SYLLABUS IN TAXATION | (REVISED BY 2016-2017) GENERAL PRINCIPLES & INCOME TAXATION (for updating with RA 10963 provisions) ‘A. General Principles of Taxation 1. Concept1 Underlying Basis2 and Purpose Taxation, Taxes Defined Attributes or Characteristics of Taxes 1) Cebu Portland Cement v. CTA, L-29059, 15 Dec 1987, 156 5CRA 535 (Lifeblood of the Government) 2) Mun, of Makatl-v, CA, et al, L-89898, 01 Oct 1990, 190 SCRA 206 (Exempt from execution) 3) CIRv. Algue, Inc. etal, -28896, 17 Feb 1988, 158 SCRA 9 (Lifeblood Theory; Rationale is ‘Symblotie Relationship; timeliness of assessment / collection; effect of warrant of distralnt & levy; deductibility of promotional expense)3 4), BPLFamily Savings Bank v. CA tal 330 SCRA 507,12 Ape 2000 (Mutual Observance of {fairness & honesty; claim for refund due to losses, haw to prove 2, Principles of a Sound Tax System Administrative Feasibility Will the non-observance of these principles invalidate the tax law? No, unless other inherent and constitutional limitations are infringed. 3 ee a pie Z No attribute of soverel ‘is more pervading | it peas prehensive and supremeWide spectrum of the power to tax reaches every trade or occupation, every object of industry, use or enjoyment, every species of possession imposes burden, if not followed could result to seizure and penalty Pervasive affecting constantly and consistently all relations of life It also involves the power to destroy per Justice Marshall {bur Justice Holmes said no while the US SC sits} 5) CIR v Tokyo Shipping Co, 244 SCRA 332, 26 May 1995 [Claim for Refund of taxon GPB from 6) charter of vessel; claim for refund construed strictississimi juris finding of fact by CTA that vessel left without sugar laden; 15 years lapsed without refund though at one point lawyer of BIR sald it was approved; kill the goose that lay the golden eggs} 4. Limitation of Taxation Inherent Limitations a. Public Purpose b. Legislative in Nature ¢. Territorial d. International Comity CIR v Mitsubishi Metal Corp, 181 SCRA 214, 22 Jan 1990 [Exemption of Japanese govt awned bank does not extend to Jap corp, who in turn lent the loan to a local company; exemption construed strictississimi) e. Exemption of Government from tax Constitutional Limitations Directly affecting taxation a. Non-imprisonment for non-payment of poll tax b. Rule of taxation should be uniform and equitable; progressive system of taxation to evolve; authorized President to fix limits by Congress ¢. Exempt charitable and religious institution from property tax d. Exempting law must be passed by majority of all members of Congress e. Special purpose tax should be used for said purpose and excess to revert to. general fund Veto power of the President Review power of the SC 1. Grant of power to local government Exemption of non-stock, non-profit educational institution, ete from taxes rem Indirectly affecting taxation a. Due Process and Equal Protection Clauses ‘ b. Police Power and Eminent Domain higher, can override constitutional rights, subject to limitations Distinguish Taxation from Police Power and Eminent Domainy axation is subordinate to: a, Due Process b, Separation of Church and State c. Non-impairment clause of contracts d. Free exercise and enjoyment of religious profession 7) Phil Bank of Communications v. CIR, et al, 302 SCRA 241, 28 Jan 1999 [Summary collection does not infringe due pracess 8) Sison v. Ancheta, GR 59431, 25 Jul 1984 (Uniformity, Equal Protection and Due Process Clauses not violated when BP 135 adopted gross income taxation) {when the tax “operates with the same force and effect in every place where the subject may be found”, It was held to comply with uniformity requirement; “Equality and uniformity in taxation means that all taxable articles or kinds, of property of the same class shall be taxed at the same rate } 9) Reyes v. Almanzor, 196 SCRA 322 (Arbitrary valuation violated Due Process 10) Nitafan etal v. CIR, GR 78780, 23 Jul 1987 (Salaries of justices & Judges are not ‘exempt from income tax) 11) PAL v. Sec of Finance, GR 115852, 25 Aug 1994 (Withdrawal of PAL’s exemption from VAT without ‘being mentioned in title not violative of bill ‘embracing ane subject) 12) Tolentino v Sec of Finance & CIR, GR 1 1545, 64 SCAD 352, 235 SCRA 630 (Does VAT law violate the “progressivity rule of taxation” given that VAT is regressive?; equality & uniformity rule?) 13) ABAKADA Guro v, Exec Secretary, 469 SCRA 1, etc 1 Sep 2005 & 18 Oct 2005 5, Aspects of Taxation Levy 14) CIR v. Botelbo Shipping Corp, 20 SCRA 487 15) Tan ¥. Del Rosario, Jr.5 237 SCRA 324(1994) (Legislative discretion to determine nature (kind), subject (purpose), extent (rate), coverage (subject), land situs (place), SNITS is val Assessment & Collection Payment 6. Classification of Taxes According to subject matter (Capitation Tax, Property Tax, Excise Tax) According to burden or incidence (Direct or indirect) 16) Maceda v. Macaraeg 223 SCRA.217 17) ABAKADA Guro ¥, Exec Secretary, GR 168056 1 Sep 2005 & 18 Oct 2005 According to determination of amount (Ad Valorem, Specific) 18) Tan v Mun of Pagbilae GR 14264, 30 Apr'1963 7 SCRA 687 According to purpose (General, Special) 19) PAL v. Romeo Edu, GR 41383, 15 Aug 1998 164 SCRA 320 (exempt from taxes) 20) ESSO Std Eastern v CIR GR 26508-9, 7 Jul 1989 175 SCRA 149 (Margin Fee license - police power, not taxing) $ Tanv. Del Rosario, 237 SCRA 324 (1994) - This fs a challenge to the validity of Simplified Net Income Taxation lied to general professional partnerships; uniformity of taxation merely requires that all subjects or ayieth areca similarly are to be treated alike both in privileges and liabilities.