Professional Documents
Culture Documents
TAXATION I
Syllabus
Inherently legislative
-Commissioner of Internal Revenue v. Fortune Tobacco corporation, 559 SCRA
160 (2008)
Lutz v. Araneta, 98 Phil. 148
Gomez v. Palomar, 25 SCRA 827
Punsalan v. Mun. Board of the City of Manila, 95 Phil. 46
The power to tax includes the power to destroy (Chief Justice Marshall in
McCulloch vs. Maryland, 4 Wheat, 316 4L ed. 579, 607)
“The power to tax is not the power to destroy while this court sits” (Justice
Holmes in Panhandle Oil Co. vs. Mississippi, 277 US 218)
-Sison, Jr. vs. Ancheta, et al., GR No. L-59431, July 25, 1984
-Mactan Cebu International Airport Authority vs. Marcos, etc., et al., G.R. No.
120082, Sept. 11, 1996
-Luzon Stevedoring Corp. vs. CTA, et al., L-30232, July 29, 1988
-National Power Corporation vs. Albay, 186 SCRA 198
-Chamber of Real Estate and Builders’ Association, Inc. v. Romulo, 614 SCRA
605 (2010)
-Tan v. Del Rosario Jr.; Carag, et al. v. Del Rosario Jr. 237 SCRA 324
The Power to Tax involves the power to destroy so it must be exercised with
caution. In order to maintain the general public’s trust and confidence in the
government, this power must be used justly and not treacherously.
-Commissioner of Internal Revenue v. SM Prime Holdings, Inc. 613 SCRA
774 (2010)
-Commissioner of Internal Revenue v. Tokyo Shipping C., Ltd, et.al., 244
SCRA 332
NOTE: While the courts may invalidate tax measures that run counter to the
Constitution, it bears emphasis that deeply ingrained in our jurisprudence is the time-
honored principle that a statute is presumed to be valid.’
-Coconut Oil Refiners Association, Inc., etc., et al., v. Torres, etc., et al., G.R.
No. 132527, July 29, 2005
-Basco v. Phil. Amusements and Gaming Corporation, G.R. No. 91649, May 14,
1991, 197 SCRA 52
C. Characteristics of taxation
E. Purpose of taxation
1. Revenue-raising
2. Non-revenue/special or regulatory
Caltex Philippines, Inc. vs. Commission on Audit, et al., G.R. No. 92585, May 8,
1992
Lutz vs. Araneta (98 Phil. 148)
Osmena vs. Orbos, etc., et al. G.R. No. 99886, Mar. 31, 1993
H. Doctrines in taxation
1. Prospectivity of tax laws
-Commissioner of Internal Revenue v. Acosta, 529 SCRA 177 (2007)
2. Imprescriptibility
3. Double taxation
a) Strict sense
b) Broad sense
c) Constitutionality of double taxation
d) Modes of eliminating double taxation
4. Escape from taxation
a) Shifting of tax burden
(i) Ways of shifting the tax burden
(ii) Taxes that can be shifted
(iii) Meaning of impact and incidence of taxation
b) Tax avoidance
c) Tax evasion
5. Exemption from taxation
a) Meaning of exemption from taxation
b) Nature of tax exemption
c) Kinds of tax exemption
(i) Express
(ii) Implied
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(iii) Contractual
d) Rationale/grounds for exemption
e) Revocation of tax exemption
MERALCO vs. Province of Laguna, GR No. 131359, May 5, 1999
MERALCO Vs. Vera, GR No. L-23847, Oct. 22, 1975
6. Compensation and set-off
Domingo vs. Garlitos G.R. No. L-18994, June 29, 1963
Republic vs. Mambulao, G.R. No. L-17725, Feb 28, 1962
Francia vs. IAC, L-67649, June 28, 1988
CIR vs. Itogon-Suyoc Mines, Inc., 28 SCRA 867
Solinap vs. Judge del Rosario, G.R. 50638, July 23, 1983
Sycip vs. CA, L-38711, January 31, 1985
Caltex Philippines vs. COA, G.R. No. 9285, May 8, 1992
Cordero vs. gonad, 18 SCRA 331 (1966)
7. Compromise
8. Tax amnesty
a) Definition
b) Distinguished from tax exemption
LG ELECTRONICS PHILIPPINES, INC. vs. COMMISSIONER OF INTERNAL REVENUE [G.R.
No. 165451. December 3, 2014.]
b) Inherently legislative
(i) General rule – “Non-delegation of taxing power”
(ii) Exceptions
(a) Delegation to local governments
Cu Unjieng vs. Patstone, 42 Phil. 818
Pepsi-Cola Bottling Company of the Philippines vs. Municipality of
Tanauan, 69 SCRA 460
LUCENA D. DEMAALA vs. COMMISSION ON AUDIT, represented by its
Chairperson Commissioner MA. GRACIA M. PULIDO TAN (G.R.
No. 199752. February 17, 2015)
c) Territorial
(i) Situs of taxation
(a) Meaning
(b) Situs of income tax
(1) From sources within the Philippines
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(2) From sources without the Philippines
(3) Income partly within and partly without the
Philippines
(c) Situs of property taxes
(1) Taxes on real property
(2) Taxes on personal property
(d) Situs of excise tax
(1) Estate tax
(2) Donor’s tax
(e) Situs of business tax
(1) Sale of real property
(2) Sale of personal property
(3) Value-Added Tax (VAT)
Wells Fargo Bank & Union Trust Co. vs.
Collector, 70 Phil. 325
Meralco vs. Yatco, 69 Phil 89
CIR vs. Marubeni Corp. GR No. 137377 Dec. 18,
2001
d) International comity
Pepsi-Cola vs. Municipality of Tanauan, 69SCRA 460
Doctrine of Sovereign Equality
e) Exemption of government entities, agencies, and instrumentalities
Maceda vs. Macaraig GR No. 88291 June 8, 1993
Basco vs. PAGCOR GR No. 91649 May 14, 1991
MCIAA vs. Marcos GR No. 120082 Sept 11, 1996
Infantry Post Exchange vs. Posadas GR No. 33403 Sept. 4, 1930
Board of Assessment Appeals of Laguna vs CTA, GR No. L-18125,
May 31, 1963
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) vs.
THE BUREAU OF INTERNAL REVENUE, represented by JOSE MARIO
BUÑAG, in his capacity as Commissioner of the Bureau of Internal
Revenue, and JOHN DOE and JANE DOE, who are persons acting for, in
behalf or under the authority of respondent (G.R. No. 215427.
December 10, 2014)
CITY OF LAPU-LAPU vs. PHILIPPINE ECONOMIC ZONE AUTHORITY
[G.R. No. 187583. November 26, 2014.]
2. Constitutional limitations
a) Provisions directly affecting taxation
(i) Prohibition against imprisonment for non-payment of poll tax
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(ii) Uniformity and equality of taxation
City of Bagiuo vs. De Leon GR No. 24756, Oct. 31, 1968
De Villata vs. Standley GR No. 8154 December 20, 1915
Tolentino vs. Secretary of Finance, GR No. 115455,
August 25, 1994
(iii) Grant by Congress of authority to the president to impose tariff
rates
(iv) Prohibition against taxation of religious, charitable entities, and
educational entities
Lung Center of the Philippines vs. Quezon City, GR
No. 144104, June 29, 2004
Abra Valley College vs. Aquino, GR No. L-39086
June 15, 1988
(v) Prohibition against taxation of non-stock, non-profit institutions
CIR VS. ST. LUKE’S MEDICAL CENTER, INC. (Sept. 26,
2012)
J. Stages of taxation
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1. Levy
2. Assessment and collection
3. Payment
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4. Refund
N. Kinds of taxes
1. As to object
a) Personal, capitation, or poll tax
b) Property tax
c) Privilege tax
2. As to burden or incidence
a) Direct
b) Indirect
3. As to tax rates
a) Specific
b) Ad valorem
c) Mixed
4. As to purposes
a) General or fiscal
b) Special, regulatory, or sumptuary
5. As to scope or authority to impose
a) National – internal revenue taxes
b) Local – real property tax, municipal tax
6. As to graduation
a) Progressive
b) Regressive
c) Proportionate
Questions:
1. Define taxation.
2. Discuss comprehensively but briefly the basic purposes of taxation.
3. Define taxes.
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4. Give the essential elements of a tax.
5. What is the theory and basis of taxation.
6. May a person legally refuse to pay a tax on the ground that he will derive no
personal benefit from the tax?
7. State the nature or characteristics of the State’s power to tax.
8. Give the processes that are included in the term taxation.
9. In the exercise of the power to tax, what matters are within the competence of the
legislature to determine?
10. Do taxpayers have sufficient interest to question or prevent illegal expenditures of
public funds?
11. What are the basic principles of a sound tax system? Explain each briefly.
12. Classify taxes as to subject matter or object.
13. Classify taxes as to who bears the burden.
14. Classify taxes as to determination of amount.
15. Classify taxes as to purpose.
16. Classify taxes as to authority or jurisdiction to impose.
17. Classify taxes as to graduation or rate.
18. Distinguish tax from toll.
19. Distinguish tax from penalty.
20. Distinguish tax from special assessment or special levy.
21. Distinguish tax from permit or license fee.
22. Distinguish tax from debt.
23. Distinguish tax from subsidy.
24. Distinguish tax from revenue.
25. .distinguish tax from customs duties.
26. Distinguish tax from tariff.
27. Name the sources of our law on taxation.
28. Give the three (30 basic tax laws of the Philippines.
29. State the force and effect of revenue regulations.
30. Are our internal revenue laws political in nature?
31. Are our internal revenue laws penal in nature?
32. May tax laws be made retroactive?
33. May taxes already assessed under the law before its repeal, be collected after such
repeal?
34. Give the similarities among the power of eminent domain, police power and power
of taxation.
35. Give the distinctions among the three (3) inherent powers.
36. Define tax evasion.
37. Define tax avoidance.
38. Is tax avoidance punishable by law?
39. Give the distinction between tax avoidance and tax evasion.
40. What is meant by “situs of taxation?”
41. What factors determine the situs of taxation?
42. Discuss briefly the application of situs of taxation.
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43. Define double taxation.
44. Give examples of double taxation in its broad sense.
45. Does our Constitution prohibit double taxation?
46. In general, how are the limitations or restrictions on the power of taxation
classified?
47. Enumerate the inherent limitations to the power to tax.
48. Enumerate the Constitutional limitations to the power to tax.
49. Discuss briefly the limitation that due process of law must be observed in the
imposition and/or collection of taxes.
50. Discuss briefly the limitation that equal protection of the laws must be observed in
the imposition and/or collection of taxes.
51. An ordinance imposes a property tax on motor vehicles using the streets of Manila.
The tax is payable only by the owners residing in Manila. Does it violate the
Constitutional rule of equality of taxation? (Association of Customs Brokers vs. Mun.
Board of Manila, 95 Phil. 107.)
52. A municipal council passed an ordinance imposing an occupation tax on the
profession or occupation of “installation manager.” X is the only salaried person
with such occupation in the municipality. Can he successfully challenge the validity
of the ordinance as being discriminatory since he is the only one adversely affected?
(The Shell Co. vs. Vano, 94 Phil. 382)
53. Discuss briefly the requirement of uniformity and equality in taxation as a limitation
in the imposition and/or collection of taxes.
54. The rule of uniformity permits the classification of the subjects to be taxed and the
imposition of the same rate of tax on the subjects belonging to the same class. Give
the requisites for a valid classification.
55. Does the legislature have the power to grant exemptions from payment of taxes
without violating the guarantee of equal protection of the laws or the rule of
uniformity and equity in taxation? (Lutz vs. Araneta, 98 Phil. 148; Cooley 343.)
56. Explain briefly the limitation against imprisonment for non-payment of poll tax.
57. Explain briefly the limitation against impairment of the obligation of contracts.
58. Explain briefly the limitation against infringement of religious freedom.
59. For what purpose shall public money be used?
60. What properties are constitutionally exempt from taxation?
61. State the cases when tax exemption is granted to educational institutions.
62. Explain briefly the limitation on the exercise of the power of Congress to grant tax
exemption.
63. May tax exemption be revoked?
64. How are tax exemptions construed?
65. May tax exemptions be created by implication?
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