[ Memorandum Circular No. 200, August 7, 1968 ]
HOLDING ILLEGAL THE IMPOSITION OF A CITY OR MUNICIPAL TAX OR FEE ON DEPARTING AIRLINE PASSENGERS.
For the information, guidance and strict compliance by all concerned, particularly local government officials, there is quoted hereunder the Memorandum for the President dated July 24, 1968, of the Secretary of Justice on the subject, “Legality of City Ordinances Imposing a Fee or Tax on Departing Airline Passengers”:
“This has reference to your directive to study the legally of city ordinances imposing a fee or tax on every departing passenger boarding commercial aircraft using public airport owned by the national governments
“Section 2 of the Local Autonomy Act (R.A. 2264, as amended by R.A. 4497) provide:
‘Section 2. Taxation. – Any provision of law to the contrary notwithstanding, all chartered cities, municipal districts shall have authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or exercising privileges in chartered cities, municipalities or municipal districts by requiring them to secure licenses at rates fixed by the municipal board or city council of the city the municipal council of the municipal district; to collect fees and charges for service rendered by the city, municipality or municipal district; to regulate and impose reasonable fees for services rendered in connection with any business, profession or occupation being conducted within the city, municipality or municipal district and otherwise to levy for public purpose, just and uniform taxes, licenses or fees: Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National Internal Revenue Code: Provided, however, That no city, municipality or municipal district may levy or impose any of the following:
(a) Residence tax;
(b) Documentary stamp tax;
(c) Taxes on the business of persons engaged in the printing and publication of any newspaper, magazine, review or bulletin appearing ;it regular intervals and having fixed prices for subscription and sale, and which is not published primarily for the purpose of publishing advertisements;
(d) Taxes en persons operating waterworks, irrigation and other public utilities except electric light, heat and power;
(e) Taxes on forest products and forest concessions;
(f) Taxes on estates, inheritances, gifts, legacies, and other acquisitions mortis causa;
(g) Taxes on income of any kind whatsoever;
(h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof;
(i) Customs duties registration, wharfage or wharves owned by the national government, tonnage, and all other kinds of customs fees, charges and dues;
(j) Taxes of any kind on banks, insurance companies, and persons raying franchise tax;
(k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign insurance companies; and
(l) Taxes, fees r levies, of any kind, which in effect a burden on exports of Philippine finished, manufactured or processed products of Philippine cottage industries.xxx’
“In connection with the above provision, the Supreme Court has ruled that the grant of the power to tax thereunder ‘is sufficiently plenary to cover everything, excepting those which are mentioned therein, subject only to the limitation that the tax so levied is for public purposes, just and uniform’ (Nim Bay Mining Co. vs. Municipality of Roxas, Province of Palawan, G.R. No. L-20125, July 20, 1965; Hodges vs. Municipal Board of the City of Iloilo, G.R. No. L-18276, prom. Jan. 12, 1967).
“However, the general grant to municipal corporations of the power to tax, subject only to defined exceptions, is not without inherent limitations. The widening of the scope of the taxing power did not have the effect of setting aside certain basic principles in municipal taxation, e.g. that existing constitutional limitations, like those having to do with civil liberties, apply to municipal taxation.
“Thus, the imposition of any tax or fee to be paid as a condition to the exercise of a civil liberty has been regarded in the same light as censorship and declared unconstitutional in a leading; case wherein the Court held that the license tax paid by retailers could not apply to a nonprofit organization engaged in the sale of bibles and religious pamphlets, for it would impair the free exercise and enjoyment of religious profession and worship as well as the right of dissemination of religious belief. (Fernandez, Municipal Taxation pp. 4-0-4-1, citing American Bible Society vs. City of Manila, G.R. No. L-9637, prom. April 30, 1957/)
“The right to travel which is part of liberty of abode and of changing the same is a constitutional right which may not be impaired or curtailed without due process of law (Kent vs. Dulles, 357 US 116, 125; Allgeyer vs. Louisiana, 165 U.S. 578, Villanueva vs. Lukban, 39 Phil. 778) except in time of war, flood, fire or pestilence (Korematsu vs. U.S. 323 U.S. 214; Zemel vs. Dean Rusk 381 U.S. 1). It is believed that the imposition of a tax by a local government on every departing airline passenger, not to mention similar imposition of other local governments, constitutes an undue restriction on an individual’s fundamental right to travel from one place to another, and for that reason is constitutionally and legally untenable.
“In the case of Crandall vs. Nevada [1 Wall (U.S.) 35, 18 L. Ed. 794] the US Supreme Court has had occasion to pass upon a law of the state of Nevada imposing a tax upon every person living the state of Nevada. Aside from declaring the law void on account of two provisions of the US Constitution (forbidding any state to levy any imposts or duties on imports or exports, and conferring on Congress the power to regulate commerce among the several states), the Court stressed the following:
‘The people of these United States constitute one nation. They have a government I which all of them are deeply interested. This government has necessarily a capital established by law, where its principal operations are conducted. Here sits its legislature, composed of Senators and Representatives, from the states and from the people of the states. Here resides the President, directing through thousands thousands of agents, the execution of the laws over all this vast country. Here is t: seat of the supreme judicial power of the nation, to which all its citizens have a right to resort to claim justice at its hands. Here are the great Executive Departments, administrating the offices of the mails, of the public lands, of the collection and distribution of the public revenues, and of our foreign relations. These are all established and conducted under the admitted powers of the Federal government. The government has a right to call to this point any or all of its citizens to aid in its service, as members of the Congress, of the courts, of the Executive Departments, and to fill all its other offices; and this right cannot be made to depend upon the pleasure of a of a state over whose territory they must pass to reach the point where these services must be rendered, The government also, has its offices of secondary importance in all other parts of the country. On the seacoasts and on the rivers it has its ports of entry. In the interior it has its land offices, its revenue offices, and its sub-treasuries. In all these it demands the services of its citizens, and is entitled to bring them to those points from all quarters of the nation, and no power can exist in a state to obstruct this right that would not enable it to defeat the purposes for which the government was established.
‘The federal power has a right to declare and prosecute wars and, as a necessary incident, to raise and transport troops through and over the territory of any state of the Union.1âшphi1
‘If this right is dependent in any sense, however limited, upon the pleasure of a state, the government itself may be overthrown by an obstruction to its exercise. Much the largest part of the transportation of troops during the late Rebellion was by railroads, and largely through states whose people were hostile to the Union. If the tax levied by Nevada on railroad passengers had been the law of Tennessee, enlarged to meet the wishes of her people, the Treasury of the United States could not have paid the tax necessary to enable its armies to pass through her territory.
‘But if the government has these rights on her own account, the citizen also has correlative right. He has the right to come to the seat of government to assert any claim he may have upon that government, or to transact any business he may have with it. To seek its protection, to share its offices, to engage in administering its functions, he has a right to free access to its sea-ports, through which all the operations of foreign trade and commerce are conducted, to the sub-treasuries, the land offices, the revenue offices, and the courts of justice in the several states, and this right is in its nature independent of the will of any state over whose soil he must pass in the exercise of it.’
“The above argument surely applies with greater force in this jurisdiction. For if none of the states comprising the American federal union which are sovereign within their respective territories, subject only to limitations found in the Federal Constitution, may validly impose a tax on persons leaving or passing through the state, it is but logical to conclude that in our unitary system where the local governments are mere creations of Congress, possessing; only delegated and limited authority, no city or municipality may legally impose a tax on persons departing from public airports constructed within its territorial jurisdiction by the national government for the general use and convenience of all the people who wish to travel by air transportation.
“It is also s well-established principle in the law municipal corporations that on ordinance to be valid and binding must conform to the statutes and general laws of the state. When particular subject matter, otherwise falling within the ambit of the municipal power to tax, has been regulated in sufficient detail through a particular statute, it has been held that no municipal license or tax can be imposed thereon on the theory that the field having been fully occupied by the legislative enactment, municipal regulation is thereby implicitly excluded. (See City of Manila vs. Tanquintic, 58 Phil, 297, Opinions No. 290, s. 1958; No. 206, s, 1952; and No. 88, s. 1951) As regards the Manila International Airport and other public airports, it is significant to note that Congress has enacted a special law vesting administration, operation, management, control, maintenance and development thereof in the Civil Aeronautics administration (sec. 32, subsec. 24, Republic Act No. 776). Considering the scope of the statute, it is indeed difficult to perceive how any city or municipal government may by ordinance impose a tax or fee on airline passengers departing from such airports without invading or intruding into an area already covered and preempted by national legislation. Examination of the said Civil Aeronautics Act reveals that it has fully and adequately dealt with the field of legislation concerning the use, administration, operation, etc. of government-owned airports or aerodromes and necessary facilities for air travel. If the municipal imposition is conceived or designed or operates in effect to curtail or impinge on the traveler’s right to leave or deport from the locality via air carrier or any other means of transportation, for that matter, unless he pays the local tax or prescribed, notwithstanding that the cited law and regulations adopted pursuant thereto allow him otherwise to do so, we believe that the municipal ordinance cannot prevail over the national law and should be deemed an invalid and unenforceable local legislation.
“Needless to add, we are of the opinion that the imposition of the aforementioned city or municipal tax or fee on departing airline passengers is legally untenable.”
Manila, August 7, 1968.
