THE CITY OF NAGA, PETITIONER, VS. COURT OF APPEALS AND SAN MIGUEL BREWERY, RESPONDENTS.

The City of Naga
seeks a review on certiorari of a decision of the Court of Appeals.  The facts are set forth in the decision of
said Court, from which we quote:

“Defendant-appellant
City of Naga is a municipal
corporation existing and operating under and by virtue of its charter, Republic
Act No. 305 which took effect on June
18, 1948.

“Plaintiff-appellee San Miguel Brewery, Inc. is a private
corporation duly organized under the laws of the Philippines
with principal office in the City of Manila,
but has a plant and branch office located in the City of Naga.

“On October 15, 1954, the municipal board of Naga City passed
Ordinance No. 141 which pro­vided, among other things, to wit:

“‘Section 1.  – There shall be levied and collected from
all breweries, distil­leries, bottling houses, toyo factories and other
establishments whose business in­cludes the corking and capping of bottles,
operating in the City of Naga, in addition to the municipal license tax imposed
by existing laws, a municipal tax of 1/48 of a centavo for every bottle
of Tru-Orange, Coca-Cola, 7-Up or other similar beve­rages so corked, capped
or stoppered; x x x’

“Plaintiff-appellee paid 1/48 of a centavo muni­cipal tax per
bottle from October, 1954 up to June 1961 in the total sum of P64,281.95.

“On June 19, 1959,
Republic Act No. 2264 other­wise known as the Local Autonomy Act took
effect.  Section 2 thereof pertinently
provides as follows:

“‘Sec. 2. Taxation.  – Any provision of law to the contrary
notwithstanding, all chartered cities, municipalities and muni­cipal districts
shall have authority to im­pose municipal license taxes or fees upon persons engaged in any
occupation or busi­ness, or exercising privileges in chartered cities,
municipalities or municipal districts by requiring them to secure licenses at
rates fixed by the municipal board or city council of the city, or by the
municipal district; to collect fees and charges of ser­vices rendered by the
city, municipality or municipal district; to regulate and impose reasonable
fees for services rendered in connection with any business, profession or
occupation being conducted within the city, municipality or municipal district
and otherwise to levy for public purposes, just and uniform taxes, licenses or
fees; x x x.’

“Pursuant to this provision of the Local Autonomy Act, the
municipal board of Naga City
passed Ordinance No. 234 which took effect on January 1, 1961, imposing taxes on the business of
plaintiff as manufacturer of aerated water – for each corking machine with a
capacity of 16,000 bottles or more a day (Sec. 4).  Plaintiff-appellee since then has been paying
to defendant-appellant an annual tax of P2,300.00 on
its business in addition to the specific tax mentioned above.  This triggered the present controversy.  San Miguel Brewery, Inc. claimed that it was
being doubly taxed:  One under Ordinance
No. 141 and the other under Ordinance No. 234.

“On August 4, 1961,
plaintiff-appellee lodged the instant complaint in the Court of First Instance
of Manila.  It sought to annul Ordinance
No. 141, s. 1954; demanded the refund of the taxes with in­terests which it
paid as well as those other amounts that plaintiff-appellee may be compelled to
pay to defendant-appellant Naga City under the said ordi­nance.

“The City of Naga, through counsel, answered interposing at
the same time affirmative and special defenses – that the venue was improperly
laid; that the plaintiff was guilty of laches; and that the ordi­nance in
question is valid, it having been enacted and passed well within the statutory
powers, granted to and inherent in defendant municipal corporation.

“After trial, the lower court rendered judgment in favor of
the plaintiff-appellee (1) declaring Ordinance No. 141, series of 1954, not
applicable to the plaintiff, (2) ordering the defendant to refund to the
plaintiff the amount of P2,892.57 paid under protest with legal interest from
August 9, 1961, the date of filing of the complaint until fully paid, and any
other subsequent amount or amounts similarly paid by the defendant with legal
interest from date of payment also until duly paid, and (3) to pay the costs.

“The City of Naga
appealed to this Court.

“x  x 
x  x  x 
x  x  x 
x  x  x 
x  x  x 
x”

In due course, the Court of Appeals rendered its appealed
decision annulling Ordinance No. 141, upon the authority of Me­dina v. City of Baguio^[1]; declaring that, although the taxes
paid by the plaintiff, under said Ordinance, from October 1954 to June 1961, in
the aggregate sum of P64,281.95, had been “im­properly collected”,
the refund thereof was not in order, plaintiff having failed to prove that its
payment had been made under protest, and that, having established that the sum
of P2,892.57, collected from July to December 1961 had, however, been paid
under protest, plaintiff was entitled to recover the same; and, accordingly,
affirming the decision of the trial court, in all other respects.  Hence, this petition for review on certiorari
filed by the defendant City of Naga.

The latter maintains that Ordinance No. 141 is sanctioned by
section 15 (kk) of Republic Act No. 305 – which is the charter of the City of
Naga – vesting in its municipal board the authority to “regulate
any other business or occupation not specifically mentioned in the preceding
paragraphs, and to impose a license fee upon all persons engaged in the
same or who enjoy privileges in the city.” Said authority to
“regulate” and “to impose a li­cense fee” involves,
however, the grant of police power, which is the authority to enact
rules and regulations for the promotion of the general welfare.^[2]
Such authority is irrelevant to the ordinance under consideration, which is an
exercise of the power of taxation, the purpose of which is to raise
funds for the general operation of the government^[3]
and is distinct and separate from the police power, which, in turn, does not
and can not possibly permit the enactment of said ordinance.^[4]

Defendant insists that the approval of Republic Act No. 2264,
otherwise known as the Local Autonomy Act, authorizing cities to exercise,
subject to specific limitations, the power of taxation in general, including
the imposition of a “percentage tax on sales” and “taxes on
articles subject to specific tax, except gasoline, under the provisions of the
national internal revenue code,”^[5]
had validated Ordinance No. 141.  The
legality thereof is dependent, however, upon defendant’s powers at the time
of its enactment, on October 15,
1954.  In this connection, it
is clear that – under both its charter and Commonwealth Act No. 472, and as we
held, under similar conditions, in Medina
v. City of Baguio,^[6]
– de­fendant then had no authority to impose a tax on specific articles.  The subsequent approval of Republic Act No.
2264, on June 19, 1959, did
not remove the infirmity of origin of the ordinance in question, because none
of the provisions of said Act suggests the intent to give thereto either a
curative nature or retroactive effect.

The case of Bacolod
v. Gruet^[7]
cited by the defendant, refers to an ordinance which
became effective on July 1, 1959,
or subsequently to the approval of Republic Act No. 2264.  This was precisely the reason why we refused
to apply, in said case, the doctrine laid down in Medina
v. City of Baguio, reiterated in
Stanvac v. Antigua^[8]
and Wa Yu v. City of Lipa^[9].  In short, the Bacolod
case is not in point.

WHEREFORE, the decision appealed from is hereby affirmed,
with costs against defendant, City of Naga.

IT IS SO ORDERED.

Reyes, Dizon, Makalintal, Zaldivar, Castro, Angeles, and Fernando, JJ., concur.

Sanchez, J., took no part.

^[1]
91 Phil. 854.

^[2] Cu Unjieng v. Patstone, 42 Phil. 818; Primicias v. Fugoso, 80 Phil. 71;
Ignacio v. Ela, 99 Phil. 346; Commonwealth v. Alger, 7 Cush.
53, 61 Mass. 53.

^[3]
Cooley on Taxation, 4th ed., 72; Gruen v. State Tax Com., 35 Wash. Id. 1, 211 Par. 2d 651; Welch
v. Henry, 305 U.S. 568; Florida v. Reynolds, 183 U.S. 471; Messer
v. Lang, 129 Fla. 546, 176 So. 548.

^[4]
Medina v. City of Baguio,
91 Phil. 854, 856-857.

^[5]
Section 2 of Republic Act No. 2264.

^[6]
Supra.

^[7]
G.R. No. L-18290, January 31, 1963.

^[8]
96 Phil. 909, 913.

^[9]
99 Phil. 975, 979-980.