Title
Association of Customs Brokers, Inc. vs. Municipal Board
Case
G.R. No. L-4376
Decision Date
May 22, 1953
Petitioners challenged Manila’s Ordinance No. 3379, a 1% motor vehicle tax, arguing it was a disguised license tax violating uniformity and causing double taxation. The Supreme Court nullified the ordinance, ruling it a license tax conflicting with the Motor Vehicle Law and lacking uniformity.
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Case Digest (G.R. No. L-4376)

Facts:

Parties Involved:

  • Petitioners: Association of Customs Brokers, Inc. and G. Manlapit, Inc.
  • Respondents: Municipal Board, City Treasurer, City Assessor, and City Mayor of Manila

Background:
The petitioners challenged the validity of Ordinance No. 3379, passed by the Municipal Board of Manila on March 24, 1950. The ordinance imposed a 1% ad valorem tax annually on all motor vehicles operating within the City of Manila, with the proceeds allocated to the Streets and Bridges Funds for repair, maintenance, and improvement of city infrastructure.

Petitioners' Claims:

  1. The ordinance, while labeled as a property tax, is actually a license tax, which is beyond the authority of the Municipal Board.
  2. The ordinance violates the rule of uniformity of taxation.
  3. It constitutes double taxation.

Respondents' Defense:
The respondents argued that the ordinance imposes a property tax, which is within the power of the City of Manila under Section 18(p) of Republic Act No. 409 (Revised Charter of Manila). They also contended that the tax does not violate the rule of uniformity or constitute double taxation.

Lower Court Decision:
The Court of First Instance of Manila upheld the validity of the ordinance and dismissed the petition. The petitioners appealed the decision.

Issue:

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Ruling:

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Ratio:

  1. Nature of the Tax:

    • The Court held that while the ordinance is labeled as a property tax and is fixed ad valorem, its nature and purpose reveal it to be a license tax. The tax is levied on motor vehicles operating within Manila to raise funds for street and bridge maintenance, which aligns with the purpose of a license tax rather than a property tax.
    • The Court cited authorities stating that a tax remains an excise or license tax even if it is proportioned to the value of the property used in the taxed activity.
  2. Conflict with the Motor Vehicle Law:

    • The Motor Vehicle Law (Act No. 3992) prohibits the imposition of additional fees for the operation of motor vehicles, except for property taxes. The ordinance, by imposing a tax for the same purpose (street and bridge maintenance) as the fees collected under the Motor Vehicle Law, effectively circumvents this prohibition and results in duplication.
  3. Violation of Uniformity of Taxation:

    • The ordinance fails to distinguish between motor vehicles for hire and those for private use, as well as between vehicles registered in Manila and those registered elsewhere but occasionally using Manila’s streets. This lack of distinction creates an inequality in taxation, violating the constitutional rule of uniformity.
  4. Double Taxation:

    • The Court did not explicitly rule on the issue of double taxation but implied that the ordinance’s duplication of fees for the same purpose under the Motor Vehicle Law could be considered a form of double taxation.

Conclusion:

The Supreme Court declared Ordinance No. 3379 invalid because it imposes a license tax disguised as a property tax, violates the rule of uniformity, and results in duplication of fees prohibited by the Motor Vehicle Law.


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