FRANCIS A. CHURCHILL v. CONCEPCION G.R. No. 11572, September 22, 1916 FAC S Act No.

2339 imposed an annual tax of P4 per square meter upon "electric signs, billboards, and spaces used for posting or displa ing temporar signs, and all signs displa ed on premises not occupied b buildings." !"e rate #as later reduced to P2 b Act No. 2432, as amended b Act No. 244$, #"ic" #as ratified b t"e %ongress of t"e &nited 'tates. (ean#"ile, )rancis A. %"urc"ill and 'te#art !ait, copartners doing business under t"e firm name and st le of t"e (ercantile Ad*ertising Agenc , o#ners of a sign or billboard containing an area of $2 square meters constructed on pri*ate propert in t"e cit of (anila and exposed to public *ie#, #ere taxes t"ereon P+,4. !"e tax #as paid under protest and t"e plaintiffs "a*ing ex"austed all t"eir administrati*e remedies instituted an action under section +4, of Act No. 2339 against t"e %ollector of -nternal .e*enue to reco*er bac/ t"e amount t"us paid. -t #as alleged t"at t"e tax constitutes depri*ation of propert #it"out compensation or due process of la#, because it is confiscator and un0ustl discriminator and t"e said tax is *oid for lac/ of uniformit , because it is not graded according to *alue1 because t"e classification on #"ic" it is based on an reasonable ground1 and furt"ermore, because it constitutes double taxation. ISSUES +.2 3"et"er t"e tax in question is confiscator as to t"e business of t"e plaintiff 2.2 3"et"er t"e tax is *oid for lac/ f uniformit or because it is not graded according to *alue or constitutes double taxation, or because t"e classification upon #"ic" it is based is mere arbitrar selection and not based on an reasonable grounds4 HEL! +.2 No. !"e tax "erein complained of falls far s"ort of being confiscator . %onsequentl , it cannot be "eld t"at t"e 5egislature "as gone be ond t"e po#er conferred upon it b t"e P"ilippine 6ill in so far as t"e amount of t"e tax is concerned. -t can be obser*ed t"at t"ere are ot"er businessmen #"o are pa ing t"e tax #it"out protest and presumabl ma/ing a reasonable profit from t"eir business. !"e po#er to impose taxes is one so unlimited in force and so searc"ing in extent, t"at t"e courts scarcel *enture to declare t"at it is sub0ect to an restrictions #"ate*er, except suc" as rest in t"e discretion of t"e aut"orit #"ic" exercises it. -t reac"es to e*er trade or occupation1 to e*er ob0ect of industr , use, or en0o ment1 to e*er species of possession1 and it imposes a burden #"ic", in case of failure to disc"arge it, ma be follo#ed b sei7ure and sale or confiscation of propert . No attribute of so*ereignt is more per*ading, and at no point does t"e po#er of t"e go*ernment affect more constantl and intimatel all t"e relations of life t"an t"roug" t"e exactions made under it. 2.2 No. !"e rule of taxation8 upon suc" signs is uniform t"roug"out t"e island. -t must be noted t"at a tax is uniform #"en it operates #it" t"e same force and effect in e*er place #"ere t"e sub0ect of it is found. "&niformit ," as applied to t"e constitutional pro*ision t"at all taxes s"all be uniform, means t"at all propert belonging to t"e same class s"all be taxed ali/e. !"e la# does not require taxes to be graded according to t"e *alue of t"e sub0ect or sub0ects upon #"ic" t"e are imposed,

especiall t"ose le*ied as pri*ilege or occupation taxes. !"e fact t"at t"e land upon #"ic" t"e billboards are located is taxed at so muc" per unit and t"e billboards at so muc" per square meter does not constitute "double taxation." 9ouble taxation, #it"in t"e true meaning of t"at expression, does not necessaril affect its *alidit . -t is not for t"e 0udiciar to sa t"at t"e classification upon #"ic" t"e tax is based "is mere arbitrar selection and not based upon an reasonable grounds. !"e 5egislature selected signs and billboards as a sub0ect for taxation and it must be presumed t"at it, in so doing, acted #it" a full /no#ledge of t"e situation.

"ANILA ELEC RIC CO"PAN#, petitioner, *s. PRO$INCE OF LAGUNA %&' (ENI O R. (ALA)O, *& +*, -%p%-*t. %, Prov*&-*%/ re%,0rer o1 L%20&%, respondents. G.R. No. 131359, "%. 5, 1999 FAC S4 (:.A5%; #as granted franc"ise for t"e suppl of electric lig"t, "eat and po#er in certain municipalities of t"e Pro*ince of 5aguna. .epublic Act No. <+=,, ot"er#ise /no#n as t"e "5ocal >o*ernment %ode of +99+," #as enacted en0oining local go*ernment units to create t"eir o#n sources of re*enue and to le* taxes, fees and c"arges, sub0ect to t"e limitations expressed t"erein, consistent #it" t"e basic polic of local autonom . Pursuant to t"is, respondent pro*ince enacted 5aguna Pro*incial ;rdinance No. ,+?92, imposing franc"ise tax on businesses en0o ing a franc"ise, at a rate of fift percent @$,A2 of one percent @+A2 of t"e gross annual receipts #it"in t"e pro*ince. ;n t"e basis of t"e ordinance, respondent Pro*incial !reasurer sent a demand letter to (:.A5%; for t"e corresponding tax pa ment. Petitioner (:.A5%; paid t"e tax, #"ic" t"en amounted to P+9,$2,.=2B.42, under protest. A formal claim for reund #as t"ereb sent b (:.A5%;. (:.A5%;, contended t"at t"e imposition of a franc"ise tax under 'ection 2.,9 of 5aguna Pro*incial ;rdinance No. ,+?92, insofar as it concerned (:.A5%;, contra*ened t"e pro*isions of 'ection + of P.9. $$+ #"ic" readC An pro*ision of la# or local ordinance to t"e contrar not#it"standing, t"e franc"ise tax payable by all grantees of franchises to generate, distribute and sell electric current for lig"t, "eat and po#er s"all be t#o per cent @2A2 of t"eir gross receipts DDD in lieu of all taxes and assessments of #"ate*er nature imposed b an national or local aut"orit on earnings, receipts, income and pri*ilege of generation, distribution and sale of electric current. !"e claim for refund of petitioner #as denied. Petitioner (:.A5%; filed #it" t"e .!% a complaint for refund, #it" a pra er for t"e issuance of a #rit of preliminar in0unction andEor temporar restraining order. !"e trial court dismissed t"e complaint. ISSUE4 3"et"er or not t"ere #as a *iolation of t"e constitutional limitation of non?impairment of contracts #"en t"e Pro*ince of 5aguna imposed suc" ordinance. HEL!4 NO. 3"ile t"e %ourt "as, not too infrequentl , referred to tax exemptions contained in special franc"ises as being in t"e nature of contracts and a part of t"e inducement for carr ing on t"e franc"ise, t"ese exemptions, ne*ert"eless, are far from being strictl contractual in nature. %ontractual tax exemptions, in t"e real sense of t"e term and #"ere t"e non?impairment clause of t"e %onstitution can rig"tl be in*o/ed, are t"ose agreed to b t"e taxing aut"orit in contracts, suc" as t"ose contained in go*ernment bonds or debentures, la#full entered into b t"em under enabling la#s in #"ic" t"e go*ernment, acting in its pri*ate capacit , s"eds its cloa/ of aut"orit and #ai*es its go*ernmental immunit . !rul , tax exemptions of t"is /ind ma not be re*o/ed #it"out impairing t"e obligations of contracts. !"ese contractual tax exemptions, "o#e*er, are not to be confused #it" tax exemptions granted under franc"ises. A 1r%&-+*,e p%rt%5e, t+e &%t0re o1 % 2r%&t 6+*-+ *, be.o&' t+e p0rv*e6 o1 t+e &o&7*mp%*rme&t -/%0,e o1 t+e Co&,t*t0t*o& . -ndeed, Article D--, 'ection ++, of t"e +9B<

%onstitution, li/e its precursor pro*isions in t"e +93$ and t"e +9<3 %onstitutions, is explicit t"at &o 1r%&-+*,e 1or t+e oper%t*o& o1 % p0b/*- 0t*/*t. ,+%// be 2r%&te' e8-ept 0&'er t+e -o&'*t*o& t+%t ,0-+ pr*v*/e2e ,+%// be ,0b9e-t to %me&'me&t, %/ter%t*o& or repe%/ b. Co&2re,, %, %&' 6+e& t+e -ommo& 2oo' ,o re:0*re,.

HE PRO$INCE OF "ISA"IS ORIEN AL, repre,e&te' b. *t, PRO$INCIAL REASURER, pet*t*o&er, v,. CAGA#AN ELEC RIC PO;ER AN! LIGH CO"PAN#, INC. <CEPALCO=, re,po&'e&t. G.R. No. L7>5355, ?%&0%r. 12, 199@ FAC S4 %:PA5%; #as granted a franc"ise under .epublic Acts Nos. 324<, 3$<, and =,2,, to install, operate and maintain an electric lig"t, "eat and po#er s stem in t"e %it of %aga an de ;ro and its suburbs. 'aid franc"ise imposes upon it a franc"ise tax of 3A of t"e gross earnings in lieu of all taxes. !"e 5ocal !ax %ode @P.9. No. 23+2 #as t"ereafter promulgated, 'ection 9 of #"ic" pro*idesC Sec. 9. Franchise Tax.FAn pro*ision of special la#s to t"e contrar not#it"standing, t"e pro*ince ma impose a tax on businesses en0o ing franc"ise xxx. Pursuant to t"at, t"e Pro*ince of (isamis enacted an ordinance imposing a franc"ise tax of G of +A on businesses en0o ing a franc"ise. -t demanded pa ment from %:PA5%;, #"ic" paid under protest. ISSUE4 3"et"er or not a corporation #"ose franc"ise expressl pro*ides t"at t"e pa ment of t"e franc"ise tax of t"ree per centum of t"e gross earnings shall be in lieu of all taxes and assessments is exempt from pa ing a pro*incial franc"ise tax. HEL!4 #ES. !"ere is no pro*ision in P.9. No. 23+ expressl or impliedl amending or repealing t"e franc"ise granted to %:PA5%;. .epublic Acts Nos. 324<, 3$<, and =,2, are special la#s applicable onl to %:PA5%;, #"ile P.9. No. 23+ is a general tax la#. !"e presumption is t"at t"e special statutes are exceptions to t"e general la# @P.9. No. 23+2 because t"e pertain to a special c"arter granted to meet a particular set of conditions and circumstances. !"e franc"ise of respondent %:PA5%; e8pre,,/. e8empt, *t 1rom p%.me&t o1 A%// t%8e, o1 6+%tever %0t+or*t.A e8-ept t+e t+ree per -e&t0m <3B= t%8 o& *t, 2ro,, e%r&*&2,. !"is %ourt pointed out t"at suc" exemption is part of t"e inducement for t"e acceptance of t"e franc"ise and t"e rendition of public ser*ice b t"e grantee. As a c"arter is in t"e nature of a pri*ate contract, t"e imposition of anot"er franc"ise tax on t"e corporation b t"e local aut"orit #ould constitute an impairment of t"e contract bet#een t"e go*ernment and t"e corporation.

CAGA#AN ELEC RIC PO;ER C LIGH CO., INC.,, *s. CO""ISSIONER OF IN ERNAL RE$ENUE %&' COUR OF APPEALS, FAC S4 !"e petitioner is t"e "older of a legislati*e franc"ise, under #"ic" its pa ment of 3A tax on its gross earnings from t"e sale of electric current is "in lieu of all taxes and assessments of #"ate*er aut"orit upon pri*ileges, earnings, income, franc"ise, and poles, #ires, transformers, and insulators of t"e grantee, from #"ic" taxes and assessments t"e grantee is "ereb expressl exempted." ;n Hune 2<, +9=B, .epublic Act No. $43+ amended section 24 of t"e !ax %ode b ma/ing liable for income tax all corporate taxpayers not specificall exempt under paragrap" @c2 @+2 of said section and section 2< of t"e !ax %ode not#it"standing t"e "pro*isions of existing special or general la#s to t"e contrar ". !"us, franc"ise companies #ere sub0ected to income tax in addition to franchise tax. Io#e*er, in petitionerJs case, its franc"ise #as amended b .epublic Act No. =,2,. !"e amendment re-enacted t"e tax exemption in its original c"arter or neutrali7ed t"e modification made b .epublic Act No. $43+ more t"an a ear before. !"e %ommissioner of -nternal .e*enue required t"e petitioner to pa deficienc income taxes for +9=B?to +9=9. !"e petitioner contested t"e assessments. ISSUE4 3"et"er or not petitioner is liable for t"e income tax for t"e period from Hanuar + to August 3, +9=9 #"en its tax exemption #as modified b .epublic Act No. $43+. HEL!4 #ES. 3e "old t"at %ongress could impair petitionerJs legislati*e franc"ise b ma/ing it liable for income tax from #"ic" "eretofore it #as exempted b *irtue of t"e exemption pro*ided for in section 3 of its franc"ise. !"e %onstitution pro*ides t"at a franc"ise is sub0ect to amendment, alteration or repeal b t"e %ongress #"en t"e public interest so requires. !"e !ax %ourt acted correctl in "olding t"at t"e exemption #as restored b t"e subsequent enactment on August 4, +9=9 of .epublic Act No. =,2, #"ic" reenacted t"e said tax exemption. Ience, t"e petitioner is liable onl for t"e income tax for t"e period from Hanuar + to August 3, +9=9 #"en its tax exemption #as modified b .epublic Act No. $43+.

LEAL!A ELEC RIC CO., INC., petitioner, *s. CO""ISSIONER OF IN ERNAL RE$ENUE %&' COUR OF AD APPEALS, respondents. G.R. No. L716>2E, Apr*/ 3@, 1963 FAC S4 -n t"e ear +9+$, Hulian (. 5ocsin Anson #as granted a franc"ise to operate an electric lig"t and po#er plant to suppl electric current to t"e residents of Alba pro*ince @Act No. 24<$, as amended b Act No. 2=2,2. !"ere #ere se*eral transfer and sale of suc" franc"ise, all of #"ic" #ere appro*ed b t"e Public 'er*ice %ommission. 'ince t"e ear +9+$, t"e original grantee and, after "im, "is *arious successors in interest, paid a franc"ise tax of 2A on t"e gross earnings or receipts, because t"at #as t"e same franc"ise tax paid by "las demas franquicias y privilegios hoy existentes" @Art. B, Act No. 24<$2, until ;ctober +, +94= #"en 'ection 2$9 of t"e National -nternal .e*enue %ode #as amended b .epublic Act No. 39 #"ic" increased t"e franc"ise tax to $A. Petitioner filed #it" t"e %ommissioner of -nternal .e*enue a petition for refund contending t"at, under its c"arter, it #as liable to pa a franc"ise tax equi*alent to onl 2A and not $A of its gross earnings or receipts. ISSUE4 3"et"er or not petitioner s"ould pa as franc"ise tax a sum equi*alent to 2A onl of its gross earnings or receipts. HEL!4 NO. PetitionerJs franc"ise does not specificall state t"at t"e rate of t"e franc"ise tax to be paid t"ereunder b t"e original grantee F and "is successors in interest F s"all be 2A of "is gross earnings or receipts. -t simpl pro*ides t"at t"e grantee and "is successors in interest s"all pa "por sus entradas en bruto tales como se exigen a las demas franquicias y privilegios hoy existentes." -t seems clear, t"erefore, t"at t"e intention of t"e legislature #as to impose upon t"e grantee and "is successors in interest, t"e obligation to pa t"e same franc"ise tax imposed upon ot"er grantees or franc"ise "olders at t"e time Act No. 24<$ #as enacted. ;ur ruling in oa in !o. "nc.# is applicable, to #itC !"e rule in $anila %ailroad !ompany vs. %afferty cannot be in*o/ed b t"e petitioner, because in t"e granteesJ respecti*e franc"ises t"ere is a pro*ision t"at Jsuc" annual pa ments, #"en promptl and full made b t"e grantee, s"all be in lieu of all taxes of e*er name and nature F municipal, pro*incial or central F upon its capital stoc/, franc"ises, rig"t of #a , earnings, and all ot"er propert o#ned or operated b t"e grantee under t"is concession or franc"iseJ. !"e petitionerJs franc"ise, Act No. +2$=, does not embod suc" exemption.8