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Lutz V Araneta

This document summarizes a Supreme Court case regarding the constitutionality of taxes imposed by Commonwealth Act No. 567, also known as the Sugar Adjustment Act. The Act increased taxes on sugar production and imposed additional taxes on landowners leasing land for sugarcane cultivation. The Court ruled the taxes were constitutional, finding that the sugar industry was important to the Philippine economy and general welfare. Stabilizing the sugar industry through tax adjustments was within the legislature's police power to promote public welfare. The subject tax was upheld as a valid regulatory measure to rehabilitate and stabilize the threatened sugar industry.

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Joyce Sumagang Reyes
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123 views1 page

Lutz V Araneta

This document summarizes a Supreme Court case regarding the constitutionality of taxes imposed by Commonwealth Act No. 567, also known as the Sugar Adjustment Act. The Act increased taxes on sugar production and imposed additional taxes on landowners leasing land for sugarcane cultivation. The Court ruled the taxes were constitutional, finding that the sugar industry was important to the Philippine economy and general welfare. Stabilizing the sugar industry through tax adjustments was within the legislature's police power to promote public welfare. The subject tax was upheld as a valid regulatory measure to rehabilitate and stabilize the threatened sugar industry.

Uploaded by

Joyce Sumagang Reyes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FUNDAMENTAL POWERS OF THE STATE

POLICE POWER

WALTER LUTZ, as Judicial Administrator of the Intestate of the deceased Antonio Jayme Ledesma, plaintiff-
appellant v. J. ANTONIO ARANETA, as collector of Internal Revenue, defendant-apppelle

G.R No. L-7856. December 22, 1955

REYES, J.B L., J.:

FACTS:

Appelant in this case Walter Lutz in his capacity as the Judicial Administrator of the intestate of the deceased Antonio
Jayme Ledesma, seeks to recover from the Collector of the Internal Revenue the total sum of fourteen thousand six
hundred sixty six and forty cents (P 14, 666.40) paid by the estate as taxes, under section 3 of Commonwealth Act
No. 567, also known as the Sugar Adjustment Act, for the crop years 1948-1949 and 1949-1950. Commonwealth
Act. 567 Section 2 provides for an increase of the existing tax on the manufacture of sugar on a graduated basis, on
each picul of sugar manufacturer; while section 3 levies on the owners or persons in control of the land devoted tot
he cultivation of sugarcane and ceded to others for 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. It was alleged 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 was dismissed by the CFI thus the plaintiff appealed directly to the
Supreme Court.

ISSUE:

Whether or not the tax imposition in the Commonwealth Act No. 567 are unconstitutional.

RULING:

Yes, the Supreme Court held that the fact that sugar production is one of the greatest industry of our nation, sugar
occupying a leading position among its export products; that it gives employment to thousands of laborers in the
fields and factories; that it is a great source of the state's wealth, is one of the important source 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 be stabilized in turn; and in the
wide field of its police power, the law-making 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.

The subject 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 a valid exercise of police power.

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