Eusebio Villanueva, Et Al. vs.

City of Iloilo
G.R. No. L-26521, December 28, 1968

Facts:
On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license
tax on tenement houses. The validity and constitutionality of said tax were challenged by Sps.
Villanueva and were declared by the supreme court as ultra vires because it does not appear that
the power to tax owner of tenement houses is one among those clearly and expressly granted to the
City of Iloilo by its charter.
With the passing of R.A. 2264, The Local Autonomy Act, The municipal board of Iloilo had believed
that it acquired the authority or power to enact an ordinance similar to that previously declared by
the court as ultra vires.
In the case at bar, the city enacted Ordinance 11, series 1960 “ An Ordinance imposing Municipal
license tax on persons engaged in the business of operating tenement houses”. By virtue of the
Ordinance the city has been collecting from Sps. Villanueva who are also paying real estate taxes on
their property. Sps. Villanueva owned several apartments in Iloilo city and in other cities-which
according to them does not impose tenement or apartment taxes.
Petitioners filed a complaint praying that the Ordinance be declared invalid for being beyond the
power of the Municipal council to enact. The lower court declared the ordinance illegal because the
passage of RA 2264 does not empower cities to impose apartment taxes, it likewise ruled that the
ordinance is oppressive and unreasonable because it penalizes owners of tenement houses who fail
to pay the taxes,and that it constitute double taxation and violates the rule of uniformity of
taxation.

Issues:

1. Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double
taxation?

2. Is the City of Iloilo empowered by the Local Autonomy Act to impose tenement taxes?

3. Is Ordinance 11, series of 1960, oppressive and unreasonable because it carries a penal
clause?

4. Does Ordinance 11, series of 1960, violate the rule of uniformity of taxation?

Held:
It is settled that provisions of Republic Act 2264 confer on local governments broad taxing
authority which entends to almost “ everything, excepting those which are mentioned therein”,
provided that the tax levied is “ for public purpose, just and uniform,” and does not transgress
constitutional provision or is not repugnant to a controlling statute. Thus, when a tax, levied under
the authority of a city or municipal ordinance, is not within the exceptions and limitations
mentioned in the article, the same comes within the ambit of the general rule.
Does the tax imposed by the ordinance in question fall within any of the exceptions provided for in
section 2 of the Local Autonomy Act?

The appellees maintain that it is a property tax or real estate tax and not a “ Tax on persons engaged
in any occupation or business or exercising privileges,” or a license tax or a privilege tax or an
excise tax.
The tax imposed by the ordinance in question does not possess the attributes of a real estate tax. It
is not a tax on the land on which the tenement houses are erected, although both land and tenement
houses may belong to the same owner. The tax is not a fixed proportion of the assessed value of the
tenement houses, and does not require the intervention of assessors or appraisers. It is not payable
at a designated time or date, and is not enforceable against the tenement houses either by sale or
distraint. Clearly, therefore, the tax in question is not a real estate tax.

It is plain that the intention of the ordinance is to impose a license tax on the operation of tenement
houses, which is a form of business or calling, this is a power conferred by section 2 of the Local
Autonomy Act.

On the issue of double taxation.

While it is true that plaintiff are taxable under the provision of NIR Code as real estate dealers and
still taxable under the ordinance in question, the argument against double taxation may not be
invoked. The same taxes may be imposed by the National Government as well as the Local
Government Unit. Settled is the rule that “ a license tax may be levied upon a business or occupation
although the land or property used in connection therewith is subject to property tax. The State
may collect an ad valorem tax on property used in a calling and at the same time impose a license
tax on that calling.

On the issue of the ordinance being oppressive because it carries a penal clause.

The lower court had in mind the provision of the Constitution that “ no person shall be imprisoned
for a debt or nonpayment of a poll tax” a tax is not a debt in the sense of an obligation incurred by
contract, express or implied, and therefore is not within the meaning of constitutional or statutory
provisions abolishing or prohibiting imprisonment for debt, and a statute or ordinance which
punishes the non-payment thereof by fine or imprisonment is not, in conflict with that prohibition.
The charter of the City of Iloilo empowers its Municipal board to fix penalties for violations of
ordinances.

On the issue of the ordinance as violative of the rule of uniformity of taxation.

Neither is the rule of equality and uniformity violated by the fact that the tenement taxes are not
imposed in other cities, for the same rule does not require that taxes for the same purpose should
be imposed in different territorial subdivisions at the same time. As long a the burden of tax falls
equally and impartially on all owners or operator of tenement houses similarly classified or
situated, equality and uniformity of taxation is accomplished.

The ordinance is valid.

Associations of customs brokers, Inc. and G. Manlapit, Inc. vs. The Municipal Board,the City
Trasurer, Assessor and Mayor of the City of Manila
L-4376, May 22, 1953

Facts:
On March 24, 1950 The Municipal board of Manila enacted Ordinance No. 3379 “ An Ordinance
levying a property tax on all Motor Vehicle operating within the city of Manila”, The petitioners
challenged the validity of said ordinance on the following ground:
1. While it levies a so-called property tax it is in reality a license tax which is beyond the
power of the Municipal Board of Manila to enact.
2. The ordinance offends against the rule of uniformity of taxation.
3. It constitutes double taxation.

The respondents, represented by the city fiscal, contend on their part that the challenged ordinance
imposes a property tax which is within the power of the City of Manila to impose under its Revised
Charter [Section 18 (p) of Republic Act No. 409], and that the tax in question does not violate the
rule of uniformity of taxation, nor does it constitute double taxation.
The lower court sustained the validity of the ordinance.

Issue:
Considering the wording used in the Ordinance and its purpose, whether it is a license tax or a
property tax.

Held:
The title refers to it as "An Ordinance Levying a Property Tax on All Motor Vehicles Operating
Within the City of Manila", and that in its section 1 it provides that the tax should be 1 per cent ad
valorem per annum. It also provides that the proceeds of the tax "shall accrue to the Streets and
Bridges Funds of the City and shall be expended exclusively for the repair, maintenance and
improvement of its streets and bridges."

While as a rule an ad valorem tax is a property tax, and this rule is supported by some authorities,
the rule should not be taken in its absolute sense if the nature and purpose of the tax as gathered
from the context show that it is 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 become a property tax
because it is proportioned in amount to the value of the property used in connection with the
occupation, privilege or act which is taxed. Every excise necessarily must finally fall upon and be
paid by property and so may be indirectly a tax upon property; but if it is really imposed upon the
performance of an act, enjoyment of a privilege, or the engaging in an occupation, it will be
considered an excise."
The character of the tax as a property tax or a license or occupation tax must be determined by its
incidents, and from the natural and legal effect of the language employed in the act or ordinance,
and not by the name by which it is described, or by the mode adopted in fixing its amount. If it is
clearly a property tax, it will be so regarded, even though nominally and in form it is a license or
occupation tax; and, on the other hand, if the tax is levied upon persons on account of their
business, it will be construed as a license or occupation tax, even though it is graduated according
to the property used in such business, or on the gross receipts of the business.

While the Ordinance refers to property tax and it is fixed ad valorem, but the idea is merely levied
on Motor Vehicle operating within the city of Manila with the main purpose of raising funds to be
expended for the repair, maintenance and improvement of the streets. This purpose is exactly
under Section 73 of the Motor Vehicle Law for under the said Act, Municipal Corporation already
participated in the distribution of the proceeds that are raised for the same purpose. The
prohibition is intended to prevent duplication in the imposition of fees for the same purpose.

The Ordinance merely imposes license fee although under the cloak of an ad valorem tax to
circumvent the prohibition of the Motor Vehicle Law.

It also infringe the rule of the uniformity of taxation because it does not distinguish between motor
vehicle for hire or a private motor vehicle, and a motor vehicle registered in the city and one
registered in another place but occasionally comes to Manila.

The Ordinance is null and void.