PHILIPPINE AIRLINES, INC. v.
EDU the construction and maintenance of highways and, to amuch
G.R. No. L- 41383, August 15, 1988
FACTS:
The Philippine Airlines (PAL) is a corporation engaged in the air
transportation business under a legislative franchise, Act No. 42739.
Under its franchise, PAL is exempt from the payment of taxes.
Sometime in 1971, however, Land Transportation Commissioner
Romeo F. Elevate (Elevate) issued a regulation pursuant to Section 8,
Republic Act 4136, otherwise known as the Land and Transportation
and Traffic Code, requiring all tax exempt entities, among them PAL
to pay motor vehicle registration fees.
Despite PAL's protestations, Elevate refused to register PAL's motor
vehicles unless the amounts imposed under Republic Act 4136 were
paid. PAL thus paid, under protest, registration fees of its motor
vehicles. After paying under protest, PAL through counsel, wrote a
letter dated May 19,1971, to Land Transportation Commissioner
Romeo Edu (Edu) demanding a refund of the amounts paid. Edu
denied the request for refund. Hence, PAL filed a complaint against
Edu and National Treasurer Ubaldo Carbonell (Carbonell).
The trial court dismissed PAL's complaint. PAL appealed to the Court
of Appeals which in turn certified the case to the Supreme Court.
ISSUE:
Whether or not motor vehicle registration fees are considered
as taxes.
RULING:
Yes. If the purpose is primarily revenue, or if revenue is, at least, one
of the real and substantial purposes, then the exaction is properly
called a tax. Such is the case of motor vehicle registration fees. The
motor vehicle registration fees are actually taxes intended for
additional revenues of the government even if one fifth or less of the
amount collected is set aside for the operating expenses of the
agency administering the program.
PAL VS. EDU, 164 SCRA 320 (1988)
Facts of the case:
The disputed registration fees were imposed by the commissioner
Elevate pursuant toSection 8, RA 4136,the Land Transportation and
Traffic Code.PAL as a corporation is engaged in the airtransportation
business under the legislative franchise. Underits franchise, PAL is
exempt from thepayment of taxes.In 1971 however,
appellee Commissioner elevate issued a regulation requiring all
taxexempt enti ti es, amongthem PAL to pay motor vehicle
registrati on fees.Despite PALs protest,appellee refused to
register the appellants motor vehicles unless the
amountsimposed were paid. PALthus paid, under protest,
P19,529.75 as registration fees of its motor vehicles.After paying
underprotest, PAL wrote to Commissioner Edu demanding a refund
of the amounts paid,invoking Calalang vs.Lorenzo where it was held
that motor vehicle registration fees are in reality taxes from
thepayment of which PAL is exempt by virtue of its legislative
franchise.Edu denied request for refund based onRepublic v. Phil.
Rabbit Bus, that motor vehicle registration fees areregulatory and
not revenuemeasures and, therefore, do not come within the
exemption granted to PAL under itsfranchise.PAL filedthe complaint
against LTC Commissioner EDu and National Treasurer Carbonell.
ISSUE: What is thenature of motor vehicle registration fees? Are they
taxes or regulatory fees?
RULING ON TAX VS. LICENSE AND REGULATORY FEESC ruled that
motor vehicles registration fees are TAXES. Fees may be regarded as
taxes even thoughtheyalso serve as instruments of regulation
because taxation may be made as an implementation of theStates
policepower. But if the purpose is primarily REVENUE, or
if revenue is atleast, one of the real and substantial
purposes,then the exaction is properly called a TAX.
RULING ON PURPOSES OF TAX, OBJECTIVE OF TAXATION: GENERAL,
FISCAL REVENUE
The Legislative intent and purpose behind the law requiring owners
of vehicles , to pay fortheirregistration is mainly to raise funds for
lesserdegree, pay for the operating expenses of the administering
agency.It is possible for anexaction to be both a tax and a regulation.
License fees are charges, looked to as asource of revenue aswell as a
means of regulation. The fees may be properly regarded as taxes
eventhough theyalso serve asan instrument of regulation. If the
purpose is primarily revenue, or if revenue is atleast one
of therealand substantial purposes, then the exaction is properly
called a TAX.
RULING ON NON-DELEGABILITY OF THE POWER TO TAX
It is clear from the provisions of section 73 of Commonwealth Act
123 and section 61 of theLandTransportation and Traffic Code that
the legislative intent and purpose behind the law requiringowners of
vehicles
d2015member
PAL v. Commissioner EDU (1988)
Gutierrez, Jr., J.
FACTS:
Motor vehicle registration fees were imposed by the appellee
Commissioner of the Land Transportation Romeo Elevate pursuant
toRA 4136 or the Land Transportation and Traffic Code.PAL is a
corporation organized and existing under the laws of the Phils and
engaged in the air transportation business. Under itsfranchise, PAL is
exempt from payment of taxes but shall pay a tax of 2% of the gross
revenue from its operations.Because of an Opinion of the Sec of
Justice, PAL, since 1956, has not been paying motor vehicle reg fees.
However, in 1971,appellee Commissioner Elevate issued a regulation
requiring all tax exempt entities, among them PAL, to pay motor
vehicle regfees. Despite PAL's protests, the then Commissioner
refused to register PALs motor vehicles unless the reg fees were
paid. Andso, PAL paid, under protest, around P19.5k as reg fees.PAL
wrote to Commissioner Edu (different Commissioner, cases didnt
say if Elevate was the Commissioner before Edu) demanding a
refund of the amounts paid, invoking the ruling in Calalang v.
Lorenzo (1951) where it was held that motor vehicle regfees are in
reality taxes, of which PAL is exempt by virtue of its legislative
franchise.Commissioner Edu denied the request for refund based on
Republic v. Philippine Rabbit
(1970) that motor vehicle reg fees areregulatory and not revenue
measures and, therefore, do not come within the exemption granted
to PAL under its franchise.PAL filed a complaint against
Commissioner Edu and National Treasurer Carbonell. Edu and
Carbonell filed an MTD alleging thatthe complaint stated no COA,
using the Philippine Rabbit case that reg fees of motor vehicles are
not taxes, but regulatory feesimposed as an incident of the exercise
of the police power of the state. They say that while PAL is exempt
from taxes it is notexempt from paying regulatory fees, such as
motor vehicle reg fees.CFI dismissed the complaint because of the
decision of the SC in Philippine Rabbit. PAL appealed to the CA which
certified thecase to the SC.
ISSUE:
1. What is the nature of motor vehicle registration fees? Are
they taxes or regulatory fees?2. May the
admin agency be required to refund the amounts?
HELD:
1. Motor vehicle reg fees, at present, exacted pursuant to
the Land Transportation and Traffic Code are actually
taxesintended for additional revenues of government
(even if one fifth or less of the amount collected is set
aside for theoperating expenses of the agency
administering the program).2. No. The claim for refund is
made for payments given in 1971. It is not clear from
the records as to what payments weremade in succeeding
years.
RATIO:
Calalang and Philippine Rabbit discuss the main points of contention
in this case.Philippine Rabbit:The registration fee which defendant
had to pay was imposed by the Revised Motor Vehicle Law. Its
headingspeaks of "registration fees." The term is repeated four times
in the body. Mention is also made of the "fee forregistration." A
subsection starts with a categorical statement "No fees shall be
charged." The conclusion is that the Motor Vehicle Act requires the
payment not of a tax but of a registration fee under the police
power .Calalang:The charges prescribed by the Revised Motor
Vehicle Law for the registration of motor vehicles are called"fees."
But it is not the name but the object of the charge that determines
whether it is a tax or a fee. Generallyspeaking, taxes are for revenue,
whereas fees are exceptional for purposes of regulation and
inspection andare for that reason limited in amount to what is
necessary to cover the cost of the services rendered. Hence, acharge
fixed for the service, where the charge has no relation to the value of
the services performed and wherethe amount collected eventually
finds its way into the treasury of the branch of the government
whose officer orofficers collected, is not a fee but a tax.The fees are
not collected for regulatory purposes, as an incident to the
enforcement of regulationsgoverning the operation of motor
vehicles on public highways, for their express object is to provide
revenuefor the construction and maintenance of public highways
for everybody's use. They aretaxes, notmerely fees. Motor vehicle
reg fees were matters originally governed by the Revised Motor
Vehicle Law (Act 3992). Today, it is governed by RA4136 (Land
Transportation Code).CA 123 (Act amending the Revised Motor
Vehicle Law) states:
Section 73.
Disposal of moneys collected
. are to go into the expenditures of the Land Transportation
Twenty per centum of the money collected under the provisions
ofthis Act shall accrue to the road and bridge funds of the different
provinces and chartered cities in proportion tothe centum shall
during the next previous year and the remaining eighty per centum
shall be deposited in thePhilippine Treasury to create a special fund
for the construction and maintenance of national and
provincialroads and bridges as well as the streets and bridges in the
chartered cities to be alloted by the Secretary ofPublic Works and
Communications for projects recommended by the Director of Public
Works in the differentprovinces and chartered cities.Presently, the
Land Transportation and Traffic Code provides:
Sec. 61.
Disposal of Mortgage. Collected
Monies collected under the provisions of this Act shall be
depositedin a special trust account in the National Treasury to
constitute the Highway Special Fund, which shall beapportioned and
expended in accordance with the provisions of the" Philippine
Highway Act of 1935. "Provided, however, That the amount
necessary to maintain and equip the Land Transportation
Commission butnot to exceed twenty per cent of the total collection
during one year, shall be set aside for the purpose.From those
provisions,
the legislative intent behind the law requiring owners of vehicles to
pay for registration is to raisefunds for the construction and
maintenance of highways and to pay for the operating expenses
of the administering agency. Fees may be regarded as taxes even
though they also serve as an instrument of regulation, as stated by
a former CTA judgeand writer: If the purpose is primarily revenue or
if revenue is at least one of the real and substantial purposes, then
the exaction isproperly called a tax. Also, taxation may be made to
implement the states police power. If the purpose is primarily
revenue or is at least one of the substantial purposes, then the
exaction is properly called a tax. Such is the case of motor vehicle
reg fees. The conclusions become inescapable in view of RA 587
(amending the Revised MotorVehicle Law) quoted in the
Calalang case. The same provision appears in the Land Transpo
Code. It is patent therefrom that the legislators had in mind a
regulatory tax, as the law refers to the imposition on the
registration, operation, or ownership of a motorvehicle as a "tax or
fee."Though nowhere in the Land Transportation Code does the law
specifically state that the imposition is a tax, Section 591-593speaks
of "taxes" or fees for the registration or operation or on the
ownership of any motor vehicle, or for the exercise of theprofession
of chauffeur making the intent to impose a tax more apparent.The
Land Transportation Code also speaks of other "fees", such as the
special permit fees for certain types of motor vehicles andadditional
fees for change of registration. These are not to be understood as
taxes because such fees are very minimal to berevenue-raising. Thus,
they are not mentioned by Sec. 591-593 of the Code as taxes like the
motor vehicle registration fee andchauffers' license fee. Such fees
Commission.
Vehicle reg fees were originally intended only for purposes in the
exercise of the State's police powers.
Over the years,however, as vehicular traffic exploded in number,
Congress found the registration of vehicles a convenient way of
raisingrevenues. Without changing the earlier deputy of
registration payments as "fees," their nature has become that of
"taxes."
In view of the foregoing, SC rules that motor vehicle reg fees
exacted pursuant to the Land Transportation and Traffic Code are
actually taxes intended for additional revenues of government
even if one fifth or less of the amount collected is set aside for
theoperating expenses of the agency administering the
program.PAL's current franchise is clear and specific. It has removed
the ambiguity found in the earlier law. PAL is now exempt from
thepayment of any tax, fee, or other charge on the registration and
licensing of motor vehicles. Such payments are already included
inthe basic tax or franchise tax provided in Subsections (a) and (b) of
Section 13, P.D. 1590, and may no longer be exacted.
P e ti ti o n p a r ti a l l y g r a n t e d . R e f u n d
o f re g fe e s i s d e n i e d b u t LT F R B i s
e n j o i n e d f r o m c o l l e c ti n g a n y t a x ,
f e e , o r c h a r g e o n PALs motor vehicles.