A.

1. Distinguish between taxes and fees.

Taxes are the enforced proportional contribution from persons and property levied by
the law-making body of the State by virtue of its sovereignty for the support of
government and for public needs. On the other hand, Fee is a charge imposed under
the police power for the purposes of regulation. It has been ruled that regulation and
taxation are two different things, the first being an exercise of the police power, whereas
the latter is not.

2. What are the doctrines in the Progressive Development case?

In the case of Progressive Development case, Quezon City imposed a

supervision fee on the privately-owned market which was owned by the Progressive
Development. Such fee is based on the gross receipts derived by the market from its
tenants, and Progressive argued that the imposition was a tax on income, which the
City had no authority to impose.

The Court sided with the Quezon City.

The underlying doctrine in this case was, 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; and 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 as well.

In this case, the Farmers Market was built by virtue of a Resolution passed by the QC
Council, authorizing Progressive to establish and operate a market with a permit to sell
fresh meat, fish, poultry and other foodstuffs. The same resolution imposed upon
Progressive, as a condition for continuous operation, the obligation to abide by and
comply with the ordinances, rules and regulations prescribed for the establishment,
operation and maintenance of markets in QC.

Thus, the Court ruled that the 5% tax imposed in by the QC Market Code
constitutes neither a tax on income, nor a city income tax (as distinguished from the
national income tax imposed by the NIRC), but rather a license tax nor fee for the
regulation of the business in which Progressive is engaged.

3. What is the doctrine in the Ferrer, Jr., case?

In the case of JOSE J. FERRER, JR., vs. CITY MAYOR HERBERT BAUTISTA
ET. AL. Petitioner seeks to declare unconstitutional and illegal Ordinance Nos. SP-
2095, S-2011 and SP-2235, S-2013 on the Socialized Housing Tax and Garbage Fee,
respectively, which are being imposed by the respondents.

In Social Housing Tax (SHT), the underlying principle is that; an ordinance based
on reasonable classification does not violate the constitutional guaranty of the equal
protection of the law. The requirements for a valid and reasonable classification are: (1)
it must rest on substantial distinctions; (2) it must be germane to the purpose of the law;
(3) it must not be limited to existing conditions only; and (4) it must apply equally to all
members of the same class.

For the purpose of undertaking a comprehensive and continuing urban

development and housing program, the disparities between a real property owner and
an informal settler as two distinct classes are too obvious and need not be discussed at
length. The differentiation conforms to the practical dictates of justice and equity and is
not discriminatory within the meaning of the Constitution. Notably, 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 over another. It is inherent in the power to tax that a State is free to
select the subjects of taxation. Inequities which result from a singling out of one
particular class for taxation or exemption infringe no constitutional limitation.

It is a fundamental principle that municipal ordinances are inferior in status and

subordinate to the laws of the state. An ordinance in conflict with a state law of general
character and statewide application is universally held to be invalid. The principle is
frequently expressed in the declaration that municipal authorities, under a general grant
of power, cannot adopt ordinances which infringe the spirit of a state law or repugnant
to the general policy of the state. In every power to pass ordinances given to a
municipality, there is an implied restriction that the ordinances shall be consistent with
the general law.

Clearly, the SHT charged by the Quezon City Government is a tax which is within
its power to impose.

On garbage fee, LGUs are statutorily sanctioned to impose and collect such
reasonable fees and charges for services rendered. “Charges” refer to pecuniary
liability, as rents or fees against persons or property, while “Fee” means a charge fixed
by law or ordinance for the regulation or inspection of a business or activity.
The fee imposed for garbage collections under Ordinance No. SP-2235 is a charge
fixed for the regulation of an activity. The garbage fee was considered as a "service
charge" rather than a tax as it was actually a fee for a service given by the city which
had previously been provided at no cost to its citizens. Hence, not being a tax, the
contention that the garbage fee under Ordinance No. SP-2235 violates the rule on
double taxation142 must necessarily fail.

Nonetheless, although a special charge, tax, or assessment may be imposed by

a municipal corporation, it must be reasonably commensurate to the cost of providing
the garbage service. To pass judicial scrutiny, a regulatory fee must not produce
revenue in excess of the cost of the regulation because such fee will be construed as an
illegal tax when the revenue generated by the regulation exceeds the cost of the
regulation.

B. Taxes vs. Special Assessments

1. Distinguish between Taxes and Special Assessments under Sec. 240 of the Local
Government Code (“LGC”).

Taxes are the enforced proportional contribution from persons and property
levied by the law-making body of the State by virtue of its sovereignty for the support of
government and for public needs. On the other hand, Special Assessments or
Special Levy by local government units under Sec. 24 of Local Government Code, A
province, city or municipality may impose a special levy on the lands comprised within
its territorial jurisdiction specially benefited by public works projects or improvements
funded by the local government unit concerned: Provided, however, That the special
levy shall not exceed sixty percent (60%) of the actual cost of such projects and
improvements, including the costs of acquiring land and such other real property in
connection therewith: Provided, further, That the special levy shall not apply to lands
exempt from basic real property tax and the remainder of the land portions of which
have been donated to the local government unit concerned for the construction of such
projects or improvements.

2. Is the Special Assessment imposed in the Bacolod-Murcia Milling Co., Inc., case the
same with the Special Assessment under Sec. 240 of the LGC?