People vs. Nazario

Municipal ordinances imposing a fixed annual privilege tax on the business of fishpond operation are valid and enforceable against lessees of public land who actually operate fishponds, as such lessees fall within the term "manager," and the ordinances are neither vague, ex post facto, nor ultra vires where the tax is on the privilege of occupation rather than on property, forest products, or sales.

Eusebio Nazario was a resident of Manila who, on August 21, 1959, entered into Fishpond Lease Agreement No. 1066 with the Philippine government through the Secretary of Agriculture and Natural Resources, leasing 27.1998 hectares of forest land in Pinagbayanan, Pagbilao, Quezon, for fishpond purposes. The Municipality of Pagbilao had enacted Ordinance No. 4 (series of 1955), Ordinance No. 15 (series of 1965), and Ordinance No. 12 (series of 1966), each imposing a municipal tax of ₱3.00 per hectare per annum on "any owner or manager of fishponds" within the municipality's territorial limits. The governing statutory framework at the relevant time was Republic Act No. 2264, the Local Autonomy Act, which authorized municipalities to levy occupation taxes but prohibited percentage taxes on sales and taxes on forest products or concessions.

On August 21, 1959, Eusebio Nazario, a resident of Manila, entered into Fishpond Lease Agreement No. 1066 with the Philippine government through the Secretary of Agriculture and Natural Resources, leasing 27.1998 hectares of forest land in Pinagbayanan, Pagbilao, Quezon, for fishpond purposes. Nazario thereafter converted the leased land into a functioning fishpond: he financed its construction, introduced fish fries, and employed laborers to maintain it. Prosecution witnesses confirmed that the fishpond was operational from at least 1962 through 1967, with one witness, Nicolas Macarolay, the barrio captain of Pinagbayanan, testifying that Nazario opened the fishpond in 1959 and continued to operate it, and that he was present during the catching of fish in 1967. Another witness, Miguel Francia, worked in the clearing of the fishpond, construction of dikes, and catching of fish from 1962 to March 1964.

The Municipality of Pagbilao had enacted Ordinance No. 4 (series of 1955), imposing a municipal tax of ₱3.00 per hectare per annum on "any owner or manager of fishponds" within its territorial limits. Ordinance No. 15 (series of 1965) amended it by providing that payment would begin "after the lapse of three (3) years starting from the date said fishpond is approved by the Bureau of Fisheries." Ordinance No. 12 (series of 1966) further amended it, reckoning liability "beginning and taking effect from the year 1964, if the fishpond started operating before the year 1964." The Municipal Treasurer of Pagbilao, Rodolfo R. Alvarez, sent letters of demand to Nazario for unpaid taxes totaling ₱362.62, covering the years 1964, 1965, and 1966 for the 38.10 hectares of fishpond. The former Treasurer, Ceferino Caparros, had likewise sent an earlier demand letter. Nazario received these demands at his Manila residence and responded by requesting an inspection of the fishpond, claiming it had been destroyed by a typhoon and was not in operation.

Nazario refused to pay, asserting that he was a mere lessee of public land and not an "owner or manager" within the coverage of the ordinances, that the ordinances were vague and uncertain, that they were ex post facto, that there was no law empowering municipalities to tax fishpond operators, and that under Section 2309 of the Revised Administrative Code the taxes had lapsed. He was accordingly charged in an information dated October 9, 1968, with violation of the ordinances for willfully refusing and failing to pay the municipal taxes despite repeated demands. The trial court found him guilty beyond reasonable doubt and sentenced him to pay a fine of ₱50.00, with subsidiary imprisonment in case of insolvency, and costs.

• Vagueness and Uncertainty: Petitioner argued that the ordinances are ambiguous and uncertain because he is a mere lessee, not an "owner or manager," and that the dates of payment are vague, with liability depending on uncertain dates and events to be determined by uncertain individuals.
• Ex Post Facto: Petitioner maintained that Ordinance No. 12, passed on September 19, 1966, penalizes acts or events occurring before its passage by reckoning tax liability from 1964, and is therefore an ex post facto measure.
• Limited Coverage: Petitioner contended that the ordinances cover only owners or overseers of fishponds of private ownership and not lessees of public lands.
• Territorial Limits and Non-Residency: Petitioner argued that the ordinances cannot be enforced beyond the territorial limits of Pagbilao and do not cover non-residents.
• Ultra Vires: Petitioner maintained that there is no law empowering the municipality to pass ordinances taxing fishpond operators, and that the ordinance is outside the power of the municipal council to enact.
• Lapse of Taxes: Petitioner argued that under Section 2309 of the Revised Administrative Code, municipal taxes lapse if not paid, and that collection is being made on a lapsed ordinance.
• Tax Exemption: Petitioner contended that under the Tax Code, fishermen are exempted from percentage tax and privilege tax.
• No Operation: Petitioner argued that he should not be taxed as a fishpond operator because the fishpond was under construction and not yet being operated during the period covered by the taxes sought to be collected.

• Non-Retroactivity: Respondent countered that Ordinance No. 4 was passed on May 14, 1955, so the amendment under Ordinance No. 12 cannot be said to apply retroactively to 1964, since the reckoning period is 1955.
• Curative Nature: Respondent argued that Ordinances Nos. 12 and 15 are in the nature of curative measures intended to facilitate and enhance the collection of revenues that the original act, Ordinance No. 4, had prescribed.

• Vagueness: Whether the ordinances are null and void for being ambiguous and uncertain.
• Ex Post Facto: Whether the ordinances are unconstitutional for being ex post facto.
• Coverage of Lessees: Whether the ordinances cover only owners or overseers of privately owned fishponds and not lessees of public lands.
• Municipal Taxing Power: Whether the municipal council of Pagbilao has the power to tax fishpond operations on public forest land, and whether the ordinance can be enforced beyond the territorial limits of Pagbilao and against non-residents.

• Vagueness: No. The ordinances are not vague; they set forth sufficient standards clarifying any imagined ambiguities, and the petitioner as actual operator of the fishponds falls within the term "manager."
• Ex Post Facto: No. The ordinances are not ex post facto; the original Ordinance No. 4 was enacted in 1955, and Ordinance No. 12 merely granted amnesty to delinquent operators rather than imposing a retroactive penalty.
• Coverage of Lessees: No, the ordinances apply to the petitioner. As the actual operator who financed construction, introduced fish fries, employed laborers, and received all profits, he is a "manager" within the purview of the ordinances, notwithstanding that the government owns the land.
• Municipal Taxing Power: No merit. The tax is a privilege tax on the business of fishpond maintenance, not a tax on forest products or sales, and is thus within the municipality's taxing power under Republic Act No. 2264.

• Vagueness: A statute is vague when it lacks comprehensible standards such that persons of common intelligence must guess at its meaning and differ as to its application. However, the void-for-vagueness doctrine applies only to acts that are utterly vague on their face and cannot be clarified by construction. The ordinances at bar are not so tainted. The term "manager" clearly encompasses the petitioner, who financed the construction of the fishponds, introduced fish fries, and employed laborers to maintain them. While the government owns the land, it never shared in the profits, making it logical that the petitioner should shoulder the tax burden. As to dates of payment, Ordinance No. 15 unequivocally fixes payment at three years after Bureau of Fisheries approval, and Ordinance No. 12 reckons liability from 1964 for fishponds operating before that year. Any uncertainty the petitioner claims is a mere problem in computation, not vagueness. The ordinances set forth enough standards, visible from their intent, that clarify any imagined ambiguities.

• Ex Post Facto: The ex post facto challenge fails because Ordinance No. 4 was enacted on May 14, 1955, long before the tax years in question (1964–1966). The act of non-payment had been punishable since 1955. Ordinance No. 12 does not impose a retroactive penalty; rather, it operates to grant amnesty to operators who had been delinquent between 1955 and 1964. It is in the nature of a curative measure intended to facilitate and enhance the collection of revenues that the original ordinance had prescribed. It does not mete out a penalty, much less a retrospective one.

• Coverage of Lessees: The ordinances speak of "owner or manager" of fishponds. The petitioner, though a lessee of public land, is the actual operator of the fishpond. He financed its construction, introduced fish fries, employed laborers, and received all profits generated. The government, as owner, never shared in those profits. Upon the ancient principle of government immunity from taxation, liability cannot attach to the government as owner. It is therefore logical and proper that the actual operator and profit-recipient bears the tax burden. The petitioner cannot claim lack of fair notice of such liability.

• Municipal Taxing Power: The petitioner's reliance on Golden Ribbon Lumber Co., Inc. vs. City of Butuan, which held that local governments' taxing power does not extend to forest products or concessions under Republic Act No. 2264, is misplaced. The tax in question is not a tax on property, although the rate is based on area. Fishponds are not forest lands; they have been held to be agricultural lands. The tax is more accurately a privilege tax on the business of fishpond maintenance — a fixed annual tax on occupation, which is allowed under Republic Act No. 2264. It is not charged against sales, which would have offended Golden Ribbon Lumber. The municipality therefore acted within its taxing power.

• Void-for-Vagueness Doctrine — A statute or ordinance is vague when it lacks comprehensible standards such that persons of common intelligence must necessarily guess at its meaning and differ as to its application. It violates due process for failure to accord fair notice of the conduct to avoid, and leaves law enforcers unbridled discretion. However, the doctrine applies only to acts utterly vague on their face that cannot be clarified by saving clause or construction. Legislation couched in imprecise language but specifying a standard, even if defectively phrased, may be saved by proper construction. Statutes apparently ambiguous but fairly applicable to certain activities may not be challenged when directed against such activities. In this case, the ordinances were not vague because the term "manager" clearly encompassed the petitioner as actual operator, and the dates of payment were definitively established.

• Ex Post Facto Law (Curative Measures Exception) — An ordinance is not ex post facto where the original taxing ordinance was enacted before the period of violation, and the amendatory ordinance merely grants amnesty to delinquent taxpayers rather than imposing a new or retroactive penalty. Curative measures intended to facilitate and enhance collection of revenues prescribed by the original act are not retrospective penalties.

• Government Immunity from Taxation — The government is immune from taxes; accordingly, where the government owns the land but does not share in the profits of the fishpond operation, tax liability properly attaches to the actual operator and profit-recipient rather than to the government as owner.

• Privilege Tax vs. Tax on Sales or Forest Products — Under Republic Act No. 2264, municipalities may levy fixed annual privilege taxes on occupation or business, but may not impose percentage taxes on sales or taxes on forest products or concessions. A tax on fishpond operation, though computed per hectare, is a privilege tax on the business of fishpond maintenance, not a tax on property, sales, or forest products, and is therefore within municipal taxing power.

• "In no way may the ordinances at bar be said to be tainted with the vice of vagueness. It is unmistakable from their very provisions that the appellant falls within its coverage. As the actual operator of the fishponds, he comes within the term 'manager.'" — This passage articulates the ratio decidendi on the vagueness issue, establishing that actual operation and control, not formal ownership, determine coverage under the ordinance.

• "They are, more accurately, privilege taxes on the business of fishpond maintenance. They are not charged against sales, which would have offended the doctrine enshrined by Golden Ribbon Lumber, but rather on occupation, which is allowed under Republic Act No. 2264." — This defines the controlling classification of the tax and distinguishes it from the prohibition in Golden Ribbon Lumber, establishing the basis for the municipality's taxing authority.

• "It does not mete out a penalty, much less, a retrospective one." — This concise statement disposes of the ex post facto challenge by characterizing Ordinance No. 12 as an amnesty provision rather than a penal retroactive measure.

• Coates vs. City of Cincinnati, 402 U.S. 611 (1971) — Cited as illustrative of a "perfectly vague" ordinance struck down for imposing no standard at all; distinguished from the ordinances at bar, which set forth sufficient standards.
• Parker vs. Levy, 417 U.S. 733 (1974) — Cited for the proposition that statutes apparently ambiguous but fairly applicable to certain activities may not be challenged as vague when directed against such activities.
• Gonzales vs. Commission on Elections, 27 SCRA 835 (1969) — Cited as a Philippine application of the vagueness doctrine, where the Court sustained a statute challenged for vagueness because it included an enumeration of prohibited acts supplying standards.
• United States vs. Robel, 389 U.S. 258 (1967) — Cited in the discussion of the "less restrictive alternative" doctrine in free expression cases, as contrasted with economic regulation cases requiring less precision.
• Golden Ribbon Lumber Co., Inc. vs. City of Butuan, 12 SCRA 611 (1964) — Controlling precedent on the limitation of municipal taxing power under Republic Act No. 2264; distinguished from the present case because the fishpond tax is a privilege tax on occupation, not a tax on forest products or sales.
• Santiago vs. Insular Government, 12 Phil. 593 (1909) — Cited for the proposition that fishponds are agricultural lands, not forest lands.
• Ramos vs. Director of Lands, 39 Phil. 175 (1918) — Cited for the definition of "forest" as a large tract of land covered with natural growth of trees and underbush, to distinguish fishponds from forest lands.
• Northern Philippines Tobacco Corporation vs. Municipality of Agoo, La Union, 31 SCRA 304 (1970) — Cited as authority that occupation taxes are allowed under Republic Act No. 2264.

• Municipal Ordinance No. 4, series of 1955 (Pagbilao, Quezon) — Imposed a municipal tax of ₱3.00 per hectare per annum on "any owner or manager of fishponds" within the territorial limits of Pagbilao. Applied as the original taxing measure under which the petitioner's liability accrued from 1955.
• Municipal Ordinance No. 15, series of 1965 (Pagbilao, Quezon) — Amended Ordinance No. 4 by providing that payment begin after the lapse of three years from Bureau of Fisheries approval of the fishpond. Applied to establish the date of payment for new fishpond operators.
• Municipal Ordinance No. 12, series of 1966 (Pagbilao, Quezon) — Further amended the ordinance, reckoning liability from 1964 for fishponds operating before that year. Applied as a curative/amnesty measure for delinquent operators, not as a retroactive penalty.
• Republic Act No. 2264 (Local Autonomy Act) — The governing statute authorizing municipalities to levy occupation taxes while prohibiting percentage taxes on sales and taxes on forest products or concessions. Applied to uphold the fishpond tax as a valid privilege tax on occupation.
• Section 2309, Revised Administrative Code — Invoked by the petitioner to argue that municipal taxes lapse if not paid; the Court did not directly address this claim in its ruling.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Cortes, Griño-Aquino, and Medialdea, JJ., concurred.