Case Title Punsalan v.

The Municipal Board of Manila

G.R. no. L-4187
Main Topic Taxation
Other Related License Fee or Taxes on certain occupation
Topic
Date: May 26, 2954

DOCTRINES
Taxation - Legislature may, in its discretion, select what occupations shall be taxed, and in the
exercise of that discretion it may tax all, or it may select for taxation certain classes and leave the
others untaxed. (Cooley on Taxation, Vol. 4, 4th ed., pp. 3393-3395)

FACTS:
 In July 1950, the municipal board of Manila enacted Ordinance 3398, imposing
a municipal occupation tax to certain professions. Non-payment of such
occupation tax would incur a penalty of not more than 200 pesos and/or
imprisonment of not more than 6 months
 Plaintiffs are lawyers, medical practitioners, accountant, and a pharmacist.
They filed a class suit against the municipal board of Manila in enacting the
said ordinance, alleging that the ordinance is void due to double taxation;
license fee is already imposed on said occupations by their respective
departments.
 Lower court declared the imposition of the ordinance should be valid; however,
it was declared void and illegal on the grounds of the penalty not being
authorized. Since it was declared void, plaintiffs demands a refund from the
Municipal Board since they had already paid the amount imposed by the
ordinance.
 Another ground given by the plaintiff is that only practitioners having an office
in Manila are required to pay the license fee, but those who have office
elsewhere and practices here are not covered by taxation.
ISSUE:
Whether or not the municipal occupation tax is valid in lieu of:
1. Double taxation
2. The penalty provision in Ordinance 3398

HELD:
The court ruled that the municipal occupation tax is valid, and that the lower court erred in
deciding that the tax is invalid in lieu of the penalty provision. Section 18 of the Manila
Charter specifically delegates power to the Municipal Board to impose penalties, with
restrictions regarding the maximum penalty imposed. Therefore, the pronouncement that
the ordinance is illegal is without basis.
The Legislature may, in its discretion, select what occupations shall be taxed, and in the exercise
of that discretion it may tax all, or it may select for taxation certain classes and leave the others
untaxed.
Moreover, as the seat of the National Government and with a population and volume of trade
many times that of any other Philippine city or municipality, Manila, no doubt, offers a more
lucrative field for the practice of the professions, so that it is but fair that the professionals in
Manila be made to pay a higher occupation tax than their brethren in the provinces.
Lastly, their contention that those with offices in Manila are taxed, while those with office outside
Manila and practices here are not taxed, are classification in which the ordinance does not make.

Dissenting Opinion – The license fee required should not be imposed since the Municipal office
cannot give something the practitioners already have. The Ordinance is not invalid; however, the
practitioner should only be imposed under the provisions of the Internal Revenue Code or the
ordinance. Lack of uniformity in paying taxes, other places aside from Manila does not require the
payment of Municipal Occupation tax.