Title
City of Naga vs. Agna
Case
G.R. No. L-36049
Decision Date
May 31, 1976
City of Naga's Ordinance No. 360, enacted in 1970, amended tax rates; respondents paid but sought refund, claiming it took effect in 1971. Court ruled in favor, ordering refund with interest and fees.
city of naga
agna
ordinance
A

Case Summary (G.R. No. L-36049)

Factual Background

On June 15, 1970, the Municipal Board of the City of Naga enacted Ordinance No. 360, which changed the existing graduated tax on quarterly gross sales prescribed in Section 3, Ordinance No. 4, into a percentage tax on gross sales. The ordinance was transmitted to the Mayor on June 25, 1970 and was posted as required. Pursuant to Ordinance No. 360, Catalino Agna paid P1,805.17, Felipe Agna paid P625.00, and Salud Velasco paid P129.81 for the quarter July 1, 1970 to September 30, 1970. On February 13, 1971, respondents filed claims for refund of the excess amounts they alleged were illegally collected under the ordinance, together with interest from the dates of payment. The City Treasurer denied the claims.

Trial Court Proceedings

Respondents then filed suit in the Court of First Instance (Civil Case No. 7084) seeking a declaration that Ordinance No. 360 became effective only in the year following its approval (1971), a refund of the amounts paid plus interest, attorney’s fees, costs, and an injunction against enforcement. Petitioners answered, asserting among other defenses voluntary payment, proper publication, authority under Republic Act No. 305 for ordinance effectivity, estoppel, and absence of grounds for preliminary injunction. The parties stipulated to certain material facts, including enactment and transmission dates, posting, voluntary payment, and denial of the refund claim. On October 9, 1971, the respondent Judge rendered judgment declaring the ordinance effective in 1971 and ordering reimbursement to respondents of the claimed sums with interest from the filing of the complaint, plus P500.00 as attorney’s fees and costs.

Nature of the Present Proceeding

The petitioners sought review on certiorari of the trial court decision. The Supreme Court treated the petition as a special civil action and addressed the central legal question presented by the appeal, namely, the date on which Ordinance No. 360 took effect and whether the taxes levied and collected for the July–September 1970 quarter were unlawful.

Parties’ Contentions

Petitioners contended that Ordinance No. 360 took effect in the year of its approval and therefore applied to the quarter beginning July 1970. They invoked Section 14 of Republic Act No. 305, which provides that an approved ordinance “shall take effect and be in force on and after the tenth day following its passage unless otherwise stated,” and argued the ordinance was deemed approved on July 6, 1970, ten days after receipt by the Mayor on June 25, 1970. Petitioners alternatively relied on Section 2 of Republic Act No. 2264, which states that “A tax ordinance shall go into effect on the fifteenth day after its passage unless the ordinance shall provide otherwise.” Respondents argued that Section 2309 of the Revised Administrative Code governs and that an ordinance which changes an existing municipal license tax shall be subject to change only by an ordinance enacted prior to December 15 of any year to take effect in the next succeeding year; hence Ordinance No. 360, which changed a preexisting graduated sales tax to a percentage tax, should take effect in 1971.

Legal Issue Presented

The principal issue was whether an ordinance that changes an existing municipal license tax becomes effective in the year it is approved or only in the next succeeding year under Section 2309 of the Revised Administrative Code, and whether Section 2 of Republic Act No. 2264 abrogated or controlled the effectivity rule for such tax ordinances.

Court’s Analysis on Statutory Construction

The Court examined the apparent conflict between Section 2309 of the Revised Administrative Code, which distinguishes between ordinances changing existing license taxes and ordinances creating entirely new taxes, and Section 2 of Republic Act No. 2264, which speaks generally of a “tax ordinance” taking effect on the fifteenth day after its passage unless otherwise provided. The Court noted the rule that a statute does not repeal a prior statute in the absence of express repeal or irreconcilable repugnancy and that statutes in pari materia should be construed together. The Court held that the two provisions were not irreconcilable. It reasoned that Section 2309 specifically contemplates (1) ordinances that change a municipal license tax already in existence, which must be enacted prior to December 15 to take effect in the next year, and (2) ordinances creating entirely new taxes, which may be enacted during a quarter to take effect at the beginning of a subsequent quarter. The Court concluded that where a provision specifically addresses changes to existing municipal license taxes, as Section 2309 does, that provision controls; where an ordinance creates an entirely new tax, Section 2 of Republic Act No. 2264 governs.

Application of Law to the Facts

The Court found that Ordinance No. 360 did not create an entirely new tax but changed the existing graduated sales tax under Ordinance No. 4 into a percentage tax. Accordingly, the Court applied the rule of Section 2309 of the Revised Administrative Code and held that the ordinance should be effective only in the next succeeding year after approval, i.e., 1971. The Court therefore concluded that the taxes collected for the quarter July 1, 1970 to September 30, 1970 w

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