TAXATION

ATTY. GERRY SEBASTIAN, CPA

ALL RIGHTS RESERVED 2017

AGS COPYRIGHT 2017

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Philippine Copyright 2017. Atty. Gerry Sebastian, CPA. All rights reserved. No part of this may be

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reproduced in any form or any means, electronic or mechanical, including photocopying or
xeroxing without written permission from the author. Any copy of this without the express written
consent of the author or his duly authorized representative, either proceeds from an illegitimate
source or is in the possession of one who has no authority to dispose of the same. Unauthorized
users, in addition to the penalties provided by law, shall be punished by the law of karma and
they will not pass the examinations they shall take or be unsuccessful and unhappy in life.

ATTY. GERRY SEBASTIAN, CPA

FUNDAMENTALS
AGS ALL RIGHTS RESERVED 2017

SIGNIFICANCE OF TAXATION
• “It only needs to be stated - what actually should be obvious
- that a tax measure, like the expanded VAT law, is enacted
by Congress and approved by the President in the exercise
of the State's power to tax, which is an attribute of
sovereignty. xxx xxx xxx the power to tax is an
essential right of government. Without taxes, basic
services to the people can come to a halt; economic
progress will be stunted, and, in the long run, the people will
suffer the pains of stagnation and retrogression.” (SC
Justice Padilla in Arturo M. Tolentino vs. The Secretary
of Finance, Gr. No. 115455, August 25, 1994)

AGS ALL RIGHTS RESERVED 2017 1

FUNDAMENTAL POWERS
• Inherent powers of every State:
• Police Power
• Power of Eminent Domain
• Power of Taxation
• These are built-in powers of a state.
• 1987 Constitution cannot take away these powers, only limit.
• They are inseparable in sovereignty.

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POLICE POWER OF THE STATE

• Defined. It is the power vested in the Legislature by the
Constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes and ordinances,
either with penalties or without, not repugnant to the
Constitution for the good and welfare of the State and its
subjects.

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POLICE POWER OF THE STATE

• Basis of Police Power.
• It is based on the Latin maxim, “Salus populi est suprema
lex” (the voice of the people is the supreme law). Every citizen
of every community, in a civilized society must bear certain
burdens imposed for the good of all. No rights are absolute
in the face of the common good.

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POLICE POWER OF THE STATE

• Nature of Police Power.
• It is an attribute of sovereignty. It is founded on the obligation
of the State to provide protection for its citizens and the
safety and good order of society.

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POLICE POWER OF THE STATE
• Scope of Police Power.
• On this power depends, the security of the social order, the
life and health of the citizens, the comfort and existence in a
thickly populated community, the enjoyment of social life, and
the beneficial use of property. It is the very foundation on
which our social system rests and has for its object the
improvement of the social and economic conditions affecting
the community at large and collectively with a view of
bringing about the greatest good to the greatest number.

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POLICE POWER OF THE STATE

• Essential Requisites.
• Interest of the public generally, as distinguished from that
of a particular class, requires the exercise of police
power.
• The means used are reasonably necessary for the
purpose and not unduly oppressive upon individuals.

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POWER OF EMINENT DOMAIN

• Defined. It is the right of the State to acquire private property
for public use, upon payment of just compensation and
observance of due process.

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POWER OF EMINENT DOMAIN

• Basis of the Power.
• It is based on genuine necessity and that necessity must be
of a public character. It must be a reasonable or practicable
necessity, such as would combine the greatest benefit to the
public with the least inconvenience and expense to the
condemning party and property owner consistent with such
benefit.

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POWER OF EMINENT DOMAIN
• Nature of the Power.
• It is an attribute of sovereignty. It is founded on the theory
that all properties ultimately belongs to the State. Thus, when
needed for genuine necessity, the private owner must yield
its ownership over the property.

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POWER OF EMINENT DOMAIN

• Essential requisites.
• There must be a taking of private property.
• It must be for public use.
• There must be just compensation.
• Due process of law be observed in taking of the property.

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POWER OF TAXATION
• Defined. It is the inherent power of the sovereign exercised
through the Legislature to impose burdens upon the subject
and objects within its jurisdiction for the purpose of raising
revenues to carry out the legitimate objects of the
government.

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TAXATION
ATTY. GERRY SEBASTIAN, CPA

ALL RIGHTS RESERVED 2017