PAL v.

Edu (1988)
Purpose of Taxation – General/Fiscal/Revenue
Facts: PAL works under a legislative franchise (Act No. 4271), which exempts it from the payment of taxes.
Philippine Airlines, Inc. (PAL) is engaged in the air transportation business, with a legislative franchise that exempts
it from tax payment (Sec. 13, Act No. 4271) and has not been paying motor vehicle registration fees since 1956. The
Land Transportation Commission issued a regulation requiring all tax exempt entities to pay motor vehicle
registration fees.

Held: Motor vehicle registration fees are taxes. Exactions may be both a tax and a regulation. License fees may be
regarded as taxes, even though they also serve as an instrument of regulation in the exercise of police power. 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. The Legislative intent and purpose behind the law requiring motor vehicle 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. It was held that it is the object of the charge, and not the name, that
determines whether a charge is a tax or a fee. As proof that the money collected is not intended for the expenditures
of the Motor Vehicle Office, the Revised Motor Vehicle Law (RA 587) itself provides that all such money shall
accrue to the funds for the construction and maintenance of public roads, streets and bridges. The fees are not
collected for regulatory purposes (for the enforcement of regulations governing the operation of motor vehicles on
public highways), since the express object of the fees is to provide revenue with which the Government can
construct and maintain public highways for everybody's use (one of the principal functions of government). They
are therefore veritable taxes, not merely fees.
Ruling: PARTIALLY GRANTED. PAL is exempted from paying the motor vehicle registration fees, except for the
period between June 27, 1968 to April 9, 1979 (its tax exemption was repealed during this time by Sec. 24 of RA
5448). The requested refund of the 1971 fees are denied.

Chavez vs Ongpin(1990)
Principles of a Sound Tax System
Facts: Francisco Chavez, with Realty Owners Association of the Philippines, contest the constitutionality of EO 73
which would use the 1984 real property values over the 1978 ones. By using such values, the real property tax on his
parcels of land would be increased excessively. Intervenors Realty Owners Association of the Phils (ROAP) which
is the national association of owners-lessors, joined Chavez in his petition to declare unconstitutional Executive
Order No. 73, additionally adding that Presidential Decree 464 which provides for revision on assessments every
five years is unconstitutional, as it imposes an additional one percent (1%) tax on all property owners to raise funds
for education, as real property tax is admittedly a local tax for local governments; that the General Revision of
Assessments does not meet the requirements of due process as regards publication, notice of hearing, opportunity to
be heard and insofar as it authorizes "replacement cost" of buildings (improvements) which is not provided in
Presidential Decree No. 464, but only in an administrative regulation of the Department of Finance.
Held: EO 73’s revision of the 1978 assessment with the 1984 value did not render it unconstitutional. Fiscal
adequacy, which is one of the characteristics of a sound tax system, requires that sources of revenues must be
adequate to meet government expenditures and their variations. In line with this, one cannot disregard the increase in
value of real properties when assessing for real estate taxes. To render it unconstitutional would disregard the more
recent changes in value of real properties.