G.R. No. L-9167. September 27, 1956

Plaintiff is the owner and manager of a gasoline station located in the City of Lipa where  gasoline, kerosene, oil and the like are sold.  He paid  under protest to  the city treasurer  during  the  period from  October  24, 1952 to September 30, 1953 the aggregate sum of P733.84 as taxes levied under Ordinance No. 457-A, as  amended by Ordiance No. 462, imposing one-tenth  1/10)  centavo per liter on the sale of gasoline and one-half  (1/2) centavo per liter on the sale of alcohol, gas, or petroleum that may be made in any store or establishment within the city.   To recover the amount paid on the ground that the two ordinances are ultra vires, he brought the present action in the Court  of First Instance of  Batangas.  The City  of Lipa put  up the defense that the ordinances are valid because they were enacted  pursuant to the  power grantee} to  it by the Charter,  Republic  Act No. 162.

The parties submitted a joint motion for judgment on the pleadings, and on May 27,  1954, the  court  rendered judgment declaring the ordinances ultra vires and  ordering  defendant to reimburse to plaintiff  the  amount  of P733.84  and  such other  fees as plaintiff  may have paid after the filing of the  complaint.   Defendant took the case directly  to this Court.

Ordinance No. 457-A, as amended by Ordinance No. 462, of the City of Lipa, provides in section 1  as  follows: 

“SECTION 1.—There is  hereby imposed a tax of one tenth (1/10) centavo per liter on the sale of gasoline and one-half (1/2)  centavo per liter on the sale of alcohol, gas, petroleum, or all of any  kindred type of combustible  liquid  made  in  any  store or  establishment by any person or entity within  the City of Lipa.”

The above ordinances were enacted pursuant to section 15, paragraph (p), of Republic  Act No.  162, otherwise known as Charter of the City of  Lipa, which reads: 

“SEC. 15. General powers  and duties  of  the  Board.—-Except as otherwise provided  by law, and subject to the conditions  and limitations thereof,  the  Municipal  Board  shall have  the  following legislative powers: 

(p) To tax, fix the license fee for, regulate the business and fix the location of, match factories, blacksmith shops, foundries, steam boilers, lumber yards, shipyards, the storage and  sale of gunpowder, tar,  pitch,  resin,  coal,  oil, gasoline, benzine,  turpentine,  hemp, cotton, nitroglycerine, petroleum, or any of the products thereof, and of all  other highly combustible or  explosive  materials, and other establishments likely to  endanger  the  public safety  or  give  rise to conflagrations  or explosion,  and, subject to the rules and regulations issued by  the  Director  of  Health in  accordance with law, tanneries,   renderies,  tallow   chandleries,  embalmers, and scrap factories.”

It is clear from the above that the City of Lipa is given the power and authority (1) to tax,  (2) to fix the license fee for,  (3)  to regulate the business, and  (4) to fix the location of * * * the storage and sale of oil, gasoline and the like.  In other words,  it is given the power to tax, fix the license  fee  for, or regulate the business  affecting match  factories,   blacksmith   shops,  foundries,  steam boilers,  lumber yards,  shipyards,  the  storage  and the sale  of oil, gasoline, petroleum  and  the like.   It  does not possess the  power to impose a tax on specific articles which may take the form of specific tax.  In order that such  power  may be exercised,  the  grant  must be clear. It cannot be implied for  the  reason that a municipal corporation,  unlike  a sovereign  state,  does  not possess inherent power of  taxation.

It  is  settled that a  municipal corporation, unlike  a sovereign state,  is  clothed  with no inherent power of taxation.  The charter or statute must plainly  show an intent to confer that power or  the  municipality cannot assume it. And the power when granted is  to be construed strictissimi juris.  Any  doubt  or ambiguity  arising out of the term used in granting that power must be resolved against  the  municipality.   Inferences,  implications, deductions—all these—have  no place  in the interpretation of the taxing power of a municipal  corporations.  [Icard vs. City  Council of Baguio and the City of  Baguio, 48 Off. Gaz., (Supp. 11) 320; Medina, et al. vs. City of Baguio, 48 Off. Gaz., No. 11,  4769].

The question now to be determined is:  Do the ordinances impose merely  a tax on the business of selling and storing oil, gasoline, or petroleum, or a specific tax on the article therein enumerated?

We are inclined to uphold the latter view for the reason that  the tax which  they seek  to collect  is  Imposed by “some standard of weight  or measurement”  and not regardless of it.  Thus, the tax  imposed is  y10  centavo per liter  on  the  sale of gasoline and i  centavo per liter on the  sale  of alcohol,  gas, or petroleum.  And it has  been held that “A tax which imposes a  specific sum by the head or number, or some standard  of weight or measurement, and which  requires no assessment beyond a  listing  and classification of the  objects to be  taxed”, is  a  specific tax (61 C. J.,  74).  It is the sense  that the tax on manufactured oils and other fuels is imposed by the National Internal Revenue Code (section 142, Commonwealth Act No. 466, as amended by section 11, Republic Act No. 56).   The tax  is considered a  specific tax  if the amount is imposed per   liter  of  volume  capacity.”   It  is therefore  plain that the enactment of  the  ordinances  in  question is ultra  vires.

There  is  a marked  parallelism  between the case of Medina,  et  al. vs.,City  of Baguio, supra and the  present case.  In the  Medina case we said: 

“An examination  of  section 2553 (c), of the  Revised Administrative Code, as amended,  will reveal that the power given to the City of Baguio  to tax, to  license  and to regulate only refers to the business  of the taxpayer and not to the  articles used in said business.  This is clearly inferred  from a reading of said  section and  from the concluding sentence  appearing  therein, to wit, ‘and such other businesses, trades and occupations as may be established or practised  in. the City.’   One reason  for this undoubtedly is the fact that under section  142  of the Internal Revenue Code (Commonwealth Act No. 466, as amended by the Republic Act No. 39), most of the products mentioned  in the charter, particularly gasoline and oil,  are already specifically  taxed,  and under section  361  of said code, the City of Baguio gets a share of 20 per cent of the amount of specific tax collected.  At any rate, the  charter of the City of Baguio does not show plainly an intent to confer  that power upon the  City  of  Baguio and,  following the rule  already  adverted to, this doubt or ambiguity must be  resolved against the city. An indication of the legislative intent on this matter is Commonwealth Act  No.  472  which  confers general  authority  upon  municipal councils to  levy taxes,  subject to certain  limitations,  wherein it was specifically provided that the general  authority so conferred shall not  include ‘percentage taxes and taxes  on  specified articles.’ In other words, the power  to levy a percentage tax or a specified tax  has been expressly withheld.  It is, therefore, our considered opinion that Ordinance No. 100 is ultra  vire  and has no force and effect.”

Wherefore,  the  decision  appealed  from  is  affirmed,

without pronouncement as to costs.

Paras, C. J. Padilla, Montemayor, Labrador, Concepcion, Reyes, J.  B. L., Endencia, and Felix, JJ.,  concur.

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RESOLUTION

February 25, 1957

In  G.  R. No.  L-9167, We  Wa Yu vs. City  of Lipa, acting in the motion for reconsideration filed by appellant, the Court adopted the following resolution:

Considering that  on  June  14,  1956 Congress enacted Republic Act No. 1435 providing in section 4 that Municipal boards of  councils may,  notwithstanding the provisions of  sections one hundred  and  forty-two  and  one hundred and forty-five of the  National Internal Revenue Code, as herein above amended, levy  an additional tax of not exceeding twenty-five  percent of the rates  fixed in said sections, on manufactured oils sold or distributed with in the limits of  the city or municipality”;

Considering that municipal taxes  heretofore levied  by the city councils on gasoline, airplane fuel, lubricating oil and other fuels, were ratified and declared valid by said Act  (Section 4);

Considering that  the tax imposed by the ordinances in question  does not go beyond the limit of  twenty-five per cent of the rates prescribed  in  section 142  and 145 of the National  Internal Revenue Code;

Considering  that  revenue  acts, retroactively  applied, are not open to the objection that they infringe upon the due process of law clause of the Constitution  (Republic of the Philippines  vs.  Angelina Oasan, et al., supra, p. 934) ;

The decision of this Court dated September 27, 1956 is hereby modified by reversing the  decision  appealed from and dismissing the  case, without costs.