03/07/22 – Tax Law Review

GENERAL PRINCIPLES.

Trend right now Is to focus on the remedies. The basic principles still has to be tackled.

General Rule on Non-delegation

 Power to tax is inherent in the state.

 Abakada Guro Partylist

 Fortune tobacco
 Angara v. electoral Commission.

A delegated power cannot be re delegated.

 United states v. Varias. Sept 24, 1908 case. Still good doctrine.
 Taxation is inherently legislative power and can only be exercised by the legislative
branch.
 Marshall Dictum & Holmes doctrine.
o Harmonized by the:
 The power to tax includes the power to destroy if it is used validly as an
implement of police power
Delegtion of power to tax is allowed in the FF cases:
1.) To local govts in respect of matters of local concern. Sec 5 Art 10, 1987 constitution
 May congress under the 87 consti abolish the tax of local govt? NO. congress cannot
abolish what is provided for under the constitution. Sec 5 -art 10 of the 87 constitutions.
BAR Q.
 Although this is broad – but still subject to limitations as provided for by law.
 Power to tax shall only be exercised by the passage of laws, enacting of statutes, as in
the case of LGUS – by passing ordinances.
o Magtajas v. Pryce. GR 111097 – July 20, 1994
 Requirements as to how municipal ordinances be valid.
 Must not contravene the constitution or any statute
 Must not be unfair or oppressive
 Must not be partial or discriminatory
 Must not prohibit, but may regulate, trade
 Must not be unreasonable
 Must be general in application and consistent with public policy

2.) When allowed by the consti, the congress may by law authorize the president to fix
within specified limits to impose tariff rates, import and export quotas, tonnage and
wharfage dues and other duties or imposts
 3.) When the delegation relates merely to administrative implementation that may call for
some degree of discretionary powers under a set of sufficient standards expressed by
law.
a. Cervantes v. auditor general
b. Maceda v. macaraig
c. Abakada guro v. ermita
i. W/n there is valid delegation?
ii. Power of subordinate legislation.
iii. The intent and will to increase vat rate to 12% came from congress and
the task of the president is simply to execute the legislative policy

d. Pelaez v. Auditor General

i. Completeness test and
ii.

VAT is not unconstitutional – the tax code already provides, upon the
recommendation of the SOF when to increase the tax.
4.) Delegation to the people at large – THRU REFERENDUM and INITIATIVE.

Taxation as an implement of police power

 REGULATING AN ACTIVITY or CERTAIN PERSONS
1.) Ferrer v. Bautista – liquor/ cigarettes
a. Tax was used to protect the welfare of the citizens
b. 1989 bar Q on taxation – massage clinic. 5000 – annual fee; 50 pesos per
attendant. Is this a regulatory measure? It Is both a taxation measure and
licensee fee.
i. 5k is too much.
ii. To protect the health,safety and morals.
c. Road usage tax. To be paid by the driver. On all private cares during peak hours
from Monday to Friday
i. Car pooling
ii. Minimize the traffic.
iii. The ordinance is valid as it is an imposition under police power to
promote the general welfare of the citizenry
iv. Uniformity and classification.
1. When do we say there is valid classification?
a. When there Is substantial distinction
b. There is difference, between one person driving and car
pooling.
2.) Southern Cross cement v. Philippine cement – imposition of general safeguard measures
3.) RP v. COCOFED - a tax measure seems to discriminate at this particular industry

Direct of specific constitutional limitations

1.) No imprisonment for non-payment of poll tax.
a. Ma preso ba ka if wa ka mu bayad sa income tax?
i. YES! Sec 20 art 3 only applies to poll tax
ii.
b. Taxation shall be uniform and equitable.
i.
c. Congress shall evolve a progressive system of taxation in line with the ability to
pay principle. Sec 28(1) 2nd sentence
i. Direct taxes are preferred, and indirect taxes be minimized
1. Direct – income tax
2. Indirect – VAT, sales tax – regressive tax – imposed on persons
regardless of income
3. Progressive – based on the person’s ability to pay
4. GR 115852. 10/30/95
d. All appropriation, revenue, or tariff bills shall originate exclusively in the house
of reps, but the senate may concur with amendments.
i. In the enactment of the law, 3 versions may come out. The house, the
senate, and bicam committee.
ii. Senate has to wait the bill from the house.
Tolentino case gr 115455 08/25/94.

e. President shall have the veto power

f. Delegated authority of the president
g. Tax exemption of charitable institutions, churches, parsonages, convents, all
lands, buildings, and improvements, directly and exclusively used for religious or
charitable purposes
i. Burden of proof to prove exemption is on the person claiming the
exemption
ii. The dominant/principal use – cannot replace EXCLUSIVELY.
iii. Lung center of the phils v. Quezon City case. GR 144104
1. A charitable institution, but there are portions of its real property
leased to other persons, THUS not exempt from real property
taxes.
2. REAL PROPERTY TAX
iv. No tax exemption shall be passed without concurrence of congress
1. Taxation power is exercised thru the legislative
a. MITSUBISHI CORP V. CIR GR 175772. – REVIIEW THE
RECORDINGS.
i. Exchange of note
ii. It is stated that treaties, agreements, conventionsm
charters, protocols, declarations, MOU, modus
vivendi and exchange of notes all refer to
international instruments binding at international
law.
 iii. Significantly, an exchange of notes is an executive
agreement which becomes binding thru executive
action without the need o f a vote by the senate or
congress
iv. Abaya v. Ebdane 544 phil 645 2007
v. ASSUMPTION v. EXEMPTION
1. Assumption of obligation is not synonymous
with exemption.
2. This does not require congress approval.
h. Tax exemption on Non stock educational institution. Sec 4, article 14 of the 87
consti.
i. Proprietary Educational institutions
ii. Actually, directly, exclusively used for educational purposes shall be
exempt from tax.
iii. ALL REVENUES AND ASSETS are TAX EXEMPT. INCOME TAX, VAT
and LOCAL BUSINESS TAX.
iv. There is no qualification as to how it was generated or where it came
from
v. DONATIONS and GRANTS – ADE used for educ purposes are exempt
vi. GR 202792. 02/27/2019
1. Income from cafeteria, bookstores, are exempt if they are
operated by the institution and located within the school premises
vii. Though exempt, there are also limitations as provided for by law.
viii. SPECIAL CORPORATE TAX RATE – lower.

i. Filipino First or preferential use concept.