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Unit 3: THE PHILIPPINE CONSTITUTION

3.0. Intended Learning Outcomes

a. Understand the legal basis of the Philippine Constitution

b. Explain the importance of a constitution as a citizen
c. Discuss the types of a constitution through a flowchart

3.1. Introduction

Before we start, let us have first an activity below.

Activity 1. Word for Word

Arrange the jumbled letters to see the hidden word. Write your answer beside
on each item.

1. FIREB - _________________________
2. ABORD - _________________________
3. TIEDFINE - _________________________
4. GINIRO - _________________________
5. GIRID - _________________________
6. SALTICE - _________________________
7. MORF – _________________________
8. DEVELVO - _________________________
9. DAMEN - _________________________
10. TUITIONSONCT - _________________________

A constitution is an aggregate of fundamental principles or established precedents

that constitute the legal basis of a polity, organization or other type of entity and commonly
determine how that entity is to be governed. When these principles are written down into a
single document or set of legal documents, those documents may be said to embody a written
constitution; if they are encompassed in a single comprehensive document, it is said to
embody a codified constitution. Some constitutions (such as that of the United Kingdom) are
uncodified, but written in numerous fundamental Acts of a legislature, court cases or treaties.

Constitutions concern different levels of organizations, from sovereign countries to

companies and unincorporated associations. A treaty which establishes an international
organization is also its constitution, in that it would define how that organization is
constituted. Within states, a constitution defines the principles upon which the state is based,
the procedure in which laws are made and by whom. Some constitutions, especially codified
constitutions, also act as limiters of state power, by establishing lines which a state's rulers
cannot cross, such as fundamental rights.

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In its broad sense, the term constitution refers to “that body of rules and principles in
accordance with which the powers of sovereignty are regularly exercise. As thus defined, it
covers both written and unwritten constitution.

3.2. Topics/Discussion

3.2.1. Nature and Purpose of a Constitution

1. Serves as the supreme or fundamental law. A constitution is the charter

creating the government. It has the status of a supreme or fundamental
law as it speaks for the entire people from whom it derives its claim to
obedience.

The constitution is binding on all individual citizens and all organs of

the government. It occupies the highest level in the hierarchy of laws. It
is the law to which all other laws must conform and in accordance with
which all private rights must be determined and all public authority
administered. It is the test of the legality of all governmental actions,
whether proceeding from the highest official or lowest functionary.

2. Establishes basic framework and underlying principles of government.

The constitution is also referred to as the organic or basic law being or
relating to the law by the virtue of which the government exists as such.

It prescribes the permanent framework of the system of government and

to assign to the different departments or branches, their respective
powers and duties, and to establish certain basic principles on which the
government is founded.

3. Designed to protect the basic rights of the people. The constitution is

primarily designed to preserve and protect the rights of individuals
against the arbitrary actions of those in authority. Its function is not to
legislate in detail but to set limitations otherwise unlimited powers of
the legislature or the government as a whole. It sets forth the basic rights
of the people which the government must observe, respect, and protect.

In your own point of view…

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Q2. Why do we need to have a constitution? Is it a need or a want? Write

your answer on the space provided below.
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3.2.2. Kinds of a Constitution

A constitution may be classified as follows;

Figure 1

Conventional or
Enacted
as to their ORIGIN
and HISTORY Cumulative or
Evolved
Constitution

Written
as to their FORM
Unwritten

Rigid or Inelastic
as to manner of
AMENDING them
Flexible or Elastic

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1. As to their origin and history:

a. Conventional or enacted – one which is enacted by a constituent assembly
or granted by a monarch to his subject.

b. Cumulative of evolved – one which is a product of growth or a long period

of development originating in customs, traditions, judicial decisions, rather
than from a deliberate and formal enactment.

2. As to their form:
a. Written – one which has been given definite written form at a particular
time, usually by a specially constituted authority called a “constitutional
convention”

b. Unwritten – one which is entirely the product of political evolution,

consisting largely of a mass of customs, usages and judicial decisions
together with a smaller body of statutory enactments of a fundamental
character, usually by bearing different dates.

3. As to manner of amending them:

a. Rigid or inelastic – one regarded as a document of special sanctity which
cannot be amended or altered except by some special machinery more
cumbrous than the ordinary legislative process.

b. Flexible or elastic – one which possesses no higher legal authority than

ordinary laws and which may be altered in the same way as other laws.

For you to know…

The Philippine constitution may be classified as
conventional or enacted, written and rigid or inelastic. It
was drafted by an appointive body called “Constitutional
Commission”

3.2.3. Advantages, Disadvantages and a Requisites of a good

Written Constitution

1. It has the advantage of clearness and definiteness over an unwritten

one. This is because it is prepared with great care and deliberation.
Such a constitution cannot be easily bent or twisted by the legislature
or by the courts, to meet the temporary fancies of the moment.

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Hence, the protection it affords and the rights it guarantees are apt
to be more secure. Moreover, it is more stable and freer from al
dangers of temporary popular passion.

2. Its disadvantages, lies in the difficulty of its amendment. This

prevents the immediate introduction of needed changes and may
thereby retard the healthy growth and progress of the state.

Requisites of a good Written Constitution

1. As to form, a good written constitution should be;

a. Brief – because if a constitution is to detailed, it would lose the

advantage of a fundamental law which in a few provisions
outlines the structure of the government of the whole state and
the rights of the citizens. It would probably never be understood
by the public. Furthermore, it would then be necessary to amend
it every once in a while, to cover many future contingencies.

b. Broad – because a statement of the powers and functions of

government and of the relations between the governing body and
the governed, required that it be as comprehensive as possible.

c. Definite – because otherwise the application of its provisions to

concrete situations may prove unduly difficult if not impossible.
Any vagueness which may lead to opposing interpretations of
essential features may cause incalculable harm. Civil war and the
disruption of the state may conceivably follow from ambiguous
expressions in a constitution.

2. As to contents, it should contain at least three (3) sets of provisions:

a. That dealing with the framework of government, its structure

and powers, and defining the electorate. This group of provisions
has been called the “constitution of government”.

b. That setting forth the fundamental rights of the people and

imposing certain limitations on the powers of the government as
a means of securing the enjoyment of these rights. This group has
been referred to as the “constitution of liberty”.

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c. That pointing out the mode or procedure for amending or

revisiting the constitution. This group has been called the
“constitution of sovereignty”.

3.2.4. The 1987 Philippine Constitution

1. FRAMING and Ratification

The 1987 constitution was drafted by 1986 Constitutional Commission
which was created under Proc. No. 3 issued on March 25, 1986. The Concom
was organize to provide details of its operations and establish procedure for
the ratification or rejection of the proposed new constitution. The Concom shall
be composed of not more than 50 representatives which shall be appointed by
the President. The members reached 48 – 42 men and 6 women with a
preponderance of lawyers. One (1) appointee withdraw because he was an
opposition appointee and Iglesia ni kristo did not accept the Presidents offer to
submit a nominee.

June 2, 1986 – the Concom convened and started its work to draft the
new constitution at the Batasang Pambansa Building in Diliman, Quezon City
using the 1899, 1935 and 1973 Constitution as its working drafts. October 12,
1986, the new constitution was approved culminating in 133 days. October 15,
1986, the ConCom held its final session to sign the 109 page of the drafted
constitution consisting of a preamble, 18 articles, 321 sections and about 2000
words and was presented to the President in two copies (English and Filipino)
February 2, 1987 – ratified by the people through PLEBISCITE and superseded
the 1973 constitution.

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2. MERITS and DEMERITS of an appointive framing body;

a. The ConCom was not expensive and time-consuming, and it was

thus practical because the country could not then afford the cost of
electing the delegates because of the luck of funds.

b. The most argument against this method is that an appointive body

is susceptible to the charge of lack of independence and the
suspicion of pressure and even manipulation by the appointing
power.

c. Need to cure defect in the Constitution - To have a truly democratic

and constitutional government, it is absolutely necessary that the
constitution be initially drafted by duly elected members of a
representative constituent assembly or constitutional convention
and later on approved by the people in a plebiscite. Some see the
need to straighten out the present Constitution which was drafted
by non-elective commissioners and ratified under the authority of a
revolutionary government.

3.2.5. Basic principles underlying the New Constitution

To have a truly democratic and constitutional government, it is absolutely

necessary that the constitution be initially drafted by duly elected members of
a representative constituent assembly or constitutional convention and later
on approved by the people in a plebiscite.

a. Recognition of the aid of Almighty God (Preamble)

b. Sovereignty of the people (Art. II, Sec. 1)
c. Renunciation of war as an instrument of national policy (Art. II, Sec. 2)
d. Supremacy of civilian authority over the military (Art. II, Sec. 3)
e. Separation of church and State (Art. Sec. 6)
f. Recognition of the importance of family (Art. XV, Sec. 13-14)
g. Guarantee of human rights
h. Government through suffrage
i. Separation of powers
j. Independence of judiciary
k. Guarantee of local autonomy
l. Public service, morality and accountability of public officers
m. Nationalization of natural resources
n. Non-suability of the State
o. Rule of the majority
p. Government of laws and not of men

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Rule of Constitution

1. CONCEPT

The observance of the rule of the majority is an unwritten law of

popular government. The wishes of the majority prevail over those of the
minority. It does not mean that the minority is left without rights like the
right to express their opinions or protest the acts of the majority although it is
bound to abide by the decision of the majority.

2. INSTANCES

A majority vote of all the respective members of the Congress is

necessary –

1. to elect the Senate President and the Speaker of the House of

Representatives
2. To a grant of amnesty
3. To pass a law granting tax exemptions
4. In case of a tie for Pres and VPres., it will again be chosen by a
majority vote.

3.2.6. Assessment

A. MULTIPLE CHOICE
Directions: Read and understand the questions carefully. Encircle the correct letter that
corresponds to your answers on your answer sheets.

1. Which define Constitution?

a. A body of rules and principles in accordance with which the powers are
exercised
b. A body of rules and principles in accordance with which the powers of
sovereignty are irregularly exercised
c. A body of rules and principles in accordance with which the powers of
sovereignty are regularly exercised
d. A body of rules and principles with the rights and privileges of the sovereign
people are exercised

2. A constitution is the charter creating the government. It has the status of a supreme
or fundamental law as it speaks for the entire people. What nature and purpose of a
constitution is emphasized?
a. Serves as the supreme or fundamental law
b. Establishes basic framework and underlying principles of government
c. Designed to protect the basic rights of the people
d. Serves as a tool for the revision and amendments of a new constitution

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3. The 1987 Constitution was drafted by the 1986 constitutional commission which was
created under what proclamation number?
a. Proclamation No. 1 c. Proclamation No. 3
b. Proclamation No. 2 d. Proclamation No. 4

4. A member of either house of the Congress may be expelled or suspended by their

fellow members. For a member to be expelled or suspended, how many votes of the
total number of all the respective members must concur with the expulsion or
suspension?
a. one-thirds b. two-thirds c. one-fourths d. two-fourths

5. The 1987 Constitution is composed of _______.

a. 18 Articles, 123 Sections, and about 2000 words
b. 18 Articles, 213 Sections and about 2000 words
c. 18 Articles, 321 Sections and about 2000 words
d. 18 Articles, 312 Sections and about 2000 words

B. Essay. (5 pts.)

1. Given the chance to play the role of a President of the Republic of the Philippines
for a day, will amend the 1987 Constitution? If YES, cite specific provision/s to be
amended, if NO, expound your answer by citing examples.

Begin your answer here.

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Unit 4: THE EVOLUTION OF PHILIPPINE TAXATION

4.0. Intended Learning Outcomes

d. Understand the legal basis of the Philippine Taxation

e. Explain the importance of taxation in a holistic perspective
f. Compare and contrast the setting of Philippine taxation from Pre-colonial era to
Spanish era through an editorial

4.1. Introduction

A tax is a compulsory financial charge or some other type of levy imposed on

a taxpayer (an individual or legal entity) by a governmental organization in order to
fund government spending and various public expenditures. A failure to pay, along
with evasion of or resistance to taxation, is punishable by law. Taxes consist
of direct or indirect taxes and may be paid in money or as its labour equivalent. The
first known taxation took place in Ancient Egypt around 3000–2800 BC. Most
countries have a tax system in place to pay for public, common, or agreed national
needs and government functions. Some levy a flat percentage rate of taxation on
personal annual income, but most scale taxes based on annual income amounts.

Most countries charge a tax on an individual's income as well as on corporate

income. Countries or subunits often also impose wealth taxes, inheritance taxes, estate
taxes, gift taxes, property taxes, sales taxes, payroll taxes or tariffs. In economic terms,
taxation transfers wealth from households or businesses to the government. This has
effects which can both increase and reduce economic growth and economic welfare.
Consequently, taxation is a highly debated topic.

Is a reality that all citizens must contend with, for the PRIMARY reason the
governments raise revenue from the people they govern to be able to function fully.
In exchange for the taxes that people pay, the government promises to improve the
citizens lives through good governance. Taxation is a government mechanism to
raise funds, develop and evolved through time.

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4.2. Topics/Discussion

4.2.1. Pre-colonial and Spanish Era

The Philippines may have abundant natural resources even before the
encroachment of the Spaniards, but our ancestors were mainly involved in a
subsistence economy and while the payment of tribute or taxes (buhis, buwis, handug)
or the obligation to provide labor services to the datus in some early Filipino
communities in the Philippines resembles taxation. The arrival of the Spaniards
altered this by imposing the payment of TRIBUTOS from the Filipinos. The purpose
is to generate resources to finance the maintenance of the islands, such as salaries of
government officials and the expenses of the clergy.

The difficulty faced by the Spaniards in revenue collection through the tribute
because of the dispersed settlements which they solve by introducing reduccion by
creating PUEBLOS where Filipinos are gathered and awarded lands to till. Later on
the encomenderos who received rewards from the Spanish government for their
services. Exempted from payment of tributos were, principales, alcaldes,
gobernadores, cabezas de barangay, soldiers, civil guards and government officials.

In your own point of view…

Q2. Why do such government impose taxes to its citizens? Is it a need or a

want? Write your answer on the space provided below.
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Toward the end of 16th century, the Manila-Acapulco trade was established
through the GALLEONS. One a year the Galleon will be loaded up with merchandise
from Asia and sent to New Spain – Mexico and back. Tax collection was still very poor
and subsidy from the Spain will be needed through the SITUADO REAL delivered by
the Mexican treasury to the Philippines through Galleons.
In 1884, the payment of tribute was put to stop and was replaced by a poll of
tax collected through a certificate of identification called the CEDULA PERSONAL.
This is required from every resident and must be carried while travelling. Unlike the
tribute the payment of cedula is by person not by family. Two direct taxes were added
in 1878 and imposed on urban incomes. URBANA is a tax on the annual rental value
of an urban estate. And INDUSTRIA taxes for salaries and dividends. The colonial
government also gains income from monopolies such as the sale of stamped paper,
manufacture and sale of the liquor, cockpits and opium, but the biggest of the state
monopolies was TOBACCO which began in 1781 to 1882. Only certain areas were
assigned to cultivate tobacco which the government purchases at a price dictated to
the growers.

pinoystop.org

When the Spaniards came to the Philippines, our ancestors were already
trading with China, Japan, Siam, India, Cambodia, Borneo and the Moluccas. The

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Spanish government continued trade relations with these countries, and

the Manila became the center of commerce in the East. The Spaniards closed the ports
of Manila to all countries except Mexico. Thus, the Manila–Acapulco Trade, better
known as the "Galleon Trade" was born. The Galleon Trade was a
government monopoly. Only two galleons were used: One sailed
from Acapulco to Manila with some 500,000 pesos worth of goods, spending 120 days
at sea; the other sailed from Manila to Acapulco with some 250,000 pesos worth of
goods spending 90 days at sea.

Forced labor was a

character of Spanish
colonial taxation in the
Philippines and was
required from the Filipinos.
Through the POLO
SYTEM, male Filipinos
were obliged to serve, a
burden that resulted to an
increase in death rate and
flight to the mountains. The
POLO and SERVICIOS
became lighter and
organized at the municipal buhayofw.com
level. Labor was on public
works, building of roads and bridges. Some were made to serve the municipal offices
or as night guards. Males were required to provide labor for 40 days a year and was
reduced to 15 days a year in 1884. they may opt in paying the “fallas” of three pesos
per annum which was usually lost to corruption and where known as CAIDAS or
DROPPINGS. The polos will be called prestacion personal (personal services) by the
second half of the 19th century.

4.2.2. Taxation under the American and Commonwealth

Regime

In 1936 – income tax rates were increased for an increase of 10,000 for net
income rates. In 1937, the cedula tax were abolished, but in 1940 a residence tax
were imposed on every citizen age 18 years old and on every corporation. In 1939,

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the Commonwealth government drafted the National Internal Revenue Code,

introducing major changes of the new tax systems as follows;

1. the normal tax of three percent and the surtax on income was replaced
by a single tax at a progressive rate.

2. personal exemptions were reduced

3. corporation income tax was slightly increased by introducing taxes on
inherited estates or gifts donated in the name of the dead person.

4. the cumulative sales tax was replace by a single turnover tax of 10% on
luxuries.

5. taxes on liquors, cigarettes, forestry products and mining were

increased.

6. dividends were made taxable.

The introduced tax structure was an improvement of the earlier system

introduced by the Americans., but still remained inequitable. The lower class still felt
the bulk of the burden of taxation while the upper class, the landed elite, the people
in political positions were able to maneuver the situation that will benefit them more.
As WW2 reached the Philippine shores, activity was put to stop, and the Philippines
bowed to a new set of administrators, the JAPANESE.

The Japanese military administration continued the tax administration

introduced during the Commonwealth. Foreign trade fell and the main sources of
taxation came from amusements, manufacturers, professions and business licenses.
The expenditures of the Japanese military government grew greatly, and they issued
MILITARY NOTES in order to cover the costs of the war.

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The impact of the war on the Philippine economy was effectively desperate. the
economic situation, was so problematic that by 1949, the American government
advised the adoption of direct taxation but the administration of Pres. Manuel Roxas
declined the proposal because it did not want to alienate its allies in Congress. The
impetus for economic growth came during the time of Pres. Elpidio Quirino through
the implementation of
import and exchange.
While the succeeding
presidencies of
Magsaysay, Garcia and
Macapagal promised to
study the tax structure
and policy of the country,
creation of a Tax
Commision in 1959 by
means of RA 2211.

As Corazon
Aquino took the helm of
the government after the Businesstips.ph
EDSA Revolution, she
reformed the tax system
through the 1986 Tax Reform Program. A major reform in the tax system introduced
under the term of Aquino was the introduction of the value added tax (VAT) The VAT
law was signed in 1986 and put to effect in 1988. During the term of Pres. Fidel Ramos,
he ventured into its own tax reform program in 1997 through the Comprehensive Tax
Reform Program and broadened the VAT through RA 7716. The succeeding term of
Pres. Estrada was to short to effect any change in the tax system when his Vpres Gloria
Arroyo swept to power through EDSA revolution, as president she introduces the
EVAT or the Expanded Value Added Tax which was signed into law through RA 9337.
As Pres. Benigno Aquino came, he ventured into the adjustment of tax particularly on
the excise tax on liquor and cigarettes the so-called SIN TAX REFORM.

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Sample of Japanese Military notes during their occupation in the Archipelago.

4.2.3. Some Taxes in the Philippines

1. Personal Income Tax. Income of residents in Philippines is taxed

progressively up to 32%. Resident citizens are taxed on all their net income
derived from sources within and without the Philippines. For nonresident,
whether an individual or not of the Philippines is taxable only on income
derived from sources within the Philippines.

• The above rates apply to individuals who derive income from business (including
capital gains from the sale transfer or exchange of shares in a foreign corporation) or
from the practice of a profession.

• Individuals holding managerial and highly technical positions employed by RHQs1 ,

ROHQs2 , multinational companies and offshore business units are taxed at 15% on
their gross income.

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Income in Philippines is divided into the following three categories which are
taxed separately, as summarized below.

1. Compensation employment income: This income is taxed at progressive

rates on gross income after deduction of personal and additional
exemptions but without deductions for expenses.

2. Passive income: This income, including dividends and interest, is subject to

tax at 7.5%.

3. Business income and professional income: This income is taxed at

progressive rates on net business income after deduction of certain specified
expenses.

2. The corporate income. This tax rate is both for domestic and resident
foreign corporations is 30% based on net taxable income. Excluded from the
income tax are dividends received from domestic corporations; interest on
Philippine currency bank deposit and yield from trust funds. It is important
to note that foreign corporations, whether resident or nonresident, are
taxable only on income derived from sources within the Philippines.

3. Withholding Tax.

• All other taxable income earned by domestic and resident foreign

corporations is subject to a 20% final withholding tax. However,
Regional operating headquarters are taxed at 10% on taxable
income. Special economic zone enterprises duly registered with
the Philippines Economic Zone Authority are taxed at the rate of
5% on gross income.

• The net capital gains from the sale of shares of stock of a domestic
corporation are taxed on a per transaction basis at the rate of 5%
on the first PhP 100,000 and 10% in excess of said amount. On the
other hand, the sale of shares of stock of a domestic corporation
through the Philippine Stock Exchange or through the initial
public offering is subject to a percentage tax on the transaction at
the rate of 0.5% of the selling price.

• The sale of land, building and other real properties classified as

capital asset is subject to 6% final capital gains tax based on the
gross selling price.

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• Any branch profit to be remitted to the Head Office is

additionally taxed at the rate of 15%.

4. Value Added Tax/ Sales Tax. A 12% value added tax (VAT) of the gross
selling price is imposed to all importation, sale, barter, exchange or lease of
goods or properties and sale of services.

The term 'Gross selling price' means the total amount of money or its
equivalent that the purchaser pays or is obligated to pay to the seller in
consideration of the sale, barter or exchange of the goods or properties,
excluding the value added tax.

5. Tax Incentives for SMEs

1. Direct Tax.
Tax incentive for importers and exporters –
Tax credits are available for taxes and duties paid on purchases
of raw materials of products for export, domestic capital equipment,
domestic breeding stock and genetic materials.
A tax credit of 25% of the duties paid on raw materials and capital
equipment and/or spare parts.

Tax incentives also available to enterprises registered with the Philippine

Economic Zone Authority (PEZA).

These incentives are shown below:

- 4 to 8 years income tax holiday. A 5% tax on the modified gross

income is imposed after the end of the income tax holiday.

- Tax and duty exemption on imported capital equipment and

raw materials. - National and local tax exemption.

- Tax rebate for the purchase of domestic capital good.

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2. Indirect Tax Under the Investment Priority Plan (IPP), SME owners
shall be eligible for the following incentives.

- An exemption from wharfage dues and export tax, duty import

and fees.
- Additional deduction for labor expense (ADLE).
- Additional deduction for necessary and major infrastructure
works.

Excise tax on exported goods produced or manufactured locally can be credited

or refunded upon submission of the proof of actual exportation and upon receipt of the
corresponding.

4.2.4. Assessment

C. MULTIPLE CHOICE
Directions: Read and understand the questions carefully. Encircle the correct letter that
corresponds to your answers on your answer sheets.

6. What is TRUE about taxation?

e. A compulsory financial contribution
f. A levy imposed on a taxpayer
g. A mandatory charge in a form of goods and services
h. A fund used for salary and travel expenses of the government officials

7. Mr. Amelick is a Canadian residing the in Philippines. He owns and runs businesses
in the country with profits doubled with his capital outlayed. Can the government
impose tax to Mr. Amelick?
e. No, because he is a Canadian citizen
f. No, because the government is not a co-owner of his businesses
g. Yes, because he is residing in the Philippines
h. Yes, because his profits is doubled

8. Why do governments levy taxes to its citizens?

c. Because it is for the luxury of the government officials
d. Because the collected fund will be used to buy goods and services by the
President
e. Because it is under the law and the constitution
f. Because it is the President’s and Vice Presidents will

9. This is the resemblance of the Spanish tax during the pre-colonial era in the
Philippines.
a. Reduccion
b. Tributos

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c. Situado
d. Cedula Real

10. During the Spanish settlement in the Philippines, the payment of buwis was
replaced through a certificate of identification called ____________.
a. Industria
b. Urbana
c. Cedula Real
d. Polo Y Serbisyo

D. Essay. Expound your answer by giving concrete example/s. (5 pts.)

2. Why is levying of taxes by the government is a salient factor to make or break the
country’s development locally and or internationally?

Begin your answer here.

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E. Editorial On the Go
Direction: Using any type of a pen make an editorial soft or hard presentation
depicting the comparison of the Philippine taxation from Pre-colonial to Spanish Era.
Put your presentation inside the box below or you may use other sheet of paper.

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3 Readings in Philippine History

Pre-colonial Setting

C. M. D. Hamo-ay
 69
3 Readings in Philippine History

Spanish Era

C. M. D. Hamo-ay