[No,11572.September22,1916.

]
FRANCIS A. CHURCHILL and STEWART TAIT ET AL., plaintiffs and
appellants,vs.VENANCIOCONCEPCION,asActingCollectorofInternal
Revenue,defendantandappellee.
1. 1.REVENUE STATUTES;VALIDITY OF.The validity of a revenue
statute or the exercise of the taxing power of the Legislature is not
dependentupontheopinionoftwointerestedwitnessestotheeffectthata
certaintaxisconfiscatorywhenitisagreedthatanumberofotherpersons
havepaidsuchtax.
1. 2.TAXATION;POWER OF THE PHILIPPINE LEGISLATURE;SIGNS
AND
970
970 PHILIPPINEREPORTSANNOTATED
Churchillvs.Concepcion.
1. BILLBOARDS.TheLegislaturehavingthepower toimposeataxupon
signs,signboards, andbillboards,thecourtswillnot attempt torestrict
suchpowerintheabsenceofashowingthattheexercisethereofonthe
partoftheLegislaturewassoabusedastomakeitcleartothejudicial
mindthatthepowerhadbeenexercisedforthesolepurposeofdestroying
rights which could not be rightfully destroyed consistently with the
principlesoffreedomandjustice.
1. 3.ID.;UNIFORMITY OF.Uniformity intaxation means that all taxable
articlesorkindsofpropertyofthesameclassesshallbetaxedatthesame
rate.Ataxisuniformwhenitoperateswiththesame.forceandeffectin
everyplacewherethesubjectofitisfound.
1. 4.ID.;ID.A tax of P2 a square meter or fraction thereof imposed upon
every electric sign, billboard, etc., wherever found in the Philippine
Islands,satisfiestherequirementofthePhilippineBill"thattheruleof
taxationinsaidIslandsshallbeuniform."
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.Ostrand,
J.
Thefactsarestatedintheopinionofthecourt.
Aitken&DeSelmsforappellants.
AttorneyGeneralAvanceaforappellee.
TRENT,J.:
Section 100 of Act No. 2339, passed February 27, 1914, effective July 1,
1914,imposedanannualtaxofP4persquaremeterupon"electricsigns,
billboards,andspacesusedforpostingordisplayingtemporarysigns,and
allsignsdisplayedonpremisesnotoccupiedbybuildings."Thissectionwas
subsequently amended by Act No. 2432, effective January 1, 1915, by
reducingthetaxonsuchsigns,billboards,etc.,toP2persquaremeteror
fractionthereof.Section26ofActNo.2432wasinturnamendedbyActNo.
2445,butthisamendmentdoesnotinanywayaffectthequestionsinvolved
in the case under consideration. The taxes imposed by Act No. 2432, as
amended,wereratifiedbytheCongressoftheUnitedStatesonMarch4,
1915.Theratifyingclausereadsasfollows:
"TheinternalrevenuetaxesimposedbythePhilippineLegislatureunder
thelawenactedbythatbodyonDecember
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VOL.34,SEPTEMBER22,1916. 971
Churchillvs.Concepcion.
twentythird,nineteenhundredandfourteen(ActNo.2432),asamendedby
thelawenactedbyitonJanuarysixteenth,nineteenhundredandfifteen
(ActNo.2445),areherebylegalizedandratified,andthecollectionofall
suchtaxesheretoforeorhereafterisherebylegalized,ratifiedandconfirmed
as fully to all intents and purposes as if the same had by prior Act of
Congressbeenspecificallyauthorizedanddirected."
FrancisA.ChurchillandStewartTait,copartnersdoingbusinessunder
thefirmnameandstyleoftheMercantileAdvertisingAgency,ownersofa
sign or billboard containing an area of 52 square meters constructed on
private property in the city of Manila and exposed to public view, were
taxed thereon P104. The tax was paid under protest and the plaintiffs
havingexhaustedalltheiradministrativeremediesinstitutedthepresent
actionundersection140ofActNo.2339againsttheCollectorofInternal
Revenuetorecoverbacktheamountthuspaid.Fromajudgmentdismissing
thecomplaintuponthemerits,withcosts,theplaintiffsappealed.
Itisnowurgedthatthetrialcourterred:
"(1)InnotholdingthatthetaxasimposedbyvirtueofActNo.2339,as
amended by Act No. 2432, as amended by Act No. 2445, constitutes
deprivationofpropertywithoutcompensationordueprocessoflaw,because
itisconfiscatoryandunjustlydiscriminatoryand(2)innotholdingthatthe
saidtaxisvoidforlackofuniformity,becauseitisnotgradedaccordingto
value; because the classification on which it is based is mere arbitrary
selectionandnotbasedonanyreasonableground;andfurthermore,because
itconstitutesdoubletaxation."
Wewillfirstinquirewhetherthetaxinquestionisconfiscatoryastothe
businessoftheplaintiff.Uponthispointthelowercourt,inacceptingthe
testimony of the plaintiff Churchill, to the effect that "the billboard in
question cost P300 to construct, that its annual gross earning power is
P268,andthattheannualtaxisP104,"found"thatforafiveyears'period
thegrossincomefromthebillboardwouldbe
972
972 PHILIPPINEREPORTSANNOTATED
Churchillvs.Concepcion.
P1,340,andthattheexpendituresfororiginalconstructionandtaxeswould
amounttoP820,leavingabalanceofP520,"heldthat"unlessthetaxequals
orexceedsthegrossincome,thecourtwouldhardlybejustifiedindeclaring
the tax confiscatory." These findings of fact and conclusions of law are
attackeduponthegroundthatthecourtfailedtotakeintoconsiderationthe
pertinentfactsthattheannualdepreciationofthebillboardis20percent;
thatattheendoffiveyearsthecapitalofP300wouldbecompletelylost;
thattheplaintiffsareentitledtoreceiveareasonablerateofinterestonthis
capital; and that there should be charged against the billboard its
proportion of the overhead charges such as labor, management,
maintenance,rentalofofficepremises,rentalorpurchaseofgroundspace
forboard,repair,paints,oils,etc.,resultinginanactuallossperyearonthe
business,insteadofanapparentprofitofP520forfiveyears,orP44forone
year,Ifthesecontentionsresteduponasoundbasisitmightbesaidthat
thetaxis,inasense,confiscatory;buttheydonot,aswewillattemptto
showfromtheevidenceofrecord.
TheplaintiffChurchilltestifiedinpartasfollows:
"Q.Inyouropinion,Mr.Churchill,statewhatyouwouldthinkofthe
ratesthatarechargedbyyouforadvertisingpurposesinconnectionwith
thisboard;couldtheyberaised?A.No.
"Q. Why?A. The business wouldn't allow it; the business wouldn't
affordit;andotherwiseitwouldmeanbankruptcytotrytoincreaseit.
"Q. Who couldn't afford it? Explain it fully Mr. Churchill?A, The
merchantscouldn'taffordtopaymore.
Oncrossexamination:"Q.Itisafact,isitnot,Mr.Churchill,thatsince
thepassageofActNo.2339youhavenevermadeanyattempttoraisethe
advertisingrates?A.Itwouldbeimpossibletoraisethem.
"Q.Myquestionis:Youhavenevermadeanyattempttoraisethem?A.
Wehavetalkeditoverwiththemerchantsandtalkedoverthepriceonthe
eventofataxbeingputatareasonableamount,aboutputtingupsome
increase.
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VOL.34,SEPTEMBER22,1916. 973
Churchillvs.Concepcion.
"Q.Butyouhavenevermadeanactualattempttoincreaseyourrates?A.
Iwouldconsiderthatanactualattempt.
"Q.Youhaveneverfixedtheratehigherthanitisnow?A.No;no."
It was agreed that Tait, the other plaintiff, would testify to the same
effect.Theparties,plaintiffsanddefendant,furtheragreed"thatanumber
ofpersonshavevoluntarilyandwithoutprotestpaidthetaxesimposedby
section 100 of Act No. 2339, as amended by Act No. 2432, and in turn
amendedbyActNo.2445."
 It will thus be seen that the contention that the rates charged for
advertisingcannotberaisedispurelyhypothetical,basedentirelyuponthe
opinionoftheplaintiffs,unsupportedbyactualtest,andthattheplaintiffs
themselves admit that a number of other persons have voluntarily and
without protest paid the tax herein complained of. Under these
circumstances,canitbeheldasamatteroffactthatthe.taxisconfiscatory
orthat,asamatteroflaw,thetaxisunconstitutional?Istheexerciseofthe
taxing power of the Legislature dependent upon and restricted by the
opinionoftwointerestedwitnesses?Therecanbebutoneanswertothese
questions,especiallyinviewofthefactthatothersarepayingthetaxand
presumablymakingareasonableprofitfromtheirbusiness.
InChicagoandGrandTrunkRailwayCo.vs.Wellman(143U.S,,339),a
questionsimilartotheonenowunderconsiderationwasraisedanddecided
bytheSupremeCourtoftheUnitedStates.Theprincipalcontentionmade
in that case was thatanAct of the Legislature of Michigan fixing the
amount per mile to be charged by railways for the transportation of a
passengerwasunconstitutional,onthegroundthattheratesofixedwas
confiscatory. It was agreed in the pleadings that the total earnings and
incomeofthecompanyfromallsourcesforagivenyearwerelessthanthe
expensesforthesameperiod.Inadditiontothisagreedstatementoffacts,
two witnesses were called, one the traffic manager and the other the
treasurerofthe
974
974 PHILIPPINEREPORTSANNOTATED
Churchillvs.Concepcion.
company.Theirtestimonywastotheeffectthatinviewofthecompetition
prevailingatChicagoforthroughbusiness,itwasimpossibletoincreasethe
freight rates then charged by the company because it would throw the
volume of business into the hands of competing roads. In overruling the
contentionofthecompanythattheactinquestionwasunconstitutionalon
thegroundthattheratefixedtherebywasconfiscatory,thecourtsaid:
"Surely, before the courts are called upon to adjudge an act of the
legislaturefixingthemaximumpassengerratesforrailroadcompaniestobe
unconstitutional, on the ground that its enforcement would prevent the
stockholders from receiving any dividends on their investments, or the
bondholdersanyinterestontheirloans,theyshouldbefullyadvisedasto
what is done with the receipts and earnings of the company; for if so
advised,it might clearly appear that a prudent andhonest management
would,withintheratesprescribed,securetothebondholderstheirinterest,
andtothestockholdersreasonabledividends.Whiletheprotectionofvested
rightsofpropertyIsasupremedutyofthecourts,ithasnotcometothis,
thatthelegislativepowerrestssubservienttothediscretionofanyrailroad
corporation which may, by exhorbitant and unreasonable salaries, or in
someotherimproperway,transferitsearningsintowhatitispleasedtocall
'operatingexpenses.'"
Itisfurtherallegedthatthetaxinquestionisunconstitutionalbecause
"thelawhereincomplainedofwasenactedforthesolepurposeofdestroying
billboards and advertising business depending on the use of signs or
billboards."IfitbeconcededthattheLegislaturehasthepowertoimposea
tax upon signs, signboards, and billboards, then "the judicial cannot
prescribetothelegislativedepartmentoftheGovernmentlimitationupon
theexerciseofitsacknowledgedpowers."(VeazieBankvs.Fenno,8Wall.,
533,548.)ThatthePhilippineLegislaturehas thepowertoimposesuch
taxes,wethinktherecanbenoseriousdoubt,because"thepowertoimpose
taxesisonesounlimitedinforceandsosearchinginextent,thatthecourts
scarcely
975
VOL.34,SEPTEMBER22,1916. 975
Churchillvs.Concepcion.
venturetodeclarethatitissubjecttoanyrestrictionswhatever,exceptsuch
asrestinthediscretionoftheauthoritywhichexercisesit.Itreachesto
everytradeoroccupation;toeveryobjectofindustry,use,orenjoyment;to
everyspeciesofpossession;anditimposesaburdenwhich,incaseoffailure
to discharge it, may be followed by seizure and sale or confiscation of
property. No attribute of sovereignty is more pervading, and at no point
doesthepowerofthegovernmentaffectmoreconstantlyandintimatelyall
therelationsoflifethanthroughtheexactionsmadeunderit."(Cooley's
ConstitutionalLimitations,6thEdition,p.587.)
InMcCrayvs.U,S.(195U.S.,27),thecourt,inrulingadverselytothe
contentionthatafederaltaxonoleomargarineartificiallycoloredwasvoid
becausetherealpurposeofCongresswasnottoraiserevenuebuttotaxout
ofexistenceasubstancenotharmfulofitselfandonewhichmightbelawf
ullymanufacturedandsold,said:
"Whilst,asaresultofourwrittenconstitution,itIsaxiomaticthatthe
judicialdepartmentofthegovernmentischargedwiththesolemndutyof
enforcing theConstitution, and therefore, in cases properly presented, of
determiningwhetheragivenmanifestationofauthorityhasexceededthe
power conferred by that instrument, no instance is afforded from the
foundation of the government where an act which was within a power
conferred, was declared to be repugnant to the Constitution, because it
appearedtothejudicialmindthattheparticularexertionofconstitutional
power was either unwise or unjust. To announce such a principle would
amounttodeclaringthat,inourconstitutionalsystem,thejudiciarywasnot
onlychargedwiththedutyofupholdingtheConstitution,butalsowiththe
responsibilityofcorrectingeverypossibleabusearisingfromtheexerciseby
theotherdepartmentsoftheirconcededauthority,Sotoholdwouldbeto
overthrow the entire distinction between the.legislative, judicial, and
executive departments of the government, upon which our system is
founded,andwouldbeamereactofjudicialusurpation."
976
976 PHILIPPINEREPORTSANNOTATED
Churchillvs.Concepcion.
Ifacasewerepresentedwheretheabuseofthetaxingpowerofthelocal
legislaturewassoextremeastomakeitplaintothejudicialmindthatthe
powerhadbeenexercisedforthesolepurposeofdestroyingrightswhich
couldnotberightfullydestroyedconsistentlywiththeprinciplesoffreedom
andjusticeuponwhichthePhilippineGovernmentrests,thenitwouldbe
thedutyofthecourtstosaythatsuchanarbitraryactwasnotmerelyan
abuse of the power, but was the exercise of an authority not conferred.
(McCrayvs.U.S.,supra.)Buttheinstantcaseisnotoneofthatcharacter,
for the reason that the tax herein complained of falls far short of being
confiscatory.Consequently,itcannotbeheldthattheLegislaturehasgone
beyondthepowerconferreduponitbythePhilippineBillinsofarasthe
amountofthetaxisconcerned.
Isthetaxvoidforlackofuniformityorbecauseitisnotgradedaccording
tovalueorconstitutesdoubletaxation,orbecausetheclassificationupon
which it is based is mere arbitrary selection and not based on any
reasonablegrounds?Theonlylimitation,insofarasthesequestionsare
concerned, placed upon the Philippine Legislature in the exercise of its
taxingpoweristhatfoundinsection5ofthePhilippineBill,whereinitis
declared"thattheruleoftaxationinsaidIslandsshallbeuniform."
"UniformityintaxationsaysBlackonConstitutionalLaw,page292
meansthatalltaxablearticlesorkindsofproperty,ofthesameclass,shall
betaxedatthesamerate.Itdoesnotmeanthatlands,chattels,securities,
incomes,occupations,franchises,privileges,necessities,andluxuries,shall
allbeassessedatthesamerate.Differentarticlesmaybetaxedatdifferent
amounts,providedtherateisuniformonthesameclasseverywhere,with
allpeople,andatalltimes."
Ataxisuniformwhenitoperateswiththesameforceandeffectinevery
placewherethesubjectofitisfound(StateRailroadTaxCases,92U.S.,
575.)Thewords"uniformthroughouttheUnitedStates,"asrequiredofa
taxbytheConstitution,donotsignifyanintrinsic,but
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VOL.34,SEPTEMBER22,1916. 977
 Churchillvs.Concepcion.
simplyageographical,uniformity,andsuchuniformityisthereforetheonly
uniformitywhichisprescribedbytheConstitution.(Pattonvs.Brady,184
U. S., 608; 46 L. Ed., 713.) A tax is uniform, within the constitutional
requirement,whenitoperateswiththesameforceandeffectineveryplace
wherethesubjectofitisfound.(Edyevs.Robertson,112U.S.,580;28L.
Ed.,798.)"Uniformity,"asappliedtotheconstitutionalprovisionthatall
taxesshallbeuniform,meansthatallpropertybelongingtothesameclass
shall be taxed alike. (Adamsvs.Mississippi State Bank, 23 South, 395,
citing Mississippi Millsvs.Cook, 56 Miss., 40.) The statute under
considerationimposesataxofP2persquaremeterorfractionthereofupon
everyelectricsign,billboard,etc.,whereverfoundinthePhilippineIslands.
Or in other words, "the rule of taxation" upon such signs is uniform
throughout the Islands. The rule, which we have just quoted from the
PhilippineBill,doesnotrequiretaxestobegradedaccordingtothevalueof
thesubjectorsubjectsuponwhichtheyareimposed,especiallythoselevied
as privilege or occupation taxes. We can hardly see wherein the tax in
questionconstitutesdoubletaxation.Thefactthatthelanduponwhichthe
billboardsarelocatedistaxedatsomuchperunitandthebillboardsatso
much per square meter does not constitute "double taxation." Double
taxation,withinthetruemeaningofthatexpression,doesnotnecessarily
affectitsvalidity.(1CooleyonTaxation,3ded.,389.)Andagain,itisnotfor
thejudiciarytosaythattheclassificationuponwhichthetaxisbased"is
merearbitraryselectionandnotbaseduponanyreasonablegrounds."The
Legislature selectedsigns andbillboards as a subject for taxation andit
mustbepresumedthatit,insodoing,actedwithafullknowledgeofthe
situation.
Fortheforegoingreasons,thejudgmentappealedfromisaffirmed,with
costsagainsttheappellants.Soordered.
Torres,Johnson,Carson,andAraullo,JJ.,concur.
Judgmentaffirmed.
978
978 PHILIPPINEREPORTSANNOTATED
Inchausti&Co.vs.Yulo.
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