Module 2

Friday, September 10, 2021 7:14 PM

Assignment:

distinguish a tax from a license (30)

Constitutional limitations (61)

- Due process of law
○ Both substantive and procedural
○ Eg. Tax for a private purpose (does not have legal basis)
○ Right to be heard before property is confiscated by the state
○ May amount to confiscation of property
○ There must be a FACTUAL FOUNDATION to contest
- Equal protection of the laws
○ Does not prevent VALID CLASSIFICATION
▪ Remember consti II
○ Prevents only CLASS LEGISLATION
○ Remember requisites of valid classification
▪ Based on SUBSTANTIAL DISTINCTION
▪ Germane (relevant to the purpose)
▪ Applies to present and future condition
▪ Must equally apply to all members of the same class
- Uniformity
○ Rule on taxation must be UNIFORM and EQUITABLE (art VI, Sec 28)
- Progressive system of taxation
- Non-impairment of obligations of contracts
○ Revocation of "contract" is unconstitutional IF for a valid consideration
○ Tax exemption founded upon a contract is REVOCABLE
- Non-imprisonment for non-payment of poll tax
○ Poll tax = cedula
- Appropriation must be made by House of Reps
○ No law granting tax exemptions shall be granted without the concurrence of the
majority of all members of the congress
- Presidential veto
○ Pwede ma override ang above sa president
- Presidential power to fix tariff rates
- Freedom of press
- Freedom or religion

Taxation Page 1
 - Exemption from real property tax of religious, educational and charitable institutions
○ Actually, directly and exclusively used by these institutions
○ Includes cementeries because why the fuck would you sell graves of the dead for
government money. Jusq
- Non-stock, non-profit educational institutions
- No public money or property used for a particular sect, priest, religious minister, etc
○ Exception: person assigned to govt. orphanage, armed forces, or some other
government
○ Exclusive but not ABSOLUTE use (like u don't have to use the entire space for the
school)
▪ Okay lang if it is incidentally used for said purposes
▪ Basis is not ownership, it is the use
▪ Eg. A owns bldg and B, a regligious insitution, uses it as a church.
building and land will not be taxed for real property tax, but A will be taxed
sa income he receives for the rental of the building and land.
- Tax exceptions
○ Non-stock, non-profit education institutions are exempt from donors tax, revenue
tax
○ No law granting tax exemptions shall be granted without the concurrence of the
majority of all members of the congress
- LGU taxing powers
- Special funds
- Appellate jurisdiction of SC for tax-related cases
○ Cannot be overturned by Congress

inherent limitations (35)

For public purpose
- Legislative decides but may be questioned by the court
- Purposes: (also see p38)
○ To support government Instrumentality
○ To support OBJECTS of the government
GOOC
○ Promotion of the welfare of the community (public in general)
▪ Kahit na directly konti lang nakakabenefit pero end goal is the community,
okay lang.
□ Pero dapat INCIDENTAL
International comity
- Equality between state powers
- Par in parem non habet imperium
○ May grant tax exeptions via international agreement
Territoriality
- Cannot impose tax if not sa territory
- Exeption: if there is privity between taxing authority and taxpayer
○ Eg. Filipino citizen situated abroad
Excise tax
- Imposed on the exercise of a right or privelage
Non-delegation of the power to tax
- Remember permissible delegation (consti II)
- Valid delegation: LGUs can impose taxes
○ Limitations of LGU (see local government code)
Emergency powers of the government
Exception of government agencies/instrumentalities
- Legal, but it makes no sense because they ARE the government

Situs of taxation
Location of property determines who taxes which territory has taxing power over it
Refers to TAXING AUTHORITY over a certain territory

If taxing a PERSON, ang situs is the one sa may RESIDENCE of the person

REAL PROPERTY, ang location is the situs

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REAL PROPERTY, ang location is the situs

Situs of SALE OF REAL PROPERTY on non-resident Filipinos

- Controlling factor is where the contract was consumated
- Where payment made is irrelevant

Mobilia sequuntur personam

Movables follow the person

Aquisition of situs
- Definite location + some degree of permanency

Stocks: state where they are permanently kept

Section 104, RA 2424:

Stuff with situs in the PH
- Franchise exercised in PH
- Stocks, etc. Organized in accordance with PH laws
- Shares, etc of foreign corpos where 85% of business is in PH
- Shares, etc of foreign corpos which has acquired business situs
- Shares, etc. Of partnership/industry established in the PH

Double taxation (page 240/137)

Same thing taxed twice by the same authority and for the same purpose and in the same
taxing period

Direct double taxation (see above)

Also known as Direct duplicate taxation
- Unconstitutional under the equal protection clause
Indirect
- Different nature, by different taxing authorities
- Not really bawal but unfavored
Domestic
- Taxes imposed by both the local and national government
International
- Same sa domestic but different states

Tax treaty
Way of eliminating double taxation

Exemption method - focus is income or capital itself

- Income or capital is excepted in state of residence (so pay lang sa situs)
Credit method - focuses on tax
- Tax paid in state is credited against tax in state of residence.

Tax evasion - fraud

Tax avoidance - legal

Exemption on taxation (54)

Reason: it's stupid
- Government properties
- LGU
- Agencies performing governmental functions (unless expressly taxed)
agencies performing proprietary functions are not (unless expressly untaxed)
- GSIS
- SSS
- PHIC
- PCSO
- Instrumentality of the National Government (from local taxation)

Income v. Capital

Taxation Page 3
Income v. Capital

Capital should not be taxed as income

GOCC Government Instrumentality

Owned by government directly or
through its instrumentalities
at least 51% of stock
same
Any agency of government not integrated within the
dept. Framework but vested with special functions
(usually government-related work)
Usually made through a charter
Ie. Regulatory agencies, chartered institutions,
GOCC's

Test: if performing government functions, untaxed

If performing governmental proprietary functions (commercial), taxed

Sources of tax laws:

• Constitutions
• Statutes
○ Including presidential
decrees
• Regulations issued by BIR
• Jurisprudence
• Court of tax appeals jurisprudence
• Ordinances (municipal/brgy.)
• Treaties and international
agreements

Tariff and customs code

Local government code
NIRC

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NIRC

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