General-Principles (Miranda Notes)

TAXATION LAW GENERAL PRINCIPLES ATTY.
MIRANDA
TAXATION LAW – GENERAL PRINCIPLES
A. DEFINITION AND ATTRIBUTES OF TAXATION ............................................................................................. 7

1. DOCTRINE OF SYMBIOTIC RELATIONSHIP ............................................................................................... 7
• CIR V. ALGUE, INC. .................................................................................................................................... 7
2. DOCTRINE OF UNJUST ENRICHMENT AS APPLIED TO GOVERNMENT ........................................... 7
• BPI FAMILY SAVINGS BANK V. CA ....................................................................................................... 7
B. NATURE OF TAXATION ........................................................................................................................................... 7
1. TAXATION AS AN INHERENT ATTRIBUTE OF SOVEREIGNTY .............................................................. 7
2. TAXATION AS LEGISLATIVE IN CHARACTER ............................................................................................ 7
a. SCOPE OF LEGISLATIVE POWER TO TAX........................................................................................... 8
C. CHARACTERISTICS OF TAXATION (CUPS) ......................................................................................................... 8
D. POWER OF TAXATION AS DISTINGUISHED FROM POLICE POWER AND EMINENT DOMAIN ..... 9
TAXATION ................................................................................................................................................................... 9
POLICE POWER .......................................................................................................................................................... 9
EMINENT DOMAIN ................................................................................................................................................... 9
PURPOSE...................................................................................................................................................................... 9
AMOUNT OF EXACTION ......................................................................................................................................... 9
BENEFITS RECEIVED BY THE TAXPAYER............................................................................................................ 9
NON-IMPAIRMENT OF CONTRACTS ................................................................................................................... 9
TRANSFER OF PROPERTY RIGHTS ....................................................................................................................... 9
SCOPE ........................................................................................................................................................................... 9
WHO EXERCISES THE POWER ............................................................................................................................... 9
E. PURPOSE OF TAXATION ......................................................................................................................................... 9
1. REVENUE .............................................................................................................................................................. 9
2. NON-REVENUE ................................................................................................................................................... 9
a. REGULATION .................................................................................................................................................. 9
b. PROMOTION OF GENERAL WELFARE .................................................................................................... 9
• LUTZ V. ARANETA...................................................................................................................................... 9
• OSMENA V. ORBOS .................................................................................................................................. 9
c. REDUCTION OF SOCIAL INEQUITY ........................................................................................................ 10
d. ENCOURAGE ECONOMIC GROWTH ..................................................................................................... 10
e. PROTECTIONISM ......................................................................................................................................... 10
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TAXATION LAW GENERAL PRINCIPLES ATTY. MIRANDA
F. PRINCIPLES OF SOUND TAX SYSTEM ............................................................................................................... 10

1. FISCAL ADEQUACY ......................................................................................................................................... 10
• ABAKADA GURO V. ERMITA ................................................................................................................ 10
2. THEORETICAL JUSTICE – SECTION 28 (1), ARTICLE VI OF THE 1987 CONSTITUTION .............. 10
a. UNIFORMITY ................................................................................................................................................. 10
• ABAKADA GURO V. ERMITA ................................................................................................................ 11
b. EQUITABILITY AND PROGRESSIVITY .................................................................................................... 11
• REYES V. ALMANZOR ............................................................................................................................. 11
• PAL V. SEC OF FINANCE ........................................................................................................................ 11
c. REGRESSIVITY .............................................................................................................................................. 11
• TOLENTINO V. SEC. OF FINANCE & CIR ........................................................................................... 11
3. ADMINISTRATIVE FEASIBILITY .................................................................................................................... 11
G. THEORY AND BASIS OF TAXATION ............................................................................................................... 11
1. LIFEBLOOD THEORY ...................................................................................................................................... 11
• CEBU PORTLAND CEMENT V. CTA ..................................................................................................... 11
• BULL V. UNITED STATES ........................................................................................................................ 11
2. NECESSITY THEORY ....................................................................................................................................... 12
3. BENEFITS-PROTECTION THEORY (SYMBIOTIC RELATIONSHIP) ...................................................... 12
4. JURISDICTION OVER SUBJECTS AND OBJECTS .................................................................................... 12
• CIR V. JULIANE BAIER-NICKEL ............................................................................................................ 12
H. DOCTRINES IN TAXATION ................................................................................................................................ 12
1. CONSTRUCTION AND INTERPRETATION OF TAX LAWS, RULES AND REGULATIONS .............. 12
• CIR V. CA, CENTRAL VEGETABLE MFG. CO. & CTA ....................................................................... 13
• LUZON STEVEDORING V. CTA ............................................................................................................. 13
• CIR V. GOTAMCO & SONS .................................................................................................................... 13
• CIR V. CA, CTA AND ATENEO DE MANILA ....................................................................................... 13
2. PROSPECTIVITY OF TAX LAWS ................................................................................................................... 13
• HYDRO RESOURCES V. CA ................................................................................................................... 13
• CENTRAL AZUCARERA DE DON PEDRO V. CTA ............................................................................ 13
• LORENZO V. POSADAS ......................................................................................................................... 13
• SMIETANKA V. FIRST TRUST SAVINGS BANK, ................................................................................ 13
• CIR V. BENGUET CORP........................................................................................................................... 13

• CIR V. BURMEISTERS & WAIN SCANDINAVIAN ............................................................................. 13

3. IMPRESCRIPTIBILITY OF TAXES .................................................................................................................. 13
• CIR V. AYALA SECURITIES CORP ........................................................................................................ 13
4. DOUBLE TAXATION ........................................................................................................................................ 13
• PEPSI COLA V. TANAUAN ..................................................................................................................... 14
• CIR V. SC JOHNSON & SONS ............................................................................................................... 14
a. STRICT V. BROAD SENSE........................................................................................................................... 14
b. CONSTITUTIONALITY OF DOUBLE TAXATION .................................................................................. 14
c. MODES OF ELIMINATING DOUBLE TAXATION.................................................................................. 14
• CARLOS SUPER DRUG V. DSWD ......................................................................................................... 14
d. TREATIES WITH OTHER STATES .............................................................................................................. 15
5. ESCAPE FROM TAXATION ............................................................................................................................ 15
a. SHIFTING OF TAX BURDEN ...................................................................................................................... 15
b. TAX AVOIDANCE ......................................................................................................................................... 16
c. TAX EVASION ............................................................................................................................................... 16
• CIR V. RUFINO .......................................................................................................................................... 16
• DELPHER TRADES CORP V. IAC .......................................................................................................... 16
• CIR V. BENIGNO TODA .......................................................................................................................... 16
6. EXEMPTION FROM TAXATION ................................................................................................................... 16
a. MEANING OF AND BASIS OF TAX EXEMPTION ................................................................................. 16
b. NATURE OF TAX EXEMPTION ................................................................................................................. 17
c. KINDS OF TAX EXEMPTION ..................................................................................................................... 17
d. GROUNDS FOR TAX EXEMPTION .......................................................................................................... 17
e. REVOCATION OF TAX EXEMPTION ....................................................................................................... 17
• PROV OF MIZAMIS ORIENTAL V. CAGAYAN ELECTRIC .............................................................. 18
• CIR V. CA, ROH AUTO PRODUCTS PHILS & CTA ............................................................................ 18
• MACEDA V. MACARAEG ....................................................................................................................... 18
• CIR V. DLSU ............................................................................................................................................... 18
7. COMPENSATION AND SET-OFF.................................................................................................................. 18
• FRANCIA V. IAC ........................................................................................................................................ 19
• CALTEX PHILS. V. COA ........................................................................................................................... 19
• PHILEX MINING V. CIR ........................................................................................................................... 19

• CIR V. ESSO STANDARD ........................................................................................................................ 19

8. DOCTRINE OF EQUITABLE RECOUPMENT .............................................................................................. 19
• UST V. COLLECTOR ................................................................................................................................. 19
• DOMINGO V. GARLITOS ....................................................................................................................... 19
• REPUBLIC V. MAMBULAO LUMBER ................................................................................................... 19
9. COMPROMISE AND ITS REQUISITES......................................................................................................... 20
10. TAX AMNESTY VS. TAX EXEMPTION..................................................................................................... 20
• PEOPLE V. CASTANEDA ........................................................................................................................ 20
• FLORER V. SHERIDAN ............................................................................................................................ 20
I. SOURCES OF TAX LAWS........................................................................................................................................ 21
J. INHERENT AND CONSTITUTIONAL LIMITATIONS OF TAXATION ........................................................... 22
1. INHERENT LIMITATIONS ............................................................................................................................... 22
a. PUBLIC PURPOSE ........................................................................................................................................ 23
b. INHERENT LEGISLATIVE (NON – DELEGATION OF TAXING POWER) .......................................... 23
c. TERRITORIALITY – SITUS OF TAXATION ............................................................................................... 24
d. INTERNATIONAL COMITY ........................................................................................................................ 26
• CIR V. MITSUBISHI METAL CORP ........................................................................................................ 26
e. EXEMPTION OF GOVERNMENT ENTITIES, AGENCIES AND INSTRUMENTALITIES................. 26
• BOARD OF ASSESSMENT OF APPEALS OF LAGUNA V. CTA...................................................... 27
2. CONSTITUTIONAL LIMITATIONS ................................................................................................................ 27
a. PROVISIONS DIRECTLY AFFECTING TAXATION ................................................................................ 27
i. PROHIBITION AGAINST IMPRISONMENT FOR NON-PAYMENT OF TAX........................... 27
ii. UNIFORMITY AND EQUALITY OF TAXATION ............................................................................. 28
• COMMISSIONER V. LINGAYEN GULF ELEC. CO. ............................................................................ 28
iii. GRANT OF CONGRESS OF AUTHORITY TO THE PRESIDENT TO IMPOSE TARIFF
RATES [SECTION 28 (2), ARTICLE VI, 1987 CONSTITUTION] ........................................................ 28
iv. PROHIBITION AGAINST TAXATION OF RELIGIOUS, CHARITABLE ENTITIES, AND
EDUCATIONAL ENTITIES [SECTION 28 (3), ARTICLE VI, 1987 CONSTITUTION] ..................... 28
• LUNG CENTER OF THE PHIL. QUEZON CITY ................................................................................... 28
• PROVINCE OF ABRA VS. HERNANDO ............................................................................................... 29
• ABRA VALLEY V. AQUINO..................................................................................................................... 29
v. PROHIBITION AGAINST TAXATION OF NON-STOCK, NON-PROFIT INSTITUTIONS...... 29

vi. MAJORITY VOTE OF CONGRESS FOR GRANT OF TAX EXEMPTION [SECTION 28(4),
ARTICLE VI] .................................................................................................................................................... 29
vii. PROHIBITION ON THE USE OF TAX LEVIED FOR SPECIAL PURPOSE [SECTION 29(3),
ARTICLE VI] .................................................................................................................................................... 30
viii. PRESIDENT VETO POWER OF APPROPRIATION, REVENUE AND TARIFF BILLS
[SECTION 27(2), ARTICLE VI] ................................................................................................................... 30
ix. NON-IMPAIRMENT OF JURISDICTION OF THE SUPREME COURT [SECTION 2,
ARTICLE VIII] ................................................................................................................................................. 30
x. GRANT OF POWER TO THE LOCAL GOVERNMENT TO CREATE ITS OWN SOURCES OF
REVENUE [SECTION 5, ARTICLE X] ........................................................................................................ 31
xi. FLEXIBLE TARIFF CLAUSE [SECTION 28, ARTICLE VI AND SECTION 401 TCC] ............ 31
xii. EXEMPTION FROM REAL PROPERTY TAXES (SECTION 234 OF THE LOCAL
GOVERNMENT CODE ................................................................................................................................. 32
b. PROVISIONS INDIRECTLY AFFECTING TAXATION ........................................................................... 33
i. DUE PROCESS....................................................................................................................................... 33
• KAPATIRAN V. CIR .................................................................................................................................. 34
• PHIL BANK OF COMMUNICATIONS V. CIR, ET AL......................................................................... 34
• SISON V. ANCHETA................................................................................................................................. 34
• REYES V. ALMANZOR ............................................................................................................................. 34
ii. EQUAL PROTECTION.......................................................................................................................... 34
• ORMOC SUGAR CENTRAL V. CIR ........................................................................................................ 34
• VICTORIA MILLING CO., INC. V. MUNICIPALITY OF VICTORIA ................................................. 34
iii. RELIGIOUS FREEDOM .................................................................................................................... 35
• TOLENTINO V. THE SECRETARY OF FINANCE, ET AL. ................................................................. 35
iv. NON-IMPAIRMENT OF OBLIGATIONS AND CONTRACTS .................................................. 36
• CAGAYAN ELECTRIC POWER AND LIGHT CO., INC V. COMMISSIONER ............................... 36
K. STAGES OF TAXATION ...................................................................................................................................... 37
1. TAX LEGISLATION (LEVY).............................................................................................................................. 37
2. TAX ADMINISTRATION .................................................................................................................................. 37
3. PAYMENT ........................................................................................................................................................... 37
4. REFUND .............................................................................................................................................................. 37
• CIR V. BOTELBO SHIPPING CORP ...................................................................................................... 37
• TAN V. DEL ROSARIO, JR. ..................................................................................................................... 37
L. ESSENTIALS CHARACTERISTICS OF TAXES..................................................................................................... 38

M. REQUISITES OF A VALID TAX .......................................................................................................................... 38

N. TAX AGAINST OTHER FORMS OF EXACTIONS (TOLL, LICENSE FEE, SPECIAL ASSESSMENT,
DEBT)38
• PROCTER & GAMBLE V. MUN OF JAGNA ........................................................................................ 39
• GOLDEN RIBBON LUMBER V CITY OF BUTUAN ............................................................................. 39
• CITY OF OZAMIS V. LUMAPAS ............................................................................................................ 39
• APOSTOLIC PREFECT V. TREASURER OF BAGUIO ........................................................................ 39
• VICTORIA MILLING V. PHIL PORTS AUTHORITY ............................................................................ 40
• CIR V. PRIETO ........................................................................................................................................... 40
O. KINDS OF TAXES ................................................................................................................................................. 40
1. AS TO OBJECT (PERSONAL, PROPERTY AND EXCISE) ........................................................................ 40
2. AS TO BURDEN OR INCIDENCE (DIRECT AND INDIRECT) .................................................................. 40
3. AS TO TAX RATES (SPECIFIC TAX, AD VALOREM TAX AND MIXED) ............................................... 41
4. AS TO PURPOSE (GENERAL AND SPECIAL) ............................................................................................. 41
5. AS TO SCOPE OR AUTHORITY TO IMPOSE (NATIONAL AND LOCAL) ............................................ 41
6. AS TO GRADUATION (PROGRESSIVE, REGRESSIVE AND PROPORTIONATE) .............................. 42
• MACEDA V. MACARAEG ....................................................................................................................... 42
• TAN V. MUN OF PAGBILAO .................................................................................................................. 42
• PAL V. ROMEO EDU ................................................................................................................................ 42
• ESSO STD EASTERN V. CIR ................................................................................................................... 42
• LOZANO V. ENERGY REGULATORY BOARD ................................................................................... 42

A. DEFINITION AND ATTRIBUTES OF TAXATION
Taxation is a power by which the sovereign, through its law-making body, raises revenue to
defray the necessary expenses of the government. It is merely a way of apportioning the costs of
the government among those who in some measure and privileged to enjoy its benefits and must
bear its burdens.
1. DOCTRINE OF SYMBIOTIC RELATIONSHIP
It is said that taxes are what we pay for civilization society. Without taxes, the government
would be paralyzed for lack of the motive power to activate and operate it. Hence, despite
the natural reluctance to surrender part of one's hard earned income to the taxing authorities,
every person who is able to must contribute his share in the running of the government. The
government for its part, is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and material values. This
symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that
it is an arbitrary method of exaction by those in the seat of power.
• CIR V. ALGUE, INC.
2. DOCTRINE OF UNJUST ENRICHMENT AS APPLIED TO GOVERNMENT
Technicalities and legalisms, however exalted, should not be misused by the government to
keep money not belonging to it and thereby enrich itself at the expense of its law-abiding
citizens. If the State expects its taxpayers to observe fairness and honesty in paying their taxes,
so must it apply the same standard against itself in refunding excess payments of such taxes.
Indeed, the State must lead by its own example of honor, dignity and uprightness.
• BPI FAMILY SAVINGS BANK V. CA
B. NATURE OF TAXATION
1. TAXATION AS AN INHERENT ATTRIBUTE OF SOVEREIGNTY
The power of taxation is an incident of sovereignty as it is inherent in the State, belonging as

a matter of right to every independent government. It does not need constitutional
conferment. Constitutional provisions do not give rise to the power to tax but to merely
impose limitations on what would otherwise be an invisible power.
Inherent in National Government and not in LGU’s unless expressed in the Constitution, and
enacted by Congress.
2. TAXATION AS LEGISLATIVE IN CHARACTER
The power to tax is inherent and State is free to select to the object of taxation such power
being exclusively vested in the legislature except where the Constitution provides otherwise.

Revenues derived from taxes are intended primarily to finance the government and its
activities.
a. SCOPE OF LEGISLATIVE POWER TO TAX
I. Discretion as to
i. Amount or Rate of Tax
ii. Subjects of Taxation
iii. Purpose – must be public
iv. Apportionment of tax – general / limited to a local
v. Situs of Taxation
vi. Manner, Means and Agencies of Collection
II. Grant tax exemption or condonation
III. Provide for administrative / judicial remedies
C. CHARACTERISTICS OF TAXATION (CUPS)
I. COMPREHENSIVE – it covers persons, businesses, activities, professions, rights and

privileges
II. UNLIMITED – tax is so searching in extent that courts scarcely venture to declare that it is
subject to any restriction whatever, except such as rest in the discretion of the authority
which exercises it.
III. PLENARY – it is complete.
IV. SUPREME – cannot be interpreted to mean that it is superior to other inherent powers, it
is only supreme insofar as the selection of the subject of taxation is concerned.

D. POWER OF TAXATION AS DISTINGUISHED FROM POLICE POWER AND EMINENT DOMAIN
TAXATION POLICE POWER EMINENT DOMAIN

To facilitate the taking of
PURPOSE To raise revenue To promote public welfare
private property for public use
Unlimited, must be equal
AMOUNT OF Limited to the cost of
to the needs of the Just compensation
EXACTION regulation
government
General benefit for Heathy, economic and
BENEFITS RECEIVED The owner is compensated in
protection and welfare of standard community is
BY THE TAXPAYER a just manner
all maintained
NON-IMPAIRMENT OF Contracts may not be Contracts may be Contracts may be impaired
CONTRACTS impaired impaired
No Transfer but only
TRANSFER OF Taxes paid form part of Transfer is effected in favor of
restraint on the exercise of
PROPERTY RIGHTS public funds the State.
property rights
All persons, property and All persons, property, Only upon a particular
SCOPE
excises rights and privileges property
1. By the government and its
WHO EXERCISES THE By the government and its By the government and its political subdivisions;
POWER political subdivisions political subdivisions 2. Granted to public service
companies or public utilities
E. PURPOSE OF TAXATION
1. REVENUE
Revenues derived from taxes are intended primarily to finance the government and its
activities.
2. NON-REVENUE
a. REGULATION
To discourage certain business or the use of certain products that are not illegal but
considered inimical to the society – alcohol, tobacco
b. PROMOTION OF GENERAL WELFARE
Taxation may be used as an implement of police power in order to promote the general
welfare of the people.
• LUTZ V. ARANETA
• OSMENA V. ORBOS

c. REDUCTION OF SOCIAL INEQUITY
To implement the social justice provisions of the constitution through the provisions of the
constitution through the progressive system of taxation which would result to equal
distribution of wealth. Tax are imposed on person gets higher as income gets higher.
d. ENCOURAGE ECONOMIC GROWTH
As seen by preferential tax system such as registered in PEZA, SBMA venues derived from
taxes are intended primarily to finance the government and its activities.
e. PROTECTIONISM
Imposition of special tariffs to protect local industries against foreign competition. Ex is

Anti – Dumping Act which protects our local industries against local industries against
importations sold at lower cost.
F. PRINCIPLES OF SOUND TAX SYSTEM
1. FISCAL ADEQUACY
The principle of fiscal adequacy as a characteristic of a sound tax system was originally stated
by Adam Smith in his Canons of Taxation (1776), as:
IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of
the people as little as possible over and above what it brings into the public treasury of the
state.
It simply means that sources of revenues must be adequate to meet government
expenditures and their variations.
The proceeds of tax revenue should coincide with, and approximate the needs of,
government expenditures. Neither an excess nor a deficiency of revenue vis-à-vis the needs
of government would be in keeping with the principle.
• ABAKADA GURO V. ERMITA
2. THEORETICAL JUSTICE – SECTION 28 (1), ARTICLE VI OF THE 1987 CONSTITUTION
The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive
system of taxation. [SECTION 28(1), ARTICLE VI, 1987 CONSTITUTION]
a. UNIFORMITY
Uniformity in taxation means that all taxable articles or kinds of property of the same class
shall be taxed at the same rate. Different articles may be taxed at different amounts
provided that the rate is uniform on the same class everywhere with all people at all times.

• ABAKADA GURO V. ERMITA
b. EQUITABILITY AND PROGRESSIVITY
Taxation is said to be equitable when its burden falls on those better able to pay. Taxation
is progressive when its rate goes up depending on the resources of the person affected
• REYES V. ALMANZOR
• PAL V. SEC OF FINANCE
c. REGRESSIVITY
Indeed, regressivity is not a negative standard for courts to enforce. What Congress is
required by the Constitution to do is to "evolve a progressive system of taxation." This is a
directive to Congress, just like the directive to it to give priority to the enactment of laws
for the enhancement of human dignity and the reduction of social, economic and political
inequalities (Art. XIII, § 1), or for the promotion of the right to "quality education" (Art. XIV,
§ 1). These provisions are put in the Constitution as moral incentives to legislation, not as
judicially enforceable rights.
• TOLENTINO V. SEC. OF FINANCE & CIR
3. ADMINISTRATIVE FEASIBILITY
Tax laws must be capable of being effectively enforced with the least inconvenience to the
taxpayer. Should be clear and plain, convenient as to time and manner of payment and not
discouraging to business activity.
NOTE: it is constitutional if it not in consonance with administrative feasibility and fiscal
adequacy but not when it is against theoretical justice.
G. THEORY AND BASIS OF TAXATION
1. LIFEBLOOD THEORY
But taxes are the lifeblood of government, and their prompt and certain availability an
imperious need.
• CEBU PORTLAND CEMENT V. CTA
• BULL V. UNITED STATES

2. NECESSITY THEORY
The existence of the government is a necessity. It cannot continue without a means to pay its
expenses and therefore has a right to compel all citizens and property within its power to
contribute.
3. BENEFITS-PROTECTION THEORY (SYMBIOTIC RELATIONSHIP)
It is said that taxes are what we pay for civilization society. Without taxes, the government
would be paralyzed for lack of the motive power to activate and operate it. Hence, despite
the natural reluctance to surrender part of one's hard earned income to the taxing authorities,
every person who is able to must contribute his share in the running of the government. The
government for its part, is expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and material values. This
symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that
it is an arbitrary method of exaction by those in the seat of power.
4. JURISDICTION OVER SUBJECTS AND OBJECTS
The power to tax can only be exercised within the territorial jurisdiction of a taxing authority
except when there exists privity of relationship between the taxing State and the object of tax.
• CIR V. JULIANE BAIER-NICKEL
H. DOCTRINES IN TAXATION
1. CONSTRUCTION AND INTERPRETATION OF TAX LAWS, RULES AND REGULATIONS
i. Tax laws are prospective with exceptions

ii. Legislative intention must be considered to carry out purpose
iii. When there is doubt – tax statues imposing payment of tax are construed against the
government and in favor of the taxpayer
iv. When language is plain – rule of strict construction against the government does not apply
where the language of tax law is plain. Words must be given their ordinary meaning.
v. Public purpose is always presumed
vi. Provisions of the taxing act are not to be extended by implication
• Hornbook Doctrine – a statute will not be construed as imposing tax unless it does so
clearly, expressly and unambiguously.
vii. Tax laws are special laws and hence they prevail over general laws
viii.Construction by predecessors is not binding on the successors
ix. Principle of Legislative Approval by Reenactment – it means that the re-enactment of a
statute substantially unchanged is indication of the adoption by Congress of a prior
executive construction

• CIR V. CA, CENTRAL VEGETABLE MFG. CO. & CTA
• LUZON STEVEDORING V. CTA
• CIR V. GOTAMCO & SONS
• CIR V. CA, CTA AND ATENEO DE MANILA
2. PROSPECTIVITY OF TAX LAWS
Taxes must only be imposed prospectively, except when:

i. Provided by law
ii. Taxpayer deliberately misstates or omits material facts from his return or any document
iii. The facts subsequently gathered by the BIR are materially different from the facts in which
the ruling is based
iv. Taxpayer acted in bad faith
• HYDRO RESOURCES V. CA
• CENTRAL AZUCARERA DE DON PEDRO V. CTA
• LORENZO V. POSADAS
• SMIETANKA V. FIRST TRUST SAVINGS BANK,
• CIR V. BENGUET CORP
• CIR V. BURMEISTERS & WAIN SCANDINAVIAN
3. IMPRESCRIPTIBILITY OF TAXES
The Court is persuaded by the fundamental principle invoked by petitioner that limitations
upon the right of the government to assess and collect taxes will not be presumed in the
absence of clear legislation to the contrary and that where the government has not by express
statutory provision provided a limitation upon its right to assess unpaid taxes, such right is
imprescriptible.
• CIR V. AYALA SECURITIES CORP
4. DOUBLE TAXATION
Taxing the same person (same subject / object) twice by the same jurisdiction over the same
thing.

In the broad sense, double taxation means direct duplicate taxation. It extends to all cases in
which there are two or more pecuniary impositions.
• PEPSI COLA V. TANAUAN
• CIR V. SC JOHNSON & SONS
a. STRICT V. BROAD SENSE
I. STRICT SENSE (DIRECT DUPLICATE TAXATION / OBNOXIOUS)

The objectionable kind since it violates the equal protection clause of the Constitution.
ELEMENTS:
i. Same property or subject matter is taxed twice when it should be taxed only once
ii. Both taxes are levied for the same purpose
iii. Imposed by the same taxing authority
iv. Within the same jurisdiction
v. During the same taxing period
vi. Covering the same kind or character of tax
II. BROAD SENSE (INDIRECT DUPLICATE TAXATION)
The permissible kind of double taxation, this arises in the absence of one or more of
elements in strict sense objectionable kind since it violates the equal protection clause
of the Constitution
b. CONSTITUTIONALITY OF DOUBLE TAXATION
The Constitution does not prohibit the imposition of double taxation in the broad sense.
c. MODES OF ELIMINATING DOUBLE TAXATION
I. Tax Credits – an amount is subtracted from an individual or entity’s liability to arrive at

the total tax liability.
II. Reduction of the Philippine Income Tax Rate
III. Tax Exemptions – a grant of immunity to particular persons or corporations from the
obligation to pay taxes.
IV. Tax Deductions – the amount of tax is written off or treated as deduction from an
individual or entity’s gross income on which the resulting amount the tax liability is
calculated
V. Tax Treaties – an agreement between two countries specifying what items of income
will be taxed by the authorities of the country where the income is earned.
• CARLOS SUPER DRUG V. DSWD

d. TREATIES WITH OTHER STATES
FIRST METHOD:
An exclusive right to tax is conferred in one of the contracting states however, for other
items of income or capital, both states are given the right to tax although the amount of
tax that may be imposed by the State of sources if limited.
SECOND METHOD:
The state of source is given a full or limited right to tax together with the state of residence.
In this case, the treaty makes it incumbent upon the state of residence to allow relief in
order to avoid double taxation. Two ways are:
I. TAX EXEMPTION METHOD
the income or capital which is taxable in the state of source, situs is exempt in the
State of residence, although in some instances it may be taken into account in
determining the rate of tax applicable to the taxpayers remaining income or capital.
II. THE CREDIT METHOD
although the income or capital which is taxed in the state of source, is still taxable
in the state of residence, the tax paid in the former is credited against the tax levied
in the latter.
MOST FAVORED NATION CLAUSE IN TAX TREATIES
The purpose of the most favored nation clause is to grant the contracting party treatment
not less favorable than that which has been or may be granted to the most favored among
other countries. The most favored nation clause is intended to establish the principle of
equality of international treatment by providing that the citizens or subjects of the
contracting nations may enjoy the privileges accorded by either party to those of the most
favored nation.
5. ESCAPE FROM TAXATION
a. SHIFTING OF TAX BURDEN
The transfer of the burden of tax by the original payer or the one on whom the tax was
assessed or imposed to another or someone else.
Only indirect taxes can be shifted, those that are demanded in the first instance from
one person in the expectation he can transfer the burden not as tax but as additional
to purchase price.
i. FORWARD SHIFTING
when the burden of tax is transferred from a factor production through the factors
of distribution until it finally settles on the ultimate purchases or consumer.

ii. BACKWARD SHIFTING

when the burden is transferred from the consumer through the factors of
distribution to the factors of production.
iii. ONWARD SHIFTING
when the tax is shifted two or more times either forward or backward.
b. TAX AVOIDANCE
Also called tax minimization. Tax exploitation by the taxpayer of legally permissible
alternative tax rates or methods of assessing taxable property or income, in order to avoid
or reduce tax liability.
**Tax saving device within the means sanctioned by law.
c. TAX EVASION
An illegal means of escaping taxation. It connotes fraud through the use of pretenses and
forbidden devices to lessen or defeat taxes.
It is used outside the lawful means and subject of taxpayer to civil or criminal liabilities.
• CIR V. RUFINO
• DELPHER TRADES CORP V. IAC
• CIR V. BENIGNO TODA
6. EXEMPTION FROM TAXATION
a. MEANING OF AND BASIS OF TAX EXEMPTION
The grant of immunity, express or implied (or contractual) to particular persons or

corporations of a particular class from a tax which persons or corporations generally within
the same state or taxing district are obliged to pay.
The inherent power of the State carries with it the power to grant tax exemptions. It may
arise through reciprocity between states, necessity and convenience, generosity and
contractual agreement.
Tax exemptions are strictly construed against the taxpayer and liberally in favor of the
taxing power.
EXCEPT WHEN:
i. When statute provides liberal construction thereof;
ii. Special taxes relating to special classes;
iii. Exemptions refers to public property;

iv. Granted to religious, charitable and educational institutions;

v. In favor of government political subdivisions, and instrumentalities;
vi. If taxpayers fall within the purview of exemption by clear legislative intent.
b. NATURE OF TAX EXEMPTION
TAX EXEMPTIONS ARE:

i. Mere personal privileges to the grantees;
ii. Generally revocable by the government unless founded on contract which is protected
by the non-impairment clause;
iii. Implies a waiver on the part of the Government of its right to collect what otherwise
would be due; and
iv. Not necessarily discriminatory so long as the exemption has a rational basis.
c. KINDS OF TAX EXEMPTION
i. EXPRESS – expressly granted by the Constitution, statutes, treaties, franchises, or

similar legislative acts
ii. IMPLIED – whenever particular persons, properties, excises are deemed exempt as
they fall outside the scope of the taxing provision itself
iii. CONTRACTUAL – tax exemption in consideration of a contractual agreement with the
government.
d. GROUNDS FOR TAX EXEMPTION
i. Contract;
ii. Some ground of public policy; and
iii. Treaty created on grounds of reciprocity or to lessen the rigors of international double
or multiple taxation
e. REVOCATION OF TAX EXEMPTION
Since taxation is the rule and exemption are the exception, the exemption may thus be
withdrawn at the pleasure of the taxing authority. However, if the tax exemption constitutes
a binding contract and for valuable consideration, the government cannot unliterally
revoke the tax exemption.
RESTRICTIONS ON REVOCATION:
i. Non – impairment clause – where the exemption was granted to private parties based
on mutual nature, it then becomes contractual and is covered by the non – impairment
clause of the Constitution.
ii. Adherence to form – if the tax exemption is granted by the constitution, its revocation
may be effected through constitutional amendment only

iii. Where the tax exemption grant is in the form of a special law and not by general law,
even if the terms of the general act are broad enough to include the codes in the
general law unless there is manifest intent to repeal alter the special law.
• PROV OF MIZAMIS ORIENTAL V. CAGAYAN ELECTRIC
• CIR V. CA, ROH AUTO PRODUCTS PHILS & CTA
• MACEDA V. MACARAEG
• CIR V. DLSU
7. COMPENSATION AND SET-OFF
COMPENSATION takes place when two persons in their own right are creditors and debtors
of each other.
While set-off,
c) Credit or refund taxes erroneously or illegally received or penalties imposed without
authority, refund the value of internal revenue stamps when they are returned in good
condition by the purchaser, and, in his discretion, redeem or change unused stamps that
have been rendered unfit for use and refund their value upon proof of destruction. No
credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing
with the Commissioner a claim for credit or refund within two (2) years after the payment
of the tax or penalty: Provided, however, That a return filed showing an overpayment shall
be considered as a written claim for credit or refund. [SECTION 204(C), NATIONAL
INTERNAL REVENUE CODE]
The government may be allowed to set off a tax payer’s claim for refund that has been finally
adjudged by the courts in favor of the taxpayer as against a tax assessment that the
Government issued to such taxpayer even if such assessment is not yet final and executory.
Taxpayer cannot claim the defense of compensation of its claim for refund that is not yet finally
adjudged by the courts as against as tax assessment.
GENERAL RULE:
Taxes are not subject to legal compensation or set off. Because taxes and debts are of
different nature and character.
EXCEPTION:
i. When set off took place because both the claim of the government for inheritance taxes
and the claim of the estate for services rendered have already become overdue,
demandable and fully liquidated. Further, an amount for the claim of the estate had
already been appropriated by the government by virtue of a law.

ii. And as long as the requisites under Art. 1279 of the New Civil Code are present
In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are consumable, they be
of the same kind, and also of the same quality if the latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor. [ARTICLE 1279, NEW CIVIL CODE]
• FRANCIA V. IAC
• CALTEX PHILS. V. COA
• PHILEX MINING V. CIR
• CIR V. ESSO STANDARD
8. DOCTRINE OF EQUITABLE RECOUPMENT
Where the refund of a tax illegally or erroneously collected or overpaid by a taxpayer is barred
by the statute of limitations and a tax is being presently assessed against said taxpayer, said
present tax may be recouped or set-off against the tax, the refund of which has been barred.
Pertains only to tax arising from the same transaction on which overpayment is made and
underpayment is due.
Allowed in common law and not in the Philippines. Because the collecting agency and the
payer might be tempted to delay and neglect the pursuit of their respective claims within the
period prescribed by law.
The doctrine of equitable recoupment means that when a refund of a tax illegally or
erroneously collected or overpaid by a taxpayer is barred by the statute of limitations and a
tax is being presently assessed against said taxpayer, SAID PRESENT TAX MAY BE
RECOUPED OR SET-OFF AGAINST THE TAX, the refund of which has been barred.
• UST V. COLLECTOR
• DOMINGO V. GARLITOS
• REPUBLIC V. MAMBULAO LUMBER

9. COMPROMISE AND ITS REQUISITES
A contract whereby the parties by making reciprocal concessions, avoid litigation or put an
end to one already commenced. (ARTICLE 2028, NEW CIVIL CODE)
REQUISITES:
i. The taxpayer must have a tax liability
ii. There must be an offer (by the taxpayer of an amount to be paid by the taxpayer)
iii. There must be an acceptance (by the Commissioner or taxpayer as the case may be) of
the offer in the settlement of the original claim.
IT IS ALLOWED AND ENFORCEABLE WHEN THE:
i. Subject matter thereof is not expressly prohibited from being compromised and
ii. The public official entering into it is duly authorized by law.
PERSONS ALLOWED TO COMPROMISE:
i. Commissioner on Internal Revenue
ii. Collector of Customs
iii. Customs Commissioner
iv. Local Gov’t Code
10. TAX AMNESTY VS. TAX EXEMPTION
TAX AMNESTY
general or intentional overlooking by the State of its authority to impose penalties on persons
otherwise guilty of evasion or violation of a revenue or tax law. It partakes of an absolute
forgiveness of waiver of the government of its right to collect. To give tax evaders, who wish
to relent, and are willing to reform, a chance to do so.
Tax amnesty is an immunity from all criminal and civil obligations arising from non-payment
of taxes. It is a general pardon given to all taxpayers. It applies only to past tax periods; hence,
of retroactive application.
On the other hand, tax exemption is an immunity from civil liability only. It is an immunity or
privilege, a freedom from a charge or burden of which others are subjected. It is generally
prospective in application.
• PEOPLE V. CASTANEDA
• FLORER V. SHERIDAN

I. SOURCES OF TAX LAWS
1. CONSTITUTION
2. STATUTES
• National (National Internal Revenue Code, Tariff and Customs Code, Presidential Decrees,
Special Laws)
• Local
3. ADMINISTRATIVE RULINGS AND REGULATIONS
• Administrative Rulings refer to less general interpretation of tax laws issued on a timely
basis by the CIR
• Administrative Regulations are intended to clarify or explain the law and carry into effect
its general provisions by providing details of administration and procedure. Such is issued
by the Secretary of Finance upon recommendation of the CIR.
KINDS OF ADMINISTRATIVE ISSUANCES
LEGISLATIVE RULE
a legislative rule is in the nature of subordinate legislation, designed to implement a
primary legislation by providing the details thereof. In the same way that law must have
the benefit of public hearing, it is generally required that before a legislative rule is
adopted, there must be a public hearing.
INTERPRETATIVE RULE
when an administrative rule is merely interpretative in nature, its applicability needs
nothing further than its bare issuance for it gives no real consequences more than what
the law itself has already prescribed. When upon the other hand, the administrative rule
goes beyond merely providing the means that can facilitate or render at least
cumbersome the implementation of the law but substantially adds to or increases the
burden of those governed, it behooves the agency to accord at least to those directly
affected a chance to be heard, and thereafter to be duly informed, before that new
issuance is given the force and effect of law.
4. REVENUE REGULATIONS
are issuances signed by the Secretary of Finance, upon recommendation of the CIR, which
specify, prescribe or define rules and regulations for the effective enforcement of the
provisions of the NIRC and related statutes.
5. REVENUE MEMORANDUM CIRCULARS
are issuances that publish pertinent and applicable portions, as well as amplifications of laws,
rules, regulations and precedents issued by the BIR and other agencies/offices.
6. REVENUE MEMORANDUM ORDERS
are issuances that provide directives or instructions; prescribe guidelines; and outline
processed, operations, activities, workflows, methods and procedures necessary in the

implementation of stated policies, goals and objectives, plans and programs of the BIR in all
areas of operations, except auditing.
7. REVENUE AUDIT MEMORANDUM ORDERS
are orders issued specifically stating the audit programs of the BIR for a particular taxable
year.
8. REVENUE MEMORANDUM RULINGS
are rulings, opinions and interpretations of the CIR with respect to the provision of the NIRC
and other laws, as applied to a specific set of facts, with or without established precedents,
and which the CIR may issue from time to time for the purpose of providing taxpayers
guidance on the tax consequences in specific situations. BIR rulings cannot contravene duly
issued RMRs
9. REVENUE BULLETINS
are periodic issuances, notices and official announcements of the CIR that consolidate the
BIR’s position on certain specific issues of law or administration in relation to the provision of
the Tax Code, relevant laws and other issuances for the guidance of the public.
KINDS OF RULINGS
• RULINGS OF FIRST IMPRESSION

these refer to the rulings, opinions and interpretations of the CIR with respect to the
provisions of the Tax Code and other tax laws without established precedent, and
which are issued in response to the specific request for ruling filed by a taxpayer with
the BIR. Provided, however, that the term shall include reversal, modification, or
revocation of an existing ruling.
• RULINGS OF ESTABLISHED PRECEDENTS
these are reiterations of previous rulings, opinions or interpretations of the CIR. This
power may be delegated (e.g. request for rulings with BIR, Treaty Relief Application
with BIR international Tax Affairs Division)
10. JUDICIAL DECISIONS
decisions of the Supreme Court and CTA
11. TREATIES
12. CONGRESSIONAL RECORDS AND LEGISLATIVE MATERIAL
J. INHERENT AND CONSTITUTIONAL LIMITATIONS OF TAXATION
The power to tax is not absolute. It maybe inherent or imposed by the Constitution.
1. INHERENT LIMITATIONS
A violation of these inherent limitations can amount of the taking of the property without due
process of law, hence in this sense it can be said that any tax law contravening any limitation
of taxation if effect will be un constitutional.

a. PUBLIC PURPOSE
It is given broad meaning in jurisprudence not only to mean the transfer of the burden of
tax by the original payer or the one on whom the tax was assessed or imposed to another
or someone else.
TESTS IN DETERMINING PUBLIC PURPOSE IN TAXATION
1. DUTY TEST
whether the thing to be furthered by the appropriation of public revenue is something
which is the duty of the State as a government to provide and;
2. PROMOTION OF GENERAL WELFARE TEST
whether the proceeds of the tax will directly promote the welfare of the community in
equal measure.
CASES OF PUBLIC PURPOSE:
• Public improvement
• Unemployment relief
• Buildings, road and infrastructure
• Subsidies for local police forces
• Construction of home site
• Promotion of science and invention
• Upliftment of the underprivileged
• Rehabilitation of the sugar industry
• Pensions to deserving retirees
• Oil industry’s protection
• Socialized housing
• Educational subsidy
b. INHERENT LEGISLATIVE (NON – DELEGATION OF TAXING POWER)
GENERAL RULE:
A delegated power cannot be further delegated. As a general rule, it is the Congress that
exercises the power to tax and it cannot delegate it to others.
EXCEPTIONS
I. DELEGATION TO THE PRESIDENT
a. Delegation by Congress to the President to fix (TITO) Tariff rates, Import and
export quotas, Tonnage and wharfage dues, and Other duties and imposts.
(SECTION 28 (2), ARTICLE VI, 1987 CONSTITUTION)
b. Delegation of emergency powers to the President (SECTION 23(2), ARTICLE VI ,
1987 CONSTITUTION)

c. Delegation to the President to enter into executive agreements, and to ratify

treaties which may contain tax exemption provisions subject to the concurrence
by the Senate.
II. DELEGATION TO ADMINISTRATIVE AGENCIES – also known as the power of
subordinate legislation subject to THE FOLLOWING TESTS OF VALID
DELEGATIONS:
a. COMPLETENESS TEST
in order for the delegation to be valid, the law must be complete in all aspects
when it leaves the legislature. The only thing left for the delegate to do is to
implement the law. The legislative department has not delegated the power to
enact the law
b. SUFFICIENT STANDARD TEST
there must exist a sufficient standard which should limit the boundaries of the
delegate’s authority by the defining legislative policy and the circumstances
under which it is to be pursued and implemented.
III. DELEGATIONS TO THE LOCAL GOVERNMENT – the Constitution grants each LGU
the power to create its own sources of revenue and levy taxes, fees and charges which
shall accrue exclusively the LGU.
LIMITATIONS TO THE EXCEPTION:
I. The delegation shall not contravene any constitutional provisions or the inherent
limitations
II. The delegation is effected either by the Constitution or by validly enacted legislative
measure or statures; and
III. The delegated levy power except when the delegation is by an express provision of
the Constitution itself should only be in favor of the local legislative body of the local
or municipal government concerned.
TESTS OF VALID DELEGATION
I. COMPLETENESS TEST
the law must be complete and nothing is left except to enforce it
II. SUFFICIENT STANDARD TEST
the law must offer a sufficient standard to specify the limits of the delegates authority,
announce legislative policy and specify conditions under which it is to be
implemented
c. TERRITORIALITY – SITUS OF TAXATION
It is also known as place of taxation. It is the place or authority that has the right to impose
and collect taxes except:
1. When tax laws operate outside territorial jurisdiction and

2. When tax law does not operate within territorial jurisdiction of the state i. If exempted
by treaty obligation ii. When exempted by international comity
FACTORS TO DETERMINE SITUS
a. Nationality or citizenship of the taxpayer;
b. Residence or domicile of the taxpayer;
c. Source of income;
d. Location of the property;
e. Place or exercise of the privilege;
f. Classification of the tax being levied;
g. Possible protection and benefit that may accrue to both the government and to the
taxpayer
FROM SOURCES WITHIN THE PHILIPPINES
all kinds of taxpayers are subject to income tax derived from sources within the Philippines.
Generally, income is derived from the Philippines, if it is derived from activity within the
Philippines, in accordance with Section 42 of the NIRC.
FROM SOURCES WITHOUT THE PHILIPPINES
only resident citizens and domestic corporations are liable to income tax on income
derived from sources without the Philippines.
1. SITUS ON PROPERTY TAXES – depends on the place where the act is performed
or occupation is engaged in
a. TAXES ON REAL PROPERTY – place where the real property is located
b. TAXES ON PERSONAL PROPERTY –
i. SITUS ON TANGIBLE PERSONAL PROPERTY – where property is physically
located although the owner resides in another jurisdiction
ii. SITUS ON INTANGIBLE PERSONAL PROPERTY – situs is the domicile of the
owner (movables follow the person)
EXCEPTIONS:
• When the property has acquired a business situs in another jurisdiction
• When the law provides for the situs of the subject tax
2. SITUS OF EXCISE TAX
a. ESTATE TAX
the value of the gross estate of the decedent shall be determined by including
the value at the time of his death of all property, real or personal, tangible or
intangible, wherever situated; PROVIDED, however, that in the case of a non-
resident alien decedent who at the time of his death, only that part of the gross
estate which is situated or deemed situated in the Philippines shall be included.
(Section 104, NIRC)
b. DONOR’S TAX

the transmission of property from the donor to a done may be subject to taxation
in the state where the transferor is a citizen or resident or where the property is
located.
3. SITUS OF BUSINESS TAX
a. SALE OF PROPERTY
where the property is located
b. SALE OR PERSONAL PROPERTY
where the sale is perfected and consummated
c. VAT PLACE
place where the transaction was made
d. INTERNATIONAL COMITY
Posits that the property of a foreign state or government may not be taxed by another.
States find it mutually advantageous for themselves to create self-imposed restraints on
their taxing powers especially with reference to the properties of foreign governments
within their territorial domain.
BASIS:
• SOVEREIGN EQUALITY AMONG STATES

one state cannot exercise powers over another (in par in parem non habet
imperium);
• USAGE AMONG STATES
that when one enters the territory of another, there is implied understanding that
the former does not intend to degrade its dignity by placing itself under the
jurisdiction of the latter; and
• FOREIGN GOVERNMENT MAY NOT BE SUED WITHOUT ITS CONSENT
so that it is useless to assess the tax anyway because it cannot be collected
• CIR V. MITSUBISHI METAL CORP
e. EXEMPTION OF GOVERNMENT ENTITIES, AGENCIES AND INSTRUMENTALITIES
ENTITY
through which the functions of the government are excised throughout the Philippines.
AGENCY
refers to various units of the Government including a department, instrumentality or
GOCC.

INSTRUMENTALITY
refers to agency of the National Gov’t not integrated within the department framework
vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds and enjoying operational autonomy usually through
a charter. (ex. MIAA)
REASON:
a. So that functions of the government shall not be duly impeded and
b. To reduce the amount of money that has to be handled by the government in the
course of its operations.
GENERAL RULE: agencies performing government functions are tax-exempt
EXCEPTIONS:
• Agencies performing proprietary functions

• When expressly provided by law or their charter subjects them to tax
• BOARD OF ASSESSMENT OF APPEALS OF LAGUNA V. CTA
2. CONSTITUTIONAL LIMITATIONS
a. PROVISIONS DIRECTLY AFFECTING TAXATION
i. PROHIBITION AGAINST IMPRISONMENT FOR NON-PAYMENT OF TAX.
POLL TAX (personal or capitation tax)

is a tax of fixed amount on individuals residing within a specified territory, whether
citizens or not without regard to their property or the occupation in which they may be
engaged.
One cannot be imprisoned for its non-payment as this is not mandatory. But a person
may be imprisoned for non-payment of other kinds of taxes where the law so expressly
provides
A tax creates a civil liability on the part of the delinquent taxpayer and the non-payment
thereof whether be it on account of the taxpayer’s failure or refusal to pay, it creates a
criminal liability which could be the subject of criminal prosecution under existing laws.

ii. UNIFORMITY AND EQUALITY OF TAXATION
UNIFORMITY
All taxable articles or properties of the same class shall be taxed at the same rate. A tax
is considered to be uniform when it operates with the same force and effect in every
place where the subject may be found. When the tax law applies equally well to all
persons, firms and corporations placed in similar situation there is no infringement of
the rule.
What the clause requires is equality among equals as determined according to a valid
classification. Different articles may be taxed at different rates provided that the rate is
uniform on the same class everywhere.
EQUITABILITY
When its burden falls on those better able to pay
• COMMISSIONER V. LINGAYEN GULF ELEC. CO.
iii. GRANT OF CONGRESS OF AUTHORITY TO THE PRESIDENT TO IMPOSE TARIFF

RATES [SECTION 28 (2), ARTICLE VI, 1987 CONSTITUTION]
The Congress may by law authorize the President to fix within specified limits and
subject to such limitations and restrictions as it may impose tariff rates, import and
export quotas, tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the Government. [SECTION 28 (2),
ARTICLE VI, 1987 CONSTITUTION]
iv. PROHIBITION AGAINST TAXATION OF RELIGIOUS, CHARITABLE ENTITIES, AND
EDUCATIONAL ENTITIES [SECTION 28 (3), ARTICLE VI, 1987 CONSTITUTION]
Charitable institutions, churches and personages or convents appurtenant thereto,

mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually,
directly, and exclusively used for religious, charitable, or educational purposes shall be
exempt from taxation. [SECTION 28 (3), ARTICLE VI, 1987 CONSTITUTION]
It applies only to property and real taxes assessed on such properties used directly,
actually, and exclusively for religious charitable and educational purposes. It is the use
of property and not the ownership.
The term exclusive is not limited to absolute use, if a property is incidentally used for
the purposes, it is clear from the decide cases that exemption may still subsist.
• LUNG CENTER OF THE PHIL. QUEZON CITY

• PROVINCE OF ABRA VS. HERNANDO
• ABRA VALLEY V. AQUINO
v. PROHIBITION AGAINST TAXATION OF NON-STOCK, NON-PROFIT

INSTITUTIONS
All revenues and assets used actually, directly, and exclusively shall be exempt from
taxes.
NON – PROFIT EDUCATIONAL INSTITUTION:
a. Incorporated as non- stock entity
b. Paying no dividends
c. Governed by trustees who receive no compensation
d. Devotes all its income to accomplishment and promotion of the purposes
enumerated in its Articles of Incorporation
COVERAGE OF EXEMPTION:
a. Real property tax
b. Income tac
c. Donors tax
DORM, CANTEENS AND BOOKSTORE EXEMPTED FROM TAX IF:

a. They are owned and operated by the educational institution as ancillary activities
and
b. The same are located within the school premises.
vi. MAJORITY VOTE OF CONGRESS FOR GRANT OF TAX EXEMPTION [SECTION
28(4), ARTICLE VI]
No law granting any tax exemption shall be passed without the concurrence of majority
of the members of the Congress. [SECTION 28 (4), ARTICLE VI, 1987 CONSTITUTION]
To prevent indiscriminate grant of tax exemptions.
(all the members = ½ plus 1 of all the member voting separately)
The law requires small number of votes to withdraw tax exemption. Absolute majority
is needed in tax amnesty, condonation, and refund.

vii. PROHIBITION ON THE USE OF TAX LEVIED FOR SPECIAL PURPOSE [SECTION
29(3), ARTICLE VI]
All money collected on any tax levied for a special purpose shall be treated as a special
fund and paid out for such purpose only. If the purpose for which a special fund was
created has been fulfilled or abandoned, the balance if any shall be transferred to the
general funds of the Government. [SECTON 29(3), ARTICLE VI, 1987 CONSTITUTION]
viii. PRESIDENT VETO POWER OF APPROPRIATION, REVENUE AND TARIFF
BILLS [SECTION 27(2), ARTICLE VI]
The President shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to
which he does not object. [SECTION 27(2), ARTICLE VI, 1987 CONSTITUTION]
a. APPROPRIATION BILL
b. REVENUE BILL
c. TARIFF BILL
The veto shall not affect item/s which he does not object.
ix. NON-IMPAIRMENT OF JURISDICTION OF THE SUPREME COURT [SECTION 2,
ARTICLE VIII]
The Congress shall have the power to define, prescribe, and apportion the jurisdiction
of the various courts but may not deprive the Supreme Court of its jurisdiction over
cases enumerated in Section 5 hereof.
No law shall be passed reorganizing the Judiciary when it undermines the security of
tenure of its Members. [SECTION 2, ARTICLE VIII, 1987 CONSTITUTION]
The Supreme Court can review judgments, or orders of lower courts in all cases
involving:
a. The legality of any tax, impost, assessment or toll and
b. The legality of any penalty imposed in relation thereto.
JUDICIAL NON-INTERFERENCE:
Courts cannot inquire into the wisdom of a taxing act unless there is a violation of
Constitutional limitations or restrictions.
The court may strike down provisions that fails to abide with the Constitution.

x. GRANT OF POWER TO THE LOCAL GOVERNMENT TO CREATE ITS OWN

SOURCES OF REVENUE [SECTION 5, ARTICLE X]
Each local government unit shall have the power to create its own revenues and to levy
taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the local governments. [SECTION 5, ARTICLE X,
1987 CONSTITUTION]
xi. FLEXIBLE TARIFF CLAUSE [SECTION 28, ARTICLE VI AND SECTION 401 TCC]
1. The rule of taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation.
2. The Congress may, by law, authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and
export quotas, tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the Government.
3. Charitable institutions, churches and personages or convents appurtenant thereto,
mosques, non-profit cemeteries, and all lands, buildings, and improvements,
actually, directly, and exclusively used for religious, charitable, or educational
purposes shall be exempt from taxation.
4. No law granting any tax exemption shall be passed without the concurrence of a
majority of all the Members of the Congress. [SECTION 28, ARTICLE VI, 1987
CONSTITUTION]
FLEXIBLE TARRIF CLAUSE
FLEXIBLE CLAUSE.
a. The President, upon investigation by the Commission and recommendation of
the National Economic Council, is hereby empowered to reduce by not more
than fifty per cent or to increase by not more than five times the rates of import
duty expressly fixed by statute (including any necessary change in classification)
when in his judgment such modification in the rates of import duty is necessary
in the interest of national economy, general welfare and/or national defense.
b. Before any recommendation is submitted to the President by the Council
pursuant to the provisions of this section, the Commission shall conduct an
investigation in the course of which it shall hold public hearings wherein
interested parties shall be afforded reasonable opportunity to be present, to
produce evidence and to be heard. The Commission may also request the
views and recommendations of any government office, agency or
instrumentality, and such office, agency or instrumentality shall cooperate fully
with the Commission.

c. The President shall have no authority to transfer articles from the duty-free list
to the dutiable list nor from the dutiable list to the duty-free list of the tariff.
d. The power of the President to increase or decrease rates of import duty within
the limits fixed in subsection "a" shall include the authority to modify the form
of duty. In modifying the form of duty, the corresponding ad valorem or specific
equivalents of the duty with respect to imports from the principal concerning
foreign country for the most recent representation period shall be used as
basis.
e. The Commissioner of Customs shall regularly furnish to the Commission a copy
each of all customs import entries containing every pertinent information
appearing in the collectors' liquidated duplicates, including the consular
invoice and/or the commercial invoice. The Commission or its duly authorized
agents shall have access to and the right to copy all the customs import entries
and other documents appended thereto as finally in the General Auditing
Office.
f. The Commission is authorized to adopt such reasonable procedure, rules and
regulations as it may deem necessary to carry out the provisions of this section.
g. Any order issued by the President pursuant to the provisions of this section shall
take effect thirty days after its issuance.
h. he provisions of this section shall not apply to any article the importation of
which into the Philippines is or may be governed by Section 402 of this Code.
i. The authority herein granted to the President shall be exercised only when
Congress is not in session. [SECTION 401, TARIFF AND CUSTOMS CODE]
xii.EXEMPTION FROM REAL PROPERTY TAXES (SECTION 234 OF THE LOCAL
GOVERNMENT CODE
EXEMPTIONS FROM REAL PROPERTY TAX. - The following are exempted from
payment of the real property tax:
a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person;
b) Charitable institutions, churches, parsonages or convents appurtenant thereto,
mosques, non-profit or religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
c) All machineries and equipment that are actually, directly and exclusively used by
local water districts and government owned or controlled corporations engaged in
the supply and distribution of water and/or generation and transmission of electric
power;

d) All real property owned by duly registered cooperatives as provided for under R.A.
No. 6938; and
e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously
granted to, or presently enjoyed by, all persons, whether natural or juridical, including
all government-owned or controlled corporations are hereby withdrawn upon the
effectivity of this Code. [SECTION 234, LOCAL GOVERNMENT CODE]
b. PROVISIONS INDIRECTLY AFFECTING TAXATION
i. DUE PROCESS
No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws. [SECTION 1, ARTICLE III,
1987 CONSTITUTION]
1. SUBSTANTIVE DUE PROCESS
statute must be within the constitutional authority of Congress and that it must be
fair, just, and reasonable
SUBSTANTIVE REQUISITES:
a. The means employed must be reasonably necessary to the accomplishment of
the purpose and not unduly oppressive;
b. Assessment should not be harsh, oppressive and confiscatory;
c. It must not be arbitrary and must be in harmony with the Constitution; and
d. It must be within the authority of a valid law.
2. PROCEDURAL DUE PROCESS
requires notice and hearing or at least an opportunity to be heard
PROCEDURAL REQUISITES:
a. The tax is for the public purpose;
b. The rule on uniformity of taxation is observed;
c. Either the person or property taxed is within the jurisdiction of the government
levying the tax; and
d. In the assessment and collection of certain kinds of taxes, notices and
opportunity of hearing are provided.
VIOLATIONS OF DUE PROCESS CLAUSE:
• If the tax amounts to a confiscation of property

• If the subject of confiscation is outside the jurisdiction of the taxing authority
• If the law is imposed for a purpose other than a public purpose
• If the law which is applied retroactively imposes unjust and oppressive taxes or

• Where the law is in violation of inherent limitations.
• KAPATIRAN V. CIR
• PHIL BANK OF COMMUNICATIONS V. CIR, ET AL
• SISON V. ANCHETA
• REYES V. ALMANZOR
ii. EQUAL PROTECTION
It does not require equal rates of taxation on different classes of property nor prohibits
unequal taxation so long as the inequality is not based upon arbitrary classification. It
merely requires 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.
Absolute equality is not required
REQUISITES FOR A VALID CLASSIFICATION:
1. It must be based on substantial distinction
2. It must apply to both present and future conditions
3. It must be germane to the purposes of the law
4. It must apply equally to all members of the same class.
VERTICAL EQUITY
connotes a difference in the tax treatment between those who are financially well off
and those who have relatively less.
HORIZONTAL EQUITY
implies that those who are similarly situated in life should be taxed similarly.
The equal protection clause may be violated when:
1. When classification is made where there should be none.
2. When classification is called for but none was made.
• ORMOC SUGAR CENTRAL V. CIR
• VICTORIA MILLING CO., INC. V. MUNICIPALITY OF VICTORIA

iii. RELIGIOUS FREEDOM
No law shall be made respecting an establishment of religion or prohibiting the free

exercise thereof. The free exercise and enjoyment of religious profession and worship,
without discrimination or preference, shall be forever allowed. No religious test shall
be required for the exercise of civil or political rights. [SECTION 5, ARTICLE III, 1987
CONSTITUTION]
The first sentence is the NON-ESTABLISHMENT CLAUSE, it covers the prohibition to
establish a national or official religion since in that case, there would be an
appropriation from taxes paid by the people, while the second sentence is the FREE
EXERCISE CLAUSE, which is the basis of tax exemptions granted to religious
institutions.
A municipal license tax on the sale of bibles and religious articles by a non-stock, non-
profit missionary organization at minimal profit constitutes curtailment of religious
freedom and worship which is guaranteed by the Constitution.
Not every imposition of tax however constitutes curtailment of religious freedom. The
free exercise of religion clause does not prohibit imposing a generally applicable sales
and use tax on the sale of religious materials by a religious organization. VAT which is
not a license tax but a revenue tax is allowed.
INCOME OF RELIGIOUS ORGANIZATION:
GENERAL RULE:
EXEMPT FROM TAXATION IF:
1. Non stock corporation
2. Organizes and operated exclusively for religious, charitable, scientific, athletic
or cultural and social welfare purposes and
3. No part of the income inures to the benefit of any member organizer or any
specific person
EXCEPTION:
Income of such organizations is taxable regardless of the disposition made of such
income if realized from:
a. productive use of property, real or personal;
b. profitable business pursuits.
• TOLENTINO V. THE SECRETARY OF FINANCE, ET AL.

iv. NON-IMPAIRMENT OF OBLIGATIONS AND CONTRACTS
No law impairing the obligation of contracts shall be passed. [SECTION 10, ARTICLE
III, 1987 CONSTITUTION]
IMPAIRMENT TAXES PLACE:
• Impairment takes place when the law that is passed substantially alters the legal
relationship between the parties by invalidating, releasing, or extinguishing the
obligations of a contract.
• Contracts cover those entered into by the State either in its sovereign or proprietary
capacity and those between private parties.
• Tax exemptions in franchises are always subject to alteration, amendment or repeal.
• “In lieu of all taxes” provisions in a franchise grant are not assumed to cover both
national and local taxes when granted.
• Withdrawal or modification of tax exemptions that are granted for a clear
consideration may give rise to impairment.
To impair an obligation of a contract is to alter or change the terms or effect of the
contract and thus in contemplation of the law weaken the position or rights of one or
all of the parties to it. A law which changes the terms of a contract by making new
conditions or changing those in the contract or dispenses with those expressed impairs
its obligations
It becomes a limitation to the power to tax when the taxpayer enters into an agreement
with the government. It applies when one party is the Government and the other is a
private party.
When the state grants an exemption on the basis of a contract, consideration is
presumed to be paid to the State, and the public is supposed to receive the whole
equivalent therefrom.
EXCEPTIONS:
1. When the exemption is unilaterally granted by law and the same is withdrawn by
virtue of another law
2. When the exemption is granted under a franchise (a franchise is subject to
amendment, alteration or repeal by Congress when the common good so requires.
3. Impairments permitted, provided that the legislation:
a. Must serve important and legitimate public interest
b. Is reasonable and narrowly tailored means of promoting that interest
• CAGAYAN ELECTRIC POWER AND LIGHT CO., INC V. COMMISSIONER

K. STAGES OF TAXATION
1. TAX LEGISLATION (LEVY)
Enactment of Law by the Congress authorizing the imposition of tax on persons, properties,
or excises. IT INCLUDES:
a. Determination of subject of taxation
b. Determination of the purposes for which taxes shall be levied
c. Fixing the rate of taxation
d. Discretion as to the manner, means, and agencies of collection
2. TAX ADMINISTRATION
Act of administration and implementation of the tax law by executive through its
administrative agencies.
IT INCLUDES:
1. Assessment, and
2. Collection
RULES ON ASSESSMENT AND COLLECTION:
a. The tax laws must designate which agency will collect the taxes
b. The circulars and regulations issued by the secretary of finance or the BIR Commissioner
must be in accordance with the tax measures imposed by the Congress.
3. PAYMENT
Act of compliance by the taxpayer, including such options, schemes or remedies as may be
legally available to him
4. REFUND
The recovery of any tax 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.
If what is delegated is tax legislation, the delegation is invalid. If what is delegated is tax
administration, the delegation is valid.
• CIR V. BOTELBO SHIPPING CORP
• TAN V. DEL ROSARIO, JR.

L. ESSENTIALS CHARACTERISTICS OF TAXES
a. IT IS AN ENFORCED CONTRIBUTION
Its payment is not voluntary in nature, and the imposition is not dependent upon the will of
the person taxed
b. IT IS PAYABLE IN CASH
Payment by means of check, promissory notes or in kind is not accepted.
c. PROPORTIONATE IN CHARACTER
Payment of taxes should be based on the ability to pay principle; thus, the higher the income
of the taxpayer the bigger the amount of tax paid
d. LEVIED IN PERSONS AND IN PROPERTY
There are taxes though that are imposed or levied in acts, rights, privileges ex. Documentary
tax
e. LEVIED BY THE STATE
As a general rule, only persons, properties, acts, rights or transactions within the jurisdiction
of the taxing State (city, municipality or province) are subject for taxation.
f. LEVIED BY THE LAW-MAKING BODY OF THE STATE
This means that a prior law must be enacted first by the Congress before assessment and
collection may be implemented
g. LEVIED FOR PUBLIC PURPOSE
Taxes are imposed to support the government for implementation of its project and programs
h. PAID AT REGULAR PERIODS OR INTERVALS
i. PERSONAL TO THE TAXPAYER
M. REQUISITES OF A VALID TAX
a. the tax must be for a public purpose;

b. the rule on taxation should be uniform;
c. the person or property taxed is within the jurisdiction of the taxing authority;
d. the assessment and collection should be in harmony with the due process clause; and
e. the tax must not infringe on the inherent and constitutional limitations of the power of
taxation.
N. TAX AGAINST OTHER FORMS OF EXACTIONS (TOLL, LICENSE FEE, SPECIAL ASSESSMENT,
DEBT)
TOLL TAX
Demand of proprietorship Demand of sovereignty
Paid for use of another’s property
Amount depends upon the cost of construction
Generally, no limit on the amount of tax that
or maintenance of the public improvement
may be imposed
used

Imposed by the government or private

Imposed only by the government
individuals or entities
SPECIAL ASSESSMENT TAX

Levied on persons, property, privileges, acts,
Levied only on land
etc
Not a personal liability of the person involved,
Personal liability
his liability is limited only to the land involved
Based wholly on benefits Based on necessity and benefits
Exceptional both as to the time and space Has general application
TARIFF TAX
Levied by both the National and Local
Levied only by the national government
Government
Imposed on both domestic and imported
Generally imposed on imported products
products
Understood to be a change on goods that are Broadly covers impositions or persons,
traded beyond borders Collected by the BOC property, and transactions
Levied only by the National Government Collected by the BIR and Local Governments
DEBT TAX
Generally based on contract Based on law
Assignable Generally, cannot be assigned
May be paid in kinds Generally, payable in money
May be the subject of set-off or compensation Cannot be the subject of set-off
Person cannot be imprisoned for non-payment Imprisonment is a sanction for non-payment
Governed by the ordinary periods or Governed by prescriptive period provided
prescription under tax laws
• PROCTER & GAMBLE V. MUN OF JAGNA
• GOLDEN RIBBON LUMBER V CITY OF BUTUAN
• CITY OF OZAMIS V. LUMAPAS
• APOSTOLIC PREFECT V. TREASURER OF BAGUIO

• VICTORIA MILLING V. PHIL PORTS AUTHORITY
• CIR V. PRIETO
O. KINDS OF TAXES
1. AS TO OBJECT (PERSONAL, PROPERTY AND EXCISE)
PERSONAL
also known as “capitalization” or “poll taxes” taxes of a fixed amount upon all persons of a
certain class within the jurisdiction of the taxing power without regard to the amount of their
property or the occupations of businesses in which they may be engaged.
PROPERTY
taxes assessed on all property or all property of a certain class within the jurisdiction of the
taxing power. (e.g. real estate tax)
EXCISE
taxes laid upon the manufacture, sale or consumption of commodities within the country
upon licenses to pursue certain occupations and upon corporate privileges (e.g. value-added
tax)
i.e. all of the tax code is excise tax, EXCEPT for the community tax which is the only personal
tax
2. AS TO BURDEN OR INCIDENCE (DIRECT AND INDIRECT)
DIRECT (withholding tax. For the most part is an enforcement tool for those entities
beyond the territory of the country)
taxes wherein both the tax liability was well as the impact or burden of the tax falls on the
same person. (e.g. corporate and individual income tax)
INDIRECT (just because the withholding agent is a 3rd party, it does not make such and
indirect tax. Tax is still not imposed on the income recipient NOT the withholding agent)
taxes wherein the tax liability falls on one person but the burden thereof may be shifted or
passed to another. (e.g. value-added tax, percentage taxes)

3. AS TO TAX RATES (SPECIFIC TAX, AD VALOREM TAX AND MIXED)
SPECIFIC TAX
tax which imposes a specific sum by the head or number or by some standard of weight or
measurement and which requires no assessment beyond a listing and classification of the
subjects to be taxed. (e.g. taxes on distilled spirits)
AD VALOREM
tax upon the value of the article or thing subject of taxation. (e.g. real estate tax); imposed on
a fixed portion of the value of property with respect to which the tax is assessed; needs an
independent appraiser to determine its value
MIXED
partially specific and partly ad valorem. An example would be the excise tax on fermented
liquors which has a separate specific tax rate based on the selling price of the article (e.g. ad
valorem tax based on net selling price plus VAT and excise taxes)
NOTE: cigarettes are the only object that is subject to excise tax that is both specific and ad
valorem
4. AS TO PURPOSE (GENERAL AND SPECIAL)
GENERAL TAX
taxes levied for the general or ordinary purposes of Government, to raise revenue for
governmental needs (e.g. income tax, value-added tax, motor vehicle registration fees)
SPECIAL TAX
taxes levied for a special purpose, to achieve some social or economic needs (e.g. for
regulation or the exercise of police power, irrespective of whether revenue is actually raised)
5. AS TO SCOPE OR AUTHORITY TO IMPOSE (NATIONAL AND LOCAL)
NATIONAL TAXES
taxes levied by the National Government (e.g. national internal revenue taxes)
LOCAL TAXES
taxes levied by the local government subject to such guidelines and limitations as the
Congress may provide (e.g. real estate tax, municipal tax, business tax)

6. AS TO GRADUATION (PROGRESSIVE, REGRESSIVE AND PROPORTIONATE)
PROGRESSIVE
whereby the rate or amount of tax increases as the amount of the income or earning to be
taxed increases (e.g. income tax)
REGRESSIVE
whereby the tax rate decreases as the amount of income or earning to be taxed increases
PROPORTIONATE
the tax rate is based on a fixed percentage of the amount of the property, receipts or other
bases to be taxed (e.g. real estate tax)
• MACEDA V. MACARAEG
• TAN V. MUN OF PAGBILAO
• PAL V. ROMEO EDU
• ESSO STD EASTERN V. CIR
• LOZANO V. ENERGY REGULATORY BOARD

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TAXATION LAW GENERAL PRINCIPLES ATTY.

TAXATION LAW – GENERAL PRINCIPLES

A. DEFINITION AND ATTRIBUTES OF TAXATION ............................................................................................. 7

S.A VILLANUEVA Page | 1

F. PRINCIPLES OF SOUND TAX SYSTEM ............................................................................................................... 10

S.A VILLANUEVA Page | 2

• CIR V. BURMEISTERS & WAIN SCANDINAVIAN ............................................................................. 13

S.A VILLANUEVA Page | 3

• CIR V. ESSO STANDARD ........................................................................................................................ 19

S.A VILLANUEVA Page | 4

S.A VILLANUEVA Page | 5

M. REQUISITES OF A VALID TAX .......................................................................................................................... 38

S.A VILLANUEVA Page | 6

A. DEFINITION AND ATTRIBUTES OF TAXATION

• CIR V. ALGUE, INC.

2. DOCTRINE OF UNJUST ENRICHMENT AS APPLIED TO GOVERNMENT

• BPI FAMILY SAVINGS BANK V. CA

1. TAXATION AS AN INHERENT ATTRIBUTE OF SOVEREIGNTY

The power of taxation is an incident of sovereignty as it is inherent in the State, belonging as

S.A VILLANUEVA Page | 7

I. COMPREHENSIVE – it covers persons, businesses, activities, professions, rights and

S.A VILLANUEVA Page | 8

D. POWER OF TAXATION AS DISTINGUISHED FROM POLICE POWER AND EMINENT DOMAIN

TAXATION POLICE POWER EMINENT DOMAIN

S.A VILLANUEVA Page | 9

c. REDUCTION OF SOCIAL INEQUITY

Imposition of special tariffs to protect local industries against foreign competition. Ex is

• ABAKADA GURO V. ERMITA

2. THEORETICAL JUSTICE – SECTION 28 (1), ARTICLE VI OF THE 1987 CONSTITUTION

S.A VILLANUEVA Page | 10

• ABAKADA GURO V. ERMITA

b. EQUITABILITY AND PROGRESSIVITY

• PAL V. SEC OF FINANCE

• TOLENTINO V. SEC. OF FINANCE & CIR

• CEBU PORTLAND CEMENT V. CTA

• BULL V. UNITED STATES

S.A VILLANUEVA Page | 11

• CIR V. JULIANE BAIER-NICKEL

1. CONSTRUCTION AND INTERPRETATION OF TAX LAWS, RULES AND REGULATIONS

i. Tax laws are prospective with exceptions

S.A VILLANUEVA Page | 12

• CIR V. CA, CENTRAL VEGETABLE MFG. CO. & CTA

• LUZON STEVEDORING V. CTA

• CIR V. GOTAMCO & SONS

• CIR V. CA, CTA AND ATENEO DE MANILA

2. PROSPECTIVITY OF TAX LAWS

Taxes must only be imposed prospectively, except when:

• CENTRAL AZUCARERA DE DON PEDRO V. CTA

• SMIETANKA V. FIRST TRUST SAVINGS BANK,

• CIR V. BENGUET CORP

• CIR V. BURMEISTERS & WAIN SCANDINAVIAN

• CIR V. AYALA SECURITIES CORP

S.A VILLANUEVA Page | 13

• PEPSI COLA V. TANAUAN

• CIR V. SC JOHNSON & SONS

a. STRICT V. BROAD SENSE

I. STRICT SENSE (DIRECT DUPLICATE TAXATION / OBNOXIOUS)

I. Tax Credits – an amount is subtracted from an individual or entity’s liability to arrive at

• CARLOS SUPER DRUG V. DSWD

S.A VILLANUEVA Page | 14

d. TREATIES WITH OTHER STATES

a. SHIFTING OF TAX BURDEN

S.A VILLANUEVA Page | 15

ii. BACKWARD SHIFTING