June 3, 1977

Presidential
Decree
No.
1158
consolidated the internal revenue laws and
Presidential Decrees into a single TAX CODE
National Internal Revenue Code (NIRC) of
1977.
October 1985
Presidential Decree No. 1994, after
amending certain provisions of the NIRC, called
the code National Internal Revenue Code of
1986.

During the 1986 Revolutionary Government

Executive
Orders
(EO)
amended
provisions of the NIRC.
NIRC of 1986 was amended by various
Presidential Decrees, Executive Orders, and
laws enacted by different legislative bodies of
the Philippines, the latest being the TAX
REFORM ACT of 1997 (R.A. No. 8424)

The latest amendment being the provisions

of Republic Act 9504 An Act Amending
Sections 22, 24, 34, 35, 51 and 79 of Republic Act
No. 8424, as amended , otherwise known as the
National Internal Revenue Code relative to the
Withholding of Income Tax on Compensation
and other Concerns,
and renamed the Code as.
NATIONAL INTERNAL REVENUE CODE OF
1997
(Sec.1 of NIRC).

(P.D. No. 1158 as amended up to R.A. No.

9504)

The BIR, under the

SUPERVISION and CONTROL of
the Department of Finance
(DOF), is principally tasked with

POWERS and DUTIES

Section 2 of NIRC

1. ASSESSMENT and COLLECTIONS

of all national internal revenue taxes, fees,
and charges
2. ENFORCEMENT of all forfeitures, penalties and fines
connected assessment and collection
3. EXECUTION of judgments in all cases decided in its favor
by the Court of Tax Appeals and Ordinary
Courts.
5. ADMINISTRATION OF THE SUPERVISORY POLICE
POWERS conferred by the NIRC and other laws.

Chief Officials of the Bureau of Internal Revenue

1. The Chief is known as the COMMISSIONER
OF INTERNAL REVENUE; (Sec. 3 of NIRC).
2. The Four (4) Assistant Chiefs to be known
as DEPUTY COMMISSIONERS; (Sec. 3 of NIRC).
3. The Revenue Regional Directors; (Sec. 10,14,15
of NIRC).

4. The Revenue District Officers; (Sec. 9,11,14, 15 of

NIRC.)

5. Revenue

Examiners

and

Officers;

13,14,15,16,17,18 of NIRC).

6. Division Chiefs of the BIR;

7. BIR Collecting Agents. (Sec. 12 of NIRC)

(Sec.

POWERS of the Internal Revenue Commissioner

1. The BIR Commissioner has the
exclusive and original power to
INTERPRET provisions of the NIRC and
other tax laws. (Sec. 4, par. 1 of NIRC)
Is the interpretation subject to review?
Who will review?
SUBJECT TO REVIEW BY THE
SECRETARY OF FINANCE

POWERS of the Internal Revenue Commissioner

2.

DECIDE TAX CASES (Sec. 4 par. 2 of NIRC

-Disputed assessments
-Refunds of internal revenue taxes, fees or other
charges
-Penalties imposed arising under the Tax Code or
other tax laws;
-Other matters arising under the NIRC.

Is the Decision of the Commissioner subject to APPEAL?

It is subject to the EXCLUSIVE APPELLATE

JURISDICTION of the COURT OF TAX APPEALS.

POWERS of the Internal Revenue Commissioner

3.

POWER TO SUMMON (Sec. 5

of NIRC)

The
intention
is
to
ascertain the correctness of tax return, and to
determine
the
taxpayers
liability
and
compliance.
-Examine
taxpayers records;

-Obtain taxpayers financial information;

-Summon the person liable for tax;
-Take testimony of the person concerned under
oath;
-Conduct regular canvass concerning all
persons liable to pay any internal revenue tax.

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
I.

Examination of the following:

a. Returns and determination of tax due, and

(Sec. 6 (A) of NIRC)

b. Statements, reports and other documents not

submitted. (Sec. 6 (B) of NIRC)

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the
following:
a. Conduct inventory and
surveillance, and
prescribe presumptive
Gross Sales and
Receipts. (Sec. 6 (C) of NIRC)

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the following:
b.Terminate taxable period. (Sec. 6(D)

of NIRC)

If it shall come to the knowledge of the Commissioner that

taxpayer:
-retiring from business subject to tax
-Intends to leave the Philippines;
-Removes, hide or conceals his properties in the
Philippines
-Performs any act tending to obstruct the proceedings of
the collection of tax for the past or current quarter, or
renders the same totally or partially inefficient.

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the following:
c. To prescribe real property values
(Sec. 6(E) of NIRC)

For purposes of computing internal revenue tax the value

of the property shall be:
Whichever is higher of:
the FAIR MARKET VALUE as determined by the
Commissioner; OR
the FAIR MARKET VALUE as shown schedule of
values of the Provincial and Assessors.

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the following:
d.
To inquire into Bank Deposits Accounts.
(Sec. 6(F) of NIRC)

Inquiry is limited only to the bank deposits of:

1.A decedent to determine his gross estate; and
2.Any taxpayer who has filed an application for
compromise of his tax liability under Sec. 204 (A)(2) of
the NIRC by reason of financial incapacity.

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the following:
e. To accredit and register Tax Agents.
Sec. 6(F) of NIRC)

These are individuals and general professional

partnership accredited based on the following:
Professional Competence
Integrity
Moral Fitness

POWERS of the Internal Revenue Commissioner

II. Authority on the following:
e. To accredit and register Tax Agents.
Sec. 6(F) of NIRC)

IF DENIED ACCREDITATION:
An appeal can be made to the Secretary of
Finance who shall rule within 60 days.
Failure to rule within the prescribed period
shall be deemed as APPROVAL of the
application for accreditation of the appellant
individual or general professional partnership.

POWERS of the Internal Revenue Commissioner

4. POWER TO MAKE ASSESSMENT
II. Authority on the following:
f. To prescribe additional procedural
or documentary requirements.
Sec. 6(H) of NIRC)

This is in connection with the submission or

preparation
of
financial
statements
accompanying the tax returns.

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
BIR Commissioner can delegate powers
vested in him under the pertinent
provisions of the NIRC to ANY or such
subordinate officials with the rank
equivalent to a Division Chief or higher.

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
BUT, the following powers of the BIR
Commissioner SHALL NOT be delegated:
1.
The power to recommend the
promulgation of rules and regulations by
the Secretary of Finance;

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
BUT, the following powers of the BIR
Commissioner SHALL NOT be delegated:
2. The power to issue rulings of first
impression or to reverse, revoke or modify
any existing ruling of the Bureau;

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
BUT, the following powers of the BIR
Commissioner SHALL NOT be delegated:
3. The power to compromise or abate,
under Sec. 204(A) and (B) of the NIRC,
ANY tax liability;

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
General Rule:
The power to compromise or abate,
under
Sec. 204(A) and (B) of the NIRC, ANY tax liability
shall NOT be delegated.

Exemption:
Assessments issued by the regional
offices involving basic deficiency taxes of
P500,000 or less,
AND minor criminal violations, may be
compromised by the regional evaluation board.

POWERS of the Internal Revenue Commissioner

5. POWER of DELEGATION (Sec. 7 of NIRC)
Composition of the Regional Evaluation Board:
Chairman : Regional Director
Members :
Heads of the Legal, Assessment and
Collections Divisions
Revenue District Officer having
jurisdiction over the taxpayers

POWERS of the Internal Revenue Commissioner

5. POWER TO ENSURE THE PROVISION AND
DISTRIBUTION OF FORMS, RECEIPTS,
CERTIFICATES, and APPLIANCES, AND
THE ACKNOWLEDGMENT OF PAYMENT
OF TAXES. (Sec. 8 of NIRC)

Commissioners Annual report

Sec. 19 of NIRC

Contents:

Detailed Statements of the

Collection specifying the
following:

-Sources of revenue by type of tax

by manner of payment
by revenue region
by industry group
- Disbursements by classes of expenditures

Commissioners Annual report

Exceeds
by

15%

ACTUAL
COLLECTIO
N

OR

1% to
14.99
%

ANNUAL
NATIONAL
BUDGET

Falls
short by
15%

If actual collection exceeds or falls short of target as

set in the annual national budget by 15% or more,
the Commissioner shall explain the reason for such
excess or shortfall.

Submission of Report and Pertinentt Information

Sec. 20 (A) of NIRC

Upon request
of Congress

&

In AID of
legislation

The Commissioner shall furnish

the appropriate Committee
pertinent information including
but not limited to the following:
1. Industry audit
2. Collection performance data
3. Status reports in criminal actions
against persons and taxpayers
returns.

Submission of Report and Pertinent Information

Sec. 20 (B) of NIRC

Section 204 of the NIRC

Authority of the Commissioner to
COMPROMISE, ABATE & REFUND or CREDIT
TAXES
In the exercise of his
power pursuant to Section
204, the Commissioner
SUBMIT TO THE OVERSIGHT
SHALL: COMMITTEE
(section 290 of the NIRC) through its
Chairmen of the Committee on Ways and
Means of the SENATE and HOUSE of
REPRESENTATIVES every SIX (6) months of

THE NATIONAL INTERNAL REVENUE TAXES

Sec. 21 of NIRC

PercentageTax
es

EVAT
Esta
te
Taxe
s

Document
ary Stamp
Taxes

Excise
Tax

Donors
Tax

Income
Tax

Such other taxes as may be

imposed
and collected by the BIR

THE NATIONAL INTERNAL REVENUE TAXES

Sec. 21 of NIRC

DIRECT TAXES
Donors
Tax

Esta
te
Taxe
s

Income
Tax

THE NATIONAL INTERNAL REVENUE TAXES

Sec. 21 of NIRC

INDIRECT TAXES
Percentage
Taxes

E-VAT

Documentary
Stamp Taxes

Excise
Tax

The Sovereign State is born and will exist

continuously with ESSENTIAL POWERS
necessary for its survival.

INHERENT POWERS OF
SOVEREIGN STATE

INHERENT POWERS OF SOVEREIGN STATE

SIMILARITIES AMONG TAXATION,

EMINENT DOMAIN AND POLICE POWERS
They are inherent powers of the state;
They constitute the three ways by which
the state interferes with the private rights
and property;
They are all necessary attributes of sovereignty.
They are legislative in nature and character;
They all underlie and exist independently of the
Constitution; The provisions in the Constitution
are just limitations on the exercise of these powers.

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to CONCEPT

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to PURPOSE

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to AUTHORITY

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to NECESSITY OF DELEGATION

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to PERSON AFFECTED

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to BENEFITS

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to AMOUNT OF IMPOSITION/EXACTION

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN
As to RELATIONSHIP TO CONSTITUTION/
As to SUPERIORITY of CONTRACTS

DISTINCTIONS OF TAXATION,
POLICE POWER, AND EMINENT DOMAIN

As to LIMITATIONS

DEFINITION OF TAXATION
A power by which an Independent State,
through its law-making body, raises and
accumulates revenue from its inhabitants to
pay the necessary expenses of the
government. (51 Am. Jur. 341; 1 Cooley 72 93)
Means

Process

DEFINITION OF TAXATION

As a power, it refers to the inherent

power of a state,
As a process, it passes a legislative undertaking
through the enactment of tax laws by the
Congress which will be implemented by the
Executive Branch of the government through its
Bureau of Internal Revenue (BIR)
As a means, it is a way of collecting and
apportioning the cost of government among
those who are privileged to enjoy its benefits. (
Commissioner vs. Algue Inc. February 17, 1988)

NATURE OF TAXATION POWER

INHERENT POWER OF SOVEREIGNTY

Essentially a LEGISLATIVE FUNCTION
For PUBLIC PURPOSES
TERRITORIAL IN OPERATION
TAX EXEMPTION OF GOVERNMENT
STRONGEST AMONG THE
INHERENT POWERS OF THE
GOVERNMENT
Subject to CONSTITUTIONAL and
INHERENT LIMITATIONS

INHERENT POWER OF SOVEREIGNTY

It is a necessary attribute of sovereignty,

belonging as a matter of RIGHT to every
independent State or government.
Without the power of taxation, no
sovereign State can continue to exist
without means to pay its expenses;
and for those means, it has the right
to compel all its citizens and

INHERENT POWER OF SOVEREIGNTY

Can
the government
having sovereignty
enforce
contributions through taxation even
without a specific provision in the Constitution
authorizing it?

YES. Any provision in the Constitution

regarding taxation does not create rights
for the sovereignty to have the power to
tax but it merely constitutes limitations
upon the supremacy of tax power

INHERENT POWER OF SOVEREIGNTY

The NATIONAL GOVERNMENT exercises the INHERE
NT POWER of taxation of the state.
Do

LOCAL GOVERNMENT UNITS possess

inherent power of taxation of the state?

the

NO. In order for these local government units to

have the power to tax, there must be an expressed
constitutional provision granting them the power to
tax or at least a valid delegation of tax power through
a statute

ESSENTIALLY A LEGISLATIVE FUNCTION

The LAW-MAKING BODY of the government exercis
es the power of taxation.

GENERAL RULE:
In strict sense, the power to make tax laws
CANNOT be DELEGATED.

ESSENTIALLY A LEGISLATIVE FUNCTION

EXEMPTIONS:
1. The power to tax can be delegated
to the
LOCAL GOVERNMENT UNITS
(LGU)

ESSENTIALLY A LEGISLATIVE FUNCTION

Each local government unit shall have

the power to create its own sources of
revenue, fees, charges, subject to
guidelines and limitations as the Congress
may provide consistent with the basic
policy of local autonomy. Such taxes, fees,
and
shall
accrueSection
exclusively
to
Articlecharges
X, Section 5 of
the Constitution;
133 of R.A. 7160
the local governments.

ESSENTIALLY A LEGISLATIVE FUNCTION

So, when the power to tax is delegated

to the LGU..
What branch of the LGU can exercise the power
tax?
Only the LEGISLATIVE BRANCH of the LGU can exerc
ise the power to tax.

ESSENTIALLY A LEGISLATIVE FUNCTION

Therefore, the power to make tax laws CANNOT

be delegated to a non-legislative body
WHAT CAN BE DELEGATED TO A NON-LEGISLATIVE
BODY?
Only if the power delegated is
ministerial and advisory
since said powers are not legislative but onl
y administrative in nature.
(power to value property, assess and collect taxes)

ESSENTIALLY A LEGISLATIVE FUNCTION

SUMMARY:

If what is delegated to a nonlegislative body is TAX LEGISLATION,

the delegation is INVALID.
BUT, if what is involved is only TAX
ADMINISTRATION, the delegation is
allowed and valid and the nondelegability rule is not violated.

ESSENTIALLY A LEGISLATIVE FUNCTION

EXEMPTIONS:
2. The Congress may, by law, authorize the
President to impose tariff rates, import and export
quotas, etc, subject to the limitations and
guidelines as the Congress may impose, consistent
with the national development program of the
government.
Article VI, Section 28 (2) of the Constitution

ESSENTIALLY A LEGISLATIVE FUNCTION

EXAMPLES OF TAXATION POWER
THAT CANNOT BE DELEGATED
Power to select the coverage, object, or
property to be taxed
Determining the NATURE and
PURPOSES for which taxes shall be
collected.
Determining the place or situs of tax
imposition

ESSENTIALLY A LEGISLATIVE FUNCTION

EXAMPLES OF TAXATION POWER
THAT CANNOT BE DELEGATED
Granting tax
exemptions or
condonations.

Fixing the amount to be

imposed and tax rates.

Setting down the rules of taxation in general.

FOR PUBLIC PURPOSE

WHO MAY DETERMINE PUBLIC PURPOSE?

The power to determine whether the
purpose of taxation is PUBLIC or PRIVATE
resides in Congress. Such power is the
exclusive right of the legislative.

FOR PUBLIC PURPOSE

It has been held that tax has been

utilized for public purpose if the
welfare of the nation or the
greater portion of its population
has benefited with its use.
(Gomez vs. Palomar, 25 SCRA 827)

FOR PUBLIC PURPOSE

Can the court question the propriety of a

statute on the ground that the law enacted is
not for public purpose?
YES. But once it is settled that the law is
for a public purpose, the court may no
longer inquire into the wisdom, expediency
or necessity of such tax measure.

FOR PUBLIC PURPOSE

SETTLED CASES OF PUBLIC PURPOSE

ic
Unem
Publ
d
n
n
e
a
p
m
l
oyme
e
ve
gs
r
o
n
r
u
i
t
p
d
n
c
l
t relie
u
Im
ui
r
t
B
s
t
f
ra
f
n
I
/
s
Local Police
road
Forces
Industries
(subsidies)
classified as
under R.A.
indispensable
6141
under P.D. 1987
Promotion of
Construction of
science and
home sites
invention

FOR PUBLIC PURPOSE

SETTLED CASES OF PUBLIC PURPOSE

Eductional
Subsidy

Rehabilitatio
n of the
sugar industr
y
Socialized
Housing

Pension
deservin s to
g retiree
s

Oil Industrys
Protection
Upliftment of the
underprivileged

TERRITORIALITY
General
Rule

The power to tax can only be

exercised
WITHIN
the
territorial
jurisdiction of a taxing authority.
Tax laws are not applicable to the
property of foreign government.

TERRITORIALITY
Taxation is bound to observe
INTERNATIONAL COMITY
Basis of this Rule:
Section 2, Article II of the Constitution The
Philippines renounces war as an instrument of
national policy, adopts the generally accepted
principles of international law as part of the law of
the land and adheres to the policy of peace,
equality, justice, freedom, cooperation, and amity
with all nations.

TERRITORIALITY
Taxation is bound to observe
INTERNATIONAL COMITY
Basis of this Rule:
Principle of International Law:
Sovereign Equality Among States

states are juridically equal, enjoy the same

rights, and have equal capacity in their
exercise.

TERRITORIAL IN OPERATION/
TERRITORIALITY
EXCEPTION

exists
a
privity
of
relationship between the taxing State
and the object of tax.
when

there

TERRITORIAL IN OPERATION/
TERRITORIALITY

Where privity of relationship exists, the state can

still exercise its taxing powers over its citizen
outside its territory.
Basis of this Rule:

the right to tax is the capacity of the

government to provide benefits and protection
to the object of th e tax.

TERRITORIALITY
RULES OBSERVED in FIXING TAX SITUS

POLL/CAPITATION/COMMUNITY TAX
Poll or capitation, or community taxes are
based upon the residence of the taxpayer,
regardless of the source of income or
location of the property of the taxpayer.

TERRITORIALITY
RULES OBSERVED in FIXING TAX SITUS

REAL PROPERTY TAX

Real estate is subject to taxation in the state
or country where it is located, regardless of
whether the owner is a resident or a nonresident

TERRITORIALITY
RULES OBSERVED in FIXING TAX SITUS

PERSONAL PROPERTY
The situs of personal property, wherever it
was actually kept or located, was held to be
at the domicile of its owner, following the
age-old doctrine of mobilia sequuntur

personam.

TERRITORIALITY
RULES OBSERVED in FIXING TAX SITUS
PERSONAL PROPERTY

mobilia sequuntur personam.

MOVABLES FOLLOW THE PERSON.

TERRITORIALITY
RULES OBSERVED in FIXING TAX SITUS
PERSONAL PROPERTY
EXCEPTION to the principle of
mobilia sequuntur personam.

In cases of shares of stocks.

The situs for the purposes of taxtion is the
state in which they are permanently kept regardless
of the domicile of the owner or the state in which the
corporation was organized.

TAX EXEMPTION OF THE GOVERNMENT

The state cannot be taxed without its consent;

otherwise, such is derogation to its
sovereignty.
The State immunity from taxation is inherent
in its power to impose tax.

TAX EXEMPTION OF THE GOVERNMENT

GENERAL RULE

TAX EXEMPTION applies only to

government entities through which
the
government
immediately
and
directly
exercises
GOVERNMENTAL
FUNCTIONS.

TAX EXEMPTION OF THE GOVERNMENT

EXCEPTION to the GENERAL RULE:

Government
Entities
performing
PROPRIETARY
FUNCTIONS
are
generally subject to tax.
EXCEPTION to the EXECPTION:

When
the
provisions
in
their
charters or the law creating them
provides for a tax exemption.

TAX EXEMPTION OF THE GOVERNMENT

SUMMARY:

Agencies
performing
governmental
functions are exempt from tax unless
expressly taxed.

agencies
performing
proprietary functions are subject
to
tax
unless
expressly
exempted.
WHILE,

STRONGEST AMONG THE INHERENT POWERS

Without money, the government can neither survive nor
dispense any of its other powers and functions effectively.

Taxation reaches every trade or occupation,

every object of industry, and every species of
possession.
It imposes a burden which, in case of failure
to discharge, may be followed by seizure or
confiscation of property.

STRONGEST AMONG THE INHERENT POWERS

VE
I
S
N
E
H
E
R
COMP
ns,
o
s
r
e
p
s
r
e
v
as it co
ies,
it
iv
t
c
a
,
s
e
s
busines
and
s
t
h
ig
r
,
s
n
professio
privileges.

UNLIMITED.

PLENARY
der
n
U
.
e
t
le
p
m
o
as it is c
may
R
I
B
e
h
t
,
C
SUPREME
the NIR
s to
.
ie
d
e
m
e
r
It is suprem
in
a
t
f cer
o
il
a
v
e
a
i
n
s
o
f
ar as the
of
n
io
selection o
t
c
e
ll
o
c
e
f the subjec
ure th
s
n
e
t of taxation
taxes.
is concerne
d

Subject to INHERENT and

CONSTITUTIONAL LIMITATIONS

violation of these inherent limitations is

tantamount to taking a property without due
process of law
a tax law that violates the Constitution, shall
be declared null and void.
Any tax law that contradicts the limitation of
taxation is also unconstitutional

INHERENT and CONSTITUTIONAL LIMITATIONS

INHERENT
LIMITATIONS

NATURAL RESTRICTIONS to safeguard and

ensure that the power of taxation shall be
exercised by the government only for the
betterment of the people whose interest
should be served, enhanced and protected

INHERENT and CONSTITUTIONAL LIMITATIONS

Taxation is subject
to international
comity
Tax powe
e
r is limite
b
y
a
m
d to
territorial
Taxes
jurisdictio
r
o
f
y
l
n of
n
o
d
e
i
t
h
e State;
lev
public
tly
;
s
n
e
e
s
r
o
e
p
nh
i
pur
g
n
n
o
i
i
t
a
x
Be
ta
,
e
v
i
d;
t
e
a
t
l
a
s
i
g
leg
ele
d
e
b
Government entities may not
are generally taxexempt.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS

PROVISIONS OF THE FUNDAMENTAL

LAW OF THE LAND that restrict the
comprehensive, unlimited, plenary and
sunpreme exercise by the State of its
inherent power to tax.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
DUE PROCESS OF LAW
No person shall be deprived of life,
liberty, or property without due process
of law, nor shall any person be denied the equal
protection of the laws.

Article III, Section 1 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS

DUE PROCESS OF LAW

Give
NOTI
to th CE
taxp e
ayer

Give taxpayer fair

opportunity to
assert his substantial
rights before
competent court

de
i
v
Pro RING
A
HE the
r
to
e
y
a
p
x
ta

Before he shall be denied or

deprived of his property for
non-payment of tax.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EQUAL PROTECTION OF LAW
No person shall be deprived of life, liberty, or property
without
due process of
law, nor shall any

person be denied the equal protection of

the laws.
Article III, Section 1 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EQUAL PROTECTION OF LAW
that all persons subject to legislation shall be treated
alike under similar circumstances and conditions
both in the privileges conferred and liabilities
imposed
There is denial of equal protection of laws if
there is discrimination in the implementation of
tax laws

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS

EQUAL PROTECTION OF LAW

SUBJEC
T
to

reasonable
classification

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS

EQUAL PROTECTION OF LAW

REQUISITES of VALID
reasonable
classification

Must be
germane to the
purpose of the
law

pl y
p
a
t
Mus lly to
a
equ mbers
e
m
e
l
l
m
a
a
es
h
t
of
s
clas

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
RULE OF UNIFORMITY and EQUITY
The rule of taxation shall be uniform and
equitable. Congress shall evolve a progressive
system of taxation.
Article VI, Section 28 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
RULE OF UNIFORMITY and EQUITY
All taxable property shall be
alike subjected to the tax

UNIFORMITY

operates with the same

force and effect in every
place where the subject
may be found,

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
RULE OF UNIFORMITY and EQUITY
The burden of tax falls
equally and impartially
upon all the persons
and property subject to
it.

EQUALITY

Equality in tax
ation is simila
r
to PROGRESS
IVE SYSTEM
OF TAXATION

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
RULE OF UNIFORMITY and EQUITY
PROGRESSIVE SYSTEM OF TAXATION
tax laws shall give emphasis on direct rather than
indirect taxes or on the ability-to-pay principle of
taxation
The tax rate INCREASES as the amount of taxable
income INCREASES

INHERENT and CONSTITUTIONAL LIMITATIONS

RULE OF UNIFORMITY and EQUITY

PROGRESSIVE SYSTEM OF TAXATION

Example:

The
INDIVIDU
AL TAX
SYSTEM

Not over P10,000

Over P10,000 but
not over P30,000
Over P30,000 but
not over P70,000
Over P70,000 but
not over P140,000
Over P140,000 but
not over P250,000
Over P250,000 but
not over P500,000
Over P500,000

5%
P500
+ 10% of the excess
over P10,000
P2,500
+ 15% of the excess
over P30,000
P8,500
+ 20% of the excess
over P70,000
P22,500
+ 25% of the excess
over P140,000
P50,000
+
30% of excess
over P250,000
P125,000 + 32% of the excess
over P500,000

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
REGRESSIVE SYSTEM OF TAXATION

The tax rate DECREASES as the amount of

taxable income INCREASES

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
Is a tax law adopting a regressive system
of taxation VALID?
YES. Congress shall evolve a progressive
system of taxation.-this is only a mere
directive upon Congress, not legally
enforceable. The Congress is not mandated to
prescribe, but to evolve progressive system of
taxation.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PRESIDENTs VETO POWER
Every bill passed by the Congress shall, before it
becomes a law be presented to the President. If he
approves the same, he shall sign it; otherwise, he
shall veto it and return the same with his objections
at large in its journal and proceed to reconsider it.
Article VI, Section 27 (2) of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PRESIDENTs VETO POWER
V E TO
POWER

The power of the President to refuse to

sign into law (can be tax laws) a bill that
has been passed by a legislature.
ITE
M
VET
O

POCKE
T
VETO

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PRESIDENTs VETO POWER

the power to veto

items in appropriation
bills without affecting
any other provisions of
such bills

the power to disapprove

legislative act with the
result that bills shall fail
to become laws.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PRESIDENTs VETO POWER
If the President vetoed the bill, two-thirds
(2/3) of the members of the House are required
to make such bill to become a law.
The power of the President to remit
fines and forfeitures does not include
civil penalties regarding nonpayment of
tax and other violation of tax laws.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EXEMPTION FROM REAL PROPERTY TAXES

Charitable institutions, churches, parsonages or

convents appurtenant thereto, mosques and nonprofit cemeteries and all lands, buildings and
improvements actually, directly and exclusively

used for religious, charitable or educational

purposes shall be exempt from taxation.
Article VI, Section 28 (3) of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EXEMPTION FROM REAL PROPERTY TAXES
The Supreme Court, however, held that such tax

should be
applicable only to REAL PROPERTY
TAXES and not to transfer taxes.
exemption for the above provision

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EXEMPTION FROM REAL PROPERTY TAXES
To be exempted from taxation, the real property must
be exclusively used for religious, educational and
charitable purposes.
the issue of ownership is not relevant, as long as the
real property is used exclusively for religious,
educational and charitable purposes, THEN IT SHALL
BE EXEMPTED FROM REAL ESTATE TAX.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EXEMPTION FROM REAL PROPERTY TAXES
idle lands or property used by others for other
purposes although owned by religious, educational and
charitable institutions could be subjected to real estate tax
income derived from these idle lands or property not
related to the exercise or performance of religious,
educational and charitable purposes or functions shall be
subject to internal revenue taxes---INCOME TAX.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
EXEMPTION FROM INCOME TAXES
and
CUSTOM DUTIES
All revenues and assets of non-stock, non-profit
educational institutions used actually, directly and
exclusively for educational purposes shall be exempted
from taxes and duties.
Article XIV, Section 4 (3) of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PUBLIC MONEY NOT FOR RELIGIOUS PURPOSES
No public money or property shall ever be appropriated,
applied, paid or used directly or indirectly for the use, benefit, or
support of any sect, church, denomination, sectarian , institution,
or system of religion, or for the use, benefit or support of any
priest, preacher, minister, or other religious teacher or dignitary as
such, except when such priest, preacher, minister, or
dignitary is assigned to the armed forces, or to any penal
institution, or government orphanage or leprosarium.
Article VI, Section 29 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
PUBLIC MONEY NOT FOR RELIGIOUS PURPOSES
BASIS:

Tax principle that taxes can only be levied for

public purposes
principle of the separation of the church and the
State.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
CONGRESS GRANTING TAX EXEMPTION

No law granting any tax exemption shall be

passed without the concurrence of a
majority of all the members of the
Congress.
Article VI, Section 28 (4) of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
CONGRESS GRANTING TAX EXEMPTION
GRANT OF
TAX EXEMPTIONS

Absolute Majority
Vote of the
MEMBERS of
Congress

WITHDRAWAL OF
TAX EXEMPTIONS

Relative majority vote is

sufficient/ majority of the
attendees constituting
quorum

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
SUPREME COURTS JURISDICTION
OVER TAX CASES
The Supreme Court shall have the power to review, revise,
reverse, modify or affirm on appeal or certiorari, as the
laws or the Rules of Court may provide, final judgments and
orders of lower courts in all cases involving the legality of any
tax, impost, assessment, or toll or any penalty imposed in
relation thereto.
Article VIII, Section 5 (2)(b) of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
SUPREME COURTS JURISDICTION
OVER TAX CASES

no law shall be passed increasing the appellate

jurisdiction of the Supreme Court as provided in this
Constitution without its advice and concurrence.
Article VI, Section 30 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
SUPREME COURTS JURISDICTION
OVER TAX CASES

The Power of Judicial Review in taxation is limited

only to the interpretation and application of tax
laws.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
NO IMPRISONMENT
FOR NON-PAYMENT of POLL TAX

no person shall be imprisoned for debt or nonpayment of a poll tax.

Article III, Section 20 of the 1987 Constitution

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
NO IMPRISONMENT
FOR NON-PAYMENT of POLL TAX

POLL
TAX

COMMUNI
TY TAX

a tax imposed on a person as a resident

within a territory of the taxing authority without
regard to his property, business or occupation.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
NO IMPRISONMENT
FOR NON-PAYMENT of POLL TAX

the prohibition of imprisonment applies only to

the nonpayment of poll tax.
imprisonment for nonpayment of other
taxes or imposition of fine would not be
contrary to the Constitution.

INHERENT and CONSTITUTIONAL LIMITATIONS

CONSTITUTIONAL LIMITATIONS
TAXES as GENERAL FUNDS of the GOVERNMENT
All money collected on any tax levied for a special
purpose shall be treated as a special fund and paid
out for such purpose only. If the purpose for which a
special und was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to
the general funds of the Government.
Article VI, Section 29 (3) of the 1987 Constitution

Taxation power exists inseparably with the

State because it is essential for the existence
of the government. (Luzon Stevedoring Co. vs. CTA, July
29, 1988).

WITHOUT TAXATION, NO REVENUE

Without revenue, no continuing government

Without government, no civilization.

government cannot exist without any means

to pay its expenses a necessary burden to
preserve the States sovereignty.
Taxation is the lifeblood or the bread and
butter of the government

GOVERNMENT

SILENT PARTNER in PROVIDING

INCOME/GIVING PROTECTION TO ITS
CITIZENRY

pay taxes to support the government

PEOPLE
symbiotic relationship and partnership
between the taxing authority and the subject of taxation

REVENUE PURPOSE

PRIMARY PURPOSE

TO RAISE REVENUE TO SUPPORT THE GOVERNMENT

REGULATORY PURPOSE or SUMPTUARY PURPOSE

SECONDARY or NON REVENUE OBJECTIVE

Encourage
Tool to
e
c
u
red
growth of
protect
l
a
i
c
so
local
TRADE
y
t
i
l
a
u
ineq
industries
RELATION
Implement the
police power of
the state

REGULATORY PURPOSE or SUMPTUARY PURPOSE

Tool to
protect
TRADE
RELATION

Special duties ma
be created to
protect local
industries against
foreign
competition.

REGULATORY PURPOSE or SUMPTUARY PURPOSE

SPECIAL DUTIES IMPOSED
TO PROTECT LOCAL INDUSTRIES

Discriminatory
Duty

this special duty is

designed to offset any
foreign discrimination
against our local
commerce.

REGULATORY PURPOSE or SUMPTUARY PURPOSE

SPECIAL DUTIES IMPOSED
TO PROTECT LOCAL INDUSTRIES

Countervailing
Duty

imposed to offset any

foreign subsidy granted
to imported goods to the
prejudice of our local
industries.

REGULATORY PURPOSE or SUMPTUARY PURPOSE

SPECIAL DUTIES IMPOSED
TO PROTECT LOCAL INDUSTRIES

MARKING DUTY

REGULATORY PURPOSE or SUMPTUARY PURPOSE

SPECIAL DUTIES IMPOSED
TO PROTECT LOCAL INDUSTRIES

DUMPING DUTIES

PROSPECTIVITY
OF TAX LAWS

the effectivity of the tax law

commences upon its approval
and its scope would only
cover
the
present
and
future transactions.
retroactive application of tax
laws shall not be applied

unless

there is a clear intent

of the legislature that such law
shall also be imposed on past
transactions.

Ex Post
FACTO LAW

NOT APPLICABLE for TAX

PURPOSES

a law is said to be ex post facto if it provides for the

infliction of punishment upon a person for an act done

when such act was committed, is not

subject to any punishment.
which,

IMPRESCRIPTIBILITY
OF TAXES
General Rule:

taxes in general are not cancelable

Exemptions:

unless otherwise the limitation are

provided by the tax laws or the tax code
itself.

IMPRESCRIPTIBILITY
OF TAXES
LIMITATIONS in the ASSESSMENT and
COLLECTION OF TAXES as provided for
by the TAX CODE

Sections 203 and 222 of the NIRC

IMPRESCRIPTIBILITY
OF TAXES
RULES in Section 203 and 222 of the NIRC
LIMITATION for ASSESSMENT
OF TAX
Within
3
YEARS
From the date
prescribed
by law to file
a return

If filed after
the date
prescribed by
law, from the
date of
ACTUAL
FILING.

IMPRESCRIPTIBILITY
OF TAXES
If no return is filed

BUT,

If the return filed is false or

fraudulent

PERIOD TO ASSESS IS WITHIN

TEN (10) YEARS
FROM

Discovery of the OMISSION,

FRAUD or FALSITY

IMPRESCRIPTIBILITY
OF TAXES
LIMITATIONS in the ASSESSMENT and
COLLECTION OF TAXES as provided for
by other TAX LAWS

Section 4 of R.A. 9135 and

Section 194 of R.A. 7160

IMPRESCRIPTIBILITY
OF TAXES
Section 4, R.A. 9135
TARIFF and CUSTOMS CODE
When articles have been entered and passed free of duty
of final adjustment duties made, with subsequent delivery,
such entry and passage free from duty or settlements of
duties will, after the expiration of three (3) years, from
the date of the final payment of duties and in the absence
of fraud or protest or compliance audit pursuant to the
provisions of this Code, BE FINAL AND CONCLUSIVE
UPON ALL THE PARTIES, unless the liquidation of the
import entry was merely tentative.

IMPRESCRIPTIBILITY
OF TAXES
Section 194 R.A. 7160
LOCAL GOVERNMENT CODE
General Rule:
Local taxes, fees or charges

Assessed within FIVE (5) years

from the date they became due.

IMPRESCRIPTIBILITY
OF TAXES
Section 194 R.A. 7160
LOCAL GOVERNMENT CODE
Exemption:
In case of fraud, intent to evade
payment of local taxes, fees or charges

Assessed within TEN (10) years from discovery

of the fraud or intent to evade payment

DOUBLE
TAXATION
act of the sovereign by

TAXING TWICE
-for the same purpose
-in the same year
-upon the same
property or activity of
the same person

when it should be
TAXED ONCE
-for the same purpose
and
with the same kind of
character of tax.

KINDS OF DOUBLE TAXATION

Imposition of comparable taxes in two or

more states on the same taxpayer
in
respect of the same subject matter and for
identical periods

KINDS OF DOUBLE TAXATION

It arises when the taxes are imposed by the

local or national government within the same
state.

KINDS OF DOUBLE TAXATION

KINDS OF DOUBLE TAXATION

Through. . . .
TAX
EXEMPTION
S

The INCOME or CAPITAL which

is taxable in the state of
source/situs is EXEMPTED in
the state of residence

KINDS OF DOUBLE TAXATION

Through. . . .

TAX CREDIT

The TAX PAID in the state of

source/situs is CREDITED
against the tax levied in the
state of residence

KINDS OF DOUBLE TAXATION

Through. . . .

KINDS OF DOUBLE TAXATION

FROM THE SAME

CORPORATION
TAX ON THE
CORPORATE
INCOME and TAX
ON THE
STOCKHOLDERS
DIVIDENDS

KINDS OF DOUBLE TAXATION

UPON SAME
OCCUPATION/ACTIVIT
Y
TAX imposed BY
THE STATE and
TAX imposed BY
THE LOCAL
GOVERNMENT

KINDS OF DOUBLE TAXATION

UPON SAME REAL

PROPERTY LEASED FOR
EARNING PURPOSES

Subject to REAL
ESTATE TAX and
INCOME TAXT

KINDS OF DOUBLE TAXATION

PROHIBITED

KINDS OF DOUBLE TAXATION

act of the sovereign by

when it should be

TAXING TWICE

TAXED ONCE
-for the same
purpose and
with the same kind
of character of tax.

-for the same purpose

-in the same year
-upon the same
property or activity
of the same person

taxes are not

subject to set-off
or legal
compensation

government and the

taxpayer are NOT
mutual creditor and
debtor of each other.

taxes are not subject to

set-off or legal
compensation

government and the

taxpayer are NOT mutual
creditor and debtor of each
other.

a tax claim for refund, may be allowed to be

used as payment for unsettled tax liabilities if
both taxes arise from the same transaction

effected through court proceedings

and could only be allowed if the act
involves a direct and illegal
disbursement of public funds
derived from taxation