City of Manila Vs Gomez

SUPREME COURT REPORTS ANNOTATED VOLUME 107
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SUPREME COURT REPORTS ANNOTATED

City of Manila vs. Gomez
*
No. L-37251. August 31, 1981.
CITY
OF
MANILA
and
CITY
TREASURER,
petitionersappellants, vs. JUDGE AMADOR E. GOMEZ of
the Court of First Instance of Manila and ESSO
PHILIPPINES, INC., respondents-appellees.
Taxation; Statutes; The doctrine of implications in statutory
construction sustains the contention that under R.A. 5447 which
took effect on January 1, 1969 the City of Manila can by ordinance
impose an additional 1/2% realty tax provided the total realty tax
does not exceed 3%.We hold that the doctrine of implications in
statutory construction sustains the City of Manilas contention that
the additional one-half percent realty tax is sanctioned by the
provision in section 4 of the Special Education Fund Law that the
total real property tax shall not exceed a maximum of three per
centum.
Same; Same; Same.While the 1949 Revised Charter of Manila
fixed the realty tax at one and a half percent, on the other hand,
the 1968 Special Education Fund Law definitively fixed three
percent as the maximum real property tax of which one percent
would accrue to the Special Education Fund. The obvious
implication is that an additional one-half percent tax could be
imposed by municipal corporations. Inferentially, that law fixed at
two percent the realty tax that would accrue to a city or
municipality.
Same; Same; The fact that the 1974 Realty Property Tax Code,
Presidential Decree No. 464, fixes the realty tax to 2% confirms the
prior intention of the lawmaker in enacting R.A. 5447 in January
1,
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_______________
*
SECOND DIVISION
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1969 to impose 2% as the realty tax proper even though the Charter
of Manila authorized the City to impose only a 11/2% realty
tax.And the fact that the 1974 Real Property Tax Code specifically
fixes the real property tax at two percent confirms the prior
intention of the lawmaker to impose two percent as the realty tax
proper. That was also the avowed intention of the questioned
ordinance.
Same; Same; Same.In invalidating the ordinance, the trial
court upheld the view of Esso Philippines, Inc. that the Special
Education Fund Law refers to a contingency where the application
of the additional one percent realty tax would have the effect of
raising the total realty tax to more than three percent and that it
cannot be construed as an authority to impose an additional realty
tax beyond the one percent fixed by the said law. At first glance,
that appears to be a specious or reasonable contention. But the fact
remains that the city charter fixed the realty tax at 1!1/2% and the
later law, the Special Education Fund Law, provides for three
percent as the maximum realty tax of which one percent would be
earmarked for the education fund.
Same; Same; While it is true that the power to tax should be
expressly granted, what is, however, involved here is only the
amount thereof.It is true, as contended by the taxpayer, that the
power of a municipal corporation to levy a tax should be expressly
granted and should not be merely inferred. But in this case, the
power to impose a realty tax is not controverted. What is disputed is
the amount thereof, whether one and one-half percent only or two
percent. (See sec. 2 of Rep. Act No. 2264). As repeatedly observed,
section 4 of the Special Education Fund Law, as confirmed by the
Real Property Tax Code, in prescribing a total realty tax of three
percent impliedly authorizes the augmentation by one-half percent
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of the pre-existing one and one-half percent realty tax.
APPEAL from the decision of the Court of First Instance of

Manila.
The facts are stated in the opinion of the Court.
AQUINO, J.:
This case is about the legality of the additional one-half
percent (1/2%) realty tax imposed by the City of Manila.
100
100

Section 64 of the Revised Charter of Manila, Republic Act

No. 409, which took effect on June 18, 1949, fixes the annual
realty tax at one and one-half percent (1!1/2%).
On the other hand, section 4 of the Special Education
Fund Law, Republic Act No. 5447, which took effect on
January 1, 1969, imposed an annual additional tax of one
per centum on the assessed value of real property in
addition to the real property tax regularly levied thereon
under existing laws but the total real property tax shall
not exceed a maximum of three per centum.
That maximum limit gave the municipal board of Manila
the idea of fixing the realty tax at three percent. So, by
means of Ordinance No. 7125, approved by the city mayor
on December 26, 1971 and effective beginning the third
quarter of 1972, the board imposed an additional one-half
percent realty tax. The ordinance reads:
SECTION 1. An additional annual realty tax of one-half percent
(1/2%), or in short a total of three percent (3%) realty tax (1!1/2%
pursuant to the Revised Charter of Manila; 1% per Republic Act No.
5447; and 1/2% per this Ordinance) on the assessed value x x x is
hereby levied and imposed.
Esso Philippines, Inc. paid under protest the sum of P1

6,092.69 as additional one-half percent realty tax for the
third quarter of 1972 on its land and machineries located in
Manila.
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On November 9, 1972, Esso filed a complaint in the Court

of First Instance of Manila for the recovery of the said
amount. It contended that the additional one-half percent
tax is void because it is not authorized by the city charter
nor by any law (Civil Case No. 88827).
After hearing, the trial court declared the tax ordinance
void and ordered the city treasurer of Manila to refund to
Esso the said tax. The City of Manila and its treasurer
appealed to this Court under Republic Act No. 5440 (which
superseded Rule 42 of the Rules of Court).
The only issue is the validity of the tax ordinance or the
legality of the additional one-half percent realty tax.
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The petitioners in their manifestation of March 17, 1981
averred that the said tax ordinance is still in force; that
Ordinance No. 7566, which was enacted on September 10,
1974, imposed a two percent tax on commercial real
properties (like the real properties of Esso) and that that two
percent tax plus the one percent tax under the Special
Education Fund Law gives a total of three percent realty
tax on commercial properties.
Esso Philippines, Inc., now Petrophil Corporation, in its
manifestation of March 2, 1981, revealed that up to this
time it has been paying the additional one-half percent tax
and that from 1975 to 1980 it paid the total sum of
P4,206,240.71 as three percent tax on its real properties.
In this connection, it is relevant to note that section 39(2)
of the Real Property Tax Code, Presidential Decree No. 464,
which took effect on June 1, 1974, provides that a city
council may, by ordinance, impose a realty tax of not less
than onehalf of one percent but not more than two percent of
the assessed value of real property.
Section 41 of the said Code reaffirms the one percent tax
on real property for the Special Education Fund in addition
to the basic two percent realty tax.
So, there is no question now that the additional one-half
percent realty tax is valid under the Real Property Tax
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Code. What is in controversy is the legality of the additional

one-half percent realty tax for the two-year period from the
third quarter of 1972 up to the second quarter of 1974.
We hold that the doctrine of implications in statutory
construction sustains the City of Manilas contention that
the additional one-half percent realty tax is sanctioned by
the provision in section 4 of the Special Education Fund
Law that the total real property tax shall not exceed a
maximum of three per centum.
The doctrine of implications means that that which is
plainly implied in the language of a statute is as much a
part of it as that which is expressed (In re McCulloch Dick,
38 Phil. 41, 45, 90; 82 C.J.S. 632; 73 Am Jur 2nd 404).
102
102

While the 1949 Revised Charter of Manila fixed the realty

tax at one and a half percent, on the other hand, the 1968
Special Education Fund Law definitively fixed three
percent as the maximum real property tax of which one
percent would accrue to the Special Education Fund.
The obvious implication is that an additional one-half
percent tax could be imposed by municipal corporations.
Inferentially, that law fixed at two percent the realty tax
that would accrue to a city or municipality.
And the fact that the 1974 Real Property Tax Code
specifically fixes the real property tax at two percent
confirms the prior intention of the lawmaker to impose two
percent as the realty tax proper. That was also the avowed
intention of the questioned ordinance.
In invalidating the ordinance, the trial court upheld the
view of Esso Philippines, Inc. that the Special Education
Fund Law refers to a contingency where the application of
the additional one percent realty tax would have the effect
of raising the total realty tax to more than three percent
and that it cannot be construed as an authority to impose an
additional realty tax beyond the one percent fixed by the
said law.
At first glance, that appears to be a specious or
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reasonable contention. But the fact remains that the city

charter fixed the realty tax at 1!1/2% and the later law, the
Special Education Fund Law, provides for three percent as
the maximum realty tax of which one percent would be
earmarked f or the education fund.
The unavoidable inference is that the later law
authorized the imposition of an additional one-half percent
realty tax since the contingency referred to by the
complaining taxpayer would not arise in the City of Manila.
It is true, as contended by the taxpayer, that the power of
a municipal corporation to levy a tax should be expressly
granted and should not be merely inferred. But in this case,
the power to impose a realty tax is not controverted. What is
disputed is the amount thereof, whether one and one-half
percent only or two percent. (See sec. 2 of Rep. Act No. 2264.)
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VOL. 107, AUGUST 31, 1981
103

As repeatedly observed, section 4 of the Special Education
Fund Law, as confirmed by the Real Property Tax Code, in
prescribing a total realty tax of three percent impliedly
authorizes the augmentation by one-half percent of the
preexisting one and one-half percent realty tax.
WHEREFORE, the decision of the trial court is reversed
and set aside. The complaint of Esso Philippines, Inc. for
recovery of the realty tax paid under protest is dismissed.
No costs.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., Fernandez and
De Castro, JJ., concur.
Justice Abad Santos is on leave. Justice Fernandez
was designated to sit in the Second Division.
Decision reversed and set aside.
Notes.The Manila Charter provides for the power to
tax in cases where it was intended to be exercised. (Morcoin
Co., Ltd. vs. City of Manila, 1 SCRA 310).
Section 76 of the Charter of Manila, which provides that
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no court shall entertain any suit assailing the validity of

tax under this article until the taxpayer shall have paid,
under protest the taxes assessed against him x x x, relates
to the assessment, collection and recovery of a real estate
taxes only, and not to the recovery of retail dealers taxes.
(Gonzalo Puyat & Sons, Inc. vs. City of Manila, 7 SCRA
970).
The grant of power to tax to chartered cities under
Section 2 of the Local Autonomy Act is sufficiently plenary
to cover everything, excepting those which are mentioned
therein, subject only to the limitation that the tax so levied
is for public purposes, just and uniform. (C.N. Hodges vs.
Municipal Board of lloilo City, 19 SCRA 28).
The taxing ordinance should not be singular and
exclusive as to exclude any subsequently established sugar
central from
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104

Province of Abra vs. Hernando
the coverage of the tax. (Ormoc Sugar Co., Inc. vs. Treasurer
of Ormoc City, 22 SCRA 603).
A manufacturer selling at wholesale both at the factory
and at its store located some four blocks away from the
factory, is liable to the payment of wholesale dealers tax,
notwithstanding its having paid the corresponding
manufacturers license. (Co Tuan vs. City of Manila, 2 SCRA
1070).
After a municipality had been converted into a City the
latter assumes the obligation to refund taxes illegally
collected by the municipality. (Arabay, Inc. vs. CFI of
Zamboanga del Norte, 66 SCRA 617).
The power to tax of a municipal court is strictly
construed. (City of Ozamis vs. Lumapas, 65 SCRA 33),
R.A. 5448 which imposed an additional science stamp tax
cannot be considered as deficient in providing for a criminal
penalty for falsification of science stamp. (People vs. Martin,
97 SCRA 591).
A petition for reconsideration of the assessment of a
deficiency tax suspends the prescriptive period for collection
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of the tax, not the prescriptive period of a criminal action for

violation of law. (Ungab vs. Cusi, Jr., 97 SCRA 877).
Interpretative regulation by the GSIS of C.A. 186
exempting the GSIS from the payment of taxes carries great
weight. (City of Baguio vs. Busuego, 100 SCRA 116).
o0o
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SUPREME COURT REPORTS ANNOTATED VOLUME 107

SUPREME COURT REPORTS ANNOTATED

No. L-37251. August 31, 1981.

SUPREME COURT REPORTS ANNOTATED VOLUME 107

VOL. 107, AUGUST 31, 1981