Progressive Development Corporation v.

Quezon CityFacts:

The City Council of QC passed an ordinance known as the Market Code of QC, which imposed a 5%
supervision fee on gross receipts on rentals or lease of privately-owned market spaces in QC. n case of
failure of the owners of the market spaces to pay the ta! for three consecutive months, the City shall
revoke the permit of the privately-owned market to operate."rogressive #evelopment Corp, owner and
operator of $armer s Market, &led a petition for prohi'ition against QC on the ground that the ta!
imposed 'y the Market Code was in reality a ta! on income, which the municipal corporation was
prohi'ited 'y law to impose.

Issue:

(hether or not the supervision fee is an income ta! or a license fee

Held:

t is a license fee. ) * C+ + $++ is imposed in the e!ercise of the police power primarily for
purposes of regulation, while T) is imposed under the ta!ingpower primarily for purposes of raising
revenues. f the generating of revenue is the primary purpose and regulation is merely incidental, the
imposition is a ta!/ 'ut if regulation is the primary purpose, the fact that incidentally, revenue is also
o'tained does not make the imposition a ta!. To 'e considered a license fee, the imposition must relate to
an occupation or activity that so engages the pu'lic interest in health, morals, safety, and development
as to re0uire regulation for the protection and promotion of such pu'lic interest/ the imposition must
also 'ear a reasona'le relation to the pro'a'le e!penses of regulation, taking into account not only the
costs of direct regulation 'ut also its incidental conse0uences. n this case, the $armers Market is a
privately-owned market esta'lished for the rendition of service to the general pu'lic. t warrants close
supervision and control 'y the City for the protection of the health of the pu'lic 'y insuring the
maintenance of sanitary conditions, prevention of fraud upon the 'uying pu'lic, etc. ince the purpose
of the ordinance is primarily regulation and not revenue generation, the ta! is a license fee. The use of
the gross amount of stall rentals as 'asis for determining the collecti'le amount of license ta! does not, 'y
itself, convert the license ta! into a prohi'ited ta! on income. uch 'asis actually has a reasona'le
relationship to the pro'a'le costs of regulation and supervision of "rogressive s kind of 'usiness, since
ordinarily, the higher the amount of rentals, the higher the volume of items sold. The higher the volume
of goods sold, the greater the e!tent and fre0uency of supervision and inspection may 'e re0uired in the
interest of the 'uying pu'lic.

Facts:

The City Council of Que1on City adopted 2rdinance 3443 64748 where privately owned and operated
pu'lic markets to pay 69% of the gross receipts from stall rentals to the City, as supervision fee. uch
ordinance was amended 'y2rdinance 4:;7 643:8, which imposed a 5% ta! on gross receipts on rentals
or lease of space in privately-owned pu'lic markets in Que1on City. "rogressive #evelopment Corp.,
owner and operator of $armer s Market and hopping Center,&led a petition for prohi'ition against
the city on the ground that the supervision fee or license ta! imposed is in reality a ta! on income the
city cannot impose.

Issue:

(hether the supervision fee < license ta! is a ta! on income

Held:

The 5% ta! imposed in 2rdinance 4:;7 does not constitute a ta! on income, nor a city income ta!
distinguished from the national income ta! 'y the Ta! Code8 within the meaning of ection : g8 of
the *ocal )utonomy )ct, 'ut rather a license ta! or fee for the regulation of 'usiness in which the company
is engaged. To 'e considered a license fee, the imposition must relate to an occupation or activity that so
engages the pu'lic interest in health, morals, safetyand development as to re0uire regulations for the
protection and promotion of such pu'lic interest/ the imposition must also 'ear a reasona'le relation to
the pro'a'le e!penses of the regulation, taking into account not only the costs of direct regulation 'ut also
its incidental conse0uences as well. The gross receipts from stall rentals have 'een used only as a 'asis for
computing the fees or ta!es due to the city to cover the latter s administrative e!penses. The use of
the grossamount of stall rentals, as 'asis for the determination of the collecti'le amount of license ta!,
does not 'y itself convert or render the license ta! into a prohi'ited city ta! on income. $or ordinarily, the
higher the amount of stall rentals, the higher the aggregate volume of foodstu=s and related items sold
in the privately owned market/ and the higher the volume of goods sold in such market, the greater
e!tent and fre0uency of inspection and supervision that may 'e reasona'ly re0uired in the interest of the
'uying pu'lic