THEORIES

Why Taxation is
Important?
Submitted To:
Atty. Antonio P. Bonilla

Submitted by:
Jennylyn B. Albano
(Lifeblood and Necessity Theory)

Maria Lourdes Chiquito

(Symbiotic Relationship and Benefits Received Theory)

What is TAX?

In a general sense, a tax is any contribution imposed by government upon individuals,

for the use and service of the state, whether under the name of toll, tribute, tallage,
gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name.

Lifeblood Theory

The existence of government is a necessity;

that government cannot continue without means to pay its expenses;

it has a right to compel its citizens and property within its limits to contribute.

Illustration

Collection of taxes cannot be enjoined by injunction.

Taxes could not be the subject of compensation or set off.

A valid tax may result in the destruction of the taxpayers property.

Taxation is an unlimited and plenary power.

Cases

Philex Mining Corporation v. CIR, 294 SCRA 687

Taxes are the lifeblood of the government and so should be collected without unnecessary
hindrance. Philexs claim that it had no obligation to pay the excise tax liabilities within the
prescribed period since it still has pending claims for VAT input credit/refund with the BIR is
untenable.

CIR vs BPI, R. No. 134062

We realize that these assessments (which have been pending for almost 20 years) involve a
considerable amount of money. Be that as it may, we cannot legally presume the existence of
something which was never there. The state will be deprived of the taxes validly due it and the
public will suffer if taxpayers will not be held liable for the proper taxes assessed against them.

Necessity Theory

Phil. Guaranty Co., Inc. v. Commissioner [13 SCRA 775]

It is a necessary burden to preserve the States 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 States territory and facilities and protection which a government is supposed to provide.

Benefits Received Principle

 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.

The taxpayer receives the general advantages and protection which the government
affords the taxpayer and his property.

ILLUSTRATION

One is compensation or consideration for the other; protection for support and support
for protection.

Case

Lorenzo v. Posadas
In fact, from the contribution received, the government renders no special or commensurate
benefit to any particular property or person. The only benefit to which the taxpayer is entitled is
that derived from the enjoyment of the privilege of living in an organized society established and
safeguarded by the devotion of taxes to public purpose. The government promises nothing to
the person taxed beyond what may be anticipated from an administration of the laws for the
general good.

Symbiotic Relationship Theory

CIR v. Algue, Inc. [158 SCRA 9]

Taxes are what we pay for civilized society. Without taxes, the government would be paralyzed
for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to
surrender part of ones 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.

SOURCES:

1.
2.
3.
4.
5.
6.
7.

Blacks law dictionary

Lawphil.net
CIR v. Algue, Inc. [158 SCRA 9]
Lorenzo v. Posadas G.R. No. L-43082
Phil. Guaranty Co., Inc. v. Commissioner [13 SCRA 775]
CIR vs BPI, R. No. 134062
Philex Mining Corporation v. CIR, 294 SCRA 687