A license tax or fee constitutes a curtailment of 2. Rule Requiring That Appropriations, Revenue And 8.
And 8. Exemption From Taxes Of The Revenues And
religious freedom if imposed as a condition for its
exercise.(American Bible Society vs. City of Manila,
GR No. L-9637, April 30, 1957)
1. Non-Impairment Of Contracts (Art. III, Sec. 10,
1987 Constitution)
No law impairing the obligation of contract shall be
passed.(Sec. 10, Art. III, 1987 Constitution)
The rule, however, does not apply to public utility
franchises or right since they are subject to
amendment, alteration or repeal by the Congress
when the public interest so requires. (Cagayan
Electric & Light Co., Inc. v. Commissioner, GR No.
60216, September 25, 1985)
RULES:
a. When the exemption is bilaterally agreed upon
between the government and the taxpayer – it
cannot be withdrawn without violating the non-
impairment clause.
b. When it is unilaterally granted by law, and the
same is withdrawn by virtue of another law – no
violation.
c. When the exemption is granted under a franchise
– it may be withdrawn at any time thus, not a
violation of the non-impairment of contracts
2. Presidential power to grant reprieves,
commutations and pardons and remit fines and
forfeitures after conviction (ART. VII, SEC. 19, 1987
CONSTITUTION)
3. No taking of private property without payment of
just compensation.
A. SPECIFIC OR DIRECT CONSTITUTIONAL
LIMITATIONS
1. Non-Imprisonment For Debt Or Non-Payment Of
Poll Tax (Art. III, Sec. 20, 1987 Constitution)
Example of Poll tax – Community Tax
TAX TARIFF/
CUSTOMS
DUTIES
Tariff Bills Shall Originate Exclusively From The Assets Of Educational Institutions, Including Grants,
House Of Representatives (Art. VI, Sec. 24, 1987 Endowments, Donations And Contributions.
Constitution)
(Art. XIV, Sec. 4(3) And (4), 1987 Constitution)
3. Uniformity, Equitability And Progressivity Of
Taxation (Art. VI, Sec. 28(1), 1987 Constitution)
Uniformity– all taxable articles or kinds of property TAX
of the same class are taxed at the same rate.
Taxes are enforced proportional contributions from
Equitability– the burden falls to those who are more persons and properties, levied by the State by virtue
capable to pay. of its sovereignty for the support of the government
and for all its public needs (1 Cooley 62).
Progressivity– rate increases as the tax base
increases. Characteristics of taxes (SLEP4)
Q: Is a tax law adopting a regressive system of 1. It is levied by the State which has jurisdiction over
the person or property;
taxation valid?
2. It is levied by the State through its Law-making body;
3. It is an Enforced contribution not dependent on the
A: Yes. The Constitution does not really prohibit the
will of the person taxed;
imposition of indirect taxes which, like the VAT, are
4. It is generally Payable in money;
regressive. The Constitutional provision means
5. It is Proportionate in character;
simply that indirect taxes shall be minimized. The 6. It is levied on Persons and property;
mandate to Congress is not to prescribe, but to 7. It is levied for a Public purpose.
evolve, a progressive tax system.(EVAT En Banc
Resolution, Tolentino, et al vs Secretary of Finance,
October 30, 1995) Requisites of a valid tax
4. Limitations On The Congressional Power To 1. It should be for a public purpose;
2. It should be uniform;
Delegate To The President The Authority To Fix Tariff
3. That either the person or property being taxed be
Rates, Import And Export Quotas, Etc. (Art. VI, Sec. within the jurisdiction of the taxing authority;
28(2), 1987 Constitution) 4. The tax must not impinge on the inherent and
constitutional limitations on the power of taxation.
5. Tax Exemption Of Properties Actually, Directly
And Exclusively Used For Religious, Charitable And TAX as distinguish from other forms of exactions
Educational Purposes. (Art. VI, Sec. 28(3) 7, 1987
Constitution)
6. Voting Requirement In Connection With The
Legislative Grant Of Tax Exemption (Art. VI, Sec.
28(4), 1987 Constitution)
7. Non-Impairment Of The Jurisdiction Of The
Supreme Court In Tax Cases (Art. VIII, Sec. 2 And
5(2)(B), 1987 Constitution)
Coverage An all-embracing Only a kind of
term to include tax therefore
various kinds of limited
enforced coverage
contributions
imposed upon
persons for the
attainment of public
purpose
Object Persons, property, Goods imported
 after the start commencement
of the taxpayer person
of of the business
etc. or exported business assessed
Purpose For the support Contribution to
TAX TOLL of the
BAR Q 2004
Definition An enforced A consideration the government cost of public
proportional paid for the use improvement
Q: A municipality, BB, has an ordinance
contribution of which requires that all stores, restaurants, and other establishments Scope Regular Exceptional as
selling liquor should
frompay a fixed annual fee of P20,000. Subsequently, the municipal board proposed an
a road, bridge exaction to
ordinance imposingpersons
a salesand
tax equivalent
or to 5% of the amount paid for the purchase or consumption of liquor time and
in stores, restaurants and other
property for establishments.
the like, of The municipal mayor, CC, refused to sign the ordinance on the locality
ground that it would constitute double
public taxation. Is the refusal of the mayor justified? Reason briefly. (2004
a public
Bar) purpose/s nature TAX DEBT
Basis Demand of Demand of Basis Obligation Obligation
sovereignty proprietorship A: No. The refusal of the mayor is not justified. The created by law based on
Amount Generally, the Amount is impositions are of different nature and character. The contract,
amount is limited fixed annual fee is in the nature of a license fee imposed express or
unlimited to the cost and through the exercise of police power while the 5% tax implied
maintenance of on purchase or consumption is a local tax imposed Assignability Not assignable Assignable
public through the exercise of taxing powers. Both a license fee Mode of Payable in Payable in
improvement and a tax may be imposed on the same business or Payment money or in money or in
Purpose For the support For the use of occupation, or for selling the same article and this is not kind kind
of another’s in violation of the rule against double taxation Set-Off Not subject to subject to
the government property (Campania General de Tabacos de Filipinos v. City of set-off set-off
Authority May be May be Manila, 8 SCRA 367 [1963]). Effect of Non- May result in No
imposed imposed by payment imprisonment imprisonment
by the State private ----- (except when
only individuals debt
or entities TAX SPECIAL arises from
ASSESSMENT crime)
Nature An enforced An enforced Interest Bears interest Interest
TAX LICENSE FEE proportional proportional only if depends
Purpose Imposed to For regulation contribution contribution delinquent upon the
raise and control from from written
revenue persons and owners of lands stipulation of
Collected under Collected under property for especially those the
Basis
the power of police power public who are parties
taxation purpose/s peculiarly Prescription Governed by Governed by
benefited by the special the
Amount Generally, Limited to the
public
amount necessary KINDS OF TAXES prescriptive ordinary periods
improvements periods of
is unlimited expenses of
Subject Imposed on Levied only on provided for in prescription
regulation and As to object:
control persons, land the or
NIRC
1. Personal/Poll Capitation tax – A fixed
property rights
Subject Imposed on Imposed on the amount imposed upon all persons, or upon all
or
persons, exercise of a persons of a certain class, residents within a
transactions
property, right or specified territory, without regard to their
Person liable A personal Not a personal
rights or privilege property or occupation. E.g. Community tax
transaction liability liability of the
Effect of Non- Non-payment Non-payment
Payment does makes the
not make the business illegal
business illegal
Time of Normally paid Normally paid
Payment before the
 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. E.g. Real
Property tax
3. Privilege/Excise tax – a charge upon the
performance of an act, the enjoyment of a
privilege, or the engaging in an occupation. An
excise tax is a tax that does not fall as
property tax. E.g. Income tax, Estate tax,
Donor’s tax, VAT
NOTE: This is different from the excise tax under the
NIRC which is a business tax imposed on items such as
cigars, cigarettes, wines, liquors, frameworks, mineral
products, etc.
As to burden or incidence:
1. Direct
2. Indirect
taxes for which the buyer is directly liable (CIR v. PLDT,
478 SCRA 61).
Indirect taxes, like VAT and excise tax, are different
from withholding taxes (direct taxes). To distinguish,
indirect taxes, the incidence of taxation falls on one
person but the burden thereof can be shifted or passed
on to another person, such as when the tax is imposed
upon goods before reaching the consumer who
ultimately pays for it. On the other hand, in case of
withholding taxes, the incidence and burden of taxation
fall on the same entity, the statutory taxpayer. The
burden of taxation is not shifted to the withholding agent
who merely collects, by withholding, the tax due from
income payments to entities arising from certain
transactions and remits the same to the government.
Due to this difference, the deficiency VAT and excise tax
cannot be “deemed” as withholding taxes merely
because they constitute indirect taxes (Asia
International Auctioneers, Inc. v. CIR, G.R. No. 179115,
September 26, 2012).
1. National tax – Tax levied by the National Government.
E.g. Income tax, Estate tax, Donor’s tax, VAT, Other
Percentage taxes and Documentary Stamp taxes
2. Local or Municipal – A tax levied by a local government.
E.g. Real Estate tax and Community tax
As to graduation:
1. Progressive – A tax rate which increases as the tax
base or bracket increases. E.g. Income tax, Estate tax
and Donor’s tax
2. Regressive – The tax rate decreases as the tax base
or bracket increases.
3. Proportionate – A tax of a fixed percentage of
amounts of the base (value of the property, or amount
of gross receipts etc.) E.g. VAT and Other Percentage
taxes.
----------------------------END OF COVERAGE--------------
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
As to tax rates: a
BAR Q d
Q: Distinguish a direct from an indirect tax. Give 1.
examples (Bar 1994, 2000, 2001, 2006). S o
p r
A: e
(1) Direct taxes are demanded from the very person c
who, as intended, should pay the tax which he cannot i n
shift to another. f u
i m
(2) Indirect taxes are demanded in the first instance c b
from one person with the expectation that he can shift e
the burden to someone else, not as a tax but as a part r
– ,
of the purchase price.

------ t o
a r
Income tax, estate and donor's tax are considered as x
direct taxes. On the other hand, value-added tax, excise
tax, other percentage taxes, and documentary stamp b
o y
tax are indirect taxes.
f
NOTE: The liability for payment of the indirect taxes lies s
only with the seller of the goods or services, not in the a o
buyer thereof. Thus, one cannot invoke one’s exemption m
privilege to avoid the passing on or the shifting of the f e
VAT to him by the manufacturers/suppliers of the i
goods. Hence, it is important to determine if the tax x s
exemption granted specifically includes the indirect tax, e t
otherwise, it is presumed that the tax exemption d a
embraces only those
n
a d
m a
o r
u d
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f
i
m w
p e
o i
s g
e h
d t

b o
y r

t m
h e
e a
s
h u
e r
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
e s y
m
e 2.
w
n A
i
t d
t
.
h
v
E a
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i
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t
p
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o r u
r t i
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
r i e
e m
s a
c
t
a
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t n
h
e t
b
h
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e
i
n
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t v
e
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m
n
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.
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f
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g
a .
p
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s
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y
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s
b t
o
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r
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a r
p e
t
p
a
r
t x
a
h ,
i
e
s
e I
r a n
s m c
o o
u m
t
n e
o
t
t
e
d a
s
u x
t
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
,
a a
D d t
o t
n a
v
o c
a
r h
l
’ e
o
s d
r
.
e
t m
a
As to purposes:
x
a
n 1.
a d G
n / e
d o n
r e
E r
s s a
t p l
a e /
t c F
e i i
f s
i c
t a
c
a l
x
d
3. e o
M p r
i e
x n R
e d e
d i v
n e
g n
–
u
o e
a
n
–
c
t
h
h t
o
e a
i
c x
e c
o i
n m
b
d p
e
i o
t
t s
w
i e
e
o d
e
n
n
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
. S
u
s
m
o I
p
l n
t
e c
u
l o
a
y m
r
e
y
f
o t
–
r a
x
t
t
a
h a
x
e n
d
l
g
e
e D
v
n o
i
e n
e
r o
d
a r
l ’
s f
o
p
r
u t
r a
p x s
o p
s 2. e
e S c
p i
e f
o
c i
f
i c
a
t l
p
h
u
e
/ r
p
g o
R
o s
e
v e
g
e ,
u
r
l
n
a i
m
t .
e
o e
n
r .
t
y
.
t
o o
E
r
.
g a
TAXATION LAW REVIEWER
Based on the lectures of Atty. Gerald Yu
SRT Faelnar Notes
c r
h t
i a
e i
v n
e
d
s u
o t
m i
e e
s
s
o o
c n
i
a
i
l
m
p
o o
r r
t
s
e
c
As to scope or authority to impose:
o
n
o
m
i
c

e
n
d
s

E
.
g
.

T
a
r
i
f
f

a
n
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