Principles Of Taxation

Mr. Clieford Perez, CPA, MBM

Relevant Doctrines in
Taxation
Doctrines
 Lifeblood Doctrine – Without revenue raised from taxation, the
government will not survive, resulting in detriment to society.
Without taxes, the government would be paralyzed for lack of
motive power to activate and operate it. (CIR v. Algue, Inc., G.R.
No. L-28896, February 17, 1988, 158 SCRA 9)
 Necessity Theory – The exercise of the power to tax emanates
from necessity, because without taxes, government cannot fulfill its
mandate of promoting the general welfare and well being of the
people. (CIR v. Bank of Philippine Islads, G.R. No. 134062, April
17, 2007, 521 SCRA 373) 3
Doctrines
 Benefits received principle – Taxpayers receive benefits from
taxes through the protection the State affords to them. For the
protection they get arises their obligation to support the
government through payment of taxes. (CIR v. Algue, Inc., G.R.
No. L-28896, February 17, 1988, 158 SCRA 9)
 Doctrine of symbiotic relationship - Taxation arises because of
reciprocal relation of protection and support between the State and
taxpayers. The State gives protection and for it to continue giving
protection, it must be supported by the taxpayers in the form of
taxes. (CIR v. Algue, Inc., G.R. No. L-28896, February 17, 1988,
158 SCRA 9) 4
Manifestation of the Lifeblood Theory

 Rule of “No Estoppel against the government”

 Collection of taxes cannot be enjoined (stopped) by injunction.
 Taxes could not be the subject of compensation or set-off.
 Right to select objects (subjects) of Taxation
(Determined in Congress: Subject or object to be taxed, purpose,
amount or rate, kind, apportionment, situs and manner, means and
agencies of collection of the tax)
 A valid tax may result in the destruction of the taxpayer’s property.
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Manifestation of the Lifeblood Theory

Read: G.R. No. L-25043 - April 26, 1968, Roxas, et al. v.

CTA, et al. (
https://lawphil.net/judjuris/juri1968/apr1968/gr_l-25043_19
68.html
)

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Sources of Tax Laws

 Philippine Constitution
 National Internal Revenue Code (NIRC)
 Tariff and Customs Code
 Local Government Code (Book II)
 Local Tax Ordinances
 Tax Treaties and International Agreements
 Special Laws
 Decisions of the Supreme Court and the Court of Tax Appeals
 Revenue rules and regulations and administrative rulings and opinions
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Simple Exercises
Case to Ponder:
Congress passed a sin tax law that increased the tax rates on liquor by 400%. The
law was thought to be sufficient to drive many distillers and distributors of liquors
out of business, and was questioned in court by a distiller company that would go
out of business because it would not be able to pay the increased tax. The distiller
company is ________.

A. wrong because taxes are the lifeblood of the government

B. wrong because the law recognizes that the power to tax is the power to destroy
C. correct because no government can deprive a person of his livelihood
D. correct because Congress, in this case, exceeded its power to tax

AND EXPLAIN WHY!?

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Third Topic is partially
completed.
Thank you!