G.R. No. L-40296 November 21, 1984
ALLIED THREAD CO., INC., and KER & COMPANY, LTD., petitioners, vs. HON. CITY MAYOR OF MANILA, HON. CITY TREASURER OF MANILA, HON. LORENZO RELOVA, in his capacity as Presiding Judge, Branch II, CFI of Manila, respondents.

FACTS

Petitioners Allied Thread Co., Inc., a manufacturer with its factory and principal office in Pasig, Rizal, and its sales broker Ker & Company, Ltd., challenged Manila Ordinance No. 7516, as amended. The ordinance imposed a graduated business tax on manufacturers, importers, or producers doing business in Manila. Allied Thread sold its products in Manila through its broker. Petitioners filed for declaratory relief, contending the ordinance was invalid for non-compliance with procedural requirements.
They argued the ordinance, intended to take effect on July 1, 1974, was invalid because its amendments were enacted after the June 15, 1974 deadline set by P.D. No. 426 and Local Tax Regulation No. 1-74. They also asserted a lack of proper publication in a newspaper of general circulation. Finally, Allied Thread claimed it was not taxable under the ordinance as it maintained no branch or office in Manila.

ISSUE

The primary issues were: (1) whether Ordinance No. 7516, as amended, was validly enacted and published; and (2) whether petitioner Allied Thread Co., Inc., a manufacturer based outside Manila but selling therein through a broker, was subject to the tax.

RULING

The Supreme Court upheld the ordinance’s validity and found Allied Thread taxable. On the enactment date, the basic Ordinance No. 7516 was enacted on June 12, 1974, and approved by the Mayor on June 15, 1974, conforming to the deadline for a July 1, 1974 effectivity. The subsequent amendments did not invalidate the original ordinance or alter its effectivity date, as the local board retained the power to amend ordinances as needed.
Regarding publication, the Court found substantial compliance. The Local Tax Code provided two alternative modes: publication in a newspaper or posting in the legislative hall and two other conspicuous places. Respondents complied with the second mode by posting copies in public buildings and places, which was legally sufficient.
On taxability, the Court ruled that Allied Thread was doing business in Manila and thus subject to the excise tax. The ordinance taxed the performance of an act or engaging in an occupation within the city, not based on the location of the taxpayer’s office or factory. Since Allied Thread sold its products in Manila through its broker, the sales transactions were perfected and consummated there, making the tax liability attach. The place of business activity, not the place of domicile or factory location, was the determining factor.