Equal protection

Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc vs. Tan

G.R No. L-81311 June 30, 1988

FACTS: The petitioners seeks to nullify Executive Order No. 273 issued by the President of the
Philippines on July 25, 1987, to take effect on January 1, 1988, and which amended certain
sections of the National Internal Revenue Code and adopted the Value-added tax (VAT), for
being unconstitutional in that its enactment is not allegedly within the powers of the President;
that the Vat is oppressive, and violates the due process and equal protection clauses and other
provisions of the 1987 Constitution.

ISSUES: 1. Whether or not Executive Order No. 273 is unconstitutional on the ground that
the President had no authority to issue the said EO.

2. Whether or not Executive Order No.273 is oppressive, discriminatory, unjust and

regressive, in violation of the provisions of Art. VI, sec. 28(1) of the 1987 Constitution.

3. Whether or not EO 273 unduly discriminates against custom brokers.

HELD: 1. The EO 273 issued by the President is constitutional. Under the Proclamation No. 3,
which decreed a Provisional Constitution, sole legislative authority was vested upon the
President. Art. II, sec. 1 of the Provisional Constitution states that, “Sec. 1 Until the Legislature
is elected and convened under a new Constitution, the President shall continue to exercise
legislative powers”. On October 15, 1986, the Constitutional Commission of 1986 adopted a
new Constitution for the Republic of the Philippines which was ratified in a plebiscite conducted
on February 2, 1987. Art. XVIII, sec.6 of said Constitution, provides that, “Sec. 6 The incumbent
President shall continue to exercise legislative powers until the first Congress is convened”.
Under both the Provisional and 1987 Constitution, the President is vested with legislative
powers until a legislature under a new Constitution is convened. The First Congress, created
and elected under the 1987 Constitution, was convened on July 27, 1987. Hence, the
enactment of EO 273 on July 25, 1987, two days before Congress convened on July 27, 1987,
was within the President’s constitutional power and authority to legislate.

2. EO 273 satisfies all the requirements of a valid tax. It is uniform.

 Equality and uniformity in taxation means that all taxable articles or kinds of property of the
same class shall be taxed at the same rate. The sales tax adopted in EO 273 is applied similarly
on all goods and services sold to the public, which are not exempt, at constant rate of 0% or
10%. The disputed tax is also equitable. It is imposed only on sales of goods and services by
persons engaged in business with an aggregate gross annual sales exceeding Php 200,
000.00. Small corner sari-sari stores are consequently exempt from its application. Likewise
exempt from the tax are sales of farm and marine products, so that the cost of basic food and
other necessities, spared as they are from the incidence of the VAT, are expected to be
relatively lower and within the reach of the general public.

3. The phrase “except customs brokers” under Sec. 103 of EO 273 is not meant to
discriminate against customs brokers. It was inserted in Sec. 103(r) to complement the
provisions of Sec. 102 of the Code, which makes the services of customs brokers subject to the
payment of the VAT and to distinguish customs brokers from other professionals who are
subject to the payment of an occupation tax under the Local Tax Code. The distinction is based
upon material differences, in that the activities of customs brokers partake more of a business,
rather than a profession and were thus subjected to the percentage tax under Sec. 174 of the
National Internal Revenue Code prior to its amendment by EO 273. EO 273 abolished the
percentage tax and replaced it with the VAT.

VICTORIAS MILLING CO. INC v MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS

OCCIDENTAL

G.R. No. L-21183 September 27, 1968

FACTS: Ordinance 1 was approved by the municipal Council of Victorias on September 22,
1956 by way of an amendment to two municipal ordinances separately imposing license taxes
on operators of sugar centrals and sugar refineries. The changes were: with respect to sugar
centrals, by increasing the rates of license taxes; and as to sugar refineries, by increasing the
rates of license taxes as well as the range of graduated schedule of annual output capacity.

Plaintiff Victorias Milling Co. filed a suit to ask for judgment declaring the said Ordinance null
and void as it is discriminatory since it singles out plaintiff which is the only operator of a sugar
central and a sugar refinery within the jurisdiction of defendant municipality; and that it
constitutes double taxation.

ISSUES:

1) Whether Ordinance 1 is discriminatory.

2) Whether Ordinance 1 constitutes double taxation.

RULING:

1) No. The ordinance does not single out Victorias as the only object of the ordinance. Said
ordinance is made to apply to any sugar central or sugar refinery which may happen to operate
in the municipality. The fact that plaintiff is actually the sole operator of a sugar central and a
sugar refinery does not make the ordinance discriminatory. Not even the name of plaintiff herein
was ever mentioned in the ordinance now disputed.

2) No. First, the two taxes cover two different objects. Section 1 of the ordinance taxes a person
operating sugar centrals or engaged in the manufacture of centrifugal sugar. While under
Section 2, those taxed are the operators of sugar refinery mills. One occupation or business is
different from the other. Second, the disputed taxes are imposed on occupation or business.
Both taxes are not on sugar. The amount thereof depends on the annual output capacity of the
mills concerned, regardless of the actual sugar milled. Plaintiff's argument perhaps could make
out a point if the object of taxation here were the sugar it produces, not the business of
producing it.Commissioner v Lingayen Gulf Electric (1988)

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:

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.
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.

PUNSALAN VS. MUNICIPAL BOARD OF MANILA [95 PHIL 46; NO.L-4817; 26 MAY 1954]

Saturday, January 31, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, Political Law

Facts: Petitioners, who are professionals in the city, assail OrdinanceNo. 3398 together with the
law authorizing it (Section 18 of the Revised Charter of the City of Manila).
The ordinance imposes a municipal occupation tax on persons exercising various professions in
the city and penalizes non-payment of the same. The law authorizing
said ordinanceempowers the Municipal Board of the city to impose a municipal occupation tax
on persons engaged in various professions. Petitioners, having already paid their occupation tax
under section 201 of the National Internal Revenue Code, paid the tax under protest as imposed
byOrdinance No. 3398. The lower court declared the ordinance invalid and affirmed the validity
of the law authorizing it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation,
and authorize what amounts to double taxation.

Held: The Legislature may, in its discretion, select what occupationsshall be taxed, and in its
discretion may tax all, or select classes of occupation for taxation, and leave others untaxed. It
is not for the courts to judge which cities or municipalities should be empowered
to imposeoccupation taxes aside from that imposed by the National Government. That matter is
within the domain of political departments. The argumentagainst double taxation may not be
invoked if one tax is imposed by the state and the other is imposed by the city. It is widely
recognized that there is nothing inherently terrible in the requirement that taxes be exacted with
respect to the same occupation by both the state and the political subdivisions thereof.
Judgment of the lower court is reversed with regards to the ordinance and affirmed as to the law
authorizing it.

NLRB v. Jones & Laughlin Steel Corp

Citation. 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893, 1937 U.S.

Brief Fact Summary. This case challenges the constitutionality of the National Labor Relations
Act of 1935 (the Act) when the Act regulates activity that occurs solely within the boundaries of
one state.

Synopsis of Rule of Law. Congress has the power to regulate intrastate activities that potentially
could have a significant impact on interstate commerce.

Facts. This case challenged the constitutionality of the Act. The National Labor Relations Board
(NLRB) found that Jones & Laughlin Steel Corp. (Jones & Laughlin) engaged in unfair labor
practices by firing employees involved in union activity. Jones & Laughlin failed to comply with
an order to end the discriminatory practices. The NLRB sought enforcement of its order in the
Court of Appeals. The Court of Appeals found the order was outside of the range of federal
power. The matter was appealed to the Supreme Court of the United States (Supreme Court).

Issue. Does the federal government have the power to regulate local employment practices in
companies whose business effects interstate commerce?

Held. Yes. Judgment reversed.

The Supreme Court found that Jones & Laughlin does significant business outside of the state
of Pennsylvania. The majority of its products were sold outside of the state. Congress retains
the power to control and regulate interstate commerce. Although the employee discharges may
be an intrastate activity, the repercussions from such discharges have the potential to
significantly affect interstate commerce. Therefore, Congress has the power of legislation over
such activities.

Dissent. The employee discharges are too remote from interstate commerce to justify
Congressional regulation.

Discussion. Congress passed the Act under its commerce power. The commerce power is a
broad ranging power, which is the basis for a significant amount of CongressiWalter Lutz vs. J.
Antonio Araneta (G.R. L-7859)

WALTER LUTZ vs. J. ANTONIO ARANETA

G.R. No. L-7859

December 22, 1955

FACTS

Plaintiff, Walter Lutz, as judicial administrator, seeks to recover from the CIR the sum of
P14,666.40 paid by the estate as taxes under Sec.3 of Commonwealth Act 567 from the years
1948-1950 alleging that such tax is inconstitutional as it is being levied for the aid and support of
the sugar industry exclusively. Hence, the taxes are not collected for a public purpose.
ISSUE

Whether or not the taxes imposed by Commonwealth Act No. 567, otherwise known as the
Sugar Adjustment Act is legally valid

RULING

Petition is DENIED. Under Sec. 6 of the Sugar Adjustment Act, the tax is levied with a
regulatory purpose - to provide means for the rehabilitation and stabilization of the threatened
sugar industry. The protection and promotion of the sugar industry is a matter of public concern,
it follows that the Legislature may determine within reasonable bounds what is necessary for its
protection and expedient for its promotion. This is a valid exercise of police power.

G.R. No. L-6093 February 24, 1954

THE SHELL CO. OF P.I., LTD., vs. E. E. VAÑO, as Municipal Treasurer of the Municipality
of Cordova, Province of Cebu

FACTS: The Municipal Council of Cordova, Province of Cebu, adopted the following ordinances:
No. 10, series of 1946, which imposes an annual tax of P150 on occupation or the exercise of
the privilege of installation manager; No. 9, series of 1947, which imposes an annual tax of P40
for local deposits in drums of combustible and inflammable materials and an annual tax of P200
for tin can factories; and No. 11, series of 1948, which imposes an annual tax of P150 on tin can
factories having a maximum output capacity of 30,000 tin cans. The Shell Co. of P.I. Ltd., a
foreign corporation, filed suit for the refund of the taxes paid by it, on the ground that the
ordinances imposing such taxes are ultra vires. The defendant denies that they are so.

ISSUE: Are the ordinances unauthorized and illegal? Discriminatroy and hostile?

RULING: NO. The permit and the fee referred to may be required and charged by the Municipal
Council of Cordova in the exercise of its regulative authority, whereas the ordinance which
imposes the taxes in question was adopted under and pursuant to the provisions of
Commonwealth Act No. 472, which authorizes municipal councils and municipal district councils
"to impose license taxes upon persons engaged in any occupation or business, or exercising
privileges in the municipality or municipal district, by requiring them to secure licenses at rates
fixed by the municipal council or municipal district council," which shall be just and uniform but
not "percentage taxes and taxes on specified articles.
Re: installation manager

even if the installation manager is a salaried employee of the plaintiff, still it is an occupation
"and one occupation or line of business does not become exempt by being conducted with
some other occupation or business for which such tax has been paid'1 and the occupation tax
must be paid "by each individual engaged in a calling subject thereto."2 And pursuant to section
179 of the National Internal Revenue Code, "The payment of . . . occupation tax shall not
exempt any person from any tax, . . . provided by law or ordinance in places where such . . .
occupation in . . . regulated by municipal law, nor shall the payment of any such tax be held to
prohibit any municipality from placing a tax upon the same . . . occupation, for local purposes,
where the imposition of such tax is authorized by law.

Re: tin can factories

Ordinance No. 11, series of 1948, which imposes a municipal tax of P150 on tin can factories
having a maximum annual output capacity of 30,000 tin cans which, according to the stipulation
of facts, was approved by the Provincial Board of Cebu and the Department of Finance, is valid
and lawful, because it is neither a percentage tax nor one on specified articles which are the
only exceptions provided in section 1, Commonwealth Act No. 472. Neither does it fall under
any of the prohibitions provided for in section 3 of the same Act. Specific taxes enumerated in
the National Internal Revenue Code are those that are imposed upon "things manufactured or
produced in the Philippines for domestic sale or consumption" and upon "things imported from
the United States and foreign countries," such as distilled spirits, domestic denatured alcohol,
fermented liquors, products of tobacco, cigars and cigarettes, matches, mechanical lighters,
firecrackers, skimmed milk, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel
oil, cinematographic films, playing cards, sacharine.3 And it is not a percentage tax because it is
tax on business and the maximum annual output capacity is not a percentage, because it is not
a share or a tax based on the amount of the proceeds realized out of the sale of the tin cans
manufactured therein but on the business of manufacturing tin cans having a maximum annual
output capacity of 30,000 tin cans