29 Tio v.

Regulatory Board
G.R. No. L-75697 (1987)
J. Melencio-Herrera / Tita K

Subject Matter: Overview and general principles; Tax as distinguished from other forms of exactions
Summary:
Petitioner assails the constitutionality of PD 1987 which created Videogram Regulatory Board, which is tasked to
regulate the video industry. PD 1987 contained a provision imposing a tax of 30% of the purchase price or rental rate of
videograms. Petitioner argued that such tax is harsh, confiscatory, oppressive and/or in unlawful restraint of trade, in
violation of due process. Nonetheless, the SC upheld the constitutionality of PD 1987. It held that the imposition of the
tax in this case is both a regulatory measure and a revenue measure.

Doctrines:
The Constitutional requirement that “every bill shall embrace only one subject which shall be expressed in the title
thereof” is 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.

In this case, Sec. 10 is allied and germane to, and is reasonably necessary for the accomplishment of, the general
object of PD 1987, which is the regulation of the video industry through the Videogram Regulatory Board. The
tax provision is not inconsistent with, nor foreign to that general subject and title. As a tool for regulation, it is
simply one of the regulatory and control mechanisms scattered throughout PD 1987.

A tax does not cease to be valid merely because it regulates, discourages or deter activities taxed.
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.
Parties:
Petitioner VALENTIN TIO doing business under the name and style of OMI ENTERPRISES
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA
Respondent
COMMISSION, CITY MAYOR and CITY TREASURER OF MANILA
Facts:
Petitioner assails the constitutionality of PD 19871.
PD 1987 created Videogram Regulatory Board, which is tasked to regulate and supervise the video industry.
Preambular clauses of the PD 1897 set out the rationale, including:
 Videogram establishments collectively earn
around P600M p.a. but have not been 
subjected to tax, thereby depriving Gov’t of approximately P180M in taxes
each year. 

A month after the promulgation of PD 1987, PD 1994 amended the NIRC providing an imposition of an annual tax of
P5 on processed video-tape cassettes and that locally manufactured or imported blank video tapes shall be subject to
sales tax. 

Petitioner’s attack on the constitutionality of PD 1987 rests on the following grounds:
1. Sec. 102 thereof, which imposes 30% tax on the gross receipts payable to the LGU, is a RIDER and the same is
not germane to the subject matter thereof; 


1entitled “An Act Creating the Videogram Regulatory Board”

2Section 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.
 2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade, in violation of due
process; 

3. No factual or legal basis for the exercise by the President of the vast powers conferred upon him by Amendment
No. 6; 

4. Undue delegation of power and authority; 

5. Decree is an ex-post facto law; 

6. There is over regulation of the video industry as if it were a nuisance; 

Issues:

1. WON PD 1987 sec. 10 is a rider. (NO)

2. WON the tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade. (NO)

Ratio:

1. Petitioner argues that Sec. 10 thereof, which imposes 30% tax on the gross receipts payable to the LGU, is a RIDER and
the same is not germane to the subject matter PD 1987.

NO –PD 1987 is not a rider; PD 1987 is constitutional.

 The Constitutional requirement that “every bill shall embrace only one subject which shall be expressed in the
title thereof” is 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.
o Sec. 10 is allied and germane to, and is reasonably necessary for the accomplishment of, the general
object of PD 1987, which is the regulation of the video industry through the Videogram Regulatory
Board. The tax provision is not inconsistent with, nor foreign to that general subject and title. As a tool
for regulation, it is simply one of the regulatory and control mechanisms scattered throughout PD 1987.

2. NO - The tax imposed is NOT harsh, confiscatory, oppressive and/or in unlawful restraint of trade. (NO)

 A tax does not cease to be valid merely because it regulates, discourages or deter activities taxed.
 The 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. In imposing a tax, the legislature acts upon its constituents. This is, in general, a
sufficient security against erroneous and oppressive taxation.
o The tax imposed by PD 1987 is not only 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.
o 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.
o It is a tax that is imposed uniformly on all videogram operators.

o 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.
o And while it was also an objective of the PD 1987 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.”
 “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 “inequities which result from a singling out of one particular class for taxation or exemption
infringe no constitutional limitation.” Taxation has been made the implement of the state’s police power.

WHEREFORE, the instant Petition is hereby dismissed.