AMERICAN MAIL LINE, ET AL., PLAINTIFFS AND APPELLEES, VS. CITY OF BASILAN, ET AL., DEFENDANTS AND APPELLANTS.

Appeal from the decision of the Court of First Instance of Manila “declaring
illegal and void Ordinance No. 180, Series of 1955, of the City of Basilan, and
dismissing defendants’ counterclaim for lack of merit.

On September 12, 1955 the City Council of Basilan City enacted Ordinance No.
180, Series of 1955, (Exh. B) amending Title IV, Ordinance No. 7, Series of 1948
(Exh. A) by adding thereto Section 1 (D) and Sections 2 (C) and (D). The first
reads as follows:

“SECTION 1. Article IV of Ordinance numbered seven entitled, ‘The Port Area
Ordinance’, is hereby amended to read as follows:

“‘ARTICLE IV. REGULATIONS FOR BERTHING, MOORING, DOCKING AND ANCHORING AT
PIERS OR WHARVES AT ANY POINT WITHIN THE CITY CF BASILAN AND FOR ANCHORING
AT.ANY OPEN BAY, CHANNEL OR ANY OTHER POINT WITHIN THE TERRITORIAL WATERS OF THE
CITY OF BASILAN.’

“SEC. 2. Section 1 of Ordinance No. 7 is hereby amended and adding thereto a
new paragraph to be known as Section 1(D), to read as follows:

“‘Section 1(D). Any foreign vessel engaged in coastwise trade which may
anchor at any open bay, channel, or any loading point within the territorial
waters of the City of Basilan for the purpose of loading or unloading logs or
passengers and other cargoes shall pay an anchorage fee of 1/2 centavo (P.005)
per registered gross ton of the vessel for the first twenty-four (24) hours, or
part thereof, and for succeeding hours, or part thereof, PROVIDED, that maximum
charge shall not exceed, seventy-five pesos (P75.00) per day, irrespective of
the greater tonnage of the vessels.'”

Appellees are foreign shipping companies licensed to do business in the
Philippines, with offices in Manila. Their vessels call at Basilan City and
anchor in the bay or channel within its territorial waters. As the city
treasurer assessed and attempted to collect from them the anchorage fees
prescribed in the aforesaid amendatory ordinance, they filed the present action
for Declaratory Relief to have the courts determine its validity. Upon their
petition the lower court issued a writ of preliminary injunction restraining
appellants from collecting or attempting to collect from them the fees
prescribed therein.

After the denial of appellants’ motion to dismiss the complaint on the ground
of wrong venue, they filed their answer alleging therein that the City of
Basilan had authority, through its city council, to enact the questioned
ordinance in the exercise of either its revenue-raising power or of its police
power. They also filed a counterclaim to recover alleged uncollected anchorage
dues amounting to P7,500.00, and the sum of P2,000.00 for expenses incurred in
defending the suit.

The question to be resolved is whether the City of Basilan has the authority
to enact Ordinance 180 and to collect the anchorage fees prescribed therein.

In support of the affirmative, appellant city relies upon the following
provisions of its Charter (Republic Act 288):

“SEC. 14. General Powers and Duties of the Council.—Except as
otherwise provided by law, and subject to the conditions and limitations
thereof, the Council shall have the following legislative powers:

(a) To levy and collect taxes for general and special purposes in
accordance with law.

x x x x

(o) To enact ordinances for the maintenance and
preservation of peace and good morals.

x x x x

(v) To fix the charges to be
paid by all watercraft landing at or using public wharves, docks, levees, or
landing places.”

Under paragraph (a) transcribed above, it is clear that the City of
Basilan may only levy and collect taxes for general and special purposes in
accordance with or as provided by law; in other words, the City of Basilan was
not granted a blanket power of taxation. The use of the phrase “in accordance
with law”—which, in our opinion, means the same as “as provided by law”—clearly
discloses the legislative intent to limit the taxing power of the City.

The next point to be considered is whether the questioned ordinance may be
upheld under the provisions of Section 14 (v) of Republic Act No. 288.
After a careful consideration of the language employed therein, we have reached
the conclusion that said provision does not authorize the City of Basilan to
promulgate ordinances providing for the collection of “Anchorage” fees. This is
clearly not included in the power granted by the provision under consideration
“to fix the charges to be paid by all watercraft landing at or using public
wharves, docks, levees or landing places”. That this is so is shown by the need
which the City of Basilan had to enact the amendatory ordinance.

Appellants also argue that the ordinance in question was validly enacted in
the exercise of the city’s police power and that the fees imposed therein are
for purely regulatory purposes. In this connection it has been held that the
power to regulate as an exercise of police power does not include the power to
impose fees for revenue purposes (Cu Unjieng vs. Patstone, 42
Phil., 188; Pacific Commercial Co. vs. Romualdez, etc., et al., 46 Phil.,
917; Arquiza etc. vs. Municipality of Zamboanga, 55 Phil., 653). In the
Cu Unjieng case it was held that fees for purely regulatory purposes “may only
be of sufficient amount to include the expenses of issuing the license and the
cost of the necessary inspection or police surveillance, taking into account not
only the expense of direct regulation but also incidental expenses. In (Manila
Electric Co. vs. Auditor General, 73 Phil., 129-135), it was also held
that the regulatory fee “must be no more than sufficient to cover the actual
cost of inspection or examination as nearly as the same can be estimated. If it
were possible to prove in advance the exact cost, that would be the limit of the
fee”.

To support the claim that the fees imposed are merely regulatory it is said
that the City of Basilan is an island with mountainous coasts and fringed by
numerous coves and inland bays and islets, and may become a veritable haven for
smugglers if the city has no funds or means to suppress their illegal
activities, but we believe that, this notwithstanding, the fees required are
intended for revenue purposes. In the first place, being based upon the tonnage
of the vessels, the fees have no proper or reasonable relation to the cost of
issuing the permits and the cost of inspection or surveillance. In the second
place, the fee imposed on foreign vessels—1/2 centavo per registered gross ton
for the first 24 hours, and which shall not exceed P75.00 per day—exceeds even
the harbor fee imposed by the National Government, which is only P50.00 for
foreign vessels (Sec. 2702 of the Tariff and Customs Code, Republic Act No.
1937, taken from Sec. 2, Republic Act No. 1317 which was enacted by Congress to
raise revenues for the Port Works Fund). Moreover, Mariano Mancao, Port
Inspector of the City of Basilan, in his affidavit dated February 17, 1956
(Exh.C), states that were it not for the injunction issued by the lower court in
this case, the city “would have collected considerable amounts from the
plaintiffs for anchorage fees”. All these circumstances point to the conclusion
that the fees were intended for revenue purposes.

Lastly, appellant city’s own contention that the questioned ordinance was
enacted in the exercise of its power of taxation, makes it obvious that the fees
imposed therein are not merely regulatory.

Wherefore, the decision appealed from is affirmed, and the preliminary
injunction issued heretofore is made final. Without costs.

Bengzon, C.J.,
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, De
Leon, and Natividad, JJ., concur.