ARELLANO UNIVERSITY SCHOOL OF LAW

Pasay City

TAXATION 1

Atty. Arnel A. dela Rosa, CPA, REB, REA

Professor

Part 1 – General Principles

Course Outline

I. Taxes & Taxation, Defined

II. Basis of Taxation

A. Lifeblood Doctrine

Case/s:
1. CIR v. Cebu Portland & CTA, 156 SCRA 535 (1987)
2. Mun. of Makati v. CA, et. al, 190 SCRA 206 (1990)
3. CIR v. Algue, et. al, 158 SCRA 9 (1988)
4. PILMICO-MAURI Foods Corp. v. CIR, 802 SCRA 618 (2016)
5. CIR v. Next Mobile, Inc., 776 SCRA 343 (2015)
6. CIR v. Nippon Express (Phils.) Corp., 771 SCRA 27 (2015)
7. CIR v. Dash Engineering Phils., Inc., 712 SCRA 347 (2013)
8. Camp John Hay Dev’t. Corp. v. CBAA, 706 SCRA 547 (2013)
9. First Lepanto Taisho Insurance Corp. v. CIR, 695 SCRA 639 (2013)
10. CIR v. San Roque Power Corp., 695 SCRA 336 (2013)
11. CIR v. BPI, 521 SCRA 373 (2007)
12. CIR v. Pineda, 21 SCRA 105 (1967)
13. Misael P. Vera v. Hon. Jose F. Fernandez, et. al., 89 SCRA 199 (1979)
14. CIR v. CTA, 234 SCRA 348 (1994)
15. YMCA v. CIR, 298 SCRA 83(1998)
16. Davao Gulf Lumber Corp. v. CIR, 293 SCRA 77 (1998)
17. Ferdinand R. Marcos II v. CA, 273 SCRA 47 (1997)
18. Jose Reyes v. Pedro Almanzor, 196 SCRA 322 (1991)
19. Phil. Bank of Communications v. CIR, 302 SCRA 250 (1999)
20. Philippine Guarantee Co., Inc. v. CIR, 13 SCRA 775 (1965)
21. Philex Mining Corp. v. CIR, 294 SCRA 687 (1998)
22. North Camarines Lumber Co. v. CIR, 109 Phil 511 (1960)
23. BPI Family Savings Bank v. CA, 330 SCRA 507

B. Benefit-Protection Theory

C. Doctrine of Symbiotic Relationship

Case/s:
1. CIR v. Algue, supra.

III. Liabilities Involved

IV. Nature of Taxing Power

A. Taxation as Inherent Attribute of Sovereignty

B. Taxation as Legislative in Character

V. Aspects, Processes, Phases of Taxation

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 A. Levy/Imposition
i. Scope of Legislative Power to Tax

Case/s:
i. Walter Lutz v. J. Antonio Araneta, 98 Phil. 148 (1955)
ii. Benjamin Gomez v. Enrico Palomar, 25 SCRA 827 (1968)
iii. Silvestre Punsalan v. The Mun. Board of the City of Manila, 95 Phil. 46 (1954)
iv. CIR v. Botelbo Shipping Corp., 20 SCRA 487
v. Tan v. Del Rosario, Jr., 237 SCRA 324

ii. Is the Power to Tax the Power to Destroy?

iii. Judicial Review of Taxation

B. Assessment and Collection

C. Payment

VI. Purposes of Taxation

A. Primary Purpose - Revenue Generation

B. Secondary / Non-Revenue Purpose

i. Reduction of Social Inequality
ii. Encourage the Growth of Local Industries
iii. Protect Local Industry against Unfair Competition
iv. As an Implement of the Police Power
v. As an Implement of the Power of Eminent Domain

VII. Extent of Taxing Power

VIII. Principles of a Sound Tax System

A. Fiscal Adequacy
B. Theoretical Justice
C. Administrative Feasibility

IX. Kinds of Taxes, examples

A. Direct and Indirect

Case/s:
1. Maceda v. Macaraeg, 223 SCRA 217
2. ABAKADA Guro v. Executive Secretary, G.R. No. 168056, 1 Sept.
2005 and 18 October 2005

B. Specific and Ad Valorem

Case/s:
1. Tan v. Mun. of Pagbilao, 7 SCRA 887

C. General and Special

Case/s:
1. PAL v. Romeo Edu, 164 SCRA 320
2. ESSO Standard Eastern v. CIR, 175 SCRA 149
3. Lozano v. Energy Regulatory Board, 192 SCRA 363

D. National and Local

Case/s:

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 1. Meralco Securities v. Central Board of Assessments Appeal, 114
SCRA 260

E. Personal and Property

F. Progressive and Regressive

X. Taxation as Distinguished from Other Inherent Powers of the State & Other Impositions:

A. Taxation Distinguished from Police Power

B. Taxation Distinguished from Eminent Domain
C. Taxes Distinguished from other Impositions
i. Tax vs. Special Assessment
Case/s:
1. Apostolic Prefect v. Treasurer of Baguio, 71 Phil 547

ii. Tax vs. License

Case/s:
1. Proctor and Gamble v. Mun. of Jagna, 94 SCRA 894
2. Golden Ribbon Lumber v. City of Butuan, 12 SCRA 611

iii. Tax vs. Toll

Case/s:
1. City of Ozamis v. Lumagpas, 65 SCRA 33

iv. Tax vs. Penalty

v. Tax vs. Debt
⮚ Taxes are not subject to set-off

Cases: (on Tax v. Debt)

1. Republic v. Ericta, 172 SCRA 623
2. CIR v. ESSO Standard Eastern, Inc., 172 SCRA 364
3. Francia v. Intermediate Appellate Court, 162 SCRA 753
4. Domingo v. Garlitos, 8 SCRA 443
5. Philex Mining Corp. v. CIR, 294 SCRA 687
6. Victoria Milling v. PPA, 153 SCRA 317
7. CIR v. Prieto, 109 Phil 592

XI. Limitations on the Taxing Power

A. Inherent Limitations

i. Public Purpose

Case/s:
1. Gomez v. Palomar, 25 SCRA 827
2. Lutz v. Araneta, 98 Phil. 148
3. Tio v. Videogram Regulatory Board, 151 SCRA 208
4. City of Baguio v. De Leon, 25 SCRA 983
5. Hon. Ramon Bagatsing v. Hon. Pedro Ramirez, 74 SCRA 306
6. Pascual v. Secretary of Public Works, 110 Phil. 331

ii. International Comity

iii. Territoriality

Case/s:
1. CIR v. BOAC, 149 SCRA 395
2. Atlas Consolidated Mining v. CIR, 524 SCRA 73

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 iv. Non-Delegation of the Power to Tax

Case/s:
1. Board of Assessment Appeals of Laguna v. CTA, 8 SCRA 224
2. Pepsi Cola Bottling Co. of the Phils. v. City of Butuan, 24 SCRA 789
3. Pepsi Cola Bottling Co. of the Phils. v. Mun. of Tanauan, Leyte, 69
SCRA 460
4. John H. Osmenz v. Oscar Orbos, 220 SCRA 703
5. Mayor Antonio J. Villegas v. Hiu Chiong Tsai Pao Ho and Judge Arca,
86 SCRA 270
6. Benjamin Gomez v. Palomar, 25 SCRA 827
7. Hon. Ramon Bagatsing v. Hon. Pedro Ramirez, 74 SCRA 306

v. Exemption from Taxation of Government Agencies/Instrumentalities

⮚ Relate to: Doctrine of Supremacy of National Government over Local

Government

Case/s:
2. Manila International Airport Authority v. CA, 495 SCRA 591
3. Philippine Fisheries Development Authority v. The Mun. of Navotas,
534 SCRA 490
4. Manila International Airport Authority v. City of Pasay, 583 SCRA 234
5. Republic v. City of Paranaque, 677 SCRA 246
6. Mactan Cebu International Airport Authority v. City of Lapu Lapu, 757
SCRA 323
7. City of Lapu Lapu v. PEZA, 742 SCRA 524
8. Standard Oil Company of New York v. Juan Posadas, Jr., 55 Phil. 715
9. Board of Assessment Appeals, Province of Laguna v. National
Waterworks and Sewerage Authority, 8 Phil. 227
10. National Development Company v. Cebu City, 215 SCRA 382
11. ESSO Standard Eastern, Inc. v. Acting Commissioner of Customs, 18
SCRA 488

B. Constitutional Limitation

i. Due Process Clause (Art. III, Sec. 1, 1987 Constitution)

Case/s:
1. British American Tabacco v. Camacho, 562 SCRA 511
2. CREBA v. Romulo, 614 SCRA 605
3. Carlos Superdrug Corp. v. DSWD, 526 SCRA 130
4. Reyes v. Almanzor, 196 SCRA 322
5. CIR v. Hon. CA, CTA, and Fortune Tobacco Corp., 261 SCRA 236

ii. Equal Protection Clause (Art. III, Sec. 1, 1987 Constitution)

Case/s:
1. Ormoc Sugar Company, Inc. v. Treasurer of Ormoc City, 22 SCRA 603
2. British American Tabacco v. Camacho, 562 SCRA 511
3. Ferrer, Jr. v. Bautista, 760 SCRA 652
4. Gomez v. Palomar, 25 SCRA 827
5. Eastern Theatrical Co. v. Alfonso, 83 Phil. 852
6. Manila Race Horse Trainers Assn., Inc. v. De La Fuente, 88 Phil 60
7. Silvestre Punsalan v. The Municipal Board of the City of Manila, 95
SCRA 46
8. City of Baguio v. Fortunato de Leon, 25 SCRA 938
9. Antero Sison v. Ancheta, 130 SCRA 654
10. Juan Luna Subdivision, Inc. v. Sarmiento, et. al., 91 Phil. 371

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 11. Assn. of Customs Brokers, Inc. v. Mun. Board, City of Manila, 93 Phil.
107
12. Reyes v. Almanzor, 196 SCRA 322
13. Mayor Antonio Villegas v. Hiu Chiong Tsai Pao Ho and Judge Arca,
86 SCRA 270
14. Misamis Oriental Association of Coco Traders v. Dept. of Finance
Secretary, 238 SCRA 63
15. Tolentino, et. al., v. Secretary of Finance, 235 SCRA 630
16. Nitafan v. CIR, G.R. No. 78780, 23 July 1987

iii. Uniformity of Taxation (Art. VI, Sec. 28[1], 1987 Constitution)

Case/s:
1. Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas v. Tan,
163 SCRA 371
2. Eastern Theatrical Company v. Alfonso, 83 Phil 852
3. Manila Race Horses Trainers’ Ass’n v. De La Fuente, 88 Phil 60, 65
4. Uy Matias v. City of Cebu, 93 Phil. 300

iv. Progressive Taxation (Art. VI, Sec. 28 [1], 1987 Constitution]

Case/s:
1. Tolentino, et. al. v. Secretary of Finance, Resolution, October 30, 1995
2. People v. Sandiganbayan, 467 SCRA 137

v. Non-Impairment Clause (Art. III, Sec. 10, 1987 Constitution)

Case/s:
1. Casanova v. Hord, 8 Phil. 125
2. Tolentino v. Secretary of Finance, 235 SCRA 630
3. Cagayan Electric Power and Light Co., Inc. v. CIR, 138 SCRA 629
4. Phil. Power and Development Co. v. CIR, CTA Case No. 1152,
October 31, 1965

vi. Non-imprisonment for non-payment of Poll Tax (Art. III, Section 20, 1987
Constitution)

vii. Bills to Originate from the House of Representatives

Case/s:
1. Tolentino v. Secretary of Finance, 235 SCRA 630

viii. Veto Power of the President (Art. VI, Sec. 27[2], 1987 Constitution)

ix. President’s Power to Tax (Art. VIII, Sec. 28[2], Constitution)

Case/s:
1. Garcia v. Executive Secretary, 211 SCRA 219
2. ABAKADA Guro v. Executive Secretary, 469 SCRA 1, etc. 1 Sept.
2015 and 18 October 2018

x. Taxation and the Freedom of the Press (Art. III, Sec. 4, 1987 Constitution)

Case/s:
1. Tolentino vs. Secretary of Finance, 235 SCRA 630

xi. Taxation and Freedom of Religion (Art. III. Sec. 5, 1987 Constitution)

Case/s:
1. American Bible Society v. City of Manila, 101 Phil. 386

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 xii. Tax Exemption of Properties Actually, Directly and Exclusively used for
Religious, Charitable, and Educational Purposes (Article VI, Sec. 28(3), 1987
Constitution

Case/s:
1. Province of Abra v. Hernando & The Roman Catholic Archbishop of
Bangued, Abra, 107 Phil. 104
2. Abra Valley College, Inc. v. Aquino, 162 SCRA 106
3. Lung Center of the Philippines v. Quezon City, 433 SCRA 119
4. NAPOCOR v. Central Board of Assessment Appeals, 577 SCRA 418
5. Rev. Fr. Casimiro Lladoc v. CIR, 14 Phil. 292
6. YMCA of Manila v. CIR 33 Phil. 217
7. Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil.
352
8. Herrera v. Quezon City Board of Assessment, 14 SCRA 991

xiii. Tax Exemption Granted to Non-Stock, Non-Profit Educational Institutions

(Art. XIV, Sec. 4(3) and (4), 1987 Constitution)

xiv. Appropriation of Public Money (Art. VI, Sec. 29(2), 1987 Constitution)

xv. Grant of Tax Exemptions (Art. VI, Sec. 28(4), 1987 Constitution)

⮚ Tax Exemption v. Tax Amnesty

xvi. Local Taxation (Art. X, Sec. 5, 1987 Constitution)

Read also: Section 130 of the Republic Act. 7160 (Local Gov’t. Code)

Case/s:
1. Pepsi Cola Bottling Co. of the Phils. v. City of Butuan, 24 SCRA 789
2. Pepsi Cola Bottling Co. of the Phils. v. Municipality of Tanauan, Leyte,
69 SCRA 460
3. Villanueva v. City of Iloilo, 26 SCRA 578
4. Victoria Milling v. Municipality of Victoria, 25 SCRA 192 (on Doctrine
of Preemption in Local Taxation)
5. Ferrer v. Bautista, 760 SCRA 652

xvii. Special Funds (Art. VI, Sec. 29(3), 1987 Constitution)

Case/s:
1. Osmena v. Orbos, 220 SCRA 703

xviii. Supreme Court’s Jurisdiction over Tax Cases (Art. VIII, Secs. 2, 5)

XII. Double Taxation

A. Direct vs Direct Double Taxation

B. Tax Treaty as a Mode of Eliminating Double Taxation

Case/s:
1. Ericsson Telecommunications, Inc. v. City of Pasig, 538 SCRA 99
2. Pepsi Cola v. Tanauan, 69 SCRA 460
3. CIR v. SC Johnson & Sons, 309 SCRA 87

XIII. Escape from Taxation

A. Shifting of Tax Burdens

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 B. Tax Avoidance
C. Tax Evasion

Case/s:
1. CIR v. Rufino, 148 SCRA 42
2. Delpher Trades Corp. v. IAC, 157 SCRA 349
3. CIR v. Benigno Toda, 438 SCRA 290
4. Yutivo Sons Hardware v. CTA, 1 SCRA 160
5. CIR v. Javier, Jr., 199 SCRA 824
6. Ungab v. Cusi, 97 SCRA 877
7. CIR V. CA, 257 SCRA 200
8. CIR V. PASCOR, 309 SCRA 402

XIV. Interpretation and Construction of Tax Statutes

A. Construction of Tax Laws

B. Construction of Tax Exemptions (Principle of Strictissimi Juris)
C. Exceptions to the principle of Strictissimi juris

Case/s:
1. CIR v. CA, Central Vegetable Mfg. Co. & CTA, G.R. No. 107137
2. Luzon Stevedoring v. CTA, 163 CTA 647
3. CIR v. Gotamco & Sons, 148 SCRA 36
4. CIR v. CA, CTA & Ateneo de Manila, 271 SCRA 605
5. Prov. Of Misamis Oriental v. Cagayan Electric, 181 SCRA 38
6. CIR vs. CA, ROH Auto Products & CTA, 240 SCRA 368
7. Maceda v. Macaraeg, 197 SCRA 77
8. CIR v. DLSU, G.R. No. 196596, 9 Nov. 2016
9. CIR v. Tokyo Shipping Co., 224 SCRA 332 (1995)
10. CIR v. Mitsubishi Metal Corp., 181 SCRA 214 (1990)

XV. Prospectivity and Retroactivity

Case/s:
1. Hydro Resources v. CA, 192 SCRA 604
2. Central Azucarera de Don Pedro v. CTA, 20 SCRA 344
3. Lorenzo v. Posadas, 64 Phil 353
4. CIR v. Benguet Corp., 463 SCRA 28
5. CIR v. Burmeisters & Wain Scandinavian, G.R. No. 153205, Jan. 2007

XVI. Doctrine of Imprescriptibility / Non-Prescription

A. Exceptions
B. Doctrine of Equitable Recoupment

Case/s:
1. CIR v. Ayala Securities Corp., G.R. No. L-29485, 21 Nov. 1989
2. Republic v. Oasan Vda. De Fernandez, 99 Phil. 934
3. CIR v. UST, 104 Phil 1062

XVII. Set Off of Taxes

Case/s:
1. Philex Mining v. CIR, G.R. No. L-125704, 28 August 1998
2. CIR v. ESSO Standard, 172 SCRA 369
3. Domingo v. Garlitos, 8 SCRA 443

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 XVIII. Taxpayer’s Suit

Case/s:
1. Maceda v. Macaraeg, 197 SCRA 771
2. Abaya v. Ebdane, 515 SCRA 720

Reference : Tax Principles and Remedies by Justice Japar B. Dimaampao, 2018 Ed.

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