Taxation

1. Definition and Nature

Purposetaxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate
and operate it.
i. Every person who is able must contribute his share in the running
of the government. The government for its part is expected to
respond in the form of tangible and intangible benefits intended to
improve the lives of the people and enhance their moral and
material values.
ii. Exercise of taxation must be (1) reasonable and (2) in accordance
with law. (CIR v. Algue, Inc.)
Tarif and custom duties are taxes constituting a significant portion of the
public revenue which are the lifeblood that enables the government to
carry out functions it has been instituted to perform. (Commissioner v.
Makasiar)
2. Scope (the power to tax is the power to destroy)
Who exercises the power?
i. Art. VI, Sec 28: Section 28. (1) The rule of taxation shall be uniform
and equitable. The Congress shall evolve a progressive system of
taxation.
(2) The Congress may, by law, authorize the President to fix
within specified limits, and subject to such limitations and
restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the
Government.
ii. Art. XIV, Sec. 4(3): All revenues and assets of non-stock, non-profit
educational institutions used actually, directly, and exclusively for
educational purposes shall be exempt from taxes and duties. Upon
the dissolution or cessation of the corporate existence of such
institutions, their assets shall be disposed of in the manner
provided by law.
Proprietary educational institutions, including those
cooperatively owned, may likewise be entitled to such exemptions,

subject to the limitations provided by law, including restrictions on

dividends and provisions for reinvestment.
iii. Art. X, Sec. 5: Each local government unit shall have the power to
create its own sources of revenues and to levy taxes, fees and
charges subject to such guidelines and limitations as the Congress
may provide, consistent with the basic policy of local autonomy.
Such taxes, fees, and charges shall accrue exclusively to the local
governments.
3. Tax Exemptions
YMCA of Manila is exempted from taxation because it is used for
religious, charitable, and educational purposes. (YMCA v. Collector of
Internal Revenue)
Lot, on which the convent stood, and lot, formerly used as a cemetery
(now for lodging of the people who participate in religious festivities) are
exempt from land tax. (Bishop of Nueva Segovia v. Provincial Board)
Notwithstanding constitutional provision, gift tax is not a property tax; it
is an excise tax imposed on the exercise of the privilege of receiving the
property. A gift tax is not within the exempting provisions of the section
just mentioned. (Lladoc v. CIR)
There must be proof of the actual and direct use of the lands, buildings,
and improvements for religious or charitable purposes to be exempt from
taxation. Exemption from taxation is not favored and is never presumed; it
must be construed strictissimi juris against the taxpayer. (Province of Abra v.
Hernando)
While the use of the second floor of the main building in the case at bar for
residential purposes of the Director and his family, may find justification
under the concept of incidental use, which is complimentary to the main or
primary purpose, i.e., educational, the lease of the first floor to the
Northern Marketing Corporation cannot by any stretch of the imagination
be considered incidental to the purpose of education. (Abra Valley College
v. Aquino)
Flat license tax cannot be exacted from American Bible Society because it
would impair the societys free exercise and enjoyment of its religious
profession and worship. (American Bible Society v. City of Manila)
4. Double Taxation

Argument against double taxation may not be invoked where one tax is
imposed by the state and other by the cities or municipalities because it is
recognized that there is nothing inherently obnoxious in exacting license fees
or taxes with respect to the same occupation, calling or activity by both
state and political subdivisions. (Punzalan v. Municipal Board)
5. License Fees
The amount of the fee or charge is properly considered in determining
whether it is a tax or an exercise of the police power. The amount may be
so large as to itself show that the purpose was to raise revenue and not to
regulate, but in regard to this matter there is a marked distinction between
license fees imposed upon useful and beneficial occupations which the
sovereign wishes to regulate but not restrict, and those which are inimical
and dangerous to public health, morals or safety. In the latter case the fee may be
very large without necessarily being a tax.
i. Manila Municipal Board considered the practice of hygienic and
aesthetic massage not as a useful and beneficial occupation.
(Physical Therapy Org. v. Municipal Board)

Due Process
1. Article III, Sec. 1: No person shall be deprived of life, liberty, or property without
due process of law, nor shall any person be denied the equal protection of laws.
Sec. 14 (1): No person shall be held to answer for a criminal offense
without due process of law.
2. Definition, Nature and Scope; Purpose of the Guaranty
The words due process of law do not mean and have not the effect to
limit the powers of State governments to prosecutions for crime by
indictment, but these words do mean law in its regular course of
administration through courts of justice, according to prescribed forms and in
accordance with the general rules for the protection of individuals.
Due process is general law, a law which hears before it condemns, which
proceeds upon inquiry and renders judgment only after trial, so that every
citizen shall hold his life, liberty, property and immunities under the
protection of the general rules which govern society, and thus excluding,
as not due process of law, acts of attainder, bills of pains and penalties, acts
of confiscation, acts reversing judgments, and acts directly transferring
one mans estate to another, legislative judgments and decrees, and other

similar special, partial and arbitrary exertions of power under the forms of
legislation.
Any legal proceeding enforced by public authority, whether sanctioned by
age and custom, or newly devised in the discretion of the legislative
power, in furtherance of the general public good, which regards and
preserves these principles of liberty and justice, must be held to be due
process of law. (Hurtado v. California)
3. Meaning of Life, Liberty, and Property
The bulk of jurisprudence is that a license authorizing a person to enjoy a
certain privilege is neither a property nor a property right. A license is
merely a permit or privilege to do what otherwise would be unlawful, and
is not a contract between the authority granting it and the person to whom
it is granted; neither is it property or a property right, nor does it create a
vested right. Thus, all licenses may be revoked or rescinded by executive
action; it is not a contract, property or a property right protected by the
due process clause.
i. Property interests protected by the Due Process Clause of the
Fourteenth Amendment do not arise whenever a person has only
an abstract need or desire for, or unilateral expectation of a
benefit. They arise from legitimate claims of entitlement . . .
defined by existing rules or understanding that stem from an
independent source, such as state law. . . .
ii. The test whether the statute creates a property right or interest
depends largely on the extent of discretion granted to the issuing
authority.
iii. In point of fact, PNP Chief is granted broad discretion in the
issuance of PTCFOR. (Chavez v. Romulo)
Public office is a public agency or trust; it is not a property envisioned by
the Constitution
4. Substantive Due Process
Although a state may not allow an alien to enter its territory, it cannot
deprive the alien of its right to life without due process of law once the
alien is admitted. This guarantee includes the means of livelihood.
Exacting P50 from an alien for him to continue his work through an
ordinance is already deprivation of life without due process of law. For

there was an absence of purpose or criterion for the refusal or grant of

mayors permit. (Villegas v. Hu Chiong Tsai Pao Ho)
Ordering the Mangyanes to live in one place does not violate the due
process of law. The reason for Sec. 2145 of the Administrative Code is to
civilize the Mangyanes so that they can be useful to the state and that they
can protect themselves from abuses.
There exists a law; the law seems to be reasonable; it is enforced according
to the regular methods of procedure prescribed; and it applies alike to all
of a class. (Rubi v. Prov. Board of Mindoro)
5. Void for Vagueness/Overbreadth
See Ople v. Torres
RA 7080 (Plunder Law), as amended by RA 7659, is constitutional. It is not
vague or overbreadth. It has defined the prohibited acts clearly and
sufficiently that due process of law is guaranteed. (Estrada v.
Sandiganbayan)
The overbreadth and vagueness doctrines cannot be applied against PP
1017 because they are only applicable in free speech cases. But PP 1017
pertained to a spectrum of conduct, not free speech. In overbreadth claims,
challengers must establish that there can be no instance when the assailed
law may be valid. In void-for-vagueness claims, challenger must attempt to
show that the statute is vague in all its possible applications. Alas, neither
was accomplished by the challengers. (David v. Arroyo)
See Ong v. Sandiganbayan
6. Procedural Due Process
Publication is indispensable in every case, but the legislature may in its
discretion provide that the usual fifteen-day period shall be shortened or
extended. In addition to statutes (including those of local application and
private laws), the following should also be published: presidential decrees,
executive orders, administrative rules and regulations, charter of a city,
circulars of Monetary Board intended to fill in the details of Central Bank
Act. But interpretative regulations, those internal in nature regulating only
personnel of administrative agency, letters of instruction, instructions by
the Minister of Social Welfare on case studies to be made in petitions for
adoption, or rules laid down by the head of a government agency on
assignments or workload of his personnel or wearing of office uniforms
need not be published. (Tanada v. Tuvera)

The Philippine International Trading Corporation had authority to

regulate trade through its issuance of Administrative Orders. Such
authority was a valid exercise of a power ancillary to legislation delegated
by law to the Executive Department, and, in turn, delegated by the latter to
the former. But AO SOCPEC 89-08-01 was never effective because it was
not published. (PITC v. Angeles)
See Republic v. Extelcom
7. Impartial Court or Tribunal
Philippine Atomic Energy Commissioners were found to be biased
because of the pamphlets that they have been distributing. The pamphlets
already prejudged that the Nuclear Power Plant that the Commissioners
were supposed to examine were safe. Hence, the Court enjoined them
from acting on the licensing proceedings involving the Nuclear Power
Plant. (Tanada v. PAEC)
Evidently, Doctor Anzaldo was denied due process of law when
Presidential Executive Assistant Clave concurred with his own
recommendation as concurrent Chairman of the Civil Service
Commission. Due process of law means fairness. Common sense and
propriety dictate that the Commissioner in the CSC, who should be
consulted by the Office of the President, should be a different person from
the person in the OP who would decide the appeal of the protestant in a
contested appointment. Clave committed grave abuse of discretion in
acting on the appeal against Anzaldo. (Anzaldo v. Clave)