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San Beda College of Law!

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TAXATION LAW

I. GENERAL PRINCIPLES POWER OF TAXATION

TAXATION power by which thesovereign through its law-making bodyraises revenue to defray the necessaryexpenses of government from amongthose who in some measure areprivileged to enjoy its benefits and mustbear its burdens.

Two Fold Nature of the Power of

Taxation1. It is an inherent attribute of

sovereignty2. It is legislative in character

Extent of Taxing PowerSubject to constitutional and

inherent restrictions, the power oftaxation is regarded as comprehensive,unlimited, plenary and supreme.

SCOPE OF LEGISLATIVETAXINGPOWER 1. Amount or rate of tax2. Apportionment of the tax3. Kind of tax4. Method of collection5. Purpose/s of its levy, provided it is

for public purpose6. Subject to be taxed, provided it is

within its jurisdiction7. Situs of taxation

TAXES enforced proportionalcontributions from the persons andproperty levied by the law-making bodyof the State by virtue of its sovereigntyin support of government and for publicneeds.

CHARACTERISTICS OFTAXES 1. forced charge;2. pecuniary burden payable in money;3. levied by the legislature;4. assessed with some reasonable rule

of apportionment; (see theoreticaljustice)

5. imposed by the State within itsjurisdiction;

6. levied for a public purpose.R EQUISITES OF A VALIDTAX 1. should be for a public purpose2. the rule of taxation shall be uniform3. that either the person or property

taxed be within the jurisdiction ofthe taxing authority

4. that the assessment and collectionof certain kinds of taxes guaranteesagainst injustice to individuals,especially by way of notice andopportunity for hearing be provided

5. the tax must not impinge on theinherent and Constitutionallimitations on the power of taxation

THEORIES ANDBASES OF TAXATION 1. Lifeblood Theory

Taxes are what we pay for civilizedsociety. Without taxes, the governmentwould be paralyzed for lack of themotive power to activate and operate it.Hence, despite the natural reluctance tosurrender part of one's hard-earnedincome to the taxing authorities, every

person who is able to must contributehis share in the running of thegovernment. (CIR v. Algue, Inc.)

2. Necessity TheoryThe power to tax is an attribute of

sovereignty emanating from necessity. Itis a necessary burden to preserve theState's sovereignty and a means to givethe citizenry an army to resist anaggression, a navy to defend its shoresfrom invasion, a corps of civil servants toserve, public improvements designed forthe enjoyment of the citizenry and thosewhich come within the State's territory,and facilities and protection which agovernment is supposed to provide.(Phil. Guaranty Co., Inc. v. CIR)

3. Benefits-Protection / ReciprocityTheoryTaxation is described as a symbiotic

relationship whereby in exchange of thebenefits and protection that the citizensget from the Government, taxes arepaid. (CIR v. Algue, Inc.)

8/11/2019 Beda Taxation Reviewer

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