Equal protection
authority to legislate.
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
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 municipal law, nor shall the payment of any such tax be held to prohibit any
Municipality of Cordova, Province of Cebu municipality from placing a tax upon the same . . . occupation, for local purposes,
where the imposition of such tax is authorized by law.

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: 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.

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