CONSTITUTIONAL LIMITATIONS - those limitations on the state's exercise of the taxing power specifically provided by the

particular provisions of the Philippine Constitution.

a. Due process of law. As provided for, no person shall be deprived of life, liberty or property without due process of law.
This covers two types: substantive, and procedural. Substantive due process relates to the circumstances and procedures
in the passage of tax laws and ordinances, while the other relates to the procedural aspects in the implementation of the tax
laws and ordinances. Applied to taxation, due process mandates that there should be a valid law imposing a tax to a
particular taxpayer, and should the taxpayer failed to pay the same, it must be given each and every opportunity to explain
itself and justify. No law imposing a tax, then the taxpayer shall not be collected such tax. On the other hand, granting that
the taxpayer failed to pay in full but was not issued as assessment notice informing the facts and the law of the assessment,
still, the taxpayer could not be held to pay. These are the essence of due process. The taxing authority, while implementing
the necessary mandates of its office must give due respect to the established procedures the way it works in an organized
society.
b. Equal protection of law. "...nor shall any person be denied equal protection of law". Equal protection relates to how a
particular tax measure or ordinance is being applied to persons or class of persons similarly situated. Thus, if two entities
falling on the same classification shall be taxed similarly. Example, if an ordinance imposes a tax on technicians and it
happened that in a locality there was a single technician, such technician cannot complain for unequal application because
the ordinance is made applicable to all technicians belonging to the same class.
c. Non-imprisonment for non-payment of debt or poll tax. Debt refers to a civil obligation that is payable in money or in
kind, while poll tax or community tax refers to an charge or imposition administered by the local government unit (LGU)
where the taxpayer is located. The prohibition admits the fact of inequality of distribution of wealth in the society and
provides for instances in extreme poverty. This is likewise in furtherance of the basic doctrine in civil law that civil liability
does not put the person liable behind bars. Applied to tax, while poll tax is a basicmandate in the Local Government Code,
its non-payment does not entitle imprisonment.
d. Non-impairment of obligations of contracts. To impair is to damage or to harm and obligation referred to is the duty or
commitment imposed upon by the valid contract entered into by the contracting parties. Applied to tax, a new tax law shall
not be passed in such a way as to impair or to prejudice the obligation of a contracting party by virtue of a contract entered
into with the state. This is to give due respect to the contractual terms the state is bind with respect to its contract with
private individuals. A theoretical example of this is, if an exemption is granted by the state by virtue of a contract with a
private entity for which a valuable consideration is involved, then no new law could later be passed to prejudice said
exemption.
e. Rule of taxation shall be uniform and equitable. As stated in uniform application above, uniformity relates to
classification of taxpayers to be subjected to tax. Equitable on the other hand relates to the ability to pay the tax of those
that belong to the same class. In other words, it refers to how much will each pay and the constitution requires that there
must be a reasonable classification and justification for the unequal imposition.
f. Separation of church and state. This is based on the sad experiences during the Spanish regime where the church had
much to say about the governance of state. Applied to tax, no public money from taxes shall be spent for furtherance
ofreligious activities. Thus, a municipality cannot spend public funds for the celebration of its municipal fiesta.
g. Exemption of educational, charitable, and religious institutions. The state acknowledges the valuable contribution of
educating its inhabitants, benefits brought about by charities on various programs for general welfare, and thereligious wellbeing of its inhabitants to the success and development of thesociety as a whole. Thus, to encourage private individuals
and entities for the furtherance of this objectives, the constitution provided certain tax exemptions from income, real
property and customs duties and taxes under specific circumstances and limitations. There must be showing of an actual,
direct, and exclusive use and furtherance of such objectives in order to be exempt to prevent abuse and capitalization of
such objectives to escape from tax.
h. Concurrence of the majority members of Congress in granting tax exemption. Tax exemptions are immunity from a
particular tax that is being imposed to others similarly situated. The more exemptions, the less collections. Accordingly, in

order to control and to see to it that only those necessarily entitled must be provided exemptions, the constitution require
that such grant of tax exemption shall be concurred by the vote of the majority of the membership in the Congress. It should
be noted that Philippines is on a bicameral congress, the senate and the lower house, thus, granting tax exemptions are not
quite easy to legislate.
i. Non-impairment of the jurisdiction of the Supreme Court on tax cases. This is in furtherance of the principles of
check and balances. The jurisdiction of the lower courts are based on the mercy of the laws passed for the purpose, thus,
may be modified and revised from time to time. However, in the case of the Supreme Court, no law can take its power to
become the final arbiter of tax cases.
j. Veto power of the President in tax bills. Generally, on bills passed by Congress, the President is empowered to either
approve or disapprove a bill as a whole. If approved or not acted upon within a certain period of time, it becomes a law, and
if vetoed, it does not become a law in its entirety. Tax bills however, can be granted either fully or partially. If a bill is granted
partially, provisions which are approved becomes part of the law while those provisions vetoed upon becomes ineffective.

Constitutional limitations are those provided for in the constitution or implied from its
provisions, while inherent limitations are restrictions to the power to tax attached to its
nature.
The following are the inherent limitations.
1. Purpose. Taxes may be levied only for public purpose;
2. Territoriality. The State may tax persons and properties under its jurisdiction;
3. International Comity. the property of a foreign State may not be taxed by another.
4. Exemption. Government agencies performing governmental functions are exempt from

taxation
5. Non-delegation. The power to tax being legislative in nature may not be delegated.

(subject to exceptions)
Constitutional limitations.
1. Observance of due process of law and equal protection of the laws. (sec, 1, Art. 3) Any

deprivation of life , liberty or property is with due process if it is done under the
authority of a valid law and after compliance with fair and reasonable methods or
procedure prescribed. The power to tax, can be exercised only for a constitutionally valid
public purpose and the subject of taxation must be within the taxing jurisdiction of the
state. The government may not utilize any form of assessment or review which is
arbitrary, unjust and which denies the taxpayer a fair opportunity to assert his rights
before a competent tribunal. All persons subject to legislation shall be treated alike
under like circumstances and conditions, both in the privileges conferred in liabilities
imposed. Persons and properties to be taxed shall be group, and all the same class shall
be subject to the same rate and the tax shall be administered impartially upon them.

2. Rule of uniformity and equity in taxation (sec 28(1)Art VI) All taxable articles or

properties of the same class shall be taxed at the same rate. Uniformity implies equality
in burden not in amount. Equity requires that the apportionment of the tax burden be
more or less just in the light of the taxpayers ability to bear the tax burden.
3. No imprisonment for non-payment of poll tax (sec. 20, Art III) A person cannot be

imprisoned for non-payment of community tax, but may be imprisoned for other
violations of the community tax law, such as falsification of the community tax
certificate, or for failure to pay other taxes.
4. Non-impairment of obligations and contracts, sec 10, Art III . the obligation of a contract

is impaired when its terms and conditions are changed by law or by a party without the
consent of the other, thereby weakening the position or the rights of the latter. IF a tax
exemption granted by law and of the nature of a contract between the taxpayer and the
government is revoked by a later taxing law, the said law shall not be valid, because it
will impair the obligation of contract.
5. Prohibition against infringement of religious freedom Sec 5, Art III, it has been said that

the constitutional guarantee of the free exercise and enjoyment of religious profession
and worship, which carries the right to disseminate religious belief and information, is
violated by the imposition of a license fee on the distribution and sale of bibles and other
religious literatures not for profit by a non-stock, non-profit religious corporation.
6. Prohibition against appropriations for religious purposes, sec 29, (2) Art. VI, Congress

cannot appropriate funds for a private purpose, or for the benefit of any priest, preacher
or minister or for the support of any sect, church except when such priest, preacher, is
assigned to the armed forces or to any penal institutions, orphanage or leprosarium.
7. exemption of all revenues and assets of non-stock, non-profit educational institutions

used actually, directly, and exclusively for educational purposes from income, property
and donors taxes and custom duties (sec. 4 (3 and 4) art. XIV.
8. Concurrence by a majority of all members of Congress in the passage of a law granting

tax exemptions. Sec. 28 (4) Art. VI.

9. Congress may not deprive the Supreme Court of its jurisdiction to review, revise,

reverse, modify or affirm on appeal or certiorari, final judgments and orders of lower
courts in all cases involving the legality of any tax, impost, assessment or any penalty
imposed in the relation thereto.