Philippine Airlines v.

Edu (1988)
FACTS : Appellant Philippine Airlines (PAL) is engaged in air transportation business under a legislative franchise wherein it is exempt from payment of taxes. Since 1956, PAL has not been paying motor vehicle registration fees. In 1971, appellee Comm. Edu issued a regulation requiring all tax exempt entities to pay motor vehicle registration fess. Despite PALs protestations, the appellant paid the registration fees. After paying under protest, PAL through counsel demanded a refund invoking that motor vehicle registration fees are in reality taxes from the payment of which PAL is exempt by virtue of its legislative franchise. Comm. Edu denied the request contending that motor vehicle registration fees are regulatory exactions and not revenue measures, and do not come within the exemption granted under its franchise. PAL filed a complaint against Land Transportation Comm. Edu and National Treasurer Carbonell. The trial court dismissed the case. Hence, PAL appealed. ISSUE : Whether or not motor vehicle registration fees are taxes or regulatory fees to which PAL isexempted. 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 Motor Vehicle Law is not intended for the expenditures of the MV Office but accrues to the funds for the construction and maintenance of public roads, streets and bridges. As fees are not collected for regulatory purposes as an incident to the enforcementof 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 everyones 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such fees, except for the period between June 27, 1968 to April 9, 1979 where its taxexemption in the franchise was repealed. The court held that the motor vehicle registration fees are taxes. These fees were originally simple exactions intended only for regulatory purposes in the exercise of the States police power. Fees may be properly regarded as taxes. 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. Taxation may be made the implement of the States police power. In the case, the purpose behind the law requiring owners of vehicles to pay their registration is mainly to raise revenue for the construction and maintenance of highways. PAL is thus exempt from paying such fees, except for the period between June 27, 1968 to April 9, 1979 where its taxexemption in the franchise was repealed.