M3 - Taxation

Question 1

illustrate the concept of taxation as an exaction to raise revenue.

The court ruled that even if a tax may have a regulatory purpose, its primary purpose MUST be to raise revenue to be considered a true tax.

This distinction is crucial because the exercise of police power (regulation) is subject to different limitations than the power of taxation.

Answer 1

Planters Products Incorporated

Question 2

What is the consti provision for delegated power to tax for LGU

Answer 2

Sec 5, Article 10

Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges [subject] to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.

note
- can’t be revoked by legislation as it is a consti provision
- LGUs must exercise this power subject to guidelines and limitations provided by Congress, which must be consistent with the basic policy of local autonomy.

Question 3

Taxes paid by the owner: If the owner can substantiate the payment of real estate taxes on the expropriated property, they may be reimbursed for those taxes as part of the just compensation. What case

Answer 3

City of Manila v Salvador Rojas

Question 4

What is the consti provision for delegated power to tax for the President

Answer 4

Section 28 (2) Article 6
“The Congress may, by law, authorize the President to fix within specified limits, and [subject] to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.”

note
- a law passed by congress is necessary for this delegation

Question 5

Republic Act No. 7160 (Local Government Code of 1991): Provides guidelines and limitations for LGU taxation as authorized by the Constitution (not the basis for the delegation itself).

Question 6

Exemption Implied in Authority to Tax:

The power to tax inherently carries the power not to tax (tax exemption). This means that when a sovereign entity has the authority to impose taxes, it also has the choice to waive that power in specific cases.

Answer 6

Legal Basis: This concept stems from the inherent nature of the power to tax and is not explicitly mentioned in the Philippine Constitution. However, it is a well-established principle in taxation law

Question 7

How is tax exemption effected as the exception to the general rule to tax

Answer 7

The burden of proof lies on the party claiming exemption to demonstrate their eligibility. They must prove they fall under the specific criteria established by law for exemption.

Question 8

Constitutional Rules on Tax Exemptions

Answer 8

section 28(4), art 6
- requires majority vote of all Congress members to pass a law granting tax exemptions

section 28(3), art 6
grants tax exemptions for real property taxes to
- charitable institutions (church, mosques, non-profit x)
- lands & bldgs exclusive for [religious, charitable, or educational purposes]

Question 9

Differentiate Uniformity & Equitability

Answer 9

Uniformity - Taxes must be applied fairly and consistently to individuals or entities in similar situations

Equitability - Taxes should be distributed fairly according to individuals’ ability to pay. (those w/ higher pay more)

regressive tax - tax is higher for lower earners

Question 10

What is the issue and ruling in the case of Tolentino v. Secretary of Finance (2003)

Answer 10

Issue; won VAT violates the Consti’s mandate for a progressive system of tax

Ruling: The court ruled that the Constitution mandates Congress to evolve, not prohibit, a progressive system. This means that while Congress has a duty to work towards a progressive system, it does not necessarily mean all taxes must be progressive. Additionally, the court determined that regressivity is not a basis for the court to invalidate tax laws.

progressive - higher earner, higher tax, vice versa.

Question 11

declaring the levy unconstitutional for violating the principle that taxes can only be levied for public purposes

The Court emphasized that taxes can only be levied for public purposes and cannot be used for purely private purposes or for the exclusive benefit of private individuals.

Answer 11

Planters Products Inc. (PPI) v, FertiPhil

Question 12

limitations of taxation

Answer 12

1. due process of law
2. equitable
3. uniform
4. progressive
5. for public purpose