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Philippine Airlines, Inc. Vs The Secretary of Finance and Commissioner of Internal Revenue

Philippine Airlines (PAL) claimed that Republic Act No. 7716, which withdrew PAL's exemption from value-added tax (VAT), violated the Philippine Constitution because its title did not express that it amended PAL's tax exemption under its franchise. The Supreme Court of the Philippines held that RA 7716's title of "Restructuring the VAT System" expressed its intention to amend any law necessary to widen the VAT tax base. Specifically mentioning PAL's franchise was unnecessary as long as the title indicated it would amend the relevant provisions of the National Internal Revenue Code, including the section granting PAL's VAT exemption. The Court therefore ruled that RA 7716's title provided sufficient notice of the law

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346 views1 page

Philippine Airlines, Inc. Vs The Secretary of Finance and Commissioner of Internal Revenue

Philippine Airlines (PAL) claimed that Republic Act No. 7716, which withdrew PAL's exemption from value-added tax (VAT), violated the Philippine Constitution because its title did not express that it amended PAL's tax exemption under its franchise. The Supreme Court of the Philippines held that RA 7716's title of "Restructuring the VAT System" expressed its intention to amend any law necessary to widen the VAT tax base. Specifically mentioning PAL's franchise was unnecessary as long as the title indicated it would amend the relevant provisions of the National Internal Revenue Code, including the section granting PAL's VAT exemption. The Court therefore ruled that RA 7716's title provided sufficient notice of the law

Uploaded by

Aaliyah Andrea
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
  • FACTS

Philippine Airlines, Inc.

vs The Secretary of Finance


And Commissioner of Internal Revenue
G. R. No. 115852 , August 25, 1994

FACTS:

PAL maintains that R.A. No. 7716 violates Art. VI, Sec 26 (1) of the Constitution which provides
that "Every bill passed by Congress shall embrace only one subject which shall be expressed in
the title thereof." PAL contends that the amendment of its franchise by the withdrawal of its
exemption from the VAT is not expressed in the title of the law.

Pursuant to Sec13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu
of all other taxes, duties, royalties, registration, license and other fees and charges of any kind,
nature, or description, imposed, levied, established, assessed or collected by any municipal, city,
provincial or national authority or government agency, now or in the future."

PAL was exempted from the payment of the VAT along with other entities by Sec.103 of the
National Internal Revenue Code. R.A. No. 7716 seeks to withdraw certain exemptions, including
that granted to PAL.

ISSUE:

Whether the amendments of its franchise by the withdrawal of its exemption from the VAT is not
expressed in the title of the law.

HELD:

By stating that R.A. No. 7716 seeks to "Restructure the Value-Added Tax (VAT) System by
widening its tax base and enhancing its administration, and for these purposes amending and
repealing the relevant provisions of the national internal revenue code, as amended and for other
purposes," Congress thereby clearly expresses its intention to amend any provision of the NIRC
which stands in the way of accomplishing the purpose of the law.

PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific
reference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional
requirement, since it is already stated in the title that the law seeks to amend the pertinent
provisions of the NIRC, among which is Sec103(q), in order to widen the base of the VAT.
Actually, it is the bill which becomes a law that is required to express in its title the subject of
legislation. The titles of H. No. 11197 and S. No. 1630 in fact specifically referred to §103 of the
NIRC as among the provisions sought to be amended. We are satisfied that sufficient notice had
been given of the pendency of these bills in Congress before they were enacted into what is now
R.A. No. 7716.

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