Professional Documents
Culture Documents
2011-2012
st
c.
Sec. 240, LGC. Special Levy by Local Government Units. - A province, city or municipality may impose a special levy on the lands comprised within its territorial jurisdiction specially benefited by public works projects or improvements funded by the local government unit concerned: Provided, however, That the special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements, including the costs of acquiring land and such other real property in connection therewith: Provided, further, That the special levy shall not apply to lands exempt from basic real property tax and the remainder of the land portions of which have been donated to the local government unit concerned for the construction of such projects or improvements. Republic v. Bacolod-Murcia. [petitioners: purchase of the Insular Sugar Refinery with money from the Philsugin Fund; fund is for our benefit] The appellants' refusal to continue paying the assessment under Republic Act 632 may not rightly be equated with a taxpayer's refusal to pay his ordinary taxes precisely because there is a substantial distinction between a "special assessment" and an ordinary tax. The purpose of the former is to finance the improvement of particular properties, with the benefits of the improvement accruing or inuring to the owners thereof who, after all, pay the assessment. The purpose of an ordinary tax, on the other hand, is to provide the Government with revenues needed for the financing of state affairs. Thus, while the refusal of a citizen to pay his ordinary taxes may not indeed be sanctioned because it would impair government functions, the same would not hold true in the case of a refusal to comply with a special assessment. Tax v. Toll Tax Toll Definition Enforced proportional contributions from A sum of money for the use of something, a persons and property consideration which is paid for the use of a property Basis Sovereignty Proprietorship Amount No limit Depends upon the cost of construction or maintenance of the public improvement used Authority Imposed only be government May be imposed by government or private entities Sec. 155, LGC. Toll Fees or Charges. - The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physicallyhandicapped, and disabled citizens who are sixty-five (65) years or older. When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use. Tax v. Tariff and Customs Duties Garcia v. Exec. Sec. [The President issued an EO which imposed, across the board, including crude oil and other oil products, additional duty ad valorem.] Customs duties which are assessed at the prescribed tariff rates are very much like taxes which are frequently imposed for both revenue-raising and for regulatory purposes. Thus it has been held that customs duties is the name given to taxes on importation and the exportation of commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign county. The levying of customs duties on imported goods may have in some measure the effect of protecting local industries actually exist and are producing comparable food. Simultaneously, however, the very same customs duties inevitably have the effect of producing governmental revenues. Customs duties like internal revenue taxes are rarely, if ever, designed to achieve one policy objective only. Most commonly, customs duties, which constitutes taxes in the sense of exactions the proceeds of which become public funds have either or both the generation of revenue and the regulation of economic social activity as their moving purposes and frequently, it is very difficult to say which, in a particular instance, is the dominant objective. In the instant case, since the Philippines in fact produces 10-15% of the crude oil consumed here, the imposition of increased tariff rates and a special duty on imported crude oil and imported oil products may be seen to have some protective impact upon indigenous oil production. For the effective price of imported crude oil and oil products are increased. At the same time, it cannot be gainsaid that substantial revenues for the government are raised by the imposition of such tariff rates or special duty. Obligation to pay Tax v. Obligation to Pay Debt Tax Debt Basis Law Contract or judgment Effect of non-payment Imprisonment No imprisonment for failure to pay a debt Mode of payment Generally, money Money, property, services Assignability Not assignable Assignable Interest Does not draw interest unless delinquent Draws interest if stipulated or delayed Authority Imposed by public authority Can be imposed by private individuals Prescription Governed by NIRC Governed by CC Taxes cannot be the subject to legal compensation or set-off for the simple reason that the government and the taxpayers are not mutually creditors and debtors of each other Obligations in the nature of debts are due to the government in its corporate capacity, while taxes are due to the government in its sovereign capacity CC, 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. Caltex v. COA [COA disallowed reimbursements of OPSF to Caltex; oil companies were allowed to offset the amounts due to the Oil Price Stabilization Fund against their outstanding claims from the said Fund for the calendar years 1987 and 1988]. It is settled that a taxpayer may not offset taxes due from the claims that he may have against the government. Taxes cannot be the subject of compensation because the government and taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not such a debt, demand, contract or judgment as is allowed to be set-off. || We may even further state that technically, in respect to the taxes for the OPSF, the oil companies merely act as agents for the Government in the latters collection since the taxes are, in reality, passed unto the end-users the consuming public. In that capacity, the petitioner, as one of such companies, has the primary obligation to account for and remit the taxes collected to the administrator of the OPSF. This duty stems from the fiduciary relationship between the two; petitioner certainly cannot be considered merely as a debtor. In respect, therefore, to its collection for the OPSF vis-a-vis its claims for reimbursement, no compensation is likewise legally feasible. Firstly, the Government and the petitioner cannot be said to be mutually debtors and creditors of each other. Secondly, there is no proof that petitioners claim is already due and liquidated. || That compensation had been the practice in the past can set no valid precedent. Such a practice has no legal basis. Lastly, R.A. No. 6952 does not authorize oil companies to offset their claims against their OPSF contributions. Instead, it prohibits the government from paying any amount from the Petroleum Price Standby Fund to oil companies
d.
e.
B.
C.
D.
E.
Amount of imposition
Relationship to constitution
2.
3.
Superior to non-impairment Including the prohibition against clause imparment of obligation of contracts The distinction lies in the PURPOSE >>> if the generation of revenue is the primary purpose and regulation is merely incidental, its a TAX Essential characteristics of taxation a. Inherent in sovereignty The power of taxation is inherent in the State, being an attribute of sovereignty. As an incident of sovereignty, the power to tax has been described as unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay it. Being an inherent power, the legislature can enact laws to raise revenues even without the grant of said power in the Constitution. it must be noted that Constitutional provisions relating to power do not operate as grants of power to the government, but instead merely constitutes as limitations upon a power which would otherwise be practically without limit. Roxas v. CTA. [kind Roxas brothers] It should be borne in mind that the sale of the Nasugbu farm lands to the very farmers who tilled them for generations was not only in consonance with, but more in obedience to the request and pursuant to the policy of our Government to allocate lands to the landless. It was the bounden duty of the Government to pay the agreed compensation after it had persuaded Roxas y Cia. to sell its haciendas, and to subsequently subdivide them among the farmers at very reasonable terms and prices. However, the Government could not comply with its duty for lack of funds. Obligingly, Roxas y Cia. shouldered the Government's burden, went out of its way and sold lands directly to the farmers in the same way and under the same terms as would have been the case had the Government done it itself. For this magnanimous act, the municipal council of Nasugbu passed a resolution expressing the people's gratitude. || The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg". And, in order to maintain the general public's trust and confidence in the Government this power must be used justly and not treacherously. It does not conform with Our sense of justice in the instant case for the Government to persuade the taxpayer to lend it a helping hand and later on to penalize him for duly answering the urgent call. b. Exclusively legislative in nature The power of taxation is essentially a legislative function. The power to tax includes the authority to: (1) determine the nature, object, extent, coverage, apportionment, situs, and method of collection; (2) grant tax exemptions or condonations and (3) specify or provide for the administrative as well as judicial remedies that either the government or the taxpayers may avail themselves in the propoer implementation of the tax measure (Petron v. Pililia) c. Subject to inherent and constitutional limitations The power to tax is said to be the strongest of all the powers of the government. It is unlimited, plenary, comprehensive and supreme, in the absence of constitutional restrictions, the principal check on its abuse resting in the responsibility of Congress. But, the power of taxation is subject to constitutional and inherent limitations Inherent limitations a. Purpose must be public in nature Public purpose = governmental purpose It means a purpose affectibe the inhabitants of the state or taxing district as a community and not merely as individuals Pascual v. Sec. of Public Works. [streets owned by Sen. Zulueta] It is a general rule that the legislature is without power to appropriate public revenue for anything but a public purpose. . . . It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax, and not the magnitude of the interest to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental to the public or to the state, which results from the promotion of private interest and the prosperity of private enterprises or business, does not justify their aid by the use public money. Caltex v. CIR, supra. Gaston v. Republic Planters. [petitioners contending the sugar fund = implied trust for them] That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them since it is also they who are to be benefited from the expenditure of the funds derived from it. The investment in shares of respondent Bank is not alien to the purpose intended because of the Bank's character as a commodity bank for sugar conceived for the industry's growth and development. Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the "payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM" thereby immediately negating the claim that the entire amount levied is in trust for sugar, producers, planters and millers. || To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the domestic market," including the foreign market the industry being of vital importance to the country's economy and to national interest. PPI v. Fertiphil. It is apparent that the imposition of P10 per fertilizer bag sold in the country by LOI 1465 is purportedly in the exercise of the power of taxation. It is a settled principle that the power of taxation by the state is plenary. Comprehensive and supreme, the principal check upon its abuse resting in the responsibility of the members of the legislature to their constituents. However, there are two kinds of limitations on the power of taxation: the inherent limitations and the constitutional limitations. || One of the inherent limitations is that a tax may be levied only for public purposes: The power to tax can be resorted to only for a constitutionally valid public purpose. By the same token, taxes may not be levied for purely private purposes, for building up of private fortunes, or for the redress of private wrongs. They cannot be levied for the improvement of private property, or for the benefit, and promotion of private enterprises, except where the aid is incident to the public benefit. It is well-settled principle of constitutional law that no general tax can be levied except for the purpose of raising money which is to be expended for public use. Funds cannot be exacted under the guise of taxation to promote a purpose that is not of public interest. Without such limitation, the power to tax could be exercised or employed as an authority to destroy the economy of the people. A tax, however, is not held void on the ground of want of public interest unless the want of such interest is clear. || To be sure, ensuring the continued supply and distribution of fertilizer in the country is an undertaking imbued with public interest. However, the method by which LOI 1465 sought to achieve this is by no means a measure that will promote the public welfare. The governments commitment to support the successful rehabilitation and continued viability of PPI, a private corporation, is an unmistakable attempt to mask the subject statutes impartiality. There is no way to treat the self-interest of a favored entity, like PPI, as identical with the general interest of the countrys farmers or even the Filipino people in general. Well to stress, substantive due process exacts fairness and equal protection disallows distinction where none is needed. When a statutes public purpose is spoiled by private interest, the use of police power becomes a travesty which must be
c.
d.
e.
4.
d.
e.
f.
g.
h.
i.
j.
F.
G.
H.
c.
2.
3.
b.
c.
d.
iii.
iv. v.
I.
(g)
For the purpose of this Section, 'large taxpayer' means a taxpayer who satisfies any of the following criteria; (1) Value-Added Tax (VAT) - Business establishment with VAT paid or payable of at least One hundred thousand pesos (P100,000) for any quarter of the preceding taxable year; (2) Excise tax - Business establishment with excise tax paid or payable of at least One million pesos (P1,000,000) for the preceding taxable year; (3) Corporate Income Tax - Business establishment with annual income tax paid or payable of at least One million pesos (P1,000,000) for the preceding taxable year; and (4) Withholding tax - Business establishment with withholding tax payment or remittance of at least One million pesos (P1,000,000) for the preceding taxable year. Provided, however, That the Secretary of Finance, upon recommendation of the Commissioner, may modify or add to the above criteria for determining a large taxpayer after considering such factors as inflation, volume of business, wage and employment levels, and similar economic factors. The penalties prescribed under Section 248 of this Code shall be imposed on any violation of the rules and regulations issued by the Secretary of Finance, upon recommendation of the Commissioner, prescribing the place of filing of returns and payments of taxes by large taxpayers. Sec. 511, Tariff and Customs Code. Rules and Regulations of the Commission. The Commission shall adopt and promulgate such rules and regulations as may be necessary to carry out the provisions of this Code. Sec. 519, Tariff and Customs Code. Misamis Oriental Assoc v. DOF. [copra, food/non-food] Moreover, as the government agency charged with the enforcement of the law, the opinion of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of his power under 245 of the NIRC to "make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes." (i) Validity of revenue rules and regulations Tan v. del Rosario, supra. CIR v. CA, supra. Phil. Petroleuim v. Pililia. [municipal ordinance re: effectivity of tax on oil] Well-settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of discrepancy between the basic law and an implementing rule or regulation, the former prevails. || The exercise by local governments of the power to tax is ordained by the present Constitution. To allow the continuous effectivity of the prohibition set forth in PC No. 26-73 (1) would be tantamount to restricting their power to tax by mere administrative issuances. Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may be established by Congress can define and limit such power of local governments Umali v. Estanisalo. [adjustment of personal exemptions] The tax exemptions referred to in the law should be effective already with respect to the income earned for the year 1991. After all, even if We say that the law became effective only in 1992, still this can refer only to the income obtained in 1991 since after all, what should be filed in 1992 is the income tax return of the income earned in 1991. La Suerte v. CTA. [leaf tobacco] As herein earlier mentioned, the word "leaf", although used to modify the term "tobacco" only in the Explanatory Note to then House Bill No. 735 was omitted when the Bill was signed into law (RA 31). However, when General Circular No. V-27 dated October 29, 1946 was issued by then Collector of Internal Revenue Bibiano L. Meer to implement the provisions of Sections 6, 7 and 14 of Act 2613 (Tobacco Inspection Law), the word "leaf" was erroneously included therein, causing damage to the financial stability of the Government as the inspection fees due on cigars and cigarettes for domestic sale and imported leaf and partially manufactured tobacco for factory use were not collected for more than twenty (20) years. Such error was only discovered when an Assistant Chief of the Tobacco Inspection Service of the BIR appeared in a public hearing of the Joint Legislative-Executive Tax Commission. || Thus, the assailed Revenue Memorandum Circular was issued to rectify the error in General Circular No. V-27 and to interpret the phrase "tobacco for domestic sale or factory use" with the view of arresting huge losses of tobacco inspection fees which were not collected and imposed since the said Circular (No. V-27) took effect. Furthermore, the questioned Revenue Memorandum Circular was also issued to apprise those concerned of the construction and interpretation which should be accorded to Act No. 2613, as amended, and which respondent is duty bound to enforce. It is an opinion on how the law should be construed and there was no attempt whatsoever to enlarge or restrict the meaning of the law. || When an administrative agency renders an opinion by means of a circular or Memorandum, it merely interprets a pre-existing law, and no publication is necessary for its validity. 4 Construction by an executive branch of government of a particular law although not binding upon courts must be given weight as the construction come from the branch of the government called upon to implement the law.
3.
4.
5.