G.R. No. L-59431 July 25, 1984 ANTERO M. SISON, JR., petitioner, vs. RUBEN B. ANCHETA, A !

"#$ Co%%"&&"o#'(, Bu(')u o* I#!'(#)l R'+'#u', ROMULO -ILLA, .'/u!y Co%%"&&"o#'(, Bu(')u o* I#!'(#)l R'+'#u', TOMAS TOLE.O .'/u!y Co%%"&&"o#'(, Bu(')u o* I#!'(#)l R'+'#u', MANUEL ALBA, M"#"&!'( o* Bu0$'!, 1RANCISCO TANTUICO, C2)"(%)#, Co%%"&&"o#'( o# Au0"!, )#0 CESAR E. A. -IRATA, M"#"&!'( o* 1"#)# ', respondents.

administer for the public elfare than is any private individual or group of individuals,= continue to lose their ell>defined boundaries and to be absorbed ithin activities that the government must underta+e in its sovereign capacity if it is to meet the increasing social challenges of the times.- .ence the need for more revenues. The po er to ta', an inherent prerogative, has to be availed of to assure the performance of vital state functions. It is the source of the bul+ of public funds. To praphrase a recent decision, ta'es being the lifeblood of the government, their prompt and certain availability is of the essence. !. The po er to ta' moreover, to borro from 1ustice 7alcolm, -is an attribute of sovereignty. It is the strongest of all the po ers of of government.- It is, of course, to be admitted that for all its plenitude =the po er to ta' is not unconfined. There are restrictions. The $onstitution sets forth such limits . :dversely affecting as it does properly rights, both the due process and e0ual protection clauses inay properly be invo+ed, all petitioner does, to invalidate in appropriate cases a revenue measure. if it ere other ise, there ould >be truth to the 1343 dictum of $hief 1ustice 7arshall that -the po er to ta' involves the po er to destroy.- In a separate opinion in Graves v. New York, 1ustice /ran+furter, after referring to it as an 1, unfortunate remar+ characteri(ed it as -a flourish of rhetoric 8attributable to9 the intellectual fashion of the times follo ing9 a free use of absolutes.- This is merely to emphasi(e that it is riot and there cannot be such a constitutional mandate. 1ustice /ran+furter could rightfully conclude< -The eb of unreality spun from 7arshall=s famous dictum as brushed a ay by one stro+e of 7r. 1ustice .olmess pen< =The po er to ta' is not the po er to destroy hile this $ourt sits.- So it is in the Philippines. 3. This $ourt then is left ith no choice. The $onstitution as the fundamental la overrides any legislative or e'ecutive, act that runs counter to it. In any case therefore here it can be demonstrated that the challenged statutory provision ? as petitioner here alleges ? fails to abide by its command, then this $ourt must so declare and ad,udge it null. The in,ury thus is centered on the 0uestion of hether the imposition of a higher ta' rate on ta'able net income derived from business or profession than on compensation is constitutionally infirm. @, The difficulty confronting petitioner is thus apparent. .e alleges arbitrariness. : mere allegation, as here. does not suffice. There must be a factual foundation of such unconstitutional taint. $onsidering that petitioner here ould condemn such a provision as void or its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that ere the due process and e0ual protection clauses are invo+ed, considering that they arc not fi'ed rules but rather broad standards, there is a need for of such persuasive character as ould lead to such a conclusion. :bsent such a sho ing, the presumption of validity must prevail. 5. It is undoubted that the due process clause may be invo+ed here a ta'ing statute is so arbitrary that it finds no support in the $onstitution. :n obvious e'ample is here it can be sho n to amount to the confiscation of property. That ould be a clear abuse of po er. It then becomes the duty of this $ourt to say that such an arbitrary act amounted to the e'ercise of an authority not conferred. That properly calls for the application of the .olmes dictum. It has also been held that here the assailed ta'

1ERNAN.O, C.J.: The success of the challenge posed in this suit for declaratory relief or prohibition proceeding 1 on the validity of Section I of Batas Pambansa Blg. 135 depends upon a sho ing of its constitutional infirmity. The assailed provision further amends Section !1 of the "ational Internal #evenue $ode of 1%&&, hich provides for rates of ta' on citi(ens or residents on )a* ta'able compensation income, )b* ta'able net income, )c* royalties, pri(es, and other innings, )d* interest from ban+ deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements, )e* dividends and share of individual partner in the net profits of ta'able partnership, )f* ad,usted gross income. 2 Petitioner 3 as ta'payer alleges that by virtue thereof, -he ould be unduly discriminated against by the imposition of higher rates of ta' upon his income arising from the e'ercise of his profession vis-avis those hich are imposed upon fi'ed income or salaried individual ta'payers. 4 .e characteri(es the above sction as arbitrary amounting to class legislation, oppressive and capricious in character 5/or petitioner, therefore, there is a transgression of both the e0ual protection and due process clauses 3 of the $onstitution as ell as of the rule re0uiring uniformity in ta'ation. 4 The $ourt, in a resolution of 1anuary !2, 1%3!, re0uired respondents to file an ans er ithin 14 days from notice. Such an ans er, after t o e'tensions ere granted the 5ffice of the Solicitor 6eneral, as filed on 7ay !3, 1%3!. 8 The facts as alleged ere admitted but not the allegations hich to their mind are -mere arguments, opinions or conclusions on the part of the petitioner, the truth 8for them9 being those stated 8in their9 Special and :ffirmative ;efenses.- 9 The ans er then affirmed< -Batas Pambansa Big. 135 is a valid e'ercise of the State=s po er to ta'. The authorities and cases cited hile correctly 0uoted or paraghraph do not support petitioner=s stand.- The prayer is for the dismissal of the petition for lac+ of merit. This $ourt finds such a plea more than ,ustified. The petition must be dismissed. 1. It is manifest that the field of state activity has assumed a much ider scope, The reason as so clearly set forth by retired $hief 1ustice 7a+alintal thus< -The areas hich used to be left to private enterprise and initiative and hich the government as called upon to enter optionally, and only =because it as better e0uipped to

measure is beyond the ,urisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is sub,ect to attac+ on due process grounds. 2. "o for e0ual protection. The applicable standard to avoid the charge that there is a denial of this constitutional mandate hether the assailed act is in the e'ercise of the lice po er or the po er of eminent domain is to demonstrated that the governmental act assailed, far from being inspired by the attainment of the common eal as prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that the la s operate e0ually and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. /avoritism and undue preference cannot be allo ed. /or the principle is that e0ual protection and security shall be given to every person under circumtances hich if not Identical are analogous. If la be loo+ed upon in terms of burden or charges, those that fall ithin a class should be treated in the same fashion, hatever restrictions cast on some in the group e0ually binding on the rest.- 25 That same formulation applies as ell to ta'ation measures. The e0ual protection clause is, of course, inspired by the noble concept of appro'imating the Ideal of the la s benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, hich is of the very essence of the Idea of la . There is, ho ever, isdom, as ell as realism in these ords of 1ustice /ran+furter< -The e0uality at hich the =e0ual protection= clause aims is not a disembodied e0uality. The /ourteenth :mendment en,oins =the e0ual protection of the la s,= and la s are not abstract propositions. They do not relate to abstract units :, B and $, but are e'pressions of policy arising out of specific difficulties, address to the attainment of specific ends by the use of specific remedies. The $onstitution does not re0uire things hich are different in fact or opinion to be treated in la as though they ere the same.- 21.ence the constant reiteration of the vie that classification if rational in character is allo able. :s a matter of fact, in a leading case of Aut( B. :raneta, 22 this $ourt, through 1ustice 1.B.A. #eyes, ent so far as to hold -at any rate, it is inherent in the po er to ta' that a state be free to select the sub,ects of ta'ation, and it has been repeatedly held that =ine0ualities hich result from a singling out of one particular class for ta'ation, or e'emption infringe no constitutional limitation.=- 23 &. Petitioner li+e ise invo+ed the +indred concept of uniformity. :ccording to the $onstitution< -The rule of ta'ation shag be uniform and e0uitable.- 24 This re0uirement is met according to 1ustice Aaurel in Philippine Trust Company v. Yatco, 25 decided in 1%@4, hen the ta' -operates ith the same force and effect in every place here the sub,ect may be found. - 23 .e li+e ise added< -The rule of uniformity does not call for perfect uniformity or perfect e0uality, because this is hardly attainable.- 24 The problem of classification did not present itself in that case. It did not arise until nine years later, hen the Supreme $ourt held< -C0uality and uniformity in ta'ation means that all ta'able articles or +inds of property of the same class shall be ta'ed at the same rate. The ta'ing po er has the authority to ma+e reasonable and natural classifications for purposes of ta'ation, ... . 28 :s clarified by 1ustice Tuason, here -the differentiation- complained of -conforms to the practical dictates of ,ustice and e0uity- it -is not discriminatory ithin the meaning of this clause and is therefore

uniform.- 29 There is 0uite a similarity then to the standard of e0ual protection for all that is re0uired is that the ta' -applies e0ually to all persons, firms and corporations placed in similar situation.- 35 3. /urther on this point. :pparently, hat misled petitioner is his failure to ta+e into consideration the distinction bet een a ta' rate and a ta' base. There is no legal ob,ection to a broader ta' base or ta'able income by eliminating all deductible items and at the same time reducing the applicable ta' rate. Ta'payers may be classified into different categories. To repeat, it. is enough that the classification must rest upon substantial distinctions that ma+e real differences. In the case of the gross income ta'ation embodied in Batas Pambansa Blg. 135, the, discernible basis of classification is the susceptibility of the income to the application of generali(ed rules removing all deductible items for all ta'payers ithin the class and fi'ing a set of reduced ta' rates to be applied to all of them. Ta'payers ho are recipients of compensation income are set apart as a class. :s there is practically no overhead e'pense, these ta'payers are e not entitled to ma+e deductions for income ta' purposes because they are in the same situation more or less. 5n the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or e'penses necessary to produce their income. It ould not be ,ust then to disregard the disparities by giving all of them (ero deduction and indiscriminately impose on all ali+e the same ta' rates on the basis of gross income. There is ample ,ustification then for the Batasang Pambansa to adopt the gross system of income ta'ation to compensation income, hile continuing the system of net income ta'ation as regards professional and business income. %. "othing can be clearer, therefore, than that the petition is ithout merit, considering the )1* lac+ of factual foundation to sho the arbitrary character of the assailed provisionD 31 )!* the force of controlling doctrines on due process, e0ual protection, and uniformity in ta'ation and )3* the reasonableness of the distinction bet een compensation and ta'able net income of professionals and businessman certainly not a suspect classification, E.C#C/5#C, the petition is dismissed. $osts against petitioner.