The basic principles in the grant of tax exemptions:

1. Pertinent Constitutional Provision: Article VI, Sec. 28, 1987 Constitution

No law granting any tax exemption shall be passed without the concurrence of a majority
of all the Members of the Congress.
Example: In order to place all the special economic zones created under RA 7227
(otherwise known as the BCDA Act) on equal footing and entitled to the same tax benefits
granted to enterprises registered with the Subic special economic zone, then President Fidel
Ramos promulgated Proclamation No. 420 on July 5, 1994.
The Supreme Court ruled that the grant of preferential tax rate of five percent (5%) based
on gross income earned in favor of enterprises registered with the Camp John Hay Special
Economic Zone contravenes the above-mentioned provision. (John Hay Peoples Alternative
Coalition, et.al. vs. Lim, GR No. 119775, October 24, 2003)
2. Tax exemptions must be construed in strictissimi juris against the taxpayer and liberally
in favour of the taxing authority.
He who claims an exemption from his share of the common burden of taxation must
justify his claim by showing that the Legislature intended to exempt him by words too plain to be
beyond doubt or mistake (City of Iloilo, et.al. vs. Smart Communications, Inc. G.R. No. 167260,
dated February 27, 2009).