Lutz vs.

Araneta GR L-7859, 22 December 1955First Division, Reyes JBL (J): 8 concur Facts: Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to recover the sum ofP14,6666.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act 567 (the Sugar Adjustment Act), alleging that such tax is u n c o n s t i t u t i o n a l a s i t l e v i e d for the aid and support of the sugar industry exclusively, which is in his opinion not a public purpose. Issue: Whether the tax is valid in supporting an industry. Held: The tax is levied with a regulatory prupose, i . e . t o provide means for the rehabilitation and stabilizat ion of the threatened sugar industry. The act is primarily an exercise of p o l i c e p o w e r , a n d i s n o t a p u r e exercise of taxing power. As s u g a r p r o d u c t i o n i s o n e o f t h e g r e a t i n d u s t r i e s o f t h e Philippines; and that its promotion, protection and advancement r e d o u n d s g r e a t l y t o the general welfare, the legislature found that the general welfare demanded that the industry should be stabilized, and provided that the distribution of benefits therefrom be readjusted among its component to e n a b l e i t t o resist the added strain of the increase in tax that it had to sustain. Further, it cannot be said that the devoti o n o f t a x money to experimental statio ns to seek increase of efficiency in s u g a r p r o d u c t i o n , u t i l i z a t i o n o f b y - p r o d u c t s , etc., as well as to the improvement of living and working condition s in sugarmills and plantations, without any part o f s u c h m o n e y b e i n g channeled directly to private persons, constitute expenditure oftax money for private purposes. The tax is valid. P a s c u a l v s . S e c r e t a r y o f P u b l i c W o r k s a n d Communications GR L-10405, 29 December 1960En Banc, Concepcion (J): 10 concur Facts: RA 920 (Act appropriating funds for public works) was enacted in 1953 containing an item (Section 1 c[a] ) f o r t h e construction, reconstruction, repair, extension and improvement

166494 June 29.o f P a s i g f e e d e r r o a d t e r m i n a l s ( t h e p r o j e c t e d a n d p l a n n e d subdivision roads. o r a c t s performed. n u l l and void. AO 171 or the Policies and Guidelines to Implement the . o r a p p r o v e d b y t h e President. Z u l u e t a “donated” said parcels of land to the Government 5 months after the enactment of RA 920. the result is that the a p p r o p r i a t i n g s o u g h a p r i v a t e p u r p o s e a n d h e n c e . inasmuch as the land on which the p r o j e c t e d feeder roads were to be constructed belonged to Senator Zulueta a t t h e t i m e R A 9 2 0 w a s p a s s e d b y C o n g r e s s . ET. it being not for a public purpose. Herein. and the disbursement of said sum became effective on2 0 J u n e 1 9 5 3 pursuant to Section 13 of the Act. not upon events occupyin g . wit h retrospective operation. on the condition that if the Government v i o l a t e s s u c h c o n d i t i o n t h e l a n d s w o u l d r e v e r t t o Z u l u e t a . DSWD G. T h e provincial governor of Rizal. 2007 FACTSPetitioners are domestic corporations and proprietors operating drugstores in the Philippines. Held: The right of the legislature to appropriate fu nds is c o r r e l a t i v e w i t h i t s r i g h t t o t a x . vs. subsequently thereto. No. Issue: Whether the item in the appropriation is valid. which were not yet constru c t e d .. the constitutional limitation infrin ged by said statute. Meanwhile. unless the latter consist of an amendment of the organic law. removing. Wenceslao Pascual. w i t h i n Antonio Subdivision owned by Senator J o s e C . u n d e r c o n s t i t u t i o n a l provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose a n d t h e devotion thereof to another purpose.R. AL. The validity of a statute depends upon the powers of Congress at the time of its passage or approval. CARLOS SUPERDRUG CORP. Z u l u e t a ) . no appropriation of state funds can be made for other than a public purpose. questioned the v a l i d i t y o f t h e d o n a t i o n a n d t h e C o n s t i t u t i o n a l i t y o f t h e i t e m in RA 920.

the twenty percent discount shall not be limited to the purchase of unbranded generic medicines only. The Court believes so. DOH issued Administrative Order No 177 amending A. utilization of services in hotels and similar lodging establishments. substantial. leisure and amusement. This constitutes compensable taking for which petitioners would ordinarily become entitled to a just compensation.” Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private property. and to convey the idea that the equivalent to be rendered for the property to be taken shall be real. admission fees charged by theaters. circuses. and 2) the law failed to provide a scheme whereby drugstores will be justly compensated for the discount. . full and ample. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and capital because 1)drugstores impose a mark-up of only 5% to 10% on branded medicines. The word just is used to intensify the meaning of the word compensation. RULING The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. this raises the question of whether the State. air and sea travel. 171. carnivals. it would not meet the definition of just compensation. No. The measure is not the taker’s gain but the owner’s loss. can impose upon private establishments the burden of partly subsidizing a government program. fares for domestic land. in promoting the health and welfare of a special group of citizens.O. but shall extend to both prescription and non-prescription medicines whether branded or generic. As such. 177.O. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. and diagnostic and laboratory fees. The law grants a twenty percent discount to senior citizens for medical and dental services. otherwise known as the “Expanded Senior Citizens Act of 2003” was issued by the DOH. A tax deduction does not offer full reimbursement of the senior citizen discount.Relevant Provisions of Republic Act 9257. it stated that “[t]he grant of twenty percent(20%) discount shall be provided in the purchase of medicines from all establishments dispensing medicines for the exclusive use of the senior citizens. providing the grant of twenty percent (20%) discount in the purchase of unbranded generic medicines from all establishments dispensing medicines for the exclusive use of the senior citizens. concert halls. Having said that. Under A. and other similar places of culture.No. Thus.

statutes. Police power is not capable of an exact definition. As a form of reimbursement. insistent and the least limitable of powers. the questioned provision is invalidated. and ordinances. the law provides that business establishments extending the twenty percent discount to senior citizens may claim the discount as a tax deduction. because petitioners have not taken time to calculate correctly and come up with a financial report. it is incorrect for petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their business. thus assuring the greatest benefits. so that they have not been able to show properly whether or not the tax deduction scheme really works greatly to their disadvantage. property rights must bow to the primacy of police power because property rights. The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing component of the business. can intervene in the operations of a business which may result in an impairment of property rights in the process. extending as it does to all the great public needs. continuously serve as a reminder .” It is “[t]he power vested in the legislature by the constitution to make. Moreover. in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question. when the conditions so demand as determined by the legislature. The law is a legitimate exercise of police power which. similar to the power of eminent domain. the right to property has a social dimension. in the exercise of police power. petitioners must accept the realities of business and the State. Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings and capital. and of the subjects of the same. it has been described as “the most essential. has general welfare for its object. While Article XIII of the Constitution provides the precept for the protection of property.” For this reason. Accordingly. ordain. there is no basis for its nullification in view of the presumption of validity which every law has in its favor. must yield to general welfare. as they shall judge to be for the good and welfare of the commonwealth. particularly on agrarian reform and the regulation of contracts and public utilities. and establish all manner of wholesome and reasonable laws. but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances. though sheltered by due process.restaurants and recreation centers. Given these. either with penalties or without. Moreover. and purchases of medicines for the exclusive use or enjoyment of senior citizens. not repugnant to the constitution. various laws and jurisprudence. While the Constitution protects property rights.

•They were required to pay 10 centavos per picul (around 5-6 kilos) of sugar collected for 5 crop years under Sec. Inc. They had unpaid balances •The Court of First Instance said that they had to pay the balance.. and the Supreme Court affirmed its decision Definitions: •Special assessments: a levy on property where the property against which it islevied derives special benefits from how the money was used (in normal peoplespeak: whatever this tax is spent on will benefit those who paid the tax) •RA 632: Philippine Sugar Institute charter. Talisay-Silay Milling Co. etc. Republic v. •The sugar tax was levied to create Philsugin (Philippine Sugar Institute)..) oSection 15 of RA 632: to raise funds for Philsugin. marketing. respondent Action: Joint Appeal from Court of First Instance of Manila Summary: •The three sugar centrals are sister companies under single ownership and management. Date: 9 July 1966 Ponente: Justice Regala Parties: Bacolod-Murcia Milling Co. Central Azucarera del Danao. The amount will be borne by sugar centrals and sugar cane planters Facts: •CFI case: oAppellants and another sugar central. Ma-ao Sugar Central Co. to conduct research and development for sugar and sugar by-products. Inc. annual sugar production will be levied 10c per picul of sugar collected for 5 crop years.v The Republic of the Philippines..that the right to property can be relinquished upon the command of the State for the promotion of public good... 1951-52 to 1956). Inc. (c. •Philsugin acquired the Insular Sugar Refinery and lost a lot of money •Appellants stopped paying the levy because they said that the purchase was unauthorized by RA 632. petitioners.y. where Philsugin is a semi-public corporation meant to advance the Philippine sugar industry (research. had . Bacolod-Murcia Milling Co.. 15 of RA 632. et al..

77 o3 Sept 1951: Philsugin acquired the Insular Sugar Refinery through the sugar tax imposed by RA632 o1954-57: Philsugin lots a LOT of money. sugar central=sugar mill that manufacture sugar for a number of plantations oRefusal to pay an assessment is different from refusal to pay a tax. Philsugin had no authority to acquire the refinery. including sugar refineries Decision to purchase was made the board of directors. 70% of Philsugin’s time and effort had gone into the operation of Insular Sugar Refinery oAppellants contend that the purchase of the Insular Sugar Refinery. the appellants say that: oUnder Section 3 of RA632. Cited Collector v Ledesma: definition. and other pertinent authorities and safeguards in order to ensure that purchases (including that of the refinery) had been legal and proper Appellants’ refusal to pay is like a taxpayer refusing to pay taxes.070. CFI decision is AFFIRMED.74 Danao:P48. using money from the Philsugin fun.059. since a tax is different from an assessment oThe imposition of a special assessment on property owners who won’t benefit from it is a denial of due process Issue: Did the CFI make the right call in ruling that the defendants are liable for the special assessments under RA 632? Ruling: •Supreme Court finds for the appellee. Philsugin is empowered to purchase a “central experiment station or… at most a sugar central.800. with costs . it’s dangerous to allow their motion because they were essentially takingthe law into their own hands •In the PRESENT.” not a sugar refinery. and the appellants were duly represented by the Philippine Sugar Association.unpaid balance: Bacolod-Murcia:P216.50 Ma-ao:P235. and property owners who pay the assessment don’t have to be forced to pay if the proceeds have been misapplied to their prejudice oLower court’s Decision: Appellants are liable for special assessments and have to pay the balance Appellants are liable under RA632 • Section 3 authorizes Philsugin to buy things for sugar and its by-products. was not authorized by RA632 and refused to contribute to it 10c/picul is a special assessment. the Office of the President.20 Talisay-Silay:P208. not a tax. of which the appellants are members All of Philsugin’s transactions pass through the General Auditor.193. and at that time.

the Municipal Board of Manila enacted Ordinance7522. M a r t i n ( J ) : 7 c o n c u r . RamirezGR L-41631. Whereas. the Philippines was a sugar cartel with the US as its top customer. regulating the operation of public markets and prescribing fees for the rentals of stalls and providing p enalties for violation thereof. but the Act that enabled it to supply the US with sugar was expiring) oThe sugar industry was a leading exporter and employer and a prime source of foreign exchange and state wealth such that its welfare redounds to general welfare oThe assailed act is therefore an exercise of POLICE POWER because of its importance to general welfare •Like in the Lutz v Araneta case. there is now a better appreciation for the management problems faced by sugar centrals Bagatsing vs. The Federation of Manila Market Vendors Inc. fees or o t h e r c h a r g e s ” in particular. assailed the validity of the ordinance.•Cited Lutz v Araneta: Section 6 of CA 567 (sugar adjustment act) levies a tax to accrue to the “Sugar Adjustment and Stabilization Fund” oSC said that the assailed tax was levied to help rehabilitate and stabilize the threatened sugar industry (history lesson: before.” which justifies its acquisition of the Insular Sugar Refinery •The experience is technically NOT a loss to the industry: through Philsugin’s purchase. 1 reserved vote Facts: In 1974. alleging among oth ers t h e n o n compliance to the publication requirement under th e Revised Charter of the City of Manila. 1 c o n c u r w i t h qualification. Section 5 of RA632 is an exercise of police power •Under Section 2 of RA632. S e c t i o n 1 7 o f t h e C h a r t e r s p e a k s o f “ordinance” in general. While the Charter requires . w h e r e a s t h e L o c a l Tax Code id a general law because it applies universally to all l o c a l g o v e r n m e n t s . Issue: Whether the publication requirement was complied with. 17 December 1976E n B a n c . Philsugin is authorized to do research for the sugar industry “in all its phases. Held: The Revised Charter of the City of Manila is a special act s i n c e i t r e l a t e s o n l y t o t h e C i t y o f M a n i l a . Section 43 of the L o c a l T a x Code relates to “ordinances levying or imposing taxes.

the Local Tax Code only prescribes for publication widely circulated within the jurisdictio n of the l o c a l g o v e r n m e n t o r b y p o s t i n g t h e o r d i n a n c e i n t h e l o c a l legislative hall or premises and in two other conspicuous places within the territorial jurisdiction of the local gove r n m e n t . But then. 1465 which provided. Fertiphil filed a complaint for collection and damages against FPA and PPI with the RTC in Makati. among others. 1985. which remitted the amount collected to the Far East Bank and Trust Company. G. which is the PPI. 1465.publication. FPA voluntarily stopped the imposition of the P10 levy. RTC's decision on November 20. It questioned the constitutionality of LOI No. Taxes are exacted on for a public purpose and cannot be used for purely private . which are both engaged in the importation and distribution of fertilizers. Ferdinand Marcos issued LOI No. Fertiphil Corp. With that.R. Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the Fertilizer and Pesticide Authority (FPA). pesticides and agricultural chemicals. before the enactment of the ordinance and after a p p r o v a l t h e r e o f . After the 1986 EDSA revolution. the depository bank of PPI. Being a general law with a special provision a p p l i c a b l e i n t h e case. PPI refused to give in to the demand. ISSUE Is the P10 assessment on fertilizer sale a valid exercise of taxation? HELD No. Planters Products v. the Local Tax Code prevails. and some other fees. An inherent limitation on the power of taxation is public purpose. are private corporations incorporated under Philippine laws. Pres. for the imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers in the Philippines. 166006 March 14. On June 3. 1991 favored Fertiphil and ordered the latter to pay a certain sum of the previously collected amount with an interest. 2008 FACTS Philippine Planters Products (PPI) and Fertiphil Corp. for which Fertiphil demanded PPI a refund of the amounts it paid under LOI No. and favoring one privately owned corporation. 1465 for being unjust and unreasonable. i n t w o d a i l y n e w s p a p e r s o f t h e g e n e r a l circulation in the city. Pursuant to the aforementioned LOI.

insist that the bicameral conference committee should not even have acted on the no pass-on provisions since there is no disagreement between House Bill Nos. Puno En Banc Facts: Motions for Reconsideration filed by petitioners. and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. No. They submit that the recommendatory power given to the Secretary of Finance in regard to the occurrence of either of two events using the Gross Domestic Product (GDP) as a benchmark necessarily and inherently required extended analysis and evaluation.R. 168056. also reiterate that R. The LOI expressly provided that the levy be imposed to benefit PPI. as well as policy making.. July 5. Being void. As to the no pass-on provision for sale of petroleum products. When the courts declare a law to be inconsistent with the Constitution. ABAKADA Guro party List Officer and et al.." The petition was denied. 3705 and 3555 on the one hand. Fertiphil is not required to pay the levy.purposes or for exclusive benefit of private persons. constitutes undue delegation of legislative power. especially on account of the recommendatory power granted to the Secretary of Finance. 9337 grossly violates the constitutional imperative on exclusive origination of revenue bills under Section 24 of Article VI of the Constitution when the Senate introduced amendments not connected with VAT. Thus. petitioners argue that the fact that the presence of such a no pass-on provision in the House version and the absence thereof in the Senate Bill means there is no conflict because “a House provision cannot be in conflict with something that does not exist. the former shall be void and the latter shall govern. et al. with regard to the no pass-on provision for the sale of service for power generation because both the Senate and the House were in agreement that the VAT burden for the sale of such service shall not be passed on to the end-consumer.” Escudero. et. 9337’s stand. and Senate Bill No. Petitioners also reiterate their argument that the input tax is a property or a . this already exceeded the limitation which taxes are supposed to be limited to. Even if the levy was acted for the enforcement of police powers. a private company. Petitioners Escudero. Ermita G.A. also contend that Republic Act No. All levies paid should be refunded in accordance with the general civil code principle against unjust enrichment: "Laws are repealed only by subsequent ones.. No. 1950 on the other. 2005 J.by authority to the Executive to increase the VAT rate. al. it is still unconstitutional because it did not promote public interest. inherently and naturally. Abakada Guro v.

9337 was passed. the means through which such end shall be accomplished is for the legislature to choose so long as it is within constitutional bounds. The temporary restraining order issued by the Court is LIFTED. the assailed provisions of R. He is acting as the agent of the legislative department. 9337 already involve legislative policy and wisdom. Petitioners also contend that even if the right to credit the input VAT is merely a statutory privilege. bills authorizing increase of the public debt. Article VI. So long as there is a public end for which R. 9337 or the Vat Reform Act is constitutional? Held: The Court is not persuaded. The Motions for Reconsideration are hereby DENIED WITH FINALITY. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented. considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. In the same breath. it has already evolved into a vested right that the State cannot remove. Issue: Whether or not the R. bills of local application. but the Senate may propose or concur with amendments. and a VAT-registered person’s entitlement to the creditable input tax is a mere statutory privilege. As the Court stated in its Decision. The Court reiterates that in making his recommendation to the President on the existence of either of the two conditions. the right to credit the input tax is a mere creation of law. revenue or tariff bills.property right.A. to determine and declare the event upon which its expressed will is to take effect. No. No.A. the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. No. Section 24 of the Constitution provides that All appropriation. the Court reiterates its finding that it is not a property or a property right. . More importantly. and private bills shall originate exclusively in the House of Representatives.A. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present.

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