Tax+2 Local+Taxation (1)

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-31156 February 27, 1976

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,vs.MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees.

Sabido, Sabido & Associates for appellant.

Provincial Fiscal Zoila M. Redona & Assistant Provincial Fiscal Bonifacio R Matol and Assistant Solicitor General Conrado T. Limcaoco& Solicitor Enrique M. Reyes for appellees.

MARTIN, J.:

This is an appeal from the decision of the Court of First Instance of Leyte in its Civil Case No. 3294, which was certified to Us by theCourt of Appeals on October 6, 1969, as involving only pure questions of law, challenging the power of taxation delegated tomunicipalities under the Local Autonomy Act (Republic Act No. 2264, as amended, June 19, 1959).

On February 14, 1963, the plaintiff-appellant, Pepsi-Cola Bottling Company of the Philippines, Inc., commenced a complaint withpreliminary injunction before the Court of First Instance of Leyte for that court to declare Section 2 of Republic Act No. 2264. 1 otherwiseknown as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23and 27, series of 1962, of the municipality of Tanauan, Leyte, null and void.

On July 23, 1963, the parties entered into a Stipulation of Facts, the material portions of which state that, first , both Ordinances Nos. 23and 27 embrace or cover the same subject matter and the production tax rates imposed therein are practically the same, and second,that on January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed to the Manager of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce compliance by the latter of the provisions of said Ordinance No. 27, series of 1962.

Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies and collects "from soft drinksproducers and manufacturers a tai of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked." 2 For the purpose of computing the taxes due, the person, firm, company or corporation producing soft drinks shall submit to the Municipal Treasurer amonthly report, of the total number of bottles produced and corked during the month. 3

On the other hand, Municipal Ordinance No. 27, which was approved on October 28, 1962, levies and collects "on soft drinks producedor manufactured within the territorial jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces,U.S.) of volume capacity." 4 For the purpose of computing the taxes due, the person, fun company, partnership, corporation or plantproducing soft drinks shall submit to the Municipal Treasurer a monthly report of the total number of gallons produced or manufacturedduring the month. 5

The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.'

On October 7, 1963, the Court of First Instance of Leyte rendered judgment "dismissing the complaint and upholding theconstitutionality of [Section 2, Republic Act No. 2264] declaring Ordinance Nos. 23 and 27 legal and constitutional; ordering the plaintiff to pay the taxes due under the oft the said Ordinances; and to pay the costs."

From this judgment, the plaintiff Pepsi-Cola Bottling Company appealed to the Court of Appeals, which, in turn, elevated the case to Uspursuant to Section 31 of the Judiciary Act of 1948, as amended.

There are three capital questions raised in this appeal:

1. Is Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive?

2. Do Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific taxes?

3. Are Ordinances Nos. 23 and 27 unjust and unfair?


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1. The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independentgovernment, without being expressly conferred by the people. 6 It is a power that is purely legislative and which the central legislativebody cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separationof powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powersmay be delegated to local governments in respect of matters of local concern. 7 This is sanctioned by immemorial practice. 8 Bynecessary implication, the legislative power to create political corporations for purposes of local self-government carries with it thepower to confer on such local governmental agencies the power to tax. 9 Under the New Constitution, local governments are grantedthe autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: "Each localgovernment unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be providedby law." Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power toenact and vest in local governments the power of local taxation.

The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense, would not suffice to invalidate the saidlaw as confiscatory and oppressive. In delegating the authority, the State is not limited 6 the exact measure of that which is exercisedby itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegatedsuch measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted totax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes. 10 This is not to saythough that the constitutional injunction against deprivation of property without due process of law may be passed over under the guiseof the taxing power, except when the taking of the property is in the lawful exercise of the taxing power, as when (1) the tax is for apublic purpose; (2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is within the jurisdiction of thegovernment levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing areprovided. 11 Due process is usually violated where the tax imposed is for a private as distinguished from a public purpose; a tax isimposed on property outside the State, i.e., extraterritorial taxation; and arbitrary or oppressive methods are used in assessing andcollecting taxes. But, a tax does not violate the due process clause, as applied to a particular taxpayer, although the purpose of the taxwill result in an injury rather than a benefit to such taxpayer. Due process does not require that the property subject to the tax or the

amount of tax to be raised should be determined by judicial inquiry, and a notice and hearing as to the amount of the tax and themanner in which it shall be apportioned are generally not necessary to due process of law. 12

There is no validity to the assertion that the delegated authority can be declared unconstitutional on the theory of double taxation. Itmust be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not beexercised. 13 The reason is that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation, ingeneral, is not forbidden by our fundamental law, since We have not adopted as part thereof the injunction against double taxationfound in the Constitution of the United States and some states of the Union. 14 Double taxation becomes obnoxious only where thetaxpayer is taxed twice for the benefit of the same governmental entity 15 or by the same jurisdiction for the same purpose, 16 but not ina case where one tax is imposed by the State and the other by the city or municipality. 17

2. The plaintiff-appellant submits that Ordinance No. 23 and 27 constitute double taxation, because these two ordinances cover thesame subject matter and impose practically the same tax rate. The thesis proceeds from its assumption that both ordinances are validand legally enforceable. This is not so. As earlier quoted, Ordinance No. 23, which was approved on September 25, 1962, levies or

collects from soft drinks producers or manufacturers a tax of one-sixteen (1/16) of a centavo for .every bottle corked, irrespective of thevolume contents of the bottle used. When it was discovered that the producer or manufacturer could increase the volume contents of the bottle and still pay the same tax rate, the Municipality of Tanauan enacted Ordinance No. 27, approved on October 28, 1962,imposing a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The difference between the twoordinances clearly lies in the tax rate of the soft drinks produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked;in Ordinance No. 27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The intention of the MunicipalCouncil of Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the prior Ordinance No. 23, andoperates as a repeal of the latter, even without words to that effect. 18 Plaintiff-appellant in its brief admitted that defendants-appelleesare only seeking to enforce Ordinance No. 27, series of 1962. Even the stipulation of facts confirms the fact that the Acting MunicipalTreasurer of Tanauan, Leyte sought t6 compel compliance by the plaintiff-appellant of the provisions of said Ordinance No. 27, seriesof 1962. The aforementioned admission shows that only Ordinance No. 27, series of 1962 is being enforced by defendants-appellees.Even the Provincial Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance No. 27, series of 1962clearly repeals Ordinance No. 23 as the provisions of the latter are inconsistent with the provisions of the former."

That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage or a specific tax. Undoubtedly, thetaxing authority conferred on local governments under Section 2, Republic Act No. 2264, is broad enough as to extend to almost"everything, accepting those which are mentioned therein." As long as the text levied under the authority of a city or municipalordinance is not within the exceptions and limitations in the law, the same comes within the ambit of the general rule, pursuant to therules of exclucion attehus and exceptio firmat regulum in cabisus non excepti 19 The limitation applies, particularly, to the prohibitionagainst municipalities and municipal districts to impose "any percentage tax or other taxes in any form based thereon nor impose taxeson articles subject to specific tax except gasoline, under the provisions of the National Internal Revenue Code." For purposes of thisparticular limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of thetaxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. 20 But, the imposition of "a taxof one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax islevied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks isconsidered solely for purposes of determining the tax rate on the products, but there is not set ratio between the volume of sales andthe amount of the tax. 21


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effect. To some, it delivered the coup justice to the bogey of double taxation as a constitutional bar to the exercise of the taxing power.It would seem though that in the United States, as with us, its ghost, as noted by an eminent critic, still stalks the juridical stage. 'In a1947 decision, however, we quoted with approval this excerpt from a leading American decision: 'Where, as here, Congress has clearlyexpressed its intention, the statute must be sustained even though double taxation results. 12

So I would view the issues in this suit and accordingly concur in the result.

Footnotes

1 "Sec. 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered cities, municipalities and municipal distr icts shall

have authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or exercising private inchartered cities, municipalities and municipal districts by requiring them to secure licenses at rates fixed by the municipal board or citycouncil of the city, the municipal council of the municipality, or the municipal district council of the municipal district to collect fees andcharges for service rendered by the city, municipality or municipal district; to regulate and impose reasonable for services rendered inconnection with any business, profession occupation being conducted within the city, municipality or municipal district and otherwise to levyfor public purposes, just and uniform taxes, licenses or fees: Provided, That municipalities and municipal districts shall, in no case, imposeany percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline,under the provisions of the National Internal Revenue Code: Provided, however, That no city, municipality or municipal district may levy or impose any of the following:

(a) Residence tax;

(b) Documentary stamp tax;

(c) Taxes on the business of any newspaper engaged in the printing and publication of any newspaper, magazine, review or bulletinappearing at regular interval and having fixed prices for subscription and sale, and which is not published primarily for the purpose of publishing advertisements;

(d) Taxes on persons operating waterworks, irrigation and other public utilities except electric light, heat and power;

(e) Taxes on forest products and forest concessions;

(f) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa

(g) Taxes on income of any kind whatsoever;

(h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof;

(i) Customs duties registration, wharfage on wharves owned by the national government, tonnage and all other kinds of customs fees,charges and dues;

(j) Taxes of any kind on banks, insurance companies, and persons paying franchise tax:

(k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign insurance companies; and

(i) Taxes, fees or levies, of any kind, which in effect impose a burden on exports of Philippine finished, manufactured or processed productsand products of Philippine cottage industries.

2 Section 2.

3 Section 3.

4 Section 2.

5 Section 3.

6 Cooley, The Law of Taxation, Vol. 1, Fourth Edition, 149-150.

7 Pepsi-Cola Bottling Co. of the Phil., Inc. vs. City of Butuan, L-22814, August 28, 1968, 24 SCRA 793-96.

8 Rubi v. Prov. Brd. of Mindoro, 39 Phil. 702 (1919).

9 Cooley, ante at 190.

10 Idem at 198-200.


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11 Malcolm, Philippine Constitutional Law, 513-14.

12 Cooley ante at 334.

13 See footnote 1.

14 Pepsi-Cola Bottling Co. of the Phil. Inc. vs. City of Butuan, 1, 2S 1 4, August 28, 1968, 24 SCRA 793-96. See Sec. 22, Art. VI, 1935

Constitution and Sec. 17 (1), Art. VIII, 1973 Constitution.

15 Commissioner of Internal Revenue v. Lednicky L- 18169, July 31, 1964, 11 SCRA 609.

16 SMB, Inc. v. City of Cebu, L-20312, February 26, 1972, 43 SCRA 280.

17 Punzalan v. Mun. Bd of City of Manila, 50 O.G. 2485; manufacturers Life Ins. Co. v. Meer, 89 Phil. 351 (1951).

18 McQuillin. Municipal Corporations, 3rd. Ed., Vol. 6, at 206.-210.

19 Villanueva v. City of Iloilo, L-26521, December 28, 1968, 26 SCRA 585-86; Nin Bay Mining Co. v. Mun. of Roxas, Palawan, L-20125, July20, 1965, 14 SCRA 663-64.

20 Arabay, Inc. v. CFI of Zamboanga del Norte, et al., L-27684, September 10, 1975.

21 SMB, Inc. v. City of Cebu, ante, Footnote 16.

22 Shell Co. of P.I. Ltd. v. Vao, 94 Phil. 394-95 (1954); Sections 123-148, NIRC; RA No. 953, Narcotic Drugs Law, June 20, 1953.

23 Brief, defendants-appellees, at 14. A regular bottle of Pepsi-Cola soft drinks contains 8 oz., or 192 oz. per case of 24 bottles; a family-sizecontains 26 oz., or 312 oz. per case of 12 bottles.

24 See Pepsi-Cola Bottling Co. of the Phil., Inc. v. City of Butuan, ante, Footnote 14, where the tax rate is P.10 per case of 24 bottles; City of Bacolod v. Gruet, L-18290, January 31, 1963, 7 SCRA 168-69, where the tax is P.03 on every case of bottled Coca-Coal.

25 Northern Philippines Tobacco Corp. v. Mun. of Agoo, La Union, L-26447, January 30, 1971, 31 SCRA 308.

26 William Lines, Inc. v. City of Ozamis, L-350048, April 23, 1974, 56 SCRA 593, Second Division, per Fernando, J.

27 Victorias Milling Co. v. Mun. of Victorias, L-21183, September 27, 1968, 25 SCRa 205.

28 Procter & Gamble Trading Co. v. Mun. of Medina, Misamis Oriental, L-29125, January 31, 1973, 43 SCRA 133-34.

29 Subject of plaintiff-appellant's Motion for Admission and consideration of Essential Newly Dissevered Evidence, dated April 30, 1969.

FERNANDO, J.

1 L-24756, October 31, 1968, 25 SCRA 938.

2 Article XI, Section 5 of the present Constitution.

3 Article VII, Section 10 of the 1935 Constitution.

4 Commonwealth Act 472 entitled: "An Act Revising the General Authority of Municipal Councils and Municipal District Councils to LevyTaxes, Subject to Certain Limitations."

5 Republic Act No. 2264.

6 L-18534, December 24,1964,12 SCRA 611.

7 Ibid, 619. Cf. Cuunjieng v. Potspone, 42 Phil. 818 (1922); De Linan v. Municipal Council of Daet, 44 Phil. 792 (1923); Arquiza Luta v.Municipality of Zamboanga, 50 Phil. 748 (1927; Hercules Lumber Co. v. Zamboanga, 55 Phil. 653 (1931); Yeo Loby v. Zamboanga, 55 Phil.656 (1931); People v. Carreon, 65 Phil. 588 (1939); Yap Tak Wing v. Municipal Board, 68 Phil. 511 (1939); Eastern Theatrical Co. v. Alfonso83 Phil. 852 (1949); De la Rosa v. City of Baguio, 91 Phil. 720 (I!)52); Medina v. City of Baguio, 91 Phil. 854 (1952); Standard-Vacuum OilCo. v. Antigua, 96 Phil. 909 (1955); Municipal Government of Pagsanjan v. Reyes, 98 Phil. 654 (1956), We Wa Yu v. City of Lipa, Phil. 975(1956); Municipality of Cotabato v. Santos, 105 Phil. 963 (1959).


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8 L-14264, April 30, 1963, 7 SCRA 887.

9 Ibid , 892.

10 Ibid .

11 L-24756, October 31, 1968, 25 SCRA 938.

12 Ibid, 943-944.


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Manila

EN BANC

G.R. No. L-21183 September 27, 1968

VICTORIAS MILLING CO., INC., plaintiff-appellant,vs.THE MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS OCCIDENTAL, defendant-appellant.

Hilado & Hilado for plaintiff-appellant.The Provincial Fiscal of Negros Occidental for defendant-appellant.

SANCHEZ, J.:

This case calls into question the validity of Ordinance No. 1, series of 1956, of the Municipality of Victorias, Negros Occidental.

The disputed ordinance was approved by the municipal Council of Victorias on September 22, 1956 by way of an amendment totwo municipal ordinances separately imposing license taxes on operators of sugar centrals 1 and sugar refineries. 2 The changes were:with respect to sugar centrals, by increasing the rates of license taxes; and as to sugar refineries, by increasing the rates of licensetaxes as well as the range of graduated schedule of annual output capacity.

Ordinance No. 1 3 is labeled "An Ordinance Amending Ordinance No. 25, Series of 1953 and Ordinance No. 18, Series of 1947on Sugar Central by Increasing the Rates on Sugar Refinery Mill by Increasing the Range of Graduated Schedule on Capacity AnnualOutput Respectively". It was, as the ordinance itself states, enacted pursuant to the taxing power conferred by Commonwealth Act 472.By Section 1 of the Ordinance: "Any person, corporation or other forms of companies, operating sugar central or engage[d] in themanufacture of centrifugal sugar shall be required to pay the following annual municipal license tax, payable quarterly, to wit: . . ."Section 1 referred to prescribes a wide range of schedule. It starts with a sugar central with mill having an annual output capacity of notless than 50,000 piculs of centrifugal sugar, in which case an annual municipal license tax of P1,000.00 is provided. Depending uponthe annual output capacity the schedule of taxes continues with P2,000.00 progressively upward in twelve other grades until an outputcapacity of 1,500,001 piculs or more shall have been reached. For this, the annual tax is P40,000.00. The tax on sugar refineries islikewise calibrated with similar rates. It also starts with P1,000.00 for a refinery with mill having an annual output capacity of not lessthan 25,000 bags of 100 lbs. of refined sugar. Then, it continues with the second bracket of from 25,001 bags to 75,000 bags of 100lbs. Here, the municipal license tax is P1,500.00. Then follow the other rates in the graduated scale with the ceiling placed at a capacityof 1,750,001 bags or more. The annual municipal license tax for the last mentioned output capacity is P40,000.00.

Of importance are the provisions of Section 1(m) relating to sugar centrals and Section 2(m) covering sugar refineries withspecific reference to the maximum annual license tax, viz :

Section No. 1 Any person, corporation or other forms of Companies, operating Sugar Central or engage[d] in themanufacture of centrifugal sugar shall be required to pay the following annual municipal license tax, payable quarterly, to wit:

x x x x x x x x x

(m) Sugar Central with mill having a capacity of producing an annual output of from 1,500,001 piculs or more shall berequired to pay an annual municipal license tax of P40,000.00.

Section No. 2 Any person, corporation or other forms of Companies shall be required to pay an annual municipallicense tax for the operation of Sugar Refinery Mill at the following rates:

x x x x x x x x x

(m) Sugar Refinery with mill having a capacity of producing an annual output of from 1,750,001 bags of 100 lbs. or moreshall be required to pay an annual municipal license tax of P40,000.00.

For, the production of plaintiff Victorias Milling Co., Inc. in both its sugar central and its sugar refinery located in the Municipalityof Victorias comes within these items in the schedule.

Plaintiff filed suit below 4 to ask for judgment declaring Ordinance No. 1, series of 1956, null and void; ordering the refund of alllicense taxes paid and to be paid under protest; directing the officials of Victorias and the Province of Negros Occidental to observe,during the pendency of the action, the provisions of section 357 of the Revised Manual of Instructions to Treasurers of Provinces, Cities


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and Municipalities, 1954 edition, 5 regarding the treatment of license taxes paid under protest by virtue of a disputed ordinance; andother reliefs. 6

The reasons put forth by plaintiff are that: (a) the ordinance exceeds the amounts fixed in Provincial Circular 12-A issued by theFinance Department on February 27, 1940; (b) it is discriminatory since it singles out plaintiff which is the only operator of a sugar central and a sugar refinery within the jurisdiction of defendant municipality; (c) it constitutes double taxation; and (d) the nationalgovernment has preempted the field of taxation with respect to sugar centrals or refineries.

Upon the complaint as supplemented and amended, and the answer thereto, and following hearing on the merits, the trial courtrendered its judgment. After declaring that "[t]here is no doubt that" the ordinance in question refers to license taxes or fees," and that

"[i]t is settled that a license tax should be limited to the cost of licensing, regulating and surveillance,"7

the trial court ruled that saidlicense taxes in dispute are unreasonable, 8 and held that: "If the defendant has the power to tax the plaintiff for purposes of revenue, itmay do so by proper municipal legislation, but not in the guise of a license tax." 9 The court added: "The Court is not, however, preparedto order the refund of all the license taxes paid by the plaintiff under protest and amounting, up to the second quarter of 1960, toP280,000.00, considering that the plaintiff appears to have agreed to the payment of the license taxes at the rates fixed prior toOrdinance No. 1, series of 1956; that the defendant had evidently not complied with the provisions of Section 357 of the RevisedManual of Instructions to Treasurers of Provinces, Cities and Municipalities, 1954 Edition, as the plaintiff herein seeks an order enjoining the defendant and its appropriate officials to carry out said provisions; that the financial position of the defendant would surelybe disrupted if ordered to refund, while the plaintiff may perhaps easily forego or forget what it had already parted with". 10 It disposes of the suit in the following manner:

WHEREFORE, judgment is rendered (a) declaring that Ordinance No. 1, series of 1956, of the municipality of Victorias,Negros Occidental, is invalid; (b) ordering all officials of the defendant to observe the provisions of Section 357 of the RevisedManual of Instructions to Treasurers of Provinces, Cities and Municipalities, 1954 Edition, with particular reference to any

license taxes paid by the plaintiff under said Ordinance No. 1, series of 1956, after notice of this decision; and (c) ordering thedefendant to refund to the plaintiff any and all such license taxes paid under protest after notice of this decision. 11

Both plaintiff and defendant appealed direct to this Court. Plaintiff questions that portion of the decision denying the refund of thelicense taxes paid under protest in the amount of P280,000 covering the period from the first quarter of 1957 to the second quarter of 1960; and balked at the court's order limiting refund to "any and all such license taxes paid under protest after notice of this decision."Defendant, upon the other hand, challenges the correctness of the court's decision invalidating Ordinance No. 1, series of 1956.

The questions raised in the appeals will be discussed in their proper sequence.

1. We first grapple with the threshold question: Was Ordinance No. 1, series of 1956, passed by defendant's municipal council asa regulatory enactment or as a revenue measure?

The trial court says, and plaintiff seconds, that the amounts set forth in the ordinance in question did exceed the cost of licensing,regulating and surveillance, and that defendant cannot impose a tax for revenue in the guise of a police or a regulatory measure.Our finding, however, is the other way. 1awphl.nt

The ordinance itself recites that its source of taxing power emanates from Commonwealth Act 472, Section 1 of which reads:

Section 1. A municipal council or municipal district council shall have authority to impose municipal license taxes uponpersons engaged in any occupation or business, or exercising privileges in the municipality or municipal district, by requiringthem to secure licenses at rates fixed by the municipal council, or municipal district council, and to collect fees and charges for services rendered by the municipality or municipal district and shall otherwise have power to levy for public local purposes,and for school purposes, including teachers' salaries, just and uniform taxes other than percentage taxes and taxes onspecified articles.

Under the statute just quoted and pertinent jurisprudence, a municipality is authorized to impose three kinds of licenses: (1)license for regulation of useful occupations or enterprises; (2) license for restriction or regulation of non-useful occupations or enterprises; and (3) license for revenue. 12 The first two easily fall within the broad police power granted under the general welfareclause. 13 The third class, however, is for revenue purposes. It is not a license fee, properly speaking, and yet it is generally so termed.It rests on the taxing power. That taxing power must be expressly conferred by statute upon the municipality. 14 It is so granted under Commonwealth Act 472.

To be recalled at this point is that Ordinance No. 1, series of 1956, is but an amendment of Ordinance No. 18, series of 1947, inreference to refineries, and Ordinance No. 25, series of 1953, covering sugar centrals. Ordinance No. 18 imposes "municipal taxes onpersons, firms or corporations operating refinery mills in this municipality." 15 Ordinance No. 25 speaks of municipal taxes "relative to theoutput of the sugar centrals." 16

What are these taxes for? Resolution No. 60 of the municipal council of Victorias, 17 adopted also on September 22, 1956 inconjunction with Ordinance No. 1, series of 1956, furnishes a ready answer. It reads in part:


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WHEREAS, the Municipal Treasurer informed the Municipal Council of the revenue of the Municipality and the heavyobligations which confront it because of the implementation of Minimum Wage Law on the salaries and wages it pays to itsmunicipal employees and laborers thus greatly draining the Municipal Treasury;

WHEREAS, this local administration is committed to the plan of ameliorating the deplorable situation existing in thebarrios, sitios and rural areas by giving them essential and necessary facilities calculated to improve conditions thereat thruimprovements of roads and feeder roads;

WHEREAS, one of the causes of the municipality's financial difficulty is low rates of municipal taxes imposed by some of the ordinances enacted by the local legislative body;

WHEREAS, [in] . . . the ordinances known as Ordinance No. 25, Series of 1953, dealing on the operation of Sugar Central, and Ordinance No. 18, Series of 1947, which exclusively deals with the operation of Sugar Refinery Mill, the rates sogiven are rates suggested and determined by the Provincial Circular No. 12-A, dated February 27, 1940 issued by theDepartment of Finance as regards to Sugar Centrals;

WHEREAS, the Municipal Council has come to the conclusion that the rates provided for in such ordinances are nolonger adequate if made in keeping with the present high cost of living;

WHEREAS, the Municipal Council has also taken cognizance of the fact that the price of sugar per picul today is morethan twice its pre-war average price; . . . . 18

Given the purposes just mentioned, we find no warrant in logic to give our assent to the view that the ordinance in question is

solely for regulatory purpose. Plain is the meaning conveyed. The ordinance is for raising money. To say otherwise is to misread thepurpose of the ordinance. 1awphl.nt

We should not hang so heavy a meaning on the use of the term "municipal license tax". This does not necessarily connote theidea that the tax is imposed as the lower court would want it to mean a revenue measure in the guise of a license tax. For really,this runs counter to the declared purpose to make money.

Besides, the term "license tax" has not acquired a fixed meaning. It is often "used indiscriminately to designate impositionsexacted for the exercise of various privileges." 19 It does not refer solely to a license for regulation. In many instances, it refers to"revenue-raising exactions on privileges or activities." 20 On the other hand, license fees are commonly called taxes. But, legallyspeaking, the latter are "for the purpose of raising revenues," in contrast to the former which are imposed "in the exercise of policepower for purposes of regulation." 21

We accordingly say that the designation given by the municipal authorities does not decide whether the imposition is properly a

license tax or a license fee. The determining factors are the purpose and effect of the imposition as may be apparent from theprovisions of the ordinance. 22 Thus, "[w]hen no police inspection, supervision, or regulation is provided, nor any standard set for theapplicant 23 to establish, or that he agrees to attain or maintain, but any and all persons engaged in the business designated, withoutqualification or hindrance, may come, and a license on payment of the stipulated sum will issue, to do business, subject to noprescribed rule of conduct and under no guardian eye, but according to the unrestrained judgment or fancy of the applicant andlicensee, the presumption is strong that the power of taxation , and not the police power, is being exercised." 24

Precisely because of these considerations the present imposition must be treated as a levy for revenue purposes. A quick glanceat the big amount of maximum annual tax set forth in the ordinance, P40,000.00 for sugar centrals, and P40,000.00 for sugar refineries,will readily convince one that the tax is really a revenue tax. And then, we read in the ordinance nothing which would as much asindicate that the tax imposed is merely for police inspection, supervision or regulation.

Our view that the tax imposed by the ordinance is for revenue purposes finds support in judicial pronouncements which havegained foothold in this jurisdiction. In Standard Vacuum vs. Antigua , 25 this Court had occasion to pass upon a similar ordinance. In

categorical terms, we there stated: "We are satisfied that the graduated license tax imposed by the ordinance in question is anoccupation tax, imposed not under the police or regulatory power of the municipality but by virtue of its taxing power for purposes of revenue, and is in accordance with the last part of Section 1 of Commonwealth Act No. 472. It is, therefore, valid." 26

The present case is not to be analogized with Panaligan vs. City of Tacloban cited in the decision below. 27 For there, theinspection fee sought to be collected upon every head of specified animals to be transported out of the City of Tacloban (P2.00 per hog, P10.00 per cow and 20.00 per carabao) was in reality an export tax specifically withheld from municipal taxing power under Section 2287 of the Revised Administrative Code.

So also do we say that the cases of Pacific Commercial Co. vs. Romualdez , 28 Lacson vs. City of Bacolod , 29 and Santos vs.Municipal Government of Caloocan , 30 used by plaintiff as references, are entirely inopposite. In Pacific Commercial , the tax involved on frozen meat was nullified because tax measures on cold stores were not then within the legislative grant to the City of Manila. InLacson , the City of Bacolod taxed every admission ticket sold in the moviehouses. And justification for this imposition was moored to


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the general welfare clause of the city charter. This Court held the ordinance ultra vires for the reason that the authority to tax cannot bederived from the general welfare clause. In Santos , the taxes in controversy were internal organs fees, meat inspection fees and corralfees, separate from the slaughter or slaughterhouse fees. In annulling the taxes there questioned, this Court declared: "[W]hen theCouncil ordained the payment of internal organs fees, meat inspection fees and corral fees, aside from the slaughter or slaughterhousefees, it overstepped the limits of its statutory grant [Sec. 1, C.A. 655]. Only one fee was allowed by that law to be charged and that wasslaughter or slaughterhouse fees."

In the cases cited then, the tax ordinances did not find plain and clear statutory prop. Such infirmity is not present here.

We, accordingly, rule that Ordinance No. 1, series of 1956, of the Municipality of Victorias, was promulgated not in the exercise of

the municipality's regulatory power but as a revenue measure a tax on occupation or business. The authority to impose such tax isbacked by the express grant of power in Section 1 of Commonwealth Act 472.

2. Not that the disputed ordinance lacks the imprimatur of the Secretary of Finance required in paragraph 2, Section 4, of Commonwealth Act 472. This legal provision necessitates such approval "[w]henever the rate of fixed municipal license taxes onbusinesses not excepted in this Act or otherwise covered by the preceding paragraph and subject to the fixed annual tax imposed insection one hundred eighty-two of the National Internal Revenue Law, is in excess of fifty pesos per annum ; . . . ."

The ordinance here challenged was recommended by the Provincial Board of Negros Occidental in its resolution (No. 1864) of October 26, 1956. 31 And, the Undersecretary of Finance in his letter to the municipal council of Victorias on December 18, 1956approved said ordinance. But considering that it is amendatory in nature, that approval was coupled with the mandate that theordinance "should take effect at the beginning of the ensuing calendar year [1957] pursuant to Section 2309 of the Revised

Administrative Code." 32

3. Plaintiff argues that the municipality is bereft of authority to enact the ordinance in question because the national government"had preempted it from entering the field of taxation of sugar centrals and sugar refineries." 33 Plaintiff seeks refuge in Section 189 of theNational Internal Revenue Code which subjects proprietors or operators of sugar centrals or sugar refineries to percentage tax.

The implausibility of this position is at once apparent. We are not dealing here with percentage tax. Rather, we are concernedwith a tax specifically for operators of sugar centrals and sugar refineries. The rates imposed are based on the maximum annual outputcapacity. Which is not a percentage. Because it is not a share. Nor is it a tax based on the amount of the proceeds realized out of thesale of sugar, centrifugal or refined. 34

What can be said at most is that the national government has preempted the field of percentage taxation. Section 1 of Commonwealth Act 472, while granting municipalities power to levy taxes, expressly removes from them the power to exact"percentage taxes".

It is correct to say that preemption in the matter of taxation simply refers to an instance where the national government elects totax a particular area, impliedly withholding from the local government the delegated power to tax the same field. This doctrine primarilyrests upon the intention of Congress. 35 Conversely, should Congress allow municipal corporations to cover fields of taxation it alreadyoccupies, then the doctrine of preemption will not apply.

In the case at bar, Section 4(1) of Commonwealth Act 472 clearly and specifically allows municipal councils to tax personsengaged in "the same businesses or occupation" on which "fixed internal revenue privilege taxes" are "regularly imposed by theNational Government." With certain exceptions specified in Section 3 of the same statute. Our case does not fall within the exceptions.It would therefore be futile to argue that Congress exclusively reserved to the national government the right to impose the disputedtaxes.

We rule that there is no preemption.

4. Petitioner advances the theory that the ordinance is excessive.

An ordinance carries with it the presumption of validity. The question of reasonableness though is open to judicial inquiry. Muchshould be left thus to the discretion of municipal authorities. Courts will go slow in writing off an ordinance as unreasonable unless theamount is so excessive as to be prohibitive, arbitrary, unreasonable, oppressive, or confiscatory. 36 A rule which has gained acceptanceis that factors relevant to such an inquiry are the municipal conditions as a whole and the nature of the business made subject toimposition. 37

Plaintiff has however not sufficiently proven that, taking these factors together, the license taxes are unreasonable. Thepresumption of validity subsists. For, plaintiff has limited itself to insisting that the amounts levied exceed the cost of regulation and thatthe municipality has adequate funds for the alleged purposes as evidenced by the municipality's cash surplus for the fiscal year ending1956.


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The cost of regulation cannot be taken as a gauge, if the municipality really intended to enact a revenue ordinance. For, "if thecharge exceeds the expense of issuance of a license and costs of regulation, it is a tax." 38 And if it is, and it is validly imposed, as in thiscase, "the rule that license fees for regulation must bear a reasonable relation to the expense of the regulation has no application." 39

And then, a cash surplus alone cannot stop a municipality from enacting a revenue ordinance increasing license taxes inanticipation of municipal needs. Discretion to determine the amount of revenue required for the needs of the municipality is lodged withthe municipal authorities. Again, judicial intervention steps in only when there is a flagrant, oppressive and excessive abuse of power bysaid municipal authorities. 40

Not that defendant municipality was without reason. On February 27, 1940, the Secretary of Finance, later President, Manuel A.

Roxas, issued Provincial Circular 12-A. In that circular, the then Finance Secretary stated that his "Department has reached theconclusion that a tax on the basis of one centavo for every picul of annual output capacity of sugar centrals ... would be just andreasonable." At that time, the price of sugar was around P6.00 per picul. Sixteen years later 1956 when Ordinance No. 1 wasapproved, the market quotation for export sugar ranged from P12.00 to P15.00 per picul. 41 And yet, since then the rate per outputcapacity of a sugar central in Ordinance No. 1 was merely from one centavo to two centavos. There is a statement in the municipality'sbrief 42 that thereafter the price of sugar had never gone below P16.00 per picul; instead it had gone up.

The reasonableness of the ordinance may not be disputed. It is not confiscatory.

There was misapprehension in the decision below in its statement that the increase of rates for refineries was 2,000%. Weshould not overlook the fact that the original maximum rate covering refineries in Ordinance No. 18, series of 1947, was P2,000.00; butthat was only for a refinery with an output capacity of 90,000 or more sacks. Under Section 2(c) of Ordinance No. 1, series of 1956,where the refineries have an output capacity of from 75,001 bags to 100,000 bags, the tax remains at P2,000.00. From here on, theordinance provides for ten more scales for the graduation of the tax depending upon the output capacity (P3,000.00, P4,000.00,

P5,000.00, P10,000.00, P15,000.00, P20,000.00, P25,000.00, P30,000.00, P35,000.00 and P40,000.00). But it is only where a refineryhas an output capacity of 1,750,001 or more bags that the present ordinance imposes a tax of P40,000.00. The happenstance thatplaintiff's refinery is in the last bracket calling upon it to pay P40,000.00 per annum does not make the ordinance in questionunreasonable.

Neither may we tag the ordinance with excessiveness if we consider the capital invested by plaintiff in both its sugar central andsugar refinery and its annual income from both. Plaintiff's capital investment in the sugar central and sugar refinery is more or lessP26,000,000.00. 43 And here are its annual net income: for the year 1956 P3,852,910; for the year 1957 P3,854,520; for the year 1958 P7,230,493; for the year 1959 P5,951,187; and for the year 1960 P7,809,250. 44 If these figures mean anything at all,they show that the ordinance in question is neither confiscatory nor unjust and unreasonable.

5. Upon the averment that in the Municipality of Victorias plaintiff is the only operator of a sugar central and sugar refinery,plaintiff now presses its argument that Ordinance No. 1, series of 1956, is discriminatory. The ordinance does not single out Victorias asthe only object of the ordinance. Said ordinance is made to apply to any sugar central or sugar refinery which may happen to operate in

the municipality. So it is, that the fact that plaintiff is actually the sole operator of a sugar central and a sugar refinery does not make theordinance discriminatory. Argument along the same lines was rejected in Shell Co. of P.I., Ltd. vs. Vao , 45 this Court holding that thecircumstance "that there is no other person in the locality who exercises" the occupation designated as installation manager "does notmake the ordinance discriminatory and hostile, inasmuch as it is and will be applicable to any person or firm who exercises such callingor occupation." And in Ormoc Sugar Company, Inc. vs. Municipal Board of Ormoc City , 46 declaratory relief was sought to test thevalidity of a municipal ordinance which provides a city tax of twenty centavos per picul of centrifugal sugar and one per centum on thegross sale of its derivatives and by-products "produced by the Ormoc Sugar Company, Incorporated, or by any other sugar mill inOrmoc City." Mr. Justice Enrique Fernando, delivering the opinion of this Court, declared that the ordinance did not suffer "from aconstitutional or statutory infirmity." And yet, in Ormoc , it is to be observed that Section 1 of the ordinance spelled out Ormoc Sugar Company, Incorporated specifically by name. Not even the name of plaintiff herein was ever mentioned in the ordinance now disputed.

No discrimination exists.

6. As infirm is plaintiff's stand that its business is not confined to the Municipality of Victorias. It suffices that plantiff engages in a

business or occupation subject to an exaction by the municipality within the territorial boundaries of that municipality. Plaintiff's sugar central and sugar refinery are located within the Municipality of Victorias. In this central and refinery, plaintiff manufactures centrifugalsugar and refined sugar, respectively.

But plaintiff insists that plaintiff's sugar milling and refining operations are not wholly performed within the territorial limits of Victorias. According to plaintiff, transportation of canes from plantation to the mill site, operation and maintenance of telephone system,inspection of crop progress and other related activities, are conducted not only in defendant's municipality but also in the municipalitiesof Cadiz, Manapla, Sagay and Saravia as well. 47 We fail to see the relevance of these facts. Because, if we follow plaintiff'sratiocination, neither Victorias nor any of the municipalities just adverted to would be able to impose the tax. One thing certain, of course, is that the tax is imposed upon the business of operating a sugar central and a sugar refinery. And the situs of that business isprecisely the Municipality of Victorias.


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7. Plaintiff finally impleads double taxation. Its reason is that in computing the amount of taxes to be paid by the sugar refinery thecost of the raw sugar coming from the sugar central is not deducted; ergo , plaintiff is taxed twice on the raw sugar.

Double taxation has been otherwise described as "direct duplicate taxation." 48 For double taxation to exist, "the same propertymust be taxed twice, when it should be taxed but once." 49 Double taxation has also been "defined as taxing the same person twice bythe same jurisdiction for the same thing." 50 As stated in Manila Motor Company, Inc. vs. Ciudad de Manila , 51 there is double taxation"cuando la misma propiedad se sujeta a dos impuestos por la misma entidad o Gobierno, para el mismo fin y durante el mismo periodode tiempo."

With the foregoing precepts in mind, we find no difficulty in saying that plaintiff's argument on double taxation does not inspire

assent. First . The two taxes cover two different objects. Section 1 of the ordinance taxes a person operating sugar centrals or engagedin the manufacture of centrifugal sugar. While under Section 2, those taxed are the operators of sugar refinery mills. One occupation or business is different from the other. Second . The disputed taxes are imposed on occupation or business. Both taxes are not on sugar.The amount thereof depends on the annual output capacity of the mills concerned, regardless of the actual sugar milled. Plaintiff'sargument perhaps could make out a point if the object of taxation here were the sugar it produces, not the business of producing it.

There is no double taxation.

For the reasons given

The judgment under review is hereby reversed; and

Judgment is hereby rendered: (a) declaring valid and subsisting Ordinance No. 1, series of 1956, of the Municipality of Victorias,

Province of Negros Occidental; and (b) dismissing plaintiff's complaint as supplemented and amended. Costs against plaintiff. Soordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Angeles, Fernando and Capistrano, JJ., concur.

Footnotes

1Ordinance No. 25, series of 1953, Exhibit 3.

2Ordinance No. 18, series of 1947, Exhibit 2.

3Exhibit 1.

4Civil Case No. 5565, Court of First Instance of Negros Occidental, entitled "Victorias Milling Co., Inc., Plaintiff, versus The Municipality of Victorias, Province of Negros Occidental, Defendant". The complaint was supplemented and amended.

5". . . Section 357 of the Revised Manual of Instructions to Treasurers of Provinces, Cities and Municipalities, promulgated under the directionof the Auditor General, 1954 edition, ... provides that:

'Tax ordinance under controversy. Until declared illegal or void by a competent court, or otherwise revoked by the councilor board from which it originated or which exercised authority over the same, a tax ordinance will be enforced in accordance with itsprovisions. Collection of taxes therein prescribed will be made even if the legality of the same should be impugned or any of itsprovisions be challenged or be under controversy. All protested collections, however, provided that the fact of said protest is madeto appear on the receipt wherein payment has been acknowledged, will be taken up in the accounts as Undistributed Income, B-3-1.Upon final determination of the protest, a reversion entry will then be made, either by debiting the collection to the correspondingrevenue account or crediting Cash if the protest has been considered in favor of the protestant and the amount protested is to bereturned to him.'" Record on Appeal, pp. 11-12.

6Record on Appeal, pp. 12-14.

7Id ., p. 70.

8Id ., p. 72.

9Id ., p. 73.

10Id .

11 Id ., pp. 73-74.

12See: Cu Unjieng vs. Patstone, 42 Phil. 818, 828-830.


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13"Sec. 2238. General power of council to enact ordinances and make regulations . The municipal council shall enact such ordinances andmake such regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon itby law and such as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace,good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of property therein." Revised

Administrative Code.

14Section 2287, Revised Administrative Code; Cu Unjieng vs. Patstone, supra , at p. 831; Pacific Commercial Co. vs. Romualdez, 49 Phil. 917,926; City of Iloilo vs. Villanueva, 105 Phil. 337, 340; People vs. Felisarta, L-15346, June 29, 1962.

15Emphasis supplied.


17Exhibit G.


19McQuillin, Municipal Corporations, 3rd. ed., Vol. 9, Chapter 26, p. 62.

20Ibid .

21Compaia General de Tabacos de Filipinas vs. City of Manila, L-16619, June 29, 1963.

2219 R.C.L., pp. 951-952.

23 Applicant for permit or license to do business.

2419 R.C.L., p. 952; emphasis supplied.

2596 Phil. 909, 911.

26Same ruling: Municipality of Cotabato vs. Santos, 105 Phil. 963, 966.

27L-9319, September 27, 1957; Plaintiff's Brief as Appellant, p. 22; Record on Appeal, p. 70.

28Supra , at p. 926; Plaintiff's Brief as Appellee, p. 47.

29L-15892, April 23, 1962; Plaintiff's Brief as Appellee, pp. 23, 26.

30L-15807, April 22, 1963; Plaintiff's Brief as Appellee, p . 47.

31Exhibit 6-A.

32Exhibit 6.

33Plaintiff's Brief as Appellant, p. 42.

34See: Shell Co. of P.I., Ltd. vs. Vao, 94 Phil, 389, 394-395.

35Plaintiff's Brief as Appellant, pp. 43-44, citing Yorkley on Municipal Corporations, p. 361.

3664 C.J.S., pp. 646-647.

37McQuillin, op. cit. , p. 65.

38Ibid . p. 29.

39Ibid ., p. 71.

4038 Am. Jur., p. 42.

41Resolution 1864 dated October 26, 1956 of the Provincial Board, Exhibit 6-A.


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42 At p. 36.

43Tr. (Antenero), p. 83.

44Exhibit 8.

45Supra , at p. 393. See also: Cooley on Taxation, 4th ed., Vol. I, p. 747.

46L-24322, July 21, 1967; 1967C Phild. 116, 119.

47Plaintiff's Brief as Appellant, pp. 36-37.

48Cooley, op. cit. , p. 475.

49Ibid ., citing Attorney General vs. Supervisors of Sanilac County, 71 Mich. 16, 38 N.W. 639.

50Ibid ., citing Harvey Coal & Coke Co. vs. Dillon, 59 W. Va. 605, 53 S.E. 928.

5172 Phil. 336, 339, citing Cooley on Taxation, Vol. I, pp. 475-479; emphasis supplied.


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Manila

FIRST DIVISION

G.R. No. L-28138 August 13, 1986

MATALIN COCONUT CO., INC., petitioner-appellee,vs.THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M. BALINDONG and HADJI PANGILAMUN MANALOCON,MUNICIPAL MAYOR and MUNICIPAL TREASURER OF MALABANG, LANAO DEL SUR, respondents-appellants. PURAKANPLANTATION COMPANY, intervenor-appellee.

YAP, J.:

On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the authority of Section 2 of Republic Act No. 2264,otherwise known as the Local Autonomy Act, enacted Municipal Ordinance No. 45-46, entitled "AN ORDINANCE IMPOSING APOLICE INSPECTION FEE OF P.30 PER SACK OF CASSAVA STARCH PRODUCED AND SHIPPED OUT OF THE MUNICIPALITYOF MALABANG AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF." The ordinance made it unlawful for any person,company or group of persons "to ship out of the Municipality of Malabang, cassava starch or flour without paying to the MunicipalTreasurer or his authorized representatives the corresponding fee fixed by (the) ordinance." It imposed a "police inspection fee" of P.30per sack of cassava starch or flour, which shall be paid by the shipper before the same is transported or shipped outside themunicipality. Any person or company or group of individuals violating the ordinance "is liable to a fine of not less than P100.00, but notmore than P1,000.00, and to pay Pl.00 for every sack of flour being illegally shipped outside the municipality, or to suffer imprisonmentof 20 days, or both, in the discretion of the court.

The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a petition for declaratory relief filed with the then Court of First Instance of Lanao del Sur against the Municipal Council, the Municipal Mayor and the Municipal Treasurer of Malabang, Lanao delSur. Alleging among others that the ordinance is not only ultra vires, being violative of Republic Act No. 2264, but also unreasonable,oppressive and confiscatory, the petitioner prayed that the ordinance be declared null and void ab initio, and that the respondentMunicipal Treasurer be ordered to refund the amounts paid by petitioner under the ordinance. The petitioner also prayed that during thependency of the action, a preliminary injunction be issued enjoining the respondents from enforcing the ordinance. The application for preliminary injunction, however, was denied by the trial court; instead respondent Municipal Treasurer was ordered to allow payment of the taxes imposed by the ordinance under protest.

Claiming that it was also adversely affected by the ordinance, Purakan Plantation Company was granted leave to intervene in theaction. The intervenor alleged that while its cassava flour factory was situated in another municipality, i.e., Balabagan, Lanao del Sur, ithad to transport the cassava starch and flour it produced to the seashore through the Municipality of Malabang for loading in coastwisevessels; that the effect of the enactment of Ordinance No. 45-46, is that intervenor had to refrain from transporting its products throughthe Municipality of Malabang in order to ship them by sea to other places.

After trial, the Court a quo rendered a decision declaring the municipal ordinance in question null and void; ordering the respondentMunicipal Treasurer to refund to the petitioner the payments it made under the said ordinance from September 27, 1966 to May 2,1967, amounting to P 25,500.00, as well as all payments made subsequently thereafter; and enjoining and prohibiting the respondents,their agents or deputies, from collecting the tax of P.30 per bag on the cassava flour or starch belonging to intervenor, PurakanPlantation Company, manufactured or milled in the Municipality of Balabagan, but shipped out through the Municipality of Malabang.

After the promulgation of the decision, the Trial Court issued a writ of preliminary mandatory injunction, upon motion of petitioner,requiring the respondent Municipal Treasurer to deposit with the Philippine National Bank, Iligan Branch, in the name of the Municipalityof Malabang, whatever amounts the petitioner had already paid or shall pay pursuant to the ordinance in question up to and until finaltermination of the case; the deposit was not to be withdrawn from the said bank without any order from the court. On motion for reconsideration by respondents, the writ was subsequently modified on July 20, 1967, to require the deposit only of amounts paid fromthe effectivity of the writ up to and until the final termination of the suit.

From the decision of the trial court, the respondents appealed to this Court.

A motion to dismiss appeal filed by petitioner-appellee, was denied by this court in its resolution of October 31, 1967. Subsequently,respondents-appellants filed a motion to dissolve the writ of preliminary mandatory injunction issued by the trial court on July 20, 1967.This motion was also denied by this Court on January 10, 1968.

Of the assignments of error raised by the appellants in their Brief, only the following need be discussed: (1) that the trial court erred inadjudicating the money claim of the petitioner in an action for declaratory relief; and (2) that the trial court erred in declaring themunicipal ordinance in question null and void.


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The respondents-appellants maintain that it was error for the trial court, in an action for declaratory relief, to order the refund topetitioner-appellee of the amounts paid by the latter under the municipal ordinance in question. It is the contention of respondents-appellants that in an action for declaratory relief, all the court can do is to construe the validity of the ordinance in question and declarethe rights of those affected thereby. The court cannot declare the ordinance illegal and at the same time order the refund to petitioner of the amounts paid under the ordinance, without requiring petitioner to file an ordinary action to claim the refund after the declaratoryrelief judgment has become final. Respondents maintain that under Rule 64 of the Rules of Court, the court may advise the parties tofile the proper pleadings and convert the hearing into an ordinary action, which was not done in this case.

We find no merit in such contention. Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an ordinary actionand the parties allowed to file such pleadings as may be necessary or proper, if before the final termination of the case "a breach or

violation of an...ordinance, should take place." In the present case, no breach or violation of the ordinance occurred. The petitioner decided to pay "under protest" the fees imposed by the ordinance. Such payment did not affect the case; the declaratory relief actionwas still proper because the applicability of the ordinance to future transactions still remained to be resolved, although the matter couldalso be threshed out in an ordinary suit for the recovery of taxes paid (Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680, March 20, 1959). In its petition for declaratory relief, petitioner-appellee alleged that by reason of the enforcement of themunicipal ordinance by respondents it was forced to pay under protest the fees imposed pursuant to the said ordinance, andaccordingly, one of the reliefs prayed for by the petitioner was that the respondents be ordered to refund all the amounts it paid torespondent Municipal Treasurer during the pendency of the case. The inclusion of said allegation and prayer in the petition was notobjected to by the respondents in their answer. During the trial, evidence of the payments made by the petitioner was introduced.Respondents were thus fully aware of the petitioner's claim for refund and of what would happen if the ordinance were to be declaredinvalid by the court.

Respondents' contention, if sustained, would in effect require a separate suit for the recovery of the fees paid by petitioner under protest. Multiplicity of suits should not be allowed or encouraged and, in the context of the present case, is clearly uncalled for andunnecessary.

The main issue to be resolve in this case whether not Ordinance No. 45-66 enacted by respondent Municipal Council of Malabang,Lanao del Sur, is valid. The respondents-appellants contend that the municipality has the power and authority to approve the ordinancein question pursuant to Section 2 of the Local Autonomy Act (Republic Act No. 2264).

Since the enactment of the Local Autonomy Act, a liberal rule has been followed by this Court in construing municipal ordinancesenacted pursuant to the taxing power granted under Section 2 of said law. This Court has construed the grant of power to tax under theabove-mentioned provision as sufficiently plenary to cover "everything, excepting those which are mentioned" therein, subject only tothe limitation that the tax so levied is for public purposes, just and uniform (Nin Bay Mining Company vs. Municipality of Roxas,Province of Palawan, 14 SCRA 661; C.N. Hodges vs. Municipal Board, Iloilo City, et al., 19 SCRA 28).

We agree with the finding of the trial court that the amount collected under the ordinance in question partakes of the nature of a tax,although denominated as "police inspection fee" since its undeniable purpose is to raise revenue. However, we cannot agree with thetrial court's finding that the tax imposed by the ordinance is a percentage tax on sales which is beyond the scope of the municipality'sauthority to levy under Section 2 of the Local Autonomy Act. Under the said provision, municipalities and municipal districts areprohibited from imposing" any percentage tax on sales or other taxes in any form based thereon . " The tax imposed under theordinance in question is not a percentage tax on sales or any other form of tax based on sales. It is a fixed tax of P.30 per bag of cassava starch or flour "shipped out" of the municipality. It is not based on sales.

However, the tax imposed under the ordinance can be stricken down on another ground. According to Section 2 of the abovementioned Act, the tax levied must be "for public purposes, just and uniform" (Emphasis supplied.) As correctly held by the trial court, the so-called"police inspection fee" levied by the ordinance is "unjust and unreasonable." Said the court a quo:

... It has been proven that the only service rendered by the Municipality of Malabang, by way of inspection, is for thepoliceman to verify from the driver of the trucks of the petitioner passing by at the police checkpoint the number of bags loaded per trip which are to be shipped out of the municipality based on the trip tickets for the purpose of computing the total amount of tax to be collect (sic) and for no other purpose. The pretention of respondents that thepolice, aside from counting the number of bags shipped out, is also inspecting the cassava flour starch contained inthe bags to find out if the said cassava flour starch is fit for human consumption could not be given credence by theCourt because, aside from the fact that said purpose is not so stated in the ordinance in question, the policemen of said municipality are not competent to determine if the cassava flour starch are fit for human consumption. Thefurther pretention of respondents that the trucks of the petitioner hauling the bags of cassava flour starch from the millto the bodega at the beach of Malabang are escorted by a policeman from the police checkpoint to the beach for thepurpose of protecting the truck and its cargoes from molestation by undesirable elements could not also be givencredence by the Court because it has been shown, beyond doubt, that the petitioner has not asked for the said policeprotection because there has been no occasion where its trucks have been molested, even for once, by badelements from the police checkpoint to the bodega at the beach, it is solely for the purpose of verifying the correctnumber of bags of cassava flour starch loaded on the trucks of the petitioner as stated in the trip tickets, whenunloaded at its bodega at the beach. The imposition, therefore, of a police inspection fee of P.30 per bag, imposed bysaid ordinance is unjust and unreasonable.


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The Court finally finds the inspection fee of P0.30 per bag, imposed by the ordinance in question to be excessive andconfiscatory. It has been shown by the petitioner, Matalin Coconut Company, Inc., that it is merely realizing amarginal average profit of P0.40, per bag, of cassava flour starch shipped out from the Municipality of Malabangbecause the average production is P15.60 per bag, including transportation costs, while the prevailing market price isP16.00 per bag. The further imposition, therefore, of the tax of P0.30 per bag, by the ordinance in question wouldforce the petitioner to close or stop its cassava flour starch milling business considering that it is maintaining a biglabor force in its operation, including a force of security guards to guard its properties. The ordinance, therefore, hasan adverse effect on the economic growth of the Municipality of Malabang, in particular, and of the nation, in general,and is contrary to the economic policy of the government.

Having found the ordinance in question to be invalid, we find it unnecessary to rule on the other errors assigned by the appellants.

WHEREFORE, petition is dismissed. The decision of the court a quo is hereby affirmed. No costs.

SO ORDERED.

Narvasa, Melencio-Herrera, Cruz and Paras, JJ., concur.


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Manila

THIRD DIVISION

G.R. No. L-52019 August 19, 1988

ILOILO BOTTLERS, INC., plaintiff-appellee,vs.CITY OF ILOILO, defendant-appellant.

Efrain B. Trenas for plaintiff-appellee.

Diosdado Garingalao for defendant-appellant.

CORTES, J.:

The fundamental issue in this appeal is whether the Iloilo Bottlers, Inc. which had its bottling plant in Pavia, Iloilo, but which soldsoftdrinks in Iloilo City, is liable under Iloilo City tax Ordinance No. 5, series of 1960, as amended, which imposes a municipal licensetax on distributors of soft-drinks.

On July 12,1972, Iloilo Bottlers, Inc. filed a complaint docketed as Civil Case No. 9046 with the Court of First Instance of Iloilo prayingfor the recovery of the sum of P3,329.20, which amount allegedly constituted payments of municipal license taxes under Ordinance No.5 series of 1960, as amended, that the company paid under protest.

On November 15,1972, the parties submitted a partial stipulation of facts, the material portions of which state

xxx xxx xxx

2. That plaintiff is engaged in the business of bottling softdrinks under the trade name of Pepsi Cola And 7-up andselling the same to its customers, with a bottling plant situated at Barrio Ungca Municipality of Pavia, Iloilo,Philippines and which is outside the jurisdiction of defendant;

3. That defendant enacted an ordinance on January 11, 1960 known as Ordinance No. 5, Series of 1960 whichordinance was successively amended by Ordinance No. 28, Series of 1960; Ordinance No. 15, Series of 1964; andOrdinance No. 45, Series of 1964; which provides as follows:

Section l. Any person, firm or corporation engaged in the distribution, manufacture or bottling of coca-cola, pepsicola, tru-orange, seven-up and other soft drinks within the jurisdiction of the City of Iloilo, shall pay a municipal licensetax of ten (P0.10) centavos for every case of twenty-four bottles; PROVIDED, HOWEVER, that softdrinks sold to thepublic at not more than five (P0.05) centavos per bottle shall pay a tax of one and one half (P0.015) (centavos) per case of twenty four bottles.

Section 1-AFor purposes of this Ordinance, all deliveries and/or dispatches emanating or made at the plant and allgoods or stocks taken out of the plant for distribution, sale or exchange irrespective (of) where it would take placeshall be covered by the operation of this Ordinance.

4. That prior to September, 1966, Santiago Syjuco Inc., owned and operated a bottling plant at Muelle Loney Street,Iloilo City, which was doing business under the name of Seven-up Bottling Company of the Philippines and bottledthe soft-drinks Pepsi-Cola and 7-up; however sometime on September 14,1966, Santiago Syjuco, Inc., informed allits employees that it (was) closing its Iloilo Plant due to financial losses and in fact closed the same and later sold theplant to the plaintiff Iloilo Bottlers, Inc.

5. That thereafter, plaintiff operated the said plant by bottling the soft drinks Pepsi-Cola and 7-up; however, sometimein July 1968, plaintiff closed said bottling plant at Muelle Loney, Iloilo City, and transferred its bottling operations to itsnew plant in Barrio Ungca, Municipality of Pavia, Province of Iloilo, and which is outside the jurisdiction of the City of Iloilo;

6. That from the time of (the) enactment (of the ordinance), the Seven Up Bottling Company of the Philippines under Santiago Syjuco Inc., had been religiously paying the defendant City of Iloilo the abovementioned municipal licensetax due therefrom for bottler because its bottling plant was then still situated at Muelle Loney St., Iloilo City; but the


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plaintiff stopped paying the municipal license tax (after) October 21, 1968 (when) it transferred its plant to BarrioUngca Municipality of Pavia, Iloilo which is outside the jurisdiction of the City of Iloilo;

7. That sometime on July 31, 1969, the defendant demanded from the plaintiff the payment of the municipal licensetax under the above-mentioned ordinance, a xerox copy of the said letter is attached to the complaint as Annex "A"and made an integral part hereof by reference.

8. That plaintiff explained in a letter to the defendant that it could not anymore be liable to pay the municipal licensefee because its bottling plant (was) not anymore inside the City of Iloilo, and that moreover, since it itself (sold) itsown products to its (customers) directly, it could not be considered as a distributor in line with the doctrines

enunciated by the Supreme Court in the cases of City of Manila vs. Bugsuk Lumber Co., L- 8255, July 11, 1957;Manila Trading & Supply Co., Inc. vs. City of Manila L-1 2156, April 29, 1959; Central Azucarera de Don Pedro vs.City of Manila et al., G.R. No. L7679, September 29,1955; Cebu Portland Cement vs. City of Manila and CityTreasurer of Manila, L-1 4229,July 26,1960. A xerox copy of the said letter is attached as Annex "B" to the complaintand made an integral part hereof by reference. As a result of the said letter of the plaintiff, the defendant did notanymore press the plaintiff to pay the said municipal license tax;

9. That sometime on January 25, 1972, the defendant demanded from the plaintiff compliance with the saidordinance for 1972 in view of the fact that it was engaged in distribution of the softdrinks in the City of Iloilo, and itfurther demanded from the plaintiff payment of back taxes from the time it transferred its bottling plant to theMunicipality of Pavia, Iloilo;

10. That the plaintiff demurred to the said demand of the defendant raising as its jurisdiction the reason that itsbottling plant is situated outside the City of Iloilo and as bottler could not be considered as distributor under the said

ordinance although it sells its product directly to the consumer, in line with the jurisprudence enunciated by theSupreme Court but due to insistence of the defendant, the plaintiff paid on April 20, 1972, the first quarter payment of the municipal licence tax in the sum of P3,329.20, under protest, and thereafter has been paying defendant everyquarter under protest;

11. That on June l5, 1972,the defendant informed the plaintiff that it must pay all the taxes due since July, 1968 up tothe last quarter of 1971, otherwise it shall be constrained to cancel the operation of the business of the plaintiff, andbecause of this threat, and so as not to occasion disruption of its business operation, the plaintiff under protestagreed to the payment of the back taxes, on staggered basis, which was acceded to by the defendant;

12. That as computed by the plaintiff the following are its softdrinks sold in Iloilo City since it transferred its bottlingplant from the City of Iloilo to Barrio Ungca Pavia, Iloilo in July 1968, to wit:

No. of Cases sold

SEVEN-UP

PEPSI-COLA

TOTAL

1968 Jul toDec

39,340 49,060 88,400 P

1969 Jan. toDec.

81,240 87,660 168,900

1970 Jan. toDec.

79,389 89,211 168,600

1971 Jan. toDec.

80,670 88,480 169,150

TOTAL 280,639 314,411

595,050


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13. That the plaintiff does not maintain any store or commercial establishment in the City of Iloilo from which itdistributes its products, but by means of a fleet of delivery trucks, plaintiff distributes its products from its bottling plantat Barrio Ungca Municipality of Pavia, Iloilo, directly to its customers in the different towns of the Province of Iloilo aswell as the City of Iloilo;

14. That the plaintiff is already paying the National Government a percentage Tax of 71/t, as manufacturer's sales taxon all the softdrinks it manufactures as follows:

O.R. No. 4683995 - January, 1972 Sales P17,222.90

O.R. No. 5614767 - February " " 17,024.81

O.R. No. .5614870 - March " " 17,589.19

O.R. No. 5614891 - April " " 18,726.77

O.R. No. 5614897 - May " " 16,710.99

O.R. No. 5614935 - June " " 14,791.20

O.R. No. 5614967 - July " " 13,952.00

O.R. No. 5614973 - August " " 15,726.16

O.R. No. 56'L4999 - September " " 19,159.54

and is also paying the municipal license tax to the municipality of Pavia, Iloilo in the amount of P l0,000.00 every year,plus a municipal license tax for engaging in its business to the municipality of Pavia in its amount of P2,000.00 everyyear.

xxx xxx xxx

[Rollo, P. 10 (Record on Appeal, pp. 25-31)]

On the basis of the above stipulations, the court a quo rendered on January 26, 1973 a decision in favor of Iloilo Bottlers, Inc. declaring

the Corporation not liable under the ordinance and directing the City of Iloilo to pay the sum of' P3,329.20. The decision was amendedin an Order dated March 15, 1973, so as to include the amounts paid by the company after the filing of the complaint. The City of Iloiloappealed to the Court of Appeals which certified the case to this Court.

The tax ordinance imposes a tax on persons, firms, and corporations engaged in the business of:

1. distribution of soft-drinks

2. manufacture of soft-drinks, and

3. bottling of softdrinks within the territorial jurisdiction of the City of Iloilo.

There is no question that after it transferred its plant to Pavia, Iloilo province, Iloilo Bottlers, Inc. no longer manufactured/bottled its

softdrinks within Iloilo City. Thus, it cannot be taxed as one falling under the second or the third type of business. The resolution of thiscase therefore hinges on whether the company may be considered engaged in the distribution of softdrinks in Iloilo City, even after ithad transferred its bottling plant to Pavia, so as to be within the purview of the ordinance.

Iloilo Bottlers, Inc. disclaims liability on two grounds: First, it contends that since it is not engaged in the independent business of distributing soft-drinks, but that its activity of selling is merely an incident to, or is a necessary consequence of its main or principalbusiness of bottling, then it is NOT liable under the city tax ordinance. Second, it claims that only manufacturers or bottlers having their plants inside the territorial jurisdiction of the city are covered by the ordinance.

The second ground is manifestly devoid of merit. It is clear from the ordinance that three types of activities are covered: (1) distribution,(2) manufacture and (3) bottling of softdrinks. A person engaged in any or all of these activities is subject to the tax.

The first ground, however, merits serious consideration.


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This Court has always recognized that the right to manufacture implies the right to sell/distribute the manufactured products [SeeCentral Azucarera de Don Pedro v. City of Manila and Sarmiento, 97 Phil. 627 (1955); Caltex (Philippines), Inc. v. City of Manila andCudiamat, G.R. No. L-22764, July 28, 1969, 28 SCRA 840, 843.] Hence, for tax purposes, a manufacturer does not necessarilybecome engaged in the separate business of selling simply because it sells the products it manufactures. In certain cases, however, amanufacturer may also be considered as engaged in the separate business of selling its products.

To determine whether an entity engaged in the principal business of manufacturing, is likewise engaged in the separate business of selling, its marketing system or sales operations must be looked into.

In several cases [See Central Azucarera de Don Pedro v. City of Manila and Sarmiento, supra ; Cebu Portland Cement Co. v. City of

Manila and the City Treasurer, 108 Phil. 1063 (1960); Caltex (Philippines), Inc. v. City of Manila and Cudiamat, supra ], this Court hadoccasion to distinguish two marketing systems:

Under the first system, the manufacturer enters into sales transactions and invoices the sales at its main office where purchase ordersare received and approved before delivery orders are sent to the company's warehouses, where in turn actual deliveries are made. Nowarehouse sales are made; nor are separate stores maintained where products may be sold independently from the main office. Thewarehouses only serve as storage sites and delivery points of the products earlier sold at the main office. Under the second system,sales transactions are entered into and perfected at stores or warehouses maintained by the company. Any one who desires topurchase the product may go to the store or warehouse and there purchase the merchandise. The stores and warehouses serve asselling centers.

Entities operating under the first system are NOT considered engaged in the separate business of selling or dealing in their products,independent of their manufacturing business. Entities operating under the second system are considered engaged in the separatebusiness of selling.

In the case at bar, the company distributed its softdrinks by means of a fleet of delivery trucks which went directly to customers in thedifferent places in lloilo province. Sales transactions with customers were entered into and sales were perfected and consummated byroute salesmen. Truck sales were made independently of transactions in the main office. The delivery trucks were not used solely for the purpose of delivering softdrinks previously sold at Pavia. They served as selling units. They were what were called, until recently,"rolling stores". The delivery trucks were therefore much the same as the stores and warehouses under the second marketing system.Iloilo Bottlers, Inc. thus falls under the second category above. That is, the corporation was engaged in the separate business of sellingor distributing soft-drinks, independently of its business of bottling them.

The tax imposed under Ordinance No. 5 is an excise tax. It is a tax on the privilege of distributing, manufacturing or bottling softdrinks.Being an excise tax, it can be levied by the taxing authority only when the acts, privileges or businesses are done or performed withinthe jurisdiction of said authority [Commissioner of Internal Revenue v. British Overseas Airways Corp. and Court of Appeals, G.R. Nos.65773-74, April 30, 1987, 149 SCRA 395, 410.] Specifically, the situs of the act of distributing, bottling or manufacturing softdrinks mustbe within city limits, before an entity engaged in any of the activities may be taxed in Iloilo City.

As stated above, sales were made by Iloilo Bottlers, Inc. in Iloilo City. Thus, We have no option but to declare the company liable under the tax ordinance.

With the foregoing discussion, it becomes unnecessary to discuss the other issues raised by the parties.

WHEREFORE, the appealed decision is hereby REVERSED. The complaint in Civil Case No. 9046 is ordered DISMISSED. No Costs.

SO ORDERED.

Fernan, C.J., Feliciano and Bidin, JJ., concur.

Gutierrez, Jr., J., took no part.


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THIRD DIVISION

[G.R. No. 126232. November 27, 1998]

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVEZ, and MANUEL DJ SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL ADVISE, respectively, petitioners, vs.THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), PUBLIC CEMENT CORPORATION, respondents

D E C I S I O N

ROMERO, J .:

Before us is a petition for certiorari seeking the reversal of the decision of the Court of Appeals dated September 27, 1995 declaringpetitioner without authority to levy taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands, as wellas the August 26, 1996 resolution of the appellate court denying its motion for reconsideration.

The facts are as follows:

On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, known as "An ordinance Enactingthe Revenue Code of the Bulacan Province," which was to take effect on July 1, 1992, section 21 of the ordinance provides as follows:

Section 21. Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry resources, such, but not limited to marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and other public waters within itsterritorial jurisdiction. (Italics ours)

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed private respondent RepublicCement Corporation (hereafter Republic Cement) P2,524,692.13 for extracting limestone, shale and silica from several parcels of

private land in the province during the third quarter of 1992 until the second quarter of 1993. Believing that the province, on the basis of above-said ordinance, had no authority to impose taxes on quarry resources extracted from private lands, Republic Cement formallycontested the same on December 23, 1993. The same was, however, denied by the Provincial Treasurer on January 17, 1994.Republic Cement, consequently filed a petition for declaratory relief with the Regional Trial Court of Bulacan on February 14, 1994.The province filed a motion to dismiss Republic Cement's petition, which was granted by the trial court on May 13, 1993, which ruledthat declaratory relief was improper, allegedly because a breach of the ordinance had been committed by Republic Cement.

On July 11, 1994, Republic Cement filed a petition for certiorari with the Supreme Court seeking to reverse the trial court's dismissal of their petition. The Court, in a resolution dated July 27, 1994, referred the same to the Court of Appeals, where it was docketed as CAG.R. SP No. 34915. The appellate court required petitioners to file a comment, which they did on September 7, 1994.

In the interim , the Province of Bulacan issued a warrant of levy against Republic Cement, allegedly because of its unpaid tax liabilities.Negotiations between Republic Cement and petitioners resulted in an agreement and modus vivendi on December 12, 1994, wherebyRepublic Cement agreed to pay under protest P1,262,346.00, 50% of the tax assessed by petitioner, in exchange for the lifting of thewarrant of levy. Furthermore, Republic Cement and petitioners agreed to limit the issue for resolution by the Court of Appeals to thequestion as to whether or not the provincial government could impose and/or assess taxes on quarry resources extracted by RepublicCement from private lands pursuant to Section 21 of the Provincial Ordinance No. 3. This agreement and modus vivendi wereembodied in a joint manifestation and motion signed by Governor Roberto Pagdanganan, on behalf of the Province of Bulacan, byProvincial Treasurer Florence Chavez, and by Provincial Legal Officer Manuel Siayngco, as petitioner's counsel and filed with the Courtof Appeals on December 13, 1994. In a resolution dated December 29, 1994, the appellate court approved the same and limited theissue to be resolved to the question whether or not the provincial government could impose taxes on stones, sand, gravel, earth andother quarry resources extracted from private lands.

After due trial, the Court of Appeals, on September 27, 1995, rendered the following judgment:

WHEREFORE, judgment is hereby rendered declaring the Province of Bulacan under its Provincial Ordinance No. 3 entitled"An Ordinance Enacting the Revenue Code of Bulacan Province" to be without legal authority to impose and assess taxeson quarry resources extracted by RCC from private lands, hence the interpretation of Respondent Treasurer of Chapter II,

Article D, Section 21 of the Ordinance, and the assessment made by the Province of Bulacan against RCC is null and void.

Petitioner's motion for reconsideration, as well as their supplemental motion for reconsideration, was denied by the appellate court onaugust 26, 1996, hence this appeal.

Petitioner's claim that the Court of Appeals erred in:


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1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT PETITION ON THE GROUND THAT THE SAME ISNOT THE APPROPRIATE REMEDY FROM THE TRIAL COURT'S GRANT OF THE PRIVATERESPONDENTS' (HEREIN PETITIONER) MOTION TO DISMISS;

2. NOT DISMISSING THE SUBJECT PETITION FOR BEING VIOLATIVE OF CIRCULAR 2-90 ISSUED BY THESUPREME COURT;

3. NOT DISMISSING THE PETITION FOR REVIEW ON THE GROUND THAT

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