COMMISSIONER OF INTERNAL REVENUE,petitioner,vs.ALGUE, INC., and
THE COURT OF TAX APPEALS,respondents.CRUZ,J.:Taxes are the
lifeblood of the government and so should be collected without
unnecessary hindrance On the other hand, such collection should be
made in accordance with law as any arbitrariness will negate the
very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities
and the taxpayers so that the real purpose of taxation, which is
the promotion of the common good, may be achieved.The main issue in
this case is whether or not the Collector of Internal Revenue
correctly disallowed the P75,000.00 deduction claimed by private
respondent Algue as legitimate business expenses in its income tax
returns. The corollary issue is whether or not the appeal of the
private respondent from the decision of the Collector of Internal
Revenue was made on time and in accordance with law.We deal first
with the procedural question.The record shows that on January 14,
1965, the private respondent, a domestic corporation engaged in
engineering, construction and other allied activities, received a
letter from the petitioner assessing it in the total amount of
P83,183.85 as delinquency income taxes for the years 1958 and
1959.1On January 18, 1965, Algue flied a letter of protest or
request for reconsideration, which letter was stamp received on the
same day in the office of the petitioner.2On March 12, 1965, a
warrant of distraint and levy was presented to the private
respondent, through its counsel, Atty. Alberto Guevara, Jr., who
refused to receive it on the ground of the pending protest.3A
search of the protest in the dockets of the case proved fruitless.
Atty. Guevara produced his file copy and gave a photostat to BIR
agent Ramon Reyes, who deferred service of the warrant.4On April 7,
1965, Atty. Guevara was finally informed that the BIR was not
taking any action on the protest and it was only then that he
accepted the warrant of distraint and levy earlier sought to be
served.5Sixteen days later, on April 23, 1965, Algue filed a
petition for review of the decision of the Commissioner of Internal
Revenue with the Court of Tax Appeals.6The above chronology shows
that the petition was filed seasonably. According to Rep. Act No.
1125, the appeal may be made within thirty days after receipt of
the decision or ruling challenged.7It is true that as a rule the
warrant of distraint and levy is "proof of the finality of the
assessment"8and renders hopeless a request for
reconsideration,"9being "tantamount to an outright denial thereof
and makes the said request deemed rejected."10But there is a
special circumstance in the case at bar that prevents application
of this accepted doctrine.The proven fact is that four days after
the private respondent received the petitioner's notice of
assessment, it filed its letter of protest. This was apparently not
taken into account before the warrant of distraint and levy was
issued; indeed, such protest could not be located in the office of
the petitioner. It was only after Atty. Guevara gave the BIR a copy
of the protest that it was, if at all, considered by the tax
authorities. During the intervening period, the warrant was
premature and could therefore not be served.As the Court of Tax
Appeals correctly noted,"11the protest filed by private respondent
was notpro formaand was based on strong legal considerations. It
thus had the effect of suspending on January 18, 1965, when it was
filed, the reglementary period which started on the date the
assessment was received, viz., January 14, 1965. The period started
running again only on April 7, 1965, when the private respondent
was definitely informed of the implied rejection of the said
protest and the warrant was finally served on it. Hence, when the
appeal was filed on April 23, 1965, only 20 days of the
reglementary period had been consumed.Now for the substantive
question.The petitioner contends that the claimed deduction of
P75,000.00 was properly disallowed because it was not an ordinary
reasonable or necessary business expense. The Court of Tax Appeals
had seen it differently. Agreeing with Algue, it held that the said
amount had been legitimately paid by the private respondent for
actual services rendered. The payment was in the form of
promotional fees. These were collected by the Payees for their work
in the creation of the Vegetable Oil Investment Corporation of the
Philippines and its subsequent purchase of the properties of the
Philippine Sugar Estate Development Company.Parenthetically, it may
be observed that the petitioner had Originally claimed these
promotional fees to be personal holding company income12but later
conformed to the decision of the respondent court rejecting this
assertion.13In fact, as the said court found, the amount was earned
through the joint efforts of the persons among whom it was
distributed It has been established that the Philippine Sugar
Estate Development Company had earlier appointed Algue as its
agent, authorizing it to sell its land, factories and oil
manufacturing process. Pursuant to such authority, Alberto Guevara,
Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo
Sanchez, worked for the formation of the Vegetable Oil Investment
Corporation, inducing other persons to invest in it.14Ultimately,
after its incorporation largely through the promotion of the said
persons, this new corporation purchased the PSEDC properties.15For
this sale, Algue received as agent a commission of P126,000.00, and
it was from this commission that the P75,000.00 promotional fees
were paid to the aforenamed individuals.16There is no dispute that
the payees duly reported their respective shares of the fees in
their income tax returns and paid the corresponding taxes
thereon.17The Court of Tax Appeals also found, after examining the
evidence, that no distribution of dividends was involved.18The
petitioner claims that these payments are fictitious because most
of the payees are members of the same family in control of Algue.
It is argued that no indication was made as to how such payments
were made, whether by check or in cash, and there is not enough
substantiation of such payments. In short, the petitioner suggests
a tax dodge, an attempt to evade a legitimate assessment by
involving an imaginary deduction.We find that these suspicions were
adequately met by the private respondent when its President,
Alberto Guevara, and the accountant, Cecilia V. de Jesus, testified
that the payments were not made in one lump sum but periodically
and in different amounts as each payee's need arose.19It should be
remembered that this was a family corporation where strict business
procedures were not applied and immediate issuance of receipts was
not required. Even so, at the end of the year, when the books were
to be closed, each payee made an accounting of all of the fees
received by him or her, to make up the total of
P75,000.00.20Admittedly, everything seemed to be informal. This
arrangement was understandable, however, in view of the close
relationship among the persons in the family corporation.We agree
with the respondent court that the amount of the promotional fees
was not excessive. The total commission paid by the Philippine
Sugar Estate Development Co. to the private respondent was
P125,000.00.21After deducting the said fees, Algue still had a
balance of P50,000.00 as clear profit from the transaction. The
amount of P75,000.00 was 60% of the total commission. This was a
reasonable proportion, considering that it was the payees who did
practically everything, from the formation of the Vegetable Oil
Investment Corporation to the actual purchase by it of the Sugar
Estate properties. This finding of the respondent court is in
accord with the following provision of the Tax Code:SEC.
30.Deductions from gross income.--In computing net income there
shall be allowed as deductions (a) Expenses:(1) In general.--All
the ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business, including a
reasonable allowance for salaries or other compensation for
personal services actually rendered; ...22and Revenue Regulations
No. 2, Section 70 (1), reading as follows:SEC. 70.Compensation for
personal services.--Among the ordinary and necessary expenses paid
or incurred in carrying on any trade or business may be included a
reasonable allowance for salaries or other compensation for
personal services actually rendered. The test of deductibility in
the case of compensation payments is whether they are reasonable
and are, in fact, payments purely for service. This test and
deductibility in the case of compensation payments is whether they
are reasonable and are, in fact, payments purely for service. This
test and its practical application may be further stated and
illustrated as follows:Any amount paid in the form of compensation,
but not in fact as the purchase price of services, is not
deductible. (a) An ostensible salary paid by a corporation may be a
distribution of a dividend on stock. This is likely to occur in the
case of a corporation having few stockholders, Practically all of
whom draw salaries. If in such a case the salaries are in excess of
those ordinarily paid for similar services, and the excessive
payment correspond or bear a close relationship to the
stockholdings of the officers of employees, it would seem likely
that the salaries are not paid wholly for services rendered, but
the excessive payments are a distribution of earnings upon the
stock. . . . (Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.)It is
worth noting at this point that most of the payees were not in the
regular employ of Algue nor were they its controlling
stockholders.23The Solicitor General is correct when he says that
the burden is on the taxpayer to prove the validity of the claimed
deduction. In the present case, however, we find that the onus has
been discharged satisfactorily. The private respondent has proved
that the payment of the fees was necessary and reasonable in the
light of the efforts exerted by the payees in inducing investors
and prominent businessmen to venture in an experimental enterprise
and involve themselves in a new business requiring millions of
pesos. This was no mean feat and should be, as it was, sufficiently
recompensed.It is said that taxes are what we pay for civilization
society. Without taxes, the government would be paralyzed for lack
of the motive power to activate and operate it. Hence, despite the
natural reluctance to surrender part of one's hard earned income to
the taxing authorities, every person who is able to must contribute
his share in the running of the government. The government for its
part, is expected to respond in the form of tangible and intangible
benefits intended to improve the lives of the people and enhance
their moral and material values. This symbiotic relationship is the
rationale of taxation and should dispel the erroneous notion that
it is an arbitrary method of exaction by those in the seat of
power.But even as we concede the inevitability and indispensability
of taxation, it is a requirement in all democratic regimes that it
be exercised reasonably and in accordance with the prescribed
procedure. If it is not, then the taxpayer has a right to complain
and the courts will then come to his succor. For all the awesome
power of the tax collector, he may still be stopped in his tracks
if the taxpayer can demonstrate, as it has here, that the law has
not been observed.We hold that the appeal of the private respondent
from the decision of the petitioner was filed on time with the
respondent court in accordance with Rep. Act No. 1125. And we also
find that the claimed deduction by the private respondent was
permitted under the Internal Revenue Code and should therefore not
have been disallowed by the petitioner.ACCORDINGLY, the appealed
decision of the Court of Tax Appeals is AFFIRMEDin toto,without
costs.SO ORDERED.Teehankee, C.J., Narvasa, Gancayco and
Grio-Aquino, JJ., concur.Footnotes1 Rollo, pp. 28-29.2 Ibid.,pp.
29; 42.3 Id.,p. 29.4 Respondent's Brief, p. 11.5 Id.,p. 29.6 Id,7
Sec. 11.8 Phil. Planters Investment Co. Inc. v. Comm. of Internal
Revenue, CTA Case No. 1266, Nov. 11, 1962; Rollo, p. 30.9 Vicente
Hilado v. Comm. of Internal Revenue, CTA Case No. 1266, Oct.
22,1962; Rollo, p. 30.10 Ibid.11 Penned by Associate Judge
Estanislao R. Alvarez, concurred by Presiding Judge Ramon M. Umali
and Associate Judge Ramon L. Avancea.12 Rollo, p. 33.13 Ibid., pp.
7-8; Petition, pp. 2-3. 11 Id., p. 37.15 Id.16 Id.17 Id.18 Id.19
Respondents Brief, pp. 25-32.20 Ibid.,pp. 30-32.21 Rollo, p. 37.22
Now Sec. 30, (a)(1)-(A.), National Internal Revenue Code.23
Respondent's Brief, p. 35.
PHILIPPINE AIRLINES, INC.,Plaintiff-Appellant,v.ROMEO F. EDU in
his capacity as Land Transportation Commissioner, and UBALDO
CARBONELL, in his capacity as National
Treasurer,Defendants-Appellants.Ricardo V. Puno, Jr. and Conrado A.
Boro for plaintiff-appellant.GUTIERREZ, JR.,J.:What is the nature
of motor vehicle registration fees? Are they taxes or regulatory
fees?chanrobles virtual law libraryThis question has been brought
before this Court in the past. The parties are, in effect, asking
for a re-examination of the latest decision on this
issue.chanroblesvirtualawlibrarychanrobles virtual law libraryThis
appeal was certified to us as one involving a pure question of law
by the Court of Appeals in a case where the then Court of First
Instance of Rizal dismissed the portion-about complaint for refund
of registration fees paid under
protest.chanroblesvirtualawlibrarychanrobles virtual law libraryThe
disputed registration fees were imposed by the appellee,
Commissioner Romeo F. Elevate pursuant to Section 8, Republic Act
No. 4136, otherwise known as the Land Transportation and Traffic
Code.chanroblesvirtualawlibrarychanrobles virtual law libraryThe
Philippine Airlines (PAL) is a corporation organized and existing
under the laws of the Philippines and engaged in the air
transportation business under a legislative franchise, Act No.
42739, as amended by Republic Act Nos. 25). and 269.1 Under its
franchise, PAL is exempt from the payment of taxes. The pertinent
provision of the franchise provides as follows:Section 13. In
consideration of the franchise and rights hereby granted, the
grantee shall pay to the National Government during the life of
this franchise a tax of two per cent of the gross revenue or gross
earning derived by the grantee from its operations under this
franchise. Such tax shall be due and payable quarterly and shall be
in lieu of all taxes of any kind, nature or description, levied,
established or collected by any municipal, provincial or national
automobiles, Provided, that if, after the audit of the accounts of
the grantee by the Commissioner of Internal Revenue, a deficiency
tax is shown to be due, the deficiency tax shall be payable within
the ten days from the receipt of the assessment. The grantee shall
pay the tax on its real property in conformity with existing law.On
the strength of an opinion of the Secretary of Justice (Op. No.
307, series of 1956) PAL has, since 1956, not been paying motor
vehicle registration fees.chanroblesvirtualawlibrarychanrobles
virtual law librarySometime in 1971, however, appellee Commissioner
Romeo F. Elevate issued a regulation requiring all tax exempt
entities, among them PAL to pay motor vehicle registration
fees.chanroblesvirtualawlibrarychanrobles virtual law
libraryDespite PAL's protestations, the appellee refused to
register the appellant's motor vehicles unless the amounts imposed
under Republic Act 4136 were paid. The appellant thus paid, under
protest, the amount of P19,529.75 as registration fees of its motor
vehicles.chanroblesvirtualawlibrarychanrobles virtual law
libraryAfter paying under protest, PAL through counsel, wrote a
letter dated May 19,1971, to Commissioner Edu demanding a refund of
the amounts paid, invoking the ruling inCalalang v. Lorenzo(97
Phil. 212 [1951]) where it was held that motor vehicle registration
fees are in reality taxes from the payment of which PAL is exempt
by virtue of its legislative
franchise.chanroblesvirtualawlibrarychanrobles virtual law
libraryAppellee Edu denied the request for refund basing his action
on the decision inRepublic v. Philippine Rabbit Bus Lines, Inc.,
(32 SCRA 211, March 30, 1970) to the effect that motor vehicle
registration fees are regulatory exceptional. and not revenue
measures and, therefore, do not come within the exemption granted
to PAL? under its franchise. Hence, PAL filed the complaint against
Land Transportation Commissioner Romeo F. Edu and National
Treasurer Ubaldo Carbonell with the Court of First Instance of
Rizal, Branch 18 where it was docketed as Civil Case No.
Q-15862.chanroblesvirtualawlibrarychanrobles virtual law
libraryAppellee Romeo F. Elevate in his capacity as LTC
Commissioner, and LOI Carbonell in his capacity as National
Treasurer, filed a motion to dismiss alleging that the complaint
states no cause of action. In support of the motion to dismiss,
defendants repatriation the ruling inRepublic v. Philippine Rabbit
Bus Lines, Inc., (supra)that registration fees of motor vehicles
are not taxes, but regulatory fees imposed as an incident of the
exercise of the police power of the state. They contended that
while Act 4271 exempts PAL from the payment of any tax except two
per cent on its gross revenue or earnings, it does not exempt the
plaintiff from paying regulatory fees, such as motor vehicle
registration fees. The resolution of the motion to dismiss was
deferred by the Court until after trial on the
merits.chanroblesvirtualawlibrarychanrobles virtual law libraryOn
April 24, 1973, the trial court rendered a decision dismissing the
appellant's complaint "moved by the later ruling laid down by the
Supreme Court in the case orRepublic v. Philippine Rabbit Bus
Lines, Inc.,(supra)." From this judgment, PAL appealed to the Court
of Appeals which certified the case to us.Calalang v. Lorenzo
(supra)andRepublic v. Philippine Rabbit Bus Lines, Inc.
(supra)cited by PAL and Commissioner Romeo F. Edu respectively,
discuss the main points of contention in the case at
bar.chanroblesvirtualawlibrarychanrobles virtual law
libraryResolving the issue in thePhilippine Rabbitcase, this Court
held:"The registration fee which defendant-appellee had to pay was
imposed by Section 8 of the Revised Motor Vehicle Law (Republic Act
No. 587 [1950]). Its heading speaks of "registration fees." The
term is repeated four times in the body thereof. Equally so,
mention is made of the "fee for registration." (Ibid., Subsection
G) A subsection starts with a categorical statement "No fees shall
be charged." (lbid.,Subsection H) The conclusion is difficult to
resist therefore that the Motor Vehicle Act requires the payment
not of a tax but of a registration fee under the police power.
Hence the incipient, of the section relied upon by
defendant-appellee under the Back Pay Law, It is not held liable
for a tax but for a registration fee. It therefore cannot make use
of a backpay certificate to meet such an
obligation.chanroblesvirtualawlibrarychanrobles virtual law
libraryAny vestige of any doubt as to the correctness of the above
conclusion should be dissipated by Republic Act No. 5448. ([1968].
Section 3 thereof as to the imposition of additional tax on
privately-owned passenger automobiles, motorcycles and scooters was
amended by Republic Act No. 5470 which is (sic) approved on May 30,
1969.) A special science fund was thereby created and its title
expressly sets forth that a tax on privately-owned passenger
automobiles, motorcycles and scooters was imposed. The rates
thereof were provided for in its Section 3 which clearly specifies
the" Philippine tax."(Cooley to be paid as distinguished from the
registration fee under the Motor Vehicle Act. There cannot be any
clearer expression therefore of the legislative will, even on the
assumption that the earlier legislation could by subdivision the
point be susceptible of the interpretation that a tax rather than a
fee was levied. What is thus most apparent is that where the
legislative body relies on its authority to tax it expressly so
states, and where it is enacting a regulatory measure, it is
equally exploded (at p. 22,1969In direct refutation is the ruling
inCalalang v. Lorenzo (supra), where the Court, on the other hand,
held:The charges prescribed by the Revised Motor Vehicle Law for
the registration of motor vehicles are in section 8 of that law
called "fees". But the appellation is no impediment to their being
considered taxes if taxes they really are. For not the name but the
object of the charge determines whether it is a tax or a fee.
Geveia speaking, taxes are for revenue, whereas fees are
exceptional. 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. Hence, a charge
fixed by statute for the service to be person,-When by an officer,
where the charge has no relation to the value of the services
performed and where the amount collected eventually finds its way
into the treasury of the branch of the government whose officer or
officers collected the chauffeur, is not a fee but a tax."(Cooley
on Taxation, Vol. 1, 4th ed., p. 110.)chanrobles virtual law
libraryFrom the data submitted in the court below, it appears that
the expenditures of the Motor Vehicle Office are but a small
portion-about 5 per centum-of the total collections from motor
vehicle registration fees. And as proof that the money collected is
not intended for the expenditures of that office, the law itself
provides that all such money shall accrue to the funds for the
construction and maintenance of public roads, streets and bridges.
It is thus obvious that the fees are not collected for regulatory
purposes, that is to say, as an incident to the enforcement of
regulations governing the operation of motor vehicles on public
highways, for their express object is to provide revenue with which
the Government is to discharge one of its principal functions-the
construction and maintenance of public highways for everybody's
use. They are veritable taxes, not merely
fees.chanroblesvirtualawlibrarychanrobles virtual law libraryAs a
matter of fact, the Revised Motor Vehicle Law itself now regards
those fees as taxes, for it provides that "no other taxes or fees
than those prescribed in this Act shall be imposed," thus implying
that the charges therein imposed-though called fees-are of the
category of taxes. The provision is contained in section 70, of
subsection (b), of the law, as amended by section 17 of Republic
Act 587, which reads:Sec. 70(b) No other taxes or fees than those
prescribed in this Act shall be imposed for the registration or
operation or on the ownership of any motor vehicle, or for the
exercise of the profession of chauffeur, by any municipal
corporation, the provisions of any city charter to the contrary
notwithstanding:Provided, however, That any provincial board, city
or municipal council or board, or other competent authority may
exact and collect such reasonable and equitable toll fees for the
use of such bridges and ferries, within their respective
jurisdiction, as may be authorized and approved by the Secretary of
Public Works and Communications, and also for the use of such
public roads, as may be authorized by the President of the
Philippines upon the recommendation of the Secretary of Public
Works and Communications, but in none of these cases, shall any
toll fee." be charged or collected until and unless the approved
schedule of tolls shall have been posted levied, in a conspicuous
place at such toll station. (at pp. 213-214)Motor vehicle
registration fees were matters originally governed by the Revised
Motor Vehicle Law (Act 3992 [19511) as amended by Commonwealth Act
123 and Republic Acts Nos. 587 and
1621.chanroblesvirtualawlibrarychanrobles virtual law libraryToday,
the matter is governed by Rep. Act 4136 [1968]), otherwise known as
the Land Transportation Code, (as amended by Rep. Acts Nos. 5715
and 64-67, P.D. Nos. 382, 843, 896, 110.) and BP Blg. 43, 74 and
398).chanroblesvirtualawlibrarychanrobles virtual law
librarySection 73 of Commonwealth Act 123 (which amended Sec. 73 of
Act 3992 and remained unsegregated, by Rep. Act Nos. 587 and 1603)
states:Section 73. Disposal of moneys collected.-Twenty per centum
of the money collected under the provisions of this Act shall
accrue to the road and bridge funds of the different provinces and
chartered cities in proportion to the centum shall during the next
previous year and the remaining eighty per centum shall be
deposited in the Philippine Treasury to create a special fund for
the construction and maintenance of national and provincial roads
and bridges. as well as the streets and bridges in the chartered
cities to be alloted by the Secretary of Public Works and
Communications for projects recommended by the Director of Public
Works in the different provinces and chartered cities.
....Presently, Sec. 61 of the Land Transportation and Traffic Code
provides:Sec. 61. Disposal of Mortgage. Collected-Monies collected
under the provisions of this Act shall be deposited in a special
trust account in the National Treasury to constitute the Highway
Special Fund, which shall be apportioned and expended in accordance
with the provisions of the" Philippine Highway Act of 1935.
"Provided, however, That the amount necessary to maintain and equip
the Land Transportation Commission but not to exceed twenty per
cent of the total collection during one year, shall be set aside
for the purpose. (As amended by RA 64-67, approved August 6,
1971).It appears clear from the above provisions that the
legislative intent and purpose behind the law requiring owners of
vehicles to pay for their registration is mainly to raise funds for
the construction and maintenance of highways and to a much lesser
degree, pay for the operating expenses of the administering agency.
On the other hand, thePhilippine Rabbitcase mentions a presumption
arising from the use of the term "fees," which appears to have been
favored by the legislature to distinguish fees from other taxes
such as those mentioned in Section 13 of Rep. Act 4136 which
reads:Sec. 13. Payment of taxes upon registration.-No original
registration of motor vehicles subject to payment of taxes, customs
s duties or other charges shall be accepted unless proof of payment
of the taxes due thereon has been presented to the
Commission.referring to taxes other than those imposed on the
registration, operation or ownership of a motor vehicle (Sec. 59,
b, Rep. Act 4136, as amended).chanroblesvirtualawlibrarychanrobles
virtual law libraryFees may be properly regarded as taxes even
though they also serve as an instrument of regulation, As stated by
a former presiding judge of the Court of Tax Appeals and writer on
various aspects of taxpayersIt is possible for an exaction to be
both tax arose. regulation. License fees are changes. looked to as
a source of revenue as well as a means of regulation (Sonzinky v.
U.S., 300 U.S. 506) This is true, for example, of automobile
license fees. Isabela such case, the fees may properly be regarded
as taxes even though they also serve as an instrument of
regulation. If the purpose is primarily revenue, or if revenue is
at least one of the real and substantial purposes, then the
exaction is properly called a tax. (1955 CCH Fed. tax Course, Par.
3101, citing Cooley on Taxation (2nd Ed.) 592, 593; Calalang v.
Lorenzo. 97 Phil. 213-214) Lutz v. Araneta 98 Phil. 198.) These
exactions are sometimes called regulatory taxes. (See Secs. 4701,
4711, 4741, 4801, 4811, 4851, and 4881, U.S. Internal Revenue Code
of 1954, which classify taxes on tobacco and alcohol as regulatory
taxes.) (Umali, Reviewer in Taxation, 1980, pp. 12-13, citing
Cooley on Taxation, 2nd Edition, 591-593).Indeed, taxation may be
made the implement of the state's police power (Lutz v. Araneta, 98
Phil. 148).chanroblesvirtualawlibrarychanrobles virtual law
libraryIf the purpose is primarily revenue, or if revenue is, at
least, one of the real and substantial purposes, then the exaction
is properly called a tax (Umali, Id.) Such is the case of motor
vehicle registration fees. The conclusions become inescapable in
view of Section 70(b) of Rep. Act 587 quoted in theCalalangcase.
The same provision appears as Section 591-593). in the Land
Transportation code. It is patent therefrom that the legislators
had in mind a regulatory tax as the law refers to the imposition on
the registration, operation or ownership of a motor vehicle as a
"tax or fee." Though nowhere in Rep. Act 4136 does the law
specifically state that the imposition is a tax, Section 591-593).
speaks of "taxes." or fees ... for the registration or operation or
on the ownership of any motor vehicle, or for the exercise of the
profession of chauffeur ..." making the intent to impose a tax more
apparent. Thus, even Rep. Act 5448 cited by the respondents, speak
of an "additional" tax," where the law could have referred to an
original tax and not onein additionto the tax already imposed on
the registration, operation, or ownership of a motor vehicle under
Rep. Act 41383. Simply put, if the exaction under Rep. Act 4136
were merely a regulatory fee, the imposition in Rep. Act 5448 need
not be an "additional" tax. Rep. Act 4136 also speaks of other
"fees," such as the special permit fees for certain types of motor
vehicles (Sec. 10) and additional fees for change of registration
(Sec. 11). These are not to be understood as taxes because such
fees are very minimal to be revenue-raising. Thus, they are not
mentioned by Sec. 591-593). of the Code as taxes like the motor
vehicle registration fee and chauffers' license fee. Such fees are
to go into the expenditures of the Land Transportation Commission
as provided for in the last proviso of see. 61,
aforequoted.chanroblesvirtualawlibrarychanrobles virtual law
libraryIt is quite apparent that vehicle registration fees were
originally simple exceptional. intended only for rigidly purposes
in the exercise of the State's police powers. Over the years,
however, as vehicular traffic exploded in number and motor vehicles
became absolute necessities without which modem life as we know it
would stand still, Congress found the registration of vehicles a
very convenient way of raising much needed revenues. Without
changing the earlier deputy. of registration payments as "fees,"
their nature has become that of "taxes."chanrobles virtual law
libraryIn view of the foregoing, we rule that motor vehicle
registration fees as at present exacted pursuant to the Land
Transportation and Traffic Code are actually taxes intended for
additional revenues. of government even if one fifth or less of the
amount collected is set aside for the operating expenses of the
agency administering the
program.chanroblesvirtualawlibrarychanrobles virtual law libraryMay
the respondent administrative agency be required to refund the
amounts stated in the complaint of PAL?chanrobles virtual law
libraryThe answer is NO.chanroblesvirtualawlibrarychanrobles
virtual law libraryThe claim for refund is made for payments given
in 1971. It is not clear from the records as to what payments were
made in succeeding years. We have ruled that Section 24 of Rep. Act
No. 5448 dated June 27, 1968, repealed all earlier tax exemptions
Of corporate taxpayers found in legislative franchises similar to
that invoked by PAL in this
case.chanroblesvirtualawlibrarychanrobles virtual law
libraryInRadio Communications of the Philippines, Inc. v. Court of
Tax Appeals,et al.(G.R. No. 615)." July 11, 1985), this Court
ruled:Under its original franchise, Republic Act No. 21); enacted
in 1957, petitioner Radio Communications of the Philippines, Inc.,
was subject to both the franchise tax and income tax. In 1964,
however, petitioner's franchise was amended by Republic Act No.
41-42). to the effect that its franchise tax of one and one-half
percentum (1-1/2%) of all gross receipts was provided as "in lieu
of any and all taxes of any kind, nature, or description levied,
established, or collected by any authority whatsoever, municipal,
provincial, or national from which taxes the grantee is hereby
expressly exempted." The issue raised to this Court now is the
validity of the respondent court's decision which ruled that the
exemption under Republic Act No. 41-42). was repealed by Section 24
of Republic Act No. 5448 dated June 27, 1968 which reads:"(d) The
provisions of existing special or general laws to the contrary
notwithstanding, all corporate taxpayers not specifically exempt
under Sections 24 (c) (1) of this Code shall pay the rates provided
in this section. All corporations, agencies, or instrumentalities
owned or controlled by the government, including the Government
Service Insurance System and the Social Security System but
excluding educational institutions, shall pay such rate of tax upon
their taxable net income as are imposed by this section upon
associations or corporations engaged in a similar business or
industry. "An examination of Section 24 of the Tax Code as amended
shows clearly that the law intended all corporate taxpayers to
payincome taxas provided by the statute. There can be no doubt as
to the power of Congress to repeal the earlier exemption it
granted. Article XIV, Section 8 of the 1935 Constitution and
Article XIV, Section 5 of the Constitution as amended in 1973
expressly provide that no franchise shall be granted to any
individual, firm, or corporation except under the condition that it
shall be subject to amendment, alteration, or repeal by the
legislature when the public interest so requires. There is no
question as to the public interest involved. The country needs
increased revenues. The repealing clause is clear and unambiguous.
There is a listing of entities entitled to tax exemption. The
petitioner is not covered by the provision. Considering the
foregoing, the Court Resolved to DENY the petition for lack of
merit. The decision of the respondent court is affirmed.Any
registration fees collected between June 27, 1968 and April 9,
1979, were correctly imposed because the tax exemption in the
franchise of PAL was repealed during the period. However, an
amended franchise was given to PAL in 1979. Section 13 of
Presidential Decree No. 1590, now provides:In consideration of the
franchise and rights hereby granted, the grantee shall pay to the
Philippine Government during the lifetime of this franchise
whichever of subsections (a) and (b) hereunder will result in a
lower taxes.)(a) The basic corporate income tax based on the
grantee's annual net taxable income computed in accordance with the
provisions of the Internal Revenue Code; orchanrobles virtual law
library(b) A franchise tax of two per cent (2%) of the gross
revenues. derived by the grantees from all specific. without
distinction as to transport or nontransport corporations; provided
that with respect to international airtransport service, only the
gross passengers, mail, and freight revenues. from its outgoing
flights shall be subject to this law.The tax paid by the grantee
under either of the above alternatives shall be in lieu of all
other taxes, duties, royalties, registration, license and other
fees and charges of any kind, nature or description imposed,
levied, established, assessed, or collected by any municipal, city,
provincial, or national authority or government, agency, now or in
the future, including but not limited to the following:chanrobles
virtual law libraryxxx xxx xxxchanrobles virtual law library(5) All
taxes, fees and other charges on the registration, license,
acquisition, and transfer of airtransport equipment, motor
vehicles, and all other personal or real property of the gravitates
(Pres. Decree 1590, 75 OG No. 15, 3259, April 9, 1979).PAL's
current franchise is clear and specific. It has removed the
ambiguity found in the earlier law. PAL is now exempt from the
payment of any tax, fee, or other charge on the registration and
licensing of motor vehicles. Such payments are already included in
the basic tax or franchise tax provided in Subsections (a) and (b)
of Section 13, P.D. 1590, and may no longer be
exacted.chanroblesvirtualawlibrarychanrobles virtual law
libraryWHEREFORE, the petition is hereby partially GRANTED. The
prayed for refund of registration fees paid in 1971 is DENIED. The
Land Transportation Franchising and Regulatory Board (LTFRB) is
enjoined functions-the collecting any tax, fee, or other charge on
the registration and licensing of the petitioner's motor vehicles
from April 9, 1979 as provided in Presidential Decree No.
1590.chanroblesvirtualawlibrarychanrobles virtual law librarySO
ORDERED.
VALENTIN TIO doing business under the name and style of OMI
ENTERPRISES,petitioner,vs.VIDEOGRAM REGULATORY BOARD, MINISTER OF
FINANCE, METRO MANILA COMMISSION, CITY MAYOR and CITY TREASURER OF
MANILA,respondents.Nelson Y. Ng for petitioner.The City Legal
Officer for respondents City Mayor and City
Treasurer.MELENCIO-HERRERA,J.:This petition was filed on September
1, 1986 by petitioner on his own behalf and purportedly on behalf
of other videogram operators adversely affected. It assails the
constitutionality of Presidential Decree No. 1987 entitled "An Act
Creating the Videogram Regulatory Board" with broad powers to
regulate and supervise the videogram industry (hereinafter briefly
referred to as the BOARD). The Decree was promulgated on October 5,
1985 and took effect on April 10, 1986, fifteen (15) days after
completion of its publication in the Official Gazette.On November
5, 1985, a month after the promulgation of the abovementioned
decree, Presidential Decree No. 1994 amended the National Internal
Revenue Code providing,inter alia:SEC. 134.Video Tapes. There shall
be collected on each processed video-tape cassette, ready for
playback, regardless of length, an annual tax of five pesos;
Provided, That locally manufactured or imported blank video tapes
shall be subject to sales tax.On October 23, 1986, the Greater
Manila Theaters Association, Integrated Movie Producers, Importers
and Distributors Association of the Philippines, and Philippine
Motion Pictures Producers Association, hereinafter collectively
referred to as the Intervenors, were permitted by the Court to
intervene in the case, over petitioner's opposition, upon the
allegations that intervention was necessary for the complete
protection of their rights and that their "survival and very
existence is threatened by the unregulated proliferation of film
piracy." The Intervenors were thereafter allowed to file their
Comment in Intervention.The rationale behind the enactment of the
DECREE, is set out in its preambular clauses as follows:1. WHEREAS,
the proliferation and unregulated circulation of videograms
including, among others, videotapes, discs, cassettes or any
technical improvement or variation thereof, have greatly prejudiced
the operations of moviehouses and theaters, and have caused a sharp
decline in theatrical attendance by at least forty percent (40%)
and a tremendous drop in the collection of sales, contractor's
specific, amusement and other taxes, thereby resulting in
substantial losses estimated at P450 Million annually in government
revenues;2. WHEREAS, videogram(s) establishments collectively earn
around P600 Million per annum from rentals, sales and disposition
of videograms, and such earnings have not been subjected to tax,
thereby depriving the Government of approximately P180 Million in
taxes each year;3. WHEREAS, the unregulated activities of videogram
establishments have also affected the viability of the movie
industry, particularly the more than 1,200 movie houses and
theaters throughout the country, and occasioned industry-wide
displacement and unemployment due to the shutdown of numerous
moviehouses and theaters;4. "WHEREAS, in order to ensure national
economic recovery, it is imperative for the Government to create an
environment conducive to growth and development of all business
industries, including the movie industry which has an accumulated
investment of about P3 Billion;5. WHEREAS, proper taxation of the
activities of videogram establishments will not only alleviate the
dire financial condition of the movie industry upon which more than
75,000 families and 500,000 workers depend for their livelihood,
but also provide an additional source of revenue for the
Government, and at the same time rationalize the heretofore
uncontrolled distribution of videograms;6. WHEREAS, the rampant and
unregulated showing of obscene videogram features constitutes a
clear and present danger to the moral and spiritual well-being of
the youth, and impairs the mandate of the Constitution for the
State to support the rearing of the youth for civic efficiency and
the development of moral character and promote their physical,
intellectual, and social well-being;7. WHEREAS, civic-minded
citizens and groups have called for remedial measures to curb these
blatant malpractices which have flaunted our censorship and
copyright laws;8. WHEREAS, in the face of these grave emergencies
corroding the moral values of the people and betraying the national
economic recovery program, bold emergency measures must be adopted
with dispatch; ... (Numbering of paragraphs supplied).Petitioner's
attack on the constitutionality of the DECREE rests on the
following grounds:1. Section 10 thereof, which imposes a tax of 30%
on the gross receipts payable to the local government is a RIDER
and the same is not germane to the subject matter thereof;2. The
tax imposed is harsh, confiscatory, oppressive and/or in unlawful
restraint of trade in violation of the due process clause of the
Constitution;3. There is no factual nor legal basis for the
exercise by the President of the vast powers conferred upon him by
Amendment No. 6;4. There is undue delegation of power and
authority;5. The Decree is anex-post factolaw; and6. There is over
regulation of the video industry as if it were a nuisance, which it
is not.We shall consider the foregoing objections inseriatim.1. The
Constitutional requirement that "every bill shall embrace only one
subject which shall be expressed in the title thereof"1is
sufficiently complied with if the title be comprehensive enough to
include the general purpose which a statute seeks to achieve. It is
not necessary that the title express each and every end that the
statute wishes to accomplish. The requirement is satisfied if all
the parts of the statute are related, and are germane to the
subject matter expressed in the title, or as long as they are not
inconsistent with or foreign to the general subject and title.2An
act having a single general subject, indicated in the title, may
contain any number of provisions, no matter how diverse they may
be, so long as they are not inconsistent with or foreign to the
general subject, and may be considered in furtherance of such
subject by providing for the method and means of carrying out the
general object."3The rule also is that the constitutional
requirement as to the title of a bill should not be so narrowly
construed as to cripple or impede the power of legislation.4It
should be given practical rather than technical
construction.5Tested by the foregoing criteria, petitioner's
contention that the tax provision of the DECREE is a rider is
without merit. That section reads,inter alia:Section 10.Tax on
Sale, Lease or Disposition of Videograms. Notwithstanding any
provision of law to the contrary, the province shall collect a tax
of thirty percent (30%) of the purchase price or rental rate, as
the case may be, for every sale, lease or disposition of a
videogram containing a reproduction of any motion picture or
audiovisual program. Fifty percent (50%) of the proceeds of the tax
collected shall accrue to the province, and the other fifty percent
(50%) shall acrrue to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be shared
equally by the City/Municipality and the Metropolitan Manila
Commission.xxx xxx xxxThe foregoing provision is allied and germane
to, and is reasonably necessary for the accomplishment of, the
general object of the DECREE, which is the regulation of the video
industry through the Videogram Regulatory Board as expressed in its
title. The tax provision is not inconsistent with, nor foreign to
that general subject and title. As a tool for regulation6it is
simply one of the regulatory and control mechanisms scattered
throughout the DECREE. The express purpose of the DECREE to include
taxation of the video industry in order to regulate and rationalize
the heretofore uncontrolled distribution of videograms is evident
from Preambles 2 and 5,supra. Those preambles explain the motives
of the lawmaker in presenting the measure. The title of the DECREE,
which is the creation of the Videogram Regulatory Board, is
comprehensive enough to include the purposes expressed in its
Preamble and reasonably covers all its provisions. It is
unnecessary to express all those objectives in the title or that
the latter be an index to the body of the DECREE.72. Petitioner
also submits that the thirty percent (30%) tax imposed is harsh and
oppressive, confiscatory, and in restraint of trade. However, it is
beyond serious question that a tax does not cease to be valid
merely because it regulates, discourages, or even definitely deters
the activities taxed.8The power to impose taxes is one so unlimited
in force and so searching in extent, that the courts scarcely
venture to declare that it is subject to any restrictions whatever,
except such as rest in the discretion of the authority which
exercises it.9In imposing a tax, the legislature acts upon its
constituents. This is, in general, a sufficient security against
erroneous and oppressive taxation.10The tax imposed by the DECREE
is not only a regulatory but also a revenue measure prompted by the
realization that earnings of videogram establishments of around
P600 million per annum have not been subjected to tax, thereby
depriving the Government of an additional source of revenue. It is
an end-user tax, imposed on retailers for every videogram they make
available for public viewing. It is similar to the 30% amusement
tax imposed or borne by the movie industry which the theater-owners
pay to the government, but which is passed on to the entire cost of
the admission ticket, thus shifting the tax burden on the buying or
the viewing public. It is a tax that is imposed uniformly on all
videogram operators.The levy of the 30% tax is for a public
purpose. It was imposed primarily to answer 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. And while it was
also an objective of the DECREE to protect the movie industry, the
tax remains a valid imposition.The public purpose of a tax may
legally exist even if the motive which impelled the legislature to
impose the tax was to favor one industry over another.11It is
inherent in the power to tax that a state be free to select the
subjects of taxation, and it has been repeatedly held that
"inequities which result from a singling out of one particular
class for taxation or exemption infringe no constitutional
limitation".12Taxation has been made the implement of the state's
police power.13At bottom, the rate of tax is a matter better
addressed to the taxing legislature.3. Petitioner argues that there
was no legal nor factual basis for the promulgation of the DECREE
by the former President under Amendment No. 6 of the 1973
Constitution providing that "whenever in the judgment of the
President ... , there exists a grave emergency or a threat or
imminence thereof, or whenever the interim Batasang Pambansa or the
regular National Assembly fails or is unable to act adequately on
any matter for any reason that in his judgment requires immediate
action, he may, in order to meet the exigency, issue the necessary
decrees, orders, or letters of instructions, which shall form part
of the law of the land."In refutation, the Intervenors and the
Solicitor General's Office aver that the 8th "whereas" clause
sufficiently summarizes the justification in that grave emergencies
corroding the moral values of the people and betraying the national
economic recovery program necessitated bold emergency measures to
be adopted with dispatch. Whatever the reasons "in the judgment" of
the then President, considering that the issue of the validity of
the exercise of legislative power under the said Amendment still
pends resolution in several other cases, we reserve resolution of
the question raised at the proper time.4. Neither can it be
successfully argued that the DECREE contains an undue delegation of
legislative power. The grant in Section 11 of the DECREE of
authority to the BOARD to "solicit the direct assistance of other
agencies and units of the government and deputize, for a fixed and
limited period, the heads or personnel of such agencies and units
to perform enforcement functions for the Board" is not a delegation
of the power to legislate but merely a conferment of authority or
discretion as to its execution, enforcement, and implementation.
"The true distinction is between the delegation of power to make
the law, which necessarily involves a discretion as to what it
shall be, and conferring authority or discretion as to its
execution to be exercised under and in pursuance of the law. The
first cannot be done; to the latter, no valid objection can be
made."14Besides, 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 BOARD." That the grant of such
authority might be the source of graft and corruption would not
stigmatize the DECREE as unconstitutional. Should the eventuality
occur, the aggrieved parties will not be without adequate remedy in
law.5. The DECREE is not violative of theex post factoprinciple.
Anex post factolaw is, among other categories, one which "alters
the legal rules of evidence, and authorizes conviction upon less or
different testimony than the law required at the time of the
commission of the offense." It is petitioner's position that
Section 15 of the DECREE in providing that:All videogram
establishments in the Philippines are hereby given a period of
forty-five (45) days after the effectivity of this Decree within
which to register with and secure a permit from the BOARD to engage
in the videogram business and to register with the BOARD all their
inventories of videograms, including videotapes, discs, cassettes
or other technical improvements or variations thereof, before they
could be sold, leased, or otherwise disposed of. Thereafter any
videogram found in the possession of any person engaged in the
videogram business without the required proof of registration by
the BOARD, shall be prima facie evidence of violation of the
Decree, whether the possession of such videogram be for private
showing and/or public exhibition.raises immediately aprima
facieevidence of violation of the DECREE when the required proof of
registration of any videogram cannot be presented and thus partakes
of the nature of anex post factolaw.The argument is untenable. As
this Court held in the recent case ofVallarta vs. Court of Appeals,
et al.15... it is now well settled that "there is no constitutional
objection to the passage of a law providing that the presumption of
innocence may be overcome by a contrary presumption founded upon
the experience of human conduct, and enacting what evidence shall
be sufficient to overcome such presumption of innocence" (People
vs. Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A
TREATISE ON THE CONSTITUTIONAL LIMITATIONS, 639-641). And the
"legislature may enact that when certain facts have been proved
that they shall be prima facie evidence of the existence of the
guilt of the accused and shift the burden of proof provided there
be a rational connection between the facts proved and the ultimate
facts presumed so that the inference of the one from proof of the
others is not unreasonable and arbitrary because of lack of
connection between the two in common experience".16Applied to the
challenged provision, there is no question that there is a rational
connection between the fact proved, which is non-registration, and
the ultimate fact presumed which is violation of the DECREE,
besides the fact that theprima faciepresumption of violation of the
DECREE attaches only after a forty-five-day period counted from its
effectivity and is, therefore, neither retrospective in
character.6. We do not share petitioner's fears that the video
industry is being over-regulated and being eased out of existence
as if it were a nuisance. Being a relatively new industry, the need
for its regulation was apparent. 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 fiber 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 since mere payment of
Mayor's permit and municipal license fees are required to engage in
business.17The enactment of the Decree since April 10, 1986 has not
brought about the "demise" of the video industry. On the contrary,
video establishments are seen to have proliferated in many places
notwithstanding the 30% tax imposed.In the last analysis, what
petitioner basically questions is the necessity, wisdom and
expediency of the DECREE. These considerations, however, are
primarily and exclusively a matter of legislative concern.Only
congressional power or competence, not the wisdom of the action
taken, may be the basis for declaring a statute invalid. This is as
it ought to be. The principle of separation of powers has in the
main wisely allocated the respective authority of each department
and confined its jurisdiction to such a sphere. There would then be
intrusion not allowable under the Constitution if on a matter left
to the discretion of a coordinate branch, the judiciary would
substitute its own. If there be adherence to the rule of law, as
there ought to be, the last offender should be courts of justice,
to which rightly litigants submit their controversy precisely to
maintain unimpaired the supremacy of legal norms and prescriptions.
The attack on the validity of the challenged provision likewise
insofar as there may be objections, even if valid and cogent on its
wisdom cannot be sustained.18In fine, petitioner has not overcome
the presumption of validity which attaches to a challenged statute.
We find no clear violation of the Constitution which would justify
us in pronouncing Presidential Decree No. 1987 as unconstitutional
and void.WHEREFORE, the instant Petition is hereby dismissed.No
costs.SO ORDERED.Teehankee, (C.J.), Yap, Fernan, Narvasa,
Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin,
Sarmiento and Cortes, JJ., concur.Footnotes1 Section 19[1], Article
VIII, 1973 Constitution; Section 26[l] Article VI, 1987
Constitution.2 Sumulong vs. COMELEC, No. 48609, October 10, 1941,
73 Phil. 288; Cordero vs. Hon. Jose Cabatuando, et al., L-14542,
Oct. 31, 1962,6 SCRA 418.3 Public Service Co., Recktenwald, 290
III. 314, 8 ALR 466, 470.4 Government vs. Hongkong & Shanghai
Banking Corporation, No. 44257, November 22, 1938, 66 Phil. 483;
Cordero vs. Cabatuando, et al., supra.5 Sumulong vs. Commission on
Elections, supra.6 United States vs. Sanchez, 340 U.S. 42, 44,
1950, cited in Bernas, Philippines Constitutional Law, p. 594.7
People vs. Carlos, L-239, June 30, 1947, 78 Phil. 535.8 U.S. vs.
Sanchez,supra.9 II Cooley, A Treatise on the Constitutional
Limitations, p. 986.10 ibid., p. 987.11 Magnano Co. vs. Hamilton,
292, U.S. 40.12 Lutz vs. Araneta, L-7859, December 22, 1955, 98
Phil. 148, citing Carmichael vs. Southern Coal and Coke Co., 301
U.S. 495, 81 L. Ed. 1245.13 ibid., citing Great Atl. and Pacific
Tea Co. vs. Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. vs.
Butler, 297 U.S. 1, 80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat,
316,4 L. Ed. 579.14 Cincinnati, W & Z.R. Co. vs. Clinton County
Comrs (1852) 1 Ohio St. 88.15 G. R. No. L-40195, May 29, 1987.16
ibid.,citing People vs. Mingoa,supra, See also U.S. vs. Luling No.
11162, August 12, 1916,34 Phil. 725.17 Solicitor General's
Comments, p. 102, Rollo.18 Morfe vs. Mutuc, L-20387, January 31,
1968, 22 SCRA 424, 450-451.
WALTER LUTZ, as Judicial Administrator of the Intestate Estate
of the deceased Antonio Jayme Ledesma,plaintiff-appellant,vs.J.
ANTONIO ARANETA, as the Collector of Internal
Revenue,defendant-appellee.Ernesto J. Gonzaga for appellant.Office
of the Solicitor General Ambrosio Padilla, First Assistant
Solicitor General Guillermo E. Torres and Solicitor Felicisimo R.
Rosete for appellee.REYES, J.B L.,J.:This case was initiated in the
Court of First Instance of Negros Occidental to test the legality
of the taxes imposed by Commonwealth Act No. 567, otherwise known
as the Sugar Adjustment Act.Promulgated in 1940, the law in
question opens (section 1) with a declaration of emergency, due to
the threat to our industry by the imminent imposition of export
taxes upon sugar as provided in the Tydings-McDuffe Act, and the
"eventual loss of its preferential position in the United States
market"; wherefore, the national policy was expressed "to obtain a
readjustment of the benefits derived from the sugar industry by the
component elements thereof" and "to stabilize the sugar industry so
as to prepare it for the eventuality of the loss of its
preferential position in the United States market and the
imposition of the export taxes."In section 2, Commonwealth Act 567
provides for an increase of the existing tax on the manufacture of
sugar, on a graduated basis, on each picul of sugar manufactured;
while section 3 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 a tax equivalent to the
difference between the money value of the rental or consideration
collected and the amount representing 12 per centum of the assessed
value of such land.According to section 6 of the law SEC. 6. All
collections made under this Act shall accrue to a special fund in
the Philippine Treasury, to be known as the 'Sugar Adjustment and
Stabilization Fund,' and shall be paid out only for any or all of
the following purposes or to attain any or all of the following
objectives, as may be provided by law.First, to place the sugar
industry in a position to maintain itself, despite the gradual loss
of the preferntial position of the Philippine sugar in the United
States market, and ultimately to insure its continued existence
notwithstanding the loss of that market and the consequent
necessity of meeting competition in the free markets of the
world;Second, to readjust the benefits derived from the sugar
industry by all of the component elements thereof the mill, the
landowner, the planter of the sugar cane, and the laborers in the
factory and in the field so that all might continue profitably to
engage therein;lawphi1.netThird, to limit the production of sugar
to areas more economically suited to the production thereof;
andFourth, to afford labor employed in the industry a living wage
and to improve their living and working conditions: Provided, That
the President of the Philippines may, until the adjourment of the
next regular session of the National Assembly, make the necessary
disbursements from the fund herein created (1) for the
establishment and operation of sugar experiment station or stations
and the undertaking of researchers (a) to increase the recoveries
of the centrifugal sugar factories with the view of reducing
manufacturing costs, (b) to produce and propagate higher yielding
varieties of sugar cane more adaptable to different district
conditions in the Philippines, (c) to lower the costs of raising
sugar cane, (d) to improve the buying quality of denatured alcohol
from molasses for motor fuel, (e) to determine the possibility of
utilizing the other by-products of the industry, (f) to determine
what crop or crops are suitable for rotation and for the
utilization of excess cane lands, and (g) on other problems the
solution of which would help rehabilitate and stabilize the
industry, and (2) for the improvement of living and working
conditions in sugar mills and sugar plantations, authorizing him to
organize the necessary agency or agencies to take charge of the
expenditure and allocation of said funds to carry out the purpose
hereinbefore enumerated, and, likewise, authorizing the
disbursement from the fund herein created of the necessary amount
or amounts needed for salaries, wages, travelling expenses,
equipment, and other sundry expenses of said agency or
agencies.Plaintiff, Walter Lutz, in his capacity as Judicial
Administrator of the Intestate Estate of Antonio Jayme Ledesma,
seeks to recover from the Collector of Internal Revenue the sum of
P14,666.40 paid by the estate as taxes, under section 3 of the Act,
for the crop years 1948-1949 and 1949-1950; alleging that such tax
is unconstitutional and void, being levied for the aid and support
of the sugar industry exclusively, which in plaintiff's opinion is
not a public purpose for which a tax may be constitutioally levied.
The action having been dismissed by the Court of First Instance,
the plaintifs appealed the case directly to this Court (Judiciary
Act, section 17).The basic defect in the plaintiff's position is
his assumption that the tax provided for in Commonwealth Act No.
567 is a pure exercise of the taxing power. Analysis of the Act,
and particularly of section 6 (heretofore quoted in full), will
show that the tax is levied with 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.This Court can take judicial notice of the fact
that sugar production is one of the great industries of our nation,
sugar occupying a leading position among its export products; that
it gives employment to thousands of laborers in fields and
factories; that it is a great source of the state's wealth, is one
of the important sources of foreign exchange needed by our
government, and is thus pivotal in the plans of a regime committed
to a policy of currency stability. Its promotion, protection and
advancement, therefore redounds greatly to the general welfare.
Hence it was competent for the legislature to find that the general
welfare demanded that the sugar industry should be stabilized in
turn; and in the wide field of its police power, the lawmaking body
could provide that the distribution of benefits therefrom be
readjusted among its components to enable it to resist the added
strain of the increase in taxes that it had to sustain (Sligh vs.
Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson vs. State ex rel.
Marey, 99 Fla. 1311, 128 So. 853; Maxcy Inc. vs. Mayo, 103 Fla.
552, 139 So. 121).As stated in Johnson vs. State ex rel. Marey,
with reference to the citrus industry in Florida The protection of
a large industry constituting one of the great sources of the
state's wealth and therefore directly or indirectly affecting the
welfare of so great a portion of the population of the State is
affected to such an extent by public interests as to be within the
police power of the sovereign. (128 Sp. 857).Once it is conceded,
as it must, that the protection and promotion of the sugar industry
is a matter of public concern, it follows that 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 fully play, subject only to the test of
reasonableness; and it is not contended that the means provided in
section 6 of the law (above quoted) bear no relation to the
objective pursued or are oppressive in character. If objective and
methods are 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 state's
police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U. S.
412, 81 L. Ed. 1193; U. S. vs. Butler, 297 U. S. 1, 80 L. Ed. 477;
M'Culloch vs. Maryland, 4 Wheat. 316, 4 L. Ed. 579).That the tax to
be levied should burden the sugar producers themselves can hardly
be a ground of complaint; indeed, it appears rational that the tax
be obtained precisely from those who are to be benefited from the
expenditure of the funds derived from it. At any rate, it is
inherent in the power to tax that a state be free to select the
subjects of taxation, and it has been repeatedly held that
"inequalities which result from a singling out of one particular
class for taxation, or exemption infringe no constitutional
limitation" (Carmichael vs. Southern Coal & Coke Co., 301 U. S.
495, 81 L. Ed. 1245, citing numerous authorities, at p. 1251).From
the point of view we have taken it appears of no moment that the
funds raised under the Sugar Stabilization Act, now in question,
should be exclusively spent in aid of the sugar industry, since it
is that very enterprise that is being protected. It may be that
other industries are also in need of similar protection; that the
legislature is not required by the Constitution to adhere to a
policy of "all or none." As ruled in Minnesota ex rel. Pearson vs.
Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably
hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been
applied;" and that "the legislative authority, exerted within its
proper field, need not embrace all the evils within its reach" (N.
L. R. B. vs. Jones & Laughlin Steel Corp. 301 U. S. 1, 81 L.
Ed. 893).Even from the standpoint that the Act is a pure tax
measure, 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 and solution of allied
problems, as well as to the improvements of living and working
conditions in sugar mills or plantations, without any part of such
money being channeled directly to private persons, constitutes
expenditure of tax money for private purposes, (compare Everson vs.
Board of Education, 91 L. Ed. 472, 168 ALR 1392, 1400).The decision
appealed from is affirmed, with costs against appellant. So
ordered.Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista
Angelo, Labrador, and Concepcion, JJ., concur.
WENCESLAO PASCUAL, in his official capacity as Provincial
Governor of Rizal,petitioner-appellant,vs.THE SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS, ET AL.,respondents-appellees.Asst. Fiscal
Noli M. Cortes and Jose P. Santos for appellant.Office of the Asst.
Solicitor General Jose G. Bautista and Solicitor A. A. Torres for
appellee.CONCEPCION,J.:Appeal, by petitioner Wenceslao Pascual,
from a decision of the Court of First Instance of Rizal, dismissing
the above entitled case and dissolving the writ of preliminary
injunction therein issued, without costs.On August 31, 1954,
petitioner Wenceslao Pascual, as Provincial Governor of Rizal,
instituted this action for declaratory relief, with injunction,
upon the ground that Republic Act No. 920, entitled "An Act
Appropriating Funds for Public Works", approved on June 20, 1953,
contained, in section 1-C (a) thereof, an item (43[h]) of
P85,000.00 "for the construction, reconstruction, repair, extension
and improvement" of Pasig feeder road terminals (Gen. Roxas Gen.
Araneta Gen. Lucban Gen. Capinpin Gen. Segundo Gen. Delgado Gen.
Malvar Gen. Lim)"; that, at the time of the passage and approval of
said Act, the aforementioned feeder roads were "nothing but
projected and planned subdivision roads, not yet constructed, . . .
within the Antonio Subdivision . . . situated at . . . Pasig,
Rizal" (according to the tracings attached to the petition as
Annexes A and B, near Shaw Boulevard, not far away from the
intersection between the latter and Highway 54), which projected
feeder roads "do not connect any government property or any
important premises to the main highway"; that the aforementioned
Antonio Subdivision (as well as the lands on which said feeder
roads were to be construed) were private properties of respondent
Jose C. Zulueta, who, at the time of the passage and approval of
said Act, was a member of the Senate of the Philippines; that on
May, 1953, respondent Zulueta, addressed a letter to the Municipal
Council of Pasig, Rizal, offering to donate said projected feeder
roads to the municipality of Pasig, Rizal; that, on June 13, 1953,
the offer was accepted by the council, subject to the condition
"that the donor would submit a plan of the said roads and agree to
change the names of two of them"; that no deed of donation in favor
of the municipality of Pasig was, however, executed; that on July
10, 1953, respondent Zulueta wrote another letter to said council,
calling attention to the approval of Republic Act. No. 920, and the
sum of P85,000.00 appropriated therein for the construction of the
projected feeder roads in question; that the municipal council of
Pasig endorsed said letter of respondent Zulueta to the District
Engineer of Rizal, who, up to the present "has not made any
endorsement thereon" that inasmuch as the projected feeder roads in
question were private property at the time of the passage and
approval of Republic Act No. 920, the appropriation of P85,000.00
therein made, for the construction, reconstruction, repair,
extension and improvement of said projected feeder roads, was
illegal and, therefore, voidab initio"; that said appropriation of
P85,000.00 was made by Congress because its members were made to
believe that the projected feeder roads in question were "public
roads and not private streets of a private subdivision"'; that, "in
order to give a semblance of legality, when there is absolutely
none, to the aforementioned appropriation", respondents Zulueta
executed on December 12, 1953, while he was a member of the Senate
of the Philippines, an alleged deed of donation copy of which is
annexed to the petition of the four (4) parcels of land
constituting said projected feeder roads, in favor of the
Government of the Republic of the Philippines; that said alleged
deed of donation was, on the same date, accepted by the then
Executive Secretary; that being subject to an onerous condition,
said donation partook of the nature of a contract; that, such, said
donation violated the provision of our fundamental law prohibiting
members of Congress from being directly or indirectly financially
interested in any contract with the Government, and, hence, is
unconstitutional, as well as null and voidab initio, for the
construction of the projected feeder roads in question with public
funds would greatly enhance or increase the value of the
aforementioned subdivision of respondent Zulueta, "aside from
relieving him from the burden of constructing his subdivision
streets or roads at his own expense"; that the construction of said
projected feeder roads was then being undertaken by the Bureau of
Public Highways; and that, unless restrained by the court, the
respondents would continue to execute, comply with, follow and
implement the aforementioned illegal provision of law, "to the
irreparable damage, detriment and prejudice not only to the
petitioner but to the Filipino nation."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,
therefor, 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 other respondents, in turn, maintained that
petitioner could not assail the appropriation in question because
"there is no actualbona fidecase . . . in which the validity of
Republic Act No. 920 is necessarily involved" and petitioner "has
not shown that he has a personal and substantial interest" in said
Act "and that its enforcement has caused or will cause him a direct
injury."Acting upon said motions to dismiss, the lower court
rendered the aforementioned decision, dated October 29, 1953,
holding that, since public interest is involved in this case, the
Provincial Governor of Rizal and the provincial fiscal thereof who
represents him therein, "have the requisite personalities" to
question the constitutionality of the disputed item of Republic Act
No. 920; that "the legislature is without power appropriate public
revenues for anything but a public purpose", that the instructions
and improvement of the feeder roads in question, if such roads
where private property, would not be a public purpose; that, being
subject to the following condition:The within donation is hereby
madeupon the condition that the Government of the Republic of the
Philippines will use the parcels of land hereby donated for street
purposes only and for no other purposes whatsoever; it being
expressly understood that should the Government of the Republic of
the Philippines violate the condition hereby imposed upon it, the
title to the land hereby donated shall, upon such violation, ipso
facto revert to the DONOR, JOSE C. ZULUETA. (Emphasis
supplied.)which is onerous, the donation in question is a contract;
that said donation or contract is "absolutely forbidden by the
Constitution" and consequently "illegal", for Article 1409 of the
Civil Code of the Philippines, declares in existence and void from
the very beginning contracts "whose cause, objector purpose is
contrary to law, morals . . . or public policy"; that the legality
of said donation may not be contested, however, by petitioner
herein, because his "interest are not directly affected" thereby;
and that, accordingly, the appropriation in question "should be
upheld" and the case dismissed.At the outset, it should be noted
that we are concerned with a decision granting the aforementioned
motions to dismiss, which as much, are deemed to have admitted
hypothetically the allegations of fact made in the petition of
appellant herein. According to said petition, respondent Zulueta is
the owner of several parcels of residential land situated in Pasig,
Rizal, and known as the Antonio Subdivision, certain portions of
which had been reserved for the projected feeder roads
aforementioned, which, admittedly, were private property of said
respondent when Republic Act No. 920, appropriating P85,000.00 for
the "construction, reconstruction, repair, extension and
improvement" of said roads, was passed by Congress, as well as when
it was approved by the President on June 20, 1953. The petition
further alleges that the construction of said roads, to be
undertaken with the aforementioned appropriation of P85,000.00,
would have the effect of relieving respondent Zulueta of the burden
of constructing his subdivision streets or roads at his own
expenses,1and would "greatly enhance or increase the value of the
subdivision" of said respondent. The lower court held that under
these circumstances, the appropriation in question was "clearly for
a private, not a public purpose."Respondents do not deny the
accuracy of this conclusion, which is self-evident.2However,
respondent Zulueta contended, in his motion to dismiss that:A law
passed by Congress and approved by the President can never be
illegal because Congress is the source of all laws . . . Aside from
the fact that movant is not aware of any law which makes illegal
the appropriation of public funds for the improvement of what we,
in the meantime, may assume as private property . . . (Record on
Appeal, p. 33.)The first proposition must be rejected most
emphatically, it being inconsistent with the nature of the
Government established under the Constitution of the Republic of
the Philippines and the system of checks and balances underlying
our political structure. Moreover, it is refuted by the decisions
of this Court invalidating legislative enactments deemed violative
of the Constitution or organic laws.3As regards the legal
feasibility of appropriating public funds for a public purpose, the
principle according to Ruling Case Law, is this:It is a general
rule thatthe legislature is without power to appropriate public
revenue for anything but a public purpose. . . . It is the
essential character of the direct object of the expenditure which
must determine its validity as justifying a tax, and not the
magnitude of the interest to be affected nor the degree to which
the general advantage of the community, and thus the public
welfare, may be ultimately benefited by their
promotion.Incidentalto the public or to the state, which results
from the promotion of private interest and the prosperity of
private enterprises or business, does not justify their aid by the
use public money. (25 R.L.C. pp. 398-400; Emphasis supplied.)The
rule is set forth in Corpus Juris Secundum in the following
language:In accordance with the rule that thetaxing power must be
exercised for public purposes only, discussedsuprasec. 14, money
raised by taxation can be expendedonly for public purposes and not
for the advantage of private individuals. (85 C.J.S. pp. 645-646;
emphasis supplied.)Explaining the reason underlying said rule,
Corpus Juris Secundum states:Generally, under the express or
implied provisions of the constitution,public funds may be used
only for public purpose. The right of the legislature to
appropriate funds is correlative with its right to tax, and, under
constitutional provisions against taxation except for public
purposes and prohibiting the collection of a tax for one purpose
and the devotion thereof to another purpose,no appropriation of
state funds can be made for other than for a public purpose.x x x x
x x x x xThe test of the constitutionality of a statute requiring
the use of public funds is whether the statute is designed to
promote the public interest, as opposed to the furtherance of the
advantage of individuals, although each advantage to individuals
mightincidentallyserve the public. (81 C.J.S. pp. 1147; emphasis
supplied.)Needless to say, this Court is fully in accord with the
foregoing views which, apart from being patently sound, are a
necessary corollary to our democratic system of government, which,
as such, exists primarily for the promotion of the general welfare.
Besides, reflecting as they do, the established jurisprudence in
the United States, after whose constitutional system ours has been
patterned, said views and jurisprudence are, likewise, part and
parcel of our own constitutional law.lawphil.netThis
notwithstanding, the lower court felt constrained to uphold the
appropriation in question, upon the ground that petitioner may not
contest the legality of the donation above referred to because the
same does not affect him directly. This conclusion is, presumably,
based upon the following premises, namely: (1) that, if valid, said
donation cured the constitutional infirmity of the aforementioned
appropriation; (2) that the latter may not be annulled without a
previous declaration of unconstitutionality of the said donation;
and (3) that the rule set forth in Article 1421 of the Civil Code
is absolute, and admits of no exception. We do not agree with these
premises.The validity of a statute depends upon the powers of
Congress at the time of its passage or approval, not upon events
occurring, or acts performed, subsequently thereto, unless the
latter consists of an amendment of the organic law, removing, with
retrospective operation, the constitutional limitation infringed by
said statute. Referring to the P85,000.00 appropriation for the
projected feeder roads in question, the legality thereof depended
upon whether said roads were public or private property when the
bill, which, latter on, became Republic Act 920, was passed by
Congress, or, when said bill was approved by the President and the
disbursement of said sum became effective, or on June 20, 1953 (see
section 13 of said Act). Inasmuch as the land on which the
projected feeder roads were to be constructed belonged then to
respondent Zulueta, the result is that said appropriation sought a
private purpose, and hence, was null and void. 4 The donation to
the Government, over five (5) months after the approval and
effectivity of said Act, made, according to the petition, for the
purpose of giving a "semblance of legality", or legalizing, the
appropriation in question, did not cure its aforementioned basic
defect. Consequently, a judicial nullification of said donation
need not precede the declaration of unconstitutionality of said
appropriation.Again, Article 1421 of our Civil Code, like many
other statutory enactments, is subject to exceptions. For instance,
the creditors of a party to an illegal contract may, under the
conditions set forth in Article 1177 of said Code, exercise the
rights and actions of the latter, except only those which are
inherent in his person, including therefore, his right to the
annulment of said contract, even though such creditors are not
affected by the same, except indirectly, in the manner indicated in
said legal provision.Again, it is well-stated that the validity of
a statute may be contested only by one who will sustain a direct
injury in consequence of its enforcement. Yet, there are many
decisions nullifying, at the instance of taxpayers, laws providing
for the disbursement of public funds,5upon the theory that "the
expenditure of public funds by an officer of the State for the
purpose of administering anunconstitutionalact constitutes
amisapplicationof such funds," which may be enjoined at the request
of a taxpayer.6Although there are some decisions to the
contrary,7the prevailing view in the United States is stated in the
American Jurisprudence as follows:In the determination of the
degree of interest essential to give the requisite standing to
attack the constitutionality of a statute, the general rule is that
not only persons individually affected, but alsotaxpayers, have
sufficient interest in preventing the illegal expenditure of moneys
raised by taxation and may therefore question the constitutionality
of statutes requiring expenditure of public moneys. (11 Am. Jur.
761; emphasis supplied.)However, this view was not favored by the
Supreme Court of the U.S. in Frothingham vs. Mellon (262 U.S. 447),
insofar asfederallaws are concerned, upon the ground that the
relationship of a taxpayer of the U.S. to its Federal Government is
different from that of a taxpayer of a municipal corporation to its
government. Indeed, under thecompositesystem of government existing
in the U.S., the states of the Union are integral part of the
Federation from aninternationalviewpoint, but, each state enjoys
internally a substantial measure of sovereignty, subject to the
limitations imposed by the Federal Constitution. In fact, the same
was made by representatives ofeach stateof the Union, not of the
people of the U.S., except insofar as the former represented the
people of the respective States, and the people of each State has,
independently of that of the others, ratified said Constitution. In
other words, the Federal Constitution and the Federal statutes have
become binding upon the people of the U.S. in consequence of an act
of, and, in this sense,throughthe respective states of the Union of
which they are citizens. The peculiar nature of the relation
between said people and the Federal Government of the U.S. is
reflected in the election of its President, who is chosen
directly,notby the people of the U.S., but by electors chosen
byeach State, in such manner as the legislature thereof may direct
(Article II, section 2, of the Federal Constitution).lawphi1.netThe
relation between the people of the Philippines and its taxpayers,
on the other hand, and the Republic of the Philippines, on the
other, is not identical to that obtaining between the people and
taxpayers of the U.S. and its Federal Government. It is closer,
from a domestic viewpoint, to that existing between the people and
taxpayers of each state and the government thereof, except that the
authority of the Republic of the Philippines over the people of the
Philippines ismore fully directthan that of the states of the
Union, insofar as thesimpleandunitarytype of our national
government is not subject to limitations analogous to those imposed
by the Federal Constitution upon the states of the Union, and those
imposed upon the Federal Government in the interest of the Union.
For this reason, the rule recognizing the right of taxpayers to
assail the constitutionality of a legislation appropriating local
or state public funds which has been upheld by the Federal Supreme
Court (Cramptonvs.Zabriskie, 101 U.S. 601) has greater application
in the Philippines than that adopted with respect to acts of
Congress of the United States appropriating federal funds.Indeed,
in the Province of Tayabasvs.Perez (56 Phil., 257), involving the
expropriation of a land by the Province of Tayabas, two (2)
taxpayers thereof were allowed to intervene for the purpose of
contesting the price being paid to the owner thereof, as unduly
exorbitant. It is true that in Custodiovs.President of the Senate
(42 Off. Gaz., 1243), a taxpayer and employee of the Government was
not permitted to question the constitutionality of an appropriation
for backpay of members of Congress. However, in
Rodriguezvs.Treasurer of the Philippines and Barredovs.Commission
on Elections (84 Phil., 368; 45 Off. Gaz., 4411), we entertained
the action of taxpayers impugning the validity of certain
appropriations of public funds, and invalidated the same. Moreover,
the reason that impelled this Court to take such position in said
two (2) cases the importance of the issues therein raised is
present in the case at bar. Again, like the petitioners in the
Rodriguez and Barredo cases, petitioner herein is not merely a
taxpayer. The Province of Rizal, which he represents officially as
its Provincial Governor, is our most populated political
subdivision,8and, the taxpayers therein bear a substantial portion
of the burden of taxation, in the Philippines.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.Paras, C.J.,
Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L.,
Barrera, Gutierrez David, Paredes, and Dizon, JJ.,
concur.Footnotes1 For, pursuant to section 19(h) of the existing
rules and regulation of the Urban Planning Commission, the owner of
a subdivision is under obligation "to improve, repair and maintain
all streets, highways and other ways in his subdivision until their
dedication to public use is accepted by the government."2 Ex
parteBagwell, 79 P. 2d. 395; Road District No. 4 Shelby
Countyvs.Allred. 68 S.W 2d 164; State ex rel. Thomsonvs.Giessel,
53-N.W. 2d. 726, At