G.R. No. L-12647; May 31, 1961
AMERICAN MAIL LINE, ET AL., plaintiffs-appellees, vs. CITY OF BASILAN, ET AL., defendants-appellants.

FACTS

The City Council of Basilan enacted Ordinance No. 180, Series of 1955, imposing an anchorage fee on foreign vessels engaged in coastwise trade that anchor within the city’s territorial waters for loading or unloading. The fee was set at half a centavo per registered gross ton for the first twenty-four hours, with a maximum charge of seventy-five pesos per day. The appellees, foreign shipping companies licensed to do business in the Philippines, regularly had vessels calling at Basilan City and anchoring in its bay. Upon assessment and attempted collection of these fees by the city treasurer, the shipping companies filed an action for declaratory relief, seeking a judicial declaration on the ordinance’s validity. The lower court issued a preliminary injunction against the collection.
The appellants, the City of Basilan and its officials, defended the ordinance, asserting it was a valid exercise of either the city’s revenue-raising (taxation) power or its police power. They argued the fees were necessary, citing the city’s geographical nature as an island with numerous coves, which could become a haven for smugglers without proper funds for surveillance. The city also filed a counterclaim to recover uncollected anchorage dues and litigation expenses.

ISSUE

Whether the City of Basilan had the legal authority to enact Ordinance No. 180 and collect the prescribed anchorage fees.

RULING

The Supreme Court affirmed the lower court’s decision, declaring Ordinance No. 180 illegal and void. The Court held that the City of Basilan lacked the authority to impose the anchorage fees under either its taxing power or police power. Examining the city’s charter (Republic Act 288), Section 14(a) granted the power to levy taxes only “in accordance with law,” indicating a limited, not blanket, taxing authority. The ordinance was not enacted pursuant to any specific enabling law from Congress. Furthermore, Section 14(v) of the charter, which authorized fixing charges for watercraft “landing at or using public wharves, docks, levees, or landing places,” did not extend to vessels merely anchoring in open waters, as covered by the ordinance.
The Court also rejected the argument that the fee was a valid regulatory measure under police power. Jurisprudence establishes that regulatory fees must only cover the approximate cost of regulation, including issuance, inspection, and surveillance. The anchorage fee, being based on vessel tonnage and capped at a significant daily sum, lacked a reasonable relation to such costs. Notably, the fee even exceeded the national government’s harbor fee for foreign vessels, which was set at fifty pesos. The city’s own admission that it sought to raise considerable revenue from the fees, and its initial defense based on taxation power, confirmed the fee’s revenue-raising purpose, which is not permissible under the guise of police power without explicit statutory grant.