COURSE OUTLINE PART 2

I. TAXATION AND OTHER INHERENT POWERS

A. Similarities among Taxation, Police Power and Eminent Domain

The similarities among the three Inherent power of the State are as follows:
1. They are inherent in sovereignty (they can be exercised even without being expressly
granted in the Constitution);
2. They are all necessary attributes of sovereignty because there can be no effective
government without them;
3. They constitute the three ways by which the state interferes with the private rights and
property;
4. They are all legislative in nature and character;
5. They presuppose an equivalent compensation; and
6. The provisions in the Constitution are just limitations on the exercise of these power.

B. Distinctions

TAXATION POLICE POWER EMINENT DOMAIN

Power to take private

Power to enforce Power to make and
property for public use
1. As to concept contribution to raise implement laws for the
with just
government funds general welfare
compensation

Broader in application
Plenary, Merely a power to take
general power to
2. As to scope comprehensive and private property for
make and implement
supreme public use
laws

Exercised only by Exercised only be May be granted to

3. As to authority government or its government or its public service or public
political subdivisions political subdivisions utility companies

Money is taken to Property is taken or

Private property is
4. As to purpose support the destroyed to promote
taken for public use
government general welfare
 Can be expressly Can be expressly
The power to make tax
5. As to necessity delegated to the local delegated to the local
laws cannot be
of delegation government units by government units by
delegated
the law-making body the law-making body

Operates on a
Operates on a Operates on a
6. As to person particular private
community or a class community or a class
affected property of an
of individual of individual
individual

Continuous protection Healthy economic Market value of the

7. As to benefits
and organized society standard of society property expropriated

Cost of regulation,
8. As to amount of Generally no limit license and other No imposition
imposition
necessary expenses

Inseparable for the Common necessities

existence of a nation and interest of the
9. As to Protection, safety and
it supports police community transcend
importance welfare of society
power and eminent individual rights in
domain property
Subject to Relatively free from Superior to and may
Constitutional and Constitutional override Constitutional
10. As to Inherent Limitations limitations impairment provision
relationship to
because the welfare of
Constitution
Inferior to non- Superior to non- the State is superior to
impairment clause impairment clause any private contract

Constraints by Limited by the demand Bounded by public

11. As to Constitutional and for public interest and purpose and just
limitation
Inherent limitations due process compensation
 I. TAXES
A. Definition
Taxation is defined as
1. A power by which an Independent State, through its law-making body, raises and accumulates
revenue from its inhabitants to pay the necessary expenses of the government. (51 Am. Jur.
341 ; 1 Cooley 72-93)

As a power, it refers to the inherent power of a state, co-extensive with sovereignty to

demand contributions for public purposes to support the government.

2. A process or act of imposing a charge by governmental authority on property, individuals or

transactions to raise money for public purposes.

As a process, it passes a legislative undertaking through the enactment of Tax laws by the
Congress which will be implemented by the Executive branch of the government through its
Bureau if Internal Revenue (BIR) to raise revenue from the inhabitants in order to pay the
necessary expenses of the government.

3. A means by which the Sovereign State through its law-making body demands for revenur in
order to support its existence and carry out its legitimate objectives. (Tio vs. Video Regulatory
Board)

As a means, it is a way of collecting and apportioning the cost of government among those
who are privileged to enjoy its benefits. (Commissioner vs. Algue Inc.)

B. Essential Characteristics
The essential characteristics of tax are:
1. Enforced contribution. The imposition shall not be dependent upon the will of the taxpayer;

2. Imposed by the legislative body. The Congress makes tax laws.

3. Proportionate in character. The ability to pay principle is the basic rule in collecting taxes.
Those who earn more contribute to the governments coffer more than those with lesser
earnings;

4. Payable in the form of money. Money is the preferred payment of taxes. If property is taken
to satisfy liability, the property is sold through public auction to satisfy the tax;

5. Imposed for the purpose of raising revenue. Taxes are the primary source of government funds
to finance its expenditures and projects;

6. Used for a public purpose. Money is taken from the public so it can be returned to them in the
form of public benefits;
7. Enforced on some persons, properties or rights. Objects of taxation are either tangible or
intangible properties, including business transactions;

8. Commonly required to be paid at regular intervals. The dates for paying of taxes are fixed by
the law to comply with the principle of administrative feasibility; and

9. Imposed by the sovereign state within its jurisdiction. The enforcement of tax is subject to
territorial jurisdiction and international comity.

C. Classification
D. Tax and other charges

III. TAX LAWS

A. Definition
B. Nature
C. sources
D. Interpretation
E. Revenue Law