4. NON IMPRISONMENT FOR NON-PAYMENT OF A POLL TAX

Prohibition against imprisonment for non-payment of poll tax

No person shall be imprisoned for debt or non-payment of poll tax. [Section 20, Article III, Constitution]

The non-imprisonment rule applies to non-payment of poll tax which is punishable only by a surcharge, but not to other violations like falsification of community tax certificate and non-payment of other taxes.

Poll tax

Poll tax is a tax of fixed amount imposed on residents within a specific territory regardless of citizenship, business or profession. Example is community tax.

3. RULE OF UNIFORMITY AND EQUITY IN TAXATION

The rule of taxation shall be uniform and equitable (Sec.28 (1), Art.III, 1987 Constitution).

The tax is uniform when it operates with the same force and effect in every place where the subject of it is found. "Uniformity" means all property belonging to the same class shall be taxed alike. It does not signify an intrinsic, but simply a geographic, uniformity (Churchill & Tait vs. Conception, 34 Phil. 969). Uniformity does not require the same treatment; it simply requires reasonable basis for classification.

Application

In the following cases, the uniformity requirement is not violated:

(a) Where a statute imposes a tax of P2.50 a square meter or fraction thereof on every billboard or sign anywhere in the country (Churchill vs. Concepcion, 10 Phil.381 1908.)

(b) Where a license tax is imposed upon hotels and the amount required to be paid is graduated by the number of rooms which may be devoted to the accommodation of the public (St. Louis vs. Bircher,7 Mo. App.169; US vs. Sumulong, 30 Phil.381 1915.)

(c) Where those with different incomes are made to pay different rates of tax because in this case the incomes are considered as belonging to different classes;

(d) Where residential houses, regardless of their assessed value, are considered for purposes of taxation as belonging to one class (i.e., residential property and made subject to the same rate (e.g., 2% of assessed value) but different amounts of tax depending on their value;

The law, however, may validly further classify such property according to their assessed value and levy different rates, and consequently, different amounts of tax on the basis of such value;

Section 28 (c), Article VI of the Constitution provides that “the rule of taxation shall be uniform and equitable.”

The concept of uniformity in taxation implies that all taxable articles or properties of the same class shall be taxed at the same rate. It requires the uniform application and operation, without discrimination, of the tax in every place where the subject of the tax is found. It does not, however, require absolute identity or equality under all circumstances, but subject to reasonable classification.

The concept of equity in taxation requires that the apportionment of the tax burden be, more or less, just in the light of the taxpayer’s ability to shoulder the tax burden and, if warranted, on the basis of the benefits received from the government. Its cornerstone is the taxpayer’s ability to pay.

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.

CONSTITUTIONAL LIMITATIONS 1.DUE PROCESS OF LAW

1. DUE PROCESS OF LAW

No person shall de deprived of life, liberty or property without due process of law (Sec. 1, Art.III, 1987 Constitution).

Adversely affecting as it does property rights, both the due process and equal protection clauses may be invoked to invalidate a revenue measure. Where the due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. Absent such a showing, however, the presumption of validity must prevail (Sision vs. Ancheta, 130 SCRA 654).

Application

(a) A tax which is imposed for a private purpose or which is beyond the jurisdiction of the government to levy and collect offends due process of law. Here, the law imposing such tax is void or invalid.

(b) If a tax law is judicially declared invalid, any tax levied under it cannot, of course, be enforced as this will also infringe due process. If the tax has already been paid, it should be refunded to the taxpayer in accordance with the general principle that no one shall unjustly enrich himself at the expense of another. This principle applies even to the government.

(c) A taxpayer may not be deprived of his property for non-payment of taxes without giving notice to him as required by law of his tax liability as well as of the sale at public auction (i.e., public sale to the highest bidder) of such property to satisfy the taxes as this will amount to a denial of due process.

(d) A tax law, which denies a taxpayer a fair opportunity to assert his substantial rights before a competent tribunal, is invalid as violation of the same constitutional guarantee.

Due process requires hearing before adoption of legislative rules by administrative bodies of interpretative rulings. (Misamis vs. DFA)

Compliance with strict procedural requirements must be followed effectively to avoid a collision course between the states power to tax and the individual recognized rights (CIR vs. Algue)

The due process clause may correctly be invoked only when there is a clear contravention of inherent or constitutional limitations in the exercise of tax power. (Tan vs. del Rosario)

a) SUBSTANTIVE DUE PROCESS requires that a tax statute must be within the constitutional authority of Congress to pass and that it be reasonable, fair and just

b) PROCEDURAL DUE PROCESS requires notice and hearing or at least an opportunity to be heard