Bagatsing v Ramirez

FACTS: In 1974, the Municipal Board of Manila enacted Ordinance 7522, regulating the operation
of public markets and prescribing fees for the rentals of stalls and providing penalties for
violation thereof. The Federation of Manila Market Vendors Inc. assailed the validity of the
ordinance, alleging among others the noncompliance to the publication requirement under the
Revised Charter of the City of Manila. CFI-Manila declared the ordinance void. Thus, the present
petition.
ISSUE: What law should govern the publication of a tax ordinance, the Revised City Charter,
which requires publication of the ordinance before its enactment and after its approval, or the
Local Tax Code, which only demands publication after approval? Is the ordinance valid?
RULING: The Local Tax Code prevails. There is no question that the Revised Charter of the City of
Manila is a special act since it relates only to the City of Manila whereas the Local Tax Code is a
general law because it applies universally to all local governments. The fact that one is special
and the other general creates a presumption that the special is to be considered as remaining an
exception of the general, one as a general law of the land, the other as the law of a particular
case. However, the rule readily yields to a situation where the special statute refers to a subject
in general, which the general statute treats in particular. The Revised Charter of the City
prescribes a rule for the publication of ordinance in general, while the Local Tax Code
establishes a rule for the publication of ordinance levying or imposing taxes fees or other
charges in particular.
The ordinance is valid.
Abakada Guro vs Ermita
FACTS: Motions for Reconsideration filed by petitioners, ABAKADA Guro party List Officer and et
al.,insist that the bicameral conference committee should not even have acted on the no pass-on
provisions since there is no disagreement between House Bill Nos. 3705 and 3555 on the one
hand, and Senate Bill No. 1950 on the other, with regard to the no pass-on provision for the sale
of service for power generation because both the Senate and the House were in agreement that
the VAT burden for the sale of such service shall not be passed on to the end-consumer. As to the
no pass-on provision for sale of petroleum products, petitioners argue that the fact that the
presence of such a no pass-on provision in the House version and the absence thereof in the
Senate Bill means there is no conflict because a House provision cannot be in conflict with
something that does not exist.Escudero, et. al., also contend that Republic Act No. 9337 grossly
violates the constitutionalimperative on exclusive origination of revenue bills under Section 24 of
Article VI of the Constitution when the Senate introduced amendments not connected with VAT.
Petitioners Escudero, et al., also reiterate that R.A. No. 9337 stand- by authority to the Executive
to increase the VAT rate, especially on account of the recommendatory power granted to the
Secretary of Finance, constitutes undue delegation of legislative power. They submit that the
recommendatory power given to the Secretary of Finance in regard to the occurrence of either of
two events using the Gross Domestic Product (GDP) as a benchmark necessarily and inherently
required extended analysis and evaluation, as well as policy making. Petitioners also reiterate
their argument that the input tax is a property or a property right. Petitioners also contend that
even if the right to credit the input VAT is merely a statutory privilege, it has already evolved into
a vested right that the State cannot remove.
Issue: Whether or not the R.A. No. 9337 or the Vat Reform Act is constitutional?
Held: The Court is not persuaded. Article VI, Section 24 of the Constitution provides that All
appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.
The Court reiterates that in making his recommendation to the President on the existence of
either of the two conditions, the Secretary of Finance is not acting as the alter ego of the
President or even her subordinate. He is acting as the agent of the legislative department, to
determine and declare the event upon which its expressed will is to take effect. The Secretary of
Finance becomes the means or tool by which legislative policy is determined and implemented,
considering that he possesses all the facilities to gather data and information and has a much
broader perspective to properly evaluate them. His function is to gather and collate statistical
data and other pertinent information and verify if any of the two conditions laid out by
Congressis present. In the same breath, the Court reiterates its finding that it is not a property or
a property right, and a VAT-registered persons entitlement to the creditable input tax is a mere

statutory privilege. As the Court stated in its Decision, the right to credit the input tax is a mere
creation of law. More importantly, the assailed provisions of R.A. No. 9337 already involve
legislative policy and wisdom. So long as there is a public end for which R.A. No. 9337 was
passed, the means through which such end shall be accomplished is for the legislature to choose
so long as it is within constitutional bounds. The Motions for Reconsideration are hereby DENIED
WITH FINALITY. The temporary restraining order issued by the Court is LIFTED
Eastern Theatrical Co. vs. Alfonso
Facts: The municipal board of Manila enacted Ordinance 2958 (series of 1946) imposing a fee on
the price of every admission ticket sold by cinematograph theaters, vaudeville companies,
theatrical shows and boxing exhibitions, in addition to fees imposed under Sections 633 and 778
of Ordinance 1600. Eastern Theatrical Co., among others, question the validity of ordinance, on
the ground that it is unconstitutional for being contrary to the provisions on uniformity and
equality of taxation and the equal protection of the laws in as much as the ordinance does not
tax other kinds of amusement, such as race tracks, cockpits, cabarets, concert halls, circuses,
and other places of amusement.
Issue: Whether the ordinance violates the rule on uniformity and equality of taxation.
Held: Equality and uniformity in taxation means that all taxable articles or kinds of property of
the same class hall be taxed at the same rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of taxation; and the theater companies
cannot point out what places of amusement taxed by the ordinance do not constitute a class by
themselves and which can be confused with those not included in the ordinance. The fact that
some places of amusement are not taxed while others, like the ones herein, are taxed is no
argument at all against the equality and uniformity of the tax imposition.
British American Tobacco Corporation v. Finance Secretary Camacho
Doctrine: Classification if rational in character is allowable. The taxing power has the authority
to make reasonable and natural classifications for purposes of taxation.
Facts:
British American Tobacco is the distributor of Lucky Strike Cigarette in the Philippines
The company is questioning the constitutionality of RA 8240, entitled "An Act Amending
Sections 138, 139, 140, and 142 of the NIRC, as Amended and For Other Purposes," which
took effect on January 1, 1997
The law provided a legislative freeze on brands of cigarettes introduced between the
period January 2, 1997 to December 31, 2003, such that said cigarettes shall remain in the
classification under which the BIR has determined them to belong as of December 31,
2003, until revised by Congress.
In effect: older brands or existing brands will have, in the long term, lower price and tax
rate as inflation and price appreciation were not factored in.
o Their tax rate shall remain until Congress changes it
o Hence, a legislative freeze in the class of cigarettes
Net
2005 Tax
2007 Tax
2009 Tax
2011 Tax
Supreme
Retail
Court
Price
Classificati
(excludi
on
ng
excise
tax and
VAT
Less
P2/pack
P2.23/pac P2.47/pac P2.72/pac Low-priced
than P5
k
k
k
per pack
Bet P5- P6.35/pac P6.74/pac P7.14/pac P7.56/pac MediumP6.50
k
k
k
k
priced
Bet
P10.35/pa P10.88/pa P11.43/pa P12/pack
HighP6.50ck
ck
ck
priced
P10
Above
P25/pack
P26.06/pa P27.16/pa P28.30/pa PremiumP10
ck
ck
ck
priced
New brands shall be classified according to current net retail price

New brands are the ones registered after January 1, 1997

In 2001, Lucky Strike was introduced in the market
Lucky Strike was classified as premium-priced hence was imposed the Above P10 tax rate
Lucky Strike protested the P22.77M tax assessment pegged at P25/pack
Lucky Strike interposes that the legislative freeze is discriminatory against new brands and
poses barrier to entry in the cigarette industry
o Legislative freeze means: existing or "old" brands shall be taxed based on their net
retail price as of October 1, 1996.
o Hence, the classification based on pricing is lower for older brands compared to new
entrants
Lucky Strike found it unfair that Philip Morris and Marlboro are classified only as Highpriced while it is classified as Premium Priced.

WON:
1. The pertinent portions of RA 8240, as amended by RA 9334, discriminates against new
cigarette brands and favors old cigarette brands?
2. The classification freeze provision unduly favors older brands over newer brands?
Held: In applying the rational basis test, the Court found the questioned law Constitutional.
A legislative classification that is reasonable does not offend the constitutional guaranty of
the equal protection of the laws.
The classification is considered valid and reasonable provided that:
(1) it rests on substantial distinctions;
(2) it is germane to the purpose of the law;
(3) it applies, all things being equal, to both present and future conditions; and
(4) it applies equally to all those belonging to the same class.
classification freeze provision uniformly applies to all newly introduced brands in the
market,
Finding that the assailed law seems to derogate, to a limited extent, one of its avowed
objectives (i.e. promoting fair competition among the players in the industry) would
suggest that, by Congresss own standards, the current excise tax system on sin products
is imperfect. But the Court cannot declare a statute unconstitutional merely because it
can be improved or that it does not tend to achieve all of its stated objectives.