11. PLANTERS PRODUCTS, INC. VS. FERTIPHIL
1465, but PPI refused to accede to the
CORPORATION
Doctrine/s:
(1) 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.
(2) The power to tax exists for the general
welfare; hence, implicit in its power is the
limitation that it should be used only for a
public purpose.
Facts: Petitioner PPI and private respondent
Fertiphil are private corporations incorporated
under Philippine laws. They are both engaged in
the importation and distribution of fertilizers,
pesticides and agricultural chemicals.
On 3 June 1985, then President Ferdinand
Marcos, exercising his legislative powers, issued
LOI No. 1465 which provided, among others, for
the imposition of a capital recovery component
(CRC) on the domestic sale of all grades of
fertilizers in the Philippines. The LOI provides:
The Administrator of the Fertilizer Pesticide
Authority to include in its fertilizer pricing
formula a capital contribution component of
not less than P10 per bag. This capital
contribution shall be collected until adequate
capital is raised to make PPI viable. Such capital
contribution shall be applied by FPA to all
domestic sales of fertilizers in the Philippines.
(Underscoring supplied)
Pursuant to the LOI, Fertiphil paid P10 for every
bag of fertilizer it sold in the domestic market to
the Fertilizer and Pesticide Authority (FPA). FPA
then remitted the amount collected to the Far
East Bank and Trust Company, the depositary
bank of PPI. Fertiphil paid P6,689,144 to FPA
from July 8, 1985 to January 24, 1986
After the 1986 Edsa Revolution, FPA voluntarily
stopped the imposition of the P10 levy. With
the return of democracy, Fertiphil demanded
from PPI a refund of the amounts it paid under
LOI No.
demand.
Fertiphil filed a complaint for collection and
damages against FPA and PPI with the RTC in
Makati. It questioned the constitutionality of
LOI No. 1465 for being unjust, unreasonable,
oppressive, invalid and an unlawful imposition
that amounted to a denial of due process of
law.Fertiphil alleged that the LOI solely favored
PPI, a privately owned corporation, which used
the proceeds to maintain its monopoly of the
fertilizer industry.
In its Answer, FPA, through the Solicitor
General, countered that the issuance of LOI No.
1465 was a valid exercise of the police power of
the State in ensuring the stability of the
fertilizer industry in the country. It also averred
that Fertiphil did not sustain any damage from
the LOI because the burden imposed by the levy
fell on the ultimate consumer, not the seller.
RTC: the imposition of the P10 CRC was an
exercise of the State’s inherent power of
taxation; invalidated the levy for violating the
basic principle that taxes can only be levied for
public purpose. (PPI filed a M.R. -> denied; In a
separate but related proceeding, SC allowed
appeal but remanded to CA)
CA: affirmed with modification; even on the
assumption that LOI No. 1465 was issued under
the police power of the state, it is still
unconstitutional because it did not promote
public welfare; the levy was NOT for the
benefit, as alleged, of Planters Foundation, Inc.
(on the strength of the Letter of Understanding
(LOU) issued by then Prime Minister Cesar
Virata on 18 April 1985 and affirmed by the
Secretary of Justice in an Opinion dated 12
October 1987.(PPI filed a M.R. -> denied)
Issue/s:
(1) Whether the imposition of the levy was
an exercise by the State of its taxation power.
(2) Whether LOI 1465 constitutes a valid
legislation pursuant to the exercise of taxation.
1
(3) Whether LOI 1465 constitutes a valid
legislation pursuant to the exercise of police
power.
Held:
(1) Yes;
The imposition of the levy was an exercise by
the State of its taxation power. While it is true
that the power of taxation can be used as an
implement of police power,the primary purpose
of the levy is revenue generation. 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.
In Philippine Airlines, Inc. v. Edu, it was held
that the imposition of a vehicle registration fee
is not an exercise by the State of its police
power, but of its taxation power, thus:
It is clear from the provisions of Section 73 of
Commonwealth Act 123 and Section 61 of the
Land Transportation and Traffic Code 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. x xx Fees
may be properly regarded as taxes even though
they also serve as an instrument of regulation.
Taxation may be made the implement of the
state's police power (Lutz v. Araneta, 98 Phil.
148). 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. Such is the case of motor
vehicle registration fees. The same provision
appears as Section 59(b) 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." x xx 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. 59(b) of the Code as
taxes like the motor vehicle registration fee and
chauffeurs’ license fee. Such fees are to go into
the expenditures of the Land Transportation
Commission as provided for in the last proviso
of Sec. 61. (Underscoring supplied)
The P10 levy under LOI No. 1465 is too
excessive to serve a mere regulatory purpose.
The levy, no doubt, was a big burden on the
seller or the ultimate consumer. It increased the
price of a bag of fertilizer by as much as five
percent. A plain reading of the LOI also supports
the conclusion that the levy was for revenue
generation. The LOI expressly provided that the
levy was imposed "until adequate capital is
raised to make PPI viable."
(2) No;
The P10 levy is unconstitutional because it was
not for a public purpose. The levy was imposed
to give undue benefit to PPI.
An inherent limitation on the power of taxation
is public purpose. Taxes are exacted only for a
public purpose. They cannot be used for purely
private purposes or for the exclusive benefit of
private persons. The reason for this is simple.
The power to tax exists for the general welfare;
hence, implicit in its power is the limitation that
it should be used only for a public purpose.
The term "public purpose" is not defined. It is
an elastic concept that can be hammered to fit
modern standards. Jurisprudence states that
"public purpose" should be given a broad
interpretation. It does not only pertain to those
purposes which are traditionally viewed as
essentially government functions, such as
building roads and delivery of basic services, but
also includes those purposes designed to
promote social justice. Thus, public money may
2
now be used for the relocation of illegal settlers,
low-cost housing and urban or agrarian reform.
While the categories of what may constitute a
public purpose are continually expanding in
light of the expansion of government functions,
the inherent requirement that taxes can only be
exacted for a public purpose still stands. Public
purpose is the heart of a tax law. When a tax
law is only a mask to exact funds from the
public when its true intent is to give undue
benefit and advantage to a private enterprise,
that law will not satisfy the requirement of
"public purpose."
Indications that it is not for the public purpose
1. The LOI expressly provided that the levy
be imposed to benefit PPI, a private company.
2. The LOI provides that the imposition of
the P10 levy was conditional and dependent
upon PPI becoming financially "viable."
3. The levies paid under the LOI were
directly remitted and deposited by FPA to Far
East Bank and Trust Company, the depositary
bank of PPI which proves that PPI benefitted
from the LOI
4. The levy was used to pay the corporate
debts of PPI.
(3) No;
Even if We consider LOI No. 1695 enacted
under the police power of the State, it would
still be invalid for failing to comply with the test
of "lawful subjects" and "lawful means."
Jurisprudence states the test as follows: (1) the
interest of the public generally, as distinguished
from those of particular class, requires its
exercise; and (2) the means employed are
reasonably necessary for the accomplishment
of the purpose and not unduly oppressive upon
individuals.
For the same reasons as discussed, LOI No. 1695
is invalid because it did not promote public
interest. The law was enacted to give undue
advantage to a private corporation.
12. CIR VS BANK OF COMMERCE
Facts: Bank of Commerce derived passive
income in the form of interests or discounts
from its investments in government securities
and private commercial papers, it paid 5% gross
receipts tax on its income, as reflected in its
quarterly percentage tax returns. Included
therein were the respondent bank’s passive
income from the said investments amounting to
P85,384,254.51, which had already been
subjected to a final tax of 20%. Meanwhile, the
CTA rendered judgment in Asia Bank
Corporation v. Commissioner of Internal
Revenue, holding that the 20% final withholding
tax on interest income from banks does not
form part of taxable gross receipts for Gross
Receipts Tax (GRT) purposes. The CTA relied on
Section 4(e) of Revenue Regulations (Rev. Reg.)
No. 12-80. The respondent bank then filed an
administrative claim for refund, claimed that it
had overpaid its gross receipts tax for 1994 to
1995 by P853,842.54. Granted.
Issue: DOES THE 20% FINAL WITHHOLDING TAX
ON BANK’S INTEREST INCOME FORM PART OF
THE TAXABLE GROSS RECEIPTS IN COMPUTING
THE 5% GROSS RECEIPTS TAX?
Held: YES. In Far East Bank & Trust Co. v.
Commissioner and Standard Chartered Bank v.
Commissioner, both promulgated on 16
November 2001, the tax court ruled that the
final withholding tax forms part of the bank’s
gross receipts in computing the gross receipts
tax. The tax court held that Section 4(e) of
Revenue Regulations No. 12-80 did not
prescribe the computation of the amount of
gross receipts but merely authorized “the
determination of the amount of gross receipts
on the basis of the method of accounting being
used by the taxpayer.” The word “gross” must
be used in its plain and ordinary meaning. It is
defined as “whole, entire, total, without
deduction.
13. CIR VS CITY TRUST INVESTMENT PHILS
Summary: Citytrust reported its total gross
3
 receipts and paid the 5% GRT corresponding
to it. Citytrust claimed for tax refund, seeking
to be reimbursed of the 5% GRT it paid on
the portion of 20% FWT contending that the
20% final tax on the passive income was
already deducted and withheld by various
withholding agents. Hence, the actual or the
exact amount received, as its passive income
was less the 20% final tax and to include the
same would constitute double taxation. SC
held that the 20% FWT is included in
computing the 5% GRT and such does not
amount to double taxation. The GRT is a
percentage tax, while the FWT is an income
tax. The two concepts are different from each
other.
DOCTRINE: Double taxation means taxing for
the same tax period the same thing or
activity twice, when it should be taxed but
once, for the same purpose and with the
same kind of character of tax.
Facts: Citytrust is a domestic corporation
engaged in quasi-banking activities.In 1994,
Citytrust reported the amount of
P110,788,542.30 as its total gross receipts and
paid the amount of P5,539,427.11
corresponding to its 5% GRT. On January 30,
1996, the CTA, in Asian Bank Corporation v.
Commissioner of Internal Revenue (ASIAN BANK
case), ruled that the basis in computing the 5%
GRT is the gross receipts minus the 20% FWT.
Based on this ruling, Citytrust claimed for tax,
seeking to be reimbursed of the 5% GRT it paid
on the portion of 20% FWT or the amount of
P326,007.01.
CTA: monies or receipts that do not redound to
the benefit of the taxpayer are not part of its
gross receipts for the purpose of computing its
taxable gross receipts the 20% final tax on the
passive income was already deducted and
withheld by various withholding agents. Hence,
the actual or the exact amount received, as its
passive income in the year 1994, was less the
20% final tax already withheld by various
withholding agents to include it again would
tantamount to double taxation.
G.R. No. 140857
Asianbank is a domestic corporation also
engaged in banking business. It remitted to the
BIR 5% GRT on its total gross receipts. It filed a
claim for refund for the overpaid GRT based on
the Asian bank case.
CTA: allowed refund in the reduced amount of
P1,345,743.01
CA: Reversed CTA.
It is true that Revenue Regulation No. 12-80
provides that the gross receipts tax on banks
and other financial institutions should be based
on all items of income actually received. Actual
receipt here is used in opposition to mere
accrual. But receipt may be actual or
constructive. The 20% final tax withheld from
interest income of banks and other similar
institutions is not income that they have not
received; it is simply withheld from them and
paid to the government, for their benefit.
PETITIONER’S ARGUMENT:
Commissioner’s Arguments:
first, there is no law which excludes the 20%
FWT from the taxable gross receipts for the
purpose of computing the 5% GRT; second, the
imposition of the 20% FWT on the bank's
passive income and the 5% GRT on its taxable
gross receipts, which include the bank's passive
income, does not constitute double taxation;
third, the ruling by this Court in Manila Jockey
Club, cited in the ASIAN BANK case, is not
applicable; and fourth, in the computation of
the 5% GRT, the passive income need not be
actually received in order to form part of the
taxable gross receipts.
RESPONDENT’S ARGUMENT:
first, Section 4(e) of Revenue Regulations No.
12-80 dated November 7, 1980 provides that
the rates of taxes on the gross receipts of
financial institutions shall be based only on all
items of income actually received; second,
Court's ruling in Manila Jockey Club is applicable
Issue:
4
1. WON the 20% FWT on a bank's interest
income forms part of the taxable gross receipts
for the purpose of computing the 5% GRT?
Held: NO
Numerous cases are unanimous in defining
"gross receipts" as "the entire receipts without
any deduction.” CIR v. Bank of Philippine
Islands: The Tax Code does not provide a
definition of the term "gross receipts".
Accordingly, the term is properly understood in
its plain and ordinary meaning and must be
taken to comprise of the entire receipts without
any deduction CIR v. Bank of Commerce: The
word "gross" must be used in its plain and
ordinary meaning. It is defined as "whole,
entire, total, without deduction." Gross is the
antithesis of net. China Banking Corporation v.
Court of Appeals: Under the ordinary basic
methods of handling accounts, the term gross
receipts, in the absence of any statutory
definition of the term, must be taken to include
the whole total gross receipts without any
deductions
the legislative intent to apply the term in its
plain and ordinary meaning may be surmised
from a historical perspective of the levy on
gross receipts. From the time the GRT on banks
was first imposed in 1946 under Republic Act
No. 39 the legislature has not established a
definition of the term "gross receipts." Under
Revenue Regulations No. 12-80 and No. 17-84,
as well as several numbered rulings, the BIR has
consistently ruled that the term "gross receipts"
does not admit of any deduction. This
interpretation has remained unchanged
throughout the various re-enactments of the
present Section 121 of the Tax Code.
Commissioner of Internal Revenue v. Solidbank
Corporation: When we speak of the "gross
earnings" of a person or corporation, we mean
the entire earnings or receipts of such person or
corporation from the business or operation to
which we refer. Webster's Dictionary gross
="whole or entire."
2. WON there is double taxation
Held: NO
The 20% FWT and 5% GRT does not constitute
double taxation.
Double taxation means taxing for the same tax
period the same thing or activity twice, when it
should be taxed but once, for the same purpose
and with the same kind of character of tax. This
is not the situation in the case at bar. The GRT is
a percentage tax under Title V of the Tax Code
([Section 121], Other Percentage Taxes), while
the FWT is an income tax under Title II of the
Code (Tax on Income). The two concepts are
different from each other. Solidbank Case: a
percentage tax is a national tax measured by a
certain percentage of the gross selling price or
gross value in money of goods sold, bartered or
imported; or of the gross receipts or earnings
derived by any person engaged in the sale of
services. It is not subject to withholding. An
income tax, on the other hand, is a national tax
imposed on the net or the gross income
realized in a taxable year. It is subject to
withholding. Tax Code imposes two different
kinds of taxes.
Granted the petition of the Commissioner of
Internal Revenue and reversed the Decision of
the CA
14. PASCUAL VS SECRETARY OF PUBLIC
WORKS
Facts: 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, an item of P85,000.00, "for the
construction, reconstruction, repair, extension
and improvement" of "Pasig feeder road
terminals"; 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"
which projected feeder roads "do not connect
any government property or any important
5
premises to the main highway"; that the
aforementioned Antonio Subdivision 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 29, 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, void ab 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", respondent 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, as 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 void ab 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."
Issue: Whether or not the statute is
unconstitutional and void?
Held: "It is a general rule that the 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
interests 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. Incidental
advantage to the public or to the state, which
results from the promotion of private interests
and the prosperity of private enterprises or
business, does not justify their aid by the use of
public money." (25 R.L.C. pp. 398-400; Italics
supplied.)
6
The rule is set forth in Corpus Juris Secundum in
the following language:
"In accordance with the rule that the taxing
power must be exercised for public purposes
only, money raised by taxation can be expended
only for public purposes and not for the
advantage of private individuals."
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 a 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 a public purpose. * * *
"The test of the constitutionality of a statute
requiring the use of public funds is whether the
statute is designed to promote the public
interests, as opposed to the furtherance of the
advantage of individuals, although each
advantage to individuals might incidentally
serve the public. * * * ." (81 C.J.S. p. 1147;
italics supplied.)
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. 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, later
on, became Republic Act No. 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.
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.
15. LUTZ VS ARANETA
Facts: 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 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.
7
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
constitutionally levied. The action having been
dismissed by the Court of First Instance, the
plaintiffs appealed the case directly to this
Court (Judiciary Act, section 17).
Issue: Whether or not the CA No. 567 or Sugar
Adjustment Act is constitutional and for public
purpose.
Held: 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, 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.
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 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.
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".
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
8
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".