LEI ANN P.

VENTURA
TAXATION 1

1. The power of taxation is distinguished from police power and eminent

domain as follows:

As to the amount of imposition, the tax that may be imposed is unlimited,

while the amount that may be imposed under the police power is limited, to
the extent of the cost of the regulation, while in eminent domain, there is no
exaction or no particular imposition since private property is taken instead.

As to purpose of the imposition, the power of taxation is exercised for the

purpose of raising revenues, while police power is exercised to promote the
general welfare of the citizenry through regulations and in eminent domain,
the power is exercised to facilitate the State’s need of property by the taking
of private property for public use.

As to the effect of imposition, the power of taxation covers all persons and
property under its jurisdiction, while police power has a broader scope, it
may not only cover persons and property but extend to rights and privileges.
On the other hand, the power of eminent domain only covers particular or
specific property which is the subject of the taking.
2. For a tax to be valid, it has to meet the following requisites:

1. First, it has to be levied for a public purpose.

2. Second, the rule on uniformity of taxation must be followed.
3. Third, the subjects to be taxed must be within the jurisdiction of the taxing
authority.
4. Fourth, the collection methods must undergo the requirements of notice
and hearing.
5. Lastly, the tax must not infringe on the inherent and constitutional
limitations on the power of taxation.
3. The constitutional limitations on the power of taxation are the following:

1. Due process of the law

2. Equal protection of the laws
3. The Rule on Uniformity of Taxation
4. The non-impairment of contracts
5. The non-imprisonment for non-payment of poll taxes
6. Appropriation, revenue and tariff bills must originate exclusively in the
House of Representatives
7. Exemption from property tax of properties of religious, educational and
charitable institutions
8. Tax exemptions granted to non-stock and non-profit educational
institutions
9. Freedom of the press clause
10. Freedom of religion clause
IV. As enunciated in Abra Valley College vs Aquino , the grant of exemption may also
apply even though the purpose for which it generates is only incidental.

V. As enunciated in the case of Lung Center vs Quezon City, the phrase “actually,
directly, and exclusively” used for charitable purposes meant that the grant of tax
exemption may only be availed of if the purpose for which the institution was
primarily constituted for uses the property “actually, directly and exclusively, or
solely with that purpose, to the exclusion of others.

vi.
 VII
No. A taxpayer cannot question the wisdom and expediency of a decree
imposing a tax.
The power of taxation is the least limitable among the inherent sovereign
powers of the state. Taxes, being the lifeblood of every existing
government, relies heavily upon it for its existence. Without taxes, the
government may cease to operate and may not deliver the public services,
the very reason why its sovereign power exists.

When a taxpayer always shows up to question every tax decree, the cycle
of litigation will never end.

Thus, the government cannot await the results of a litigation before it can
actually exercise the power.
 VIII.
As stated in the case of Gomez vs Palomar, since the power of taxation may be
delegated to the select administrative agencies of the government, the latter is
given the discretion to adopt tax measures within their jurisdiction, provided that
the tax measures are within the ambit of the delegation conferred to them.

IX. Yes. Removing the VAT exemption of the press is valid. It is a valid exercise
of the taxing power.
Classification is allowed by the Constitution for as long as it is
germane to the purposes of the law. A tax does not cease to be valid
merely because it regulates, discourages or deters activities of one
class.

x.

The Symbiotic Relationship Principle, as enunciated in CIR vs Algue, means that the
relationship of the taxpayer and the taxing authority is mutually existent. The latter
imposes some burden for its existence while the former carries the burden as
payment for the benefits and privileges it gives. This is what the taxpayer owes to
the taxing authority for a civilized society.

xi. As a general rule, taxes are not subject to compensation since the government
and the taxpayer are not creditor and debtor of each other.

The estate may only be liable to the extent of the inheritance of the intestate heir.

xii. Tax evasion is distinguished from tax avoidance in the following manner.

Tax evasion is the act of fraudulently adopting methods to defeat tax

liabilities. It connotes bad faith and evil mind.

On the other hand, tax avoidance is taking advantage of legally permissible

means to reduce tax liabilities.
 Tax evasion arises when a taxpayer understates his gross income and
overstates its deductions of expenses.

Tax avoidance arises when a taxpayer avails of tax discounts to its prime
advantage.

xiii. The Principles of a sound tax system are the following:

Fiscal Adequacy. Taxes must be sufficient or adequate to meet its public
needs.
Administrative Feasibility. Taxes must be effectively enforced.
Theoretical Justice. Taxes must be based on one’s ability to pay.

xiv. No. Double taxation is not a valid defense against the legality of a tax measure.
In the first place, double taxation is not constitutionally prohibited. In our
jurisdiction, it is permissible. The legality or illegality of a tax measure can only be
questioned on the grounds of constitutional infirmities. In the absence of such
infirmity, double taxation cannot be invoked to declare a tax measure illegal or
invalid.

No. There is no double taxation when an item of income is taxed within the
Philippines and the same income is taxed without the Philippines.

There is double taxation only when a subject of taxation is being taxed twice when
it should have been taxed only once, by the same taxing authority, and within the
same jurisdiction. One example is when the national government taxes one
property and the same property is taxed in the city or local government where the
property is located.

xv. The nature of the power of taxation is that it is an inherent power of sovereignty.
It exists by virtue of the sovereignty it holds. Thus, the power is comprehensive,
unlimited, plenary and supreme.

It is also exclusively legislative. The power of taxation is vested in the Legislature. It

is neither vested in the executive nor judicial departments. Thus, only the
legislature rests upon the plenary power of choosing who to tax, where to tax, what
to tax and so on.