PAL v Edu (1988)

Philippine Airlines v Edu

GR No L-41383, August 15, 1988

FACTS:

PAL is engaged in the air transportation business under a legislative franchise (Act 4271), wherein it is
exempt from the

payment of taxes. On the strength of an opinion of the Secretary of Justice, PAL was determined to have
not been paying motor vehicle registration fees since 1956. The Land Transportation Commissioner
required all tax-exempt entities, including PAL, to pay motor vehicle registration fees. PAL protested. The
trial court dismissed PAL’s complaint. Hence, this petition.

ISSUE:

Are motor vehicle registration fees taxes or regulatory taxes?

RULING:

They are taxes. Tax are for revenue, whereas fees are exactions for purposes of regulation and
inspection, and are for that reason limited in amount to what is necessary to cover the cost of the
services rendered in that connection.

It is the object of the charge, and not the name, that determines whether a charge is a tax or a fee. The
money collected under the Motor Vehicle Law is not intended for the expenditures of the Motor Vehicle
Law is not intended for the expenditures of the Motor Vehicles Office but accrues to the funds for the
construction and maintenance of public roads, streets and bridges.

As the fees are not collected for regulatory purposes as an incident to the enforcement of regulations
governing the operation of motor vehicles on public highways, but to provide revenue with which the
Government is to construct and maintain public highways for everyone’s use, they are veritable taxes,
not merely fees.

PAL is, thus, exempt from paying such fees, except for the period between June 27, 1968 to April 9, 1979,
where its tax exception in the franchise was repealed.