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the function of regulating and supervising the sugar industry until it was superseded by its co-respondent Sugar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 Planter’s 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 State’s 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. The LOI expressly provided that the levy be imposed to benefit PPI, a private company.
2. The LOI provides that the imposition of the P10 levy was conditional and dependent upon PPI becoming financially
"viable."
3. 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
4. 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.
(taxpayer’s 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. 17-99 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 latter’s 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 liquor…shall 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. Whether Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive
2. Whether Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific taxes
3. 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 1-½ 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 non-payment 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.