Philippine Airlines vs.

Edu

HR L-41383, 15 August 1988

FACTS:

The Philippine Airlines (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 (Opinion 307 of 1956),

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.

ISSUE:

Whether registration fees as to motor vehicles are taxes to which Philippine Airlines is exempt.

RULING:

Taxes 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 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was repealed.