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          P      a      g      e        1        6  Taxation Law 1 Reviewer 2011 3. Constitutional LimitationsDue Process of LawEqual Protection of the LawsRule of Uniformity and Equity in a!ationProhi ition a#ainst im$risonment for non%$ayment of $oll ta!Prohi ition a#ainst im$airment of o li#ations of contractsProhi ition a#ainst a$$ro$riation of $roceedsProhi ition a#ainst ta!ation of reli#ious& charita le and educational entitiesProhi ition a#ainst ta!ation of non%stoc'& non%$ro(t educational institutions )thers*rant of ta! e!em$tion+eto of a$$ro$riation& re,enue or tari- illson%im$airment of the /urisdiction of the u$reme CourtRe,enue ills shall or#inate from the ouse of Re$resentati,enfrin#ement of Press reedom*rant of ranchisea. Due $rocess of law ã  There must be a valid law ã  Tax measure should not be unconscionable and unjust as to amount to confscation o property ã  Tax statute must not be arbitrary as to fnd no support in the onstitution When does the power of taxation impinge the due process clause?  The due process clause may be invo!ed where a taxing statute is so arbitrary that it fnds nosupport in the onstitution as where it can be shown to amount to a confscation o property  [Reyes v. Almanzor, 1! #RA $%%& # ec. 1& 4rt. & 1567 Constitution No person shall be deprived of life, liberty, or property without due process of law nor shallany person be denied e$ual protection o the laws# RE8URE9E ) DUE PR)CE  4:4) 1% Tax must be or a Public purpose&% 'mposed within the Territorial jurisdiction(% )o arbitrariness or oppression in *% assessment and +% collection DUE PR)CE  4:4) D)E ) RE8URE 1)Determination through judicial inquiry of *%property subject to tax+%amount o tax to be imposed 2)Notice of hearing as to: *%amount o the tax+%manner o apportionment an ,. del Rosario& su$ra.  The due process clause may correctly be invo!ed only when there is a clear contravention o inherent or constitutional limitations in the exercise o tax power# ison ,. 4ncheta& su$ra.  't is undoubted that the due process clause may be invo!ed where a taxing statute is soarbitrary that it fnds no support in the onstitution# *n obvious example is where it can be shownto amount to the confscation o property# That would be a clear abuse o power# 't then becomesthe duty o this ourt that such an arbitrary act amounted to the exercise o an authority notconerred# That property calls or the application o the ,olmes dictum -The power to tax is not thepower to destroy while this ourt sits#'t has been held that where the assailed tax measure is beyond the jurisdiction o the state or is not or a public purpose or in case a retroactive statute is so harsh an unreasonable it issubject to attac! on due process grounds# )iel .# /eensor   UNOR-SCHOOL OF LAW          P      a      g      e        1        6  Taxation Law 1 Reviewer 2011 . Equal $rotection of the laws No person shall be deprived of life, liberty, or property without due process of law nor shall anyperson be denied e$ual protection o the laws# ec. 1& 4rt. & 1567 Constitutionison ,. 4ncheta& su$ra.  The taxing power has the authority to ma!e reasonable and natural classifcation orpurposes o taxation but the government0s act must not be prompted by spirit o hostility or at thevery least discrimination that fnds no support in reason# 't suces then that the laws operatee$ually and uniormly on all persons under similar circumstances or that all persons must betreated in the same manner the conditions not being di2erent both in privileges conerred andliabilities imposed  [ ison v. Ancheta, 1$' #RA !()& # +ille#as ,s& iu Chion# sai Pao o*R L%25;<;& 10 o,em er 1576acts=  The 3unicipal +oard o 3anila enacted 4rdinance 65( re$uiring aliens 7except thoseemployed in the diplomatic and consular missions o oreign countries in technical assistanceprograms o the government and another country and members o religious orders orcongregations% to procure the re$uisite mayor0s permit so as to be employed or engage in trade inthe ity o 3anila# The permit ee is P58 and the penalty or the violation o the ordinance is ( to 6months imprisonment or a fne o P188 to P&88 or both# ssue= 9hether the ordinance imposes a regulatory ee or a tax# eld=  The ordinance0s purpose is clearly to raise money under the guise o regulation by exactingP58 rom aliens who have been cleared or employment# The amount is unreasonable and excessivebecause it ails to consider di2erence in situation among aliens re$uired to pay it i#e# being casual permanent part:time ran! and:fle or executive#; The 4rdinance was declared invalid as it is arbitrary oppressive and unreasonable being appliedonly to aliens who are thus deprived o their rights to lie liberty and property and thereoreviolates the due process and e$ual protection clauses o the onstitution# <urther the ordinancedoes not lay down any criterion or standard to guide the 3ayor in the exercise o his discretion thusconerring upon the mayor arbitrary and unrestricted powers# = an ,. del Rosario& su$ra.  The court cannot reely delve into those matters which by constitutional fat rightly rest onlegislative judgment# 4 course where a tax measure becomes so unconscionable and unjust as toamount to confscation o property courts will not hesitate to stri!e it down or despite all itsplenitude the power to tax cannot override constitutional proscriptions#  The legislative intent to increasingly shit the income tax system towards the schedularapproach   in the income taxation o individual taxpayers and to maintain by and large the presentglobal treatment   on taxable corporations we certainly do not view this classifcation to be arbitraryand inappropriate# CR ,. C4 > 4lham ra nd.& 2;7 CR4 ??7 @1557Aiu ,. C4& 301 CR4 276 @1555A  The onstitutional right to e$ual protection o the law is not violated by an executive order issued pursuant to law granting tax and duty incentives only to businesses within the - securedarea > o the .ubic .pecial ?conomic @one and denying them to those who live within the @one butoutside such - fenced in   territory# The onstitution does not re$uire absolute e$uality amongresidents# 't is enough that all persons under li!e circumstances or conditions are given the sameprivileges and re$uired to ollow the same obligations# 'n short a classifcation based on valid andreasonable standards does not violate the e$ual protection clause#9e fnd real and substantial distinctions between the circumstances obtaining inside andthose outside the .ubic )aval +ase thereby justiying a valid and reasonable classifcation#c# Uniformity and equity in ta!ationec. 26 c& 4rt. +  o the onstitution provides that - the rule of ta!ation shall be uniform andequitable ># Uniformity in a!ation )iel .# /eensor   UNOR-SCHOOL OF LAW          P      a      g      e        1        6  Taxation Law 1 Reviewer 2011  The concept o uniormity in taxation implies that all taxable articles or properties o the same classshall be taxed at the same rate# 't re$uires the uniorm application and operation withoutdiscrimination o the tax in every place where the subject o the tax is ound# 't does not however re$uire absolute identity or e$uality under all circumstances but subject to reasonableclassifcation# Equity in a!ation  The concept o e$uity in taxation re$uires that the apportionment o the tax burden be more orless just in the light o the taxpayer0s ability to shoulder the tax burden and i warranted on thebasis o the benefts received rom the government# 'ts cornerstone is the taxpayer0s ability to pay# Classi(cation of ta!$ayers& su /ect or items to e ta!edRE8UE ) 4 +4LD CL4C4) @ 4 * E A1. 't must be based on  substantial distinction 2. #ermane$relevant to the purpose of the law$ordinance 3.  %pplies not only to the present condition but also to uture substantially identical conditions# <. &qually applicable to all members o the same class# olentino ,. ec. of inance& su$ra.& su$ra.  The constitution does not really prohibit the imposition o indirect taxes which li!e A*T are regressive# 9hat is simply provides is that the congress shall evolve a progressive system o taxation# 'ndeed the mandate o congress is not to prescribe but to evolve a progressive tax system# 4therwise sales taxes which perhaps are the oldest orm indirect tax would have been prohibited# 9la. Race orse ,. dela uente& 66 Phil ;0 @15?1A 4rdinance )o# (865:tax on license stables license ees or boarding stable or race horses# Tax assessed on the owners o the boarding stables or race horses is valid because there is e$uityand no arbitrary classifcation even no such tax imposed on boarding stables or other types o horses# The owners o the stables are class by themselves and are appropriately taxed when other!inds are taxed less or not at all considering that e$uity in taxation is generally conceived in termso liability 'n relation to the benefts received by the tax payer# Race horses as devoted to gambling their owners derive at income and such demands heavy burden o resource rom the governmentsuch as police supervision# ,ence ta!ing into everything into account the di2erentiation againstwhich the plainti2s complain conorm to the practical dictates o justice and e$uity and is notdiscriminatory within the meaning o the constitution# )ot valid or discriminatory when other boarding stables or race horses with the samenumber o horses were made to pay less or not at all# Eastern heatrical ,. 4lfonso& 63 Phil 6?2 @15<5A *n ordinance which imposes a ee on the price o every admission tic!et sold by the cinema theaters and boxing exhibitions is valid because same class same rate# ?$uality and uniormity in taxation means that all taxable articles or !inds or property o thesame class shall be taxed at the same rate# The taxing power has the authority to ma!e reasonableand natural classifcations or purposes o taxation and the appellant can0t point out what places o amusement taxed by the ordinance do not constitute a class by themselves and which can beconused with those not included in the ordinance#  Pe$si Cola ,. City of Butuan& su$ra. Aalid classifcation o taxes are not ull met by the city ordinance which imposes a tax uponthe sale o merchandise payable only by agentBconsignee o any outside dealer o suchmerchandise while the sales o the local dealers regardless o the amount would be exempt# hell ,. +ano& 9un. reas. of Cordo,a& Ce u& 5< Phil 365 @15?<A * municipal ordinance imposing an occupation tax on the proession or occupation o -installation manager> is valid even there is only one person with such occupation in themunicipality# * person can0t challenge the validity o an ordinance as being discriminatory since heis only one adversely e2ected because all other installation managers who may come within the jurisdiction o the municipality would be subject to tax under the ordinance# )iel .# /eensor   UNOR-SCHOOL OF LAW          P      a      g      e        1        6  Taxation Law 1 Reviewer 2011 9hat the ordinance tax is the occupation itsel regardless who or how many exercise it# 'twill be applicable to any personBfrm who may come to exercise such calling# City of Ba#uio ,. de Leon& 2? CR4 536 @15;6A ?$uality and uniormity o taxation means that all taxable articles or !inds o property o the same class be taxed at the same rate# The taxing power has the authority to ma!e reasonableand natural classifcation or purposes o taxation# To satisy this re$uirement it is enough that thestatute applies e$ually to all persons orms and corporations placed in similar situation#  a$atiran ,. an& su$ra. A*T law does not discriminate unduly against custom bro!ers who are subject to said tax# +illanue,a ,. City of loilo& su$ra. *n ordinance exacting tax on apartment ownersBoperators are violative o rule o uniormityo taxation because 7a% R#*# &&6C does not empower cities to impose apartment taxes 7b% it isoppressive and unreasonable or it penaliDes owners o tenement houses who ail to the pay tax 7c%it constitutes not only double taxation but treble at that and 7d% that it violates the rule o uniormity o taxation# 4sso. of Customs Bro'ers ,. 9un. Board& su$ra. *n ordinance which imposes tax upon owners o vehicles operating inside 3anila is aninringement o rule o uniormity o taxation as ordained by the constitution because it does notdistinguish the vehicle or hire or or private use neither does it distinguish vehicle registered in theity o 3anila or outside# The owners o vehicles residing outside 3anila who also use the streets are not made to sharethe corresponding burden# 'n this case those owners o the vehicles which use the streets o 3anila regardless whether they are citiDen or not all within the same class# ?.Prohi ition a#ainst im$risonment for non%$ayment of $oll ta! )o person shall be imposed or debt or non:payment o poll tax# ;.ec# &8 *rt# ''' onstitution= ã  The non:imprisonment rule applies to non:payment o poll tax which is punishable only by asurcharge but not to other violations li!e alsifcation o community tax certifcate and non:payment o other taxes# *oll tax  ã Poll tax is a tax o fxed amount imposed on residents within a specifc territory regardless o citiDenship business or proession# e#g# community tax ec. 20& 4rt. & 1567 Constitutioncommunity ta! ,. $oll ta!ec. 1?;%1;<& R. 4. 71;01?;. Community a!% ities or 3unicipalities may levy a community tax in accordance with theprovisions o this article# 1?7. ndi,idual Lia le to Community a!% ?very inhabitants o the Philippines 1E yrs or overthat has been regularly employed on a wage or salary base or at least (8 days#### 1?6. uridical Persons Lia le to C : ?very orp no matter how created or organiDe domestic ororeign engaged in or doing business in the Phils# 1?5. E!em$tions%1. /iplomatic and consular representatives &#Transient visitors staying not morethan ( months  ;.Prohi ition a#ainst im$airment of o li#ation of contractsec. 10& 4rt. & 1567 Constitution -)o law impairing the obligation o contracts shall be passed#> The obligation o a contract is impaired when its terms or conditions are changed by law or by partywithout the consent o the other thereby wea!ening the position or rights o the latter# )iel .# /eensor   UNOR-SCHOOL OF LAW
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