G.R. No. L-4060 August 29, 1952
DR. ESTEBAN MEDINA, DR. JOSE DE LA ROSA, MR. ENRIQUE SANTAMARIA, and BENGUET DEVELOPMENT CO., INC., plaintiffs-appellants, vs. CITY OF BAGUIO, defendant-appellee.

FACTS

Plaintiffs are business operators in Baguio City: Dr. Esteban Medina (owner/operator of Pines Theater), Dr. Jose de la Rosa (owner/operator of Plaza Theater), Mr. Enrique Santamaria (owner/operator of Session Theater), and Benguet Development Co., Inc. (operator of a gasoline station). They filed an action to nullify City Ordinances Nos. 62, 99, and 100, claiming these were enacted without authority and were oppressive, unjust, and unreasonable, and sought recovery of taxes and fees paid under protest. Ordinance No. 99 fixed annual license fees for businesses: P120 for gasoline stations and P2,400, P1,800, or P1,200 for theaters classified as A, B, or C, respectively. Ordinance No. 62 imposed an additional tax on theaters. Ordinance No. 100 levied a specific tax on gasoline and oil sales. The plaintiffs paid under protest: Medina paid P1,200 under Ordinance No. 99 and P4,896.60 under Ordinance No. 62; de la Rosa paid P1,800 under Ordinance No. 99; Santamaria paid P1,855.05 under Ordinance No. 62; and Benguet Development paid P3,554.44 under Ordinance No. 100. The trial court declared Ordinances Nos. 99 and 100 valid, Ordinance No. 62 null and void, and denied plaintiffs’ claim for reimbursement. Only the plaintiffs appealed.

ISSUE

1. Whether Ordinance No. 99, which fixes license fees for businesses, is valid.
2. Whether Ordinance No. 100, which imposes a specific tax on gasoline and oil, is valid.
3. Whether the plaintiffs are entitled to reimbursement of the taxes and fees paid under protest.

RULING

1. Ordinance No. 99 is VALID. The City of Baguio’s charter, as amended by Republic Act No. 329 (enacted July 15, 1948), expressly grants the city council the power “to tax, to license and to regulate” businesses. This amendment expanded the city’s power beyond mere regulation to include taxation for revenue purposes. Therefore, the ordinance, whether characterized as a license fee or a tax, is within the city’s authority, provided the subjects are included in the charter. The terminology used is inconsequential.
2. Ordinance No. 100 is NULL and VOID. The city’s charter, as amended, does not plainly confer the power to levy a specific tax on articles like gasoline and oil. Section 2553(c) of the Revised Administrative Code, as amended, only grants the power to tax, license, and regulate the business of the taxpayer, not the articles used in such business. This is inferred from the phrase “and such other businesses, trade and occupations as may be established or practised in the city.” Municipal corporations have no inherent taxing power; any doubt or ambiguity in the grant of such power must be resolved against the municipality. Additionally, under the Internal Revenue Code, gasoline and oil are already subject to specific tax, and the city receives a 20% share of such collections. Commonwealth Act No. 472 also withholds from municipal councils the power to levy “percentage taxes and taxes on specified articles.” Thus, Ordinance No. 100 is ultra vires.
3. Regarding REIMBURSEMENT:
– For payments under Ordinance No. 99: Reimbursement is DENIED. The ordinance is valid.
– For payments under Ordinance No. 62: Reimbursement is DENIED. The lower court declared this ordinance null and void, and no appeal was taken from that part of the decision. The court held that the additional amounts collected from theater-goers were not the property of the plaintiffs but of the public who paid them; the theater owners acted merely as agents of the city in collecting the additional price on admission tickets.
– For payments under Ordinance No. 100: The City of Baguio is ORDERED to return the amount of P3,554.44 to Benguet Development Co., Inc., as the ordinance is invalid. However, in a Resolution dated November 28, 1952, the Court, upon motion for reconsideration, held in abeyance the order for refund pending determination of a factual issue: whether the tax was collected directly from the corporation or from car owners (similar to the theater tax collection agency issue). The case was remanded to the lower court for presentation of evidence on this point.
The decision appealed from is AFFIRMED with the modification that Ordinance No. 100 is declared null and void. No pronouncement as to costs.