G.R. No. L-45524; May 4, 1939
THE MUNICIPALITY OF VICTORIAS, plaintiff-appellant, vs. VICTORIAS MILLING CO., INC., defendant-appellee.

FACTS

The Municipality of Victorias enacted Municipal Ordinance No. 4, series of 1930, which prohibited the establishment of private markets without prior authority from the municipal president and required the payment of an annual tax based on the market’s distance from the public market. Victorias Milling Co., Inc., constructed a concrete building on its own land, about three kilometers from the public market, to serve as a private market for its approximately 1,200 employees and their families. The company did not obtain the required authority, did not collect any fees or rent from vendors or buyers using the market, and maintained the facility at its own expense solely for the health and welfare of its employees. The municipality sued to enjoin the operation of the market and to collect the tax. The Court of First Instance held the ordinance inapplicable and invalid as applied to the company.

ISSUE

Whether the Municipality of Victorias has the power to impose a tax under Ordinance No. 4 on Victorias Milling Co., Inc., for operating a private market not engaged in business or for profit.

RULING

No. The ordinance imposes a tax, not a regulatory license fee. Under Act No. 3422 , as amended, municipal license taxes may only be imposed upon persons engaged in any occupation or business or exercising privileges in the municipality. The company’s market was not operated as a business or for profit; it provided a free service to employees, collected no fees, and was maintained at company expense for welfare purposes. Since the company was not engaged in a business or exercising a privilege in operating the market, the municipality lacked the power to levy the tax. The judgment of the lower court, declaring the ordinance ultra vires and inapplicable, is affirmed.