G.R. No. L-36049. May 31, 1976.
CITY OF NAGA, VICENTE P. SIBULO, as Mayor, and JOAQUIN C. CLEOPE, as Treasurer of the City of Naga, petitioners, vs. CATALINO AGNA, FELIPE AGNA and SALUD VELASCO, respondents.

FACTS

On June 15, 1970, the City of Naga enacted Ordinance No. 360, amending its tax code by shifting from a graduated tax to a percentage tax on merchants’ gross sales. The private respondents, merchants Catalino Agna, Felipe Agna, and Salud Velasco, paid taxes under this new ordinance for the third quarter of 1970 (July 1 to September 30). Subsequently, on February 13, 1971, they filed a claim for refund with the City Treasurer, arguing that under applicable law, the ordinance could only take effect in the year following its approval, which would be 1971, rendering their 1970 payments illegal. The City Treasurer denied their claim.
The respondents then filed a complaint with the Court of First Instance of Camarines Sur, seeking a declaration that Ordinance No. 360 was effective only in 1971, a refund of the alleged overpayments, and injunctive relief. The petitioners, the City of Naga and its officials, contended that under the city charter (Republic Act No. 305), an ordinance takes effect ten days after its passage unless otherwise stated, and that the respondents had voluntarily made the payments. The trial court ruled in favor of the private respondents, ordering the refund of the tax differences with interest.

ISSUE

Whether Ordinance No. 360 of the City of Naga took effect in 1970, the year of its approval, or in 1971, the year following its approval, for purposes of tax liability.

RULING

The Supreme Court affirmed the trial court’s decision, ruling that Ordinance No. 360 took effect only in 1971. The Court resolved the apparent conflict between the city charter and the Local Autonomy Act (Republic Act No. 2264). Section 14 of the Naga City Charter provided that an ordinance takes effect on the tenth day following its passage unless otherwise stated. However, Section 2 of the Local Autonomy Act, a later general law, specifically governs municipal tax ordinances and mandates that “a tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise.”
The Court applied the legal principles of statutory construction to harmonize these laws. The Local Autonomy Act, being a special and later enactment specifically dealing with the effectivity of local tax ordinances, must prevail over the general provisions of the city charter regarding ordinance effectivity. Furthermore, the Court noted that Ordinance No. 360 itself did not provide for a different effectivity date. Consequently, under the Local Autonomy Act, the ordinance could only become effective in the calendar year 1971, as it was passed in June 1970 and the fifteen-day period for effectivity had lapsed within that same year. Therefore, the taxes collected under the ordinance for the third quarter of 1970 were improperly collected, and the private respondents were entitled to a refund of the difference between what they paid under the new ordinance and what they should have paid under the old law.