Documente Academic
Documente Profesional
Documente Cultură
Aranas)
By: RLB | DHB | TLD | RRM 1
I.
HISTORY
OF
TAXATION
spouses.
The
English
and
Dutch
referred
to
the
inheritance
tax
of
Augustus
in
developing
their
own
inheritance
taxes.
EGYPT
During
the
various
reins
of
the
Egyptian
Pharaohs
tax
collectors
were
known
as
scribes.
During
During
the
time
of
Julius
Caesar
a
1
percent
sales
tax
was
imposed.
During
the
time
of
Caesar
1
one
period
the
scribes
imposed
a
tax
on
cooking
oil.
To
insure
that
citizens
were
not
avoiding
Augustus
the
sales
tax
was
4
percent
for
slaves
and
1
percent
for
everything
else.
the
cooking
oil
tax
scribes
would
audit
households
to
insure
that
appropriate
amounts
of
cooking
oil
were
consumed
and
that
citizens
were
not
using
leavings
generated
by
other
Saint
Matthew
was
a
publican
(tax
collector)
from
Capernaum
during
Caesar
Augustus
cooking
processes
as
a
substitute
for
the
taxed
oil.
reign.
He
was
not
of
the
old
publicani
but
hired
by
the
local
government
to
collect
taxes.
It
started
in
a
place
back
taxation
in
Egypt,
in
Ancient
Egypt
–
where
tax
collectors
were
known
Also
during
this
period
Caesar
Augustus
was
considered
by
many
as
most
brilliant
tax
as
scribes
and
even
impost
taxes
on
cooking
oil.
Because
it
was
even
said
that
during
this
strategist
of
the
Roman
Empire.
For
us
Catholics
we
know
Caesar
Augustus,
“give
to
Caesar
period
this
people
even
make
audit
if
people
are
using
the
cooking
oil
na
girasyon
ug
gihatag
what
is
to
Caesar,
and
give
to
God
what
is
to
God”.
So
they
implemented
5%
inheritance
tax
sa
ilaha.
So
that’s
the
base
form
of
tax/
taxation.
and
1%
sales
tax.
So
what
is
the
purpose
for
the
5%
inheritance
tax?
For
retirement
plan
for
his
soldiers.
Tax
collectors
in
this
time
were
known
as
publican,
example
of
it
is
Saint
Matthew
GREECE
(apostle
of
Christ).
In
times
of
war
the
Athenians
imposed
a
tax
referred
to
aseisphora.
No
one
was
exempt
from
the
tax
which
was
used
to
pay
for
special
wartime
expenditures.
The
Greeks
are
one
of
the
GREAT
BRITAIN
few
societies
that
were
able
to
rescind
the
tax
once
the
emergency
was
over.
When
The
first
tax
assessed
in
England
was
during
occupation
by
the
Roman
Empire.
additional
resources
were
gained
by
the
war
effort
the
resources
were
used
to
refund
the
tax.
Lady
Godiva
was
an
Anglo-‐Saxon
woman
who
lived
in
England
during
the
11th
century.
In
this
also,
taxation/tax
is
referred
to
as
aseisphora
which
is
used
to
pay
for
special
war
time
According
to
legend,
Lady
Godiva's
husband
Leofric,
Earl
of
Mercia,
promised
to
reduce
the
expenditure.
Different
ang
rates
because
during
this
time
they
engage
in
different
wars
so
the
high
taxes
he
levied
on
the
residents
of
Coventry
when
she
agreed
to
ride
naked
through
the
tax,
if
they
engage
in
war
they
will
have
to
collect
the
tax,
if
they
have
a
loot
in
a
while
then
streets
of
the
town.
the
loot
will
also
be
used,
iuli
ang
gi.collect
the
tax
to
their
citizens.
So
when
additional
resources
were
gained
by
the
war,
the
resources
were
used
to
refund
the
taxes
to
the
people
In
Great
Britain,
the
first
tax
was
during
the
occupation
of
the
Spanish
Empire
so,
basically
it
so
sila
ang
nakauna
sa
concept
of
tax
refund/credit/carry-‐over.
the
Roman
Empire
who
brings
the
tax
to
Great
Britain.
The
tax
in
the
United
States
was
brought
by
the
English.
The
legend
of
Lady
Godiva,
Lady
Godiva
is
the
wife
of
an
Earl
or
Duke
Athenians
imposed
a
monthly
poll
tax
on
foreigners,
people
who
did
not
have
both
an
in
an
area
in
Great
Britain
(you
will
have
this
area,
manage
this
area
and
collect
taxes
in
this
Athenian
Mother
and
Father,
of
one
drachma
for
men
and
a
half
drachma
for
women.
The
tax
area).
The
earl/duke
imposes
very
high
taxes.
Now
Lady
Godiva
is
for
the
people
man
daw,
so
was
referred
to
as
metoikion
nihangyo
si
Lady
Godiva
to
her
husband
na
i.demise
ang
tax.
So
and
condition
sa
iyang
husband
was
he
will
minimize
the
tax
if
Lady
Godiva
will
roam
the
town
naked
riding
a
horse.
Athenians
imposed
a
monthly
poll
tax
on
foreigners.
Poll/community
tax
imposed
by
the
Lady
Godiva
roamed
around
the
town
naked
riding
a
horse,
the
tax
then
was
minimized.
Atheneans
were
poll
tax
on
foreigners
lang.
In
Philippines,
poll
taxes
are
applied
to
residents.
PHILIPPINES
ROMAN
EMPIRE
In
the
Philippines
of
course
we
trace
our
taxation
during
the
Spanish
Era
or
during
the
Spanish
The
earliest
taxes
in
Rome
were
customs
duties
on
imports
and
exports
calledportoria. Regime
where
several
taxes
and
monopolies
were
established.
In
Roman
Empire,
they
usually
use
the
taxation-‐-‐
they
applied
it
in
collecting
for
customs
Tribute
duties
on
their
imports
and
exports.
They
call
it
the
portoria.
What
is
the
good
thing
in
this
It
was
the
resident
tax
during
the
Spanish
times.
It
may
be
paid
in
cash
or
kind,
partly,
or
Roman
Empire
is
sila
nakauna
sa
what
you
call
Tax
Haven,
in
every
area
there
is
a
tax
but
for
wholly.
But
in
1884,
the
tribute
was
replaced
by
the
cedula
personal
or
personal
identity
this
particular
area
there
is
no
tax.
So
what
they
did
is
that
there
was
this
specific
canal
where
paper,
equivalent
to
the
present
community
tax
certificate.
there
will
be
no
taxes.
Why?
So
that
they
can
use
it
during
war
para
dali
ang
pagsulod
ug
gawas
sa
resources.
In
our
case
the
tribute/buwis/dugyot
during
that
Spanish
period
basically
can
still
be
paid
in
kind
and
in
cash.
It
can
be
paid
using
chicken,
goose,
wool
blanket,
cotton,
rice
or
any
other
Caesar
Augustus
was
consider
by
many
to
be
the
most
brilliant
tax
strategist
of
the
Roman
products
depending
of
on
the
region.
Empire.
During
his
reign
as
"First
Citizen"
the
publicani
were
virtually
eliminated
as
tax
collectors
for
the
central
government.
During
this
period
cities
were
given
the
responsibility
Bandala
System
for
collecting
taxes.
Caesar
Augustus
instituted
an
inheritance
tax
to
provide
retirement
funds
It
is
a
form
of
direct
taxes
that
the
Spaniards
implemented
in
which
the
natives
were
coerced
for
the
military.
The
tax
was
5
percent
on
all
inheritances
except
gifts
to
children
and
to
ell
their
products
to
the
government
at
very
low
prices.
It
comes
from
the
tagalog
word
mandala,
which
is
a
round
stock
of
rice
stalks
to
be
threshed.
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 2
We
also
had
what
we
call
as
the
bandala.
It
is
an
annual
forced
sale
and
requisitioning
of
! forced
labor;
explains
why
in
the
Philippines
we
have
so
many
churches;
all
male
are
goods
such
as
rice,
customs
duties
and
income
tax
were
also
collected.
During
the
Spanish
required
at
least
40-‐days/
15days(reduced)
of
work
in
one
year
for
a
ration
of
rice
only.
period,
the
collecting
of
taxes
was
specific
in
a
particular
area
nga
rebellious
to
the
Spaniard.
To
be
exempted
from
work,
payment
of
falla
must
be
made.
Basil(wine
made
with
rice)
Revolt,
the
source
is
the
bandala.
People
in
there
were
already
! Falla
-‐
sum
of
money
for
exemption
from
polo
y
servicio.
making
the
Basil,
when
the
Spaniards
knew
about
it,
they
wanted
to
centralized
everything
daw
they
implemented
the
bandala.
What
they
did
was
there
is
this
forced
sale
of
the
raw
Different
taxes
UNDER
THE
NATIONAL
INTERNAL
REVENUE
CODE:
materials
for
the
making
of
the
Basil
to
the
government
in
the
North
Luzon.
Then
the
North
1. Income
tax
-‐
FOCUS
FOR
THIS
SEMETER
Luzon
government
gisugo
nasad
nila
balik
ang
mga
namaligya
to
it
process
to
basil
and
then
a. Individuals
they
will
have
to
resend
the
basil
to
the
same
people
who
sold
to
them
the
raw
materials
at
a
b. Corporation
much
higher
price.
c. Other
persons
2. Business
Taxes
–
different
from
income
tax
Cedula
Personal
a. Value-‐added
tax
th
In
19
century,
the
cedula
served
as
an
identification
card
that
had
to
be
carried
at
all
times.
A
b. Other
percentage
taxes
person
who
could
not
present
his
or
her
cedula
to
a
guardia
civil
could
then
be
detained
for
3. Transfer
taxes
being
indocumentado.
A
legal
identity
document
issued
by
cities
and
municipalities
to
all
a. Donor’s
tax
persons
that
have
reached
the
age
of
majority
and
upon
payment
of
a
community
tax,
it
is
b. Estate
tax
considered
as
a
primary
form
of
identification
in
the
Philippines
and
is
one
of
the
closest
single
document
the
Philippines
has
to
a
national
system
od
identification,
akin
to
a
driver’s
license
Atty.
A’s
discussion:
and
a
passport.
→ Taxation
is
a
destructive
power
of
the
state
which
interferes
with
personal
and
property
rights
of
the
people
and
takes
a
portion
of
their
property
from
them
for
the
support
of
Andres
Bonifacio
and
other
Katipuneros
tore
their
cedulas
in
August
1896,
signalling
the
start
the
government.
Being
a
destructive
power,
it
can
be
used
to
kill
an
activity
or
business
if
of
the
Philippine
Revolution.
it
wants
to.
Thus
it
must
be
exercised
with
caution.
→ And
among
the
three
inherent
power
of
the
state,
the
most
powerful
is?
It
is
a
battle
! Everyone
over
18
yrs.,
but
not
more
than
60
yrs.
old,
were
required
to
pay
for
personal
between
police
power
and
taxation.
Both
are
supreme.
identification.
Tax
payers
were
responsible
for
Spanish
authorities
for
payment
for
the
→ Taxation
is
more
powerful
if
we
are
looking
at
coverage
because
taxation
is
plenary
and
tax.
If
you
cannot
present
the
cedula
receipt,
the
authorities
can
immediately
arrest
you.
unlimited.
So
if
we’re
looking
at
object/subject
to
which
we
impose
the
power
of
! Play
a
very
important
part
in
the
Philippine
history
involving
our
hero
Andres
Bonifacio
in
taxation,
then
taxation
is
more
powerful
a
particular
event—Pugad
Lawin,
where
the
Filipinos
tore
their
cedula
as
a
sign
that
they
→ But
if
we
look
at
vested
rights
not
being
impaired,
then
police
power
is
more
powerful.
are
not
anymore
adhering
to
the
policies
of
the
Spaniads.
Because
taxation
cannot
impair
vested
rights
but
police
power
can
impair.
! Still
existing
until
up
to
now,
community
tax
certificate
is
still
called
cedula.
Technically
it
is
not
anymore
the
same
cedula
that
was
implemented
during
the
Spanish
period.
II.
DEFINITION
OF
TAXATION
DEVELOPMENT
OF
THE
COMMUNITY
TAX
The
cedula
was
imposed
by
the
Americans
on
January
1,
1940,
when
Commonwealth
Act.
No.
i.
Taxation
vis-‐à-‐vis
Tax
465
went
into
effect,
mandating
the
imposition
of
a
base
residence
tax
of
50
centavos
and
an
Taxation
additional
tax
of
one
peso
based
on
factors
such
as
income
and
real
estate
holdings.
The
- Power
wherein
the
sovereign
raise
revenue
to
defray
the
necessary
expenses
of
pyment
of
this
tax
would
merit
the
issue
of
residence
certificate.
Corporations
were
also
the
government
from
among
those
who
in
some
measure
are
privileged
to
subject
to
the
resident
tax.
enjoy
its
benefits
and,
therefore,
must
bear
its
burdens.
! Implemented
to
all
the
Indios.
Eventually,
it
was
abolished
during
the
American
regime.
- Primary
purpose
is
to
raise
revenue.
But
it
was
reinstated
under
CA
465.
Proof
of
payment
is
the
residence
tax.
From
cedula
it
- If
the
primary
purpose
of
imposition
by
the
government
is
to
raise
revenue,
the
was
changed
from
residence
tax.
Eventually,
when
we
had
our
independence
we
passed
power
exercised
by
the
government
is
the
power
of
taxation.
But
if
that
our
local
government
code.
The
local
government
code
mandated
for
the
payment
of
amount
imposed
by
the
government
is
not
primarily
for
revenue
purposes
like
Community
Tax
and
proof
of
entries
is
the
community
tax
certificate
but
it
has
one
root
for
example
if
it
is
for
regulation
purposes,
it
may
be
police
power.
In
police
source
which
is
the
cedula.
power,
the
primary
purpose
is
for
regulation.
- Idea
that
taxation
must
be
progressive
Polo
Y
Servicio
It
was
the
forced
labor
for
40
days,
of
men
ranging
from
16
to
60
years
of
age
who
were
Tax
obligated
to
give
personal
services
to
community
projects.
One
could
be
exempted
from
the
- Enforced
proportional
contributions
from
proeprerties
and
persons
levied
by
polo
by
paying
a
fee
called
falla
(wich
is
worth
one
and
a
half
real)
the
state
by
virtue
of
its
sovereignty
for
the
support
of
th
govt
and
public
needs
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 3
made
by
the
legislative
body
in
order
to
raise
revenue
despite
the
absence
of
- All
revenue
appropriations
must
originate
in
the
house
of
representatives
constitutional
provisions
(inherent
nature)
(constitutional
provision)
- General
Rule:
cannot
be
delegated
*Taxation
is
broader.
- Exception:
o Local
taxes
by
Local
Government
Units
thru
the
Local
government
Q:
If
the
local
government
of
cebu
imposed
amusement
tax
on
local
swimming
pools,
not
code
(Actually
the
constitution
provides
that
taxation
must
be
provided
for
in
the
local
govt
code
or
other
laws.
Can
it
validly
enact
law
imposing
such
delegated
to
LGUs
but
the
congress
merely
set
out
the
limitations)
tax?
o Flexible
tariff
clause
o Administrative
regulation
(assessment
and
collection)
A:
No.
they
cannot.
Although
it
is
an
inherent
power,
for
local
government
units,
there
must
be
a
delegation.
Cebu
city
is
not
sovereign
thus
there
is
no
inherent
power
of
b. Scope:
To
determine—
taxation.
Thus
it
cannot
impose
any
tax
only
those
delegated
to
it
by
the
legislative
1. Purpose(s)
branch
of
the
government.
- must
be
for
a
public
purpose
- The
courts
can
inquire
into
whether
the
purpose
is
really
public
or
private.
*Only
the
legislative
branch
(Congress)
have
an
unlimited
power
to
exercise
the
power
to
Judicial
action
is
limited
only
to
a
review
where
it
involves:
tax
(a)
the
determination
of
the
validity
of
the
tax
in
relation
to
constitutional
precepts
or
provisions;
or
Paseo
Realty
vs
CA
(b)
the
determination
in
an
appropriate
case
of
the
application
of
a
tax
law.
Pelizloy
Realty
vs
Province
of
Benguet
2. Subjects
and
objects
of
taxation
(within
its
jurisdiction)
- refer
to
the
coverage
and
the
kind
or
nature
of
the
tax.
III.
NATURE
OF
POWER
OF
TAXATION
- They
may
be
persons,
(natural/juridical);
property
(real/personal,
tangible/intangible);
businesses,
transactions,
rights,
or
privileges.
i.
Inherent
prerogative
of
the
sovereignty
- Inequalities
which
result
from
a
singling
out
of
one
particular
class
for
a. Basis:
Lifeblood
theory
taxation
or
exemption
infringe
no
constitutional
limitation
so
long
as
such
- The
existence
of
the
state
is
necessary
exemption
is
reasonable
and
not
arbitrary.
- If
the
government
will
not
collect
tax
it
becomes
useless
because
it
wont
have
any
money
to
finance
its
own
operations
3. Amount
and
rate
of
tax
- As
a
general
rule,
the
legislature
may
levy
a
tax
of
any
amount
or
rate
it
b. Manifestations
sees
fit.
If
the
taxes
are
oppressive
or
unjust,
the
only
remedy
is
the
ballot
- Tax
can
be
imposed
even
absence
of
constitutional
provision
box
and
the
election
of
new
representatives.
Constitutionally,
“the
rule
of
- The
state
can
select
the
object
and
subject
matter
of
taxation
thus
unlimited
taxation
shall
be
uniform
and
equitable.”
- No
injunction
in
the
collection
of
taxes,
as
a
general
rule,
unless
you
have
a
pending
case
filed
in
the
CTA
to
enjoin
the
collection
of
tax.
4. Kind
of
tax
to
be
collected
- Taxation
is
not
subject
to
set-‐off
or
off-‐set.
(Domingo
vs
Cardigon:
although
general
rule
in
taxation
there
is
no
off-‐setting,
but
when
it
is
due
and
5. Apportionment
of
the
tax
demandable
and
has
been
fully
liquidated,
there
can
be
offsetting.
Will
be
discussed
later)
6. Manner
and
mode
of
enforcement
and
collection
- As
a
general
rule,
the
power
to
tax
is
plenary
and
unlimited
in
its
range,
acknowledging
in
its
very
nature
no
limits,
so
that
the
principal
check
against
its
7. Situs
of
taxation
abuse
is
to
be
found
only
in
the
responsibility
of
the
legislature
(which
imposes
- you
have
to
consider
the
nature
of
the
taxes.
the
tax)
to
its
constituency
who
are
to
pay
it.
Nevertheless,
it
is
circumscribed
- Example:
Community
tax
-‐
Residence
of
the
taxpayer;
Real
property
tax
-‐
by
constitutional
limitations.
Concurring
and
Dissenting
Opinion
of
Justice
Location
of
the
property.
Leonen
(Manila
Memorial
Park)
- We
can
only
impose
property
tax
on
the
properties
of
a
person
whose
residence
is
in
the
Philippines.
ii.
Legislative
in
Character
-
a. Basis
8. Grant
tax
exemption
or
condonation
- Taxes
are
a
grant
of
the
people
who
are
taxed
and
the
grant
must
be
made
by
the
immediate
rep
of
the
people
9. Provision
of
administrative
and
judicial
remedies
that
may
be
availed
by
the
- It
should
be
our
representatives
who
must
levy
and
impose
the
tax
taxpayers
and
government
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 4
iii.
Secondary:
Non-‐revenue
Raising
Q:
Can
the
mayor
impose
tax?
a. Regulation—e.g.
to
protect
local
industries
against
unfair
competition
A:
No.
only
the
sangunian.
In
short
in
so
far
as
local
government
units
are
concerned,
Holmes
Dictum:
McCulloch
vs
Maryland
imposition
of
taxes
are
still
made
by
the
legislative
branch—sangunians.
→ The
power
of
taxation
involves
the
power
to
destroy
iii.
Subject
to
constitutional
and
inherent
limitations
Marshall
Dictum:
Panhandle
Oil
vs
Mississippi
→ The
power
of
taxation
does
not
involve
the
power
to
destroy
as
long
as
this
(SC)
court
sits
IV.
BASIS
OF
TAXATION
- Necessity
Theory:
existence
of
state
is
a
necessity
therefore
there
is
a
need
to
levy
and
How
are
they
reconciled?
Reyes
vs
Almanzor
impose
taxes
for
the
countenance
of
the
state,
to
defray
the
expenses.
→ The
power
to
tax
"is
an
attribute
of
sovereignty".
In
fact,
it
is
the
strongest
of
all
i.
Necessity
to
serve
the
people
the
powers
of
government.
But
for
all
its
plenitude
the
power
to
tax
is
not
ii.
Necessity
to
protect
the
people
unconfined
as
there
are
restrictions.
Adversely
effecting
as
it
does
property
rights,
both
the
due
process
and
equal
protection
clauses
of
the
Constitution
may
properly
be
invoked
to
invalidate
in
appropriate
cases
a
revenue
measure.
V.
IMPORTANCE
OF
TAXES
(Lifeblood
Doctrine)
If
it
were
otherwise,
there
would
be
truth
to
the
1903
dictum
of
Chief
Justice
Marshall
that
"the
power
to
tax
involves
the
power
to
destroy."
The
web
or
unreality
spun
from
Marshall's
famous
dictum
was
brushed
away
by
one
stroke
VI.
THEORIES
OF
TAXATION
of
Mr.
Justice
Holmes
pen,
thus:
"The
power
to
tax
is
not
the
power
to
destroy
i.
Lifeblood
Theory
while
this
Court
sits.”
So
it
is
in
the
Philippines.
- Taxes
are
lifeblood
of
the
government
and
should
be
collected
without
hindrance.
It
→ In
the
same
vein,
the
due
process
clause
may
be
invoked
where
a
taxing
statute
is
said
that
taxes
are
what
we
pay
for
a
civilized
society,
without
taxes,
the
is
so
arbitrary
that
it
finds
no
support
in
the
Constitution.
An
obvious
example
is
government
will
be
paralyzed
for
the
lack
of
motive
to
operate.
CIR
vs
Metro
Star
where
it
can
be
shown
to
amount
to
confiscation
of
property.
That
would
be
a
Superama
Inc.
clear
abuse
of
power.
- But
even
if
we
concede
as
to
the
indispensability
of
taxation,
it
is
a
requirement
in
all
→ The
taxing
power
has
the
authority
to
make
a
reasonable
and
natural
democratic
regime
that
it
be
exercised
reasonably
and
in
accordance
with
the
classification
for
purposes
of
taxation
but
the
government's
act
must
not
be
prescribed
procedure.
(Prescriptive
Periods
to
assess/collect)
prompted
by
a
spirit
of
hostility,
or
at
the
very
least
discrimination
that
finds
no
support
in
reason.
It
suffices
then
that
the
laws
operate
equally
and
uniformly
ii.
Necessity
Theory
on
all
persons
under
similar
circumstances
or
that
all
persons
must
be
treated
in
the
same
manner,
the
conditions
not
being
different
both
in
the
privileges
iii.
Benefits
received
Theory/Reciprocity
Theory/Symbiotic
Theory
(Doctrine
of
Symbiotic
conferred
and
the
liabilities
imposed.
Relationship)
→ Verily,
taxes
are
the
lifeblood
of
the
government
and
so
should
be
collected
a. Support
by
the
taxpayers
without
unnecessary
hindrance.
However,
such
collection
should
be
made
in
b. Protection
and
benefits
by
the
government
accordance
with
law
as
any
arbitrariness
will
negate
the
very
reason
for
government
itself
It
is
therefore
necessary
to
reconcile
the
apparently
Atty.
A:
Mutual
Benefits;
There
exist
reciprocal
duties
of
protection
and
support
between
conflicting
interests
of
the
authorities
and
the
taxpayers
so
that
the
real
the
state
and
its
inhabitants.
TAKE
NOTE:
state
and
inhabitants,
not
citizens,
because
purpose
of
taxations,
which
is
the
promotion
of
the
common
good,
may
be
even
if
you’re
an
alien
and
an
inhabitant
here,
you
are
still
taxed.
The
protection
is
in
the
achieved.
Consequently,
it
stands
to
reason
that
petitioners
who
are
burdened
form
of
security
(either
tangible/intangible
aspects)
by
the
government
by
its
Rental
Freezing
Laws
(then
R.A.
No.
6359
and
P.D.
20)
under
the
principle
of
social
justice
should
not
now
be
penalized
by
the
same
government
by
the
imposition
of
excessive
taxes
petitioners
can
ill
afford
and
VII.
PURPOSE
AND
OBJECTIVE
OF
TAXATION
eventually
result
in
the
forfeiture
of
their
properties.
i.
4
R’s
of
Taxation
a. Revenue
b. Promotion
of
general
welfare—implementation
of
the
police
power
b. Redistribution
- primary
purpose
is
police
power;
secondary
purpose
is
power
of
taxation
c. Re-‐pricing—i.e.
sin
taxes,
as
a
way
to
change
behavior
- power
of
taxation
can
be
a
tool
in
exercising
police
power
d. Representation—demand
for
accountability
from
the
government
on
taxes
collected
c. Reduction
of
social
inequalities
(redistribution)
ii.
Primary:
Revenue
Raising
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 5
- progressive
system
of
taxation
prevents
the
undue
concentration
of
wealth
in
million
per
annum
have
not
been
subjected
to
tax,
thereby
depriving
the
Government
of
the
hands
of
a
few
individuals.
an
additional
source
of
revenue.
It
is
an
end-‐user
tax,
imposed
on
retailers
for
every
- Progressivity
is
the
keystone
on
the
principle
that
those
who
are
able
to
pay,
videogram
they
make
available
for
public
viewing.
It
is
similar
to
the
30%
amusement
tax
shoulders
the
bigger
portion
of
the
tax
burden.
imposed
or
borne
by
the
movie
industry
which
the
theater-‐owners
pay
to
the
government,
but
which
is
passed
on
to
the
entire
cost
of
the
admission
ticket,
thus
d. Encourage
economic
growth
shifting
the
tax
burden
on
the
buying
or
the
viewing
public.
It
is
a
tax
that
is
imposed
- by
granting
incentives
and
exemptions,
giving
lower
taxes
uniformly
on
all
videogram
operators.
- encourage
business
investments;
→ The
levy
of
the
30%
tax
is
for
a
public
purpose.
It
was
imposed
primarily
to
answer
the
i.e.
PEZA,
IT
Park,
Cebu
Business
Park
–
given
lower
tax
rates
need
for
regulating
the
video
industry,
particularly
because
of
the
rampant
film
piracy,
the
flagrant
violation
of
intellectual
property
rights,
and
the
proliferation
of
pornographic
e. Protectionism
video
tapes.
And
while
it
was
also
an
objective
of
the
DECREE
to
protect
the
movie
- to
protect
local
industries
from
foreign
competition.
industry,
the
tax
remains
a
valid
imposition.
→ The
public
purpose
of
a
tax
may
legally
exist
even
if
the
motive
which
impelled
the
legislature
to
impose
the
tax
was
to
favor
one
industry
over
another.
It
is
inherent
in
the
VIII.
SCOPE
OF
TAXATION
power
to
tax
that
a
state
be
free
to
select
the
subjects
of
taxation,
and
it
has
been
i.
Unlimited
repeatedly
held
that
"inequities
which
result
from
a
singling
out
of
one
particular
class
for
- unlimited
with
regards
to
the
object
or
subject
of
the
power
of
taxation
taxation
or
exemption
infringe
no
constitutional
limitation".
Taxation
has
been
made
the
- subject
to
the
inherent
limitations
implement
of
the
state's
police
power.
ii.
Comprehensive
→ At
bottom,
the
rate
of
tax
is
a
matter
better
addressed
to
the
taxing
legislature.
iii.
Plenary
iv.
Supreme
IX.
ASPECT
OF
TAXATION
Pepsi
Cola
vs
Municipality
of
Tanauan
i.
Levy
or
Imposition
(Legislation)
→ The
power
of
taxation
is
an
essential
and
inherent
attribute
of
sovereignty,
belonging
as
a
- refers
to
the
enactment
of
a
law
by
Congress,
imposing
a
tax
matter
of
right
to
every
independent
government,
without
being
expressly
conferred
by
- Need
to
determine
who
will
be
taxed,
how
much
will
be
taxed,
the
manner
of
the
people.
It
is
a
power
that
is
purely
legislative
and
which
the
central
legislative
body
collecting
the
tax,
who
has
the
responsibility
in
the
levy
or
imposition
of
the
tax
cannot
delegate
either
to
the
executive
or
judicial
department
of
the
government
without
infringing
upon
the
theory
of
separation
of
powers.
ii.
Assessment
→ The
exception,
however,
lies
in
the
case
of
municipal
corporations,
to
which,
said
theory
- applying
the
law
passed
by
congress
to
the
specific
person,
property
or
activity
does
not
apply.
Legislative
powers
may
be
delegated
to
local
governments
in
respect
of
covered
by
it.
matters
of
local
concern.
This
is
sanctioned
by
immemorial
practice.
By
necessary
- Assess/compute
how
much
is
the
tax
implication,
the
legislative
power
to
create
political
corporations
for
purposes
of
local
self-‐government
carries
with
it
the
power
to
confer
on
such
local
governmental
agencies
iii.
Collection
the
power
to
tax.
• Agencies
Involved:
→ Under
the
New
Constitution,
local
governments
are
granted
the
autonomous
authority
to
- BIR
create
their
own
sources
of
revenue
and
to
levy
taxes.
Section
5,
Article
XI
provides:
- BOC
"Each
local
government
unit
shall
have
the
power
to
create
its
sources
of
revenue
and
to
- Provincial,
City,
and
Municipal
Assessor
and
Treasurers
levy
taxes,
subject
to
such
limitations
as
may
be
provided
by
law."
Withal,
it
cannot
be
said
that
Section
2
of
Republic
Act
No.
2264
emanated
from
beyond
the
sphere
of
the
*In
Assessment
and
Collection,
it
is
considered
the
administration
of
tax
wherein
the
legislative
power
to
enact
and
vest
in
local
governments
the
power
of
local
taxation.
administration
and
implementation
of
the
tax
law
by
the
executive
department
through
administrative
agencies;
assessment
and
collection.
Tio
vs
Videogram
Regulatory
Board
→ a
tax
does
not
cease
to
be
valid
merely
because
it
regulates,
discourages,
or
even
*
Only
Levy
must
be
done
by
the
legislative.
The
other
may
be
delegated
to
others
like
BIR
and
definitely
deters
the
activities
taxed.
The
power
to
impose
taxes
is
one
so
unlimited
in
Bureau
of
Customs.
force
and
so
searching
in
extent,
that
the
courts
scarcely
venture
to
declare
that
it
is
subject
to
any
restrictions
whatever,
except
such
as
rest
in
the
discretion
of
the
authority
iv.
Payment
which
exercises
it.
In
imposing
a
tax,
the
legislature
acts
upon
its
constituents.
This
is,
in
- Taxpayer’s
responsibility
general,
a
sufficient
security
against
erroneous
and
oppressive
taxation.
→ The
tax
imposed
by
the
DECREE
is
not
only
a
regulatory
but
also
a
revenue
measure
prompted
by
the
realization
that
earnings
of
videogram
establishments
of
around
P600
X.
BASIC
PRINCIPLE
OF
A
SOUND
TAX
SYSTEM
(F-‐A-‐T-‐E)
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 6
i.
Fiscal
Adequacy
compensation
individual
receives
market
value
of
the
receives
indirect
- means
that
the
sources
of
revenue,
that
is,
receipts
therefrom,
taken
as
whole,
(benefits)
the
equivalent
of
the
property
taken
from
benefits
as
may
arise
should
be
sufficient
to
meet
the
demands
of
public
expenditure.
It
means
also
that
tax
in
the
form
of
him.
from
the
the
revenues
should
be
elastic
or
capable
of
expanding
or
contracting
annually
in
protection
and
maintenance
of
a
response
to
variations
in
public
expenditures.
benefits
he
receives
healthy
economic
from
the
government.
standard
of
society.
ii.
Theoretical
Justice
or
Equity
–
Ability
to
pay
doctrine
(Sec.
28(1),
Art.
VI,
1987
Consti)
As
to
persons
Operates
upon
Operates
on
an
Operates
upon
- means
that
the
tax
burden
should
be
distributed
in
proportion
to
the
taxpayer’s
affected
(1)
A
community;
or
individual
as
the
(1)
A
community;
or
ability
to
pay.
Similarly
situated
taxpayers
should
pay
equal
taxes,
while
those
who
(2)
Class
of
owner
of
a
particular
(2)Class
of
individuals.
have
more
should
pay
more.
Taxation
should
be
uniform
as
well
as
equitable.
individuals.
property.
- Most
important
principle;
if
tax
law
does
not
adhere
to
theoretical
justice
it
is
As
to
the
May
be
exercised
May
be:
May
be
exercised
defective
and
void;
without
fiscal
adequacy,
administrative
feasibility
and
economic
authority
which
only
by
the
(1)
Exercised
by
the
only
by
the
efficiency
the
tax
law
is
merely
defective
but
does
not
make
it
void.
exercises
the
government
or
its
government
or
its
government
or
its
power
political
subdivisions.
political
subdivisions;
political
subdivisions.
iii.
Administrative
Feasibility
(2)
Granted
to
public
- means
that
tax
laws
should
be
capable
of
conveniently,
effectively
enforced
by
the
service
companies
or
government
public
utilities.
- a
question
of
cost-‐benefit
As
to
the
Generally,
there
is
no
No
amount
imposed
Amount
imposed
- assessment
and
collection
must
not
be
more
costly
than
what
can
be
collected
and
amount
of
limit
on
the
amount
but
rather
the
owner
should
not
be
more
assessed
(i.e.
if
all
taxpayer’s
will
be
audited,
it
will
be
costly.
Thus,
taxpayer’s
are
imposition
of
tax
that
may
be
is
paid
the
market
than
sufficient
to
grouped
into
big
and
(small)
taxpayers;
it
is
not
feasible
for
the
government
to
audit
(amount
of
imposed.
value
of
property
cover
the
cost
of
the
all
taxpayers)
exaction)
taken.
license
and
necessary
expenses.
iv.
Economic
Efficiency
As
to
the
Is
subject
to
certain
Inferior
to
the
Relatively
free
from
- combination
of
fiscal
adequacy
and
administrative
feasibility
relationship
to
constitutional
impairment
constitutional
- to
make
sure
that
the
economy
will
be
stable.
the
Constitution
limitations.
prohibition;
limitations.
government
cannot
XI.
TAXATION
DISTINGUISHED
FROM
POLICE
POWER
AND
EMINENT
DOMAIN
-‐inherent
expropriate
private
-‐inherent
property,
which
Taxation
Eminent
Domain
Police
Power
under
a
contract
it
As
to
purpose
The
property
The
property
is
The
use
of
the
had
previously
bound
(generally
money)
is
“taken”
for
public
property
is
itself
to
purchase
taken
for
the
support
use;
it
must
be
“regulated”
for
the
from
the
other
of
the
government.
compensated
purpose
of
promoting
contracting
party.
the
general
welfare;
it
-‐to
raise
revenue
-‐facilitate
the
state’s
is
not
compensable.
-‐inherent
need
for
property
for
Effect
Including
the
There
is
a
transfer
of
Is
superior
to
the
public
purpose
prohibition
against
the
right
to
property.
impairment
of
Amount
of
-‐unlimited
-‐none;
there
is
just
-‐limited
to
the
cost
of
impairment
of
the
contract
provision.
exaction
compensation
rendering
the
service
obligation
of
(license-‐payment
contracts.
must
only
cover
the
cost)
As
to
benefits
-‐direct/indirect
-‐there
is
direct
-‐GR:no
direct
benefit
Planters
Products
vs
FertiPhil
benefit;
tangible
or
benefit
in
the
form
of
→ The
LOI
is
still
unconstitutional
even
if
enacted
under
the
police
power;
it
did
not
intangible
just
compensation;
promote
public
interest.
As
to
non-‐ -‐cannot
impair
-‐
cannot
impair
-‐can
impair
existing
→ Taxes
are
exacted
only
for
a
public
purpose.
The
P10
levy
is
unconstitutional
because
it
impairment
of
existing
contracts
existing
contracts
contracts
was
not
for
a
public
purpose.
The
levy
was
imposed
to
give
undue
benefit
to
PPI.
contracts
→ An
inherent
limitation
on
the
power
of
taxation
is
public
purpose.
Taxes
are
exacted
only
As
to
It
is
assumed
that
the
He
receives
the
The
person
affected
for
a
public
purpose.
They
cannot
be
used
for
purely
private
purposes
or
for
the
exclusive
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 7
46
benefit
of
private
persons.
The
reason
for
this
is
simple.
The
power
to
tax
exists
for
the
general
welfare;
hence,
implicit
in
its
power
is
the
limitation
that
it
should
be
used
only
Atty.
A:
Motor
vehicle
registration
fee
and
chauffeur’s
license
fee
are
power
of
taxation,
for
a
public
purpose.
It
would
be
a
robbery
for
the
State
to
tax
its
citizens
and
use
the
whereas
the
special
permit
fee
and
additional
fee
for
change
of
registration,
because
it’s
funds
generated
for
a
private
purpose.
As
an
old
United
States
case
bluntly
put
it:
"To
lay
just
minimal,
hence
an
example
of
exercise
of
police
power.
These
are
some
things
class
with
one
hand,
the
power
of
the
government
on
the
property
of
the
citizen,
and
with
the
that
you
have
to
remember.
other
to
bestow
it
upon
favored
individuals
to
aid
private
enterprises
and
build
up
private
fortunes,
is
nonetheless
a
robbery
because
it
is
done
under
the
forms
of
law
and
is
called
CIR
vs
Central
Luzon
47
taxation."
→ the
privilege
enjoyed
by
senior
citizens
does
not
come
directly
from
the
State,
but
rather
→ The
term
"public
purpose"
is
not
defined.
It
is
an
elastic
concept
that
can
be
hammered
from
the
private
establishments
concerned.
Accordingly,
the
tax
credit
benefit
granted
to
to
fit
modern
standards.
Jurisprudence
states
that
"public
purpose"
should
be
given
a
these
establishments
can
be
deemed
as
their
just
compensation
for
private
property
broad
interpretation.
It
does
not
only
pertain
to
those
purposes
which
are
traditionally
taken
by
the
State
for
public
use.
viewed
as
essentially
government
functions,
such
as
building
roads
and
delivery
of
basic
→ The
concept
of
public
use
is
no
longer
confined
to
the
traditional
notion
of
use
by
the
services,
but
also
includes
those
purposes
designed
to
promote
social
justice.
Thus,
public
public,
but
held
synonymous
with
public
interest,
public
benefit,
public
welfare,
and
public
78
money
may
now
be
used
for
the
relocation
of
illegal
settlers,
low-‐cost
housing
and
urban
convenience.
The
discount
privilege
to
which
our
senior
citizens
are
entitled
is
actually
a
or
agrarian
reform.
benefit
enjoyed
by
the
general
public
to
which
these
citizens
belong.
The
discounts
given
would
have
entered
the
coffers
and
formed
part
of
the
gross
sales
of
the
private
Atty.
A:
there
is
also
a
discussion
here
on
the
use
of
the
power
of
taxation
to
implement
establishments
concerned,
were
it
not
for
RA
7432.
The
permanent
reduction
in
their
the
police
power.
total
revenues
is
a
forced
subsidy
corresponding
to
the
taking
of
private
property
for
→ Police
power
and
the
power
of
taxation
are
inherent
powers
of
the
State.
These
public
use
or
benefit.
powers
are
distinct
and
have
different
tests
for
validity.
Police
power
is
the
power
of
→ As
a
result
of
the
20
percent
discount
imposed
by
RA
7432,
respondent
becomes
entitled
the
State
to
enact
legislation
that
may
interfere
with
personal
liberty
or
property
in
to
a
just
compensation.
This
term
refers
not
only
to
the
issuance
of
a
tax
credit
certificate
39
order
to
promote
the
general
welfare,
while
the
power
of
taxation
is
the
power
to
indicating
the
correct
amount
of
the
discounts
given,
but
also
to
the
promptness
in
its
levy
taxes
to
be
used
for
public
purpose.
The
main
purpose
of
police
power
is
the
release.
Equivalent
to
the
payment
of
property
taken
by
the
State,
such
issuance
-‐-‐
when
regulation
of
a
behavior
or
conduct,
while
taxation
is
revenue
generation.
The
not
done
within
a
reasonable
time
from
the
grant
of
the
discounts
-‐-‐
cannot
be
"lawful
subjects"
and
"lawful
means"
tests
are
used
to
determine
the
validity
of
a
considered
as
just
compensation.
In
effect,
respondent
is
made
to
suffer
the
40
law
enacted
under
the
police
power.
The
power
of
taxation,
on
the
other
hand,
is
consequences
of
being
immediately
deprived
of
its
revenues
while
awaiting
actual
circumscribed
by
inherent
and
constitutional
limitations.
receipt,
through
the
certificate,
of
the
equivalent
amount
it
needs
to
cope
with
the
79
→ We
agree
with
the
RTC
that
the
imposition
of
the
levy
was
an
exercise
by
the
State
reduction
in
its
revenues.
of
its
taxation
power.
While
it
is
true
that
the
power
of
taxation
can
be
used
as
an
→ Besides,
the
taxation
power
can
also
be
used
as
an
implement
for
the
exercise
of
the
41 80
implement
of
police
power,
the
primary
purpose
of
the
levy
is
revenue
generation.
power
of
eminent
domain.
Tax
measures
are
but
"enforced
contributions
exacted
on
81 82
If
the
purpose
is
primarily
revenue,
or
if
revenue
is,
at
least,
one
of
the
real
and
pain
of
penal
sanctions"
and
"clearly
imposed
for
a
public
purpose."
In
recent
years,
substantial
purposes,
then
the
exaction
is
properly
called
a
tax.
the
power
to
tax
has
indeed
become
a
most
effective
tool
to
realize
social
justice,
public
welfare,
and
the
equitable
distribution
of
wealth.
Atty.
A:
there
is
also
a
discussion
here
class
on
Motor
Vehicle
registration
fee
and
chauffeur’s
license
fee.
Pwede
bya
ni
mugawas
sa
MCQ,
dba?
Atty.
A:
who
won
in
this
case?
Central
Luzon.
In
short,
Central
Luzon
was
given
the
refund.
→ Taxation
may
be
made
the
implement
of
the
state's
police
power.
If
the
purpose
is
Just
a
quick
background,
the
last
3
cases—Central
Luzon,
Superdrug
and
Manila
Memorial
primarily
revenue,
or
if
revenue
is,
at
least,
one
of
the
real
and
substantial
purposes,
park—are
inter-‐related
cases.
For
the
Central
Luzon
case,
this
happened
when
the
Senior
then
the
exaction
is
properly
called
a
tax.
Such
is
the
case
of
motor
vehicle
Citizens
Act
was
not
yet
expanded
and
it
provided
that
the
discount
can
still
be
claimed
as
tax
registration
fees.
The
same
provision
appears
as
Section
59(b)
in
the
Land
credit.
But
later
on
(referring
to
the
2
later
cases),
we
will
realize
that
Congress
change
it.
Transportation
Code.
It
is
patent
therefrom
that
the
legislators
had
in
mind
a
Instead
as
tax
credit,
the
tax
deduction
scheme
is
changed
and
the
discount
was
deducted
to
regulatory
tax
as
the
law
refers
to
the
imposition
on
the
registration,
operation
or
the
gross
sales
as
part
of
the
COS
(Cost
of
Sales).
In
short,
this
case
(Central
Luzon)
is
already
ownership
of
a
motor
vehicle
as
a
"tax
or
fee."
x
x
x
Simply
put,
if
the
exaction
under
not
controlling.
Rep.
Act
4136
were
merely
a
regulatory
fee,
the
imposition
in
Rep.
Act
5448
need
not
be
an
"additional"
tax.
Rep.
Act
4136
also
speaks
of
other
"fees"
such
as
the
Carlos
Superdrug
Corp.
vs
DSWD
(expanded
Seniors
Citizen
Act)
special
permit
fees
for
certain
types
of
motor
vehicles
(Sec.
10)
and
additional
fees
→ the
law
grants
a
twenty
percent
discount
to
senior
citizens
for
medical
and
dental
for
change
of
registration
(Sec.
11).
These
are
not
to
be
understood
as
taxes
because
services,
and
diagnostic
and
laboratory
fees;
admission
fees
charged
by
theaters,
concert
such
fees
are
very
minimal
to
be
revenue-‐raising.
Thus,
they
are
not
mentioned
by
halls,
circuses,
carnivals,
and
other
similar
places
of
culture,
leisure
and
amusement;
fares
Sec.
59(b)
of
the
Code
as
taxes
like
the
motor
vehicle
registration
fee
and
chauffeurs’
for
domestic
land,
air
and
sea
travel;
utilization
of
services
in
hotels
and
similar
lodging
license
fee.
Such
fees
are
to
go
into
the
expenditures
of
the
Land
Transportation
establishments,
restaurants
and
recreation
centers;
and
purchases
of
medicines
for
the
Commission
as
provided
for
in
the
last
proviso
of
Sec.
61.
exclusive
use
or
enjoyment
of
senior
citizens.
As
a
form
of
reimbursement,
the
law
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 8
provides
that
business
establishments
extending
the
twenty
percent
discount
to
senior
an
exercise
of
police
power
or
eminent
domain.
The
20%
discount
is
intended
to
improve
citizens
may
claim
the
discount
as
a
tax
deduction.
the
welfare
of
senior
citizens
who,
at
their
age,
are
less
likely
to
be
gainfully
employed,
→ The
law
is
a
legitimate
exercise
of
police
power
which,
similar
to
the
power
of
eminent
more
prone
to
illnesses
and
other
disabilities,
and,
thus,
in
need
of
subsidy
in
purchasing
domain,
has
general
welfare
for
its
object.
Police
power
is
not
capable
of
an
exact
basic
commodities.
It
may
not
be
amiss
to
mention
also
that
the
discount
serves
to
honor
definition,
but
has
been
purposely
veiled
in
general
terms
to
underscore
its
senior
citizens
who
presumably
spent
the
productive
years
of
their
lives
on
contributing
comprehensiveness
to
meet
all
exigencies
and
provide
enough
room
for
an
efficient
and
to
the
development
and
progress
of
the
nation.
As
to
its
nature
and
effects,
the
20%
22
flexible
response
to
conditions
and
circumstances,
thus
assuring
the
greatest
benefits.
discount
is
a
regulation
affecting
the
ability
of
private
establishments
to
price
their
Accordingly,
it
has
been
described
as
"the
most
essential,
insistent
and
the
least
limitable
products
and
services
relative
to
a
special
class
of
individuals,
senior
citizens,
for
which
23 76
of
powers,
extending
as
it
does
to
all
the
great
public
needs."
It
is
"[t]he
power
vested
in
the
Constitution
affords
preferential
concern.
the
legislature
by
the
constitution
to
make,
ordain,
and
establish
all
manner
of
→ In
turn,
this
affects
the
amount
of
profits
or
income/gross
sales
that
a
private
wholesome
and
reasonable
laws,
statutes,
and
ordinances,
either
with
penalties
or
establishment
can
derive
from
senior
citizens.
In
other
words,
the
subject
regulation
without,
not
repugnant
to
the
constitution,
as
they
shall
judge
to
be
for
the
good
and
affects
the
pricing,
and,
hence,
the
profitability
of
a
private
establishment.
However,
it
24
welfare
of
the
commonwealth,
and
of
the
subjects
of
the
same."
does
not
purport
to
appropriate
or
burden
specific
properties,
used
in
the
operation
or
→ For
this
reason,
when
the
conditions
so
demand
as
determined
by
the
legislature,
conduct
of
the
business
of
private
establishments,
for
the
use
or
benefit
of
the
public,
or
property
rights
must
bow
to
the
primacy
of
police
power
because
property
rights,
though
senior
citizens
for
that
matter,
but
merely
regulates
the
pricing
of
goods
and
services
sheltered
by
due
process,
must
yield
to
general
welfare.
relative
to,
and
the
amount
of
profits
or
income/gross
sales
that
such
private
→ The
Court
is
not
oblivious
of
the
retail
side
of
the
pharmaceutical
industry
and
the
establishments
may
derive
from,
senior
citizens.
competitive
pricing
component
of
the
business.
While
the
Constitution
protects
property
→ The
20%
discount
may
be
properly
viewed
as
belonging
to
the
category
of
price
rights,
petitioners
must
accept
the
realities
of
business
and
the
State,
in
the
exercise
of
regulatory
measures
which
affect
the
profitability
of
establishments
subjected
thereto.
police
power,
can
intervene
in
the
operations
of
a
business
which
may
result
in
an
On
its
face,
therefore,
the
subject
regulation
is
a
police
power
measure.
impairment
of
property
rights
in
the
process.
→ we
find
that
there
are
at
least
two
conceivable
bases
to
sustain
the
subject
regulation’s
validity
absent
clear
and
convincing
proof
that
it
is
unreasonable,
oppressive
or
Atty.
A:
Ingun
sila
(Superdrug
Corp.)
nga
alkansi
mi
because
there
is
no
just
compensation
confiscatory.
Congress
may
have
legitimately
concluded
that
business
establishments
of
the
discount
we
give
to
the
senior’s
citizen
kay
dili
peso-‐to-‐peso
deduction.
But
then
in
have
the
capacity
to
absorb
a
decrease
in
profits
or
income/gross
sales
due
to
the
20%
this
case
the
SC
declared
that
the
basic
reason
of
the
passage
of
the
Senior
Citizens
Act
is
discount
without
substantially
affecting
the
reasonable
rate
of
return
on
their
social
justice,
general
welfare
of
the
senior
citizens.
And
the
power
that
is
actually
investments
considering
(1)
not
all
customers
of
a
business
establishment
are
senior
exercised
is
not
the
power
of
eminent
domain
but
it’s
the
police
power.
But
it
was
not
citizens
and
(2)
the
level
of
its
profit
margins
on
goods
and
services
offered
to
the
general
reconciled
in
this
case,
conflicting
ang
decision
sa
Central
Luzon
and
Superdrug.
So
take
public.
note
ha?
In
the
Central
Luzon,
it
was
declared
eminent
domain
and
the
existing
law
there
→ Concurrently,
Congress
may
have,
likewise,
legitimately
concluded
that
the
was
tax
credit
pa
tu.
Here
in
this
case,
it
was
declared
police
power
and
the
existing
law
is
establishments,
which
will
be
required
to
extend
the
20%
discount,
have
the
capacity
to
that
the
20%
discount
will
be
deducted
as
part
of
the
cost.
Do
you
follow?
So
SC
revise
their
pricing
strategy
so
that
whatever
reduction
in
profits
or
income/gross
sales
reconciled
these
2
cases
in
Manila
Memorial
Park
case.
that
they
may
sustain
because
of
sales
to
senior
citizens,
can
be
recouped
through
higher
mark-‐ups
or
from
other
products
not
subject
of
discounts.
As
a
result,
the
discounts
Manila
Memorial
Park
vs
Sec.
of
DSWD
resulting
from
sales
to
senior
citizens
will
not
be
confiscatory
or
unduly
oppressive.
In
52 88
→ A
fair
reading
of
Carlos
Superdrug
Corporation
would
show
that
we
categorically
ruled
sum,
we
sustain
our
ruling
in
Carlos
Superdrug
Corporation
that
the
20%
senior
citizen
therein
that
the
20%
discount
is
a
valid
exercise
of
police
power.
Thus,
even
if
the
current
discount
and
tax
deduction
scheme
are
valid
exercises
of
police
power
of
the
State
law,
through
its
tax
deduction
scheme
(which
abandoned
the
tax
credit
scheme
under
absent
a
clear
showing
that
it
is
arbitrary,
oppressive
or
confiscatory.
the
previous
law),
does
not
provide
for
a
peso
for
peso
reimbursement
of
the
20%
discount
given
by
private
establishments,
no
constitutional
infirmity
obtains
because,
Atty.
A:
How
did
SC
settled
the
arguments
of
the
petitioners?
Nagpalaban
lng
ang
SC
sa
being
a
valid
exercise
of
police
power,
payment
of
just
compensation
is
not
warranted.
nature
of
taxation
that
its
plenary
in
nature.
So
the
SC
said
that
you
cannot
do
anything
→ In
the
exercise
of
police
power
(as
distinguished
from
eminent
domain),
although
the
about
it
because
that’s
the
decision
of
the
legislative
in
exercising
the
power
of
taxation.
regulation
affects
the
right
of
ownership,
none
of
the
bundle
of
rights
which
constitute
Such
that,
being
plenary,
they
can
decide
what
tax
deduction
scheme
they
want
to
adapt.
ownership
is
appropriated
for
use
by
or
for
the
benefit
of
the
public.
On
the
other
hand,
Dba?
And
in
this
case,
it
was
cleared
out
that
the
20%
senior
citizen
discount
was
an
in
the
exercise
of
the
power
of
eminent
domain,
property
interests
are
appropriated
and
exercise
of
police
power.
applied
to
some
public
purpose
which
necessitates
the
payment
of
just
compensation
therefor.
Normally,
the
title
to
and
possession
of
the
property
are
transferred
to
the
Unsa
pa
man
imu
nakat-‐unan
in
this
case?
The
central
Luzon
case
was
a
mere
obiter
expropriating
authority.
Examples
include
the
acquisition
of
lands
for
the
construction
of
dictum.
public
highways
as
well
as
agricultural
lands
acquired
by
the
government
under
the
agrarian
reform
law
for
redistribution
to
qualified
farmer
beneficiaries.
→ We
now
look
at
the
nature
and
effects
of
the
20%
discount
to
determine
if
it
constitutes
XII.
TAXES,
DEFINED
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 9
vii.
LEVIED
FOR
PUBLIC
PURPOSE/S
TAX
- enforced
proportional
contributions
from
persons
and
property
levied
by
the
lawmaking
Requisites
of
a
Valid
tax
(PUJ-‐DL
/
ang
ma.jeep
ma-‐dean’s
lister)
body
of
the
State
by
virtue
of
its
sovereignty
for
the
support
of
government
and
for
all
a) it
must
be
for
public
purpose
public
needs.
b) the
rule
on
taxation
should
be
uniform
- when
we
talk
about
uniform,
it
should
be
for
the
same
tax,
same
subject
or
DIFFERENT
KINDS
OF
TAXES
object,
and
should
belong
to
the
same
class.
c) Either
the
person
the
property
taxed
must
be
within
the
jurisdiction
of
the
taxing
i.
INTERNAL
REVENUE
TAXES
(provided
under
NIRC)
authority
- Income
tax
d) That
the
assessment
and
collection
be
in
consonance
with
the
due
process
clause
- Business
tax
e) The
tax
must
not
fringed
the
inherent
and
constitutional
limitations
of
the
power
of
- Transfer
tax
taxation
- Donors
and
estate
tax
- Percentage
tax
- Excise
tax
XIV.
CLASSIFICATION
OF
TAXES
- Documentary
stampt
tax
i.
AS
TO
SUBJECT
MATTER
OR
OBJECT
ii.
LOCAL/MUNICIPAL
TAXES
1) Personal,
poll
or
Capitation
- provided
under
the
LGC
- tax
of
a
fixed
amount
imposed
on
persons
residing
within
a
specified
territory,
whether
citizens
or
not,
without
regard
to
their
property
or
the
iii.
TARIFF
AND
CUSTOMS
DUTIES
occupation
of
business
which
they
may
be
engaged.
- provided
under
the
TCC
- Being
personal,
you
cannot
shift
the
burden
to
another
person.
Ex.
Community
tax
iv.
TAXES
AND
TAX
INCENTIVES
UNDER
SPECIAL
LAWS
2) Property
- common
example:
PEZA
law
which
provides
5%
tax
in
lieu
of
all
taxed
for
businesses
- Levied
on
the
property.
Ex.
Real
property
tax
catered
within
its
territory.
3) Excise
- A
charge
imposed
upon
the
performance
of
an
act
for
the
enjoyment
of
the
privilege
or
the
engagement
in
an
occupation.
XIII.
ESSENTIAL
CHARACTERISTICS
AND
ATTRIBUTES
OF
TAXES
(please
memorize)
→ for
a
tax
to
be
valid,
it
must
have
all
these
essential
characteristics
ii.
AS
TO
WHO
BEARS
THE
BURDEN
1) Direct
i.
ENFORCED
CONTRIBUTION
- tax
for
which
the
taxpayer
is
directly
or
primarily
liable
or
which
he
cannot
- A
tax
is
not
a
voluntary
payment
or
donation
and
its
imposition
is
in
no
way
shift
to
another.
dependent
upon
the
will
or
assent,
open
or
implied,
or
the
person
taxed.
2) Indirect
- tax
which
is
demanded
from
one
person
in
the
expectation
and
intention
ii.
GENERALLY
PAYABLE
IN
MONEY
that
he
shall
indemnify
himself
at
the
expense
of
another
• can
you
go
the
BIR
and
pay
tax
in
kind?
NO.
- GR:
it
must
be
payable
in
money.
iii.
AS
TO
DETERMINATE
OF
AMOUNT
- Exception:
Backpay
Certificate;
Tax
Credit
Certificate
1) Specific
- tax
of
a
fixed
amount
imposed
by
the
head
or
number,
or
by
some
iii.
PROPORTIONATE
IN
CHARACTER
standard
of
weight
or
measurement
- Taxpayer’s
ability
to
pay
(the
more
you
have,
the
more
you
should
pay)
- so
long
as
the
item
falls
within
the
classification
being
taxed
then
it
is
- Take
note:
proportionate
is
not
progressive
(we
will
discuss
this
later
on)
subject
to
that
particular
tax;
no
need
for
an
appraisal
2) Ad
valorem
iv.
LEVIED
ON
PERSON,
PROPERTY
OR
THE
EXERCISE
OF
A
RIGHT
OR
PRIVILEGE
- tax
of
a
fixed
proportion
of
the
value
of
the
property
with
respect
to
which
the
tax
is
assessed
v.
LEVIED
BY
THE
STATE
WHICH
HAS
JURISDICTION
OVER
THE
SUBJECT
OR
OBJECT
OF
- since
this
involves
the
value
of
the
property,
it
needs
an
appraisal
by
TAXATION
appraisers
vi.
LEVIED
BY
THE
LAWMAKING
BODY
OF
THE
STATE
iv.
AS
TO
PURPOSE
1) General,
fiscal
or
revenue
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 10
- tax
imposed
for
the
general
purposes
of
the
government
and
to
raise
revenue
for
governmental
needs.
Tax
Toll
2) Specific
or
regulatory
Definition
Enforced
proportional
A
sum
of
money
for
the
use
of
- tax
imposed
for
a
special
purpose.
contributions
from
persons
something,
a
consideration
which
is
- To
achieve
some
social
or
economic
and
irrespective
of
whether
revenue
is
and
property
paid
for
the
use
of
a
property
which
actually
generated
raised
or
not.
is
of
a
public
nature;
e.g.,
road,
bridge
v.
AS
TO
THE
SCOPE
OR
AUTHORITY
IMPOSING
THE
TAX
Basis
A
demand
of
sovereignty
A
demand
of
proprietorship
1) National
Amount
No
limit
as
to
the
amount
Amount
of
toll
depends
upon
the
- Imposed
by
the
national
government.
To
be
specific,
it
is
imposed
by
the
cost
of
construction
or
maintenance
legislative
department
and
implemented
by
the
executive
department
of
the
public
improvement
used
through
the
BIR.
Authority
May
imposed
only
by
the
May
be
imposed
by
the
government
2) Municipal
or
local
government
or
private
individuals
or
entities
- It
must
be
provided
in
the
LGC
and
is
imposed
by
the
local
executive
body,
Sangguniang
Panglungsod
or
Panlalawigan.
iii.
COMPROMISE
PENALTY
vi.
AS
TO
GRADUATE
OR
RATE
Tax
Penalty
1) Proportion
Definition
Enforced
proportional
Sanction
imposed
as
a
punishment
- Tax
is
based
on
a
fixed
percentage
of
the
amount
of
the
property,
receipts,
contributions
from
persons
for
violation
of
a
law
or
acts
deemed
or
other
basis
to
be
taxed.
Ex:
real
estate
tax
and
property
injurious;
violation
of
tax
laws
may
2) Progressive
give
rise
to
imposition
of
penalty
- The
tax
rate
increases
as
the
tax
base
or
bracket
increases
Purpose
Intended
to
raise
revenue
Designed
to
regulate
conduct
3) Regressive
Authority
May
be
imposed
only
by
the
May
be
imposed
by:
- The
tax
rate
decreases
as
the
tax
base
or
bracket
increases
government
(a) Government;
or
(b) Private
individuals
or
entities
XV.
TAXES
DISTINGUISHED
FROM
OTHER
IMPOSITIONS
(From
Tiu
Notes)
iv.
SPECIAL
ASSESSMENT
i.
LICENSE
OR
PERMIT
FEE
Tax
Special
Assessment
Definition
Enforced
proportional
An
enforced
proportional
Tax
License
Fee
contributions
from
persons
contribution
from
owners
of
lands
Purpose
Imposed
for
revenue
Imposed
for
regulatory
purposes
and
property
especially
benefited
by
public
purposes
improvements
Basis
Imposed
under
the
power
of
Imposed
under
the
police
power
of
the
Basis
Based
on
necessity
Based
wholly
on
benefits
taxation
State
Subject
Levied
on:
Levied
only
on
land
Amount
No
limit
as
to
the
amount
of
Amount
of
license
fee
that
can
be
(a) Persons;
tax
collected
is
limited
to
the
cost
of
the
(b) Property;
or
license
and
the
expenses
of
police
(c) Acts.
surveillance
and
regulation
Scope
Has
general
application
It
is
exceptional
both
to
the
time
and
Time
of
Normally
paid
after
the
start
Normally
paid
before
the
place
payment
of
business
commencement
of
the
business
Person
It
is
a
personal
liability
of
the
Not
a
personal
liability
of
the
person
Effect
of
Failure
to
pay
the
tax
does
Failure
to
pay
a
license
fee
makes
the
Liable
taxpayer
assessed;
his
liability
is
limited
only
to
non-‐ not
make
the
business
illegal
business
illegal
the
land
involved
payment
Surrender
Taxes,
being
the
lifeblood
of
License
fee
may
with
or
without
Republic
vs
Bacolod
the
State,
cannot
be
consideration
→ The
purpose
of
s
special
assessment
is
to
finance
the
improvement
of
particular
surrendered
excepts
for
properties,
with
the
benefits
of
the
improvement
accruing
or
inuring
to
the
lawful
considerations
owners
thereof
who,
after
all,
pay
the
assessment.
The
purpose
of
an
ordinary
tax,
on
the
other
hand,
is
to
provide
the
Government
with
revenues
needed
for
ii.
TOLL
FEE
the
financing
of
state
affairs.
Thus,
while
the
refusal
of
a
citizen
to
pay
his
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 11
ordinary
taxes
may
not
indeed
be
sanctioned
because
it
would
impair
government
functions,
the
same
would
not
hold
true
in
the
case
of
a
refusal
to
XVI.
LIMITATION
OF
THE
POWER
OF
TAXATION
comply
with
a
special
assessment.
i.
INHERENT
LIMITATIONS
v.
DEBT
1. Public
purpose
- The
term
"public
purpose"
is
not
defined.
It
is
an
elastic
concept
that
Tax
Debt
can
be
hammered
to
fit
modern
standards.
Jurisprudence
states
that
Basis
Based
on
law
Based
on
contract
or
judgement
"public
purpose"
should
be
given
a
broad
interpretation.
It
does
not
Effect
of
non-‐ Taxpayer
may
be
No
imprisonment
for
failure
to
pay
only
pertain
to
those
purposes
which
are
traditionally
viewed
as
payment
imprisoned
for
his
failure
a
debt
essentially
government
functions,
such
as
building
roads
and
delivery
to
pay
the
tax
(except
poll
of
basic
services,
but
also
includes
those
purposes
designed
to
tax)
promote
social
justice.
Thus,
public
money
may
now
be
used
for
the
Mode
of
Generally
payable
in
May
be
payable
in
money,
property
relocation
of
illegal
settlers,
low-‐cost
housing
and
urban
or
agrarian
payment
money
or
services
reform.
Planters
vs
Fertiphil
Assignability
Not
assignable
Can
be
assigned
(you
can
let
the
- General
rule,
public
money
can
only
be
spent
for
a
public
purpose.
other
person
pay
the
debt
on
your
Although
private
individuals
are
directly
benefited,
the
tax
would
still
behalf)
be
valid
provided
that
such
benefit
is
only
incidental.
Pascual
vs
Sec.
Interest
Does
not
draw
interest
Draws
interest
if
stipulated
or
of
Public
Works
unless
delinquent
delayed
Authority
Imposed
by
public
Can
be
imposed
by
private
Determination
that
tax
is
for
a
public
purpose:
authority
individuals
• Proceeds
of
the
tax
must
be
use
for
the
support
of
the
government,
Prescription
Prescriptive
periods
for
Civil
code
governs
the
prescriptive
specifically
on
its
governmental
function
tax
are
determined
under
period
of
debts
• Proceeds
of
the
tax
must
be
for
any
of
the
recognized
objects
of
the
the
NIRC
government
• Proceeds
of
the
tax
must
be
to
promote
the
welfare
of
the
vi.
SUBSIDY
community
- A
sum
of
money
granted
by
the
government
or
a
public
body
to
assist
an
industry
or
business
so
that
the
price
of
a
commodity
or
service
may
remain
low
or
competitive.
Atty.
A:
- a
pecuniary
aid
or
directly
granted
by
the
government
to
an
individual
or
private
- As
long
as
there
is
still
link
to
the
public
welfare,
the
purpose
is
still
commercial
enterprise
deemed
beneficial
to
the
public.
Tax,
on
the
other
hand,
not
given
public.
or
granted
by
the
government,
rather,
it
is
collected
by
the
government
form
its
- The
test
is
not
as
to
who
receives
the
money
but
the
character
of
the
inhabitants.
purpose
of
which
it
is
expected
and
not
the
immediate
result
of
the
expenditure
but
rather
the
ultimate
result.
vii.
REVENUE
- For
you
to
determine
if
its
public
purpose,
it
must
be
reckoned
on
the
- refers
to
all
the
funds
or
income
derived
by
the
government,
whether
from
tax
or
from
date
when
the
law
is
passed.
whatever
source
and
whatever
manner
CASES:
(for
public
purpose
although
it
is
for
a
specific
industry)
viii.
INTERNAL
REVENUE
Lutz
vs
Araneta
- taxes
imposed
by
the
legislature
other
than
duties
on
imports
and
exports.
→ Analysis
of
the
Act
will
show
that
the
tax
is
levied
with
a
regulatory
purpose,
to
provide
means
for
the
rehabilitation
and
stabilization
of
the
ix.
CUSTOMS
DUTIES
threatened
sugar
industry.
In
other
words,
the
act
is
primarily
an
exercise
- taxes
imposed
on
goods
exported
from
or
imported
into
a
country.
of
the
police
power.
→ sugar
production
is
one
of
the
great
industries
of
our
nation,
sugar
x.
TARIFF
occupying
a
leading
position
among
its
export
products;
it
is
a
great
source
- customs
duties,
toll,
or
tributes
payable
upon
a
merchandise
to
the
government.
of
the
state's
wealth,
is
one
of
the
important
sources
of
foreign
exchange
needed
by
our
government.
Its
promotion,
protection
and
advancement,
Atty.
A:
what
is
important
here,
from
no.
1
to
no.
10,
of
the
things
enumerated
is
that
all
therefore
redounds
greatly
to
the
general
welfare.
Hence
it
was
are
not
considered
taxes.
If
they
are
not
considered
taxes
then
it
is
not
a
requirement
competent
for
the
legislature
to
find
that
the
general
welfare
demanded
that
those
enumerated
should
be
for
PUJ-‐DL
(the
requirements
for
a
valid
tax).
that
the
sugar
industry
should
be
stabilized
in
turn;
and
in
the
wide
field
of
its
police
power,
the
lawmaking
body
could
provide
that
the
distribution
of
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
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benefits
therefrom
be
readjusted
among
its
components
to
enable
it
to
resist
the
added
strain
of
the
increase
in
taxes
that
it
had
to
sustain.
Caltex
vs
COA
→ the
protection
and
promotion
of
the
sugar
industry
is
a
matter
of
public
→ money
due
the
government,
either
in
the
form
of
taxes
or
other
dues,
is
its
concern,
it
follows
that
the
Legislature
may
determine
within
reasonable
lifeblood
and
should
be
collected
without
hindrance.
Thus,
instead
of
bounds
what
is
necessary
for
its
protection
and
expedient
for
its
giving
petitioner
a
reason
for
compensation
or
set-‐off,
the
Revised
promotion.
Here,
the
legislative
discretion
must
be
allowed
fully
play,
Administrative
Code
makes
it
the
respondents'
duty
to
collect
petitioner's
subject
only
to
the
test
of
reasonableness.
If
objective
and
methods
are
indebtedness
to
the
Oil
Price
Stabilization
Fund
(OPSF).
alike
constitutionally
valid,
no
reason
is
seen
why
the
state
may
not
levy
→ Taxation
is
no
longer
envisioned
as
a
measure
merely
to
raise
revenue
to
taxes
to
raise
funds
for
their
prosecution
and
attainment.
Taxation
may
be
support
the
existence
of
the
government;
taxes
may
be
levied
with
a
made
the
implement
of
the
state's
police
power.
regulatory
purpose
to
provide
means
for
the
rehabilitation
and
→ it
appears
rational
that
the
tax
be
obtained
precisely
from
those
who
are
stabilization
of
a
threatened
industry
which
is
affected
with
public
interest
to
be
benefited
from
the
expenditure
of
the
funds
derived
from
it.
At
any
as
to
be
within
the
police
power
of
the
state.
rate,
it
is
inherent
in
the
power
to
tax
that
a
state
be
free
to
select
the
→ There
can
be
no
doubt
that
the
oil
industry
is
greatly
imbued
with
public
subjects
of
taxation,
and
it
has
been
repeatedly
held
that
"inequalities
interest
as
it
vitally
affects
the
general
welfare.
Any
unregulated
increase
which
result
from
a
singling
out
of
one
particular
class
for
taxation,
or
in
oil
prices
could
hurt
the
lives
of
a
majority
of
the
people
and
cause
exemption
infringe
no
constitutional
limitation".
economic
crisis
of
untold
proportions.
It
would
have
a
chain
reaction
in
terms
of,
among
others,
demands
for
wage
increases
and
upward
Atty.
A:
Why
only
those
people
engaged
in
the
sugar
industry
business
will
be
spiralling
of
the
cost
of
basic
commodities.
The
stabilization
then
of
oil
the
one
to
carry
the
burden
of
paying
the
tax?
prices
is
of
prime
concern
which
the
state,
via
its
police
power,
may
- So
long
as
there
is
valid
classification,
even
if
it
would
result
to
inequality
properly
address.
to
some
people
or
affect
individuals,
the
law
cannot
be
considered
invalid
→ Also,
a
taxpayer
may
not
offset
taxes
due
from
the
claims
that
he
may
per
se.
These
people
in
the
sugar
industry
business
are
the
ones
who
will
have
against
the
government.
Taxes
cannot
be
the
subject
of
directly
benefit
from
the
said
imposition
of
tax.
compensation
because
the
government
and
taxpayer
are
not
mutually
creditors
and
debtors
of
each
other
and
a
claim
for
taxes
is
not
such
a
Ormoc
Sugar
Co.
vs
Conejos
debt,
demand,
contract
or
judgment
as
is
allowed
to
be
set-‐off.
→ The
point
remains
to
be
determined,
however,
whether
constitutional
limits
on
the
power
of
taxation,
specifically
the
equal
protection
clause
Atty.
A:
As
a
general
rule,
there
can
be
no
offsetting
of
tax
payables,
unlike
and
rule
of
uniformity
of
taxation,
were
infringed.
debts.
We
will
discuss
this
more
as
we
go
forward.
Aside
from
this,
the
SC
→ The
Constitution
in
the
bill
of
rights
provides:
".
.
.
nor
shall
any
person
be
discussed
whether
OPSF
is
a
public
purpose
or
not,
it
ruled
that
it
is
still
for
denied
the
equal
protection
of
the
laws."
(Sec.
1
[1],
Art.
III)
In
Felwa
vs.
public
purpose
(ang
reason
kay
highlighted
above).
Lastly,
you
have
to
5
Salas,
We
ruled
that
the
equal
protection
clause
applies
only
to
persons
remember
on
the
Consti
provision
Art.
6,
Sec.
29(3).
or
things
identically
situated
and
does
not
bar
a
reasonable
classification
of
the
subject
of
legislation,
and
a
classification
is
reasonable
where
(1)
it
is
TAKE
NOTE:
Art.
VI,
Sec.
29
(3)
of
the
Consti:
All
money
collected
on
any
tax
based
on
substantial
distinctions
which
make
real
differences;
(2)
these
levied
for
a
special
purpose
shall
be
treated
as
a
special
fund
and
paid
out
for
are
germane
to
the
purpose
of
the
law;
(3)
the
classification
applies
not
such
purpose
only.
If
the
purpose
for
which
a
special
fund
was
created
has
been
only
to
present
conditions
but
also
to
future
conditions
which
are
fulfilled
or
abandoned,
the
balance,
if
any,
shall
be
transferred
to
the
general
substantially
identical
to
those
of
the
present;
(4)
the
classification
applies
funds
of
the
Government.
only
to
those
who
belong
to
the
same
class.
→ A
perusal
of
the
requisites
instantly
shows
that
the
questioned
ordinance
CONCEPTS
RELATIVE
TO
PUBLIC
PURPOSE
does
not
meet
them,
for
it
taxes
only
centrifugal
sugar
produced
and
1) Inequalities
resulting
from
the
singling
out
of
one
particular
class
for
exported
by
the
Ormoc
Sugar
Company,
Inc.
and
none
other.
At
the
time
taxation
or
exemption
must
infringe
no
constitutional
limitation
of
the
taxing
ordinance's
enactment,
Ormoc
Sugar
Company,
Inc.,
it
is
true,
2) An
individual
taxpayer
need
not
derive
direct
benefits
from
tax
was
the
only
sugar
central
in
the
city
of
Ormoc.
Still,
the
classification,
to
3) Public
purpose
is
continually
expanding,
areas
formerly
left
to
private
be
reasonable,
should
be
in
terms
applicable
to
future
conditions
as
well.
initiative
are
now
maybe
undertaken
by
the
government,
if
it
is
to
meet
The
taxing
ordinance
should
not
be
singular
and
exclusive
as
to
exclude
the
increasing
social
challenges
of
the
time.
Ex:
Senior
Citizens
discount
any
subsequently
established
sugar
central,
of
the
same
class
as
plaintiff,
4) Public
pupose
is
determined
at
the
time
of
the
enactment
of
the
tax
law
for
the
coverage
of
the
tax.
As
it
is
now,
even
if
later
a
similar
company
is
and
not
at
the
time
its
implementation.
set
up,
it
cannot
be
subject
to
the
tax
because
the
ordinance
expressly
points
only
to
Ormoc
City
Sugar
Company,
Inc.
as
the
entity
to
be
levied
What
is
a
TAXPAYER’S
SUIT?
upon.
- Basically,
you’re
questioning
whether
the
public
money
is
used
for
public
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 13
purpose
or
not.
delegated
by
the
legislature.
And
in
the
Phis.,
it
is
already
been
- It’s
a
case
where
the
act
complained
of
is
directly
involved
in
the
illegal
delegated
to
the
BIR.
disbursement
of
public
funds.
However,
the
public
funds
must
be
derived
from
taxation.
EXCEPTIONS:
- Taxpayers
have
sufficient
interest
of
preventing
the
illegal
expenditures
of
1) Delegation
to
the
President
money
raised
by
taxation,
although
this
does
not
apply
to
donations
and
- Flexible
Tariff
clause
provided
under
Sec.
401(a)
of
TCC
which
contributions
made
by
public
individuals
or
private
entities.
states
that:
- A
taxpayer
is
not
relieved
from
the
obligation
of
paying
tax
because
for
his
• In
the
interest
of
national
economy,
general
welfare
and/or
belief
that
it
is
being
misappropriated
by
certain
officials.
national
security,
and
subject
to
the
limitations
herein
- A
taxpayer
has
no
legal
standing
to
question
executive
acts
that
do
not
involve
prescribed,
the
President,
upon
recommendation
of
the
the
use
of
public
funds.
Gonzales
vs
Marcos
National
Economic
and
Development
Authority
(hereinafter
referred
to
as
N
EDA),
is
hereby
empowered:
Lozada
vs
COMELEC
(1)
to
increase,
reduce
or
remove
existing
protective
→ As
taxpayers,
petitioners
may
not
file
the
instant
petition,
for
nowhere
therein
rates
of
import
duty
(including
any
necessary
change
in
is
it
alleged
that
tax
money
is
being
illegally
spent.
The
act
complained
of
is
the
classification).
The
existing
rates
may
be
increased
or
inaction
of
the
COMELEC
to
call
a
special
election,
as
is
allegedly
its
ministerial
decreased
to
any
level,
in
one
or
several
stages
but
in
duty
under
the
constitutional
provision
above
cited,
and
therefore,
involves
no
no
case
shall
the
increased
rate
of
import
duty
be
expenditure
of
public
funds.
It
is
only
when
an
act
complained
of,
which
may
higher
than
a
maximum
of
one
hundred
(100)
per
cent
include
a
legislative
enactment
or
statute,
involves
the
illegal
expenditure
of
ad
valorem;
public
money
that
the
so-‐called
taxpayer
suit
may
be
allowed.
(2)
to
establish
import
quota
or
to
ban
imports
of
any
Q:
If
the
government
receives
a
donation
from
Henry
See
and
Henry
See
specified
commodity,
as
may
be
necessary;
and
that
his
donation
will
be
used
for
the
construction
of
a
hospital
named
after
him.
Can
you
file
a
taxpayer’s
suit
questioning
why
the
hospital
should
be
named
in
favor
(3)
to
impose
an
additional
duty
on
all
imports
not
of
the
Donor?
exceeding
ten
(10)
per
cent
ad
valorem
whenever
necessary:
Provided
:
That
upon
periodic
investigations
A:
No,
because
although
the
donation
became
a
public
fund,
the
source
of
it
is
not
by
the
Tariff
Commission
and
recommendation
of
the
from
taxation
but
rather
from
donation.
NEDA,
the
President
may
cause
a
gradual
reduction
of
protection
levels
granted
in
Section
One
Hundred
and
2. Non-‐delegation
of
the
legislative
power
to
tax
Four
of
this
Code,
including
those
subsequently
- the
power
of
taxation
is
peculiarly
and
exclusively
belongs
to
the
granted
pursuant
to
this
section.
legislative,
therefore
it
may
not
be
delegated,
as
a
rule.
- who
passed
this
TCC?
Diba
Congress.
So
the
congress
even
made
- General
Rule:
the
power
of
taxation
is
vested
to
the
legislative
branch
guidelines
for
the
president
in
exercising
such
power.
of
the
government
and
it
cannot
be
delegated
to
other
branches
of
government.
2) Delegation
to
LGU
- Exception:
- Our
Constitution,
under
Art.
X,
Sec.
5,
provides:
• President
• Each
local
government
unit
shall
have
the
power
to
create
• LGU
its
own
sources
of
revenues
and
to
levy
taxes,
fees
and
• Administrative
units
charges
subject
to
such
guidelines
and
limitations
as
the
Congress
may
provide,
consistent
with
the
basic
policy
of
Powers
which
cannot
be
delegated:
(these
powers
lies
exclusively
under
local
autonomy.
Such
taxes,
fees,
and
charges
shall
accrue
the
legislative
department)
exclusively
to
the
local
governments.
o the
determination
of
the
subject
to
be
taxed
- But
this
provision
is
not
enough
so
the
Congress
passed
the
LGC
o purpose
the
tax
which
embodies
the
guidelines
on
how
to
exercise
such
power.
o amount
of
rate
of
the
tax
- Basco
vs
PAGCOR
o manner,
means
and
agencies
of
collection
→ A
mere
Municipal
corporation
has
no
inherent
right
to
o prescription
of
the
necessary
rules
with
respect
thereto
impose
taxes.
Thus,
"the
Charter
or
statute
must
plainly
show
an
intent
to
confer
that
power
or
the
municipality
TAKE
NOTE:
what
cannot
be
delegated
strictly
is
the
imposition
or
the
cannot
assume
it".
Its
"power
to
tax"
therefore
must
always
levy
of
tax.
While
administration,
collection
and
regulation
can
be
yield
to
a
legislative
act
which
is
superior
having
been
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 14
passed
upon
by
the
state
itself
which
has
the
"inherent
• PHIC
power
to
tax".
• PCSO
→ "municipal
corporations
are
mere
creatures
of
Congress"
• PAGCOR
(but
not
exempted
from
business
tax)
which
has
the
power
to
"create
and
abolish
municipal
corporations"
due
to
its
"general
legislative
powers".
REASONS
FOR
EXEMPTION
(why
are
they
exempted):
Congress,
therefore,
has
the
power
of
control
over
Local
• So
that
it
would
not
hinder
in
their
operations
governments.
And
if
Congress
can
grant
the
City
of
Manila
the
power
to
tax
certain
matters,
it
can
also
provide
for
4. International
comity
exemptions
or
even
take
back
the
power.
- The
property
of
a
foreign
state
or
government
may
not
be
taxed
by
another
under
the
principle
of
sovereign
equality
among
states
by
3) Delegation
to
the
Administrative
Bodies
virtue
of
which
one
state
cannot
exercise
its
sovereign
powers
over
- BIR
and
Bureau
of
Customs
another.
- This
principle
is
based
on
any
of
the
following
grounds:
3. Exemption
from
taxation
of
government
entities
• Sovereign
equality
among
states
–
under
international
law
- So
long
as
the
government
is
performing
its
governmental
functions,
by
virtue
of
which
one
state
cannot
exercise
it
sovereign
there
will
be
no
tax.
But
if
the
government
is
performing
a
proprietary
powers
over
another.
function,
it
is
taxable.
• Usage
among
states
–
when
one
enters
the
territory
of
- Proprietary
function:
when
the
property
is
rented
out
to
another
another,
there
is
an
implied
understanding
that
the
former
entity
for
commercial/business
purposes
(Phil.
Lung
Center
case).
does
not
intend
to
degrade
its
dignity
by
placing
itself
under
- Exemption
applies
only
to
governmental
entities
thru
which
the
the
jurisdiction
of
the
latter.
government
immediately
and
directly
exercises
its
sovereign
power.
• A
foreign
government
may
not
be
sued
without
its
consent
Meaning
those
gov’t
entities
that
are
exercising
governmental
–
it
is
useless
to
assess
a
tax
since
anyway
it
cannot
be
functions.
collected.
- NDA
vs
Cebu
City
→ The
Republic,
like
any
individual,
may
form
a
corporation
with
5. Territorial
jurisdiction
personality
and
existence
distinct
from
its
own.
The
separate
- A
state
may
not
tax
property
lying
outside
its
border
or
lay
an
excise
or
personality
allows
a
GOCC
to
hold
and
possess
properties
in
its
privilege
tax
upon
the
exercise
or
enjoyment
of
a
right
or
privilege
derived
own
name
and,
thus,
permit
greater
independence
and
flexibility
from
the
laws
of
another
state
and
therein
exercised.
Persons,
properties,
in
its
operations.
It
may,
therefore,
be
stated
that
tax
exemption
businesses,
activities,
and
other
transactions
within
the
territorial
of
property
owned
by
the
Republic
of
the
Philippines
"refers
to
boundary
of
the
State,
which,
and
persons
outside
it,
who,
received
properties
owned
by
the
Government
and
by
its
agencies
which
benefits
and
protection
from
the
government,
are
subject
to
tax.
do
not
have
separate
and
distinct
personalities
(unincorporated
- What
about
foreign
embassy?
Not
subject
to
tax
because
they
are
entities).
considered
extension
of
the
sovereign
of
the
foreign
country
they
→ GOCC
with
original
charter
(attached
to
the
gov’t;
represent.
unincorporated)
–
exempted
from
tax
- PEZA,
why
give
special
tax
rate
when
in
fact
they
still
within
the
territorial
→ GOCC
with
special
charter
(personality
distinct
from
the
gov’t)
–
jurisdiction
of
the
Philippines
or
the
taxing
authority?
In
a
case
it
was
subject
to
tax
explained
that
since
it
the
legislature
who
exercises
the
power
of
taxation,
→ In
this
case,
NDA
is
exempted
from
tax
because
it
does
not
have
it
could
choose
to
whom
it
may
impose
the
tax
and
it
can
choose
also
to
a
separate
personality
from
the
gov’t
but
rather
its
duty
to
whom
it
will
exempt
or
give
special
incentive
insofar
as
taxation
is
concern.
administer
the
questioned
reserved
land,
which
is
owned
by
the
- Property
outside
one’s
jurisdiction
does
not
receive
any
protection
of
the
government
and
thus
exempted
from
tax
while
the
State.
That’s
the
reason
why
these
properties
(foreign
embassies,
improvements,
which
were
done
by
NDA,
subject
to
tax.
consulates,
etc.)
will
not
be
subject
to
tax
anymore
in
the
Philippines.
- If
the
law
is
passed
by
the
Congress,
the
Congress
must
see
to
it
that
the
Atty.
A:
but
remember
here
that
what
is
exempted
is
real
estate
tax.
object
or
subject
of
taxation
is
within
the
territorial
jurisdiction
of
the
So
kung
sa
exam
kay
income
tax
ang
g.ingun
out
of
the
rent
of
that
taxing
authority.
land,
that
would
be
a
different
a
story.
• Example:
GROSS
ORDER
DOCTRINE(???
Wa
ku
sure
sa
name)
which
we
apply
under
value-‐added
taxation.
Because
in
VAT,
if
GOVERNMENT
ENTITIES
EXEMPTED
FROM
INCOME
TAX:
importation—there
will
be
VAT;
if
exportation—no
VAT;
• GSIS
• SSS
Atty.
A:
what
will
happen
if
the
tax
law
violates
the
inherent
limitation?
What’s
the
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 15
consequence?
VOID.
Not
just
mere
defective.
IT’S
VOID.
(actually
this
is
vague
because
it
does
not
specify
whether
all
the
members
of
both
houses
vote
together
or
separately).
ii.
CONSTITUTIONAL
LIMITATIONS
- Required
for
tax
exemption
is
ABSOLUTE
majority
(majority
of
all
the
1. Direct
members)
however
if
it
refers
to
a
law
withdrawing
any
tax
a. Revenue
bill
must
originate
exclusively
in
the
House
but
the
Senate
may
exemption
it
only
requires
RELATIVE
majority
(majority
of
the
propose
with
amendments
–
lawmaking
process
quorum)
during
the
session.
- This
is
more
on
the
law
making
process.
- Tax
exemptions,
amnesties
and
refunds
are
considered
in
the
nature
- To
Remember:
what
will
originate
from
the
house
is
the
BILL,
not
the
of
tax
exemptions,
a
grant
thereof
needs
the
approval
of
the
absolute
law
or
the
statute.
majority
of
the
members
of
congress.
- What
is
the
difference
between
a
bill
and
a
statute?
- When
is
it
considered
as
statute?
When
it
is
already
passed
by
the
c. Rule
of
uniformity
and
equity
in
taxation
congress
and
bi-‐cameral
committee,
and/or
approved
by
the
- Uniformity:
it
implies
that
“all
taxable
articles
or
properties
of
the
president.
same
class
shall
be
taxed
at
the
same
rate.”
- The
bill
is
just
a
proposition
then
it
undergoes
three
(3)
readings.
- Equity:
uniformity
in
taxation
is
effected
through
the
apportionment
Eventually
if
it
passed
in
the
House
of
Representative,
it
will
be
of
the
tax
burden
among
the
taxpayers
which
under
the
Constitution
submitted
in
the
senate.
And
there,
they
might
have
their
own
must
be
equitable;
based
on
the
ability
of
the
taxpayer
to
pay
the
tax.
version.
If
they
have
their
own
version
and
if
it
is
different
form
the
one
submitted,
they
will
have
to
combine
it
and
form
a
committee
d. Progressive
system
of
taxation
who
will
have
to
resolve
it.
Then
if
it
passes
to
the
senate,
and
then
- tax
laws
shall
place
emphasis
on
direct
rather
than
indirect
taxation,
signed
by
the
president,
senate
president
and
the
speaker
of
the
with
ability
to
pay
as
the
principal
criterion.
As
income
increases,
so
house.
Then
it
became
a
statute.
as
the
tax
rate
- Is
progressive
system
of
taxation
directory
or
mandatory?
It
is
merely
Tolentino
vs
Secretary
of
Finance
directory
not
mandatory
because
we
even
have
regressive
taxes
(ex.
→ to
insist
that
a
revenue
statute
and
not
only
the
bill
which
initiated
VAT)
the
legislative
process
culminating
in
the
enactment
of
the
law
must
- VAT
–
the
lesser
money
you
have
the
more
you
can
feel
the
impact
substantially
be
the
same
with
the
house
bill
would
be
to
deny
impact.
senate’s
power
not
only
to
concur
with
amendments
but
also
to
propose
amendments
e. Exemption
of
religious,
charitable
and
educational
entities,
non-‐profit
→ This
case
involves
the
question
on
the
validity
of
the
VAT.
One
of
the
cemeteries,
and
churches
from
property
taxation
questions
is
that
the
VAT
did
not
originate
in
the
House
of
- covers
only
property
taxes
and
not
other
taxes;
Representatives
but
rather,
in
the
senate.
SC
explained
that
it
is
not
- it
is
the
use
of
the
property
that
is
exempt,
not
the
ownership;
the
statute
that
must
originate
in
the
house
but
the
BILL.
Otherwise
if
- property
must
be
used
actually,
directly,
and
exclusively
for
religious,
you
require
that
the
statute
must
originate
from
the
house,
what
charitable,
or
educational
purposes;
would
be
the
purpose
for
the
statement
regarding
the
senate’s
power
- exemption
extends
to
facilities
which
are
incidental
to
or
necessary
to
propose
amendments.
The
Constitution
simply
requires
that
there
for
the
accomplishment
of
said
purposes
must
be
that
initiative
coming
from
the
house
of
representatives
- self-‐executing
provision
of
the
Constitution
(Art.
6,
Sec.
28[3]):
relative
to
appropriation,
revenue
and
tariff
bills.
The
constitution
• “(3)
Charitable
institutions,
churches
and
personages
or
convents
does
not
also
prohibit
the
filling
in
the
senate
of
a
substitute
bill
in
appurtenant
thereto,
mosques,
non-‐profit
cemeteries,
and
all
anticipation
of
its
receipt
of
the
bill
from
the
house
as
long
as
action
lands,
buildings,
and
improvements,
actually,
directly,
and
by
the
senate
is
withheld
until
receipt
of
the
bill
coming
from
the
exclusively
used
for
religious,
charitable,
or
educational
purposes
house
of
representatives
shall
be
exempt
from
taxation.”
b. Concurrence
of
a
majority
of
ALL
the
members
of
Congress
for
the
passage
Example:
of
a
law
granting
tax
exemption
USC
- What
is
your
idea
of
tax
exemption?
Tax
exemption
is
given
when
the
- School
building/area
–
exempt
from
property
tax
government
withholds
its
power
to
enforce
taxes.
It
is
actually
benefit
Reason:
used
for
educational
purpose
or
privilege
given
to
a
few.
- Area
rented
by
commercial
establishments
–
taxable
- For
example,
the
congress
passes
a
law
granting
tax
exemption
and
it
was
voted
upon
by
majority
of
the
members
during
the
quorum
(50%
Herrera
vs
QC
plus
1),
is
it
a
valid
grant
of
tax
exemption?
NO,
it
must
be
voted
by
→ the
exemption
in
favor
of
property
used
exclusively
for
charitable
or
majority
of
ALL
MEMBERS
of
congress
not
only
of
the
quorum
educational
purposes
is
"not
limited
to
property
actually
indispensable"
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 16
therefor,
but
extends
to
facilities
which
are
"incidental
to
and
reasonably
improvements
actually,
directly
and
exclusively
used
for
religious,
necessary
for"
the
accomplishment
of
said
purposes,
such
as,
in
the
case
of
charitable
or
educational
purposes."
hospitals,
"a
school
for
training
nurses,
a
nurses'
home,
property
use
to
→ We
note
that
under
the
1935
Constitution,
"...
all
lands,
buildings,
and
provide
housing
facilities
for
interns,
resident
doctors,
superintendents,
improvements
used
‘exclusively’
for
…
charitable
…
purposes
shall
be
and
other
members
of
the
hospital
staff,
and
recreational
facilities
for
exempt
from
taxation.”
However,
under
the
1973
and
the
present
student
nurses,
interns
and
residents",
such
as
"athletic
fields,"
including
Constitutions,
for
"lands,
buildings,
and
improvements"
of
the
charitable
"a
farm
used
for
the
inmates
of
the
institution".
institution
to
be
considered
exempt,
the
same
should
not
only
be
→ Within
the
purview
of
the
Constitutional
exemption
from
taxation,
the
St.
"exclusively"
used
for
charitable
purposes;
it
is
required
that
such
property
Catherine's
Hospital
is,
therefore,
a
charitable
institution,
and
the
fact
that
be
used
"actually"
and
"directly"
for
such
purposes.
it
admits
pay-‐patients
does
not
bar
it
from
claiming
that
it
is
devoted
→ Under
the
1973
and
1987
Constitutions
and
Rep.
Act
No.
7160
in
order
to
exclusively
to
benevolent
purposes,
it
being
admitted
that
the
income
be
entitled
to
the
exemption,
the
petitioner
is
burdened
to
prove,
by
clear
derived
from
pay-‐patients
is
devoted
to
the
improvement
of
the
charity
and
unequivocal
proof,
that:
wards,
which
represent
almost
two-‐thirds
(2/3)
of
the
bed
capacity
of
the
(a)
it
is
a
charitable
institution;
and
hospital,
aside
from
"out-‐charity
patients"
who
come
only
for
consultation.
(b)
its
real
properties
are
→ "all
lands,
building
and
improvements
used
exclusively
for
religious,
ACTUALLY,
DIRECTLY
and
EXCLUSIVELY
used
for
charitable
purposes.
charitable
or
educational
purposes
shall
be
exempt
from
taxation,"
→ "Exclusive"
is
defined
as
possessed
and
enjoyed
to
the
exclusion
of
others;
pursuant
to
the
Constitution,
regardless
of
whether
or
not
material
profits
debarred
from
participation
or
enjoyment;
and
"exclusively"
is
defined,
"in
are
derived
from
the
operation
of
the
institutions
in
question.
In
other
a
manner
to
exclude;
as
enjoying
a
privilege
exclusively.”
If
real
property
is
words,
Congress
may,
if
it
deems
fit
to
do
so,
impose
taxes
upon
such
used
for
one
or
more
commercial
purposes,
it
is
not
exclusively
used
for
"profits",
but
said
"lands,
buildings
and
improvements"
are
beyond
its
the
exempted
purposes
but
is
subject
to
taxation.
The
words
"dominant
taxing
power.
use"
or
"principal
use"
cannot
be
substituted
for
the
words
"used
exclusively"
without
doing
violence
to
the
Constitutions
and
the
42
Atty.
A:
But
take
note
that
this
is
now
not
controlling.
This
case
lays
down
the
law.
Solely
is
synonymous
with
exclusively.
rule
on
incidental
use
but
this
was
decided
under
the
1935
Constitution
which
→ What
is
meant
by
actual,
direct
and
exclusive
use
of
the
property
for
had
no
provision
yet
on
“actually,
directly
and
exclusively
used”.
Nganu
imu
charitable
purposes
is
the
direct
and
immediate
and
actual
application
of
man
mi
gipabasa
ana
sir
nga
di
nmn
d.i
na
controlling?
Well,
what
if
mugawas
the
property
itself
to
the
purposes
for
which
the
charitable
institution
is
sa
exam
or
mubalik?
But
of
course,
you
base
your
answer
on
the
recent
ruling.
organized.
It
is
not
the
use
of
the
income
from
the
real
property
that
is
Your
reason
will
not
be
it
is
exempted
because
it’s
incidental—that’s
not
determinative
of
whether
the
property
is
used
for
tax-‐exempt
purposes.
anymore
subsisting.
but
rather,
you
answer
using
the
the
Phil.
Lung
Center
ruling.
Atty.
A:
As
you
can
observe,
in
the
Herrera
case,
the
meaning
of
“exclusive
use”
is
the
“principal”
or
“dominant”
use.
So
long
as
it
is
related
to
the
principal
Philippine
Lung
Center
vs
QC
purpose,
then
it
can
be
exempted.
But
here
in
Phil.
Lung
Center,
“exclusively”
→ As
a
general
principle,
a
charitable
institution
does
not
lose
its
character
as
here
means
it
is
synonymous
to
“solely”.
Hence,
to
be
exempted
of
real
such
and
its
exemption
from
taxes
simply
because
it
derives
income
from
property
taxation,
it
should
be
SOLELY
for
charitable
purpose
not
just
mere
paying
patients,
whether
out-‐patient,
or
confined
in
the
hospital,
or
incidental
to
the
principal
purpose.
So
we
follow
the
Phil.
Lung
Center
case.
receives
subsidies
from
the
government,
so
long
as
the
money
received
is
devoted
or
used
altogether
to
the
charitable
object
which
it
is
intended
to
Abra
Valley
College
vs
Aquino
achieve;
and
no
money
inures
to
the
private
benefit
of
the
persons
→ while
this
Court
allows
a
more
liberal
and
non-‐restrictive
interpretation
of
managing
or
operating
the
institution.
the
phrase
"exclusively
used
for
educational
purposes"
as
provided
for
in
→ The
fundamental
ground
upon
which
all
exemptions
in
favor
of
charitable
Article
VI,
Section
22,
paragraph
3
of
the
1935
Philippine
Constitution,
institutions
are
based
is
the
benefit
conferred
upon
the
public
by
them,
reasonable
emphasis
has
always
been
made
that
exemption
extends
to
and
a
consequent
relief,
to
some
extent,
of
the
burden
upon
the
state
to
facilities
which
are
incidental
to
and
reasonably
necessary
for
the
care
for
and
advance
the
interests
of
its
citizens.
accomplishment
of
the
main
purposes.
Otherwise
stated,
the
use
of
the
→ Even
as
we
find
that
the
petitioner
is
a
charitable
institution,
we
hold
that
school
building
or
lot
for
commercial
purposes
is
neither
contemplated
by
those
portions
of
its
real
property
that
are
leased
to
private
entities
are
law,
nor
by
jurisprudence.
Thus,
while
the
use
of
the
second
floor
of
the
not
exempt
from
real
property
taxes
as
these
are
not
actually,
directly
and
main
building
in
the
case
at
bar
for
residential
purposes
of
the
Director
exclusively
used
for
charitable
purposes.
and
his
family,
may
find
justification
under
the
concept
of
incidental
use,
→ The
tax
exemption
under
this
(Sec.
28(3),
Art.
6)
constitutional
provision
which
is
complimentary
to
the
main
or
primary
purpose—educational,
the
covers
property
taxes
only.
“What
is
exempted
is
not
the
institution
itself
.
lease
of
the
first
floor
thereof
to
the
Northern
Marketing
Corporation
.
.;
those
exempted
from
real
estate
taxes
are
lands,
buildings
and
cannot
by
any
stretch
of
the
imagination
be
considered
incidental
to
the
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 17
purpose
of
education.
purpose
and
not
primary
purpose
which
means
that
even
if
it
is
incidental,
so
→ the
school
building
as
well
as
the
lot
where
it
is
built,
should
be
taxed,
not
long
as
it
is
commercial,
it
is
subject
to
tax.
But
na-‐counter
lang
nila
(Chong
because
the
second
floor
of
the
same
is
being
used
by
the
Director
and
his
Hua),
they
were
able
to
prove
that
it
was
no
commercial
purpose.
family
for
residential
purposes,
but
because
the
first
floor
thereof
is
being
used
for
commercial
purposes.
However,
since
only
a
portion
is
used
for
f. Exemption
of
non-‐stock,
non-‐profit
education
institution
from
taxation
purposes
of
commerce,
it
is
only
fair
that
half
of
the
assessed
tax
be
- covers
income,
property,
and
donor’s
taxes,
and
customs
duties;
returned
to
the
school
involved.
- the
revenue,
assets,
property
or
donations
must
be
used
actually,
directly,
and
exclusively
for
educational
purposes;
City
Assessor
of
Cebu
vs
Association
of
Benevola
de
Cebu
- lands,
buildings,
and
improvements
actually,
directly,
and
exclusively
→ We
so
hold
that
CHHMAC
is
an
integral
part
of
CHH.
used
for
educational
purposes
are
exempt
from
property
tax
whether
→ It
is
undisputed
that
the
doctors
and
medical
specialists
holding
clinics
in
the
educational
institution
is
proprietary
or
non-‐profit;
CHHMAC
are
those
duly
accredited
by
CHH,
that
is,
they
are
consultants
of
- we’re
after
of
the
USE
of
the
property,
not
the
ownership
the
hospital
and
the
ones
who
can
treat
CHH’s
patients
confined
in
it.
This
- self-‐executing
provision
of
the
Constitution
(Art.
14,
Sec.
4[3,4])
fact
alone
takes
away
CHHMAC
from
being
categorized
as
"commercial"
• “(3)
Establish
and
maintain
a
system
of
scholarship
grants,
since
a
tertiary
hospital
like
CHH
is
required
by
law
to
have
a
pool
of
student
loan
programs,
subsidies,
and
other
incentives
which
physicians
who
comprises
the
required
medical
departments
in
various
shall
be
available
to
deserving
students
in
both
public
and
medical
fields.
private
schools,
especially
to
the
under-‐privileged;
→ these
physicians
holding
offices
or
clinics
in
CHHMAC,
duly
appointed
or
accredited
by
CHH,
precisely
fulfill
and
carry
out
their
roles
in
the
(4)
Encourage
non-‐formal,
informal,
and
indigenous
learning
hospital’s
services
for
its
patients
through
the
CHHMAC.
The
fact
that
they
systems,
as
well
as
self-‐learning,
independent,
and
out-‐of-‐school
are
holding
office
in
a
separate
building,
like
at
CHHMAC,
does
not
take
study
programs
particularly
those
that
respond
to
community
away
the
essence
and
nature
of
their
services
vis-‐à-‐vis
the
over-‐all
needs;”
operation
of
the
hospital
and
the
benefits
to
the
hospital’s
patients.
Their
transfer
to
a
more
spacious
and,
perhaps,
convenient
place
and
location
Example:
for
the
benefit
of
the
hospital’s
patients
does
not
remove
them
from
being
USC
(non-‐stock,
non-‐profit)
an
integral
part
of
the
overall
operation
of
the
hospital.
- Rent
income
–
taxable
→ Finally,
respondent’s
charge
of
rentals
for
the
offices
and
clinics
its
accredited
physicians
occupy
cannot
be
equated
to
a
commercial
venture,
UC
(proprietary)
which
is
mainly
for
profit.
- not
exempted
but
given
a
special
rate
of
10%
→ First,
CHHMAC
is
only
for
its
consultants
or
accredited
doctors
and
medical
- School
building/area
–
exempted
from
property
tax
(under
specialists.
Second,
the
charging
of
rentals
is
a
practical
necessity:
(1)
to
exemption
E)
recoup
the
investment
cost
of
the
building,
(2)
to
cover
the
rentals
for
the
- Rent
income
of
UC
–
taxable
@
30%
(normal
corporate
lot
CHHMAC
is
built
on,
and
(3)
to
maintain
the
CHHMAC
building
and
its
income
tax
rate)
facilities.
Third,
as
correctly
pointed
out
by
respondent,
it
pays
the
proper
taxes
for
its
rental
income.
And,
fourth,
if
there
is
indeed
any
net
income
Atty.
A:
where
educational
institution
is
private
and
non-‐profit
but
a
stock
from
the
lease
income
of
CHHMAC,
such
does
not
inure
to
any
private
or
corporation,
it
is
subject
to
income
tax
but
a
preferential
rate
of
10%.
Same
individual
person
as
it
will
be
used
for
respondent’s
other
charitable
thing
is
true
for
charitable
hospital/institution,
it
is
subject
to
10%
income
tax.
projects.
→ Given
the
foregoing
arguments,
we
fail
to
see
any
reason
why
the
Requisite
for
the
application
of
the
10%
preferential
rate:
CHHMAC
building
should
be
classified
as
"commercial"
and
be
imposed
1) It
must
be
private
the
commercial
level
of
35%
as
it
is
not
operated
primarily
for
profit
but
as
2) It
has
permit
to
operate
as
an
educational
institution
an
integral
part
of
CHH.
The
CHHMAC,
with
operations
being
devoted
for
3) It
is
non-‐profit
the
benefit
of
the
CHH’s
patients,
should
be
accorded
the
10%
special
4) Its
gross
income
from
unrelated
trade
or
business
must
not
exceed
assessment.
50%
of
its
total
gross
income
from
all
sources
(otherwise,
if
it
will
exceed
the
50%,
it
will
be
subject
to
the
30%
corporate
income
tax
Atty.
A:
What
is
the
difference
then
with
the
Herrera
case
and
the
City
Assessor
rate)
case?
One
thing
is,
the
former
was
decided
based
on
the
1935
Consti
wherein
we
adhere
to
the
principle
that
exclusivity
means
principal
and
dominant.
That
Atty.
A:
Para
dali
mahinumduman,
for
educational
institution:
(1)
For
non-‐stock
everything
incidental
to
it,
whether
commercial
or
not,
will
be
exempted.
But
in
and
non-‐profit,
no
tax;
(2)
Even
if
it’s
for
profit,
so
long
as
it
is
an
educational
the
latter,
it
was
decided
under
the
1987
Consti
wherein
exclusivity
means
sole
institution,
preferential/special
rate
of
10%,
provided
the
less
than
50%...etc…
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 18
However,
the
10%
preferential
tax
rate
does
not
apply
to
the
following:
income
it
seeks
to
be
exempted
from
taxation
is
used
actually,
directly,
1) The
passive
income
derived
by
the
educational
institution,
which
is
and
exclusively
for
educational
purposes.
However,
the
Court
notes
that
subject
to
final
income
tax.
i.e.
rent
income
or
interest
income
not
a
scintilla
of
evidence
was
submitted
by
private
respondent
to
prove
2) Engaged
in
unrelated
trade
or
business
or
other
activity
with
a
gross
that
it
met
the
said
requisites.
income
from
such
exceeds
50%
of
the
total
gross
income
derive
by
→ YMCA
is
not
an
educational
institution
within
the
purview
of
Article
XIV,
the
school
from
all
sources
Section
4,
par.
3
of
the
Constitution.
The
term
"educational
institution"
or
"institution
of
learning"
has
acquired
a
well-‐known
technical
meaning,
of
TAKE
NOTE:
where
a
donation
is
made
in
favor
of
an
educational
institution
which
the
members
of
the
Constitutional
Commission
are
deemed
pursuant
to
sports
competition
or
tournaments,
the
donor
is
also
exempted
cognizant.
Under
the
Education
Act
of
1982,
such
term
refers
to
schools.
from
the
payment
of
donor’s
tax.
The
school
system
is
synonymous
with
formal
education,
which
"refers
to
the
hierarchically
structured
and
chronologically
graded
learnings
Perpetual
Succour
Hospital
vs
CIR,
CTA
No.
7304,
Dec.
1,
2010
organized
and
provided
by
the
formal
school
system
and
for
which
→ when
a
hospital
is
proprietary,
or
private,
which
is
not
for
profit
and
its
certification
is
required
in
order
for
the
learner
to
progress
through
the
gross
income
from
unrelated
trade,
business
or
other
activity
does
not
grades
or
move
to
the
higher
levels."
The
Court
has
examined
the
exceed
50%
of
its
total
gross
income
from
all
sources,
it
is
subject
to
10%
"Amended
Articles
of
Incorporation"
and
"By-‐Laws”
of
the
YMCA,
but
tax
rate.
On
the
other
hand,
when
a
hospital
is
non-‐stock,
meaning,
its
found
nothing
in
them
that
even
hints
that
it
is
a
school
or
an
educational
capital
stock
is
not
divided
into
shares,
and
is
not
authorized
to
distribute
institution.
to
the
holders
of
such
shares
dividends,
operated
exclusively
for
religious
→ It
is
settled
that
the
term
"educational
institution,"
when
used
in
laws
or
charitable
purpose,
no
part
of
its
net
income
or
asset
belong
to
or
inure
granting
tax
exemptions,
refers
to
a
".
.
.
school
seminary,
college
or
to
the
benefit
of
any
specific
person,
then
the
hospital
will
fall
under
the
educational
establishment
.
.
.
."
Therefore,
the
private
respondent
cannot
provision
of
Section
130(E)
of
the
NIRC
of1997,
as
amended.
be
deemed
one
of
the
educational
institutions
covered
by
the
→ It
is
well
settled,
in
this
connection,
that
the
admission
of
pay-‐patients
constitutional
provision
under
consideration.
does
not
detract
from
the
charitable
character
of
a
hospital,
if
all
its
funds
are
devoted
'exclusively
to
the
maintenance
of
the
institution'
as
a
'public
g. Non-‐impairment
from
non-‐payment
of
a
poll
tax
charity'.
In
other
words,
where
rendering
of
charity
is
its
primary
object,
- Sec.
20,
Art.
III,
1987
Consti:
“No
person
shall
be
imprisoned
for
debt
and
the
funds
derived
from
payments
made
by
patients
able
to
pay
are
or
non-‐payment
of
a
poll
tax.”
devoted
to
the
benevolent
purposes
of
the
institution,
the
mere
fact
that
a
profit
has
been
made
will
not
deprive
the
hospital
of
its
benevolent
h. Non-‐impairment
of
the
jurisdiction
of
the
SC
in
tax
cases
character.
- Sec.
5
(2)(b),
Art.
VIII:
“The
Supreme
Court
shall
have
the
following
powers:
CIR
vs
CA
(2)
Review,
revise,
reverse,
modify,
or
affirm
on
appeal
or
→ Is
the
Rental
Income
of
the
YMCA
Taxable?
certiorari,
as
the
law
or
the
Rules
of
Court
may
provide,
final
→ The
rent
income
derived
by
YMCA
from
leasing
out
a
portion
of
its
judgments
and
orders
of
lower
courts
in:
premises
to
small
shop
owners,
like
restaurants
and
canteen
operators,
(b)
All
cases
involving
the
legality
of
any
tax,
impost,
and
from
parking
fees
collected
from
non-‐members
are
taxable
income.
assessment,
or
toll,
or
any
penalty
imposed
in
relation
→ the
exemption
claimed
by
the
YMCA
is
expressly
disallowed
by
the
very
thereto.”
wording
of
the
last
paragraph
of
then
Section
27
of
the
NIRC
which
mandates
that
the
income
of
exempt
organizations
(such
as
the
YMCA)
2. Indirect
from
any
of
their
properties,
real
or
personal,
be
subject
to
the
tax
a. Due
process
of
law
imposed
by
the
same
Code.
Because
the
last
paragraph
of
said
section
- Sec.
1,
Art.
III,
1987
Consti:
“No
person
shall
be
deprived
of
life,
unequivocally
subjects
to
tax
the
rent
income
of
the
YMCA
from
its
real
liberty,
or
property
without
due
process
of
law…”
property,
the
Court
is
duty-‐bound
to
abide
strictly
by
its
literal
meaning
and
to
refrain
from
resorting
to
any
convoluted
attempt
at
construction.
Substantive
due
process
→ The
phrase
"any
of
their
activities
conducted
for
profit"
does
not
qualify
- requires
that
a
tax
statute
must
be
within
the
constitutional
the
word
"properties."
This
makes
from
the
property
of
the
organization
authority
of
Congress
to
pass
taxable,
regardless
of
how
that
income
is
used
—
whether
for
profit
or
for
- it
must
be
reasonable,
fair
and
just;
lofty
non-‐profit
purposes.
- i.e.
to
grant
exemption,
the
constitution
mandates
that
it
must
→ For
the
YMCA
to
be
granted
the
exemption
it
claims
under
the
aforecited
be
passed
by
a
vote
of
ALL
members
of
congress
(absolute
provision,
it
must
prove
with
substantial
evidence
that
(1)
it
falls
under
the
majority;
not
just
those
who
are
present)
classification
non-‐stock,
non-‐profit
educational
institution;
and
(2)
the
Atty.
A:
therefore,
everything
nga
mu-‐contradict
with
the
direct
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 19
constitutional
limitations
that
we
have
discussed
awhile
ago,
there
is
now
- What
is
prohibited
is
class
legislation
wherein
there
is
no
substantial
infringement
of
your
substantive
due
process.
distinction.
Procedural
due
process
CRITERIA
FOR
EQUAL
PROTECTION:
- requires
notice
and
hearing,
or
at
least,
an
opportunity
to
be
1) When
the
law
operates
uniformly:
heard.
- on
all
persons
- under
similar
circumstances
INSTANCES
OF
VIOLATION
OF
DUE
PROCESS:
(please
memorize)
2) All
persons
are
treated
in
the
same
manner:
1) Where
the
law
is
in
violation
of
the
inherent
limitations
- the
conditions
not
being
different
2) If
the
tax
amounts
to
a
confiscation
of
property
- both
in
privileges
conferred
and
the
liabilities
imposed
- Like
if
there
is
no
valid
classification
for
imposing
the
tax
for
that
- favoritism
and
preferences
are
not
allowed
particular
object
or
subject
3) if
the
subject
of
confiscation
is
outside
the
jurisdiction
of
the
taxing
People
vs
Cayat
authority
→ Requirements
for
valid
classification:
(FC
si
SG/Feeling
Close
si
Security
4) if
the
law
which
is
applied
retroactively
imposes
unjust
and
Guard)
oppressive
taxes
1) There
must
be
a
substantial
distinction
that
make
a
real
difference
5) if
the
law
is
imposed
for
a
purpose
other
than
a
public
purpose
2) It
must
be
germane
or
relevant
to
the
purpose
of
the
law
3) It
must
apply
not
only
to
the
present
but
also
to
future
situation
POINTS
TO
REMEMBER
WHEN
IT
COMES
TO
THE
DUE
PROCESS
CLAUSE:
4) the
distinction
must
apply
to
persons
belonging
to
the
same
class
1) The
validity
of
a
statute
may
be
contested
only
by
one
who
sustained
direct
injury
in
consequence
of
its
performance
Chamber
of
Real
Estate
and
Builder’s
Associations
vs
Romulo
EXCEPT:
transcendental
importance;
taxpayer’s
suit
→ The
equal
protection
clause
under
the
Constitution
means
that
"no
person
2) There
must
be
proof
of
arbitrariness,
otherwise,
apply
the
or
class
of
persons
shall
be
deprived
of
the
same
protection
of
laws
which
presumption
of
constitutionality
is
enjoyed
by
other
persons
or
other
classes
in
the
same
place
and
in
like
3) Due
process
requires
hearing
before
adoption
of
legislative
rules
by
circumstances.”
administrative
bodies
of
interpretative
rulings
→ The
taxing
power
has
the
authority
to
make
reasonable
classifications
for
4) Compliance
of
strict
procedural
requirements
must
be
followed
to
purposes
of
taxation.
Inequalities
which
result
from
a
singling
out
of
one
avoid
a
collision
course
between
the
state’s
power
to
tax
and
the
particular
class
for
taxation,
or
exemption,
infringe
no
constitutional
individuals’
recognized
rights
limitation.
The
real
estate
industry
is,
by
itself,
a
class
and
can
be
validly
5) Due
process
clause
may
correctly
be
invoked
only
when
there
is
a
treated
differently
from
other
business
enterprises.
clear
contravention
of
inherent
or
constitutional
limitations
Ormoc
Sugar
vs
Cornejos
Chamber
of
Real
Estate
and
Builder’s
Associations
vs
Romulo
→ A
perusal
of
the
requisites
instantly
shows
that
the
questioned
ordinance
→ In
Sison,
Jr.
v.
Ancheta,
et
al.,
we
held
that
the
due
process
clause
may
does
not
meet
them,
for
it
taxes
only
centrifugal
sugar
produced
and
properly
be
invoked
to
invalidate,
in
appropriate
cases,
a
revenue
measure
exported
by
the
Ormoc
Sugar
Company,
Inc.
and
none
other.
At
the
time
when
it
amounts
to
a
confiscation
of
property.
But
in
the
same
case,
we
of
the
taxing
ordinance's
enactment,
Ormoc
Sugar
Company,
Inc.,
it
is
true,
also
explained
that
we
will
not
strike
down
a
revenue
measure
as
was
the
only
sugar
central
in
the
city
of
Ormoc.
Still,
the
classification,
to
unconstitutional
(for
being
violative
of
the
due
process
clause)
on
the
be
reasonable,
should
be
in
terms
applicable
to
future
conditions
as
well.
mere
allegation
of
arbitrariness
by
the
taxpayer.
There
must
be
a
factual
The
taxing
ordinance
should
not
be
singular
and
exclusive
as
to
exclude
foundation
to
such
an
unconstitutional
taint.
This
merely
adheres
to
the
any
subsequently
established
sugar
central,
of
the
same
class
as
plaintiff,
authoritative
doctrine
that,
where
the
due
process
clause
is
invoked,
for
the
coverage
of
the
tax.
As
it
is
now,
even
if
later
a
similar
company
is
considering
that
it
is
not
a
fixed
rule
but
rather
a
broad
standard,
there
is
a
set
up,
it
cannot
be
subject
to
the
tax
because
the
ordinance
expressly
need
for
proof
of
such
persuasive
character.
points
only
to
Ormoc
City
Sugar
Company,
Inc.
as
the
entity
to
be
levied
upon.
b. Equal
protection
of
the
laws
- Sec.
1,
Art.
III,
1987
Consti:
“…nor
shall
any
person
be
denied
the
Tiu
vs
CA
equal
protection
of
the
laws.”
→ Certainly,
there
are
substantial
differences
between
the
big
investors
who
- All
persons,
all
properties,
all
businesses
should
be
taxed
at
the
same
are
being
lured
to
establish
and
operate
their
industries
in
the
so-‐called
rate
so
long
as
they
belong
to
the
same
classification.
"secured
area"
and
the
present
business
operators
outside
the
area.
On
- This
is
where
substantial
distinction
applies:
that
it
must
be
real
and
the
one
hand,
we
are
talking
of
billion-‐peso
investments
and
thousands
not
superficial
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 20
of
new,
jobs.
On
the
other
hand,
definitely
none
of
such
magnitude.
In
the
government
to
establish
a
national
religion;
first,
the
economic
impact
will
be
national;
in
the
second,
only
local.
Even
- In
relation
to
the
power
of
taxation,
what
is
prohibited
is
no.
3.
more
important,
at
this
time
the
business
activities
outside
the
"secured
area"
are
not
likely
to
have
any
impact
in
achieving
the
purpose
of
the
law,
Swaggart
case
(US
case)
which
is
to
turn
the
former
military
base
to
productive
use
for
the
benefit
→ The
free
exercise
of
religion
clause
does
not
prohibit
imposing
a
generally
of
the
Philippine
economy.
There
is,
then,
hardly
any
reasonable
basis
to
applicable
sales
tax
on
the
sale
of
religious
materials
by
religious
extend
to
them
the
benefits
and
incentives
accorded
in
RA
7227.
organization.
→ It
is
well-‐settled
that
the
equal-‐protection
guarantee
does
not
require
→ The
sale
of
religious
articles
can
be
subject
to
VAT,
what
cannot
be
taxed
is
territorial
uniformity
of
laws.
As
long
as
there
are
actual
and
material
the
exercise
of
religious
worship
or
activity.
differences
between
territories,
there
is
no
violation
of
the
constitutional
→ The
income
of
the
priest
from
the
exercise
of
a
religious
activity
cannot
clause.
also
be
taxed.
c. Non-‐impairment
of
the
obligations
of
contracts
e. No
appropriation
for
religious
purposes
- Sec.
10,
Art.
III,
1987
Consti:
“No
law
impairing
the
obligation
of
- As
a
general
rule,
no
appropriation,
except
for
salary
or
payment
of
contracts
shall
be
passed.”
priest
or
minister
serving
in
AFP,
penal
insitutions,
orphanage,
and
- General
Rule:
the
power
of
tax
is
pursuant
to
law
therefore
the
leprosarium.
obligation
to
pay
taxes
is
imposed
by
law.
Thus,
the
non-‐impairment
clause
does
not
apply
because
the
non-‐impairment
here
refers
to
Q:
Is
the
appropriation
or
budget
given
for
the
visit
of
the
pope
in
the
obligations
brought
about
by
contracts,
not
law.
Philippines
valid
or
a
violation
to
the
separation
of
the
church
and
the
- Exception:
the
non-‐impairment
clause
applies
when—
state?
" When
the
law
merely
provides
for
the
fulfillment
of
an
obligation
A:
It
is
valid.
The
Pope
is
a
head
of
the
state.
Being
a
head
of
the
state,
the
" When
the
law
merely
recognizes
or
acknowledges
appropriation
made
by
the
government
for
the
visit
is
justified.
the
existence
of
an
obligation
created
by
acts(????di
masabtan)
f. Non-‐infringement
of
the
freedom
of
the
press
Atty.
A:
only
when
the
law
establishes
the
obligation
and
also
provides
for
- Sec.
4,
Art,
III,
1987
Consti:
“No
law
shall
be
passed
abridging
the
its
fulfillment
that
the
law
is
the
source
of
the
obligation.
freedom
of
speech,
of
expression
or
of
the
press.”
- Focus
of
press
freedom
not
expression:
there
is
curtailment
of
press
TAKE
NOTE:
the
constitutional
guarantee
of
the
non-‐impairment
clause
freedom
and
freedom
of
thought
and
expression
if
a
taxed
is
levied
in
can
only
be
invoked
in
the
grant
of
tax
exemption.
order
to
supress
this
basic
right
and
impose
prior
restraint.
- Example:
impose
a
very
high
tax
in
order
to
prevent
the
press
or
the
RULES
(para
daw
masabtan):
freedom
of
expression
–
violates
the
constitutional
provision,
Non-‐
- If
the
exemption
was
granted
for
valuable
infringement
of
the
freedom
of
the
press.
consideration
on
the
basis
of
a
contract—cannot
be
- However
it
does
not
mean
that
the
press
is
exempted
to
tax.
The
revoked
by
passing
another
law
press
is
subject
to
tax
but
the
tax
should
be
reasonable
not
- If
the
exemption
is
granted
by
virtue
of
a
contract
oppressive,
not
arbitrary.
between
a
private
corporation
and
the
gov’t—it
cannot
- The
sale
magazine
or
newspapers
may
be
subject
to
taxation.
What
is
be
revoked
unilaterally
by
the
gov’t
not
allowed
is
to
impose
tax
on
the
exercise
of
an
activity
which
has
a
- If
the
basis
of
the
tax
exemption
is
mere
franchise
connection
with
freedom
of
the
press.
For
example:
collection
of
granted
by
Congress—it
can
be
unilaterally
revoked
by
license
fees
before
one
can
exercise
that
freedom.
the
gov’t
thru
Congress
g. Power
of
the
President
to
veto
any
particular
item/s
in
a
revenue
or
tariff
d. Non-‐infringement
of
religious
freedom
bill
- Sec.
5,
Art.
III,
1987
Consti:
“No
law
shall
be
made
respecting
an
- Sec.
27(b),
Art.
6,
1987
Consti:
“The
President
shall
have
the
power
to
establishment
of
religion,
or
prohibiting
the
free
exercise
thereof.
The
veto
any
particular
item
or
items
in
an
appropriate,
revenue
or
tariff
free
exercise
and
enjoyment
of
religious
profession
and
worship,
bill,
but
the
veto
shall
not
affect
the
item
or
items
to
which
he
does
without
discrimination
or
preference,
shall
forever
be
allowed.
No
not
object.”
religious
test
shall
be
required
for
the
exercise
of
civil
or
political
- What
type
of
veto?
Particular
or
specific
veto
rights.”
- This
provision
has
3
coverage:
(1)
freedom
to
choose
religion;
(2)
freedom
to
exercise
one’s
religion;
(3)
Prohibition
upon
the
national
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 21
XVII.
SITUS
OF
TAXATION
- As
a
rule
when
it
comes
to
persons
,
properties
or
activities
it
can
only
be
taxed
within
*Even
if
owners
are
not
domiciled
in
the
Philippines
they
will
still
be
taxed
the
place
of
the
taxing
authority
or
within
its
territorial
jurisdiction.
in
the
Philippine,
subject
to
Reciprocity
Rule
(citizen
of
such
country
which
- Remember:
look
at
the
geographical
location
for
jurial
concept
or
nexus
or
bond
between
grants
exemption
to
the
intangible
personal
properties
Filipinos
in
their
the
taxing
authority
and
the
tax
payer.
Example:
A
Filipino
resident
citizen
earning
country
will
also
be
exempted).
income
abroad
can
still
be
a
subject
of
tax
in
the
Philippine
not
because
of
geographical
location
but
due
to
the
jural
concept
or
nexus
or
bond
between
the
taxing
authority
and
3. Business
tax
-‐
place
of
business
the
taxpayer.
- WHY
is
it
important
to
know
the
situs/place
of
taxation?
4. Excise
tax
-‐
where
the
act
is
performed
or
the
occupation
is
pursued.
1. To
know
it
the
taxing
authority
really
has
the
authority
to
tax.
2. There
are
exceptions/exemptions
which
only
applies
to
a
specific
locality.
5. Sales
tax
–
where
the
ale
is
consummated.
Presumption:
sale
of
personal
property
Rules
that
need
to
be
observe:
6. Income
tax
-‐
to
consider:
1. Poll/community
tax
–
situs/place
of
taxation
is
the
residence
of
the
taxpayer
a. Citizenship
–
the
nationality
theory
regardless
of
citizenship.
b. Residence
–
the
domiciliary
theory
c. Source
–
the
source
rule
2. Property
tax
-‐
real
or
personal
a. Real
property
-‐
lex
rei
sitae/
lex
rei
situs;
levied
in
the
country
where
the
7. Transfer
tax
–
donor’s
or
estate
tax;
residence
or
citizenship
of
the
taxpayer
or
the
real
property
is
located.
location
of
the
property;
case
to
case
basis
b. Personal
property
-‐
principle
mobilia
sequuntur
personam;
movables
8. Franchise
tax
–
the
state
which
granted
the
franchise
follow
the
person;
depends
on
the
domicile
of
the
owner
of
the
property.
i. Tangible
-‐
9. Value-‐
added
tax
–
cross-‐border
doctrine
or
destination
principle
-‐
if
the
ii. Intangible
-‐
good/property
is
not
to
be
consumed
in
the
Philippines
then
it
should
not
be
taxed
1. EXCEPTION:
Actual/Business
situs
–
sec
.104,
RA
8424
in
the
Philippines;
treated
differently
form
business
tax
and
sales
tax
because
it
has
(enumeration
under)
even
if
they
are
located
outside
a
specific
law
applied
to
it..
of
the
Philippines,
can
still
be
subject
to
tax;
or
even
if
the
owner
are
foreigners
but
they
are
located
in
the
10. Interest
Income
–
the
domiciliary
theory
-‐
residence
of
the
borrower
who
pays
the
Philippines,
they
can
still
be
subject
to
tax.
Example:
interest
irrespective
of
the
place
where
the
obligation
was
contracted,
not
the
a.
Franchise
exercised
in
the
Philippines
even
if
residence
of
the
creditor.
the
franchise
owner/
franchise
holder
is
not
from
the
Philippines.
XVIII.
DOUBLE
TAXATION
b. Shares
of
stocks,
obligations,
bonds
issued
by
i.
Meaning
of
double
taxation
domestic
corporations:
taxed
in
the
a. Strict
Sense
(direct
duplicate
taxation/direct
double
taxation)—
(a)
taxing
twice,
(b)
Philippines
by
the
same
taxing
authority,
(c)
within
the
same
jurisdiction
or
taxing
district,
(d)
for
the
same
purpose,
(e)
in
the
same
year
[or
taxing
period],
(f)
some
of
the
property
in
c. Shares
of
stocks,
obligations,
bonds
issued
by
the
territory.
Both
taxes
must
be
imposed
on
the
same
property
or
subject
matter.
the
foreign
corporation:
85%
of
its
business
is
located
in
the
Philippines;
subject
to
tax
in
b. Broad
Sense
(indirect
duplicate
taxation/indirect
double
taxation)—
taxation
other
the
Philippines
than
direct
duplicate.
It
extends
to
all
cases
in
which
there
is
a
burden
of
two
or
more
pecuniary
impositions.
d. Shares
or
right
in
a
partnership
business
or
industry
established
in
the
Philippines:
taxed
Requisites
for
direct
duplicate:
in
the
Philippines
even
if
the
holders
or
• Same
subject/
object
is
taxed
twice
owners
thereof
are
not
Filipino.
• same
purpose
• imposed
by
the
same
taxing
authority
e. Shares,
obligations,
bonds
issued
by
foreign
• within
the
same
jurisdiction
corporations
used
which
acquired
business
• within
the
same
period
situs
when
sanction
in
the
furtherance
of
the
• same
kind
or
character
of
tax
foreign
corporation:
taxed
in
the
Philippines
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 22
d) When
every
bottle
or
container
of
intoxicating
beverages
is
subject
to
local
tax
*if
one
is
missing,
it
is
indirect
duplicate
taxation
which
is
valid.
and
at
the
same
time
the
business
of
selling
such
product
is
also
subject
to
liquor’s
license.
–
different
taxing
authority
and
purpose.
ii.
Instances
of
double
taxation
e) A
tax
imposed
in
both
the
occupation
of
fishing
and
the
fish
pond.
–
different
(a) A
tax
on
a
mortgage
as
personal
property
when
the
mortgaged
property
is
also
object
and
subject.
taxed
at
its
full
value
as
real
estate;
f) A
local
ordinance
imposing
a
tax
in
the
storage
of
copra
where
it
appears
that
(b) A
tax
upon
a
corporation
for
its
property
and
upon
its
shareholders
for
their
shares;
the
finished
products
manufactured
out
of
the
copra
is
also
subject
to
VAT.
–
(c) A
tax
upon
a
corporation
for
its
capital
stock
as
a
whole
and
upon
the
shareholders
different
subject
matter
and
purpose.
for
their
shares;
(d) A
tax
upon
depositors
in
a
bank
for
their
deposits
and
a
tax
upon
the
bank
for
the
To
avoid
indirect
double
taxation:
property
in
which
such
deposits
are
invested;
Avail
of:
(e) An
excise
tax
upon
certain
use
of
property
and
a
property
tax
upon
the
same
- tax
deductions,
property;
and
- tax
credits
(f) A
tax
upon
the
same
property
imposed
by
two
different
states.
- tax
exemptions
provided
under
the
law
- enter
treaties
with
other
states
o Domestic
double
taxation–
arises
when
the
taxes
are
imposed
by
the
local
or
the
national
government
iii.
Constitutionality
of
double
taxation
a. General
Rule:
not
prohibited
by
the
Constitution,
hence,
it
may
not
be
invoked
as
a
o International
double
taxation
–
imposition
of
comparable
taxes
in
two
or
more
defense
against
the
validity
of
a
tax
law.
states
on
the
same
taxpayer
with
respect
to
the
same
subject
matter
and
for
identical
period
b. Exemption:
though
not
forbidden,
it
is
not
favored.
Such
taxation,
it
has
been
held,
→ Allowed
because
they
are
imposed
by
different
taxing
authorities
should,
whenever
possible,
be
avoided
and
prevented.
(domestic
and
international)
- Doubts
as
to
whether
double
taxation
has
been
imposed
should
be
resolved
in
→ Measures
allowed
by
the
government
are
refund
or
credit,
but
not
to
favor
of
the
taxpayer
to
avoid
injustice
or
unfairness.
declare
it
invalid.
- Where
double
taxation
(in
its
narrow
sense)
occurs,
the
taxpayer
may
seek
Ex:
Manny
Pacquiao
–
subject
to
income
tax
by
US
and
Philippines
relief
under
the
uniformity
rule
or
the
equal
protection
guarantee.
DOCTRINES
of
DOUBLE
TAXATION:
XIX.
FORMS
OF
ESCAPE
FROM
TAXATION
" Only
direct
double
taxation
is
not
allowed
because
it
amounts
to
confiscation
of
i.
6
Basic
Forms
property
without
due
process
of
law.
It
violates
the
due
process
clause.
(1) shifting
" You
can
question
the
validity
of
double
taxation
if
there
is
a
violation
of
the
(2) capitalization
equal
protection
clause,
or
equality
or
uniformity
of
taxation.
(3) transformation
" Doubts
as
to
whether
double
taxation
has
been
imposed
should
be
resolved
in
(4) evasion
favor
of
the
taxpayer.
(5) avoidance,
and
(6) exemption.
Situation:
TJ
owns
a
beer
house.
He
pays
sales/business
tax
as
well
as
the
local
tax
(ordinance)
imposed
on
every
bottle
of
beverage
to
be
sold.
Is
there
double
taxation?
ii.
Definition
of
Terms
Yes.
There
is
indirect
double
taxation
because
it
is
imposed
by
different
taxing
authority
and
the
purpose
is
different,
one
is
the
sales,
the
other
is
the
fact
of
selling.
Hence,
it
a) Shifting,
in
general
–
process
where
the
tax
burden
is
transferred
from
the
statutory
does
not
make
the
local
ordinance
invalid.
taxpayer
to
another
without
violation
the
law;
applicable
only
to
indirect
taxes
like
business
taxes
or
percentage
taxes.
Decided
cases:
there
is
only
indirect
double
taxation
a) Taxpayers
with
warehousing
business
although
carried
on
in
relation
to
the
*statutory
taxpayer-‐
taxpayer
required
under
the
law
to
pay
the
tax
or
to
remit
the
tax
to
operation
of
its
sugar
central
is
a
distinct
and
separate
taxable
business.
– the
government.
different
subject,
although
the
same
owner.
b) A
license
tax
may
be
levied
upon
a
business
or
occupation
although
the
land
or
1. Impact
of
taxation–
that
point
on
which
a
tax
is
originally
imposed.
In
so
far
as
the
property
use
in
connection
therewith
is
subject
to
property
tax.
–
license
the
law
is
concerned,
the
taxpayer
is
the
person
who
must
pay
the
tax
to
the
tax
applies
to
the
business,
property
tax
is
for
the
land;
different
subject,
object
government;
referred
to
as
the
statutory
taxpayer
or
purpose
although
the
burden
is
carried
by
one
entity.
c) Both
a
license
fee
and
a
tax
may
be
imposed
in
the
same
business
or
2. Incidence
of
taxation–
that
point
on
which
the
tax
burden
finally
rests
or
settles
occupation
for
selling
the
same
article.
–
license
fee
is
not
a
tax
down.
It
takes
place
when
shifting
has
been
effected
from
the
statutory
taxpayer
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 23
to
another
or
someone
else
who
cannot
pass
the
burden
further.
But
there
may
order
to
avoid
or
reduce
tax
liability.
Here,
the
taxpayer
uses
tax
saving
device
or
means
be
incidence
without
shifting,
as
in
transformation.
In
case
of
business
taxes,
sanctioned
or
allowed
by
law,
so
no
law
is
violated
in
any
way.
(estate
planning,
the
heirs
incidence
of
taxation
falls
on
the
final
consumer.
create
a
corporation
and
convert
their
inheritance
to
shares
to
avoid
estate
tax)
*direct
taxes
cannot
be
shifted
–
e.i.
income
tax
e) Exemption
–
the
grant
of
immunity
to
particular
persons
or
corporations
or
to
persons
or
3. Relations
among
impact,
shifting
and
incidence
–
corporations
of
a
particular
class
from
a
tax
which
persons
and
corporations
generally
- IMPACT-‐
imposition
of
the
tax;
contain
in
the
tax
law;
is
the
initial
within
the
same
state
or
taxing
district
are
obliged
to
pay;
an
immunity
or
privilege;
phenomenon
freedom
from
a
financial
charge
or
burden
to
which
others
are
subjected;
allowed
only
- SHIFTING
-‐
Transfer
of
the
tax;
is
the
intermediate
process
when
there
is
a
clear
provision
of
the
law;
- INCIDENCE
-‐
Setting
or
coming
to
rest
of
the
tax;
the
burden
finally
settles
down;
is
the
result
*double
nexus
rule:
Thus,
the
impact
of
sale
tax
is
on
the
seller
(manufacturer)
who
shifts
the
burden
to
the
You
must
prove
that:
customer
who
finally
bears
the
incidence
of
the
tax.
1. Law
granting
the
exemption
‘
2. You
fall
under
within
the
law
or
you
qualify
in
the
exemption
Forward
shifting
–
takes
place
when
the
burden
of
the
tax
is
transferred
from
a
factor
of
production
through
the
factors
of
distribution
until
it
finally
settles
on
the
ultimate
purchaser
or
consumer;
from
manufacturer/producer
to
wholesaler,
then
f) Tax
evasion
(tax
dodging)
–
the
use
by
the
taxpayer
of
illegal
or
fraudulent
means
to
to
the
retailer
and
finally
to
the
consumer.
–
demand
is
greater
than
supply.
e.i.
VAT
defeat
or
lessen
the
payment
of
a
tax;
punishable
by
law,
subjecting
the
taxpayer
to
civil
and
criminal
liabilities.-‐-‐-‐to
be
dicussed
more
.
Backward
shifting–
effected
when
the
burden
of
the
tax
is
transferred
from
the
consumer
or
purchaser
through
the
factors
of
distribution
to
the
factor
of
iii.
Distinction
b/w
tax
evasion
and
tax
avoidance
production.
(discounting)
–supply
is
greater
than
demand
Tax
Evasion
Onward
shifting
–
occurs
when
the
tax
is
shifted
two
or
more
time
either
forward
or
- Tax
evasion
is
the
use
by
the
taxpayer
of
illegal
or
fraudulent
means
to
defeat
or
backward.
Thus,
a
transfer
form
producer
to
consumer
or
from
seller
to
purchaser
lessen
the
payment
of
a
tax.
It
is
also
known
as
“tax
dodging.”
It
is
punishable
by
involves
one
shift;
from
producer
to
wholesaler,
then
to
retailer,
we
have
two
shifts;
law.
and
if
the
tax
is
transferred
again
to
the
purchaser
by
the
retailer,
we
have
three
- Tax
evasion
is
a
term
that
connotes
fraud
through
the
use
of
pretenses
or
forbidden
shifts
in
all.
devices
to
lessen
or
defeat
taxes.
[Yutivo
v.
Court
of
Tax
Appeals,
1
SCRA
160]
b) Capitalization–
the
reduction
in
the
price
of
the
taxed
object
equal
to
the
capitalized
Example:
Deliberate
failure
to
report
a
taxable
income
or
property;
deliberate
reduction
value
of
future
taxes
which
the
purchaser
expects
to
be
called
upon
to
pay;
occurs
when
of
income
that
has
been
received.
the
tax
falls
on
an
income-‐producing
property
(e.g.,
commercial
building).
The
buyer
naturally
takes
into
account
the
taxes
that
he
will
be
paying
on
the
property
when
he
Tax
Avoidance
becomes
the
owner
thereof
in
determining
whether
the
price
is
reasonable
or
not.
The
- Tax
avoidance
is
the
exploitation
by
the
taxpayer
of
legally
permissible
alternative
burden
of
the
tax
rests
on
the
present
owner
(seller)
if
he
reduces
the
price
because
of
tax
rates
or
methods
of
assessing
taxable
property
or
income
in
order
to
avoid
or
the
tax;
may
be
considered
as
a
special
form
of
backward
shifting
except
that
while
the
reduce
tax
liability.
It
is
politely
called
“tax
minimization”
and
is
not
punishable
by
latter
involves
the
throwing
back
of
a
whole
series
of
taxes
(e.g.,
real
estate
taxes
which
law.
are
payable
every
year)
and
takes
place
before
any
of
them,
with
the
exception
of
the
- In
Delphers
Traders
Corp.
v.
Intermediate
Appellate
Court
[157
SCRA
349],
the
first
is
paid.
Supreme
Court
upheld
the
estate
planning
scheme
resorted
to
by
the
Pacheco
family
in
converting
their
property
to
shares
of
stock
in
a
corporation
which
they
c) Transformation–
the
method
of
escape
from
taxation
whereby
the
manufacturer
or
themselves
owned
and
controlled.
By
virtue
of
the
deed
of
exchange,
the
Pachecho
producer
upon
whom
the
tax
has
been
imposed,
fearing
the
loss
of
his
market
if
he
co-‐owners
saved
on
inheritance
taxes.
The
Supreme
Court
said
the
records
do
not
should
add
the
tax
to
the
price,
pays
the
tax
and
endeavours
to
recoup
himself
by
point
to
anything
wrong
and
objectionable
about
this
estate
planning
scheme
improving
his
process
of
production
thereby
turning
out
his
units
of
products
at
a
lower
resorted
to.
The
legal
right
of
the
taxpayer
to
decreased
the
amount
of
what
cost.
In
such
a
case,
the
loss
occasioned
by
the
tax
may
be
offset
by
the
gains
resulting
otherwise
could
be
his
taxes
or
altogether
avoid
them
by
means
which
the
law
from
the
economics
of
production;
the
taxpayer
escapes,
not
by
shifting
but
by
permits
cannot
be
doubted.
transforming
the
tax
into
a
gain
through
the
medium
of
production.
(supply
is
greater
than
demand)
illustration:
videoke,
the
greater
in
number,
the
lesser
is
the
cost(amot)
iv.
Elements
of
tax
evasion
d) Tax
avoidance
(tax
planning
or
tax
minimization)
–
the
use
by
the
taxpayer
of
legally
Tax
evasion
connotes
the
integration
of
three
factors:
permissible
alternative
tax
rate
or
methods
of
assessing
taxable
property
or
income,
in
1. The
end
to
be
achieved.
Example:
the
payment
of
less
than
that
known
by
the
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 24
taxpayer
to
be
legally
due,
or
in
paying
no
tax
when
such
is
due.
2) Local
Governments
2. An
accompanying
state
of
mind
described
as
being
“evil,”
“in
bad
faith,”
“willful”
or
- Municipal
corporations
are
clothed
with
no
inherent
power
to
tax
or
to
grant
“deliberate
and
not
accidental.”
tax
exemptions.
But
the
moment
the
power
to
impose
a
particular
tax
is
3. A
course
of
action
(or
failure
of
action)
which
is
unlawful.
granted,
they
also
have
the
power
to
grant
exemption
therefrom
unless
forbidden
by
some
provision
of
the
Constitution
or
the
law.
v.
Evidence
to
prove
tax
evasion
- The
legislature
may
delegate
its
power
to
grant
tax
exemptions
to
the
same
- Since
fraud
is
a
state
of
mind,
it
need
not
be
proved
by
direct
evidence
but
may
be
extent
that
it
may
exercise
the
power
to
exempt.
proved
from
the
circumstances
of
the
case.
- Basco
v.
PAGCOR
(196
SCRA
52):
The
power
to
tax
municipal
corporations
must
- In
Republic
v.
Gonzales
[13
SCRA
633],
the
Supreme
Court
affirmed
the
assessment
always
yield
to
a
legislative
act
which
is
superior,
having
been
passed
by
the
of
a
deficiency
tax
against
Gonzales,
a
private
concessionaire
engaged
in
the
State
itself.
Municipal
corporations
are
mere
creatures
of
Congress
which
has
manufacturer
of
furniture
inside
the
Clark
Air
Base,
for
underdeclaration
of
his
the
power
to
create
and
abolish
municipal
corporations
due
to
its
general
income.
SC
held
that
the
failure
of
the
taxpayer
to
declare
for
taxation
purposes
his
legislative
powers.
If
Congress
can
grant
the
power
to
tax,
it
can
also
provide
for
true
and
actual
income
derived
from
his
business
for
two
(2)
consecutive
years
is
an
exemptions
or
even
take
back
the
power.
indication
of
his
fraudulent
intent
to
cheat
the
government
if
its
due
taxes.
Chavez
v.
PCGG,
G.R.
No.
130716,
09
December
1998
XX.
EXEMPTION
FROM
TAXATION
→ In
a
compromise
agreement
between
the
Philippine
Government,
represented
by
the
PCGG,
and
the
Marcos
heirs,
the
PCGG
granted
tax
exemptions
to
the
assets
i.
Exemption,
defined
which
will
be
apportioned
to
the
Marcos
heirs.
The
Supreme
Court
ruled
that
the
- It
is
the
grant
of
immunity
to
particular
persons
or
corporations
or
to
persons
or
PCGG
has
absolutely
no
power
to
grant
tax
exemptions,
even
under
the
cover
of
its
corporations
of
a
particular
class
from
a
tax
which
persons
and
corporations
authority
to
compromise
ill
gotten
wealth
cases.
The
grant
of
tax
exemptions
is
the
generally
within
the
same
state
or
taxing
district
are
obliged
to
pay.
It
is
an
immunity
exclusive
prerogative
of
Congress.
or
privilege;
it
is
freedom
from
a
financial
charge
or
burden
to
which
others
are
→ In
fact,
the
Supreme
Court
even
stated
that
Congress
itself
cannot
grant
tax
subjected.
exemptions
in
the
case
at
bar
because
it
will
violate
the
equal
protection
clause
of
- Exemption
is
allowed
only
if
there
is
a
clear
provision
therefor.
the
Constitution.
- It
is
not
necessarily
discriminatory
as
long
as
there
is
a
reasonable
foundation
or
rational
basis.
iv.
Rationale
of
tax
exemption
- Its
avowed
purpose
is
some
public
benefit
or
interest
which
the
lawmaking
body
ii.
Nature
of
tax
exemption
considers
sufficient
to
offset
the
monetary
loss
entailed
in
the
grant
of
the
a) personal
privilege
exemption.
- It
is
a
mere
personal
privilege
of
the
grantee.
- The
theory
behind
the
grant
of
tax
exemptions
is
that
such
act
will
benefit
the
body
b) generally
revocable
of
the
people.
It
is
not
based
on
the
idea
of
lessening
the
burden
of
the
individual
- It
is
generally
revocable
by
the
government
unless
the
exemption
is
founded
on
owners
of
property.
a
contract
which
is
protected
from
impairment.
c) waiver
on
the
part
of
the
government
v.
Grounds
for
tax
exemption
- It
implies
a
waiver
on
the
part
of
the
government
of
its
right
to
collect
what
otherwise
would
be
due
to
it,
and
so
is
prejudicial
thereto.
1) May
be
based
on
contract.
In
such
a
case,
the
public
which
is
represented
by
the
d) not
necessarily
discriminatory
government
is
supposed
to
receive
a
full
equivalent
therefor,
i.e.
charter
of
a
- It
is
not
necessarily
discriminatory
so
long
as
the
exemption
has
a
reasonable
corporation.
foundation
or
rational
basis.
2) May
be
based
on
some
ground
of
public
policy,
i.e.,
to
encourage
new
industries
or
to
foster
charitable
institutions.
Here,
the
government
need
not
receive
any
consideration
in
iii.
Nature
of
the
power
to
grant
tax
exemption
return
for
the
tax
exemption.
3) May
be
based
on
grounds
of
reciprocity
or
to
lessen
the
rigors
of
international
double
or
1) National
Government
multiple
taxation.
- The
power
to
grant
tax
exemptions
is
an
attribute
of
sovereignty
for
the
power
to
prescribe
who
or
what
persons
or
property
shall
be
taxed
implies
the
power
Note:
Equity
is
not
a
ground
for
tax
exemption.
Exemption
is
allowed
only
if
there
is
a
clear
to
prescribe
who
or
what
persons
or
property
shall
not
be
taxed.
provision
therefor.
- It
is
inherent
in
the
exercise
of
the
power
to
tax
that
the
sovereign
state
be
free
to
select
the
subjects
of
taxation
and
to
grant
exemptions
therefrom.
vi.
Kinds
of
Tax
exemption
- Unless
restricted
by
the
Constitution,
the
legislative
power
to
exempt
is
as
broad
as
its
power
to
tax.
As
to
manner
of
creation
1) Express
or
affirmative
exemption
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 25
- When
certain
persons,
property
or
transactions
are,
by
express
provision,
interpretation
of
statutes
granting
tax
exemptions
to
the
NPC.
The
rule
on
strict
exempted
from
all
or
certain
taxes,
either
entirely
or
in
part.
interpretation
does
not
apply
in
the
case
of
exemptions
in
favor
of
a
political
2) Implied
exemption
or
exemption
by
omission
subdivision
or
instrumentality
of
the
government.
[Maceda
v.
Macaraig]
- When
a
tax
is
levied
on
certain
classes
of
persons,
properties,
or
- A
tax
cannot
be
imposed
unless
it
is
supported
by
the
clear
and
express
transactions
without
mentioning
the
other
classes.
language
of
a
statute;
on
the
other
hand,
once
the
tax
is
unquestionably
- Every
tax
statute
makes
exemptions
because
of
omissions.
imposed,
“a
claim
of
exemption
from
tax
payments
must
be
clearly
shown
and
based
on
language
in
the
law
too
plain
to
be
mistaken.”
Since
the
partial
refund
As
to
scope
or
extent
authorized
under
Section
5,
RA
1435,
is
in
the
nature
of
a
tax
exemption,
it
1) Total
must
be
construed
strictissimi
juris
against
the
grantee.
Hence,
petitioner’s
- When
certain
persons,
property
or
transactions
are
exempted,
expressly
or
claim
of
refund
on
the
basis
of
the
specific
taxes
it
actually
paid
must
expressly
implied,
from
all
taxes.
be
granted
in
a
statute
stated
in
a
language
too
clear
to
be
mistaken.
Davao
2) Partial
Gulf
v.
Commissioner,
293
SCRA
76
(1998)
- When
certain
persons,
property
or
transactions
are
exempted,
expressly
or
implied,
from
certain
taxes,
either
entirely
or
in
part.
" Restrictions
on
Revocation
of
Tax
Exemption
a) Non-‐impairment
clause
vii.
Examples
of
tax
exemption
- There
is
a
contract
but
we
need
to
qualify
because
not
all
instances
that
the
non-‐impairment
clause
will
restrict
the
revocation
of
the
tax
viii.
Construction
of
tax
exemption
statutes
exemption
because
if
the
tax
exemption
is
provided
by
law,
the
non-‐
impairment
clause
will
not
apply.
The
non-‐impairment
clause
will
apply
" General
Rule
only
if
the
exemption
is
granted
in
a
contract.
- In
the
construction
of
tax
statutes,
exemptions
are
not
favored
and
are
b) Adherence
to
form
construed
strictissimi
juris
against
the
taxpayer.
The
fundamental
theory
is
that
- The
rule
is
if
the
exemption
is
granted
by
the
Constitution,
then
exemption
all
taxable
property
should
bear
its
share
in
the
cost
and
expense
of
the
can
only
be
revoked
upon
Constitutional
amendment.
You
cannot
revoke
government.
by
mere
passage
of
law.
- Taxation
is
the
rule
and
exemption
is
the
exemption.
c) Where
the
tax-‐exempting
grant
is
in
the
form
of
special
law
and
not
by
a
- He
who
claims
exemption
must
be
able
to
justify
his
claim
or
right
thereto
by
a
general
law,
even
if
the
terms
of
the
general
act
are
broad
enough
to
include
grant
express
in
terms
“too
plain
to
be
mistaken
and
too
categorical
to
be
the
intent
to
repeal
or
alter
the
special
law,
still
there
would
be
no
revocation
misinterpreted.”
If
not
expressly
mentioned
in
the
law,
it
must
be
at
least
of
tax
exemption.
within
its
purview
by
clear
legislative
intent.
- So
if
you
want
to
revoke
the
tax
exemption
in
a
special
law
then
you
must
pass
another
special
law
revoking
it.
It
cannot
be
revoked
by
implied
" Exception
to
Application
of
Strictssimi
Juris
(instances
where
there
is
liberal
revocation.
construction):
1) If
there
is
an
express
provision
that
provides
for
liberal
interpretation
ix.
Tax
amnesty,
defined
2) If
it
pertains
to
special
taxes
relating
to
special
cases
and
affecting
only
special
- A
general
pardon
or
intentional
overlooking
by
the
State
of
its
authority
to
impose
classes
of
person
penalties
on
persons
otherwise
guilty
of
evasion
or
violation
of
a
revenue
or
tax
law
3) If
exemption
refers
to
public
property
o There
is
already
a
finding
that
this
person
has
already
evaded
the
payment
- when
it
comes
to
public
property,
the
rule
is
exemption
and
taxation
is
the
of
tax
exemption
4) In
cases
of
exemptions
granted
to
religious,
charitable
and
educational
- Partakes
of
an
absolute
forgiveness
or
waiver
by
the
government
of
its
right
to
institutions
or
their
property
collect
what
otherwise
would
be
due
it
and,
in
this
sense,
prejudicial
thereto.
It
is
- This
is
provided
than
no
less
than
the
consti
itself
granted
particularly
to
tax
evaders
who
wish
to
relent
and
are
willing
to
reform,
thus
5) Exemptions
in
favor
of
the
government,
its
political
subdivisions
or
giving
them
a
chance
to
do
so
and
thereby
become
a
part
of
the
new
society
with
a
instrumentalities
clean
slate.
Republic
v.
Intermediate
Appellate
Court,
196
SCRA
335
6) If
there
is
express
mention
by
clear
legislative
intent
o when
we
say
of
absolute
forgiveness,
this
is
retrospective.
Meaning
it
looks
back
to
your
previous
liabilities
and
if
you
are
given
a
tax
amnesty,
it
Atty.
A:
when
will
you
apply
the
strict
construction?
You
will
only
apply
it
if
there
is
doubt
as
is
as
if
you
did
not
incur
those
previous
liabilities.
to
the
interpretation
of
the
law
exempting
the
person
or
the
property.
If
there
is
no
doubt,
no
need
to
apply
the
strict
construction.
- Like
tax
exemption,
tax
amnesty
is
never
favored
nor
presumed
in
law.
It
is
granted
by
statute.
The
terms
of
the
amnesty
must
also
be
construed
against
the
taxpayer
NOTE:
Strict
interpretation
does
not
apply
to
the
government
and
its
agencies
and
liberally
in
favor
of
the
government.
- Petitioner
cannot
invoke
the
rule
on
stritissimi
juris
with
respect
to
the
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 26
x.
Tax
remission
of
tax
condonation,
defined
to
be
the
laws
of
the
occupied
territory
and
not
of
the
occupying
enemy.
- The
word
“remit”
means
to
desist
or
refrain
from
exacting,
inflicting
or
enforcing
something
as
well
as
to
restore
what
has
already
been
taken.
The
remission
of
taxes
b) Civil,
not
penal,
in
nature
due
and
payable
to
the
exclusion
of
taxes
already
collected
does
not
constitute
- Tax
laws
are
civil
and
not
penal
in
nature,
although
there
are
penalties
provided
unfair
discrimination.
Such
a
set
of
taxes
is
a
class
by
itself
and
the
law
would
be
for
their
violation.
open
to
attack
as
class
legislation
only
if
all
taxpayers
belonging
to
one
class
were
- The
purpose
of
tax
laws
in
imposing
penalties
for
delinquencies
is
to
compel
the
not
treated
alike.
Juan
Luna
Subd.
V.
Sarmiento,
91
Phil
370
timely
payment
of
taxes
or
to
punish
evasion
or
neglect
of
duty
in
respect
thereof.
Atty.
A:
from
the
word
condonation,
it
simply
means
to
say
that
you
forgive
the
- Republic
v.
Oasan,
99
Phil
934:
The
war
profits
tax
is
not
subject
to
the
taxpayer
out
of
liberality.
But
as
discussed
in
the
Juan
Luna
case,
if
you
are
going
to
prohibition
on
ex
post
facto
laws
as
the
latter
applies
only
to
criminal
or
penal
remit
or
condoned
a
tax,
you
must
not
apply
it
to
a
specific
person
only
but
you
matters.
Tax
laws
are
civil
in
nature.
need
to
apply
it
to
the
entire
individual
or
property
belonging
to
the
same
class.
Otherwise,
it
will
amount
to
class
legislation.
ii.
Construction
of
tax
laws
1) Generally
prospective
in
operation
- The
condonation
of
a
tax
liability
is
equivalent
to
and
is
in
the
nature
of
a
tax
2) Rule
when
legislative
intent
is
clear:
receive
reasonable
construction
to
carry
out
the
exemption.
Thus,
it
should
be
sustained
only
when
expressly
provided
in
the
law.
purpose
and
intent
Surigao
Consolidated
Mining
v.
Commissioner
of
Internal
Revenue,
9
SCRA
728
3) When
there
is
doubt:
- In
every
case
of
doubt
in
tax
statute
imposing
payment
of
tax,
it
shall
be
Atty.
A:
it
is
still
prospective
in
application.
construed
strictly
against
the
government
and
liberally
in
favor
of
the
taxpayer.
(reason:
the
tax
law
does
not
want
to
burden
the
inhabitants
in
the
payment
of
IN
SUMMARY:
tax)
- However,
when
it
comes
to
exemption
and
deduction,
the
rule
is
strictissimi
Tax
Amnesty
Tax
Exemption
juris.
Strictly
against
the
taxpayer
and
liberally
in
favor
of
the
government.
• Absolute
forgiveness
from
all
• only
immune
from
your
civil
(reason:
lifeblood
doctrine)
criminal
and
civil
obligation
liability
(prospective
effect)
- Taxes,
being
burdens,
are
not
to
be
presumed
beyond
what
the
statute
arising
from
your
non-‐payment
expressly
and
clearly
declares.
of
taxes
(retrospective
effect)
4) Provisions
granting
tax
exemption,
when
there
is
doubt,
it
is
construed
strictly
• General
pardon
given
to
all
against
the
taxpayer
claiming
the
tax
exemption.
taxpayers
to
cover
a
particular
5) When
the
language
is
plain,
rule
on
strict
construction
against
the
government
does
taxing
period
or
a
particular
not
apply
transaction
6) Public
purpose
is
always
presumed
7) Provisions
of
the
tax
act
are
not
to
be
extended
by
implication
8) Tax
laws
are
special
laws
and
they
prevail
over
general
laws
XXI.
NATURE,
CONSTRUCTION
AND
APPLICATION
OF
TAX
LAWS
iii.
Application
of
tax
laws
i.
Nature
of
internal
revenue
law
- Internal
revenue
laws
are
not
political
in
nature.
General
rule:
Tax
laws
are
prospective
in
operation
because
the
nature
and
amount
- Tax
laws
are
civil
and
not
penal
in
nature.
of
the
tax
could
not
be
foreseen
and
understood
by
the
taxpayer
at
the
time
the
transactions
which
the
law
seeks
to
tax
was
completed.
a) Not
political
in
nature
- Internal
revenue
laws
are
not
political
in
nature.
They
are
deemed
to
be
the
Exception:
While
it
is
not
favored,
a
statute
may
nevertheless
operate
retroactively
laws
of
the
occupied
territory
and
not
of
the
occupying
enemy.
So
even
we
are
provided
it
is
expressly
declared
or
is
clearly
the
legislative
intent.
But
a
tax
law
occupied
by
another
State,
the
taxation
laws
continue.
It
is
as
if
there
is
no
should
not
be
given
retroactive
application
when
it
would
be
harsh
and
oppressive.
stoppage
of
the
tax
law.
Thus,
our
tax
laws
continued
in
force
during
the
Japanese
occupation.
iv.
Mandatory
and
directory
provisions
of
tax
laws
- Hilado
v.
Collector,
100
Phil
288:
It
is
well
known
that
our
internal
revenue
laws
- Directory
provisions
are
those
designed
merely
for
the
information
or
direction
of
are
not
political
in
nature
and,
as
such,
continued
in
force
during
the
period
of
officers
or
to
secure
methodical
and
systematic
modes
of
proceedings.
enemy
occupation
and
in
effect
were
actually
enforced
by
the
occupation
- Mandatory
provisions
are
those
intended
for
the
security
of
the
citizens
or
which
are
government.
Income
tax
returns
that
were
filed
during
that
period
and
income
designed
to
ensure
equality
of
taxation
or
certainty
as
to
the
nature
and
amount
of
tax
payments
made
were
considered
valid
and
legal.
Such
tax
laws
are
deemed
each
person’s
tax.
- The
omission
to
follow
mandatory
provisions
renders
invalid
the
act
or
proceeding
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 27
to
which
it
relates
while
the
omission
to
follow
directory
provisions
does
not
involve
e) Federation
of
Filipino-‐Chinese
Chamber
of
Commerce;
and
such
consequence.
[Roxas
v.
Rafferty,
37
Phil
958]
f) Japanese
Chamber
of
Commerce
and
Industry
in
the
Philippines.
2) However,
other
persons
or
entities
may
request
a
copy
of
the
said
v.
Authority
of
the
Secretary
of
Finance
to
promulgate
rules
and
regulations
issuances.
- The
Secretary
of
Finance,
upon
recommendation
of
the
Commissioner
of
Internal
3) The
Bureau
of
Internal
Revenue
shall
issue
a
press
release
covering
the
Revenue,
shall
promulgate
needful
rules
and
regulations
for
the
effective
highlights
and
features
of
the
new
tax
issuance
in
any
newspaper
of
enforcement
of
the
provisions
of
the
NIRC.
general
circulation.
- This
is
without
prejudice
to
the
power
of
the
Commissioner
of
Internal
Revenue
to
4) Effectivity
date
for
enforcement
of
the
new
issuance
shall
take
place
thirty
make
rulings
or
opinions
in
connection
with
the
implementation
of
the
provisions
of
(30)
days
from
the
date
the
issuance
has
been
sent
to
the
above-‐
internal
revenue
laws,
including
rulings
on
the
classification
of
articles
for
sales
tax
enumerated
organizations.
and
similar
purposes.
TAKE
NOTE:
IRR
and
admin
regulation
are
NOT
THE
SAME.
You
have
the
law,
then
you
pass
the
TAKE
NOTE:
IRR
and
from
the
IRR,
it
now
depends
from
the
Commissioner
kung
kugihan
xa
kay
he
will
now
- Promulgation:
Sec.
of
Finance
issue
a
revenue
regulation
but
this
revenue
regulation
is
not
to
implement
the
whole
IRR
but
- Recommendation:
Commissioner
of
Internal
Revenue
specific
provisions
only.
- Administative
rulings:
Commissioner
of
Internal
Revenue
x.
Administrative
rulings
and
opinions
(BIR
RULINGS)
vi.
Nature
and
power
to
make
regulations
- Known
as
BIR
rulings
- Less
general
interpretation
of
tax
laws
being
issued
from
time
to
time
by
the
vii.
Necessity
and
function
of
regulations
Commissioner
of
Internal
Revenue.
They
are
usually
rendered
on
request
of
- Purpose
of
IRR:
taxpayers
to
clarify
certain
provisions
of
a
tax
law.
1) To
properly
enforce
and
execute
the
laws
- These
rulings
may
be
revoked
by
the
Secretary
of
Finance
if
the
latter
finds
them
not
2) To
clarify
and
explain
the
law
in
accordance
with
law.
3) To
carry
into
effect
the
law’s
general
provisions
by
providing
details
of
- The
Commissioner
may
revoke,
repeal
or
abrogate
the
acts
or
previous
rulings
of
his
administration
and
procedure
predecessors
in
office
because
the
construction
of
the
statute
by
those
administering
it
is
not
binding
on
their
successors
if,
thereafter,
such
successors
are
viii.
Requisites
for
validity
and
effectivity
of
regulations
satisfied
that
a
different
construction
of
the
law
should
be
given.
a) Must
be
reasonable
- Rulings
in
the
form
of
opinions
are
also
given
by
the
Secretary
of
Justice
who
is
the
b) Must
be
within
the
authority
conferred
chief
legal
officer
of
the
Government.
c) They
must
not
be
contrary
to
law
and
the
Constitution
d) They
must
be
published
in
the
Official
Gazette
or
a
newspaper
of
general
circulation
Atty.
A:
IF
there
is
a
provision
in
the
tax
law
which
is
not
clear,
you
can
send
a
clarification
to
the
BIR.
You
just
have
to
lay
down
all
the
facts
and
all
the
details
that
you
ix.
Force
and
effect
of
regulations
have
and
send
it
either
to
the
Commissioner
or
Regional
Director
and
they
will
address
- Revenue
Memorandum
Circular
20-‐86
was
issued
to
govern
the
drafting,
issuance,
and
clarify
your
concerns.
and
implementation
of
revenue
tax
issuances,
including:
1) Revenue
Regulations;
But
when
it
comes
to
BIR
rulings
and
admin
rulings,
it
applies
only
to
the
entity
asking
for
2) Revenue
Audit
Memorandum
Orders;
and
it.
So
even
if
you
have
the
same
condition,
let’s
say
for
example,
Company
A
and
3) Revenue
Memorandum
Circulars
and
Revenue
Memorandum
Orders.
Company
B
and
Company
A
is
asking
if
it
is
exempted
then
BIR
declared
in
a
ruling
that
Company
A
is
exempt.
Company
B,
same
economy
conditions
of
Company
A,
cannot
- Except
when
the
law
otherwise
expressly
provides,
the
aforesaid
revenue
tax
presumed
that
the
it
(Co.
B)
is
also
exempt.
To
be
safe,
Company
B
should
also
ask
from
issuances
shall
not
begin
to
be
operative
until
after
due
notice
thereof
may
be
fairly
the
BIR
a
ruling
pertaining
to
its
own
company,
even
if
it
has
the
same
situation
or
assumed.
condition
with
Company
A.
- Due
notice
of
the
said
issuances
may
be
fairly
presumed
only
after
the
following
xi.
Administrative
interpretation
and
the
courts
procedures
have
been
taken:
- Different
from
the
IRR
1) Copies
of
the
tax
issuance
have
been
sent
through
registered
mail
to
the
- Rule:
when
it
comes
to
admin
interpretation,
ruling
or
opinions
are
not
binding
to
following
business
and
professional
organizations:
the
courts.
However,
it
is
given
great
weight
in
making
the
decision.
a) Philippine
Institute
of
Certified
Public
Accountants;
- Commissioner
v.
Court
of
Appeals,
240
SCRA
368:
The
authority
of
the
Minister
of
b) Integrated
Bar
of
the
Philippines;
Finance,
in
conjunction
with
the
Commissioner
of
Internal
Revenue,
to
promulgate
c) Philippine
Chamber
of
Commerce
and
Industry;
rules
and
regulations
for
the
effective
enforcement
of
internal
revenue
rules
cannot
d) American
Chamber
of
Commerce;
be
controverted.
Neither
can
it
be
disputed
that
such
rules
and
regulations,
as
well
TAXATION 1 A.Y. 2014 - PART 1 (based on the syllabus and discussion of Atty. Aranas)
By: RLB | DHB | TLD | RRM 28
as
administrative
opinions
and
rulings,
ordinarily
should
deserve
weight
and
respect
by
the
courts.
Much
more
fundamental
than
either
of
the
above,
however,
is
that
all
such
issuances
must
not
override,
but
must
remain
consistent
with,
the
law
they
seek
to
apply
and
implement.
Administrative
rules
and
regulations
are
intended
to
carry
out,
neither
to
supplant
nor
to
modify,
the
law.
- La
Suerte
v.
Court
of
Tax
Appeals,
134
SCRA
29:
When
an
administrative
agency
renders
an
opinion
by
means
of
a
circular
or
memorandum,
it
merely
interprets
existing
law
and
no
publication
is
therefore
necessary
for
its
validity.
Construction
by
an
executive
branch
of
the
government
of
a
particular
law,
although
not
binding
upon
courts,
must
be
given
weight
as
the
construction
came
from
the
branch
of
the
government
which
is
called
upon
to
implement
the
law.
xii.
Power
of
the
Secretary
of
Finance
to
Revoke
the
Rulings
of
his
predecessor
- The
Sec.
of
Finance
has
the
power
to
revoke,
repeal
or
abrogate
the
acts
or
previous
rulings
of
his
predecessors
in
office
if
the
former
becomes
satisfied
that
a
different
construction
should
be
given.
xiii.
Non-‐retroactivity
of
repeal
of
regulations
or
rulings,
and
its
exceptions
- No
retroactivity
if
the
repeal,
revocation,
modification
or
reversal
of
regulations
or
rulings
is
prejudicial
to
the
taxpayer.
- Exception:
a) Where
the
taxpayer
deliberately
misstates
or
omits
material
facts
from
his
return
or
in
any
document
required
of
him
by
the
BIR;
b) Where
the
facts
subsequently
gathered
by
the
BIR
are
materially
different
from
the
facts
on
which
the
ruling
is
based;
and
c) Where
the
taxpayer
acted
in
bad
faith.
xiv.
Decisions
of
the
SC
and
the
CTA
- Follow
the
hierarchy
of
the
courts
- If
it
is
a
question
pertaining
to
the
constitutionality
of
a
ruling
or
IRR,
raise
it
immediately
in
the
regular
courts
- But
if
it
pertains
to
questions
on
the
tax
payable
computations,
question
it
first
with
the
BIR
(administrative
level)
then
appeal
it
to
the
CIR
(depends
on
the
amount),
then
after
it
can
be
appealed
later
on
to
the
Sec.
of
Finance
or
CTA
then
after,
that’s
the
time
you
can
go
the
SC.
- But
in
the
SC,
it
should
only
be
purely
questions
of
law.
XXII.
SOURCES
OF
TAX
LAWS
i.
Constitution
ii.
Legislations/Statutes
(R.A.,
P.D.,
E.O.)
iii.
Administrative
rules
and
regulations,
rulings
or
opinions
of
tax
officials
iv.
Judicial
decisions
- Stare
decisis,
meaning,
only
the
decisions
of
the
SC
v.
Tax
treaties
or
agreements