06. G.R. No.

L-24192           May 22, 1968

COMMISSIONER OF CUSTOMS, petitioner,
vs.
CALTEX (PHILIPPINES), INC., and COURT of TAX APPEALS, respondents.

Ross, Selph, Salcedo, Del Rosario, Bito and Misa for respondents.
Office of the Solicitor General for petitioner.

CONCEPCION, C.J.:

The Commissioner of Customs seeks the review by certiorari of a decision of the Court of Tax
Appeals ordering him to refund to Caltex (Philippines), Inc., the sum of P33,766.00, without
pronouncement as to costs.

There is no dispute as to the facts, the same having been stipulated. During the period from January
to September 1959, 32 shipments of assorted goods, consigned to Caltex, arrived at the Port of
Cebu. The Collector of Customs thereof assessed and collected the special import tax prescribed in
Republic Act No. 1394, at the rate of 17%, amounting to P75,730.00, on the goods imported from
January to June 1959, and at the rate of 15.3%, in the total sum of P49,408.00, on the other
shipments. Thus, the aggregate sum paid by Caltex amounted to P125,138.00.

In due time, it filed separate protests upon the ground that the rate fixed in Section 1 of Republic Act
1394, for the year 1959, was 11.9%. On April 22, 1960, the Collector of Customs of Cebu rendered
his decision on said protests holding that the rate of special import tax applicable, pursuant to
Proclamation No. 601 of the President of the Philippines, dated July 14, 1959, is 15.3%. This
decision having been affirmed by the Commissioner of Customs, Caltex appealed to the Court of
Tax Appeals, with the result already adverted to. Hence, the present petition for review on certiorari,
filed by said Commissioner, which has been given due course.

The point in issue is the rate of the special import tax collectible on the importations under
consideration. The parties agree that, if the rate applicable is 11.9%, the total amount of taxes due
would be P91,322.00 and Caltex would be entitled to reimbursement in the sum of P33,766.00,
whereas, if the proper rate were 15.3%, the special import tax due would aggregate P117,567.00, so
that the amount refundable would be P7,571.00. 1ªvvphi1.nêt

The pertinent law is admittedly Republic Act 1394, approved on August 29, 1955. Section 1 thereof
prescribes a diminishing rate of special import tax on goods, articles or products imported or brought
into the Philippines, ranging from 17% for 1956 to 1.7% for 1965. The rate fixed for the calendar year
1959 is 11.9%. However, Section 2 of said Act provides:

SEC. 2. (a) Notwithstanding the provisions of section one of this Act, if as a result of the
application of the schedule therein, the total revenue derived from the customs duties and
from the special import tax on goods, articles or products imported from the United States is
less in any calendar year than proceeds from the exchange tax imposed under Republic Act
Numbered Six hundred and one, as amended, on such good, articles or products during the
calendar year 1955, the President may, by proclamation, suspend the reduction of the
special import tax for the next succeeding calendar year as prescribed in the schedule,
and, in order to restore the total revenue to be collected on the importation of United States
goods, articles or products to the level of the exchange tax thereon during the calendar year
1955, increase the special import tax on all goods coming from any country for such
succeeding calendar year to any previous rate provided for in this Act which is deemed
 necessary to restore the said revenue to the level attained in the calendar year 1955.
(Emphasis supplied.)

(b) After the President shall have made adjustments in the rate of tax for any given year in
accordance with paragraph (a) of this section, the tax to be imposed in subsequent years
shall be as provided for the corresponding year in the schedule in section one: Provided,
That the President may impose any higher rate of tax within the schedule other than that
fixed for the corresponding year in order to cover anticipated deficiency in revenue arising
from the operation of this Act." .

Pursuant to the authority vested in him by this section, on July 14, 1959, the President issued
Proclamation No. 601 suspending "during the calendar year 1959, starting from January 1st," the
rate of 11.9% prescribed therefor in Section 1 of Republic Act 1394, and increasing the special
import tax for said year to 15.3% — which is the rate prescribed in sec. 1 of Rep. Act 1394 for the
year 1957 — upon the ground that such measure was "considered necessary to restore in the
calendar year 1959 ... the total revenue to be collected on the importation of ... goods ... to the level
of the exchange tax collected ... during the calendar year 1955," which was P68,929,140.00,
inasmuch as the total revenue from import duties and special import tax from January 1 to
December 31, 1958, "amounted to only P62,684,354.60," or "below the level attained in the calendar
year 1955."

Despite the explicit language of said proclamation, making the increase effective "during the
calendar year 1959, starting from January 1," the Tax Court ruled the same inapplicable to the
importations in question for the reason that the same were made prior to the publication of said
proclamation in the issue of the Official Gazette dated July 27, 1959, which was actually released to
the public on September 22, 1959, and said Section 2 of Republic Act 1394 authorized the increase
of the special import tax for the "succeeding calendar year," from which said Court deduced that said
increase could apply only to importations made on the 15th day after the publication of the
proclamation in the Official Gazette, or October 8, 1959, or subsequently thereto.

The issue boils down to this: Does the phrase "succeeding calendar year," in section 2 refer to the
year succeeding the issuance or publication of the proclamation suspending the operation of the
rate set forth in section 1, or to the "calendar year" in which the total revenue derived from customs
duties and special import tax is less than the proceeds from the exchange tax imposed during
theyear 1955? The Tax Court adopted the first alternative; but, we find that the answer must be
otherwise.

Pursuant to said section 2, "if as a result of application of the schedule" provided in section 1, "the
total revenue derived from the customs duties and from the special import tax on goods, articles or
products imported from the United States is less in any calendar year than the proceeds from the
exchange tax imposed under Republic Act 601, as amended, on such goods, articles or products
during the calendar year 1955" — in which Republic Act 1394 was approved — "the President may
by proclamation suspend the reduction of the special import tax for the next succeeding calendar
year as prescribed in the schedule" aforementioned "and in order to restore the total revenue to be
collected on the importation of United States goods, articles or products to the level of the exchange
tax thereon during the calendar year 1955, increase the special import tax on all goods coming from
any country for such succeeding calendar year to any previous rate provided for in this Act which is
deemed necessary to restore the said revenue to the level attained in the calendar year 1955."

It is obvious, from the context and the spirit of this provision that the expression "succeeding
calendar year" refers, not to the "year" succeeding the issuance of the
executive proclamation increasing the rate of special import tax, but to the "calendar year" following
that in which "the total revenue derived from customs duties and from the special import tax on
goods, articles or products imported from the United States is less ... than the proceeds from the
exchange tax imposed under Republic Act Numbered 601 on such goods, articles or products during
the calendar year 1955."

Indeed, the phrase "succeeding calendar year" could not refer, either to the period immediately
following the issuance of said proclamation, or to the calendar year subsequent thereto, because:

1) The proclamation could not possibly be issued before the expiration of the calendar year
in which a reduction of the total revenues derived from customs duties and special import
taxes has taken place, because the data essential to determine the rate of increase to be
ordered by the President can not be completed before the end of said year;

2) Since it would generally take some time, after the close of said "calendar year," to gather
said data, the proclamation could not possibly be issued at the very first day of the "calendar
year" next following;

3) Inasmuch as the proclamation would necessarily have to be issued sometime after said
day, the result would be — if the view taken by the Tax Court were accepted — that the
reduction in the total revenue for the preceding year could not be offset immediately
thereafter, but would have to wait until, at least, one full year later, thus unduly delaying the
application of the remedy necessary to protect the stability of our currency and national
economy.

Evidently realizing that the total revenue from customs duties and the special import tax for the year
1958 was less than the proceeds from the exchange tax imposed during the year 1955, and that the
President would have to exercise his authority under Section 2(a), but could not fix the rate of
increase of the special import tax to be ordered by executive proclamation, until after the precise
amount of said total revenue shall have been determined, the Commissioner of Customs, acting in
pursuance of instructions from higher authorities, had ordered all collectors of customs to assess
and collect, beginning from January 1, 1959, the special import tax at the rate of 17%, subject to
adjustment or liquidation, later on, in accordance with the rate to be fixed by said proclamation, and,
upon the issuance thereof, levied and collected said tax at the rate so fixed. As a consequence, all
importers, including Caltex, were put on notice, since January 1, 1959, that the rate of 11.9%
prescribed in section 1 of Republic Act 1394 for the special import tax during that year would be
suspended and the rate thereof increased, pursuant to section 2 of said Act, although the specific
rate of said increase would be fixed by proclamation to be issued by the President. In fact, Caltex
had paid said tax, at the rate of 17% on each one of its importations, during the year 1959, prior to
the issuance of said proclamation, and, at the rate of 15.3% fixed therein, for its subsequent
importations.

Citing People vs. Bonje,1 People vs. Que Po Lay,2 People vs. Chan Hen,3 Tan Lim Te vs. Workmen's
Compensation Commission,4 People vs. Uy Kimpang,5 and Section 11 of the Revised Administrative
Code,6 the Tax Court held that Proclamation No. 601 "became effective only after fifteen (15) days"
from the actual release, on September 22, 1959, of the issue of the Official Gazette of July 27, 1959,
in which the proclamation was published, or "only on October 8, 1959."

Section 11 of the Revised Administrative Code does not bear out the view taken by the Tax Court.
To begin with, said section refers to statutes "passed by the Congress of the Philippines." It does not
apply to executive proclamations. Secondly, such statutes "take effect at the beginning of the
fifteenth day after the completion of the publication of the statute in the Official Gazette," but, only,
"in the absence of special provision," or, in the language of Article 2 of the Civil Code of the
Philippines, "unless it is otherwise provided" in the statute or law involved. Proclamation No. 601
explicitly declares, however, that the rate of increase therein fixed shall be in force "during the
calendar year 1959, starting from January 1." Thirdly, said section 11 of the Revised Administrative
Code provides, also, that for the purpose thereof, "the Gazette is conclusively presumed to be
published on the date indicated therein as the date of issue." The Tax Court contravened this
provision when it considered, not the date appearing in the issue of the Official Gazette in which the
proclamation appeared, but the actual date of release of said issue.

Moreover, the cases cited in the decision of said Court are not in point. The Bonje case construed,
not section 11 of the Revised Administrative Code, but a provision of Article 2 of the Civil Code of
the Philippines relative to the date of effectivity thereof. The case of Que Po Lay, in turn, dwelt on
the date of effectivity of Central Bank Circular No. 20, dated December 9, 1949, which was not
published in the Official Gazette until November, 1951.7 Unlike Proclamation No. 601, said circular
was silent on its date of effectivity. Again, the Rules of the Workmen's Compensation Commission,
which were involved in the case of Tan Lim Te,8 explicitly provided that they shall "take effect fifteen
days after its publication in the Official Gazette." Upon the other hand, in the case of Chan Hen the
decision of the Court of Appeals was based upon the penal nature of the circular9 involved therein,
like that sought to be applied in the Que Po Lay case, upon which the same court relied in the case
of Uy Kimpang.10

Particularly relevant to the question under consideration is the case of Gil Balbuna vs. The Secretary
of Education.11 One of the issues therein referred to a department order promulgating rules and
regulations for the conduct of the compulsory flag ceremony in all schools, as provided in Republic
Act No. 1265. The petitioners in said case maintained that the department order had no binding
force, because it had not been published in the Official Gazette. This Court rejected such pretense
and refused to apply the rule laid down in the Que Po Lay case and affirmed in Lim Hoa Ting vs.
Central Bank,12 upon ground that the penalties provided for violations of the circulars involved in
these two (2) cases constituted "the primary factor that influenced the rationale" thereof.

In effect, this Court held that the aforementioned department order had no penal character, despite
the adverse consequences it may have upon those who violate the same, for which reason its
publication in the Official Gazette was not essential to impart the binding force. Similarly,
Proclamation No. 601, like tax laws, in general, is not penal in nature. Indeed, a legislation merely
imposing taxes, without strictly penal sanctions for violations thereof, may have a retrospective
operation, without being an ex post facto law.13 Hence:

A statute imposing a penalty, computed at a certain per cent per annum for a five-year
period, upon estates of decedents for nonpayment of taxes during the lifetime of the
owner, not being in punishment of crime, is not invalid as an ex post facto law in so far as the
five-year period antedates the passage of the statute.14 (Emphasis supplied.)

WHEREFORE, we hold that the rate of special import tax due and collectible on the importations
under consideration is 15.3%; that the amount refundable to Caltex is P7,571.00; and that the
appealed decision of the Court of Tax Appeals should be as it is hereby modified accordingly,
without special pronouncement as to costs.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Fernando, J., is on leave.
07. G.R. No. L-26521      December 28, 1968

EUSEBIO VILLANUEVA, ET AL., plaintiff-appellee,

vs.
CITY OF ILOILO, defendants-appellants.

Pelaez, Jalandoni and Jamir for plaintiff-appellees.

Assistant City Fiscal Vicente P. Gengos for defendant-appellant.

CASTRO, J.:

Appeal by the defendant City of Iloilo from the decision of the Court of First Instance of Iloilo
declaring illegal Ordinance 11, series of 1960, entitled, "An Ordinance Imposing Municipal License
Tax On Persons Engaged In The Business Of Operating Tenement Houses," and ordering the City
to refund to the plaintiffs-appellees the sums of collected from them under the said ordinance.

On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license
tax fees as follows: (1) tenement house (casa de vecindad), P25.00 annually; (2) tenement house,
partly or wholly engaged in or dedicated to business in the streets of J.M. Basa, Iznart and Aldeguer,
P24.00 per apartment; (3) tenement house, partly or wholly engaged in business in any other
streets, P12.00 per apartment. The validity and constitutionality of this ordinance were challenged by
the spouses Eusebio Villanueva and Remedies Sian Villanueva, owners of four tenement houses
containing 34 apartments. This Court, in City of Iloilo vs. Remedios Sian Villanueva and Eusebio
Villanueva, L-12695, March 23, 1959, declared the ordinance ultra vires, "it not appearing that the
power to tax owners of tenement houses is one among those clearly and expressly granted to the
City of Iloilo by its Charter."

On January 15, 1960 the municipal board of Iloilo City, believing, obviously, that with the passage of
Republic Act 2264, otherwise known as the Local Autonomy Act, it had acquired the authority or
power to enact an ordinance similar to that previously declared by this Court as ultra vires, enacted
Ordinance 11, series of 1960, hereunder quoted in full:

AN ORDINANCE IMPOSING MUNICIPAL LICENSE TAX ON PERSONS ENGAGED IN

THE BUSINESS OF OPERATING TENEMENT HOUSES

Be it ordained by the Municipal Board of the City of Iloilo, pursuant to the provisions of
Republic Act No. 2264, otherwise known as the Autonomy Law of Local Government, that:

Section 1. — A municipal license tax is hereby imposed on tenement houses in accordance

with the schedule of payment herein provided.

Section 2. — Tenement house as contemplated in this ordinance shall mean any building or
dwelling for renting space divided into separate apartments or accessorias.

Section 3. — The municipal license tax provided in Section 1 hereof shall be as follows:

I. Tenement houses:

(a) Apartment house made of strong materials P20.00 per door p.a.

(b) Apartment house made of mixed materials P10.00 per door p.a.
 II Rooming house of strong materials P10.00 per door p.a.

Rooming house of mixed materials P5.00 per door p.a.

III. Tenement house partly or wholly engaged in or dedicated to

business in the following streets: J.M. Basa, Iznart, Aldeguer,
Guanco and Ledesma from Plazoleto Gay to Valeria. St. P30.00 per door p.a.

IV. Tenement house partly or wholly engaged in or dedicated to

business in any other street P12.00 per door p.a.

V. Tenement houses at the streets surrounding the super market

as soon as said place is declared commercial P24.00 per door p.a.

Section 4. — All ordinances or parts thereof inconsistent herewith are hereby amended.

Section 5. — Any person found violating this ordinance shall be punished with a fine note
exceeding Two Hundred Pesos (P200.00) or an imprisonment of not more than six (6)
months or both at the discretion of the Court.

Section 6 — This ordinance shall take effect upon approval.

ENACTED, January 15, 1960.

In Iloilo City, the appellees Eusebio Villanueva and Remedios S. Villanueva are owners of five
tenement houses, aggregately containing 43 apartments, while the other appellees and the same
Remedios S. Villanueva are owners of ten apartments. Each of the appellees' apartments has a door
leading to a street and is rented by either a Filipino or Chinese merchant. The first floor is utilized as
a store, while the second floor is used as a dwelling of the owner of the store. Eusebio Villanueva
owns, likewise, apartment buildings for rent in Bacolod, Dumaguete City, Baguio City and Quezon
City, which cities, according to him, do not impose tenement or apartment taxes.

By virtue of the ordinance in question, the appellant City collected from spouses Eusebio Villanueva
and Remedios S. Villanueva, for the years 1960-1964, the sum of P5,824.30, and from the appellees
Pio Sian Melliza, Teresita S. Topacio, and Remedios S. Villanueva, for the years 1960-1964, the
sum of P1,317.00. Eusebio Villanueva has likewise been paying real estate taxes on his property.

On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a complaint, and an amended
complaint, respectively, against the City of Iloilo, in the aforementioned court, praying that Ordinance
11, series of 1960, be declared "invalid for being beyond the powers of the Municipal Council of the
City of Iloilo to enact, and unconstitutional for being violative of the rule as to uniformity of taxation
and for depriving said plaintiffs of the equal protection clause of the Constitution," and that the City
be ordered to refund the amounts collected from them under the said ordinance.

On March 30, 1966,1 the lower court rendered judgment declaring the ordinance illegal on the
grounds that (a) "Republic Act 2264 does not empower cities to impose apartment taxes," (b) the
same is "oppressive and unreasonable," for the reason that it penalizes owners of tenement houses
who fail to pay the tax, (c) it constitutes not only double taxation, but treble at that and (d) it violates
the rule of uniformity of taxation.

The issues posed in this appeal are:

1. Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double
taxation?

2. Is the City of Iloilo empowered by the Local Autonomy Act to impose tenement taxes?

3. Is Ordinance 11, series of 1960, oppressive and unreasonable because it carries a penal
clause?

4. Does Ordinance 11, series of 1960, violate the rule of uniformity of taxation?

1. The pertinent provisions of the Local Autonomy Act are hereunder quoted:

SEC. 2. Any provision of law to the contrary notwithstanding, all chartered cities,
municipalities and municipal districts shall have authority to impose municipal license taxes
or fees upon persons engaged in any occupation or business, or exercising privileges in
chartered cities, municipalities or municipal districts by requiring them to secure licences at
rates fixed by the municipal board or city council of the city, the municipal council of the
municipality, or the municipal district council of the municipal district; to collect fees and
charges for services rendered by the city, municipality or municipal district; to regulate and
impose reasonable fees for services rendered in connection with any business, profession or
occupation being conducted within the city, municipality or municipal district and otherwise to
levy for public purposes, just and uniform taxes, licenses or fees; Provided, That
municipalities and municipal districts shall, in no case, impose any percentage tax on sales
or other taxes in any form based thereon nor impose taxes on articles subject to specific tax,
except gasoline, under the provisions of the National Internal Revenue Code; Provided,
however, That no city, municipality or municipal district may levy or impose any of the
following:

(a) Residence tax;

(b) Documentary stamp tax;

(c) Taxes on the business of persons engaged in the printing and publication of any
newspaper, magazine, review or bulletin appearing at regular intervals and having fixed
prices for for subscription and sale, and which is not published primarily for the purpose of
publishing advertisements;

(d) Taxes on persons operating waterworks, irrigation and other public utilities except electric
light, heat and power;

(e) Taxes on forest products and forest concessions;

(f) Taxes on estates, inheritance, gifts, legacies, and other acquisitions mortis causa;

(g) Taxes on income of any kind whatsoever;

(h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of
licenses or permits for the driving thereof;

(i) Customs duties registration, wharfage dues on wharves owned by the national
government, tonnage, and all other kinds of customs fees, charges and duties;
 (j) Taxes of any kind on banks, insurance companies, and persons paying franchise tax; and

(k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign
insurance companies.

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall
have authority to suspend the effectivity of any ordinance within one hundred and twenty
days after its passage, if, in his opinion, the tax or fee therein levied or imposed is unjust,
excessive, oppressive, or confiscatory, and when the said Secretary exercises this authority
the effectivity of such ordinance shall be suspended.

In such event, the municipal board or city council in the case of cities and the municipal
council or municipal district council in the case of municipalities or municipal districts may
appeal the decision of the Secretary of Finance to the court during the pendency of which
case the tax levied shall be considered as paid under protest.

It is now settled that the aforequoted provisions of Republic Act 2264 confer on local governments
broad taxing authority which extends to almost "everything, excepting those which are mentioned
therein," provided that the tax so levied is "for public purposes, just and uniform," and does not
transgress any constitutional provision or is not repugnant to a controlling statute.2 Thus, when a tax,
levied under the authority of a city or municipal ordinance, is not within the exceptions and limitations
aforementioned, the same comes within the ambit of the general rule, pursuant to the rules
of expressio unius est exclusio alterius, and exceptio firmat regulum in casibus non excepti.

Does the tax imposed by the ordinance in question fall within any of the exceptions provided for in
section 2 of the Local Autonomy Act? For this purpose, it is necessary to determine the true nature
of the tax. The appellees strongly maintain that it is a "property tax" or "real estate tax,"3 and not a
"tax on persons engaged in any occupation or business or exercising privileges," or a license tax, or
a privilege tax, or an excise tax.4 Indeed, the title of the ordinance designates it as a
"municipal license tax on persons engaged in the business of operating tenement houses," while
section 1 thereof states that a "municipal license tax is hereby imposed on tenement houses." It is
the phraseology of section 1 on which the appellees base their contention that the tax involved is a
real estate tax which, according to them, makes the ordinance ultra vires as it imposes a levy "in
excess of the one per centum real estate tax allowable under Sec. 38 of the Iloilo City Charter, Com.
Act 158."5.

It is our view, contrary to the appellees' contention, that the tax in question is not a real estate tax.
Obviously, the appellees confuse the tax with the real estate tax within the meaning of the
Assessment Law,6 which, although not applicable to the City of Iloilo, has counterpart provisions in
the Iloilo City Charter.7 A real estate tax is a direct tax on the ownership of lands and buildings or
other improvements thereon, not specially exempted,8 and is payable regardless of whether the
property is used or not, although the value may vary in accordance with such factor.9 The tax is
usually single or indivisible, although the land and building or improvements erected thereon are
assessed separately, except when the land and building or improvements belong to separate
owners.10 It is a fixed proportion11 of the assessed value of the property taxed, and requires,
therefore, the intervention of assessors.12 It is collected or payable at appointed times,13 and it
constitutes a superior lien on and is enforceable against the property14 subject to such taxation, and
not by imprisonment of the owner.

The tax imposed by the ordinance in question does not possess the aforestated attributes. It is not a
tax on the land on which the tenement houses are erected, although both land and tenement houses
may belong to the same owner. The tax is not a fixed proportion of the assessed value of the
tenement houses, and does not require the intervention of assessors or appraisers. It is not payable
at a designated time or date, and is not enforceable against the tenement houses either by sale or
distraint. Clearly, therefore, the tax in question is not a real estate tax.

"The spirit, rather than the letter, or an ordinance determines the construction thereof, and the court
looks less to its words and more to the context, subject-matter, consequence and effect.
Accordingly, what is within the spirit is within the ordinance although it is not within the letter thereof,
while that which is in the letter, although not within the spirit, is not within the ordinance."15 It is within
neither the letter nor the spirit of the ordinance that an additional real estate tax is being imposed,
otherwise the subject-matter would have been not merely tenement houses. On the contrary, it is
plain from the context of the ordinance that the intention is to impose a license tax on the operation
of tenement houses, which is a form of business or calling. The ordinance, in both its title and body,
particularly sections 1 and 3 thereof, designates the tax imposed as a "municipal license tax" which,
by itself, means an "imposition or exaction on the right to use or dispose of property, to pursue a
business, occupation, or calling, or to exercise a privilege."16.

"The character of a tax is not to be fixed by any isolated words that may beemployed in the
statute creating it, but such words must be taken in the connection in which they are used
and the true character is to be deduced from the nature and essence of the subject."17 The
subject-matter of the ordinance is tenement houses whose nature and essence are
expressly set forth in section 2 which defines a tenement house as "any building or
dwelling for renting space divided into separate apartments or accessorias." The Supreme
Court, in City of Iloilo vs. Remedios Sian Villanueva, et al., L-12695, March 23, 1959,
adopted the definition of a tenement house18 as "any house or building, or portion thereof,
which is rented, leased, or hired out to be occupied, or is occupied, as the home or residence
of three families or more living independently of each other and doing their cooking in the
premises or by more than two families upon any floor, so living and cooking, but having a
common right in the halls, stairways, yards, water-closets, or privies, or some of them."
Tenement houses, being necessarily offered for rent or lease by their very nature and
essence, therefore constitute a distinct form of business or calling, similar to the hotel or
motel business, or the operation of lodging houses or boarding houses. This is precisely one
of the reasons why this Court, in the said case of City of Iloilo vs. Remedios Sian Villanueva,
et al., supra, declared Ordinance 86 ultra vires, because, although the municipal board of
Iloilo City is empowered, under sec. 21, par. j of its Charter, "to tax, fix the license fee for,
and regulate hotels, restaurants, refreshment parlors, cafes, lodging houses, boarding
houses, livery garages, public warehouses, pawnshops, theaters, cinematographs,"
tenement houses, which constitute a different business enterprise,19 are not mentioned in the
aforestated section of the City Charter of Iloilo. Thus, in the aforesaid case, this Court
explicitly said:.

"And it not appearing that the power to tax owners of tenement houses is one among those
clearly and expressly granted to the City of Iloilo by its Charter, the exercise of such power
cannot be assumed and hence the ordinance in question is ultra vires insofar as it taxes a
tenement house such as those belonging to defendants." .

The lower court has interchangeably denominated the tax in question as a tenement tax or an
apartment tax. Called by either name, it is not among the exceptions listed in section 2 of the Local
Autonomy Act. On the other hand, the imposition by the ordinance of a license tax on persons
engaged in the business of operating tenement houses finds authority in section 2 of the Local
Autonomy Act which provides that chartered cities have the authority to impose municipal license
taxes or fees upon persons engaged in any occupation or business, or exercising privileges within
their respective territories, and "otherwise to levy for public purposes, just and uniform taxes,
licenses, or fees." .

2. The trial court condemned the ordinance as constituting "not only double taxation but treble at
that," because "buildings pay real estate taxes and also income taxes as provided for in Sec. 182 (A)
(3) (s) of the National Internal Revenue Code, besides the tenement tax under the said ordinance."
Obviously, what the trial court refers to as "income taxes" are the fixed taxes on business and
occupation provided for in section 182, Title V, of the National Internal Revenue Code, by virtue of
which persons engaged in "leasing or renting property, whether on their account as principals or as
owners of rental property or properties," are considered "real estate dealers" and are taxed
according to the amount of their annual income.20.

While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National
Internal Revenue Code as real estate dealers, and still taxable under the ordinance in question, the
argument against double taxation may not be invoked. The same tax may be imposed by the
national government as well as by the local government. There is nothing inherently obnoxious in the
exaction of license fees or taxes with respect to the same occupation, calling or activity by both the
State and a political subdivision thereof.21.

The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate
taxes and the tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-
settled rule that a license tax may be levied upon a business or occupation although the land or
property used in connection therewith is subject to property tax. The State may collect an ad valorem
tax on property used in a calling, and at the same time impose a license tax on that calling, the
imposition of the latter kind of tax being in no sensea double tax.22.

"In order to constitute double taxation in the objectionable or prohibited sense the same
property must be taxed twice when it should be taxed but once; both taxes must be imposed
on the same property or subject-matter, for the same purpose, by the same State,
Government, or taxing authority, within the same jurisdiction or taxing district, during the
same taxing period, and they must be the same kind or character of tax."23 It has been shown
that a real estate tax and the tenement tax imposed by the ordinance, although imposed by
the sametaxing authority, are not of the same kind or character.

At all events, there is no constitutional prohibition against double taxation in the Philippines.24 It is
something not favored, but is permissible, provided some other constitutional requirement is not
thereby violated, such as the requirement that taxes must be uniform."25.

3. The appellant City takes exception to the conclusion of the lower court that the ordinance is not
only oppressive because it "carries a penal clause of a fine of P200.00 or imprisonment of 6 months
or both, if the owner or owners of the tenement buildings divided into apartments do not pay the
tenement or apartment tax fixed in said ordinance," but also unconstitutional as it subjects the
owners of tenement houses to criminal prosecution for non-payment of an obligation which is purely
sum of money." The lower court apparently had in mind, when it made the above ruling, the
provision of the Constitution that "no person shall be imprisoned for a debt or non-payment of a poll
tax."26 It is elementary, however, that "a tax is not a debt in the sense of an obligation incurred by
contract, express or implied, and therefore is not within the meaning of constitutional or statutory
provisions abolishing or prohibiting imprisonment for debt, and a statute or ordinance which
punishes the non-payment thereof by fine or imprisonment is not, in conflict with that
prohibition."27 Nor is the tax in question a poll tax, for the latter is a tax of a fixed amount upon all
persons, or upon all persons of a certain class, resident within a specified territory, without regard to
their property or the occupations in which they may be engaged.28 Therefore, the tax in question is
not oppressive in the manner the lower court puts it. On the other hand, the charter of Iloilo
City29 empowers its municipal board to "fix penalties for violations of ordinances, which shall not
exceed a fine of two hundred pesos or six months' imprisonment, or both such fine and
imprisonment for each offense." In Punsalan, et al. vs. Mun. Board of Manila, supra, this Court
overruled the pronouncement of the lower court declaring illegal and void an ordinance imposing an
occupation tax on persons exercising various professions in the City of Manilabecause it imposed a
penalty of fine and imprisonment for its violation.30.

4. The trial court brands the ordinance as violative of the rule of uniformity of taxation.

"... because while the owners of the other buildings only pay real estate tax and income
taxes the ordinance imposes aside from these two taxes an apartment or tenement tax. It
should be noted that in the assessment of real estate tax all parts of the building or buildings
are included so that the corresponding real estate tax could be properly imposed. If aside
from the real estate tax the owner or owners of the tenement buildings should pay apartment
taxes as required in the ordinance then it will violate the rule of uniformity of taxation.".

Complementing the above ruling of the lower court, the appellees argue that there is "lack of
uniformity" and "relative inequality," because "only the taxpayers of the City of Iloilo are singled out
to pay taxes on their tenement houses, while citizens of other cities, where their councils do not
enact a similar tax ordinance, are permitted to escape such imposition." .

It is our view that both assertions are undeserving of extended attention. This Court has already
ruled that tenement houses constitute a distinct class of property. It has likewise ruled that "taxes are
uniform and equal when imposed upon all property of the same class or character within the taxing
authority."31 The fact, therefore, that the owners of other classes of buildings in the City of Iloilo do
not pay the taxes imposed by the ordinance in question is no argument at all against uniformity and
equality of the tax imposition. Neither is the rule of equality and uniformity violated by the fact that
tenement taxesare not imposed in other cities, for the same rule does not require that taxes for the
same purpose should be imposed in different territorial subdivisions at the same time.32 So long as
the burden of the tax falls equally and impartially on all owners or operators of tenement houses
similarly classified or situated, equality and uniformity of taxation is accomplished.33 The plaintiffs-
appellees, as owners of tenement houses in the City of Iloilo, have not shown that the tax burden is
not equally or uniformly distributed among them, to overthrow the presumption that tax statutes are
intended to operate uniformly and equally.34.

5. The last important issue posed by the appellees is that since the ordinance in the case at bar is a
mere reproduction of Ordinance 86 of the City of Iloilo which was declared by this Court in L-
12695, supra, as ultra vires, the decision in that case should be accorded the effect of res judicata in
the present case or should constitute estoppel by judgment. To dispose of this contention, it suffices
to say that there is no identity of subject-matter in that case andthis case because the subject-matter
in L-12695 was an ordinance which dealt not only with tenement houses but also warehouses, and
the said ordinance was enacted pursuant to the provisions of the City charter, while the ordinance in
the case at bar was enacted pursuant to the provisions of the Local Autonomy Act. There is likewise
no identity of cause of action in the two cases because the main issue in L-12695 was whether the
City of Iloilo had the power under its charter to impose the tax levied by Ordinance 11, series of
1960, under the Local Autonomy Act which took effect on June 19, 1959, and therefore was not
available for consideration in the decision in L-12695 which was promulgated on March 23, 1959.
Moreover, under the provisions of section 2 of the Local Autonomy Act, local governments may now
tax any taxable subject-matter or object not included in the enumeration of matters removed from the
taxing power of local governments.Prior to the enactment of the Local Autonomy Act the taxes that
could be legally levied by local governments were only those specifically authorized by law, and their
power to tax was construed in strictissimi juris. 35.

ACCORDINGLY, the judgment a quo is reversed, and, the ordinance in questionbeing valid, the
complaint is hereby dismissed. No pronouncement as to costs..

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,Fernando and Capistrano,
JJ., concur..