Apple Joy B.

Dabbay
Assignment:

OTHER FUNDAMENTAL DOCTRINES IN TAXATION

1. Marshall’s Doctrine - “The power to tax involves the power to destroy.”
This doctrine explains that taxation is a powerful tool that can affect or even discourage certain
activities, especially if taxes are set very high. However, if the only purpose of taxation is to raise
revenue, then it should not be used destructively. For example, sin taxes (like those on cigarettes)
discourage harmful behavior.
2. Holme’s Doctrine - “Taxation power is not the power to destroy while the court sits.”
This doctrine balances the Marshall Doctrine by saying taxation should not destroy useful or
beneficial sectors. Taxes may be used to promote good industries by giving tax breaks or
incentives, like ecozones or small businesses. In practice, both doctrines are applied depending
on the government's purpose.
3. Prospectivity of Tax Laws
Tax laws are generally prospective, meaning they apply only to future actions. Retroactive
taxation is not allowed unless clearly stated by law and under special conditions, such as taxes
imposed after wartime. This protects taxpayers from sudden or unfair tax burdens
4. Non-compensation or Set-off
Taxes cannot be used as payment for a claim against the government. A taxpayer cannot refuse to
pay taxes just because the government owes them money. Tax is not an ordinary debt and must
be paid regardless of pending refunds—unless there is already a recognized and approved refund.
5. Non-assignment of Taxes
You cannot transfer your tax obligation to someone else through a contract. Even if you agree
with someone to pay your tax for you, the government can still collect the tax from you directly.
6. Imprescriptibility in taxation
Imprescriptibility in taxation means that the government’s right to collect taxes does not expire
unless the law specifically provides a time limit. Under the NIRC, if a tax has been assessed, the
government has five years from the date of assessment to collect it. If there was no assessment, it
must collect the tax within three years from the date the return was required to be filed. However,
if the taxpayer did not file a return or filed a fraudulent one, the tax can be collected at any time
because the period to collect does not prescribe.

7. Doctrine of Estoppel
If someone makes a misleading statement and another person relies on it in good faith, they can
be held to it. But the government is not bound by this—even if a tax official made a mistake, the
government can still collect the right amount. Public interest prevails
8. Judicial Non-Interference
Courts cannot stop the government from collecting taxes through injunctions. This is to ensure
that tax collection continues, since taxes are the lifeblood of the government. Legal remedies are
available after payment, not before.
9. Strict construction of tax laws
Strict construction of tax laws means that tax laws must be applied exactly as written, and any
doubts are resolved in favor of the taxpayer. Taxation is the general rule, while exemption is the
exception, so anyone claiming a tax exemption must prove it with a clear and specific law. If the
tax law is vague, it is interpreted against the government to protect the taxpayer. On the other
hand, if the exemption law is vague, it is interpreted against the taxpayer, meaning no exemption
is granted unless clearly stated by law.

TAXATION LAW
Taxation law refers to any law that arises from the exercise of the taxation power of the State.
Types of Taxation Laws
1. Tax Laws – These are laws that provide for the assessment and collection of taxes.
Examples:
a. The National Internal Revenue Code (NIRC)
b. The Tariff and Customs Code
c. The Local Tax Code
d. The Real Property Tax Code
2. Tax Exemption Laws- These are laws that grant certain immunity from taxation.
Examples:
a. The Minimum Wage Law
b. The Omnibus Investment Code of 1987 (E.O.226)
c. Barangay Micro-Business Enterprise (BMBE) Law
d. Cooperative Development Act

TAX LAWS, REVENUE REGULATIONS, and RULINGS

Tax Laws:
Tax laws are legal rules created by the government that specify how taxes are assessed
(computed) and collected from individuals or businesses. In the Philippines, tax laws are
considered civil in nature, meaning they deal with the rights and obligations of citizens (such as
paying taxes), not with political matters like elections or governance. Being civil laws, they aim
to regulate financial relationships between the government and taxpayers, rather than control
political behavior or rights.

Revenue and Regulations:

Refers to the authority to Promulgate Rules and Rulings. The Secretary of Finance, with
recommendation from the Commissioner of Internal Revenue, has the power to issue rules and
regulations needed to enforce the National Internal Revenue Code (NIRC). They serve to clarify,
explain, and provide detailed procedures for applying tax laws. Revenue regulation has the force
and effect of a law, but is not intended to expand or limit the application of the law; otherwise, it
is void.

BIR rulings:
Are official interpretations of tax laws made by the Commissioner of Internal Revenue, usually
upon the request of taxpayers seeking clarification. These rulings are not permanent and can be
revoked or modified by the Commissioner or the Secretary of Finance if found inconsistent with
the law. Additionally, legal opinions on tax matters may also be issued by the Secretary of
Justice, who serves as the government's chief legal officer.

Rulings:
Rulings are official responses issued by the Bureau of Internal Revenue (BIR) to specific tax
inquiries or situations raised by taxpayers. These rulings serve as guidance or advice on how the
tax laws apply to a particular case. However, they are not generally binding for everyone—only
the taxpayer who requested the ruling can rely on it. May be reversed by the BIR at any time.

Tax administration:
Refers to the organization, implementation, and enforcement of tax laws—essentially, how the
government manages the tax system. In the Philippines, the responsibility for administering
national taxes lies with the Bureau of Internal Revenue (BIR), which operates under the
Department of Finance (DOF).

Classifications of taxpayers:
1. Large Taxpayers – These are businesses or individuals with significant tax contributions.
They are monitored by the Large Taxpayers Service (LTS) at the BIR National Office for
closer supervision due to the scale and complexity of their transactions.
2. Non-Large Taxpayers – These are smaller businesses or professionals whose tax affairs are
handled by the Revenue District Office (RDO) that covers the area where their business or
profession is located.

Criteria for Large Taxpayers:

A. As to payment
1. Value Added Tax (VAT) – A 12% tax added to the price of goods or services sold by VAT-
registered businesses.
2. Excise Taxes – These are taxes on specific goods like alcohol, cigarettes, gasoline, and cars,
whether produced locally or imported.
3. Income Tax – This is a tax on income earned by individuals, companies, or businesses. The
more you earn, the higher the tax you may pay.
4. Withholding Tax – Refers to the total amount of taxes withheld and remitted by a taxpayer to
the Bureau of Internal Revenue (BIR) on behalf of others (e.g., employees, suppliers, or
contractors) during a given year.
5. Percentage Taxes – Tax on gross sales or receipts of certain businesses that are not VAT-
registered (like small businesses earning below the VAT threshold).
6. Documentary Stamp Tax (DST) – A tax imposed on documents like loan agreements,
contracts, and certificates, as evidence of transactions.
B. As to financial conditions and results of operations
1. Gross Receipts or Sales- P1,000,000,000 total annual gross sales or receipts
2. Net Worth- P300,000,000 total net worth at the close of each calendar or fiscal year
3. Gross Purchases- P800,000,000 total annual purchases for the preceding year
4. Top corporate taxpayer listed and published by the Securities and Exchange Commission

POWERS OF THE BUREAU OF INTERNAL REVENUE (BIR)

1. Assessment and collection of taxes
2. Enforcement of all forfeitures, penalties, and fines, and judgements in all cases
decided in its favor by the courts
3. Giving effect to, and administering the supervisory and police powers conferred to it
by the NIRC and other laws
4. Assignment if internal revenue officers and other employees to other duties
5. Provisions and distribution of forms, receipts, certificates, stamps, etc. to proper
officials
 6. Issuance of receipts and clearances
7. Submission of annual report, pertinent information to Congress and reports to the
Congressional Oversight Committee in matters of taxation

POWERS OF THE COMMISSIONER OF INTERNAL REVENUE

1. To interpret the provisions of the NIRC, subject to review by the Secretary of Finance
2. To decide tax cases, subject to the exclusive appellate jurisdiction of the court of Tax
Appeals
3. To obtain information and to summon, examine, and take testimony of persons to
effect tax collection
4. To make an assessment and prescribe additional requirement for tax administration
and enforcement
5. To examine tax returns and determine tax due thereon
6. To conduct inventory taking or surveillance
7. To prescribe presumptive gross sales and receipts for a taxpayer
8. To terminate tax period when the taxpayer is retiring from business, intending to
leave the Philippines and intending to remove, hide, or conceal his property
9. To prescribed real property value
10. To compromise tax liabilities of taxpayers
11. To inquire into bank deposits
12. To accredit and register tax agents
13. To refund or credit internal revenue taxes
14. To abate or cancel tax liabilities in certain cases
15. To prescribe additional procedures or documentary requirements
16. To delegate his powers to any subordinate officer with a rank equivalent to a division
chief of an office

Non-Delegated Power of the CIR

1. The power to recommend the promulgation of rules and regulations to the Secretary
of Finance.
2. The power to issue rulings of first impression or to reverse, revoke, or modify any
existing rulings of the bureau.
3. The power to compromise or abate any tax liability
4. The power to assign and reassign internal revenue officers to establishments where
articles subject to exercise tax are produced or kept.