CONSTI 2 - TAXATION

NATURE – taxes are imposed proportional contributions from persons and property, levied by the state by virtue of the sovereignty for the support of the government.

The obligation to pay taxes is not based on contract. It is a duty imposed upon the individual by the mere fact of his membership in the body politic and his enjoyment of the benefits available from such membership. But taxation is subject to the general requirements of the equal protection clause as provided in the constitution that “the rule of taxation shall be uniform and equitable”, which means that persons or things belonging to the same class shall be taxed at the same rate. In Equitable taxation – taxes should be apportioned among the people according to their capacity to pay.

IN the case of PUNZALAN V MUNICIPAL BOARD OF MANILA

FACTS:The suit was commence by 2 lawyers, a medical practitioner, a public accountant, a dental surgeon and a pharmacist.

The object of the suit is the annulment of City of Manila Ordinance no. 3398 which imposes a municipal occupation tax on persons exercising various professions in the city and penalizes non-payment of the tax. The ordinance was enacted pursuant to par. 1 of sec. 18 of the Revised charter of the city of Manila (as amended by RA 409) which empowers the Municipal Board of said city to impose a municipal occupation tax, not to exceed P50 per annum.

Having paid their occupation tax under sec 201 of NIRC, plaintiffs, upon being required to pay the additional tax prescribed in the ordinance. Petitioners paid the same under protest and challenge the second tax as double taxation and asked that it be annulled.

ISSUE: WHETHER OR NOT THE RULING IS CORRECT?

HELD: YES, the SC held that the two taxes had been imposed by different jurisdictions, one by the national government and the other by the city government. Despite that the petitioners contended that they were being discriminated against because other professionals practising elsewhere were not subjected to the additional tax. The SC disagreed, holding that there was a substantial distinction between them and other professionals as practitioners in Manila could expect a more lucrative income than those in other parts of the country.