Law School Noob: [CASE DIGEST] PROGRESSIVE DEV. CORP. v. QUEZON CITY (G.R. No. L-36081)

Saturday, April 11, 2020

[CASE DIGEST] PROGRESSIVE DEV. CORP. v. QUEZON CITY (G.R. No. L-36081)

April 24, 1989

172 SCRA 629

FACTS

In 1969, the City Council of Quezon City adopted Ordinance No. 7997, which imposed a 5 percent tax on gross receipts on rentals or lease of space in privately owned public markets in the city.

Progressive Development Corporation, owner and operator of a public market known as the “Farmers Market & Shopping Center,” filed a Petition for Prohibition with Preliminary Injunction against the City Council before the then CFI of Rizal on the ground that the supervision fee or license tax imposed by the abovementioned ordinance is in reality a tax on income which the City Council may not impose, the same being expressly prohibited by the Local Autonomy Act.

The CFI dismissed the petition, ruling that the questioned imposition is not a tax on income, but rather a privilege tax or license fee which local governments, like the City Council of Quezon City, are empowered to impose and collect.

RULING

The Court ruled in favor of the City Council of Quezon City.

Both the Local Autonomy Act and the Charter of Quezon City clearly show that the City Council is authorized to fix the license fee collectible from and regulate the business of Progressive Development as operator of a privately owned public market.

In fact, the scope of legislative authority conferred upon the City Council in respect of businesses like that of Progressive Development, is comprehensive: the grant of authority is not only to “regulate” and “fix the license fee,” but also “to tax.”

To be considered a license fee, the imposition questioned 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 as well.

License fee is imposed in the exercise of police power primarily for purposes of regulation, while tax is imposed under the taxing power primarily for purposes of raising revenues. Thus, 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.

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