SANCHO B. DE LEON AND VENANCIO F. LIM, PLAINTIFFS-APPELLANTS, VS. MUNICIPALITY OF CALUMPIT, BULACAN, DEFENDANT-APPELLEE.

The question in these two
appeals to be decided jointly is
whether a municipal license tax
may be imposed by ordinance on a
holder of a franchise to operate
an electric plant?  It may be observed that it is not impressed with novelty.  The answer has been supplied by us
in two cases decided in 1966, Butuan Sawmill, Inc. v. City
of Butuan^[1] and Ilocos Norte
Electric Co., Inc. v. Municipality of Laoag.^[2] It is in the negative.  The lower court that heard these two cases,
presided by the then Judge Samuel F. Reyes viewed the matter differently.  It may be said in all fairness, however, that
as of the time of its single decision in the two cases on November
4, 1964, there was
no definite ruling from us as yet, our authoritative pronouncement in Butuan Sawmill, Inc. v. City of Butuan coming only on April 29, 1966.

There is no question that plaintiffs Sancho
V. de Leon and Venancio F. Lim in both cases were
holders of municipal franchises to operate electric plants in Calumpit, Bulacan as well as in Hagonoy, Bulacan.  On April
18, 1962, they challenged the validity of a Calumpit
municipal ordinance which imposed a municipal license tax of P700.00 as well as
a license fee of P25 for a mayor’s permit on any operator of an electric plant
doing business in such municipality.^[3]
Earlier, on January 19, 1962,
the same plaintiffs have challenged, in a complaint filed before the Court of
First Instance of Bulacan, a municipal ordinance of Hagonoy, Bulacan, imposing an
annual municipal license tax of P1,200.00 on persons, associations and
corporations engaged in the business and operation of electric light, heat and
power plants within such municipality.^[4]

The answers of the respective municipalities to both com­plaints
in seeking that they be dismissed relied on the Local Autonomy Act^[5]
which in express language, while negating the municipal power to tax persons
operating waterworks, irri­gation and other public utilities excepted those
engaged in the operation of electric light, heat and power plants.  They likewise called attention to rule of
construction provided for in such Act. 
Thus:  “Implied power of a
province, city or municipality shall be liberally construed in its favor.  Any fair and reasonable doubt as to the
existence of the power should be interpreted in favor of the local government and it shall be presumed to exist.”^[6]

A joint decision was rendered by the lower court, on November 4, 1964, sustaining the
power of both muni­cipalities to enact such ordinances under the Local Autonomy
Act.  It relied on the proviso above
referred to, which while denying the power of a city, municipality or a
municipal district to levy or impose municipal taxes or fees on persons
operating waterworks, irrigation and other public utilities, excepted electric
light, heat and power plants from its operation and dismissed the complaints
filed by plaintiffs.

Hence, these two appeals which we consider meritorious in the light
of the Butuan Sawmill, Inc. as well as the Ilocos Norte Electric Co., Inc. decisions rendered by us in
1966.  In the former case, this Court, in
an opinion by Justice J.B.L. Reyes, after referring to the above exception,
took into consideration a later subsection placing it beyond the competence of
a chartered city, municipality or a municipal district to impose taxes of any
kind on banks, insurance companies and persons paying a franchise tax.^[7]
From which, emerged this conclusion: 
“The logical construction of section 2(d) of Republic Act 2264,
that would not nullify section 2 (j) of the same Act, is that the local
government may only tax electric light and power utilities that are not subject
to franchise taxes, unless the franchise itself authorizes additional taxation
by cities or municipalities.”

Plaintiff Butuan Sawmill, Inc. in the
above case did have a legislative franchise from the government.^[8]
In the subse­quent Ilocos Norte Electric Co., Inc.
case, decided seven months later the same year, the plaintiff was shown to have
a municipal franchise.  There was no
change in our ruling.  It was held
likewise as not subject to the taxing power of the muni­cipality in accordance
with the Butuan Sawmill, Inc. decision.  As set forth in the opinion of Justice Regala in the Ilocos Norte
Electric Co. decision:  “The
question, troublesome for some time because of the new orientation introduced
by the Local Autonomy Act, was recently resolved in Butuan Sawmill, Inc. v.
City of Butuan, G.R.
No. L-21516, April 29, 1966.  Through Mr. Justice J.B.L. Reyes, this Court
held that local govern­ments are without power to tax electric power companies
already subject to franchise tax unless their franchise allows the im­position
of additional tax.”

Certainly, then, with the two above controlling decisions
pointing the way, plaintiffs have made out a successful case for the reversal
of the joint decision appealed from. 
They cannot, as municipal franchise holders, be considered as em­braced
within the taxing power of the municipalities of Calumpit
and Hagonoy. 
The complaints filed by them, instead of being dismissed, ought to have
prospered, at least to the extent of their being considered exempt from the
operation of the ordi­nances complained of. 
At the very least, the challenged ordinances are invalid as applied to
plaintiffs.^[9]

WHEREFORE, the lower court decision of November 4, 1964
dismissing the two complaints filed by plaintiffs against the Municipalities of
Calumpit and Hagonoy is
reversed and another entered ordering each municipality to refund to plaintiffs
any and all sums thus far collected by virtue of Municipal Ordinance No. 7
approved on March 21, 1959 in the case of Calumpit
and Municipal Ordinance No. 2, Series of 1961, in the case of Hagonoy.  Without
pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Teehankee,
and Barredo,
JJ., concur.

^[1]
16 SCRA 755.

^[2]
18 SCRA 703.

^[3]
Civil Case No. 2548 of the Court of First Instance of Bulacan,
Branch II, now L-29606.

^[4]
Civil Case No. 2494 of the Court of First Instance of Bulacan,
Branch II, now L-26907.

^[5]
Sec. 2 of Rep. Act No. 2264 (1959).

^[6]
Sec. 12, Ibid.

^[7]
Ibid, Sec. 2(j).

^[8]
Republic Act No. 399 (1949).

^[9]
Cf. Switzer v. Municipality of
Cebu, 20
Phil. 111 (1911); United States
v. Pompeya, 31 Phil. 245 (1915); Bastida v. City Council of Baguio,
53 Phil. 553 (1929); People v. Cruz, 54 Phil. 24 (1929); Primicias v. Fugoso, 80
Phil. 71 (1948); Manila Race Horse Trainers v. de la Fuente,
88 Phil. 60 (1951); Manila Lighter Trans. v. Mun.
Board, 98 Phil. 872 (1956); American Bible Society v. City of Manila,
101 Phil. 386, 402 (1957); Ah Nam
v. City of Manila, L-15502, Oct. 25, 1960; Pampanga
Bus Co. v. Mun. of Tarlac,
3 SCRA 816 (1961); and People v. Soria, 7 SCRA
242 (1963).