Lera M.

Robosa
Topic: Power to destroy vis--vis Power to Build
SISON vs. ANCHETA G.R. No. L-59431 July 25, 1984
FACTS:
The challenged posed is a suit for declaratory relief or prohibition on the validity of Section 1 of
Batas Pambansa Blg. 135. The assailed provision further amends Sec. 21of the NIRC of 1977,
which provides for the rate tax on residents or citizens on (a) taxable compensation income, (b)
taxable net income, (c) royalties, prizes, and other winnings, (d) interests from bank deposits and
yield or any other monetary benefit from deposit substitutes and from trust fund and similar
arrangements, (e) dividends and share from individual partner in the net profits of taxable
partnership, (f) adjusted gross income. Sison, as taxpayer, alleged that its provision (Section 1)
unduly discriminated against him by the imposition of higher rates upon his income as a
professional, that it amounts to class legislation, and that it transgresses against the equal
protection and due process clauses of the Constitution as well as the rule requiring uniformity in
taxation.
ISSUE:
Whether BP 135 violates the due process and equal protection clauses, and the rule on uniformity
in taxation?
RULING:
There is a need for proof of such persuasive character as would lead to a conclusion that there
was a violation of the due process and equal protection clauses. Absent such showing, the
presumption of validity must prevail. Equality and uniformity in taxation means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate. The taxing power
has the authority to make reasonable and natural classifications for purposes of taxation. Where
the differentiation conforms to the practical dictates of justice and equity, similar to the standards
of equal protection, It is not discriminatory within the meaning of the clause and is therefore
uniform. Taxpayers may be classified into different categories, such as recipients of
compensation income as against professionals. Recipients of compensation income are not
entitled to make deductions for income tax purposes as there is no practically no overhead
expense, while professionals and businessmen have no uniform costs or expenses necessary to
produce their income. There is ample justification to adopt the gross system of income taxation
to compensation income, while continuing the system of net income taxation as regards
professional and business income.