G.R. No. L-44143 August 31, 1988
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. EUSEBIO NAZARIO, accused-appellant.

FACTS

Accused-appellant Eusebio Nazario was charged with violating municipal ordinances of Pagbilao, Quezon, for failing to pay fishpond operation taxes for the years 1964-1966. The prosecution established that Nazario operated a fishpond in Pinagbayanan, Pagbilao, and received repeated written demands for payment from the Municipal Treasurer, which he ignored. The ordinances imposed an annual tax on fishpond operators based on the area of their ponds.
Nazario admitted operating the fishpond under a lease agreement with the Philippine Fisheries Commission but contested the ordinances’ validity and application. He argued he was a Manila resident, his fishpond was non-operational due to typhoon damage, and the ordinances were unconstitutional for being vague, oppressive, and beyond the municipal council’s taxing authority under the Local Autonomy Act ( Republic Act No. 2264 ).

ISSUE

The core issue is whether Municipal Ordinances Nos. 4, 15, and 12 of Pagbilao, imposing a tax on fishpond operations, are constitutional and validly applicable to the accused-appellant.

RULING

The Supreme Court upheld the ordinances’ constitutionality and affirmed Nazario’s conviction. The Court methodically rejected all constitutional challenges. First, it found the ordinances were not void for vagueness. The tax was clearly imposed on “fishpond operators,” a term with a settled and understandable meaning, and the rate was explicitly fixed per hectare. The ordinance provided sufficient standards for enforcement and fair notice to persons of ordinary intelligence.
Second, the Court ruled the tax was not oppressive or confiscatory. A tax is not rendered invalid merely because it diminishes business profit; it must be shown to be so excessive as to amount to a confiscation of property. Nazario failed to provide evidence that the tax rate was unreasonable or oppressive relative to the costs and benefits of municipal services.
Third, and crucially, the Court held the tax was a valid exercise of municipal power under the Local Autonomy Act. The Court clarified the levy was not a property tax or a percentage tax on sales, which would be prohibited. Instead, it was a permissible “privilege tax” or license fee on the occupation or business of operating a fishpond. The power to impose such fixed annual taxes on businesses was expressly granted to municipalities. The tax’s calculation based on hectareage was a reasonable measure of the privilege’s extent and did not transform it into an illegal property tax. Consequently, the ordinances were valid, and Nazario’s non-payment constituted a violation.