Villanueva vs.

City of Iloilo (1968)

Summary Cases:

Eusebio Villanueva vs. City of Iloilo 26 SCRA 578

Subject: Local government given broad taxing powers under the Local Autonomy Act; Tax imposed
under Ordinance 11 is not a real estate tax; The nature of the tax is that of a license tax on the operation
of tenement houses, a form of leasing business; Imposing license tax on the operation of a business
conducted on a property, at the same time subjecting said property to property tax does not result in
double taxation; A tax is not a debt, hence, a statute or ordinance which punishes the non-payment of
tax is not violative of the constitutional provision on no inprisonment for non-payment of debt; No
violation of rule on uniformity of taxation; No res judicata

Facts:
In 1946, the municipal board of Iloilo City enacted Ordinance 86, imposing license tax fees on tenement
(or apartment) houses. The validity and constitutionality of this ordinance were challenged by the
spouses Villanueva, owners of five tenement houses, aggregately containing 43 apartments.
The Supreme Court, in City of Iloilo vs. Villanueva, 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."
In 1960, with the passage of Republic Act 2264 (Local Autonomy Act), the municipal board of Iloilo City,
believing it had acquired the authority or power to enact an ordinance similar to Ordinance 86, enacted
Ordinance 11, series of 1960, entitled An Ordinance Imposing Municipal License Tax on Persons
Engaged in the Business of Operating Tenement Houses
By virtue of Ordinance 11, the City of Iloilo collected from the spouses Villanueva, and other appellees,
license taxes for the years 1960-1964.
The Spouses Villanueva, together with others, filed a complaint against the City of Iloilo 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 that the City be ordered to refund the amounts collected from them under
the said ordinance.
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.
Hence, this appeal by the City of Iloilo.
Held:
Local government given broad taxing powers under the Local Autonomy Act
1. Republic Act 2264 or the Local Autonomy Act, specifically Section 2 thereof, 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
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not transgress any constitutional provision or is not repugnant to a controlling statute. 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.
2. 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."
Tax imposed under Ordinance 11 is not a real estate tax
3. The spouses Villanueva (appellees) strongly maintain that it is a "property tax" or "real estate tax," 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. 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 spouses 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."
4. The court however is of the view that the tax in question is not a real estate tax. A real estate tax is a
direct tax on the ownership of lands and buildings or other improvements thereon, not specially
exempted, and is payable regardless of whether the property is used or not, although the value may vary
in accordance with such factor. 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. It is a fixed proportion of the assessed value of the property
taxed, and requires, therefore, the intervention of assessors, It is collected or payable at appointed times,
and it constitutes a superior lien on and is enforceable against the property subject to such taxation, and
not by imprisonment of the owner.
5. 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 nature of the tax is that of a license tax on the operation of tenement houses, a form of
leasing business
6. The spirit, rather than the letter, of 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." 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,
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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.
7. 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." 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.
Imposing license tax on the operation of a business conducted on a property, at the same time
subjecting said property to property tax does not result in double taxation
8. The contention that the 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 sense a double tax.
9. 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 (1) on the same property
or subject-matter, (2) for the same purpose, (3) by the same State, Government, or taxing authority, (4)
within the same jurisdiction or taxing district, (5) during the same taxing period, and (6) they must be the
same kind or character of tax." It has been shown that a real estate tax and the tenement tax imposed by
the ordinance, although imposed by the same taxing authority, are not of the same kind or character.
10. At all events, there is no constitutional prohibition against double taxation in the Philippines. 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.
A tax is not a debt, hence, a statute or ordinance which punishes the non-payment of tax is not
violative of the constitutional provision on no inprisonment for non-payment of debt
11. The lower court held that the ordinance is unconstitutional as it subjects the owners of tenement
houses to criminal prosecution for non-payment of the tax. The lower court apparently had in mind the
provision of the Constitution that "no person shall be imprisoned for a debt or non-payment of a poll tax."
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."
12. 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.
13. Therefore, the tax in question is not oppressive in the manner of the lower court puts it. On the other
hand, the charter of Iloilo City 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."
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No violation of rule on uniformity of taxation

14. 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 an
added apartment or tenement tax.
15. 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." 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 taxes are 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.
16. 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. 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.
No res judicata
17. The appellees contend that since the ordinance in the case at bar is a mere reproduction of
Ordinance 86which was declared 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.
18. It suffices to say that there is no identity of subject-matter in that case and this 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.
19. 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 86,
while one of the issues in the present case is whether the City is empowered 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.

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