JURISPRUDENCE ON ORDINANCES IMPOSING

REGULATORY FEES UNDER THE EXERCISE OF POLICE

POWER

1. G.R. No. L-24265 December 28, 1979

PROCTER & GAMBLE PHILIPPINE MANUFACTURING

CORPORATION, plaintiff-appellant,
vs.
THE MUNICIPALITY OF JAGNA, PROVINCE OF BOHOL, defendant-
appellee.

A direct appeal by plaintiff company from the judgment of the Court of

First Instance of Manila, Branch VI, upholding the validity of Ordinance
No. 4, Series of 1957, enacted by defendant Municipality, which
imposed "storage fees on all exportable copra deposited in the bodega
within the jurisdiction of the Municipality of Jagna Bohol.

Plaintiff-appellant is a domestic corporation with principal offices in

Manila. lt is a consolidated corporation of Procter & Gamble Trading
Company and Philippine Manufacturing Company, which later became
Procter & Gamble Trading Company, Philippines. It is engaged in the
manufacture of soap, edible oil, margarine and other similar products,
and for this purpose maintains a "bodega" in defendant Municipality
where it stores copra purchased in the municipality and therefrom
ships the same for its manufacturing and other operations.

On December 13, 1957, the Municipal Council of Jagna enacted

Municipal Ordinance No. 4, Series of 1957, quoted hereinbelow:

AN ORDINANCE IMPOSING STORAGE FEES OF ALL

EXPORTABLE COPRA DEPOSITED IN THE BODEGA WITHIN
THE JURISDlCTI0N OF THE MUNICIPALITY OF JAGNA
BOHOL.

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 Be it ordained by the Municipal Council of Jagna Bohol, that:

SECTION 1. Any person, firm or corporation having a deposit of

exportable copra in the bodega, within the jurisdiction of the
Municipality of Jagna Bohol, shall pay to the Municipal Treasury a
storage fee of TEN (P0.10) CENTAVOS FOR EVERY HUNDRED
(100) kilos;

SECTION 2. All exportable copra deposited in the bodega within

the Municipality of Jagna Bohol, is part of the surveillance and
lookout of the Municipal Authorities;

SECTION 3. Any person, firm or corporation found violating the

provision of the preceding section of this Ordinance shall be
punished by a fine of not less than TWO HUNDRED (P 200.00)
PESOS, nor more than FOUR HUNDRED (P400.00) PESOS, or an
imprisonment of hot less than ONE MONTH, nor more than
THREE MONTHS, or both fines and imprisonment at the
discretion of the court.

SECTION 4. This Ordinance shall take effect on January 1, 1958.

APPROVED December 13,1957.

(Sgd.) TEODORO B. GALACAR Municipal Mayor

It is plaintiff's submission that the subject Ordinance is inapplicable to

it as it is not engaged in the business or trade of storing copra for
others for compensation or profit and that the only copra it stores is for
its exclusive use in connection with its business as manufacturer of
soap, edible oil, margarine and other similar products; that the levy is
intended as an "export tax" as it is collected on "exportable copra' ,
and, therefore, beyond the power of the Municipality to enact; and that
the fee of P0.10 for every 100 kilos of copra stored in the bodega is
excessive, unreasonable and oppressive and is imposed more for
revenue than as a regulatory fee.

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The main question to determine is whether defendant
Municipality was authorized to impose and collect the storage
fee provided for in the challenged Ordinance under the laws
then prevailing.

The validity of the Ordinance must be upheld pursuant to the broad

authority conferred upon municipalities by Commonwealth Act No.
472, approved on June 16, 1939, which was the prevailing law when
the Ordinance was enacted (Procter & Gamble Trading Co. vs.
Municipality of Medina, 43 SCRA 130 11972]). Section 1 thereof reads:

Section 1. A municipal council or municipal district council shall

have the authority to impose municipal license taxes upon
persons engaged in any occupation or business, or exercising
privileges in the municipality or municipal district, by requiring
them to secure licenses at rates fixed by the municipal council,
or municipal district council, and to collect fees and charges for
services rendered by the municipality or municipal district and
shall otherwise have power to levy for public local purposes, and
for school purposes, including teachers' salaries, just and uniform
taxes other than percentage taxes and taxes on specified
articles.

Under the foregoing provision, a municipality is authorized to impose

three kinds of licenses: (1) a license for regulation of useful occupation
or enterprises; (2) license for restriction or regulation of non-useful
occupations or enterprises; and (3) license for revenue. It is thus
unnecessary, as plaintiff would have us do, to determine whether the
subject storage fee is a tax for revenue purposes or a license fee to
reimburse defendant Municipality for service of supervision because
defendant Municipality is authorized not only to impose a license fee
but also to tax for revenue purposes.

The storage fee imposed under the question Ordinance is actually a

municipal license tax or fee on persons, firms and corporations, like

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plaintiff, exercising the privilege of storing copra in a bodega within the
Municipality's territorial jurisdiction. For the term "license tax" has not
acquired a fixed meaning. It is often used indiseriminately to designate
impositions exacted for the exercise of various privileges. In many
instances, it refers to revenue-raising exactions on privileges or
activities.

Not only is the imposition of the storage fee authorized by the general
grant of authority under section 1 of CA No. 472. Neither is the storage
fee in question prohibited nor beyond the power of the municipal
councils and municipal district councils to impose, as listed in section 3
of said CA No. 472.

Moreover, the business of buying and selling and storing copra

is property the subject of regulation within the police power
granted to municipalities under section 2238 of the Revised
Administrative Code or the "general welfare clause", which we
quote hereunder:

Section 2238. General power of council to enact ordinances and

make regulations. — The municipal council shall enact such
ordinances and make such regulations, not repugnant to law, as
may be necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety,
promote the prosperity, improve the morals, peace, good order,
comfort, and convenience of the municipality and the inhabitants
thereof, and for the protection of property therein.

For it has been held that a warehouse used for keeping or storing
copra is an establishment likely to endanger the public safety or likely
to give rise to conflagration because the oil content of the copra when
ignited is difficult to put under control by water and the use of
chemicals is necessary to put out the fire. And as the Ordinance itself

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states, all exportable copra deposited within the municipality is "part of
the surveillance and lookout of municipal authorities.

Plaintiff's argument that the imposition of P0.10 per 100 kilos of copra
stored in a bodega within defendant's territory is beyond the cost of
regulation and surveillance is not well taken. As enunciated in the case
of Victorias Milling Co. vs. Municipality of Victorias, supra.

The cost of regulation cannot be taken as a gauge, if the

municipality really intended to enact a revenue ordinance. For, 'if
the charge exceeds the expense of issuance of a license and
costs of regulation, it is a tax'. And if it is, and it is validly
imposed, 'the rule that license fees for regulation must bear a
reasonable relation to the expense of the regulation has no
application'.

Municipal corporations are allowed wide discretion in determining the

rates of imposable license fees even in cases of purely police power
measures. In the absence of proof as to municipal conditions and the
nature of the business being taxed as well as other factors relevant to
the issue of arbitrariness or unreasonableness of the questioned rates,
Courts will go slow in writing off an Ordinance. In the case at bar,
appellant has not sufficiently shown that the rate imposed by the
questioned Ordinance is oppressive, excessive and prohibitive.

Plaintiff's averment that the Ordinance, even if presumed valid, is

inapplicable to it because it is not engaged in the business or
occupation of buying or selling of copra but is only storing copra in
connection with its main business of manufacturing soap and other
similar products, and that to be compelled to pay the storage fees
would amount to double taxation, does not inspire assent. The
question of whether appellant is engaged in that business or
not is irrelevant because the storage fee, as previously mentioned, is
an imposition on the privilege of storing copra in a bodega within
defendant municipality by persons, firms or corporations. Section 1 of

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the Ordinance in question does not state that said persons, firms or
corporations should be engaged in the business or occupation of
buying or selling copra. Moreover, by plaintiff's own admission that it is
a consolidated corporation with its trading company, it will be hard to
segregate the copra it uses for trading from that it utilizes for
manufacturing.

Thus, it can be said that plaintiff's payment of storage fees imposed by

the Ordinance in question does not amount to double taxation. For
double taxation to exist, the same property must be taxed twice, when
it should be taxed but once. Double taxation has also been defined as
taxing the same person twice by the same jurisdiction for the same
thing. Surely, a tax on plaintiff's products is different from a tax on the
privilege of storing copra in a bodega situated within the territorial
boundary of defendant municipality.

Plaintiff's further contention that the storage fee imposed by the

Ordinance is actually intended to be an export tax, which is expressly
prohibited by section 2287 of the Revised Administrative Code, is
without merit. Said provision reads as follows:

Section 2287 ...

It shall not be in the power of the municipal council to impose a

tax in any form whatever upon goods and merchandise carried
into the municipality, or out of the same, and any attempt to
impose an import or export tax upon such goods in the guise of
an unreasonable charge for wharfage use of bridges or
otherwise, shall be void.

xxx xxx xxx

We have held that only where there is a clear showing that what is
being taxed is an export to any foreign country would the prohibition
come into play. When the Ordinance itself speaks of "exportable"
copra, the meaning conveyed is not exclusively export to a foreign

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country but shipment out of the municipality. The storage fee
impugned is not a tax on export because it is imposed not only upon
copra to be exported but also upon copra sold and to be used for
domestic purposes if stored in any warehouse in the Municipality and
the weight thereof is 100 kilos or more.

WHEREFORE, affirming the judgment appealed, from, we sustain the

validity of Ordinance No. 4, Series of 1957, of defendant Municipality
of Jagna Bohol, under the laws then prevailing.

2. G.R. No. L-43634 August 24, 1937

FRANCISCO JAVIER and ROMAN OZAETA, plaintiff-appellants,

vs.
TOMAS EARNSHAW, Mayor of the City of Manila, defendant-
appellee.

The municipal board of the City of Manila, in the exercise of the police
power, may reasonably regulate professions and business enterprises
within its territorial limits when the public health, safety and welfare so
demand. The ordinance in question is of this nature and, therefore, is
not illegal. "The conduct of particular kinds of business which may
injuriously affect the health, safety, comfort, or morals of the people of
the community may be forbidden within certain territorial limits; and a
state may prohibit the sale of any goods near a place in which a
religious society is holding an outdoor meeting, or may forbid traffic of
a harmful nature near institutions of learning asylums, prisons,
soldiers' homes state capitol grounds, and kindred place." (12 C. J.,
sec. 1076, p. 1275, p 1275; Hadacheck vs. Sebastian, 239 U. S., 394;
Ex parte Quong Wo, 161 Cal., 220.)

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Likewise, the municipal board of the City of Manila, by virtue of the
police power may reasonably regulate the use of private property
whenever such measure is required by the public health and safety,
and the welfare of its inhabitants (Fabie vs. City of Manila, 21 Phil.,
486; Kwong Sings vs. City of Manila, 41 Phil., 103; Manigault vs. Ward,
123 Fed., 707; Ex parte Yun Quong, 114 Pac., 835; Sierra Country vs.
Flanigan, 87 Pac., 913; Plunas County vs. Wheeler, 87 Pac., 909). The
ordinance under consideration prohibits the installation of gasoline
stations within the distance of 500 meters from each other not only to
prevent ruinous competition among merchants engaged in this kind of
business but also to protect the public from any harm or danger that
may be occassioned by said inflammable substance.

3. G.R. No. L-6583 February 16, 1912

RAMON FABIE, ET AL., plaintiffs-appellees,

vs.
THE CITY OF MANILA, defendant-appellant.

In accord with the rule laid down in the case of Lawton vs. Steele (152
U. S., 132-134), quoted at some length in the opinion in the case of U.
S. vs. Toribio, to justify the State in the exercise of it police powers on
behalf of the public, it must appear;

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 First, that the interests of the public generally, as distinguished
from those of a particular class, require such interference; and,
second, that the means are reasonably necessary for the
accomplishment of the purpose, and not unduly oppressive upon
individuals. The legislature may not, under the guise of
protecting the public interest, arbitrary interfere with private
business, or impose unusual and unnecessary restrictions upon
lawful occupations. In other words, is determination as to what is
a proper exercise of its police powers is not conclusive, but is
subject to the supervision of the court.

It is very clear that the ordinance, if it be held to be reasonable,

prescribes a rule in the interest of the public of the city of Manila
generally, as distinguished from the interest of individuals or of a
particular class. In determining its validity, therefore, the only
questions which need be considered, are whether its provisions are or
are not reasonably necessary for the accomplishment of its purposes,
and whether they are or are not unduly oppressive upon individuals.

That the ordinance is not "unduly oppressive upon individuals"

becomes very clear when the nature and extent of the limitations
imposed by its provisions upon the use of private property are
considered with relation to the public interests, the public health and
safety, which the ordinance seeks to secure.

To this we may add the following citation from the opinion in the case
of Commonwelth vs. Alger (7 Cush., 53, 84) which to our minds well
states the principle in this regard on which the validity of the of the
ordinance in question must be sustained:

We think it is a settled principle, growing out of the nature of well

ordered civil society, that every holder of property, however
absolute and unqualified may be his title, holds it under the
implied liability that his use of it may be so regulated that it shall
not be injurious to the rights of the community. . . . Rights of

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property, like all other social and conventional rights, are subject
to such reasonable limitations in their enjoyment as shall prevent
them from being injurious, and to such reasonable restraints and
regulations established by law, as the legislature, under the
governing and controlling power vested in them by the
constitution, may think necessary and expedient.

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4. G.R. No. 138810 September 29, 2004

BATANGAS CATV, INC., petitioner,

vs.
THE COURT OF APPEALS, THE BATANGAS CITY SANGGUNIANG
PANLUNGSOD and BATANGAS CITY MAYOR, respondents.

There is no dispute that respondent Sangguniang Panlungsod, like

other local legislative bodies, has been empowered to enact
ordinances and approve resolutions under the general welfare clause
of B.P. Blg. 337, the Local Government Code of 1983. That it continues
to posses such power is clear under the new law, R.A. No. 7160 (the
Local Government Code of 1991). Section 16 thereof provides:

"SECTION 16. General Welfare. – Every local government unit

shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and those
which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government
units shall ensure and support, among others, the preservation
and enrichment of culture, promote health and safety, enhance
the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant,
scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order,
and preserve the comfort and convenience of their inhabitants."

In addition, Section 458 of the same Code specifically mandates:

"SECTION 458. Powers, Duties, Functions and Compensation. —

(a) The Sangguniang Panlungsod, as the legislative body of the
city, shall enact ordinances, approve resolutions and appropriate
funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of

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 the corporate powers of the city as provided for under Section 22
of this Code, x x x:"

The general welfare clause is the delegation in statutory form

of the police power of the State to LGUs. Through this, LGUs may
prescribe regulations to protect the lives, health, and property of their
constituents and maintain peace and order within their respective
territorial jurisdictions. Accordingly, we have upheld enactments
providing, for instance, the regulation of gambling, the occupation of
rig drivers, the installation and operation of pinball machines, the
maintenance and operation of cockpits, the exhumation and transfer of
corpses from public burial grounds, and the operation of hotels,
motels, and lodging houses as valid exercises by local legislatures of
the police power under the general welfare clause.

Speaking for the Court in the leading case of United States vs.
Abendan, Justice Moreland said: "An ordinance enacted by virtue of the
general welfare clause is valid, unless it contravenes the fundamental
law of the Philippine Islands, or an Act of the Philippine Legislature, or
unless it is against public policy, or is unreasonable, oppressive,
partial, discriminating, or in derogation of common right." In De la Cruz
vs. Paraz, we laid the general rule "that ordinances passed by virtue of
the implied power found in the general welfare clause must be
reasonable, consonant with the general powers and purposes of the
corporation, and not inconsistent with the laws or policy of the State."

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5. G.R. No. L-34915 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF

QUEZON CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First
Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG
PILIPINO, INC., respondents.

Police power is defined by Freund as 'the power of promoting the

public welfare by restraining and regulating the use of liberty and
property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50).
It is usually exerted in order to merely regulate the use and enjoyment
of property of the owner. If he is deprived of his property outright, it is
not taken for public use but rather to destroy in order to promote the
general welfare. In police power, the owner does not recover from the
government for injury sustained in consequence thereof (12 C.J. 623).
It has been said that police power is the most essential of government
powers, at times the most insistent, and always one of the least
limitable of the powers of government (Ruby vs. Provincial Board, 39
PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power
embraces the whole system of public regulation (U.S. vs. Linsuya Fan,
10 PhiL 104). The Supreme Court has said that police power is so far-

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reaching in scope that it has almost become impossible to limit its
sweep. As it derives its existence from the very existence of the state
itself, it does not need to be expressed or defined in its scope. Being
coextensive with self-preservation and survival itself, it is the most
positive and active of all governmental processes, the most essential
insistent and illimitable Especially it is so under the modern democratic
framework where the demands of society and nations have multiplied
to almost unimaginable proportions. The field and scope of police
power have become almost boundless, just as the fields of public
interest and public welfare have become almost all embracing and
have transcended human foresight. Since the Courts cannot foresee
the needs and demands of public interest and welfare, they cannot
delimit beforehand the extent or scope of the police power by which
and through which the state seeks to attain or achieve public interest
and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

The police power being the most active power of the government
and the due process clause being the broadest station on
governmental power, the conflict between this power of government
and the due process clause of the Constitution is oftentimes inevitable.

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