Case Summary (G.R. No. 191940)
Applicable Law
The relevant legislation includes Republic Act No. 399, which granted Butuan Sawmill, Inc. its legislative franchise, as well as sections from the Local Autonomy Law (Republic Act 2264) and other statutes governing municipal taxing authority. The ordinances in question, specifically Ordinances No. 7, 11, 131, 148, and 104, are also central to the deliberation.
Summary of Facts
Butuan Sawmill, Inc. was granted a franchise for electric services in Butuan and Cabadbaran under Republic Act No. 399 on June 18, 1949, and received a certificate of public convenience in 1954. The City of Butuan enacted Ordinance No. 7 on October 1, 1950, imposing a 2% tax on gross sales. This was amended by subsequent ordinances that further defined taxable entities and included businesses engaged in electric services. Ordinance No. 104, enacted in 1960, imposed penalties for disconnecting electric service without consent.
Legal Arguments
The City of Butuan argued that it had the authority to impose taxes under its charter, which purportedly enabled it to levy taxes for general and special purposes. They contended that the franchise of Butuan Sawmill, Inc. could be amended or altered by the National Assembly, and thus supported the legality of the tax ordinances.
Conversely, Butuan Sawmill, Inc. contended that the ordinances were unconstitutional and ultra vires, infringing upon its contractual rights by imposing a tax that constituted a deprivation of property without due process. The petitioner maintained that the ordinances impaired the obligation of its franchise contract.
Judicial Analysis
The court analyzed the relationship between the city's charter and the legislative franchise granted to Butuan Sawmill, Inc. It established that the power to tax does not extend to franchises granted by legislative act unless expressly stated. The court emphasized that the franchise was enacted prior to the city's charter; thus, any subsequent municipal tax ordinance could not negate the express provisions of the franchise.
Furthermore, the court noted that the Local Autonomy Law does not empower municipalities to levy taxes on public utilities already subject to franchise taxes. Focus was placed on the interpretation of various sections of Republic Act 2264, where it was clarified that only utilities not subject to franchise taxation could be taxed by municipalities, distinguishing Butuan Sawmill's operations.
Ordinance No. 104 Review
The court found the provisions of Ordinance No. 104 problematic. It mandated the continued supply of electricity regardless of
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Case Background
- The case is a direct appeal on questions of law from a decision by the Court of First Instance of Agusan in its Special Civil Case No. 152.
- The case centers around the constitutionality of certain ordinances imposed by the City of Butuan, which included a 2% tax on the gross sales or receipts of the Butuan Sawmill, Inc., a business engaged in electric light, heat, and power services.
- The decision declared Ordinances Nos. 7, 11, 131, and 148 unconstitutional and ultra vires concerning the imposition of the tax on the petitioner-appellee.
- Ordinance No. 104 was annulled for being unconstitutional, arbitrary, unreasonable, and oppressive.
Legal Framework
- The petitioner, Butuan Sawmill, Inc., was granted a legislative franchise under Republic Act No. 399 on June 18, 1949, to operate an electric light, heat, and power system.
- A certificate of public convenience and necessity was also issued by the Public Service Commission on March 18, 1954.
- Ordinance No. 7, effective October 1, 1950, imposed a 2% tax on gross sales or receipts from any business, payable monthly, and included penalties for violations.
- Subsequent amendments to this ordinance expanded its reach to include businesses engaged in electric light, heat, and power.
Ordinances in Question
- Ordinance No. 7: Imposed a 2% tax on gross sales or receipts of businesses in the city.
- Ordinance No. 11: Amended Ordinance No. 7 to specify kinds of businesses subject to the tax.
- Ordinance No. 131: Further amended the penal provisions related to the tax.
- Ordinance No. 148: Expanded the definition of taxable businesses to include electric light, heat, and power services.
- Ordinance No. 104: Prohi