G.R. No. L-24265. December 28, 1979
PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION, PLAINTIFF-APPELLANT, VS. THE MUNICIPALITY OF JAGNA, PROVINCE OF BOHOL, DEFENDANT-APPELLEE.
MELENCIO-HERRERA, J.:
A direct appeal by plaintiff company
from the judgment of the Court of First Instance of Manila, Branch VI,
upholding the validity of Ordinance No. 4, Series of 1957, enacted by defendant
Municipality, which imposed
“storage fees on all exportable copra deposited in the bodega within the
jurisdiction of the Municipality of Jagna, Bohol.”
Plaintiff-appellant is a domestic corporation with principal
offices in Manila. It is a consolidated corporation of Procter
& Gamble Trading Company and Philippine Manufacturing Company, which later
became Procter & Gamble Trading Company, Philippines. It is engaged in the manufacture of soap,
edible oil, margarine and other similar products, and for this purpose
maintains a “bodega” in defendant
Municipality where it stores copra
purchased in the municipality and therefrom ships the
same for its manufacturing and other operations.
On December 13, 1957,
the Municipal Council of Jagna enacted Municipal
Ordinance No. 4, Series of 1957, quoted hereinbelow:
“AN ORDINANCE IMPOSING STORAGE FEES OF ALL EXPORTABLE COPRA
DEPOSITED IN THE BODEGA WITHIN THE JURISDICTION OF THE MUNICIPALITY
OF JAGNA, BOHOL.
“Be it ordained by the Municipal Council of Jagna, Bohol,
that:
“SECTION 1. Any person, firm or corporation having a
deposit of exportable copra in the bodega, within the jurisdiction of the
Municipality of Jagna, Bohol,
shall pay to the Municipal Treasury a storage fee of TEN (P0.10) CENTAVOS FOR
EVERY HUNDRED (100) kilos;
“SECTION 2. All exportable copra deposited in the bodega
within the Municipality of Jagna, Bohol, is part of the surveillance and lookout
of the Municipal Authorities;
“SECTION 3. Any person, firm or corporation found
violating the provision of the preceding section of this Ordinance shall be
punished by a fine of not less than TWO HUNDRED (P200.00) PESOS, nor more than
FOUR HUNDRED (P400.00) PESOS, or an imprisonment of not less than ONE MONTH,
nor more than THREE MONTHS, or both fines and imprisonment at the discretion of
the court.
“SECTION 4. This Ordinance shall take effect on January 1, 1958.
“APPROVED, December 13, 1957.
(Sgd.) TEODORO B. GALACAR
Municipal Mayor
“[1]
For a period of six years, from 1958 to 1963, plaintiff paid defendant
Municipality, allegedly under
protest, storage fees in the total sum of P42,265.13,
broken down as follows:
“Procter & Gamble Trading Co.– Procter & Gamble
Philippine Manufacturing Corp.
1958
5,072.13 P – – –
1959
7,076.00 – – –
1960
9,950.00 – – –
1961
7,830.00 – – –
1962
3,648.00 P5,279.00
1963 – – – P3,410.00
P33,576.13 P8,689.00
TOTAL CLAIM – P42,265.13“[2]
On March 3, 1964, plaintiff filed this suit in the Court of First
Instance of Manila, Branch VI, wherein it prayed that 1) Ordinance No. 4 be declared
inapplicable to it, or in the alternative, that it be pronounced ultra–vires and void for being beyond the power of the
Municipality to enact; and 2) that defendant Municipality be ordered to refund
to it the amount of P42,265.13 which it had paid under
protest; and costs.
For its part, defendant Municipality upheld its power to enact
the Ordinance in question; questioned the jurisdiction of the trial Court to
take cognizance of the action under section 44(h) of the Judiciary Act in that
it seeks to enjoin the enforcement of a Municipal Ordinance; and pleaded
prescription and laches for plaintiff’s failure to
timely question the validity of the said Ordinance.
After the parties had agreed to submit the case for judgment on
the pleadings, the trial Court upheld its jurisdiction as well as defendant
Municipality’s power to enact the Ordinance in question under section 2238 of
the Revised Administrative Code, otherwise known as the general welfare clause,
and declared that plaintiff’s right of action had prescribed under the 5-year
period provided for by Article 1149 of the Civil Code.
In this appeal, plaintiff interposes the following Assignments of
Error:
I
“THE TRIAL COURT ERRED IN HOLDING THAT ORDINANCE NO. 4, SERIES
OF 1957, ENACTED BY THE DEFENDANT MUNICIPALITY OF JAGNA, BOHOL, IS A VALID,
LEGAL AND ENFORCEABLE ORDINANCE AGAINST THE PLAINTIFF.
II
“THE TRIAL COURT ERRED IN HOLDING THAT PAYMENT OF THE TAX
UNDER ORDINANCE NO. 4, SERIES OF 1957 WAS NOT DONE UNDER PROTEST.
III
“THE TRIAL COURT ERRED IN HOLDING THAT THE ACTION OF THE
PLAINTIFF TO ANNUL AND TO DECLARE ORDINANCE NO. 4, SERIES OF 1957 OF THE
DEFENDANT HAS ALREADY PRESCRIBED.
IV
“AND, FINALLY, THE TRIAL COURT ERRED IN NOT HOLDING ORDINANCE
NO. 4, SERIES OF 1957 ULTRA VIRES AND VOID AND IN NOT ORDERING THE REFUND OF
TAXES PAID THEREUNDER.”[3]
It is plaintiff’s submission that the subject Ordinance is
inapplicable to it as it is not engaged in the business or trade of storing
copra for others for compensation or profit and that the only copra it stores
is for its exclusive use in connection with its business as manufacturer of
soap, edible oil, margarine and other similar products; that the levy is
intended as an “export tax” as it is collected on “exportable
copra”, and, therefore, beyond the power of the Municipality to enact; and
that the fee of P0.10 for every 100 kilos of copra stored in the bodega is
excessive, unreasonable and oppressive and is imposed more for revenue than as
a regulatory fee.
The main question to determine is whether defendant Municipality
was authorized to impose and collect the storage fee provided for in the
challenged Ordinance under the laws then prevailing.
The validity of the Ordinance must be upheld pursuant to the
broad authority conferred upon municipalities by Commonwealth Act No. 472,
approved on June 16, 1939, which was the prevailing law when the Ordinance was
enacted (Procter & Gamble Trading Co. vs. Municipality of Medina, 43 SCRA
130 [1972]). Section 1 thereof reads:
“Section 1. A municipal council or municipal district
council shall have the authority to impose municipal license taxes upon persons
engaged in any occupation or business, or exercising privileges in the
municipality or municipal district, by requiring them to secure licenses at
rates fixed by the municipal council, or municipal district council, and to
collect fees and charges for services rendered by the municipality or municipal
district and shall otherwise have power to levy for public local purposes, and
for school purposes, including teachers’ salaries, just and uniform taxes other
than percentage taxes and taxes on specified articles.
Under the foregoing provision, a municipality is authorized to
impose three kinds of licenses: (1) a
license for regulation of useful occupation or enterprises; (2) license for
restriction or regulation of non-useful occupations or enterprises; and (3)
license for revenue.[4]
It is thus unnecessary, as plaintiff would have us do, to determine whether the
subject storage fee is a tax for revenue purposes or a license fee to reimburse
defendant Municipality for service of supervision because defendant
Municipality is authorized not only to impose a license fee but also to tax for
revenue purposes.
The storage fee imposed under the questioned Ordinance is
actually a municipal license tax or fee on persons, firms and corporations,
like plaintiff, exercising the privilege of storing copra in a bodega within
the Municipality’s territorial jurisdiction.
For the term “license tax” has not acquired a fixed
meaning. It is often used
indiscriminately to designate impositions exacted for the exercise of various
privileges. In many instances, it refers
to “revenue-raising exactions on privileges or activities.”[5]
Not only is the imposition of the storage fee authorized by the
general grant of authority under section 1 of CA No. 472. Neither is the storage fee in question
prohibited nor beyond the power of the municipal councils and municipal
district councils to impose, as listed in section 3 of said CA. No. 472.[6]
Moreover, the business of buying and selling and storing copra is
properly the subject of regulation within the police power granted to
municipalities under section 2238 of the Revised Administrative Code or the
“general welfare clause”, which we quote hereunder:
“Section 2238. General power of council
to enact ordinances and make regulations. – The municipal council shall enact such
ordinances and make such regulations, not repugnant to law, as may be necessary
to carry into effect and discharge the powers and duties conferred upon it by
law and such as shall seem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort,
and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein.”
For it has been held that a warehouse
used for keeping or storing copra is an establishment likely to endanger the
public safety or likely to give rise to conflagration because the oil content
of the copra when ignited is difficult to put under control by water and the
use of chemicals is necessary to put out the fire.[7]
And as the Ordinance itself states, all exportable copra deposited within the
municipality is “part of the surveillance and lookout of municipal
authorities.”
Plaintiff’s argument that the imposition of P0.10 per 100 kilos
of copra stored in a bodega within defendant’s territory is beyond the cost of
regulation and surveillance is not well taken.
As enunciated in the case of Victorias Milling
Co. vs. Municipality of Victorias, supra.
“The cost of regulation cannot be taken as a gauge, if the
municipality really intended to enact a revenue ordinance. For, ‘if the charge exceeds the expense of
issuance of a license and costs of regulation, it is a tax’. And if it is, and it is validly imposed, ‘the
rule that license fees for regulation must bear a reasonable relation to the
expense of the regulation has no application’.
Municipal corporations are allowed wide discretion in determining
the rates of imposable license fees even in cases of purely police power
measures. In the absence of proof as to
municipal conditions and the nature of the business being taxed as well as
other factors relevant to the issue of arbitrariness or unreasonableness of the
questioned rates, Courts will go slow in writing off an Ordinance.[8]
In the case at bar, appellant has not sufficiently shown that the rate imposed
by the questioned Ordinance is oppressive, excessive and prohibitive.
Plaintiff’s averment that the Ordinance, even if presumed valid,
is inapplicable to it because it is not engaged in the business or occupation
of buying or selling of copra but is only storing copra in connection with its
main business of manufacturing soap and other similar products, and that to be
compelled to pay the storage fees would amount to double taxation, does not
inspire assent. The question of whether
appellant is engaged in that business or not is irrelevant because the storage
fee, as previously mentioned, is an imposition on the privilege of storing
copra in a bodega within defendant municipality by persons, firms or
corporations. Section 1 of the Ordinance
in question does not state that said persons, firms or corporations should be
engaged in the business or occupation of buying or selling copra. Moreover, by plaintiff’s own admission that
it is a consolidated corporation with its trading company, it will be hard to
segregate the copra it uses for trading from that it utilizes for
manufacturing.
Thus, it can be said that plaintiff’s payment of storage fees
imposed by the Ordinance in question does not amount to double taxation. For double taxation to exist, the same
property must be taxed twice, when it should be taxed but once. Double taxation has also been defined as
taxing the same person twice by the same jurisdiction for the same thing.[9]
Surely, a tax on plaintiff’s products is different from a tax on the privilege
of storing copra in a bodega situated within the territorial boundary of
defendant municipality.
Plaintiff’s further contention that the
storage fee imposed by the Ordinance is actually intended to be an export tax,
which is expressly prohibited by section 2287 of the Revised Administrative
Code, is without merit. Said provision
reads as follows:
“Section 2287. x x x
“It shall not be in the power of the municipal council to
impose a tax in any form whatever upon goods and merchandise carried into the
municipality, or out of the same, and any attempt to impose an import or export
tax upon such goods in the guise of an unreasonable charge for wharfage, use of bridges or otherwise, shall be void. x x x .”
We have held that only where there is a
clear showing that what is being taxed is an export to any foreign country
would the prohibition come into play.[10]
When the Ordinance itself speaks of “exportable” copra, the meaning
conveyed is not exclusively export to a foreign country but shipment out of the
municipality. The storage fee impugned
is not a tax on export because it is imposed not only upon copra to be exported
but also upon copra sold and to be used for domestic purposes if stored in any
warehouse in the Municipality and the weight thereof is 100 kilos or more.[11]
Thus finding the Ordinance in question to be valid, legal and
enforceable, we find it unnecessary to discuss the ascribed error that the
Court a quo erred in declaring that appellant had not paid the
taxes under protest.
However, we find merit in plaintiff’s contention that the lower
Court erred in ruling that its action has prescribed under Article 1149 of the
Civil Code, which provides for a period of five years for all actions whose
periods are not fixed in that Code. The
case of Municipality of Opon vs. Caltex
Phil.,[12]
is authority for the view that the period for prescription of actions to
recover municipal license taxes is six years under Article 1145(2) of the Civil
Code. Thus, plaintiff’s action brought
within six years from the time the right of action first accrued in 1958 has
not yet prescribed.
WHEREFORE, affirming the judgment appealed from, we
sustain the validity of Ordinance No. 4, Series of 1957, of defendant
Municipality of Jagna, Bohol,
under the laws then prevailing.
Costs against plaintiff-appellant.
SO ORDERED.
Teehankee, (Chairman), Makasiar, Fernandez, Guerrero, and De Castro, JJ., concur.
[1]
Pp. 7-8, Annex “A”, Record on Appeal.
[2] p. 4, Record on Appeal.
[3] Pp. 3-4, Brief for Plaintiff-Appellant.
[4] Victorias Milling Co., Inc. vs. The Municipality of Victorias, Province
of Negros Occidental,
25 SCRA 192 (1968), citing Cu Unjieng vs. Patstone, 42 Phil. 818 (1922).
[5] Victorias
Milling Co., Inc. vs. Municipality of Victorias, Negros Occidental, supra.
[6] Uy Matiao & Co., Inc. vs.
The City of Cebu,
et al., 93 Phil. 300 (1953).
[7] Uy Matiao & Co., Inc. vs. The City of Cebu, et al., supra.
[8]
Northern Phil. Tobacco Co. vs. Municipality of Agoo,
31 SCRA 304, (1970); Victorias Milling Co. vs.
Municipality of Victorias, supra; San
Miguel Brewery Inc. vs. City of Cebu, 43 SCRA
275, (1972).
[9] Victorias
Milling Co. vs. Municipality of Victorias, supra.
[10] Procter & Gamble Trading Co. vs. Municipality of Medina, supra.
[11] Uy Matiao & Co., Inc. vs. The City of Cebu, et al., supra.
[12]
22 SCRA 755 (1968), citing Puyat vs. The
City of Manila, 7 SCRA 970 (1963).