Miranda vs. Carreron et al.( G.R. No.

143540, April 11, 2003) (taxpayers suit) FACTS In the early part of 1998, Vice Mayor Amelita Navarro, while serving as acting Mayor of Santiago City because of the suspension of Mayor Jose Miranda, appointed the above name respondents to various positions in the city government. Their appointments were with permanent status which the Civil Service Commission approved. When Mayor Jose Miranda reassumed his post after his suspension, he formed a three-man special performance audit team to conduct personnel evaluation of those who were previously screened by the PSPB and those on probation. Three months thereafter, he issued an order terminating the respondents services because they performed poorly during the probationary period. Respondents appealed to the Civil Service Commission, contending that being employees on probation, they can be dismissed from the service on the ground of poor performance only after their probationary period. Civil Service Commission issued Resolution reversing the order of Mayor Miranda and ordering that respondents be reinstated to their former positions with payment of back wages. Meanwhile, the COMELEC disqualified Mayor Jose Miranda as mayoralty candidate in the 1998 May elections. His son Joel Miranda, herein petitioner, substituted for him and was proclaimed Mayor of Santiago City. He then filed a MR of the Civil Service Commission Resolution but it was denied. Petitioner then filed with Court of Appeals a petition for review on certiorari but the Court of Appeals rendered a decision affirming in toto the Resolution of CSC. Forthwith, petitioner filed a MR but before it could be resolved by the Court of Appeals, several events supervened, wherein the proclamation of Miranda as Mayor of Santiago City was set aside for lack certificate of candidacy and declared Navarro as City Mayor by operation of law. Mayor Navarro then filed with the Court of Appeals Motion to Withdraw the MR previously filed by petitioner which the Court of Appeals granted. In effect, the Civil Service Commission Resolution reinstating respondents to their positions stays. Contention of the parties: Miranda claims that the Court of Appeals erred in affirming the Civil Service Commission Resolution declaring that the termination of respondents services is illegal and ordering their reinstatement to the former position with payment of back wages. In their comment, the respondents claim that since petitioner ceased to be Mayor of Santiago City, he has no legal personality to file the instant petition and therefore, the same should be dismissed. In his reply, Miranda contents that as a taxpayer, he has a legal interest in the case at bar, hence, can lawfully file this petition. Issue: Whether or not this is a taxpayers suit and whether respondents services were illegally terminated. Held: Even as taxpayer, petitioner does not stand to be benefited or injured by the judgment of the suit. Not every action filed by a taxpayer can qualify to challenge the legality of official acts done by the government. It bears stressing that a taxpayers suit refers to case where the act complained of directly involves the illegal disbursement of public funds from taxation. The issue in this case is whether respondents services were illegally terminated. Clearly, it does not involve the illegal disbursement of public funds; hence, petitioners action cannot be considered a taxpayers suit. Inherent Limitations:

Purpose must be public in nature VALENTIN TIO doing business under the name and style of CMI ENTERPREISES, petitioner, vs. VIDEIOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA COMMISSION, CITY MAYOR and CITY TREASURER OF MANILA, respondents. Facts: The petitioner in this case filed this petition on his own behalf and purportedly on behalf of other video gram operators adversely affected. He assails the constitutionality of Presidential Decree No. 1987 entitled An Act Creating the Video gram Regulatory Board with broad powers to regulate and supervise the video gram industry. Petitioner averred that the imposition of a tax of 30% on the gross receipts payable to the local government provided for the Sec 10 of the decree is a RIDER and the same is not germane to the subject matter thereof and it is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation of the due process clause of the Constitution. The rationale behind the enactment of the DECREE expressly laid the purpose to include taxation of the video industry in order to regulate the rationalize the uncontrolled distribution of video grams and the fact that the activities of video establishments are virtually untaxed. Issue: Won the Decree is unconstitutional because it included a tax provision which is not germane to the subject matter of the decree. Held: The Supreme Court held that there is no clear violation of the Constitution which would justify the pronouncing Presidential Decree No. 1987 as unconstitutional and void. The tax provision is not inconsistent with, nor foreign to that general subject and title. As a tool for regulation, it is simply one of the regulatory and control mechanisms scattered throughout the DECREE. The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulation and protecting the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. The express purpose of the DECREE to include taxation of the video industry is to regulate and rationalize the heretofore uncontrolled distribution of video grams. The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the realization that earnings of video gram establishments of around P600 million per annum have not been subjected to tax, thereby depriving the Government of an additional source of revenue. While the underlying objective of the DECREE is to protect the moribund movie industry, there is no question that public welfare is at bottom of its enactment, considering the unfair competition posed by rampant film piracy; the erosion of the moral fiver of the viewing public brought about by the availability of unclassified and unreviewed video tapes containing pornographic films and films with brutally violent sequences; and losses in government revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video establishments are virtually untaxed.

Inherent Limitations: Purpose must be public in nature

CALTEX PHILIPPINES, INC., Petitioner vs. THE HONORABLE COMMISSION ON AUDIT, HONORABLE COMMISSIONER BARTOLOME C. FERNANDEZ and HONORABLE COMMISSIONER ALBERTO P. CRUZ. G.R. NO. 92585, May 8, 1992 Facts: The case revolves around the Oil Price Stabilization Fund (OPSF) created under Section 8 of Presidential Decree (P.D.) No. 1956, as amended by Executive Order (E.O.) No. 137 for the purpose of minimizing frequent price changes brought about by exchange rate adjustments and/or changes in world market prices of crude oil and imported petroleum products. On 2 February 1989, the COA sent a letter to Caltex Philippines, Inc. (CPI), hereinafter referred to as Petitioner, directing the latter to remit to the OPSF its collection, excluding that unremitted for the years 1986 and 1988, of the additional tax on petroleum products authorized under the aforesaid Section 8 of P.D. No. 1956 which as of 31 December 1987, amounted to 335,037,649.00 and informing it that, pending such remittance all of its claims from the OPSF shall be held in abeyance. On 9 March 1989, the COA sent another letter to petitioner informing it that partial verification with the OEA showed that the grand total of its unremitted collections of the above tax is P1,287,668,820.00, directing it to remit the same, with interest and surcharges thereon; advising it tat the COA will hold in abeyance the audit of all its claims for reimbursement from the OPSF; and directing it to desist from further offsetting the taxes collected against outstanding claims in 1989 and subsequent periods. Petitioner requested the COA for an early release of its reimbursement certificates from the OPSF covering claims with the Office of Energy Affairs since June 1987 up to March 1989, invoking in support thereof COA Circular No. 89-299 on the lifting of pre-audit of government transactions of national government agencies and government-owned or controlled corporations. The COA denied petitioners request for the early release of the reimbursement certificates from the OPSF and repeated its earlier directive to petitioner to forward payment of the latters unremitted collections to the OPSF to facilitate COAs audit action on the reimbursement claims. Petitioner claims that the amounts due from it do not arise as a result of taxation because P.D. 1956, as amended, did not create a source of taxation; it instead established a special fund. It also contends that the OPSF contribution do not go to t he general fund of the state and are not used for public purpose, i.e., not for the support of the government, the administration of law, or the payment of public expenses. This alleged lack of a public purpose behind expenses. This alleged lack of a public purpose behind OPSF exactions distinguished such from a tax. Issue: Whether or not the OPSF contributions are for public purpose. Held: The Supreme Court ruled against the petitioners contention that the OPSF contributions are not for a public purpose because they go to a special fund of the government. Taxation is no longer envisioned as a measure merely to raise revenue to support the existence of the government; taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected with public interest as to be within the police power of the state. There can be no doubt that the oil industry is greatly imbued with public interest as it vitally affects the general welfare. Any unregulated increase in oil prices could hurt the lives of a majority of the people and cause economic crisis of untold proportions. It would have a chain reaction in terms of, among others, demands for wage increases and upward spiraling of the cost of basic commodities. The stabilization then of oil prices is one of prime concern which the state, via its police power may properly address.

Inherent Limitations Purpose must be public in nature Gaston vs. Republic Planter 158 SCRA 626 Facts: Petitioners who are sugar producers, sugarcane planters and millers, who have come to this Court in their individual capacities and in representation of other sugar producers, planters and millers and intervenors Angel Severino, Jr. et. al., who are sugarcane planters planting and milling their sugarcane in different mill districts of Negros Occidental, were allowed to intervene by the Court, since they have common cause with petitioners and respondents having interposed no objection to their intervention, filed with the Supreme Court a petition praying for a Writ of mandamus to order respondent Philippine Sugar Commission (PHILSUCOM, for short) which was superseded by its co-respondent Sugar Regulatory Administration (SRA, for brevity) and Republic Planters Bank (briefly, the Bank(, a commercial banking corporation, implement the privatization of the Bank by the transfer and distribution of the shares of stock of the said Bank which is in the name of PHILSUCOM to the sugar producers, millers and planters, who are the true and beneficial owners thereof. PHILSUCOM and SRA argued that no trust results and that the stabilization fees collected are considered government funds, that the transfer of shares of stock from PHILSUCOM to the sugar producers would be irregular, if not illegal. Issue: Whether the stabilization fees collected from sugar planters and millers pursuant to Section 7 of P.D. No. 388 are funds in trust for them, or public funds. Held: The Supreme Court held that the stabilization fees collected are in the nature of a tax which constitutes public funds, which is within the power of the State to impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D. No. 388). The collections made accrue to a Special Fund, a Development 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 a pure exercise of the 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. The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special purpose that of Financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market that fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special purpose. 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 stature, 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 funds of the Government. The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by law. That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them since it is also they who are to be benefited from the expenditure of the funds derived from it. To rule in petitioners favor would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, and all its components,

stabilization of the domestic market, including the foreign market the industry being of vital importance to the countrys economy and to national interest. WHEREFORE, the Writ of mandamus is denied and the Petition hereby dismissed. No costs.

Inherent Limitations Public Purpose

Pascual vs. Secretary of Public Works (110 Phil 331) Facts: A law was enacted in 1953 containing a provision for the c o n s t r u c t i o n , reconstruction, repair, extension and improvement of Pasig feeder road terminals within Antonio Subdivision owned by Senator Jose C. Zulueta. Zulueta donated said parcels of land to the Government 5 months after the enactment of the law, on the condition that if the Government violates such condition the lands would revert to Zulueta. The provincial governor of Rizal, Wenceslao Pascual, questioned the validity of the donation and the Constitutionality of the particular provision, it being an appropriation not for a public purpose. Petitioner prayed, therefore, that the contested item of Republic Act No. 920 be declared null and void; that the alleged deed of donation of the feeder roads in question be "declared unconstitutional and, therefore, illegal"; that a writ of injunction be issued enjoining the Secretary of Public Works and Communications, the Director of the Bureau of Public Works and Highways and Jose C. Zulueta from ordering or allowing the continuance of the above-mentioned feeder roads project, and from making and securing any new and further releases on the aforementioned item of Republic Act No. 920, and the disbursing officers of the Department of Public Works and Highways from making any further payments out of said funds provided for in Republic Act No. 920; and that pending final hearing on the merits, a writ of preliminary injunction be issued enjoining the aforementioned parties respondent from making and securing any new and further releases on the aforesaid item of Republic Act No. 920 and from making any further payments out of said illegally appropriated funds. Respondents moved to dismiss the petition upon the ground that petitioner had "no legal capacity to sue", and that the petition did "not state a cause of action". In support to this motion, respondent Zulueta alleged that the Provincial Fiscal of Rizal, not its provincial governor, should represent the Province of Rizal, pursuant to section 1683 of the Revised Administrative Code; that said respondent is " not aware of any law which makes illegal the appropriation of public funds for the improvements of . . . private property"; and that, the constitutional provision invoked by petitioner is inapplicable to the donation in question, the same being a pure act of liberality, not a contract. The Court of First Instance of Rizal, granted respondents motion to dismiss the above entitled case and dissolve the writ of preliminary injunction therein issued, without costs. Hence, this petition. Issue: Whether or not the appropriation is for public purpose. Held: No. The appropriation of amount for the construction on a land owned by private individual is invalid imposition since it results in the promotion of private enterprise; it benefits the property of a particular individual. The provision that the land thereafter be donated to the government does not cure this defect. The rule is that if the public advantage or benefit is merely incidental in the promotion of a particular enterprise, such defect shall render the law invalid. On the other hand, if w h a t i s i n c i d e n t a l i s t h e p r o m o t i o n o f a p r i v a t e e n t e r p r i s e , t h e t a x l a w s h a l l b e deemed for public purpose Hence, it is our considered opinion that the circumstances surrounding this case sufficiently justify petitioners action in contesting the appropriation and donation in question; that this action should not have been dismissed by the lower court; and that the writ of preliminary injunction should have been maintained. Wherefore, the decision appealed from is hereby reversed, and the records are remanded to the lower court for further proceedings not inconsistent with this decision, with the costs of this instance against respondent Jose C. Zulueta. It is so ordered.