Tan vs Del Rosario, Jr October 3, 1994 Petitioners: G.R 109289 Rufino Tan G.

.R 109446 Carlo Carag, Manuelito Caballes, Elpidio Jamora, Jr. , Benjamin Samera, Jr. Respondent: Ramon Del Rosario as Secretary of Finance Jose Ong as Commissioner of Internal Revenue Nature of the Case: Special Civil Action in the SC. Prohibition. Ponente: VITUG, J Facts: There are two consolidated special civil action for prohibition in this case: o G.R 109289: challenged the constitutionality of RA No. 7496, commonly known as the Simplified Net Income Taxation Scheme (SNIT) o G.R 109446: challenged the validity of Sec. 6, Revenue Regulations No. 2-93 In the first petition, the petitioner were asserting that RA No. 7496 violates Sec, 26 (1) and Sec 28 (1) of Art VI and Sec 1 of Art III. For their first contention, they were saying that the bills title does not express its content. The bill is entitled, An Act Adopting the Simplified Net Income Taxation Scheme For the Self-Employed and Professionals Engaged In the Practice of Their Profession, Amending Sections 21 and 29 of the National Internal Revenue Code, as Amended. The petitioner was saying that the taxation contemplated on the statute is now based on gross income and not net income since the allowance for deductible items have been reduced by the questioned statute. Also in the first petition, the petitioner was arguing that the tax law would not be uniform and equitable since it imposes tax on single proprietorship and professionals differently In the second petition, the petitioner was saying that the respondents have exceeded their authority in promulgating Sec 6, Revenue Regulations No. 2-93, to carry out RA No. 7496 because it applies SNIT to partners in general professional partnerships, which in their position should have been taxed like other normal partnerships Issues: 1. WON the RA 7496 contemplates gross income as basis for net income so its title stating net income as basis does not express its subject and content thus in contravention to Sec 26 (1) of Art VI 2. WON the taxation scheme adopted by RA 7946 is not equitable and uniform, thus contravening Sec 28(1) of Art VI 3. WON SNIT rightly applies to general professional partnership as stated in Sec 6, Revenue Regulations No. 2-93 Held: Issue 1: RA 7496 still reflects net income as basis for its taxation scheme and thus its title correctly expresses its subject and content. Limiting or reducing allowable deductions from gross income is not opposed to the net income tax concept a. Various deductions still continue to be well provided under the new law b. Sec 26 of Art VI is aimed to (a) prevent log-rolling legislation intended to unite the members of the legislature who favour any one of unrelated subjects in support of the whole act, (b) to avoid surprises or even fraud upon the legislature, and (c) to fairly apprise the people through such publications of its proceedings as are usually made, of the subjects of legislation. These objectives are sufficiently met by the questioned statute. Issue 2: The statute does not violate Sec 28 of Art VI. That taxation shall be uniform and equitable in Sec 28(1) of Art VI shall mean that all subjects or objects of taxation similarly situated, are to be treated alike both in privileges and liabilities.

a. The system adopted in income taxation has long been a prevailing rule even prior to Republic Act No. 7496 b. Uniformity does not mean classification as long as (1) the standards that are used therefore are substantial and not arbitrary, (2) the categorization is germane to achieve the legislative purpose, (3) the law applies, all things being equal, to both present and future conditions, and (4) the classification applies equally well to all those belonging to the same class Legislature primarily decides and determines the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs (place) of taxation. The court cannot delve into such matters unless there is a violation of a constitutional right.

Issue 3: General Professional Partnership should be taxed as a person who practices his profession alone