Villanueva vs City of Iloilo license tax on that calling, the imposition of the latter kind of tax being in no sense
n that calling, the imposition of the latter kind of tax being in no sense a double
Facts:
City of Iloilo appeals decision of CFI declaring Ordinance 11, series of 1960 illegal, entitled “An
Ordinance Imposing Municipal License Tax On Persons Engaged In The Business Of Operating
Tenement Houses," and ordering the City to refund to the plaintiffs-appellees the sums of
money collected from them under the said ordinance.
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 Court declared the Ordinance as ultra vires, stating that the power
to tax owners of tenement houses is one among those clearly and expressly granted to the City
of Iloilo by its Charter.
Later, the municipal board of Iloilo City, believing that with the passage of Republic Act 2264,
otherwise known as the Local Autonomy Act, it had acquired the authority or power to enact
an ordinance similar to that previously declared by this Court as ultra vires, enacted Ordinance
11, series of 1960.
The plaintiffs-appellees, apartment owners, filed a complaint against the City of Iloilo praying
that Ordinance 11, series of 1960, be declared "invalid for being beyond the powers of the
Municipal Council of the City of Iloilo to enact, and unconstitutional for being violative of the
rule as to uniformity of taxation and for depriving said plaintiffs of the equal protection clause
of the Constitution," and that the City be ordered to refund the amounts collected from them
under the said ordinance.
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: Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double
taxation?
Ruling: 
 its repeal, in—
No. The trial court condemned the ordinance as constituting "not only double taxation but
treble at that," because "buildings pay real estate taxes and also income taxes as provided for
in Sec. 182 (A) (3) (s) of the National Internal Revenue Code, besides the tenement tax under
the said ordinance."
While it is true that the plaintiffs-appellees are taxable under the aforesaid
provisions of the NIRC 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.
It is a well-settled rule that a license tax may be levied upon a 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
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 subject-matter, 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. At all events, 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.
Republic Bank vs CTA & CIR
Doctrine: Imposition of a penalty and a tax on one taxpayer does not amount to double
taxation.
Facts:
Petitioner Republic Bank appeals the decision of respondent Court of Tax Appeals
dismissing its Petition for Review, thereby affirming CIR’s assessment for petitioner’s reserve
deficiency taxes inclusive of 25% surcharge for the taxable years 1969 and 1970 in the amounts
of P1,325,768.82 and P1,953,132.67, respectively.
CIR assessed petitioner the amount of P1,060,615.06, plus 25% with a total of P1,325,768.82,
as 1% monthly bank reserve deficiency tax for taxable year 1969; and the amount of
P1,562,506.14, plus 25% surcharge, with a total of P1,953,132.67, as 1% monthly bank reserve
deficiency tax for taxable year 1970.
Petitioner contends that Section 249 of the Tax Code is no longer enforceable,
because Section 126 of Act 1459, which was allegedly the basis for the imposition of the 1%
reserve deficiency tax, was repealed by Section 90 of Republic Act 337, the General Banking
Act, and by Sections 100 and 101 of Republic Act 265. Both petitioner and public respondent
agree that:
“x x x. The requirement on the maintenance of bank reserves, previously
found in Section 126 of Act 1459 (The Corporation Law), remained prescribed, after
a. Sec. 26, RA 3374—subjecting the deposit liabilities of commercial
banks including the Philippine National Bank to the reserve requirements and other
conditions prescribed by the Monetary Board in accordance with the authority
granted to it under the Central Bank Act.
b. Sec. 100, RA 2655—requiring banks to maintain reserves against their
deposit liabilities;
c. Sec. 101, RA 2656—authorizing the Monetary Board to prescribe and
to modify the minimum reserved ratios applicable to each class of peso deposits;
d. Sec. 106, RA 2657—imposing a penalty of 1/10 of 1% for violation of
the Banking Law.”
Issue: Whether there is double taxation?
Ruling:
There is none. As the law stood during the years the petitioner was assessed for
taxes on reserve deficiencies (1969 & 1970), petitioner had to pay twice—the first, a penalty,
to the Central Bank by virtue of Section 106 for violation of Secs. 100 and 101, all of the Central
Bank Act and the second, a tax, to the Bureau of Internal Revenue for incurring a reserve
deficiency.
 As correctly analyzed by the petitioner and public respondents, the new
legislations on bank reserves merely provided the basis for computation of the reserve
deficiency of petitioner bank.
 It is clear from the statutes then in force that there was no
double taxation involved —one was a penalty and the other was a tax.
The Court has upheld the validity of double taxation.12 The payment of 1/10 of 1%
for incurring reserve deficiencies (Section 106, Central Bank Act) is a penalty as the primary
purpose involved is regulation, while the payment of 1% for the same violation (Second
Paragraph, Section 249, NIRC) is a tax for the generation of revenue which is the primary
purpose.
Petitioner should not complain that it is being asked to pay twice for incurring
reserve deficiencies. It can always avoid this predicament by not having reserve deficiencies.
Petitioner’s case is covered by two special laws—one a banking law and the other, a tax law.
These two laws should receive such construction as to make them harmonize with each other
and with the other body of pre-existing laws.