C. N. HODGES, PETITIONER AND APPELLANT, VS. THE MUNICIPAL BOARD OF THE CITY OF ILOILO, ET AL., RESPONDENTS AND APPELLANTS.

On June 13, 1960, the Municipal Board of the City of Iloilo enacted
ordinance No. 33, series of 1960, pursuant to the provisions of
Republic Act No. 2264, known as the Local Autonomy Act, requiring any
person, firm, association or corporation to pay a sales tax of 1/2 of
1% of the selling price of any motor vehicle and prohibiting the
registration of the sale of the motor vehicle in the Motor Vehicles
Office of the City of Iloilo unless the tax has been paid. It is
expressly required therein that the payment of the municipal tax shall
be a requirement for registration and transfer of ownership, the tax to
be paid in the office of the city treasurer, and that the tax receipt
shall be made part of the documents to be presented to the Motor
Vehicles Office.

C. N. Hodges, who was engaged in the business of buying and selling
second-hand motor vehicles in the City of Iloilo, is one of those
affected by the enactment of the ordinance, and believing that the same
is invalid for having been passed in excess of the authority conferred
by law upon the municipal board, he filed on June 27, 1960 a petition
for declaratory judgment with the Court of First Instance of Iloilo
praying that said ordinance be declared void ab initio, and
that the City of Iloilo be ordered to refund to him the amounts he was
required to pay thereunder without prejudice of determining its
validity in an appropriate action.

The City of Iloilo, in its answer, justified the approval of the
ordinance alleging that the same was approved by virtue of the power
and authority granted to it by Section 2 of Republic Act No. 2264,
known as the Local Autonomy Act.

A copy of the petition for declaratory judgment was furnished the
Solicitor General in accordance with Section 4, Rule 66, of the Rules
of Court.

The case having been submitted under a stipulation of facts, the court a quo
rendered decision on December 8, 1960 holding that part of the
ordinance which requires the owner of a used motor vehicle to pay a
sales tax of 1/2 of 1% of the selling price is valid, but the portion
thereof which requires the payment of the tax as a condition precedent
for the registration of the sale in the Motor Vehicles Office is
invalid for being repugnant to Section 2(h) of Republic Act 2264.

Both parties have appealed.

Section 2 of Republic Act No. 2264, known as the Local Autonomy
Act, pursuant to which the ordinance in question, was approved by the
Municipal Board of the City of Iloilo, provides in part:

“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 privileges in chartered cities, municipalities or 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 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: * * *”

It would appear that the City of Iloilo, thru its municipal board,
is empowered (a) to impose municipal licenses, taxes or fees upon any
person engaged in any occupation or business, or exercising any
privilege, in the city; (b) to regulate and impose reasonable fees for
services rendered in connection with any business, profession or
occupation conducted within the city; and (c) to levy for public
purposes just and uniform taxes, licenses of fees. It would also appear
that municipalities and municipal districts are prohibited from
imposing any percentage tax on sales or other taxes in any form on
articles subject to specific tax, except gasoline, under the provisions
of the National Internal Revenue Code.

From a cursory analysis of the provisions above-stated we can
readily draw the conclusion that the City of Iloilo has the authority
and power to approve the ordinance in question for it merely imposes a
percentage tax on the sale of a second-hand motor vehicle that may be
carried out within the city by any person, firm, association or
corporation owning or dealing with it who may come within its
jurisdiction. Indeed, it cannot be disputed that a sales tax of 1/2 of
1% of the selling price of a second-hand motor vehicle comes within the
category of a just tax within the provision of Section 2 of
Republic Act 2264. It is true that the tax in question is in the form
of a percentage tax on the proceeds of the sale of a second-hand motor
vehicle which comes within the prohibition of the section above
adverted to; but the prohibition only refers to municipalities and
municipal districts and does not comprehend chartered cities as the
City of Iloilo .

But the ordinance, besides imposing a percentage tax, also imposes
an additional requirement. It provides, that the payment of the tax
shall be a requirement for registration and transfer of ownership and
that unless the tax is paid the registration and transfer of ownership
cannot be effected in the Motor Vehicles Office of the city. The court a quo
considered this portion invalid reasoning as follows: “Chartered cities
are not authorized to establish any condition on the registration of
motor vehicles. To require the payment of sales tax before the
registration of the sale can be made in the Motor Vehicles Office, is
tantamount to imposing a tax for the registration of motor vehicles.”

We disagree. The court a quo undoubtedly had in mind the
provision of Section 2 (h) of Republic Act No. 2264 which prohibits a,
chartered city from imposing a tax on the registration of motor
vehicles and the issuance of all kinds of licenses or permits for the
driving thereof, which is one of the exceptions constituting a
restriction on the taxation power granted by said Act to a city,
municipality or municipal district. But the requirement of the
ordinance cannot be considered a tax in the light viewed by the court a quo
for the same is merely a coercive measure to make the enforcement of
the contemplated sales tax more effective. Well-settled is the
principle that taxes are imposed for the support of the government in
return for the general advantages and protection which the government
affords to taxpayers and their property (Union Refrigerator Transit Co.
vs. Com. 26 S. Ut. 36, 199 1 (2nd) 169). Taxes are the lifeblood of the
government. It is imperative that the power to impose them be clothed
with the implied authority to devise ways and means to accomplish their
collection in the most effective manner. Without this implied power the
end of government may falter or fail.

“It is a general and undisputed proposition of law
that a municipal corporation possesses and can exercise the following
powers, and no others; First, those granted in express words; second,
those necessarily or fairly implied in or incident to the powers
expressly granted; third, those essential to the accomplishment of the
declared objects and purposes of the corporation—not simply convenient,
but indispensable.” (Dillon, Municipal Corporations, 5th Ed., Vol. I,
p. 449; citing Cook Co. vs. McCrea, 93 III. 236; Ottawa vs. Carey, 108 U. S. , 110.)

“Municipal corporations may exercise all powers in the fair intent and
purpose of their creation which are reasonably proper to give effect to
the powers expressly granted, and in so doing they have the choice of
the means adapted to the ends and are not confined to any one mode of
operation.” (62 C.J.S., Section 117, citing Spahn vs. Stewart, 103 S. W. 2d 651, 559, 268 Ky. 97; Riddle vs. Ledbetter, 5 S. E., 2d 542, 216 N.C. 491)

“If the power of municipalities are to be confined to those expressly
granted by the law, in many cases they will be denied even the power of
self-preservation as well as of the means necessary to accomplish the
essential object of their creation. Hence in giving corporations
authority to carry out the powers expressly granted to them, it is
understood that they are also given the power to adopt such means as
may be necessary for accomplishing their ends.” (Sinco, Philippine
Political Law, 10th Ed., p. 688, citing Smith vs. New Bern , 16 Am. Rep, 766.)

We are, therefore, of the opinion that the ordinance in question is
valid it being exercise of the power of taxation granted to Iloilo City
by Section 2 of Republic Act No, 2264.

Wherefore, the decision appealed from is modified by declaring
Ordinance No. 33 of the City of Iloilo valid even with regard to the
portion which requires the payment of the tax as a condition precedent
for the registration of the sale in the Motor Vehicles Office of said
City. No costs.

Bengzon, C. J., Labrador , Concepcion , Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.