G.R. No. 47358; June 17, 1941
MANILA MOTOR COMPANY, INC., plaintiff and appellant, vs. THE CITY OF MANILA, defendant and appellee.

FACTS

The plaintiff, Manila Motor Company, Inc., engaged in selling automobiles and accessories, paid P500 as a one-year license fee from July 1, 1937, to June 30, 1938, under City Ordinance No. 1925, as amended by Ordinance No. 2120. Subsequently, the Municipal Board approved Ordinance No. 2529, under which the plaintiff was required to pay, starting January 1, 1938, quarterly license fees based on its sales or gross receipts. As the plaintiff’s sales exceeded P75,000 in each of the first three quarters of 1938, it was required to pay P450 as a license fee per quarter, totaling P1,350. From the P500 previously paid under the old ordinance, the defendant City credited P250 corresponding to half a year (July 1 to December 31, 1937) and applied the remaining P250 as partial payment for the first quarter of 1938. The plaintiff was then required to pay the balance of P1,100 (P200 to complete the first quarter and P900 for the second and third quarters of 1938). The plaintiff paid this amount under protest and initiated the present action to recover it.

ISSUE

1. Whether Ordinance No. 2529 imposes an exorbitant license fee that exceeds the cost of issuing the license and conducting surveillance and inspection, thereby rendering it null and void.
2. Whether the ordinance is unconstitutional for being excessive, unjust, and unreasonable.
3. Whether the ordinance imposes double taxation in violation of the Constitution.

RULING

The Supreme Court affirmed the decision of the Court of First Instance of Manila, which dismissed the plaintiff’s complaint and absolved the defendant City.
1. On the Nature of the Fee: The trial court correctly held that Ordinance No. 2529 does not merely fix a license fee but also imposes a tax for revenue purposes. The Supreme Court agreed, stating that the ordinance must be interpreted as a whole, not by isolated phrases. The amounts fixed, by their quantity, constitute both a fee for license issuance and a tax for taxation purposes. It is a recognized rule that when a municipality imposes charges under its delegated power, whether as a license or a tax, the phrase “license fees” generally denotes both. The City is authorized to collect both a license fee and a tax for the exercise of an occupation or industry under Section 2444 of the Revised Administrative Code, as amended by Act No. 3669 and Commonwealth Act No. 76.
2. On the Alleged Excessiveness and Unreasonableness: The Supreme Court adopted the trial court’s reasoning, which refuted the plaintiff’s claim. Using the plaintiff’s own example: if 25 Studebaker cars were sold at P3,000 each in a quarter, the plaintiff would pay P7,500 under the new Internal Revenue Code and an additional P450 under the ordinance. This amounts to an additional contribution of 43 1/3 centavos per P100 of sales over three months. Compared to the old ordinance (P125 per quarter versus P450), the difference is P325, which, divided by P75,000, results in 0.4333% or 43 1/3 centavos per P100. The Court found this amount not unreasonable, unjust, oppressive, or an excessive burden.
3. On Double Taxation: The plaintiff’s claim that the ordinance imposes double taxation because it already pays another tax under the Internal Revenue Law for the sale of automobiles and accessories is unfounded. The double taxation prohibited by the Constitution exists only when the same property is subjected to two taxes by the same entity or government, for the same purpose, and during the same period. The charges under the ordinance and the internal revenue tax are imposed by different governing bodies (the City and the National Government) and serve different purposes.
The appealed decision was confirmed, with costs against the plaintiff-appellant.