II.
Legal and Constitutional Basis of each major The process or means by which the sovereign,
component of Philippine Public Finance
TAXATION
Taxation is the inherent power of the
sovereign.
4 Element to say that the country is a
SOVEREIGN (note: the country should acquire
all of the elements, it must be complete)
- People – number of people living
- Territory – land
- Government – governing an organized
community, generally a state.
- Sovereignty – authority/power
3 fundamental POWER (once, a country
acquires 4 elements to be a sovereign
automatically it grants inherent power)
- Police power – the government's
power to control laws and property for
the public good. It is also a right to
defend the country and its citizens
against dangers to public health and
safety.
- Taxation power – the ability of a
government to impose and collect
taxes.
- Power of eminent domain – the power
of the government to take private
property and convert it into public use,
referred to as a taking. The Fifth
Amendment provides that the
government may only exercise this
power if they provide just
compensation to the property owners.
It is also defined as the act of levying a tax.
through its law-making body, raises income to
defray the necessary expenses of government.
SOURCES
a. Constitution
⮚ The power of taxation is merely regulated by
the Constitution.
Constitution is a supreme law and it was
respected by the people and the government.
This means the constitution brings balance and
control for abusing the human rights and power
of the government.
Hierarchy of law
- Constitution (saligang batas)
- Law made by the congress under the
constitution
- Executive order and administrative
order
⮚ Taxation can be exercised even without the
Constitution.
- since taxation is an inherent power of the
sovereign meaning even without the
constitution the sovereign needs taxation as a
source to sustain the need of the people in the
country such as expenses for health,
education, securities, and other programs of
the government.
b. Laws and Statutes
⮚ Tax laws passed by Congress.
o Republic Acts (RA) - a piece of legislation used
to create policy in order to carry out the
principles of the Constitution.
o Presidential Decrees (PD) - a piece of
legislation used to create policy in order to carry
out the principles of the Constitution.
o Batas Pambansa (BP) - also known by its
nickname, the Batasan, was the former
parliament of the Philippines, established as an
interim assembly in 1976 and finally as an
official body in 1981. Under the 1973
constitution, it replaced the former Congress
established under the 1935 Commonwealth
constitution.
o Executive Orders (EO) - n order issued by a
government's executive on the basis of
authority specifically granted to the executive
branch (as by the U.S. Constitution or a
congressional act) but does not create law but
can be enforced like a law.
o National Internal Revenue Code (NIRC) - the
official "consolidation and codification of the
general and permanent laws of the United
States," as the Code's preface explains. 1
Commonly referred to as the IRS code or IRS tax
code, the laws in Title 26 are enforced by the
Internal Revenue Service (IRS).
c. Administrative Rules and Regulations
Administrative - Branch of law governing the
creation and operation of administrative
agencies.
⮚ Administrative rulings refer to the less
general interpretation of tax laws - they
interpret or enact, and implement the tax laws
base on the law created from the legislative
issued on a timely basis by the Commissioner of
the Bureau of Internal
Revenue (BIR).
⮚ Issued by request of the taxpayer to clarify
certain provisions of tax law.
⮚ BIR Rulings
d. Administrative Rulings and Tax Lax options
⮚ These are intended to clarify or explain the
law and carry into effect its general provisions
by providing details of administration and
procedure.
⮚ Issued by the Secretary of Finance upon the
recommendation of the Commissioner of BIR
⮚ Revenue regulations
- the administrative ruling and tax lax option
are part of explaining and detailing the
regulation plan and changes in the policy we
know that the administrative role to enforce the
law by applying it in the department
e. Judicial Decisions
⮚ These refer to the decisions of the Court of
Tax Appeals and the
Supreme Court applying or interpreting tax
laws.
⮚ Part of the jurisprudence on taxation and the
legal system of the Philippines.
- Every tax law or rule and regulation
should pass under the court of tax
appeal for judicial decision.
⮚ Appealable to the Supreme Court
3 branches of government
o Executive Branch - The branch of
government that oversees the carrying
out of the laws. Ex; President
o Legislative Branch - the branch of
government having the power to make
laws; the legislature. The legislative
branch is divided into two “The house
of representative and the Senate”
o Judicial Branch – The branch of
government refers to the federal
judiciary system of federal courts and
the Supreme Court. This is the highest
federal court in the land and is
responsible for handling major legal
appeals and dealing with bills that may
be unconstitutional.