TAX MATES

M o n d a y, O c t o b e r 1 2 , 2 0 0 9

2. EQUAL PROTECTION OF THE LAWS

EQUAL PROTECTION OF THE LAWS

Nor shall any person be denied the equal protection of the laws (Sec.1, Art.III, 1987
Constitution).
All persons subject to legislation shall be treated alike under like circumstances and conditions
both in the privileges conferred and liabilities imposed.
It is to be noted that the doctrine does not require that persons or properties different in fact be
treated in law as though they were the same. Indeed, to treat them the same or alike may offend
the Constitution. What the Constitution prohibits is class legislation which discriminates against
some and favors others. As long as there are rational or reasonable grounds for so doing,
Congress, may, therefore, group the persons or properties to be taxed and it is sufficient “if all of
the same class are subject to the same rate and the tax is administered impartially upon them.

Application

Where the statute or ordinance in question applies alike to all persons, firms, or corporations
placed in similar situations, or differently to persons, firms, or corporations belonging to different
classes provided all those belonging to one class are treated alike, there is no infringement of the
constitutional guarantee. What the Constitution requires is equal treatment under the law and this
may involve same or different treatment depending on the circumstances.

Thus, there is no violation of the protection

(a) Where those with different amounts of incomes are made to pay different rates for taxes; or

(b) Where compensation income is subject to a lower tax rate than business and professional
income because recipients of the former are not entitled to make deductions for income tax
purposes, as there are practically no overhead expenses;

(c) Where certain corporations (e.g., non-profit proprietary educational institutions and hospitals)
are made to pay lower amount of taxes than that paid by other corporations;

(d) Where unpaid real property taxes are condoned to the exclusion of taxes already collected.
Each set of taxpayers is a class by itself and all those belonging to one class are treated alike; or

(e) Where stables for race horses are taxed while stables for non- race horses are not (Manila Race
Horse Owners Association vs. De la Fuente, 88 Phil. 62 1951.);

(f) Where a tax is imposed by ordinance on person engaged in the business of operating buildings
or improvements offered for rent or lease, while owners of other classes of buildings (e.g.,
residential houses) in the same taxing district (e.g., city or municipality) do not pay the same tax.
Taxes are (uniform and) equal when imposed upon all property of the same class or character
within the taxing authority. Tenement buildings constitute a district class of property.

There is denial of the protection:

(a) Where an ordinance imposes a property tax on motor vehicles using the streets of Manila, such
tax being payable only by the owners residing in Manila, because owners of vehicles residing
outside of Manila who also use the streets are not made to share the corresponding burden.
(Association of Customs Brokers vs. Municipal Board of Manila, 95 Phil. 107 1954.)

(b) Where a tax provision is enforced against manufacturers of filled milk (fatty part is removed
and substituted with coconut oil) only, but not against persons similarly situated such as
manufacturers of condensed skimmed milk (fatty part is removed and substituted with vegetable
or corn oil) for the law, if not equally enforced, would offend against the Constitution. (Vera vs.
Cuevas, 90 SCRA 374, May 31, 1979.)
Here, there is likewise different tax treatment when both manufacturers belong to the same class
or are similarly situated.

All persons subject to legislation shall be treated alike under similar circumstances and conditions
both in the privileges conferred and liabilities imposed.

The doctrine does not require that persons or properties different in fact be treated in law as
though they were the same. What it prohibits is class legislation which discriminates against some
and favors others.
As long as there are rational or reasonable grounds for so doing, Congress may group persons or
properties to be taxed and it is sufficient if all members of the same class are subject to the same
rate and the tax is administered impartially upon them.
Requisites of a valid classification

1. It must be based on substantial distinctions which make real differences.

2. The classification must be germane to the purpose of the law.
3. The classification must not be limited to existing conditions only but must also apply to future
conditions substantially identical to those of the present.

4. The classification must apply equally to all members of the same class. [Tiu v. Court of Appeals,
301 SCRA 278 (1999)]
Tiu v. Court of Appeals, 301 SCRA 278 (1999)
The Constitutional right to equal protection of the law is not violated by an executive order, issued
pursuant to law, granting tax and duty incentives only to business within the “secured area” of the
Subic Special Economic Zone and denying them to those who live within the Zone but outside
such “fenced in” territory. The Constitution does not require absolute equality among residents. It
is enough that all persons under like circumstances or conditions are given the same privileges
and required to follow the same obligations. In short, a classification based on valid and
reasonable standards does not violate the equal protection clause.

We find real and substantial distinctions between the circumstances obtaining inside and those
outside the Subic Naval Base, thereby justifying a valid and reasonable classification.
 TAXMATE at 10:40 AM

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