1
FIRST DIVISION
G.R. No. L-29059 December 15, 1987
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
CEBU PORTLAND CEMENT COMPANY and COURT OF TAX APPEALS, respondents.
CRUZ, J.:
By virtue of a decision of the Court of Tax Appeals rendered on June 21, 1961, as
modified on appeal by the Supreme Court on February 27, 1965, the Commissioner of
Internal Revenue was ordered to refund to the Cebu Portland Cement Company the
amount of P 359,408.98, representing overpayments of ad valorem taxes on cement
produced and sold by it after October 1957. 1
On March 28, 1968, following denial of motions for reconsideration filed by both the
petitioner and the private respondent, the latter moved for a writ of execution to
enforce the said judgment. The motion was opposed by the petitioner on the ground
that the private respondent had an outstanding sales tax liability to which the
judgment debt had already been credited. In fact, it was stressed, there was still a
balance owing on the sales taxes in the amount of P 4,789,279.85 plus 28%
surcharge. 3
On April 22, 1968, the Court of Tax Appeals * granted the motion, holding that the
alleged sales tax liability of the private respondent was still being questioned and
therefore could not be set-off against the refund. 4
In his petition to review the said resolution, the Commissioner of Internal Revenue
claims that the refund should be charged against the tax deficiency of the private
respondent on the sales of cement under Section 186 of the Tax Code. His position is
that cement is a manufactured and not a mineral product and therefore not exempt
from sales taxes. He adds that enforcement of the said tax deficiency was properly
effected through his power of distraint of personal property under Sections 316 and
318 5 of the said Code and, moreover, the collection of any national internal revenue
tax may not be enjoined under Section 305, 6 subject only to the exception prescribed
in Rep. Act No. 1125. 7 This is not applicable to the instant case. The petitioner also
denies that the sales tax assessments have already prescribed because the
prescriptive period should be counted from the filing of the sales tax returns, which
had not yet been done by the private respondent.
For its part, the private respondent disclaims liability for the sales taxes, on the ground
that cement is not a manufactured product but a mineral product. 8 As such, it was
exempted from sales taxes under Section 188 of the Tax Code after the effectivity of
Rep. Act No. 1299 on June 16, 1955, in accordance with Cebu Portland Cement Co. v.
Collector of Internal Revenue, 9 decided in 1968. Here Justice Eugenio Angeles declared
that "before the effectivity of Rep. Act No. 1299, amending Section 246 of the National
Internal Revenue Code, cement was taxable as a manufactured product under Section
186, in connection with Section 194(4) of the said Code," thereby implying that it was
not considered a manufactured product afterwards. Also, the alleged sales tax
deficiency could not as yet be enforced against it because the tax assessment was not
yet final, the same being still under protest and still to be definitely resolved on the
merits. Besides, the assessment had already prescribed, not having been made within
the reglementary five-year period from the filing of the tax returns. 10
Our ruling is that the sales tax was properly imposed upon the private respondent for
the reason that cement has always been considered a manufactured product and not a
mineral product. This matter was extensively discussed and categorically resolved
in Commissioner of Internal Revenue v. Republic Cement Corporation, 11 decided on
August 10, 1983, where Justice Efren L. Plana, after an exhaustive review of the
pertinent cases, declared for a unanimous Court:
From all the foregoing cases, it is clear that cement qua cement was never
considered as a mineral product within the meaning of Section 246 of the Tax
Code, notwithstanding that at least 80% of its components are minerals, for the
simple reason that cement is the product of a manufacturing process and is no
longer the mineral product contemplated in the Tax Code (i.e.; minerals subjected
to simple treatments) for the purpose of imposing the ad valorem tax.
What has apparently encouraged the herein respondents to maintain their present
posture is the case of Cebu Portland Cement Co. v. Collector of Internal Revenue,
L-20563, Oct. 29, 1968 (28 SCRA 789) penned by Justice Eugenio Angeles. For
some portions of that decision give the impression that Republic Act No. 1299,
which amended Section 246, reclassified cement as a mineral product that was
not subject to sales tax. ...
xxx xxx xxx
After a careful study of the foregoing, we conclude that reliance on the decision
penned by Justice Angeles is misplaced. The said decision is no authority for the
proposition that after the enactment of Republic Act No. 1299 in 1955 (defining
mineral product as things with at least 80% mineral content), cement became a
'mineral product," as distinguished from a "manufactured product," and therefore
ceased to be subject to sales tax. It was not necessary for the Court to so rule.
It was enough for the Court to say in effect that even assuming Republic Act No.
1299 had reclassified cement was a mineral product, the reclassification could not
be given retrospective application (so as to justify the refund of sales taxes paid
before Republic Act 1299 was adopted) because laws operate prospectively only,
unless the legislative intent to the contrary is manifest, which was not so in the
case of Republic Act 1266. [The situation would have been different if the Court
instead had ruled in favor of refund, in which case it would have been absolutely
necessary (1) to make an unconditional ruling that Republic Act 1299 re-classified
cement as a mineral product (not subject to sales tax), and (2) to declare the law
retroactive, as a basis for granting refund of sales tax paid before Republic Act
1299.]
In any event, we overrule the CEPOC decision of October 29, 1968 (G.R. No. L-
20563) insofar as its pronouncements or any implication therefrom conflict with
the instant decision.
The above views were reiterated in the resolution 12 denying reconsideration of the
said decision, thus:
The nature of cement as a "manufactured product" (rather than a "mineral
product") is well-settled. The issue has repeatedly presented itself as a threshold
question for determining the basis for computing the ad valorem mining tax to be
paid by cement Companies. No pronouncement was made in these cases that as a
"manufactured product" cement is subject to sales tax because this was not at
issue.
The decision sought to be reconsidered here referred to the legislative history of
Republic Act No. 1299 which introduced a definition of the terms "mineral" and
"mineral products" in Sec. 246 of the Tax Code. Given the legislative intent, the
holding in the CEPOC case (G.R. No. L-20563) that cement was subject to sales tax
prior to the effectivity f Republic Act No. 1299 cannot be construed to mean that,
after the law took effect, cement ceased to be so subject to the tax. To erase any
and all misconceptions that may have been spawned by reliance on the case
of Cebu Portland Cement Co. v. Collector of Internal Revenue, L-20563, October
29, 1968 (28 SCRA 789) penned by Justice Eugenio Angeles, the Court has
expressly overruled it insofar as it may conflict with the decision of August 10,
1983, now subject of these motions for reconsideration.
On the question of prescription, the private respondent claims that the five-year
reglementary period for the assessment of its tax liability started from the time it filed
its gross sales returns on June 30, 1962. Hence, the assessment for sales taxes made
on January 16, 1968 and March 4, 1968, were already out of time. We disagree. This
contention must fail for what CEPOC filed was not the sales returns required in Section
 2
183(n) but the ad valorem tax returns required under Section 245 of the Tax Code. As
Justice Irene R. Cortes emphasized in the aforestated resolution:
In order to avail itself of the benefits of the five-year prescription period under
Section 331 of the Tax Code, the taxpayer should have filed the required return for
the tax involved, that is, a sales tax return. (Butuan Sawmill, Inc. v. CTA, et al.,
G.R. No. L-21516, April 29, 1966, 16 SCRA 277). Thus CEPOC should have filed
sales tax returns of its gross sales for the subject periods. Both parties admit that
returns were made for the ad valorem mining tax. CEPOC argues that said returns
contain the information necessary for the assessment of the sales tax. The
Commissioner does not consider such returns as compliance with the requirement
for the filing of tax returns so as to start the running of the five-year prescriptive
period.
We agree with the Commissioner. It has been held in Butuan Sawmill Inc. v.
CTA, supra, that the filing of an income tax return cannot be considered as
substantial compliance with the requirement of filing sales tax returns, in the
same way that an income tax return cannot be considered as a return for
compensating tax for the purpose of computing the period of prescription
under Sec. 331. (Citing Bisaya Land Transportation Co., Inc. v. Collector of
Internal Revenue, G.R. Nos. L-12100 and L-11812, May 29, 1959). There being
no sales tax returns filed by CEPOC, the statute of stations in Sec. 331 did not
begin to run against the government.

The assessment made by the Commissioner in 1968 on CEPOC's cement sales

during the period from July 1, 1959 to December 31, 1960 is not barred by the
five-year prescriptive period. Absent a return or when the return is false or
fraudulent, the applicable period is ten (10) days from the discovery of the
fraud, falsity or omission. The question in this case is: When was CEPOC's
omission to file tha return deemed discovered by the government, so as to
start the running of said period? 13

The argument that the assessment cannot as yet be enforced because it is still being
contested loses sight of the urgency of the need to collect taxes as "the lifeblood of
the government." If the payment of taxes could be postponed by simply questioning
their validity, the machinery of the state would grind to a halt and all government
functions would be paralyzed. That is the reason why, save for the exception already
noted, the Tax Code provides:
Sec. 291. Injunction not available to restrain collection of tax. No court shall
have authority to grant an injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed by this Code.

It goes without saying that this injunction is available not only when the assessment is
already being questioned in a court of justice but more so if, as in the instant case, the
challenge to the assessment is still-and only-on the administrative level. There is all
the more reason to apply the rule here because it appears that even after crediting of
the refund against the tax deficiency, a balance of more than P 4 million is still due
from the private respondent.

To require the petitioner to actually refund to the private respondent the amount of the
judgment debt, which he will later have the right to distrain for payment of its sales
tax liability is in our view an Idle ritual. We hold that the respondent Court of Tax
Appeals erred in ordering such a charade.

WHEREFORE, the petition is GRANTED. The resolution dated April 22, 1968, in CTA
Case No. 786 is SET ASIDE, without any pronouncement as to costs. SO ORDERED.

FIRST DIVISION
G.R. No. L-28896 February 17, 1988
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.
CRUZ, J.:
Taxes are the lifeblood of the government and so should be collected without
unnecessary hindrance On the other hand, such collection should be made in
accordance with law as any arbitrariness will negate the very reason for government
itself. It is therefore necessary to reconcile the apparently conflicting interests of the
authorities and the taxpayers so that the real purpose of taxation, which is the
promotion of the common good, may be achieved.
The main issue in this case is whether or not the Collector of Internal Revenue
correctly disallowed the P75,000.00 deduction claimed by private respondent Algue as
legitimate business expenses in its income tax returns. The corollary issue is whether
or not the appeal of the private respondent from the decision of the Collector of
Internal Revenue was made on time and in accordance with law.
We deal first with the procedural question.
The record shows that on January 14, 1965, the private respondent, a domestic
corporation engaged in engineering, construction and other allied activities, received a
letter from the petitioner assessing it in the total amount of P83,183.85 as delinquency
income taxes for the years 1958 and 1959. 1 On January 18, 1965, Algue flied a letter
of protest or request for reconsideration, which letter was stamp received on the same
day in the office of the petitioner. 2 On March 12, 1965, a warrant of distraint and levy
was presented to the private respondent, through its counsel, Atty. Alberto Guevara,
Jr., who refused to receive it on the ground of the pending protest. 3
A search of the protest in the dockets of the case proved fruitless. Atty. Guevara
produced his file copy and gave a photostat to BIR agent Ramon Reyes, who deferred
service of the warrant. 4 On April 7, 1965, Atty. Guevara was finally informed that the
BIR was not taking any action on the protest and it was only then that he accepted the
warrant of distraint and levy earlier sought to be served. 5 Sixteen days later, on April
23, 1965, Algue filed a petition for review of the decision of the Commissioner of
Internal Revenue with the Court of Tax Appeals. 6
The above chronology shows that the petition was filed seasonably. According to Rep.
Act No. 1125, the appeal may be made within thirty days after receipt of the decision
or ruling challenged. 7 It is true that as a rule the warrant of distraint and levy is "proof
of the finality of the assessment" 8 and renders hopeless a request for
reconsideration," being "tantamount to an outright denial thereof and makes the said
request deemed rejected." 10 But there is a special circumstance in the case at bar that
prevents application of this accepted doctrine.
The proven fact is that four days after the private respondent received the petitioner's
notice of assessment, it filed its letter of protest. This was apparently not taken into
3
account before the warrant of distraint and levy was issued; indeed, such protest could
not be located in the office of the petitioner. It was only after Atty. Guevara gave the
BIR a copy of the protest that it was, if at all, considered by the tax authorities. During
the intervening period, the warrant was premature and could therefore not be served.
As the Court of Tax Appeals correctly noted," 11 the protest filed by private respondent
was not pro forma and was based on strong legal considerations. It thus had the effect
of suspending on January 18, 1965, when it was filed, the reglementary period which
started on the date the assessment was received, viz., January 14, 1965. The period
started running again only on April 7, 1965, when the private respondent was
definitely informed of the implied rejection of the said protest and the warrant was
finally served on it. Hence, when the appeal was filed on April 23, 1965, only 20 days
of the reglementary period had been consumed.
Now for the substantive question.
The petitioner contends that the claimed deduction of P75,000.00 was properly
disallowed because it was not an ordinary reasonable or necessary business expense.
The Court of Tax Appeals had seen it differently. Agreeing with Algue, it held that the
said amount had been legitimately paid by the private respondent for actual services
rendered. The payment was in the form of promotional fees. These were collected by
the Payees for their work in the creation of the Vegetable Oil Investment Corporation of
the Philippines and its subsequent purchase of the properties of the Philippine Sugar
Estate Development Company.
Parenthetically, it may be observed that the petitioner had Originally claimed these
promotional fees to be personal holding company income 12 but later conformed to the
decision of the respondent court rejecting this assertion. 13
In fact, as the said court found, the amount was earned through the joint efforts of the
persons among whom it was distributed It has been established that the Philippine
Sugar Estate Development Company had earlier appointed Algue as its agent,
authorizing it to sell its land, factories and oil manufacturing process. Pursuant to such
authority, Alberto Guevara, Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and
Pablo Sanchez, worked for the formation of the Vegetable Oil Investment Corporation,
inducing other persons to invest in it. 14 Ultimately, after its incorporation largely
through the promotion of the said persons, this new corporation purchased the PSEDC
properties. 15 For this sale, Algue received as agent a commission of P126,000.00, and
it was from this commission that the P75,000.00 promotional fees were paid to the
aforenamed individuals. 16
There is no dispute that the payees duly reported their respective shares of the fees in
their income tax returns and paid the corresponding taxes thereon. 17 The Court of Tax
Appeals also found, after examining the evidence, that no distribution of dividends was
involved. 18
The petitioner claims that these payments are fictitious because most of the payees
are members of the same family in control of Algue. It is argued that no indication was
made as to how such payments were made, whether by check or in cash, and there is
not enough substantiation of such payments. In short, the petitioner suggests a tax
dodge, an attempt to evade a legitimate assessment by involving an imaginary
deduction.
We find that these suspicions were adequately met by the private respondent when its
President, Alberto Guevara, and the accountant, Cecilia V. de Jesus, testified that the
payments were not made in one lump sum but periodically and in different amounts as
each payee's need arose. 19 It should be remembered that this was a family
corporation where strict business procedures were not applied and immediate issuance
of receipts was not required. Even so, at the end of the year, when the books were to
be closed, each payee made an accounting of all of the fees received by him or her, to

make up the total of P75,000.00. 20 Admittedly, everything seemed to be informal. This
arrangement was understandable, however, in view of the close relationship among
the persons in the family corporation.
We agree with the respondent court that the amount of the promotional fees was not
excessive. The total commission paid by the Philippine Sugar Estate Development Co.
to the private respondent was P125,000.00. 21After deducting the said fees, Algue still
had a balance of P50,000.00 as clear profit from the transaction. The amount of
P75,000.00 was 60% of the total commission. This was a reasonable proportion,
considering that it was the payees who did practically everything, from the formation
of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar
Estate properties.
This finding of the respondent court is in accord with the following provision of the Tax
Code:
SEC. 30. Deductions from gross income.--In computing net income there shall be
allowed as deductions
(a) Expenses:
(1) In general.--All the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on any trade or business, including a reasonable
allowance for salaries or other compensation for personal services actually
rendered; ... 22
4
form of tangible and intangible benefits intended to improve the lives of the people
and enhance their moral and material values. This symbiotic relationship is the
rationale of taxation and should dispel the erroneous notion that it is an arbitrary
method of exaction by those in the seat of power.
But even as we concede the inevitability and indispensability of taxation, it is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure. If it is not, then the taxpayer has a right to
complain and the courts will then come to his succor. For all the awesome power of the
tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate, as
it has here, that the law has not been observed.
We hold that the appeal of the private respondent from the decision of the petitioner
was filed on time with the respondent court in accordance with Rep. Act No. 1125. And
we also find that the claimed deduction by the private respondent was permitted
under the Internal Revenue Code and should therefore not have been disallowed by
the petitioner.
ACCORDINGLY, the appealed decision of the Court of Tax Appeals is AFFIRMED in
toto, without costs.
SO ORDERED.

and Revenue Regulations No. 2, Section 70 (1), reading as follows:

SEC. 70. Compensation for personal services.--Among the ordinary and necessary
expenses paid or incurred in carrying on any trade or business may be included a
reasonable allowance for salaries or other compensation for personal services
actually rendered. The test of deductibility in the case of compensation payments
is whether they are reasonable and are, in fact, payments purely for service. This
test and deductibility in the case of compensation payments is whether they are
reasonable and are, in fact, payments purely for service. This test and its practical
application may be further stated and illustrated as follows:
Any amount paid in the form of compensation, but not in fact as the purchase
price of services, is not deductible. (a) An ostensible salary paid by a
corporation may be a distribution of a dividend on stock. This is likely to occur
in the case of a corporation having few stockholders, Practically all of whom
draw salaries. If in such a case the salaries are in excess of those ordinarily
paid for similar services, and the excessive payment correspond or bear a
close relationship to the stockholdings of the officers of employees, it would
seem likely that the salaries are not paid wholly for services rendered, but the
excessive payments are a distribution of earnings upon the stock. . . .
(Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.)

It is worth noting at this point that most of the payees were not in the regular employ
of Algue nor were they its controlling stockholders. 23
The Solicitor General is correct when he says that the burden is on the taxpayer to
prove the validity of the claimed deduction. In the present case, however, we find that
the onus has been discharged satisfactorily. The private respondent has proved that
the payment of the fees was necessary and reasonable in the light of the efforts
exerted by the payees in inducing investors and prominent businessmen to venture in
an experimental enterprise and involve themselves in a new business requiring
millions of pesos. This was no mean feat and should be, as it was, sufficiently
recompensed.

It is said that taxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate and operate
it. Hence, despite the natural reluctance to surrender part of one's hard earned income
to the taxing authorities, every person who is able to must contribute his share in the
running of the government. The government for its part, is expected to respond in the

EN BANC
[G.R. No. L-18129. January 31, 1963.]
C. N. HODGES, Petitioner-Appellant, v. THE MUNICIPAL BOARD OF THE CITY
OF ILOILO, ET AL., Respondents-Appellants.
DECISION
BAUTISTA ANGELO, J.:
On June 13, 1960, the Municipal Board of the City of Iloilo enacted Ordinance No. 33,
series of 1960, pursuant to the provisions of Republic Act No. 2264, known as the Local
Autonomy Act, requiring any person, firm, association or corporation to pay a sales tax
of 1/2 of 1% of the selling price of any motor vehicle and prohibiting the registration of
the sale of the motor vehicle in the Motor Vehicles Office of the City of Iloilo unless the
tax has been paid. It is expressly required therein that the payment of the municipal
tax shall be a requirement for registration and transfer of ownership, the tax to be paid
in the office of the city treasurer, and that the tax receipt shall be made part of the
documents to be presented to the Motor Vehicles Office.
C. N. Hodges, who was engaged in the business of buying and selling second-hand
motor vehicles in the City of Iloilo, is one of those affected by the enactment of the
ordinance, and believing that the same is invalid for having been passed in excess of
the authority conferred by law upon the municipal board, he filed on June 27, 1960 a
petition for declaratory judgment with the Court of First Instance of Iloilo praying that
said ordinance be declared void ab initio, and that the City of Iloilo be ordered to
refund to him the amounts he was required to pay thereunder without prejudice to
determining its validity in an appropriate action.
The City of Iloilo, in its answer, justified the approval of the ordinance alleging that the
same was approved by virtue of the power and authority granted to it by Section 2 of
Republic Act No. 2264, known as the Local Autonomy Act. A copy of the petition for
declaratory judgment was furnished the Solicitor General in accordance with Section 4,
Rule 66, of the Rules of Court.
The case having been submitted under a stipulation of facts, the court a quo rendered
decision on December 8, 1960 holding that part of the ordinance which requires the
owner of a used motor vehicle to pay a sales tax of 1/2 of 1% of the selling price is
valid, but the portion thereof which requires the payment of the tax as a condition
precedent for the registration of the sale in the Motor Vehicles Office is invalid for
being repugnant to Section 2(h) of Republic Act 2264. Both parties have appealed.
5
Section 2 of Republic Act No. 2264, known as the Local Autonomy Act, pursuant to
which the ordinance in question was approved by the Municipal Board of the City of
Iloilo, provides in part:
"SEC. 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered
cities, municipalities and municipal districts shall have authority to impose municipal
license taxes or fees upon persons engaged in any occupation or business, or
exercising privileges in chartered cities, municipalities or municipal districts by
requiring them to secure licenses at rates fixed by the municipal board or city council
of the city, the municipal council of the municipality or the municipal district council of
the municipal district; to collect fees and charges for services rendered by the city,
municipality or municipal district; to regulate and impose reasonable fees for services
rendered in connection with any business, profession or occupation being conducted
within the city, municipality or municipal district and otherwise to levy for public
purposes, just and uniform taxes, licenses or fees: Provided, That municipalities and
municipal districts shall, in no case, impose any percentage tax on sales or other taxes
in any form based thereon nor impose taxes on articles subject to specific tax, except
gasoline, under the provisions of the National Internal Revenue Code:
It would appear that the City of Iloilo, thru its municipal board, is empowered (a) to impose
municipal licenses, taxes or fees upon any person engaged in any occupation or business, or
exercising any privilege, in the city; (b) to regulate and impose reasonable fees for services
rendered in connection with any business, profession or occupation conducted within the
city; and (c) to levy for public purposes just and uniform taxes, licenses or fees. It would also
appear that municipalities and municipal districts are prohibited from imposing any
percentage tax on sales or other taxes in any form on articles subject to specific tax, except
gasoline, under the provisions of the National Internal Revenue Code.
From a cursory analysis of the provisions above-stated we can readily draw the conclusion
that the City of Iloilo has the authority and power to approve the ordinance in question for it
merely imposes a percentage tax on the sale of a second-hand motor vehicle that may be
carried out within the city by any person, firm, association or corporation owning or dealing
with it who may come within its jurisdiction. Indeed, it cannot be disputed that a sales tax of
1/2 of 1% of the selling price of a second-hand motor vehicle comes within the category of a
just tax within the provision of Section 2 of Republic Act 2264. It is true that the tax in
question is in the form of a percentage tax on the proceeds of the sale of a second-hand
motor vehicle which comes within the prohibition of the section above adverted to; but the
prohibition only refers to municipalities and municipal districts and does not comprehend
chartered cities as the City of Iloilo.
But the ordinance, besides imposing a percentage tax, also imposes an additional
requirement. It provides that the payment of the tax shall be a requirement for registration
and transfer of ownership and that unless the tax is paid the registration and transfer of
ownership cannot be effected in the Motor Vehicles Office of the City. The Court a quo
considered this portion invalid reasoning as follows: "Chartered cities are not authorized to
establish any condition on the registration of motor vehicles. To require the payment of sales
tax before the registration of the sale can be made in the Motor Vehicles Office, is
tantamount to imposing a tax for the registration of motor vehicles."cralaw virtua1aw library
We disagree. The court a quo undoubtedly had in mind the provision of Section 2(h) of
Republic Act No. 2264 which prohibits a chartered city from imposing a tax on the
registration of motor vehicles and the issuance of all kinds of licenses or permits for the
driving thereof, which is one of the exceptions constituting a restriction on the taxation
power granted by said Act to a city, municipality or municipal district. But the requirement of
the ordinance cannot be considered a tax in the light viewed by the court a quo for the same
is merely a coercive measure to make the enforcement of the contemplated sales tax more
effective. Well-settled is the principle that taxes are imposed for the support of the
government in return for the general advantage and protection which the government
affords to taxpayers and their property (Union Refrigerator Transit Co. v. Com., 26 S. Ct. 36,
199 I [2nd] 160). Taxes are the lifeblood of the government. It is imperative that the power
 6
to impose them be clothed with the implied authority to devise ways and means to
accomplish their collection in the most effective manner. Without this implied power the end
of government may falter or fail.

"It is a general and undisputed proposition of law that a municipal corporation possesses and
can exercise the following powers, and no others: First, those granted in express words;
second, those necessarily or fairly implied in or incident to the powers expressly granted;
third, those essential to the accomplishment of the declared objects and purposes of the
corporation not simply convenient, but indispensable." (Dillon, Municipal Corporations, 5th
Ed., Vol. I, p. 449; citing Cook Co. v. McCrea, 93 Ill. 236; Ottawa v. Carey, 108 U. S., 110.)

"Municipal corporations may exercise all powers in the fair intent and purpose of their
creation which are reasonably proper to give effect to the powers expressly granted, and in
so doing they gave the choice of the means adapted to the ends and are not confined to any
one mode of operation." (62 C.J.S., Section 117, citing Spahn v. Stewart, 103 S. W. 2d 651,
559, 268 Ky. 97; Riddle v. Ledbetter, 5 S. E., 2d 542, 216 N.C. 491.)

"If the power of municipalities are to be confined to those expressly granted by the law, in
many cases they will be denied even the power of self-preservation as well as of the means
necessary to accomplish the essential object of their creation. Hence in giving corporations
authority to carry out the powers expressly granted to them, it is understood that they are
also given the power to adopt such means as may be necessary for accomplishing their
ends." (Sinco, Philippine Political Law, 10th Ed., p. 688, citing Smith v. New Bern, 16 Am.
Rep. 766.)

We are, therefore, of the opinion that the ordinance in question is valid it being a valid
exercise of the power of taxation granted to Iloilo City by Section 2 of Republic Act No. 2264.

WHEREFORE, the decision appealed from is modified by declaring Ordinance No. 33 of the
City of Iloilo valid even with regard to the portion which requires the payment of the tax as a
condition precedent for the registration of the sale in the Motor Vehicles Office of said City.
No costs.