GR 109289: TAN v.

DEL ROSARIO, ONG

GR 109446: CARAG, CABALLES, JAMORA AND SOMERA
LAW OFFICES, ET AL. v. DEL ROSARIO, ONG
October 3, 1994 | Vitug, J. | Essential Characteristics of Taxes &
Administrative Issuances
Digester: Tan, Raya Grace
SUMMARY: Petitioners, as taxpayers, filed special civil actions for
prohibition challenging the constitutionality of RA 7946 (SNIT),
and the validity of Sec 6, Revenue Regulations No. 2-93. The Court
held that: (1) RA 7946 is constitutional. It retained the net income
taxation scheme and did not violate the one subject, one bill
clause. Uniformity of taxation allows for classification such as
individuals and corporations. There is no violation of the due
process clause. (2) The revenue regulation did not alter the
existing rule as to the extent of allowable deductions applicable to
all individual income taxpayers.
DOCTRINE: With the legislature primarily lies the discretion to
determine the nature (kind), object (purpose), extent (rate),
coverage (subjects) and situs (place) of taxation.
Administrative issuances cannot alter law. (Walang sinabi about
admin issuances)
FACTS:
In GR 109289, Rufino Tan argues that the enactment of RA
7946 (Simplified Net Income Taxation Scheme or SNIT),
amending certain provisions of the NIRC, violates the ff.
Constitutional provisions:
(1) Art VI, Sec 26(1) one subject, one bill because it adopted a
gross income taxation scheme;
(2) Art VI, Sec 28(1) the rule of taxation shall be uniform and
equitable because it attempts to tax single proprietorships and
professionals differently from corporations and partnerships;
and
(3) Art III, Sec 1 due process and equal protection clauses.
In GR 109446, petitioners question the validity of Sec 6,
Revenue Regulations No. 2-93 which makes SNIT applicable to
partners in general professional partnerships, as it creates a
distinction between a person who practices his profession
individually and one who does it through partnership with
others. Noting that based on the deliberations in Congress,
This bill is not applicable to business corporations or to

partnerships; it is only with respect to individuals and

professionals.
RULING: Petitions DISMISSED.
WoN RA 7496 is unconstitutional NO, it is constitutional.
The net income taxation scheme was retained.1 The allowance
for deductible items may have significantly been reduced by
the questioned law in comparison with that which has
prevailed prior to the amendment; BUT limiting allowable
deductions from gross income is neither discordant with, nor
opposed to, the net income tax concept. Also, the objectives of
Art VI, Sec 26(1)2 have been sufficiently met.
Uniformity of taxation, like the concept of equal protection,
merely requires that all subjects or objects of taxation,
similarly situated, are to be treated alike both in privileges and
liabilities. Uniformity does not forfend classification. The
legislative intent to increasingly shift the income tax system
towards the schedular approach in the income taxation of
individual taxpayers and to maintain the present treatment on
global corporations is valid.
The due process clause may correctly be invoked only when
there is a clear contravention of inherent or constitutional
limitations in the exercise of the tax power.
With the legislature primarily lies the discretion to
determine the nature (kind), object (purpose), extent
(rate), coverage (subjects) and situs (place) of taxation.
This court cannot freely delve into those matters which,
by constitutional fiat, rightly rest on legislative
judgment. Of course, where a tax measure becomes so
unconscionable and unjust as to amount to confiscation

1 Sec 21. Tax on citizens or residents. xxx (f) Simplified Net

Income Tax for the SelfEmployed and/or Professionals Engaged in
the Practice of Profession. A tax is hereby imposed upon the
taxable net income as determined in Section 27 received during
each taxable year from all sources xxxSec 29. Deductions from
gross income. xxx That in computing taxable income subject to tax
under Section 21 (f) in the case of individuals engaged in business
or practice of profession, only the following direct costs shall be
allowed as deductions xxx

2 I.e. to prevent log-rolling legislation, to avoid surprises or fraud

upon the legislation, and to fairly apprise the people

of property, courts will not hesitate to strike it down, for,

despite all its plenitude, the power to tax cannot override
constitutional proscriptions.
WoN public respondents exceeded their authority in
promulgating Sec 6, Revenue Regulations No. 2-93, to carry
out RA 7496 NO.
There is no distinction in income tax liability between a person
who practices his profession individually and one who does it
through partnership with others.
A general professional partnership, unlike an ordinary business
partnership (which is treated as a corporation for income tax

purposes and so subject to the corporate income tax), is not

itself an income taxpayer. The income tax is imposed not on the
professional partnership, which is tax exempt, but on the
partners themselves in their individual capacity computed on
their distributive shares of partnership profits.
SNIT is not intended or envisioned to cover corporations and
partnerships which are independently subject to the payment
of income tax. Sec 6 of Revenue Regulation No. 293 did not
alter, but merely confirmed, the above standing rule as now so
modified by RA 7496 on basically the extent of allowable
deductions applicable to all individual income taxpayers on
their noncompensation income.