Constitutional Limitations

Note: Majority pertains to all members of the Congress not the

attendees.

privatization of Republic Planters Bank by the transfer and

distribution of the shares of stock in the said bank claiming that
they are the beneficial owners of the 761,416 common shares
valued at P36,548.000 and 53,005,045 preferred shares with a total
per value P254, 424,224.71 for the reason that the said investment
had been funded by the deduction of P1 per picul from sugar
proceeds of the sugar producers commencing the year of 19781979 until the present stabilization fund pursuant to P.D. 368.

6. All money collected on any tax levied for special purpose

shall be treated as a special fund and paid for such purpose
only. If the purpose of such special fund was created has
been fulfilled or abandoned, the balance if any, shall be
transferred to the general funds.

PHILSUCOM and SRA transverse the petition arguing that no

trust results from Section 7 of P.D. No. 288 that the stabilization fees
are collected are considered government fuinds under the
Government Auditing Code that the transfer of shares of stock from
PHILSUCOM to the sugar producers would be irregular, if not illegal.

5.
No law granting any tax exemptions shall be passed
without the concurrence of a majority vote.

Gaston vs. Republic Planters Bank

Facts:
The petitioners are sugar producers, sugarcane planters and
millers who have come to this Court in their individual capacities
and in representation of other sugar planters, producers and millers.
Philippine Sugar Commission (PHILSUCOM) was formerly the
government office tasked with the function of regulating the sugar
industry until it was superseded by its co-respondent Sugar
Regulatory Administration (SRA). Although said executive abolished
PHILSUCOM, its existence as a juridical entity was mandated by to
continue for three(3) more years for the purpose of prosecuting and
defending suits by or against it and enables it to settle and close its
affairs, to dispose of and convey its properties.
The petitioners have come to this Court praying for a Writ of
Mandamus to compel PHILSUCOM to implement and accomplish the

Issue: Whether the stabilization fees collected from sugar

producers, planters and millers pursuant to Section 7 of P.D. No. 288
are public funds.
Ruling:
Yes, the stabilization fees collected are in the nature of a tax,
which is within the power of the State to impose for the promotion
for the sugar industry. The collection made accrue to Special
Fund, a Developmental and Stabilization fund almost identical to
the Sugar Adjustment and Stabilization Fund created under
Section 6 of Commonwealth Act 567. The tax collected is not in pure
exercise of taxing power. It is levied with a regulatory purpose, to
provide means for the stabilization of the sugar industry. The levy is
primarily in the exercise of the police power of the state. Having
been levied for a special purpose, the revenues collected are to be
treated as a special fund, to be, in the language of the statute,

administered in trust for the purpose intended. Once the purpose

has been fulfilled or abandoned, the balance, if any, is to be
transferred to the general fund of the Government.

protection and due process clauses had been transgressed, as well

as the rule requiring uniformity in taxation. In response thereto, the
Solicitor General stated in his answer that BP135 is a valid exercise
of the States power to tax.
Issue: Who among the contenders are correct?

7. Presidents veto power on appropriation, revenue and

tariff bills.
Veto Power- The power vested with a government official or
entity preventing justifiably the furtherance of a proposed measure
by another government body.
Purpose:

To preserve the integrity of the branch of the

government in which it is vested and thus maintain
equilibrium of government powers.

8. Judicial power to review legality of tax.

Judicial review- a process under which executive and
legislative actions are subject to review by the judiciary (Wikipedia)
Sison vs. Ancheta, July 25, 1984, 130 SCRA 652
Facts:
The National Internal Revenue Code was amended by BP 135,
effectively broadening the rates of tax on individual income taxes.
Petitioner brought a taxpayers suit alleging that the amendatory
provision was arbitrary amounting to class legislation, oppressive
and capricious in character. He concludes that both the equal

Ruling:
Finding in favor of the respondents contention, the Supreme
Court held that being an attribute of sovereignty, the power to tax is
the strongest of all the powers of the government. So powerful that
Chief Justice Marshall once said that the power to tax involves the
power to destroy. However, the power to tax is restricted by the
equal protection clause and due process clauses of the Constitution.
Hence, Justice Frankfurter could rightfully concluded: The web
unreality spun from Marshalls famous dictum was brushed away by
one stroke of Mr. Justice Holmess pen stating that The power to
tax is not the power to destroy while the court sits
The Constitution as the fundamental law overrides any
legislative or executive act that runs counter to it. In any case,
therefore, where it can be demonstrated that the challenged
statutory provision fails to abide by its command, then the court
must declare and adjudge it null.
9. Grant of power to the local government units to create its
own sources of revenue.
City of Baguio vs. De Leon, October 31, 1968, 25 SCRA 938
Facts:

The City of Baguio passed an ordinance imposing a license fee

on any person, entity or corporation doing business in the City. The
ordinance sourced its authority from RA No. 329, thereby amending
the city charter empowering it to fix the license fee and regulate
businesses, trades and occupations as may be established or
practiced in the City. De Leon was assessed for P50 annual fee it
being shown that he was engaged in property rental and deriving
income therefrom. The latter assailed the validity of the ordinance
arguing that is ultra vires fro there is no statutory authority which
expressly grants the City of Baguio to levy such tax.
Issue: Is the contention of the defendant tenable?
Ruling:
No, First, RA 329 was enacted amending Section 2553 of the
Revised Administrative Code empowering the City Council not only
to impose a license fee but to levy tax for the purpose of revenue,
thus the ordinance cannot be considered as ultra vires for there is
more than ample statutory authority for the enactment thereof.
10. Prohibition against taxation of non-stock, non-profit
institutions.
11. Tax bills should originate exclusively in the House of
Representatives.
Tolentino vs. Secretary of Finance, August 25, 1994, 235 SCRA 630

Facts:
Petitioners assail the constitutionality of RA 7116 imposing
Value Added Tax (VAT) on the sale, barter or exchange of goods and
properties as well as on the sale of exchange services. It is
equivalent to 10% of gross selling price or gross value in money of
good or properties sold, bartered or exchanged or the gross receipts
from the sale or exchange services. RA 7716 seeks to widen the tax
base on exiting VAT system and enhance its administration by
amending the NIRC. The contention of petitioners is that in enacting
the VAT law, Congress violated the Constitution because RA 7716
did not originate exclusively in the House of Representatives,
because it is in fact the result of the consolidation of two distinct
bills, one from the House of Representatives and the other from the
Senate.
Issue: Is contention of the petitioners correct?
Ruling:
No, it is not the law but the revenue bill which is required by
the Constitution to originate exclusively in the House of
Representatives. A bill originating in the House of Representatives
may undergo extensive changes in the Senate that may result in
the rewriting of the whole. To insist that the revenue statute and not
only the bill must substantially be the same as the House bill will be
to violate the Senates power to concur and propose amendments.