[Tax 1 Atty.

Gruba]
UNDERGROUND CASE DIGESTS
Lutz v. Araneta

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alike constitutionally valid, no reason is seen why the state may not
levy taxes to raise funds for their prosecution and attainment. Taxation
may be made the implement of the states police power.

FACTS

CFI decision affirmed.

Due to the threat to the sugar industry (it lost its preferential position in
the US market), CA No 567 (Sugar Adjustment Act) was enacted. It
provides for an increase of the existing tax on the manufacture of sugar
(Sec 2 of the Act) and 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 (Sec 3).

Digest by Maria Ilsea Salvador

Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme

Ledesma, seeks to recover P14,666.40 paid by the estate as taxes
under Sec 3 of the Act. He alleges that the tax collected is
unconstitutional and void, being levied for the aid and support of the
sugar industry exclusively. He posits that it is not a public purpose for
which a tax may be constitutionally levied.
The CFI dismissed his petition. He thus appeals directly to the SC.

ISSUE
Whether or not the tax paid by virtue of the Sugar Adjustment Act is
unconstitutional.

HELD
NO. The tax provided for in the Act is not a pure exercise of taxing
power. The tax is levied for 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.
The sugar industry is one of the countrys primary sources of wealth. Its
promotion, protection and advancement redound greatly to the general
welfare. It was competent for the legislature to find that the general
welfare demanded that the sugar industry should be stabilized in
return.
Since the promotion and protection of the sugar industry is a matter of
public concern, 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. If objective and methods are

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TAYAG

| ALBERTO ATILLO

CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT

[Tax 1 Atty. Gruba]

UNDERGROUND CASE DIGESTS

Page 2 of 2

TAYAG

| ALBERTO ATILLO

This digest may not be

reproduced and distributed
without the permission of
the author.

CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT