Tan v. Municipality of Pagbilao
REITERATIONFacts
The Antecedents: The Municipality of Pagbilao owned and operated a wharf. In 1956, the municipal council enacted Ordinance No. 11, imposing charges on goods landed or loaded from this wharf and an adjacent shoreline. Plaintiffs, fishermen and merchants from Padre Burgos, Quezon, used this wharf to transport their goods to Lucena. They were required to pay the fees imposed by the ordinance, which they did under protest, alleging the ordinance was ultra vires and the fees constituted import or export taxes disguised as wharfage or rental fees. Procedural History: The plaintiffs filed an action with the Court of First Instance (CFI) of Quezon Province, seeking to declare Ordinance No. 11 null and void and to recover P1,800.00 in fees paid under protest. The defendants argued that the fees were used for the wharf's repair and maintenance and for security. The CFI rendered judgment declaring Ordinance No. 11 null and void, ordering the municipality to refund P774.25 to plaintiff Raymundo B. Tan with legal interest, and dismissing the defendants' counterclaim. The defendants appealed this decision to the Supreme Court. The Petition: The defendants-appellants urged the Supreme Court to reverse the lower court's decision, primarily arguing that the municipality had the authority to enact the ordinance and collect the fees under various provisions of the Administrative Code and Executive Order No. 255. They contended that the fees were legitimate wharfage rentals for the use of municipal property and not prohibited import or export taxes. Conversely, the appellees maintained that the municipality lacked the authority to pass such an ordinance, citing provisions that prohibit municipalities from imposing taxes on goods carried into or out of the municipality, especially when disguised as wharfage fees, and referencing Commonwealth Act No. 472, which explicitly forbids municipalities from collecting customs duties, wharfage, and other similar fees.
Issue(s)
Whether the defendant municipality could validly enact Ordinance No. 11, series of 1956, and collect the charges therein. Whether plaintiff Tan is entitled to a refund of the fees paid to the defendant municipality.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, declaring Ordinance No. 11, series of 1956, of the Municipality of Pagbilao, Quezon, null and void for being ultra vires. The Court ordered the Municipality to refund the fees collected from the plaintiffs.
Ratio Decidendi
On the validity of the ordinance and collection of fees: The Court held that the defendant municipality could not validly enact Ordinance No. 11, series of 1956, and collect the charges therein. The Court found the ordinance to be ultra vires and void. While municipalities are granted powers to regulate wharves under Sections 2242(e) and 2318 of the Revised Administrative Code, and Executive Order No. 255 allows collection of berthing fees for port maintenance, these powers are circumscribed by other provisions. Specifically, Section 2287 of the Revised Administrative Code prohibits municipalities from imposing taxes on goods carried into or out of the municipality, and any attempt to impose such an import or export tax in the guise of wharfage or other charges is void. Furthermore, Section 3(t) of Commonwealth Act No. 472 expressly prohibits municipal councils from imposing customs duties, registration, wharfage, tonnage, and other kinds of customs fees. The ordinance in question was characterized as a specific tax, imposing a fixed sum based on classification, which municipalities are not empowered to levy. The Court also noted that the fees collected, despite being labeled as rental, were in essence wharfage fees, which are beyond the municipality's power to impose under Commonwealth Act No. 472. The Court also gave weight to the opinions of the Secretaries of Justice stating that municipal ordinances levying wharfage or berthing fees are illegal and void in view of Section 3(t) of Commonwealth Act No. 472. The Court observed that the municipality's previous attempt to impose similar fees through Ordinance No. 9 was also declared void, and Ordinance No. 11 appeared to be a continuation of the same objective to impose a specific tax on goods and merchandise. On the entitlement to a refund: The Court ruled that plaintiff Tan is entitled to a refund of the fees paid. The payments were made under protest, and more importantly, they were collected under an invalid ordinance. The Supreme Court has consistently held that monies collected under invalid acts or tax laws are refundable, even if the payments were voluntary. Therefore, the municipality was ordered to refund the amount collected from the plaintiff.
Main Doctrine
A municipal ordinance imposing wharfage fees that partake of the nature of import or export taxes, or are otherwise beyond the municipality's taxing power, is ultra vires and void. Monies collected under such invalid ordinance are refundable.