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Tan v. Del Rosario | G.R. No.

109289 | October 3, 1994

Case 1: RA 7496 violates the following constitutional
1. Art. VI, Sec. 26(1) Every bill shall embrace only
one subject
2. Art. VI, Sec. 28(1) Requirement that rule of
taxation shall be uniform and equitable;
Requirement of evolving a progressive system of
3. Article III, Sec. 1 Due process and equal
protection clause

Case 2: By issuing Section 6 of Revenue Regulations No.

2-93, the SOF and CIR have exceeded their rule-making
authority by applying SNIT to General Professional

Engaged In The Practice of Their Profession,

Amending Sections 21 and 29 1 of the
National Internal Revenue Code, as
o Their stand: Adopting gross income as
base limits the deductions employees may
claim for
o SC: The fact that deductions are limited is
not discordant with the concept of net
income. Other deductions still continue to
be provided for under the law.
RA 7496 has met the objectives of Article VI, Sec.
26(1). (A/N: SC did not explain why)
1. To prevent log-rolling legislation intended to
unite members of the legislature who favor
any one of unrelated subjects in support of
the whole act
2. To avoid surprises or even fraud upon the
3. To fairly apprise people, through such
publications of such proceedings as are
usually made, as subjects of legislation

On RA 7496 being a misnomer or deficient

On Uniformity and Equitability

- No, the title is sufficient.

- RA 9496 does not violate such requirements for it does


Petitioners claim that it should be based on net

income and not on gross income (A/N: Not
mentioned in the facts, it just appeared in the
o Full Title: Full Title: An Act Adopting the
Simplified Net Income Taxation Scheme For

The system of taxation present during the

promulgation of the decision has been existing
even prior to the enactment of RA 7496.

Uniformity all subjects or objects of taxation,

similarly situated, are to be treated alike in both
privileges and liabilities
Uniformity does not forfend classifications as long
1. the standards that are used therefor are
substantial and not arbitrary
2. the categorization is germane to achieve
the legislative purpose
3. the law applies, all things being equal, to
both present and future conditions, and
4. (4) the classification applies equally well to
all those belonging to the same class
The intent of the law to increasingly shift the tax
system to schedular approach and maintain the
global treatment on corporations

- No, they did not.

On Violation of Due Process

The due process clause may only be invoeked only when
there is a clear contravention of inherent or constitutional
limitations in the exercise of the tax power. Such
transgression is not evident in this case

On WoN SOF and CIR exceeded there authority by

promulgating Sec. 6, RR 2-932

Sec. 6 - General Professional Partnership The general professional partnership
(GPP) and the partners comprising the GPP are covered by R. A. No. 7496. Thus, in
determining the net profit of the partnership, only the direct costs mentioned in said
law are to be deducted from partnership income. Also, the expenses paid or incurred
by partners in their individual capacities in the practice of their profession which are
not reimbursed or paid by the partnership but are not considered as direct cost, are
not deductible from his gross income.

Petitioners: through this provision and based on

the deliberations, the law is made applicable to
Taxable partnerships v. Exempt partnerships
o Taxable partnerships those assimilated
within the context of corprorations
o Exempt partnerships those not similarly
identified as corporations nor even
entitties for income tax purposes
GPP is an example
In this case, the partners themselves
ar required to file their returns in their
individual capacity computed on
the basis of their respective and
distributive shares of profits
GPP is deemed to be no more than
a mere mechanism or a flowthrough entity in the generation of
income by, and the ultimate
distribution of such income to,
respectively, each of the individual
Section 6 of RR 2-93 merely confirmed to RA 7496.
There was no evident intention of the law to put a
significant variance in terms of income tax
treatment between individuals and GPPs who
exercise their profession.