PHILIPPINE AIRLINES, INC., vs. ROMEO F. EDU
G.R. No. L- 41383 August 15, 1988
Facts:
1. Under its franchise, PAL is exempt from the payment of taxes.
2. On the strength of an opinion of the Secretary of Justice PAL has, since 1956, not been paying motor vehicle registration fees.
3. Sometime in 1971, however, appellee Commissioner Romeo F. Elevate issued a regulation requiring all tax exempt entities, among them PAL to pay motor vehicle registration fees.
4. Despite PAL's protestations, the appellee refused to register the appellant's motor vehicles unless the amounts imposed under Republic Act 4136 were paid. The appellant thus paid, under protest.
5. After paying under protest, PAL through counsel, wrote a letter, to Commissioner Edu demanding a refund of the amounts paid, invoking the ruling in Calalang v. Lorenzo (97 Phil. 212 [1951]) where it was held that motor vehicle registration fees are in reality taxes from the payment of which PAL is exempt by virtue of its legislative franchise.
6. Appellee Edu denied the request for refund basing his action on the decision in Republic v. Philippine Rabbit Bus Lines, Inc., (32 SCRA 211, March 30, 1970) to the effect that motor vehicle registration fees are regulatory exceptional, and not revenue measures and, therefore, do not come within the exemption granted to PAL under its franchise.
7. Hence, PAL filed the complaint
Issue:
What is the nature of motor vehicle registration fees? Are they taxes or regulatory fees?
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Ruling:
Today, the matter is governed by Rep. Act 4136 [1968]), otherwise known as the Land Transportation Code, (as amended by Rep. Acts Nos. 5715 and 64-67, P.D. Nos. 382, 843, 896, 110.) and BP Blg. 43, 74 and 398).
It appears clear from the provisions that the legislative intent and purpose behind the law requiring owners of vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of highways and to a much lesser degree, pay for the operating expenses of the administering agency. On the other hand, the Philippine Rabbit case mentions a presumption arising from the use of the term "fees," which appears to have been favored by the legislature to distinguish fees from other taxes.
Fees may be properly regarded as taxes even though they also serve as an instrument of regulation.
It is possible for an exaction to be both tax and regulation. License fees are charges, looked to as a source of revenue as well as a means of regulation. This is true, for example, of automobile license fees. The fees may properly be regarded as taxes even though they also serve as an instrument of regulation. 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. These exactions are sometimes called regulatory taxes.
Indeed, taxation may be made the implement of the state's police power.
Such is the case of motor vehicle registration fees. It is patent that the legislators had in mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership of a motor vehicle as a "tax or fee." Though nowhere in Rep. Act 4136 does the law specifically state that the imposition is a tax, Section 591-593, speaks of "taxes." or fees ... for the registration or operation or on the ownership of any motor vehicle, or for the exercise of the profession of chauffeur ..." making the intent to impose a tax more apparent.
It is quite apparent that vehicle registration fees were originally simple exceptional, Intended only for rigidly purposes in the exercise of the State's police powers. Over the years, however, as vehicular traffic exploded in number and motor vehicles became absolute necessities without which modem life as we know it would stand still, Congress found the registration of vehicles a very convenient way of raising much needed revenues.
The court ruled that motor vehicle registration fees as at present 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 the operating expenses of the agency administering the program.
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