ENRIQUE R. YU KING, PLAINTIFF AND APPELLEE, VS. CITY OF ZAMBOANGA, DEFENDANT AND APPELLANT.

Yu King versus City of Zamboanga

The Case

This is an appeal by the City of Zamboanga from a decision of the Court of First Instance of Zamboanga declaring void three city ordinances that imposed a specific or license tax on gasoline, kerosene and oil sold within the city, and ordering the city to refund the taxes collected. Enrique R. Yu King, a businessman engaged in buying and selling petroleum products, sued the city to recover what he had paid under ordinances he claimed were invalid. The case matters because it fixes two working rules every local taxation examinee must know: the scope of a city's charter power to tax petroleum products, and the burden of proving that an ordinance was not duly enacted as an emergency measure.

Procedural History

Yu King commenced the action in the Court of First Instance of Zamboanga on July 17, 1956, seeking annulment of the ordinances and refund of the taxes paid. After trial, the lower court rendered judgment in his favor, declaring the ordinances void, ordering the City of Zamboanga to refund the amount paid with legal interest from the date of the complaint, and awarding attorney's fees. The City of Zamboanga appealed directly to the Supreme Court, which resolved the appeal on the questions of the city's authority to enact the ordinances and the validity of their enactment.

Facts

Yu King was engaged in the business of buying and selling gasoline, kerosene and oil in the City of Zamboanga. On October 6, 1950, the City Council passed Ordinance No. 340, which imposed a specific tax of fifty centavos per liter of gasoline sold, two centavos per liter of lubricating oil, one centavo per gallon of kerosene, and one centavo per gallon of crude oil. The ordinance was approved with retroactive effect as of October 1, 1950, five days earlier. It was later superseded by Ordinance No. 503, approved on December 29, 1952, and then by Ordinance No. 672, approved on December 29, 1954, each imposing an identical tax. All three ordinances were passed as emergency measures.

Pursuant to these ordinances, Yu King paid the City Treasurer of Zamboanga, from November 9, 1950 to December 20, 1955, the total amount of twenty-six thousand seven hundred seventy-nine pesos and ninety-two centavos as specific or license tax on the gasoline, kerosene and oil he sold. He demanded a refund from the city through its treasurer, but the demand failed.

The city defended the ordinances as validly passed under its charter and confirmed by Congress in Republic Act No. 1435, approved on June 14, 1956, and further claimed that Yu King had not paid the taxes under protest. The lower court ruled for Yu King, and the city appealed.

Issues

• Whether or not the City of Zamboanga had authority under its charter to enact the ordinances imposing the tax on gasoline, kerosene and oil.
• Whether or not the ordinances were void because Ordinance No. 340 was given retroactive effect.
• Whether or not the ordinances were void for lack of prior certification by the City Mayor as emergency measures.

Applicable Provisions

Section 14 (a) of Commonwealth Act No. 39, as amended, the charter of the City of Zamboanga, grants the city the power to tax and regulate the businesses enumerated therein. The Court quoted it as follows:

To tax, fix the license fee for xxx regulate the business and fix the location of match factory or factories xxx the storage and sale of gunpowder xxx coal, oil, gasoline, benzine xxx petroleum, or any of the products thereof and of all other highly combustible or explosive materials.

This grant is the source of the city's authority to impose the questioned tax, and the Court held that the authority is clear from its terms.

Paragraph (f), Section 10, Article II of Commonwealth Act No. 39, as amended, is the provision on the enactment of emergency measures, which Yu King invoked when he alleged that the ordinances had not been previously certified by the City Mayor. The Court did not quote the text of this provision but discussed its requirement of prior certification.

Section 4 of Republic Act No. 1435, approved on June 14, 1956, was invoked by the city as confirming its authority. It provides:

Section 4. Municipal boards or councils may, notwithstanding the provisions of section one hundred and forty-two and one hundred and forty-five of the National internal Revenue Code as hereinabove amended, levy an additional Tax of not exceeding twenty-five per cent of the rates fixed in said sections, on manufactured oils sold or distributed within the limits of the city or municipality; Provided, That municipal taxes heretofore levied by cities through city ordinances on gasoline, airplane fuel, lubricating oil and other fuels, are hereby ratified and declared valid. The method of collecting said additional tax shall be prescribed by the Municipal board or council concerned.

This provision ratifies taxes previously levied by cities through ordinances on gasoline and other fuels, and it bears on the validity of the ordinances in question.

Ruling

On the first issue, the Court answered in the affirmative. Under Section 14 (a) of Commonwealth Act No. 39, as amended, the City of Zamboanga has the power to tax and regulate the storage and sale of oil, gasoline, benzine, petroleum and their products. The authority of the city to impose the tax in question being thus clear, the ordinances could not be struck down as ultra vires, that is, beyond the city's granted powers.

On the second issue, the Court held that the retroactive effect of Ordinance No. 340 did not render it void. The ordinance was passed on October 6, 1950 and made effective as of October 1 of the same year, a matter of five days, and the Court did not believe such an insignificant circumstance could render the measure void. The Court also noted that the ordinance had been superseded by a later ordinance enacted on December 29, 1950, while the action was commenced only on July 17, 1956.

On the third issue, the Court held that the ordinances were not shown to be void for lack of certification by the City Mayor. It was incumbent upon Yu King to prove the absence or lack of certification, since he had gone to court to seek annulment precisely on that ground. The Court added that even if the ordinances are emergency measures, the presumption must be that official duty in connection with their enactment had been duly complied with, in the absence of clear evidence to the contrary.

Doctrine

A city may impose a specific or license tax on gasoline, kerosene, oil and other petroleum products when its charter expressly grants it the power to tax and regulate the storage and sale of such highly combustible materials. The grant of power in the charter is the measure of the tax, and an ordinance falling within that grant is not ultra vires.

A slight retroactive effect in a tax ordinance, here a matter of five days, does not by itself render the measure void, especially where the ordinance has long been superseded and the action to annul it is brought years later.

He who seeks the annulment of an ordinance on the ground that it was not duly certified as an emergency measure carries the burden of proving the absence of certification. In the absence of clear evidence to the contrary, the presumption is that official duty in connection with the enactment of the ordinance was duly complied with.

Disposition

The Supreme Court reversed the decision of the lower court and dismissed Yu King's complaint, with costs. The City of Zamboanga prevailed.

Remember This

Memorize this line: the burden of proving that an ordinance was not duly enacted as an emergency measure rests on the one who attacks it, because official duty is presumed regularly performed. Examiners use this case to test charter-based taxing power over petroleum products and the presumption of regularity in the enactment of local ordinances.