ABAKADA Guro Party List vs.

Ermita

G.R. No. 168056 September 1, 2005

FACTS:
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a petition for
prohibition on May 27, 2005 questioning the constitutionality of Sections 4, 5 and 6 of R.A. No.
9337, amending Sections 106, 107 and 108, respectively, of the National Internal Revenue Code
(NIRC). Section 4 imposes a 10% VAT on sale of goods and properties, Section 5 imposes a 10%
VAT on importation of goods, and Section 6 imposes a 10% VAT on sale of services and use or lease
of properties. These questioned provisions contain a uniformp ro v is o authorizing the President,
upon recommendation of the Secretary of Finance, to raise the VAT rate to 12%, effective January 1,
2006, after specified conditions have been satisfied. Petitioners argue that the law is
unconstitutional.

ISSUES:

1. Whether or not there is a violation of Article VI, Section 24 of the Constitution.

2. Whether or not there is undue delegation of legislative power in violation of Article VI Sec 28(2)
of the Constitution.

3. Whether or not there is a violation of the due process and equal protection under Article III Sec. 1
of the Constitution.

RULING:

1. Since there is no question that the revenue bill exclusively originated in the House of
Representatives, the Senate was acting within its constitutional power to introduce amendments to
the House bill when it included provisions in Senate Bill No. 1950 amending corporate income
taxes, percentage, and excise and franchise taxes.

2. There is no undue delegation of legislative power but only of the discretion as to the execution of
a law. This is constitutionally permissible. Congress does not abdicate its functions or unduly
delegate power when it describes what job must be done, who must do it, and what is the scope of
his authority; in our complex economy that is frequently the only way in which the legislative
process can go forward.

3. The power of the State to make reasonable and natural classifications for the purposes of
taxation has long been established. Whether it relates to the subject of taxation, the kind of
property, the rates to be levied, or the amounts to be raised, the methods of assessment, valuation
and collection, the State’s power is entitled to presumption of validity. As a rule, the judiciary will
not interfere with such power absent a clear showing of unreasonableness, discrimination, or
arbitrariness
Compania de Tabacos v. City of Manila
 Facts: Petitioner Tabacalera filed an action before CFI Manila to recover the sum of P15, 280
allegedly overpaid by it as taxes on the wholesale and retail sales of liquor for the period from the
3rd quarter of 1954 to the 2nd quarter of 1957 pursuant to Ordinances Nos. 3634, 3301 and 3816

· Tabacalera is a wholesale and retail liquor dealer and is paying the license fees prescribed by
Ordinance 3358 from 1954-1957 and also a wholesale and retail dealer of general merchandise and
is paying sales taxes required by Ordinance 3634, 3301 and 3816

· Tabacalera included its liquor sales in its sworn statements of wholesale, retail and grocery sales
of general merchandise.

· In 1954, the City Treasurer addressed a letter to an accounting firm, expressing the view that
liquor dealers who pays the annual license feesunder Ordinance 3358 is exempted from wholesale
and retailers taxes under City Ordinances 3634, 3301, and 3816.

· The Tabacalera, upon learning of such stopped including quarterly sworn declarations required
by the latter ordinances, and in 1957, demanded refund of the alleged overpayment.

Petitioner argued: in connection with its liquor sales it should pay the license fees but not the
municipal sales taxes and since it already paid the license fees, the sales taxes paid by it amounting
to P15,208 under the 3 ordinances in an overpayment by mistake and should be refundable

City of Manila argued: Tabacalera should pay the license fees prescribed by Ordinance 3358 as
well as the sales taxes imposed by the 3 other ordinances. And assuming it should not pay the sales
taxes with regard its liquor sales, it is not entitled to refund because, it voluntarily paid the amount,
overpayment was mistake of law due to negligence and the government for public improvements
and services already used the amount
ISSUE: Is petitioner entitled to refund? NO.

HELD:

· The term "tax" applies—generally speaking—to all kinds of exaction which become public funds.
The term is often loosely used to include levies for revenue as well as levies for regulatory
purposes. Thus license fees are commonly called taxes.
· Legally speaking, license fee is a legal concept quite distinct from tax
· License fee is imposed in the exercise of police power for purposes of regulation
· Tax is imposed under the taxing power for the purpose of raising revenues
· The Ordinance 3358 prescribes municipal license fees for the privilege of engaging in business of
selling liquor and was enacted by Municipal Board of Manila pursuant to its charger power to fix
license fees and regulate the sales of intoxicating liquor (imported/local)
· The license fees imposed is justified and is for its regulation because suchfee is a license for the
privilege of engaging in such business because not anyone or anybody may freely engage in such
and that the liquor is potentially harmful to public health and morals, and must be subject to
supervision or regulation by the state and by cities and municipalities
· As for the sales taxes on general merchandise they are revenue measures by respondents by
virtue of its power to tax dealers for the sale of such merchandise
· Both a license fee and tax may be imposed on the same business or occupation or for selling same
article without violating rule on double taxation

Note:
· Merchandise - all subjects of commerce and traffic; whatever sold and bought in trade or market’
goods bought and sold for gain; commodities to trade; commercial commodities in general
· Regarding the letter by the treasurer that a liquor dealer who pays the annual license fee is
exempted from sales taxes is without merit, because the government is not bound by the errors by
its officers.

Osmeña v Orbos (1993)

Osmeña v Orbos
GR No 99886, March 31, 1993

FACTS:
President Marcos created a special account in the General Fund designated as the Oil Price Stabilization
Fund (OPSF). The OPSF was designated to reimburse oil companies for cost increases in crude oil.
Subsequently, EO 137 expanded the grounds for reimbursement to oil companies for cost underrecovery.
Now, the petition avers that the creation of the trust fund violates the Constitution that if a special tax is
collected for a specific purpose, the revenue generated as a special fund to be used only for the purpose
indicated.

ISSUE:
Is the OPSF constitutional?

RULING:
Yes. The tax collected is not in pure exercise of the taxing power. It is levied with a regulatory purpose, to
provide a means for the stabilization of the petroleum products industry. The levy is primarily in the
exercise of the police power of the State

Philippine Airlines v Edu

GR No L-41383, August 15, 1988

FACTS:
PAL is engaged in the air transportation business under a legislative franchise (Act 4271), wherein it is
exempt from the
payment of taxes. On the strength of an opinion of the Secretary of Justice, PAL was determined to have
not been paying motor vehicle registration fees since 1956. The Land Transportation Commissioner
required all tax-exempt entities, including PAL, to pay motor vehicle registration fees. PAL protested.
The trial court dismissed PAL’s complaint. Hence, this petition.

ISSUE:
Are motor vehicle registration fees taxes or regulatory taxes?

RULING:
They are taxes. Tax are for revenue, whereas fees are exactions for purposes of regulation and inspection,
and are for that reason limited in amount to what is necessary to cover the cost of the services rendered in
that connection.
It is the object of the charge, and not the name, that determines whether a charge is a tax or a fee. The
money collected under the Motor Vehicle Law is not intended for the expenditures of the Motor Vehicle
Law is not intended for the expenditures of the Motor Vehicles Office but accrues to the funds for the
construction and maintenance of public roads, streets and bridges.
As the fees are not collected for regulatory purposes as an incident to the enforcement of regulations
governing the operation of motor vehicles on public highways, but to provide revenue with which the
Government is to construct and maintain public highways for everyone’s use, they are veritable taxes, not
merely fees.
PAL is, thus, exempt from paying such fees, except for the period between June 27, 1968 to April 9,
1979, where its tax exception in the franchise was repealed

Facts:
Progressive Development Corporation, owner and operator of a public market
known as the "Farmers Market & Shopping Center" filed a Petition for Prohibition
with Preliminary Injunction against respondent... on the ground that the supervision
fee or license tax imposed by the above-mentioned ordinances is in reality a tax on
income which respondent may not impose, the same being expressly prohibited by
Republic Act No. 2264, as amended
Petitioner, however, insists that the "supervision fee" collected from rentals, being a
return from capital invested in the construction of the Farmers Market, practically
operates as a tax on income, one of those expressly excepted from respondent's
taxing authority, and... thus beyond the latter's competence.
Issues:
The only issue to be resolved here is whether the tax imposed by respondent on
gross receipts of stall rentals is properly characterized as partaking of the nature of
an income tax or, alternatively, of a license fee.
Ruling:
The "Farmers' Market and Shopping Center" being a public market in the sense of a
market open to and inviting the, patronage of the general public, even though
privately owned, petitioner's operation thereof required a license issued by the
respondent City, the issuance... of which, applying the standards set forth above,
was done principally in the exercise of the respondent's police power
The operation of a privately owned market is, as correctly noted by the Solicitor
General,... equivalent to or quite the same as the operation of a government-owned
market;
We believe and so hold that the five percent (5%) tax imposed in Ordinance No.
9236 constitutes, not a tax on income, not a city income tax... but rather a license
tax or fee for the regulation of the business in which the petitioner is engaged.
35 SCRA 630 (1994) – 249 SCRA 635 (1995) – Political Law – Origination of
Revenue Bills – EVAT – Amendment by Substitution
Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise
known as the Expanded Value Added Tax (EVAT) Law. Tolentino averred that this
revenue bill did not exclusively originate from the House of Representatives as
required by Section 24, Article 6 of the Constitution. Even though RA 7716
originated as HB 11197 and that it passed the 3 readings in the HoR, the same did
not complete the 3 readings in Senate for after the 1 st reading it was referred to the
Senate Ways & Means Committee thereafter Senate passed its own version known
as Senate Bill 1630. Tolentino averred that what Senate could have done is amend
HB 11197 by striking out its text and substituting it with the text of SB 1630 in that
way “the bill remains a House Bill and the Senate version just becomes the text
(only the text) of the HB”. (It’s ironic however to note that Tolentino and co-petitioner
Raul Roco even signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that
such consolidation was consistent with the power of the Senate to propose or
concur with amendments to the version originated in the HoR. What the Constitution
simply means, according to the 9 justices, is that the initiative must come from the
HoR. Note also that there were several instances before where Senate passed its
own version rather than having the HoR version as far as revenue and other such
bills are concerned. This practice of amendment by substitution has always been
accepted. The proposition of Tolentino concerns a mere matter of form. There is no
showing that it would make a significant difference if Senate were to adopt his over
what has been done.

Republic of the Philippines v Bacolod-Murcia (1966)

Republic of the Philippines v Bacolod-Murcia GR No. L-19824, L-19825, L-19826

July 9, 1966

FACTS:
RA 632 created the Philippine Sugar Institute, a semi-public corporation. In 1951, the Institute acquired
the Insular Sugar Refinery for P3.07 million payable in installments from the proceeds of the Sugar tax to
be collected under RA 632. The operation of the refinery for 1954 to 1957 was disastrous as the Institute
suffered tremendous losses. Contending that the purchase of refinery with money from the Institute’s fund
was not authorized under RA 632, and that the continued operation of the refinery is inimical to their
interest, Bacolod-Murcia Milling Co., Ma-ao Sugar Central, Talisay-Silay Milling Co. and the Central
Azucarera del Danao refused to continue with their contribution to said fund. The trial court found them
liable under RA 632. Hence, this petition.

ISSUE:
Are the milling companies liable?

RULING:
Yes. The special assessment or levy for the Philippine Sugar Institute Fund is not so much an exercise of
the power of
taxation, nor the imposition of a special assessment, but the exercise of 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.
Section 2a of the charter authorizes Philsugin to acquire the refinery in question. The financial loss
resulting from the operation thereof is no means an index that the industry did profit therefrom, as other
gains of a different nature (such as experience) may have been realized.

Garcia vs executive secretary

211 SCRA 219 – Political Law – Congress Authorizing the President to Tax
In November 1990, President Corazon Aquino 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 5% ad valorem tax.
This additional duty was imposed across the board on all imported articles, including
crude oil and other oil products imported into the Philippines. In 1991, EO 443
increased the additional duty to 9%. In the same year, EO 475 was passed
reinstating the previous 5% duty except that crude oil and other oil products
continued to be taxed at 9%. Enrique Garcia, a representative from Bataan, avers
that EO 475 and 478 are unconstitutional for they violate Section 24 of Article VI of
the Constitution which provides:
All appropriation, revenue or tariff bills, bills authorizing increase of the public debt,
bills of local application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments.
He contends that since the Constitution vests the authority to enact revenue bills in
Congress, the President may not assume such power by issuing Executive Orders
Nos. 475 and 478 which are in the nature of revenue-generating measures.
ISSUE: Whether or not EO 475 and 478 are constitutional.
HELD: Under Section 24, Article VI of the Constitution, the enactment of
appropriation, revenue and tariff bills, like all other bills is, of course, within the
province of the Legislative rather than the Executive Department. It does not follow,
however, that therefore Executive Orders Nos. 475 and 478, assuming they may be
characterized as revenue measures, are prohibited to be exercised by the President,
that they must be enacted instead by the Congress of the Philippines.
Section 28(2) of Article VI of the Constitution provides as follows:
(2) The Congress may, by law, authorize the President to fix within specified limits,
and subject to such limitations and restrictions as it may impose, tariff rates, import
and export quotas, tonnage and wharfage dues, and other duties or imposts within
the framework of the national development program of the Government.
There is thus explicit constitutional permission to Congress to authorize the
President “subject to such limitations and restrictions as [Congress] may impose” to
fix “within specific limits” “tariff rates . . . and other duties or imposts . . . .” In this
case, it is the Tariff and Customs Code which authorized the President ot issue the
said EOs.

Republic v Mambulao Lumber Company (1962)

Republic v Mambulao Lumber Company, et al GR No L-17725, February 28, 1962

FACTS:
Mambulao Lumber Company paid the Government a total of P 9,127.50 as reforestation charges for the
years 1947 to
1956. It is the company’s contention that said sum of 9,127.50, not having been used in the reforestation
of the area covered by its license, the same is refundable to it or may be applied in compensation of P
4,802.37 due from it as forest charges.
Court of First Instance of Manila ordered the company to pay the government the sum of P 4,802.37 with
6% interest thereon from date of the filing of the complaint until fully paid, plus costs. Thus, the present
appeal.

ISSUE: Whether the set-off or compensation is proper

RULING:
No. There is nothing in the law which requires that the amount collected as reforestation charges should
be used exclusively for the reforestation of the area covered by the license of a licensee or concessionaire,
and that if not so used, the same shall be refunded to him.
The conclusion seems to be that the amount paid by a licensee as reforestation charges is in the nature of a
tax which forms part of the Forestation Fund, payable by him irrespective of whether the area covered by
his license is reforested or not.
Said fund, as the law expressly provides, shall be expended in carrying out the purposes provided for
thereunder, namely, the reforestation or afforestation, among others, of denuded areas needing
reforestation or afforestation.
The weight of authority is to the effect that internal revenue taxes, such as the forest charges in question is
not subject to set-off or compensation. Taxes are not in the nature of contracts between the parties but
grow out of a duty to, and are positive acts of the government, to the making and enforcing of which, the
personal consent of the individual taxpayers is not required.
With respect to the forest charges which the company has paid to the government, they are in the coffers
of the government as tax collected, and the government does not owe anything. It is crystal clear that the
Republic of the Philippines and the Mambulao Lumber Company are not creditors and debtors of each
other, because compensation refers to mutual debts.

Philex Mining Corporation v CIR (1998)

Philex Mining Corporation v CIR GR No 125704, August 28, 1998

FACTS:
BIR sent a letter to Philex asking it to settle its tax liabilities amounting to P124 million. Philex protested
the demand for payment stating that it has pending claims for VAT input credit/refund amounting to P120
million. Therefore, these claims for tax credit/refund should be applied against the tax liabilities.
In reply the BIR found no merit in Philex’s position. On appeal, the CTA reduced the tax liability of
Philex.

ISSUES:

1. Whether legal compensation can properly take place between the VAT input credit/refund and the
excise tax liabilities of
Philex Mining Corp;
2. Whether the BIR has violated the NIRC which requires the refund of input taxes within 60 days
3. Whether the violation by BIR is sufficient to justify non-payment by Philex

RULING:

1. No, legal compensation cannot take place. The government and the taxpayer are not creditors and
debtors of each other.
2. Yes, the BIR has violated the NIRC. It took five years for the BIR to grant its claim for VAT
input credit. Obviously, had the
BIR been more diligent and judicious with their duty, it could have granted the refund
3. No, despite the lethargic manner by which the BIR handled Philex’s tax claim, it is a settled rule
that in the performance of
government function, the State is not bound by the neglect of its agents and officers. It must be
stressed that the same is not a valid reason for the non-payment of its tax liabilities.
4. Caltex Philippines, Inc. v COA (1992)
5.
6. Caltex Philippines, Inc. v Commission on Audit GR No. 92585, May 8, 1992

FACTS:
In 1989, COA sent a letter to Caltex, directing it to remit its collection to the Oil Price
Stabilization Fund (OPSF), excluding that unremitted for the years 1986 and 1988, of the
additional tax on petroleum products authorized under the PD 1956. Pending such remittance, all
of its claims for reimbursement from the OPSF shall be held in abeyance. The grant total of its
unremitted collections of the above tax is P1,287,668,820.
Caltex submitted a proposal to COA for the payment and the recovery of claims. COA approved
the proposal but prohibited Caltex from further offsetting remittances and reimbursements for the
 current and ensuing years. Caltex moved for reconsideration but was denied. Hence, the present
petition.

ISSUE:
Whether the amounts due from Caltex to the OPSF may be offsetted against Caltex’s outstanding
claims from said funds

RULING:
No. Taxation is no longer envisioned as a measure merely to raise revenue to support the
existence of 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.
PD 1956, as amended by EO 137, explicitly provides that the source of OPSF is taxation. A
taxpayer may not offset taxes due from the claims he may have against the government. Taxes
cannot be subject of compensation because the government and taxpayer are not mutually
creditors and debtors of each other and a claim for taxes is not such a debt, demand,, contract or
judgment as is allowed to be set-off.
Hence, COA decision is affirmed except that Caltex’s claim for reimbursement of underrecovery
arising from sales to the National Power Corporation is allowed.

Francia v Intermediate Appellate Court (1988)

Francia v Intermediate Appellate Court GR No L-67649, June 28, 1988

FACTS:
Engracio Francia was the registered owner of a house and lot located in Pasay City. A portion of such
property was
expropriated by the Republic of the Philippines in 1977. It appeared that Francia did not pay his real
estate taxes from 1963 to 1977. Thus, his property was sold in a public auction by the City Treasurer of
Pasay City. Francia filed a complaint to annual the auction sale. The lower court dismissed the complaint
and the Intermediate Appellate Court affirmed the decision of the lower court in toto. Hence, this petition
for review. Francia contends that his tax delinquency of P 2,400 has been extinguished by legal
compensation. He claims that the government owed him P 4,116 when a portion of his land was
expropriated on October 15, 1977.

ISSUE:
May the expropriation payment compensate for the real estate taxes due?

RULING:
No. There can be no offsetting of taxes against the claims that the taxpayer may have against the
government. A person
cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than
the tax being collected. The collection of a tax cannot await the results of a lawsuit against the
government. Internal revenue taxes cannot be the subject of compensation. The Government and the
taxpayer are not mutually creditors and debtors of each other under Article 1278 of the Civil Code and a
claim of taxes is not such a debt, demand, contract or judgment as is allowed to be set-off.

Moreover, the amount of P4,116 paid by the national government for the 125 square meter portion of his
lot was deposited with the Philippine National Bank long before the sale at public auction of his
remaining property. It would have been an easy matter to withdraw P 2,400 from the deposit so that he
could pay the tax obligation thus aborting the sale at public auction. Thus, the petition for review is
dismissed. The taxes assessed are the obligations of the taxpayer arising from law, while the money
judgment against the government is an obligation arising from contract, whether express or implied.

Lorenzo v Posadas (Tax)

FACTS:

Lorenzo, in his capacity as trustee of the estate of Thomas Hanley, brought an

action against the Collector of Internal Revenue Posadas for the refund of
P2,052.74 inheritance taxes. The properties under the will were to pass to Matthew
Hanley after 10 years.

ISSUES:
1. When does the inheritance tax accrue and when must it be satisfied?
2. Should the inheritance tax be computed on the basis of the value at the time of
the testator's death or on its value ten years later?
3. In determining the net value of the estate subject to tax, is it proper to deduct
the compensation due to trustees?
4. What law governs the case?
5. Has there been delinquency in the payment of the inheritance tax?

RULING:
1. Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of
that date. But it must be paid before the delivery of the properties in question to
PJM Moore as trustee on March 10, 1924.
2. It should be computed at the time of the decedent's death, regardless of any
subsequent contingency value of any increase or decrease and notwithstanding the
postponement of the actual possession or enjoyment of the estate by the
beneficiary and the tax measured by the value of the property transmitted at that
time regardless of its appreciation or depreciation.
3. No. The compensation of a trustee, earned not in the administration of the
estate, but in the management thereof for the benefit of the legatees or devises,
does not come properly within the class or reason for exempting administration
expenses.
4. Act 3031 and not Act 3606 applies. Even if Act 3606 is more favorable to the
taxpayer, revenue laws, generally, which impose taxes collected by means
ordinarily resorted to for the collection of taxes are not classes as penal laws.
5. Yes. That taxes must be collected promptly is a policy deeply entrenched in our
tax system. Thus, no court is allowed to grant injunction to restrain the collection of
any internal revenue tax. The mere fact that the estate of the deceased was placed
in trust did not remove it from the operation of our inheritance tax laws or exempt
it from the payment of the inheritance tax.
 Tio v videogram

151 SCRA 208 – Political Law – The Embrace of Only One Subject by a Bill
Delegation of Power – Delegation to Administrative Bodies
In 1985, Presidential Dedree No. 1987 entitled “An Act Creating the Videogram
Regulatory Board” was enacted which gave broad powers to the VRB to regulate
and supervise the videogram industry. The said law sought to minimize the
economic effects of piracy. There was a need to regulate the sale of videograms as
it has adverse effects to the movie industry. The proliferation of videograms has
significantly lessened the revenue being acquired from the movie industry, and that
such loss may be recovered if videograms are to be taxed. Section 10 of the PD
imposes a 30% tax on the gross receipts payable to the LGUs.
In 1986, Valentin Tio assailed the said PD as he averred that it is unconstitutional on
the following grounds:
1. Section 10 thereof, which imposed the 30% tax on gross receipts, is a rider and is
not germane to the subject matter of the law.
2. There is also undue delegation of legislative power to the VRB, an administrative
body, because the law allowed the VRB to deputize, upon its discretion, other
government agencies to assist the VRB in enforcing the said PD.
ISSUE: Whether or not the Valentin Tio’s arguments are correct.
HELD: No.
1. The Constitutional requirement that “every bill shall embrace only one subject
which shall be expressed in the title thereof” is sufficiently complied with if the title be
comprehensive enough to include the general purpose which a statute seeks to
achieve. In the case at bar, the questioned provision is allied and germane to, and is
reasonably necessary for the accomplishment of, the general object of the PD,
which is the regulation of the video industry through the VRB as expressed in its
title. 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 PD.
2. There is no undue delegation of legislative powers to the VRB. VRB is not being
tasked to legislate. What was conferred to the VRB was the authority or discretion to
seek assistance in the execution, enforcement, and implementation of the
law. Besides, in the very language of the decree, the authority of the BOARD to
solicit such assistance is for a “fixed and limited period” with the deputized agencies
concerned being “subject to the direction and control of the [VRB].”

Lutz v Araneta (1955)

Lutz v Araneta
GR No L-7859 December 22, 1955

FACTS:
Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to
recover the sum of
P14,666.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act
567 or the Sugar Adjustment Act, alleging that such tax is unconstitutional as it levied for the aid and
support of the sugar industry exclusively, which is in his opinion not a public purpose.

ISSUE:
Is the tax valid?

HELD:
Yes. The tax is levied with a regulatory purpose, i.e. to provide means for the rehabilitation and
stabilization of the threatened sugar industry. The act is primarily an exercise of police power and is not a
pure exercise of taxing power.
As sugar production is one of the great industries of the Philippines and its promotion, protection and
advancement redounds greatly to the general welfare, the legislature found that the general welfare
demanded that the industry should be stabilized, and provided that the distribution of benefits had to
sustain.
Further, it cannot be said that the devotion of tax money to experimental stations to seek increase of
efficiency in sugar production, utilization of by-products, etc., as well as to the improvement of living and
working conditions in sugar mills and plantations without any part of such money being channeled
directly to private persons, constitute expenditure of tax money for private purposes.
Hence, the tax is valid.