FRANCIS A. CHURCHILL and STEWART TAIT, ET AL, plaintiffs-appellants, vs. VENANCIO CONCEPCION, as Acting Collector of Internal Revenue, defendant-appellee. G.R. No. 11572 September 22, 1916

G.R. No. 11572           September 22, 1916

FRANCIS A. CHURCHILL and STEWART TAIT, ET AL, plaintiffs-appellants,

vs.

VENANCIO CONCEPCION, as Acting Collector of Internal Revenue, defendant-appellee.

Facts: Petitioners Francis A. Churchill and Stewart Tait, co-partners doing business under the firm name and style of the Mercantile Advertising Agency, are owners of a sign or billboard containing an area of 52 square meters constructed on private property in the city of Manila and exposed to public view.

On February 27, 1914, Act No. 2339 was passed. Section 100 of the said law, imposed an annual tax of P4 per square meter upon "electric signs, billboards, and spaces used for posting or displaying temporary signs, and all signs displayed on premises not occupied by buildings." This section was subsequently amended by Act No. 2432, effective January 1, 1915, by reducing the tax on such signs, billboards, etc., to P2 per square meter or fraction thereof.

Petitioners challenged the validity of Act No. 2339 (as amended by Act No. 2432, as amended by Act No. 2445). They contend that:

(1)    The tax constitutes deprivation of property without compensation or due process of law, because it is confiscatory and unjustly discriminatory; and

(2)    Said tax is void for lack of uniformity, because it is not graded according to value; because the classification on which it is based on any reasonable ground;

(3)    and furthermore, because it constitutes double taxation.

Issue: Whether or not law imposing said tax lacks uniformity?

Held: NO.  The tax herein complained of falls far short of being confiscatory. Consequently, it cannot be held that the Legislature has gone beyond the power conferred upon it by the Philippine Bill in so far as the amount of the tax is concerned.

Uniformity in taxation (as defined in Black on Constitutional Law) means that all taxable articles or kinds of property, of the same class, shall be taxed at the same rate. It does not mean that lands, chattels, securities, incomes, occupations, franchises, privileges, necessities, and luxuries, shall all be assessed at the same rate. Different articles may be taxed at different amounts, provided the rate is uniform on the same class everywhere, with all people, and at all times.

A tax is uniform when it operates with the same force and effect in every place where the subject of it is found. Uniformity does not signify an intrinsic, but simply a geographical, uniformity, and such uniformity is therefore the only uniformity which is prescribed by the Constitution. A tax is uniform, within the constitutional requirement, when it operates with the same force and effect in every place where the subject of it is found. "Uniformity," as applied to the constitutional provision that all taxes shall be uniform, means that all property belonging to the same class shall be taxed alike. (Various US Jurisprudence)

The statute under consideration imposes a tax of P2 per square meter or fraction thereof upon every electric sign, bill-board, etc., wherever found in the Philippine Islands. Or in other words, "the rule of taxation" upon such signs is uniform throughout the Islands.

Philippine Legislature in the exercise of its taxing power is that found in section 5 of the Philippine Bill, wherein it is declared "that the rule of taxation in said Islands shall be uniform."

The rule, which we have just quoted from the Philippine Bill, does not require taxes to be graded according to the value of the subject or subjects upon which they are imposed, especially those levied as privilege or occupation taxes.

Issue (2): Whether or not said tax on billboards constitute double taxation?

Held (2): NO. We can hardly see wherein the tax in question constitutes double taxation. The fact that the land upon which the billboards are located is taxed at so much per unit and the billboards at so much per square meter does not constitute "double taxation." Double taxation, within the true meaning of that expression, does not necessarily affect its validity.

And again, it is not for the judiciary to say that the classification upon which the tax is based "is mere arbitrary selection and not based upon any reasonable grounds." The Legislature selected signs and billboards as a subject for taxation and it must be presumed that it, in so doing, acted with a full knowledge of the situation.

Additional Notes: What is the Scope of the Legislature’s Taxing Power? The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the discretion of the authority which exercises it. It reaches to every trade or occupation; to every object of industry, use, or enjoyment; to every species of possession; and it imposes a burden which, in case of failure to discharge it, may be followed by seizure and sale or confiscation of property. No attribute of sovereignty is more pervading, and at no point does the power of the government affect more constantly and intimately all the relations of life than through the exactions made under it." (Clooey)