ACTIVITY 1

Instructions: Hand-written answers, indicate your name,

course and year in the yellow paper, scan then upload the file
in the google drive within our time (schedule) or as further
instructed.

1. Briefly explain the following doctrines:

a) Lifeblood doctrine
b) Necessity theory
c) Benefits received principle
d) Doctrine of symbiotic relationship

2. Explain the principles of a sound tax system.

3. A is the only daughter of B who was a resident in Washington

DC USA, B died in the US leaving to A three million shares of
Petron Corporation. A corporation organized and existing
under the laws of the Republic of the Philippines. Said shares
were held in trust for B by the Corporate Secretary of Petron
and the latter can vote the shares and receive dividends for B.
The Internal Revenue Service (IRS) of the US taxed the shares
on the ground that B was domiciled in the US at the time of her
death.
A) Can the CIR of the Philippines also tax the same
shares? Explain
B) Explain the concept of double taxation.

4. The small municipality of Biri passed an ordinance imposing a

tax on electronic installation managers (EIM). At that time
there was only one EIM, thus only he would be liable for the
tax. Is this constitutional?
a) Lifeblood doctrine
The lifeblood theory of taxation is a system of doctrine that underlines the
importance of taxes to both the state and its people. This view holds that taxes are
the government's primary source of revenue, allowing it to carry out its obligations
and offer public goods and services. The state couldn't carry out its duties and
safeguard the welfare of its citizens without taxes. As a result, taxes are viewed as
the state's main source of funding.
The lifeblood theory has been upheld by various courts and authorities in
different jurisdictions. For example, in the Philippines, the Supreme Court has
declared that “taxes are what we pay for a civilized society” and that “without taxes,
the government would be paralyzed” (CIR v. Algue, G.R. No. L-28896, 17 Feb. 1988).

b) Necessity theory
It is a power emanating from necessity. It is a necessary burden to preserve
the state's sovereignty and a means to give the citizenry an army to resist an
aggression, a navy to defend its shores from invasion, a corps of civil servants to
serve, public improvements designed for the enjoyment of the citizenry and those
which come within the state's territory, and facilities and protection which a
government is supposed to provide. (Phil. Guarantee Co., Inc. vs. CIR, 13 SCRA 775)
c) Benefits received principle
The "benefits-received principle" is one of the fundamental principles of
taxation, and it suggests that individuals or entities should be taxed in proportion to
the benefits they receive from government services or public goods. In other words,
those who benefit more from government programs and services should pay higher
taxes, while those who benefit less should pay lower taxes.
d) Doctrine of symbiotic relationship
It involves the power of the State to demand and receive taxes based on the
reciprocal duties of support and protection between the State and its citizen.
Every person who is able must contribute his share in the burden of running
the government.
The government for its part is expected to respond in the form of tangible
and intangible benefits intended to improve the lives of the people and enhance
their material and moral values. (CIR v. Algue, G.R. No. L-28896, February17, 1988)

3. Explain the principles of a sound tax system.

The principles of a sound tax system are fiscal adequacy, administrative
feasibility, and theoretical justice. Fiscal adequacy means the sources of revenue
must be sufficient to meet government expenditures and other public needs.
Administrative feasibility means tax laws and regulations must be capable of being
effectively enforced with the least inconvenience to the taxpayer. And, theoretical
justice means that a sound tax system must be based on the taxpayers' ability to pay.
Yes, the Commissioner of Internal Revenue (CIR) in the Philippines could tax shares
because B was regarded as a U.S. domiciliary or resident at the time of her death.
However, there may be certain exclusions and deductions that apply, and since B's
estate may be liable to U.S. estate tax. A system of estate taxes is also in place in the
Philippines, although it usually only applies to assets that are physically located
there. The Philippine estate tax may apply to Petron Corporation shares because
they are domiciled in the Philippines. Thus, it's possible that upon B's death, the
shares will be subject to tax in both the Philippines and the United States.

In relation to the stated context,