; (3) Other fixed taxes. -- The following
fixed taxes shall be collected as follows, the amount stated being for the whole year,
when not otherwise specified: .

      XXX      XXX      XXX

"(s) Stockbrokers, dealers in securities, real estate brokers, real estate dealers,
commercial brokers, customs brokers, and immigration brokers, one hundred and
fifty pesos: Provided, however, That in the case of real estate dealers, the annual
fixed tax to be collected shall be as follows: .

"One hundred and fifty pesos, if the annual income from buying, selling, exchanging,
leasing, or renting property (whether on their own account as principals or as owners
of rental property or properties) is four thousand pesos or more but not exceeding ten
thousand pesos; .

"Three hundred pesos, if such annual income exceeds ten thousand pesos but does
not exceed thirty thousand pesos; and .

"Five hundred pesos, if such annual income exceeds thirty thousand pesos."

21
 Punsalan, et al. vs. Mun. Board of the City of Manila, et al., L-4817, May 26, 1954, 95 Phil.
46, per Reyes, J.: In this case the Supreme Court upheld the validity of Ordinance 3398 of
the City of Manila, approved on July 25, 1950, imposing a municipal occupation tax on
persons exercising various professions (lawyers, medical practitioners, public accountants,
dental surgeons, pharmacists, etc.), in the city and penalizes non-payment of the tax by a
fine of not more than P200.00 or by imprisonment of not more than 6 months, or by both
such fine and imprisonment in the discretion of the court, although section 201 [now sec.
182(B)] of the National Internal Revenue Code requires the payment of taxes on occupation
or professional taxes. Said Justice Reyes: "The argument against double taxation may not
be invoked where one tax is imposed by the state and the other is imposed by the city (1
Cooley on Taxation, 4th ed., p. 492), it being widely recognized that there is nothing
obnoxious in the requirement thatlicense fees or taxes be exacted with respect to the same
occupation, calling or activity by both the state and the political subdivision thereof. (51 Am.
Jur., 341.)" .

A month after the promulgation of the above decision, Congress passed Rep. Act
1166, approved on June 18, 1954, providing as follows: "Any provisions of existing
laws, city charters and ordinances, executive orders and regulations, or parts thereof,
to the contrary notwithstanding, every professional legally authorized to practice his
profession, who has paid the corresponding annual privilege tax on professions
required by Sec. 182 of the NIRC, Com. Act No. 466,shall be entitled to practice the
profession for which he has been duly qualified under the law, in all parts of the
Philippines without being subject to any other tax, charge, license or fee for the
practice of such profession; Provided, however, That they have paid to the office
concerned the registration fees required in their respective professions." .

 People vs. Santiago Mendaros, et al., L-6975, May 27, 1955, 97 Phil. 958-959, per
22

Bautista Angelo, J. Appeal from the decision of the CFI of Zambales. Defendants-appellees
were convicted by the JP Court of Palauig, Zambales, and sentenced to pay a fine of P5.00,
for failure to pay the occupation tax imposed by a municipal ordinance on owners of
fishponds on lands of private ownership. The Supreme Court, in sustaining the validity of the
ordinance, held:.

"The ground on which the trial court declared the municipal ordinance invalid would
seem to be that, since the land on which the fishpond is situated is already subject to
land tax, it would be unfair and discriminatory to levy another tax on the owner of the
fishpond because that would amount to double taxation. This view is erroneous
because it is a well-settled rule that a license tax may be levied upon a business or
occupation although the land or property used therein is subject to property tax. It
was also held that "the state may collect an ad valorem tax on property used in a
calling, and at the same time impose a license tax on the pursuit of that calling." The
imposition of this kind of tax is in no sense called a double tax." .

Veronica Sanchez vs. The Collector of Internal Revenue, L-7521, Oct. 18, 1955, 97
Phil. 687, per Reyes, J.B.L., J.

"Considering that appellant constructed her four-door "accessoria" purposely for rent
or profit; that she has been continuously leasing the same to third persons since its
construction in 1947; that she manages her property herself; and that said leased
holding appears to be her main source of livelihood, she is engaged in the leasing of
real estate, and is a real estate dealer as defined in section 194(s) [now, Sec. 182(A)
(3)(s)] of the Internal Revenue Code, as amended by Rep. Act No. 42.

"Appellant argues that she is already paying real estate taxes on her property, as
well as income tax on the income derived therefrom, so that to further subject its
rentals to the "real estate dealers" tax amounts to double taxation. This argument
has already been rejected by this Court in the case of People vs. Mendaros et al., L-
6975, promulgated May 27, 1955, wherein we held that it is a well-settled rule that
license tax may be levied upon a business or occupation although the land or
property used therein is subject to property tax, and that"the state may collect an ad
valorem tax on property used in a calling, and at the same time impose a license tax
on the pursuit of that calling", the imposition of the latter kind of tax being in no sense
a double tax." ".

23
 84 C.J.S. 131-132.

24
 Manufacturers' Life Insurance Co. vs. Meer, L-2910, June 29, 1951; City of Manila vs.
Interisland Gas Service, L-8799, Aug 31, 1956; Commissioner of Internal Revenue vs.
Hawaiian-Philippine Co., L-16315, May 30, 1964; Pepsi-Cola Bottling Co. of the Philippines
vs. City of Butuan, et al., L-22814, Aug. 28, 1968.

Pepsi-Cola Bottling Co. vs. City of Butuan, supra: .

"The second and last objections are manifestly devoid of merit. Indeed --
independently of whether or not the tax in question, when considered in relation to
the sales tax prescribed by Acts of Congress, amounts to double taxation, on which
we need not and do not express any opinion -- double taxation, in general, is not
forbidden by our fundamental law. We have not adopted, as part thereof, the
injunction against double taxation found in the Constitution of the United States and
some States of the Union. Then, again, the general principle against delegation of
legislative powers, in consequence of the theory of separation of powers is subject to
 one well-established exception, namely; legislative powers may be delegated to local
governments - to which said theory does not apply - in respect of matters of local
concern." .

 84 C.J.S. 133-134; "Double taxation, although not favored, is permissible in the absence of
25

express or implied constitutional prohibition.

"Double taxation should not be permitted unless the legislature has authority to
impose it. However, since the taxing power is exclusively a legislative function, and
since, except as it is limited or restrained by constitutional provisions, it is absolute
and unlimited, it is generally held that there is nothing, in the abscence of any
express or implied constitutional prohibition against double taxation, to prevent the
imposition of more than one tax on property within the jurisdiction, as the power to
tax twice is as ample as the power to tax once. In such case whether or not there
should be double taxation is a matter within the discretion of the legislature.

"In some states where double taxation is not expressly prohibited, it is held that
double taxation is permissible, or not invalid or unconstitutional, or necessarily
unlawful, provided some other constitutional requirement is not thereby violated, as a
requirement that taxes must be equal and uniform." .

The Constitution of the Philippines, Art. VI, sec. 22 (1) provides: "The rule of taxation
shall be uniform." .

26
 Art. III, sec. 1, par. 12, Constitution.

27
 51 Am. Jur. 860-861, citing Cousins v. State, 50 Ala. 113, 20 Am. Rep. 290; Rosenbloom
v. State, 64 Neb. 342, 89 NW 1053, 57 LRA 922; Voelkel v. Cincinnati, 112 Ohio St. 374,
147 NE 754, 40 ALR 73 (holding the provisions of an ordinance making the non-payment of
an excise tax levied in pursuance of such ordinance a misdemeanor punishable by fine not
in violation of the constitutional prohibition against the imprisonment of any person for "debt
in a civil action, or mesne or final process"); Ex parte Mann, 39 Tex. Crim. Rep. 491, 46 SW
828,73 Am. St. Rep. 961.

26 R.C.L. 25-26: "It is generally considered that a tax is not a debt, and that the
municipality to which the tax is payable is not a creditor of the person assessed. A
debt is a sum of money due by certain and express agreement. It originates in, and is
founded upon, contract express or implied. Taxes, on the other hand, do not rest
upon contract, express or implied. They are obligations imposed upon citizens to pay
the expenses of government. They are forced contributions, and in no way
dependent upon the will or contract, express or implied, of the persons taxed." .

 51 Am. Jur. 66-67; "Capitation or poll taxes are taxes of a fixed amount upon all persons,
28

or upon all the persons of a certain class, resident within a specified territory, without regard
to their property or the occupations in which they may be engaged. Taxes of a specified
amount upon each person performing a certain act or engaging in a certain business or
profession are not, however, poll taxes." .

29
 Com. Act No. 158 (An Act Establishing a Form of Government for the City of Iloilo), section
21: "Except as otherwise provided by law, and subject to the conditions and limitations
thereof, the Municipal Board shall have the following legislative powers: .
 "(aa) ... and to fix penalties for the violation of ordinances which shall not exceed a
fine of two hundred pesos or six months' imprisonment, or both such fine and
imprisonment, for each offense." .

30
 "To begin with the defendants' appeal, we find that the lower court was in error in saying
that the imposition of the penalty provided for in the ordinance was without the authority of
law. The last paragraph (kk) of the very section that authorizes the enactment of the
ordinance (section 18 of the Manila Charter) in express terms also empowers the Municipal
Board to "fix penalties for the violation of ordinances which not exceed to [sic] two hundred
pesos fine or six months' imprisonment, or both such fine and imprisonment, for a single
offense." Hence, the pronouncement below that the ordinance in question is illegal and void
because it imposes a penalty not authorized by law is clearly without legal basis." .

31
 51 Am. Jur. 203, citing Re Page, 60 Kan. 842, 59 P 478, 47 LRA 68: "Taxes are uniform
and equal when imposed upon all property of the same character within the taxing authority."
Manila Race Horse Trainers Assn., Inc. vs. De la Fuente, L-2947, Jan. 11, 1951, 88 Phil. 60:
"In the case of Eastern Theatrical Co., Inc. vs. Alfonso, [L-1104, May 31, 1949], 46 O.G.
Supp. to No. 11, p. 303, it was said that there is equality and uniformity in taxation if all
articles or kinds of property of the same class are taxed at the same rate. Thus, it was held in
that case, that "the fact that some places of amusement are not taxed while others, such as
cinematographs, theaters, vaudeville companies, theatrical shows, and boxing exhibitions
and other kinds of amusements or places of amusement are taxed, is no argument at all
against equality and uniformity of the tax imposition." Applying this criterion to the present
case, there would be discrimination if some boarding stables of the class used for the same
number of horses were not taxed or were made to pay less or more than others." Tan Kim
Kee vs. Court of Tax Appeals, et al., L-18080, April 22, 1963, per Reyes, J.B.L., J.: "The rule
of uniform taxation does not deprive Congress of the power to classify subjects of taxation,
and only demands uniformity within the particular class.".

32
 Am. Jur. 203: "153. Uniformity of Operation Throughout Tax Unit. — One requirement with
respect to taxation imposed by provisions relating to equality and uniformity, which has been
introduced into some state constitutions in express language, is that taxation must be
uniform throughout the political unit by or with respect to which the tax is levied. This means,
for example, that a tax for a state purpose must be uniform and equal throughout the state, a
tax for a county purpose must be uniform and equal throughout the county, anda tax for a
city, village, or township purpose must be uniform and equal throughout the city, village, or
township. It does not mean, however, that the taxes levied by or with respect to the various
political subdivisions or taxing districts of the state must be at the same rate, or, as one court
has graphically put it, that a man in one county shall pay the same rate of taxation for all
purposes that is paid by a man in an adjoining county. Nor does the rule require that taxes
for the same purposes shall be imposed in different territorial subdivisions at the same time.
It has also been said in this connection that the omission to tax any particular individual who
may be liable does not render the whole tax illegal or void."

 84 C.J.S. 77: "Equality in taxation is accomplished when the burden of the tax falls equally
33

and impartially on all the persons and property subject to it [State ex rel. Haggart v. Nichols,
265 N.W. 859, 66 N.D. 355], so that no higher rate or greater levy in proportion to value is
imposed on one person or species of property than on others similarly situated or of like
character."

84 C.J.S. 79: "The rule of uniformity in taxation applies to property of like kind and
character and similarly situated, and a tax, in order to be uniform, must operate alike
 on all persons, things, or property, similarly situated. So the requirement is complied
with when the tax is levied equally and uniformly on all subjects of the same class
and kind and is violated if particular kinds, species or items of property are selected
to bear the whole burden of the tax, while others, which should be equally subjected
to it, are left untaxed."

 84 C.J.S. 81: "There is a presumption the at tax statutes are intended to operate uniformly
34

and equally [Alaska Consol. Canneries v. Territory of Alaska, C.C.A. Alaska, 16 F. 2d. 256],
and a liberal construction will be indulged in order to accomplish fair and equal taxation of all
property within the state."

 Medina vs. City of Baguio, L-4060, Aug. 29, 1952; Wa Wa Yu vs. City of Lipa, L-9167,
35

Sept. 27, 1956; Saldana vs. City of Iloilo, 55 O.G. 10267, and the cases cited therein.
G.R. No. L-16619             June 29, 1963

COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee,

vs.
CITY OF MANILA, ET AL., defendants-appellants.

Ponce Enrile, Siguion Reyna, Montecillo and Belo for plaintiff-appellee.

City Fiscal Hermogenes Concepcion, Jr. and Assistant City Fiscal M. T. Reyes for defendants-
appellants.

DIZON, J.:

Appeal from the decision of the Court of First Instance of Manila ordering the City Treasurer of
Manila to refund the sum of P15,280.00 to Compania General de Tabacos de Filipinas.

Appellee Compania General de Tabacos de Filipinas — hereinafter referred to simply as Tabacalera

— filed this action in the Court of First Instance of Manila to recover from appellants, City of Manila
and its Treasurer, Marcelino Sarmiento — also hereinafter referred to as the City — the sum of
P15,280.00 allegedly overpaid by it as taxes on its wholesale and retail sales of liquor for the period
from the third quarter of 1954 to the second quarter of 1957, inclusive, under Ordinances Nos. 3634,
3301, and 3816.

Tabacalera, as a duly licensed first class wholesale and retail liquor dealer paid the City the
fixed license fees prescribed by Ordinance No. 3358 for the years 1954 to 1957, inclusive, and, as a
wholesale and retail dealer of general merchandise, it also paid the sales taxes required by
Ordinances Nos. 3634, 3301, and 3816. 1äwphï1.ñët

In its sworn statements of wholesale, retail, and grocery sales of general merchandise from the third
quarter of 1954 to the second quarter of 1957, inclusive, Tabacalera included its liquor sales of the
same period, and it is not denied that of the taxes it paid on all its sales of general merchandise, the
sum of P15,280.00 subject to the action represents the tax corresponding to the liquor sales
aforesaid.

Tabacalera's action for refund is based on the theory that, in connection with its liquor sales, it
should pay the license fees prescribed by Ordinance No. 3358 but not the municipal sales taxes
imposed by Ordinances Nos. 3634, 3301, and 3816; and since it already paid the license fees
aforesaid, the sales taxes paid by it — amounting to the sum of P15,208.00 — under the three
ordinances mentioned heretofore is an overpayment made by mistake, and therefore refundable.

The City, on the other hand, contends that, for the permit issued to it granting proper authority to
"conduct or engage in the sale of alcoholic beverages, or liquors" Tabacalera is subject to pay
the license fees prescribed by Ordinance No. 3358, aside from the sales taxes imposed by
Ordinances Nos. 3634, 3301, and 3816; that, even assuming that Tabacalera is not subject to the
payment of the sales taxes prescribed by the said three ordinances as regards its liquor sales, it is
not entitled to the refund demanded for the following reasons:.

(a) The said amount was paid by the plaintiff voluntarily and without protest;

(b) If at all the alleged overpayment was made by mistake, such mistake was one of law and
arose from the plaintiff's neglect of duty; .
 (c) The said amount had been added by the plaintiff to the selling price of the liquor sold by it
and passed to the consumers; and

(d) The said amount had been already expended by the defendant City for public
improvements and essential services of the City government, the benefits of which are
enjoyed, and being enjoyed by the plaintiff.

It is admitted that as liquor dealer, Tabacalera paid annually the wholesale and retail liquor license
fees under Ordinance No. 3358. In 1954, City Ordinance No. 3634, amending City Ordinance No.
3420, and City Ordinance No. 3816, amending City Ordinance No. 3301 were passed. By reason
thereof, the City Treasurer issued the regulations marked Exhibit A, according to which, the term
"general merchandise as used in said ordinances, includes all articles referred to in Chapter 1,
Sections 123 to 148 of the National Internal Revenue Code. Of these, Sections 133-135
included liquor among the taxable articles. Pursuant to said regulations, Tabacalera included its
sales of liquor in its sworn quarterly declaration submitted to the City Treasurer beginning from the
third quarter of 1954 to the second quarter of 1957, with a total value of P722,501.09 and
correspondingly paid a wholesaler's tax amounting to P13,688.00 and a retailer's tax amounting to
P1,520.00, or a total of P15,208.00 — the amount sought to be recovered.

It appears that in the year 1954, the City, through its treasurer, addressed a letter to Messrs. Sycip,
Gorres, Velayo and Co., an accounting firm, expressing the view that liquor dealers paying the
annual wholesale and retail fixed tax under City Ordinance No. 3358 are not subject to the wholesale
and retail dealers' taxes prescribed by City Ordinances Nos. 3634, 3301, and 3816. Upon learning of
said opinion, appellee stopped including its sales of liquor in its quarterly sworn declarations
submitted in accordance with the aforesaid City Ordinances Nos. 3634, 3301, and 3816, and on
December 3, 1957, it addressed a letter to the City Treasurer demanding refund of the alleged
overpayment. As the claim was disallowed, the present action was instituted.

The term "tax" applies — generally speaking — to all kinds of exactions which become public funds.
The term is often loosely used to include levies for revenue as well as levies for regulatory purposes.
Thus license fees are commonly called taxes. Legally speaking, however, license fee is a legal
concept quite distinct from tax; the former is imposed in the exercise of police power for purposes of
regulation, while the latter is imposed under the taxing power for the purpose of raising revenues
(MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p. 26).

Ordinance No. 3358 is clearly one that prescribes municipal license fees for the privilege to engage
in the business of selling liquor or alcoholic beverages, having been enacted by the Municipal Board
of Manila pursuant to its charter power to fix license fees on, and regulate, the sale of intoxicating
liquors, whether imported or locally manufactured. (Section 18 [p], Republic Act 409, as amended).
The license fees imposed by it are essentially for purposes of regulation, and are justified,
considering that the sale of intoxicating liquor is, potentially at least, harmful to public health and
morals, and must be subject to supervision or regulation by the state and by cities and municipalities
authorized to act in the premises. (MacQuillin, supra, p. 445.)

On the other hand, it is clear that Ordinances Nos. 3634, 3301, and 3816 impose taxes on the sales
of general merchandise, wholesale or retail, and are revenue measures enacted by the Municipal
Board of Manila by virtue of its power to tax dealers for the sale of such merchandise. (Section 10
[o], Republic Act No. 409, as amended.).

Under Ordinance No. 3634 the word "merchandise" as employed therein clearly includes liquor.
Aside from this, we have held in City of Manila vs. Inter-Island Gas Service, Inc., G.R. No. L-8799,
August 31, 1956, that the word "merchandise" refers to all subjects of commerce and traffic;
whatever is usually bought and sold in trade or market; goods or wares bought and sold for gain;
commodities or goods to trade; and commercial commodities in general.

That Tabacalera is being subjected to double taxation is more apparent than real. As already stated
what is collected under Ordinance No. 3358 is a license fee for the privilege of engaging in the sale
of liquor, a calling in which — it is obvious — not anyone or anybody may freely engage, considering
that the sale of liquor indiscriminately may endanger public health and morals. On the other hand,
what the three ordinances mentioned heretofore impose is a tax for revenue purposes based on the
sales made of the same article or merchandise. It is already settled in this connection that both a
license fee and a tax may be imposed on the same business or occupation, or for selling the same
article, this not being in violation of the rule against double taxation (Bentley Gray Dry Goods Co. vs.
City of Tampa, 137 Fla. 641, 188 So. 758; MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p.
83). This is precisely the case with the ordinances involved in the case at bar.

Appellee's contention that the City is repudiating its previous view — expressed by its Treasurer in a
letter addressed to Messrs. Sycip, Gorres, Velayo & Co. in 1954 — that a liquor dealer who pays the
annual license fee under Ordinance No. 3358 is exempted from the wholesalers and retailers taxes
under the other three ordinances mentioned heretofore is of no consequence. The government is not
bound by the errors or mistakes committed by its officers, specially on matters of law.

Having arrived at the above conclusion, we deem it unnecessary to consider the other legal points
raised by the City.

WHEREFORE, the decision appealed from is reversed, with the result that this case should be, as it
is hereby dismissed, with costs.

Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Regala and Makalintal, JJ.,
concur.
Bengzon, C.J. and Concepcion, J., took no part.
 G.R. No. 126232. November 27, 1998

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN,

FLORENCE CHAVEZ, and MANUEL DJ SIAYNGCO in their
capacity as PROVINCIAL GOVERNOR, PROVINCIAL
TREASURER, PROVINCIAL LEGAL ADVISE,
respectively, Petitioners, v. THE HONORABLE COURT OF
APPEALS (FORMER SPECIAL 12TH DIVISION), PUBLIC
CEMENT CORPORATION, Respondents.

DECISION

ROMERO, J.:

Before us is a petition for certiorari seeking the reversal of the

decision of the Court of Appeals dated September 27, 1995
declaring petitioner without authority to levy taxes on stones, sand,
gravel, earth and other quarry resources extracted from private
lands, as well as the August 26, 1996 resolution of the appellate
court denying its motion for reconsideration.

The facts are as follows:

On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed

Provincial Ordinance No. 3, known as "An ordinance Enacting the
Revenue Code of the Bulacan Province," which was to take effect on
July 1, 1992, section 21 of the ordinance provides as follows:

Section 21. Imposition of Tax. There is hereby levied and collected a

tax of 10% of the fair market value in the locality per cubic meter of
ordinary stones, sand, gravel, earth and other quarry resources,
such, but not limited to marble, granite, volcanic cinders, basalt,
tuff and rock phosphate, extracted from public lands or from beds of
seas, lakes, rivers, streams, creeks and other public waters within
its territorial jurisdiction. (Italics ours)

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter

dated November 11, 1993, assessed private respondent Republic
Cement Corporation (hereafter Republic Cement) P2,524,692.13 for
extracting limestone, shale and silica from several parcels of private
land in the province during the third quarter of 1992 until the
second quarter of 1993. Believing that the province, on the basis of
above-said ordinance, had no authority to impose taxes on quarry
resources extracted from private lands, Republic Cement formally
contested the same on December 23, 1993. The same was,
however, denied by the Provincial Treasurer on January 17, 1994.
Republic Cement, consequently filed a petition for declaratory relief
with the Regional Trial Court of Bulacan on February 14, 1994. The
province filed a motion to dismiss Republic Cement's petition, which
was granted by the trial court on May 13, 1993, which ruled that
declaratory relief was improper, allegedly because a breach of the
ordinance had been committed by Republic Cement.

On July 11, 1994, Republic Cement filed a petition for certiorari with

the Supreme Court seeking to reverse the trial court's dismissal of
their petition. The Court, in a resolution dated July 27, 1994,
referred the same to the Court of Appeals, where it was docketed as
CA G.R. SP No. 34915. The appellate court required petitioners to
file a comment, which they did on September 7, 1994.

In the interim, the Province of Bulacan issued a warrant of levy

against Republic Cement, allegedly because of its unpaid tax
liabilities. Negotiations between Republic Cement and petitioners
resulted in an agreement and modus vivendi on December 12,
1994, whereby Republic Cement agreed to pay under
protest P1,262,346.00, 50% of the tax assessed by petitioner, in
exchange for the lifting of the warrant of levy. Furthermore,
Republic Cement and petitioners agreed to limit the issue for
resolution by the Court of Appeals to the question as to whether or
not the provincial government could impose and/or assess taxes on
quarry resources extracted by Republic Cement from private lands
pursuant to Section 21 of the Provincial Ordinance No. 3. This
agreement and modus vivendi were embodied in a joint
manifestation and motion signed by Governor Roberto
Pagdanganan, on behalf of the Province of Bulacan, by Provincial
Treasurer Florence Chavez, and by Provincial Legal Officer Manuel
Siayngco, as petitioner's counsel and filed with the Court of Appeals
on December 13, 1994. In a resolution dated December 29, 1994,
the appellate court approved the same and limited the issue to be
resolved to the question whether or not the provincial government
could impose taxes on stones, sand, gravel, earth and other quarry
resources extracted from private lands.

After due trial, the Court of Appeals, on September 27, 1995,

rendered the following judgment:

WHEREFORE, judgment is hereby rendered declaring the

Province of Bulacan under its Provincial Ordinance No. 3
entitled "An Ordinance Enacting the Revenue Code of Bulacan
Province" to be without legal authority to impose and assess
taxes on quarry resources extracted by RCC from private
lands, hence the interpretation of Respondent Treasurer of
Chapter II, Article D, Section 21 of the Ordinance, and the
assessment made by the Province of Bulacan against RCC is
null and void.

Petitioner's motion for reconsideration, as well as their supplemental

motion for reconsideration, was denied by the appellate court on
august 26, 1996, hence this appeal.

Petitioner's claim that the Court of Appeals erred in:

1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT

PETITION ON THE GROUND THAT THE SAME IS NOT
THE APPROPRIATE REMEDY FROM THE TRIAL
COURT'S GRANT OF THE PRIVATE RESPONDENTS'
(HEREIN PETITIONER) MOTION TO DISMISS;
2. NOT DISMISSING THE SUBJECT PETITION FOR BEING
VIOLATIVE OF CIRCULAR 2-90 ISSUED BY THE
SUPREME COURT;
3. NOT DISMISSING THE PETITION FOR REVIEW ON THE
GROUND THAT THE TRIAL COURT'S ORDER OF MAY
13, 1994 HAD LONG BECOME FINAL AND
EXECUTORY;
 4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE
JURISDICTION IN RENDERING THE SEPTEMBER 27,
1995 DECISION;
5. HOLDING THAT PRIVATE RESPONDENT (HEREIN
PETITIONER) ARE ESTOPPED FROM RAISING THE
PROCEDURAL ISSUE IN THE MOTION FOR
RECONSIDERATION;
6. THE INTERPRETATION OF SECTION 134 OF THE LOCAL
GOVERNMENT CODE AS STATED IN THE SECOND TO
THE LAST PARAGRAPH OF PAGE 5 OF ITS SEPTEMBER
27, 1995 DECISION;
7. SUSTAINING THE ALLEGATIONS OF HEREIN
RESPONDENT WHICH UNJUSTLY DEPRIVED
PETITIONER THE POWER TO CREATE ITS OWN
SOURCES OF REVENUE;
8. DECLARING THAT THE ASSESSMENT MADE BY THE
PROVINCE OF BULACAN AGAINST RCC AS NULL AND
VOID WHICH IN EFFECT IS A COLLATERAL ATTACK
ON PROVINCIAL ORDINANCE NO. 3; AND
9. FAILING TO CONSIDER THE REGALIAN DOCTRINE IN
FAVOR OF THE LOCAL GOVERNMENT.

The issues raised by petitioners are devoid of merit. The number

and diversity of errors raised by appellants impel us, however, to
discuss the points raised seriatim.

In their first assignment of error, petitioners contend that instead of

filing a petition for certiorari with the Supreme Court, Republic
Cement should have appealed from the order of the trial court
dismissing their petition. Citing Martinez vs. CA,1 they allege that a
motion to dismiss is a final order, the remedy against which is not a
petition for certiorari, but an appeal, regardless of the questions
sought to be raised on appeal, whether of fact or of law, whether
involving jurisdiction or grave abuse of discretion of the trial court.

Petitioners' argument is misleading. While it is true that the remedy

against a final order is an appeal, and not a petition for certiorari,
the petition referred to is a petition for certiorari under Rule 65. As
stated in Martinez, the party aggrieved does not have the option to
substitute the special civil action for certiorari under Rule 65 for the
remedy of appeal. The existence and availability of the right of
appeal are antithetical to the availment of the special civil action
for certiorari.

Republic Cement did not, however, file a petition for certiorari under

Rule 65, but an appeal by certiorari under Rule 45. Even law
students know that certiorari under Rule 45 is a mode of appeal, an
appeal from the Regional Trial Court being taken in either of two
ways (a) by writ of error (involving questions of fact and law) and
(b) by certiorari (limited only to issues of law), with an appeal
by certiorari being brought to the Supreme Court, there being no
provision of law for taking appeals by certiorari to the Court of
Appeals.2 It is thus clearly apparent that Republic Cement correctly
contested the trial court's order of dismissal by filing an appeal
by certiorari under Rule 45. In fact, petitioners, in their second
assignment of error, admit that a petition for review
on certiorari under Rule 45 is available to a party aggrieved by an
order granting a motion to dismiss.3 They claim, however, that
Republic Cement could not avail of the same allegedly because the
latter raised issues of fact, which is prohibited, Rule 45 providing
that "(t)he petition shall raise only questions of law which must be
distinctly set forth."4 In this respect, petitioners claim that Republic
Cement's petition should have been dismissed by the appellate
court, Circular 2-90 providing:

4. Erroneous Appeals. - An appeal taken to either the

Supreme Court or the Court of Appeals by the wrong or
inappropriate mode shall be dismissed.

xxx

d) No transfer of appeals erroneously taken. -- No transfers

of appeals erroneously taken to the Supreme Court or to the
Court of Appeals to whichever of these Tribunals has
appropriate appellate jurisdiction will be allowed; continued
ignorance or wilful disregard of the law on appeals will not be
tolerated.
Petitioners even fault the Court for referring Republic Cement's
petition to the Court of Appeals, claiming that the same should have
been dismissed pursuant to Circular 2-90. Petitioners conveniently
overlook the other provisions of Circular 2-90, specifically 4b)
thereof, which provides:

b) Raising factual issues in appeal by certiorari. - Although

submission of issues of fact in an appeal by certiorari taken
to the Supreme Court from the regional trial court is
ordinarily proscribed, the Supreme Court nonetheless retains
the option, in the exercise of its sound discretion and
considering the attendant circumstances, either itself to take
cognizance of and decide such issues or to refer them to the
Court of Appeals for determination.

As can be clearly adduced from the foregoing, when an appeal

by certiorari under Rule 45 erroneously raises factual issues, the
Court has the option to refer the petition to the Court of Appeals.
The exercise by the Court of this option may not now be questioned
by petitioners.

As the trial court's order was properly appealed by Republic

Cement, the trial court's May 13, 1994 order never became final
and executory, rendering petitioner's third assignment of error moot
and academic.

Petitioners' fourth and fifth assignment of errors are likewise

without merit. Petitioners assert that the Court of Appeals could
only rule on the propriety of the trial court's dismissal of Republic
Cement's petition for declaratory relief, allegedly because that was
the sole relief sought by the latter in its petition for certiorari.
Petitioners claim that the appellate court overstepped its jurisdiction
when it declared null and void the assessment made by the Province
of Bulacan against Republic Cement.

Petitioners gloss over the fact that, during the proceedings before
the Court of Appeals, they entered into an agreement and modus
vivendi whereby they limited the issue for resolution to the question
as to whether or not the provincial government could impose and/or
assess taxes on stones, sand, gravel, earth and other quarry
resources extracted by Republic Cement from private lands. This
agreement and modus vivendi were approved by the appellate court
on December 29, 1994. All throughout the proceedings, petitioners
never questioned the authority of the Court of Appeals to decide this
issue, an issue which it brought itself within the purview of the
appellate court. Only when an adverse decision was rendered by the
Court of Appeals did petitioners question the jurisdiction of the
former.

Petitioners are barred by the doctrine of estoppel from contesting

the authority of the Court of Appeals to decide the instant case, as
this Court has consistently held that "(a) party cannot invoke the
jurisdiction of a court to secure affirmative relief against his
opponent and after obtaining or failing to obtain such relief,
repudiate or question that same jurisdiction."5 The Supreme Court
frowns upon the undesirable practice of a party submitting his case
for decision and then accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction when adverse.6
cräläwvirtualibräry

In a desperate attempt to ward off defeat, petitioners now repudiate

the above-mentioned agreement and modus vivendi, claiming that
the same was not binding in the Province of Bulacan, not having
been authorized by the Sangguniang Panlalawigan of Bulacan. While
it is true that the Provincial Governor can enter into contract and
obligate the province only upon authority of the sangguniang
panlalawigan,7 the same is inapplicable to the case at bar. The
agreement and modus vivendi may have been signed by petitioner
Roberto Pagdanganan, as Governor of the Province of Bulacan,
without authorization from the sangguniang panlalawigan, but it
was also signed by Manuel Siayngco, the Provincial Legal Officer, in
his capacity as such, and as counsel of petitioners.

It is a well-settled rule that all proceedings in court to enforce a

remedy, to bring a claim, demand, cause of action or subject matter
of a suit to hearing, trial, determination, judgment and execution
are within the exclusive control of the attorney.8 With respect to
such matters of ordinary judicial procedure, the attorney needs no
special authority to bind his client.9 Such questions as what action
or pleading to file, where and when to file it, what are its formal
requirements, what should be the theory of the case, what defenses
to raise, how may the claim or defense be proved, when to rest the
case, as well as those affecting the competency of a witness, the
sufficiency, relevancy, materiality or immateriality of certain
evidence and the burden of proof are within the authority of the
attorney to decide.10 Whatever decision an attorney makes on any
of these procedural questions, even if it adversely affects a client's
case, will generally bind a client. The agreement and modus
vivendi signed by petitioner's counsel is binding upon petitioners,
even if the Sanggunian had not authorized the same, limitation of
issues being a procedural question falling within the exclusive
authority of the attorney to decide.

In any case, the remaining issues raised by petitioner are likewise

devoid of merit, a province having no authority to impose taxes on
stones, sand, gravel, earth and other quarry resources extracted
from private lands. The pertinent provisions of the Local
Government Code are as follows:

Sec. 134. Scope of Taxing Powers. - Except as otherwise

provided in this Code, the province may levy only the taxes,
fees, and charges as provided in this Article.
Sec. 138. Tax on Sand, Gravel and Other Quarry Resources. -
The province may levy and collect not more than ten percent
(10%) of fair market value in the locality per cubic meter of
ordinary stones, sand, gravel, earth, and other quarry
resources, as defined under the National Internal Revenue
Code, as amended, extracted from public lands or from the
beds of seas, lakes, rivers, streams, creeks, and other public
waters within its territorial jurisdiction.

x x x (Italics supplied)

The appellate court, on the basis of Section 134, ruled that a

province was empowered to impose taxes only on sand, gravel, and
other quarry resources extracted from public lands, its authority to
tax being limited by said provision only to those taxes, fees and
charges provided in Article One, Chapter 2, Title One of Book II of
the Local Government Code.11 On the other hand, petitioners claim
that Sections 12912 and 18613 of the Local Government Code
authorizes the province to impose taxes other than those specifically
enumerated under the Local Government Code.

The Court of Appeals erred in ruling that a province can impose only
the taxes specifically mentioned under the Local Government Code.
As correctly pointed out by petitioners, Section 186 allows a
province to levy taxes other than those specifically enumerated
under the Code, subject to the conditions specified therein.

This finding, nevertheless, affords cold comfort to petitioners as

they are still prohibited from imposing taxes on stones, sand,
gravel, earth and other quarry resources extracted from private
lands. The tax imposed by the Province of Bulacan is an excise tax,
being a tax upon the performance, carrying on, or exercise of an
activity.14 The Local Government Code provides:

Section 133. - Common Limitations on the Taxing Powers of

Local Government Units. - Unless otherwise provided herein,
the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of
the following:

xxx

(h) Excise taxes on articles enumerated under the National

Internal Revenue Code, as amended, and taxes, fees or
charges on petroleum products;

xxx

A province may not, therefore, levy excise taxes on articles already

taxed by the National Internal Revenue Code. Unfortunately for
petitioners, the National Internal Revenue Code provides:

Section 151. - Mineral Products. -

(A) Rates of Tax. - There shall be levied, assessed and

collected on minerals, mineral products and quarry resources,
excise tax as follows:
xxx

(2) On all nonmetallic minerals and quarry resources, a

tax of two percent (2%) based on the actual market
value of the gross output thereof at the time of
removal, in case of those locally extracted or produced;
or the values used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax
and value-added tax, in the case of importation.

xxx

(B) [Definition of Terms]. - For purposes of this Section, the term-

xxx

(4) Quarry resources shall mean any common stone or

other common mineral substances as the Director of
the Bureau of Mines and Geo-Sciences may declare to
be quarry resources such as, but not restricted to,
marl, marble, granite, volcanic cinders, basalt, tuff and
rock phosphate; Provided, That they contain no metal
or metals or other valuable minerals in economically
workable quantities.

It is clearly apparent from the above provision that the National

Internal Revenue Code levies a tax on all quarry resources,
regardless of origin, whether extracted from public or private land.
Thus, a province may not ordinarily impose taxes on stones, sand,
gravel, earth and other quarry resources, as the same are already
taxed under the National Internal Revenue Code. The province can,
however, impose a tax on stones, sand, gravel, earth and other
quarry resources extracted from public land because it is expressly
empowered to do so under the Local Government Code. As to
stones, sand, gravel, earth and other quarry resources extracted
from private land, however, it may not do so, because of the
limitation provided by Section 133 of the Code in relation to Section
151 of the National Internal Revenue Code.
Given the above disquisition, petitioners cannot claim that the
appellate court unjustly deprived them of the power to create their
sources of revenue, their assessment of taxes against Republic
Cement being ultra vires, traversing as it does the limitations set by
the Local Government Code.

Petitioners likewise aver that the appellate court's declaration of

nullity of its assessment against Republic Cement is a collateral
attack on Provincial Ordinance No. 3, which is prohibited by public
policy.15 Contrary to petitioners' claim, the legality of the ordinance
was never questioned by the Court of Appeals. Rather, what the
appellate court questioned was petitioners' assessment of taxes on
Republic Cement on the basis of Provincial Ordinance No. 3, not the
ordinance itself.

Furthermore, Section 21 of Provincial Ordinance No. 3 is practically

only a reproduction of Section 138 of the Local Government Code. A
cursory reading of both would show that both refer to ordinary
sand, stone, gravel, earth and other quarry resources extracted
from public lands. Even if we disregard the limitation set by Section
133 of the Local Government Code, petitioners may not impose
taxes on stones, sand, gravel, earth and other quarry resources
extracted from private lands on the basis of Section 21 of Provincial
Ordinance No. 3 as the latter clearly applies only to quarry
resources extracted from public lands. Petitioners may not invoke
the Regalian doctrine to extend the coverage of their ordinance to
quarry resources extracted from private lands, for taxes, being
burdens, are not to be presumed beyond what the applicable
statute expressly and clearly declares, tax statutes being
construed strictissimi juris against the government.16 cräläwvirtualibräry

WHEREFORE, premises considered, the instant petition is

DISMISSED for lack of merit and the decision of the Court of
Appeals is hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.

Narvasa, C.J. (Chairman), Kapunan, Purisima, and Pardo, JJ.,

concur.
Endnotes:

1
 237 SCRA 575 (1994) citing Bell Carpets v. CA, 185 SCRA 35 (1990).

2
 Del Pozo v. Penaco, 167 SCRA 577 (1988).

3
 Petition for Certiorari, p. 6.

4
 Section 1, Rule 45, Rules of Court.

5
 Lee v. Presiding Judge, 145 SCRA 408 (1986).

6
 Zamboanga Electric Cooperative, Inc. v. Buat, 243 SCRA 47 (1995).

7
 LOCAL GOVERNMENT CODE, Section 465.

8
 Belendres v. Lopez Sugar Central Mill Co., 97 Phil. 100 (1955).

9
 See Sec. 23, Rule 138, Rules of Court.

10
 AGPALO, LEGAL ETHICS, 5th Ed., p. 249

11
 LOCAL GOVERNMENT CODE, Sections 135-141.

 Section 129. Power to Create Sources of Revenue.--  Each local government unit shall exercise its power to create its
12

own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic
policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.

13
 Section 186. Power To Levy Other Taxes, Fees or Charges.--  Local government units may exercise the power to levy
taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions
of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges
shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the
ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the
purpose.

14
 Cordero v. Conda, 18 SCRA 341 (1966).

15
 See San Miguel Brewery v. Magno, 21 SCRA 292 (1967).

16
 Republic v. IAC, 196 SCRA 335 (1991).
 G.R. No. 181277, July 03, 2013

SWEDISH MATCH PHILIPPINES, INC., Petitioner, v. THE TREASURER OF THE

CITY OF MANILA, Respondent.

DECISION

SERENO, C.J.:

This is a Petition for Review on Certiorari1 filed by Swedish Match Philippines, Inc.

(petitioner) under Rule 45 of the 1997 Rules of Civil Procedure assailing the Court of
Tax Appeals En Banc (CTA En Banc) Decision2  dated 1 October 2007 and
Resolution3 dated 14 January 2008 in C.T.A. EB No. 241.

THE FACTS

On 20 October 2001, petitioner paid business taxes in the total amount of

P470,932.21.4  The assessed amount was based on Sections 14 5 and 216 of Ordinance
No. 7794, otherwise known as the Manila Revenue Code, as amended by Ordinance
Nos. 7988 and 8011.  Out of that amount, P164,552.04 corresponded to the payment
under Section 21.7

Assenting that it was not liable to pay taxes under Section 21, petitioner wrote a
letter8 dated 17 September 2003 to herein respondent claiming a refund of business
taxes the former had paid pursuant to the said provision.  Petitioner argued that
payment under Section 21 constituted double taxation in view of its payment under
Section 14.

On 17 October 2003, for the alleged failure of respondent to act on its claim for a
refund, petitioner filed a Petition for Refund of Taxes 9 with the RTC of Manila in
accordance with Section 196 of the Local Government Code of 1991. The Petition was
docketed as Civil Case No. 03-108163.

On 14 June 2004, the Regional Trial Court (RTC), Branch 21 of Manila rendered a
Decision10 in Civil Case No. 03-108163 dismissing the Petition for the failure of
petitioner to plead the latter’s capacity to sue and to state the authority of Tiarra T.
Batilaran-Beleno (Ms. Beleno), who had executed the Verification and Certification of
Non-Forum Shopping.

In denying petitioner’s Motion for Reconsideration, the RTC went on to say that
Sections 14 and 21 pertained to taxes of a different nature and, thus, the elements of
double taxation were wanting in this case.

On appeal, the CTA Second Division affirmed the RTC’s dismissal of the Petition for
Refund of Taxes on the ground that petitioner had failed to state the authority of Ms.
Beleno to institute the suit.
The CTA En Banc likewise denied the Petition for Review, ruling as follows: cralavvonlinelawlibrary

In this case, the plaintiff is the Swedish Match Philippines, Inc. However, as found by
the RTC as well as the Court in Division, the signatory of the verification and/or
certification of non-forum shopping is Ms. Beleno, the company’s Finance Manager, and
that there was no board resolution or secretary's certificate showing proof of Ms.
Beleno’s authority in acting in behalf of the corporation at the time the initiatory
pleading was filed in the RTC. It is therefore, correct that the case be dismissed.

WHEREFORE, premises considered, the petition for review is hereby DENIED.

Accordingly, the assailed Decision and the Resolution dated August 8, 2006 and
November 27, 2006, respectively, are hereby AFFIRMED in toto.

SO ORDERED.11 nadcralavvonlinelawlibrary

ISSUES

In order to determine the entitlement of petitioner to a refund of taxes, the instant

Petition requires the resolution of two main issues, to wit: cralavvonlinelawlibrary

1) Whether Ms. Beleno was authorized to file the Petition for Refund of Taxes with the
RTC; and

2) Whether the imposition of tax under Section 21 of the Manila Revenue Code
constitutes double taxation in view of the tax collected and paid under Section 14 of the
same code.12

THE COURT’S RULING

Authority from the board to sign the Verification

and Certification of Non-Forum Shopping

Anent the procedural issue, petitioner argues that there can be no dispute that Ms.
Beleno was acting within her authority when she instituted the Petition for Refund
before the RTC, notwithstanding that the Petition was not accompanied by a Secretary’s
Certificate.  Her authority was ratified by the Board in its Resolution adopted on 19 May
2004.  Thus, even if she was not authorized to execute the Verification and Certification
at the time of the filing of the Petition, the ratification by the board of directors
retroactively applied to the date of her signing.

On the other hand, respondent contends that petitioner failed to establish the authority
of Ms. Beleno to institute the present action on behalf of the corporation. 
Citing Philippine Airlines v. Flight Attendants and Stewards Association of the
Philippines (PAL v. FASAP),13 respondent avers that the required certification of non-
forum shopping should have been valid at the time of the filing of the Petition. The
Petition, therefore, was defective due to the flawed Verification and Certification of Non-
Forum Shopping, which were insufficient in form and therefore a clear violation of
Section 5, Rule 7 of the 1997 Rules of Civil Procedure.
We rule for petitioner.

Time and again, this Court has been faced with the issue of the validity of the
verification and certification of non-forum shopping, absent any authority from the
board of directors.

The power of a corporation to sue and be sued is lodged in the board of directors, which
exercises its corporate powers.14 It necessarily follows that “an individual corporate
officer cannot solely exercise any corporate power pertaining to the corporation without
authority from the board of directors.”15 Thus, physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly authorized for the
purpose by corporate by-laws or by a specific act of the board of directors. 16

Consequently, a verification signed without an authority from the board of directors is

defective.  However, the requirement of verification is simply a condition affecting the
form of the pleading and non-compliance does not necessarily render the
pleading fatally defective.17 The court may in fact order the correction of the pleading if
verification is lacking or, it may act on the pleading although it may not have been
verified, where it is made evident that strict compliance with the rules may be
dispensed with so that the ends of justice may be served. 18

Respondent cites this Court’s ruling in PAL v. FASAP,19 where we held that only
individuals vested with authority by a valid board resolution may sign a certificate of
non-forum shopping on behalf of a corporation.  The petition is subject to dismissal if a
certification was submitted unaccompanied by proof of the signatory’s authority. 20 In a
number of cases, however, we have recognized exceptions to this rule. Cagayan Valley
Drug Corporation v. Commissioner of Internal Revenue 21 provides: cralavvonlinelawlibrary

In a slew of cases, however, we have recognized the authority of some corporate

officers to sign the verification and certification against forum shopping. In Mactan-
Cebu International Airport Authority v. CA, we recognized the authority of a general
manager or acting general manager to sign the verification and certificate against
forum shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an
"employment specialist" who had not even presented any proof of her authority to
represent the company; in Novelty Philippines, Inc., v. CA, we ruled that a personnel
officer who signed the petition but did not attach the authority from the company is
authorized to sign the verification and non-forum shopping certificate; and in Lepanto
Consolidated Mining Company v. WMC Resources International Pty. Ltd. (Lepanto), we
ruled that the Chairperson of the Board and President of the Company can sign the
verification and certificate against non-forum shopping even without the submission of
the board’s authorization.

In sum, we have held that the following officials or employees of the company
can sign the verification and certification without need of a board resolution:
(1) the Chairperson of the Board of Directors, (2) the President of a
corporation, (3) the General Manager or Acting General Manager, (4)
Personnel Officer, and (5) an Employment Specialist in a labor case.

While the above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency
of the authority was done on a case to case basis. The rationale applied in the
foregoing cases is to justify the authority of corporate officers or
representatives of the corporation to sign the verification or certificate against
forum shopping, being “in a position to verify the truthfulness and correctness
of the allegations in the petition.” (Emphases supplied)

Given the present factual circumstances, we find that the liberal jurisprudential
exception may be applied to this case.

A distinction between noncompliance and substantial compliance with the requirements

of a certificate of non-forum shopping and verification as provided in the Rules of Court
must be made.22 In this case, it is undisputed that the Petition filed with the RTC was
accompanied by a Verification and Certification of Non-Forum Shopping signed by Ms.
Beleno, although without proof of authority from the board. However, this Court finds
that the belated submission of the Secretary’s Certificate constitutes substantial
compliance with Sections 4 and 5, Rule 7 of the 1997 Revised Rules on Civil Procedure.

A perusal of the Secretary’s Certificate signed by petitioner’s Corporate Secretary

Rafael Khan and submitted to the RTC shows that not only did the corporation authorize
Ms. Beleno to execute the required Verifications and/or Certifications of Non-Forum
Shopping, but it likewise ratified her act of filing the Petition with the RTC. The Minutes
of the Special Meeting of the Board of Directors of petitioner-corporation on 19 May
2004 reads: cralavvonlinelawlibrary

RESOLVED, that Tiarra T. Batilaran-Beleno, Finance Director of the Corporation, be

authorized, as she is hereby authorized and empowered to represent, act, negotiate,
sign, conclude and deliver, for and in the name of the Corporation, any and all
documents for the application, prosecution, defense, arbitration, conciliation, execution,
collection, compromise or settlement of all local tax refund cases pertaining to
payments made to the City of Manila pursuant to Section 21 of the Manila Revenue
Code, as amended; chanroblesvirtualawlibrary

RESOLVED, FURTHER, that Tiarra T. Batilaran-Beleno be authorized to execute

Verifications and/or Certifications as to Non-Forum Shopping of Complaints/Petitions
that may be filed by the Corporation in the above-mentioned tax-refund cases; chanroblesvirtualawlibrary

RESOLVED, FURTHER, that the previous institution by Tiarra T. Batilaran-

Beleno of tax refund cases on behalf of the Corporation, specifically Civil Cases
Nos. 01-102074, 03-108163, and, 04-109044, all titled “Swedish Match
Philippines, Inc. v.  The Treasurer of the City of Manila” and pending in the
Regional Trial Court of Manila, as well as her execution of the Verifications
and/or Certifications as to Non-Forum Shopping in these tax refund cases, are
hereby, approved and ratified in all respects. (Emphasis supplied)

Clearly, this is not an ordinary case of belated submission of proof of authority from the
board of directors.  Petitioner-corporation ratified the authority of Ms. Beleno to
represent it in the Petition filed before the RTC, particularly in Civil Case No. 03-
108163, and consequently to sign the verification and certification of non-forum
shopping on behalf of the corporation.  This fact confirms and affirms her authority and
gives this Court all the more reason to uphold that authority. 23
Additionally, it may be remembered that the Petition filed with the RTC was a claim for
a refund of business taxes.  It should be noted that the nature of the position of Ms.
Beleno as the corporation’s finance director/manager is relevant to the determination of
her capability and sufficiency to verify the truthfulness and correctness of the
allegations in the Petition.  A finance director/manager looks after the overall
management of the financial operations of the organization and is normally in charge of
financial reports, which necessarily include taxes assessed and paid by the corporation. 
Thus, for this particular case, Ms. Beleno, as finance director, may be said to have been
in a position to verify the truthfulness and correctness of the allegations in the claim for
a refund of the corporation’s business taxes.

In Mediserv v. Court of Appeals,24 we said that a liberal construction of the rules may be
invoked in situations in which there may be some excusable formal deficiency or error
in a pleading, provided that the invocation thereof does not subvert the essence of the
proceeding, but at least connotes a reasonable attempt at compliance with the rules.
After all, rules of procedure are not to be applied in a very rigid, technical manner, but
are used only to help secure substantial justice.25

More importantly, taking into consideration the substantial issue of this case, we find a
special circumstance or compelling reason to justify the relaxation of the rule.
Therefore, we deem it more in accord with substantive justice that the case be decided
on the merits.

Double taxation

As to the substantive issues, petitioner maintains that the enforcement of Section 21 of

the Manila Revenue Code constitutes double taxation in view of the taxes collected
under Section 14 of the same code.  Petitioner points out that Section 21 is not in itself
invalid, but the enforcement of this provision would constitute double taxation if
business taxes have already been paid under Section 14 of the same revenue code.
Petitioner further argues that since Ordinance Nos. 7988 and 8011 have already been
declared null and void in Coca-Cola Bottlers Philippines, Inc. v. City of Manila,26 all taxes
collected and paid on the basis of these ordinances should be refunded.

In turn, respondent argues that Sections 14 and 21 pertain to two different objects of
tax; thus, they are not of the same kind and character so as to constitute double
taxation.  Section 14 is a tax on manufacturers, assemblers, and other processors,
while Section 21 applies to businesses subject to excise, value-added, or percentage
tax.  Respondent posits that under Section 21, petitioner is merely a withholding tax
agent of the City of Manila.

At the outset, it must be pointed out that the issue of double taxation is not novel, as it
has already been settled by this Court in The City of Manila v. Coca-Cola Bottlers
Philippines, Inc.,27 in this wise:
cralavvonlinelawlibrary

Petitioners obstinately ignore the exempting proviso in Section 21 of Tax Ordinance No.
7794, to their own detriment. Said exempting proviso was precisely included in said
section so as to avoid double taxation.
Double taxation means taxing the same property twice when it should be taxed only
once; that is, “taxing the same person twice by the same jurisdiction for the same
thing.” It is obnoxious when the taxpayer is taxed twice, when it should be but once.
Otherwise described as “direct duplicate taxation,” the two taxes must be imposed on
the same subject matter, for the same purpose, by the same taxing authority, within
the same jurisdiction, during the same taxing period; and the taxes must be of the
same kind or character.

Using the aforementioned test, the Court finds that there is indeed double taxation
if respondent is subjected to the taxes under both Sections 14 and 21 of Tax
Ordinance No. 7794, since these are being imposed: (1) on the same subject
matter – the privilege of doing business in the City of Manila; (2) for the same
purpose – to make persons conducting business within the City of Manila
contribute to city revenues; (3) by the same taxing authority – petitioner City
of Manila; (4) within the same taxing jurisdiction – within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods – per
calendar year; and (6) of the same kind or character – a local business tax
imposed on gross sales or receipts of the business.

The distinction petitioners attempt to make between the taxes under Sections 14 and
21 of Tax Ordinance No. 7794 is specious. The Court revisits Section 143 of the LGC,
the very source of the power of municipalities and cities to impose a local business tax,
and to which any local business tax imposed by petitioner City of Manila must conform.
It is apparent from a perusal thereof that when a municipality or city has already
imposed a business tax on manufacturers, etc. of liquors, distilled spirits,
wines, and any other article of commerce, pursuant to Section 143(a) of the
LGC, said municipality or city may no longer subject the same manufacturers,
etc. to a business tax under Section 143(h) of the same Code. Section 143(h)
may be imposed only on businesses that are subject to excise tax, VAT, or
percentage tax under the NIRC, and that are “not otherwise specified in
preceding paragraphs.” In the same way, businesses such as respondent’s,
already subject to a local business tax under Section 14 of Tax Ordinance No.
7794 [which is based on Section 143(a) of the LGC], can no longer be made
liable for local business tax under Section 21 of the same Tax Ordinance
[which is based on Section 143(h) of the LGC].28 (Emphases supplied)

Based on the foregoing reasons, petitioner should not have been subjected to taxes
under Section 21 of the Manila Revenue Code for the fourth quarter of 2001,
considering that it had already been paying local business tax under Section 14 of the
same ordinance.

Further, we agree with petitioner that Ordinance Nos. 7988 and 8011 cannot be the
basis for the collection of business taxes.  In Coca-Cola,29 this Court had the occasion to
rule that Ordinance Nos. 7988 and 8011 were null and void for failure to comply with
the required publication for three (3) consecutive days. Pertinent portions of the ruling
read:cralavvonlinelawlibrary

It is undisputed from the facts of the case that Tax Ordinance No. 7988 has already
been declared by the DOJ Secretary, in its Order, dated 17 August 2000, as null and
void and without legal effect due to respondents’ failure to satisfy the requirement that
said ordinance be published for three consecutive days as required by law.  Neither is
there quibbling on the fact that the said Order of the DOJ was never appealed by the
City of Manila, thus, it had attained finality after the lapse of the period to appeal.

Furthermore, the RTC of Manila, Branch 21, in its Decision dated 28 November 2001,
reiterated the findings of the DOJ Secretary that respondents failed to follow the
procedure in the enactment of tax measures as mandated by Section 188 of the Local
Government Code of 1991, in that they failed to publish Tax Ordinance No. 7988 for
three consecutive days in a newspaper of local circulation.  From the foregoing, it is
evident that Tax Ordinance No. 7988 is null and void as said ordinance was published
only for one day in the 22 May 2000 issue of the Philippine Post in contravention of the
unmistakable directive of the Local Government Code of 1991.

Despite the nullity of Tax Ordinance No. 7988, the court a quo, in the assailed Order,
dated 8 May 2002, went on to dismiss petitioner’s case on the force of the enactment of
Tax Ordinance No. 8011, amending Tax Ordinance No. 7988.  Significantly, said
amending ordinance was likewise declared null and void by the DOJ Secretary in a
Resolution, dated 5 July 2001, elucidating that  “[I]nstead of amending Ordinance No.
7988, [herein] respondent should have enacted another tax measure which strictly
complies with the requirements of law, both procedural and substantive.   The
passage of the assailed ordinance did not have the effect of curing the defects
of Ordinance No. 7988 which, any way, does not legally exist.”  Said Resolution
of the DOJ Secretary had, as well, attained finality by virtue of the dismissal with
finality by this Court of respondents’ Petition for Review on Certiorari in G.R. No.
157490 assailing the dismissal by the RTC of Manila, Branch 17, of its appeal due to
lack of jurisdiction in its Order, dated 11 August 2003. 30 (Emphasis in the original)

Accordingly, respondent’s assessment under both Sections 14 and 21 had no basis. 

Petitioner is indeed liable to pay business taxes to the City of Manila; nevertheless,
considering that the former has already paid these taxes under Section 14 of the Manila
Revenue Code, it is exempt from the same payments under Section 21 of the same
code.  Hence, payments made under Section 21 must be refunded in favor of petitioner.

It is undisputed that petitioner paid business taxes based on Sections 14 and 21 for the
fourth quarter of 2001 in the total amount of P470,932.21. 31 Therefore, it is entitled to
a refund of P164,552.0432 corresponding to the payment under Section 21 of the Manila
Revenue Code.

WHEREFORE, premises considered, the instant Petition is GRANTED.  Accordingly, the

Court of Tax Appeals En Banc Decision dated 1 October 2007 and Resolution dated 14
January 2008 are REVERSED and SET ASIDE.

SO ORDERED.

Leonardo-De Castro, Bersamin, Villarama, Jr., and Reyes, JJ., concur.

Endnotes:
1
Rollo, pp. 26-75. cralawlibrary

2
 Id. at 76-87; penned by Associate Justice Juanito C. Castañeda Jr. and concurred in
by then Presiding Justice Ernesto D. Acosta, Associate Justices Lovell R. Bautista,
Erlinda P. Uy, Caesar A. Casanova and Olga Palanca-Enriquez. The CTA En
Banc affirmed the Decision dated 8 August 2006 and Resolution dated 27 November
2006 rendered by the CTA Second Division in C.T.A. AC No. 6, which affirmed the
dismissal of petitioner’s claim for a refund. The claim was dismissed by the Regional
Trial Court (RTC) of Manila, Branch 21 on the ground of lack of legal capacity to sue
and failure to establish a cause of action. cralawlibrary

3
 Id. at 88-90. cralawlibrary

4
 Id. at 269. cralawlibrary

5
 SEC. 14. Tax on Manufacturers, Assemblers and other Processors. - There is hereby
imposed a graduated tax on manufacturers, assemblers, repackers, processors,
brewers, distillers, rectifiers and compounders of liquors, distilled spirits, and wines on
manufacturers of any articles of commerce of whatever kind or nature in accordance
with the following schedule.

With gross receipts or sales for the preceding calendar year in the amount of: xxx. cralawlibrary

6
  SEC. 21. Tax on Business Subject to the Excise, Value-Added or Percentage Taxes
under the NIRC - On any of the following businesses and articles of commerce subject
to the excise, value-added or percentage taxes under the National Internal Revenue
Code, hereinafter referred to as NIRC, as amended, a tax of FIFTY PERCENT (50%) OF
ONE PERCENT (1%) per annum on the gross sales or receipts of the preceding calendar
year is hereby imposed: cralavvonlinelawlibrary

A) On person who sells goods and services in the course of trade or businesses; xxx

PROVIDED, that all registered businesses in the City of Manila already paying the
aforementioned tax shall be exempted from payment thereof. cralawlibrary