5Milwaukee v. Milwaukee & ST Corp.

6 Wis. 2d 299 (1959)

CITY OF MILWAUKEE, Respondent, v. MILWAUKEE & SUBURBAN TRANSPORT
CORPORATION, Appellant.
Supreme Court of Wisconsin.
MARTIN, C. J.
Facts:
Where the power to license exists, a reasonable discretion is vested in the municipality,
but the courts will look into ordinances with a view of determining whether they are
passed for the purpose of revenue. Cities should not be permitted, under the guise of
their regulatory power, to collect revenue for the benefit of the city.
The City of Milwaukee was authorized to tax the company for revenue
The trial court took notice that in its conversion ordinances, the city of Milwaukee bear
the expenses of the obligation to repave and widen the streets, including the obligation
to prohibit parking of automobiles along portions of the routes. The court stated that the
ordinances reveal benefits to the company and expenses to the city. It further reasoned
that it did not constitute a tax for revenue but compensation for the costs and services
rendered by the city.
Issue/s:
Whether or not the “license fees” exacted under the ordinances constitute a tax for
revenue or a charge for regulation or a contract.

Rulings:
The license fees exacted under the ordinances constitute a tax for revenue.
In 51 Am. Jur., Taxation, p. 34, sec. 2, taxation was defined as the power by which the
sovereign raises revenue to defray the necessary expenses of government, the purpose of
which is to promote the general welfare and protection of its citizens.
Accordingly, if the purpose is regulation, the imposition is an exercise of police power,
but if the purpose is revenue, it is an exercise of taxing power. The distinction between
taxation for revenue and for regulation is determined by the relationship between the
cost, services provided, and the charge imposed.
In a similar case, the court said that from the face of the ordinance and from the amount
of the fee imposed, it is an imposition for the purpose of revenue and hence, it cannot
be treated as an exaction for the purpose of covering the expense incident to the
supervision and regulation of the street railway business. Therefore, the ordinance
could not be upheld as it was not passed as a regulation but as a revenue measure.
For that reason, the city had no authority to tax for revenue purposes
They cannot also argue that the ordinances are binding contracts entered into between
the city and the company. This is because whenever a municipal corporation makes a
contract in its governmental capacity with a third party, it is the same as if the state itself
were one of the two contracting parties, the municipality being but an arm of the state.
The city also argues that it had the right to insist payment of reasonable compensation for granting the
company valuable rights. For this, it is important to note that at the time, the city had the authority to
tax for revenue. Under those circumstances, it could only mean that it considered the fees reasonable as
a tax for revenue. The same answer of the Court applies to the city’s argument that the license fees are
in effect a charge for the rental of the streets.

The only power the city has over the use of the streets, aside from regulatory or police power, must be
delegated to it by the state.

G.R. No. L-59431 July 25, 1984

ANTERO M. SISON, JR., petitioner,
vs.
RUBEN B. ANCHETA, Acting Commissioner, Bureau of Internal Revenue;
ROMULO VILLA, Deputy Commissioner, Bureau of Internal Revenue; TOMAS
TOLEDO Deputy Commissioner, Bureau of Internal Revenue; MANUEL ALBA,
Minister of Budget, FRANCISCO TANTUICO, Chairman, Commissioner on Audit,
and CESAR E. A. VIRATA, Minister of Finance, respondents.
Antero Sison for petitioner and for his own behalf.
The Solicitor General for respondents.

FERNANDO, C.J.:

Facts:
Petitioner, as taxpayer, alleges that he would be discriminated by the imposition of
higher rates of tax from the exercise of his profession as compared to those salaries
individual taxpayers. He refers to the validity of Section 1 of BP Blg. 135 which provides
for rates of tax on citizens based on different factors such as taxable compensation
income, taxable net income, royalties, interest from bank deposits and others.
Therefore, he argues that there is transgression of the equal protection and due process
clauses of the Constitution as well as the rule requiring uniformity in taxation. The Office
of the Solicitor General in its answer said that BP Blg. 135 is a valid exercise of the
State’s power to tax. The Court then ordered the dismissal of the petition for lack of
merit,
Issue:
Whether the imposition of a higher tax rate on taxable net income derived from business
or profession than on compensation is constitutionally infirm.
Ruling:
The court dismissed the petition. Taxes are the lifeblood of the government which is
vital for state functions. The Court also added that the power to tax is an attribute of
sovereignty of the government.
Accordingly, a mere allegation does not suffice. Sison failed to prove that BP Blg 135
ran coutner to the Constitution. Absent such showing, the presumption of validity must
prevail.
As for the equal protection, the Court said that classification, if rational in character, is
allowable. It has been repeatedly held that “inequalities resulting from singling out of
one particular class for taxation infringes no constitutional limitation. The rule on
uniformity does not call for perfect uniformity or perfect equality.
Rather, equality and uniformity in taxation means that the same class shall be taxed at
the same rate. The taxing power has the authority to reasonable classifications for
purposes of taxation. Where it conforms to justice and equity, it is not discriminatory. As
such, there is sufficient justification to adopt the taxation system for salaried individuals,
while continuing the same to those derived from exercise of business or profession.