PERSONAL NOTES IN TAXATION 1.
This refers to the enactment of a law by
KDB
GENERAL PRINCIPLES
Taxation is the power by which the sovereign
raises revenue to defray the expenses of
government. It interferes with the personal and
property rights of the people and takes from them
a portion of their property for the support of the
government.
The power of taxation is inherent in the State,
being an attribute of sovereignty. Being an
inherent power, the legislature can enact laws to
raise revenues even without the grant of said
power in the Constitution.
Taxation is legislative in character. In other words,
the power of taxation is essentially a legislative
function.
GR: Power of taxation is not delegated to executive
or judicial department.
EXC: Power of taxation may be delegated to:
1. To local governments in respect of matter of
local concern to be exercised by the local
legislative bodies thereof;
2. When allowed by the Constitution. Thus, the
Congress may, by law, authorize the President
to fix within specified limits tariff rates,
import and export quotas, tonnage and
wharfage dues, and other duties or imposts
within the framework of the national
development program of the Government.
3. When the delegation relates merely to
administrative implementation.
Congress cannot abolish the power to tax of local
governments because it is expressly granted by the
Constitution.
The three stages or aspects of taxation are:
Levy.
Congress, imposing a tax.
2. Assessment and collection. This is the act of
administration and implementation of the tax
law by the executive department through the
administrative agencies.
3. Filing / Payment. This is the act of compliance
by the taxpayer, including such options,
schemes, or remedies as may be legally
available to him.
Lifeblood doctrine. Without revenue raising 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 it.
Necessity theory. The exercise of the power to tax
emanates from necessity, because without taxes,
government cannot fulfill its mandate of promoting
the general welfare and well-being of the people.
Benefits received principle. Taxpayers receive
benefits from taxes through the protection the
State affords to them. For the protection they get
arises their obligation to support the government
through payment of taxes.
Doctrine of symbiotic relationship. Taxation arises
because of the reciprocal relation of protection and
support between the State and taxpayers. The State
gives protection and for it to continue giving
protection, it must be supported by the taxpayers
in the form of taxes.
Taxes are: (1) the enforced proportional
contributions; (2) from persons and property
levied by the lawmaking body of the State by virtue
of its sovereignty; (3) for the support of
government and for all public needs.
Attributes / Characteristics of Taxes:
1. A forced charge, imposition, or contributions.
2. Assessed in accordance with some reasonable
rule of apportionment.
3. A pecuniary burden payable in money. excise tax, other percentage taxes, and
documentary stamp tax.

4. Imposed by the State on persons, property, or

excises within its jurisdiction, in accordance
Characteristics of a Sound Tax System:
with the principle of territoriality.

The income from sale of tickets in the

Philippines is an income derived from
Philippine sources which is subject to
Philippine income tax. Accordingly, there is no
violation of the principle of territoriality in
taxation.
If the property is located in the Philippines, it
is subject ti the Philippine estate tax
irrespective of the citizenship or residence of
the decedent. However, if the decedent is a
non-resident alien at the time of her death, the
transmission of the shares of stock can only be
taxed applying the principle of reciprocity.
1. Fiscal adequacy which means that the sources
of revenue should be sufficient to meet the
demands of public expenditures.
2. Equality or theoretical justice which means
that the tax burden should be proportionate to
the taxpayer’s ability to pay.
3. Administrative feasibility which means that
the tax law should be capable of convenient,
just, and effective administration, as well as
easy compliance by the taxpayer.

5. It is levied by the legislative body of the State.

Purpose and Objectives of Taxation:

6. It is levied for a public purpose.

7. It is personal to the taxpayer.
GR: Stockholders cannot be held personally
liable for the unpaid taxes of a dissolved
corporation because a corporation is bested by
law with a personality that is separate and
distinct from those of the persons composing
it.
1. To raise revenue.
2. To regulate to provide means for the
rehabilitation and stabilization of a threatened
industry which is affected with public interest
as to be within the police power of the State.
3. Promotion of general welfare.

EXC: Stockholders may be liable for the unpaid 4. Reduction of social inequality.
taxes of a dissolved corporation, if it appears
that the corporate assets have passed into
their hands. Likewise, when stockholders have 5. Encourage economic growth by granting
unpaid subscriptions to the capital of the incentives and exemptions.
corporation, they can be made liable for
unpaid taxes of the corporation to the extent
6. Protectionism.
of their unpaid subscriptions.

Direct tax distinguished from indirect tax:

1. Direct tax is demanded from the very person

who, as intended, should pay the tax which he
cannot shift to another, while an indirect tax is
demanded in the first instance from one
person with the expectation that he can shift
the burden to someone else, not as a tax but as
part of the purchase price.

2. Examples of direct tax are income tax, estate

tax and donor’s tax. On the other hand,
examples of indirect tax are value added tax,