SUGGESTED ANSWERS FOR QUIZ 1

1. The Congress passed a law imposing a tax on the manufacture of sugar by sugar
centrals and another tax on owners of land planted to sugar cane. The collections
from said taxes were to accrue to a special fund to be used exclusively for the
rehabilitation of the sugar industry. Is this valid?

Answer:
Yes. The law passed by the Congress is valid.
One of the inherent limitations of the power to tax is it should only be for public
purpose; also, the Congress is allowed to accrue special fund for a specific purpose.
In this case, the Congress passed a law that shall impose a tax on the
manufacture of sugar and to owners of land which plants sugar cane. Such is valid
because the collection from these taxes will be for a special fund that will be solely used
exclusively for the rehabilitation of the sugar industry. Such essence of taxing these
objects is for the public welfare through boosting the economy of the sugar industry.
Hence, such law is valid.
It should be noted however, that in case such special fund shall have an excess
after implementing its very purpose, the excess shall accrue to the general fund of the
government.

2. May Congress under the 1987 Constitution, abolish the power to tax of local
governments?

Answer:
No. The Congress cannot abolish such power but they can only provide guidelines and
limitations on the local government’s power to tax.

3. In our jurisdiction, which of the following statements may be erroneous? Justify your
answer.
 Taxes are pecuniary in nature
 Taxes are enforced charges and contributions
 Taxes are imposed on persons and property within the territorial jurisdiction of
a State
 Taxes are levied by the executive branch of government
 Taxes are assessed according to a reasonable rule of apportionment

Answer:
Taxes are levied by the executive branch of government.
This statement is erroneous because “levy” refers to the act of imposition by the
legislature which is done through the enactment of a tax law. Levy is an exercise of the
power to tax, which is exclusively legislative in nature and character. Clearly, taxes are
not levied by the executive branch of government, but it is the legislative or the
Congress who has the power to act such.

4. Is a Filipino citizen who resides abroad and whose properties are outside the
Philippines, subject to the taxing power of the government?

Answer:
No. He cannot be taxed in the Philippines.
The Doctrine of Territoriality means that only those properties or objects that are
within a certain country’s jurisdiction shall be taxed.
In this case, the person is a Filipino citizen, however, he resides abroad, thus, he
is qualified as a non-resident citizen. The law provides that if a person is classified as a
non-resident citizen, he shall only be taxed on his income and properties located in the
jurisdiction of the Philippines.
 Hence, basing from the facts, the person cannot be taxed through the taxing
power of the government by the mere fact that he is not residing in the Philippines and
that all his properties are located outside the country.
Thus, he shall not be taxed in the Philippines.
However, if he has properties located in the Philippines or any objects that are
producing income, he shall be taxed on these objects since these properties are within
the territorial jurisdiction of the country.

5. Bee who wishes to avoid the payment of taxes assessable on the transaction was
advised by his tax consultant to make it appear on the deed of sale that the selling
price was only P200,000 although it was actually P300,000. Is this valid?

Answer:
No. The intention of the tax consultant and Bee is not valid.
Tax evasion is a scheme used outside of those lawful means to escape tax
liability and, when availed of, it usually subjects the taxpayer to further or additional civil
or criminal liabilities. Tax evasion is illegal because it violates the inherent power of
taxation of the government.
In this case, the proposed understatement of the selling price is a form of tax
evasion. Hence, it is invalid since it violates the very essence of the taxing power of the
government and it deprives the latter of its income.
Hence, it is invalid.

6. Limberge refuses to pay taxes because according to him, while some people are
receiving full protection, he has not been receiving any protection to his life, liberty,
and property from the government. Is the contention of Limberge tenable?

Answer:
No. The contention of Limberge is not tenable.
The power of taxation is inherent in the government and the very reason why
there is a power of taxation vested in the government is for the latter to raise revenue
for the benefit and welfare of the people. Such benefit and welfare are conclusively
presumed. Everyone is conclusively presumed to have received such even in unequal
proportions.
In this case, because of the theory that receipt of benefits from the government
are conclusively presumed, Limberge could not reason out that he has not received any
protection to his life, liberty, and property from the government.
Lastly, nowadays, it is hardly believable to conclude that there are taxpayers who
receive no benefits at all from projects sponsored by the government, all of which
improvements are used, directly or indirectly by all people or inhabitants.

7. Paul passed a law requiring owners of lands in Indonesia to pay real property tax in
the Philippines. Is the law valid?

Answer:
No. The law is invalid.
The Doctrine of Territoriality states that properties lying outside a certain
country’s borders are not taxable, likewise with an excise or privilege tax upon the
exercise or enjoyment of a right or privilege in another state.
Hence, in this case, the law passed by Paul is invalid because the objects of the
law are lands located in Indonesia. The law does not operate beyond a country’s
jurisdictional limits. Also, the properties located outside the jurisdiction of another state
generally do not receive protection from the Philippine government.
Hence, the law is invalid.

8. The United States Embassy in the Philippines is being required by the Customs to
pay customs duties on all properties being transported to the Philippines for use in
 the embassy by the ambassador and other diplomatic officers. May the US
government be required to pay?

Answer:
No. The US government cannot be required to pay.
Under the doctrine of International Comity, the property of a foreign state or
government may not be the subject of taxation by another. This principle is based on
the sovereign equality among states under International Law.
In this case then, the state cannot exercise its power of taxation to the US. The
US Embassy even though located in the Philippines is not within the territorial
jurisdiction of the Philippines. Embassies are treated as if it is in their own jurisdiction.
Hence, in this case, the US government cannot be required to pay taxes to the
Philippines.