TAXATION LAWS NOTES (Dimaampao & Ingles)  Constitutional provisions merely impose limitations on what would otherwise be

an invincible power
A. Definition (Taxation)  Taxation’s relinquishment is never presumed
o Taxation –  It is a necessary attribute of sovereignty
 is an enforced proportional contribution, imposed by the State in its sovereign  Without this power, no sovereign State can exist nor endure
capacity, to support the government  No sovereign State can continue to exist without the means to pay its
 a mode of raising revenue for public purposes expenses and that for those means, it has the right to compel all citizens
o Taxes – and property within its limit to contribute
 enforced proportional contributions from persons and property, levied by the 2. Legislative in Character
state by virtue of its sovereignty for the support of the Government for all its  Such power to tax is exclusively vested in the legislature, except where the
public needs Constitution provides otherwise. (Art. VI, Sec. 28(2); Art. X, Sec. 5)
o Three (3) Elements of Taxation  In the legislature primarily lies the discretion to determine the nature (kind),
1. An enforced proportional contribution from persons and properties object (purpose), extent (rate), coverage (subjects), and situs (place) of taxation
2. Imposed by the State by its virtue of sovereignty  It has the authority to prescribe a certain tax at a specific rate for a particular
3. Levied for the support of the government public purpose on persons or things within its jurisdiction.
o Nature and Characteristics of Taxation
 Power of taxation is inherent to the State D. Theory and Basis of Taxation
 Right of State to impose taxes exists apart from the Constitution 1. Lifeblood Theory
 The State is free to select the subjects of taxation; inequalities which result from  Taxes are the lifeblood of the State, through which the government and its
singling out of one particular class for taxation or exemption infringe no agencies continue to operate and with which the State effects its functions for
constitutional limitation the welfare of its constituents
 State is also free to select those who will be exempt from taxation  Without taxes, the State would be paralyzed
 Because of the lifeblood theory –
B. Nature of Internal Revenue Law  Injunction does not lie against the collection of taxes
o Power of taxation must be exercised reasonably and in accordance with the law and  The State is not estopped from collecting taxes by the mistakes or
prescribed procedure errors of its agents
o It must be exercise fairly, equally, and uniformly  Exception: When the taxpayer raises the defense of
o Taxes are not political in nature, and are continued in force during the period of enemy prescription on appeal and the State does not question the
occupation. timeliness of the defense, the State can be bound by the acts of
 Such tax laws are deemed to be the laws of the occupied territory and not of the its agents
occupying enemy  Laws exempting subjects from taxation are strictly construed against
the taxpayer
C. Scope and Nature of Taxation 2. Necessity Theory
1. Inherent Attribute of Sovereignty  It is a necessary burden to preserve the State’s sovereignty and means to give the
 The power of taxation is an incident of sovereignty as it is inherent in the State; citizenry within the State’s territory and facilities and protection which a
a matter of right to every independent government government is supposed to provide
 It does not need constitutional conferment 3. Benefits-Protection Theory
  Bases the power of the State to demand and receive taxes under reciprocal duties
of support and protection.
 The citizens support the State by paying the portion from his property that is
demanded in order that he may be secured in the enjoyment of the benefits of an
organized society.
 Doctrine of Symbiotic Relationship
 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 burden of running the government.
 The government for its part is expected to respond in the form of
tangible and intangible benefits in order to improve the lives of the
people and enhance their material and moral values.
E. Purposes of Taxation
1. General/Fiscal/Revenue
 Primary purpose of taxation is to raise funds or property to enable the State to
promote the general welfare and protection of its citizens
2. Non-Revenue/Special or Regulatory
 Reduction of Social Inequality
 Our present tax system has adopted the progressive system of taxation
(tax rate increases as tax base increases)
 This system aims at reducing inequality in the distribution of wealth by
preventing its undue concentration in the hands of few individuals
 Encourage the Growth of Local Industries
 Power of tax carries with it the power to grant tax exemptions
 Tax exemptions and tax reliefs serve as incentives to encourage
investment in our local industry and promote economic growth
 Protect our Local Industry against Unfair Competition
 The Tarriff and Custom Code allows the imposition of certain taxes
upon imported goods or articles to further protect our local industry
 As an Implement of the Police Power of the State
 Imposition of taxes with the end view of regulating a particular activity
 If objective and methods are alike constitutionally valid, no reason is
seen why the State may not levy taxes to raise funds for their
prosecution and attainment.
 Taxation may be made the implement of the State’s police power
 It must be stressed that power of taxation be exercised with caution to
minimize injury to the proprietary rights of the taxpayer; it must be
exercised fairly, equally, and uniformly
 Property rights of individuals may be subjected to restraints and
burdens in order to fulfill the objectives of the government in the
exercise of police power
 Power of Taxation also used as an implement of Eminent Domain
 Tax measures are but “enforced contributions exacted on pain of penal
sanctions” and “clearly imposed for a public purpose
 It is in tax credit that our legislators find support to realize social
justice, and no administrative body can alter the fact.
 20% discount on senior citizen is an exercise of police power
F. Characteristics of a Sound Tax System
o Fiscal Adequacy
 The sources of revenue should be adequate to meet government expenditures
and their variations
o Administrative Feasibility
 Tax system should be capable of being effectively administered and enforced
with the least inconvenience to the taxpayer
 Tax laws must be capable of effective and efficient enforcement; they must not
obstruct business growth and economic development.
 Even if the imposition is burdensome to taxpayer, the tax imposition is not
necessarily invalid unless some aspect of it is shown to violate any law or the
Constitution.
 Each tax should be clear and plain to the taxpayers, capable of enforcement by
an adequate and well-trained staff of public officials, convenient as to time and
manner of payment, and not duly burdensome upon or discouraging business
activity
o Theoretical Justice
 The tax system should be fair to the average taxpayer and based upon the ability
to pay
 Taxes must be reasonable, just, fair, and conscionable.
 Under Article VI, Section 28(1) of the Constitution, the rule of taxation must
be uniform and equitable; it must evolve a progressive system of taxation
 Taxation is equitable when its burden falls on those better able to pay
 Taxation is progressive
  Rate goes up depending on the resources of the person affected
 A violation of the principle of a sound tax system may or may not invalidate
a tax law
 A tax law will retain its validity even if it is not in consonance with the
principles of fiscal adequacy and administrative feasibility because the
Constitution does not expressly requires so
 However, if a tax law runs contrary to the principle of theoretical
justice, such violation will render the law unconstitutional considering
that under the Constitution, the rule of taxation should be uniform and
equitable, (Sec. 28 (1), Art, VI, 1987 Constitution)
MODULE 2
A. Definition of Taxes – refer to 1st page
B. Essential Characteristics of Taxes
1. Imposed by the State
 The object to be taxed must be subject to the jurisdiction of the taxing state.
(infra.) This is necessary in order that the tax can be enforced.
 Although a state can tax all persons subject to its jurisdiction for all their
property left by them within its jurisdiction to seize upon person or property for
purposes of taxation.
2. Levied by the law-making body of the State
 The power to tax is a legislative power which under the Constitution only
Congress can exercise through the enactment of tax statutes. Accordingly, the
obligation of a tax is statutory liability.
 The power to tax is granted by the Constitution to local government subject to
such guidelines and limitations as may be provided by law.
 During the period of martial law, the then incumbent President exercised the
executive powers vested under the 1973 Constitution in the Prime Minister (who
was the Chief Executive before its amendment in 1981) as well legislative
powers through the issuance of “presidential decrees”.
 By virtue of Amendment No. 6 to the 1973 Constitution, the President was
given concurrent legislative authority under certain conditions, which he
exercised even after the lifting of martial law.
 Pending the ratification of a new Constitution and in the absence of a legislative
body in the Provisional Government installed on February 25,1986, the
President exercised legislative power through the issuance of executive orders
under the convening of Congress on July 27, 1987.
3. Enforced Contribution
 A tax is not a voluntary payment or donation (84 C.J.S. 32.) and its imposition is
in no way dependent upon the will or assent, open or implied, of the person
taxed.
 To be sure, taxation without representation, or without the consent in some form
of those who are to be taxed, is contrary to the fundamental principles of good
government.
 The principle of representation, however, applies only to political communities,
as such, and not to individuals. It is satisfied by their adequate representation in
the legislative body which votes the tax.
4. Payable in Money
 Unless qualified by law (e.g., backpay certificates under Sec. 2, R.A No. 304, as
amended.), the term “taxes” or “tax” is usually understood to be a pecuniary
burden – an exaction to be discharged alone in the form of money which must
be in legal tender.
 All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the
obligation or transaction shall be settled in any other currency at the time of
payment.
5. Proportionate in Character
 A tax is laid by some rule of apportionment according which persons share the
public burden. It is ordinarily based on ability to pay.
 Thus, in practice, some people pay very high taxes; others, very small amounts
or none at all.
6. Levied on persons or property and excise (privilege)
 A tax may also be imposed on acts, transactions, rights or privileges. In each
case, however, it is only a person who pays the tax.
 The property is resorted to for the purpose of ascertaining the amount of tax that
must be paid and of enforcing payment in case default of the taxpayer. (84 C.J.S.
36.)
 But not all who pay a tax shoulder the burden of the tax. (ex. VAT)
7. Paid at regular periods or intervals
  Example: every 30th of the month by a professional
8. Levied for a public purpose
 Revenues derived from taxes cannot be used for purely private purposes or for
the exclusive benefit of private persons.
 The public purpose or purposes of the imposition is implied in levy of tax
 A tax levied for a private purpose constitutes a taking of property without due
process of law
9. Personal to the Taxpayer
- tax is non-assignable
C. Requisites of a Valid Tax
1. Taxable subject must be within the jurisdiction of taxing authority
 taxing power of a country is likewise limited to person and property within and
subject to its jurisdiction
 Same rule applies to the taxing power of a territory
Rules Observed In Fixing Tax Situs
1. Poll/Capitation/Community Tax
 Tax is based upon residence of the taxpayer, regardless of source of income
or location of the property of the taxpayer
 Tax of a fixed amount imposed on persons residing within a specified
territory, whether citizens or not, without regard to their property or the
occupation or business in which they may be engaged
 Example: community tax or cedula
2. Property Tax - Tax imposed on property whether real or personal in proportion either
to its value, or in accordance with some other reasonable method of apportionment.
 Real Estate – subject to taxation in the state or country where it is located,
regardless of whether the owner is a resident or non-resident
 Personal Property – subject to taxation on situs of personal property,
wherever it was actually kept or located, was held to be at the domicile of its
owner; follows doctrine of mobilia sequuntur personam
o mobilia sequuntur personam = movables follow the person
 Principle: Taxation of intangible personal properties (such
as credits, bills, bank deposits promissory notes, and
corporate stocks) follows the residence/domicile of owner
thereof. Situs is the domicile or residence of the owner.
 Applied when convenient and not inconsistent with express
provisions of the law, or when its application would result
in injustice or unless such property has acquired actual situs
elsewhere.
 To acquire situs elsewhere other than domicile of owner:
(1) tangible property must have definite location there
(2) accompanied by some degree of permanency
 Exception: When it is inconsistent with express provisions
of law.
 Exception to the exception; Rule of Reciprocity.
 There is reciprocity if the foreign country of which the
decedent was a citizen and resident at the time of his death:
1. Did not impose a transfer tax of any character, in
respect of intangible personal property of citizens of the
Philippines not residing in that foreign country; OR
2. Allowed a similar exemption from transfer tax in
respect of intangible personal property owned by citizens
of the Philippines not residing in that country
If there is reciprocity, the intangible personal property
of an NRA shall not be included in his gross estate. If
there is no reciprocity, such intangible personal property
will be included.
o Shares of stock
 Situs for purposes of taxation:
a. State in which they are permanently kept; regardless
of domicile of owner or state in which corporation is
organized
o Domicile
 The place which constitutes the principal seat of his residence, his business,
his pursuits, his connections, his attachments, and his political relations
 It embraces the fact of residence at a place with the intent to regard it and
make it a home and live there for an indefinite time.
 To establish a domicile, the act and the intent must concur.
 o There must be the fact of living in a place with intent to make it o NATIONALITY
one’s home a) Resident and non-resident citizen – tax based upon properties wherever
3. Excise Tax situated
 Taxes imposed on the exercise of a right or privilege o RESIDENCE
 Excise tax is a charge imposed upon: a) Resident alien – tax based upon properties wherever situated
o the performance of an act,
o the enjoyment of a privilege, or C. Estate tax (Secs. 85, 104, RA 8424); CRITERIA:
o the engagement in an occupation, profession, or business. o PLACE
a) Non-resident aliens – are taxed on properties situated within the Philippines
A. Income Tax (Sec. 23, R.A. 8424); CRITERIA:
o NATIONALITY
o PLACE – applied to a) Resident and non-resident citizen – are taxed upon their properties wherever
a) Non-resident alien situated
b) Non-resident foreign corporations o RESIDENCE
c) Non-resident citizens a) Resident alien – taxes imposed upon properties wherever situated

* taxed upon sources of income derived from within the D. Value Added Tax (Sec. 105, RA 8424)
Philippines
- tax situs is the place where transaction is made
o NATIONALITY – applied to
- transaction made outside of Philippines, we can no longer tax such transaction
a) Resident citizen
b) Domestic corporation 2. Taxable subject must be accorded due process in the assessment and collection of taxes
* taxed upon sources of income from within and without the  The Supreme Court has recognized that, between the power of the State to tax and an
Philippines individual’s right to due process, the scale favors the right of the taxpayer to due process.
 National Internal Revenue Code (Tax Code) sets substantial and procedural requirements for
o RESIDENCE – applied to
the Bureau of Internal Revenue (BIR) to observe in performing tax investigations.
a) Resident alien
o Section 228 of the Tax Code requires that the assessment must be made in writing
b) Resident Foreign Corporation
and should state the law and facts on which the assessment is based.
* taxed upon income derived from sources within the Philippines  BIR should observe proper procedure in the issuance of the assessment. The process should
provide the taxpayer the right to discuss, and protest or appeal, the findings of the BIR.
 Source of an income – property, activity, or service that produces the income o Taxpayer and the BIR have 30 days from taxpayer’s receipt of the NoD to discuss
 Source of income coming from the Philippines – income is derived from the BIR’s findings of alleged discrepancies in tax payment (Discussion of
activity within the Philippines Discrepancy)
B. Donor’s Tax (Secs. 98, 104, RA 8424); CRITERIA: o During Discussion of Discrepancy, taxpayer is given the opportunity to present his
side of the case and explain the discrepancy found during the investigation of the
o PLACE revenue officer assigned and submit documents to support the explanation or
a) Non-resident alien – tax based upon properties situated within the Philippines arguments.
 o If the taxing authority still finds the taxpayer liable for deficiency tax or the taxpayer
is unable to sufficiently address the items of the alleged tax discrepancy, the
Preliminary Assement Notice (PAN) may be issued within 10 days from the
conclusion of the Discussion.
o The assessment shall be formalized through the issuance of the formal assessment
notice (FAN). The taxpayer has 30 days from receipt of the FAN to protest the
assessment by writing a request for reconsideration or reinvestigation.
o If the protest is denied, in whole or in part, the taxpayer may either: appeal to the
Court of Tax Appeals (CTA) within 30 days from receipt of the FDDA; or elevate
the protest, through request for reconsideration, to the Commissioner of Internal
Revenue (CIR) within 30 days from receipt of the FDDA.
 The Supreme Court repeatedly stressed the importance of giving the taxpayer an opportunity
to make an effective protest or appeal on the assessment or decision. It held that any
deficiency to the mandated content of the assessment or its process will not be tolerated
3. Imposition for a public purpose
 Taxes cannot be used for purely private purposes or for the exclusive benefit of private
persons
 Power to tax exists for the general welfare
 “Public purpose” –
o Those purposes which are traditionally viewed as essentially government
functions
o Purposes designed to promote social justice
o Embraces not only direct public benefit or advantage but also indirect public
benefit
 Where an assailed tax measure is not for a public purpose, such an act is tantamount to
confiscation of property and the taxpayer may invoke the law for his protection
o This appeal to the law for protection of individual’s property would place such
issue within ambit of the judiciary
 Determining “public purpose” is a legislative prerogative
o However this will not prevent the court from questioning the propriety of such
statute on the ground that the law enacted is not for a public purpose
 Purpose is deemed public as determined by the character of the tax law not the number
of persons benefited.
o As long as ultimate result favors the welfare of the public in general,
appropriation of a public revenue is deemed for a public purpose
 Public purpose of a tax may legally exist even if it favors one over another
o It is inherent in the power to tax to select the subjects of taxation
 Inequities which result from singling out of one particular class for taxation or exempt
infringe no constitutional limitation
4. Rule of taxation be uniform
 Sec. 28 (1), Art. VI, 1987 Constitution
 The tax is uniform when it operates with the same force and effect in every place where the
subject of it is found.
 "Uniformity" means all property belonging to the same class shall be taxed alike. It does not
signify an intrinsic, but simply a geographic, uniformity (Churchill & Tait vs. Conception, 34
Phil. 969).
 Uniformity does not require the same treatment; it simply requires reasonable basis for
classification.
 The law, however, may validly further classify such property according to their assessed value
and levy different rates, and consequently, different amounts of tax on the basis of such value;
 It requires the uniform application and operation, without discrimination, of the tax in every
place where the subject of the tax is found.
 It does not, however, require absolute identity or equality under all circumstances, but subject
to reasonable classification.
5. Must not violate inherent and constitutional limitations
Inherent Limitations:
 Purpose – discussed above
 Territoriality – discussed above (Situs)
 Double Taxation
 no property shall be taxed twice by the State for the same reason
 There is double taxation where one tax is imposed by the State and the other
imposed by the city
 There is double taxation when the same taxpayer is taxed twice when he should be
taxed only once for the same purpose by the same taxing authority within the same
jurisdiction during the same taxing period, and the taxes are of the same kind or
character. (G.R. No. 180651, Nursery Care Corporation vs. City of Manila)
 In its strict sense, double taxation refers to direct duplicate taxation or:
 1. Being taxed by the same taxing authority or jurisdiction
2. Taxing twice for the same purpose
3. Taxing twice in the same year or taxing period
4. Same subject or object were subjected to tax twice
5. Same kind/character of the tax
 On the other hand, in its broad sense, which is not prohibited by the Constitution,
double taxation is referred to as indirect double taxation and exist if any of the
elements described above is not present. It extends to all cases in which there is a
burden of two or more impositions.
 Exemption – agencies of the government are tax exempt
4. Prohibition against taxation of religious, charitable entities, and educational entities; (Art. VI, Sec.
28 (3))
5. Prohibition against taxation of non-stock, non-profit educational institutions; (id.)
6. Majority vote of Congress for grant of tax exemption; (Art. VI, Sec. 28 (4))
7. Prohibition on use of tax levied for special purpose; (Art VI, Sec. 29 (3))
8. President’s veto power on appropriation, revenue, tariff bills; (Art. VI, Sec. 28(2))
9. Non-impairment of jurisdiction of the Supreme Court; (Art. VI, Sec. 30)

10. Grant of power to the local government units to create its own sources of revenue; (Art. X, Sec. 5)
 Non-delegation – the power to tax by legislative body may not be delegated to any other
branch; except as stated by the constitution such as: 11. Flexible tariff clause;
Art. VI, Sec. 28(2)
The President shall have the power to veto any particular item or items in an 12. Exemption from real property taxes; and
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to
13. No appropriation or use of public money for religious purposes.
which he does not object.

Art. X, Sec. 5 D. Classification of Taxes

Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees and charges subject to such guidelines and I. As to Subject Matter – discussed above
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 a. Personal, poll or capitation
governments. b. Property
c. Excise
Art. VI, Sec. 28 (2)
The Congress may, by law, authorize the President to fix within specified limits, and II. As to who Bears Burden and Incidence
subject to such limitations and restrictions as it may impose, tariff rates, import and
a. Direct
export quotas, tonnage and wharfage dues, and other duties or imposts within the
b. Indirect
framework of the national development program of the Government.
DIRECT TAX INDIRECT TAX
Constitutional Limitations
Taxpayer is directly liable on the transaction Primarily paid by persons who can shift the
1. Prohibition against imprisonment for nonpayment of poll tax; (Art. III, Sec. 20) or business it engages in burden upon someone else

2. Uniformity and equality of taxation; (Art. VI, Sec. 28 (1)) Ex: custom duties, ad valorem taxes paid by Ex: ad valorem taxes paid by oil companies
oil companies for importation of crude oil can be shifted to its buyer by adding them
3. Grant by Congress of authority to the President to impose tariff rates; (Art. VI, Sec. 28 (2)) to the selling price
 Tax which is demanded from the person who
also shoulders the burden of tax or tax which
the taxpayer cannot shift to another.
Both the incidence (liability for the payment
of the tax) as well as the impact or burden of
the tax falls on the same person.
Exacted from the very person who, it is
intended or desired should pay them
III. As to Purpose – discussed above (Module 1)
a. General, fiscal, revenue
b. Special, regulatory, sumptuary
IV. As to How Amount is determined
a. Specific
b. Ad Valorem (Value)
SPECIFIC TAX
Imposed based on weight or volume capacity or
any other physical unit or measurement
Examples:
- excise taxes on distilled spirits, tobacco
products, petroleum products
V. As to taxing authority
a. National
Tax which is demanded from one person in b. Local
the expectation and intention that he shall
indemnify himself at the expense of NATIONAL TAX LOCAL TAX
another. Imposed by the national government: Levied and collected by the local government
These are taxes wherein the incidence of or President
the liability for the payment of the tax falls The Congress
on one person, but the burden thereof can be Examples: revenue taxes under NIRC, custom Examples: real property tax, business tax
shifted or passed on another person duties
Those demanded, in the first instance. from
one person in the expectation and intention
that he can shift burden to someone else VI. As to Rate
Liability for payment of indirect taxes lies a. Progressive
only with the seller of the goods or
services, not the buyer b. Regressive
c. Proportionate
* tax base: total amount of income, property, assets, consumption, transactions or other economic
activity subject to taxation by a tax authority.
* tax rate: percentage or fraction that is to be taken from the tax base
PROGRESSIVE TAX REGRESSIVE TAX PROPORTIONATE TAX
Rate increases as the tax base Tax rate decreases as tax base Rate of tax is based on a fixed
(amount) increases increases percentage of the amount of the
property, receipts or other basis
Taxation is progressive when to be taxed
its rate goes up depending on
the resources of the person
AD VALOREM TAX affected
Imposed based on selling price or other
specified value of goods Mandated by Art. VI, Sec.
Examples: 28(1)
- excise tax on automobiles and non-essential Example: income tax, estate or Example: VAT Examples: real estate tax,
goods donor’s tax VAT, and other percentage
taxes.
E. Taxes distinguished from other Imposition
A. Tax vs Debts

TAXES DEBTS C. Tax vs. Special Assessment/Levies

Not dependent upon consent of taxpayer; Dependent upon consent as debts arise from - Special assessment – in the nature of a tax upon property levied according to benefits
there is no express or implied contract to contracts between parties: (creditor and conferred on the property
pay taxes debtor) - Power to levy such assessments is an exercise of taxing power; but exercise of taxing power
Taxes if uncollected, assets cannot be Debts, if remain unpaid, assets can be in imposing an assessment does not necessarily make the assessment a tax
seized by attachment or other judicial seized by attachment or other judicial
processes processes to fulfill payment of obligation
Not the subject of set-off either on behalf of Can be the subject of a set-off. TAX SPECIAL ASSESSMENT/LEVIES
state or the municipality Can be levied on all property and excise, Can be levied only on land
Do not draw interest except only when Debts may draw interest when it is so real or personal
delinquent stipulated or where there is default Can be made a personal liability of person Cannot be made a personal liability of the
Law abolishing imprisonment for debt not Law abolishing imprisonment for debt is assessed as stated in Taxation’s essential persons assessed
applicable and remedies for tax’s non- applicable characteristic
payment may include imprisonment if Based on as to the kind of tax (as to rate) Based wholly on benefits
legislature provides Charged on all property in a prescribed Charge imposed only on property owners
Generally cannot be assigned Assignable area benefitted
Generally paid in money May be paid in kind
Governed by the special prescriptive Governed by the ordinary periods of
periods provided for in the NIRC prescription D. Tax vs. Tolls
Imposed only by public authority Can be imposed by private individual
TAX TOLLS
 Exceptional Circumstance of Supreme Court allowing off-setting of taxes: A demand of sovereignty A demand of proprietorship
o SC allowed it because the determination of the taxpayer’s liability is intertwined Charged for the purpose of raising revenues Amount charged for the cost and
with the resolution of the claim for tax refund of erroneously or illegally collected maintenance of property used
taxes under Section 229 of the NIRC Imposed only by the government Imposed by the government or by private
individuals or entities.
o Section 229, the recovery of any national internal revenue tax alleged to have been
Generally, no limit on the amount collected Amount paid depends upon the cost of
erroneously or illegally assessed or collected, any penalty claimed to have been as long as it is not excessive, unreasonable construction or maintenance of the public
collected without authority, or any sum alleged to have been excessively or in any or confiscatory improvement used.
way wrongfully collected, requires filing an administrative claim

B. Tax vs. License Fees E. Tax vs. Penalties

TAX
Levied in the exercise of the taxing power
Main Purpose: Generate revenues
Amount of exaction depends as to the kind
of tax as to its rate
LICENSE FEES
Emanate from police power
Main Purpose: Regulatory purposes
Amount for exaction must only be sufficient
to include expenses of issuing a license
TAX
Civil liability; a person only criminally
liable on only when he fails to satisfy his
civil obligation to pay taxes
Intended to raise revenue
PENALTIES
Criminal liability; this is a punishment for
the commission of a crime
Designed to regulate conduct
 Cannot be a subject of set off or
compensation (only on exceptional
circumstance)
F. Tax vs. Custom Duties
TAX
All embracing term to include various
kinds of enforced contributions upon
persons for the attainment of public
purposes
MODULE III – LIMITATIONS OF TAXING POWER
Classified into:
(1) Inherent Limitations
(2) Constitutional Limitations
A. Inherent Limitations
Can be a subject of set off or compensation
(Art. 1279, Civil Code)
CUSTOM DUTIES/TARIFF
A kind of tax imposed on articles which are
traded internationally
Custom duties are taxes imposed on goods
exported from or imported into a country.
Tariff may be used in one of three (3)
senses:
1. A book of rates drawn usually in
alphabetical order containing the
names of several kinds of
merchandise with the
corresponding duties to be paid for
the same; or
2. The duties payable on goods
imported or exported; or
3. The system or principle of
imposing duties on the importation
or exportation of goods.
Who may determine public purpose
1) Public Purpose
- Taxes must be exacted for a public purpose
- Taxes cannot be used for purely private purposes or for the exclusive benefit
of third persons
- Power to tax exists for the general welfare; it should only be used for a public
purpose
- It would be robbery for the State to tax its citizens and use the funds generated
for a private purpose
- Term “public purpose” is not defined
 It should be given broad interpretation
 Pertains to purposes traditionally viewed as essentially government
functions and includes those purposes designed to promote social
justice
- A revenue measure must stand the first requisite of a lawful taxation –
purpose for which it is to be laid be a public purpose
- Where an assailed tax measure is not for a public purpose, such an act is
tantamount to confiscation of property and taxpayer may invoke the law for
his protection
 Such issue places it within the ambit of the judiciary
- Public purpose is not merely direct public benefit but also indirect public
benefit
- Right to tax depends upon the ultimate use, purpose, and object for which the
fund is raised
- People may be taxed for a public purpose although it be under the direction of
an individual or private corporation (Bagatsing v. Ramirez, 74 SCRA 306)
- If the public benefit or advantage is merely incidental to in the promotion of a
particular enterprise, such defect shall render the law invalid (Pascual v. Sec.
of Public Works, 110 Phil. 331)
 If what is incidental is the promotion of a private enterprise, tax law
shall be deemed for “public purpose” (id.)
- Legislative, such determination resides in the Congress
- However, this will not prevent the court from questioning the propriety of
such a statute on the ground that the law enacted is not for a public purpose
  But once it is settled that the law/statute is for a public purpose, court The Philippines renounces war as an instrument of national policy, adopts the
may no longer inquire into wisdom, expediency, or necessity of such generally accepted principles of international law as part of the law of the
tax measure land and adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations.
Purpose when deemed “public” - There is also the principle of Sovereign Equality Among States
- It is the purpose which determines the public character of the tax law, not the  States are juridically equal, enjoy the same rights, and have equal
number of persons benefited. capacity in their exercise.
- As long as ultimate result favors the welfare of the public in general,  Rights of each one do not depend upon the power which it possesses
appropriation is deemed for a public purpose (i.e 20% discount for senior to assure its exercise, but upon the simple fact of its existence as a
citizens) person under international law
 Principle finds its roots in the rule par in parem non habet imperium
Public purpose of a tax may legally exist even if it favors one over another where even the strongest State cannot assume jurisdiction over
another state
- Public purpose of a tax may legally exist even if the motive which impelled
3) Territoriality – majority are already discussed in Mod 2
the legislature to impose the tax was to favor one over another
- It is inherent in the power to tax to select the subjects of taxation Supplements:
- Inequities which result from singling out of one particular class infringe no
constitutional limitation - Section 104, R.A. 8424 enumerates certain properties which have acquired
situs in the Philippines:
Cases of “Public Purpose” 1. Franchise exercised in the Philippines
2. Shares of stock, obligations, bonds issued by domestic corporations
a. Public Improvement
organized and constituted in accordance with Philippine laws
b. Unemployment Relief
3. Shares, obligations, bonds issued by a foreign corporation where
c. Buildings and roads/Infrastructure
85% of its business is located in the Philippines; subject to donor’s
d. Local police forces (subsidies) under R.A 6141
tax and estate tax
e. Industries classified as indispensable under P.D 1987
4. Shares, obligations, bonds issued by foreign corporation which has
f. Construction of home sites
acquired business situs when such have been used in the furtherance
g. Promotion of science and invention
of the business of the foreign corporation
h. Upliftment of the underprivileged
5. Shares/rights in a partnership business or industry established in the
i. Rehabilitation of the sugar industry
Philippines
j. Pensions to deserving retirees
- Properties are considered as situated, thus taxed, in the Philippines
k. Oil industry’s protection
- Irrespective of the owner, donor’s tax or estate tax can be imposed upon these
l. Socialized housing
properties
m. Educational custody
 Except where foreign country grants exemption or does not impose
taxes on intangible properties of Filipino citizens
2) International Comity
- Article II, Section 2 of the 1987 Constitution
4) Non-Delegation of the Power to Tax
- Power to tax is exclusively vested in the legislative body
- There are exceptions:
 Article VI, Section 28 (2) of the 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.
 Flexible Power Clause in Customs Modernization and Tariff Act
(CMTA)
President, upon recommendation of the National Economic and
Development Authority (NEDA) may:
1.
Increase, reduce or remove existing protective tarrif rates
of import duty, but in no case shall be higher than 100%
ad valorem
2. Establish import quota or ban importation of any
commodity as may be necessary
3. Impose additional duty on all import not exceeding 10%
ad valorem, whenever necessary
 Article X, Section 5 of the 1987 Constitution
Each local government unit shall have the power to create its own
sources of 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.
 In the absence of constitutional provision, power to tax may
be delegated to LGU’s in accordance with well-settled
doctrine that power to create local government units by
implication confers upon it the power to tax
 Power to tax granted to municipalities under the Local
Autonomy Act is constitutional
 Though power to taxation cannot be delegated by the central
legislative body to the executive (except under Article VI,
Section 28 (2) of the Constitution) or judicial power of the
government w/out infringing upon the theory of separation of
powers, there is exception in case of municipal
corporations
 By necessary implication, legislative power to create political
corporations for purposes of self-government carries with it
the power to confer on such local government agencies the
power to tax
- For a valid delegation of power it is essential that delegating power must be:
1. Complete in itself – it must set forth the policy to be executed by the
delegate
2. It must fix a standard – limits of which are sufficiently determinate or
determinable to which delegate must conform
- A ‘standard’ defines legislative policy, marks its limits, maps out its
boundaries and specifies the public agency to apply it.
 It indicates the circumstances under which legislative command is to
be effected
- Standard may be express or implied
 Express – non-delegation objection is easily met
 Implied – seen from the policy and the purpose of the act considered
as a whole
- An ordinance of a municipality fails to state any policy or set-up any standard
ro guide or limit the mayor’s action, expresses no purpose to be attained by
requiring a permit, enumerates no condition for its grant or refusal and
entirely lacks standard, thus conferring upon the Mayor arbitrary and
unrestricted power to issuance of building permits; ordinance is invalid.
(Villegas v. Pao Ho & Arca)
- The right to tax depends on the ultimate use, purpose, and object for which the
fund is raised.
5) Exemption from Taxation of Government Agencies/Instrumentalities
- Properties of the government as well as those of the local government units
are not subject to tax
May the Government Tax Itself?
- Constitution is silent on whether Congress is prohibited from taxing the
properties of the agencies of the government however, CJ Hilario Davide, Jr.
has stated that nothing prevents Congress from doing so.
 - Agencies performing governmental functions are tax exempt unless
expressly taxed
- Agencies performing proprietary functions are subject to tax unless expressly
exempted
- Certain corporations have been granted exemption under Section 27 (c) R.A.
8424 amended by R.A 11534:
1. Government Service Insurance System (GSIS)
2. Social Security System (SSS)
3. Philippine Health Insurance Corporation (PHIC)
4. Local Water Districts
5. Home Development Mutual Fund
Instrumentality of the National Government Is Exempt
- PFDA, being an instrumentality of the national government, es exempt from
real property tax but the exemption does not extend to the portions of the
Navotas Fishing Port Complex (NFPC), that were leased to taxable or private
persons and entities for their beneficial use
- “Instrumentality” definition is under Section 2(10) of the Introductory
Provisions of the Administrative Code of 1987
Instrumentality refers to any agency of the National Government, 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. This term includes regulatory agencies, chartered
institutions and government-owned or controlled corporations.
- “Instrumentality” is broader than “government-owned or controlled
corporation
- “Government-owned or controlled corporation” has a separate definition
under Section 2(13) of the Introductory Provisions of the Administrative Code
of 1987
Government-owned or controlled corporation refers to any agency organized
as a stock or non-stock corporation, vested with functions relating to public
needs whether governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the extent of at least fifty-
one (51) per cent of its capital stock xxx
- A government “instrumentality” may include a “government-owned or
controlled corporation,” but an instrumentality may not qualify as a
government-owned or controlled corporation
- Philippine Reclamation Authority (PRA) is not organized either as a stock or
non-stock corporation, neither was it created by the Congress to operate
commercially and compete in the private market
 PRA is a government instrumentality vested with corporate powers
and performing an essential public service; it is exempt from real
property tax
- Real property owned by the Republic of the Philippines is exempt from real
property tax unless the beneficial use of it has been granted to a taxable person
Doctrine Of Supremacy of the National Government over Local Governments
- No state or political subdivision can regulate a federal (national/central)
instrumentality in such a way as to prevent it from consummating its (latter)
responsibilities, or even seriously burden it in the accomplishment of them
- The power to tax which was called by Justice Marshall as the “power to
destroy” cannot be allowed to defeat an instrumentality or creation of the very
entity which has the inherent power to wield it
B. Constitutional Limitations on the Power to Tax
(1) Due process of law
(2) Equal protection of laws
(3) Uniformity
(4) Progressive system of taxation
(5) Non-impairment of contracts
(6) Non-imprisonment for non-payment of poll tax
(7) Appropriation, revenue and tariff bills must originate exclusively in the House of
Representatives
(8) Presidential veto
(9) Presidential power to fix tariff rates
(10) Freedom of the press
(11) Freedom of religion
(12) Exemption from property tax of properties of religious, educational, charitable
institutions
(13) Tax exemptions granted to non-stock, non-profit educational institutions
(14) No public money or property used for a particular sect, priest, religious minister, etc.
(15) Grant to tax exemptions
 (16) Grant of power to tax to LGU
(17) Money collected for a special purpose shall be considered a special fund
(18) Exclusive appellate jurisdiction of the Supreme Court over judgments of lower courts
involving the legality of taxes, imports, assessment, fees, penalty
1) Due Process of Law
- Article III, Sec. 1 of the 1987 Constitution
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.
- One may be deprived of property as long as requirement of due process – notice
hearing – have been complied with
- Due process is usually violated where tax imposed is for private purpose as
distinguished from a public purpose
- A tax imposed on property outside the State and arbitrary or oppressive methods are
used in assessing and collecting taxes violates due process
- Due process does not require that property subject to tax or amount to be raised should
be determined by judicial inquiry, and a notice and hearing as yo the amount of tax and
the manner in which it shall be apportioned are generally not necessary to due process
- Due process clause may be invoked where a taxing statute is so arbitrary as to amount
to confiscation of property
- Mere allegation of such arbitrariness is not enough; there must be a clear and
unequivocal breach of the Constitution; there must be proof of arbitrariness
- Following situations are illustrative of violations of the due process clause:
a. If tax amounts to a confiscation of property
b. If the subject of confiscation is outside the jurisdiction of the taxing authority
c. If the law is imposed for a purpose other than public purpose
d. If the law which is applied retroactively imposes unjust and oppressive taxes
e. Where the law is in violation of inherent limitations
- For income to be taxable, following requisites must exist:
1. There must be gain
2. Gain must be realized or received
3. Gain must not be excluded by law or treaty from taxation
- An income tax is arbitrary and confiscatory if it taxes capital because capital is not
income
- In the absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the presumption
of validity which every law has in its favor
- Taxing power has the authority to make reasonable and natural classification for
purposes of taxation but the government’s act must not be prompted by a spirit of
hostility, or at the very least discrimination that finds no support in reason
- It suffices that the laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner
- When an administrative rule is merely interpretative in nature, its applicability needs
nothing further than its bare issuance
- When administrative rule goes beyond merely providing for the means that can
facilitate or render 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 those directly affected a chance to be heard and be duly informed before new
issuance is given force and effect
2) Equal Protection of the Law
- Article III, Sec. 1 of the 1987 Constitution
- Our Constitution requires uniformity, not equality, in taxation
- Equality of taxation is accomplished when the burden of the tax falls equally and
impartially upon all persons and property subject to it
- Uniformity in taxation requires that all taxable property subjected to the tax, shall be
alike and this requirement is violated if particular kinds, species, or items of property
are selected to bear the whole burden of the tax, while other, which should be equally
subject to it, are left untaxed
- “Equal protection” does not require equal rates of taxation on different classes of
property, nor prohibit unequal taxation so long as the inquality is not based upon
arbitrary classification
a. 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 Impossible
- Inequality of taxes means substantial differences
- There is no imperative requirement that taxation shall be absolutely equal, only that tax
laws be framed with a view to apportioning the burdens of the government so that each
person enjoying protection shall be required to contribute so much as is his reasonable
proportion, and no more.
 - But when for any reason, it becomes discriminative between individuals of a class No law shall be made respecting an establishment of religion, or prohibiting the free
taxed, and selects some for an exceptional burden, the tax is deprived of the necessary exercise thereof. The free exercise and enjoyment of religious profession and worship,
element of legal equality, and becomes inadmissible without discrimination or preference, shall forever be allowed. No religious test shall
be required for the exercise of civil or political rights.
Universal Application Not Required - Municipal license tax on sale of bibles and religious articles by a non-stock, non-profit
- What clause requires is equality among equals as determined according to a valid missionary organization at minimal profit constitutes a curtailment of religious
classification freedom and worship
- By classification is meant the grouping of persons or things similar to each other in - However, income of such organizations from any activity conducted for profit or from
certain particulars and different from all others in these same particulars any of their property, real or personal, regardless of the disposition made of such
income, is taxable
Classification, When Proper
5) Non-impairment of Contracts
- Power to select subjects of taxation and apportion the public burden among them
- Article III, Sec. 10 of the 1987 Constitution
includes the power to make classifications
No law impairing the obligation of contracts shall be passed.
- For classification to be valid, following requisites must concur:
- A contract is the law b/w contracting parties
a. It must be based on substantial distinction
- Any law which enlarges, or in any manner changes the intention of the parties
b. It must apply both to present and future
discoverable in it, necessarily impairs the contract itself
c. It must be germane to the purposes of the law
- When the state has stipulated by contract to give exemption from taxation or has
d. It must apply equally to all members of the same class
commuted the uncertain taxes for a definite and fixed sum or sums, and afterwards
- Principle of equality admits of classification or distinction as long as they are based
undertakes to tax, in the same manner as it taxes other subjects, the persons,
upon real and substantial differences between persons, property, or privileges
corporations or property which were subject of the exemption or commutation, contract
is impaired
3) Taxation and the Freedom of the Press
- This constitutional prohibition does not apply to mere decisions of the court construing
- Article III, Sec. 4 of the 1987 Constitution
a contract
No law shall be passed abridging the freedom of speech, of expression, or of the press,
- But as state may, at its pleasure, withdraw an exemption which is a mere gratuity
or the right of the people peaceably to assemble and petition the government for
possessing no element of a contract, even though the corporation may have incurred
redress of grievances.
expense on the faith thereof
a. An exemption from taxation may be modified or repealed by the legislature
- The press is not immune from general regulation by the State; they have no immunity
unless such modification or repeal would impair the obligation of a contract
from general application of laws
- On other hand, if tax exemption constitutes a binding contract and for a valuable
- A member of the press has no special privilege to invade the rights and liberties of
consideration, government cannot unilaterally revoke the tax exemption
others and must answer for crimes (i.e libel under the RPC)
- Contractual tax exemptions are those agreed to by the taxing authority in contracts,
- They may be punished for contempt of court
lawfully entered into by them under enabling laws in which the government, acting its
- They must pay equitable and nondiscriminatory taxes on his business
private capacity sheds its cloak of authority and waives its governmental immunity
- Franchises are beyond the purview of this tax exemption
4) Taxation and Freedom of Religion
- Article III, Sec. 5 of the 1987 Consitution
 - Tax exemptions or incentives granted to it presently enjoyed by natural or juridical Uniformity, Not Equality
persons are withdrawn upon effectivity of the LGC except with respect to those entities
expressly enumerated - The Constitution requires uniformity, not equality in taxation
- A system which imposes system the same taxation upon every species of property,
6) Non-imprisonment for Non-Payment of Poll Tax irrespective of its nature or condition or class,” is destructive of the principle of
- Article III, Sec. 20 of the 1987 Constitutiom uniformity and equality of taxation
No person shall be imprisoned for debt or non-payment of a poll tax. Equality vs Uniformity
- But a person may be imprisoned for non-payment of other kinds of taxes where the law
expressly provides EQUALITY UNIFORMITY
Accomplished when the burden of the tax All taxable property shall be alike subjected
7) Bills to Originate From the House of Representatives falls equally and impartially upon all the to the tax, and this requirement is violated if
- Article VI, Sec. 24 of the 1987 Constitution persons or property subject to it, so that no particular kinds, species or items of property
All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, higher rate or greater levy in proportion to are selected to bear the whole burden of the
bills of local application, and private bills shall originate exclusively in the House of value is imposed upon one person or tax, while others, which should equally be
species or property upon others similarly subject to it are left untaxed
Representatives, but the Senate may propose or concur with amendments.
situated or of like character
- Both Houses of Congress may initiate bills but only lower house may propose tax
measures
- Sec. 26 (2) of the same Article Progressive Taxation
(2) No bill passed by either House shall become a law unless it has passed three - Article VI, Sec. 28 (1) of the 1987 Constitution
readings on separate days, and printed copies thereof in its final form have been The rule of taxation shall be uniform and equitable. The Congress shall evolve a
distributed to its Members three days before its passage, except when the President progressive system of taxation.
certifies to the necessity of its immediate enactment to meet a public calamity or - Taxation shall be said to be equitable when its burden falls on those better able to pay;
emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, taxation is progressive when its rate goes up depending on the resources of the person
and the vote thereon shall be taken immediately thereafter, and the yeas and nays affected
entered in the Journal. - Built on principle of taxpayer’s ability to pay
- Constitution does not prohibit imposition of regressive taxes
8) Uniformity of Taxation - Constitutional provision should be construed to mean that “direct taxes are to be
- Article VI, Sec. 28 (1) of the 1987 Constitution preferred and indirect taxes, as much as possible, should be minimized”
(1) The rule of taxation shall be uniform and equitable. The Congress shall evolve a - Same provision is a mere directive towards the Congress
progressive system of taxation. - Tax pyramiding is prohibited because a taxpayer cannot be compelled to to pay a tax
upon a tax itself
- Uniformity in taxation – all taxable articles or kinds of property of the same class shall
be taxed at the same rate 9) Non-delegation of legislative power – discussed on 4) of inherent limitations
- Different articles may be taxed at different amounts provided that the rate is uniform
on the same class everywhere, with all people and at all times 10) Delegation of Legislative Authority to Fix Tariff Rates, Import and Export Quotas
- A tax is uniform when it operates with the same form and effect in every place where - Article VI, Sec. 28 (2) of the 1987 Constitution
the subject of it is found
 The Congress may, by law, authorize the President to fix within specified limits, and  “Directly” – direct way w/out anything intervening; not by secondary but by
subject to such limitations and restrictions as it may impose, tariff rates, import and direct means
export quotas, tonnage and wharfage dues, and other duties or imposts within the  “Exclusively” – apart from all others; w/out admission of others to
framework of the national development program of the Government. participation; in a manner to exclude
- Custom duties which are assessed at the prescribed tariff rates are very much like taxes  To be entitled to the exemption, lands, buildings, and improvements of
which are imposed for both revenue raising and regulatory purpose religious and charitable institutions should “actually, directly and exclusively
- ‘flexible tariff clause’ – authority given to the President to adjust tariff rates under used” for religious and charitable purposes
Section 1608 of the Customs Modernization and Tariff Act (R.A. 10863) which is  Test of exemption from taxation is the use of the property for the purposes
the enabling law that made the aforesaid constitutional provision effective mentioned in the Constitution
 What is exempted from taxation is not the institution itself; those exempted
11) Tax Exemption of Properties Actually, Directly and Exclusively Used for Religious, from real estate taxes are lands, buildings, and improvements actually,
Charitable and Educational Purposes directly, and exclusively used for religious, charitable, or educational
- Article VI, Sec. 28 (3) of the 1987 Constitution purposes.
Charitable institutions, churches and parsonages or convents appurtenant thereto,  What is meant by this statement under the constitutional provision aforesaid is
mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, the direct and immediate and actual application of the property itself to the
directly, and exclusively used for religious, charitable, or educational purposes shall purposes for which the charitable institution is organized; not the use of the
be exempt from taxation. income from the property
- Reasons for exemption:  If real property is used for one or more commercial purposes, it is subject to
a. Difficulty of collecting a tax taxation
b. Impropriety of selling the graves of the dead to defray expenses of government
c. Churches and parsonages or convents appurtenant are exempt because such 12) Voting Requirements in Connection with the Legislative Grant of Tax Exemption
institutions perform work which would otherwise have to be carried on by the - Article VI, Sect. 28 (4) of the 1987 Constitution
public at the expense of the taxpayers and that expenses of such institutions
from taxation lessens rather than increases the burden upon other taxpayers
- ‘Charitable Institutions’
 An organization must meet the substantive test of charity to be qualified as
such
 Charity is essentially a gift to an indefinite number of persons which lessens
the burden of government
 Charitable instittuions provide for free, goods and services to the public which
would otherwise fall on the shoulders of the government
 Loss of taxes by the government is compensated by its relief from doing
public works which would have been funded by appropriations from the
Treasury
- ‘Actually, Directly and Exclusively Used’
 “Actually” – opposed to seemingly, pretendedly, or feignedly; truly in fact