Case Summary (G.R. No. L-26521)
Nature of the Tax: License versus Real Estate
The respondents argued that Ordinance 11 imposed a “real estate tax” in excess of the one-percent ceiling under their Charter. The Court clarified that a real estate tax is an ad valorem levy on ownership at fixed intervals, enforced by lien and sale. By contrast, Ordinance 11 imposes a fixed annual license fee per apartment door, payable on operation, without assessors, liens, or distraint. Its title and structure classify it as a municipal license (privilege) tax on the business of renting tenement apartments.
Authority under the Local Autonomy Act
Section 2 of RA 2264 empowers chartered cities “to impose municipal license taxes or fees upon persons engaged in any occupation or business … and otherwise to levy … just and uniform taxes, licenses or fees,” except for specified prohibited categories. A tax on operating tenement houses is neither a prohibited category nor a residence, documentary‐stamp, income, nor customs duty tax. Consequently, the City has statutory authority under RA 2264 to impose the license tax.
Double Taxation Argument
The lower court held that the tax constituted double and “treble” taxation because respondents also paid real estate and national “fixed” income taxes on rental income. The Supreme Court rejected this, noting that distinct levies by different taxing authorities or on different bases do not constitute unconstitutional double taxation. A property tax and an occupation license tax may co-exist. Philippine law contains no absolute prohibition on double taxation, so long as constitutional uniformity is respected.
Penal Clause and Imprisonment for Non-Payment
Ordinance 11 prescribes a penalty of up to ₱200 or six months’ imprisonment for failure to pay the license tax. The Constitution bars imprisonment for debt or failure to pay a poll tax. The Court held that a license tax is not a “debt” in the contractual sense nor a poll tax. Penal sanctions for non-payment of taxes are permissible and are expressly authorized by the Iloilo City Charter.
Uniformity and Equality of Taxation
The trial court found a uniformity violation because only tenement houses bore the additional tax. The Supreme Court explained that uniformity requires equal treatment of all subjects within the same class. Tenement houses form a distinct class. The ordinance applies equally to all tenement operators in Iloilo City, satisfying the cons
...continue readingCase Syllabus (G.R. No. L-26521)
Procedural History
- The City of Iloilo appealed from the Court of First Instance’s March 30, 1966 decision declaring Ordinance 11, series of 1960, illegal and ordering refunds to the plaintiffs-appellees.
- The initial challenge arose after this Court declared Ordinance 86 (1946) ultra vires in City of Iloilo vs. Remedios Sian Villanueva and Eusebio Villanueva (L-12695, March 23, 1959).
- Supreme Court Decision promulgated December 28, 1968 (G.R. No. L-26521, per Justice Castro).
Relevant Statutory Provisions
- Iloilo City Charter (Com. Act 158), Sec. 21(j): Authorizes taxation and licensing of specified businesses (hotels, boarding houses, etc.).
- Republic Act 2264 (Local Autonomy Act), Sec. 2: Grants chartered cities broad authority “to levy for public purposes, just and uniform taxes, licenses or fees” on any occupation or business, except those expressly excluded.
Ordinance 86 (1946) and Prior Ruling
- Enacted September 30, 1946: imposed license tax on tenement houses (P25 per casa de vecindad; P24 or P12 per apartment in designated streets).
- Villanuevas challenged as ultra vires for lack of express charter power.
- This Court (L-12695) struck down Ordinance 86: tenement-house taxation not among charter-granted powers.
Enactment of Ordinance 11, Series of 1960
- Enacted January 15, 1960 under RA 2264’s authority.
- Defined “tenement house” (§2) as any building divided into apartments or accessorias for rent.
- Fixed municipal license tax per door (§3):
• Apartment houses of strong/mixed materials: P20/P10 p.a.
• Rooming houses of strong/mixed materials: P10/P5 p.a.
• Business-engaged tenements on specified streets: P30 p.a.
• Business-engaged elsewhere: P12 p.a.
• Surrounding the market once declared commercial: P24 p.a. - Penal clause (§5): fine up to P200, or imprisonment up to six months, or both.
Factual Background
- Spouses Villanueva owned five tenement houses (43 apartments); other appellees owned 10 apartments.
- Each apartment fronted on a street; first floor used as store, second as dwelling by merchant-tenant.
- Appellee Villanueva’s other rental properties in cities without similar taxes.
- City collected P5,824.30 (Vi
- ...continue reading