Santos Lumber Company v. City of Cebu
REITERATIONFacts
The Antecedents: Plaintiffs, Santos Lumber Company, et al., brought an action to nullify Municipal Board Ordinances No. 92 (series of 1950) and No. 116 (series of 1951) of the City of Cebu, and to recover taxes paid thereunder. These ordinances imposed a tax of P2 for every first local sale of one thousand board feet of lumber sold during the month, payable within the first twenty days of the succeeding month, with a 20% surcharge for late payment. Procedural History: The lower court upheld the validity of the ordinances and dismissed the case. Plaintiffs appealed directly to the Supreme Court, asserting that only questions of law were involved. The Petition: Plaintiffs claimed that the City of Cebu's charter, Commonwealth Act No. 58, did not grant the power to impose the tax on the sale of lumber.
Issue(s)
Whether Municipal Board Ordinances No. 92 and No. 116 of the City of Cebu, imposing a tax on the sale of lumber, are valid. Whether Section 17(m) of Commonwealth Act No. 58 confers upon the City of Cebu the power to tax the sale of lumber.
Ruling
The Supreme Court reversed the decision of the lower court, declared the ordinances illegal, and ordered the appellees to return the sums paid by the appellants under said ordinances.
Ratio Decidendi
On whether Municipal Board Ordinances No. 92 and No. 116 of the City of Cebu, imposing a tax on the sale of lumber, are valid: The Court held that these ordinances are invalid. The power of the City of Cebu to tax is derived from its charter, Commonwealth Act No. 58. Section 17(m) of this Act enumerates specific businesses and materials that the Municipal Board is empowered to tax. While it explicitly grants the power to tax "lumber yards" and the "storage and sale" of certain combustible materials like gunpowder, tar, and oil, it does not explicitly include the "sale of lumber" itself. The principle of inclusio unius est exclusio alterius suggests that the express mention of lumber yards and specific combustible materials implies the exclusion of the sale of lumber from the taxing power. On whether Section 17(m) of Commonwealth Act No. 58 confers upon the City of Cebu the power to tax the sale of lumber: The Court found that Section 17(m) of Commonwealth Act No. 58 does not confer the power to tax the sale of lumber. The provision grants the power to tax "lumber yards" and the "storage and sale" of enumerated combustible materials. The phrase "or any of the products thereof" in relation to the enumerated materials refers to products derived from those specific materials, not products of establishments like lumber yards. Lumber is not among the specifically enumerated combustible materials. Furthermore, the Court emphasized that municipal corporations possess only the powers expressly granted by their charter and such powers are to be construed strictissimi juris. Any doubt or ambiguity must be resolved against the municipality. The reasoning that the business of a lumber yard inherently involves the sale of lumber does not overcome the explicit limitations and the principle of strict construction of taxing powers.
Main Doctrine
A municipal corporation, unlike a sovereign state, is clothed with no inherent power of taxation. Its charter must plainly show an intent to confer that power, and the power when granted is to be construed in strictissimi juris, with any doubt or ambiguity resolved against the corporation.