Title CHAPTER 2 - Inherent and Constitutional Limitations of Taxation ✅

people. This relationship, often enforced through a taxpayer's suit, demands that the funds be used not for the "exclusive benefit of private persons" but for the "common good." 2. The "Robbery" Doctrine: The judiciary has been clear in its position. To levy a tax for a private purpose is an act of "robbery" or "spoliation." As the Supreme Court has stated, "To lay with one hand, the power of the government on the property of the citizens, and with the other to bestow it upon favored individuals... is nonetheless a robbery because it is done under the forms of law..." 3. Distinguishing Taxation from a "Taking": This limitation separates taxation from an unconstitutional taking of private property. The Due Process clause of the Constitution (Art. III, Sec. 1) bars the government from taking private property for private use. A tax levied for a private purpose is, therefore, a "taking" of property without due process of law and is void. The Test of Public Purpose While the principle is absolute, its application is often complex. What constitutes a "public purpose" is not static. The term is broad, elastic, and evolving. It is synonymous with "public good," "public interest," and "public welfare." The General Rule: The determination of what constitutes a public purpose is, in the first instance, a matter of legislative discretion. The legislature, as the representative of the people, is presumed to know the needs of the public and the most effective way to address them. Courts will not interfere with this discretion unless the legislative determination is clearly and arbitrarily abusive. The Test: The test of public purpose is the "use" of the tax proceeds. The central question is: ● Who is the ultimate, direct beneficiary of the tax? ● Is the benefit to the public direct, or merely incidental? ● Does it support the "State" or a "recognized objective of government"? The Exception (Judicial Review): While courts generally defer to legislative discretion, they may intervene when a tax or appropriation is challenged, particularly through a taxpayer's suit. A taxpayer has legal standing to question

This provision provides the procedural enforcement mechanism for the substantive inherent limitation. ● The inherent limitation (Public Purpose) dictates that taxes can only be levied for the public good. ● The constitutional limitation (Art. VI, Sec. 29(1)) dictates that the proceeds of those taxes cannot be spent except for a purpose identified and authorized by a specific law. These two principles work in tandem. The "appropriation made by law" must, itself, be for a public purpose. If Congress passes a law (an appropriation) to spend ₱1 billion to build a private resort for its members, that appropriation is void because the purpose violates the inherent limitation. This clause is the legal basis for a taxpayer's suit. A taxpayer can go to court and seek to enjoin the Secretary of Budget and Management from releasing funds, arguing that the appropriation law (e.g., an item in the General Appropriations Act) is unconstitutional because the intended expenditure is for a private, not a public, purpose, as was the case in Pascual v. Secretary of Public Works. This constitutional provision changes the "public purpose" doctrine from a political theory into a justiciable issue, allowing the judiciary to examine a law, whether it is a tax levy or a spending bill, and measure its purpose against the constitutional standard. Jurisprudence (Case Doctrines) The public purpose doctrine has been defined by the Supreme Court in two key cases. Pascual establishes the rule for appropriations, while Planters Products provides the modern application for tax levies, distinguishing it from the valid exercise of police power. A. Pascual v. Secretary of Public Works, G.R. No. L-10405 (1960) ● Facts: The Governor of Rizal, Wenceslao Pascual, filed a taxpayer's suit to block the release of ₱85,000 appropriated under Republic Act No. 920 for the construction of "Pasig feeder road terminals," arguing that the roads were