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TAXATION LAW COMPILATION REPORT

by: Shendy Anne L. Catulin


University of Cagayan Valley
College of Law
December, 2018

 TAXATION AND TAXES

TAXATION
 Taxation is the inherent power of the sovereign, exercised through the legislature,
to impose burdens upon the subjects and objects within its jurisdiction, for the
purpose of raising revenues to carry out legitimate objects of the government.
 It is also defined as the act of levying a tax, i.e. the process or means by which
the sovereign, through its law-making body, raises income to defray the necessary
expenses of government. It is a method of apportioning the cost of government
among those who, in some measure are privileged to enjoy its benefits and must
therefore bear its burdens. (De Leon)
 It is a mode of raising revenue for public purposes. (Cooley)
 Symbiotic relationship between the government and the citizens.

TAXES
 Taxes are the enforced proportional contributions from persons and property
levied by the law-making body of the State by virtue of its sovereignty for the
support of the government and all public needs. (Cooley)
 They are not arbitrary exactions but contributions levied by authority of law, and
by some rule of proportion which is intended to ensure uniformity of contribution
and a just apportionment of the burdens of government.

 THEORIES AND BASIS OF TAXATION

1. NECESSITY THEORY
 Taxation is a power predicated upon necessity. It is a necessary burden to
preserve the State’s sovereignty and a means to give the citizenry an army
to resist aggression, a navy to defend its shores from invasion, a corps of civil
servants to serve, public improvements 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. Guaranty Co.,
Inc. v, Commissioner 13 SCRA 7775)

2. BENEFITS- PROTECTION THEORY


 This theory bases the power of the State to demand and receive taxes on
the reciprocal duties of support and protection. The citizen supports the
State by paying the portion from his property that is demanded in order
that he may, by means thereof, be secured in the enjoyment of the benefits
of an organized society.
 No one is allowed to object to or resist payment of taxes solely because no
personal benefit to him can be pointed out as arising from the tax. (Lorenzo
v. Posadas)

3. IMPORTANCE OF TAXES: LIFEBLOOD THEORY


 The lifeblood theory constitutes the theory of taxation, which provides that
the existence of government is a necessity; that government cannot
continue without means to pay its expenses; and that for these means it
has a right to compel its citizens and property within its limits to contribute.
 Without revenue raised from taxation, the government will not survive,
resulting in detriment to society. Without taxes, the government would be
paralyzed for lack of motive power to activate and operate it. (CIR v.
Algue)
 Taxes are the lifeblood of the government and there prompt and certain
availability is an imperious need. (CIR v. Goodrich International Rubber Co.)

 RATIONALE OF TAXATION: DOCTRINE OF SYMBIOTIC RELATIONSHIP

 This doctrine is enunciated in CIR v. Algue, Inc. (158 SCRA 9, February 17, 1988)
which states that “Taxes are what we pay for civilized society. Without taxes,
the government would be paralyzed for lack of motive power to activate and
operate it. Hence, despite the natural reluctance, to surrender part of one’s
hard-earned income to the taxing authorities, 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.”

 BASIC PRINCIPLES OF TAXATION

1. FISCAL ADEQUACY
 The sources of revenues must be adequate to meet government
expenditures. (Chavez v. Ongpin, 186 SCRA 331)
 Even if a tax law violates the principle of Fiscal Adequacy and the proceeds
may not be sufficient to satisfy the needs of the government, still the tax law
is valid.

2. THEORETICAL JUSTICE
 The tax burden should be in proportion to the taxpayer’s ability to pay.
(ABILITY TO PAY PRINCIPLE)
 Equitable Taxation has been mandated by our constitution, as if taxes are
unjust and unreasonable then they are not equitable, thus invalid.

3. ADMINISTRATIVE FEASIBILITY
 The tax law must be capable of effective or efficient enforcement.
 There is no law that requires compliance with this principle, so even if the
tax law violates this principle, such tax law is valid.

 BUREAU OF INTERNAL REVENUE

 DIFFERENT INTERNAL REVENUE TAXES (RA NO. 8424)

 COURT OF TAX APPEALS

 Law creating the CTA- Republic Act No. 1125, June 15, 1954
 The creation of the CTA is for the purpose of having a centralized body well
versed in tax matters- a regular court forming part of the judicial system which
could exclusively hear and determine tax cases; and,
 To prevent delay in the disposition of tax cases in view of backlog of civil and
criminal cases in the regular courts. (Ursal v. CA 101 Phil 209)

JURISDICTION OF THE CTA

CTA shall exercise exclusive appellate jurisdiction to review by appeal the ff:

 Decisions of the Commissioner of Internal Revenue, involving


disputed assessments; refunds of Internal revenue taxes, fees or other
charges; penalties imposed in relation thereto; or other matters
arising under the NIRC or other law or part of law administered by the
BIR.
 Decisions of the Commissioner of Customs in cases involving liability
for customs duties, fees or other money charges; seizure, detention
or release of property affected; fines, forfeitures or other penalties
imposed in relation thereto, or other matters arising under the
Customs law or other law or part of law administered by the Bureau
of Customs.
 Decision of the Sec. of Finance, on an assessment which the
Commissioner of Customs decided in favor of the taxpayer.
(Decisions of the Commissioner of Customs which are adverse to the
government, may be raised on appeal to the Sec. of Finance, whose
decision is appealable to the CTA.)

Jurisdiction over decisions of the Local Board of Assessment Appeals is now


lodged with the Central Board of Assessment Appeals.

ANCILLARY JURISDICTION OF THE CTA

 The ancillary jurisdiction of the CTA such as the power to issue writs of
prohibition and injunction is only SUPPLEMENTARY to its appellate jurisdiction.
The power to issue writs exists only in cases appealed to it. There has to be a
main action first pending before it.
NATURE OF THE CTA
 It is judicial and not an administrative body.
 It is a court of special jurisdiction, and as such can only take cognizance of
such matters as are clearly within its jurisdiction.
 It is not governed strictly by the technical rules of evidence.

ORGANIZATION OF THE CTA


 The CTA is composed of a Presiding Judge and two Associate Judges, each
of whom is appointed by the President form a list of nominees prepared by the
Judicial and Bar Council. Such appointments need no confirmation.

QUORUM
 Any two judges of the CTA shall constitute a quorum and the concurrence of
two judges shall be necessary to promulgate any decision thereof.

APPEAL FROM DECISIONS OF THE CTA


 One motion for reconsideration may be allowed for the decisions of the CTA.
 Pro Forma Request for Reconsideration- one that is submitted only for purposes
of delay and will NOT interrupt the running of the prescriptive period.
 Decisions of the CTA are appealed to the Court of Appeals through a verified
petition for review. (Sections 1 and 5, Rule 43, Rules of Court)
 Appeals period is fifteen (15) days from receipt of the decision or judgment.
The Court of Appeals may grant an additional period of fifteen (15) days only
within which to file the petition for review. No further extension shall be granted
except for the most compelling reasons and in no case to exceed fifteen (15)
days. (Section 4, Rule 43, Rules of Court)

DISPOSITION OF CASES BY THE CTA


 Cases brought before the CTA shall be decided within 30 days after the
submission thereof for decision, which shall be in writing, stating clearly and
distinctly the facts and the law on which they are based, and signed by the
the judges who concurred therewith.

 LOCAL GOVERNMENT TAXATION

LOCAL TAXATION AS DECENTRALIZATION

 The principles of local taxation under the 1987 Constitution simply means
“Decentralization”. It does not mean that local governments are sovereigns
within the state or “imperium in imperia”.

ASPECTS OF LOCAL TAXATION

1. Levy of taxes, fees, charges and other impositions


2. Real Property Taxation
3. Local Taxation, itself
SCOPE AND EXERCISE OF LOCAL TAXING POWER

1. Local authority shall exercise taxing power:

 The power shall be exercised by the appropriate sanggunian or the


sangguniang panlalawigan in the case of provinces, the sangguniang
panglunsod in case of cities, the sangguniang bayan in the case of
municipalities or the sangguniang barangay in the case of barangays, through
an appropriate ordinance. (Section 132, Local Government Code).
 The exercise of the power to tax by the local legislative assembly is subject to
the veto power of the local chief executive; (1) Ultra Vires , and, (2) Prejudicial
to the public welfare. However, the sangguniang may override the veto by
2/3 vote of all its members.

2. Procedure for approval and effectivity of tax ordinance and revenue measures
and Procedure for Protest of tax ordinance

 The procedure for approval of local tax ordinances and revenue measures
shall be in accordance with the provisions of the Local Government Code. #