Case Digest: Tan vs Del Rosario... The two consolidated cases question the constitutionality of RA 7496 or the Simplified Net Income Taxation Scheme. Petitioners claim to be taxpayers adversely affected by the continued implementation of the amendatory legislation. Petitioners also assailed Section 6 of Revenue Regulations No. 2-93: that public respondents have exceeded their rule-making authority in applying SNIT to general professional partnerships.

[G.R. NO. 109289, OCTOBER 03, 1994]

RUFINO R. TAN, PETITIONER, VS. RAMON R. DEL ROSARIO, JR., AS SECRETARY OF FINANCE & JOSE U. ONG, AS COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

[G.R. NO. 109446. OCTOBER 3, 1994]

CARAG, CABALLES, JAMORA AND SOMERA LAW OFFICES, CARLO A. CARAG, MANUELITO O. CABALLES, ELPIDIO C. JAMORA, JR. AND BENJAMIN A. SOMERA, JR., PETITIONERS, VS. RAMON R. DEL ROSARIO, IN HIS CAPACITY AS SECRETARY OF FINANCE AND JOSE U. ONG, IN HIS CAPACITY AS COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

Petitioners posit RA 7496, also commonly known as the Simplified Net Income Taxation Scheme (SNIT), amending certain provisions of the National Internal Revenue Code, as violative of the constitutional requirement that taxation shall be "uniform and equitable”. The law would now attempt to tax single proprietorships and professionals differently from the manner it imposes the tax on corporations and partnerships. Petitioner gives a fairly extensive discussion on the merits of the law, illustrating in the process, what he believes to be an imbalance between tax liabilities of those covered by the amendatory law and those who are not.

FACTS:

These two consolidated special civil actions for prohibition challenge, in G.R. No. 109289, the constitutionality of Republic Act No. 7496, also commonly known as the Simplified Net Income Taxation Scheme ("SNIT"), amending certain provisions of the National Internal Revenue Code and, in G.R. No. 109446, the validity of Section 6, Revenue Regulations No. 2­93, promulgated by public respondents pursuant to said law.

Petitioners claim to be taxpayers adversely affected by the continued implementation of the amendatory legislation.

In G.R. No. 109289, it is asserted that the enactment of Republic Act No. 7496 violates the following provisions of the Constitution:

"Article VI, Section 26(1) - Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof."

"Article VI, Section 28(1) - The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation."

"Article III, Section 1 - No person shall be deprived of x x x property without due process of law, nor shall any person be denied the equal protection of the laws."

In G.R. No. 109446, petitioners, assailing Section 6 of Revenue Regulations No. 2-93, argue that public respondents have exceeded their rule-making authority in applying SNIT to general professional partnerships.

ISSUES/HELD:

1.  Whether or not the tax law is unconstitutional for violating due process. (NO).

     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. No such transgression is so evident in herein case.

     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 violate classification as long as: (1) the standards that are used therefor 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.

           What is apparent from the amendatory law is the legislative intent to increasingly shift the income tax system towards the schedular approach in the income taxation of individual taxpayers and to maintain, by and large, the present global treatment on taxable corporations. The Court does not view this classification to be arbitrary and inappropriate.

 

2: Whether or not public respondents exceeded their authority in promulgating the Revenue Regulations. (NO).

      There is no evident intention of the law, either before or after the amendatory legislation, to place in an unequal footing or in significant variance the income tax treatment of professionals who practice their respective professions individually and of those who do it through a general professional partnership.

 

 

ACCORDINGLY, the Court RESOLVES

1.  To REVERSE and SET ASIDE the assailed Resolutions dated June 26, 2014 and November 27, 2014 of the Court of Appeals in CA-G.R. CV No. 102266;

2. To DENY the Petition for Review dated February 17,2015 in G.R. No. 215801 and the Special Civil Action for Certiorari dated February 12, 2015 in G.R. No. 218924; and,

3. To AFFIRM the Resolution dated September 5, 2013 and Order dated December 18, 2013 of the Regional Trial Court, Branch 146, Makati City in Special Civil Action No. 12-1236.

SO ORDERED.

 Case Digest by: Paler, MDC, JD1 / 2020 - 2021 

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