G.R. No. L-10196; January 22, 1958
SANTOS LUMBER COMPANY, ET AL., plaintiffs-appellants, vs. CITY OF CEBU, ET AL., defendants-appellees.

FACTS

The plaintiffs, Santos Lumber Company, et al., filed an action in the Court of First Instance seeking to nullify Ordinance No. 92 (series of 1950) and Ordinance No. 116 (series of 1951) of the Municipal Board of the City of Cebu, and to recover taxes paid under said ordinances. The ordinances imposed a tax of P2 “for every first local sale of one thousand board feet of lumber sold during the month,” payable within the first twenty days of the succeeding month, with a 20% surcharge for failure to pay on time. The plaintiffs claimed the ordinances were ultra vires and invalid. The defendants, the City of Cebu, et al., defended the ordinances as valid exercises of power under the city’s charter, Commonwealth Act No. 58 . The lower court upheld the ordinances and dismissed the case. The plaintiffs appealed directly to the Supreme Court, as only questions of law were involved.

ISSUE

Whether the City of Cebu had the power under its charter, specifically Section 17(m) of Commonwealth Act No. 58 , to impose a tax on the sale of lumber through the contested ordinances.

RULING

The Supreme Court reversed the lower court’s decision. It held that the ordinances were ultra vires and invalid. The Court ruled that the City of Cebu’s charter did not confer the power to tax the sale of lumber. Section 17(m) granted the city the power to tax the business of lumber yards and to tax the storage and sale of specifically enumerated items like gunpowder, tar, pitch, resin, coal, oil, gasoline, benzine, turpentine, hemp, cotton, nitroglycerin, petroleum, or any of their products, and all other highly combustible or explosive materials. Lumber was not included in this enumeration. Applying the principle of inclusio unius est exclusio alterius, the express mention of certain items excluded others, such as lumber. The Court rejected the argument that taxing the business of a lumber yard inherently includes taxing the sale of lumber, emphasizing that municipal corporations have no inherent taxing power; such power must be expressly granted by charter and construed strictly (strictissimi juris). Any doubt or ambiguity must be resolved against the municipality. The Court cited the analogous case of Jos S. Johnston & Sons, Inc. vs. Ramon Regondola, which held that a similar ordinance in Zamboanga City taxing lumber sales was ultra vires, as lumber is not a highly combustible or explosive material specifically authorized to be taxed. Consequently, the Court declared the ordinances illegal and ordered the defendants to return the taxes paid by the plaintiffs, amounting to P97,542.57 and any sums paid after February 1953.