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3. Benefits-received Theory – The basis of taxation is found in the reciprocal duties of

protection and support between the state and its inhabitants. Taxpayers receive benefits from
taxes through the protection the State affords to them.1 For the protection they get, arises their
obligation to support the government through payment of taxes. (see CIR v. Algue, Inc., 158
SCRA 9 [1988]). This is a standard of equity or fairness often advanced in evaluating tax laws. It
calls for the tax burdens to be apportioned in the same proportions as the benefits derived by
taxpayers from government spending of tax revenues.2

1
De Leon, H. (2016). The Fundamentals of Taxation (17th ed.).
2
Infra.
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