TAXES
TAXATION
Are the enforced proportional and pecuniary
contributions levied by the lawmaking body of
the State, by virtue of its sovereignty, upon the
persons or property within its jurisdiction for
the support of the government and all the
public needs
ESSENTIAL CHARACTERISTICS OF TAXATION
1. Enforced contribution
2. Generally payable in money
3. Laid by some rule of apportionment
4. Levied on persons or property and
on acts, transactions, rights, or
privileges
5. Levied by the State which has
jurisdiction over the person or
property
6. Levied by the lawmaking body of
the State
7. Levied for public purpose
NATURE OF TAXATION
 Power of taxation is INHERENT IN
SOVEREIGNTY being essential to the
existence of every government
 It is essentially A LEGISLATIVE
FUNCTION. It falls under the
general power of law making
 Subject to CONSTITUTIONAL AND
INHERENT LIMITATIONS
o Equal protection of the laws
o Due process of law
o Rule of uniformity
o Equity in taxation
o Territoriality
o International Comity
o Exemption of governmental
agencies from taxation
o Prohibition against delegation
of legislative power
o Levy of tax must be for public
purpose
UNDERLYING THEORY AND BASIS OF
 LIFEBLOOD THEORY – taxes are the
lifeblood of the government for
without taxes, the government can
neither exist nor endure
 NECESSITY THEORY – the sovereign
state can not continue 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
 BENEFITS PROTECTION THEORY –
the basis of taxation is found in the
reciprocal duties of protection and
support between the State and its
inhabitants. The State receives
taxes to carry on its mandate while
the inhabitants or citizens pays the
portion of taxes demanded in order
that he may be secured in the
enjoyment of the benefits of an
organized society.
BASIC PRINCIPLES OF A SOUND TAX SYSTEM
 FISCAL ADEQUACY – sources of
revenue should be sufficient to
meet the demands of the public
expenditure
 EQUALITY OR THEORETICAL JUSTICE
– tax burden should be
proportionate to the taxpayer’s
ability to pay
 ADMINISTRATIVE FEASIBILITY – tax
laws should be capable of
convenient, just, and effective
administration.
CLASSIFICATION OF TAXES
 As to subject matter:
Personal, Poll or Capitation – tax of a fixed
amount imposed on individuals residing within
a specified territory without regard to property
or their occupation
Property – tax imposed on property, whether
real or personal, in proportion either to its value
or in accordance with some other reasonable
method of apportionment
Excise – tax imposed upon the performance of
an act, enjoyment of a privilege, or other
engaging in an occupation
 As to who bears the burden:
Direct – demanded from the person who is
intended or bound to pay it
Indirect – imposed upon goods before they
reach the customer who ultimately pays for it
not as tax but as part of the purchase price
 As to determination of amount
Specific – tax imposed by the head or number,
or by some standard of weight or measurement
Ad Valorem – tax fixed in proportion to the
value of the property
 As to purpose
General, fiscal or revenue – for the general
purpose of the government
Special or regulatory – imposed for a special
purpose
 As to authority imposing the tax
National – imposed by the national government
Municipal or local – imposed by the LGUs
 As to graduation or rate
Proportional – based on a fixed percentage of
the amount of the property, income or other
basis to be taxed
Progressive or graduated – where the rate
increases as the tax base increases
Regressive – tax rate decreases as the tax base
increases
MODES OF ACQUIRING OWNERSHIP
 OCCUPATION
 INTELLECTUAL CREATION
 PRESCRIPTION
 LAW
 SUCCESSION
 DONATION
 TRADITION
OCCUPATION
Is a mode of acquisition through the seizure of
corporeal things which do not have an owner
with the intention of acquiring them in
accordance with the rules prescribed by law
The requisites are:
1. There must be seizure
2. The thing seized must be corporeal
3. The thing seized must not have an
owner
4. There must be intention to acquire
ownership over the things
5. There must be compliance with the
rules prescribed by law
Art. 713. Things appropriable by nature which
are without an owner, such as animals that are
the object of hunting and fishing, hidden
treasure and abandoned movables, are
acquired by occupation.
(Civil Code of the Philippines)
INTELLECTUAL CREATION
Intellectual creation is a mode by virtue of
which the author acquires intellectual property
or ownership over the products of his intellect,
with the consequent power to authorize or
refuse publication or production of such
products.
Art. 721. By intellectual creation, the following
persons acquire ownership:
(1) The author with regard to his literary,
dramatic, historical, legal, philosophical,
scientific or other work;
(2) The composer; as to his musical
composition;
(3) The painter, sculptor, or other artist, with
respect to the product of his art;
(4) The scientist or technologist or any other
person with regard to his discovery or
invention.
PRESCRIPTION
Prescription, in general, is a mode of acquiring
(or losing) ownership and other real rights
through the lapse of time in the manner and
under conditions laid down by law.
As when ownership of land is acquired by
adverse possession for the period of time
required under the law, provided the necessary
legal conditions or requisites are present.
 Ordinary acquisitive prescription –
possession in good faith with just
title for 10 years
 Extraordinary acquisitive
prescription – Uninterrupted
adverse possession for 30 year if
without good faith and just title
LAW
By virtue of law directly vests the ownership of
the thing in a certain individual once the
prescribed requisites or conditions are present
or complied with
Art. 681. Fruits naturally falling upon adjacent
land belong to the owner of said land.
Art. 445. Whatever is built, planted or sown on
the land of another and the improvements or
repairs made thereon, belong to the owner of
the land, subject to the provisions of the follow
Art. 457. To the owners of lands adjoining the
banks of rivers belong the accretion which they
gradually receive from the effects of the current
of the waters.
SUCCESSION
Succession is acquisition of property, rights, and
obligations transmitted from the time of death
of the person.
 Testate – when decedent left a will
 Intestate – when decedent left no
will
 Mixed
Art. 774. Succession is a mode of acquisition by
virtue of which the property, rights and
obligations to the extent of the value of the
inheritance, of a person are transmitted
through his death to another or others either by
his will or by operation of law.
DONATION
An act of liberality whereby one person
disposes a thing in favor of another who accepts
it.
Art. 725. Donation is an act of liberality
whereby a person disposes gratuitously of a
thing or right in favor of another, who accepts
it.
Art. 726. When a person gives to another a
thing or right on account of the latter's merits
or of the services rendered by him to the donor,
provided they do not constitute a demandable
debt, or when the gift imposes upon the donee
a burden which is less than the value of the
thing given, there is also a donation.
TRADITION
A Derivative mode wherein the property is
transmitted by means of just title, there being
an intention and capacity on both side of the
parties.

Kinds of Tradition:

 Real – delivery or transfer of a thing

from hand to hand if movable, or
by a certain material or possessory
act if it is immovable
 Constructive – delivery of a
movable or immovable thing by
means of acts or signs thereof by
means of:

o Traditio symbolica – delivery of

a symbol such as keys
o Traditio longa manu – by
pointing out which must be
within sight
o Traditio brevi manu – when one
is already in possession of a
thing under a title which is not
of ownership (ex. When a
lessee purchases the leased
property)
o Traditio constitutum
possessorium – when one
alienates a thing belonging to
him but continues in possession
thereof