City of Naga vs Agna

May 31, 1976

Martin J
Martin Lagmay
Topics and Provisions
Facts:

On June 15, 1970, the City of Naga enacted an ordinance changing the
graduated tax on quarterly gross sales of merchants prescribed in Section 3 of
Ordinance No. 4 of the City of Naga to percentage tax on gross sales provided
for in Section 2 thereof. Pursuant to said ordinance, respondents paid to the
City of Naga the following taxes on their gross sales for the quarter from July 1,
1970 to September 30, 1970, as follows:
Catalino Agna paid P1,805.17 as per Official Receipt No. 1826591;
Felipe Agna paid P625.00 as per Official Receipt No. 1826594; and
Salud Velasco paid P129.81 as per Official Receipt No. 1820339.

On February 13, 1971, respondents filed with the City Treasurer of the City of
Naga a claim for refund of the following amounts, together with interests
thereon from the date of payments: To Catalino Agna, P1,555.17; to Felipe
Agna, P560.00; and to Salud Velasco, P127.81, representing the difference
between the amounts they paid under Section 3, Ordinance No. 4 of the City of
Naga, i.e., P250.00; P65.00 and P12.00 respectively

They alleged that under existing law, Ordinance No. 360, which amended
Section 3, Ordinance No. 4 of the City of Naga, did not take effect in 1970, the
year it was approved but in the next succeeding year after the year of its
approval, or in 1971, and that therefore, the taxes they paid in 1970 on their
gross sales for the quarter from July 1, 1970 to September 30, 1970 were illegal
and should be refunded to them by the petitioners
The City Treasurer denied the claim for refund of the amounts in question. So private
respondents filed a complaint with the Court of First Instance of Naga (Civil Case No.
7084), seeking to have Ordinance No. 360 declared effective only in the year following
the year of its approval, that is, in 1971; to have Sections 4, 6 and 8 of Ordinance No. 360
declared unjust, oppressive and arbitrary, and therefore, null and void; and to require
petitioners to refund the sums being claimed with interests thereon from the date the
taxes complained of were paid and to pay all legal costs and attorney's fees in the sum of
P1,000.00. Private respondents further prayed that the petitioners be enjoined from
enforcing Ordinance No. 360.
In their answer, the petitioners among other things, claimed that private respondents
were not "compelled" but voluntarily made the payments of their taxes under Ordinance
No. 360; that the said ordinance was published in accordance with law; that in
accordance with Republic Act No. 305 (Charter of the City of Naga) an ordinance takes
effect after the tenth day following its passage unless otherwise stated in said ordinance;
that under existing law the City of Naga is authorized to impose certain conditions to
secure and accomplish the collection of sales taxes in the most effective manner. As
special and affirmative defenses, the petitioners allege that the private respondents have
no cause of action against them; that granting that the collection of taxes can be enjoined.
the complaint does not allege facts sufficient to justify the issuance of a writ of
preliminary injunction; that the refund prayed for by the private respondents is
untenable; that petitioners Vicente P. Sibulo and Joaquin C. Cleope, the City Mayor and

Treasurer of the City of Naga, respectively are not proper parties in interest; that the
private respondents are estopped from questioning the validity and/or constitutionality
of the provisions of Ordinance No. 360. Petitioners counterclaimed for P20,000.00 as
exemplary damages, for the alleged unlawful and malicious filing of the claim against
them, in such amount as the court may determine.
During the hearing of the petition for the issuance of a writ of preliminary injunction and
at the pre-trial conference as well as at the trial on the merits of the case, the parties
agreed on the following stipulation of facts: That on June 15, 1970, the City Board of the
City of Naga enacted Ordinance No. 360 entitled "An ordinance repealing Ordinance No.
4, as amended, imposing a sales tax on the quarterly sales or receipts on all businesses in
the City of Naga," which ordinance was transmitted to the City Mayor for approval or
veto on June 25, 1970; that the ordinance was duly posted in the designated places by
the Secretary of the Municipal Board; that private respondents voluntarily paid the gross
sales tax, pursuant to Ordinance No. 360, but that on February 15, 1971, they filed a
claim for refund with the City Treasurer who denied the same.
On October 9, 1971, the respondent Judge rendered judgment holding that Ordinance No.
360, series of 1970 of the City of Naga was enforceable in the year following the date of
its approval, that is, in 1971 and required the petitioners to reimburse the following
sums, from the date they paid their taxes to the City of Naga: to Catalino Agna, the sum of
P1,555.17; to Felipe Agna, P560.00; and to Salud Velasco, P127.81 and the corresponding
interests from the filing of the complaint up to the reimbursement of the amounts plus
the sum of P500.00 as attorney's fees and the costs of the proceedings.
Petitioners' submit that Ordinance No. 360, series of 1970 of the City of Naga, took effect
in the quarter of the year of its approval, that is in July 1970, invoking Section 14 of
Republic Act No. 305, 1 as amended, otherwise known as the Charter of the City of Naga,
which, among others, provides that "Each approved ordinance ... shall take effect and be
enforced on and after the 10th day following its passage unless otherwise stated in said
ordinance ... ". They contend that Ordinance No. 360 was enacted by the Municipal Board
of the City of Naga on June 15, 1970 2 and was transmitted to the City Mayor for his
approval or veto on June 25, 1970 3 but it was not acted upon by the City Mayor until
August 4, 1970. Ordinarily, pursuant to Section 14 of Republic Act No. 305, said
ordinance should have taken effect after the 10th day following its passage on June 15,
1970, or on June 25, 1970. But because the ordinance itself provides that it shall take
effect upon its approval, it becomes necessary to determine when Ordinance No. 360 was
deemed approved. According to the same Section 14 of Republic Act No. 305, "if within
10 days after receipt of the ordinance the Mayor does not return it with his veto or
approval 4 the ordinance is deemed approved." Since the ordinance in question was not
returned by the City Mayor with his veto or approval within 10 days after he received it
on June 25, 1970, the same was deemed approved after the lapse of ten (10) days from
June 25, 1970 or on July 6, 1970. On this date, the petitioners claim that Ordinance No.
360 became effective. They further contend that even under Section 2, of Republic Act
No. 2264 (Local Autonomy Acts) 5 which expressly provides: "A tax ordinance shall go
into effect on the fifteenth day after its passage unless the ordinance shall provide
otherwise', Ordinance No. 360 could have taken effect on June 30, 1970, which is the
fifteenth day after its passage by the Municipal Board of the City of Naga on June 15,
1970, or as earlier explained, it could have taken effect on July 6, 1970, the date the
ordinance was deemed approved because the ordinance itself provides that it shall take

effect upon its approval. Of the two provisions invoked by petitioners to support their
stand that the ordinance in question took effect in the year of its approval, it is Section 2
of Republic Act No. 2264 (Local Autonomy Act) that is more relevant because it is the
provision that specifically refers to effectivity of a tax ordinance and being a provision of
much later law it is deemed to have superseded Section 14 of Republic Act No. 305
(Charter of the City of Naga) in so far as effectivity of a tax ordinance is concerned.

expressly repealing Section 2309 of the Revised Administrative Code. All that is
mentioned therein is Section 9 which reads:

On the other hand, private respondents contend that Ordinance No. 360 became effective
and enforceable in 1971, the year following the year of its approval, invoking Section
2309 of the Revised Administrative Code which provides:

The foregoing provision does not amount to an express repeal of Section 2309 of the
Revised Administrative Code. It is a well established principle in statutory construction
that a statute will not be construed as repealing prior acts on the same subject in the
absence of words to that effect unless there is an irreconcilable repugnancy between
them, or unless the new law is evidently intended to supersede all prior acts on the
matter in hand and to comprise itself the sole and complete system of legislation on that
subject. Every new statute should be construed in connection with those already existing
in relation to the same subject matter and all should be made to harmonize and stand
together, if they can be done by any fair and reasonable interpretation ... . 6 It will also be
noted that Section 2309 of the Revised Administrative Code and Section 2 of Republic
Act No. 2264 (Local Autonomy Act) refer to the same subject matter-enactment and
effectivity of a tax ordinance. In this respect they can be considered in pari materia.
Statutes are said to be in pari materia when they relate to the same person or thing, or to
the same class of persons or things, or have the same purpose or object. 7 When statutes
are in pari materia, the rule of statutory construction dictates that they should be
construed together. This is because enactments of the same legislature on the same
subject matter are supposed to form part of one uniform system; that later statutes are
supplementary or complimentary to the earlier enactments and in the passage of its acts
the legislature is supposed to have in mind the existing legislation on the same subject
and to have enacted its new act with reference thereto. 8 Having thus in mind the
previous statutes relating to the same subject matter, whenever the legislature enacts a
new law, it is deemed to have enacted the new provision in accordance with the
legislative policy embodied in those prior statutes unless there is an express repeal of
the old and they all should be construed together. 9 In construing them the old statutes
relating to the same subject matter should be compared with the new provisions and if
possible by reasonable construction, both should be so construed that effect may be
given to every provision of each. However, when the new provision and the old relating
to the same subject cannot be reconciled the former shall prevail as it is the latter
expression of the legislative will. 10 Actually we do not see any conflict between Section
2309 of the Revised Administrative Code and Section 2 of the Republic Act No. 2264
(Local Autonomy Act). The conflict, if any, is more apparent than real. It is one that is not
incapable of reconciliation. And the two provisions can be reconciled by applying the
first clause of Section 2309 of the Revised Administrative Code when the problem refers
to the effectivity of an ordinance changing or repealing a municipal license tax already in
existence. But where the problem refers to effectivity of an ordinance creating an
entirely new tax, let Section 2 of Republic Act No. 2264 (Local Autonomy Act) govern.

Section 2309. Imposition of tax and duration of license.A municipal

license tax already in existence shall be subject to change only by
ordinance enacted prior to the 15th day of December of any year after
the next succeeding year, but an entirely new tax may be created by
any ordinance enacted during the quarter year effective at the
beginning of any subsequent quarter.
They submit that since Ordinance No. 360, series of 1970 of the City of Naga, is one
which changes the existing graduated sales tax on gross sales or receipts of dealers of
merchandise and sari-sari merchants provided for in Ordinance No. 4 of the City of Naga
to a percentage tax on their gross sales prescribed in the questioned ordinance, the same
should take effect in the next succeeding year after the year of its approval or in 1971.
Evidently, the divergence of opinion as to when Ordinance No. 360 took effect and
became enforceable is mainly due to the seemingly apparent conflict between Section
2309 of the Revised Administrative Code and Section 2 of Republic Act No. 2264 (Local
Autonomy Act). Is there really such a conflict in the above-mentioned provisions? It will
be easily noted that Section 2309 of the Revised Administrative Code contemplates of
two types of municipal ordinances, namely: (1) a municipal ordinance which changes a
municipal license tax already in existence and (2) an ordinance which creates an entirely
new tax. Under the first type, a municipal license tax already in existence shall be subject
to change only by an ordinance enacted prior to the 15th day of December of any year
after the next succeeding year. This means that the ordinance enacted prior to the 15th
day of December changing or repealing a municipal license tax already in existence will
have to take effect in next succeeding year. The evident purpose of the provision is to
enable the taxpayers to adjust themselves to the new charge or burden brought about by
the new ordinance. This is different from the second type of a municipal ordinance
where an entirely new tax may be created by any ordinance enacted during the quarter
year to be effective at the beginning of any subsequent quarter. We do not find any such
distinction between an ordinance which changes a municipal license tax already in
existence and an ordinance creating an entirely new tax in Section 2 of Republic Act No.
2264 (Local Autonomy Act) which merely refers to a "tax ordinance" without any
qualification whatsoever.
Now to the meat of the problem in this petition. Is not Section 2309 of the Revised
Administrative Code deemed repealed or abrogated by Section 2 of Republic Act No.
2264 (Local Autonomy Act) in so far as effectivity of a tax ordinance is concerned? An
examination of Republic Act No. 2264 (Local Autonomy Act) fails to show any provision

Section 9 All acts, executive orders, administrative orders,

proclamations or parts thereof, inconsistent with any of the
provisions of this Act are hereby repealed and modified accordingly.

In the case before Us, the ordinance in question is one which changes the graduated sales
tax on gross sales or receipts of dealers of merchandise and sari-sari merchants
prescribed in Section 3 of Ordinance No. 4 of the City of Naga to percentage tax on their
gross sale-an ordinance which definitely falls within the clause of Section 2309 of the
Revised Administrative Code. Accordingly it should be effective and enforceable in the
next succeeding year after the year of its approval or in 1971 and private respondents

should be refunded of the taxes they have paid to the petitioners on their gross sales for
the quarter from July 1, 1970 to September 30, 1970 plus the corresponding interests
from the filing of the complaint until reimbursement of the amount.
IN VIEW OF THE FOREGOING, the instant petition is hereby dismissed.
SO ORDERED.