TAX REVIEWER

GENERAL PRINCIPLES
DEFINITION OF TAXATION
Taxation is the inherent power of the sovereign, exercised through the legislature, to
impose burdens upon the subjects and objects within its jurisdiction, for the purpose of raising
revenues to carry out the legitimate objects of the government.
TAXES
Enforced proportional contributions from properties and persons levied by the State by
virtue its sovereignty for the support of the government and for public needs.
BASIS OF TAXATION
> G!E"#$E#T%& #E'ESS(T)
* The existence of the government depends upon its capacity to perform its two +,- basic
functions.
%.. to serve the people
/.. to protect the people
THEORY OF TAXATION
>"E'(0"'%& 12T(ES 3 S200"T %#1 0"TE'T(#
4- Support on the part of the taxpayers
,- 0rotection and benefits on the part of the government
BENEFITS RECEIVED PRINCIPLE
+CIR vs. ALGUE-
1espite the natural reluctance to surrender part of ones hard earned income to the taxing
authority, every person who is able to must contribute his share in the running of the
government.
The government is expected to respond in the form of tangible or intangible benefits
intended to improve the lives of the people and enhanced their material and moral
values.
(n return for his contribution, the taxpayer receives the general advantages and protection
which the government affords the taxpayer and his property. ne is compensation or
consideration for the other. 0rotection for support and support for protection.
5owever, it does not mean that only those who are able to
pay taxes can enjoy the privileges and protection
given to a citi6en by the government.
LORENZO vs. POSADAS
> The only benefit to which the taxpayer is entitled is that derived form the enjoyment of
the privileges of living in an organi6ed society established and safeguarded by the
devotion of taxes to public purpose. The government promises nothing to the person
taxed beyond what maybe anticipated from an administration of the laws for the general
good.
> Taxes are essential to the existence of the government. The
obligation to pay taxes rests not upon the privileges enjoyed by or the protection afforded
to the citi6en by the government, but upon the necessity of money for the support of the
State. 3or this reason, no one is allowed to object to or resist payment of taxes solely
because no personal benefit to him can be pointed out as arising from the tax.
ESSENTIAL ELEMENTS OF A TAX
4- (t is an enforced contribution
,- (t is generally payable in money
7- (t is proportionate in character
8- (t is levied on persons, property, or the exercise of a right or privilege
9- (t is levied by the State which has jurisdiction over the subject or object of taxation
:- (t is levied by the law;ma<ing body of the State
=- (t is levied for publics purpose or purposes
REQUISITES of a VALID TAX code. >P, U, J, A, N?
4- (t should be for a public purpose
,- The rule of taxation should be uniform
7- That either the person or property taxed be within the jurisdiction of the taxing authority
8- That the assessment and collection be in consonance with the due process clause
9- The tax must not infringe on the inherent and constitutional limitations of the power of
taxation
*> Taxes are the lifeblood of the government and should be collected without unnecessary
hindrance. /ut their collection should not be tainted with arbitrariness
NATURE OF TAXATION
4- (nherent in sovereignty
,- &egislative in character
SCOPE OF TAXATION
4- 'omprehensive
,- 2nlimited
7- 0lenary
8- Supreme
TOLENTINO vs. SEC. Of FINANCE
> (n the selection of the object or subject of taxation the courts have no power to in@uire
into the wisdom, objectivity, motive, expediency or necessity of such tax law. +A$E#-
PURPOSES OF TAXATION
0"($%")
- To raise revenue in order to support the government
SE'#1%")
4- 2sed to reduce social ine@uality
,- 2tili6ed to implement the police power of the State
7- 2sed to protect our local industries against unfair competition
8- 2tili6ed by the government to encourage the growth of local industries
PAL vs. EDU
> (t is possible for an exaction to be both a tax and a regulation. &icense fees and
charges, loo<ed to as a source of revenue as well as a means regulation. The fees may
properly regarded as taxes even though they also serve as an instrument of regulation. (f
the purpose is primarily revenue, or if revenue is at least one of the real and substantial
purposes, then the exaction is properly called a tax.
CALTEX vs.. CIR
> Taxation is no longer a measure merely to raise revenue to support the existence of the
government. Taxes may be levied with a regulatory purpose to provide means for
rehabilitation and stabili6ation of a threatened industry which is affected with public
interest as to be within the police power of the State.
LIFEBLOOD DOCTRINE
> Taxes are the lifeblood of the nation
> Aithout revenue raised from taxation, the government will not survive, resulting in
detriment to society. Aithout taxes, the government would be paraly6ed for lac< of motive
power to activate and operate it. +CIR vs. ALGUE-
> Taxes are the lifeblood of the government and there prompt and certain availability is
an imperious need.
> Taxes are the lifeblood of the nation through which the agencies of the government
continue to operate and with which the state effects its functions for the benefit of its
constituents
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ILLUSTRATIONS OF THE LIFEBLOOD THEORY
4- 'ollection of the taxes may not be enjoined by injunction
,- Taxes could not be the subject of compensation or set off
7- % valid tax may result in destruction of the taxpayerBs property
8- Taxation is an unlimited and plenary power
POWER TO TAX AND POWER TO DESTROY
* > The power to tax includes the power to destroy if it is used as an implement of the police
power +regulatory- of the State. However, it does not include the power to destroy if it is used
solely for the purpose of raising revenue. +ROXAS vs. CTA-
#TES.
> (f the purpose of taxation is regulatory in character, taxation is used to implement the
police power of the state
> (f the power of taxation is used to destroy things, businesses, or enterprises and the
purpose is to raise revenue, the court will come in because there will be violation of the
inherent and constitutional limitations and it will be declared invalid.
NATURE OF THE TAXING POWER
4- %ttribute of sovereignty and emanates from necessity, relin@uishment of which is never
presumed
,- &egislative in character, and
7- Subject to inherent and constitutional limitations
NECESSITY THEORY
> Existence of a government is a necessity and cannot continue without any means to
pay for expenses
BENEFITS PROTECTION THEORY
> "eciprocal duties of protection and support between State and inhabitants. (nhabitants
pay taxes and in return receive benefits and protection from the State
SCOPE OF LEGISLATIVE TAXING POWER
4- The persons, property and excises to be taxed, provided it is within its jurisdiction
,- %mount or rate of tax
7- 0urposes for its levy, provided it be for a public purpose
8- Cind of tax to be collected
9- %pportionment of the tax
:- Situs of taxation
=- $ethod of collection
ASPECTS OF TAXATION
4- &E!) or ($0S(T(#
enactment of tax laws
legislative in character
,- %SSESS$E#T
collection
administrative in character
#TES.
> (t is inherent in the power to tax that the State is free to select the object of taxation
> The power of he !e"#s!$%re o #&pose $' #()!%*es he power
4- what to tax
,- whom to tax
7- how much to tax
BAGATSING vs. RA+IREZ
3
> Ahat cannot be delegated is the legislative enactment of a tax measure but as regards
to the administrative implementation of a tax law that can be delegated.
> The collection may be entrusted to a private corporation.
> The rule that the power of taxation cannot be delegated does not apply to the
administrative implementation of a tax law
> There is no violation because what is delegated or entrusted is the collection and not
the enactment of such laws
> The issuance of regulations or circulars by the /(" or the Secretary of 3inance should
not go beyond the scope of the tax measure
BASIC PRINCIPLES OF A SOUND TAX SYSTEM
4- T5E"ET('%& D2ST('E
,- 3(S'%& %1EE2%')
7- %1$(#(ST"%T(!E 3E%S(/(&(T)
#TES.
FISCAL ADEQUACY
- !(&%T(# F !%&(1
> Sources of revenue should be sufficient to meet the demands of public expenditure
> "evenues should be elastic or capable of expanding or contracting annually in
response to variations in public expenditure
>Elasticity may be obtained without creating annually any new taxes or any new tax
machinery but merely by changes in the rates applicable to existing taxes
> Even if a tax law violates the principle of 3iscal %de@uacy , in other words, the
proceeds may not be sufficient to satisfy the needs of the government, still the tax law is
valid
ADMINISTRATIVE FEASIBILITY
- !(&%T(# F !%&(1
> The tax law must be capable of effective or efficient enforcement
> Tax laws should be capable of convenient, just and effective administration
> Tax laws should close;up the loopholes for tax evasion and deter unscrupulous officials
from committing fraud
> There is no law that re@uires compliance with this principle, so even if the tax law
violates this principleG such tax law is valid.
THEORETICAL JUSTICE
- !(&%T(# F (#!%&(1
> This principle mandates that taxes must be just, reasonable and fair
Taxation shall be uniform and e@uitable
> E@uitable taxation has been mandated by our constitution, as if taxes are unjust and
unreasonable then they are not e@uitable, thus invalid.
> The tax burden should be in proportion to the taxpayers ability to pay +ABILITY TO
PAY PRINCIPLE-
DISTINCTIONS.
TAXATION v! POLICE POWER v! EMINENT DOMAIN
4- As o p%rpose.
T$'$#o( F for the support of the government
E&#(e( Do&$#(H; for public use
Po!#)e Power F to promote general welfare, public health, public morals, and public
safety.
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,- As o )o&pe(s$#o(.
T$'$#o( F 0rotection and benefits received from the government.
E&#(e( Do&$#( F just compensation, not to exceed the mar<et value declared by the
owner or administrator or anyone having legal interest in the property, or as determined
by the assessor, whichever is lower.
Po!#)e Power F The maintenance of a healthy economic standard of society.
/- As o perso(s $ffe)e*.
T$'$#o( $(* Po!#)e Power F operate upon a community or a class of individuals
E&#(e( Do&$#( F operates on the individual property owner.
8- As o $%hor#0 wh#)h e'er)#ses he power.
T$'$#o( $(* Po!#)e Power F Exercised only by the government or its political
subdivisions.
E&#(e( Do&$#( F may be exercised by public services corporation or public utilities if
granted by law.
9- As o $&o%( of #&pos##o(.
T$'$#o( F Generally no limit to the amount of tax that may be imposed.
Po!#)e Power F &imited to the cost of regulation
E&#(e( Do&$#( F There is no impositionG rather, it is the owner of the property ta<en
who is just paid compensation.
:- As o he re!$#o(sh#p o he Co(s#%#o(.
T$'$#o( $(* E&#(e( Do&$#( F Subject to certain constitutional limitations, including the
prohibition against impairment of the obligation of contracts.
Po!#)e Power 1 "elatively free from constitutional limitations and superior to the non;
impairment provisions thereof.
TAX DISTINGUISHED FROM LICENSE FEE"
a- PURPOSE. Tax imposed for revenue A5(&E license fee for regulation. Tax for general
purposes A5(&E license fee for regulatory purposes only.
b- BASIS. Tax imposed under power of taxation A5(&E license fee under police power.
c- A+OUNT. (n taxation, no limit as to amount A5(&E license fee limited to cost of the
license and expenses of police surveillance and regulation.
d- TI+E OF PAY+ENT. Taxes normally paid after commencement of business A5(&E
license fee before.
e- EFFECT OF PAY+ENT. 3ailure to pay a tax does not ma<e the business illegal A5(&E
failure to pay license fee ma<es business illegal.
f- SURRENDER. Taxes, being lifeblood of the state, cannot be surrendered except for
lawful consideration A5(&E a license fee may be surrendered with or without
consideration.

I+PORTANCE OF DISTINCTION BET2EEN TAXES AND LICENSE FEES.
(t is necessary to determine whether a particular imposition is a tax or a license fee,
because some limitations apply only to one and not to the other.
3urthermore, exemption from taxes does not include exemption from license fees
TAXES DISTINGUISHED FROM OTHER IMPOSITIONS.
4- #o$$ F amount charged for the cost and maintenance of property usedG
,- %o&'(o&)* '*+a$#, F amount collected in lieu of criminal prosecution in cases of tax
violationsG
7- '*%)a$ a*&*+# F levied only on land based wholly on the benefit accruing thereon
as a result of improvements of public wor<s underta<en by government within the vicinity.
8- $)%*+* f** F regulatory imposition in the exercise of the police power of the StateG
5
9- &a(-)+ f** F exaction designed to stabili6e the currency
:- %.#o& /.#)* a+/ f** F duties charged upon commodities on their being imported into
or exported from a countryG
=- /*0# a tax is not a debt but is an obligation imposed by law.
S'*%)a$ a*&*+# v! #a1
4. % special assessment tax is an enforced proportional contribution from owners of
lands especially benefited by public improvements
,. % special assessment is levied only on land.
7. % special assessment is not a personal liability of the person assessedG it is limited to
the land.
8. % special assessment is based wholly on benefits, not necessity.
9. % special assessment is exceptional both as to time and placeG a tax has general
application.
Rep%3!#) v. B$)o!o*4 56 SCRA 7/,
% special assessment is a levy on property which derives some special benefit from the
improvement. (ts purpose is to finance such improvement. (t is not a tax measure
intended to raise revenues for the government. The proceeds thereof may be devoted to
the specific purpose for which the assessment was authori6ed, thus accruing only to the
owners thereof who, after all, pay the assessment.
Some "ules.
%n exemption from taxation does not include exemption from a special treatment.
The power to tax carries with it a power to levy a special assessment.
To$$ v! #a1
4. To!! is a sum of money for the use of something. (t is the consideration which is paid for
the use of a road, bridge, or the li<e, of a public nature. T$'es4 on the other hand, are
enforced proportional contributions from persons and property levied by the State by
virtue of its sovereignty for the support of the government and all public needs.
,. To!! is a demand of proprietorshipG $' is a demand of sovereignty.
7. To!! is paid for the used of anotherBs propertyG $' is paid for the support of government.
8. The amount paid as toll depends upon the cost of construction or maintenance of the
public improvements usedG while there is no limit on the amount collected as tax as long
as it is not excessive, unreasonable, or confiscatory.
9. To!! may be imposed by the government or by private individuals or entitiesG $' may be
imposed only by the government.
Ta1 v! '*+a$#,
4. Pe($!0 is any sanction imposed as a punishment for violation of law or for acts
deemed injuriousG $'es are enforced proportional contributions from persons and
property levied by the State by virtue of its sovereignty for the support of the
government and all public needs.
,. Pe($!0 is designed to regulate conductG $'es are generally intended to generate
revenue.
7. Pe($!0 may be imposed by the government or by private individuals or entities8
$'es only by the government.
O0$)-a#)o+ #o 'a, /*0# v! o0$)-a#)o+ #o 'a, #a1
6
4. % *e3 is generally based on contract, express or implied, while a $' is based on laws.
,. % *e3 is assignable, while a $' cannot generally be assigned.
7. % *e3 may be paid in <ind, while a $' is generally paid in money.
8. % *e3 may be the subject of set off or compensation, a $' cannot.
9. % person cannot be imprisoned for non;payment of tax, except poll tax.
:. % *e3 is governed by the ordinary periods of prescription, while a $' is governed by the
special prescriptive periods provided for in the #("'.
=. % *e3 draws interest when it is so stipulated or where there is default, while a $' does
not draw interest except only when delin@uent.
R*2.))#* of %o&'*+a#)o+
4. That each one of the obligor be bound principally, and that he be at the same time a
principal creditor of the other.
,. That both debts consist in a sum of money, or if the things due are consumable, they be
of the same <ind and also of the same @uality if the latter has been stated.
7. That the two +,- debts be due.
8. That they be li@uidated and demandable.
9. That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtors.
R.$* (*" *# off o( %o&'*+a#)o+ of /*0#
G*+*(a$ (.$*. % tax delin@uency cannot be extinguished by legal compensation. This is
so because the government and the tax delin@uent are not mutually creditors and
debtors. #either is a tax obligation an ordinary act. $oreover, the collection of a tax
cannot await the results of a lawsuit against the government. 3inally, taxes are not in the
nature of contracts but grow out of the duty to, and are the positive acts of the
government to the ma<ing and enforcing of which the personal consent of the taxpayer is
not re@uired. 9Fr$()#$ v. IAC4 57, SCRA 6:; $(* Rep%3!#) v. +$&3%!$o L%&3er4 ;
SCRA 7,,-
E1%*'#)o+ . S' allowed set off in the case of Do&#("o v. G$r!#os <= SCRA ;;/? re. claim
for payment of unpaid services of a government employee vis;I;vis the estate taxes due
from his estate. The fact that the court having jurisdiction of the estate had found that the
claim of the estate against the government has been appropriated for the purpose by a
corresponding law shows that both the claim of the government for inheritance taxes and
the claim of the intestate for services rendered have already become overdue and
demandable as well as fully li@uidated. 'ompensation therefore ta<es place by operation
of law.
Philex Mining Corporation v. Commissioner, 294 SCRA 687 (998!
0hilex $ining 'orporation was to set off its claims for !%T input creditJrefund for the
excise taxes due from it. The Supreme 'ourt disallowed such set off or compensation.
S.(v*, of P3)$)'')+* Ta1*
7
A. I(er($! Reve(%e $'es #&pose* %(*er he NIRC.
4. (ncome tax
,. Transfer taxes
a- Estate tax
b- 1onorBs tax
7. 0ercentage taxes
a- !alue %dded Tax
b- ther 0ercentage Taxes
8. Excise taxes
9. 1ocumentary stamp tax
B. Lo)$!> +%(#)#p$! T$'es
C. T$r#ff $(* C%so&s D%#es
D. T$'es > T$' I()e(#ves %(*er spe)#$! !$ws
CLASSIFICATION OF TAXES
AS TO SUB?ECT +ATTER OR OB?ECT
4. 0ersonal, poll or capitation tax
Tax of a fixed amount imposed on persons residing within a specified territory, whether
citi6ens or not, without regard to their property or the occupation or business in which they may
be engaged, i.e. community tax.
,. 0roperty tax
Tax imposed on property, real or personal, in proportion to its value or in accordance with
some other reasonable method of apportionment.
7. Excise tax
% charge impose upon the performance of an act, the enjoyment of privilege, or the engaging
in an occupation.
AS TO PURPOSE
GeneralJfiscal revenue tax is that imposed for the purpose of raising public funds for the
service of the government.
% special or regulatory tax is imposed primarily for the regulation of useful or non;useful
occupation or enterprises and secondarily only for the purpose of raising public funds.
AS TO 2HO BEARS THE BURDEN
4. 1irect tax
% direct tax is demanded from the person who also shoul,ders the burden of the tax. (t is a tax
which the taxpayer is directly or primarily liable and which he or she cannot shift to another.
,. (ndirect tax
%n indirect tax is demanded from a person in the expectation and intention that he or she
shall indemnify himself or herself at the expense of another, falling finally upon the ultimate
purchaser or consumer. % tax which the taxpayer can shift to another.
AS TO THE SCOPE OF THE TAX
4. #ational tax
% national tax is imposed by the national government.
8
,. &ocal tax
% local tax is imposed by the municipal corporations or local government units +&G2s-.
AS TO THE DETER+INATION OF A+OUNT
4. Specific tax
% specific tax is a tax of a fixed amount imposed by the head or number or by some other
standard of weight or measurement. (t re@uires no assessment other than the listing or
classification of the objects to be taxed.
,. %d valorem tax
%n ad valorem tax is a fixed proportion of the value of the property with respect to which the
tax is assessed. (t re@uires the intervention of assessors or appraisers to estimate the value of
such property before due from each taxpayer can be determined.
AS TO GRADUATION OR RATE
4. 0roportional tax
Tax based on a fixed percentage of the amount of the property receipts or other basis to be
taxed. Example. real estate tax.
,. 0rogressive or graduated tax
Tax the rate of which increases as the tax base or brac<et increases.
1igressive tax rate. progressive rate stops at a certain point. 0rogression halts at a particular
stage.
7. "egressive tax
Tax the rate of which decreases as the tax base or brac<et increases. There is no such tax in
the 0hilippines.
TAX SYSTEMS
Co+#)#.#)o+a$ &a+/a#*
The rule of taxation shall be uniform and e@uitable. The 'ongress shall evolve a
progressive system of taxation. >Se)#o( ,= 95-4 Ar#)!e @I4 Co(s#%#o(?
"egressivity is not a negative standard for courts to enforce. Ahat 'ongress is re@uired
by the 'onstitution to do is to Aevo!ve $ pro"ress#ve s0se& of $'$#o(.B This is a
directive to 'ongress, just li<e the directive to it to give priority of the enactment of law
for the enhancement of human dignity. The provisions are put in the 'onstitution as
moral incentives to legislation, not as judicially enforceable rights. 9To!e(#(o v. Se)re$r0
of F#($()e.-
Progressive s"stem o# taxation v. regressive s"stem o# taxation
% pro"ress#ve s0se& of $'$#o( means that tax laws shall place emphasis on direct
taxes rather than on indirect taxes, with ability to pay as the principal criterion.
% re"ress#ve s0se& of $'$#o( exists when there are more indirect taxes imposed than
direct taxes.
#o regressive taxes in the 0hilippine jurisdiction
9
CLASSIFICATION OF TAXES.
4. perso($! $' F also <nown as capitali6ation or poll taxG
,. proper0 $' F assessed on property of a certain classG
7. *#re) $' F incidence and impact of taxation falls on one person and cannot be shifted
to anotherG
8. #(*#re) $' F incidence and liability for the tax falls on one person but the burden thereof
can be passed on to anotherG
9. e')#se $' F imposed on the exercise of a privilegeG
:. "e(er$! $'es F taxes levied for ordinary or general purpose of the governmentG
=. spe)#$! $' 1 levied for a special purposeG
K. spe)#f#) $'es F imposed on a specific sum by the head or number or by some
standards of weight or measurementG
L. $* v$!ore& $' F tax imposed upon the value of the articleG
4M. !o)$! $'es F taxes levied by local government units pursuant to validly delegated power
to taxG
44. pro"ress#ve $'es F rate increases as the tax base increasesG and
4,. re"ress#ve $'es F rate increases as tax base decreases.
GENERAL RULE"
- Taxes are personal to the taxpayer. 'orporationBs tax delin@uency cannot be enforced on
the stoc<holder or transfer taxes on the estate be assessed on the heirs.
EXCEPTIONS
4. stoc<holders may be held liable for unpaid taxes of a dissolved corporation if the
corporate assets have passed into their handsG and
,. heirs may be held liable for the transfer taxes on the estate, if prior to the payment of
the same, the properties of the decedent have been distributed to the heirs.
LIMITATIONS ON THE POWER OF TAXATION
I+3*(*+# L)&)#a#)o+
4. (t must be imposed for a public purpose.
,. (f delegated either to the 0resident or to a &.G.2., it should be validly delegated.
7. (t is limited to the territorial jurisdiction of the taxing authority.
8. Government entities are exempted.
9. (nternational comity is recogni6ed i.e. property of foreign sovereigns are not subject to
tax.
Co+#)#.#)o+a$ $)&)#a#)o+ F
I(*#re) F
a- 1ue process clause
b- E@ual protection clause
10
c- 3reedom of the press
d- "eligious freedom
e- #on;impairment clause
f- &aw;ma<ing process F
4. ne;subject F ne;title "ule
,. 7 readings on 7 separate days "ule except when there is a
'ertificate of Emergency
7. 1istribution of copies 7 days before the 7
rd
reading.
g- 0residential power to grant reprieves, commutations and pardons, and remit fines and
forfeitures after conviction by final judgment.
D#re) 1
a- "evenue bill must originate exclusively in 5.". but the Senate may propose with amendments.
b- #on;imprisonment for non;payment of poll tax.
c- Taxation shall be uniform and e@uitable.
d- 'ongress shall evolve a progressive system of taxation.
e- Tax exemption of charitable institutions, churches and personages or convents appurtenant
thereto, mos@ues, non;profit cemeteries, and all lands, buildings and improvements %1E
+actually, directly , exclusively- used for charitable, religious, and educational purposes.
f- Tax exemption of all revenues and assets used %1E for educational purposes of F
4. #on;profit non;stoc< educational institutions.
,. 0roprietary or cooperative educational institutions subject to limitations provided by
law including F
a- restriction on dividends
b- provisions for re;investments.
g- Tax exemption of grants, endowments, donations or contributions %1E for educational
purposes, subject to conditions prescribed by law.
h- #o tax exemption without the concurrence of a majority of all members of 'ongress.
i- S' power to review judgments or orders of lower courts in all cases involving F &egality of any
tax. (mpost or toll, &egality of any penalty imposed in relation thereto.
INHERENT LIMITATIONS
#TES. PUBLIC PURPOSE F
GO@ERN+ENTAL PURPOSE
RULE.
NThe &egislature is without the power to appropriate revenues for anything but for public
purposes.O
11
RULE.
N0ublic money can only be spent for a public purpose.O
PUBLIC PURPOSE F % purpose affecting the inhabitants of the State or taxing district as a
community and not merely as individuals
> 0ublic purpose includes not only direct benefits or advantage, it also includes indirect
benefits or advantage
TIO vs. @IDEOGRA+
> (t is not the immediate result but the ultimate result that determines, whether the
purpose is public or not
> (t is not the number of persons benefited but it is the character of the purpose that
determines the public character of such tax law
> Ahat is not allowed is that if it has no lin< to public welfare
> 0ublic purpose is determined by the use to which the tax money is devoted
> (f it benefits the community in general then it is for a public purpose no matter who
collects it
TEST
4. (f the public advantage or benefit is merely incidental in the promotion of a particular
enterprise, that will render the law (#!%&(1
,. (f what is incidental is the promotion of a private enterprise, the tax law is still for a
public purpose+!%&(1-
> % tax levied for a private, not public purpose constitutes ta<ing of property without due
process of law as it is beyond the powers of the government to impose it.
> %lthough private individuals are directly benefited, the tax would still be valid, provided
such benefit is only incidental
> (f what is incidental is the promotion of a private enterprise, as long as there is a lin< to
the public welfare, the purpose is still public
> The test is not as to who receives the money, but the character of the purpose for
which it is expended
> #ot the immediate result of the expenditure, but rather the ultimate
> The es h$ &%s 3e $pp!#e* #( *eer&#(#(" wheher he p%rpose #s p%3!#) or pr#v$e
4- The character of the direct object
,- The ultimate result not the immediate result
7- The general welfare for public good
TEST OF RIGHTFUL TAXATION
- 0roceeds of a tax must be used
4- for the support of the government
,- for any of the recogni6ed objects of the government
7- to promote the welfare of the community
12
LEGISLATIVE PREROGATIVE
RULE. (t is 'ongress which has the power to determine whether the purpose is public or
private
> )ou can always @uestion the validity of such tax measure on the ground that it is not for
a public purpose before the courts. /ut once it is settled that it is for a public purpose, you
can no longer in@uire on such tax measure
TAXPAYERS SUIT
- a case where the act complained of directly involves the illegal disbursement of public
funds derived from taxation
> courts discretion to allow
> Taxpayers have sufficient interest of preventing the illegal expenditures of money
raised by taxation +NOT 1#%T(#S %#1 '#T"(/2T(#S-
> % taxpayer is not relieved from the obligation of paying a tax because of his belief that it
is being misappropriated by certain officials
> % taxpayer has no legal standing to @uestion executive acts that do not involve the use
of public funds. +GONZALES vs. +ARCOS-
LOZADA vs. CO+ELEC
> (t is only when an act complained of which may include a legislative enactment of a
statute, involves the illegal expenditure of public money that the so;called taxpayers suit
may be allowed.
CALTEX vs. COA
> Taxpayers may be levied with a regulatory purpose to provide means for the
rehabilitation and stabili6ation of a threatened industry which is affected with the public
interest as to be within the police power of the State.
> % law imposing burdens may be both a tax measure and an exercise of the police
power in which case the license fee may exceed the necessary expenses of police
surveillance and regulation.
REQUISITES FOR A TAXPAYERS PETITION
4- That money is being extracted and spent in violation of specific constitutional protections
against abuses of legislative power
,- That public money is being deflected to any improper purpose
7- That the petitioner see<s to restrain respondents from wasting public funds through the
enforcement of an invalid or unconstitutional law.
CILOS BAYAN vs. GUINGONA
> The Supreme 'ourt has discretion whether or not to entertain taxpayers suit and could
brush aside lac< of locus standi
CONCEPTS RELATIVE TO PUBLIC PURPOSE
13
4- (ne@ualities resulting from the singling out of one particular class for taxation or
exemption infringe no constitutional limitation
(t is inherent in the power to tax that the legislature is free to select the subject of
taxation
,- %n individual taxpayer need not derive direct benefits from the tax
The paramount consideration is the welfare of the greater portion of the
population
7- 0ublic purpose is continually expanding. %reas formerly left to private initiative now loose
their boundaries and may be underta<en by the government, if it is to meet the increasing
social challenges of the times
8- 0ublic purpose is determined at the time of enactment of the tax law and not at the time
of implementation
#TES. INTERNATIONAL COMITY
- /ased on tradition, practice or custom
DOCTRINE OF INCORPORATION
> The Ph#!#pp#(es $*ops he "e(er$!!0 $))epe* pr#()#p!es of #(er($#o($! !$w $s p$r of
he !$w of he !$(*
> (f a tax law violates certain principles of international law, then it is not only invalid but
also unconstitutional
GROUNDS FOR TAX EXEMPTION OF FOREIGN GOVERNMENT PROPERTY
4- Sovereign e@uality of States
,- 2sage among States
7- (mmunity from suit of a State
#TES. NON4DELEGATION OF THE POWER TO TAX
GENERAL RULE.
- The power of taxation is peculiarly and exclusively legislative, therefore, it may not be
delegated
EXCEPTIONS"
4- 1elegation to the 0resident
,- 1elegation to local government units
7- 1elegation to administrative units
POWERS WHICH CANNOT BE DELEGATED
14
4- 1etermination of the subjects to be taxed
,- 0urpose of the tax
7- %mount or rate of the tax
8- $anner, means and agencies of collection
9- 0rescription of the necessary rules with respect thereto
DELEGATION TO THE PRESIDENT
> 'ongress may authori6e, by law, the 0resident to fix, within specified limits and subject
to such limitations and restrictions as it may impose
4- Tariff rates
,- (mport and export @uotas
7- Tonnage and wharfage dues
8- ther duties and import within the national development program of the government
> There must be a law authori6ing the 0resident to fix tariff rates
> The delegation of power must impose limitations and restrictions and specify the
minimum as well as the maximum tariff rates.
FLEXIBLE TARIFF CLAUSE +SE'. 8M4 T''-
- (n the interest of national economy, general welfare andJor national security, the
0resident upon the recommendation of the #ational Economic and 1evelopment
%uthority is empowered.
4- To increase, reduce or remove existing protective rates of import duty, prov#*e* that the
increase should not be higher than 4MMP ad valorem
,- To establish import @uota or to ban imports of any commodity
7- To impose additional duty on all imports not exceeding 4MP ad valorem
DELEGATION TO LOCAL GOVERNMENT UNITS
> Each local government unit has the power to create its own revenue and to levy taxes,
fees and charges subject to such guidelines and limitations as the 'ongress may provide
+ART X Se) :-
> &ocal government units have no power to further delegate said constitutional grant to
raise revenue, because what is delegated is not the enactment or the imposition of a tax,
it is the administrative implementation
BASCO vs. PAGCOR
> The power of local government units to impose taxes and fees is always subject to the
limitations which 'ongress may provide, the former having no inherent power to tax.
15
> $unicipal corporations are mere creatures of 'ongress which has the power to create
and abolish municipal corporations. 'ongress therefore has the power to control over
local government units. (f 'ongress can grant to a municipal corporation the power to tax
certain matters, it can also provide for exemptions or even ta<e bac< the power
DELEGATION TO ADMINISTRATIVE AGENCIES
> 3or the delegation to be constitutionally valid, the law must be complete in itself and
must set forth sufficient standards
> 'ertain aspects of the taxing process that are not really legislative in nature are vested
in administrative agencies. (n these cases, there really is no delegation, to wit.
%- power to value property
/- power to assess and collect taxes
'- power to perform details of computation, appraisement or adjustments.
#TES. EXEMPTION OF GOVERNMENT AGENCIES
4- %gencies performing governmental functions
D TAX EXE+PT
,- %gencies performing proprietary functions
> SUB?ECT TO TAX
* > The exemption applies only to governmental entities through which the government
immediately and directly exercises its sovereign powers.
NDC vs. CEBU CITY
> Tax exemption of property owned by the "epublic of the 0hilippines refers to the
property owned by the government and its agencies which do not have separate and
distinct personality.
> Those with ORIGINAL CHARTERS +incorporated agencies-
> Those created by SPECIAL CHARTER +incorporated agencies- are (o )overe* 30 he
e'e&p#o(
GOVERNMENT ENTITIES EXEMPT FROM INCOMING TAX
4- GS(S
,- SSS
7- 05('
8- 0'S
9- 0%G'"
REASON FOR EXE+PTIONS
4- Government will be taxing itself to raise money for itself.
16
,- (mmunity is necessary in order that governmental functions will not be impeded.
#TES" TERRITORIAL JURISDICTION
RULES.
> Tax laws cannot operate beyond a StateBs territorial limits
> The government cannot tax a particular object of taxation which is not within its
territorial jurisdiction.
> 0roperty outside ones jurisdiction does not receive any protection of the State
> (f a law is passed by 'ongress, 'ongress must always see to it that the object or
subject of taxation is within the territorial jurisdiction of the taxing authority
SITUS OF TAXATION
0lace of taxation
RULE"
- The State where the subject to be taxed has a situs may rightfully levy and collect the tax
> (n determining the situs of taxation, you have to consider the nature of the taxes
E'$&p!e.
4- 0&& T%Q, '%0(T%T(# T%Q, '$$2#(T) T%Q
> "esidence of the taxpayer
,- "E%& 0"0E"T) T%Q " 0"0E"T) T%Q
> &ocation of the property
D 2e )$( o(!0 #&pose proper0 $' o( he proper#es of $ perso( whose res#*e()e #s #(
he Ph#!#pp#(es.
EXCEPTIONS TO THE TERRITORIALITY RULE
A- 2here he $' !$ws oper$e o%s#*e err#or#$! E%r#s*#)#o(
4- T%Q%T(# of resident citi6ens on their incomes derived from abroad
B- 2here $' !$ws *o (o oper$e w#h#( he err#or#$! E%r#s*#)#o( of he S$e
4- Ahen exempted by treaty obligations
,- Ahen exempted by international comity
SITUS OF TAX ON REAL PROPERTY
F LEX REI SITUS or where the property is located
17
"E%S#.
The place where the real property is located gives protection to the real property,
hence the property or its owner should support the government of that place
SITUS OF PROPERTY TAX ON PERSONAL PROPERTY
; +OBILIA SEGUNTUR PERSONA+
R movables follow the owner
R movables follow the domicile of the owner
RULES"
5- TANGIBLE PERSONAL PROPERTY
; Ahere located, usually the owners domicile
,- INTANGIBLLE PERSONAL PROPERTY
G. ". F 1omicile of the owner
EQ'E0T(#. The situs location not domicile
> Ahere the intangible personal property has ac@uired a business situs in another jurisdiction
* > The principle of A+o3#!#$ SeH%(%r Perso($&O is only for purposes of convenience. (t
must yield to the actual situs of such property.
* > Perso($! #($("#3!e proper#es wh#)h $)H%#res 3%s#(ess s#%s here #( he Ph#!#pp#(es
4- 3ranchise which is exercised within the 0hilippines
,- Shares, obligations, bonds issued by a domestic corporation
7- Shares, obligations, bonds issued by a foreign corporation, K9P of its business is conducted in
the 0hilippines
8- Shares, obligations, bonds issued by a foreign corporation which shares of stoc< or bonds
ac@uire situs here
9- "ights, interest in a partnership, business or industry established in the 0hilippines
> These intangible properties ac@uire business situs here in the 0hilippines, you cannot apply the
principle of N+o3#!#$ SeH%(%r Perso($&O because the properties have ac@uired situs here.
SITUS OF INCOME TAX
A- DO+ICILLARY THEORY
; The location where the income earner resides in the situs of taxation
B- NATIONALITY THEORY
; The country where the income earner is a citi6en is the situs of taxation
C- SOURCE RULE
; The country which is the source of the income or where the activity that produced
the income too< place is the situs of taxation.
18
SITUS OF SALE OF PERSONAL PROPERTY
> The place where the sale is consummated and perfected
SITUS OF TAX ON INTEREST INCOME
> The residence of the borrower who pays the interest irrespective of the place where the
obligation was contracted
CIR vs. BOAC
> "evenue derived by an of;line international carrier without any flight from the
0hilippines, from tic<et sales through its local agent are subject to tax on gross 0hilippine
billings
SITUS OF EXCISE TAX
> Ahere the transaction performed
HOPE2ELL vs. CO+. OF CUSTO+S
> The power to levy an excise upon the performance of an act or the engaging in an
occupation does not depend upon the domicile of the person subject to the exercise, nor
upon the physical location of the property or in connection with the act or occupation
taxed, but depends upon the place on which the act is performed or occupation engaged
in.
Thus, the gauge of taxability does not depend on the location of the office, but attaches
upon the place where the respective transaction is perfected and consummated
CONSTITUTIONAL LIMITATIONS
I! DUE PROCESS
> 1ue process mandates that (o perso( sh$!! 3e *epr#ve* of !#fe4 !#3er04 or proper0
w#ho% *%e pro)ess of !$w.
PEPSI COLA vs. +UN. OF TANAUAN
; REQUIREMENTS OF DUE PROCESS IN TAXATION
4- Tax must be for a 0ublic purpose
,- (mposed within the Territorial jurisdiction
7- #o arbitrariness or oppression in
%- assessment, and
/- collection
DUE PROCESS IN TAXATION DOES NOT REQUIRE
19
5- Deer&#($#o( hro%"h E%*#)#$! #(H%#r0 of
%- property subject to tax
/- amount of tax to be imposed
,- No#)e of he$r#(" $s o.
%- amount of the tax
/- manner of apportionment
REQUISITES OF DUE PROCESS OF LAW
4- There must be a valid law
,- Tax measure should not be unconscionable and unjust as to amount to confiscation of
property
7- Tax statute must not be arbitrary as to find no support in the constitution
> $hen is %eprivation o# li#e, li&ert" or propert" %one in a''or%an'e (ith %)e
pro'ess o# la(S
4- (f done under authority of a law that is valid or of the constitution itself
,- %fter compliance with fair and reasonable methods of procedure prescribed by law.
> (f properties are taxed on the basis of an invalid law, such deprivation is a violation of
due process
RE+EDY F as< for refund
> To justify the nullification of a tax law, there must be a clear and une@uivocal breach of
the constitution
> There must be proof of arbitrariness
INSTANCES WHEN THE TAX LAW MAYBE DECLARED AS UNCONSTITUTIONAL 5C,
O, N, U6
4- (f it amounts to )o(f#s)$#o( of proper0 without due process
,- (f the subject of taxation is o%s#*e of he E%r#s*#)#o( of the taxing state
7- The law maybe declared as unconstitutional if it is imposed (o for $ p%3!#)
p%rpose
8- (f a tax law which is applied retroactively, imposes %(E%s $(* oppress#ve $'es.
> % tax law which denies a taxpayer a fair opportunity to assert his substantial rights
before a competent tribunal is invalid
> A $'p$0er &%s (o 3e *epr#ve* of h#s proper0 for (o(Fp$0&e( of $'es w#ho%
4- notice of liability
,- sale of property at public auction
20
> The validity of statute maybe contested only by one who will sustain a direct injury in
conse@uence of its enforcement
> % violation of the inherent limitations on taxation would contravene the constitutional
injunctions against deprivation of property without due process of law
> There must be proof of arbitrariness, otherwise apply the presumption of
constitutionality
> 1ue process re@uires hearing before adoption of legislative rules by administrative
bodies of interpretative rulings. ++#s$&#s vs. DFA-
> 'ompliance with strict procedural re@uirements must be followed effectively to avoid a
collision course between the states power to tax and the individual recogni6ed rights +CIR
vs. A!"%e-
> The due process clause may correctly be invo<ed only when there is a clear
contravention of inherent or constitutional limitations in the exercise of tax power. +T$(
vs. *e! Ros$r#o-
> SUBSTATNTI@E DUE PROCESS re@uires that a tax statute must be within the
constitutional authority of 'ongress to pass and that it be reasonable, fair and just
> PROCEDURAL DUE PROCESS re@uires notice and hearing or at least an opportunity
to be heard
((! EQUAL PROTECTION CLAUSE
> A!! perso(s4 $!! proper#es4 $!! 3%s#(esses sho%!* 3e $'e* $ he s$&e r$e
> prohibits class legislation
> prohibits undue discrimination
EQUALITY IN TAXATION 7UNIFORMITY8
> EH%$!#0 #( $'$#o( reH%#res h$ $!! s%3Ee)s or o3Ee)s of $'$#o( s#&#!$r!0 s#%$e* sho%!*
3e re$e* $!#Ie or p% o( eH%$! foo#(" 3oh o( he pr#v#!e"e )o(ferre* $(* !#$3#!##es #&pose*
> %ll taxable articles of the same class shall be taxed at the same rate
> The 1octrine does not re@uire that persons or properties different in fact be treated in
law as though there were the same. Ahat it prohibits is class legislation which
discriminates against some and favors others
> %s long as there are rational or reasonable grounds for doing so, 'ongress may group
persons or properties to be taxed and it is sufficient if all members of the same class are
subject to the same rate and the tax is administered impartially upon them.
REQUISITES OF A VALID CLASSIFICATION 7S A G E 8
4- (t must be based on s%3s$(#$! *#s#()#o(
,- (t must $pp!0 (o o(!0 o he prese( )o(*##o(, but also to future conditions
7- (t must be "er&$(e o he p%rpose of he !$w
8- (t must $pp!0 eH%$!!0 to all members of the same class
21
SUBSTANTIAL DISTINCTION
> (t must be real, material and not superficial distinction
> Ahat is not allowed is ine@uality resulting from singling out of a particular class which
violates the re@uisites of a valid classification
> There maybe ine@uality but as long as it does not violate the re@uisites of a valid
classification that such mere ine@uality is not enough to justify the nullification of a tax law
or tax ordinance
> Taxation is e@uitable when its burden falls on those better able to pay
>%lthough the e@ual protection clause does not forbid classification, it is imperative that
the substantial differences having a reasonable relation to the subject of the particular
legislation
> Taxes are uniform and e@ual when imposed upon all property of the same class or
character within the taxing authority
> Tax exemptions are not violative of the e@ual protection clause, as long as there is valid
classification.
TIU vs. CA
The 'onstitutional right to e@ual protection of the law is not violated by an executive
order, issued pursuant to law, granting tax and duty incentives only to business within the
Nsecured areaO of the Subic Special Economic ToneO and denying them to those who live
within the 6one but outside such Nfenced inO territory. The 'onstitution does not re@uire the
absolute e@uality among residents. (t is enough that all persons under li<e circumstances or
conditions are given the same privileges and re@uired to follow the same obligations. (n short,
a classification based on valid and reasonable standards does not violate the e@ual protection
clause.
Ae find real and substantial distinctions between the circumstances obtaining inside and
those outside the Subic #aval /ase, thereby justifying a valid and reasonable classification.
TWO WAYS EQUAL PROTECTION CLAUSE CAN BE VIOLATED
4- 2he( )!$ss#f#)$#o( #s &$*e where here sho%!* 3e (o(e
ex. Ahen the classification does not rest upon substantial distinctions that ma<e for real
difference
,- 2he( (o )!$ss#f#)$#o( #s &$*e where $ )!$ss#f#)$#o( #s )$!!e* for
ex. Ahen substantial distinctions exist but no corresponding classification is made on the
basis thereof
OR+OC SUGAR CENTRAL vs. CIR
> (f the ordinance is intended to supply to a specific taxpayer and to no one else
regardless of whether or not other entities belonging to the same class are established in
the future, it is a violation of the e@ual protection clause, but if it is intended to apply also
to similar establishments which maybe established in the future, then the tax ordinance is
valid even if in the meantime, it applies to only one entity or taxpayer for the simple
reason that there is so far only one member of the class subject of the tax measure
UNIFORMITY IN TAXATION
22
> The concept of uniformity in taxation implies that all taxable articles or properties of the
same class shall be taxed at the same rate.
(t re@uires the uniform application and operation, without discrimination, of the tax in
every place where the subject of the tax is found. (t does not, however, re@uire absolute
identity or e@uality under all circumstances, but subject to reasonable classification.
EQUITY IN TAXATION
> The concept of e@uity in taxation re@uires that the apportionment of the tax burden be
more or less, just in the light of the taxpayerBs ability to shoulder to tax burden and if
warranted, on the basis of the benefits received from the government. (ts cornerstone is
the taxpayers ability to pay.
CRITERIA OF EQUAL PROTECTION
4- 2he( he !$ws oper$e %(#for&!0
%- on all persons
/- under similar circumstances
,- A!! perso(s $re re$e* #( he s$&e &$((er
%- The conditions not being different
/- /oth in privileges conferred and liabilities imposed
'- 3avoritism and preference not allowed
REYES vs. AL+AZOR
> Taxation is e@uitable when its burden falls on those better able to pay
CAPATIRAN vs. TAN
> (t is inherent in the power to tax that the state be free to select the subjects of taxation
and it has been repeatedly held that ine@ualities which result from a singling out of one
particular class of taxation or exemption infringe no constitutional limitation
III! FREEDOM OF THE PRESS
> The press is not exempt from taxation
> The sale of maga6ines or newspapers, maybe the subject of taxation
> Ahat is not allowed is to impose tax on the exercise of an activity which has a
connection with freedom of the press +license fee-
> (f we impose tax on persons before they can deliver or broadcast a particular news or
information, that is the one which cannot be taxed.
TOLENTINO vs. SEC. OF FINANCE
> Ahat is prohibited by the constitutional guarantee of free press are laws which single
out the press or target a group belonging to the press for special treatment or which in
any way discriminates against the press on the basis of the content of the publication.
23
IV! FREEDOM OF RELIGION
> (t is the activity which cannot be taxed
> activities which have connection with the exercise of religion
A+ERICAN BIBLE SOCIETY vs. +ANILA
> The payment of license fees for the distribution and sale of bibles suppresses the
constitutional right of free exercise of religion.
?I++Y S2AGGART vs. BOARD OF EGUALIZATION
> The 3ree Exercise of "eligion 'lause does not prohibit imposing a generally applicable
sales and use tax on the sale of religious materials by a religious organi6ation.
> The Sale of religious articles can be the subject of the !%T
> 2h$ )$((o 3e $'e* #s he e'er)#se of re!#"#o%s worsh#p or $)#v#0
> The income of the priest derived from the exercise of religious activity can be taxed.
V! NON4IMPAIRMENT CLAUSE
> The parties to the contract cannot exercise the power of taxation.
> They cannot agree or stipulate that this particular transaction may be exempt from tax;
not allowed +except if government-
OPOSA vs. FACTORAN
> 0olice power prevails over the non;impairment clause
LA INSULAR vs. +ANCHUCA
> % lawful tax on a new subject or an increased tax on an old one, does not interfere with
a contract or impairs its obligation.
> *he 'onstit)tional g)arantee o# the non+impairment 'la)se 'an onl" invo,e% in
the grant o# tax exemption.
RULES"
4- (f the exemption was granted for valuable consideration and it is granted on the basis of a
contract.
> cannot be revo<ed
,- (f the exemption is granted by virtue of a contract, wherein the government enters into a
contract with a private corporation
> cannot be revo<ed unilaterally by the government
7- (f the basis of the tax exemption is a franchise granted by 'ongress and under the franchise or
the tax exemption is given to a particular holder or person
24
> can be unilaterally revo<ed by the government +'ongress-
> The non;impairment clause applies only to contracts and not to a franchise.
> The non;impairment clause applies to taxation but not to police power and eminent
domain. 3urthermore, it applies only where one party is the government and the other, a
private individual.
> %s a rule, the obligation to pay tax is based on law. /ut when, for instance, a taxpayer
enters into a compromise with the /(", the obligation of the taxpayer becomes one based
on contract
PRO@INCE OF +ISA+IS vs. CAGAYAN ELECTRIC
> 3ranchises with magic words, Nsh$!! 3e #( !#e% of $!! $'esB descriptive of the payment of
a franchise tax on their gross earnings are exempt from.
4- all taxes
,- the franchise tax under the #("'
7- the franchise tax under the local tax code
?UAREZ vs. CA
> %s long as the contract affects the public welfare one way or another so as to re@uire
the interference of the state, then must the police power be asserted and prevail over the
impairment clause
RULES ON TAX AMNESTY
> Tax amnesty, li<e tax exemption, is never favored nor presumed in law and if granted
by statute must be construed strictly against the taxpayer, who must show compliance
with the law.
>The government is not estopped from @uestioning the tax liability even if amnesty tax
payments were already received
REASON. Erroneous application and enforcement of the law by public officers do not
bloc< subse@uent correct application of the statute. The government is never estopped by
mista<es or errors by its agents.
PP vs. CASTAJEDA
> 1efense of tax amnesty, li<e amnesty, is a personal defense
REASON. (t relates to the circumstances of a particular accused and not the character of the
acts charged in the information
REPUBLIC vs. IAC
>(n case of doubt, tax amnesty is to be strictly construed against the government
REASON. Taxes are not construed, for taxes being burdens are not to be presumed beyond
what the tax amnesty expressly and clearly declares
VI! LAW MA9ING PROCESS
25
%8 ONE SUBJECT ONE TITLE RULE
> Every bill passed by the 'ongress shall embrace only one subject which shall be expressed in
the title thereof +Se). ,7 95- ART II-
/- THREE READING RULE
> #o bill passed by either 5ouse shall become a law unless it has passed three readings on
separate days and printed copies thereof in its final form have been distributed to its members
three days before its passage, EQ'E0T when the 0resident certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. +Se). ,7 9,- ART II-
PHIL. ?UDGES ASSOC. vs. PRADO
> % presidential certification dispenses with the re@uirement not only of printing but also
that of reading the bill on separate days.
>(t is within the power of a /icameral 'onference 'ommittee to include in its report an
entirely new provision that is not found either in the 5ouse /ill or Senate /ill, so long as
such amendment is germane to the subject of the bills before the committee. %fter all its
report was not final but needed the approval of both houses of 'ongress to become valid
as an act of the legislative department.
C8 ENROLLED BILL DOCTRINE
G!R! %n enrolled copy of a bill is conclusive not only of its provisions but also of its due
enactment
EXCEPTION. (n ASTORGA vs. @ILLEGAS, the Supreme 'ourt Nwent behindO the enrolled bill
and consulted the journal to determine whether certain provisions of a state had been
approved by the Senate 0residentBs admission of a mista<e and withdrawal of his signature.
VII! PARDONING POWER OF THE PRESIDENT
> The 0resident has the power to grant reprieves, commutations and pardons and remit fines
and forfeitures after conviction by final judgment. +Se). 5K4 ART @II-
NATURE OF TAX AMNESTY
F % general pardon or intentional overloo<ing by the state of its authority to impose penalties
on persons otherwise guilty of evasion or violation of a revenue or tax law
- absolute forgiveness or waiver to collect
VIII! NO IMPRISONMENT FOR NON4PAYMENT OF POLL TAX
- #o person shall be imprisoned for debt or non;payment of poll tax +Se). ,L ART III-
> The non;imprisonment rule applies to non;payment of poll tax which is punishable only
by a surcharge, but not to other violations li<e falsification of community tax certificate or
non;payment of other taxes
POLL TAX F tax of fixed amount imposed upon residents within a specific territory regardless of
citi6enship, business or profession
Ex. 'ommunity tax
26
IX! TAXATION SHALL BE UNIFORM AND EQUITABLE
- The rule of taxation shall be uniform and e@uitable. The 'ongress shall evolve a
progressive system of taxation. 9Se). ,= 95- ART @I-
UNIFORMITY
- means that all taxable articles <inds of property of the same class shall be taxed at the
same rate
> % tax is uniform when it operates with the same force and effect in every place where
the subject of it is found
EQUITABILITY
> Taxation is said to be e@uitable when its burden falls on those better able to pay
X! CONGRESS SHALL EVOLVE A PROGRESSIVE SYSTEM OF TAXATION
PROGRESSIVITY
> Taxation is progressive when its rate goes up depending on the sources of the person
affected
SYTEMS OF TAXATION
4- PROPORTIONAL TAXATION
- where the tax increases or decreases in relation to the tax brac<et
,- PROGRESSI@E or GRADUATED SYSTE+
- where the tax increases as the income of the taxpayer goes higher
7- REGRESSI@E SYSTE+
- where the tax decreases as the income of the taxpayer increases
PROGRESSI@ITY IS NOT REPUGNANT TO UNIFOR+ITY $(* EGUALITY
%- 2niformity does not re@uire the things which are not different be treated in the same manner
/- 1ifferentiation, which is not arbitrary and conforms to the dictates of justice and e@uity is
allowed. 0rogressivity is one way of classification.
'- The State has the inherent right to select subjects of taxation
TOLENTINO vs. SEC. OF FINANCE
> "% ==4: +E!%T-, does not violate the constitutional mandate that 'ongress shall
Nevolve a progressive system of taxationO
> The 'onstitution does not really prohibit the imposition of indirect taxes, which li<e the !%T,
are regressive. The constitutional provision means simply that indirect taxes shall be
minimi6ed.
27
> The mandate to 'ongress is not to prescribe, but to evolve, a progressive system of
taxation
> "esort to indirect taxes should be minimi6ed but not to be avoided entirely because it is
difficult, if not impossible to avoid them by imposing such taxes according to the
taxpayers ability to pay.
XI! ORIGIN OF REVENUE, TARIFF o( TAX BILLS
%ll appropriation, revenue or tariff bills, bills authori6ing increase of the public debt, bills of
local application, and private bills shall originate exclusively in the 5ouse of "epresentatives, but
the Senate may propose or concur with amendments. +Se)#o( ,;4 Ar#)!e @I-
RULE.
- (t is not the revenue statute but the revenue bill which is re@uired by the constitution to
originate exclusively in the 5ouse of "epresentatives
REASON.
- To insist that a revenue statute and not only the bill which initiated the legislative process
culminating in the enactment of the law must substantially be the same as the 5ouse bill
would be to deny the SenateBs power not only to Nconcur with amendmentsO but also to
Npropose amendments.O (t would be to violate the co;e@uality of legislative power of the
two houses of 'ongress and in fact ma<e the 5ouse superior to the Senate. +To!e(#(o
vs. Se). of F#($()e-
> The 'onstitution simply re@uires that there must be that initiative coming from the
5ouse of "epresentatives relative to appropriation, revenue and tariff bills.
>The 'onstitution does not also prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the 5ouse, as long as action by the Senate is
withheld until receipt of said bill +To!e(#(o vs. Se). of F#($()e-
XII! PRESIDENTIAL VETO
> NThe 0resident shall have the power to veto any particular item or items in an
appropriation, revenue or tariff bill, but the veto shall not affect the item or items to which
he does not objectO 9Se). ,6 9,-4 ART @I-
XIII! TARIFF POWER OF THE PRESIDENT
NThe 'ongress may, by law, authori6ing the 0resident to fix within specific limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and export
@uotas, tonnage and wharfage dues, the other duties or imports within the framewor< of
the national development program of the GovernmentO +Se). ,= 9,-4 ART @I-
REQUISITES.
4- There must be a law passed by 'ongress authori6ing the 0resident to impose tariff rates
and other fees.
,- 2nder the law, there must be limitations and restrictions on the exercise of such power
7- The taxes that may be imposed by the 0resident are limited to.
%- Tariff rates
/- (mport and export @uotas
28
'- Tonnage and wharfage dues
1- ther duties +customs duties-
8- The imposition of these tariff and duties must be within the framewor< of the #ational
1evelopment program of the government
> 'ongress Nmay not passO a law authori6ing the 0resident to impose income tax, donors
tax, and other taxes which are not in the nature of customs duties.
> The 'onstitution allows only the imposition by the 0resident of these custom duties
XIV! TAX EXEMPTION OF REAL PROPERTY
N'haritable institutions, churches and personages or convents appurtenant thereto,
morgues, non;profit cemeteries and all lands, buildings and improvements, actually
directly and exclusively used for religious, charitable, or educational purposes shall be
exempt from taxation.O +Se). ,= 9/- ART @I-
APPLICATION"
> The exemption only covers property taxes and not other taxes
TEST OF EXEMPTION.
> (t is the 2SE of the property and not ownership of the property
ABRA @ALLEY COLLEGE vs. AGUINO 957, SCRA 5L7-
> The exemption does not only extend to indispensable facilities but also covers
incidental facilities which are reasonably necessary to the accomplishment of said
purpose
> % property leased by the owner to another who uses it exclusively for religious
purposes is exempt from property tax, but the owner is subject to income tax or rents
received.
> "eal property purchased by any religious sect to be used exclusively for religious
purposes are subject to the tax on the transfer of ownership or of title to real property
+also if donated; donorBs tax-
> 0roperty held for future use is not tax exempt
XV! LAW GRANTING TAX EXEMPTIONS
N #o law granting any tax exemptions shall be passed without the concurrence of a
majority of all members of the 'ongressO +Se). ,= 9;- ART @I-
RULES ON VOTE REQUIREMENT
4- &aw granting any tax exemption
> absolute majority
,- &aw withdrawing any tax exemption
> "elative majority
29

> Tax exemption, amnesties, refunds are considered in the nature of tax exemptions
> % law granting such needs approval of the absolute majority of the 'ongress
XVI! NO USE OF PUBLIC MONEY OR PROPERTY FOR PUBLIC PURPOSES
> N #o public money or property shall be appropriated, applied, paid, or employed,
directly or indirectly, for the use, benefit, or support of any sect, church, denomination,
sectarian, institution or system of religion, or of any priest, preacher, minister or other
religious teacher or dignitary as such, EQ'E0T when such priest, preacher, minister or
dignitary is assigned to the armed forces, or to any penal institution, or government
orphanage or leprosarium as suchO +Se). ,K 9,- ART @I-
> 0ublic property may be leased to a religious group provided that the lease will be totally
under the same conditions as that to private persons +amount of rent-
> 'ongress is without power to appropriate funds for a private purpose.
XVII! TAX LEVIED FOR SPECIAL PURPOSES
N %ll money collected or any tax levied for a special purpose shall be treated as a special fund and
paid out for such purpose only. (f the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.O +Se). ,K 9/- ART @I-
> (f a 0resident of the 0hilippines spent a special fund for a general purpose, he can be
charged with culpable violation of the 'onstitution.
XVIII! SUPREME COURT:S POWER OF REVIEW
NThe Supreme 'ourt shall have the power to review, revise, reverse, modify or affirm on appeal
or certiorari, all cases involving the legality of any tax imposed, assessment, or toll, or any penalty
imposed in relation thereto.O +Se). : 9,B- ART @III-
> 'ongress cannot ta<e away from the Supreme 'ourt the power given to it by the
'onstitution as the final arbiter of the tax cases.
XIX! DELEGATED AUTHORITY TO LOCAL GOVERNMENT UNITS
N Each local government unit shall have the power to create its own sources of revenues and to
levy taxes, fees, and charges subject to such guidelines and limitations as the 'ongress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, charges shall have
exclusivity to the local government.O 9Se). :4 ART X-
LIMITATIONS ON POWER TO TAX 7L!G!U!8
4- (t is subject to such guidelines and limitations provided by 'ongress.
,- (t must be consistent with the basic policy of local autonomy.
30
7- Such taxes, fees, and charges shall accrue exclusively to the local government.
RULES" NATIONAL GOV:T v! LGU
IMPOSITION OF TAXES
4- The #ational Government may impose local taxes on articles or subjects which are within the
territorial jurisdiction of the local government unit.
,- The &ocal Government unit cannot impose tax on the national government.
> )ou can only tax those articles, which are within your jurisdiction
SEC. 74 ART X
N local government units shall have a just share, as determined by law, in the national taxes which
shall be automatically released to them.O
XX! TAX EXEMPTIONS OF EDUCATIONAL INSTITUTIONS
N %ll revenues and assets of non;stoc<, non;profit educational institutions used actually, directly,
and exclusively for educational purposes shall be exempt from taxes and duties.O 9Se). ; 9/- ART
XI@-
REQUISITES FOR EXEMPTION"
4- (t must be a private educational institution
,- (t must be non;stoc< and non;profit
7- (tBs assets +property- and revenues +income- must be used actually, directly and exclusively for
educational purposes
RULES"
4- (f the first re@uisite is absent +meaning, itBs a government educational institution-, it is
nonetheless exempt from income tax
,- (f the second re@uirement is absent +meaning, it is stoc< and profit- as long as the third
re@uirement is present, it is nonetheless exempt from real estate tax
7- (f the third re@uirement is absent, as long as it is non;stoc< and non;profit, it is nonetheless
exempt from income tax
8- (f the third re@uirement is absent, but it is private and non;profit, it is subject to income tax, but
at the preferential rate of ten percent +4MP-
> 2nder the present tax code, for a private educational institution to be exempt from the
payment of income tax, all it has to be is non;stoc< and non;profit. 5owever, a
governmental educational institution is exempt from income tax without any condition
EXEMPTION DOES NOT EXTEND TO"
4- (ncome derived by these educational institutions from their property, real or personal, and
,- 3rom activities conducted by them for profit regardless of the disposition made on such income
+ANILA POLO CLUB vs. CTA
> 0roceeds of the sale of real property by the "oman 'atholic church is exempt from
income tax because the transaction was an isolated one
ST. PAUL HOSPITAL of ILOILO vs. CIR
31
> (ncome derived from the hospital pharmacy, dormitory and canteen was exempt from
income tax because the operation of those entities was merely incidental to the primary
purpose of the exempt corporation
- $here the e%)'ational instit)tion is private an% non+pro#it (&)t a sto',
'orporation! it is s)&.e't to in'ome tax &)t at the pre#erential rate o# ten per'ent
(/0!
REQUISITES fo( APPLICATION of ;<= PREFERENTIAL RATE
4- (t is privateG
,- (t has permit to operate from the 1E'S, or '5E1 or TES1%G
7- (t is non;profitG
8- (ts gross income from unrelated trade or business must not exceed fifty percent +9MP- of its
total gross income from all sources.
;<= PREFERENTIAL TAX RATE DOES NOT APPLY TO THE FOLLOWING"
4- 0assive incomes derived by the educational institution +subject to final income tax- and
,- Ahere the educational institution is engaged in unrelated trade, business or other activity, and
the gross income from such unrelated trade, business or other activities exceeds fifty percent
+9MP- of the total gross income derived by the school from all sources
> Ahere a donation is made in favor of an educational institution pursuant to sports
competition and tournaments, the donor is exempt from the payment of donorBs tax
CIR vs. CA 9,K= SCRA =/-
> (ncome derived by )$'% from leasing out a portion of its premises to small shop
owners, li<e restaurant and canteen operators, and from par<ing fees collected from non;
members are taxable income
)$'% is not an educational institution
XXI! TAX EXEMPTION OF DONATIONS fo( EDUCATIONAL PURPOSES
> NSubject to conditions prescribed by law, all grants endowments, donations, or
contributions used actually, directly and exclusively for educational purposes shall be
exempt from tax.O 9Se). ; 9;- ART XI@-
XXII! NO EXPOST FACTO LAW PROHIBITION IN TAXATION
FERNANDEZ vs. FERNANDEZ
> The prohibition against Nex post facto lawsO applies only to criminal laws and not to
those that concern civil matters
ur tax laws are civil in nature
> The collection of interest on taxes is not penal in nature and the ex post facto law
prohibition does not apply to it.
DOUBLE TAXATION
> Taxing same property twice when it should be taxed but once. Taxing the same person
twice by the same jurisdiction over the same thing.
32
%lso <nown as duplicate taxation
PEPSI COLA vs. CITY OF BUTUAN
> There is no constitutional prohibition against double taxation in the 0hilippines. (t is
something not favored but is permissible, provided that the other constitutional
re@uirements is not thereby violated
9INDS OF DOUBLE TAXATION
4- DIRECT DOUBLE TAXATION
- 1ouble taxation in the objectionable or prohibited sense
- Same property is taxed twice
REQUISITES"
%- The same property is taxed twice when it should only be taxed onceG
/- /oth taxes are imposed on the same property or subject matter for the same purposeG
'- (mposed by the same taxing authorityG
1- Aithin the same jurisdictionG
E- 1uring the same periodG and
3- 'overing the same <ind or character of tax
,8 INDIRECT DOUBLE TAXATION
- #ot legally objectionable
- (f taxes are not of the same <ind, or the imposition are imposed for different taxing
authority and this may involve the same subject matter
EXA+PLES.
%- The taxpayers warehousing business although carried on in relation to the operation of its
sugar central is a distinct and separate taxable business
/- % license tax may be levied upon a business or occupation although the land or property used
in connection therewith is subject to property tax
'- /oth a license fee and a tax may be imposed on the same business or occupation for selling
the same article and this is not in violation of the rules against double taxation
1- Ahen every bottle or container of intoxicating beverages is subject to local tax and at the
same time the business of selling such product is also subject to li@uors license
E- % tax imposed on both on the occupation of fishing and of the fishpond itself
3- % local ordinance imposes a tax on the storage of copra where it appears that the finished
products manufactured out of the copra are subject to !%T
33
MEANS EMPLOYED TO AVOID DOUBLE TAXATION
4- Tax deductions
,- Tax credits
7- 0rovide for exemption
8- Enter into treatise with other states
9- %llowance on the principle of reciprocity
TAX CREDIT
- %n amount allowed as a deduction of the 0hilippine (ncome tax on account of income
taxes paid or incurred to foreign countries. (t is given to a taxpayer in order to provide a
relief from too onerous a burden of taxation in case where the same income is subject to
a foreign income tax and the 0hilippine (ncome tax.
2HO CAN CLAI+ TAX CREDIT
4- 'iti6ens of the 0hilippines
,- 1omestic corporations
CITY OF BAGUIO vs. DE LEON
> The argument against double taxation may not be invo<ed where one tax is imposed by
the state and the other imposed by the city, it being widely recogni6ed that there is
nothing inherently obnoxious in the re@uirement that license fees or taxes be exacted
with respect to the same occupation, calling or activity by both the state and a political
subdivision thereof. %nd where the statute or ordinance in @uestion applies e@ually to all
persons, firms and corporations placed in a similar situation, there is no infringement of
the rule on e@uality.
@ILLANUE@A vs. CITY OF ILOILO
> %n ordinance imposing a municipal tax on tenement houses was challenged because
the owners already pay real estate taxes and also income taxes under the #("'. The
Supreme 'ourt held that there was no double taxation. The same tax may be imposed by
the #ational Government as well as the local government. There is nothing inherently
obnoxious in the exaction of license fees or taxes with respect to the same occupation,
calling or activity by both the state and a political subdivision thereof. 3urther, a license
tax may be levied upon a business or occupation although the land used in connection
therewith is subject to property tax.
DOCTRINES ON DOUBLE TAXATION
4- 1irect 1ouble Taxation +11T- is not allowed because it amounts to confiscation of property
without due process of law
,- )ou can @uestion the validity of double taxation if there is a violation of the E@ual protection
clause or E@uality or 2niformity of Taxation
7- %ll doubts as to whether double taxation has been imposed should be resolved in favor of the
taxpayer
34
ESCAPE FROM TAXATION
BASIC FORMS OF ESCAPE FROM TAXATION
4- S5(3T(#G
,- '%0(T%&(T%T(#
7- T"%#S3"$%T(#
8- %!(1%#'E
9- EQE$0T(#
:- E!%S(#
I! SHIFTING
- Shifting is the transfer of the burden of a tax by the original payer or the one on whom the
tax was assessed or imposed to someone else
- 0rocess by which such tax burden is transferred from statutory taxpayer to another
without violating the law
> (t should be borne in mind that what is transferred is not the payment of the tax, but the
burden of the tax
> nly indirect taxes may be shiftedG direct taxes cannot be shifted
WAYS OF SHIFTING THE TAX BURDEN
4- FOR2ARD SHIFTING
- Ahen 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.
Example.
- $anufacturer or producer may shift tax assessed to wholesaler, who in turn shifts it to the
retailer, who also shifts it to the final purchaser or consumer
,- BACC2ARD SHIFTING
- Ahen the burden of the tax is transferred from the consumer or purchaser through the
factors of distribution to the factors of production
Example.
- 'onsumer or purchaser may shift tax imposed on him to retailer by purchasing only after
the price is reduced, and from the latter to the wholesaler, or finally to the manufacturer
or producer
/- ON2ARD SHIFTING
- Ahen the tax is shifted two or more times either forward or bac<ward
Example.
- Thus, a transfer from the seller to the purchaser involves one shiftG from the producer to
the wholesaler, then to retailer, we have two shiftsG and if the tax is transferred again to
the purchaser by the retailer, we have three shifts in all.
I&'a%# a+/ I+%)/*+%* of Ta1a#)o+
I&p$) of $'$#o( is the point on which a tax is originally imposed. (n so far as the law is
concerned, the taxpayer is the person who must pay the tax to the government. 5e is
also termed as the statutory taxpayer;the one on whom the tax is formally assessed. 5e
is the subject of the tax
35
I()#*e()e of $'$#o( is that point on which the tax burden finally rests or settle down. (t
ta<es place when shifting has been effected from the statutory taxpayer to another.
S#a#.#o(, Ta1'a,*(
The Statutory taxpayer is the person re@uired by law to pay the tax or the one on whom
the tax is formally assessed. (n short, he or she is the subject of the tax.
(n direct taxes, the statutory taxpayer is the one who shoulders the burden of the tax
while in indirect taxes, the statutory taxpayer is the one who pay the tax to the
government but the burden can be passed to another person or entity.
R*$a#)o+3)' 0*#>**+ )&'a%#, 3)f#)+-, a+/ )+%)/*+%* of a #a1
The #&p$) is the initial phenomenon, the sh#f#(" is the intermediate process, and the
#()#*e()e is the result. Thus, the impact in a sales tax +i.e. !%T- is on the seller
+manufacturer- who shifts the burden to the customer who finally bears the incidence of
the tax.
I&p$) is the imposition of the taxG sh#f#(" is the transfer of the taxG while #()#*e()e is the
setting or coming to rest of the tax.
II! CAPITALI?ATION
- "eduction is the price of the taxed object e@ual to the capitali6ed value of future taxes on
the property sold
> This is a special form of bac<ward shifting, where the burden of future taxes which the
buyer may have to pay is shifted bac< to the seller in the form of reduction in the selling
price
III! TRANSFORMATION
- The manufacturer in an effort to avoid losing his customers, maintains the same selling
price and margin of profit, not by shifting the tax burden to his customers, but by
improving his method of production and cutting down or other production cost, thereby
transforming the tax into or earn through the medium of production.
IV! TAX AVOIDANCE
- %lso <nown as A$' &#(#&#M$#o(B
- not punished by law
- Tax avoidance is the exploitation of the taxpayer of legally permissible alternative tax
rates or methods of assessing taxable property or income in order to avoid or reduce tax
liability
DELPHERS TRADERS CORP vs. IAC 95:6 SCRA /;K-
> The Supreme 'ourt upheld the estate planning scheme resorted to by the 0acheco
family in converting their property to shares of stoc< in a corporation which they
themselves owned and controlled. /y virtue of the deed of exchange, the 0acheco co;
owners saved on inheritance taxes. The Supreme 'ourt said the records do not point
anything wrong and objectionable about this estate planning scheme resorted to. The
legal right of the taxpayer to decrease the amount of what otherwise could be his taxes or
altogether avoid them by means which the law permits cannot be doubted.
E'$&p!e.
36
3ollowing the Nho!*#(" per#o* r%!eO in capital gains transaction, by postponing the sale of the
capital asset until after twelve months from date of ac@uisition you can reduce the tax on the
capital gains by 9MP
V! TAX EXEMPTION
Ta1 E1*&'#)o+
(t is the grant of immunity to particular persons or corporations or to persons or
corporations of a particular class from a tax which persons and corporations generally
within the same state or taxing district are obliged to pay. (t is an immunity or privilegeG it
is freedom from a financial charge or burden to which others are subjected.
Exemption is allowed only if there is a clear provision there for.
(t is not necessarily discriminatory as long as there is a reasonable foundation or rational
basis.
Exemptions are not presumed, but when public property is involved, exemption is the rule
and taxation is the exemption.
Ra#)o+a$* fo( -(a+#)+- #a1 *1*&'#)o+
(ts avowed purpose is some public benefit or interests which the lawma<ing body
considers sufficient to offset the monetary loss entailed in the grant of the exemption.
The theory behind the grant of tax exemptions is that such act will benefit the body of the
people. (t is not based on the idea of lessening the burden of the individual owners of
property.
G(o.+/ fo( -(a+#)+- #a1 *1*&'#)o+
4- $ay be based on contract. (n such a case, the public, which is represented by the government
is supposed to receive a full e@uivalent therefor, i.e. charter of a corporation.
,- $ay be based on some ground of public policy, i.e., to encourage new industries or to foster
charitable institutions. 5ere, the government need not receive any consideration in return for the
tax exemption.
7- $ay be based on grounds of reciprocity or to lessen the rigors of international double or
multiple taxation
No#*" E@uity is not a ground for tax exemption. Exemption is allowed only if there is a clear
provision therefor.
Na#.(* of #a1 *1*&'#)o+
4- (t is a mere personal privilege of the grantee.
,- (t is generally revocable by the government unless the exemption is founded on a contract
which is contract which is protected from impairment.
7- (t 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.
8- (t is not necessarily discriminatory so long as the exemption has a reasonable foundation or
rational basis.
9- (t is not transferable except if the law expressly provides so.
9)+/ of #a1 *1*&'#)o+ a%%o(/)+- #o &a++*( of %(*a#)o+
4- E'press or $ff#r&$#ve e'e&p#o(
37
Ahen certain persons, property or transactions are, by express provision, exempted from
all certain taxes, either entirely or in part.
,- I&p!#e* e'e&p#o( or e'e&p#o( 30 o&#ss#o(
Ahen a tax is levied on certain classes of persons, properties, or transactions without
mentioning the other classes.
Ever0 $' s$%e &$Ies e'e&p#o(s 3e)$%se of o&#ss#o(s.
No #a1 *1*&'#)o+ 0, )&'$)%a#)o+
(t must be expressed in clear and unmista<able language
CALTEX vs. COA
> (n claiming tax exemption, the burden of proof lies upon the claimant
(t cannot be created by mere implication
(t cannot be presumed that you are entitled to tax exemption
)ou must prove it
RULE"
- Taxation is the rule and exemption is the exception
PR1P2R*3 *A4 5 6172R8M28* PR1P2R*3
> 0roperties owned by the government whether in their proprietary or governmental
capacity are exempt from real estate tax
TEST.
; O2NERSHIP
> nce established that it belongs to the government, the nature of the use of the
property whether proprietary or sovereign becomes immaterial.
> Exemption of public property from taxation does not extend to improvements therein
made by occupants or claimants at their own expense.
9INDS OF TAX EXEMPTIONS ACCORDING TO SCOPE OR EXTENT
4- TT%&
- Ahen certain persons, property or transactions are exempted, expressly or impliedly from
all taxes
,- 0%"T(%&
- Ahen certain persons, property or transactions are exempted, expressly or impliedly from
certain taxes, either entirely or in part.
7- There can be no simultaneous exemptions under two laws, when one grants partial exemption
while other grants total exemption.
Does prov#s#o( #( $ s$%e "r$(#(" e'e&p#o( fro& A$!! $'esB #()!%*e #(*#re) $'esN
#. %s a general rule, indirect taxes are not included in the grant of such exemption
unless it is expressly stated.
38
Na#.(* of 'o>*( #o -(a+# #a1 *1*&'#)o+
4- N$#o($! "over(&e(
The power to grant tax exemptions is an attribute of sovereignty for the power to prescribe who
or what persons or property shall not be taxed.
(t is inherent in the exercise of the power to tax that the sovereign state be free to select
the subjects of taxation and to grant exemptions therefrom.
2nless restricted by the 'onstitution, the legislative power to exempt is as broad as its
power to tax.
,- Lo)$! "over(&e(s
$unicipal corporations are clothed with no inherent power to tax or grant tax exemptions. /ut
the moment the power to impose a particular tax is granted, they also have the power to grant
exemption therefrom unless forbidden by some provision of the 'onstitution or the law
The legislature may delegate its power to grant tax exemptions to the same extent that it
may exercise the power to exempt.
B$s)o vs. PAGCOR 95K7 SCRA :,-. The power to tax municipal corporations must always
yield to a legislative act which is superior, having been passed by the State itself. $unicipal
corporations are mere creatures of 'ongress which has the power to create and abolish
municipal corporations due to its general legislative powers. (f 'ongress can grant the power to
tax, it can also provide for exemptions or even ta<e bac< the power.
Ch$veM v. PCGG4 G.R. No. 5/L6574 LK De)e&3er 5KK=
(n a compromise agreement between the 0hilippine Government, represented by the
0'GG, and the $arcos heirs, the 0'GG granted tax exemptions to the assets which will
be apportioned to the $arcos heirs. The Supreme 'ourt ruled that the 0'GG has
absolutely no power to grant tax exemptions, even under the cover of its authority to
compromise ill gotten wealth cases. The grant of tax exemptions is the exclusive
prerogative of the 'ongress.
(n fact, the Supreme 'ourt even stated that 'ongress itself cannot grant tax exemptions
in the case at bar because it will violate the e@ual protection clause of the 'onstitution.
I+#*('(*#a#)o+ of #3* $a> -(a+#)+- #a1 *1*&'#)o+
G*+*(a$ (.$*
(n the construction of tax statutes, exemptions are not favored and are construed sr#)#ss#&#
E%r#s against the taxpayer. The fundamental theory is that all taxable property should bear its
share in the cost and expense of the government.
T$'$#o( #s he r%!e $(* e'e&p#o( #s he e'e&p#o(.
5e who claims exemption must be able to justify his claim or right thereto by a grant express
in terms Aoo p!$#( o 3e &#s$Ie( $(* oo )$e"or#)$! o 3e &#s#(erpree*.B (f not expressly
mentioned in the law, it must be at least within its purview by clear legislative intent.
E1%*'#)o+
4- Ahen the law itself expressly provides for a liberal construction thereof.
,- (n cases of exemptions granted to religious, charitable and educational institutions or to the
government or its agencies or to public property because the general rule is that they are exempt
from tax.
39
Sr#) #(erpre$#o( *oes (o $pp!0 o he "over(&e( $(* #s $"e()#es
0etitioner cannot invo<e the rule on stritissimi juris with respect to the interpretation of
statutes granting tax exemptions to the #0'. The rule on strict interpretation does not
apply in the case of exemptions in favor of a political subdivision or instrumentality of the
government. <+$)e*$ v. +$)$r$#"O
D$v$o G%!f v. Co&&#ss#o(er4 ,K/ SCRA 67 95KK=-
% tax cannot be imposed unless it is supported by the clear and express language of a
statuteG on the other hand, once the tax is un@uestionably imposed, Na claim of exemption
from tax payers must be clearly shown and based on language in the law too plain to be
mista<en.O Since the partial refund authori6ed under Section 9, "% 4879, is in the nature
of a tax exemption, it must be construed sr#)#ss#&# E%r#s against the grantee. 5ence,
petitionerBs claim of refund on the basis of the specific taxes it actually paid must
expressly be granted in a statute stated in a language too clear to be mista<en.
> E'e&p#o( of he 3%0er *oes (o e'e(* o he se!!er
Exemption of the principal does not extend to the accessory
SURIGAO vs. COLLECTOR of CUSTO+S
> T$' ref%(*s4 )o(*o($#o(s $(* $&(es#es, they being in the nature of tax exemptions
must be strictly construed against the taxpayer and liberally in favor of the government.
Ta1 (*&))o+ o( #a1 %o+/o+a#)o+
The word Are&#B means to desist or refrain from exacting, inflicting or enforcing
something as well as to restore what has already been ta<en. The remission of taxes due
and payable to the exclusion of taxes already collected does not constitute unfair
discrimination. Such a set of taxes is a class by itself and the law would be open to attac<
as class legislation only if all taxpayers belonging to one class were not treated ali<e.
>?%$( L%($ S%3*. @. S$r&#e(o4 L4 0hil 7=M?
The condition of a tax liability is e@uivalent to and is in the nature of a tax exemption.
Thus, it should be sustained only when expressly provided in the law. >S%r#"$o
Co(so!#*$e* +#(#(" v. Co&&#ss#o(er of I(er($! Reve(%e4 K SCRA 6,=?
Ta1 a&+*#,
Tax amnesty, being a general pardon or intentional overloo<ing by the State of its
authority to impose penalties on persons otherwise guilty of evasion or violation of a
revenue to collect what otherwise would be due it and, in this sense, prejudicial thereto. (t
is granted particularly to tax evaders who wish to relent and are willing to reform, thus
giving them a chance to do so and thereby become a part of the new society with a clean
slate. >Rep%3!#) v. I(er&e*#$e Appe!!$e Co%r, 4L: S'"% 779?
&i<e tax exemption, tax amnesty is never favored nor presumed in law. (t is granted by
statute. The terms of the amnesty must also be construed against the taxpayer and
liberally in favor of the government.
Ta1 a&+*#, v! #a1 %o+/o+a#)o+ v! #a1 *1*&'#)o+
40
% tax amnesty, being a general pardon or intentional overloo<ing by the Statute of its
authority to impose penalties on persons otherwise guilty of evasion or violation of a
revenue or tax law, parta<es of an absolute forgiveness or waiver by the Government of
its right to collect what otherwise would be due it and, in this sense, prejudicial thereto,
particularly to tax evaders who wish to relent and are willing to reform are given a chance
to do so and therefore become a part of the society with a clean slate.
&i<e a tax exemption, a tax amnesty is never favored nor presumed in law, and is granted
by statute. The terms of the amnesty must be strictly construed against the taxpayer and
literally in favor of the government. 2nli<e a tax exemption, however, a tax amnesty has
limited applicability as to cover a particular taxing period or transaction only.
There is a tax condonation or remission when the State desists or refrains from exacting,
inflicting or enforcing something as well as to reduce what has already been ta<en. The
condonation of a tax liability is e@uivalent to and is in the nature of a tax exemption. Thus,
it should be sustained only when expressed in the law.
Tax exemption, on the other hand, is the grant of immunity to particular persons or
corporations of a particular class from a tax of which persons and corporations generally
within the same state or taxing district are obliged to pay. Tax exemptions are not favored
and are construed sr#)#ss#&# E%r#s against the taxpayer.
CIR vs. RIO TUBA
> &aw granting partial refund parta<es the nature of a tax exemption and therefore must
be strictly construed against the taxpayer
CIR vs. TOUR SPECIALIST
> Gross receipts subject to tax under the tax code do not include monies or receipts
entrusted to the taxpayer which do not belong to it and does not redound to the taxpayers
benefit, and it is not necessary that there must be a law or regulation which would exempt
such monies and receipts within the meaning of gross receipts.
CONSTITUTIONAL RESTRICTION"
N#o law granting any tax exemption shall be passed without the concurrence of a majority of all
members of 'ongress.O 9Se). ,= 9;- ART @I-
PRO@. OF NUE@A ECI?A vs. I+PERIAL +INING
> /asis or test for real property taxation is use and not ownership. Thus, it does not
matter who the owner of the property is even if it is not tax exempt entity, as long as it is
being used for religious, charitable or educational purposes, then it is tax exempt.
'onversely, even if the property taxation is owned by the government if the beneficial
use has been granted, for consideration or otherwise, to a taxable person, then the property
is subject to tax.
VI! TAX EVASION
- (t is also <nown as A$' *o*"#("O
- (t is punishable by law
- Tax evasion is the use by the taxpayer of illegal or fraudulent means to defeat or lessen
the payment of tax.
YUTI@O vs. CTA
41
> Tax evasion is a term that connotes fraud through the use of pretenses or forbidden
devices to lessen or defeat taxes
ELEMENTS OF TAX EVASION
- Tax evasion connotes the integration of three +7- factors.
4- The end to be achieved, i.e. payment of less than that <nown by the taxpayer to be legally due,
or paying no tax when it is shown that tax is due
,- %n accompanying state of mind which is described as being NevilO, Nin bad faithO, NwillfulO, or
NdeliberateO and not NaccidentalO
7- % course of action +or failure of action- which is unlawful
INDICIA of FRAUD IN TAX EVASION
4- 3ailure to declare for taxation purposes true and actual income derived from business for two
+,- consecutive yearsG or
,- Substantial underdeclaration of income tax returns of the taxpayer for four +8- consecutive
years coupled with unintentional overstatement of deductions
EVIDENCE TO PROVE TAX EVASION
> Since fraud is a state of mind, it need not be proved by direct evidence but may be
proved from the circumstances of the case.
REPUBLIC vs. GONZALES 95/ SCRA 7/=-
> 3ailure of the taxpayer to declare for taxation purposes his true and actual income
derived from his business for two +,- consecutive years is an indication of his fraudulent
intent to cheat the government of its due taxes.
TAX ENFORCEMENT AND ADMINISTRATION
SOURCES OF TAX LAWS.
4- Statutes
,- 0residential decrees
7- Executive orders
8- 'onstitution
9- 'ourt decisions
:- Tax code
=- "evenue regulations
K- %dministrative issuances
L- /(" rulings
4M- &ocal tax ordinances
44- Tax treaties and conventions with foreign countries
PROSPECTIVITY OF TAX LAWS +%00&('%T(#-
GENERAL RULE"
- Tax laws should be applied prospectively
EXCEPTION.
- (t may be applied retroactively when the law expressly provides for such retroactive
application
42
EXCEPTION TO THE EXCEPTION"
- (t may not be given retroactive application even if the tax law expressly so provides if it
imposes unjust and oppressive taxes.
IMPRESCRIPTIBILITY OF TAXES
GENERAL RULE"
- Taxes are imprescriptible
EXCEPTION"
- They are prescriptible if the tax laws provide for statute of limitations
PRESCRIPTIVE PERIODS"
4- 0rescriptive periods for the assessment and collection of taxes
4M years if return is tainted with falsity or fraud
7 years if there is no fraud
,- T%"(33 %#1 '2ST$S '1E
; %fter the expiration of 4 year from the payment of final duties.
> )ou should impose those custom duties that are supposed to be imposed on the imported
articles within the 4 year period, except if it is in the nature of partial li@uidation, if there is fraud or
protest
7- &'%& G!E"#$E#T '1E
; 0rescriptive periods for local taxes and real property tax
> 9 years
> 4M years if fraud has been employed
INTERPRETATION AND APPLICATION OF TAX LAWS
Na#.(* of I+#*(+a$ (*v*+.* $a>
4- (nternal revenue laws are not political in nature.
,- Tax laws are civil and not penal in nature.
No# 'o$)#)%a$ )+ +a#.(*
(nternal revenue laws are not political in nature. They are deemed to be laws of the occupied
territory and not of the occupying enemy.
Thus, our tax laws continued in force during the Dapanese occupation. H#!$*o v. Co!!e)or4 5LL
Ph#!. ,==-. (t is well <nown that our internal revenue laws are not political in nature and, as such,
continued in force during the period of enemy occupation and in effect were actually enforced by
the occupation government. (ncome tax returns that were filed during that period and income tax
payments made were considered valid and legal. Such tax laws are deemed to be the laws of the
occupied territory and not of the occupying enemy.
C)v)$ +o# '*+a$ )+ +a#.(*
Tax laws are civil and not penal in nature, although there are penalties provided for their violation.
43
The purpose of tax laws in imposing penalties for delin@uencies is to compel the timely payment
of taxes or to punish evasion or neglect of duty in respect thereof.
Rep%3!#) v. O$s$(4 KK Ph#! K/;. The war profits tax is not subject to the prohibition on e' pos
f$)o laws as the latter applies only to criminal or penal matters. Tax laws are civil in nature.
Co+#(.%#)o+ of #a1 $a>
4- R%!e whe( !e"#s!$#ve #(e( #s )!e$r
Tax statutes are to receive a reasonable construction with a view to carrying out their
purpose and intent.
They should not be construed as to permit the taxpayer easily to evade the payment of
taxes.
,- R%!e whe( here #s *o%3
#o person or property is subject to taxation unless within the terms or plain import of a
taxing statute. (n every case of doubt, tax statutes are construed strictly against the government
and liberally in favor of the taxpayer.
Taxes, being burdens, are not to be presumed beyond what the statute expressly and
clearly declares.
7- Prov#s#o(s "r$(#(" $' e'e&p#o(s
Such provisions are construed strictly against the taxpayer claiming tax exemption.
A''$)%a#)o+ of #a1 $a>
G*+*(a$ (.$* . Tax laws are prospective in operation because the nature and amount to
the tax could not be foreseen and understood by the taxpayer at the time the transactions
which the law see<s to tax was completed
E1%*'#)o+ . Ahile it is not favored, a statute may nevertheless operate retroactively
provided it is expressly declared or is clearly the legislative intent. /ut a tax law should
not be given retroactive application when it would be harsh and oppressive.
D)(*%#o(, a+/ &a+/a#o(, '(ov))o+ of #a1 $a>
D#re)or0 prov#s#o(s are those designed merely for the information or direction of office
or to secure methodical and systematic modes of proceedings.
+$(*$or0 prov#s#o(s are those intended for the security of the citi6ens or which are
designed to ensure e@uality of taxation or certainty as to the nature and amount of each
personBs tax.
The omission to follow mandatory provisions renders invalid the act or proceeding to
which it relates while the omission to follow directory provisions does not involve such
conse@uence. >Ro'$s v. R$ffer04 /6 Ph#! K:=O
REQUISITES OF TAX REGULATIONS
4. reasonable
,. within the authority conferred
44
7. not contrary to law
8. must be published
EXCEPTIONS TO NON4RETROACTIVITY OF RULINGS
"evocation, modification of revenue of any rules and regulations promulgated by the Sec.
of 3inance or '(" shall not have retroactive effect if it will be prejudicial to the taxpayer, except.
4. where the taxpayer deliberately misstates or omits material facts from his return or in any
document re@uired of him by the /("
,. where the facts subse@uently gathered by the /(" are materially different from the facts
on which the ruling is based
7. where the taxpayer acted in bad faith
AGENCIES INVOLVED IN TAX ADMINISTRATION
4. /("
,. /ureau of 'ustoms
7. 0rovincial, city, and municipal assessors and treasurers
POWERS AND DUTIES OF THE BIR
4. %ssessment and collection of all national internal revenue taxes, fees and charges
,. Give effect to and administer the supervisory and police power conferred to it by the Tax
'ode or other laws
7. Enforcement of all forfeitures, penalties and fines in connection therewith
8. Execution of judgments in all cases decided in its favor by the 'ourt of Tax %ppeals and
the ordinary courts
CLASSIFFICATION OF ASSESSMENTS
4. Se!fF$ssess&e( F one in which the tax is assessed by the taxpayer himself.
,. I!!e"$! $(* @o#* $ssess&e( F one wherein the tax assessor has no power to act at all.
7. Def#)#e()0 $ssess&e( F one made by the tax assessor himself whereby the correct
amount of the tax is determined by the examination or investigation is conducted. The
liability is determined and is thereafter assessed for the following reasons.
a. the amount ascertained exceeds that which is shown as the tax by the taxpayer
in his return
b. no amount of tax is shown in the return
c. the taxpayer did not file any return at all
8. Erro(eo%s $ssess&e( F one wherein the assessor has the power to assess but errs in
the exercise of the power.
PRINCIPLES GOVERNING TAX ASSESSMENTS
45
4. assessments are prima facie presumed correct and made in good faith
,. assessment should be based on actual facts
7. assessment is discretionary on the part of the 'ommissioner to assess taxes may be
delegated
8. assessments must be directed to the right party.
MEANS EMPLOYED IN THE ASSESSMENT OF TAXES
4. Examination of tax returns
,. 2se of the best evidence obtainable
7. (nventory ta<ing, surveillance and use of presumptive gross sales and receipts
8. Termination of taxable period
9. 0rescription of real property values
:. Examination of ban< deposits to determine the correct amount of the gross estate
=. %ccreditation and registration of tax agents
K. 0rescription of additional procedural or documentary re@uirements
GENERAL RULE"
(ncome tax returns are confidential
EXCEPTIONS"
4. when the inspection of the return is authori6ed upon written order of the 0resident of the
0hilippines
,. when inspection is authori6ed under 3inance "egulations no. 77 of the Secretary of
3inance
7. when the production of the tax return is material evidence in a criminal case wherein the
Government is interested in the result
8. when the production or inspection thereof is authori6ed by the taxpayer himself
CASES WHEN COMMISSIONER MAY ASSESS TAXES ON THE BASIS OF THE BEST
EVIDENCE OBTAINABLE"
4. in case a person fails to file a return or other document at the time prescribed by law
,. he willfully or otherwise files a false or fraudulent return or other document
GROUNDS FOR TERMINATION OF TAXABLE PERIOD"
4. the taxpayer is retiring from business subject to tax
,. he intends to leave the 0hilippines or remove his property therefrom
7. he hides or conceals his property
8. he performs any act tending to obstruct the proceedings for the collection of the tax for
the past or current @uarter or year or renders the same totally or partly ineffective unless
such proceedings are began immediately.
INSTANCES WHEN THE COMMISSIONER MAY INQUIRE INTO BAN9 DEPOSITS"
4. for the purpose of determining the gross estate of a decedent
46
,. where a taxpayer offers to compromise his tax liability on the ground of financial inability
in which case he must submit a waiver.
INSPECTION AND EXAMINATION OF BOO9S AND RECORDS SHALL BE MADE ONCE IN A
TAXABLE YEAR,
EXCEPT"
4. in cases of fraud, irregularity, or mista<es
,. when taxpayer re@uests a reinvestigation
7. to verify compliance with withholding tax laws and regulations
8. to verify capital gains tax liabilities
9. upon order of the 'ommissioner
@A= SURCHARGE ON THE AMOUNT OF THE TAX DUE IS IMPOSED IN THE FOLLOWING
CASES.
4. failure to file any return re@uired under the provisions of the Tax 'ode or regulations on
the date prescribed
,. filing a return with an internal revenue officer other than those with whom the return is
re@uired to be filed
7. failure to pay the tax within the time prescribed for its payment
8. failure to pay the full amount of tax shown on any return re@uired to be filed under the
provisions of the Tax 'ode or regulations or the full amount of tax due for which no return
is re@uired to be filed, on or before the date prescribed for its payment
REVENUE RULES AND REGULATIONS AND ADMINISTRATIVE RULINGS AND
OPINIONS
A)thorit" to prom)lgate r)les an% reg)lations an% r)lings an% opinions
The Secretary of 3inance, upon recommendation of the 'ommissioner of (nternal
"evenue, shall promulgate needful rules and regulations for the effective enforcement of
the provisions of the #("'.
This is without the prejudice to the power of the 'ommissioner of (nternal "evenue to
ma<e rulings or opinions in connection with the implementation of the provisions of
internal revenue laws, including rulings on the classification of articles for sales tax and
similar purposes.
P)rpose o# r)les an% reg)lations
4. To properly enforce and execute the laws
,. To clarify and explain the law
7. To carry into effect the lawBs general provisions by providing details of administration and
procedure
Re9)isites #or vali%it" o# r)les an% reg)lations
47
4. They must not be contrary to law and the 'onstitution.
,. They must be published in the fficial Ga6ette or a newspaper of general circulation.
Co&&#ss#o(er v. Co%r of Appe$!s4 ,;L SCRA /7=
The authority of the $inister of 3inance, in conjunction with the 'ommissioner of (nternal
"evenue, to promulgate rules and regulations for the effective enforcement of internal
revenue rules cannot be converted. #either can it be disputed that such rules and
regulations, as well as administrative opinions and rulings, ordinarily should deserve
weight and respect by the courts. $uch more fundamental than either of the above,
however, is that all issuances must not override, but must remain consistent with, the law
they see< to apply and implement. %dministrative rules and regulations are intended to
carry out, neither to supplant nor to modify, the law.
L$ S%ere v. Co%r of T$' App!e$!s4 5/; SCRA ,K
Ahen 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. 'onstruction 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.
2##e'tivit" o# reven)e r)les an% reg)lations
"evenue $emorandum 'ircular ,M;K: was issued to govern the drafting, issuance and
implementation of revenue tax issuances including.
4. "evenue "egulationsG
,. "evenue and $emorandum rdersG and
7. "evenue $emorandum 'irculars and "evenue $emorandum rders.
Except when the law otherwise expressly provides, the aforesaid revenue tax issuances
shall not begin to be operative until after due notice thereof may be fairly assumed.
1ue notice of said issuances may be fairly presumed only after the following procedures
have been ta<en.
4. 'opies of tax issuance have been sent through registered mail to the following business
and professional organi6ations.
a. 0hilippine (nstitute of 'ertified 0ublic %ccountantsGG
b. (ntegrated /ar of the 0hilippinesG
c. 0hilippine 'hamber of 'ommerce and (ndustryG
d. %merican 'hamber of 'ommerceG
e. 3ederation of 3ilipino;'hinese 'hamber of 'ommerceG and
f. Dapanese 'hamber of 'ommerce and (ndustry in the 0hilippines.
,. The /ureau of (nternal "evenue shall issue a press release covering the highlights and
features of the new tax issuance in any newspaper of general circulation.
7. Effectivity date for enforcement of the new issuance shall ta<e place thirty +7M- days from
the date the issuance has been sent to the above;enumerated organi6ations.
48
:;R r)lings
%dministrative rulings, <nown as /(" rulings, are the less general interpretation of tax
laws being issued from time to time by the 'ommissioner of (nternal "evenue. They are
usually rendered on re@uest of taxpayers to clarify certain provisions of a tax law. These
rulings may be revo<ed by the Secretary of 3inance if the latter finds them not in
accordance with the law.
The 'ommissioner may revo<e, repeal or abrogate the acts or previous rulings of his
predecessors in office because the construction of the statute by those administering it is
not binding on their successors if, thereafter, such successors are satisfied that a
different construction of the law should be given.
"ulings in the forms of opinion are also given by the Secretary of Dustice who is the chief
legal officer of the Government.
EFFECTIVITY AND VALIDITY OF A TAX ORDINANCE
T%$Mo( v. Co%r of T$' App!e$!s4 ,5, SCRA 6/K
(f the resolution is to be considered as a tax ordinance, it must be shown to have been
enacted in accordance with the re@uirements of the &ocal Government 'ode. These would
include the holding of a public hearing on the measure and its subse@uent approval by the
Secretary of 3inance, in addition to the usual re@uisites for publication of ordinances in
general.
BASIC POWERS OF THE BIR COMMISSIONER
4 CODE" 5E R A P6
4. Enforcement of forfeitures, fines, and penalties imposed in relation thereto, including the
enforcement execution of judgment rendered by the 'T% or S' in favor of the /("
,. "ecommend needful rules and regulations to the Secretary of 3inance for the effective
implementation of the provisions of the #("' and special laws
7. %ssessment and collection of internal revenue taxes, fees and other taxes.
8. 0olice power, to administer or to give effect to the police power conferred upon it by law.
CORROLARY POWERS OF THE BIR COMMISSIONER
CODE" 5S I E O T A A T 6
4. Summon persons on certain cases pending investigation
,. (n@uire into ban< deposits
49
; Except. Secrecy of ban< deposits law
> nly to determine the gross estate of decedent not to determine the income
7. Examine boo<s of the accounts of the taxpayer and other documents
8. btain information
9. Ta<e testimony of persons
:. %dminister oaths
=. %rrest persons who have violated the provisions of the tax code
> should have warrant of arrest
K. Ta<e inventory

50