9/8/2016 G.R.No.

L4376

TodayisThursday,September08,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L4376May22,1953

ASSOCIATIONOFCUSTOMSBROKERS,INC.andG.MANLAPIT,INC.,petitionersappellants,
vs.
THEMUNICIPALITYBOARD,THECITYTREASURER,THECITYASSESSORandTHECITYMAYOR,allof
theCityofManila,respondentsappellees.

TeotimoA.Rojaforappellants.
CityFiscalEugenioAngelesandAssistantFiscalEulogioS.Serranoforappellees.

BAUTISTAANGELO,J.:

ThisisapetitionfordeclaratoryrelieftotestthevalidityofOrdinanceNo.3379passedbytheMunicipalBoardof
theCityofManilaonMarch24,1950.

TheAssociationofCustomsBrokers,Inc.,whichiscomposedofallbrokersandpublicserviceoperatorsofmotor
vehiclesintheCityofManila,andG.Manlapit,Inc.,amemberofsaidassociation,alsoapublicserviceoperator
ofthetrucksinsaidCity,challengethevalidityofsaidordinanceonthegroundthat(1)whileitleviesasocalled
propertytaxitisinrealityalicensetaxwhichisbeyondthepoweroftheMunicipalBoardoftheCityofManila(2)
saidordinanceoffendsagainsttheruleofuniformityoftaxationand(3)itconstitutesdoubletaxation.

The respondents, represented by the city fiscal, contend on their part that the challenged ordinance imposes a
propertytaxwhichiswithinthepoweroftheCityofManilatoimposeunderitsRevisedCharter[Section18(p)of
RepublicActNo.409],andthatthetaxinquestiondoesnotviolatetheruleofuniformityoftaxation,nordoesit
constitutedoubletaxation.

Theissueshavingbeenjoined,theCourtofFirstInstanceofManilasustainedthevalidityoftheordinanceand
dismissedthepetition.Hencethisappeal.

ThedisputedordinancewaspassedbytheMunicipalBoardoftheCityofManilaundertheauthorityconferredby
section 18 (p) of Republic Act No. 409. Said section confers upon the municipal board the power "to tax motor
and other vehicles operating within the City of Manila the provisions of any existing law to the contrary
notwithstanding."ItiscontendedthatthispowerisbroadenoughtoconferupontheCityofManilathepowerto
enactanordinanceimposingthepropertytaxonmotorvehiclesoperatingwithinthecitylimits.

InthedecidingtheissuebeforeusitisnecessarytobearinmindthepertinentprovisionsoftheMotorVehicles
Law,asamended,(ActNo.3992)whichhasabearingonthepowerofthemunicipalcorporationtoimposetaxon
motorvehiclesoperatinginanyhighwayinthePhilippines.Thepertinentprovisionsarecontainedinsection70
(b)whichprovideinpart:

NofurtherfeesthanthosefixedinthisActshallbeexactedordemandedbyanypublichighway,bridgeor
ferry, or for the exercise of the profession of chauffeur, or for the operation of any motor vehicle by the
ownerthereof:Provided,however,ThatnothinginthisActshallbeconstruedtoexemptanymotorvehicle
fromthepaymentofanylawfulandequitableinsular,localormunicipalpropertytaximposedthereupon...
.

Notethatundertheabovesectionnofeesmaybeexactedordemandedfortheoperationofanymotorvehicle
other than those therein provided, the only exception being that which refers to the property tax which may be
imposedbyamunicipalcorporation.Thisprovisionisallinclusiveinthatsensethatitappliestoallmotorvehicles.
Inthissense,thisprovisionshouldbeconstruedaslimitingthebroadgrantofpowerconferredupontheCityof
Manila by its Charter to impose taxes. When section 18 of said Charter provides that the City of Manila can
impose a tax on motor vehicles operating within its limit, it can only refers to property tax as a different
interpretationwouldmakeitrepugnanttotheMotorVehicleLaw.

Comingnowtotheordinanceinquestion,wefindthatitstitlereferstoitas"AnOrdinanceLevyingaPropertyTax
onAllMotorVehiclesOperatingWithintheCityofManila",andthatinitssection1itprovidesthatthetaxshould
be1percentadvaloremperannum.Italsoprovidesthattheproceedsofthetax"shallaccruetotheStreetsand
BridgesFundsoftheCityandshallbeexpendedexclusivelyfortherepair,maintenanceandimprovementofits
streetsandbridges."Consideringthewordingusedintheordinanceinthelightinthepurposeforwhichthetaxis
created,canweconsiderthetaxthusimposedaspropertytax,asclaimedbyrespondents?

Whileasaruleanadvaloremtaxisapropertytax,andthisruleissupportedbysomeauthorities,theruleshould
notbetakeninitsabsolutesenseifthenatureandpurposeofthetaxasgatheredfromthecontextshowthatitis
in effect an excise or a license tax. Thus, it has been held that "If a tax is in its nature an excise, it does not
becomeapropertytaxbecauseitisproportionedinamounttothevalueofthepropertyusedinconnectionwith
the occupation, privilege or act which is taxed. Every excise necessarily must finally fall upon and be paid by
propertyandsomaybeindirectlyataxuponpropertybutifitisreallyimposedupontheperformanceofanact,
enjoymentofaprivilege,ortheengaginginanoccupation,itwillbeconsideredanexcise."(26R.C.L.,3536.)It
hasalsobeenheldthat

The character of the tax as a property tax or a license or occupation tax must be determined by its
incidents,andfromthenaturalandlegaleffectofthelanguageemployedintheactorordinance,andnot
bythenamebywhichitisdescribed,orbythemodeadoptedinfixingitsamount.Ifitisclearlyaproperty

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tax,itwillbesoregarded,eventhoughnominallyandinformitisalicenseoroccupationtaxand,onthe
otherhand,ifthetaxislevieduponpersonsonaccountoftheirbusiness,itwillbeconstruedasalicenseor
occupation tax, even though it is graduated according to the property used in such business, or on the
grossreceiptsofthebusiness.(37C.J.,172)

Theordinanceinquestionfallsundertheforegoingrules.Whileitreferstopropertytaxanditisfixedadvalorem
yetwecannotrejecttheideathatitismerelyleviedonmotorvehiclesoperatingwithintheCityofManilawiththe
main purpose of raising funds to be expended exclusively for the repair, maintenance and improvement of the
streetsandbridgesinsaidcity.ThisispreciselywhattheMotorVehicleLaw(ActNo.3992)intendstoprevent,for
thereasonthat,undersaidAct,municipalcorporationalreadyparticipateinthedistributionoftheproceedsthat
areraisedforthesamepurposeofrepairing,maintainingandimprovingbridgesandpublichighway(section73
oftheMotorVehicleLaw).Thisprohibitionisintendedtopreventduplicationintheimpositionoffeesforthesame
purpose.Itisforthisreasonthatwebelievethattheordinanceinquestionmerelyimposesalicensefeealthough
underthecloakofanadvaloremtaxtocircumventtheprohibitionaboveadvertedto.

ItisalsoouropinionthattheordinanceinfringestheruleoftheuniformityoftaxationordainedbyourConstitution.
Note that the ordinance exacts the tax upon all motor vehicles operating within the City of Manila. It does not
distinguish between a motor vehicle for hire and one which is purely for private use. Neither does it distinguish
between a motor vehicle registered in the City of Manila and one registered in another place but occasionally
comes to Manila and uses its streets and public highways. The distinction is important if we note that the
ordinanceintendstoburdenwiththetaxonlythoseregisteredintheCityofManilaasmaybeinferredfromthe
word "operating" used therein. The word "operating" denotes a connotation which is akin to a registration, for
undertheMotorVehicleLawnomotorvehiclecanbeoperatedwithoutpreviouspaymentoftheregistrationfees.
There is no pretense that the ordinance equally applies to motor vehicles who come to Manila for a temporary
stayorforshorterrands,anditcannotbedeniedthattheycontributeinnosmalldegreetothedeteriorationof
thestreetsandpublichighway.Thefactthattheyarebenefitedbytheirusetheyshouldalsobemadetoshare
thecorrespondingburden.Andyetsuchisnotthecase.Thisisaninequalitywhichwefindintheordinance,and
whichrendersitoffensivetotheConstitution.

Wherefore,reversingthedecisionappealedfrom,weherebydeclaretheordinancenullandvoid.

Paras,C.J.,BengzonandTuason,JJ.,concur.
Montemayor,Reyes,JugoandLabrador,JJ.,concurintheresult.

SeparateOpinions

FERIA,J.,concurring:

Iconcuronthegroundthatitisalicensetax.

TheLawphilProjectArellanoLawFoundation

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