Documente Academic
Documente Profesional
Documente Cultură
Fundamental Principles
Taxation Defined ·
1
RELATED Pepsi-Cola Bottling Company of the Philippines, Inc. v.
CASE Municipality of Tanauan , Leyte, G.R. No. L-31156, February
27, 19 76
1. Natu re
ISSU E: contribution s to raise
Whether or not a legislative body may enact laws to raise revenues in gov't fu nds.
the absence of a constitutional provision gran ting said body the power 2. Auth ority Governm ent only
to tax.
2
-
Taxation Police Power Eminent Domain
1. Nature Power to enforce Power to make and Power to take private
ccntributions to raise implement laws for the property for public use
~ov't funds. general welfare. with just compensation.
2. Auth ority Go\'ernment only Government only May be granted to public
service/utility companies
3. Purpose For the support of the Promotion of general The taking of private
government welfare through property for public use .
regulation
4. Persons Community or a class of Community. or a class of On an individual .§.S the
affected individuals. Applies to individuals. owner of personal
all persons, property and property.
excises that may be Applies to all persons, Only particular property
subject thereto property and excises that is comprehended .
may be subject thereto.
J
I
PURPOSES OF TAXATION
i . Primary: Revenue or Fiscal Purpose
The primary purpose of taxation on the part of the government is
to provide funds or property with which to promote the general welfare
and the protection of its citizens and to enable it to finance its
multifarious activities. A government can run its administrative set up
on ly through public funding which is collected in the form of tax.
I '\
RELATED CAL TEX V. C0MSII.ISS!0NER. 20S SCRA 755
CASES ·7=.i.:c~•;:-~ :s '"IC' io"1ger a n:?3 SL:-P merely tu raiS<:? revenue :o
s ... :"1:-i;::1-: :~ E'\ ;s'.e:..:'.2 of :he go\-emment. Taxes may be ;evit?d ,vith a
?,?:J:O~') ::,:.:~se Iv provlde rne2ns for the reh.ab1!itat100 and
s~~:iii'--.l:i::i:i .)f a LTirea ~~ned indu.stry which is aF.ec:ed v. ith public
i"':?i?Si :: s :v ;)? \\'~hin t~e po!ice pvm~r of the state The oil industry
:s 17=-'Je-: w~ pub:ic i0:erest as it vitally affects general welfare ·.
5
RELATED
CASES
COMMISSIONER v. ALGUE 1
The Supreme Court held that taxes are the lifeblood of the
government and should be collected without unnecessary
hindrance. They are what we pay for a civilized society. Without
taxes, the government would be paralyzed for lack of motive power to
activate and operate it. The government, for its part, is expected to
respond in the form of tangible and intangible benefits intended to
improve the lives of the people and enhance their moral and material
values.
6
Every person who is able to, must
contribute his share in the running of the
government by paying taxes.
~~
••
1111
In return for the contributions made, the
taxpayers receive the general advantages
and protection in the form of tangible or
intangible benefits intended to improve the
lives of tho people and enhanced their
material and moral values which the
government atfords the taxpayer and his
properly.
7
hw£wwi/n~
. . _Th is prohibrt.io~ shall apply t~ all collection activrties , inciuding
imposition and collection of taxes . issuance of warrants of distraint
and garn ishment, and/or levy on fin al decisions of the BIR on disputed
assessme nts , cases fi led before the CTA, and the sale of property
distrained or garnished (RMO 42-2010).
SCPJ. 443).
RELATED
-- --- - - --
LfRAnCIA VS. !AC. G.R 76749, June 28. 19881
--
CAS ES X the ounf:r of a r~s~enti21 lot srtuated at Quirioo Avenue.
IS
Pasay City. The lot has an area of 300 square meters. On June 1,
19S4, 100 square meters of Said lot 01med by X was expropriated
by the government to be used in the widening of Quirino Avenue,
for P300,000.00 representing the estimated assessed value of
said portion. From 1991 to 1995, X, who ts a businessman, has
not been paying his income taxes. X is now being assessed for
the unpaid income taxes in the total amount of P150,000.00. X
ciairns his income tax liability has already been compensated by
V>~ amount of P300.000 which the government owes him for the
r;1;Jt<,;mation of his property. Decide.
~
• I /
is
ANSWER: No. Set-off available only if both obligalions are j
3mount ha s still _
to be deterrnined . The liquidated obligation of the
1
9
r
• • 1
10
-·
ASPECTS of Taxation
Aspects refer to "stages, phases or p_rocess" that are incl uded or
embodied in the term "taxation'" such as:
1. Levying or imposition of the tax which is a legislative act or function.
2. Assessment or determination of the correct amount of applicable tax.
3. Collection of the tax levied which is essentially administrative in
character. The national agency charged with the function of collecting
internal revenue taxes is the Bureau of Internal Revenue.
~ 1. Levyin g
3 . Collection
(Executive Function) (Legislative Function)
2. As sessment
(Executive Function)
11
- /
/ 11111(11111 L'II Id / 1}. o/~
r1✓1
2 . It is legislative in character.
The power to' tax (levying or imposition) is peculiarly a~d exclusive1y·
legislAtive in nature . It cannot be exercise by the executive or judicial
branches of the government.
12
CASI:· lo Pomlrr:
•
Since t~e authority of the LGUs to tax is merely a
delegated power, may the Congress, under the 1987
Constitution, abolish the power of the former to tax?
ANSWER:
• NO. Congress cannot abolish what is expressly granted
by the fundamental law. The only authority conferred to
Congress is to provide the guidelines and limitations on
the local government's exercise of the power to tax (Sec.
5, Art. X, 1987 Constitution).
13
ANSWER: NO
The law centralizing the imposition and collection of all taxes
in the national government would contravene the Constitution
which mandates that:
It is clear that Congress can only give the guidelines and limitations
on the exercise by the local governments of the power to tax but
what was granted by the fundamental law cannot be withdrawn by
Con ress
14
5. Limitation of territorial jurisdiction
Tax laws cannot operate beyond a state's territorial limits.
Property outside one's jurisdiction does not receive any protection from
the state.
6. Strongest among the inherent powers of the state (Sison v. Ancheta , 130
SCRA 654).
Classification of Taxes
1. As to scope
a. National - imposed by the National Government (e.g. income tax,
estate tax, donor's tax, VAT other percentage taxes, documentary
stamp tax)
c; Exciso - any tax which does not fall within the classification of a poll
tax or a property tax. This is a tax on the exercise of certain rights and
privileges (e.g. income tax, estate tc:1x, donor's lax). Excise tax may
al~o refer to the tax levied or imposed on sin products and non-
essentinl goods such as cigars and liquors (Discussed in volume 2 -
Trr:insfer and Business Taxes). Excise taxes of this nature are taxes
r1pplicnble to certain specified articles or products manufactured in the
Philippines for domestic sale or consumption or any other disposition
..incl to specified things or goods imported into the Philippines. It may
bo specific or ad valorern
15
-· - .. - ---
' .
I -r r.r,,,.,:.rr,d /~1 1:,;l,
I
3. As to who bears the_burd e;: anded from the person who ;ilso shoulders CIGARETTES, PER PACK (bastd on Republic Act No. 10351)
2013 2014 2015 2018 Z017
a. Direct - tax which is t emwhich the taxpayer cannot shill to another.
the :,,..burden of SPECIFIC TAX ON
'd tax
ce or ax for the payment of tI1e t AX ) as weII as the
(liability Clgarottes pncktid by
Botli the 1nc1 den f the tax falls on the same person (e.g. income tax
impact o1bur en o ' m:ichlno whoro lho NRP
estate tax, donor's tax). (oxcludlng oxclso ~nd VAT)
por pnck Is
d _ tax which is demanded from one person in the expectation • P 11 .50 ,ind b11low µI : p I/
1
b. ~nn~~~tention that he shall indemnify_ h!mself at the expe~~e of
another. These are taxes wherein the 1nc1de11ce of or the hab1hty for
• Mor,1 thnn P11 50 P,~ P.11
the payment of the tax falls on one person but the burden thereof can 5. As to purpose:
be shifted or passed on to another person (e.g. VAT, percentage tax, n. Primnry. Flsr.nl. or Ruv11111111 Pwpu:.,1 I.ix 1111µ0•, 11d •t11h1ly rm t1 1r1
excise tax 011 exciseable articles). In the case of Maceda v. Macaraig yonornl purposu of tho novo11111h111l, 1 ,1. 10 1.11:10 1t-11n11u,, h•r
(197 SCRA 771 ), an indirect tax is defined as one paid by_a person govommont purpo:HlS (o fJ lnconw l,t>,: , dunor'~ 1.1:.. .mit ,,,,t.1h• 1.1, )
who is not directly liable therefor, and who _may t~erefore shift or pass b. Ser.ondnry, Rt1{Jululury, Sµ,w.il or S ur11pll111ry f'lllPl' "u t.a , 1111p,,-.,,.,J
on the tax to another person or entity, which ultunately assumes the for ,1 spoclflc purposu. l ll . to ,1d1111vt1 •,01110 :to11111 ,11 111 1111,11111c ,m,H
tax burden. lrrospactlvo of whuthor rov1111110 l:1 11t:tu11lly r111,,11d lH 111•1 \•' " t. 11,N .111d
cortuln dutio:; on imµorts).
4. As to determination of amount:
a. Specific - tax of fixed amount imposed by the head or number, or by u. As to grndllfltion or mtu:
some standard of weight or measurement (e.g. excise tax on cigars n. Proportloonl - t11x bmiud 011 .1 1tx,1t1 pMc:11111111111•, of ,1111c..11J1 1l ,, r tht•
and liquors) pruporty , rocolpts. or ollwr bust:, lo Liu 1,o.11d 1,111 VA r. 1.il>I,> t :,
11bovo (At.l-vnlorom tn>t 011 drstlllod :;p1rll t1)l
b. Ad valorem - tax of fixed proportion of the value of the property with 1.J. Prog1oss1vo o, g1r1t/11otvci - 1.1x thu ri1tu or wh1,.11 1111 11>11:,,,.., ,r , 111 11 1.1x
respect to which the tax is assessed (e.g. vat, income tax , donor's t.-ix bnso or brnckul lncromrn:i (o !I • 111co111,1 tax 1111 1,11 11vrd1111I t.1 ~11.iy11r·, }
and estate tax) c. Royross,1vo - lox thu ratu or wh1t:lt rtuc1r111•;,,-. 11 ,; th,, t.n t,., , 1 or
brnckut rncruasos
TABLE 1-5: SAMPLE COMPUTATION OF AD-Valorem and S ecific Tax
7. As to taxlnu authonty:
11 . N11//011al - t:rxus hnposud u11<1111 tl111 N11lltln(II 111111111.,1 l<11v,.11l 1,,
Cut.lo (commonly knuwn us tho I 11x Cudu) cull"l tnd hy 1h11
- Based on the Net Retail 11,1tlor1nl oovornmont throuuh tho lluw.iu ni lnt,,t11111 1<,,v11ntr,1
Price (NRP) per proof (BIH) 011c.J othur 11i1l101111I 11ovurn1111 111t .iu ,, 11<.1<1 ·, Otlwr 11.1l11u1.1I
(excluding the excise and t.ixus othor tllUII th1H,o <..11llm:t11d by lll o lllll . l'\ p1,ivrd,1<1 f(Jr ut1d<1i
value-added taxes) 15% 15% 20% 20% 20% :;podal l11ws lncludo hut 110111111111111 lo
SPECIFIC TAX - Per pmof iit&r P20 P20 P20 P20 80 P21.63 Customs dutlo:,
Tnxo:i on 1wrClJllc druu11
Spuclnl oducation lunli 1u11w,
Emiruy taxos 011 :,lr crort. 111t110111, ·d w.1t"r~1.d1 111,1,·I,,, 111,
puwur con:ll1111pt1u11
Sunur odjw;tmunt taxu•,
16 1/
fu11,k,rt'l//11l'Pni1'J~
18 19
I
....
- . • • ~·"-- ! -"-'• • - - "' · - - ~
.· -
•
,. f/7? . Ctjjl__
fu,1lu,1i:1tlt1h rut;= r I ,,. / r,'r-t1t1 I'
f"lt/t.,{/{h {el[C/{ I fr.(
There are substantial cf1fferences ~t... <?en b,g 1nv~ ter.g
2. Constitutional Limitations Id
a) Due process of law . w and the measure shou ~ot be enticed to the ·secured area' and :he business cperatcrs l
There must be a valid la IO amount to confiscation of
unconscionable an d un1·usl as 0I be arbitrary as tO fiind no
outside that are in accord with the equal ;irotf:C!IOn clause !ha!
does not require temtonal unrformity of laws. me c:lasst.\ca:cri
•t
st
property. Tax statu_te _mu -!'ti power to tax should not be
support In the Constitution. tery This limitation is also
applies equally to an the resident indiYlduals and bUSLr:csxs
within the ·secu~ area·. The residents.. being ·n .ke \
• or confisca o · circumstances to contributing diredly to !he achle'f!:!T'~t of
harsh, oppressive . and hearing.
known as the right lo notice the end purpose of ttle law. are not categonzea fur.i€:f.
Instead. llley are similarly :reated. botll ·111 prr-r.1e1;j€s g-on~f.d
b) Equal protection of l~ws islation shall be treated alike and o_blig_~tions £~ -- _ __ __ __ _ _ _ __
I
All persons subJect to eg d conditions both in the
under similar circumstances an d . c) Rule of umfonrnty and equity in taxation
.. f d and liabilities imposed. The oc!nne does "The rule of taxatJon shall be uniform and eqwtable. • It reqwres
privileges con erre r1· different in fact b8
not require tha\ persons or prope ies . . . the uniform appl1cauon and operallon. without c:1saimination . of tn ;-
treated in law as though they were the same. ~hat it proh1b1ts tax in every place where the subject of the tax ,s found. It c:oes noL
is class legislation which discriminates against some and however, require absolute 1dent.1ty or e<.ualrty ur,der a.I
favors others. As long as there are rational or reasonable circumstances, but sub1ect to reasonable classification.
grounds for so doing, Congress may group persons or ,
properties 10 be taxed and ii is sufficient If all members of the For classificat.1on to be vahd. the follow ing must concur:
sume class are subject to the same rate and the tax Is • It must be based on substanllal c:1stmct10n
administered impartially upon them. It must apply both lo present and future condioons
It must be germane to the purposes of the law
TIU, ot al vs.CA (G.R. No. 127410, January 20, 1999) -1 It must apply equally to all members of the same class.
RELATED
CASE/
20
21
r,,., ,ti:r.v:1rI Pn,,,_.,_,i,.
,I
":it tn•'nl ,;I ·poll ~x thr,- :;;rm...:, f,:,r~ . ' l 1? c.:;r11 ~~• ~.t.,rr 1'?"r,ri- ":r('
n11r1t f()f non.., , I f 'l
, 11111~! irnp11wnr ,J,-t t or nr>n•-oaymr:ri <J c,ri.,h :;,r,ag,:; or lr,-prr,J;.:;,ni;-1
,JJ ,,,,,11,1,,11on NO I ijll t,,1 ,r11r111f>rin1, d for . ' t )fl·,Payrn•:nt of
w, pt,rMJn c i, nm•mt rul~ appli•1'> o n<
01 111
,, n1Jri.Jmpr1w tJ :i w re,harg(;, but n<.1\ to h) Prc.,h,t,rtirx, :;,g31n;;t ta,,;;,~o., of r"'i•'.:1•0•JS :;,-.,ar:-~;:.,r<;: :r,:
;;;;:: ~:11 w11,()1 1~ /lun,_ l;~~:~~h~~tyof ~ mmunity wx o :rtlfi~t•~ '::'OUC:f\lC.,;'1:31~.1%
vlfllr111r,rt~ 11~,, fa , " Pull t:J/. ,., :,i WY- of 111.•:d Chc::nt:ib\r:, 1nSllt\J'Jc,nt; , chur(;nr,-,s :;s"Y.: :B">!Y':::1~5 :,•
olltt/r , f c1th1•r t;JY':•, 't
rm<l non-p:,ymont ' ,,.: td,•rit~ w1\111n ;; :;p<:of1c tt?m ory ~,:,nv<::nt;; av.,urt1:cn<:1nt ~"l';:r.,,...'J. -.:::5,:::r:.i~ ,:,,..,.,.rifr.
' rrtJJ(Jt>IJ{J (/fl
arr11111111 1
,v ,
u~int-r ., <Jr prof1:1,1>1on. 0<m':t<:n<.:s. anc :;,II land,. :.sJlldinos 3,~ n::r:·~- ::;
,,,unru·'I,,.0 ~ <I( t)IJ/(lfl:S1llf/. 1I , • ' ' actually, dir':Ctly. a, d e,,:,ccJtS,':i/ !..Y.:-'.l- l:x -':itg,o_-s ::-:a--"':"~
• • t c)I r tiliga1J0n vf contracts or eduv.itionaf p u r ~ shall :,::; eY.~p: :ror-i :a.xa:io,- -:--,is :s
,,) /J,oi11lllf1()fl ;iq;1ifl'>I 1nl J),Jlfrl1W t I ·)I on of e,ontrac\.6 t,hall bt: an ":.r.emp6on from r":al prop<::rtJ la.t W / . 7:-,e = npoon i<1
Nr, t:1'/1 ,rr,p;iirlrl'J lh tJ (~) 1\J,l I • r irt?d wh,;;n it(;
favor of prapeqy us<:d exclus1(ei1 ' r:,r cre-t.Ero\.:? C:£ ~jcJCa'..JCl!"a
p1,~.. ' . . ,. di· ng•,rJ tJy
1,,,,1,~ 1/f c,;l)r1dlf11ma ,Jr • "
,~m
., ,1 Tt1•1 ot1t1:p,1oon of ., virilriicl IJ ,mp~ rty v11thout
•
or tiy a ~a
. th<- po~,,tion or
purpc0.,s is not llrr,r..eo b pro;:>erty ac:bar, r - . c ~
therefore, t>u1 e:rt£:M> to lac,:~ ,,.n,cr; ;;,·'= n :, j';-:-.ai t;) ;;;ro
1111, r,mw,r,t 1/f th<, ott,,,,, 1ti,1r<;by w1;aken1~gt by,law lo; v1ht?n
reasonably oei-...essary fr:,r ~ aco:.•rr pls~ -1 of s.;,1c
ri(ll •I ~ uf 11,,, tall•ir. An ,,1-arnpt,, of 1rnpairrn1,n1· •·a&!<d on a
~' . a wr ,,x,-rnp ,on u , purPoses. The I<:$! cf. exernptio., r1,~,. ::: cr--~ai !..-s.a. , o:
a 1,,1,,r 1a1.1rIu 1,1:,tu1'; r•,v<J ' ' • •• mption has ownership. The tern, ·e.xc:lu!>f>ely' 5"0!.,IO t~ -::;n:,ri:"'2 : as
vmtr:ir.l llul thli, r/llly r,pph<;'J 'llh!Jn tM taxP. e:: e:xemplion ·primarily" rather t."lan · so,1:I{
11,,•,n IJran11,tJ for ;1 v:itirJ r,,(Jn ',1d1;rat1on. If u,, I . 1~1 t<· may
r/,,11:,irI:.· ((Jr tnr.l:mr,<; , 1<1 a fr:,m;h1:,1;
• •
tax, iJ liJl<lr ~:, ud , th~t
t t I on prov, <:s 0 ILLUSTRATJVE I .Ar Ra~~ c"-:: '),I.--=-:fa 5 '))) ~ "'\ -~ -;; ~ -,c ~
,,,vc,H, ,.1J1,t1,,1,,rr1rJt10n liu<..;jU,,'J tti,, con~ ,~.' . £: eal
"h,mr;t,1,,,J l:1Y ,., •,ut1J1;1,t !() wnr,ndrm;nt, alt(;r:,hon or r p . CASE 11 the O':f \m.15 o' ~ C,:y ~ ,:.::;;;:: ~ -.:rxr..ry iy
PSO.cm a J"..31 IO 3 • ~..s ~ r-t('..a:r.ir !'.)' 3 :>?"O: ':J ~
I) f'1,,litt11l1w1 r,1rm1·,t infr1ng1;mt:nl 0f rohgrous fre:edorn (15) ,ea~ (201().2".!LS T ~ ~,g,o. s c.:r,g-e,;z:Cf1 ~:: r 3
No t:iw :.ti:111 tJ,1 rri:,tl<: r<,op<,clinlJ :,n establishment of 1,000 sq m poruor, a ;err.-"Esri ;-,c ~ ::na;x., :nai 1 _-&: r,
r•,htJl',ri. r,r pruhlt1il111[J Iii•: rr,:11 1;xc.,rci~•1 th~reof. The fr eq COOl'lea;()ll ,. r:11 -:s -e:,g,oc:.s a:: . : res • :.xs:;,...,:;~ a :~ (i ~ J
, 111 ,r r. I:,,, :ind ,,,l)liy,nc.,111 or ruhgioua proft:Gs1on and worship, s1Dr1 b-J <!•ng e,n ~ 'i,':l"..,1.",,r;g J m ~q ,,, .,·•ci 1 ·~!i:,J :>...!
w,llu,ut rJ1:,(,,r1rri1ri:lll(J11 ur pr<,feronc.u . i,hall forov<:r brl allowed. 10 ,aro..s comrne<aa! este!>I s.· meris ' . ! ' l e ~ ':I! ..,· ,er JO
N,, r11 t1r,,ou•, 1,,:,1 ~11;,tl be r<1qu11ud for th<: (JX(Jrciso of c1v1I_or IC tne $1.ppo(t c! ,ts \'ol'lO!JS Sor r,ar~s ,oca~ :."'i>'~'at :;,e
put111uil 11otit·, Tlu1 payrn<,r1t of liccn~u foes for tlw .dn;tribul1on Ph11tpp,nes Tl>eSe s~ n.;lloi:$ arc ~ .z~ ?.S 'lO"-"~ a·-c
111,tf •,:,t,, of ll1t,trr, 1,11pp1u~o<:G lhu con~l1tut1onal right of fre,i noo-stoct e<li.caW\al ~a..:.cr-.s
,,x111r,I1.•J or ,uh!Jl•m.
Ouest1ons
o) fl1ut111JI11u1111uaIw,1appropri<1f1on of proe<:<:d~ of taxation for 1. Is Mr Ramos e,empt from ir,e ;Byrrrem ol ·e~I ;,r:: ;,.2riy :a,;,s7
l'11111•,1,, 1Juriof1I, or i,upport of w1y church Yes Mr Rarno'l rs e...empt 'rcrr. :rs: pa1·~-:".! c! 1.;a.. ~ :3,,,,s :,~
No 1,11lillG rnonuy or prope:rty shall bc c1ppropm1led , the 1.000 sq m por110n c1 ~.. s 5 000 SQ m 'Cl. as w~·! as o.-, ~
appll,,d, p111d, or urnriloyud drroclly or Indirectly, for lht: us,i, remau1111g 4.000 SQ m
t1u11ul11, (Jr ~upport of any church, dunorninal1on, sectarian
1t11,11tullo11 ur uyutum (Jf rotruton, or of any priest. preacher, 2. Is tho rehg,ous coogregot,on eiempt from rM pa1me": of ~al :>:op,:ny t21 es?
111ln1~lllr ,,r olh<,r 1olluiou1, loacl1(Jr, or dignitary as 5uch oxcupt The religious congregahan should pa1 real pro;ieny L:Jes en tr~ ~.c,oo
wl11111 •,uc.11 prlui,1, proachur, mlnlstur or dignitary is a5slgned to sq m. parcel of land and tne 10-story b,.,,1d.ng ~ ~se N baS:s '::,r
taxauon ol real property s use ard not ownership. HO\,ever. .t •s
:!2
23
fu,1,/4ntelflrt / Pn>t o/i
the 1ooo sq. m. parcel of land ai
f mreal property taxes o\apel ~nd the seminary. This is so j) OTHERS
exempt ro the improvements _the/ and exclusively used for religious 1. Grant of tax exemption
well as onthey are actually, d,rec yt with regard to the 4,000 sq. m~ No law granting any ta x exemption (i.e., a_mnesties,
because t's differen t · condonations and refunds) shall be passed without the
urposes. The treatmen . I • which it rented out o commercial
P story bu1ld1ng concurrence of a majority of all Members of Congress
and the 10 (voting separately).
establishments.
, the payment of income taxes on the
tion exempt ,ram 2. Veto of appropriation, revenue, tariff bills by the President
3. Is the religious congrega .
The President shall have the power to veto any
rental receipts? . . subject to income taxation. The
1 particular item or items in an appropriation, revenue, or
• The religious congregat,on ~ c,nly lo real property that are actua~.
tariff bill, but the veto shall not affect the item or items to
constitutional tax exemptJou:~e :r religious, charHable or educationa
which he does not object. An item in a bill refers to
directly and exclusively constitutionally recognized exemption from
I particulars, details, the distinct and severable parts of a
purposes, and that the on Y those earned by non-profit, non-stoct
bill. In budgetary legislation, an item is an individual sum of
taxation of . re~enues ahr_ eh are actually, directly and exclusively used
educational 1nsututi0ns w ic money dedicated to a stated purpose.
for educational purposes.
3. Delegated authority of President to impose tariff rates,
i) Prohibition against taxation of non-stock, non-profit import and export quotas. tonnage and wharfage dues as
educational institutions. delegated by Congress through a law (subject to
All revenues and assets of non- - - ~ Congressional limits and restrictions) within the framework
stock, non-profit educational institutions Nonprofit non-stock of national development program.
used actually, directly, and exclusively Educational Institution
for eclucational purposes shall be This exemption covers 4. Non-impairment of the Supreme Court (SC) jurisdiction
exempt from taxes and duties. However, income, property, donor's Congress cannot take away from the Supreme
they shall be subject to internal revenue tax, and customs duties Court the power given to it by the Constitution as the final
tax on income from trade, business or (distinguish from arbiter of tax cases. The Supreme Court shall have the
other activity, the conduct of which is not exemption in the preceding following powers: Review. revise, reverse, modify, or
related lo the exercise or performance page which pertains only to affirm on appeal or certiorari. as the law or the Rules of
by such educational institution of its property tax). Court may provide, final judgments and orders of lower
educational purposes or functions.
courts in all cases involving the legality of any tax, impost.
assessment, or toll, or any penalty imposed in relation
Taxation of "proprietary" educational institutions
thereto.
Proprietary educational institutions, including those
cooperatively owned: may likewise be entitled to such exemptions 5. REVENUE BILLS shall originate exclusively from the
sub1ect to the llm1tat1?ns provided by law including restrictions on House of Representatives
d1v1dends and prov1s1ons for investment. Proprietary educational All appropriation, reven·ue or tariff bills. bills
inslitut,ons and hospitals which are non-profit shall pay a tax of ten authorizing an increase of the public debt. bills of local
percent (10%) on their taxable income except for passive , application, and private bills shall originate exclusively in
incomes which are subi'e t 1O • '
Chapter 4 _ c different tax rates as discussed In the House of Representatives, but the Senate may
propose or concur with amendments. The Constitution
simply means that the initiative for the filing of bills must
24 25
/ 11111/4~,tl'l!ltll/{1111l
r Rt r,,·;1,nt;,IJVM. (J(I thr, th 1,o,y
u,rr,,, lrr,rn lh'' l-to1J•·· '' '', ,r' , ' ,Ji••1tlr..t.•, th•, ,n,,,nhflf'>. of I,_ lnfrmg,,m1,r,/ of pm ,1 frr,r,,Jom
11i11t. i,11,1,I"'l ,,. ~• lhr,.,, ""' mml 11':b{ .•rnnrr,. 1,M1t,vr, tr, th(J n 113 llmataoon <100'1 not mAan !Mt the preg~ '"
r r M t,,, t ,tr)(,C.1h< Iri u
0
11,,, I11i111;, •
ri
GI . n tt ,. pr,11(,r r,f 111£: ,$1,r,:il(J fl1r,mpt from taJcation. Ta,auon r..oost,ture, an 1nfn~men1
lc,r,nl w ,1,rlti ;,nrl r,rr,tiltirM. , '~'n' r ,~;p(if•I: 11!; r,wn 1/(JO\i(,n c,f pr,,3,. freooom whf!n ,t OPfJrnlr.~ a~ a pr'°' r1Jslrn1nt 10
•
to propnll'' ;J
, morirlrw•nlii , r,,, , i
• '
'
h r,h w, r,,quirr:rl t,y th(J lh!', E,J(:fCI% or th,,
con', !Jlull0f1al ngh t Whfon 1h11 lrlt 11
ti f( hP'•' I In t,111 'l W 1 ' ,rnpoaed on fht, receipt', or IM ,n<.omf: of thll pr<:"i'i ,t ,s a
r,v,,n w, I ~ • thr Hriu<·rJ nor (JD' : 'i th&
f
r,1,nr;111u1,on lo ono,~•' 1 In In ,;,,, 5 ,.~~tl, uf ,J r,ufJr,fltufo
Cr nr·ttlulion protuti,t 111'' II" 1(J i th Houu ,
valid r,x,,rc1M or the w v~re,gn p11:r()(Jilt1v1,
7. Rr,vocat,on of Ta,c Exempuon•,
!'' If~': ''.'"
•
,:,,; ,,·, uflllr:lpa//011 of //11 f(Jr,ti/pf
• • ae1Jt)n t,y tht, Sr,n,,t,, ;,J ' '
b~:~yn i!! ~111thh,;ld Tax exempbon1 w c.h 0 '1 ·gran t of franch1<1e" m;iy
b•, rovoked by another l;,w a<1 11 ,, c;pi.<:1f1cally provided ,n
r.c, lr,nu ,, . ' f H rr• t ill (Tr;lrJnfino v. r;,Jw,tr,ry (Jf
p,,nrtln(I rr,a,rpt o th•: ou . . , . tt,o Con-.lltulion lhal !he grant fJf r1ny lrancn,, c '" alway-.
r:mr,fltJJ, ;,:,5 SCl<A fJ.1{}) !!ubj,;ct to amendmMt. allera11on, or rApeal l'>y tM
Conore'ls when the common good so rAqwro~
, RELATED (HJI.WTINO ,; SEU<ETJ.f<Y OF FIi/A/iCE, GR /lrJ, 115455,
CASE OU :JO, 1905) ILLUSTRATIVE ·x· Coq)cration wa1 thi, rerJp:enl of ~"'o tax e~r,mp11cn•. '.lOth
ISSUE: ,. H& 7/t,'J thiUI CASE from Coogre1.~. Oil& i:'!N Mtsm;:,11ng trte comp4n:(i bona ,~W!!',
lhll Hc,W; c,f f'•:pri,ti,rilaltVf:', ,nltctllJCh, I . from Lil~ and t/10 Othl:f 6x1:mpMg t/la ro"1p;;ny trom Lax,;~ ,n
,. ,. 1, ,, • ,,,, on vortt:M ltiJnVlCfU)n'i . Mtf.:r IM bill w;i, IN: O~tJOrt of Its pubuc ull!,l,e; Th& tt/0 low\ 11xtoooIng th-:
l:IIVl',l(Jr1(;~ w ; 1 il " l' , , ,
tw 11 , HrJu·, ,.• t/11·• t,11! w;,<, ¼fll IIJ 1hr: _,i:n.,!i: " ' •,o
•1pp,O•/(; d " I I! t;,~ e, emption, 1;ort f>JVo~f:d by Conqrffl bt:fore 1h1;ir a, p,ry
, ·-" b II < Con• lilul!CJn In tt,,. ur,pN ht,u'h, ,nr,tcarJ of a oato1 Were the revocat1ona conslltullonal?
r!;quir.,,, Y '; • • • ~-0 ~'""'
dt;h~f:roh(}() ~" tht; HrJ)J',(: 8111, !hi; s,,nw, 1n1tc,rJur.1:'l " C/\NV
which wot ,t:, r,1111 vr:r&,on of !ht; •, w ,1: lot ft,•: Si;nate ANSWER: YES
dr:1,1,,,r;,tt;d "" tt11, ~>,n~1•: f.l1II and ai,pruwl Ilic ~;,rr,,, The The exempting "atule~ a11, oom <Jrante<J un1!dlernlly by
Hou~!: 8111 arirJ Ille S•:no!J: 8111 'IIW: !Mn Curiw l,tJ,Jlh1 In the Congre,s In !M 1:•11ruw ol lM1ll<J poNr::P, Since t;11a~on 1$ tr,"
1:Ji(;Jmorol Currirr11l11,,: Evtrilually, 11,1: u,r1'11h1Jalf:d bill wa1 rulo and tax 1,1umphon. the u~ctphon. my t;11. vxemp1Ion
awroved orirJ •,enl tr, tlw Pre~id•,nl vthri ~1gn1:d thll ~,irnri The un,lateralty g,anw,1 can r,1, N1th<Jr-,wn :it lhll ph,iwro of 1h~
pnv;,I~ r,r,~10f:, ;ilf1:1,t1,d t,'I ll,c 111:11 IM1 quf:'.loon1:d !hr, 1alld1t~ of 1,,,,ng autt10n1y without v1oLJUn4 tttr. Con·i11tut1011 N•Hther of
tt,t M~clm(if1t r1r, 11,,: yrwrid !hilt !hr; CJJri, litJJlirinol r,rrNI~,on th630 woro 1,·.u~ by lllo t.,Au1u autnonty ,n ,1 control! t:iwful!y
1uquirir,g lha1 ,JII ,,,.,1,nu1; t,111~ :,hwl1J or,g,n1111: frw, IM Hou~tJ of I i;nte,ed by ,t w Ihu1 tho,r r&voc.at1on would not conbWulll an
Hcpm~ontaUvr,•, tiarJ t,,;1:n v,rJlolr:rJ Rt1,,,lv1: lh•: ,,,,,ue 1mpa,rment or th& ob1iga11on, of contract, (MactDn Cebu
/nttrnaf/onal Airport Aulhor/ry v, Marco,. G.R No. 120082,
ANSWER: lt,r,rr: ,,, no 'll'JloDon c,f 1hr; w nblilut1r,r,;,i r1,qu,rr,m1lnl Soptombor 11, 1oa6).
lhal ;ill rev,,r,u,, bill•, ~htJulrJ ong1r1alr; from lhu Hriu~<J of
Rwr:11t:nlativr:·, Wh;,1 i•, i,roh1b1lf;cJ I•, fr;r lhl; bun;,ti; It, unact SITUS OF TAXATION
11:vr:nu~ rne;,•.ur1:·, or, 11:, owri withr,ut " bill ongIn;,t,rig lrr,rn lh& L1lfJrally, mtu& of taxalron 111U,1fl!> ·p1uc,, o f tw w 1Iori It 1, 1h11 •,t,lht
1
Hvu:;t. flut <,nw tt,b rt;/f:nuo t;1ll '/1iJ~ flil%ud by 1hr: H<1u•,1; and I or p()lttic;il unit wt11ch M fJ jurli;dlChOn IO lmpOt,(J cl p;irt,cular tnx. f hc !<trJIO
~1:nl lo th1J Sc,narc, 1t,r1 laflf:r can p~~5 il'J <,wr, v1;r~I•Jri on tM whom tho &Uh)UCI lo M taxod hat, a Miu<, muy nghtfu lly lt.,vy on(J COll(JCI
,,;,mo bUbJeci rn~llvr r;Jn~m~r,t w1lt1 tt1u J;,flr:r'~ powi,r le, fJr<ipr;•,e 1 th1J tn,c The tiltus 18 nor,es•,arlly In tho 11tatu which h,1<1 1ur1·-,d1c t1on or
or wncur with ;,rn,:ndrn,mt•, Th,~ rolltm~ fwrn thr: C<J-r:'111ahty 'Jr which o,corclse(l ctornln,on ovor tho 'iUltJOC:l in Q110 ...11ori
U1r. two ch~rnti,:r•, r;f Con~ri:c~.
,tfj 21
TOLL TAX
DETERMINING THE SITUS OF Demand of proprie,orship D1Jmand of sovereignty
TO CONSIDER IN
FACTORS Paid for lhe use of anolhor's property Paid for the support of gov1:rnrntint
TAXATION: . . ) Amount Is based on cost of construc1Ion Amount is based on th11 n1;0M1t1P.r, of
• roperty, or ac11v1\y
fl Subject ma1tcr (person, p or maintenance of the public lhe State
Nature of the tr-Ix improvemenl used
b.
c. Citizenship er Maybe Imposed by the government or May be imposed only oy the S1:i10
Residence of the taxpay rivale individuals or enlities
d. Source of Jncome . occupation being taxed
e. . business or
f. Place of excise, 2. TAX versus PENALTY
Penalty is a sanction imposed as a punishment for violat,on of l,1w
&',1•·1•2•:&:til"
,.
1~• 17
ft)l1ili&f•JitVSiW or acts deem injurious. The violation of tax may give right to tmpo,;;I1,on
ai 'J• :,tb , Residence of the taxpayer
Persons of penalty. ·
Location
Real Properly
. Place of sale or transaction
Locat,on. PENALTY TAX
Personal Designed to regulate conduct Primarily aimed al nsmg re-1onuP.
Property hen the intangible has a situs elsewhere
Domicileof the owner excep1w
Intangible May be imposed by the government or May be imposed only by tt1e 9o~emm~n1
Personal such as· rights trademarks: Situs is the place or rivale individuals or enlilies
, Franchise. patents. COPY . •
Property country where suc:11 intangibles are exercised.
. bles· Domicile or residence of the debtor 3, TAX versus SPECIAL ASSESSMENT
, ReceIva . . b k
• Bank deposits: Location of the depository an . . . Special assessment is an enforced proportional contribution from
. domestic corporation of a nonresident alien ani owners of lands for special benefits resultmy from public
k
... shares of stoc in a . · th
taxable in the Philippines because the said shares receive e improvements. In Republic v. Bacolod, 17SCRA632, a special
protection and benefil of the Philippine laws. .:tssessment is a levy on properly which derives some special benefit
from the improvement. Its purpose is to finance such 1mprovernent.
Income " • Source of income . thus accruing only to the own ers thereof wh o , a fter a ll . pay
• Occupation - where the occupation is engaged in
, Transaction _ where the transaction took place the ass essment.
Business Place of the business It Is not a tax m e a sure in tended to raise re venues for t he
Residence or c1t1zensh1p of the 1axpayer; or location of lhe property government because the proceeds thereof may be devoted to
Gratuitous
the specific purpose for which the assessment was autho rized .
Transfer
29
28
4 1AX vor11w1 HEVENUE
. f to nit tho IundsI or tncorno derived by the
r sourcu.
. Huvonuo ro orn tax or any ot ,o
QOVOlfllllOflt, Whothur from ' PAL vs. EDU, 164 SCRA 320 (1988)
The Supreme Court ruled that "Fees· may be regarded as
laxes even though they also serve as instruments of regulation
because taxation may be made as an implementation of the
State ·s po/Ice power. II the purpose of the ·tee· is pnmarity to
raise revenue or if ·revenue· is at least one ol the real and
SU8SIDY
~
gron\od tho govornment to an
5. TAX _vun,u5 lu n pocunlory nld dlrocII rise doomod bonoliciat lo the substantial purposes, then the exaction is property called tax'.. In
I the case provided, the purpose behind the law requiring owners of
Incl vSltl uun:dir privoto coromorclol
, tnx nlt11oug ' may hovo to bo lrnposod lo
on\~ i-Jx
vehicles to pay for their registration Is mainly to raise revenue or
puhllc. Subtildy iu II01 •1
p11y it funds for the construction and maintenance al highways and. to a
much lesser degree. pay the operating expenses of the
0 administering
tax. agency. Hence, such exaction or fee is classified as
1 AX vori;ui.. f'l::.l~Ml1 or LICENSE
, chnran FEE
lrnposod unclor tho pohco powor r01
I '1ir11111 or Lh.:ontlo 111 ' 1
11111pm,m1of woulntion 7. TAX versus DEBT
•13:j
RLICENSE FEE B~sed on contract
I or ruyulnllon l·or rovunuu May bu p,1Id In kind
1
Exorclso ol t11x\11g powur Ganerally payable in money
I ~urc1•.11 ol polico powur Gunurallyno 1111111 Assignable/Moy be th~ sub1ec1of sct-olf
11uwssnry or compensdl1on Cannot generally be assIgnable,sub1ect
A111011nt lb limllud 1u 1110 of set-off or compensalion
A por.;on cannot be unpnsonOd for non-
,,xr,,nsus ul rug11l11tio11
l111pusud (111 lhu right ul ruward ol 011
lmposud also on pur~om, or proporty puyment of debt (except when It anses lmpnsonmeni Is a sanction for non-
from a crime) paymenl of 1ax (exceot poll ta~)
ulti~ur f(lr sµuc1hc survlcu~
Loy.ii compun$11lluII ur row 'ud of llll An onlorcod cont11IH1l1011 [ISSOSS0S ~ Drnw interest when slipulaled or wh~n al Does NOT draw 1nte1est e\cep1 only
olhG1•r 1111 spuc1h1: SUIVICtlS suvorolgn authonly to dofroy PII~ pruscnpt1on default whs>n detin~uent
oxpo11sos
8. TAX versus CUSTOMS DUTIES
I .1Ilu111 tu 11,1y liclll1$U l1w mn~us thu ad An onforcl1d w 11tr11Jut1011 nssesses ~ Customs duties arc taxes imposed on goods exported from or
<H ti11sl11uss 1llogt1I sovoroIyn autho11ty tu dofray putt ir11portt1d into a country
o~pun~os 9. TAX vt1rsus TARIFF
T·mff may be ustid In one of three (3) senses .
1EST IN- OETFHMINING IF THE IMPOS\
, fl ON IS A TAX OR ' . A book of rates drnwn usually in alphabetical order containing
LICENSE f-El: ,1. the nrimes of several kinds or merchandise 'Mth tht1
corresponding duties to be paid for ttie same: or or
If thu pu1µosu is prunonly • ' ,t Ions\,
. or '1ruvomu., 1:-, oneIsdI
. lion b. The duties payabl.o on go~ _s i111porttl~i1'.e~._xr:,~· ,mponation
c. The system or pnncIple. o rmposI11g ,
tho rvnt nnd su!Jstnntlnl purposos. thon tl a• .ux~1~ llconst
tax If tho µurposo is r~guloto,y in nnturti, it Is (or exportation) of goods. . ,r1u"""ab.'y ,n tre T311r
(PAL v. Etlu) 'The term tariff and customs duties ore used int.... =
0 "j~
and CustomsCode
30 31
/ /J7; . . /}
h1/l{t/ll/l'l{frtl ' /'ll/1{<:.{ /
h11t1(/{h/l'l//t1
/ 1)rtl/t'l/7(('.;
1
. . j1
J
ILLUSTRATIVE CASES:
DOUBLE TA
XATION
. strict sense.
double
. ____Q Determine if there is double taxation In the following independent cases:
1n its . d'Irect duphcate I. Jimsom, a lessor of a property, pays the following; real estate tax on the
d to 1s bl ~ Direct double premises, a real estate dealer's tax based on rental receipts and income tax
taxation referre broad sense. doU e
taxation.. In its d to as indirec~ dou~le
' I taxation becomes legally on the rentals. Jimson claims that this is double taxation.Decide.
t~xation Is referre cases 1n which objectionable for being Answer:
.... It xtends to aII oppressive and
taxation. e f two or more There is no double taxation. DOUBLE TAXATION means taxing for the same
. burden o inequitable. It violates
there is a tax period the same thing or activity twice. when 11should be taxed but once.
impositions. bl taxation means the concept of equal by the same taxing authority for the same purpose and with the same kind or
Direct dou e protection, uniformity
· twice · character of tax. The REAL ESTATE TAX is a tax on property; the REAL
taxing h ame taxing authonty, and equitableness of ESTATE DEALER'S TAX is a tax on the privilege to engage In business;
1 By t,,e s . . t
. jurisdiction or taxing d1stnc taxation in • the while the INCOME TAX is a tax on the pnv1lege to earn an income. These
2 For the same purpose . . Constitution. taxes are imposed by different taxing authorities and are essen~ally of
3.- In the same year or_ taxing penod different kind and character (Villanueva vs. City of lloilo, 26 SCRA 578)
4 Same subject or obiect
s.· Same kind/character of the tax II. Municipality of Cordon has an ordinance which requires that all stores.
restaurants, and other establishments selling hquor should pay a fixed annual
There is indirect double/duplicate taxation (Broad Sense - which is fee of PSOO. Subsequently. the municipal board proposed an ordinance
not rohibited by the constitution) if any of the elements descnbed above imposing a sales tax equivalent to 5% of the amount paid for the purchase or
Is P present - Unlike the United States Const1tut1on,
. not . our Constitution
· · consumption of liquor In stores. restaurants and other establishments The
does not expressly prohibit direct double taxation . However, 11 1s municipal mayor, refused to sign the ordinance on the ground that 11 would
something not favored. Such taxation should, whenever possible, be constitute double taxation. Is the refusal of the mayor jus~fied?
avoided and prevented. Answer:
7 No. The refusal of the mayor 1s not 1ustified. The impositions are of different
-RELATED Vll.LANUEVAvs. CITY OF ILOILO (26 SCRA 578)
nature and character. The fixed annual fee Is in the nature of a license fee
CASE The Supreme Court held that there is no constitutional prohibition
imposed through the exercise of pohce power while the 5% tax on purchase or
against 'double taxation' in the Philippines. However. in its strict
consumption is a local tax imposed through the exercise of taxing powflrs
sense. there is "direct" double taxation (stncl sense) when the same I Both a license fee and a tax may be Impose<1 on the same business or
property is taxed twice when it should be taxed once provided
occupal1on, or for selling the same article and thtS Is not 1n v1olat1on of the rul~
both taxes must be imposed
against double taxation (Camparna General de Tabacos de F1l1 p1nos v City of
On the same property or subject matter Manila, 8 SCRA 367 (1963!)
For the same purpose
By the same State/ Government or taxing authonty
MEANS OF AVOIDING OR M INIMIZING THE BURDEN OF TAXATION
Within the same jurisdiction or'taxing distnct 1. Shifting
During the same period; and
• _..!_hey must be the same kind or character of tax Shifting is the transfer of the burden of a tax by the original payer
J or the one on whom the tax was assessed or Imposed to someone
else. Transferred is not the payment of the tax but the burden of the
tax. Only indirect taxes may be shifted; direct taxes cannot be shifted .
32
33
~
ru11l tnrotl1(
11I J,-1,1,·1He.,/I
I
Example: shift tax assessed to .
• Manufacturer or producer ma~t to the retailer, who also shifts It ANSWER:
wholesaler, who ,n tum shifts There is lax avoidance PetJro has explo11ea a fully pormrssr~o
to the final purchaser or consumer. a//emat,ve method lo reduce his income lax by lransfemng part ol
Taxes that may be shifted: . taxes on excisable articles his rontal income lo a lax exempt onuty lhrough a donahon of ono-
VAT. Percentage taxes; Excise . ay BIR upon removal half of lhe income producmg property The oonabon is hkow1w
•• Ad-valorem
• ·1 mpames
taxes that o, co_ P 10 exempl from the dono(s lax. The donaoon rs the legal means ,
of petroIeu m Products from ,ts refinery employed to lransfcr !he inodonce of incomo ~,x on tho ronlal
income
34 35
- / ' I'
l 1~111/,r1t1(lrlr/ I ~tit.-iN,:,
I
corPOrabons are clothed With ~ equipment from XYZ Inc. The laller, in its ordinary bu~1noss :
m,rier.15 1,1~ ~ tax exemptions. But the molllerc dealings. is subiect to a sales lax XYZ Inc. cl11ims, howovcr. rhnt
b LOCAi ~ ,er 10 tal c< to 9· , iox 15 granted, they also have the since It sold the equ,pmenl to ABC Corp which Is lax oxo.mpl, ,t ,
1n11eren, ~ mpose a ~ - !fO'T1 unless forbidden by some should not be liable to pay the sales tax Is th,s cla,m Ien,1blo?
the ~ g~nt ere-r,,000 tt>e<e•the la-". The legislature may
power: 01 me ~ ()( PmptionS to the same extent 11.... ANSWER:
p,oVIS"'"' -er IO g-ant lal eJ. "lc:l No. Exemp~on from laxes ,s pe,sonal ,n nature and covur; only
delegate ilS P"" (!' ~ e1empt. taxes lor which the taxpayer-grantP.e is direcUy hable Tho 5,Jles 1a i
11 rnay eiercist' t!'e pD'/0 ,s a tax on lhe seller who ,s not exempt from taxf:3 S,nce XYZ Inc 16
directly liable for the sates tax and no tax exomp1Ion pn, 1I090 ,s over
Kinds of Exemption given to him, its cla,m that the sale Is tax oxompt ,s not tenable A
As ro oaSJS Mm iax3txin which onginate from the tax exemption Is construed In slflcllssim, JUffS and ,t cannot be
• ConstJIIJt,oN,} 1rr11!li11l>eS permitted to ex,sl upon vague ,mphcations
cons!Jtut,otl ~Jt>eS f:-0'"' tax.oii0'1 Ya-tncn emanates from
• Statutor,• Immu Amnesty
1eg1slaoon II is the general or intentional overlooking by the Stato of ,ts
authority to impose penalties on persons other,11lse guilty of evasion or
As to form .,, rr-ontfd by statute. violation of a revenue or tax law. It partakes of mi nb!.oluto
Exe'Tl;>'.!O'\S eqess:, .,,,, w forgiveness or waiver of the Government of its r1ght to coll&ct It I'l J
1 E,press , :,e~ propety, or rights are deemed
2
2 Implied \','her. p.a'1.CU · '. . · · • · way lo give tax evaders, who wish to relent and are wilhng to rnform il
,,.,..,. ,-,e c ~ of the taxing provIsIon risen.
exem;>t as. !rit:y Ia. OJ->'-'- • ~ ,--w chance to do so.
As to e,ten: Amnesty involves Immunity from all criminal, c1v,I and admm1!,trc11iv1J
1. Tota Co<ir.01.,s ~J'.e r.-.run:-J. . liab1lit1es from non-payment of taxes.
2 Partia' Ore ...~ee a co:.e,-~ c' a part of tne tax rs dispensed
"'r.n 6. Capitalization
The reduction in the selling price ol Incomo produ<:1ng property by an
PRINCIPLES GOVERN!\'., TAX EXWPT10NS amount equal to the capitalized value of future taxes th:-1I rnay bo p:tlrl
Exemptions lrO'Ti taJ.a--oon ;;;e rug.'ll/ c,sfavorf:d in law. He who by the purchaser
cla,ms an e~emp:,on m.iS1 b: ~ ~ r-1stlfy his claim by the clearest
grant of orga'uc or s~"1".e ia.r ~ us<; 1a< ex£:mpl1ons are nd 7. Avoidance
presumed. If ambiguous, r:r..,,-e ,s no tar: f:,(empLon. H€: who claims Tax avoidance is the tax saving dt,vIce w,th,n th•J mc;,,n•.
exem;>!Jon s!lCXl11J t!Xli.nr:n}y ;>-o-.e ma! he ,s £:1.empted. Therefore. sanctioned by law. This method ~hould be use<J by th,, t;i~payur ,n
tax exempooo mus. :.e s:ra:1 c.onsrru,,ci. No Ian granung any lat good fa,lh and at arm's length . Ta.( uVil',1on, on tt111 ott1or t1a11<.l. ,,, .i
exemp!JOn W I b., pa5w~ ·11.:t1.>~1 tr,e cor,rurrenCE: of rll<ljorrly of al sct1erne used oulsrdc of tho% lawful means which ,., nut ac.u,µ1,,bI,,
memt>ers of Corigrrn
Element, of T/J.( Eva~ion
(Commiss,oner of Internal Revcnu-:. µclJIJoner. v <, Thr! E'.>l:ito of
Benigno P Toda . .Jr., GR. No. 1471!$8, $(!pll,rr,b<ir 14, '.lD04)
37
Tfix e:va'.wn c..onnotes the integration of three factors:
a) TM end to oo achieved. i.e ., the payment of less than that
known by the t.a)(payer lo be legally due. o r the non- a ILLUsnu, TIVE .
Frnufr;hli'/f/4 /p . . /'
rt/fa,}/,:.;
of r.ax wnen 11 is shown that a tax is due; P yment CASE Saint Paul Coll J
Henares ( .. ege of Makati vs Ha .
bJ An aa;,o':'padnfyinthg ;1:t~flfofl'!1ind. wh!ch is described as being Tr.e R~IOnaJ Tr.alCivil Case Na. 13-1405 25~ Kim Jacinta S.
·evil.· ,n ba a, , 1111 u , or dellberatP~ and no1 acc1dentai·- • Constitu!;or. _ Cot.r. cf l.ta•,<JO C ' uly2014)
E<luca '· dd re ,ent.es and ff'/ lleid :r.at under :h
and . ller.al ,nslltl.J asser.s of non-"'"'"'- e
c) A courr.e of action or fa ilure of action v,h,' ch ·1s un 1aw1ul cOIJCa!lQrial tlons uSed actually Cir ~ - non-orofit
Upan 111e o!::,'r-<:.es snail :ie exe~t ~ a~o exc:~eiy tor
J .1
39
38
,.
. . ~,,ir:wr11rln-,,11yt' I/
I
•
~ept1on: . While • it is not favored ·'
re
• troac · ad s1atute may neverth e1ess operate
t tB1ve1y provided it is expressly
Construction of Tax Laws 1nten . ut a tax law should not be g·ecIared or is clearly th e 1eg1s · 1alive
.
Publi<! purpose is always presumed. wou be harsh and oppress· . iven retroactive applicati·on h .
If tile law 1s clear. apply the law in accordance to its plain and • h Id • 1ve which · 1 w en 1t
fig ts regarding equity and d vio ate the taxpayer's consn t'
simple tenor.
A statute will not be construed as imposing a tax unless it does so
Phil. 934; CIR vs Filipinas Cia ~: f~
0
~~ss (Fernandez vs Fernan~~;~n9a~
of \he Tax Code also provides that a; os - 107 Pht/. 1055). Section 246
'
clearly, expressly and unambiguously. of any of the rules and regular y _revocation, modification or reversal
In case of doubt. it is construed most strongly against the
Sections 244 and 255 or any f th ions_ promulgated in accordance ·th
Government, and /Jberally in favor of the taxpayer. • · 0 e rulings O • w1
Comm1ss1oner shall not be gi . r circulars promulgated by th ,
Provisions of a taxing act are not to be extended by implication. ·rr t· ven retroactive 1· . e
Tax laws operate prospectively unless the purpose of the
mo 11ca 10n or reversal will be p . d' .
d
app 1cat1on if the revocation
reJu ic1al lo the taxpayers , r
legislature to give re trospective effect is expressly declared or may I
Taxpayer's Suit
be implied from the language used.
Tax laws are special laws and prevail over a general law. It is o_ne brought or filed b a tax .
statute and its enactment or / payer arguing the validity of a tax
1
purpose. II is a case where th e ~onst1tut1onahty of its alleged public
RULE WHEN THERE JS DOUBT IN STATUTE OR LAW illegal disbursement of public f~n~c ~omplained of directly involves the
No person or property is subject to taxation unless within the terms or
have locus standi to question th s ~nved from taxation. Taxpayers
plain import of a taxing statute. In every case of doubt, tax statutes are expenditures of public money. In se ~a idity of lax measures or illegal
construed strictly against the government and liberally in favor of the th
who will be prejudiced or benefited ui ~:ses, . ey are parties in interest
taxpayer (Davao Gulf Lumber Corporation v. Commissioner of Internal 1
rule is that not only persons individu1il ffavails of the suit. The general
Reven ue, et al. , 293 SCRA 76, 88). Taxes, being burdens, are not to be
sufficient interest of preventing the ille Y a ected_nd1 but also taxpayers have
presumed beyond what the statute expressly and clearly declares. 1
taxation. They may, therefore ga tpe tures of money raised by
~~\
(Lincoln Philippine Life Insurance Company, Inc., etc., v. Court of Appeals, 1 th
constitutionality of statutes requiringqt~:s ~. e proper court the
et al. , 293 SCRA 92, 99). a taxpayer is not relieved from the obli .P n iture_ of public funds. But
his belief
. that f it is being misappropriateJ~ly1ocnertofa1n
payffi
o1ng_ a tax
1c1als, forbecause
otherwiseof
PROVISIONS GRANTING TAX EXEMPTIONS
Such provisions are construed strictly against the taxpayer claim ing coIIect1011· o taxes
. would be hampered an d th'1s may result ,n . the•
tax exemption. When a tax is unquestionably imposed, a claim of para 1yzat1on of important governmental functions In L d
Come/
. ec, "It ·is on y when an act complained of which · mayoza a vs;
include
exemption from tax payments must be clearly shown and based on 1
language in the law too plain to be mistaken. (Davao Gulf Lumber leg,slallve enactment of a statute, involves the illegal expenditure of public
Corporation ) money that the s.o-called taxpayers' suirmay be allowed.
; Manila Electric Company v. Vera, [67 SCRA351]
41
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i