Chapter 2: inherent and Constitutional Limitations Flashcards
BQ: A is a non-resident alien based in HK. In 1999, he came to the PH several times and stayed in the country for an aggregate period of more than 180 days. How will he be taxes from his income derived from PH and outside PH?
A is a non-resident alien deemed to be doing business in the PH and shall be taxable for that year. He will be taxed in the same manner as an individual citizen and a resident alien on taxable income derived within the PH. Thus, he will be allowed to avail of the itemized deductions including personal and additional exemptions but subject to reciprocity on the personal exemptions.
Enumerate the Inherent Limitations of taxation.
People - public purpose
Territory - territorial jurisdiction
Government - exemption of government entities; non-delegation of the power to tax
Sovereignty - international comity
BQ: X, a multinational corporation doing business in the PH donated 100 shares of stocks of the said corporation to its resident manager in PH. What is X’s tax liability if any?
X has no donor’s tax liability since donation is not a property located in PH. However, if 85% of the foreign corporation’s business in located in PH or the shares have acquired business situs in PH, the donation may be taxed subject to the rule of reciprocity.
Enumerate the Constitutional Limitations of taxation.
DUE PORE HEN
Due Process
Uniformity and equitability
Equal Protection
Freedom of the Press
Obligations and Contracts
Religious Freedom
Exemption of properties for religios, charitable and educational purpose
Revenue bills shall originate from HR
No law granting tax Exemption shall be passed without concurrence of majority of all members of Congress
Every bill must embrace only one subject which shall be expressed in the title thereof
Explain the requirement of uniformity as limitation in the imposition and/or collection of taxes?
Tax is uniform where it operates with the same force and effect in every place where the subject of it is found. Uniformity means that all property belonging to the same class shall be taxed alike.
BQ: X was the recipient of two tax exemptions from Congress. Both were revoked by Congress before the expiry dates. Was the revocation constitutional?
Yes. Both taxes are granted unilaterally by Congress in the exercise of taxing Any tax exemption may be withdrawn unilaterally by Congress without violating the Constitution. Neither taxes were issued by the taxing authority in a contract so the revocation does not constitute the impairment of the obligations of contracts.
Q: A donated 10k to Parish to construct a new church bldg. Donee was assesed with deficiency tax. Parish protested and contends that they are exempt from taxation. Is the contention of Parish correct?
Under law, the properties of religious institutions are exempt from real property taxes. In this case, the tax being imposed is not a property tax but an excise tax. Hence, the contention is untenable.
However, if more than 30% of the donation is used for administration purposes, the gift shall be taxable.
Q: Are paying patients detrimental to a hospital’s charitability?
In legal contemplation, a charitable institution does not necessarily mean that the services rendered by the instutution are free. Paying patients does not detract a hospital’s charitability provided that all its funds are exclusively devoted to the maintenance of the institution as public charity.
What is the scope of tax exemption granted to religious, educational and charitable institutions?
The exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes including training, home and recreational facilities.
What is the determining factor in granting property tax exemption to religious, educational and charitable institutions?
Usage not ownership is the determining factor.
BQ: X sold a piece of land to church used exclusively for religious purpose. Upon registration of its title, the registry of deeds refused on the ground that capital gains tax has not been paid. Is this contention correct?
Under NIRC, the seller is liable to pay the capital gains tax from the sale of property of an individual tax payer. The church in this case is the buyer. Hence, the church is not liable to pay it.
Payment of capital gains tax is a condition precedent to registration. The registry of deeds may validly refuse the transfer for non-payment thereof.
ABC College is a non-profit non-stock educational institution run by the church. It collects tuition fees, dormitory fees, canteen rentals, interest from money market placements of tuition fees and donation of a lot and building by school alumni.
Which among these would be exempt from taxation?
Suppose ABC is a proprietary institution owned by a bishop’s family. Which among the income ang donation will be exempt from tax?
All of the income derived by ABC including the donated properties will be exempt from taxation provided that they are used actually, directly and exclusively for educational purposes under the law.
As to the donation, the law provides the same to be used actually, directly and exclusively for that purpose save when more than 30% of the donation is used by the donee for administration purposes.
