G.R. No. 33749 ; February 18, 1931
HERCULES LUMBER CO., INC., plaintiff-appellee, vs. THE MUNICIPALITY OF ZAMBOANGA and CARLOS DOMINGUEZ, Municipal Treasurer of Zamboanga, defendants-appellants.

FACTS

The Municipality of Zamboanga enacted Ordinance No. 226, imposing an annual license tax on sellers of lumber with a fixed deposit and on motor engines for sawing wood. The Hercules Lumber Co., Inc., which maintained a lumber yard and operated a sawmill with a 25-horsepower engine in the municipality, paid the tax under protest and sued to recover the amount.

ISSUE

Did the Municipality of Zamboanga have the legal authority to impose the license tax on the plaintiff’s lumber yard and sawmill operations?

RULING

No. The Supreme Court affirmed the trial court’s judgment ordering the refund of the tax. The Municipal Council’s authority to impose license taxes was derived from subsection (d) of section 2625 of the Administrative Code of 1917, which enumerated specific taxable activities. Lumber yards and sawmills were not included in this enumeration. While subsection (e) of the same section allowed for the regulation of lumber yards and sawmills, the power to regulate is distinct from and does not include the power to impose license taxes for revenue. Municipal corporations, as subordinate entities, can only exercise taxing powers expressly granted by law and cannot extend these powers by implication.

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