15.

Tio v Videogram
G.R. No. L-75697 June 18, 1987
Melencio-Herrera, J.:

Facts:

1. Petitioner on his own behalf and purportedly on behalf of other videogram operators
adversely affected assailed the constitutionality of PD 1987 entitled "An Act Creating the
Videogram Regulatory Board" with broad powers to regulate and supervise the videogram
industry. The Decree promulgated on October 5, 1985, took effect on April 10, 1986, fifteen
(15) days after completion of its publication in the Official Gazette.

2. PD 1994 issued a month thereafter reinforced PD 1987 and in effect amended the National
Internal Revenue Code (NIRC). Petitioner contended among others that the tax provision
of the decree is a rider.

ISSUE: Whether or not the PD 1987 is unconstitutional due to the tax provision
included

RULING: PD 1987 is constitutional.

1. The title of the decree, which calls for the creation of the VRB is comprehensive enough to
include the purposes expressed in its Preamble and reasonably covered in all its
provisions. It is unnecessary to express all those objectives in the title or that the latter be
an index to the body of the decree.

2. The foregoing provision is allied and germane to, and is reasonably necessary for the
accomplishment of the general object of the decree, which is the regulation of the video
industry through the VRB as expressed in its title. The tax provision is not inconsistent with
nor foreign to the general subject and title. As a tool for regulation it is simply one of the
regulatory and control mechanisms scattered throughout the decree.

3. The express purpose of PD 1987 to include taxation of the video industry in order to
regulate and rationalize the heretofore uncontrolled distribution of videos is evident from
Preambles 2 and 5. Those preambles explain the motives of the lawmaker in presenting the
measure.

TIO vs. VRB

151 SCRA 208
GR No. L-75697, June 18, 1987
"The public purpose of a tax may legally exist even if the motive which impelled the
legislature to impose the tax was to favor one industry over another."

FACTS: The petitioner assails the validity of PD 1987 entitled an "Act creating the
Videogram Regulatory Board," citing especially Section 10 thereof, which imposes a tax of
30% on the gross receipts payable to the local government. Petitioner contends that aside
from its being a rider and not germane to the subject matter thereof, and such imposition
was being harsh, confiscatory, oppressive and/or unlawfully restraints trade in violation of
the due process clause of the Constitution.

ISSUE: Is PD 1987 a valid exercise of taxing power of the state?

HELD: Yes. It is beyond serious question that a tax does not cease to be valid merely
because it regulates, discourages, or even definitely deters the activities taxed. 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
those rest in the discretion of the authority which exercises it. In imposing a tax, the
legislature acts upon its constituents. This is, in general, a sufficient security against
erroneous and oppressive taxation.
The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the
need for regulating the video industry, particularly because of the rampant film piracy, the
flagrant violation of intellectual property rights, and the proliferation of pornographic
video tapes. And while it was also an objective of the DECREE to protect the movie
industry, the tax remains a valid imposition.
The public purpose of a tax may legally exist even if the motive which impelled the
legislature to impose the tax was to favor one industry over another.

18: GOMEZ v. PALOMAR

GR No. L-23645, October 29, 1968
25 SCRA 827

FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando,
Pampanga. It did not bear
the special anti-TB stamp required by the RA 1635. It was returned to the petitioner.
Petitioner now assails the
constitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB
Stamp law is violative of
the equal protection clause because it constitutes mail users into a class for the purpose of
the tax while leaving
untaxed the rest of the population and that even among postal patrons the statute
discriminatorily grants
exemptions. The law in question requires an additional 5 centavo stamp for every mail
being posted, and no mail
shall be delivered unless bearing the said stamp.

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal
protection clause?

HELD: No. It is settled that the legislature has the inherent power to select the subjects of
taxation and to grant
exemptions. This power has aptly been described as "of wide range and flexibility." Indeed,
it is said that in the
field of taxation, more than in other areas, the legislature possesses the greatest freedom in
classification. The
reason for this is that traditionally, classification has been a device for fitting tax programs
to local needs and
usages in order to achieve an equitable distribution of the tax burden.
The classification of mail users is based on the ability to pay, the enjoyment of a privilege
and on administrative
convenience. Tax exemptions have never been thought of as raising revenues under the
equal protection clause.

Gomez vs. Palomar

G.R. No. L-23645 October 29, 1968

Facts:
Petitioner questions the constitutionality of the statute, claiming that R.A. 1635 otherwise
known as as the Anti-TB Stamp Law, is violative of the equal protection clause of the
Constitution because it constitutes mail users into a class for the purpose of the tax while
leaving untaxed the rest of the population and that even among postal patrons the statute
discriminatory grant exemptions.

Moreover, petitioner contends that the statutory classification of taxpayers has no relation
to the object sought by the Anti-TB law.
Issue:
Whether or not the Anti-Tb law violates the equal protection clause of the constitution.

Ruling:
No, Supreme Court reiterated that the legislature has the inherent power to select the
subjects of taxation and to grant exemptions. The reason for this is that traditionally,
classification has been a device for fitting tax programs to local needs and usages in order
to achieve an equitable distribution of the tax burden. The legislative classifications must
be reasonable is of course undenied in this case.

The classification of mail users is not without any reason. It is based on ability to pay,
let alone the enjoyment of a privilege, and on administrative convenience. The classification
is likewise based on considerations of administrative convenience. For it is now a settled
principle of law that "consideration of practical administrative convenience and cost in the
administration of tax laws afford adequate ground for imposing a tax on a well recognized
and defined class. Lastly, mail users were already a class by themselves even before the
enactment of the statue and all that the legislature did was merely to select their class.
Legislation is essentially empiric and Republic Act 1635, as amended, no more than reflects
a distinction that exists in fact. As Mr. Justice Frankfurter said, "to recognize differences
that exist in fact is living law; to disregard [them] and concentrate on some abstract
identities is lifeless logic."
 Petitioner's assertions that statutory classification of mail users must bear some
reasonable relationship to the end sought to be attained, and that absent such relationship
the selection of mail users is constitutionally impermissible does not hold water. This is
altogether a different proposition, since explained by the court "that while the principle
that there must be a reasonable relationship between classification made by the legislation
and its purpose is undoubtedly true in some contexts, it has no application to a measure
whose sole purpose is to raise revenue, so long as the classification imposed is based upon
some standard capable of reasonable comprehension, be that standard based upon ability
to produce revenue or some other legitimate distinction, equal protection of the law has
been afforded."

19. Bagatsing v Ramirez

GR No L-41631, December 17, 1976

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:

1. 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?
2. Is the ordinance valid?

RULING:

1. 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.

2. The ordinance is valid.

BAGATSING vs. RAMIREZ

74 SCRA 306
GR No. L-41631, December 17, 1976
"The entrusting of the tax collection to private entities does not destroy the public
purpose of a tax ordinance."

FACTS: Aside from the issue on publication, private respondent bewails that the
market stall fees imposed in the disputed City Ordinance No. 7522, which regulates
public markets and prescribes fees for rentals of stalls, are diverted to the exclusive
private use of the Asiatic Integrated Corporation since the collection of said fees had
been let by the City of Manila to the said corporation in a "Management and
Operating Contract."

ISSUE: Does the delegation of the collection of taxes to a private entity invalidates a
tax ordinance and defeats its public purpose?

HELD: No. The assumption is of course saddled on erroneous premise. The fees
collected do not go direct to the private coffers of the corporation. Ordinance No.
7522 was not made for the corporation but for the purpose of raising revenues for
the city. That is the object it serves. The entrusting of the collection of the fees does
not destroy the public purpose of the ordinance. So long as the purpose is public, it
does not matter whether the agency through which the money is dispensed is public
or private. The right to tax depends upon the ultimate use, purpose and object for
which the fund is raised. It is not dependent on the nature or character of the person
or corporation whose intermediate agency is to be used in applying it. The people
may be taxed for a public purpose, although it be under the direction of an
individual or private corporation.

Bagatsing v. Ramirez
G.R. No. L-41631 (December 17, 1976)

FACTS:
The Municipal Board of Manila enacted Ordinance No. 7522, An Ordinance Regulating the
Operation of Public Markets and Prescribing Fees for the Rentals of Stalls and Providing
Penalties for Violation thereof and for other Purposes. Respondent were seeking the
declaration of nullity of the Ordinance for the reason that a) the publication requirement
under the Revised Charter of the City of Manila has not been complied with, b) the Market
Committee was not given any participation in the enactment, c) Sec. 3(e) of the Anti-Graft
and Corrupt Practices Act has been violated, and d) the ordinance would violate P.D. 7
prescribing the collection of fees and charges on livestock and animal products.

ISSUE:
What law shall govern the publication of tax ordinance enacted by the Municipal Board
of Manila, the Revised City Charter or the Local Tax Code.

HELD:
The fact that one is a special law and the other a general law creates the presumption that
the special law is to be considered an exception to the general. The Revised Charter of
Manila speaks of ordinance in general whereas the Local Tax Code relates to ordinances
levying or imposing taxes, fees or other charges in particular. In regard therefore, the
Local Tax Code controls.

20. Progressive Development Corporation vs. Quezon City

Facts: The City Council of QC passed an ordinance known as the Market Code of QC, which
imposed a 5% supervision fee on gross receipts on rentals or lease of privately-owned
market spaces in QC.

In case of failure of the owners of the market spaces to pay the tax for three consecutive
months, the City shall revoke the permit of the privately-owned market to operate.

Progressive Development Corp, owner and operator of Farmers Market, filed a petition for
prohibition against QC on the ground that the tax imposed by the Market Code was in
reality a tax on income, which the municipal corporation was prohibited by law to impose.

Issue: Whether or not the supervision fee is an income tax or a license fee.

Held: It is a license fee. A LICENSE FEE is imposed in the exercise of the police power
primarily for purposes of regulation, while TAX is imposed under the taxing power
primarily for purposes of raising revenues.

If the generating of revenue is the primary purpose and regulation is merely incidental, the
imposition is a tax; but if regulation is the primary purpose, the fact that incidentally,
revenue is also obtained does not make the imposition a tax.

To be considered a license fee, the imposition must relate to an occupation or activity that
so engages the public interest in health, morals, safety, and development as to require
regulation for the protection and promotion of such public interest; the imposition must
also bear a reasonable relation to the probable expenses of regulation, taking into account
not only the costs of direct regulation but also its incidental consequences.

In this case, the Farmers Market is a privately-owned market established for the rendition
of service to the general public. It warrants close supervision and control by the City for the
protection of the health of the public by insuring the maintenance of sanitary conditions,
prevention of fraud upon the buying public, etc.

Since the purpose of the ordinance is primarily regulation and not revenue generation, the
tax is a license fee. The use of the gross amount of stall rentals as basis for determining the
collectible amount of license tax does not, by itself, convert the license tax into a prohibited
tax on income.

Such basis actually has a reasonable relationship to the probable costs of regulation and
supervision of Progressives kind of business, since ordinarily, the higher the amount of
rentals, the higher the volume of items sold.

The higher the volume of goods sold, the greater the extent and frequency of supervision
and inspection may be required in the interest of the buying public.

21. Compania General de Tabacos de Filipinas and La Flor de la Isabela, Inc. vs. Hon.
Virgilio A. Sevandal, et al.
Petitioners Claims:
Petitioners claimed in its Letter-Complaint to the SEC that Tabaqueria, owned by its former
General Manager, Gabriel Ripoll, cannot be allowed to continue said name because it will
confuse and deceive the public into believing that Tabaqueria is operated and managed by,
and part of Tabacalera. Compania General, being a Spain-based company, operated under
La Flor de la Isabela in the Philippines. Petitioners filed with the DOJ and the DTI a
Complaint for Infringement and Unfair Competition. Petitioners alleged that Tabaqueria
deliberately sought to adopt the Tabacalera trademarks to confuse the public that the
Tabaqueria cigars are the same or are somehow connected with the Tabacalera products.
As such, the Petitioners filed for a Motion to grant Cease and Desist Order in order to enjoin
Tabaqueria from further producing cigars.

Respondents Claims:
Ripoll, now the Directing Manager of Tabaqueria, alleged that there is insufficient evidence
to issue a Cease and Desist Order against him on the ground of unfair competition and
infringement of trademark. Moreover, they moved to dismiss the case on the ground of
forum shopping. Further, the Office of Legal Affairs of the DTI ruled that there was no
similarity in the general appearance of the products of the parties and consumers would
not be misled. DTI further found that the competing products, in their totality, are easily
distinguishable through their brand and logos. TABACALERA is the brand of the
Tabacalera products, while FLOR DE MANILA is the brand of the Petitioners. In fact, per
Certification of BIR in 1994, Flor de Manila is the brand registered by the latter with said
bureau. As per inspection, none of their boxes even show the word TABAQUERIA.

Issue:
Whether or not there is substantial similarity between the two parties as to amount to
unfair competition and trademark infringement, and are therefore entitled to a writ of
preliminary injunction.
Ruling:
No. The Supreme Court upheld the decision of the Court of Appeals and the DTI. Injunctive
relief may only be issued when the right of the complainant is clear and unmistakable;
when the invasion of the right sought to be protected is material and substantial; and there
is an urgent and paramount necessity for the writ to prevent serious damage. The Court
found that there is no urgent and paramount necessity for the writ. The Petitioners has not
shown, at least tentatively, that there exists a fraudulent and malicious entry into the
market and as a result thereby, their sales dropped by 25%.