MEANING OF UNIFORMITY IN TAXATION
Churchill v Concepcion (1916)
GR No 11572, September 22, 1916
FACTS:
Section 100 of Act 2339 imposed an annual tax of P4 per
square meter upon electric signs, billboards, and spaces
used for posting or displaying temporary signs, and all
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-
partners in Mercantile Advertising Agency, owned a
billboard to which they were taxes at P104. The tax was
paid under protest. Churchill and Tait instituted the action
to recover the amount.
ISSUE:
Is the statute and the tax imposed void for lack of
uniformity?
RULING:
No, the tax is valid.
Uniformity in taxation means that all taxable articles or
kinds of property, of the same class, shall be taxed at the
same rate. It does not mean that all lands, chattels,
securities, incomes, occupations, franchises, privileges,
necessities, and luxuries shall all be assessed at the same
rate. Different articles may be taxed at different amounts
provided the rate is uniform on the same class
everywhere, with all people, at all times.
Herein, the Act imposes a tax of P2 per square meter or a
fraction thereof upon every electric sign, billboard, etc.
Wherever found in the Philippine Islands. The rule of
taxation upon such signs is uniform throughout the
islands. The rule does not require taxes to be graded
according to the value of the subjects upon which they are
imposed, especially those levied as privilege or occupation
taxes.
Commissioner v Lingayen Gulf Electric GR No L-23771,
August 4, 1988
FACTS:
Lingayen Gulf Electric Power operates an electric power
plant serving the municipalities of Lingayen and Binmaley,
Pangasinan, pursuant to municipal franchise granted it by
the respective municipal councils. The franchises provided
that the grantee shall pay quarterly to the provincial
treasury of Pangasinan 1% of the gross earnings obtained
through the privilege for the first 20 years (from 1946)
and 2% during the remaining 15 years of the life of the
franchise. In 1955, the BIR assessed and demanded against
the company deficiency franchise taxes and surcharges
from the years 1946 to 1954 applying the franchise tax
rate of 5% on gross receipts from 1948 to 1954. The
company asked for a reinvestigation, which was denied.
CTA, however, ruled for Lingayen. Hence, this petition.
ISSUES:
1. Whether the Court can inquire into the wisdom of the
franchise
2. Whether a rate below 5% is violative of the uniformity
clause in the Constitution
RULING:
1. No, the Court does not have the authority to
inquire into the wisdom of the Act. Charters or
special laws granted and enacted by the
legislature are in the nature of private contracts.
They do not constitute a part of the machinery of
the general government. Also, the Court ought not
to disturb the ruling of the Court of Tax Appeals
on the constitutionality of the law in question.
2. No. The legislature has the inherent power not
only to select the subjects of taxation but to grant
exemptions. Tax exemptions have never been
deemed violative of the equal protection clause.
Herein, the 5% franchise tax rate provided in
Section 259 of the Tax Code was never intended to
have universal application. Section 259 expressly
allows the payment of taxes at rates lower than
5% when the charter granting the franchise
precludes the imposition of a higher tax. RA 3843,
the law granting the franchise, did not only fix and
specify a franchise tax of 2% on its gross receipts
but made it in lieu of any and all taxes, all laws to
the contrary notwithstanding. The company,
hence, is not liable for deficiency taxes.
Villanueva v City v Iloilo
GR No L-26521, December 28, 1968
FACTS:
On September 30, 1946, the Municipal Board of Iloilo City
enacted Ordinance 86 imposing license tax fees upon
tenement houses. The validity of such ordinance was
challenged by Eusebio and Remedios Villanueva, owners of
four tenement houses containing 34 apartments. The
Supreme Court held the ordinance to be ultra views. On
January 15, 1960, however, the municipal board, believing
that it acquired authority to enact an ordinance of the
same nature pursuant to the Local Autonomy Act, enacted
Ordinance 11, Eusebio and Remedios Villanueva assailed
the ordinance anew.
ISSUE:
Does Ordinance 11 violate the rule of uniformity of
taxation?
RULING:
No. The Court has ruled the tenement houses constitute a
distinct class of property and that taxes are uniform and
equal when imposed upon all property of the same class or
character within the taxing authority.
The fact that the owners of the other classes of buildings in
Iloilo are not imposed upon by the ordinance, or that
tenement taxes are imposed in other cities do not violate
the rule of equality and uniformity. The 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 tax falls equally and impartially on all
owners or operators of tenement houses similarly
classified or situated, equality and uniformity is
accomplished. The presumption that tax statutes are
intended to operate uniformly and equally was not
overthrown therein.
MEANING OF EQUITABLE TAXATION
REYES VS. ALMANZOR
GR 43839-46 April 26, 1991 196 SCRA 322
Paras, J.:
FACTS:
Petitioner are owners of parcels of land leased to tenants.
RA 6359 was enacted prohibiting for one year an increase
in monthly rentals of dwelling units and said Act also
disallowed ejectment of lessees upon the expiration of the
usual period of lease. City assessor of Manila assessed the
value of petitioner’s property based on the schedule of
market values duly reviewed by the Secretary of Finance.
The revision entailed an increase to the tax rates and
petitioners averred that the reassessment imposed upon
them greatly exceeded the annual income derived from
their properties.
ISSUE:
Whether or not income approach is the method to be used
in the tax assessment and not the comparable sales
approach.
RULING:
By no stretch of the imagination can the market value of
properties covered by PD 20 be equated with the market
value of properties not so covered. In the case at bar, not
even factors determinant of the assessed value of subject
properties under the comparable sales approach were
presented by respondent namely:
1. That the sale must represent a bonafide arm’s length
transaction between a willing seller and a willing buyer
2. The property must be comparable property.
As a general rule, there were no takers so that there can be
no reasonable basis for the conclusion that these
properties are comparable.
Taxes are lifeblood of government, however, such
collection should be made in accordance with the law and
therefore necessary to reconcile conflicting interests of the
authorities so that the real purpose of taxation, promotion
of the welfare of common good can be achieved.
Related to equitable taxation:
Under Art. VIII, Sec. 17 (1) of the 1973 Constitution, then
enforced, the rule of taxation must not only be uniform,
but must also be equitable and progressive.
Uniformity has been defined as that principle by which all
taxable articles or kinds of property of the same class shall
be taxed at the same rate (Churchill v. Concepcion, 34 Phil.
969 [1916]).
Notably in the 1935 Constitution, there was no mention of
the equitable or progressive aspects of taxation required in
the 1973 Charter (Fernando "The Constitution of the
Philippines", p. 221, Second Edition). Thus, the need to
examine closely and determine the specific mandate of the
Constitution.
Taxation is said to be equitable when its burden falls on
those better able to pay. Taxation is progressive when its
rate goes up depending on the resources of the person
affected (Ibid.).
The power to tax "is an attribute of sovereignty". In fact, it
is the strongest of all the powers of government. But for all
its plenitude the power to tax is not unconfined as there
are restrictions. Adversely effecting as it does property
rights, both the due process and equal protection clauses
of the Constitution may properly be invoked to invalidate
in appropriate cases a revenue measure. If it were
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
Marshall's famous dictum was brushed away by one stroke
of Mr. Justice Holmes pen, thus: "The power to tax is not
the power to destroy while this Court sits. So it is in the
Philippines " (Sison, Jr. v. Ancheta, 130 SCRA 655 [1984];
Obillos, Jr. v. Commissioner of Internal Revenue, 139 SCRA
439 [1985]).
In the same vein, the due process clause may be invoked
where a taxing statute is so arbitrary that it finds no
support in the Constitution. An obvious example is where
it can be shown to amount to confiscation of property.
That would be a clear abuse of power (Sison v.
Ancheta, supra).
The taxing power has the authority to make a reasonable
and natural classification for purposes of taxation but the
government's act must not be prompted by a spirit of
hostility, or at the very least discrimination that finds no
support in reason. It suffices then that the laws operate
equally 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 (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.