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SU SUMMA MMA MMAR RY

Par Partt 1/7 Pre reli lilimi mi mina na nari ri ries es and def efin in init it itio io ion n by LEB com omm mis iss sio ione ne nerr Ab Abel el elar ar ardo do T. Do Dom mon ondon don CO CONCE NCE NCEPT PT AND PU PURP RP RPOSE OSE OF TAX AXAT AT ATIO IO ION N De Defi fi finit nit nitio io ion n of Tax axat at atio io ion n 

Inherent power of the sovereign



Exercised through the legislative



Impose burdens



Upon subjects and objects within its jurisdiction



To raise revenues



To meet legitimate objects of government

NAT NATUR UR URE E OF TAX AXAT AT ATION ION De Defi fi finit nit nitio io ion n of Tax axat at atio io ion n 

Inherent power of the sovereign



Exercised through the legislature

Nat Natur ur ure e of Tax axat at atio io ion n 

Inherent Power - An attribute of sovereignty.  Basis - lifeblood doctrine  Manifestation - imposition even without constitutional grant right to select subject and objects of taxation. No injunction rule.



Legislative Power - Exercise of high prerogative of sovereignty.  Basis - promulgation of rules.  Manifestation - No improper delegation of legislative power to tax.

CHA CHARA RA RACT CT CTER ER ERIS IS ISTI TI TICS CS OF TA TAXA XA XATI TI TION ON Cha Charac rac racte te teri ri rist st stic ic ics s of Tax axat at atio io ion n 

Attribute of sovereignty (Inherent in nature) - does not include the power to destroy.



Legislative in nature



Imprescriptible



Applies prospectively



Subservient to the non-impairment clause



May be exercised jointly with police power

PU PURP RP RPOSE OSE Pur axat Purpo po pose se ses s of Taxat atio io ion n 

Primary - Revenue



Secondary - Compensatory - Regulatory or Sumptuary

Re Reven ven venue ue Rai aisi si sing ng Re Reven ven venue ue Pur urpos pos pose e of Ta Taxa xa xati ti tion on 

The basic purpose of taxation is to raise revenues



Taxes are imposed in order to raise funds used to meet the legitimate objectives of government. This is sometimes referred to as the "lifeblood" theory of taxation



Revenue generation has undoubtedly been a major consideration in the passage of the Tax Code. (Commissioner of international revenue v. Fortune Tobacco corporation, G. R. Nos. 167274-75, July 21, 2008)

CO COMPE MPE MPENSA NSA NSATO TO TOR RY PU PURP RP RPOS OS OSE E OF TA TAXA XA XATI TI TION ON Com Compe pe pens ns nsat at ator or oryy 

Realize social justice



Achieve equal distribution of wealth



Economic progress



Maintain high level of employment

RE REGU GU GULA LA LATO TO TOR RY OR S UM UMPT PT PTUA UA UARY RY PUR URPO PO POSE SE 

Joint exercise of power of taxation and police power



Levied for a regulatory purpose to provide means for the rehabilitation of a threatened industry which is affected with public interest



"Sin taxes" on alcohol and tobacco products dissuade consumers from excessive consumption



Amount collected may exceed cost of police surveillance and regulation

TA TAX X AS DIS ISTI TI TINGU NGU NGUIS IS ISHED HED FR FROM OM OTHER FO FORM RM RMS S OF EXA XACT CT CTIO IO ION N Ot Othe he herr For Form ms of Exa xact ct ctio io ion n 

Tariff



Toll



Licence fee



Special assessment



Debt

Tax Di Dist st stin in ingu gu guis is ished hed from Tar arif if ifff Bas Basis is for the Dis isti ti tinct nct nctio io ions ns be bettwee ween n Ta Tax x and Ta Tari ri riff ff 

Concept



Imposing authority



Subject matter



Collecting authority

Tax Di Dist st stin in ingu gu guis is ished hed from Tol olll Bas Basis is for th the e Dis istin tin tinct ct ctio io ions ns bet etwe we ween en a Tax and a Tol olll



Purpose



Basis



Subject or object



Amount



Imposing authority



Surrender



Exemption

Par Partt 2/7 Tax axat at atio io ion n of Law Lec ectu tu turre Ta Tax x Dis isti ti ting ng ngui ui uish sh shed ed from Lic icen en ense se Fee by com comm m. Ab Abel el elar ar ardo do T. Dom omo ondo ndon n TA TAX X DI DIST ST STING ING INGUI UI UISHE SHE SHED D F RO ROM M LI LICE CE CENSE NSE FE FEE E Bas Basis is for Di Dist st stin in inct ct ction ion ions s bet etwe we ween en a Tax and a lilice ce cens ns nse e fe fee e 

Purpose



Amount



Time of payment



Mode of payment



Effect of failure to pay



Surrender



Exemption



Relation to the non impairment clause

TA TAX X vs vs.. SP SPEC EC ECIAL IAL ASSE ASSESS SS SSMEN MEN MENT T Tax Di Dist st stin in ingu gu guis is ished hed from S pec pecial ial Asse sess ss ssm ment Bas Basis is for Di Dist st stin in ingui gui guish sh shin in ing g be betw tw twee ee een n a Ta Tax x an and d a Spe Specia cia ciall As Asse se ses ssm smen en entt 

Subject



Amount



Liability



Basis



Application



Surrender

TA TAX X vs vs.. DE DEBT BT Tax Di Dist st stin in ingu gu guis is ished hed from Deb ebtt Tax vs vs.. De Debt bt 

Basis



Failure to pay



Mode of payment



Assignability



Compensation and set off



Interest



Prescription



Authority

DI DISTI STI STING NG NGUI UI UISH: SH: PO POW WER OF TAX TAXAT AT ATIO IO ION, N, POL OLIC IC ICE E POW POWE ER AND EMI MINE NE NENT NT DO DOMA MA MAIN IN Di Dist st stin in ingui gui guish sh sh:: Po Powe we werr of Tax axat at atio io ion, n, Pol olice ice Pow ower er Tax Taxat at atio io ion n co comp mp mpare are ared d to Poli olice ce Powe owerr 

Purpose



Amount



Compensation



Property taken



Disposition of property



Non-impairment clause



Scope



Surrender

Cri Crite te teri ri ria a fo forr Dis istin tin tingu gu guis is ishin hin hing g be betw tw twee ee een n a Tax and an Im Impos pos posit it itio io ion n un under der Po Polic lic lice e Po Power wer 



If the generating of revenue is the primary purpose and regulation is merely incidental, the Imposition is a tax; But if the regulation is primary purpose, the fact that incidentally revenue is also obtain does not make the Imposition a tax". ( Ferrer, Jr. V. City Mayor Bautista, et al,, G. R. No. 210551, June 30, 2015)



The supreme Court reiterated that that the purpose and effect of the Imposition determined wether it is a tax or a fee, and that lack of any standards of such Imposition gives the presumption that the same is a tax. (Ibid)

JOI JOINT NT EXER ERCI CI CISE SE OF TA TAXA XA XATI TI TION ON AND POL OLIC IC ICE E PO POW WER Ex Exer er ercis cis cise e of Po Polic lic lice e Pow Power er not Pow ower er to Tax 

Regulation of non-useful occupation



Levy on sugar for the general welfare of the entire country as it benefits the sugar industry one of the pillars of the Philippine economy



Margins fee on branch profit remittances to curb excessive demands upon international reserves

EMI EMINE NE NENT NT DOM OMAIN AIN Th The e Lim Limit it itat at atio io ion n  

Private property shall not be taken for public use without just compensation III:9 The tax credit given to establishment is just compensation for the 20% seniors citizens' discount which is privet property deemed taken for public use Commissioner of International Revenue v. Central Luzon Drug corporation, G. R. No. 159647, April 16, 2005

The foregoing was deemed reversed when the supreme held that the taking is police power not eminent domain (Southern Luzon Drug Corporation v. The Department of social welfare and Development, et al, G. R. No. 199669, April 25, 2017)

Cir Circu cu cums ms msta ta tance nce nces s that Qua ualif lif lifyy Tak Takin in ing g as Em Emin in inen en entt Do Doma ma main in



First, the expropriator must enter a private property



Second, the entrance into private property must be for more than a momentary period



Third, the entry into the property should be the under warrant or color of legal authority



Fourth, the property must be devoted to public or otherwise informally appropriated or injuriously affected.



Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property (Southern Luzon Drug Corporation v. The Department of Social Welfare and Development, et al,, G. R. No. 199669, April 25, 2017)

IMP IMPOS OS OSING ING DIS ISCO CO COUN UN UNT T TH THEN EN ALL LLOW OW OWIN IN ING G TH THEM EM AS DE DED DUC UCTI TI TION ON LEG EGAL AL 

The supreme Court does not doubt the legality of the method taken by the legislature to implement the declared policies of the subject laws, that is, - to impose discount on the medical services and purchases of senior citizens and PWDs and - to treat the said discounts as tax deduction rather than tax credit





The measure is fair and reasonable and no credible proof was presented to prove the claim that it was confiscatory To be considered confiscatory, there must be taking of property without just compensation (Southern Luzon Drug Corporation, v. The Department of Social Welfare [email protected], et al,, G. R. No. 199669, April 25, 2017)

Par Partt 3/7 Dis isttin ingu gu guis is ishe he hed: d: Pow ower er of Tax axat at atio io ion, n, Po Powe we werr of Emi mine ne nent nt Doma main in TAX vs DOMA TAX vs.. EM EMINE INE INENT NT DOMA MAIN IN Di Dist st stin in ingui gui guish sh sh:: Pow Power er of Ta Taxa xa xatio tio tion, n, Emine inent nt Dom omain ain Bas Basis is for Di Dist st stin in inct ct ction ion ions s be bettwee ween n Taxa axati ti tion on an and d Em Emin in inen en entt Do Dom main 

Who could exercise



Property taken



Disposition of property



Benefit derived



Authority

PO POLIC LIC LICE E POW OWER ER vs vs.. EMI EMINE NE NENT NT DOMAI MAIN N Di Dist st stin in ingui gui guish sh sh:: Pol Police ice Pow ower er er,, Em Emin in inent ent Domai main n Bas Bases es for Dis isttinc incti ti tion on ons s be betw tw twee ee een n Pol Police ice Pow ower er an and d Em Emine ine inent nt Domai main n 

Purpose



Rights affected



Payment



Who exercises the power

THE THEO ORY AND BASI BASIS S OF TAX AXAT AT ATIO IO ION N 

Lifeblood theory



Necessity theory



Benefits-protection theory (Symbolic relationship)



Jurisdiction over subject and objects

Lif Life e Theo heory ry Lif Lifeb eb eblo lo lood od The heor or oryy of Tax axat at atio io ion n 

Gov't existence necessity



Performance of all govt'al functions redounds to all



Revenues could be raised

Th Theo eo eory ry of Ta Taxa xa xati ti tion on a) Lifeblood theory b) Includes the power to destroy Pri from Taxati axati the Lif Blood Theor heor Princ nc ncipl ipl iples es that F lo low w from ation on fro rom m the Life e Blood oryy of Ta Taxa xa xati ti tion on



Power of taxation is plenary and unlimited



It includes the power to destroy



Presumption that tax laws are valid



Right to collect taxes is imprescriptible



No injunction rule



No compensation and set-off

PO POWE WE WER R NO NOT T TO DES ESTR TR TROY OY OR DE DEST ST STR ROY Pow Power er to tax in inclu clu clude de des s th the e po powe we werr to des estr tr troy oy 

"The power to tax involves the power to destroy"

[United States Chief Justice Marshall in

McCulloch v. Maryland, 17 U.S. 316, 4 Wheat, 316, 4 L Ed. 579, 607 (1819)]



The power tax is an incident of sovereignty



and unlimited in its range, acknowledge in its very nature no limits,



so that security against its abuse.



Given the realities on the ground, it might be that imposing the tax, would be highly oppressive



It is not the purpose of the government to throttle private business

Pow Power er to Tax Doe oes s No Nott in inclu clu clude de the Po Powe we werr to Dest stro ro royy 

"The power to tax is not the power to destroy while this sits"

(Justice Holmes in

Panhandle Oil Co. v. Missipi, 277 US 218)

Nec Neces es essi si sity ty The heor or oryy 

The theory behind the exercise of the power to tax



emanates from necessity,



without taxes, government cannot fulfill it's mandate of promoting the  general welfare 

and well-being of the people [Commissioner of Internal Revenue V. Bank of Philippine Islands, G. R. No. 134062, April 17, 2007 Citing National Power Corp. V. City of Cabanatuan, G. R. No. 149110, April 9, 2003 Citing various cases]

Ben Benef ef efit it itsss-R Rec eceiv eiv eived ed The heor or oryy Ben Benef ef efit it its s Pr Prot ot ote ect ction ion The heor or oryy (Symbiotic Relationship) 

The reciprocal relation of protection and support between the state and the taxpayers.



This Symbiotic relationship is the rationale of taxation and should despel the erroneous notion that is an arbitrary method of EXACTION 

by those in the seat of power (Commissioner of Internal Revenue V. San Miguel Corporation, G. R. No. 205045 & 205723, January 25, 2017)

Bas Basis is or Rati ation on onale ale of Ta Taxa xa xati ti tion on a) Symbolic relationship b) Jurisdiction Jur Juris is isdic dic dicti ti tion on Ove verr Su Subj bj bject ect ects s and Obje bject ct cts s 

Jurisdiction by the state over persons and property whithin it's territory



"Long arm"

TE TERR RR RRIT IT ITO ORI RIAL AL Ins Insid id ide e not Ta Taxe xe xed d 

Comity



Reciprocity

PR PRINC INC INCIP IP IPLE LE LES S OF A S OU OUND ND TAX SYS SYSTE TE TEM M Pri Princ nc ncipl ipl iples es es,, Ca Cano no nons ns ns,, Ch Char ar aract act acter er eris is istt ics of a S oun ound d Ta Tax x Sy Syst st stem em 

Fiscal adequacy



Theoretical justice



Administration Feasibility

Fis Fiscal cal Ade dequ qu quacy acy 

This means that the tax system must be able to generate sufficient revenues in order to meet the legitimate objects of government



Stated otherwise, the taxes collected must be able to finance government expenditures and their variations. [Abakada Guro Party List. (Formerly AASJS), etc. , V. Ermita, et,, G. R. No. 168056, September 1, 2015 citing Chavez v. Ongpin, G. R. 76778, June 6, 1990 186 SCRA 331, 338)

THE THEO ORE RETI TI TICA CA CAL L JU JUST ST STICE ICE 

This means that taxes should be collected



Premises on the ability to pay.

AD ADMIN MIN MINIST IST ISTR RAT ATIV IV IVE E FEA FEASI SI SIBIL BIL BILIT IT ITY Y 

The tax measures should easily be implemented



order to assure the smooth flow into the treasury



of the fiscally adequate revenues

Par Partt 4/ 4/7 7 Sta Stage ge ges s or asp spec ec ects ts of Tax axat at atio io ion n STA STAGE GE GES S OF TAX AXAT AT ATIO IO ION N Sta Stage ge ges s of as aspe pe pect ct cts s of Tax axat at atio io ion n a. Levy - Levy is the Imposition of the tax by the taxing authority. b. Assessment - The determination of the amount of tax to be paid, or the determination of the value of a property subject to tax. c. Collection - This stage prescribes the means, process and method of implementing the tax law for the purpose of satisfying the tax obligation. The actual effort in obtaining payment of the tax. d. Payment - Payment by the taxpayer or the tax is satisfaction of the tax burden by whatever means that are available to him under the law. Pay Payme me ment nt in Ki Kind nd

Pay Payme me ment nt of tax in kin ind d 

Not prohibited but not advisable



Taxes are pecuniary burdens



Administrative feasibility may be affected due to valuation problems.

e. Refund - The return of taxpayer of illegally collected, erroneously or excessively paid taxes RE ALID TAX REQU QU QUIS IS ISIT IT ITIE IE IES S OF A VALID 

A valid tax should be within the jurisdiction of the taxing authority



That the assessment and collection of certain kinds should be for a public purpose



The rule of taxation should be uniform



That either the person or the tax itself guarantees against injustice to individuals, especially by way or notice and opportunity for hearing



The proper procedure for its enactment must be observed.

KI KIND ND NDS S OF TAX AXES ES Tax Taxe es ar are e cl clas as assi si sifie fie fied d ac accor cor cordi di ding ng to a. Objective or subject b. Burden or incidence c. Tax rates d. Purposes e. Authority to impose f. As to graduation a. Taxes classified according to Subject or Object  Personal, poll, capitation  Property

 Excise taxes b.Taxes classified according to Burden or Incidence  Direct 

Income taxes



Estate tax



Donor's tax



Branch profits remittance tax



Tax on improperly accumulated income

 Indirect 

Value-added tax



Excise tax



Documentary stamp taxes



Other percentage taxes



Almost all business taxes

c. Taxes are classified according to Tax Rates ...