Gerena v. City of Manila
REITERATIONFacts
1. The Antecedents: Plaintiffs, engaged in the business of operating automatic phonograph machines (juke boxes), were previously paying annual license fees of P50.00 and permit fees of P50.00 for installation and P50.00 for transfers under Ordinance No. 3374. In February 1954, the City Mayor recommended amending existing ordinances to include pinball machines, citing concerns about idleness among residents. This led to the enactment of Ordinance No. 3628. 2. Procedural History: Ordinance No. 3628, enacted on March 19, 1954, imposed an annual license fee of P300.00 for mechanical contrivances used for amusement or other specified functions, including juke boxes. The plaintiffs continued to pay under the previous ordinance until April 11, 1957, when their request to hold enforcement of Ordinance No. 3628 in abeyance was denied. They subsequently filed an action on August 12, 1957, seeking to declare Ordinance No. 3628 null and void. The defendants moved to dismiss, citing a prior Supreme Court ruling upholding the ordinance's validity. After trial, the Court of First Instance of Manila upheld the ordinance, prompting this appeal, which was certified to the Supreme Court due to the involvement of only questions of law. 3. The Petition: The plaintiffs-appellants are appealing the decision of the Court of First Instance of Manila, which upheld the validity of City of Manila Ordinance No. 3628. They argue that the P300.00 annual license fee imposed by the ordinance is exorbitant, excessive, and disproportionate to the expenses of licensing and regulating their business, thus exceeding the City's police power. The appeal contends that this fee is prohibitory and suppressive, rendering the ordinance unreasonable and invalid, as evidenced by the financial records of their operations and findings by the Municipal Board's committees.
Issue(s)
Is Ordinance No. 3628 of the City of Manila, which imposes an annual license fee of P300.00 for the installation and use of juke boxes, valid?
Ruling
The Supreme Court reversed the decision of the Court of First Instance of Manila, declaring Ordinance No. 3628 null and void as applied to juke boxes. The Court found the P300.00 license fee to be unreasonable and excessive.
Ratio Decidendi
On Issue 1: The Supreme Court held that Ordinance No. 3628 of the City of Manila, which imposes an annual license fee of P300.00 for the installation and use of juke box machines, is null and void. The Court, aligning itself with its pronouncements in Morcoin Co., Ltd. and Suter, Inc. vs. City of Manila, et al. (G.R. No. L-15351, January 28, 1961), found the license fee to be excessive and unreasonable. It elaborated that the P300.00 fee far exceeded the legitimate expenses of issuing the license and regulating the operation of such machines, noting specifically that the ordinance did not even provide for inspection and supervision of each machine installed. Furthermore, the Committees on Laws and Finance of the Municipal Board of the City of Manila themselves, after conducting a public hearing, determined that juke box operators would not make any profit by paying this license fee and that the amount was "prohibitory and suppressive." This finding was strongly supported by evidence in the record, which demonstrated that two of the plaintiffs' juke box machines had an annual income of only approximately P211.00 after deducting depreciation and operating expenses, but before the payment of any permit and license fees. While a presumption of validity or reasonableness generally attaches to ordinances, such presumption must be set aside when the invalidity or unreasonableness is clearly apparent on the face of the ordinance itself or is firmly established by proper evidence, as was definitively proven in this particular case.
Main Doctrine
An ordinance imposing a license fee that is exorbitant, excessive, and unreasonable, and which prohibits and suppresses legitimate business, is an invalid exercise of police power and may be declared null and void.