G.R. No. L-70684. October 10, 1986.
CITY OF CEBU, ET AL., petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, HON. CESAR VIRATA and HON. PEDRO M. ALMANZOR, respondents.

FACTS

Pursuant to the Local Tax Code (PD 231), the City Council of Cebu enacted Tax Ordinances I and II in 1974. Upon mandatory review, the Secretary of Finance suspended specific provisions for being ultra vires. The suspended provisions included: an additional social amelioration tax on boxing exhibitions (Sec. 57); a fixed tax on amusement places with customer participation (Sec. 65(G)); food and drugs fees on sari-sari stores and similar establishments (Sec. 74(Q)); storage fees for properties held by the City Sheriff (Sec. 74(R)); fish inspection fees (Sec. 102); and a city tax on beer sales (Ordinance II, Sec. 1). The City of Cebu appealed to the Court of First Instance, which upheld the suspension. The Intermediate Appellate Court affirmed this decision, prompting the City’s petition to the Supreme Court.

ISSUE

The core issue is whether the respondent appellate court correctly affirmed the suspension of the specified tax ordinance provisions for violating the limitations and authority granted by the Local Tax Code.

RULING

The Supreme Court dismissed the petition, affirming the appellate court’s ruling. The legal logic for each suspended provision is clear. First, Sections 57 and 65(G) imposing additional amusement taxes were invalid for violating the statutory mandate of uniformity between city and provincial rates under Section 23 of PD 231, which expressly requires amusement taxes to be “uniform for the city and the province.” Cebu City’s higher rate created a prohibited disparity. Second, Section 74(Q) imposing food and drugs fees was unauthorized, as PD 231’s Section 35 only permits fees for specific services like inspection and laboratory examination, not general regulatory fees on businesses already subject to other local taxes. Third, Section 74(R) on sheriff’s storage fees was correctly suspended as excessive and confiscatory, contravening Section 2(d) of PD 231, which prohibits fees yielding unreasonable revenue. Fourth, Section 102’s fish inspection fee violated Section 5(K) of PD 231, which expressly bars taxes or fees on agricultural products, including fish, when sold by producers. This fee restrained trade by increasing fish prices. Finally, the beer tax under Ordinance II was invalid because PD 426 had amended Section 24 of PD 231, deleting the prior express authority for cities to tax nationally taxed articles like beer. The amendment evidenced a legislative intent to withdraw such power. Consequently, all challenged provisions exceeded the city’s delegated taxing authority or contravened specific statutory limitations.