GR L 18924; (June, 1964) (Digest)
G.R. No. L-18924; June 30, 1964
MARINDUQUE IRON MINES AGENTS, INC., petitioner-appellee, vs. THE MUNICIPAL COUNCIL OF THE MUNICIPALITY OF HINABANGAN, PROVINCE OF SAMAR, ET AL., respondents-appellants.
FACTS
The Municipality of Hinabangan, Samar, enacted Municipal Ordinance No. 7, Series of 1960, imposing a graduated municipal license fee on businesses, including mines, based on their yearly “gross outputs or sales.” The ordinance provided a detailed schedule of tax amounts corresponding to specified ranges of gross output or sales. The petitioner, Marinduque Iron Mines Agents, Inc., the sole mining operator within the municipality, filed a petition for declaratory relief before the Court of First Instance of Manila, challenging the validity of the ordinance. The petitioner argued the ordinance was enacted without statutory authority and violated existing law. The respondents, the Municipal Council, defended its validity. The trial court decided the case based solely on the pleadings, as neither party presented evidence.
ISSUE
The primary issue is whether Municipal Ordinance No. 7, Series of 1960, of Hinabangan, Samar, is valid and enforceable.
RULING
The Supreme Court affirmed the trial court’s decision declaring the ordinance null and void. The legal logic rests on two independent grounds. First, the ordinance is fatally defective for failing to clearly and expressly impose a tax. A valid tax imposition must be stated in explicit, unambiguous language, as taxes are burdens that citizens should not be left to infer. The ordinance’s wording, particularly in Section 2, is merely declaratory of a supposed authority and lacks the mandatory command essential for a valid tax levy. This defect is exacerbated by the ordinance’s penal provisions, which require even greater clarity.
Second, and more decisively, even assuming the ordinance successfully imposes a charge, it violates an express statutory prohibition. The authority of municipalities to impose license taxes was granted under Section 2 of Republic Act No. 2264 , which contained a clear proviso: “Provided that municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon.” The Court ruled that the graduated tax under the ordinance, while not a percentage tax, is indisputably “based on sales.” The tax liability is calculated directly from the peso value of gross output, which is determined by examining sales receipts and invoices, without allowance for deductions. This direct linkage to sales figures contravenes the explicit ban on “taxes in any form based on sales.” The respondents’ plea regarding the council members’ non-legal background was rejected, as ignorance of fundamental legal principles governing taxation is not an excuse. Consequently, the ordinance was struck down as ultra vires and invalid.