Taxation
31. As to Purpose
a. T – To raise revenue in support of the
Government. Regulation is merely
incidental.
b. PP – Promotion of general welfare
through regulations
c. ED – To facilitate the taking of private
property for public purpose.
32. As to Persons Affected
a. T – Upon the community or class of
individuals
b. PP – Upon the community or class of
individuals
c. ED – On an individual as the owner of a
particular property
33. As to Amount of Monetary Imposition
a. T – No ceiling except inherent
limitations
b. PP – Limited to the cost of regulation,
issuance of license, or surveillance
c. ED – No imposition; the owner is paid
the fair market value of his property.
34. As to Benefits Received
a. T – Protection of a secured organized
society; benefits received from
government; no direct benefit
b. PP – Maintenance of healthy and
economic standard of society; no direct
benefit
c. ED – The person receives the fair market
value of the property taken from him;
direct benefit results
35. As to the Non-Impairment of Contracts
a. T – Tax laws generally do not impair
contracts, unless government is party to
contract granting exemption for a
consideration.
b. PP – Contracts may be impaired.
c. ED – Contracts may be impaired
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36. Test of Validity
a. T – Must not be contrary to inherent and
constitutional limitations
b. PP – Must comply with the tests on
“lawful subjects” and “lawful means”
c. ED – Must be for public purpose and
with payment of just compensation.
Aspects of Taxation
38. Levy or Imposition
This refers to the enactment of a law by
Congress authorizing the imposition of tax.
39. Assessment and Collection (Tax
Administration)
This is the act of administration and
implementation of the tax law by the executive
branch through its administrative agencies.
40. Payment
This pertains to the act of compliance by the
taxpayer, including such options, schemes, or
remedies as may be legally available.
41. Refund
It is the recovery of any alleged to have been
erroneously or illegally assessed or collected, or of
any penalty claimed to have been collected without
authority, or of any sum alleged to have been
excessively, or in any manner wrongfully collected.
Basic Principles of a Sound Tax System
43. Fiscal Adequacy
Revenue raised must be sufficient to meet
government/public expenditures and other public
needs.
44. Administrative Feasibility
The tax system should be capable of being
effectively administered and enforced with the least
inconvenience to the taxpayer.
45. Theoretical Justice
In imposing taxes, the taxpayers’ ability to
pay must be taken into consideration (Ability to Pay
Theory).
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Taxation
Inherent Limitations on the Power of Taxation
47. Public Purpose
Taxes imposed must be for public purpose.
The following determine if tax is for public purpose:
a. It is for the welfare of the nation and/or
greater portion of the population;
b. It affects the area as a community rather
than as individuals; and
c. It is designed to support the services of
the government for some of its
recognized objects.
48. Territoriality
General rule: The taxing power of a country
is limited to persons and properties within and
subject to its jurisdiction.
Exceptions:
a. Where tax laws operate outside
territorial jurisdiction (e.g., taxation of
resident citizens on their incomes
derived abroad); and
b. Where tax laws do not operate within the
territorial jurisdiction of the State (e.g.,
when exempted by treaty obligations or
by international comity).
49. International Comity
It refers to the respect accorded by nations
to each other because they are sovereign equals.
Thus, the property or income of a foreign state may
not be the subject of taxation by another state.
50. Exemption from Taxation of Government
Entities
General rule: The government is exempt
from tax.
Exception: When it chooses to tax itself.
Nothing prevents the Congress from decreeing that
even instrumentalities or agencies of the
government performing government functions may
be subject to tax.
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51. Non-Delegation of the Power to Tax
General rule: The power to tax is exclusively
vested in the legislative body, being inherent in
nature, hence, it may not be delegated.
Exceptions:
a. Delegation to local government –
local taxes
b. Delegation to the President – fixing
of tariff rates, import or export
quotas, tonnage and wharfage dues
or other duties and imposts
c. Delegation to administrative
agencies – administrative
implementation that may call for
some degree of discretionary powers
under sufficient standards
expressed by law (i.e., implementing
rules and regulations).
Constitutional Limitations on the Power of
Taxation
53. Due Process of Law
No person shall be deprived of life, liberty, or
property without due process of law. Due process is
a requirement that legal matters be resolved
according to established rules and principles, and
that individuals be treated fairly.
54. Equal Protection of the Laws
No person shall be denied the equal
protection of the laws. Equal protection means that
all persons subjected to such legislation shall be
treated alike, under like circumstances and
conditions, both in the privileges conferred and in
the liabilities imposed.
55. Non-Impairment Clause
No law impairing the obligation of contracts
shall be passed. The following are ways the law can
change the terms of a contract:
a. Making new conditions;
b. Changing conditions in the contract; or
c. Dispenses with the conditions
expressed therein.
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Taxation day 02
56. Non-Imprisonment for Non-Payment of Poll Tax
No person shall be imprisoned for debt or
nonpayment of a poll tax.

57. Exemption from Real Property Tax

The following shall be exempt from real
property tax:

a. Charitable institutions
b. Churches and parsonages or convents
appurtenant thereto
c. Mosques
d. Non-profit cemeteries
e. All lands, buildings and improvements
actually, directly, and exclusively used
for religious, charitable, or educational
purposes.

58. Exemption from Income Taxes and Customs

Duties
All revenues and assets of non-stock, non-
profit educational institutions used actually,
directly, and exclusively for educational purposes
shall be exempt from taxes and duties.

59. Other Constitutional Limitations

a. Uniformity and equality of taxation

b. Grant by the Congress of authority to the
President to impose tariff rates
c. Majority vote of Congress for grant of tax
exemption
d. Prohibition on use of tax for other
purpose when levied for special purpose
e. President’s veto power on appropriation,
revenue, and tariff bills
f. Non-impairment of jurisdiction of the
Supreme Court
g. Grant of power to the LGUs to create
their own sources of revenue
h. Origin of revenue and tariff bills (House
of Representatives)
i. No appropriation or use of public money
for religious purposes
j. Religious freedom
k. Freedom of the press
***