LAW OF BASI ‘TAXATION IN THE PHILIPPINES collected from it. Is it likewise exempt from wharfage dues? Reasons. (1972 Bar) 3. The income earned by Denny Santos in 1991 in the United States amounted to $50,000 consisting of salaries, dividends, capital gains from real estate transactions, ete. This income is subject to USS. federal income tax and under our Tax Code this income is also subject to the preferential rates of from 1% to 3%. Is this a case of double taxation of the direct type? Explain briefly. 4. Itis axiomatic in taxation that “tax exemptions are construed strictissimi juris.” Does this rule apply also to the granting of tax refunds as well as questions affecting the condonation of unpaid taxes? Explain your answer. 5. A certain corporation was established to manufacture prefabricated concrete slabs for export as well as local consumption. By way of tax incentive, the corporation was granted by law an exemption from all taxes “directly payable in respect to said industry” for the duration of its tax-exempt status which is five years. State whether the tax exemption granted to the corporation includes the following: (a) payment of VAT (value-added tax) on imported conerete, steel and other raw materials used in the manufacture of concrete slabs; (b) taxes on gasoline and other fuels needed to operate its plant; (©) motor vehicle fees for the registration of its delivery trucks and panels; (d) community tax payable by the entity every year; and, (e) donor's tax on donated land to be used as a site for another factory building needed for expansion purposes. The donation is made two years after the corporation had commenced the actual operation of its business. 6. (a) “A,” after studying his tax problems, decided to withdraw his bank deposits and to buy non-taxable or tax-exempt securities. Does “A's” act constitute tax evasion which is penalized? Explain. (1972 Bar) (b) “B,” who wishes to avoid payment of taxes assessable on the transaction, was advised by his tax consultant to make it appear on the deed of sale that the selling price was only 200,000 although it was actually 300,000. Is this tax avoidance of tax evasion? Explain. (1972 Bar) 142, Chapter IV TAX LAWS AND REGULATIONS NATURE OF TAX LAWS. Tax laws are civil in nature, not political. Hence, even during the period of enemy occupation (such as, for instance, during the Japanese occupation of the Philippines in World War Il, which lasted from 1942 to 1945), tax laws are continually enforced as they are deemed to be the laws of the occupied territory and not those of the occupying power. In the case of Hilado v. Collector of Internal Revenue, et al, (100 Phil. 288), the Court did not allow the taxpayer to deduct from his 1951 tax return a “casualty” loss incurred during the war, i.c., “loss from fire, storms, shipwreck, ete., including war losses (now under Sec. 34/DJ{1][6], 1997 NIRC). Although such loss was incurred during said war it was not possible for him to make the deduetion because, according to him, internal revenue laws were at the time unenforceable or in a state of suspension. The Court, however, overruled this contention and held that during the Japanese occupation, the internal revenue laws of the Philippines continued to be in force. Neither are tax laws penal in nature. Hence, the rule on the retroactive effect of penal laws under Art. 22 of the Revised Penal Code which reads: “Penal law shall have a retroactive effect insofar as they favor the person guilty of a felony, who is not a habitual criminal as defined in rule 5 of Article 62 of this Code, although at the time of the publication of such laws a final sentence has been pronounced and the convict is serving the same,” finds no application in tax cases. As stated in a decided ease (Lorenzo v. Posadas, Jr., ete., 64 Phil. 353), revenue laws which impose taxes collected by means which are ordinarily resorted to for the collection of taxes are not classed as penal laws and, therefore, cannot be given retroactive effect. Furthermore, tax laws not being penal in character, the rule in the Constitution against the passage of ex post facto laws cannot be, invoked. The constitutional prohibition against the passage of ex post facto legislation, according to the Supreme Court, applies only to criminal or penal matters, and not to laws which concern civil matters or proceedings generally, or which affect or regulate civil or private rights (Republic v. Oasan Vda. de Fernandes, et al., 99 Phil. 984; Ex Parte Garland, 18 Law Ed. 366, 16 C.J.S. 889-891). 143,