FERRER V.
CITY MAYOR BAUTISTA
FACTS: Quezon City Council enacted Ordinance No. SP-209 ! S-20"", orACTS: Quezonenacted OrdinanceSP-209 ! S-20"" ,
the Socialized Housing Tax of Quezon City Section 3 of which provides:,
SECTION 3 I!"OSITION # special assess$ent e%uivalent to one&half percent
'( )*+ on the assessed value of land in e cess of One -undred Thousand "esos
'"hp.((,((( ((+ shall /e collected /y the City Treasurer which shall accrue to
the Socialized -ousin0 "ro0ra$s of the Quezon City 1overn$ent
2E ective for 4ve ')+ years, the Socialized -ousin0 Ta ' SHT shall /e utilized /y+
the Quezon City 1overn$ent for the followin0 pro5ects: 'a+ land purchase6land
/an7in08 '/+ i$prove$ent of current6e istin0 socialized housin0 facilities8 'c+ land
develop$ent8 'd+ construction of core houses, sanitary cores, $ediu$&risedevelop$ent8constructionsanitary cores, $ediu$&rise
/uildin0s and other si$ilar structures8 and 'e+ 4nancin0 of pu/lic&private/uildin0sother si$ilar structures8 and4nancin0pu/lic&privatesuch other functions and responsi/ilities as are necessary, appropriate, orfunctionsresponsi/ilitiesnecessary, appropriate,
partnership a0ree$ent of the Quezon City 1overn$ent and National -ousin0
#uthority 'NHA+ with the private sector 2'NHA+sector
On the other hand, Ordinance No. SP-22# ! S-20"#) was enacted onthe other hand, OrdinanceSP-22# ! S-20"#enacted
9ece$/er . , ;(.3 and too7 e ect ten days after when it was approved /y
respondent City !ayor The proceeds collected fro$ the 0ar/a0e fees onrespondent!ayorproceeds collected fro$0ar/a0e fees
residential properties shall /e deposited solely and e clusively in an ear$ar7ed
special account under the 0eneral fund to /e utilized for 0ar/a0especial account under the 0eneral fundutilized for 0ar/a0e
<collections Section . of the Ordinance set forth the schedule and $anner for
the collection of 0ar/a0e fees:
The collection of the 0ar/a0e fee shall accrue on the 4rst day of =anuary and
shall /e paid si$ultaneously with the pay$ent of the real property ta , /ut not
later than the 4rst %uarter install$ent > In case a household owner refuses to
pay, a penalty of ;)* of the 0ar/a0e fee due, plus an interest of ;* per $onth
or a fraction thereof, shall /e char0ed
"etitioner ?errer clai$s that the annual property ta is an ad valore$ ta , a
percenta0e of the assessed value of the property, which is su/5ect to revision
every three '3+ years in order to re@ect an increase in the $ar7et value of the
property The S-T and the 0ar/a0e fee are actually increases in the property ta
which are not /ased on the assessed value of the property or its reassess$ent
every three years8 hence, in violation of Sections ;3; and ;33 of the A1C
ISSUE: Bhether or not the ta ordinances are validISSUE: Bhether
$E%&: Ordinance No S"&;( ), S&;(.., the Socialized -ousin0 Ta is valid $E%&: Ordinance
Ordinance No S"&;;3), S&;(.3, which collects an annual 0ar/a0e fee on allOrdinanceS"&;;3), S&;(.3,collects
do$estic households in Quezon City, is here/y declared as DNCONSTITDTION#A
#N9 IAAE1#A
RATIO:
The . >< Constitution e plicitly espouses the view that the use of property /earse plicitlyproperty
a social function and that all econo$ic a0ents shall contri/ute to the co$$on
0ood "roperty has not only an individual function, insofar as it has to provide for
the needs of the owner, /ut also a social function insofar as it has to provide for
the needs of the other $e$/ers of society The principle is this:society
"olice power proceeds fro$ the principle that every holder of property, however
his use of it shall not /e in5urious to the e%ual en5oy$ent of others havin0 an
e%ual ri0ht to the en5oy$ent of their property, no r in5urious to the ri0ht of the
co$$unity
"roperty ri0hts of individuals $ay /e su/5ected to restraints and /urdens in order
to ful4ll the o/5ectives of the 0overn$ent in the e ercise of police power In this0overn$ente ercisepower
5urisdiction, it is well&entrenched that ta ation $ay /e $ade the i$ple$ent of
the state s police power
The S-T char0ed /y the Quezon City 1overn$ent is a ta which is within its
power to i$pose Cities are allowed to e ercise such other powers and dischar0e
incidental to eFcient and e ective provision of the /asic services and facilities
which include, a$on0 others, pro0ra$s and pro5ects for low&cost housin0 and
other $ass dwellin0s The collections $ade accrue to its socialized housin0otherdwellin0s collectionssocialized
pro0ra$s and pro5ects
The ta is not a pure e ercise of ta in0 power or $erely to raise revenue8 it is
levied with a re0ulatory purpose The levy is pri$arily in the e ercise of the
police power for the 0eneral welfare of the entire city It is 0reatly i$/ued with
pu/lic interest Ge$ovin0 slu$ areas in Quezon City is not only /ene4cial to the
underprivile0ed and ho$eless constituents /ut advanta0eous to the realunderprivile0edho$eless constituentsadvanta0eousreal
property owners as well The situation will i$prove the value of the theirproperty ownerswell situationi$provevaluetheir
property invest$ents, fully en5oyin0 the sa$e in view of an orderly, secure, and
safe co$$unity, and will enhance the %uality of life of the poor, $a7in0 the$
law&a/idin0 constituents and /etter consu$ers of /usiness products
; In the su/5ect ordinance i$posin0 0ar/a0 collection fee, the rates of thesu/5ect ordinance i$posin0 0ar/a0 collection fee,rates
i$posa/le fee depend on land or @oor area and whether the payee is ani$posa/ledependland@oor areawhetherpayee
occupant of a lot, condo$iniu$, social housin0 pro5ect or apart$ent ?or easy
reference, the relevant provision is a0ain %uoted /elow:
The rates /ein0 char0ed /y the ordinance are un5ust and ine%uita/le: a resident
of a ;(( s% $ unit in a condo$iniu$ or socialized housin0 pro5ect has to pay
twice the a$ount than a resident of a lot si$ilar in size8 unli7e unit occupants, all
occupants of a lot with an area of ;(( s% $ and less have to pay a 4 ed rate of
"hp.(( ((8 and the sa$e a$ount of 0ar/a0e fee is i$posed re0ardless of "hp.(( ((80ar/a0ere0ardless
whether the resident is fro$ a condo$iniu$ or f ro$ a socialized housin0 pro5ect
Indeed, the classi4cations under Ordinance No S&;;3) are not 0er$ane to its
declared purpose of Hpro$otin0 shared responsi/ility with the residents to attac7responsi/ility
their co$$on $indless attitude in over&consu$in0 the present resources and in
0eneratin0 waste H Instead of si$plistically cate0orizin0 the payee into land or
@oor occupant of a lot or unit of a condo$iniu$, socialized housin0 pro5ect or
apart$ent, respondent City Council should have considered factors that could
collection ?actors include, a$on0 others, household a0e and size, accessi/ility
to waste collection, population density of the /aran0ay or district, capacity to
pay, and actual occupancy of the property G # No ((3 $ay also /e loo7ed into
for 0uidance Dnder said law, B! service fees $ay /e co$puted /ased on
$ini$u$ factors such as types of solid waste to include special waste,
a$ount6volu$e of waste, distance of the transfer station to the waste
$ana0e$ent facility, capacity or type of A1D constituency, cost of construction,
cost of $ana0e$ent, and type of technolo0y Bith respect to utility rates set /y
$unicipalities, a $unicipality has the ri0ht to classify consu$ers under
reasona/le classi4cations /ased upon factors such as the cost of service, the
purpose for which the service or the product is received, the %uantity or the
a$ount received, the di erent character of the service furnished, the ti$e of its
use or any other $atter which presents a su/stantial di erence as a 0round of
distinction
Fac'(: "etitioner, a QC property owner, assails the constitutionality of two QC
ordinances, na$ely Ordinance No S"&;( ), S&;(.. or the Socialized -ousin0 Ta
of Quezon City and Ordinance No S"&;;3), S&;(.3 on 0ar/a0e collection fees
Section 3 of S"&;( ) provides:
SECTION 3 I!"OSITION # special assess$ent e%uivalent to one&half percent
'( )*+ on the assessed value of land in e cess of One -undred Thousand "esos
'"hp.((,((( ((+ shall /e collected /y the City Treasurer which shall accrue to
the Socialized -ousin0 "ro0ra$s of the Quezon City 1overn$ent The special
assess$ent shall accrue to the 1eneral ?und under a special account to /e
esta/lished for the purpose 'i e , pro0ra$s and pro5ects for low&cost housin0 and
other $ass dwellin0s+
On the other hand, Ordinance No. SP-22# ! S-20"# on 0ar/a0e collection
places the rates of the i$posa/le fee dependent on the land or @oor area and
whether the payee is an occupant of a lot, condo$iniu$, social housin0 pro5ect
or apart$ent
; S"&;;3), S&;(.3 on 1ar/a0e ?ee is IN #AI9 #lthou0h it does not violate the
I(()e(:
. BON S"&;( ), S&;(.. on the Socialized -ousin0 T 'S-T+ is valid a
a BON the S-T is a ta which is within the QC 0overn$ent to
i$pose
/ BON the S-T violates the rule on e%uality
c BON the S-T is con4scatory or oppressive
; BON S"&;;3), S&;(.3 on 1ar/a0e ?ee is valid
a BON the Ordinance on 1ar/a0e ?ee violates the rule on double
taxation.
/ BON it violates the rule on e%uality
R)*in+:
. S"&;( ), S&;(.. on the Socialized Housing Tax 'S-T+ is #AI9
a Jes The S-T char0ed /y the QC 1overn$ent is a ta which is within its
power to i$pose Cities are allowed to e ercise such other powers and
services and facilities which include, a$on0 others, pro0ra$s and
pro5ects for low&cost housin0 and other $ass dwellin0s The collections
$ade accrue to its socialized housin0 pro0ra$s and pro5ects T,e 'a i(
no' a )re e erci(e o/ 'a in+ o er or 1ere* 'o rai(e re3en)e4
i' i( *e3ied i', a re+)*a'or )r o(e. The levy is pri$arily in the
e ercise of the police power for the 0eneral welfare of the entire city It is
0reatly i$/ued with pu/lic interest Ge$ovin0 slu$ areas in Quezon City
is not only /ene4cial to the underprivile0ed and ho$eless constituents
/ut advanta0eous to the real property owners as well The situation will
i$prove the value of the their property invest$ents, fully en5oyin0 the
sa$e in view of an orderly, secure, and safe co$$unity, and will
enhance the %uality of life of the poor, $a7in0 the$ law&a/idin0
constituents and /etter consu$ers of /usiness products
/ No, the S-T does NOT violate the rule on e%uality ?or the purpose of
underta7in0 a co$prehensive and continuin0 ur/an develop$ent and
housin0 pro0ra$, the disparities /etween a real property owner and an
infor$al settler as two distinct classes are too o/vious and need not /e
discussed at len0th The di erentiation confor$s to the practical dictates
of 5ustice and e%uity and is not discri$inatory within the $eanin0 of the
Constitution Nota/ly, the pu/lic purpose of a ta $ay le0ally e ist even
if the $otive which i$pelled the le0islature to i$pose the ta was to
favor one over another It is inherent in the power to ta that a State is
free to select the su/5ects of ta ation Ine%uities which result fro$ a
sin0lin0 out of one particular class for ta ation or e e$ption infrin0e no
constitutional li$itation
c No, the S-T is NOT con4scatory nor oppressive The reasona/leness of
Ordinance No S"&;( ) cannot /e disputed It is not con4scatory or
oppressive since the ta /ein0 i$posed therein is /elow what the D9-#
actually allows Bhile the law authorizes A1Ds to collect S-T on lands
with an assessed value of $ore than ")(,((( ((, the %uestioned
ordinance only covers lands with an assessed value e ceedin0
".((,((( (( Even /etter, on certain conditions, the ordinance 0rants a
ta credit e%uivalent to the total a$ount of the special assess$ent paid
/e0innin0 in the si th ' th+ year of its e ectivity ?ar fro$ /ein0
o/no ious, the provisions of the su/5ect ordinance are fair and 5ust
rule on dou/le ta ation, it nonetheless violates the rule on e%uality
a S"&;;3) does NOT violate the rule on dou/le ta ation
The fee i$posed for 0ar/a0e collections under Ordinance No S"&;;3) is
a char0e 4 ed for the re0ulation of an activity In Progressive
Develop ent Corporation v. Quezon City the Court declared that 2if the,
0eneratin0 of revenue is the pri$ary purpose and re0ulation is $erely
incidental, the i$position is a ta 8 /ut if re0ulation is the pri$ary
purpose, the fact that incidentally revenue is also o/tained does not
$a7e the i$position a ta K In a D S case, the 0ar/a0e fee was
considered as a Hservice char0eH rather than a ta as it was actually a
fee for a service 0iven /y the city which had previously /een provided at
no cost to its citizens
 -ence, not /ein0 a ta , the contention that the 0ar/a0e fee under
Ordinance No S"&;;3) violates the rule on dou/le ta ation $ust
necessarily fail
/ Jes, S"&;;3) violates the rule on e%uality
?or the purpose of 0ar/a0e collection, there is, in fact, no su/stantial
distinction /etween an occupant of a lot, on one hand, and an occupant
of a unit in a condo$iniu$, socialized housin0 pro5ect or apart$ent, on
the other hand !ost li7ely, 0ar/a0e output produced /y these types of
occupants is unifor$ and does not vary to a lar0e de0ree8 thus, a si$ilar
schedule of fee is /oth 5ust and e%uita/le
The rates /ein0 char0ed /y the ordinance are un5ust and ine%uita/le: a
resident of a ;(( s% $ unit in a condo$iniu$ or socialized housin0
pro5ect has to pay twice the a$ount than a resident of a lot si$ilar in
size8 unli7e unit occupants, all occupants of a lot with an area of ;(( s%
$ and less have to pay a 4 ed rate of "hp.(( ((8 and the sa$e a$ount
of 0ar/a0e fee is i$posed re0ardless of whether the resident is fro$ a
condo$iniu$ or fro$ a socialized housin0 pro5ect
Indeed, the classi4cations under Ordinance No S&;;3) are not 0er$ane
to its declared purpose of 2pro$otin0 shared responsi/ility with the
residents to attac7 their co$$on $indless attitude in over&consu$in0
the present resources and in 0eneratin0 waste K Instead of si$plistically
cate0orizin0 the payee into land or @oor occupant of a lot or unit of a
condo$iniu$, socialized housin0 pro5ect or apart$ent, respondent City
Council should have considered factors that could truly $easure the
a$ount of wastes 0enerated and the appropriate fee for its collection
?actors include, a$on0 others, household a0e and size, accessi/ility to
waste collection, population density of the /aran0ay or district, capacity
to pay, and actual occupancy of the property
5$EREFORE, the petition is PARTIA%%Y 6RANTE& The constitutionality and
le0ality of Ordinance No S"&;( ), S&;(.., or the 2 Socialized Housing Tax of
Quezon City K is SUSTAINE& for /ein0 consistent with Section L3 of Gepu/lic #ct,
No <;< On the other hand, Ordinance No S"&;;3), S&;(.3, which collects an
annual 0ar/a0e fee on all do$estic households in Quezon City, is here/y
declared as UNCONSTITUTIONA% AN& I%%E6A% Gespondents are &IRECTE&
to REFUN& with reasona/le dispatch the su$s of $oney collected relative to its
enforce$ent