PROCTER &GAMBLE PHIL. MANUFACTURING CORP.

vMUNICIPALITY OF JAGNA
G.R. No. L-24265; December 28, 1979; Melencio-Herrera, J.
Digest prepared by Efren II Resurreccion

Facts:
1. December 13, 1957, the Municipal Council of Jagna, Bohol enacted Mun. Ordinance No. 4 Series of 1957
Imposing Storage Fees [on] All Exportable Copra Deposited in the Bodega Within the Jurisdiction of the
Municipality.
2. For six years (1958-1963), Procter & Gamble paid the Municipality under protest, storage fees totaling
P42,265.13.
3. March 3, 1964, Procter & Gamble (P&G) filed suit in the CFI of Manila seeking that: 1) Ordinance no 4 be
declared inapplicable to it, or that it be called ultra vires, and 2) that the Municipality be ordered to refund
the amount paid under protest + costs.
a. Municipality: questioned the jurisdiction of the trial court to take cognizance of the action and pleaded
prescription and laches for failure to timely question the validity of the ordinance.
4. TC: Upheld jurisdiction as well as Municipalitys power to enact the Ordinance under the Revised Admin
Codes sec. 2238, known as the general welfare clause. It also declared P&Gs right of action prescribed
under the 5 year period provided by Art 1149 NCC.
5. P&G appeals the case submitting that:
a. The ordinance is inapplicable as it is not engaged in the business trade of storing copra for others for
compensation or profit, and that the only copra it stores is for exclusive use in connection with its
business as a manufacturer of soap, edible oil, margarine and other similar products.
b. That the levy is intended as an export tax since it is collected from exportable copra which is
beyond the powers of the Municipal Council.
c. That the fee of P0.10 for every 100 kilos of copra stored in the bodega is excessive, unreasonable and
oppressive and is imposed more for revenue than as a regulatory fee.

Issues:
W/N the Municipality of Jagna was authorized to impose and collect the storage fee provided or in
Ordinance No. 4 YES.

Held:
The validity of the ordinance is sustained.

Ratio:
The Validity of the ordinance must be upheld pursuant to the broad authority conferred upon
municipalities by Commonwealth Act No. 472 (prevailing when the ordinance was enacted).
o Under such article, a municipality is authorized to impose three kinds of licenses 1) a license for
regulation of useful occupation or enterprises, 2) license for restriction or regulation of non-
useful occupations or enterprises, and 3) license for revenue.
o It is thus unnecessary to determine whether the subject storage fee is a tax for revenue
purposes or a license fee to reimburse the municipality for supervision services since both are
within the powers granted to the municipality.
The storage fee imposed under the ordinance is actually a municipal license tax or fee on persons,
firms and corporations exercising the privilege of storing copra in a bodega within the muicipalitys
territorial jurisdiction.
o License tax has not acquired a fixed meaning. It is often use to indiscriminately designate
impositions exacted for various privileges including revenue raising activities.
Further, the business of buying and selling and sorting copra is properly the subject of regulation
within the police power granted to municipalities under the Revised Admin Codes general welfare
clause. Since it has been held that warehouses keeping copra is a likely danger to public safety
because it contains flammable substances that are difficult to put under the control of water.

The claim that P0.10 / 100kilos fee is beyond the cost of regulation and surveillance is not well
taken. As discussed Victorias Milling v Municipality of Victorias, [t]he cost of regulation cannot be
taken as a gauge, if the municipality reallt intended to enact a revenue ordinance[]
Municipal corps. Are allowed wide discretion in determining the rates of imposable license fees
even in cases of purely police power measures.
In the absence of proof as to municipal conditions and the nature of business being taxed as well
as other factors relevant to the issue of arbitrariness of the questioned rates, courts will go slow in
writing off an ordinance.

P&Gs averment that even if presumed valid, the ordinance is inapplicable to it since it is not in the
business of buying or selling copra should also fail. The question is irrelevant since the storage fee is
an imposition on the privilege of storing copra in bodegas in the municipality.

The imposition is also not an export tax, prohibited by the Admin code. Only where there is a clear
showing that what is being taxed is an export to any foreign country would the prohibition come
into play.
o exportable copra in the ordinance does not exclusively mean export to a foreign country, but
shipment out of the municipality.
o It is also not a tax on exports because it is also impose upon copra to be used for domestic
purposes.

However, the lower court erred in claiming that the action has prescribed. In Municipality of Opon v
Caltex, the prescription period for actions to recover municipal license taxes is six years, governed
by Art. 1145(2) NCC.