NETRAN, INC., PLAINTIFF-APPELLEE, VS. BACOLOD CITY AND MIGUEL REYNALDO, IN HIS CAPACITY AS BACOLOD CITY TREASURER, DEFENDANTS-APPELLANTS.

Appeal interposed by the City and City Treasurer of Bacolod from the decision of the Court of First Instance of
Negros Occidental (in Civil Case No. 8072), declaring
as null and void Ordinance No. 875, series of 1966, imposing graduated annual
license fees on operators of transportation companies in the City of Bacolod.

The case commenced with the filing in court by Netran, Inc. of a complaint, challenging the authority of
the City Council of Bacolod to enact an ordinance
(No. 875, s. 1966) imposing annual license fees on operators of public utility
vehicles in Bacolod
City, and praying for the
declaration of its nullity.  After the
defendants Bacolod
City and City Treasurer had filed
their joint answer sustaining the validity of the disputed measure, the parties
stipulated on the following facts:

“2. That plaintiff is the owner and operator of a
public utility duly franchised by the Public Service Commission and is actually
engaged in the business of transporting goods and passengers from Bacolod City, Balintawak, San
Carlos City and Dumaguete City, Bayawan,
Negros Oriental and vice-versa;

“3. That plaintiff has duly secured and paid the
necessary licenses and fees for all its operating units, in the operation of
its business as a public utility, imposed by the Land Transportation Code, the
Public Service Act and other related laws;

“4. That plaintiff likewise pays a privilege
franchise tax of two percent (2%) on the gross collections as common carrier’s
tax, payable monthly to the Bureau of Internal Revenue for the operation of the
said public utility as provided for by the Internal Revenue Code;

“5. Plaintiff’s motor vehicles are prohibited from
operating within the city limits of Bacolod City
as defined and delimited by Ordinance No. 43, Series of 1961, of the said
defendant Bacolod
City;

“6. That defendant Bacolod City,
thru its City Council passed an ordinance imposing an annual graduated license
fee of TPU operators or transportation companies in the City of Bacolod.  Said license fee imposition being specifically
provided for by the provisions of Section 1 of the City Ordinance No. 875,
Series of 1966 of defendant Bacolod
City, xxxx;

“7. That defendant Bacolod
City and defendant Miguel Reynaldo have collected and are still imposing and
collecting the aforementioned graduated license fee on the herein
plaintiff.  In fact, plaintiff had paid
defendant under protest the amount of Nine Hundred Twenty (P920.00) Pesos, as
evidenced by defendant’s Official Receipt No. K-1065489 dated January 18, 1967, as payment of the
said graduated license for the year 1967;

“8. That the motor vehicles of herein plaintiff,
operated by it as a public utility, are all under the Land Transportation
Commission denomination or classification of PUB;

“9. That there are other PUB vehicles with the same
fixed route of from Bacolod City, Balintawak,
San Carlos City, Dumaguete City, Bayawan,
Negros Oriental and vice versa, which are not
subjected to the license fee imposition adverted to in paragraph 6 hereof, as
the operator and/or owner of said PUB motor vehicles are not residents of Bacolod nor they have their principal place of business in Bacolod City, nor do they maintain a garage or repair shop
at Bacolod City.”

Based upon the foregoing stipulation of
facts, the court rendered judgment on 15 November 1967, ruling out the
authority of the City Council of Bacolod to enact the
questioned tax measure, in view of the explicit provisions of the Land
Transportation and Traffic Code (Republic Act 4136) and the Local Autonomy Act
(Republic Act 2264), withholding from local governments the power to tax the registration,
use and operation of motor vehicles.  It
is this decision that is the subject of the present appeal.

Asserting that the enactment of Ordinance No. 875, which fixes
the rate of the annual license fee payable by operators of transportation
companies depending on the number of units owned or operated by said companies,^[1]
comes within the general authority of the City Council of Bacolod,
appellants invoke the city charter which provides:

“Sec. 17, General powers and duties of the Council.-
Except as otherwise provided by law, and subject to the conditions and
limitations thereof, the City Council shall have the following legislative
powers:

xxxxx             xxxxx              xxxxx

“(n) To tax motor and other vehicles, notwithstanding
the provisions to the contrary contained in section thirteen of Act Numbered
Thirty-nine hundred and ninety-two, as amended, all automobiles and trucks
belonging to the National Government or to any provincial or municipal government
and automobiles and trucks not regularly kept in the City of Bacolod, shall be exempt from such tax.” (Com. Act No.
326,^[2]
as amended by Com. Act No. 404).

In 1950, however, Republic Act 587 was passed to amend certain
sections of the Motor Vehicle Law (Act 3992). 
Among those affected was subsection (b) of Section 70,^[3]
Article 2, Chapter IV thereof, which was made to reed as follows:

“(b)  No other taxes or fees than those prescribed
in this Act shall be imposed for the registration or operation or on the ownership
of any motor vehicle, or for the exercise of the profession of chauffeur, by
any municipal corporation, the provisions of any city charter to the contrary
notwithstanding: xxxx;

thus eliminating there from the provision
allowing the imposition of equitable insular, local or municipal property tax
upon motor vehicles.  This same provision
was later on incorporated verbatim into, and became Section 59 (b) of the Land
Transportation and Traffic Code (Republic Act 4136) that took effect on 20 June 1964.

The issue that this case presents for resolution by this Court,
therefore, is whether or not Section 17(a) of the City Charter of Bacolod, empowering the council to tax motor vehicles, has
been repealed by the amendatory provision of Republic Act 587, and by Section
59(b) of Republic Act 4136.  There is
nothing new or novel to this question.

In a 1953 case that put to test the validity of an ordinance
levying a so-called property tax on all motor vehicles operating in the City of
Manila, this Court had already ruled that Section 70(b) of Act 3992^[4]
constituted a limitation on the broad grant of power conferred upon the city by
its charter.  Thus, we said:

“The ordinance in question falls under the foregoing
rules.  While it refers to property tax
and it is fixed ad valorem, yet we cannot
reject the idea that it is merely levied on motor vehicles operating within the
City of Manila with the main
purpose of raising funds to be expended exclusively for the repair, maintenance
and improvement of the streets and bridges in said city.  This is precisely what the Motor Vehicle Law
(Act No. 3992) intends to prevent, for the reason that, under said Act, municipal
corporations already participate in the distribution of the proceeds that are
raised for the same purpose of repairing, maintaining and improving bridges and
public highways (section 73 of the Motor Vehicle Law).  This prohibition is intended to prevent duplication
in the imposition of fees for the same purpose. 
It is for this reason that we believe that the ordinance in question
merely imposes a license fee although under the cloak of an ad valorem tax to circumvent the prohibition above adverted
to.” (Association of Customs Brokers, Inc. vs. Municipal Board, 93 Phil.
107, 111).

In a later case^[5]
also brought to its attention and involving a taxing ordinance passed by the Quezon City Council, this Court expressly declared the
amendatory provision of Republic Act 587 to have repealed Section 12 (c) of the
Charter of Quezon City (Republic Act 537), an earlier
legislation that authorized the taxing or licensing or regulation by the city
of transportation business in operation in said territory.  Reasoning its judgment, this Court stated:

” x x x
Section 17 of Republic Act No, 587 provides that ‘no other taxes or fees than
those prescribed in this Act shall be imposed for the registration or
operation, or on the owner of any motor vehicle, or for the exercise of the
profession of chauffeur, by any municipal corporation, the provisions of any
city charter to the contrary notwithstanding.’ Being a later enactment, it must
be deemed to have replaced the pro tanto
Section 12 (c) of Republic Act No. 537, the Revised Charter of Quezon City.  The
business of transportation comprises simply the operation of motor vehicles
defined in the Revised Motor Vehicle Law (Section 3 of Article 11) as including
‘all vehicles using the public highways, if propelled by any power other than
muscular power’.  To tax or impose a
license fee on the transportation business of the appellee
is therefore to tax or impose a license fee on the operation by the appellee of its vehicles, already exclusively covered by
the Revised Motor Vehicles Law.”

Following the foregoing ruling, it is clear that Republic Act No.
587, amending Section 70(b) of Act 3992, and Republic Act 4136, prohibiting the
imposition of the tax or fee of any kind, other than those therein provided,
upon the registration ownership or operation of motor vehicles, being later
enactments, should be construed as having repealed Section 17(a) of the Charter
of the City of Bacolod.  Consequently, the passage by the City Council
of Bacolod of Ordinance No. 875, series of 1966,
based on such Section 17(a) of Commonwealth Act 326, as amended, is adjudged
unauthorized, and the declaration of its nullity by the court below was proper
and justified.

WHEREFORE, the decision appealed from is hereby affirmed,
without pronouncement as to costs.

Concepcion, C.J., Dizon,
Makalintal, Zaldivar,
Castro, Fernando, Teehankee, Barredo,
and Villamor,
JJ., concur.

Makasiar, J., did not take part.

^[1]
Under the ordinance, TPU operators with 1 to 5 units shall pay an annual
license fee of P50.00; those with 6 to 10 units, P100.00; with 11 to 15 units,
P150.00, and so on.

^[2]
Approved on 18 June 1938.

^[3]
Before its amendment, Section 70(b) of the Revised Motor Vehicle Law reads:

“(b) No further fees than those
fixed in this Act shall be exacted or demanded by any public authority of these
Islands for the operation use of any motor vehicle on any public highway,
bridge or ferry, or for the exercise of the profession of chauffeur, or for the
operation of any motor vehicle by the owner thereof provided however, That,
nothing in this Act shall be construed to exempt any motor vehicle from the payment
of any lawful and equitable insular, local or municipal property tax imposed
thereupon: x x x.”

^[4]
Even before its amendment by Republic Act 587.

^[5] Heras vs. The City Treasurer of Quezon City, 109 Phil. 930, 934-935.