ESTANISLAO vs.

HONORABLE AMADO COSTALES

FACTS:

 Ordinance was passed by the Sangguniang Panglungsod of

Zamboanga City on February 1982. The Sanggunian sent a copy of the
Ordinance to the then Minister of Finance by registered mail for his
review pursuant to P.D. No. 231, otherwise known as the Local Tax
Code.
 On December 1982, the Minister of Finance through Deputy Minister
Roman, Jr., sent the letter addressed to the Sanggunian, suspending
the effectivity of Ordinance No. 44 on the ground that it contravenes
Section 19(a) of the Local Tax Code.
 On January 1983, the City Mayor of Zamboanga appealed the said
decision of the Minister of Finance to the RTC of Zamboanga.
 RTC: Although the tax levied under said Ordinance is not among those
that the Sanggunian may impose under the Local Tax Code, it upheld
its validity because the Minister of Finance did not take appropriate
action on the matter within the prescribed period of 120 days after
receipt of a copy thereof.
 This petition for review on certiorari was filed by the incumbent
Secretary of Finance alleging that the trial court erred when it held that
the failure of the Minister of Finance to suspend the effectivity of
Ordinance No. 44 within 120 days from receipt of a copy thereof
rendered said Ordinance valid.

ISSUE:

Whether or not Ordinance No. 44 of Zamboanga City imposing P0.01 tax per
liter of softdrinks produced, manufactured, and/or bottled within the
territorial jurisdiction of the City is valid?

HELD:

NO. It is null and void. Any taxes paid under protest should be accordingly
refunded to the taxpayers.

RATIO:

 Section 19(a) and section 23 of the Local Tax Code allows for the
municipalities to impose tax on businesses.
 It is clear that a city, like Zamboanga, may impose, in lieu of the
graduated fixed tax prescribed under Section 19 of the Local Tax Code,
a percentage tax on the gross sales for the preceding calendar year of
non-essential commodities at the rate of not exceeding two per cent
 and on the gross sales of essential commodities at the rate of not
exceeding one per cent.
 Ordinance No. 44 of the respondent Zamboanga City imposes P0.01
per liter of softdrinks produced, manufactured, and/or bottled within
the territorial jurisdiction of the City of Zamboanga.
o Ordinance is ultra vires as it is not within the authority of the City
to impose said tax.
o The authority of the City is limited to the imposition of a
percentage tax on the gross sales or receipts of said product
which shall be at the rate of not exceeding 2% of the gross sales
or receipts of the soft drinks for the preceding calendar year.
 The tax being imposed under said Ordinance is based on the output or
production and not on the gross sales or receipts as authorized under
the Local Tax Code.