FACTS
The constitutionality of R.A. 7946, or the Simplified Net Income Taxation Scheme (SNIT), was challenged on the following grounds: (a) it adopts a gross income taxation scheme; (b) it attempts to tax single proprietorships and professionals differently from corporations and partnerships; and (c) it violates the due process and protection clauses.
The validity of Sec. 6 of the Revenue Regulation No. 2-93, which makes SNIT applicable to partners in general professional partnerships, was also challenged for unlawfully creating a distinction between a person who practices his profession individually and one who does it through partnership with others.
RULING
The Supreme Court ruled in favor of the State.
Contrary to petitioner's assertion, the SNIT retained the net income taxation scheme. 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.
The SC also held that 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. 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.
The SC added that with the legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects), and situs (place) of taxation.
