General provisions:

INHERENT POWERS OF THE STATE:

- Inherent power – indispensible power necessary sovereign’s state for its survival.
- Naturally exist as essential force in order that a government can:
o Command
o Maintain peace and order
o Survive, irrespective of any constitutional provision

Constitution: kasulatan where rights are established, explained and provides limit
- There is no law express provision sa constitution ng power to tax because it is inherent already (kalabisan)

3 branches: Doctrine of separation of powers: each will be superior supreme to the power entrusted
1. Legislative – gumagawa batas. (Lahat ilalagay ni congressman, isasalang sa house of resp, pagtatalunan until 3 rd reading
after considering binago at botohan. After 3rd reading paginapprove ng house, dadaan pa sa senate. Senate is not superior
to house. If galling sa senate ung bill, house naman ang last call. Equal lang silang dalawa. Nakasanayan lang bicameral
system, bef bills becomes a law. dapat dalawa maapprove ng dalawang house of congreess, saka pupunta president (leader
ng executive branch).
a. House of representative
b. Senate
2. Judicial – may batas na di nagkakaintindihan, define even ordinance
3. Executive – nagpapatupad batas. President leader ng exec branch. 30 days pagiisipan. If silent, auto law. OR pede I veto ng
president. The president’s power to veto is not a mere superiority among other branches, BUT ONLY A CHECK AND
BALANCE. (di pwede isa lang nagdedecide). Ibabalik ng presi with veto note (dahilan). Tapos magdedeliberate ung congress.
pede padin iover veto ng legislative. Kung kumbinsido house na tama sila, edi pwede I over veto by 2/3 of members of
congress. Congress padin may final say)
General veto: the rest hindi effective, ibabbalik lhat
Line item: particular item lang di nya inistrike, effective lahat yon.
Line item veto is only allowed for:
• Tariff (customs duty) – gumagawa ng pera
• Revenue (NIRC) - gumagawa ng pera
• Appropriation – walang lalabas na pera na hindi sa GAA
• Increasing indebtedness – kulang, edi nangutang
• Loss of local application
Kapag ok ung batas, ibibigay kay sec of finance, papatupad na ni commissioner ung bagong tax law (train law)

a. Under: DoF
i. BIR- commissioner
1. Nagchcheck if bayad kaba
2. Kumukuha gamit mo if me utang kappa
3. Tax criminal tax evasion
ii. Bureau of customs- soF

Who exercises power to tax? Legislative ang nageexercise, executive lang ang nagpatupad. Utusan lang ang legislative. (nanay
nagutos sa anak analogy, nanay nagutos but anak sumunod)
3 subject matter of tax: person, property, privilege/right

Inherent powers of the sovereign state: (PET) government nagpapatupad

1. Police Power – protect citizens and provide for health, safety, welfare and morals of society. To guard against excess or
abuses of individual liberty.
- Kapangyarihan ng estado yuraan or sagsaan ang tao or karapatan mo para sa ikabubuti ng nakakarami (nakakarami lang,
hindi lahat. general welfare lang, kasi kapag lahat, wala ng sinagasaan. Lol)
- Bakit inherent? Ang estado sa pamamagitan ng pamahalaan ay ama ng kabutihan. Inaasahan natin sa estado na
proprotektahan nya yung bayan kaya mga batas ay (hindi na kailangan nakalagay sa saligang batas, kasi inherent na sa batas
na protektahan)
Eg. Criminal justice system is an exercise of police power, Number coding sa car
- Restricted by the “due process clause” of the constitution which provides that “no person may be deprived of life, liberty,
or property without due process of law
- May be exercised thru Taxation bc taxes may be levied for the promotion of the welfare of the public
 Eg. Preservation of natural resources, segregation of lepers from the public, imprisonment of convicted criminals and
regulation of various professions
2. Eminent Domain Power – inherent power to take private prop for public use after payment of just compensation
- Idea: common necessities and interests of the common transcend individual rights on property. Niyurakan karapatan mo na
magbenta at di magbenta
- Act: State may expropriate private property when it is necessary in the interest of national welfare
- Since eminent domain is inherent in sovereignty, pertinent provisions in the Constitution are not grants of the power, but
rather limitation upon its exercise.
- “Just compensation” – paying the owner the full monetary equivalent of the property taken for public use. Eg. Fair market
value
3. Taxation Power
What? inherent power of the state
How? to impose charge/burden
Where? upon persons, property or exercise of right
Why? to raise revenue for the support of the government

What comprises a State?

 People
 Territory
 Government – essential element, because it comes out of necessity
 Sovereignty – freedom of self determination
(Taiwan is only recognized as province of China, so no sovereingnty)
Basis to be recognized as a state? Membership with United Nations (association of sovereign)

A. A POWER BY WHICH AN INDEPENDENT STATE, THROUGH ITS LAW MAKING BODY, RAISES AND ACCUMULATES
REVENUE FROM ITS INHABITANTS TO PAY THE NECESSARY EXPENSES OF THE GOVERNMENT.
o As power, coextensive with sovereignty to demand contributions for public purpose to support the gov
B. A PROCESS OR ACT OF IMPOSING A CHARGE BY GOVERNMENTAL AUTHORITY ON PROPERTY, INDIVIDUALS OR
TRANSACTIONS TO RAISE MONEY FOR PUBLIC PURPOSES.
o It passes a legislative undertaking thru the enactment of tax laws by the congress which will be implemented by
Executive branch thru Bureau of Internal Revenue to raise revenue from inhabitants in order to pay the necessary
expenses of gov
C. A MEANS BY WHICH THE SOVEREIGN STATE THROUGH ITS LAW-MAKING BODY DEMANDS FOR REVENUE IN ORDER
TO SUPPORT ITS EXISTENCE AND CARRY OUT ITS LEGITIMATE OBJECTIVES.
o A means by which the Sovereign state thru its law-making body demands revenue in order to support its existence
and carry out its legitimate objectives
o Means: way of collecting and apportioning the cost of government among those who are privileged to enjoy its
benefits

Similarities among Taxation, Eminent Domain and Police Powers

1. Inherent in sovereignty – they can be exercised even without being expressly granted in the constitution
2. Necessary attributes of sovereignty bc there can be no effective government without them
3. Constitute 3 ways by which state interferes with private right and property
4. All legislative in nature and character
5. Presuppose an equivalent compensation
6. Provisions in Constitution are “JUST LIMITATIONS” on the exercise of these powers

Differences?
TAXATION POLICE POWER EMINENT DOMAIN
1. AS TO CONCEPT POWER TO ENFORCE POWER TO MAKE AND IMPLEMENT POWER TO TAKE PRIVATE
CONTRIBUTION TO RAISE LAWS FOR THE GENERAL WELFARE. PROPERTY FOR PUBLIC USE
GOVERNMENT FUNDS. WITH JUST COMPENSATION.
2. AS TO SCOPE PLENARY, COMPREHENSIVE BROADER IN APPLICATION, GENERAL MERELY A POWER TO TAKE
AND SUPREME POWER TO MAKE AND IMPLEMENT PRIVATE PROPERTY FOR
LAWS. PUBLIC USE.
plenary power is a power that
has been granted to a body or
 person in absolute terms, with
no review of or limitations
upon the exercise of
that power.
3. AS TO AUTHORITY EXERCISED ONLY BY
GOVERNMENT OR ITS
POLITICAL SUBDIVISIONS.
4. AS TO PURPOSE MONEY IS TAKEN TO SUPPORT
THE GOVERNMENT.
5. AS TO NECESSITY OF THE POWER TO MAKE TAX
DELEGATION LAWS CANNOT BE
DELEGATED.
6. AS TO PERSON OPERATES ON A COMMUNITY
AFFECTED OR A CLASS OF INDIVIDUAL.
7. AS TO BENEFITS CONTINUOUS PROTECTION
AND ORGANIZED SOCIETY.
(benefits protection)
8. AS TO AMOUNT OF GENERALLY, NO LIMIT.
IMPOSITION
9. AS TO IMPORTANCE INSEPERABLE FOR THE
EXISTENCE OF A NATION – IT
SUPPORTS POLICE POWER AND
EMINENT DOMAIN.
10. AS TO SUBJECT TO CONSTITUTIONAL
RELATIONSHIP TO AND INHERENT LIMITATIONS.
CONSTITUTION INFERIOR TO NON
IMPAIRMENT CLAUSE.
11. AS TO LIMITATION CONSTRAINTS BY CONSTITU-
TIONAL AND INHERENT
LIMITATIONS.
EXERCISED ONLY BY GOVERNMENT
OR ITS POLITICAL SUBDIVISIONS.
PROPERTY IS TAKEN OR DESTROYED
TO PROMOTE GENERAL WELFARE.
CAN BE EXPRESSLY DELEGATED TO
THE LOCAL GOVERNMENT UNITS BY
THE LAW MAKING BODY.
OPERATES ON A COMMUNITY OR A
CLASS OF INDIVIDUAL.
HEALTHY ECONOMIC STANDARD OF
SOCIETY.
(altruistic feeling that somehow you
have contributed to the common
good as against the non impairment
loss)
COST OF REGULATION, LICENSE AND
OTHER NECESSARY EXPENSES.
PROTECTION, SAFETY AND WELFARE
OF SOCIETY.
RELATIVELY FREE FROM
CONSTITUTIONAL LIMITATIONS.
SUPERIOR TO NON IMPAIRMENT
CLAUSE.
LIMITED BY THE DEMAND FOR
PUBLIC INTEREST AND DUE PROCESS.
MAY BE GRANTED TO PUBLIC
SERVICE OR PUBLIC UTILITY
COMPANIES.
PRIVATE PROPERTY IS TAKEN
FOR PUBLIC USE.
CAN BE EXPRESSLY DELEGATED
TO THE LOCAL GOVERNMENT
UNITS BY THE LAW MAKING
BODY.
OPERATES ON PARTICULAR
PRIVATE PROPERTY OF AN
INDIVIDUAL.
MARKET VALUE OF THE
PROPERTY EXPROPRIATED.
(just compensation)
NO IMPOSITION.
COMMON NECESSITIES AND
INTERESTS OF THE
COMMUNITY TRANSCEND
INDIVIDUAL RIGHTS IN
PROPERTY.
SUPERIOR TO AND MAY OVER
RIDE CONSTITUTIONAL
IMPAIRMENT PROVISION
BECAUSE THE WELFARE OF
THE STATE IS SUPERIOR TO
ANY PRIVATE CONTRACT.
BOUNDED BY PUBLIC PURPOSE
AND JUST COMPENSATION.

Nature of taxation:
 INHERENT POWER OF SOVEREIGNTY;
• Why is it inherent? The only way you can sustain a state is thru government, so it follows the power to tax inherent
in order to sustain the government thru lifeblood doctrine (to enable it to perform)
• From the moment a state is born, automatically possesses the power to collect taxes from it inhabitants
• Sovereignty? Gov having sovereignty can enforce contributions upon citizens even without specific provision in
Constitution authorizing it.
• Any provision in Constitution regarding taxation does not create rights for sovereignty to have power to tax but it
merely constitutes imitations upon supremacy of tax power
• ONLY NATIONAL GOV/legislat exercises inherent power to tax
• GR: LGU(executive) do not possess inherent power tax.
 • EXCEPTION: How can a gov unit or political subdivisions (brgy, municipal, city, autonomous region,
province) have the power to tax?
1. Expressed constitutional provision granting them the power to tax (determination of tariff rates by
president according to constitution)
2. Valid delegation of tax power thru the statute from the national legislature granting local government
units of political subdivisions to exercise such power (Local government code of the PH), in the
absence of constitutional provision. (sinabi ng congress with limitations na sinabi ng congress. Eg,
Local gov code- andon limit code
 ESSENTIALLY A LEGISLATIVE FUNCTION; the law making body and its poltical subdivisions exercise the power of taxation.
• Power to enact laws and ordinances and to impose and collect taxes are given to the congress (congressman)
• GR: Lahat ng klase ng batas mangagaling either house or senate.
Except the ff: restricted na galling sa house: TRAIL (pede iamend ng senate, basta ang initiative dapat galling sa
house)
• Tariff (customs duty) – gumagawa ng pera
• Revenue (NIRC) - gumagawa ng pera
• Appropriation – walang lalabas na pera na hindi sa GAA
• Increasing indebtedness – kulang, edi nangutang
• Loss of local application
o Scope of the legislative taxing power comprise the ff: (SARAP KASAMA)
• Subject matter (persons, property, exercise of rights, transax, occupation) sino or ano tataxan?
• Amount of rate of the tax
• Purpose of tax (public purpose) – saan ilalagay?
• Apportionment of tax - saan mapupunta? Government or special fund?
• Situs of taxation – buong pilipinas ba or etong klase lang?
• Method of collection
o GR: Tax delegation of legislative power – EXCLUSIVE POWER OF CONGRESS. Power to enact tax law (gumawa bill)
is exclusive to congress (house)
 Taxation power that cant be delegated are the ff:
 Power to select the coverage, object, or property to be taxed
 Determining of:
o Nature and purpose for which taxes shall be collected
o Place or situs of tax imposition
o Fixing the amount to be imposed and tax rates
o Granting tax exemptions or condonations
o Setting down the rules of taxation in general
o EXCEPT: Tax administration – can be delegated
 power is only ministerial or advisory (power to value prop, assess and collect tax)

• LGU: legislative
• Pres: admin discretion
• Tax admin: delegated
 FOR PUBLIC PURPOSES;:
• Legit objective: support the services of the gov
• Public taxes are public money to finance recognized for public needs
• No individual or private person shall primarily be enriched or benefited by the public funds.
• Utilized for public purpose if the welfare of nation/greater population has benefited with its use
 TERRITORIAL IN OPERATION;
• Observe tax situs because tax laws are enforceable only within territorial limits
• Power to tax can only be exercised within the territorial jurtisdiction of a taxing authority EXCETPTprivity of rel
BETWEEN THE TAXING STATE AND THE OBJECT OF tax based on the tax principle of reciprocal duties.
• Support/care of gov extend to citizens residing outside ph
• Taxing power is exercisable since the fundamental basis of the right to tax is the capacity of the
government to provide benefits and protection to the object of the tax.
•
• Taxation is bound to observe International comity-
• Courteous recognition, friendly agreement, interaction and respect accorded by one naton to laws and
institution of others
 • respect nontaxable property outside ph under principles of sovereign equality among states, mga
ginagamait na properties by diplomats or head of states in exercise of sovereign powers and diplomatic
funnction
 TAX EXEMPTION OF GOVERNMENT;
• grant of tax immunity to a particular class of persons or corpo
• state’s tax immunity from taxation is inherent in its power to impose tax
• state cannot be taxed without its consent otherwise such is derogation to its sovereignty
• Tax exemption – gov entities thru the gov immediately and directly exercises government functions (AFP)
• But PNR and NPC – subject to tax in the absence of tax exemptions provisions in their charters or the law
creating them (unless expressly taxed) and those performing prorprietary functions are subject to tax
unless expressly exempted
 THE STRONGEST AMONG THE INHERENT POWERS OF THE GOVERNMENT; AND
• Taxation power bec without money, gov can neither survive or dispense any of its other powers and functions
effectively
 SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS.
- Constitutional limitation – kapag contravene sa constitution, pede patayin

Importance of taxation:
Taxation power – exists inseparably with the state. Essential for existence of nation.
- uSed as an implement of police power in order to promote general welfare
- taxation is exercised to raise revemue for the very existence of gov to serve the people for whose ebenfit taxes are
collected (this is why taxes are compulsory)
- without revenue, there can be no continuing government. Without gov, there can be no civilization.

Power of taxation: To raise revenue:– inferior to non impairment clause. Contract will prevail.
To promote public welfare – exercise of Police power. Police power is superior so between law and contract. The law will prevail.

ESTABLISHED BASED ON THE PRINCIPLES OF:

A. NECESSITY
 THE GOVERNMENT HAS A RIGHT TO COMPEL ALL ITS CITIZENS, RESIDENTS AND PROPERTY WITHIN ITS TERRITORY
TO CONTRIBUTE MONEY. ( a necessary burden to preserve the state’s sovereignty)
 TAXATION IS THE “LIFEBLOOD” OR THE “BREAD AND BUTTER” OF THE GOVERNMENT AND EVERY CITIZEN MUST
PAY HIS TAXES.
 Taxes being the lifeblood of the government, their prompt and certain availability are of the essence.
 Kabawasan ay nagpapahina sa blood ng government, kailangan ito para mabuhay
B. BENEFITS-RECEIVED/BENEFITS-PROTECTION THEORY
- RECIPROCAL DUTIES OF PROTECTION AND SUPPORT BETWEEN THE STATE AND INHABITANTS.
 THE GOVERNMENT COLLECTS TAXES FROM THE SUBJECT OF TAXATION IN ORDER THAT IT MAY BE ABLE TO
PERFORM ITS FUNCTIONS.
 Gov’s right to tax income emanates from its being a silent partner in the production of income thru means of
providing protection, proper business climate, and peace and order to the tax payers in the making of earnings.
 Symbiotic relationship and partnership – between taxing authority and the subj of taxation is enough to justify the
imposition of tax power
 Indespensible partnership between people and gov
o Qualifications of benefit received principle:
 It does not mean that only those who are able to pay taxes can enjoy the privileges and protection given
to a citizen by the gov
 He cant object to or resist the payment of taes bc no specific personal benefit to him can be
pointed out as arising from tax
 The gov renders no special or commensurate benefit to any particular prop or person
 The only benefit to wchich the taxpayer is enetitled is that derived from his enjoyment of the
privileges of living in an organized society established and safeguarded by the devoition of taxes
to public purposes

OBJECTIVES IN THE EXERCISE OF TAXING POWER

1. REVENUE PURPOSES
 THE PRIMARY PURPOSE OF TAXATION IS TO RAISE REVENUE BY COLLECTING FUNDS OR PROPERTY FOR THE
SUPPORT OF THE GOVERNMENT IN PROMOTING THE GENERAL WELFARE AND PROTECTING ITS INHABITANTS.
Fiscal policy: based on rule annual rev = annual exp
Significant portion of revenue – raised from taxation

2. REGULATORY PURPOSE
- Regulatory – aka sumptuary – a secondary objective of imposing tax
THIS OBJECTIVE IS ACCOMPLISHED TO
A. REGULATE INFLATION,
B. ACHIEVE ECONOMIC AND SOCIAL STABILITY, AND
C. SERVE AS KEY INSTRUMENT FOR SOCIAL CONTROL
The amount of taxes may be increased to curve spending pow and minimize inflation in times of prosperity. It may be reduced
to expand business and ward off depression in times of declining economic condition.

Taxes may be imposed to encourage economic growth by granting tax exemptions, tax relief and incentives to attract
investments that will create employment.

IT may be implementented to serve the general welfare of the people in promoting science and invention, or in financing
educational activities or in improving the efficiency of local police forces to maintain peace and order thru grant of subsidy.

 TAXES MAYBE USED AS A TOOL AND WEAPON IN INTERNATIONAL RELATIONS

- Encorurage foreign trade by providing tax incentive or protect local industries against foreign competition
by imposing additional taxes on imported goods.
Eg. If ph wants to restrict trade relations with some foreign country, it can impose higher custom and tariff rates
on imported goods. If gusto ng open trade rel, babaan taxes on importations.

AS A TOOL TO PROTECT TRADE RELATION, SPECIAL DUTIES MAYBE CREATED TO PROTECT NEW CONDITIONS, SUCH
AS:
(1) DISCRIMINATORY DUTY
THIS SPECIAL DUTY IS DESIGNED TO OFFSET ANY FOREIGN DISCRIMINATION AGAINST OUR
LOCAL COMMERCE.
(2) COUNTERVAILING DUTY
IT MAYBE IMPOSED TO OFFSET ANY FOREIGN SUBSIDY GRANTED TO IMPORTED GOODS TO THE
PREJUDICE OF OUR LOCAL INDUSTRIES.
REGULATORY PURPOSE [CONT’D]
(3) MARKING DUTY
IT IS GENERALLY IMPOSED AS ADDITIONAL DUTY TAX ON IMPORTED ARTICLES AND/OR
CONTAINERS WITH IMPROPER CLASSIFICATION.
(4) DUMPING DUTIES
IT REFERS TO THE ADDITIONAL DUTY TAXES IMPOSED ON IMPORTED GOODS WITH PRICES
LESSER THAN THEIR FAIR MARKET VALUES TO PROTECT LOCAL INDUSTRIES.
3. COMPENSATORY PURPOSE
Tax may be used to make up for benefit received.
An excise tax on gasoline consumed is imposed on vehicle owners using roads. In this case, the tax is compensatory for the
use of road.
TAXATION IS A WAY OF GIVING BACK THE EXPECTED ECONOMIC AND SOCIAL BENEFIT DUE TO THE INHABITANTS.
Taxes may be imposed for the equitable distribution of wealth and income in the society.
In income taxation, the higher taxes are collected from those who earn more and use of funds collected for the welfare of
the people in general.
In estate taxation, the estate tax reduces thr property received by the successor thru the portion of the property collected
by the government which is to be used for the benefit of the public or defray the expenses of the government.

OBJECTS OF TAXATION MAY REFER TO THE SUBJECT TO WHICH TAXES ARE IMPOSED.
GENERALLY TAXES ARE IMPOSED ON THE FOLLOWING:
1. PERSONS, WHETHER NATURAL OR JURIDICAL PERSONS;
2. PROPERTIES, WHETHER REAL, PERSONAL, TANGIBLE OR INTANGIBLE PROPERTIES;
3. EXCISE OBJECT, SUCH AS TRANSACTIONS, PRIVILEGE, RIGHT AND INTEREST.
Ang gaap pagsumalpak sa tax code, mas mataas tax code. Tax code is substance and form, Gaap is substance over form.