ESSENTIAL NOTATIONS IN TAXATION: ‘A PRE-BAR REVIEW GUIDE (2015) by Justice Japar B. Dimaampao if GENERAL PRINCIPLES Q. Briefly explain the DOCTRINE OF SYMBIOTIC RELATIONSHIP. This doctrine is enunciated in the case of CIR v. ALGUE, INC., 158 SCRA 9, which states that: “Taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one’s hard- earned income to the taxing authorities, every person who is able to must contribute his share in the burden of running 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 material and moral values.” a. State at least four (4) recent decisional rules on the lifeblood doctrine. a) ¢) d) (Taxes are the lifeblood of the government and, consequently, tax laws must be faithfully and strictly implemented as they are not. ‘intended to be liberally construed. Hence, We are left with no other recourse but to deny respondent's judicial claim for refund for noncompliance with the provisions of Section 112 of the NIRC. (CIR v. Dash Engineering Philippines, Inc., 712 SCRA 347) The restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled. (Camp John Hay Development Corporation v. CBAA, 706 SCRA 547) (S)tipulations cannot defeat the right of the State to collect the right taxes due on an individual or juridical person because taxes are the lifeblood of our nation so its collection should be actively pursued without unnecessary impediment. (First Lepanto Taisho Insurance Corporation v. CIR, 695 SCRA 639) Taxes are the lifeblood of the nation. The Philippines has been struggling to improve its tax efficiency collection for the longest time with minimal success. Consequently, the Philippines has suffered the economic adversities arising from poor tax collections, forcing the government to continue borrowing to fund the budget deficits. (We) cannot turn a blind eye to this economic malaise by being unduly liberal to taxpayers who do not comply with statutory requirements for tax refunds or credits. The tax refund claims in the present cases are not a pittance. Many other companies stand to gain if (We) were to rule otherwise. (CIR v. San Roque aaa tie aes deel aaron naQ. Explain the pronouncement of the Supreme Court that the power of taxation is purely legislative Essentially, this means that in the legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage(subjects) and situs (place) of taxation. It has the authority to prescribe a certain tax at a specific rate for a particular public purpose on persons or things within its jurisdiction. In other words, the legislature wields the power to define what tax shall be imposed, why it should be imposed, how much tax shall be imposed, against whom (or what) it shall be imposed and where it shall be imposed (CREBA v. Romulo, 614 SCRA 605, 626). Expound on the theory that the power of taxation is considered as a principal attribute of sovereignty. A principal attribute of sovereignty, the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. The theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people (CIR v. BPI, 521 SCRA 373, 387-388). Q. Briefly discuss the dictum that “the power to tax involves the power to destroy.” In Mactan Cebu International Airport Authority v. Marcos, 261 SCRA 667, 679, the Supreme Court stressed that taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. The power to tax includes the power to destroy if it is used validly as an implement of the police power in discouraging and in effect, ultimately prohibiting certain things or enterprises inimical to the public welfare xxx (Cruz, Constitutional Law, 2000 Ed., p. 87). Q. Describe the Scope of the Power to Tax The power of taxation is the most absolute of all powers of the government (Sison v. Ancheta, 130 SCRA 654). It has the broadest scope of all the powers of. government because in the absence of limitations, it is considered as unlimited, plenary, comprehensive and supreme. However, the power of taxation should be exercised with caution to minimize injury to the proprietary rights of the taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill “the hen that lays the golden egg” (Roxas v. CTA, 23 SCRA 276). Q. Discuss the meaning and implication of the LIFEBLOOD DOCTRINE. 1. By enforcing the tax lien, the BIR availed itself of the most expeditious way to collect the tax. Taxes are the lifeblood of the government and their prompt and certain availability is an imperious need (CIR v. Pineda, 21 SCRA 105). 2. The government is not bound by the errors committed by its agents. In the performance of its government functions, the State cannot be estopped by the neglect of its agents and officers. Taxes are the lifeblood of the nation throughwhich the government agencies continue to operate and with which the state effects its functions for the welfare of its constituents. The errors of certain administrative officers should never be allowed to jeopardize the government's financial position (CIR v. CTA, 234 SCRA 348). 3. The BIR is authorized to collect estate tax deficiency through the summary remedy of levying upon the sale of real properties of a decedent, without the cognition and authority of the court sitting in probate over the supposed will of the decedent, because the collection of the estate tax is executive in character. As such, the estate tax is exempted from the application of the statute of non-claims, and this is justified by the necessity of government funding, immortalized in the maxim “Taxes are the lifeblood of the government and should be collected without unnecessary hindrance.” However, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself (MARCOS Il v. CA, 273 SCRA 47). 4, Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. Philex’s claim that it had no obligation to pay the excise tax liabilities within the prescribed period since it still has pending claims for VAT input credit/refund with the BIR is UNTENABLE (Philex Mining Corporation v. CIR, 294 SCRA 687). Qa When is Taxation considered an implement of Police Power? 1. In Walter Lutz v. J. Antonio Araneta, 98 Phil. 148, the SC upheld the validity of the tax law increasing the existing tax on the manufacture of sugar. “The protection and promotion of the sugar industry is a matter of public concern; the legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. If objective and methods alike are constitutionally valid, there is no reason why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the State’s police power.” 2. In Tio v. Videogram Regulatory Board, 151 SCRA 208, the levy of a 30% tax under PD 1987, was imposed primarily for answering the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic videotapes, and therefore VALID. While the direct beneficiaries of the said decree is the movie industry, the citizens are held to be its indirect beneficiaries. Q. May the power of taxation be used as an implement of the power of eminent domain? YES. The Supreme Court in the case of CIR v. Central Luzon Drug Corp., 456 SCRA 414, 445 held: “Tax measures are but “enforced contributions exacted on pain of penal sanctions” and “clearly imposed for a public purpose. In recent years, the power to tax has indeed become a most effective tool to realize social justice, public welfare, and the equitable distribution of wealth. While it is declared commitment under Section 1 of RA 7432, social justice “cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. The social justice consecrated in our [Constitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto. For this reason, a just compensation for income that is taken away from respondent (Central Luzon Drug Corp.) becomes