G.R. No. L-4817; May 26, 1954
SILVESTER M. PUNSALAN, ET AL., plaintiffs-appellants, vs. THE MUNICIPAL BOARD OF THE CITY OF MANILA, ET AL., defendants-appellants.

FACTS

The plaintiffs, consisting of two lawyers, a medical practitioner, a public accountant, a dental surgeon, and a pharmacist, filed a suit on their own behalf and on behalf of other professionals practicing in Manila. They sought the annulment of Manila City Ordinance No. 3398, which imposed a municipal occupation tax on persons exercising various professions in the city, and the annulment of the provision in the Manila Charter authorizing it. They also sought a refund of taxes paid under protest under the ordinance. The plaintiffs had already paid the national occupation tax under the National Internal Revenue Code. Upon being required to pay the additional municipal tax, they paid under protest and filed this suit. The lower court upheld the validity of the charter provision authorizing the tax but declared the ordinance itself illegal and void because it provided a penalty not authorized by law. Both parties appealed.

ISSUE

The primary issue is the correctness of the lower court’s ruling, specifically: (1) whether the penalty provision in Ordinance No. 3398 was authorized by law, and (2) whether the ordinance and its authorizing law constitute invalid class legislation, are unjust and oppressive, or authorize invalid double taxation.

RULING

The Supreme Court reversed the lower court’s judgment in part and affirmed it in part.
1. On the penalty: The Court held the lower court erred in declaring the ordinance void due to an unauthorized penalty. Section 18(kk) of the Manila Charter expressly empowered the Municipal Board to fix penalties for ordinance violations not exceeding a P200 fine or six months’ imprisonment, or both. Therefore, the penalty in Ordinance No. 3398 was legally authorized.
2. On class legislation: The Court rejected the claim. The legislature has discretion to select which occupations to tax and may tax certain classes while leaving others untaxed. The fact that the law authorized Manila, but not other cities or municipalities, to impose such a tax is a political question for the legislative department. The Court noted that Manila, as the national capital with a larger population and trade, offers a more lucrative field for professionals, justifying a higher occupation tax.
3. On alleged injustice/oppression: The Court rejected the argument that the ordinance discriminated between professionals with offices in Manila and those without offices but practicing there. The ordinance taxes persons “exercising” or “pursuing” a profession in Manila, and does not require an office in the city. What constitutes practice in the city is a matter for judicial determination.
4. On double taxation: The Court held the argument against double taxation is inapplicable where one tax is imposed by the state (national government) and the other by a city. There is nothing inherently invalid in both the state and its political subdivisions exacting license fees or taxes for the same occupation.
The judgment was reversed insofar as it declared Ordinance No. 3398 illegal and void, and affirmed insofar as it upheld the validity of the charter provision authorizing the ordinance. Costs were imposed on the plaintiffs-appellants.
Separate Opinion:
Chief Justice Paras dissented. He argued that a professional who has paid the national occupation tax under the Internal Revenue Code should be allowed to practice in Manila without paying the city’s additional tax. He viewed this as a contradiction where the national license is effectively withdrawn by the city for non-payment of its tax. He found an obvious discrimination, as professionals elsewhere pay only one tax, while those in Manila pay two, despite being on equal footing regarding earning opportunities. He concluded that only one tax, either the national or the city tax, should be imposed on a practitioner in Manila.