8/31/2016 G.R.No.

L1104

TodayisWednesday,August31,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L1104May31,1949

EASTERNTHEATRICALCO.,INC.,ETAL.,plaintiffsappellants,
vs.
VICTOR,ALFONSOasCityTreasurerofManila,THEMUNICIPALBOARDOFTHECITYOFMANILA,and
JUANNOLASCO,asMayoroftheCityofManila,defendantsappellees.

FranciscoZuluetaandPobladorJr.forappellants.
CityFiscalJoseP.BengzonandAssistantCityFiscalJulioVillamorforappellees.
AssistantSolicitorGeneralCarmelinoG.Alvendia,SolicitorGuillermoE.TorresandManuelD.Baldeoasamicus
curiae.

PERFECTO,J.:

Twelve corporation engaged in motion picture business have initiated these proceeding through a complaint
datedMay5,1946,toimpugnthevalidityofOrdinanceNo.2958oftheCityofManilawhichwasenactedbythe
municipalBoardofsaidcityonApril251946approvedbytheMayoronApril27,1946andtookeffectonMay1,
1946saidordinancereadingasfollows:

ANORDINANCEIMPOSINGAFEEONTHEPRICEOFEVERYADMISSIONTICKETSOLDBY
CINEMATOGRAPHS,THEATERSVAUDEVILLECOMPANIESTHEATRICALSHOWSANDBOXING
EXHIBITIONANDPROVIDINGFOROTHERPURPOSES.

SEC.1.Inadditiontothefeespaidbycinematographers,theaters,vaudevillecompanies,theatricalshows
and boxing exhibitions, as provided for in sections 633 and 778 of Ordinance No. 1600, known as the
Revised Ordinance of the City of Manila, as amended, there shall be collected from the place of
amusementwhicharespecificallymentionedabovethefollowingfeesonthepriceofeveryadmissionticket
soldbysuchenterprises:

a.ForeveryticketsoldthepriceofwhichisfromP0.25 P0.05
toP0.99
b.ForeveryticketsoldthepriceofwhichisfromP1to 0.10
P1.99
c.ForeveryticketsoldthepriceofwhichisfromP2to 0.15
P2.99
d.foreveryticketsoldthepriceofwhichisfromP3to 0.20
P4.99
e.oreveryticketsoldthepriceofwhichisfromP5to 0.25
P5.99
f.ForeveryticketsoldthepriceofwhichisfromP0to 0.35
P14.99
g.ForticketsoldtheepriceofwhichisfromP15or 0.50
more

SEC. 2 It shall be the duty of every proprietor lessee, promoter, or operatorof such cinematographs,
theater, vaudeville companies, theatrical show and boxing exhibition to provide himself with tickets which
shall be serially numbered, indication therein the name of amusement place and the fee charge for
admission. Before such ticket are sold he same shall be presented to the office of the city Treasurer for
registration.Ticketsonceissuedandpresentedatthegateofentranceshallbecutbythegatekeeperinto
halves,thefirsthalftobereturnedtothecustomerandtheotherhalftoberetainedbythegatekeeper.

It shall also be the duty of said proprietor lessee promoter or operator to deliver to the Office of the City
Treasurerthefeescorrespondingtothenumberofticketoldbyhimwithintwodaysaftertheperformances
orexhibitionhastakenplace.

SEC.3.Thefeeshereinprescribedshallnotbepaidwheretheadmissionfeesorchargearecollectionfor
andinbehalfofanycharitableeducationorreligioninstitutionorassociation.

All place of amusement which are operate by U.S. Army and Navy with fund belonging to the U.S.
Governmentareherebyexemptedfromfeeshereinimposed.

SEC. 4. Any person violation any of the provision of this ordinance shall upon conviction thereof be
punishedbyafineofnotmorethanP200orbyimprisonmentfornotmorethansixmonthsorbybothsuch
fine and imprisonment in the discretion of the court. If the violation is committed by the club firm or
corporationthemanagerthemanagingdirectororpersonchargedwiththemanagementofthebusinessof
suchclubfirmorcorporationshallbecriminallyresponsibletherefor.

SEC.5.ThisOrdinanceshalltakeeffectontheMay1,1946.

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Plaintiffs,operatoroftheatersinManilaAnddistributoroflocalorimportedfilmsallegethattheyareinterestedin
the provision of section 1,2 and 4 of said ordinance which they impugn as null and void upon the following
grounds:(a) For violation the Constitution more particular the provision regarding the uniformity and equality of
taxation and thee equal protection of the laws (b) because the Municipal Board of Manila exceeded and over
stepped the power granted it the Charter of the City of Manila (c) because it contravenes violates and is
inconsistentwith,existingnationallegislationmoreparticularlyrevenueandtaxlawsand(d)becauseitisunfair,
unjust, arbitrary capricious unreasonable oppressive and is contrary to and violation our basic and recognizes
principlesoftaxationandlicensinglaws.

Defendants allege as affirmative defenses the following: (a) That the ordinance was passed by the Municipal
Board of Manila by virtue of its express legislative power to tax fix the license fee and regulate the business of
theaters, cinematographs and further to fix the location of and to tax, fix the license fee for and regulate the
business of theatrical performances public exhibition circus and other performances and places of amusement
(b) that the graduated tax required by said ordinance being applied to all cinematographs, theaters, vaudeville
companiestheatricalshowandboxingexhibitionssimilarlysituatedandasaclasswithoutdistinctionorexception
the same does not violate the prohibition against uniformity and equality of taxation (c) that the graduated tax
onadmissionticketstotheatersandotherplacesofamusementimposedbytheNationalInternalRevenueCode
(Commonwealth Act No. 466) is collected by and for the purposes of the National Government, whereas,
Ordinance No.2958 imposes and requires the collection of a similar tax by and for the purposes of the
GovernmentoftheCityofManila,andthereisnocaseofdoubletaxation,(d) that said ordinance having been
enacted under the express power of the Municipal Board to tax for revenue as distinguishedfrom its power to
licenseforpurelypolicepurposes,thefactthattheamountcollectedthereunderarehigherthanwhatareneeded
for police regulation and supervision does not render said ordinance unfair unjust capricious unreasonable and
oppressive (e) that consideration the nature of the business of the plaintiffs and the enormous volume of
businesstheyhandlethegraduatedtaxfixedbytheordinanceisnotunreasonable.

Defendants allege also that since May 1, 1946, when the ordinance in question took effect plaintiffs have been
chargingthetheatergoingpublicincreasedpricesforadmissiontothecinematographsownedandoperatedto
thegraduatedtaximposedbysaidordinanceandasaresultwhilerefusingtopaysaidtaxbutatthesametime
collectinganamountequaltosaidtaxplaintiffshavetakenundueadvantageofsaidordinancetorealizedmore
profits.

OnSeptember5,1946,JudgeEmilioPenaofthecourtoffirstInstanceofManilarenderedadecisionupholding
thevalidityofOrdinanceNo.2958.

Plaintiffs appellants assign in the their brief three errors committed by the trial court. We will consider them
separately.

Appellantscontendthatthelowercourterredinholdingthatundersection2444(m)oftheRevisedadministrative
CodetheMunicipalBoardoftheCityofManilahadthepowertoenactOrdinanceNo.2958.

Section2444(m)oftheRevisedAdministrativecodereadsasfollows:

Totaxfixthelicensefeeandregulatethebusinessofhotelsrestaurantsrefreshmentplaces,cafes,lodging
houses,boardinghousesliverygarageswarehouses,pawnshopstheaters,cinematographsandfurtherto
fixthelocationofandtotaxfixthelicensefeeforandregulatethebusinessoflivelystables,thelicensefee
forandregulatethebusinessofliverystable,boardingstables,embalmers,publicbilliardtablepublicpool
tables, bowling alleys, dance halls, public dancing halls, cabarets, circusand other similar parades, public
vehicles,racetracks,horseraces,Junkdealers,theatricalperformances,publicexhibitions,circusandother
performances and places of amusements, match factories, blacksmith shops, foundries, steam boilers,
lumber yards, shipyards, thestorage and sale of gunpowder, tar, pitch, resin, coal, oil, gasoline,benzene,
turpentine, 'hemp, cotton, nitroglycerin, petroleum or any Ofthe products thereof and of all other highly
combustibleorexplosivematerialsandotherestablishmentlikelytoendangerthepublicsafetyorgiverise
to conflagration or explosion and subject to the provision of ordinance issue by the (Philippines Health
Service) Bureau of Health in accordance with law tanneries, renders tallow chandlers bone factories and
soapfactories.

Appellantslineofargumentrunsasfollows:

By virtue of the specific power granted in the above quoted provision of the Revised Administration Code
OrdinanceNo.2958wasenacted.

OnAugust7,1940theNationalAssemblyenactedCommonwealthActNo.466,knownastheNationalInternal
RevenueCodesection18,260and261ofwhichreadasfollows:

SEC.18.Sourcesofrevenue.Thefollowingtaxesfeesandchargesaredeemedtobenationalinternal
revenuetaxes:

(a)Incometax
(b)Estateinheritanceandgifttaxes
(c)Specifictaxesoncertainarticles
(d)Privilegetaxesonbusinessoroccupation
(e)Documentarystamptaxes
(f)Miningtaxes
(g) Miscellaneous taxes fees and charges, namely, taxes on banks and insurance companies
franchise taxes on amusements charges on forest product fees for sealing weights and measures
firearmslicensefeesradioregistrationfeesandwaterrentals.

SEC. 260. Amusement taxes. There shall be collected from the proprietor, lessee, or operation of
theater cinematographs, concert halls, circuses, boxing exhibition and other places of amusement the
followingtaxes:

(a)Whentheamountpaidforadmissionexceedstwentyninecentavos,twocentavosoneachadmission

(b) When the amount paid for admission exceeds twentynine but does not exceed thirtynine centavos,
threecentavosoneachadmission

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(c) When the amount paid for admission exceeds thirtynine centavos but does not exceed fortynine
centavosfourcentavosoneachadmission.

(d) When the amount paid for admission exceeds fortynine centavos but does not exceed fiftynine
centavosfiveadmission.

(e) When the amount paid for admission exceeds fiftynine centavos but does not exceed sixtynine
centavossixcentavosoneachadmission.

(f) When the amount paid for admission exceeds sixtynine centavos but does not exceed seventy nine
centavossevencentavosoneachadmission.

(g)Whentheamountpaidforadmissionexceedsseventyninecentavosbutdoesnotexceedeightynine
centavoseightcentavosoneachadmission

(h) When the amount paid for admission exceeds eightynine centavos but does not exceed nintynine
centavos,ninecentavosoneachadmission

(i)Whentheamountpaidforadmissionexceedsninetyninecentavos,tencentavosoneachadmission.

Inthecaseoftheatersorcinematographs,thetaxeshereinprescribedshallfirstbedecutedandwithheld
by the proprietros, lessees, or operators of such theaters or cinematogrphs and paid to the Collector of
Internal Revenue before the gross receipts are divided between the proprietros, lessees, or operators of
thetheatersofcinematographsandthedistributorsofthecinematographicfilms.

In the case of cockpits, race tracks, and cabarets, there shall be collected from the proprietor, lessee, or
operatorataxequivalenttotenpercentumofthegrossreceipts,irrespectiveofwhetherornotanyamount
ischargedorpaidforadmission:Provided,however,Thatinthecaseofracetracks,thistaxisinaddition
to the privilege tax prescribed in seciton 193. for the purpose of the amusement tax, the term "gross
receipts"embracesallthereceiptsoftheproprietor,lessee,oroperatoroftheamusementplace,excluding
thereceiptsderivedbyhimfromthesaleofliquors,beverages,orotherarticlessubjecttospecifictax,or
from any business subject to tax under this Code. (This section was amended by section 8, Republic Act
No.39,effectiveOctober1,1946.Wearequotingtheoriginalprovisiontoshowthestatusofthelawwhen
theOrdinancewaspassed.)

SEC.261.Exemption.Thetaxhereinimposedshallnotbepaidwheretheadmissionfeeorchargesare
collected by or for and in behalf of any religious, charitable, scientific, or educational institution or
association,andwherenopartofthenetproceedsofsuchadmissionfeesorchargesinurestothebenefit
ofanyprivatestockholderorindividual.

OrdinanceNo.2958doesnotspecifythekindofthetaxsoughttobeimposedbutthesevenschedulesandother
details of said ordinance are, in every respect, identical with the amusement tax provided by section 260 of
CommonwealthActNo.466.

But,plaintiffsargue,thatsection2444(m)oftheRevisedAdministrativeCodeconfersupontheCityofManilathe
powertoimposeataxonbusinessbutnotonamusementand,consequently,OrdinanceNo.2958wasenacted
beyondthecharterpowersoftheCityofManila.

Thewholeargumentofplaintiffshinges,therefore,ontheassumptionthatthepowergrantedtotheCityofManila
bysection2444(m)oftheRevisedAdministrativeCodeislimitedtotheauthoritytoimposeataxonbusiness,with
exclusionofthepowertoimposeataxamusementbut,theassumptionisbasedonanarbitrarylabelingofthe
kind of tax authorized by said section 2444(m). The distinction made by plaintiffs as to the power to tax on
business and the power to tax on amusement has no ground under the provisions of section 2444(m) of the
Revised Administrative Code. The tax therein authorized cannot be defined as tax on business and cannot be
restricted within a smaller scope than what is authorized by the words used, to the extent of excluding what
plaintiffsdescribeastaxonamusement.

Theveryfactthatsection2444(m)oftheRevisedAdministrativeCodeincludestheaters,cinematographs,public
billiard tables, public pool tables, bowling alleys, dance halls, public dancing halls, cabarets, circuses and other
similarplaces,racetracks,horseraces,theatricalperformances,publicexhibition,circusandotherperformances
andplacesofamusements,willshowconclusivelythatthepowertotaxamusementisexpresslyincludedwithin
thepowergrantedbysection2444(m)oftheRevisedAdministrativeCode.

Plaintiffsappellants contend that the lower court erred in not holding that section 2444 (m) of the Revised
AdministrativeCodewasrepealedorthepowerthereincontainedwaswithdrawnbytheNationalAssemblybythe
enactmentofCommonwealthActNo.466knownastheNationalInternalRevenueCode.

Insupportofthiscontention,plaintiffsaverthattheCharteroftheCityofManila,containingsection2444(m)of
theRevisedAdministrativeCode,wasenactedonDecember8,1929.OnApril25,1940,theNationalAssembly
enactedCommonwealthActNo.466,includingprovisionsonamusementtax,coveringthewholefieldontaxation
andprovidedformorethanwhattheordinanceinquestionhasprovided.Asaresult,therearetwotaxingpowers
seeking to occupy exactly the same field of legislation, and so the apparent conflict must be resolved with the
conclusion that, with the enactment of Commonwealth Act No. 466, as later amended by Republic Act No. 39,
section 2444(m) of the Revised Administrative Code has been impliedly repealed and the power therein
delegatedtotheCityofManilawithdrawn.

Weseeabsolutelynoforceinplaintiffs'contention.Theconflictpointedoutbythemisimaginary.Bothprovisions
oflawmaystandtogetherandbeenforcedatthesametimewithoutanyincompatibilityamongthemselves.

Finally,plaintiffscontendthatthetrialcourterredinnotholdingthatOrdinanceNo.2958violatedtheprincipleof
equality and uniformity of taxation enjoined by the Constitution (sec. 22, subsec. 1, Art. VI, Constitution of the
philippines).

To support this contenttion, appellantts point out to the fact that the ordinance in question does not tax "many
morekindsofamusements"thanthosethereinspecified,suchas"racetracks,cockpits,cabarets,concerthalls,
circuses, and other places of amusement." the argument has absolutely no merit. The fact that some places of
amusement are not taxed while others, such as cinematographs, theaters, vaudeville companies, theatrical

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shows,andboxingexhibitionsandotherkindsofamusementsorplacesofamusementaretaxed,isnoargument
at all against the equality and uniformity of the tax imposition. Equality and uniformity of the tax imposition.
Equalityanduniformityintaxationmeansthatalltaxablearticlesorkindsofpropertyofthesameclassshallbe
taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for
purposesoftaxationandtheappellantscannotpointoutwhatplacesofamusementtaxedbytheordinancedo
notconstituteaclassbythemselvesandwhichcanbeconfusedwiththosenotincludedintheordinance.

Thejudgmentofthetrialcourtisaffirmedwithcostsagainstappellants.

Paras,Pablo,Bengzon,Tuason,MontemayorandReyes,JJ.,concur.
Perfecto,J.,WecertifythattheChiefJusticevotedtoaffirmtheappealedjudgment.

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