GR L 29125; (January, 1972) (Digest)
G.R. No. L-29125 & L-29126 January 31, 1972
PROCTER & GAMBLE TRADING COMPANY, plaintiff-appellant, vs. THE MUNICIPALITY OF MEDINA, MISAMIS ORIENTAL and DOM. E. ABANIL, as Municipal Treasurer of Medina, defendants-appellees. UNION IMPORT & EXPORT CORPORATION, plaintiff-appellant, vs. THE MUNICIPALITY OF MEDINA, MISAMIS ORIENTAL and DOM. E. ABANIL, as Municipal Treasurer of Medina, defendants-appellees.
FACTS
The Municipality of Medina, Misamis Oriental, enacted Ordinance No. 13 in 1949, levying a yearly license tax of P4,000.00 on businesses operating within its jurisdiction. Procter & Gamble Trading Company and Union Import & Export Corporation, both engaged in the large-scale purchase and export of copra from Medina, filed separate complaints in 1961 seeking to annul the ordinance. They argued it was inapplicable to them or, alternatively, that it was an illegal export tax. The lower court found that both companies maintained branch offices, warehouses, and personnel in Medina, purchasing millions of pesos worth of copra annually from the municipality and its environs for direct export. The court upheld the ordinance’s validity, dismissed the complaints, and ordered the companies to pay the due taxes.
ISSUE
The primary issue is whether Ordinance No. 13 of the Municipality of Medina is a valid exercise of municipal taxing power as applied to the appellants’ copra buying and export business conducted within the municipality.
RULING
The Supreme Court affirmed the lower court’s decision, ruling the ordinance was a valid municipal license tax. The legal logic rests on the established principle that a municipality has the authority to tax businesses conducted within its territorial jurisdiction, as conferred by Commonwealth Act No. 472 (the precursor to the Local Autonomy Act). The Court found the appellants were unquestionably engaged in business within Medina, as evidenced by their physical establishments, continuous purchasing operations, and substantial annual transaction volumes exceeding one million pesos. This activity constituted a local business subject to municipal license fees.
The Court rejected the argument that the tax was a prohibited export tax. Following the precedent in Ormoc Sugarcane Planters Association, Inc. v. Municipal Board of Ormoc City, a prohibited export tax must directly tax the export itself to a foreign country. The ordinance here was a general license tax on the privilege of conducting the business of buying and shipping copra within Medina. The tax was imposed for carrying on the local commercial activity, not upon each export shipment. Since the ordinance was a valid local business tax under statutory authority and was factually applicable to the appellants’ operations, the Supreme Court found no legal basis to invalidate it.