GR L 26907; (November, 1969) (Digest)
G.R. No. L-26907 November 28, 1969
Sancho B. De Leon and Venancio F. Lim, plaintiffs-appellants, vs. Municipality of Calumpit, Bulacan, defendant-appellee. (and) Sancho B. De Leon and Venancio F. Lim, plaintiffs-appellants, vs. Municipality of Hagonoy, Bulacan, defendant-appellee.
FACTS
Plaintiffs-appellants Sancho B. De Leon and Venancio F. Lim are holders of municipal franchises to operate electric plants in Calumpit and Hagonoy, Bulacan. They separately challenged the validity of municipal ordinances imposing license taxes on operators of electric plants. On April 18, 1962, they challenged Calumpit Municipal Ordinance No. 7 (approved March 21, 1959) imposing a P700 municipal license tax and a P25 mayor’s permit fee. Earlier, on January 19, 1962, they challenged Hagonoy Municipal Ordinance No. 2, Series of 1961, imposing an annual municipal license tax of P1,200. The municipalities defended the ordinances based on the Local Autonomy Act (Republic Act No. 2264), which, while denying municipal power to tax operators of waterworks, irrigation, and other public utilities, expressly excepted electric light, heat, and power plants from this prohibition. The lower court, in a joint decision dated November 4, 1964, sustained the municipalities’ power to enact the ordinances and dismissed the complaints.
ISSUE
Whether a municipal license tax may be imposed by ordinance on a holder of a franchise to operate an electric plant.
RULING
No. The Supreme Court reversed the lower court’s decision. Applying its prior rulings in Butuan Sawmill, Inc. v. City of Butuan (1966) and Ilocos Norte Electric Co., Inc. v. Municipality of Laoag (1966), the Court held that local governments are without power to tax electric power companies already subject to a franchise tax, unless the franchise itself authorizes such additional local taxation. Since the plaintiffs are holders of municipal franchises, they are exempt from the taxing power of the municipalities under this doctrine. The challenged ordinances are invalid as applied to the plaintiffs. The Court ordered the Municipalities of Calumpit and Hagonoy to refund all sums collected from the plaintiffs under the respective ordinances.