RICARDO DE MESA, PLAINTIFF AND APPELLEE, VS. COLLECTOR OF INTERNAL REVENUE, DEFENDANT AND APPELLANT.

This action was instituted by Ricardo de Mesa in the Court of First
Instance of the Province of Pampanga for the purpose of recovering from
the Collector of Internal Revenue the sum of P1,000 for taxes paid
under protest to the municipal treasurer of the municipality of
Angeles, in the Province of Pampanga. From a judgment, entered in the
trial court, requiring the defendant to repay said sum, without costs,
the defendant appealed. The original plaintiff having died during the
course of the litigation, he has been substituted by Jose F. Santos, as
administrator.

For a number of years prior to December, 1921, the additional
municipal tax imposed by the municipal council of Angeles, Pampanga,
for the maintaining of a cockpit in the municipality was fixed at the
sum of P600. But on December 11, 1921, the municipal council of said
municipality approved ordinance No. 14, raising the municipal license
tax for a cockpit of the first class from P600 to P800 a year, and this
ordinance received the approval of the provincial board on December 29
of the same year. This increase in the amount of the cockpit tax
appears to have been brought about by a circular letter dated September
15, 1921, emanating from the office of the Executive Secretary, in
which it was recommended to municipal councils that they should revise
their municipal ordinances relative to imposts and licenses, and
especially licenses issued to cockpits and dance halls, with a view to
increasing the available funds for public works and other local
activities. In the same circular the desire was expressed that no
ordinance should be adopted lowering the tax for licenses to cockpits.

As a consequence of the adoption of said ordinance by the municipal
authorities of Angeles, it would have been proper thereafter to collect
P800, instead of P600, for the cockpit license in said municipality.
Nevertheless, during the year 1922 and thereafter until the middle of
the year 1926, the said Ricardo de Mesa paid only P600 per annum for
his cockpit license in said municipality, without any demand for a
larger amount having been made upon him by the municipal authorities.
But later he was required to pay, and did pay, under protest, the sum
of P1,000, demanded by the municipal treasurer as past due taxes upon
said account, that is to say, an additional P200 per annum for five
years, over the amount that he had previously paid.

In the year 1926, however, the ordinance No. 14, above-mentioned,
was amended, by ordinance No. 6, series 1926, by reducing the cockpit
license to the old amount, namely, P600 per year; and on June 18, 1927,
the municipal council of Angeles informed the Insular Auditor and
Collector of Internal Revenue that an error had been made in old
ordinance No. 14, in fixing therein the sum of P800, instead of P600,
per annum. The resolution conveying this information was indorsed by
the provincial board of Pampanga to the Insular Auditor, through the
Collector of Internal Revenue, and at the same time these officials
were advised that the amendatory ordinance No. 6, series 1926, had been
approved by the municipal board. It is not clear whether the municipal
council of Angeles intended, in its resolution, to suggest that the
error supposed to have been made in fixing the cockpit tax in ordinance
No. 14 at P800, consisted of a clerical error or a mere error of
legislative wisdom on the part of the council, though the surmise would
probably be safe that the error, if any, was of the last-named kind,
that is to say, the municipal board doubtless discovered, after the
ordinance was adopted, that the increase was more than the business
would bear. In view of the recommendation to the municipal authorities
from the Executive Bureau, it is almost a moral certainty that the
increase in the tax was due to said recommendation and that no mistake
was made other than that of overestimating the capacity of the business
subject to the license. But this consideration is a matter apart from
the vital issue in the case; and it is better, we think, and as the
trial judge indicated, to consider ordinance No. 6, of 1926, as a
condonation of the prior license tax. In this view the case presents
the simple question whether a municipal council, with the approval of
the provincial board, can lawfully condone, release, or remit a license
tax already accrued. Upon this point we are constrained to hold the
power in question has been withheld from the municipal councils.

To prevent abuse the lawmaker has very carefully guarded the right
of the lawmaking authorities to release taxpayers from liability for a
tax already accrued. Of course the Legislature has general power to
authorize the release of claims against the debtors of the Government;
and in sections 384 and 385 of the Assessment Law, Administrative Code
of 1917, the Governor-General is given power to remit or reduce the
real property tax for any year, in any province, if he deems that the
public interest so requires, and the provincial board, with the
approval of the Secretary of the Interior, is given a qualified
authority to the same end.

No such power has been confided by law to the municipal councils. On
the contrary, by section 2309 of the Municipal Law, it is declared that
a municipal license tax already in existence shall be subject to change
only by ordinance enacted prior to the 15th of December of any year for
the next succeeding year. This means that ordinances imposing license
taxes must be prospective only; and no authority is anywhere given to
the council to condone taxes previously accrued. The American
jurisprudence, though not very explicit, points to the conclusion that
counties, towns and municipal corporations cannot compromise or release
claims for taxes once legally assessed, at least so long as the debtor
is able to pay. (37 Cyc, 1171; Connecticut vs. Fyler, 48 Conn., 145; Territory vs. Gaines, 11 Ariz., 270; Debolt vs.
Ohio Life etc. Co., 1 Ohio St., 563.) It may be worth observing that if
the power of municipal councils to remit taxes is once admitted, the
exercise of this power might afford a means of introducing inequality
in the incidence of taxation, which would be obnoxious to the rule of
uniformity prescribed in section 3 of the Philippine Autonomy Act; and
although this argument has less force in dealing with essentially
monopolistic licenses, like cockpit licenses, nevertheless the same
considerations point to the impropriety of the exercise of such power.

It is therefore declared that ordinance No. 6 and resolution No.
101, series of 1926, did not have the effect of relieving the owner of
this cockpit license from liability for the full tax for the five years
prior to the adoption of said ordinance and while the prior ordinance
No. 14 was in force.

The judgment must therefore be reversed and the defendant absolved from the complaint. So ordered, without costs.

Avanceña, C. J., Johnson, Villamor, Johns, Romualdez, and Villa-Real, JJ., concur.