Philippine Airlines, Inc. vs.

Edu
J. Gutierrez
Aug 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 in accordance with the case Republic v. Philippine Rabbit Bus
Lines, Inc.

ISSUE: Are motor vehicle registration fees taxes or regulatory taxes? TAXES.

HELD/RATIO:

 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.
o Fees may be properly regarded as taxes even though they also serve as an instrument of
regulation
o Indeed, taxation may be made the implement of the state's police power (Lutz v.
Araneta, 98 Phil. 148)
 It is the object of the charge, and not the name, that determines whether a charge is a tax or a
fee.
o 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.
o 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.
 As to the relation to previous cases classifying the Motor Vehicle Registration Fees as an
exercise of police power
o 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. Without changing the earlier deputy. of registration payments as "fees," their
nature has become that of "taxes."
 Although the fees paid cannot be refunded anymore since its tax exemption status was
repealed.
o Any registration fees collected between June 27, 1968 and April 9, 1979, were correctly
imposed because the tax exemption in the franchise of PAL was repealed during the
period.