Case Summary (G.R. No. L-26862)
Facts of Payment and Certificates
Philippine Rabbit Bus Lines, Inc., as assignee of negotiable backpay certificates, tendered P78,636.17 to satisfy the second installment of 1959 motor vehicle registration fees for 238 vehicles. The Motor Vehicles Office in Baguio City accepted these certificates, issued official receipts, and the Auditor General concurred with the National Treasurer’s administrative approval of this payment mode.
Procedural History and Lower Court Ruling
On January 17, 1963, the Republic sued to annul the certificate-based payment, demand cash plus surcharges and interest, and declare the certificates’ use void. The Regional Trial Court of Baguio City dismissed the complaint on November 24, 1965, holding that assignees could use negotiable backpay certificates to pay registration fees. The case reached the Supreme Court via certification from the Court of Appeals, presenting a purely legal question.
Central Legal Issue
Can negotiable backpay certificates discharge an obligation for motor vehicle registration fees, given the statutory distinction between taxes and regulatory fees under the government’s police power?
Nature of Registration Fees under the Police Power
Section 8 of RA 587 imposes “registration fees” as regulatory charges, not as taxes. A tax is an enforced, proportional contribution to raise general revenue. A police-power fee regulates activities and privileges, with no primary revenue-raising objective. Motor vehicle registration fees fall squarely within the police power and are not taxes collectible under the Back Pay Law.
Relevance of Republic Act No. 5448
RA 5448 imposes an “additional tax” on privately-owned passenger automobiles, motorcycles, and scooters for the Special Science Fund. Its explicit designation of an “additional tax” confirms that the earlier vehicle “registration fees” under RA 587 were regulatory and not taxable assessments.
Assignee’s Right to Use Backpay Certificates
Because the obligation to register motor vehicles is a fee under police power rather than a tax, the Supreme Court found no need to address whether assignees generally may use backpay certificates to satisfy tax obligations. The Back Pay Law’s tax-satisfaction provision is inapplicable, and therefore the lower court erred in upholding payment by negotiable certificates.
Estoppel and Governmen
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Facts
- On January 17, 1963, the Republic of the Philippines filed a complaint seeking to invalidate the defendant-appellee’s payment of P78,636.17 in registration fees for 238 motor vehicles for the second installment of 1959.
- The defendant-appellee, as assignee (not original holder) of negotiable backpay certificates of indebtedness, presented those certificates to the Motor Vehicles Office in Baguio instead of cash.
- The Treasurer of the Philippines and the Auditor General both communicated approval of accepting negotiable backpay certificates in payment of registration fees, issuing official receipts acknowledging full payment.
- The lower court (November 24, 1965) held that such certificates could validly discharge the registration-fee obligation and dismissed the Republic’s complaint.
- The case was certified to the Supreme Court on the sole issue of law regarding the applicability of the Back Pay Law to motor vehicle registration fees.
Applicable Statutes
- Republic Act No. 304 (as amended by RAs 800 and 897): authorizes holders of backpay certificates to use them in the payment of taxes.
- Republic Act No. 587 (Revised Motor Vehicle Law, 1950): imposes “registration fees” for motor vehicles under the government’s police power.
- Republic Act No. 5448 (1968), as amended by RA 5470 (1969): create