G.R. No. L-18924. June 30, 1964
MARINDUQUE LION MINES AGENTS, INC., PETITIONER AND APPELLEE, VS. THE MUNICIPAL COUNCIL OF THE MUNICIPALITY OF HINABANGAN, PROVINCE OF SAMAR, ET AL., RESPONDENTS AND APPELLANTS.
REYES, J.B.L., J.:
Manila declaring Municipal Ordinance No. 7, Series of 1960, of the
Municipality of Hinabangan, Samar, null and void.
On June 27, 1960, the Municipality of Hinabangan, through its duly
constituted Municipal Council, enacted Ordinance No. 7, Series of 1960,
which in full reads as follows:
“An Ordinance Imposing a Municipal License Tax On
the Gross Outputs of the Mines and Other Business; Its Imposition and
Penalties Thereof Within the Jurisdiction of this Municipality.
Be it ordained by the Municipal Council of Hinabangan, Samar, That:
Section 1.—For the purpose of this Ordinance, the following terms are defined:
“Corporation” refers to any person or persons, firm
or association engaged in the business for which this Ordinance is
enacted.“Gross Outputs” shall be interpreted as the total
actual market value of minerals or mineral products from each mine or
mineral land operated as separate entity without any deduction on
expenses incurred in the operation of the business.“Municipal
Treasurer” herein referred to, is the duly appointed Municipal
Treasurer including his authorized representatives and /or deputies in
his office.
Section 2.—Republic Act 2264 empowers the Municipal Council of
Hinabangan, Samar, to impose a graduated Municipal License Fees on any
occupation or business in the municipality to any Corporation, based on
the gross outputs or sales in accordance with following schedule:
MINES AND OTHER BUSINESS
to P 100,000.00 ….. to P 500,000.00 ….. to P 1,500,000.00 ….. to P 3, 500,000.00 ….. to P 7,500,000.00 ….. to P 13,500.00 ….. to P 23,500,000.00 ….. to P 50,000,000.00 ….. to P up ….. Section 3.—Any corporation subject to payment of the Municipal
License herein imposed shall imme diately at the end of each calendar
year, but in no case shall it exceed beyond the first FIFTEEN (15) DAYS
of the succeeding year subject to Municipal Treasurer certified true
copies of receipts and/or invoices as the case maybe on the total
output per shipment of that mining produce for the year or the total
yearly sales which will serve as the basis for the collection of the
Municipal License Tax Provided that upon subsequent verification by the
Municipal Treasurer no erroneous or fraudulent entries are made. On the
contrary when upon proper investigation and examination of the Books or
Records of the Corporation, there shall bo found discrepancies in the
declarations of the total output per shipment or sales, such
discrepancy shall be revised within TEN (10) DAYS from the date of
verification within which to settle the taxes due without penalties as
provided by law.
Section 4.—To enforce this Ordinance, the Municipal Treasurer shall
have authority to examine the Books and Records of the Corporation
subject to the payment of tax herein levied, PROVIDED that such
examination of Records or Books us the case maybe, be made during
office hours unless a written consent from the President, or Manager as
the case maybe of the Corporation is secured.
Section 5.—Any violation of a provision of this Ordinance is
punishable by a fine of not less than ONE HUNDRED (P100.00) Pesos nor
more than Two Hundred (P200.00) Pesos or by an imprisonment of not less
than One (1) Month nor more than Six (6) Months or both fine and
imprisonment in the discretion of the Court. Any violation of Section 2
of this Ordinance shall subject the Corporation to pay the tax imposed
plus penalties and tha subsequent fine and imprisonment promulgated by
the Court. Criminal responsibility rests on the President, Manager or
any person charged with the management of the Corporation.
Section 6.—All Ordinances or parts thereof in conflict with the
Present Ordinance are hereby repealed.
Section 7.—This Ordinance shall
take effect Fifteen (15) Days from its approval.”
On December 14, 1960, the petitioner, a corporation duly organized
and existing under the laws of the Philippines and operating the only
mine within the jurisdiction of the municipality of Hinabangan, filed
this case of declaratory relief in the Court of First Instance of
Manila questioning the validity of the ordinance as enacted without
authority and in violation of law. Respondents answered averring the
ordinance’s validity with a counter-claim for damages; and petitioner
having filed an amended petition and answer to the counterclaim, which
amended petition was accordingly answered by respondents; the case was
tried by the Court a quo on March 15, 1961, the parties filed
respective memoranda, and on April 4, 1961 the Court a quo rendered its
decision declaring the ordinance in question illegal, from which
judgment respondents in due time perfected their appeal to this Court.
Neither petitioner-appellee nor respondents-appellants adduced any
evidence before the Court a quo, the facts heretofore stated having
been based on the allegations of the amended petition and the
admissions thereof in the appellants’ amended answer thereto, and the
case was submitted for decision on the pleadings.
Respondents-appellants maintain in this appeal that the Court a quo
erred in finding that Ordinance No. 7 does not impose a tax, that
Ordinance No. 7 was intended to impose a tax on sales; that Ordinance
No. 7 is illegal because it is an imposition of a double taxation; and
that Ordinance No. 7 is null and void.
On the petitioner-appellee’s side, they maintain that Section 2 of
Municipal Ordinance No. 7 does not impose a tax or levy, and there is
no clear and express imposition of a charge in the other provisions of
the ordinance; that the declaration of authority to impose a tax is
false and erroneous because no such power is conferred in Section 2 of
Republic Act No. 2264, upon which such authority is based; that,
moreover, there is no finding by the Court a quo that a tax was
imposed, much less, that the same is based on the gross outputs or
sales, because the Court a quo merely assumed that the tax is imposed
and declared it illegal as not within the Municipal Council’s authority
to impose because it falls within the exceptions to the taxing powera
of municipal governments, as prescribed in Section 2, last paragraph,
of the Local Autonomy Act (RA No. 2264).
We find no error in the decision appealed from in so far as it holds
that the ordinance in question fails to levy any tax. Appellants admit
in their brief that the main section (section 2) of the ordinance
“seems merely declaratory of authority”, albeit they aver that a
reading of it as a whole leads to the conclusion that a tax was
intended. It is, however, a well established rule that—
“A statute will not be construed as imposing a tax
unless it does so clearly, expressly and unambiguously.” (82 C.J.S.,
956) (Italics supplied)
and that—
It is an ancient principle that a tax can not be imposed without
clear and express words for that purpose. Accordingly, the general rule
of requiring adherence to the letter in construing statutes applies
with peculiar strictness to tax laws and the provisions of a taxing act
are not to be extended by implication.” (30 Am. Jur. 153; also
McQuillin on Municipal Corp., Vol. 16, p. 267; italics ours)
A mere reading of the ordinance discloses that not only are there no
words therein imposing a tax but that the peruser is left in doubt as
to whether the intention is to levy a tax for revenue or charge a fee
for permitting the business to be carried on; for section 2 declares
that the law “empowers the Municipal Council of Hinabangan, Samar, to
impose graduated Municipal License Fees”. Since the validity of taxes
and license fees are governed by different principles, the taxpayer is
left in doubt as to the true nature of the charge, and whether he must
bear it or not. The rule is that taxes may not be imposed by
implications,[1]
and “a tax statute is to be construed strictly and aoainat the
subjection to a tax liability where the question is whether a matter,
property or person is subject to the tax” (82 C.J.S., p. 957).
Considering the unavoidability of taxes by the citizen, it seems that
the Marinduque Iron Mines Agents, Inc. vs. Municipal Council of
Hinabangan, Samar, et al. least he is entitled to is to be expressly
required to pay a tax, which the words of the questioned ordinance do
not state. This is particularly true where the ordinance, as in this
case, carries penal provisions.
We further agree with the judgment appealed from that Ordinance No.
7, Ser. 1960, of Hinabangan, Samar, is invalid because the same
infringes upon the express restrictions placed by tha legislature upon
the taxing power delegated to city and municipal councils. Section 2,
paragraph 1, of Republic Act No. 2264, after conferring power to
cities, municipalities, and municipal districts to impose license taxes
and service fees or charges on business and occupations, expressly
limited said powers by the following proviso:
“Provided that municipalities and municipal
districts shall, in no case, impose any percentage tax on sales or
other taxes in any form based thereon; x x x “
Even granting that it does impose a tax, the ordinance in question,
while not providing for a percentage tax, but a graduated tax (the
progressive tax therein imposed not being calculated on a percentage of
the sales made by the taxpayer), nevertheless, it prescribes a tax
based on sales, contrary to the statute (R.A. 2264). It is true that
the ordinance purports to base the tax on either “gross output or
sales”; but the only standard provided for measuring the gross output
is its peso value, as determined from “true copies of receipts and/or
invoices” (which are precisely the evidence of sales) that the taxpayer
is required to submit to the municipal treasurer (section 3), without
deduction being provided for freight, insurance, or incidental costs.
Directly or indirectly, the amount of payable tax under this ordinance
is determined by the gross sales of the taxpayer, and violates the
explicit prohibition that the municipality must not levy, or impose,
“taxes in any form based on sales”.
The plea that the members of the Municipal Council are not attorneys
and of low scholastic ability” affords no excuse for not observing
well-established legal principles. The tax imposing authority is held
to know and understand that the levying of taxes ia a subject of grave
responsibility, and of serious consequences to the taxpayer. Taxation
is not merely a matter of wishing before an unused well, or of stroking
some wornout lamp.
In view of the foregoing, the judgment appealed from is affirmed, with costs against appellants.
Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes, Regala and Makalintal, J.J., concur.
[1] Howell vs.
Dept. of Labor, 222 SW 2d., 953; Olson vs. Oklahoma Tax Commission, 180
Pac 2d, 622; Harrington vs. Cobb, 172 ALR, 837; In re Lunch Rooms, 85
Fed. 2d., 1002; In re California Pea Products, Inc., 37 Fed. Supp.,
658; In re Bush Terminal Co., 93 Fed. 2d., 659.