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  • Butuan Sawmill v. City of Butuan

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    Christine Gel Madrilejo
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    The Supreme Court ruled that Butuan Sawmill is not within the taxing authority of the city's questioned taxing ordinance for three reasons: 1) An earlier special law granting Butuan Sawmill's franchise is an exception to the city's later general taxing power. 2) The ordinance would result in double taxation prohibited by the Internal Revenue Code. 3) Construing the local government's taxing power to not nullify the franchise tax exemption allows other utilities without franchises to be taxed, unless franchises authorize additional taxation.

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    The Supreme Court ruled that Butuan Sawmill is not within the taxing authority of the city's questioned taxing ordinance for three reasons: 1) An earlier special law granting Butuan Sawmill's franchise is an exception to the city's later general taxing power. 2) The ordinance would result in double taxation prohibited by the Internal Revenue Code. 3) Construing the local government's taxing power to not nullify the franchise tax exemption allows other utilities without franchises to be taxed, unless franchises authorize additional taxation.

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    117 views1 page

    Butuan Sawmill v. City of Butuan

    Uploaded by

    Christine Gel Madrilejo
    The Supreme Court ruled that Butuan Sawmill is not within the taxing authority of the city's questioned taxing ordinance for three reasons: 1) An earlier special law granting Butuan Sawmill's franchise is an exception to the city's later general taxing power. 2) The ordinance would result in double taxation prohibited by the Internal Revenue Code. 3) Construing the local government's taxing power to not nullify the franchise tax exemption allows other utilities without franchises to be taxed, unless franchises authorize additional taxation.

    Copyright:

    © All Rights Reserved
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    90. Butuan Sawmill, Inc. vs. City of Butuan, et al.

    No. L-21516. April 29, 1966.

    Petitioner BUTUAN SAWMILL, INC


    Respondent: CITY OF BUTUAN, ET AL.

    DOCTRINE:
    An earlier special statute is an exception to the later general statute.·Where there are two statutes, the earlier
    special and the later general·the terms of the general broad enough to include the matter provided for in the
    special·the fact that one is special and the other is general creates a presumption that the special is to be considered
    as remaining an exception to the general, one as a general law of the land, the other as the law of a particular case.

    FACTS:
    1. Butuan Sawmill was granted a legislative franchise under RA 399 for electric light, heat and power system
    subject to the conditions established in Act 3636, as amended by Commonwealth Act No. 132.
    2. On Oct 1, 1950 Ordinance no. 7 took effect, which imposes a tax of 2% on the gross sales or receipts of
    any business operated in the city and provides penalties for violation thereof. Ordinance no. 11
    (December 1950) amended the Ordinance no. 7, enumerating the kinds of business required to pay the tax,
    further amended Ordinance no. 11 by Ordinance no. 148 (June 1962) by including the coverage of taxable
    business “Those engaged in the business of electric light, heat and power (sic) x x x”

    3. Respondent alleged that the city has the power to impose levy and collection of taxes for general and
    special purpose under RA 523 and its taxing power was enlarged by RA 2264, which the City has the
    authority to impose the 2% tax on the gross sales or receipts of the business of electric light, heat and power
    of the Butuan Sawmill.

    4. Butuan Sawmill questioned the constitutionality of the Ordinance, as it impairs the obligation of contract
    and deprives it of property without due process of law.
    ISSUE: W/N Butuan Sawmill is within the taxing authority of the questioned taxing ordinance. – NO.

    RULING:
    The argument of the appellant city that, under subparagraph (d) of the Local Autonomy Act, the business of electric
    light, heat and power, being an exception to those which it cannot tax (like waterworks and irrigation), is within the
    city’s taxing power.

    This argument is untenable, because (1) subparagraph (j) of the same section specifically withholds the imposition
    of taxes on persons paying franchise tax (like appellee herein), and (2) the city’s interpretation of the provision
    would result in double taxation against the business of the appellee because the internal revenue code already
    imposes a franchise tax.

    The logical construction of section 2(d) of Republic Act 2264, that would not nullify section 2 (j) of the same Act, is
    that the local government may only tax electric light and power utilities that are not subject to franchise taxes, unless
    the franchise itself authorizes additional taxation by cities or municipalities.

    Be it noted that the franchise was granted by act of the legislature on 18 June 1949 while the city’s charter was
    approved on 15 June 1950.

    “Where there are two statutes, the earlier special and the later general the terms of the general broad enough to
    include the matter provided for in the special the fact that one is special and the other is general creates a
    presumption that the special is to be considered as remaining an exception to the general, one as a general law of the
    land, the other as the law of a particular case.

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