Municipality of San Fernando v. Sta. Romana
REITERATIONFacts
The Antecedents: The Municipality of San Fernando, La Union, while undertaking cement road construction, needed sand and gravel from the Municipality of Luna, La Union. Trucks sent by San Fernando to haul these materials were allegedly charged unreasonable fees per truckload by Luna. Procedural History: On March 18, 1968, San Fernando filed a complaint for Injunction with a Writ of Preliminary Injunction against Luna and its officials, seeking to enjoin them from preventing the hauling of materials and from levying unreasonable fees. The Court of First Instance (CFI) of La Union issued a preliminary injunction ex parte. Luna filed an Answer, asserting that the fees were collected pursuant to a valid ordinance and that injunction was not the proper remedy. After parties submitted memoranda, the CFI issued an Order on November 11, 1968, making the preliminary injunction permanent and enjoining Luna from preventing San Fernando from obtaining sand and gravel from Barrio Nalvo Norte. The Petition: The Municipality of Luna appealed the CFI's order to the Supreme Court, questioning the authority of Luna to pass Ordinance No. 1 and impose the questioned license fees.
Issue(s)
Whether the Municipality of Luna has the authority to pass Ordinance No. 1 and impose the license fees for the hauling of sand and gravel. Whether the Municipality of San Fernando, in hauling sand and gravel for its road improvement projects, is engaged in a proprietary or governmental function for the purpose of imposing license fees.
Ruling
The Supreme Court dismissed the petition and affirmed the assailed Order of the trial court, making the preliminary injunction permanent.
Ratio Decidendi
On the authority of the Municipality of Luna to impose license fees: The Court ruled that the authority to impose license fees on the extraction of sand and gravel, as in this case, belongs to the province, not the municipality. This is based on Presidential Decree No. 231, the Local Tax Code, which was in effect at the time. Section 10 of this decree, as amended by Presidential Decree No. 426, explicitly grants the province the power to levy a tax on sand and gravel extracted from public waters and lands. Conversely, Section 22 of the same Code prohibits municipalities from levying taxes, fees, and charges that the province or city is authorized to levy. Therefore, Ordinance No. 1 of the Municipality of Luna, which imposed such fees, was beyond its authority. On the nature of San Fernando's function: Even if the disposition of sand and gravel were within the municipality's power, the Court noted that the Municipality of San Fernando was extracting these materials for the improvement of its streets. This function is considered governmental, not proprietary. Municipalities are generally empowered to undertake such public works as part of their governmental responsibilities. The argument that San Fernando would eventually profit from improved roads, thus engaging in a proprietary function, was not sufficient to override the primary governmental nature of street improvement projects. Consequently, San Fernando would not fall under the classification of entities subject to the license fees under Ordinance No. 1, even if it were valid.
Main Doctrine
A municipality cannot impose license fees on the extraction of sand and gravel if the authority to levy such fees belongs to the province under the Local Tax Code, and the municipality is specifically prohibited from levying taxes that the province is authorized to levy.