G.R. No. 14618. May 30, 1961
SANTOS LUMBER COMPANY, ET AL., PLAINTIFFS AND APPELLEES, VS. CITY OF CEBU, ET AL., DEFENDANTS AND APPELLANTS.
PADILLA, J.:
Lumber Company et al., plaintiffs-appellants vs. City of Cebu et al.,
defendants-appellees, declaring that ordinances Nos. 92, series of 1950,and 116,
series of 1951, of the Municipal Board of the City of Cebu, imposing upon every
person, individual, company or corporation engaged in the sale of lumber a tax
of P2 “for every first local sale of one thousand board feet of lumber sold
during the month,” payable within the first twenty days of the succeeding month,
and a surcharge of 20% added to the tax should the taxpayer fail to pay it
within the period provided, are ultra vires; reversing the judgment
rendered by the Court of First Instance of Cebu that upheld their validity; and
ordering the “appellees to return to appellants the sum of P97,542.57 and all
such sums as may have been paid by the latter after February, 1953, by virtue of
said ordinances,” without pronouncement as to costs.[1]
On 14 April 1958 the plaintiffs filed in the Court of First Instance of Cebu
a “petition for the issuance of a writ of execution against defendants City of
Cebu et al.” to recover the total sum of P97,542.57, which this Court had
ordered the latter to refund to the former, and the total sum of P221,564.83
which the former had paid to the latter after February 1963. In support of their
petition, they alleged that the judgment of this Court already had become final
and executory and that it was the ministerial duty of the trial court to issue
the writ of execution including therein not only the sum of P97,542.57 but also
the total sum of P221,564.83 paid by them after February 1953. Attached to the
petition were the affidavits of Nicanor E. Santos, manager of Santos Lumber
Company (Annex A), Jose Carvajal, owner or manager of Lu Tai Lumber Company
(Annex B), Jose Ngo Chua, manager of Cebu Liberty Lumber Company (Annex C), Sy
Quia, general manager of Royal Lumber Company (Annex D), G. Biban Kian, manager
of Cebu-Manila Sawmill Company (Annex E), Dy Shui Sheng, manager of the
Katipunan Lumber Company (Annex F), See Chuan, owner of Cebu Victory Lumber Co.,
Ltd. (Annex G), Gervasio Go, owner or manager of Visayan Lumber Company (Annex
H), Claro Go Kee, attorney-in-fact of Luzon Lumber Company (Annex I), Guillermo
Go, owner or manager of Southern Lumber Company (Annex J), Chua Key Ho
alias Manuel Ong, owner of City Lumber & Furniture Supply (Annex K),
Coo Lu, owner of Central Lumber (Annex L), Apolonio Gopuco, Jr., assistant
manager of Oriental Saw Mill, Cebu Branch (Annex M), Fulvio C. Pelaez, owner or
manager of Mabuhay Lumber Co., Ltd. (Annex N), Vicente C. Perales, owner of
Malayan Lumber (Annex O), and Choa Say, manager of Continental Lumber Company
(Annex P), plaintiffs and appellants in G. R. No. L-10196 referred to at the
beginning of this opinion, wherein they stated the sums they had paid after
February 1953, the dates of payment and the numbers of the official receipts
issued for such payments. The defendants objected to the petition.[2] On 8 May 1958 the plaintiffs replied alleging
that the defendant’s objection was merely for the purpose of delaying execution
of the judgment and harassing them; that the judgment of the Supreme Court
already had become final and executory; and that contrary to the defendants’
claim, the Court of Tax Appeals, created by Republic Act No. 1125, has no
jurisdiction over cases involving the legality of taxes imposed by a municipal
or city ordinance.
On 7 June 1958 the Court of First Instance entered an order setting the
petition for hearing on 16 June 1958 at 2:30 o’clock in the afternoon for the
purpose of determining the correctness of the amount paid by the plaintiffs
after February 1953.
On 16 June 1958 the plaintiffs filed a supplement to their petition for a
writ of execution so as to include the amount of P1,431.87 paid by Mindanao Saw
Mill and P5.95 paid by Cebu Asia Lumber, thereby bringing the total amount paid
by the plaintiffs after February 1953 and sought to be recovered and included in
the writ of execution prayed for by them, to P223,002.65. Attached to the
supplemental petition were the affidavits of Vicente Ong Tue Cheng, the owner of
Cebu Asia Lumber (Annex Q), and Esteban Gochan, attorney-in-fact of Mindanao Saw
Mill (Annex R), both plaintiffs in the case already mentioned, wherein they
stated the sums they had paid after February 1953, the dates of payment and the
numbers of the official receipts issued for such payments.
After hearing, on 26 June 1958 the defendants filed a memorandum advancing
the theory that “in order that a refund for the taxes paid may be validly had,
it is necessary that the same be paid under protest,” the reason being that
“taxes are imposed and collected to support the government,” and were this
requirement not imposed, “the government is exposed to instability and there is
the consequent danger of impairment to collective security for which the
government is constituted.” Since the plaintiffs in some instances had paid
under protest and in others not under protest, only those amounts paid under
protest should be refundable. Moreover, the fact that they had paid under
protest the total sum of P97,542.57 did not amount to a continuing protest as
regards those paid after February 1953 without protest. Furthermore, the
recovery of all sums paid after February 1953 should have been made the subject
of another action, where the defendants could set up all defenses available to
them.
On 2 July 1958 the trial court entered an order holding that the charter of
the City of Cebu does not “require that the taxpayer should pay the tax under
protest before he can file the suit or proceeding for the recovery of the tax”
hence, the defendants “can recover not only the taxes paid under protest but
also those paid voluntarily during the pendency of the appeal;” that the
judgment of the Supreme Court in G. R. No. L-10196 “makes no distinction between
taxes paid under protest and those made voluntarily by the plaintiffs; and where
no distinction is made we ought not to make a distinction,” and ordering the
defendants to pay to the plaintiffs the total sum of P223,002.05, of which the
total sum of P59,108.88 were paid under protest and the total sum of P163,893.77
without protest.
On 11 July 1958 the defendants filed a notice of appeal to this Court “on
questions of law,” and the appeal bond. On 14 July 1958 the trial court entered
an order giving due course to the defendants’ appeal and denying the plaintiffs’
petition for a writ of execution. On 22 August 1958 the appellants filed an
amended record on appeal.
On 27 October 1958 the appellee filed in this Court an “urgent motion to
dismiss appeal,” on the ground that in their answer to the plaintiffs’ (herein
appellees) complaint, the defendants (herein appellants) had not set up the
defense that only those amounts paid under protest were refundable to the
appellees, notwithstanding the fact that the latter had alleged in their
complaint that some amounts had been paid under protest whereas others had not
been paid under protest; that in rendering judgment for the appellees herein in
G. R. No. L-10196, this Court had made no distinction in the amounts
refundable—whether paid under protest or not under protest; that the judgment of
the Supreme Court already had become final and executory and was res
adjudicata as between the parties; that the order dated 2 July 1958 of the
trial court was not appealable; and that this appeal was interposed by the
appellants merely for delay. On 28 October 1958 the appellants filed an “answer
to motion to dismiss appeal” professing seriousness in interposing their
appeal.
On 10 November 1958 this Court resolved to defer consideration of the
appellees’ motion to dismiss the appeal and the appellants’ objection thereto,
“until the date when this appeal can be deliberated upon on the merits.”
The appellants are willing to refund to the appellees the total sum of
P97,542.57, which this Court in G.R. No. L-10196 had ordered the former to pay
to the latter, and the total sum of P59,108.88 paid by the appellees under
protest after February 1953, but refuse to refund to them the total sum of
P163,893.77 which they had paid without protest.
McQuillin on “Municipal Corporations” says:
The right to recover municipal taxes which have been wrongfully exacted is,
generally speaking, governed by the rules relating to state and county taxes.
In the absence of statute there can be no recovery of taxes which have been
voluntarily paid, where there is no such statute, the general rule constantly
adhered to by judicial decisions early and late is that if the payment is
involuntary, municipal taxes wrongfully exacted may be recovered. Recovery
of taxes paid and refunding taxes paid generally depend upon the particular
facts involved, as whether the payment of taxes was voluntary or involuntary,
whether by mistake of law or fact and whether paid under protest. * * *. (3rd
ed., Vol. 16, pp. 454-458.) Italics supplied.
For the recovery of taxes paid, later on held by the courts to have been
illegally imposed by a municipal corporation, a protest is a condition precedent
when the charter so requires. Commonwealth Act No. 58, as amended, the charter
of the City of Cebu, does not provide for and require such condition, unlike the
charters of the City of Dumaguete (section 57 [b], Republic Act No. 327)
and of Quezon City (section 63, Republic Act No. 537). Moreover, inasmuch as the
appellees, had paid to the appellants the total sum of P97,542.57 under protest,
which they had sought to recover and succeeded to recover by a judicial
declaration of nullity of ordinances Nos. 92, series of 1950, and 116, series of
1951, of the Municipal Board of the City of Cebu, and during the pendency of the
case the appellees had paid in some instances under protest and in others
without protest, they may be deemed to have continued to pay under protest even
without expressly stating so. Considering that the appellees had filed suit for
a declaration of nullity of the ordinances in question and for the recovery of
what they had paid thereunder, and that during the pendency of the suit, they
had paid under protest some of the taxes due thereunder, subsequently declared
unlawful by the Court, it is reasonable and logical to deem the tax payments
made by the appellees as done under protest.
The order of the Court of First Instance of Cebu dated 2 July 1958 ordering
the appellants to pay the appellees the total sum of P223,002.65 is final and
executory, hence appealable.
The order appealed from is affirmed, with costs against the
appellants.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., Paredes, Dizon, De Leon, and Natividad, JJ., concur.
[1] 102 Phil., 870; 54 Off. Gaz., 5327.
[2] Their objection is not set forth in
the record on appeal.