BENJAMIN P. GOMEZ (appellee) vs. ENRICO PALOMAR, in his capacity as Postmaster General, HON. BRIGIDO R.

VALENCIA, in his capacity as Secretary of Public Works and Communications, and DOMINGO GOPEZ, in his capacity
as Acting Postmaster of San Fernando, Pampanga (appellant)
(G.R. No. L-23645 : October 29, 1968)

FACTS OF THE CASE:

The Republic Act No. 1635 was enacted to raise funds for the Philippine Tuberculosis Society in order to continue its noble work
to prevent and eradicate tuberculosis. Its way is by printing of semi-postal stamps of the different denominations through the
mandate given to the Director of Posts with a charge of additional five centavos per issuance of its regular charge to its stamps and
became a requirement that no mail shall be accepted unless they bear for the aforesaid charges. Accordingly, the respondent
Postmaster General issued several Administrative Orders with the approval of his co-respondent Secretary. One of the noted
allegations in those orders was the exemption of the Government mails and its instrumentalities for the implementation of the said
additional charges wherein prior to the amendment, it included all kinds of mails, whether private individual or the government.
Hence, this became part of contention in question.

Here comes a customer petitioner bound in Pampanga. He sent a SPECIAL letter to the post office addressed to a certain Agustin
Aquino located in Manila but because anti-TB stamps were not present in the mail, the mail sent back to the petitioner.

A declaratory relief filed by the petitioner to the Court of First Instance of Pampanga that later on declared the statute
unconstitutional on the ground of violation of equal protection of clause and the rule of uniformity and equality of taxation
pursuant to Article VI, Section 14 (1) of the 1935 Constitution. Gomez prayed in his pleadings that statutory classification of mail
users must bear some reasonable relationship to the end sought to be attained, and that absent such relationship the selection of
mail users is constitutionally impermissible

A petition for review was filed in the Supreme Court questioning the orders issued by the lower court to test the onstitutionality of
the statute.

ISSUES:

Was there a improper classification which the trial court based for them to declare the unconstitutionality of the statute?

Was the tax exemption invalid for it was not levied for a public purpose as no special benefits accrue to mail users as taxpayers,
and violates the rule of uniformity in taxation.

Was there an undue delegation of power over the Postmaster General?

HELD:

A) No, there was a proper classification.

The five centavo charge levied by Republic Act 1635, as amended, is in the NATURE OF AN EXCISE TAX, laid upon the
exercise of a privilege, namely, the privilege of using the mails.

The LEGISLATURE has the inherent power to select the subjects of taxation and to grant exemptions. This power has aptly been
described as "of wide range and flexibility." Indeed, it is said that in the field of taxation, more than in other areas, the legislature
possesses the greatest freedom in classification. The reason for this is that traditionally, classification has been a device for fitting
tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden.

That’s common

In Commonwealth vs. Life Assurance Company, while the principle that there must be a reasonable relationship between
classification made by the legislation and its purpose is undoubtedly true in some contexts, it has no application to a measure
whose sole purpose is to raise revenue ... So long as the classification imposed is based upon some standard capable of reasonable
comprehension, be that standard based upon ability to produce revenue or some other legitimate distinction, equal protection of
the law has been afforded

In Fernandez vs Wiener (1945), the Court ruled that consideration of practical administrative convenience and cost in the
administration of tax laws afford adequate ground for imposing a tax on a well recognized and defined class
In the case of the anti-TB stamps, undoubtedly, the single most important and influential consideration that led the legislature to
select mail users as subjects of the tax is the relative ease and convenience of collecting the tax through the post offices. The small
amount of five centavos does not justify the great expense and inconvenience of collecting through the regular means of collection.
On the other hand, by placing the duty of collection on postal authorities the tax was made almost self-enforcing, with as little cost
and as little inconvenience as possible.

It is then erroneous to say that the statute discriminated against a certain class of mail users. The Court enlightened us that mail
users were already a class prior to the enactment of the statute, no more distinction that exists de facto.
The State’s power to grant exemption is LIKEWISE A NECESSARY COROLLARY (incidental in nature).

Why is it necessary? In Carmichael v. Southern Coal & Coke Co., the legislature may withhold the burden of the tax in order to
foster what it conceives to be a beneficent enterprise. This is the case of newspapers which, under the amendment introduced by
Republic Act 2631, are exempt from the payment of the additional stamp.

As for the Government and its instrumentalities, their exemption rests on the State's sovereign immunity from taxation. The State
cannot be taxed without its consent and such consent, being in derogation of its sovereignty, is to be strictly construed.
Administrative Order 9 of the respondent Postmaster General, which lists the various offices and instrumentalities of the
Government exempt from the payment of the anti-TB stamp, is but a restatement of this well-known principle of constitutional
law.

B) No, the tax exemption is valid

A tax need not be measured by the weight of the mail or the extent of the service rendered. There is no infringement over imposing
flat rate rather that graduated tax.

The trial court pointed out that the money raised from the sales of the anti-TB stamps is spent for the benefit of the Philippine
Tuberculosis Society, a private organization, without appropriation by law. But as the Solicitor General points out, the Society is
not really the beneficiary but only the agency through which the State acts in carrying out what is essentially a public function.
The money is treated as a special fund and as such need not be appropriated by law.

C) None, the Postmaster General’s power is within the ambit of the law

The anti-TB stamp is a distinctive stamp which shows on its face not only the amount of the additional charge but also that of the
regular postage. In the case of business reply cards, for instance, it is obvious that to require mailers to affix the anti-TB stamp on
their cards would be to make them pay much more because the cards likewise bear the amount of the regular postage.

It is likewise true that the statute does not provide for the disposition of mails which do not bear the anti-TB stamp, but a
declaration therein that "no mail matter shall be accepted in the mails unless it bears such semi-postal stamp" is a declaration that
such mail matter is nonmailable within the meaning of section 1952 of the Administrative Code. Administrative Order 7 of the
Postmaster General is but a restatement of the law for the guidance of postal officials and employees. As for Administrative Order
9, we have already said that in listing the offices and entities of the Government exempt from the payment of the stamp, the
respondent Postmaster General merely observed an established principle, namely, that the Government is exempt from taxation.

Judgement reversed and the complaint was dismissed.

RATIONALE:

Excise taxes are taxes that are imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer,
retailer or consumer, depending on the specific tax.

1935 CONSTITUTION

SEC. 14. (1) the rule of taxation shall be uniform.

SEC. 13. (1) All money collected on any tax levied for a SPECIAL PURPOSE shall be treated as special fund and paid out for
such purpose only. If the purpose for which a special fund was created has been fulfilled or abandoned, the balance, if any, shall be
transferred to the general funds of the Government.

ACT No. 2711 known as Revised Administrative Code of 1917

Matter unmailable under section one thousand nine hundred and fifty-five, above, when deposited in any post office for
transmission or delivery by mail, shall be returned when practicable to the person who so deposited it if his identity is known or
can be ascertained, but it need not be forwarded or delivered to the addressee.