16 G.R. No.

L-19842 December 26, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee,

vs.
CENTRAL AZUCARERA DEL DANAO, defendant-appellant.

Facts:

During the five crop years;1951-1952, 1952-1953, 1953-1954, 1954-1955 and 1955-1956,
defendant Bacolod-Murcia Milling Co., Inc., has paid P267,468.00 but left an unpaid balance of
P216,070.50; defendant Ma-ao Sugar Central Co., Inc., has paid P177,613.44 but left an unpaid
balance of P235,800.20; defendant Talisay-Silay Milling Company has paid P251,812.43 but left
an unpaid balance of an P208,193.74; and defendant Central Azucarera del Danao made a
payment of P48,879.73 but left an unpaid balance of P48,059.77.

On September 3, 1951, the Philippine Sugar Institute, known as the PHILSUGIN for short,
acquired the Insular Sugar Refinery for a total consideration of P3,070,909.60 payable, in 5
installments from the proceeds of the sugar tax to be collected under Republic Act 632.
Contending that the purchase of the Insular Sugar Refinery with money from the Philsugin Fund
was not authorized by Rep. Act 632 and that the continued operation of the said refinery was
inimical to their interests, the appellants refused to continue with their contributions to the said
fund. They maintained that their obligation to contribute or pay to the said Fund subsists only to
the limit and extent that they are benefited by such contributions since Rep. Act 632 is not a
revenue measure but an Act which establishes a "special assessment."

Issue:

Whether or not a tax measure in Rep. Act 632 is intended to raise revenues for the Government.

Ruling:

The nature of a "special assessment" similar to the case at bar has already been discussed and
explained by this Court in the case of Lutz v. Araneta, 98 Phil. 148. For in this Lutz case,
Commonwealth Act 567, otherwise known as the Sugar Adjustment Act, levies on owners or
persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a
consideration, on lease or otherwise — "a tax equivalent to the difference between the money
value of the rental or consideration collected and the amount representing 12 per centum of the
assessed value of such land. (Sec. 3)."

Under Section 6 of the said law, Commonwealth Act 567, all collections made thereunder "shall
accrue to a special fund in the Philippine Treasury, to be known as the "Sugar Adjustment and
Stabilization Fund", and shall be paid out only for any or all of the foregoing purposes or to
attain any or all of the following objectives, as may be provided by law." "The basic defect in the
plaintiff's position in his assumption that the tax provided for in Commonwealth Act 567 is a
pure exercise of the taxing power. Analysis of the Act, and particularly section 6, will show that
the tax is levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. In other words, the Act is primarily an exercise of
the police power.

On the authority of the above case, then, We hold that the special assessment at bar may be
considered similarly as the above, that is, that the levy for the Philsugin Fund is not so much an
exercise of the power of taxation, nor the imposition of a special assessment, but the exercise of
the police power for the general welfare of the entire country. It is, therefore, an exercise of a
sovereign power which no private citizen may lawfully resist.

17 G.R. No. L-23645 October 29, 1968

BENJAMIN P. GOMEZ, petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as Postmaster General, HON. BRIGIDO R.
VALENCIA, in his capacity as Secretary of Public Works and Communications, and
DOMINGO GOPEZ, in his capacity as Acting Postmaster of San Fernando, Pampanga,

Facts:

Republic Act 1635,1 as amended by Republic Act 2631,2 which provides as follows: To help
raise funds for the Philippine Tuberculosis Society, the Director of Posts shall order for the
period from August 19 to September 30 every year the printing and issue of semi-postal stamps
of different denominations with face value showing the regular postage charge plus the
additional amount of five centavos for the said purpose, and during the said period, no mail
matter shall be accepted in the mails unless it bears such semi-postal stamps: Provided, That no
such additional charge of five centavos shall be imposed on newspapers. The additional proceeds
realized from the sale of the semi-postal stamps shall constitute a special fund and be deposited
with the National Treasury to be expended by the Philippine Tuberculosis Society in carrying out
its noble work to prevent and eradicate tuberculosis. Postmaster General, in implementation of
the law, thereafter issued four (4) administrative orders numbered 3 (June 20, 1958), 7 (August
9, 1958), 9 (August 28, 1958), and 10 (July 15, 1960).

On September l5, 1963 the petitioner Benjamin P. Gomez mailed a letter at the post office in San
Fernando, Pampanga. Because this letter, addressed to a certain Agustin Aquino of 1014
Dagohoy Street, Singalong, Manila did not bear the special anti-TB stamp required by the
statute, it was returned to the petitioner.

Issue :

Whether or not Republic Act 1635,1 as amended by Republic Act 2631 violates the equal
protection clause of the Constitution as well as the rule of uniformity and equality of taxation.

RULING:
1. As explained in Commonwealth v. Life Assurance Co.:8

While the principle that there must be a reasonable relationship between classification
made by the legislation and its purpose is undoubtedly true in some contexts, it has no
application to a measure whose sole purpose is to raise revenue ... So long as the
classification imposed is based upon some standard capable of reasonable
comprehension, be that standard based upon ability to produce revenue or some other
legitimate distinction, equal protection of the law has been afforded.

Granted the power to select the subject of taxation, the State's power to grant exemption must
likewise be conceded as a necessary corollary. Tax exemptions are too common in the law; they
have never been thought of as raising issues under the equal protection clause. As for the
Government and its instrumentalities, their exemption rests on the State's sovereign immunity
from taxation. The State cannot be taxed without its consent and such consent, being in
derogation of its sovereignty, is to be strictly construed.12

2. the levying of taxes except as they are used to compensate for the burden on those who pay
them and would involve the abandonment of the most fundamental principle of government —
that it exists primarily to provide for the common good.15

Nor is the rule of uniformity and equality of taxation infringed by the imposition of a flat rate
rather than a graduated tax. A tax need not be measured by the weight of the mail or the extent of
the service rendered. We have said that considerations of administrative convenience and cost
afford an adequate ground for classification. The same considerations may induce the legislature
to impose a flat tax which in effect is a charge for the transaction, operating equally on all
persons within the class regardless of the amount involved.16

18 G.R. No. 166006 March 14, 2008

PLANTERS PRODUCTS, INC., Petitioner,

vs.
FERTIPHIL CORPORATION, Respondent.

Facts:

Petitioner PPI and private respondent Fertiphil are private corporations incorporated under
Philippine laws.3 They are both engaged in the importation and distribution of fertilizers,
pesticides and agricultural chemicals.

On June 3, 1985, then President Ferdinand Marcos, exercising his legislative powers, issued LOI
No. 1465 which provided, among others, for the imposition of a capital recovery component
(CRC) on the domestic sale of all grades of fertilizers in the Philippines.4 The LOI provides:
3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing
formula a capital contribution component of not less than ₱10 per bag. This capital contribution
shall be collected until adequate capital is raised to make PPI viable. Pursuant to the LOI,
Fertiphil paid ₱10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and
Pesticide Authority (FPA). FPA then remitted the amount collected to the Far East Bank and
Trust Company, the depositary bank of PPI. Fertiphil paid ₱6,689,144 to FPA from July 8, 1985
to January 24, 1986.6

After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the ₱10 levy. With
the return of democracy, Fertiphil demanded from PPI a refund of the amounts it paid under LOI
No. 1465, but PPI refused to accede to the demand.7

Fertiphil questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable,
oppressive, invalid and an unlawful imposition that amounted to a denial of due process of law.9
Fertiphil alleged that the LOI solely favored PPI, a privately owned corporation, which used the
proceeds to maintain its monopoly of the fertilizer industry.

ISSUE

Whether or not the issuance of LOI No. 1465 CONSTITUTES A VALID LEGISLATION
PURSUANT TO THE EXERCISE OF TAXATION AND POLICE POWER FOR PUBLIC
PURPOSES.

Ruling

While it is true that the power of taxation can be used as an implement of police power,41 the
primary purpose of the levy is revenue generation. If the purpose is primarily revenue, or if
revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a
tax.42

A plain reading of the LOI also supports the conclusion that the levy was for revenue generation.
The LOI expressly provided that the levy was imposed "until adequate capital is raised to make
PPI viable." Taxes are exacted only for a public purpose. The ₱10 levy is unconstitutional
because it was not for a public purpose. The levy was imposed to give undue benefit to PPI.

An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a
public purpose. They cannot be used for purely private purposes or for the exclusive benefit of
private persons.46 The reason for this is simple. The power to tax exists for the general welfare;
hence, implicit in its power is the limitation that it should be used only for a public purpose. It
would be a robbery for the State to tax its citizens and use the funds generated for a private
purpose.
19 G.R. No. 101273 July 3, 1992
CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), petitioner,
vs.
THE EXECUTIVE SECRETARY, THE COMMISSIONER OF CUSTOMS, THE
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, THE TARIFF
COMMISSION, THE SECRETARY OF FINANCE, and THE ENERGY REGULATORY
BOARD, respondents.

Facts

On 27 November 1990, the President issued Executive Order No. 438 which imposed, in
addition to any other duties, taxes and charges imposed by law on all articles imported into the
Philippines, an additional duty of five percent (5%) ad valorem.

On 24 July 1991, the Department of Finance requested the Tariff Commission to initiate the
process required by the Tariff and Customs Code for the imposition of a specific levy on crude
oil and other petroleum products, covered by HS Heading Nos. 27.09, 27.10 and 27.11 of
Section 104 of the Tariff and Customs Code as amended.

Meantime, Executive Order No. 475 was issued by the President, on 15 August 1991 reducing
the rate of additional duty on all imported articles from nine percent (9%) to five percent (5%) ad
valorem, except in the cases of crude oil and other oil products which continued to be subject to
the additional duty of nine percent (9%) ad valorem.

Upon completion of the public hearings, the Tariff Commission submitted to the President a
"Report on Special Duty on Crude Oil and Oil Products" dated 16 August 1991, for
consideration and appropriate action. Seven (7) days later, the President issued Executive Order
No. 478, dated 23 August 1991, which levied (in addition to the aforementioned additional duty
of nine percent (9%) ad valorem and all other existing ad valorem duties) a special duty of P0.95
per liter or P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products.

ISSUE:

Whether or not the Section 401 of the Tariff and Customs Code establishes general standards
with which the exercise of the authority delegated by that provision to the President

Ruling

There is nothing in the language of either Section 104 or of 401 of the Tariff and Customs Code
that suggest such a sharp and absolute limitation of authority.

Section 401 of the Tariff and Customs Code establishes general standards with which the
exercise of the authority delegated by that provision to the President must be consistent: that
authority must be exercised in "the interest of national economy, general welfare and/or national
security." Petitioner, however, insists that the "protection of local industries" is the only
permissible objective that can be secured by the exercise of that delegated authority, and that
therefore "protection of local industries" is the sum total or the alpha and the omega of "the
national economy, general welfare and/or national security." We find it extremely difficult to
take seriously such a confined and closed view of the legislative standards and policies summed
up in Section 401. We believe, for instance, that the protection of consumers, who after all
constitute the very great bulk of our population, is at the very least as important a dimension of
"the national economy, general welfare and national security" as the protection of local
industries. And so customs duties may be reduced or even removed precisely for the purpose of
protecting consumers from the high prices and shoddy quality and inefficient service that tariff-
protected and subsidized local manufacturers may otherwise impose upon the community.

20 G.R. No. 115455 October 30, 1995

ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL
REVENUE, respondents.

FACTS:

Various motions are filed for the declaration of unconstitutionality of R.A. No. 7716, otherwise
known as the Expanded Value-Added Tax Law. The motions, of which there are 10 in all, have
been filed by the several petitioners in these cases, with the exception of the Philippine
Educational Publishers Association, Inc. and the Association of Philippine Booksellers,
petitioners in G.R. No. 115931.

Issue:

Whether or not the R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law be
declared unconstitutional?

RULING:

Denied.

I. Power of the Senate to propose amendments to revenue bills. The enactment of S. No. 1630
is not the only instance in which the Senate proposed an amendment to a House revenue bill by
enacting its own version of a revenue bill. On at least two occasions during the Eighth Congress,
the Senate passed its own version of revenue bills, which, in consolidation with House bills
earlier passed, became the enrolled bills. On the other hand, the Ninth Congress passed revenue
laws which were also the result of the consolidation of House and Senate bills. Thus, the
enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of its
power to propose amendments to bills required to originate in the House, passed its own version
of a House revenue measure.
II. S. No. 1630 a mere amendment of H. No. 11197. In several instances the provisions of S.
No. 1630, clearly appear to be mere amendments of the corresponding provisions of H. No.
11197. Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the
Senate bill was a mere amendment of the House bill, H. No. 11197 in its original form did not
have to pass the Senate on second and three readings. It was enough that after it was passed on
first reading it was referred to the Senate Committee on Ways and Means. Neither was it
required that S. No. 1630 be passed by the House of Representatives before the two bills could
be referred to the Conference Committee.

III. The President's certification. It is enough that he certifies the bill which, at the time he
makes the certification, is under consideration. Since on March 22, 1994 the Senate was
considering S. No. 1630, it was that bill which had to be certified. For that matter on June 1,
1993 the President had earlier certified H. No. 9210 for immediate enactment because it was the
one which at that time was being considered by the House. This bill was later substituted,
together with other bills, by H. No. 11197.

IV. Power of Conference Committee. The Philippine Congress has not adopted a rule
prescribing open hearings for conference committees. At all events, under Art. VI, §16(3) each
house has the power "to determine the rules of its proceedings," including those of its
committees. Any meaningful change in the method and procedures of Congress or its committees
must therefore be sought in that body itself.

V. The titles of S. No. 1630 and H. No. 11197. To require every end and means necessary for
the accomplishment of the general objectives of the statute to be expressed in its title would not
only be unreasonable but would actually render legislation impossible. [Cooley, Constitutional
Limitations, 8th Ed., p. 297] As has been correctly explained:

The details of a legislative act need not be specifically stated in its title, but matter
germane to the subject as expressed in the title, and adopted to the accomplishment of the
object in view, may properly be included in the act. Thus, it is proper to create in the
same act the machinery by which the act is to be enforced, to prescribe the penalties for
its infraction, and to remove obstacles in the way of its execution. If such matters are
properly connected with the subject as expressed in the title, it is unnecessary that they
should also have special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed. 725)

VI. Claims of press freedom and religious liberty. As a general proposition, the press is not
exempt from the taxing power of the State and that what the constitutional guarantee of free
press prohibits are laws which single out the press or target a group belonging to the press for
special treatment or which in any way discriminate against the press on the basis of the content
of the publication, and R.A. No. 7716 is none of these. Since the law granted the press a
privilege, the law could take back the privilege anytime without offense to the Constitution. The
reason is simple: by granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.

VII. Alleged violations of the due process, equal protection and contract clauses and the rule
on taxation.
(1) ON The ISSUE OF impairment of the obligations of contracts, "Authorities from numerous
sources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or
an increased tax on an old one, interferes with a contract or impairs its obligation, within the
meaning of the Constitution. Even though such taxation may affect particular contracts, as it may
increase the debt of one person and lessen the security of another, or may impose additional
burdens upon one class and release the burdens of another, still the tax must be paid unless
prohibited by the Constitution, nor can it be said that it impairs the obligation of any existing
contract in its true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil.
567, 574 (1919))

(2) ON The ISSUE OF classifyng transactions as covered or exempt without reasonable basis,
“The sale of food items, petroleum, medical and veterinary services, etc., which are essential
goods and services was already exempt under §103, pars. (b) (d) (1) of the NIRC before the
enactment of R.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted
exemption to these transactions, while subjecting those of petitioner to the payment of the VAT.
Moreover, there is a difference between the "homeless poor" and the "homeless less poor" in the
example given by petitioner, because the second group or middle class can afford to rent houses
in the meantime that they cannot yet buy their own homes. The two social classes are thus
differently situated in life. "It is inherent in the power to tax that the State be free to select the
subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling
out of one particular class for taxation, or exemption infringe no constitutional limitation.'"

(3) ON The ISSUE OF violating the rule that taxes should be uniform and equitable and that
Congress shall "evolve a progressive system of taxation." Equality and uniformity of taxation
means that all taxable articles or kinds of property of the same class be taxed at the same rate.
The taxing power has the authority to make reasonable and natural classifications for purposes of
taxation. To satisfy this requirement it is enough that the statute or ordinance applies equally to
all persons, forms and corporations placed in similar situation. (City of Baguio v. De Leon,
supra; Sison, Jr. v. Ancheta, supra)

VIII. Alleged violation of policy towards cooperatives. The Constitution does not really require
that cooperatives be granted tax exemptions in order to promote their growth and viability. As a
matter of policy cooperatives should be granted tax exemptions, but that is left to the discretion
of Congress. If Congress does not grant exemption and there is no discrimination to
cooperatives, no violation of any constitutional policy can be charged. Indeed, petitioner's theory
amounts to saying that under the Constitution cooperatives are exempt from taxation. Such
theory is contrary to the Constitution under which only the following are exempt from taxation:
charitable institutions, churches and parsonages, by reason of Art. VI, §28 (3), and non-stock,
non-profit educational institutions by reason of Art. XIV, §4 (3).