Gaston vs.

Republic Planters Bank (Ponente: Melencio-Herrera)

Doctrine/s:
(1) Revenues derived from taxes cannot be used for purely private purposes or for the exclusive
benefit of private persons.
(2) A tax may be levied with a regulatory purpose, i.e. to provide means for the stabilization of
the sugar industry and such levy is primarily in the exercise of the police power of the State
Facts:
Petitioners are sugar producers, sugarcane planters and millers, who have come to this Court in their
individual capacities and in representation of other sugar producers, planters and millers, said to be so numerous
that it is impracticable to bring them all before the Court although the subject matter of the present controversy is
of common interest to all sugar producers, whether parties in this action or not.
Respondent Philippine Sugar Commission (PHILSUCOM, for short) was formerly the government office
tasked with the function of regulating and supervising the sugar industry until it was superseded by
its co-respondent Sugar Regulatory Administration (SRA, for brevity) under Executive Order No. 18 on
May 28, 1986. Although said Executive Order abolished the PHILSUCOM, its existence as a juridical entity was
mandated to continue for three (3) more years "for the purpose of prosecuting and defending suits by or against it
and enables it to settle and close its affairs, to dispose of and convey its property and to distribute its assets."
Angel H. Severino, Jr., et al., who are sugarcane planters planting and milling their sugarcane in different mill
districts of Negros Occidental, were allowed to intervene by the Court, since they have common cause with
petitioners and respondents having interposed no objection to their intervention. Subsequently, on January
14,1988, the National Federation of Sugar Planters (NFSP) also moved to intervene, which the Court allowed
on February 16,1988.
Petitioners and Intervenors have come to this Court praying for a Writ of Mandamus to compel PHILSUCOM to
implement and accomplish the privatization of Republic Planters Bank by the transfer and distribution of the shares
of stock in the said bank claiming that they are the true beneficial owners of the 761,416 common shares
valued at P36,548,000 and 53,005,045 preferred shares with a total par value of P254,424,224.72 for the reason
that the said investment had been funded by the deduction of P1 per Picul from sugar proceeds of the
sugar producers commencing the year 1978-1979 until the present as stabilization fund pursuant to
P.D. No. 388.
Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition arguing that no trust results from
Section 7 of P.D. No. 388; that the stabilization fees collected are considered government funds under the
Government Auditing Code; that the transfer of shares of stock from PHILSUCOM to the sugar producers would
be irregular, if not illegal; and that this suit is barred by laches.
The Solicitor General aptly summarizes the basic issues thus: (1) whether the stabilization fees collected from
sugar planters and millers pursuant to Section 7 of P.D. No. 388 are funds in trust for them, or public
funds; and (2) whether shares of stock in respondent Bank paid for with said stabilization fees belong
to the PHILSUCOM or to the different sugar planters and millers from whom the fees were collected or
levied.
Issue/s:
(1) Whether the stabilization fees collected from sugar planters and millers pursuant to Section 7
of P.D. No. 388 are public funds.
(2) Whether shares of stock in respondent Bank paid for with said stabilization fees belong to the
different sugar planters and millers from whom the fees were collected or levied.
Held:
(1) Yes;
The stabilization fees collected are in the nature of a tax, which is within the power of the State to
impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens
(Sec. 7[b], P.D. No. 388). The collections made accrue to a "Special Fund," a "Development and Stabilization
Fund," almost Identical to the "Sugar Adjustment and Stabilization Fund" created under Section 6 of Commonwealth
Act 567. The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory

purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the
exercise of the police power of the State (Lutz vs. Araneta, supra.).
The protection of a large industry constituting one of the great sources of the state's wealth and
therefore directly or indirectly affecting the welfare of so great a portion of the population of the
State is affected to such an extent by public interests as to be within the police power of the
sovereign. (Johnson vs. State ex rel. Marey, 128 So. 857, cited in Lutz vs. Araneta, supra).
The stabilization fees in question are levied by the State upon sugar millers, planters and producers
for a special purpose that of "financing the growth and development of the sugar industry and all its
components, stabilization of the domestic market including the foreign market the fact that the State
has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even
though they are held for a special purpose (Lawrence vs. American Surety Co., 263 Mich 586, 249 ALR 535,
cited in 42 Am. Jur. Sec. 2, p. 718). Having been levied for a special purpose, the revenues collected are to
be treated as a special fund, to be, in the language of the statute, "administered in trust' for the
purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to
the general funds of the Government. That is the essence of the trust intended (See 1987 Constitution, Article VI,
Sec. 29(3), lifted from the 1935 Constitution, Article VI, Sec. 23(l]).
The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in
the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in
pursuance of an appropriation made by law (1987) Constitution, Article VI, Sec. 29[1],1973 Constitution, Article VIII,
Sec. 18[l]).
(2) No;
That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to
the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their
benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be
collected from them since it is also they who are to be benefited from the expenditure of the funds derived from it.
The investment in shares of respondent Bank is not alien to the purpose intended because of the
Bank's character as a commodity bank for sugar conceived for the industry's growth and development.
Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the amount levied under P.D. No. 388 is to
be utilized for the "payment of salaries and wages of personnel, fringe benefits and allowances of officers and
employees of PHILSUCOM" thereby immediately negating the claim that the entire amount levied is in trust for
sugar, producers, planters and millers.
To rule in petitioners' favor would contravene the general principle that revenues derived from taxes
cannot be used for purely private purposes or for the exclusive benefit of private persons. The
Stabilization Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization
of the domestic market," including the foreign market the industry being of vital importance to the country's
economy and to national interest.
Dispositive Portion: WHEREFORE, the Writ of mandamus is denied and the Petition hereby dismissed. No costs.

Planters Products, Inc. vs. Fertiphil Corporation (Ponente: Reyes)

Doctrine/s:
(1) If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then
the exaction is properly called a tax.
(2) The power to tax exists for the general welfare; hence, implicit in its power is the limitation that it should
be used only for a public purpose.
Facts:
Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine
laws. They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals.
On 3 June 1985, then President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465
which provided, among others, for the imposition of a capital recovery component (CRC) on the
domestic sale of all grades of fertilizers in the Philippines. The LOI provides:
3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula
a capital contribution component of not less than P10 per bag. This capital contribution shall be
collected until adequate capital is raised to make PPI viable. Such capital contribution shall be
applied by FPA to all domestic sales of fertilizers in the Philippines. (Underscoring supplied)
Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the
Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount collected to the Far East Bank
and Trust Company, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8, 1985 to January
24, 1986
After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. With the return
of democracy, Fertiphil demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI
refused to accede to the demand.
Fertiphil filed a complaint for collection and damages against FPA and PPI with the RTC in Makati. It
questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable, oppressive, invalid and an unlawful
imposition that amounted to a denial of due process of law. Fertiphil alleged that the LOI solely favored PPI, a
privately owned corporation, which used the proceeds to maintain its monopoly of the fertilizer
industry.
In its Answer, FPA, through the Solicitor General, countered that the issuance of LOI No. 1465 was a
valid exercise of the police power of the State in ensuring the stability of the fertilizer industry in the
country. It also averred that Fertiphil did not sustain any damage from the LOI because the burden imposed by the
levy fell on the ultimate consumer, not the seller.
RTC: the imposition of the P10 CRC was an exercise of the States inherent power of taxation;
invalidated the levy for violating the basic principle that taxes can only be levied for public purpose.
(PPI filed a M.R. -> denied; In a separate but related proceeding, SC allowed appeal but remanded to CA)
CA: affirmed with modification; even on the assumption that LOI No. 1465 was issued under the police
power of the state, it is still unconstitutional because it did not promote public welfare; the levy was
NOT for the benefit, as alleged, of Planters Foundation, Inc. (on the strength of the Letter of
Understanding (LOU) issued by then Prime Minister Cesar Virata on 18 April 1985 and affirmed by the
Secretary of Justice in an Opinion dated 12 October 1987. (PPI filed a M.R. -> denied)
Issue/s:
(1) Whether the imposition of the levy was an exercise by the State of its taxation power.
(2) Whether LOI 1465 constitutes a valid legislation pursuant to the exercise of taxation.
(3) Whether LOI 1465 constitutes a valid legislation pursuant to the exercise of police power.

Held:
(1) Yes;
The imposition of the levy was an exercise by the State of its taxation power. While it is true that the power of
taxation can be used as an implement of police power, the primary purpose of the levy is revenue generation. If
the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes,
then the exaction is properly called a tax.
In Philippine Airlines, Inc. v. Edu, it was held that the imposition of a vehicle registration fee is not an exercise by the
State of its police power, but of its taxation power, thus:
It is clear from the provisions of Section 73 of Commonwealth Act 123 and Section 61 of the Land
Transportation and Traffic Code that the legislative intent and purpose behind the law requiring owners of
vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of
highways and to a much lesser degree, pay for the operating expenses of the administering agency. x x
x Fees may be properly regarded as taxes even though they also serve as an instrument of
regulation.
Taxation may be made the implement of the state's police power (Lutz v. Araneta, 98 Phil. 148). If the
purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the
exaction is properly called a tax. Such is the case of motor vehicle registration fees. The same provision
appears as Section 59(b) in the Land Transportation Code. It is patent therefrom that the legislators had in
mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership of a
motor vehicle as a "tax or fee." x x x Simply put, if the exaction under Rep. Act 4136 were merely a
regulatory fee, the imposition in Rep. Act 5448 need not be an "additional" tax. Rep. Act 4136 also speaks
of other "fees" such as the special permit fees for certain types of motor vehicles (Sec. 10) and additional
fees for change of registration (Sec. 11). These are not to be understood as taxes because such
fees are very minimal to be revenue-raising. Thus, they are not mentioned by Sec. 59(b) of the Code
as taxes like the motor vehicle registration fee and chauffeurs license fee. Such fees are to go into the
expenditures of the Land Transportation Commission as provided for in the last proviso of Sec. 61.
(Underscoring supplied)
The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The levy, no
doubt, was a big burden on the seller or the ultimate consumer. It increased the price of a bag of fertilizer by as
much as five percent. A plain reading of the LOI also supports the conclusion that the levy was for
revenue generation. The LOI expressly provided that the levy was imposed "until adequate capital is
raised to make PPI viable."
(2) No;
The P10 levy is unconstitutional because it was not for a public purpose. The levy was imposed to give undue
benefit to PPI.
An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a public
purpose. They cannot be used for purely private purposes or for the exclusive benefit of private
persons. The reason for this is simple. The power to tax exists for the general welfare; hence, implicit in
its power is the limitation that it should be used only for a public purpose.
The term "public purpose" is not defined. It is an elastic concept that can be hammered to fit modern
standards. Jurisprudence states that "public purpose" should be given a broad interpretation. It does
not only pertain to those purposes which are traditionally viewed as essentially government functions,
such as building roads and delivery of basic services, but also includes those purposes designed to
promote social justice. Thus, public money may now be used for the relocation of illegal settlers, low-cost
housing and urban or agrarian reform.
While the categories of what may constitute a public purpose are continually expanding in light of the expansion of
government functions, the inherent requirement that taxes can only be exacted for a public purpose still
stands. Public purpose is the heart of a tax law. When a tax law is only a mask to exact funds from the
public when its true intent is to give undue benefit and advantage to a private enterprise, that law will
not satisfy the requirement of "public purpose."

Indications that it is not for the public purpose

1.
2.
3.
4.

The LOI expressly provided that the levy be imposed to benefit PPI, a private company.
The LOI provides that the imposition of the P10 levy was conditional and dependent upon PPI becoming
financially "viable."
The levies paid under the LOI were directly remitted and deposited by FPA to Far East Bank and Trust
Company, the depositary bank of PPI which proves that PPI benefitted from the LOI
The levy was used to pay the corporate debts of PPI.

(3) No;
Even if We consider LOI No. 1695 enacted under the police power of the State, it would still be invalid for failing
to comply with the test of "lawful subjects" and "lawful means." Jurisprudence states the test as follows: (1)
the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2) the
means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.
For the same reasons as discussed, LOI No. 1695 is invalid because it did not promote public interest. The
law was enacted to give undue advantage to a private corporation.
Dispositive Portion: WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated November 28, 2003
is AFFIRMED.

John Hay Peoples Alternative Coalition vs. Lim (Ponente: Carpio Morales)
Doctrine/s:
(1) It is the legislature, unless limited by a provision of the state constitution, that has full power to exempt
any person or corporation or class of property from taxation, its power to exempt being as broad as its
power to tax.
(2) Other than Congress, the Constitution may itself provide for specific tax exemptions, or local governments
may pass ordinances on exemption only from local taxes.
(3) Tax exemption cannot be implied as it must be categorically and unmistakably expressed.
Facts:
R.A. No. 7227 (Bases Conversion and Development Act of 1992) created public respondent Bases Conversion and
Development Authority (BCDA), vesting it with powers pertaining to the multifarious aspects of carrying out the
ultimate objective of utilizing the base areas in accordance with the declared government policy.
R.A. No. 7227 likewise created the Subic Special Economic [and Free Port] Zone (Subic SEZ) the metes and bounds
of which were to be delineated in a proclamation to be issued by the President of the Philippines.
R.A. No. 7227 granted the Subic SEZ incentives ranging from tax and duty-free importations,
exemption of businesses therein from local and national taxes, to other hallmarks of a liberalized
financial and business climate.
And R.A. No. 7227 expressly gave authority to the President to create through executive proclamation,
subject to the concurrence of the local government units directly affected, other Special Economic
Zones (SEZ) in the areas covered respectively by the Clark military reservation, the Wallace Air Station
in San Fernando, La Union, and Camp John Hay.
On 16 August 1993, BCDA entered into a Memorandum of Agreement and Escrow Agreement with
private respondents Tuntex (B.V.I.) Co., Ltd (TUNTEX) and Asiaworld Internationale Group, Inc.
(ASIAWORLD), private corporations registered under the laws of the British Virgin Islands, preparatory to the
formation of a joint venture for the development of Poro Point in La Union and Camp John Hay as
premier tourist destinations and recreation centers. Four months later or on December 16, 1993, BCDA,
TUNTEX and ASIAWORD executed a Joint Venture Agreement whereby they bound themselves to put
up a joint venture company known as the Baguio International Development and Management
Corporation which would lease areas within Camp John Hay and Poro Point for the purpose of turning
such places into principal tourist and recreation spots, as originally envisioned by the parties under
their Memorandum of Agreement.
The Sangguniang Panglungsod of Baguio City passed numerous (3) resolutions in relation to the development of
Camp John Hay.
BCDA, Tuntex and AsiaWorld agreed to some, but rejected or modified the other proposals of the sanggunian. They
stressed the need to declare Camp John Hay a SEZ as a condition precedent to its full development in accordance
with the mandate of R.A. No. 7227
On May 11, 1994, the sanggunian passed a resolution requesting the Mayor to order the determination of realty
taxes which may otherwise be collected from real properties of Camp John Hay. The resolution was intended to
intelligently guide the sanggunian in determining its position on whether Camp John Hay be declared a SEZ, it
(the sanggunian) being of the view that such declaration would exempt the camp's property and the economic
activity therein from local or national taxation.

More than a month later, however, the sanggunian passed Resolution No. 255, (Series of 1994), seeking
and supporting, subject to its concurrence, the issuance by then President Ramos of a presidential
proclamation declaring an area of 288.1 hectares of the camp as a SEZ in accordance with the
provisions of R.A. No. 7227. Together with this resolution was submitted a draft of the proposed proclamation for
consideration by the President.
On July 5, 1994 then President Ramos issued Proclamation No. 420, which established a SEZ on a portion
of Camp John Hay. Section 3 of the said proclamation provides:
Sec. 3. Investment Climate in John Hay Special Economic Zone. - Pursuant to Section 5(m) and Section 15
of R.A. No. 7227, the John Hay Poro Point Development Corporation shall implement all necessary policies,
rules, and regulations governing the zone, including investment incentives, in consultation with pertinent
government departments. Among others, the zone shall have all the applicable incentives of the
Special Economic Zone under Section 12 of R.A. No. 7227 and those applicable incentives
granted in the Export Processing Zones, the Omnibus Investment Code of 1987, the Foreign
Investment Act of 1991, and new investment laws that may hereinafter be enacted.
The issuance of Proclamation No. 420 spawned the present petition for prohibition, mandamus and declaratory
relief which was filed on April 25, 1995 challenging, in the main, its constitutionality or validity as well as the
legality of the Memorandum of Agreement and Joint Venture Agreement between public respondent BCDA and
private respondents Tuntex and AsiaWorld. (taxpayers suit)
Petitioners argue that nowhere in R. A. No. 7227 is there a grant of tax exemption to SEZs yet to be
established in base areas, unlike the grant under Section 12 thereof of tax exemption and investment incentives
to the therein established Subic SEZ. The grant of tax exemption to the John Hay SEZ, petitioners conclude,
thus contravenes Article VI, Section 28 (4) of the Constitution which provides that "No law granting
any tax exemption shall be passed without the concurrence of a majority of all the members of
Congress."
Issue: Whether Proclamation No. 420 is constitutional by providing for national and local tax exemption within and
granting other economic incentives to the John Hay Special Economic Zone
Held: No;
It is clear that under Section 12 of R.A. No. 7227 it is only the Subic SEZ which was granted by Congress with tax
exemption, investment incentives and the like. There is no express extension of the aforesaid benefits to
other SEZs still to be created at the time via presidential proclamation.
The deliberations of the Senate confirm the exclusivity to Subic SEZ of the tax and investment privileges accorded it
under the law, as the following exchanges between our lawmakers show during the second reading of the precursor
bill of R.A. No. 7227 with respect to the investment policies that would govern Subic SEZ which are now embodied
in the aforesaid Section 12 thereof.
While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones and
the like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227 are
exclusive only to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support
therein. Neither does the same grant of privileges to the John Hay SEZ find support in the other laws specified
under Section 3 of Proclamation No. 420, which laws were already extant before the issuance of the proclamation or
the enactment of R.A. No. 7227.
More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the
legislature, unless limited by a provision of the state constitution, that has full power to exempt any
person or corporation or class of property from taxation, its power to exempt being as broad as its
power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions, or
local governments may pass ordinances on exemption only from local taxes.
The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax
exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other
kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon.
Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation
should be manifest and unmistakable from the language of the law on which it is based; it must be expressly

granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must
be categorically and unmistakably expressed.
The grant by Proclamation No. 420 of tax exemption and other privileges to the John Hay SEZ is void
for being violative of the Constitution.
Dispositive Portion: WHEREFORE, the second sentence of Section 3 of Proclamation No. 420 is hereby declared
NULL AND VOID and is accordingly declared of no legal force and effect. Public respondents are hereby enjoined
from implementing the aforesaid void provision.
Proclamation No. 420, without the invalidated portion, remains valid and effective.

Commissioner on Internal Revenue vs. San Miguel Corporation (Ponente: Villarama, Jr.)
Doctrine/s:
(1) Tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly and
clearly imports, tax statutes being construed strictissimi juris against the government.
(2) The rule in the interpretation of tax laws is that a statute will not be construed as imposing a tax unless it
does so clearly, expressly, and unambiguously. (Commissioner of Internal Revenue v. Fortune Tobacco
Corporation)
Facts:
San Miguel Corporation (SMC), a domestic corporation engaged in the manufacture and sale of fermented liquor,
produces as one of its products "Red Horse" beer which is sold in 500-ml. and 1-liter bottle variants.
On 1 January 1998, Republic Act (R.A.) No. 8424 or the Tax Reform Act of 1997 took effect. It reproduced, as Section
143 thereof, the provisions of Section 140 of the old National Internal Revenue Code as amended by R.A. No.
8240 which became effective on January 1, 1997. Section 143 of the Tax Reform Act of 1997 reads:
SEC. 143. Fermented Liquor. - There shall be levied, assessed and collected an excise tax on beer, lager
beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar domestic fermented
liquors in accordance with the following schedule:
(a) If the net retail price (excluding the excise tax and value-added tax) per liter of volume
capacity is less than Fourteen pesos and fifty centavos (P14.50), the tax shall be Six pesos and
fifteen centavos (P6.15) per liter;
(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume
capacity is Fourteen pesos and fifty centavos (P14.50) up to Twenty-two pesos (P22.00), the tax
shall be Nine pesos and fifteen centavos (P9.15) per liter;
(c) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume
capacity is more than Twenty-two pesos (P22.00), the tax shall be Twelve pesos and fifteen
centavos (P12.15) per liter.
xxx
The excise tax from any brand of fermented liquor within the next three (3) years from the
effectivity of Republic Act No. 8240 shall not be lower than the tax which was due from each
brand on 1 October 1996.
The rates of excise tax on fermented liquor under paragraphs (a), (b) and (c) hereof shall be
increased by twelve percent (12%) on January 1, 2000.
On 16 December 1999, the Secretary of Finance issued Revenue Regulations No. 17-99 increasing the
applicable tax rates on fermented liquor by 12% which was qualified by the last paragraph of Section 1
of Revenue Regulations No. 17-99 which provides:

x x x the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled
spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being
paid prior to 1 January 2000.
For the period 1 June 2004 to 31 December 2004, SMC was assessed and paid excise taxes amounting
to P2,286,488,861.58 for the 323,407,194 liters of Red Horse beer products removed from its plants.
Said amount was computed based on the tax rate of P7.07/liter or the tax rate which was being applied
to its products prior to 1 January 2000, as the last paragraph of Section 1 of Revenue Regulations No. 1799 provided that the new specific tax rate for fermented liquors "shall not be lower than the excise tax that is
actually being paid prior to January 1, 2000." SMC, however, later contended that the said qualification in the last
paragraph of Section 1 of Revenue Regulations No. 17-99 has no basis in the plain wording of Section 143.
Respondent argued that the applicable tax rate was only the P 6.89/liter tax rate stated in Revenue
Regulations No. 17-99, and that accordingly, its excise taxes should have been
only P2,228,275,566.66.
On 22 May 2006, SMC filed before the BIR a claim for refund or tax credit of the amount
ofP60,778,519.56 as erroneously paid excise taxes for the period of May 22, 2004 to December 31,
2004. Later, said amount was reduced to P58,213,294.92 because of prescription.
CIR: failed to act on claim (SMC filed petition for review with the CTA)
CTA (Second Division): granted the petition and ordered CIR to refund P58,213,294.92 to SMC or to issue in the
latters favor a Tax Credit Certificate for the said amount for the erroneously paid excise taxes; Revenue Regulations
No. 17-99 modified or altered the mandate of Section 143 of the Tax Reform Act of 1997. [CIR filed petition for
review with CTA (En Banc)]
CTA (En Banc): Affirmed; nothing in the law that allows the BIR to extend the three-year transitory
period, and considering further that there is no provision in the law mandating that the new specific
tax rate should not be lower than the excise tax that is actually being paid prior to January 1, 2000 (CIR
filed petition for review on certiorari)
Issue: Whether last paragraph of Section 1 of Revenue Regulations No. 17-99 is an invalid administrative
interpretation of Section 143 of the Tax Reform Act of 1997.
Held: Yes;
Section 143 of the Tax Reform Act of 1997 is clear and unambiguous. It provides for two periods: the first is the
3-year transition period beginning January 1, 1997, the date when R.A. No. 8240 took effect, until
December 31, 1999; and the second is the period thereafter. During the 3-year transition period, Section 143
provides that "the excise tax from any brand of fermented liquorshall not be lower than the tax which was due
from each brand on October 1, 1996." After the transitory period, Section 143 provides that the excise tax rate shall
be the figures provided under paragraphs (a), (b) and (c) of Section 143 but increased by 12%, without regard to
whether such rate is lower or higher than the tax rate that is actually being paid prior to January 1, 2000 and
therefore, without regard to whether the revenue collection starting January 1, 2000 may turn out to be lower than
that collected prior to said date. Revenue Regulations No. 17-99, however, created a new tax rate when it
added in the last paragraph of Section 1 thereof, the qualification that the tax due after the 12%
increase becomes effective "shall not be lower than the tax actually paid prior to January 1, 2000." As
there is nothing in Section 143 of the Tax Reform Act of 1997 which clothes the BIR with the power or
authority to rule that the new specific tax rate should not be lower than the excise tax that is actually
being paid prior to January 1, 2000, such interpretation is clearly an invalid exercise of the power of
the Secretary of Finance to interpret tax laws and to promulgate rules and regulations necessary for
the effective enforcement of the Tax Reform Act of 1997. Said qualification must, perforce, be struck down as
invalid and of no effect.
It bears reiterating that tax burdens are not to be imposed, nor presumed to be imposed beyond what the
statute expressly and clearly imports, tax statutes being construed strictissimi juris against the
government. In case of discrepancy between the basic law and a rule or regulation issued to implement said law,
the basic law prevails as said rule or regulation cannot go beyond the terms and provisions of the basic law. It must
be stressed that the objective of issuing BIR Revenue Regulations is to establish parameters or guidelines within
which our tax laws should be implemented, and not to amend or modify its substantive meaning and import. As
held in Commissioner of Internal Revenue v. Fortune Tobacco Corporation,
x x x The rule in the interpretation of tax laws is that a statute will not be construed as
imposing a tax unless it does so clearly, expressly, and unambiguously. A tax cannot be imposed
without clear and express words for that purpose. Accordingly, the general rule of requiring adherence

to the letter in construing statutes applies with peculiar strictness to tax laws and the
provisions of a taxing act are not to be extended by implication. x x x As burdens, taxes should not
be unduly exacted nor assumed beyond the plain meaning of the tax laws.
Dispositive Portion: WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated August 7,
2008 of the Court of Tax Appeals in C.T.A. EB No. 360 is AFFIRMED.

Pepsi-Cola Bottling Company of the Philippines, Inc. vs. Municipality of Tanauan, Leyte (Ponente:
Martin)
Doctrine/s:
(1) General Rule: Taxation is a power that is purely legislative and which the central legislative body cannot
delegate either to the executive or judicial department of the government.
Exception: In the case of municipal corporations, to which, said theory does not apply.
(2) In order to determine if the exercise of taxation is lawful:
(1) the tax is for a public purpose;
(2) the rule on uniformity of taxation is observed;
(3) either the person or property taxed is within the jurisdiction of the government levying the tax; and
(4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing are
provided.
Facts:
On 14 February 1963, Pepsi-Cola Bottling Company of the Philippines, Inc., commenced a complaint with
preliminary injunction before the Court of First Instance of Leyte for that court to declare Section 2 of Republic Act
No. 2264. otherwise known as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority
as well as to declare Ordinances Nos. 23 and 27, series of 1962, of the municipality of Tanauan, Leyte, null and void.
On 23 July 1963, the parties entered into a Stipulation of Facts, the material portions of which state that, first, both
Ordinances Nos. 23 and 27 embrace or cover the same subject matter and the production tax rates imposed therein
are practically the same, and second, that on January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as
per his letter addressed to the Manager of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce
compliance by the latter of the provisions of said Ordinance No. 27, series of 1962.
Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies
and collects "from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo
for every bottle of soft drink corked." For the purpose of computing the taxes due, the person, firm, company
or corporation producing soft drinks shall submit to the Municipal Treasurer a monthly report, of the total number of
bottles produced and corked during the month. 3
On the other hand, Municipal Ordinance No. 27, which was approved on October 28, 1962, levies and
collects "on soft drinks produced or manufactured within the territorial jurisdiction of this municipality
a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity." For the
purpose of computing the taxes due, the person, fun company, partnership, corporation or plant producing soft
drinks shall submit to the Municipal Treasurer a monthly report of the total number of gallons produced or
manufactured during the month. 5

The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.'
CFI: dismissed the complaint and upheld the constitutionality of R.A. 2264 declaring Ordinance No. 23 and 27
legal and constitutional. (Pepsi-Cola appealed; certified by CA)
Issue/s:
1.
2.
3.

Whether Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive
Whether Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific taxes
Whether Ordinances Nos. 23 and 27 unjust and unfair

Held:
1.

No;

The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every
independent government, without being expressly conferred by the people. It is a power that is purely
legislative and which the central legislative body cannot delegate either to the executive or judicial
department of the government without infringing upon the theory of separation of powers. The exception,
however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative
powers may be delegated to local governments in respect of matters of local concern. This is sanctioned by
immemorial practice. By necessary implication, the legislative power to create political corporations for purposes of
local self-government carries with it the power to confer on such local governmental agencies the power to
tax. Under the New Constitution (1973), 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." Withal, it cannot be said that Section 2 of Republic Act No. 2264
emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of
local taxation.
When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be
delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus,
municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to
tax for more general purposes. This is not to say though that the constitutional injunction against deprivation of
property without due process of law may be passed over under the guise of the taxing power, except when the
taking of the property is in the lawful exercise of the taxing power, as when (1) the tax is for a public
purpose; (2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is
within the jurisdiction of the government levying the tax; and (4) in the assessment and collection of
certain kinds of taxes notice and opportunity for hearing are provided. Due process is usually violated
where the tax imposed is for a private as distinguished from a public purpose; a tax is imposed on property outside
the State, i.e., extraterritorial taxation; and arbitrary or oppressive methods are used in assessing and collecting
taxes. But, a tax does not violate the due process clause, as applied to a particular taxpayer, although the purpose
of the tax will result in an injury rather than a benefit to such taxpayer. Due process does not require that the
property subject to the tax or the amount of tax to be raised should be determined by judicial inquiry,
and a notice and hearing as to the amount of the tax and the manner in which it shall be apportioned
are generally not necessary to due process of law.
2.

No;

Double Taxation
Double taxation, in general, is not forbidden by our fundamental law, since we have not adopted as part thereof
the injunction against double taxation found in the Constitution of the United States and some states
of the Union. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the
benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a
case where one tax is imposed by the State and the other by the city or municipality.
It shows that only Ordinance No. 27, series of 1962 is being enforced by defendants-appellees. Even the Provincial
Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance No. 27, series of 1962
clearly repeals Ordinance No. 23 as the provisions of the latter are inconsistent with the provisions of
the former."
Percentage Tax and Specific Tax

The limitation applies, particularly, to the prohibition against municipalities and municipal districts to impose "any
percentage tax 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." For purposes of this particular limitation, a
municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of the
taxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. But,
the imposition of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume
capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the
nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the
produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft
drinks is considered solely for purposes of determining the tax rate on the products, but there is not set ratio
between the volume of sales and the amount of the tax.
Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified articles,
such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and
cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel
oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. Soft drink is
not one of those specified.
3.

No;

The tax of one (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all softdrinks, produced or
manufactured, or an equivalent of 1- centavos per case, cannot be considered unjust and unfair. An increase in
the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory.
Dispositive Portion: ACCORDINGLY, the constitutionality of Section 2 of Republic Act No. 2264, otherwise known as
the Local Autonomy Act, as amended, is hereby upheld and Municipal Ordinance No. 27 of the Municipality of
Tanauan, Leyte, series of 1962, re-pealing Municipal Ordinance No. 23, same series, is hereby declared of valid and
legal effect. Costs against petitioner-appellant.
Concurring Opinion: Fernando Where Congress has clearly expressed its intuition, the statute must be sustained
EVEN THOUGH double taxation results.
Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. City of Butuan
Doctrine:
(1) Uniformity essential to the valid exercise of the power of taxation does not require identity or equality
under all circumstances, or negate the authority to classify the objects of taxation.
(2) In the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not
deemed satisfied unless:
(a) it is based upon substantial distinctions which make real differences;
(b) these are germane to the purpose of the legislation or ordinance;
(c) the classification applies, not only to present conditions, but, also, to future conditions substantially
identical to those of the present; and
(d) the classification applies equally all those who belong to the same class.
(3)
Facts:
Pepsi-Cola Bottling Co. of the Philippines Inc's (Pepsi-Cola Inc.) warehouse in the City of Butuan serves as a storage
for its products the "Pepsi-Cola" soft drinks for sale to customers in the City of Butuan and all the municipalities in
the Province of Agusan. These "Pepsi-Cola Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City
warehouse of plaintiff for distribution and sale in the City of Butuan and all municipalities of Agusan. .
On August 16, 1960, the City of Butuan enacted Ordinance No. 110 which was subsequently amended by Ordinance
No. 122 and effective November 28, 1960.

That Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case
of 24 bottles of Pepsi-Cola and the Pepsi-Cola Inc. paid under protest the amount of P4,926.63 from
August 16 to December 31, 1960 and the amount of P9,250.40 from January 1 to July 30, 1961.
Pepsi-Cola Inc. filed a complaint for the recovery of the total amount of P14,177.03 paid under protest
and those that if may later on pay until the termination of this case on the ground that Ordinance No. 110
as amended of the City of Butuan is illegal, that the tax imposed is excessive and that it is unconstitutional.
CFI: dismissed the complaint;
Issue/s:
(1) Whether tax imposed by Ordinance No. 110, as amended, partakes of the nature of an import tax;
(2) Whether tax imposed by Ordinance No. 110, as amended, amounts to double taxation;
(3) Whether tax imposed by Ordinance No. 110, as amended, is excessive, oppressive and confiscatory;
(4) Whether tax imposed by Ordinance No. 110, as amended, is highly unjust and discriminatory; and
(5) Whether section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an unconstitutional
delegation of legislative powers.
Held:
(1) Yes;
When we consider, also, that the tax "shall be based and computed from the cargo manifest or bill of lading ...
showing the number of cases" not sold but "received" by the taxpayer, the intention to limit the application of
the ordinance to soft drinks and carbonated drinks brought into the City from outside thereof becomes apparent.
Viewed from this angle, the tax partakes of the nature of an import duty, which is beyond defendant's
authority to impose by express provision of law. (R.A. 2664 Section 2(i) Local Autonomy Act)
(2) No;
Double taxation, in general, is not forbidden by our fundamental law;
(3) No;
The tax of "P0.10 per case of 24 bottles," of soft drinks or carbonated drinks in the production and sale of which
plaintiff is engaged or less than P0.0042 per bottle, is manifestly too small to be excessive, oppressive,
or confiscatory.
(4) Yes;
If the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as
discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor, since only
sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not
acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded
those made by said agents or consignees of producers or merchants established outside the City of Butuan, would
be exempt from the disputed tax.
It is true that the uniformity essential to the valid exercise of the power of taxation does not require
identity or equality under all circumstances, or negate the authority to classify the objects of
taxation. The classification made in the exercise of this authority, to be valid, must, however, be
reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial
distinctions which make real differences; (2) these are germane to the purpose of the legislation or
ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions
substantially identical to those of the present; and (4) the classification applies equally all those who
belong to the same class.
(5) No;

The general principle against delegation of legislative powers, in consequence of the theory of separation of
powers is subject to one well-established exception, namely: legislative powers may be delegated to local
governments to which said theory does not apply in respect of matters of local concern.
Dispositive Portion: WHEREFORE, the decision appealed from is hereby reversed, and another one shall be entered
annulling Ordinance No. 110, as amended by Ordinance No. 122, and sentencing the City of Butuan to refund to
plaintiff herein the amounts collected from and paid under protest by the latter, with interest thereon at the legal
rate from the date of the promulgation of this decision, in addition to the costs, and defendants herein are,
accordingly, restrained and prohibited permanently from enforcing said Ordinance, as amended. It is so ordered.

Villanueva vs. City of Iloilo

Doctrine/s:
(1) A tax is not a debt in the sense of an obligation incurred by contract, express or implied, and therefore is
not within the meaning of constitutional or statutory provisions abolishing or prohibiting imprisonment for
debt, and a statute or ordinance which punishes the non-payment thereof by fine or imprisonment is not,
in conflict with that prohibition.
(2) A poll tax is a tax of a fixed amount upon all persons, or upon all persons of a certain class, resident within
a specified territory, without regard to their property or the occupations in which they may be engaged.
(3) There is a presumption that tax statutes are intended to operate uniformly and equally.
Facts:
On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license tax
fees as follows: (1) tenement house (casa de vecindad), P25.00 annually; (2) tenement house, partly or wholly
engaged in or dedicated to business in the streets of J.M. Basa, Iznart and Aldeguer, P24.00 per apartment; (3)
tenement house, partly or wholly engaged in business in any other streets, P12.00 per apartment. The validity and
constitutionality of this ordinance were challenged by the spouses Eusebio Villanueva and Remedies Sian
Villanueva, owners of four tenement houses containing 34 apartments. This Court, in City of Iloilo vs.
Remedios Sian Villanueva and Eusebio Villanueva, L-12695, March 23, 1959, declared the
ordinance ultra vires, "it not appearing that the power to tax owners of tenement houses is one among
those clearly and expressly granted to the City of Iloilo by its Charter."
On January 15, 1960 the municipal board of Iloilo City, believing, obviously, that with the passage of Republic
Act 2264 (Approved on June 19, 1959), otherwise known as the Local Autonomy Act, it had acquired the authority or

power to enact an ordinance similar to that previously declared by this Court as ultra vires, enacted Ordinance
11, series of 1960.
In Iloilo City, the appellees Eusebio Villanueva and Remedios S. Villanueva are owners of five tenement
houses, aggregately containing 43 apartments, while the other appellees and the same Remedios S.
Villanueva are owners of ten apartments.. Eusebio Villanueva owns, likewise, apartment buildings for rent in
Bacolod, Dumaguete City, Baguio City and Quezon City, which cities, according to him, do not impose tenement or
apartment taxes.
By virtue of the ordinance in question, the appellant City collected from spouses Eusebio Villanueva and Remedios
S. Villanueva, for the years 1960-1964, the sum of P5,824.30, and from the appellees Pio Sian Melliza, Teresita
S. Topacio, and Remedios S. Villanueva, for the years 1960-1964, the sum of P1,317.00. Eusebio Villanueva has
likewise been paying real estate taxes on his property.
On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a complaint, and an amended complaint,
respectively, against the City of Iloilo, in the aforementioned court, praying that Ordinance 11, series of 1960, be
declared "invalid for being beyond the powers of the Municipal Council of the City of Iloilo to enact, and
unconstitutional for being violative of the rule as to uniformity of taxation and for depriving said
plaintiffs of the equal protection clause of the Constitution," and that the City be ordered to refund the
amounts collected from them under the said ordinance.
CFI: ordinance 11, series of 1960 illegal on the grounds that (a) "Republic Act 2264 does not empower cities to
impose apartment taxes," (b) the same is "oppressive and unreasonable," for the reason that it penalizes owners of
tenement houses who fail to pay the tax, (c) it constitutes not only double taxation, but treble at that and (d) it
violates the rule of uniformity of taxation.
Issue/s:
(1) Whether Ordinance 11, series of 1960, of the City of Iloilo, is illegal because it imposes double taxation
(2) Whether the City of Iloilo is empowered by the Local Autonomy Act to impose tenement taxes
(3) Whether Ordinance 11, series of 1960, is oppressive and unreasonable because it carries a penal clause
(4) Whether Ordinance 11, series of 1960, violate the rule of uniformity of taxation
Held:
(1) No;
While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National Internal
Revenue Code as real estate dealers, and still taxable under the ordinance in question, the argument against
double taxation may not be invoked. The same tax may be imposed by the national government as well as
by the local government. There is nothing inherently obnoxious in the exaction of license fees or taxes with
respect to the same occupation, calling or activity by both the State and a political subdivision thereof.
The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate taxes and the
tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-settled rule that a
license tax may be levied upon a business or occupation although the land or property used in
connection therewith is subject to property tax. The State may collect an ad valorem tax on property used in
a calling, and at the same time impose a license tax on that calling, the imposition of the latter kind of tax being in
no sense a double tax.
(2) Yes;
It is now settled that the aforequoted provisions of Republic Act 2264 confer on local governments
broad taxing authority which extends to almost "everything, excepting those which are mentioned
therein," provided that the tax so levied is "for public purposes, just and uniform," and does not
transgress any constitutional provision or is not repugnant to a controlling statute. Thus, when a tax,
levied under the authority of a city or municipal ordinance, is not within the exceptions and limitations
aforementioned, the same comes within the ambit of the general rule, pursuant to the rules of expressio unius est
exclusio alterius, and exceptio firmat regulum in casibus non excepti.

The appellees strongly maintain that it is a "property tax" or "real estate tax," and not a "tax on persons engaged in
any occupation or business or exercising privileges," or a license tax, or a privilege tax, or an excise tax.
It is our view, contrary to the appellees' contention, that the tax in question is not a real estate tax.
Obviously, the appellees confuse the tax with the real estate tax within the meaning of the Assessment Law, which,
although not applicable to the City of Iloilo, has counterpart provisions in the Iloilo City Charter. A real estate tax
is a direct tax on the ownership of lands and buildings or other improvements thereon, not specially
exempted, and is payable regardless of whether the property is used or not, although the value may
vary in accordance with such factor. The tax is usually single or indivisible, although the land and
building or improvements erected thereon are assessed separately, except when the land and building
or improvements belong to separate owners. It is a fixed proportion of the assessed value of the property
taxed, and requires, therefore, the intervention of assessors. It is collected or payable at appointed times, and it
constitutes a superior lien on and is enforceable against the property subject to such taxation, and not by
imprisonment of the owner.
The tax imposed by the ordinance in question does not possess the aforestated attributes. It is not a tax on the
land on which the tenement houses are erected, although both land and tenement houses may belong
to the same owner. The tax is not a fixed proportion of the assessed value of the tenement houses, and does not
require the intervention of assessors or appraisers. It is not payable at a designated time or date, and is not
enforceable against the tenement houses either by sale or distraint. Clearly, therefore, the tax in question is not a
real estate tax.
The lower court has interchangeably denominated the tax in question as a tenement tax or an apartment tax.
Called by either name, it is not among the exceptions listed in section 2 of the Local Autonomy Act. On
the other hand, the imposition by the ordinance of a license tax on persons engaged in the business of operating
tenement houses finds authority in section 2 of the Local Autonomy Act which provides that chartered cities have
the authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or
exercising privileges within their respective territories, and "otherwise to levy for public purposes, just and uniform
taxes, licenses, or fees.
(3) No;
The lower court apparently had in mind, when it made the above ruling, the provision of the Constitution that "no
person shall be imprisoned for a debt or non-payment of a poll tax."
It is elementary, however, that "a tax is not a debt in the sense of an obligation incurred by contract,
express or implied, and therefore is not within the meaning of constitutional or statutory provisions
abolishing or prohibiting imprisonment for debt, and a statute or ordinance which punishes the nonpayment thereof by fine or imprisonment is not, in conflict with that prohibition." Nor is the tax in
question a poll tax, for the latter is a tax of a fixed amount upon all persons, or upon all persons of a
certain class, resident within a specified territory, without regard to their property or the occupations
in which they may be engaged. Therefore, the tax in question is not oppressive in the manner the lower court
puts it. On the other hand, the charter of Iloilo City empowers its municipal board to "fix penalties for
violations of ordinances, which shall not exceed a fine of two hundred pesos or six months'
imprisonment, or both such fine and imprisonment for each offense."
(4) No;
The fact, therefore, that the owners of other classes of buildings in the City of Iloilo do not pay the taxes imposed by
the ordinance in question is no argument at all against uniformity and equality of the tax imposition. Neither is the
rule of equality and uniformity violated by the fact that tenement taxes are not imposed in other cities, for the same
rule does not require that taxes for the same purpose should be imposed in different territorial subdivisions at the
same time. So long as the burden of the tax falls equally and impartially on all owners or operators of
tenement houses similarly classified or situated, equality and uniformity of taxation is
accomplished. The plaintiffs-appellees, as owners of tenement houses in the City of Iloilo, have not shown that the
tax burden is not equally or uniformly distributed among them, to overthrow the presumption that tax statutes
are intended to operate uniformly and equally.
Dispositive Portion: ACCORDINGLY, the judgment a quo is reversed, and, the ordinance in question being valid, the
complaint is hereby dismissed. No pronouncement as to costs.