The Supreme Court held the levy of 30% tax under P.D. 1987 as for a public purpose, and therefore a valid imposition.

Exercise of Regulatory power: The law, according to the Court, was imposed primarily for answering 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. Hence, while the direct beneficiaries of the said decree is the movie industry, the citizens are held to be its indirect beneficiaries.

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