The power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency that is to pay it. (Mactan Cebu Int’l. Airport Authority v. Marcos, 330 Phil. 392 (1996)). It is based on the principle that taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need. (Proton Pilipinas Corp. v. Republic of the Philippines, G.R. No. 165027, October 16, 2006, citing Province of Tarlac v. Alcantara, 216 SCRA 790, 798 (1992)). Thus, the theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people. (NPC v. City of Cabanatuan, 449 Phil. 233 (2003)).

    On the other hand, police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property. It is the most pervasive, the least limitable, and the most demanding of the three fundamental powers of the State. The justification is found in the Latin maxims salus populi est suprema lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others). As an inherent attribute of sovereignty which virtually extends to all public needs, police power grants a wide panoply of instruments through which the State, as parens patriae, gives effect to a host of its regulatory powers. (JMM Promotions & Mgt. Inc. v. CA, G.R. No. 120095, August 5, 1996, 260 SCRA 319). The power to “regulate” means the power to protect, foster, promote, preserve, and control, with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons. (Phil. Assn. of the Service Exporters, Inc. v. Torres, G.R. No. 101279, August 6, 1992, 212 SCRA 298).

    The conservative and pivotal distinction between these two powers rests in the purpose for which the charge is made. If generation 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 revenue is incidentally raised does not make the imposition a tax. (Progressive Dev. Corp. v. Quezon City, G.R. No. 36081, April 24, 1989, 172 SCRA 629; Gerochi, et al. v. Dept. of Energy, et al., G.R. No. 159769, July 17, 2007, Nachura, J).