Limitations on the taxing power doctrines

TAXATION 1 CASES DOCTRINES

GOMEZ VS PALOMAR (1968)

FACTS: Petitioner questions the constitutionality of R.A. 1635 (AN ACT TO REQUIRE THE PRINTING AND ISSUE OF SEMI-POSTAL STAMPS IN ORDER TO RAISE FUNDS FOR THE PHILIPPINE TUBERCULOSIS SOCIETY) mandating the bearing of Anti-TB stamps on envelopes, as well as its implementing administrative orders, contending that it is not for a public purpose.

HELD: R.A. 1635 is valid. 

RATIO: Exercise of Regulatory power. The eradication of a dreaded disease is a public purpose. The PTS is merely an agency through which the proceeds are given or allotted, but ultimately the beneficiaries are all the tuberculosis patients. But if by public purpose the petitioner means benefit to a taxpayer as a return for what he pays, then it is sufficient answer to say that the only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes. The money raised from the sale of the Anti-TB stamps is spent for the benefit of the Philippine Tuberculosis Society, a private organization, without appropriation by law. The money is treated as a special fund.

LUTZ VS ARANETA (1955)

FACTS: Plaintiff Lutz assailed the constitutionality of Sections 2 and 3, C.A. 567 which provided for an increase of the existing tax on the manufacture of sugar, alleging such tax as unconstitutional and void for not being levied for a public purpose but for the aid and support of the sugar industry exclusively.

HELD: Valid. The Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed full play, subject only to the test of reasonableness;

The protection and promotion of the sugar industry is a matter of public concern. This is an exceptional case because the sugar industry was very down at that time. (if it is decided at present, doubtful that it will pass the constitutional test.

VALENTIN TIO v. VIDEOGRAM
REGULATORY BOARD(1987)

RATIO: The Supreme Court held the levy of 30% tax under P.D. 1987 (tax for videograms)as for a public purpose, and therefore a valid imposition.

Exercise of Regulatory power: The law, according to the Court, was imposed primarily for answering the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. Hence, while the direct beneficiaries of the said decree is the movie industry, the citizens are held to be its indirect beneficiaries.

CITY OF BAGUIO v. FORTUNATO
DE LEON
25 SCRA 938

FACTS: Defendant-appellant De Leon, a real estate dealer, assailed the validity of an ordinance of the City of Baguio imposing a license fee on any person, firm, entity, or corporation doing business in the City of Baguio.

HELD: Republic Act No. 329 was enacted amending Section 2553 of the Revised Administrative Code, empowering the City Council not only to impose a license fee but also to levy a tax for purposes of revenue.

Thus, the City Council of Baguio now has the power to tax, to license, and to regulate all businesses, trades, and occupations therein.The ordinance under consideration, therefore, cannot be considered ultra vires.

HON. RAMON BAGATSING, et al. v.
HON. PEDRO RAMIREZ, et al.
74 SCRA 306 (1976)

RATIO: So long as the purpose is public, it does not matter whether the agency through which the money is dispensed is public or private. The right to tax depends upon the ultimate use, purpose and object for which the fund is raised. It is not dependent on the nature or character of the person or corporation whose intermediate agency is to be used in applying it.
he entrusting of the collection of the fees does not destroy the public purpose of the ordinance. (*this is an old case)

Present rule* Under LGU 1991, the collection cannot be delegated to private entities. The people may be taxed for a public purpose, although it be under the direction of an individual or private corporation.

In this old case, the delegation of the collection of market stall fees to a private corporation (Asiatic thru a Management and Operating Contract) affects the public purpose of the imposition. In upholding the validity of the tax ordinance, the Supreme Court held that, “The fees collected do not go direct to the private coffers of the corporation. Ordinance No. 7522 was not made for the corporation but for the purpose of raising revenues for the city.”

PASCUAL v. SECRETARY OF PUBLIC WORKS
110 Phil. 331

RATIO: Nevertheless, in the case of Pascual v. Secretary of Public Works which challenges the law appropriating a certain amount for the construction of a feeder road on a land owned by a private individual, the Court held the law to be an invalid imposition since it results in the promotion of a private enterprise, it benefits the property of a particular individual.

What about the arrgument of Zulueta na anyway maka benefit man ang public kay muagi man man sila?

RULE:

PUBLIC ADVANTAGE MERELY INCIDENTAL= RENDERS THE LAW INVALID
THE PROMOTION OF A PRIVATE ENTERPRISE IS INCIDENTAL =VALID

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 what is incidental is the promotion of a private enterprise, the tax law shall be deemed “for a public purpose.”The provision that the land shall thereafter be donated to the government does not cure this defect.

COMMISSIONER v. BOAC
149 SCRA 395

For the source of income to be considered as coming from the Philippines, it is sufficient that the income is derived from within the Philippines, x x x”

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