Procter & Gamble Philippine Manufacturing Corporation v. Municipality of Jagna
REITERATIONFacts
The Antecedents: Plaintiff-appellant, Procter & Gamble Philippine Manufacturing Corporation, a domestic corporation engaged in manufacturing, maintained a "bodega" in the Municipality of Jagna, Bohol, to store copra purchased for its operations. On December 13, 1957, the Municipal Council of Jagna enacted Municipal Ordinance No. 4, Series of 1957, imposing a storage fee of P0.10 for every 100 kilos of "exportable copra" deposited in any bodega within the municipality's jurisdiction. The ordinance also stipulated penalties for violations and took effect on January 1, 1958. Procedural History: From 1958 to 1963, the plaintiff paid a total of P42,265.13 in storage fees, allegedly under protest. On March 3, 1964, the plaintiff filed a suit in the Court of First Instance (CFI) of Manila, praying that the ordinance be declared inapplicable or void (ultra vires) and that the municipality be ordered to refund the fees paid. The Municipality of Jagna defended its power to enact the ordinance, questioned the CFI's jurisdiction, and pleaded prescription and laches. The CFI upheld its jurisdiction and the municipality's power to enact the ordinance under the general welfare clause, but declared the plaintiff's action prescribed under Article 1149 of the Civil Code. The Petition: The plaintiff appealed to the Supreme Court, assigning errors concerning the validity of the ordinance, the nature of the payment (under protest), the prescription of its action, and the denial of its prayer for annulment and refund. The plaintiff argued that the ordinance was inapplicable as it did not engage in the business of storing copra for others, that the levy was an "export tax" beyond municipal power, and that the fee was excessive and unreasonable.
Issue(s)
Whether Municipal Ordinance No. 4, Series of 1957, imposing storage fees on exportable copra, is a valid and enforceable ordinance against the plaintiff. Whether the payment of storage fees made by the plaintiff was under protest. Whether the plaintiff's action to annul the ordinance and seek a refund has prescribed. Whether the ordinance is ultra vires and void.
Ruling
The Supreme Court affirmed the judgment of the lower court, sustaining the validity of Ordinance No. 4, Series of 1957, of the Municipality of Jagna, Bohol. However, it found merit in the plaintiff's contention that its action had not prescribed, ruling that the prescriptive period for recovering municipal license taxes is six years under Article 1145(2) of the Civil Code, and the plaintiff's action, filed within six years from 1958, had not yet prescribed.
Ratio Decidendi
On the validity of Ordinance No. 4, Series of 1957: The Court held that the Municipality of Jagna was authorized to impose the storage fee under Commonwealth Act No. 472, which grants municipalities the authority to impose license taxes and collect fees for services rendered, and to levy taxes for public local purposes. The storage fee was considered a municipal license tax or fee on the privilege of storing copra within the municipality's jurisdiction. Furthermore, the ordinance was also justified under the "general welfare clause" (Section 2238 of the Revised Administrative Code), as a warehouse storing copra poses a fire hazard due to the oil content, necessitating municipal surveillance and regulation. The Court found no merit in the argument that the fee was an invalid "export tax," as "exportable" copra in the ordinance referred to shipment out of the municipality, not exclusively to foreign countries, and the fee was also imposed on copra for domestic use if stored. The Court also dismissed the claim of double taxation, distinguishing a tax on products from a tax on the privilege of storing copra. Finally, the Court found that the plaintiff had not sufficiently shown the rate to be oppressive, excessive, or unreasonable, thus upholding the municipality's discretion in setting such fees. On the nature of payment (under protest): The Court found it unnecessary to discuss this assigned error because it ultimately upheld the validity of the ordinance. If the ordinance is valid, the payment, even if under protest, would be legally due. On the prescription of the action: The Court reversed the trial court's finding that the action had prescribed. Citing Municipality of Opon vs. Caltex Phil., the Court held that the prescriptive period for actions to recover municipal license taxes is six years under Article 1145(2) of the Civil Code, not five years under Article 1149. Since the plaintiff filed its suit within six years from 1958, when the right of action first accrued, the action had not prescribed. On the ordinance being ultra vires and void: This issue was resolved by the Court's affirmation of the ordinance's validity. The Court found that the municipality possessed the legal authority to enact the ordinance under both Commonwealth Act No. 472 and the general welfare clause of the Revised Administrative Code. The imposition was deemed a legitimate exercise of municipal power for regulation and revenue, not an prohibited export tax or an unreasonable exaction.
Main Doctrine
A municipal ordinance imposing storage fees on exportable copra stored within its jurisdiction is a valid exercise of the municipality's power to impose license taxes and is not an invalid export tax, provided it is not repugnant to law and is necessary for the general welfare.