G.R. No. L-12695; March 23, 1959
CITY OF ILOILO, plaintiff-appellee, vs. REMEDIOS SIAN VILLANUEVA and EUSEBIO VILLANUEVA, defendants-appellants.

FACTS

The defendants-appellants, spouses Remedios Sian Villanueva and Eusebio Villanueva, are the owners of four apartment houses (tenement houses) in Iloilo City, containing a total of 34 apartments, each occupied by a separate family that cooks its food therein. Pursuant to Ordinance No. 86, enacted on September 30, 1946, which amended Ordinance No. 33, the City of Iloilo sought to collect from the spouses an annual license tax fee of P24 for each apartment, totaling P1,610 for the period from the fourth quarter of 1946 to the third quarter of 1948, plus a 20% penalty of P332. The ordinance classified tenement houses and imposed fees as follows: (1) tenement house, P25 annually; (2) tenement house partly or wholly engaged in business on specified streets (J.M. Basa, Iznart, Aldeguer), P24 per apartment; (3) tenement house partly or wholly engaged in business on any other streets, P12 per apartment. The defendants refused to pay, contending the ordinance infringed the city’s charter powers and violated constitutional uniformity of taxation as oppressive, unreasonable, and discriminatory. The case was elevated from the municipal court to the Court of First Instance of Iloilo due to the constitutional issue. After a stipulation of facts and oral admissions, the court upheld the ordinance and ordered payment. The defendants appealed to the Court of Appeals, and the case was elevated to the Supreme Court as it involved only questions of law.

ISSUE

Whether Ordinance No. 86 of Iloilo City, imposing an annual license tax fee of P24 per apartment on the defendants’ tenement houses, is a valid exercise of the city’s power under its Charter.

RULING

The Supreme Court reversed the decision of the lower court and dismissed the complaint. The ordinance is ultra vires (beyond the power) of the City of Iloilo.
The Court distinguished between a license fee imposed as a police regulation and one imposed as a revenue measure. A regulatory license fee must only cover the expenses of issuance, inspection, police surveillance, and incidental costs. A revenue measure (tax) requires express grant by charter or statute and cannot be implied from a general power to license and regulate. Examining the ordinance, the Court found the fee of P24 per apartment per annum, totaling P888 annually for the defendants, far exceeded the cost of regulation and was intended for revenue, as it would generate a sizeable sum for the city coffers.
The City argued that even as a revenue tax, it was authorized under its Charter (C.A. No. 158), specifically Section 21(j), which grants the power “To tax, fix the license fee for, and regulate hotels, restaurants, refreshment parlors, cafes, lodging houses, boarding houses, livery garages, public warehouses, pawnshops, theaters, cinematographs.” The Court held that a tenement house, as defined (a house rented to three or more families living independently and cooking on the premises), is distinct from a hotel (accommodation for travelers with food and lodging), a lodging house (furnished apartments let by week or month, usually without meals or with breakfast only), or a boarding house (a quasi-public house habitually keeping boarders). Therefore, tenement houses are not included in the enumerated establishments subject to the city’s taxing power.
The Court reiterated that a municipal corporation has no inherent power of taxation; such power must be expressly granted by charter and construed strictly (strictissimi juris). Any doubt or ambiguity is resolved against the municipality. Since the Charter of Iloilo City does not expressly grant the power to tax owners of tenement houses, the ordinance imposing such a tax is invalid.