1.

PRINCIPLES OF TAXATION
2. POWERS & AUTHORITY OF
COMMISSIONER OF INTERNAL
REVENUE
3. TAX REMEDIES
4. EXPANDED JURISDICTION OF
CTA
TAXATION

• The power by which the sovereign through its law-making body, raises
revenue to defray the necessary expenses of government. It is merely a
way of apportioning the costs of government among those who, in some
measure, are privileged to enjoy its benefits and must bear its burdens
(Aban, 2001).
TAXATION

• mode by which governments make exactions for revenue in

order to support their existence and carry out their legitimate
objectives. Taxation may refer to either or both the power to
tax or the act or process by which the taxing power is
exercised (Vitug, 2006).
 IN OTHER WORDS, TAXATION IS:

• - the inherent power of the sovereign exercised through legislature

• - to impose burdens
• - upon subjects and objects
• - within its jurisdiction
• - for the purpose of raising revenues
• - to carry out the legitimate objects of government.
PURPOSE OF TAXATION

• 1. Primary or Revenue Purpose

• 2. Secondary or Non-Revenue Purpose/ Sumptuary
• Promotion of general welfare
• Regulation of activities/ industries
NATURE & CHARACTERISTICS OF TAXATION

• The nature of the State’s power to tax is two-fold. It is

both an

• 1. inherent and
• 2. legislative power
I. INHERENT ATTRIBUTE OF SOVEREIGNTY

• It is considered inherent in a sovereign State because it is a necessary

attribute of sovereignty. Without this power no sovereign State can exist
or endure. The power to tax proceeds upon the theory that the existence
of a government is a necessity and this power is an essential and inherent
attribute of sovereignty, belonging as a matter of right to every
independent state or government. No sovereign state can continue to
exist without the means to pay its expenses; and that for those means, it
has the right to compel all citizens and property within its limits to
contribute, hence, the emergence of the power to tax (51 Am. Jur.,
Taxation 40).
I. LEGISLATIVE IN CHARACTER

• It is legislative in nature since it involves the promulgation of

laws. The legislature determines the coverage, object, nature,
extent and situs [CONES] of the tax to be imposed. Such
power is exclusively vested in the legislature except where the
Constitution provides otherwise (Art. VI, Sec. 28[2], Art. X, Sec.
5, Constitution) (1 Cooley Taxation, 3rd Ed.).
 SCOPE OF LEGISLATIVE POWER
• Determination of:
• 1. Amount or Rate of tax
Subjects of taxation (persons,
• 2. property, occupation, excises or privileges to be taxed, provided they are within the taxing
jurisdiction)
3. Kind of tax to be collected
• 4. Method of collection (This is not exclusive to Congress.)
• 5. Apportionment of the tax (whether the tax shall be of general application or limited to a
particular locality, or partly general and partly local)
• 6. Purposes for which taxes shall be levied, provided they are public purposes
• 7. Situs of taxation
 SCOPE OF LEGISLATIVE POWER

• The grant of tax exemptions and condonations

• The power to specify or provide for administrative as well as
judicial remedies (Philippines Petroleum Corporation v. Municipality
of Pililla, G.R. No. 85318, June 3, 1991).
LIMITATIONS OF TAXATION

• 1. inherent limitations
• II. Constitutional Limitations
INHERENT LIMITATIONS

• Public Purpose
• Inherently Legislative
• Territorial
• International Comity
• Exemption of government entities, agencies and
instrumentalities
CONSTITUTIONAL LIMITATIONS
• a. Provisions directly affecting taxation
• Prohibition against imprisonment for non- payment of poll tax (Art. III, Sec. 20)
• Uniformity and equality of taxation (Art.VI, Sec. 28)
• Grant by Congress of authority to the president to impose tariff rates (Art.VI , Sec. 28)
• Prohibition against taxation of religious, charitable entities, and educational entities (Art.VI, Sec. 28)
• Prohibition against taxation of non-stock, non-profit educational institutions (Art. IX , Sec. 4)
• Majority vote of Congress for grant of tax exemption (Art.VI , Sec. 28)
• Prohibition on use of tax levied for special purpose (Art.VI, Sec. 29)
• President’s veto power on appropriation, revenue, tariff bills (Art.VI, Sec. 27)
• Non-impairment of jurisdiction of the Supreme Court (Art.VI, Sec. 30)
• Grant of power to the LGUs to create its own sources of revenue (Art. IX, Sec. 5)
• Origin of Revenue and Tariff Bills (Art.VI, Sec. 24)
• No appropriation or use of public money for religious purposes (Art.VI, Sec. 28)
CONSTITUTIONAL LIMITATIONS

• Provisions indirectly affecting taxation (Art. III,

• 1987 Constitution)
• Due process (Sec. 1)
• Equal protection (Sec. 1)
• Religious freedom (Sec. 5)
• Non-impairment of obligations of contracts (Sec. 10)
• Freedom of the press (Sec. 4)
CHARACTERISTICS OF TAXATION

• 1. Comprehensive - It covers persons, businesses, activities, professions,

rights and privileges.
• 2. Unlimited - It is so unlimited in force and searching in extent that
courts scarcely venture to declare that it is subject to any restrictions,
except those that such rests in the discretion of the authority which
exercises it (Tio v. Videogram Regulatory Board, G.R. No. 75697, June 18,
1987).
 CHARACTERISTICS OF TAXATION

• 3. Plenary - It is complete. Under NIRC, the BIR may avail of certain remedies to
ensure the collection of taxes.
• Taxes, being the lifeblood of the government, that should be collected without
unnecessary hindrance, every precaution must be taken not to unduly suppress it
(Republic v. Caguioa, 536 SCRA 193 (2007)).
• 4. Supreme - It is supreme insofar as the selection of the subject of taxation is
concerned, but it does not mean that it is superior to the other inherent powers
of the State.
 SIMILARITIES BETWEEN TAXATION, EMINENT DOMAIN
AND POLICE POWER
• They are inherent powers of the State.
• All are necessary attributes of the sovereign.
• They exist independently of the Constitution.
• They constitute the three methods by which the State interferes
with private rights and property.
• They presuppose equivalent compensation.
• The legislature can exercise all three powers.
THEORY & BASIS OF TAXATION

• The theories underlying the power of taxation are:

• 1. Lifeblood Theory
• II. Necessity Theory
• III. Benefits-protection Theory (Doctrine of Symbiotic
Relationship)
• IV. Jurisdiction over subject and objects
PRINCIPLES OF SOUND TAX SYSTEM

• 1. Fiscal adequacy
• 2. Administrative feasibility
• 3. Theoretical justice
TAX AVOIDANCE VS TAX EVASION
TAX AVOIDANCE/ TAX MINIMIZATION

• Tax avoidance is a scheme where the taxpayer uses

legally permissible alternative method of assessing
taxable property or income, in order to avoid or
reduce tax liability.
TAX EVASION / TAX DODGING

• Tax evasion is a scheme where the taxpayer uses illegal or

fraudulent means to defeat or lessen payment of a tax.
• It is a scheme used outside of those lawful means and when
availed of, it usually subjects the taxpayer to further or
additional civil or criminal liabilities (CIR v. The Estate of
Benigno Toda Jr. G.R. No. 30554, February 28, 2004).
SITUS OF TAXATION

• It is the place or authority that has the right to impose

and collect taxes (Commissioner v. Marubeni, G.R. No.
137377, December 18, 2001).
FACTORS THAT DETERMINE THE SITUS OF
TAXATION [RECINS2]

• Residence of the taxpayer

• Citizenship of the taxpayer
• Nature of the tax
• Subject matter of the tax
• Source of income
DOUBLE TAXATION (DUPLICATE TAXATION)

• There is no constitutional prohibition against double

taxation in the Philippines. It is something not favored,
but is permissible, provided some other constitutional
requirement is not thereby violated, such as the
requirement that taxes must be uniform (Villanueva v.
City of Iloilo, 1968).
TYPES OF DOUBLE TAXATION

• As to validity:
• 1. Direct
• 2. Indirect

As to Scope:
1. domestic double taxation
II. International Double Taxation
TAXES AS DISTINGUISHED FROM OTHER FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS
TAXES AS
DISTINGUISHED
FROM OTHER
FORMS OF
EXACTIONS