Pointers in Taxation Law2015 Bar ExaminationsProfessor Victoria V.

LoanzonWith the assistance of Atty. Gera! "o# "PAan! Atty. "emente L.

$eyes %V&Both a!mitte! to the Practice of Law on A'ri 2(# 2015)

. Genera Princi'es*. What is the nat+re of the taxin, 'ower of ,o-ernment

A. The power to tax is inherent to the state but constitutional provisions limit
the exercise thereof. Taxesare mandatory impositions and not a contract
between the state and the taxpayer (

in invitum)

becauseconsent which is an essential element of contract is absent. It has

the power to destroy as it puts restrainton personal and property rights.

*. What is the two/fo! nat+re of the 'ower to tax

A. The two-fold nature of the power of taxation

is inherent power and legislative power. It is inherent because it is an

exercise of sovereign powers and not granted by the Constitution. The
primary purpose of taxation is to generate funds for the state to finance the
needs of the citizens and promote the commongood. This is carried out by
way of legislation.

*. What are the ree-ant theories which ,o-ern the state s inherent 'ower to
taxA. $ee-ant Theories

Necessity Theory

existence of government is a necessity therefore it has theright to

compel citizens and property to pay taxes!

Benefits ProtectionTheor

y payment of taxes allowsa citizen to en"oy benefits in an organized

society! and

Life Blood Theory

taxes constitute the lifebloodof the country and taxes support the operations
of government and the public services extended to the people.

Lifeoo! Theory

Western Mindanao Power Corp v. CIR, 20!"

Taxes are the lifeblood of the nation.The #hilippines has been struggling to
improve its tax efficiency collection for the longest time withminimal success.
Conse$uently the #hilippines has suffered the economic adversities arising
from poor tax collections forcing the government to continue borrowing to
fund the budget deficits.

#ational Power Corporation v. Cit$ of Ca%anatuan

(%&&' are the lifeblood of the government for without taxes the
government can neither exist nor endure.

*. What is the !istinction etween the 'ower to tax an! the exercise of 'o ice
'owerA.

Chevron v. &C'A and C'C"

)hen the purpose of the imposition of a royalty fee upon an oil company is not
for the purpose of generating revenue but a recognition that the oil industry
is imbued with public interest then the royalty fee will be considered as a
regulatory fee.*+imply stated an imposition that is for revenue is generally a
tax while an imposition that has another purpose such as regulation is an
exercise of police power.

*. What are the constit+tiona 'roscri'tions in enactin, tax awsA.

All tax measures must originate from the ,ouse of -epresentatives but +enate
may propose or concur with amendments. The rule on taxation must be
uniform and e$uitable! Congress shall evolve a

progressive system

of taxation (tax rate and tax base are directly proportional as against

proportional system

which has a fixedrate regardless of tax base! and

regressive system

where the tax rate and tax base are inversely proportional.The
constitutional provision has been interpreted to mean simply that direct
taxes are to be preferred/and0 as much as possible indirect taxes should be
minimized. (Tolentino v. +ecretary of 1inance 2334