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SISON vs. ANCHETAG.R. No. L-59431 July 25, 1984

Sison filed a suit challenging the validity of Section 1 of Batas Pambansa Blg. 135, which amended the tax rate on various types of income including compensation income and professional income. Sison argued the provision discriminated against him by imposing higher tax rates on his professional income. The Supreme Court ruled that Section 1 did not violate the due process and equal protection clauses or the rule on uniformity in taxation. The Court found taxpayers can be reasonably classified based on their source of income, with compensation earners taxed differently than professionals who have variable expenses. The differentiation in tax rates was justified.

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66 views1 page

SISON vs. ANCHETAG.R. No. L-59431 July 25, 1984

Sison filed a suit challenging the validity of Section 1 of Batas Pambansa Blg. 135, which amended the tax rate on various types of income including compensation income and professional income. Sison argued the provision discriminated against him by imposing higher tax rates on his professional income. The Supreme Court ruled that Section 1 did not violate the due process and equal protection clauses or the rule on uniformity in taxation. The Court found taxpayers can be reasonably classified based on their source of income, with compensation earners taxed differently than professionals who have variable expenses. The differentiation in tax rates was justified.

Uploaded by

Ariel Lunzaga
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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SISON vs. ANCHETAG.R. No.

L-59431 July 25, 1984 FACTS: This is a suit for declaratory relief or prohibition on the validity of Section 1 of Batas Pambansa Blg. 135. The assailed provision amends Sec. 21 of 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 such provision (Section 1) unduly discriminated 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 section 1 of BP 135 violates the due process and equal protection clauses, and the rule on uniformity in taxation? RULING: No. 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.

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