MUNICIPALITY OF SAN FERNANDO, LA UNION REPRESENTED BY MAYOR LORENZO L. DACANAY, PLAINTIFF-APPELLEE (RESPONDENT), VS. MAYOR TIMOTEO STA. ROMANA, MUNICIPAL TREASURER AND THEIR AUT…

This is a petition for review on certiorari of the
November 11, 1968 Order of
the Court of First Instance of La Union, the dispositive portion of which reads:

“IN VIEW OF THE FOREGOING CONSIDERA­TIONS, the preliminary
injunction already issued is made permanent and the defendants are enjoined not
to prevent the plaintiff from getting sand and gravel from barrio Nalvo Norte.”

The undisputed facts of this case are as follows:

The Municipality of San Fernando, La Union which was
undertaking a cement road construction around
its Supermarket and other municipal projects, needed sufficient gravel and sand
from their source, the Municipality of
Luna but its trucks sent to
the latter municipality to haul said road
construction materials were allegedly charged unreasonable fees per
truck load.

On March 18, 1968, the Municipality of San Fernando
represented by its incumbent Municipal Mayor Lorenzo L. Dacanay filed a complaint for Injunction
with Writ of Preliminary Injunction at the Court of
First Instance of La Union against the Municipality of Luna
and its offi­cials and authorized agents, praying that
the defendants be immediately enjoined from preventing
plaintiff’s truck obtaining road construction materials from Luna,
La Union and from levying unreasonable fees, and after trial to make the
injunction permanent (Complaint “Annex A”, Rollo, p. 13).

On the same day the complaint was filed, the Court of First
Instance of La Union (Branch II) issued an Order granting the Writ of
Preliminary Injunction ex-parte
(Petition, Rollo, p. 7, “Annex”,
Rollo, p. 18).  On March 26,
1968, the defendants filed their Answer wherein they averred that the license
fees collected from the hauling of sand and gravel excavated from the
municipality of Luna, La Union are by virtue of an ordi­nance duly approved
by the Municipal Council of defendant municipality in consonance
with its power to tax, and that the fees collected are reasonable,
fair and legal.  The Answer further pointed out that the remedy of
Injunc­tion availed of is not the proper remedy.  On
May 21,
1968, after the issues were joined, the lower court
issued an Order requiring the parties to submit their respective memoranda since
the issue raised was purely a question of law.  On November 11, 1968,
the lower court issued an Order making permanent the writ of preliminary
injunction issued and further ordered the defendants not to prevent the
plaintiff from getting sand and gravel from Barrio Nalvo Norte, a barrio of Luna, La
Union.

Hence, this
petition.

The main issue in this case is whether or not the
Municipality
of Luna has
the authority to pass Ordinance No. 1 and impose the license fees in
question.

Aforesaid Ordinance reads:

“ORDINANCE
NO.
1

“Section 1.  There shall be
collected from any person, partnership or corporation engaged in any business,
occupation or call­ing or enjoying any privilege hereunder enumerated the
following municipal license and/or fees at the rate set opposite
each:

“x x x

“14.  Dealer and/or hauler of
sand, gravel and/or stones for every truck load or fraction
thereof:

“Sand ……………………………………………………………..	P 1.50
“Gravel …………………………………………………………….	8.00
“Coarse sand …………………………………………………….	10.00
“Selected stones or pea size ………………………………….	15.00″

The Municipality of Luna insists on the validity of its
Ordinance No. 1 imposing the license fees in question on the basis of its
authority to exercise police power under Section 2238 of the Revised
Administrative Code, otherwise known as the General Welfare Clause and
its power to levy licenses and fees for public purposes under Republic Act 2264
(Petition, Rollo, p. 10) and justifies the
inclusion of the Municipality of San Fernando thereunder, among the persons, partnership or cor­poration
engaged in any business, occupation or calling to be charged for hauling sand
and gravel from its sea­shore, claiming that respondent municipality in hauling
sand and gravel for the improvement of its roads is engaged in a proprietary
function as it can later exact higher license fees from those in the business
center.  Thus, for eventually obtaining profit by the improvement
of its roads, the Municipality of
San Fernando should allegedly pay
license fees to the Municipality of
Luna (Brief for Petitioner, pp. 5 and
6).

On the other hand, respondent Municipality alleges that the
license fee embodied in Ordinance No. 1 is be­yond the authority of the
Municipality of Luna, La Union to impose, as the sand and gravel deposits in the
sea­shore of Nalvo Norte are classified as minerals
under the Mining Laws of the Philippines and as such belong to the State, and
fall under the administration and control of the Bureau of Mines and not of the
Municipality of Luna.  For this purpose, respondent Municipality
obtained on March 18, 1968,
a gratuitous Revocable Permit from the Bureau of Mines (Answer, Rollo, pp. 55-56; Brief for Respondent, pp. 3 and
4).  Even granting arguendo that
the disposition of sand and gravel belongs to petitioner, nevertheless,
the
Municipality
of San
Fernando does not fall under Ordinance
No. 1 because the gravel and sand extracted by said municipality are used for
the improvement of its streets which function is
governmental.

This issue in the case at bar is now governed by
Presidential Decree No. 231, enacting a Local Tax Code (for Provinces, Cities,
Municipalities and Barrios) which took effect on July 1, 1973. 
The Code provides:

“SEC. 10.  Sand and gravel fee.  — The province
may levy and collect a fee of not exceeding seventy-five centavos per cubic
meter of ordinary stones, sand, gravel, earth and other materials extracted from
lakes, rivers, streams, creeks, and other public waters within the jurisdiction
of the province.

“SEC. 22.  Specific limitations on power.  —
Except as otherwise provided in this Code, the municipality shall not levy the
following:

(a)    Taxes, fees, and
charges that the province or city is authorized to levy in this
Code;

(b)    Taxes on articles,
subject to specific tax under the provisions of the National Internal Revenue
Code; and

(c)    Taxes and other
impositions enume­rated in Section 5, Chapter I of this Code.”

Section 10 of aforesaid decree was later amended by
Presidential Decree No. 426, dated March 30, 1974, and now
reads:

“Sec. 10.  Sand and gravel tax.  — The province
may levy and collect a tax of not exceeding seventy-five centavos per cubic
meter of ordinary stones, sand, gra­vel, earth and other materials extracted
from public and private lands of the government or from the beds of seas, lakes,
rivers, streams, creeks and other public waters within the jurisdiction of the
province.  The municipality where the materials are extracted shall
share in the proceeds of the tax herein authorized at a rate of not less than
thirty per cent thereof as may be determined by the Provincial
Board.

“The permit to extract the materials shall be issued by the Director
of Mines or his duly authorized representative and the extraction thereof shall
be governed by regulations issued by the Director of Mines.” (As amended by Presidential Decree No. 426).

Under the above-quoted provisions of the Local Tax Code,
there is no question that the authority to impose the license fees in dispute,
properly belongs to the province concerned and not to the Municipality of
Luna which is specifically prohibited under Section 22 of the same
Code “from levying taxes, fees and charges that the province or city is
authorized to levy in this Code.” On the other hand, the
Municipality
of San
Fernando cannot extract sand and gravel
from the
Municipality
of Luna
without paying the corresponding taxes or fees that may be imposed by the
province of
La
Union.

PREMISES CONSIDERED, the Court RESOLVED
to DISMISS this petition and to AFFIRM assailed Order of the trial
court.

Fernan, (Chairman), Gutierrez, Jr., Padilla, Bidin, and Cortes,
JJ.,
concur.