Beruflich Dokumente
Kultur Dokumente
Oro
Taxation Law 1 – A
Judge Gil Bollozos
Justice Marshall was quoted to have said that, “the power to tax involves the
power to destroy.” Justice Holmes on the other hand insists that “the power to
With the nature of taxation being absolute, plenary, and unlimited, one cannot help
but recognize how taxation can certainly involve the power to destroy. Without having to
inquire further into the context by which Justice Marshall was able to express his
statement, one who studies the concept of taxation can ably recognize how destructive
it can be.
In the power of taxation, we know that it is essentially, an enforced contribution by
the state on its people – it is not expected to be taken out willingly from our incomes and
given to the government out of the goodness of our hearts. It may be imposed on the
many aspects of our lives, be it with regard to acts, transactions, rights, or privileges; it
is levied both on persons and property, and a burden to us all. It can be imposed to
regulate behavior, or create wealth for the nation. The legislative has the ability to
dictate the subject or objects to be taxed, the amount, the manner, the means, and the
agencies to be involved in the endeavor. We can definitely acknowledge how it
permeates through the many layers our lives, from birth to death.
The statement made by Justice Marshall, though cognizant of taxation’s destructive
power, also recognizes that the power to destroy is merely a part of the concept’s
greater whole. We know that its power comes with responsibilities, and that it is self-
limiting in the sense that if it fails to fulfill its purpose, then its power is useless. It is
meant to be levied for a public purpose which should promote the general welfare, and
be the means by which the State can provide better protection and services for its
citizens.
I guess it is in this context where Justice Holmes’ statement harmonizes the idea put
forward by Justice Marshall. We realize that while the power to tax carries with it the
power to destroy, when it is used and directed for the purpose of promoting the common
good which it was meant to serve, then it builds on the social contract between the
government and its citizens and provides the prosperity needed to succeed and
develop.
In a way, Justice Holmes’ statement can also a reminder of the responsibility of the
people to safeguard their rights and interests, and to hold government accountable
when it exercises its powers in excess. It is a symbiotic relationship after all.
NOTES
Black – Content
Highlighted – Comment
1. Limitations classified
De Leon stresses that “the extent of the power to tax is as broad as the purpose for
which it is given,” which is mainly for “the support of the government to enable it to provide for
The power to tax: “one so unlimited in force and so searching in extent that the courts
scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in
the discretion of the authority which exercises it.” (Churchill v. Concepcion, 24 Phil. 969 [1916].)
b. Inherent – those which restrict the power although they are not found in the
Constitution
a. Constitutional
b. Inherent
v. Territorial jurisdiction
due process of law. The kinds of due process are the following:
government, tax is considered void or invalid. Must give notice. If already paid, should be
refunded on the basis of no one shall unjustly enrich himself at the expense of another
Cooley 824-825; see Sison, Jr. vs. Ancheta, 130 SCRA 654 [1984].)
NOTE: This can be better understood when applying the understanding of different kinds
a. Purpose
i. General, fiscal, or revenue – on a more general sense for the sake of revenue,
when the case provides that a different class of people or property are exempt,
ii. Special or regulatory – if the intent is to regulate behavior, those who perform or
are more inclined to a certain kind of behavior are the ones subjected to taxation
b. Scope
ii. Local – when certain local taxes are imposed in specific jurisdictions, those who
enter into the local jurisdiction may be subjected to local taxation by virtue of
equal protection
c. Graduation or rate
while those who have less may be taxed less or may not be taxed at all to safeguard
There is denial of equal protection when tax laws are not properly applied to those belonging in
country.
evasion.
a. “Tax laws shall place emphasis on direct rather than indirect taxation,
income, and tax them according to the particular levels they belong.
NOTE: Taxes should be applied with the circumstances of various persons in mind, so as to
a. A person cannot be sent to prison for failure to pay the community tax.
a) Non-Impairment Clause
a. Obligation of a contract is impaired when its terms or conditions are changed by
law or by a party without the consent of the other, compromising and weakening
Interestingly, when a tax exemption based on a contract is later revoked by a taxing statute, it can be seen as
an impairment by law. But when the tax exemption is provided for in a franchise, while seen as an exemption
based on a contract, may be revoked as the Constitution sees a franchise to be “subject to amendment,
a) Religious Freedom
i. American Bible Society vs. City of Manila, (101 Phil. 386 [1957]): The
imposition of license fees on the distribution and sale of bibles and other
information.
ii. This prohibition does not include imposing a generally applicable tax on
a. Taxes can only be levied for a public purpose, and therefore Congress cannot
appropriate funds for a private purpose like the construction on lands owned by
private persons.
b. “Public property may be leased to a religious group provided that such lease will
be totally under the same conditions as to a private person, especially to the
denominations be done. They must be accorded with the same privilege and
opportunity to lease similar property under identical terms for religious purposes
10. Prohibition against taxation of religious charitable, and educational entities, etc.
i. The exemption only covers the property taxes and not other taxes (Lladoc
using it exclusively for religious purposes is exempt from property tax but
iii. Tax on transfer of ownership of, or title to, real property applies to
property acquired by the religious sect even if religious sect uses the
iv. Tax exemption applies when property is actually, directly, and exclusively
instead of “solely.”
b. The equal protection of laws, and the rule of taxation mandating that it
part without affecting the items which he does not object to.
d. The Supreme Court having “the power to review, revise, reverse, modify or
all cases involving the legality of tax, impost, assessment, or toll, or any
penalty imposed in relation thereto.” So, Congress cannot take away the
a) Public Purpose
the time, and the new social conditions which proactively require
unemployment benefits
incidental and not direct. The test is not who receives money but the
character of the purpose for expending it; not immediate result of the
into the nature of spending public funds, and may question through
taxation.
of such details.
impeded.
c) Taxability of GOCCs
charters or special laws creating them do not have any tax exemption
i. The sovereign equality among states justify that one state cannot
exercise its sovereign powers over another - Other way of saying PAR IN
each other)?
ii. When one state enters the territory of another, implied in their
understanding that the former does not intend to degrade its dignity by
iii. Foreign governments may not be sued without their consent, rendering
the law of our country. (1987 Constitution, Art. II, Section 2.)
a. States may not tax property lying outside its borders, or lay an excise or privilege
tax upon the rights enjoyed from the laws of other states outside its jurisdiction.
b. A person may be taxed where there is a privity of relationship between him and
the taxing state which justifies the levy even when he is abroad. Vinculum juris,
De Leon elaborates on the situs of taxation to literally mean place of taxation; REMEMBER:
the state where the subject to be taxed has a situs may rightfully levy and collect the tax.
The situs is necessarily in the state which has jurisdiction or exercises dominion over the
subject in question.
a. Taxable situs will depend on the nature of tax, the subject matter (whether
person, property, act, or activity), the possible protection and benefit that may
accrue both to the government and the taxpayer, the residence or the citizenship
of the taxpayer, and source of income among other various other factors.
is in another jurisdiction. Lex rei sitae applies for personal property. NCC
v. Income – exacted from persons who are residents or citizens in the taxing
property is located.
3. Multiplicity of situs
creditor, trustee, etc.) where property may have been devoted, all receive
protection of the laws of jurisdiction other than the domicile of the owner thereto,
taxes
ii. Enter into treaties with other states (with regard to income tax for
i. Taxing twice
taxation) double taxation is taxation other than direct duplicate. Two or more
ii. Tax on corporation for its property and upon shareholders for their shares
iii. Tax on corporation for its capital stock as a whole and upon shareholders
iv. Tax upon depositors in a bank or for their deposits, and tax upon bank for
vi. Tax upon same property imposed by two different states (Can it be on
i. National government and city impose tax for exercise of the same
ii. Real estate dealer’s tax is imposed for engaging in the business of
leasing real estate in addition to the real estate tax on the property
tax.
iii. Where tax on a manufacturer’s products and another tax on the privilege
a municipality are imposed, as the first tax is different from the second.
iv. Where aside from tax, a license fee is imposed in the exercised of police
measure)
injustice or unfairness.
d. Taxpayer may seek relief under uniformity rule or equal protection guarantee.