DOUBLE TAXATION
1. Villanueva, et al. v. City of Iloilo
G.R. No. L-26521, December 28, 1968
FACTS:
The municipal board of Iloilo City enacted Ordinance 86, imposing license
tax fees as follows: (1) tenement house (casa de vecindad), P25.00 annually; (2)
tenement house, partly or wholly engaged in or dedicated to business in the streets
of J.M. Basa, Iznart and Aldeguer, P24.00 per apartment; (3) tenement house, partly or
wholly engaged in business in any other streets, P12.00 per apartment. The validity and
constitutionality of this ordinance were challenged by the spouses Eusebio Villanueva
and Remedios Sian Villanueva, owners of five tenement houses containing 43
apartments. They alleged among others that the said ordinance is unconstitutional for
being violative of the rule as to uniformity of taxation.
The lower court rendered judgment declaring the ordinance illegal on the
grounds that (a) "Republic Act 2264 does not empower cities to impose apartment
taxes," (b) the same is "oppressive and unreasonable," for the reason that it
penalizes owners of tenement houses who fail to pay the tax, (c) it constitutes "not
only double taxation, but treble at that,” and (d) it violates the rule of uniformity of
taxation.
ISSUE:
1. WON the City of Iloilo is empowered by the Local
Autonomy Act to impose tenement taxes.
2. WON Ordinance 11, series of 1960, of the City of Iloilo illegal
because it imposes double taxation.
3. WON the tax in question is a real estate tax.
RULING:
1. Yes. The imposition by the ordinance of a license tax on persons engaged in the
business of operating tenement houses finds authority in Section 2 of the Local Autonomy Act
which provides that chartered cities have the authority to impose municipal license taxes or fees
upon persons engaged in any occupation business, or
exercising privileges within their respective territories, and “otherwise to levy for public purposes,
just and uniform taxes, licenses, or fees.”
2. No. While it is true that the plaintiffs-appellees are taxable under the provisions
of the National Internal Revenue Code as real estate dealers, and still taxable under the
ordinance in question, the argument against double taxation may not be invoked. The same tax
may be imposed by the national government as well as by the local government. There is nothing
inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation,
calling or activity by both the State and a political subdivision thereof.
It is a well-settled rule that a license tax may be levied upon business or occupation
although the land or property used in connection therewith is subject to
property tax. The State may collect an ad valorem tax on property used in a calling, and at the
same time impose a license tax on that calling. The imposition of the latter
kind of tax being in no sense a double tax. "In order to constitute double taxation in the
objectionable or prohibited sense the same property must be taxed twice when it should be taxed
but once; both taxes must be imposed on the same property or subjectmatter, for the same
purpose, by the same State, Government, or taxing authority, within the same jurisdiction or
taxing district, during the same taxing period, and they must be the same kind or character of
tax." It has been shown that a real estate tax and the tenement tax imposed by the ordinance,
although imposed by the same taxing authority, are not of the same kind or character.
Furthermore, there is no constitutional prohibition against double taxation in the Philippines. It is
something not favored, but is permissible, provided some other
constitutional requirement is not thereby violated, such as the requirement that taxes must be
uniform.
3. No. A real estate tax is a direct tax on the ownership of lands and
buildings or other improvements thereon, not specially exempted, and is payable regardless of
whether the property is used or not, although the value may vary in accordance with such factor.
The tax is usually single or indivisible, although the land and building or improvements erected
thereon are assessed separately, except when
the land and building or improvements belong to separate owners. It is a fixed proportion of the
assessed value of the property taxed, and requires, therefore, the intervention of assessors, It is
collected or payable at appointed times, and it constitutes a superior lien on and is enforceable
against the property subject to such taxation, and not by imprisonment of the owner.
The tax imposed by the ordinance in question does not possess the aforestated
attributes. It is not a tax on the land on which the tenement houses are erected, although both
land and tenement houses may belong to the same owner. The tax is not a fixed
proportion of the assessed value of the tenement houses, and does not require the intervention of
assessors or appraisers. It is not payable at a designated time or date, and is not enforceable
against the tenement houses either by sale or distraint. Clearly,
therefore, the tax in question is not a real estate tax. The ordinance, in both its title and
body, particularly Sections 1 and 3 thereof, designates the tax imposed as a "municipal
license tax" which, by itself, means an "imposition or exaction on the right to use or
dispose of property, to pursue a business, occupation, or calling, or to exercise a
privilege."
