FINAL

COVERAGE
MODULE 5: PHILIPPINE GOVERNANCE AND REVENUE SYSTEMS
This module analyzes the social, political and economic issues encountered by
the Philippines in its effort to achieve independence and to develop self – government.
These issues came about due to the demands of the Filipino throughout history which
were faced squarely by the different administration with high hopes of giving progress
and success to the Filipino people which can be possible if peace and order can be
maintained. These include the drafting, approval and implication of the Philippine
Constitution. The Agrarian Reform Policy and its role as well as the tax system adopted
by the Philippines.

Section 1: The Philippine Constitution

This section discusses the different Constitution promulgated in the Philippines
immediately after the proclamation of the Philippine independence on June 12, 1898.
The new Constitution is regarded as the most polished and responsive to the needs of
the people yet amendments are still recommended.

Concept of Constitution
Constitution Defined
In its broader sense the term Constitution refers to that body of rules and
principles in accordance with which the powers of sovereignty are regularly exercised.
With particular reference of the Philippine Constitution it is defined as a written
instrument by which the fundamental powers are distributed among several
departments for the safe and useful exercise of power, for the benefit of the people.
Nature and Purpose/Function of Constitution
1. A Constitution is the charter creating the government
2. It creates the different departments with their respective functions and duties.
3. It prescribed the permanent framework of the system of government.
4. It preserves and protects the right of the individuals against the abuses of those who
are in power.
5. It defines and limits the powers of the governments’ officers and offices.
Kinds of Constitution
It is classified as:
1. As to their origin and history
a) Conventional/Enacted – a constitution that has been enacted by a constituent
assembly or by a monarch to his subjects
b) Cumulative/Evolved – one which is a product of growth or long period of
development originated in customs, traditions and judicial decisions.
2. As to their forms:
a) Written – one which has been given a definite written form at a particular time
usually by a duly constituted authority known as Constitutional Convention.
b) Unwrittten – a Constitution w/c is a product of political evolution consisting
largely of mass of customs, traditions and judicial decisions.
3. As to manner of amendment
a) Rigid/Inelastic – a type of constitution which is regarded as a document of
special sanctity that cannot be easily altered except by some special machinery.
b) Flexible/Elastic – it possess no higher legal authority than the ordinary laws
and it can be easily altered.
4. As to the Contents (3 sets of provisions)
a) Constitution of Government – deals with the framework of government and its
powers and defining the electorate.
b) Constitution of Liberty – deals with fundamental rights of the people and
imposing limitations on the powers of government as a means of securing the
enjoyment of this right.
c) Constitution of Sovereignty – points out the mode or procedure for amending
or revising the constitution.

Requisites of a Good Written Constitution

a) Brief – if it is too detailed then it will lose the advantage of being a fundamental
law.
b) Broad – the statement of the powers and functions of the government and the
relationship between the governing body and the governed, requires that it be as
comprehensive as possible.
c) Definite – any vagueness to the constitution may lead to an opposing
interpretations that may bring incalculable harm.
Who has the authority to interpret the Constitution?
a) This function primarily belongs to the court whose final decisions are binding on
all departments or organs of the government
b) However, there are constitutional questions (e.g. political question) which are
addressed to the other branches of the government so it is beyond the power of
the court.
Purpose in Interpreting the Constitution?
The fundamental purpose in interpreting constitutional provisions is to ascertain
and to give effect the intent of the framers and of the people who adopted or approved it
or its amendments.
Read the Preamble of the 1987 Constitution and answer these questions: 1) who
are the authors of the Constitution? 2) What is the purpose of the Constitution? 3) What
type of government does it want to establish? And 4) what values are being implored by
the Constitution?
Evolution of the Philippine Constitution
The Malolos Constitution (1899 Constitution)
Two weeks after the proclamation of Philippine independence, Emilio Aguinaldo
with the advice of Apolinario Mabini called the delegates from the different provinces to
convene at Barasoain church in Malolos, Bulacan on Sept. 15, 1898. Originally, the very
objective in convening the Congress was to serve as an advisory body to the president.
But there was a group of delegate headed by Pedro Paterno who wanted to draft a
constitution so that a true republic will be established that soon be recognized by foreign
powers.
The draft of the Malolos Constitution was preapared by Felipe Calderon and
accordingly it was patterned with the Constitution of other countries like Belgium,
Mexico, Brazil, Nicaragua, Costa Rica and Guatemala since those countries have
similar conditions with Philippines in terms of social, political, ethnological and
governance conditions. One of the hated arguments was on the provision of the union
of the church and the state. This proposal was voted twice. The result of the first voting
was a tie and the second voting resulted to the victory of the separation of the church
and state which became possible because of Pablo Tecson who broke the tie vote.
The Malolos Constitution created a popular gov’t which means supreme power
was vested to a legislative body called the assembly of representatives composed of
delegates elected according to law. To make the function of Congress continuous, the
constitution provided for a Permanent Commission that would sit as a lawmaking body
whenever the Congress was not in session.
The Malolos Constitution had three important features; 1) the provision for an
independent Republic of the Philippines consisting of the three powers distributed to the
executive led by the president with a term of four years with no re – election, a
unicameral legislative and a judiciary. 2) The Bill of Rights and 3) Separation of the
Church and the State. This Constitution was promulgated on January 23, 1899 which
resulted to the birth of the first Republic.
Unfortunately, this constitution was never exercised due to the Philippine –
American war that broke out on February 4, 1899 and with the ratification of the Treaty
of Paris by the U.S. Congress on Feb. 6, 1899.

The 1935 Constitution and the Commonwealth Government

On March 1901, Aguinaldo was captured in Palanan, Isabella by the American
soldiers. Soon, the American established a military government and they officially
declared themselves as a new colonizers. In July 1901, they eventually established the
first civil government in the island. During this period the Philippine was governed by
laws including Organic Act of 1902 – the first Organic Law for the Philippine Islands that
provided for the creation of a popularly elected Philippine Assembly. It specifically
provided that the legislative power was vested in a bicameral legislature which is
composed of the Upper House or Philippine Commission and the Lower House or the
Philippine Assembly. The second organic act that has the function like that of a
Constitution was the Philippine Autonomy Act of 1916 otherwise known as Jones
Law which changed the structure of gov’t through the removal of the Philippine
Commission, replacing it with the Senate in which members are elected by the Filipino
voters. This act also provided that the U.S. will end their control over the Philippines and
recognize Philippine independence as soon as the stable government will be
established. In 1934, another law was promulgated by the U.S. Congress, the
TydingsMcDuffie Law which is otherwise known as Philippine Independence Act
that defined mechanisms for the establishment of a formal constitution by a
constitutional convention. On July 30, 1934, the members of the convention were
elected and immediately held their first meeting with Claro M. Recto as an elected
President.
The constitution created a Commonwealth government which will last from 1935
to 1946, a transitional administration to prepare the country until Philippine
Independence will be proclaimed. It provided for a Unicameral National Assembly with a
president and Vice president elected to a 6 years term with no re – election. The
proposed 1935 Constitution was approved on March 23, 1935 by the U.S. President
Franklin D. Roosevelt and was submitted to the Filipino People for its ratification on May
14, 1935. It came into effect on November 15, 1935.
The 1935 Constitution was later amended by National Assembly in 1940 by
changing the term limit of the President from six years with no re – election to four years
with one re – election Right of suffrage was eventually given to the Filipino men, who
are twenty one years of age and above and are able to read and write, which was later
extended to women. Another important amendment was the parity right – w/c gave the
Americans equal rights with the Filipinos in the exploitation of the Phil – natural
resources. This constitution also created a Constitutional Commission, the COMELEC
or Commission on Election and lastly the establishment of a bicameral legislature.
 This constitution ceased to operate during the Japanese occupation from 1942 to
1944. It automatically becomes effective upon the re – establishment of the
Commonwealth government on February 27, 1945 and the inauguration of the Republic
of the Philippines on July 4, 1946.
What is the dominating sources of the 1935 Constitution? It was based on U.S.
Constitution but other sources were of the Malolos Constitution and the three (3)
organic laws that were enforced in the Philippines before the passage of
TydingsMcDuffie Law.

The Second Philippine Republic (1943 Constitution)

The Commonwealth Government under the leadership of Manuel L. Quezon
went into exile to Washington, U.S.A. during the Japanese occupation in the Philippines
as the result of World War II. The Japanese created the so called Greater East Asia Co
– Prosperity Sphere program as part of their policy of attraction by offering the
Philippine its independence.
The KALIBAPI or Kapisanan ng Paglilingkod sa Bagong Pilipinas – a Filipino
political party during the Japanese time immediately acted on the orders given by the
Japanese military by convening the Philippine Commission to write a new Constitution.
On Sept. 4, 1943, this Constitution was signed and few days later it was ratified by the
KALIBAPI. The said constitution was promulgated on October 14, 1943 thereby
establishing the Second Philippine Republic with Jose P. Laurel as President.
The 1943 Constitution was based on the 1935 Constitution but it was transitory in
nature since it could only be effective as long as war is still there. It has three
departments (executive, legislative and judiciary) yet the powers of the government
were concentrated with the President due to the existence of war. The most significant
provision of this constitution was the declaration of making Tagalog as the national
language.
This Constitution was never recognized by the Commonwealth Government and
the U.S. Government: Eventually, it was abolished in 1945 upon the liberation of the
Philippines by the American forces in 1945. In the same year, the Commonwealth
Government was re – establish in the Philippines.

The 1973 Constitution (The Authoritarian Constitution)

The experience of more than three decades as a sovereign nation had revealed
flaws and inadequacies of the 1935 Constitution and taking into account the felt
necessities of the times “particularly the ever increasing population urgently pressing for
solution, Congress in joint session passed a resolution on March 16, 1967 authorizing
the holding of Constitutional Convention in 1971. In line with this resolution, Republic
Act No. 6132 was approved setting November 10, 1970 as an election day for 320
delegates to the Constitutional Convention. The Convention started to draft the new
Constitution on June 1, 1971 with the Malolos and 1973 Constitution as their major
reference and was able to finish it on November 30, 1972. But before the approval of
the 1973 Constitution, President Marcos issued Proclamation No. 1081 on Sept. 21,
1972, placing the entire country under Martial Law. Eduardo Quintero accused Marcos
of bribing delegates to vote for a provision to extend the presidential term of office and
to change the form of government.
The 1973 Constitution was not ratified by the people by means of plebiscite but
instead it was submitted to the “citizens assemblies” that was formed to approve or
reject the new Constitution. The citizens assemblies were held from January 10 – 15,
1972. It was done via viva – voce in lieu of secret ballots. The legality of this ratification
was questioned although Marcos promulgated Proclamation No. 1102 declaring the
1973 Constitution ratified and took effect on January 17, 1973. However, the supreme -
court affirmed its validity and deemed it to be in full effect.
The 1973 Constitution established a modified parliamentary form of government
in which the President was the symbolic head of the state and the Prime Minister was
the head of the government. The legislative power was exercised by the National
Assembly or Batasang Pambansa. It also provided for the creation of the 3
Constitutional Commissions such as, Commission on Election, Commission on Audit
and the Civil Service Commission.
Amendments to the 1973 Constitution were made in 1981. The most shocking
amendment was the granting of several powers and function of the President
specifically the concurrent lawmaking power the reason why during the time of Marcos
there were many P.D’s or President Decrees enacted by him.

The 1987 Constitution (The Freedom Constitution)

President Corazon Aquino’s government had three options regarding the
Constitution 1) revert to the 1935 Constitution 2) retain the 1973 Constitution and 3)
draft a new one. The third option was adopted and in line with Sec. 1, Article V of the
Provisional Constitution President Aquino issued Proclamation No. 9 creating the
CONCOM or Constitutional Commission in which members must be coming from the
different sectors.
On June 2, 1986, the CONCOM with 48 members starts to draft the provision of
a new constitution headed by Cecilia Muñoz Palma, the former Chief Justice of the
Supreme Court. They based their drafts on the Malolos Constitution, 1935 Constitution
and the 1973 Constitution and of course with committee discussions, there was also
public hearings and plenary sessions which were conducted and even public
consultations in the different parts of the country.
The proposed new Constitution was approved by the Constitutional Commission
(CONCOM) on Oct. 12, 1986 and finally on Oct. 15, 1986, the CONCOM members
signed it and the original copy was presented to Cory Aquino. It was ratified by the
people in the plebiscite on Feb. 2, 1987 with an overwhelming vote of 17,059,495.
 The 1987 Constitution has 18 articles with the significant provisions such as 1) it
established a presidential type of government, having a bicameral Congress which is
composed of a Senate and House of Representative 2) A modified Bill of Rights (Art III)
particularly the abolition of death penalty 3) the creation of a Commission of Human
Rights 4) the Recognition of an Autonomous Regions of Muslim Mindanao and the
Cordilleras and a 5) limited political autonomy for local government units. The 1987
Constitution also crated the three branches of the government; 1) the executive branch
which is headed by the President and Cabinet members; 2) legislative branch which is
composed of the Senate headed by the Senate President. The Senate is composed of
24 Senators who are elected and serve for six years terms with the half of the senators
elected every three years. The House of Representatives headed by the Speaker of the
House which is composed of the Congressmen/women (officially called
Representatives) elected to a three – year term and qualified for 2 re – election. The
house has a sectoral representatives who are members of party – list organizations who
can represent the significant minorities. 3) Judicial Branch – which is composed of the
Supreme Court and the lower courts. The Supreme Court is the Philippine highest
judicial court and the court of last resort w/c means that whatever decision rendered
becomes final and executory. It is headed by the Chief Justice and consists of 14
associate justices.
Guide Questions:
1) How is Constitution being drafted? What are some of the processes that are
observed before its final promulgation?
2) Why is constitution considered as the highest law of the land?
3) The separation of the church and state became the controversial topic of debate
in the drafting of the Malolos Constitution. Why?
4) President Rodrigo Duterte wanted to establish a federal system of government.
Will this be possible without changing the 1987 Constitution? Support your
answer.
5) What is bill of rights? Why is it so important to be a part of the Constitution?

Section 2: Agrarian Reform

This section focuses on the history of agrarian reform in the Philippine and its
significance to the Philippine development. Agrarian issues have long existed in the
country despite the effort of the past administrations to solve them. It considers the
programs and policies promulgated by the past administrations, assesses their
contributions and flaws in obtaining an effective agrarian reform policies in our country.
What is agrarian reform? It covers the restructuring of the whole system of
agriculture, an important aspect of the Philippine economy since many Filipinos are
employed in the agricultural sector. As long as there will be no genuine agrarian reform
then Filipinos in the agricultural sector will continue to suffer poverty and discontent. For
us to be able to understand better the agrarian reform in our country, it is necessary to
look back our colonial past where we can trace the root of agrarian problems which until
today being experienced by our farmers.
Landownership in the Philippine during the Spanish Regime
The Spanish crown started to award largest tracts of land w/c is known as Sitio
de Ganado mayor and the smaller tracts (caballerias) to 120 Spanish conquerors who
arrived in the Philippines during the late 16 th century. These Spanish conquerors turned
to be the hacienderos who failed to develop their lands. Later, these lands were
awarded to the 1) religious orders 2) repartamientos (Spanish military) 3)
encomenderos – those who helped the pacification process. Philippines is supposed to
be for the Filipino but during the time of the Spaniards never that they were given the
right own a parcel of land but instead they were just ask to cultivate the lands as
tenants. The encomendero even ask them to pay higher tribute.
From the encomienda system, there emerged the hacienda system as the
Spanish government promulgated policies that will expedite the entry of the Philippines
into the capitalist world as an exporter of raw materials and importer of goods. When
agricultural exports were greatly demanded the hacienda system was eventually
developed as a new form of land ownership. Spain enacted laws requiring the
landholders to register their landholding. Religious orders acquired the biggest
landholding (hacienda) and usually they were the ones exploiting the Filipino farmers by
increasing the rent. The reason why agrarian complaint was the main cause of the start
of Filipino rebellion against Spain.
Landownership under the Americans
The Americans wanted to put an end the deplorable conditions of the tenant
farmers by promulgating several land policies. These are; 1) Phil. Bill of 1902 – it
regulated for the disposal of public lands by which private individual can only owned 16
hectares of land while corporate landholders can acquire more than 1,000 hectares 2)
Act No. 496 or Land Registration Act that introduced the Torrens system to made an
accurate land surveys and address the absence of earlier records of issued land title
and 3) homestead program – that allowed the tenant to enter into an agricultural
business by acquiring a farm of 16 hectares.
In spite of American efforts to improve the landownership scheme in the
Philippines yet it even worsened since there was no limit as to the size of landholding by
those who can afford to buy. The implementation of land reform program was not
enough without the support system. Even during the commonwealth government, the
situation further worsened. In line with social justice program, President Manuel Quezon
purchased haciendas to be divided among the tenants. NARIC or National Rice and
Corn Corporation was created in order to assign public lawyers to defend and assist the
tenants in court battles and CIR or Court of Industrial Relations – to pacify any
disagreements between landowners and tenants. Still, the effort toward agrarian reform
failed because of the lack of budget allocation and the widespread peasant uprisings.
Postwar Attempt to Solve Agrarian Reform Administration of Manuel Roxas
After WWII President Roxas focused on providing solutions to Agrarian problem
by 1) enacting Republic Act no. 34 which established a 70 – 30 sharing arrangement
between the tenants and landlord respectively and regulated the share tenancy
contracts and 2) Act No. 55 which provided security to tenants from arbitrary ejectment
from the land they are tilling.
President Elpidio Quirino
He issued Executive Order No. 355 on Oct. 30, 1950, that replaced the National
Land Settlement Administration with the Land Settlement Development Corporation or
LASEDECO – w/c aimed to accelerate and expand the resettlement of peasants.
President Ramon Magsaysay
He felt the importance of pursuing genuine land reform program by convincing
the Congress to pass Republic Act No. 1199 otherwise known as Agricultural Tenancy
Act which govern the relationship between the landlords and tenant farmers, protecting
the tenurial rights of tenants and enforced tenancy practices. Through this Republic Act,
CAR or Court of Agricultural Relations was also created in order to improve tenancy
security and to resolve land disputes immediately. It was also during the administration
of Magsaysay that ACCFA or Agricultural Credit and Cooperative Financing
Administration was created to provide warehouse facilities and assists the farmers in
marketing their products. Republic Act No. 1400 or the Land Reform Act of 1955 which
provided for the expropriation of private agriculture land over 300 hectares of
contiguous areas, if owned by individuals.
President Carlos Garcia
He carried on the land – related policies of Magsaysay as he had promised in his
inaugural speech. He did not make any law on agrarian reform the reason why his
administration was described as “stalemate” between the landlords and their allies on
Congress.
President Diosdado Macapagal
Like Ramon Magsaysay, Pres. Diosdado Macapagal also came from the masses
and even called himself the “poor boy” from Lubao, Pampanga.
He promulgated Republic Act No. 3844 or Agricultural Land Reform Code of
1963 which provided for the purchase of private farmlands and intend to distribute them
in small lots to the landless tenants on easy term of payment. This code abolished the
share tenancy in the Philippines and prescribe a program to convert tenant farmers to
leases and later on owner – cultivators.
President Ferdinand Marcos
Five days after Marcos declared Martial Law he issued P.D. No. 2, placing the
entire Philippines as a land reform area. On October 21, 1971, he issued P.D. No. 27 or
the Tenant Emancipation Act which handed over the ownership of the land to the
tenants who are actually cultivating it. Landlords who owned more than seven hectares
of land had to sell their excess land to DAR which in turn, should sell these to the
landless farmers tilling the land. This program failed due to 1) narrow coverage since it
only covers lands that were planted with rice and corn, 2) protection for big landlord –
landowners could shift another crops e.g. from corn/rice to coconut, 3) heavy burden on
farmer beneficiaries – large amortization fees to be paid by the beneficiaries for only 15
years, 4) little support services and 5) weak farmers organization since if they would
cooperatives then they can be easily branded as communists or subversives. These are
the major flaws that crippled the Agrarian Reform of Marcos.
President Corazon Aquino
The “centerpiece” of her governance was the Agrarian Reform Program. On July
22, 1987, she signed Proclamation 131 and Executive Order No. 229. The first
document embodied the general principles of the program while the second gave the
detailed mechanic of its implementation.
The primary governing law on Aquino’s Agrarian Reform was Republic Act No.
6657 which is otherwise known as Comprehensive Agrarian Reform Law (CARL) signed
on June 10, 1988. The very essence of this act was to promote social justice and
industrialization for the country. It was the most comprehensive Agrarian Reform
program since it covers any type of Agricultural land with any type of crops planted on it.
Unfortunately, this program did not succeed due to ff. factors 1) the national
leadership lacks the willingness to cooperate for its implementation 2) no funds to
finance the program 3) landowners are greedy and 4) circumvention of the law.
President Fidel Ramos
The very dilemma he was facing during his administration was to revive public
trust on Agrarian Reform Program because of the issue of Hacienda Luisita, which is
owned by Conjuangco family and this landholding was notably exempted from Agrarian
Reform during Cory Aquino’s administration.
What he did was, he enacted laws that could strengthen the implementation of
CARP by implementing Republic Act No. 7905 in which he limit the land conversion
scheme by making certain types of agricultural land as non - negotiable for conversion.
Republic Act No. 3532 known as Agrarian Reform Fund Bill which provided an
additional ₱50 billion for CARP and extending its implementation for another 10 years
was also signed by Ramos.
President Joseph Estrada
Though he was not able to finish his term of office but Estrada enacted an
Executive Order No. 151 which consolidated small farm operation into medium or large
scale enterprises to qualify for long term capital. He even asked the DAR to plan a joint
projects that would be spearheaded by the private investors and the agrarian sector
under the MAGSASAKA or Magkabalikat Para Sa Kaunlarang Agraryo program.
President Gloria Arroyo
The administration of Gloria Arroyo did not pass any Agrarian reform law until
about nine months before her term ended. Because of public Clamor, she was forced to
sign Republic Act No. 9700 known as CARPER or the Comprehensive Agrarian Reform
Program Extension and Reforms on Aug. 7, 2009 and House Bill 4077 that extended
the CARL or Republic Act No. 6657 to five more years and allocated more funds for the
implementation of the CARP.
To fully achieved the goal of Agrarian reform in the Philippines is just an elusive
dreams due to the following reasons 1) the landed elite (most of them are the
government officials) have vested interest. They do not want to redistribute their lands
to farmers 2) Congress drafted and passed a weak law to easily circumvent the issue
and 3) no inventory been made as to the actual lands that are subjected to distribution.
Guide Questions
1) Consider yourself as a landowner of a ten – hectare agricultural land. Would it be
okay for you if parts of your land will be distributed to farmers in the
implementation of the Agrarian Reform Law? Why? Justify your stand.
2) Is it really necessary for the Philippines to pursue a genuine agrarian reform
program for economic development? Yes or No? Why?
3) Having experience the plight of our farmers, can you suggest of any agrarian
program that can improve their condition?
4) If you were Corazon Aquino, Will you be willing to include Hacienda Luisita to be
covered in the CARP? Why?
5) Of all the presidents of the Republic of the Philippine, who do you think had the
chance to fully implement the Agrarian Reform Program? Support your choice.

Section 3: Taxation
This section explains the nature and basis of taxation. The old and the new tax
table which was based on a newly signed law and is termed as Train Law or Tax
Reform for Acceleration and Inclusion are also presented.
What is Taxation
Taxation – is defined as an inherent power of the state to impose charge or
burdens upon person, property and property rights for the use and support of the
government so that it can exercise its appropriate functions. It is a way to raise funds to
finance the government programs, service and projects for the citizens’ welfare.
Taxation is considered the lifeblood of nation for without it the government will never
succeed in protecting the state and its people.
Even before the coming of the Spaniards, Filipinos were already having a formal
communities ruled by the chieftain. By then, by that time there was already a collection
of taxes (tribute) from the subordinate, in turn protection were afforded by chieftain.
On the other hand, tax is defined as a compulsory contribution to state revenue,
levied by the government on workers income, business profits, services and other
transactions. To have a good tax system these basic conditions should be observed; 1)
fiscal adequacy – w/c means that taxes collected must be sufficient to fund the
necessary government expenditures and basic services in a given fiscal year, 2)
administrative feasibility – means that payment of taxes must be taxpayers’ friendly e.i.
the time of payment and manner of collection must not be burdensome to the taxpayers
and 3) Theoretical Justice – refers to the ability – to – pay principle which means that
the tax burden must be proportional to the taxpayers’ level of income.
Today, tax laws are based on the National Internal Revenue Code which was
revised with the implementation of the Tax Reform Act of 1997 and the Tax Reform for
Acceleration and Inclusion (TRAIN LAW) in 2017.
Taxes are now categorized into six classes:
1. As to the subject matter:
a. Poll tax / Personal or Capitation Tax – it is a fixed amount imposed on individual
residing w/n a specified territory, regardless of their property, occupation and
business. Example: community tax or cedula.
b. Property Tax – a tax levied by the LGU where the property is located and it is
based on its value. Example: real estate tax
c. Consumption Tax – a tax that is usually passed on to consumers by adding the
amount of the tax to be paid to the price of the good or service.
2. As to who bears the burden
a. Direct tax – is paid by an individual or organization to the entity that levied the
tax. These include income tax, corporate tax, property tax, estate tax, sin tax &
VAT
b. Indirect tax – a tax collected by an intermediary from the person who bears the
ultimate economic burden of the tax
3. As to the determination of the amount of tax to be paid
a. Ad valorem tax – is a tax based on assessed value of an item, such as the real
estate or personal property. Example is the property tax levied on real estate.
b. Specific tax – a tax levied which is based on quantity e.g. the fixed amount per
cigarette or weight of tabacco
4. As to the Purpose
a. General tax – refers to a tax that applies to all or most of goods and services that
are taxed at the same rate
b. Special tax – means any tax imposed for specific purposes. These include taxes on
gasoline, tabacco, hotel stays road use and business license.
5. As to the Authority imposing the tax
a. National taxes – are the ones paid to the government through the BIR which is
based on the National Internal Revenue Code.
 b. Local tax – is a tax assessed and levied by the local authority. This usually
collected in the form of property taxes
6. As to the tax system
a. Progressive Tax – a type of taxation where as you have more income that is
subject to tax, the higher is your tax rate.
b. Regressive tax – is a tax imposed in such a manner that the tax rate decreases as
the amount subject to taxation increases.
c. Proportional Tax – imposes the same percentage of taxation on everyone
regardless of income
There are other terms related to tax such as;
1) Revenue – refers to all income or profit generated by a person or a company
from its business activities.
2) Customs Duty – refers to the tax or tariff imposed on goods exported to other
countries
3) Internal revenue – it refers to the governments’ income from tax collection
4) Toll – it is a fee collected for the use of the property of another person.
5) Debt – is a liability to pay money arising out of contract
6) Penalty – a monetary sanction imposed on taxpayer for failure to pay.
There are those who wanted to escape from paying their taxes through the
following means. 1) Shifting is one way of passing the burden of tax from one person to
another. It has three (3) kinds a) Forward shifting – happens when the burden of the tax
is transferred from a factor of production to the factor of distribution. B) Backward
shifting – occurs when the burden of tax is transferred from the consumer to the
producer or manufacturer and c) Onward shifting – occurs when tax is shifted to two or
more times either forward or backward. 2) Capitalization – refers to the reduction in the
price of the taxed object to the capitalized value of future taxes which the purchaser
expects to be called upon to pay. An example is a reduction made by the seller on the
price of the real estate, in anticipation of the future tax to be shouldered by the future
buyer, 3) Transformation – occurs when the manufacturer upon whom the tax has been
imposed pays the tax and endeavor to “recoup” himself by improving his process of
production, 4) Tax Evasion – is the practice by the taxpayer through illegal means to
defeat or lessen the amount for tax, 5) Tax Avoidance – is the exploitation by the
taxpayer of legally permissible methods inorder to avoid or reduce tax liability. This is
otherwise known as “tax minimization” and 6) Tax Exemption – is the grant of immunity
of freedom from a financial charge, obligation or burden to w/c others are subjected.
During the Marcos administration, tax system remains reggressive. In the latter
part of Marcos time, tax system was heavily dependent in indirect taxes. There was an
average annual rate of 15% which generated a low tax yield.
 When Corazon Aquino became the President, she introduced a tax reform
through the 1986 Tax Reform Program which aimed to improve the responsiveness of
the tax system, promote equity and promote growth by modifying taxes. The VAT Law
was signed in 1986 and became effective in 1988 and it was a reliable source of
revenue for the administration. Executive Order 127 was also implemented to intensify
tax collection and audit by computerization that reduced corruption.
The Ramos administration introduced a Comprehensive Tax Reform Program in
1987 which aim to minimize tax avoidance, encourage payments by increasing the tax
exemption level and rationalized the tax incentives. The VAT base was also broadened
to include services through R.A. 7716.
When Gloria Arroyo succeeded Joseph Estrada through EDSA Revolution 2
which brought a large government deficit from 2002 to 2004, the administration tried to
look for additional sources of revenue then in 2005 the EVAT (Expanded Value – Added
Tax) was signed into Law as R.A. 9337, which expanded the VAT base including
energy products like coal and petroleum products and electricity generation,
transmission and distribution. This also increased the VAT Rate from 10% to 12%.
During the administration of Benigno Aquino III, Republic Act 10351 was passed
to increase the revenue for alcohol and tobacco. There was so much increase in the
collection of tax from these two commodities that in 2015 it made up 1.1% of the Gross
Domestic Product. The Sin Tax Reform greatly give an impact on social services for it
allowed a triple increase of the DOH budget in 2015.
On December 19, 2017, President Rodrigo Duterte signed into law package 1 of
the Comprehensive Tax Reform Program (CTRP) also known as the Tax Reform for
Acceleration and Inclusion (TRAIN) as R.A. No. 10963. The law took effect on January
1, 2018.
The TRAIN aims to make the Phil. Tax System simpler, fairer and more efficient
to promote investments, create jobs and reduce poverty. It also aims to raise
government revenues that will fund the Presidents’ Build, Build, Build Projects that will
sustain high and inclusive growth of the country’s economy.
The TRAIN Law exempts the first ₱250,000 annual taxable income of the
taxpayers, repeals the provision on basic personal and additional exemptions and
retains the exemption from tax of the mandatory contributions such as those made to
the GSIS, SSS, Philhealth, Pag – ibig Fund and union dues.
Guide Questions
1) Is it possible for the government to exist without taxation? Why?
2) How important taxation is, in the continuous existence of the state/country?
3) What are the significant provisions of the TRAIN Law and analyze their
implications by giving concrete examples?
4) Compare and contrast the Old and the New Compensation Tax Table. Which is
better? Why?
5) Why do Filipinos consider taxes as an additional economic burden?