MEANING OF UNIFORMITY IN TAXATION CTA, however, ruled for Lingayen. Hence, this petition.
Churchill v Concepcion (1916) ISSUES:
GR No 11572, September 22, 1916 1. Whether the Court can inquire into the wisdom of the franchise FACTS: 2. Whether a rate below 5% is violative of the uniformity Section 100 of Act 2339 imposed an annual tax of P4 per clause in the Constitution square meter upon electric signs, billboards, and spaces used for posting or displaying temporary signs, and all RULING: signs displayed on premises not occupied by buildings. The section was amended by Act 2432, reducing the tax to P2 per square meter. Francis A. Churchill and Stewart Tait, co- 1. No, the Court does not have the authority to partners in Mercantile Advertising Agency, owned a inquire into the wisdom of the Act. Charters or billboard to which they were taxes at P104. The tax was special laws granted and enacted by the paid under protest. Churchill and Tait instituted the action legislature are in the nature of private contracts. to recover the amount. They do not constitute a part of the machinery of the general government. Also, the Court ought not ISSUE: to disturb the ruling of the Court of Tax Appeals Is the statute and the tax imposed void for lack of on the constitutionality of the law in question. uniformity? 2. No. The legislature has the inherent power not RULING: only to select the subjects of taxation but to grant No, the tax is valid. exemptions. Tax exemptions have never been deemed violative of the equal protection clause. Uniformity in taxation means that all taxable articles or Herein, the 5% franchise tax rate provided in kinds of property, of the same class, shall be taxed at the Section 259 of the Tax Code was never intended to same rate. It does not mean that all lands, chattels, have universal application. Section 259 expressly securities, incomes, occupations, franchises, privileges, allows the payment of taxes at rates lower than necessities, and luxuries shall all be assessed at the same 5% when the charter granting the franchise rate. Different articles may be taxed at different amounts precludes the imposition of a higher tax. RA 3843, provided the rate is uniform on the same class the law granting the franchise, did not only fix and everywhere, with all people, at all times. specify a franchise tax of 2% on its gross receipts Herein, the Act imposes a tax of P2 per square meter or a but made it in lieu of any and all taxes, all laws to fraction thereof upon every electric sign, billboard, etc. the contrary notwithstanding. The company, Wherever found in the Philippine Islands. The rule of hence, is not liable for deficiency taxes. taxation upon such signs is uniform throughout the Villanueva v City v Iloilo islands. The rule does not require taxes to be graded GR No L-26521, December 28, 1968 according to the value of the subjects upon which they are imposed, especially those levied as privilege or occupation FACTS: taxes. On September 30, 1946, the Municipal Board of Iloilo City Commissioner v Lingayen Gulf Electric GR No L-23771, enacted Ordinance 86 imposing license tax fees upon August 4, 1988 tenement houses. The validity of such ordinance was challenged by Eusebio and Remedios Villanueva, owners of FACTS: four tenement houses containing 34 apartments. The Lingayen Gulf Electric Power operates an electric power Supreme Court held the ordinance to be ultra views. On plant serving the municipalities of Lingayen and Binmaley, January 15, 1960, however, the municipal board, believing Pangasinan, pursuant to municipal franchise granted it by that it acquired authority to enact an ordinance of the the respective municipal councils. The franchises provided same nature pursuant to the Local Autonomy Act, enacted that the grantee shall pay quarterly to the provincial Ordinance 11, Eusebio and Remedios Villanueva assailed treasury of Pangasinan 1% of the gross earnings obtained the ordinance anew. through the privilege for the first 20 years (from 1946) and 2% during the remaining 15 years of the life of the ISSUE: franchise. In 1955, the BIR assessed and demanded against Does Ordinance 11 violate the rule of uniformity of the company deficiency franchise taxes and surcharges taxation? from the years 1946 to 1954 applying the franchise tax rate of 5% on gross receipts from 1948 to 1954. The RULING: company asked for a reinvestigation, which was denied. No. The Court has ruled the tenement houses constitute a distinct class of property and that taxes are uniform and authorities so that the real purpose of taxation, promotion equal when imposed upon all property of the same class or of the welfare of common good can be achieved. character within the taxing authority. The fact that the owners of the other classes of buildings in Related to equitable taxation: Iloilo are not imposed upon by the ordinance, or that Under Art. VIII, Sec. 17 (1) of the 1973 Constitution, then tenement taxes are imposed in other cities do not violate enforced, the rule of taxation must not only be uniform, the rule of equality and uniformity. The rule does not but must also be equitable and progressive. require that taxes for the same purpose should be imposed in different territorial subdivisions at the same time. So Uniformity has been defined as that principle by which all long as the burden of tax falls equally and impartially on all taxable articles or kinds of property of the same class shall owners or operators of tenement houses similarly be taxed at the same rate (Churchill v. Concepcion, 34 Phil. classified or situated, equality and uniformity is 969 [1916]). accomplished. The presumption that tax statutes are intended to operate uniformly and equally was not Notably in the 1935 Constitution, there was no mention of overthrown therein. the equitable or progressive aspects of taxation required in the 1973 Charter (Fernando "The Constitution of the MEANING OF EQUITABLE TAXATION Philippines", p. 221, Second Edition). Thus, the need to examine closely and determine the specific mandate of the REYES VS. ALMANZOR Constitution. GR 43839-46 April 26, 1991 196 SCRA 322 Paras, J.: Taxation is said to be equitable when its burden falls on FACTS: those better able to pay. Taxation is progressive when its Petitioner are owners of parcels of land leased to tenants. rate goes up depending on the resources of the person RA 6359 was enacted prohibiting for one year an increase affected (Ibid.). in monthly rentals of dwelling units and said Act also disallowed ejectment of lessees upon the expiration of the The power to tax "is an attribute of sovereignty". In fact, it usual period of lease. City assessor of Manila assessed the is the strongest of all the powers of government. But for all value of petitioner’s property based on the schedule of its plenitude the power to tax is not unconfined as there market values duly reviewed by the Secretary of Finance. are restrictions. Adversely effecting as it does property The revision entailed an increase to the tax rates and rights, both the due process and equal protection clauses petitioners averred that the reassessment imposed upon of the Constitution may properly be invoked to invalidate them greatly exceeded the annual income derived from in appropriate cases a revenue measure. If it were their properties. otherwise, there would be truth to the 1903 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy." The web or unreality spun from ISSUE: Marshall's famous dictum was brushed away by one stroke Whether or not income approach is the method to be used of Mr. Justice Holmes pen, thus: "The power to tax is not in the tax assessment and not the comparable sales the power to destroy while this Court sits. So it is in the approach. Philippines " (Sison, Jr. v. Ancheta, 130 SCRA 655 [1984]; Obillos, Jr. v. Commissioner of Internal Revenue, 139 SCRA 439 [1985]). RULING: By no stretch of the imagination can the market value of In the same vein, the due process clause may be invoked properties covered by PD 20 be equated with the market where a taxing statute is so arbitrary that it finds no value of properties not so covered. In the case at bar, not support in the Constitution. An obvious example is where even factors determinant of the assessed value of subject it can be shown to amount to confiscation of property. properties under the comparable sales approach were That would be a clear abuse of power (Sison v. presented by respondent namely: Ancheta, supra). 1. That the sale must represent a bonafide arm’s length transaction between a willing seller and a willing buyer The taxing power has the authority to make a reasonable 2. The property must be comparable property. and natural classification for purposes of taxation but the As a general rule, there were no takers so that there can be government's act must not be prompted by a spirit of no reasonable basis for the conclusion that these hostility, or at the very least discrimination that finds no properties are comparable. support in reason. It suffices then that the laws operate Taxes are lifeblood of government, however, such equally and uniformly on all persons under similar collection should be made in accordance with the law and circumstances or that all persons must be treated in the therefore necessary to reconcile conflicting interests of the same manner, the conditions not being different both in the privileges conferred and the liabilities imposed (Ibid., 2. No. The intention of the Municipal Council of p. 662). Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the Finally under the Real Property Tax Code (P.D. 464 as prior ordinance no. 23 and operates as a repeal of amended), it is declared that the first Fundamental the latter, even without words to that effect. The Principle to guide the appraisal and assessment of real tax is not a percentage tax as the volume capacity property for taxation purposes is that the property must of the taxpayer’s production of softdrinks is be "appraised at its current and fair market value." considered solely for purposes of determining the tax rate on the products but there is no set ratio By no strength of the imagination can the market value of between volume of sales and amount of the tax. properties covered by P.D. No. 20 be equated with the Nor can the tax levied be treated as a specific tax. market value of properties not so covered. The former has Softdrink is not one of those specified articles. naturally a much lesser market value in view of the rental restrictions. 3. No. Municipal corporations are allowed much discretion in determining the rates of imposable DOUBLE TAXATION taxes. This is in line with the constitutional policy Pepsi-Cola Bottling Company of the Phils, Inc v of according the widest possible autonomy to local Tanauan GR No. L-31156, February 27, 1976 governments in matters of local taxation, an aspect that is given expression in the Local Tax FACTS: Code. Pepsi Cola Bottling Company commenced a complaint with preliminary injunction before the Court of First Instance of Leyte for the court to declare Section 2 of RA 2264 (Local Autonomy Act) unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos 23 and 27 of municipality of Tanauan, Leyte. Municipal Ordinance No. 23 (9/25/1962) levies and collects from softdrinks producers and manufacturers a tax of 1/16 of a centavo for every bottle of softdrink corked. Municipal ordinance no. 27 (10/28/1962) levies and collects on softdrinks produced or manufactured within the territorial jurisdiction of this municipality a tax of 1 centavo on each gallon of volume capacity. The taxes imposed are denominated as “municipal production tax”. CFI-Leyte dismissed the complaint. Hence, this petition.
ISSUES:
1. Is Section 2 of RA 2264 an undue delegation of
power, confiscatory and oppressive?
2. Do ordinances nos. 23 and 27 constitute double
taxation and impose percentage or specific taxes?
3. Are ordinance nos. 23 and 27 unjust and unfair?
RULING:
1. No. Under the New Constitution, local
governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: “Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law.” Thus, legislative powers may be delegated to local governments in respect of matters of local concern.