SCHOOL OF EDUCATION, ARTS and SCIENCES

Second Semester
A.Y. 2021-2022

CORRESPONDENCE LEARNING MODULE

TAXN 1013 - Taxation

Prepared by:

CYREANE FAITH N. CARAG, MAEd

Course Instructor

Reviewed by:

RENZ MARION C. GAVINO, MP

General Education Coordinator

Recommended by:

VENUS I. GUYOS, Ph.D.

Academic Dean

Approved by:

EMMANUEL JAMES P. PATTAGUAN, Ph.D.

Vice President for Academics

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

TAXN 1013 – Taxation (Module 1)| 1

 UNIVERSITY PRAYER

O God, wellspring of goodness and blessings, we give you thanks and praise as one Louisian
community. The graces You incessantly grant upon us and Your divine providence have sustained
our beloved University throughout the years of mission and excellence.

Having been founded by the Congregation of the Immaculate Heart of Mary, we pray that You keep
us committed and dedicated to our mission and identity to serve the Church and the society as we
become living witnesses to the Gospel values proclaimed by Jesus. For if we are steadfast in our
good and beautiful mission, our works will bring success not only to ourselves but also to those
whom we are bound to love and serve.

Inspired by St. Louis our Patron Saint, who was filled with a noble spirit that stirred him to love You
above all things , may we also live believing that we are born for a greater purpose and mission as
we dwell in Your presence all the days of our life.

Grant all these supplications through the intercession of

Mother Mary and through Christ our Lord. Amen.

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

TAXN 1013 – Taxation (Module 1)| 2

Academic Intellectual Property Rights: This module and the materials posted over NEO-LMS
are the properties of USL and the Facilitators. Students are not allowed to share it to any third-
party individuals not part of the class without any permission from the owners
CORRESPONDENCE LEARNING MODULE
TAXN 1013 - Taxation
AY 2021-2022

GENERAL INTRODUCTION

WELCOME TO THE SECOND SEMESTER OF SCHOOL YEAR 2021-2022!

I am Cyreane Faith B. Narag - Carag, your instructor in Taxation. We shall be learning about
the Taxation System in the Philippines – how it’s defined, how it’s utilized, and how it operates
for each citizen and the different sectors, as a whole. Do not be hesitant in asking for any
assistance so that I could accommodate your queries as regards our course. You may just call
me Ma’am Cye, and I wish to have a productive and meaningful journey with you this
semester.

STAY CONNECTED
For queries, please feel free to contact me through the following:

 Facebook Account/Name: Cyreane Faith Narag

 E-mail: cyreanecarag.usl.edu.ph
 Phone: 0975-939-3938

GET INVOLVED
USL expects you to do the following:

 Electronic copy of modules and worksheets will be sent to your emailing address every
Monday. You are expected to read the lessons before working on the activities and quizzes.
 Contact me through messenger for any query that you want to make about your lessons or
procedures in school.
 Comply with all requirements (written outputs, projects/performance tasks examinations
and the like.) Turn in learning tasks on time to avoid backlogs. Be guided by the grading
system.
.
Remember:
Since this is Taxation Law, you are expected to have a lot of readings of your chosen reference
book and jurisprudence. You are also expected to write case digests in order to understand
each topic well and prepare for recitations. Since you are in your pre-Law course, I am strictly
warning you against plagiarism as this punishable under existing Philippine laws especially for
essay type activities. Plagscan is used to verify authenticity of your work. Any plagiarized
material will be automatically given zero. (This includes copy paste from internet and from your
classmates.)

No part of this E-module/LMS Content can be reproduced, transported or shared with others without permission from the
University. Unauthorized use of the materials, other than personal learning use, will be penalized.

TAXN 1013 – Taxation (Module 1)| 3

Academic Intellectual Property Rights: Materials posted over NEO-LMS are the properties of
USL and the Facilitators. Students are not allowed to share it to any third-party individuals not
part of the class without any permission from the owners.

I hope you find this flexible approach helpful. Continue to learn amidst this pandemic. Stay safe
while learning.

CORRESPONDENCE LEARNING MODULE

TAXN 1013 - Taxation
AY 2021-2022

Lesson 1: General Principles of Taxation

Topic: Nature and Characteristics of Taxation and Taxes

Learning Outcomes: At the end of this module, you are expected to:

At the end of this learning module, the student is expected to:

a. Define Tax and the Taxation System
b. Enumerate the different characteristics of Taxation and Taxes
c. Explain the attributes of the Taxation System in the country
d. Cite the importance of taxation in the country

Weekly Timetable
Date Topic Activities or Tasks
January 23 – Read the topic on the General Principles of
29, 2022 Taxation
Nature and Introduction on the preliminaries of Taxation
Characteristics of Law
Taxation and Taxes Discussion
Completion of learning tasks
Run-through on the case digests

TAXATION DEFINED

Taxation is a mode of raising revenue for public purposes. ¹ Taxes, on the other hand, are
enforced proportional contributions from persons and property, levied by the state by virtue of its
sovereignty for the support of the government and for all its public needs. ("Cooley's definition,"
1 Cooley 62)

They are not arbitrary exactions, but contributions levied by authority of law, and by some rule of
proportion which is intended to insure uniformity of contribution and a just apportionment of the
burdens of government. ² Thus:

a. Taxes are enforced contributions.

Taxes are obligations created by law.

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 (Vera v. Fernandez, L-31364, March 30, 1979) Taxes are never founded on contract
or agreement, and are not dependent for their validity upon the individual consent of
the persons taxed. (1 Cooley 68)

b. Taxes are proportional in character, since taxes are

based on one's ability to pay.

c. Taxes are levied by authority of the law.

¹ Cooley Taxation, 4th Ed., p. 72.
² Cooley 64; Question No. 1(A), 2004 Bar Examination.

Elements of Taxation

1. It is an enforced proportional contribution from persons and properties.

2. It is imposed by the State by virtue of its sovereignty.

3. It is levied for the support of the government (PCGG v. Cojuanco, G.R. No.
147062, December 14, 2001)

Nature and Characteristics of Taxation

1. The power of taxation is inherent to the State (along with the power of
eminent domain and police power); hence, the right of the State to impose
taxes exists apart from the Constitution.
 The State is free to select the subjects of taxation, and the Court has
repeatedly held that inequalities which result from a singling out of one
particular class for taxation or exemption infringe no constitutional limitation.
(Lutz v. Araneta, G.R. No. L-7859, 22 December 1955)

2. The power of taxation is inherent to the State (along with the power of
eminent domain and police power); hence, the right of the State to impose
taxes exists apart from the Constitution.
 As the State has the power to determine the subjects of taxation, it is also
free to select those who will be exempt from taxation. (Gomez v. Palomar,
G.R. No. L-23645, 29 October 1968)

3. Lifeblood theory
 Taxes are the lifeblood of the State, through which the government and its
agencies continue to operate and with which the State effects its functions
for the welfare of its constituents.
 Taxes are what we pay for a civilized society. Without taxes, the State will
be paralyzed.
 Injunction generally does not lie against the collection of taxes

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

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  The State is not estopped from collecting taxes by the mistakes or errors of
its agents (non-estoppel rule, not absolute)
 Even with the lifeblood theory, the power of taxation must still be exercised
reasonably and in accordance with the law and prescribed procedure.

4. Power of taxation is also called the power to destroy.

5. Taxes are not political in nature and as such are continued in force
during the period of enemy occupation. Such tax laws are deemed to be
the laws of the occupied territory and not of the occupying enemy.

Doctrines:
1. Lifeblood doctrine
 Taxes are the lifeblood of the State; without taxes, the government will not
operate

2. Necessity Theory
 The government cannot continue to operate without taxes to pay for
expenses, hence, it can compel its citizens to pay up

3. Benefits received Principle

 Taxes are what we pay for a civilized society – we pay, the government
protects

4. Symbiotic Relationship Doctrine

 Taxpayers and the government have reciprocal obligations: the taxpayer to
pay taxes and the government to provide protection and benefits

Attributes of a Sound Taxation System

1. Fiscal adequacy
 The sources of revenue should be adequate to meet government expenditures
and their variations

2. Administrative Feasibility
 The tax system should be capable of being effectively administered and enforced
with the least inconvenience to the taxpayer
 Even if the imposition is burdensome to the taxpayer, the tax imposition is not
necessarily invalid unless some aspect of it is shown to violate any law or the
Constitution

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

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 3. Theoretical Justice
 The tax system should be fair to the average taxpayer and based upon the ability
to pay.

Tax as Distinguished from Other Exactions

Importance:

1. If an exaction is not a tax, then the defense of taxpayer, of double taxation will
necessarily fail

2. Tax-exempt individual or corporation is generally only exempt from paying taxes;

hence, if the exaction is not a tax, then the individual or corporation must still pay the
exaction.

As against license/regulatory fees

TAX LICENSE FEE

Source Taxing power Police Power of the State

Purpose Raise Revenue Regulation

Object Persons, property, privilege Right to exercise a privilege

As to the amount No limit Only necessary to carry out

regulation

TAX SPECIAL ASSESSMENT

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 Imposed on Persons, properties, etc. Only on land

Why imposed Regardless of public Public improvement benefits

improvement the land and increases its
value

Purpose Support of Government Contribution to cost of public

improvement

When imposed Regular exaction Exceptional as to time and

locality

Basis Necessity Benefits Obtained

As against special assessments

As against toll fees

TAX TOLL FEES

Imposed by State Private persons

Purpose Raise revenues Reimbursement of costs and

expenses incurred in the
construction of toll ways, and
to assure reasonable margin
of income

Basis State’s sovereign power Attribute of Ownership

***END OF READING MATERIAL***

Case Digests:

Taxation and Lifeblood Doctrine:

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

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 1. CIR v. BPI
521 SCRA 37, 387-388
2. CIR v. Pineda
21 SCRA 105
3. Misael P. Vera, et.al., v. Hon. Jose F. Fernandez, et. al.
89 SCRA 199
4. CIR v. CTA
234 SCRA 348
5. Commissioner v. Algue, Inc.
158 SCRA 9
6. YMCA v. CIR
298 SCRA 83
7. Davao Gulf Lumber Corp. v. CIR
298 SCRA 83
8. Ferdinand Marcos II v. CA et.al.
273 SCRA 47
9. Jose Reyes v. Pedro Almanzor
196 SCRA 322
10. Philippine Bank of Communications v. CIR
302 SCRA 250
11. Philippine Guaranty Co., Inc. v. CIR
13 SCRA 775
12. Philex Mining Corp. v. CIR
294 SCRA 687
13. North Camarines Lumber Co. v. CIR
109 Phil. 511

REFERENCES:

Books:

Ingles, M.D. (2018), Tax Made Less Taxing: A Reviewer with Codals and Cases, Rex Book
Store, Manila PH

Dimaampao, J. (2011), Tax Principles and Remedies, Rex Book Store, Manila PH

Online References (on Jurisprudence):

https://www.chanrobles.com/

https://central.com.ph/escra/

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University. Unauthorized use of the materials, other than personal learning use, will be penalized.

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