Power of Taxation DOUBLE TAXATION

● Marshall Doctrine It means taxing the same person for the same
tax period and the same activity twice, by the
“The power to tax, the power to destroy.” same jurisdiction.

● Holme’s Doctrine Double taxation in strict sense is when:

“Taxation power is not power to destroy while 1. Both taxes are imposed on the same
the court sits.” property or subject matter;
2. For the same purpose;
● Prospectivity of tax laws 3. Imposed by the same taxing authority;
4. Within the same jurisdiction;
● Non-compensation or set-off 5. During the same taxing period;
6. Covering the same kind or character
● Non-assignment of taxes of tax.
7. Double Taxation in Broad sense is the
● Imprescriptibility in taxation opposite of direct double taxation and
is not legally objectionable. The
● Doctrine of estoppel absence of one or more of the
foregoing requisites of obnoxious
● Strict construction of tax laws direct tax makes it indirect.
8. Constitutionality of double taxation:
● Judicial non-interference Double taxation in its stricter sense is
unconstitutional but that in the broader
Theories of Taxation sense is not necessarily so.
9. Our Constitution does not prohibit
Ability to pay theory - contribution should be double taxation. However, double
based on the capacity of the taxpayer taxation will not be allowed if it results
in a violation of the equal protection
Lifeblood Doctrine clause.

● Without taxes, the government would Kinds of double taxation as to taxing

be paralyzed for lack of motive power authorities;
to activate or operate it.
● Tax is imposed even in absence of 1. Domestic double taxation - when
constitutional grant both the taxes are imposed within the
● Claims for tax exemption are same state,
construed against taxpayer 2. International double taxation - when
● The government reserves the right to the taxes are imposed by different
choose the objects of taxation states
● The courts are not allowed to interfere
with the collection of taxes
Modes of eliminating double taxation: CONSTITUTIONAL LIMITATION OF
TAXATION
1. Tax Deduction - an amount
subtracted from the gross income to 1. Observance of due process of law
arrive at taxable income,
2. Tax Credit - an amount subtracted No one should be deprived of his life,
from an individual's or entity's tax liberty, or property without due
liability (tax due) to arrive at the tax process of law. Tax laws should
liability still due. A deduction differs neither be harsh nor oppressive.
from a tax credit, in that a deduction
reduces taxable income while a credit Aspects of due process
reduces tax liability.
3. Treaties with other states: a tax 1. Substantive due process - tax must be
treaty sets out the respective rights to imposed only for public purposes.
tax of the state of source (situs) and Collected only under the authority of
the state of residence with regard to valid law and only by the taxing power
certain cases, an exclusive right to tax having jurisdiction.
is conferred on one of the contracting
states; 2. Procedural due process - there should
be no arbitrariness in the assessment
Aspects of Taxation and collection of taxes, and the govt
shall observe the taxpayer’s right to
Levy notice and hearing. The law
established procedures which must be
deals with the provisions of law which followed to in making assessments
determines: and enforcing collections.
Equal Protection of the law
● The person or property to be taxed
● The sum or sums to be raised ● No person shall be denied the equal
● The rate of the tax protection of the laws. Taxpayers
● The time and manner of levying, should be treated equally both in
receiving and collection the tax. terms of rights and conferred and
obligations imposed.
Collections - constituted of the provisions of
law which prescribe the manner of enforcing Uniformity Rule in Taxation
the obligation on the part of those taxes to pay
the demand thus created. ● The rule of taxation shall be uniformed
and equitable.
● Taxpayers under dissimilar
circumstances shall not be taxed the
same.
● They should be classified according to
commonality
Non-imprisonment for non-payment of churches, and mosques, lands, buildings,
debt or poll tax and improvements from property taxes

● The non-payment of tax is similar to a ● The Constitutional exemption from

crime. The Constitutional guarantee property tax applies for properties
on non-imprisonment for non-payment actually, directly, and exclusively (ie.
of debt does not extend to primarily) used for charitable,
non-payment of tax except poll tax. religious, and educational purposes.
● Applies only to the basic community ● In observing this Constitutional
tax. Non-payment of the additional limitation, the Philippines follows the
community tax is an act of tax evasion doctrine of use wherein only
punishable by imprisonment. properties actually devoted for
religious, charitable, or educational
Non-impairment of obligation and contract activities are exempt from real
property tax
● The State should set an example of
good faith among its constituents. It Non-appropriation of public funds or
should not set aside its obligations property for the benefit of any church, sec
from contracts by the exercise of its or system of religion
taxation power.
● Tax exemptions granted under ● This constitutional limitation is
contract should be honored and intended to highlight the separation of
should not be cancelled by a unilateral religion and the state. To support
government action. freedom of religion, the government
should not favor any particular system
of religion by appropriating public
funds or property in support thereof.

Free worship rule

Exemption from taxes of the revenues and
● The Philippine government adopts assets of non-profit, non-stock educational
free exercise of religion and does not institutions including grans, endowments,
subject its exercise to taxation. donation, or contributions for educational
● Consequently, the properties and purposes.
revenues of religious institutions such
as tithes or offerings are not subject to ● The Constitution recognises the
tax. necessity of education in state building
● This exemption, however, does not by granting tax exemption on
extend to income from properties or revenues and assets of non-profit
activities of religious institutions that educational institutions. This
are proprietary or commercial in exemption, however, applies only on
nature. revenues and assets that are actually,
directly, and exclusively devoted for
Exemptions of religious, charitable or educational purposes.
educational entities, non-profit cemeteries, ● Consistent with this constitutional
recognition of education as a
 necessity, the NIRC also exempts
government education institutions ● Laws that add income to the national
from income tax and subjects private treasury and those that allows
educational institutions to a minimal spending therein must originate from
income tax. the House of Representatives while
Senate may concur with amendments.
Non-diversification of tax collectors ● The origination of a bill by Congress
does not necessarily mean that the
● Tax collections should only be used for House bill must become the final law.
public purposes. It should never be It was held constitutional by the
diversified or used for private Supreme Court when Senate changed
purposes the entire house version of a tax bill.

Non-delegation of the power of taxation Each local government unit shall exercise
the power to create its own sources of
● The principle of checks and balances revenue and shall have a just share in the
in a republican state requires that national taxes
taxation power as part of lawmaking
be vested exclusively in Congress. ● This is a constitutional recognition of
● However, delegation may be made on the local autonomy of local
matters involving the expedient and governments and an express
effective administration and delegation of the taxing power.
implementation of assessment and
collection of taxes.
● Hence, implementing administrative
agencies such as the Department of
Finance and the Bureau of Internal
Revenue (BIR) issues revenue
regulations, rulings, orders, or
circulars to interpret and clarify the
application of the law.

Non-impairment of the jurisdiction of the

Supreme Court to review tax cases

● Notwithstanding the existence of the

Court of Tax Appeals, which is a
special court, all cases involving taxes
can be raised to and be finally decided
by the Supreme Court of the
Philippines.

Appropriations, revenue, or tariff bills shall

originate exclusively in the House of
Representatives, but the Senate may
propose or concur with amendments.
System of Taxation Liable

● Progressive 1. Individuals
● LGC - statue/law
● 18 years old or over
Common Limitations on Taxing Power ● Regularly employed
● Engaged in business
● The LGUs don’t have the power to ● Property with FMV of 1k or more
impose A-O ● Required to file ITR

Scope of Taxing Power Exceptions:

A. Province ● Diplomatic/consular representatives

● Transient visitors (does not exceed 3
● Rate and base months)
● Deadline of payment
Rate and base: 5 pesos annual tax + 1 pesos
B. Municipalities per 1k income

● Taxes not imposed by provinces (A-J) Maximium: 5k per individual

● Busines Taxes on Manufacturers
1M a year income
- within metro manila, not
exceeding 50% of the 1M/1K = 1,000 + 5 pesos = 1,005 pesos
maximum rates (only applied
to Pateros) Note: FMV of gross receipts and real property

C. Cities
2. Juridical Persons
● TFC which provinces or municipalities
may levy and collect ● Annual Tax: 500 pesos
● P2 per income

Community Tax Certificate Additional tax: based on FMV of real

property & gross receipts (basis)
● Poll tax/residence tax
● Paid where you are a resident ● Shall not exceed 10,000 pesos

Under Article 3 of the Constitution Bill of RP = 2M; GR = 4M Total: 6M

Rights
6M/5K x 2 pesos + 500 = 2,900
● Non-payment of poll tax will not result
to imprisonment
Local Legislative Bodies

Ordinances - sanggunian (konsehal)

A. Public Meaning

Local Circulation - tax ordinances

● 2 conspicuous & publicly accessible

places

B. Appeal Tax Ordinances

● Contest legality - valid constitutonality

● Appeal before Justice Secretary within
30 days from the effectivity of
ordinance

Time of Payment

● Calendar year (tax period)

● Quarterly (manner)
● Accrual of tax - 1st day of quarter next
following effectivity
● First 20 days in January

Prescriptive period - 5 years

Interest: 2% per month, 24% per year

Surcharge: 25% lapse deadline, 50%

intentional