G.R. No. 42236; September 24, 1935
CITY OF MANILA, plaintiff-appellee, vs. LYRIC MUSIC HOUSE, INC., defendant-appellant.

FACTS

The City of Manila sued Lyric Music House, Inc. to recover P525 in license fees and penalty for the period July 1, 1930, to June 30, 1932, under Municipal Ordinance No. 1925. The defendant was engaged solely in the wholesale and retail sale of musical instruments and merchandise (e.g., pianos, phonographs, radios, music sheets). Its gross sales for 1930 and 1931 were P296,653.61 and P381,283.12, respectively. The ordinance imposed an annual license fee on retail dealers, with rates based on gross sales from the preceding year. It classified businesses selling articles not specifically enumerated in the ordinance as “general merchandise” stores. The ordinance was enacted under the authority of Act No. 3669, which amended the Revised Administrative Code to grant the Municipal Board of Manila the power to impose license fees for revenue purposes. The defendant argued the ordinance was ultra vires, unreasonable, and that the fee was improperly based on its total gross sales, including those made outside Manila.

ISSUE

1. Whether Municipal Ordinance No. 1925 is ultra vires for taxing the defendant’s business as “general merchandise.”
2. Whether the license fees imposed are exorbitant, excessive, unreasonable, and oppressive.
3. Whether the license fee can be based on the defendant’s gross sales including those made outside Manila.

RULING

1. The ordinance is valid and not ultra vires. Act No. 3669 granted the Municipal Board broad authority to impose license fees for revenue. The ordinance’s classification of businesses selling unenumerated articles as “general merchandise” stores is a valid exercise of this authority. The defendant’s business, dealing in musical merchandise not listed, properly falls under this classification.
2. The license fees are not exorbitant, excessive, or oppressive. Where a license fee is imposed primarily for revenue, the amount is within the discretion of the legislative authority, and courts will not interfere absent clear evidence of abuse. The fees here, based on a graduated scale relative to gross sales, are reasonable and for public revenue.
3. The license fee can be based on the defendant’s total gross sales. The tax is imposed on the privilege of doing business within Manila, measured by the volume of business (gross sales). It is not a tax on the sales themselves but on the business privilege, and the measure (total gross sales) is permissible even if some sales occur outside the city.
The trial court’s judgment ordering the defendant to pay P525 is affirmed.

AI Generated by Armztrong.