PRINCIPLES AND DOCTRINES ON TAXATION

Prepared by: Arnel D. Mateo

I. PRINCIPLE OF NECESSITY

The existence of the government is a necessity; the main source of revenue of the government is taxes. These are the life-blood of the government. The primary purpose of taxation is to generate funds for the State to finance the needs of the citizenry and to advance the common wealth. The government chiefly relies on taxation to obtain the means to carry on its operation.

Cases:

Commissioner vs. Pineda, 21 SCRA 105- Taxes are the lifeblood of the government and their prompt and certain availability are an imperious need.

CIR vs. Algue, 158 SCRA 8- The government will not be able to survive and continue to perform its functions without taxes.

II. TAXATION IS INHERENTLY LEGISLATIVE

Along with police power ( for public good and welfare ) and eminent domain ( for public use ), taxation ( for revenue ) is an inherent power of the sovereignty.

Cases:

National Power Corporation vs. Albay, 186 SCRA 198- Power of taxation is legislative in character and is a legislative prerogative.

Petro vs. Petilla, 198 SCRA 82- The legislative taxing power includes the authority: a. to determine the nature, object, extent, coverage, and situs of the tax imposition, b. to grant tax exemptions or condonations, and c. to specify or provide for the administrative, as well as judicial remedies that either the government or the taxpayers may avail themselves of in the proper implementation of the tax measure.

III. TAXATION INCLUDES THE POWER TO DESTROY

The power of taxation is sometime also called the power to destroy. Therefore, it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kills the ‘hen that lays the golden egg.’ And, in order to maintain the general public’s trust and confidence in the government, this power must be used justly and not treacherously.

Cases:

Roxas vs. CTA, 23 SCRA 276- The power of taxation includes the power to destroy if it is used validly as an implement of the police power of the state. If it is used solely for the purpose of raising revenue, it does not include the power to destroy.

Standard Oil Co. vs. Posadas, 55 Phil 715- While ordinarily the government does not tax its own political subdivisions or its other entities, it may, however, do so by providing for it explicitly.

IV. TAXATION IS FOR A PUBLIC PURPOSE

The proceeds of the tax must be used a. for the support of the State or b. for some recognized objects of government or directly to promote the welfare of the community.

Cases:

Pascual vs. Sec. of Public Works, 110 Phil 331- The legislature is without power to appropriate public revenues for anything but a public purpose.

Valentin Tio vs. Videogram Regulatory Board, 151 SCRA 208- The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose the tax was to favor one industry over another.

V. TAXPAYER SUIT

It is the remedy available to a taxpayer when taxes are used for illegal activities or when the public funs are used by the government for projects which are not intended for a public purpose.

Cases:

Pascual vs. Sec. of Public Works, 110 Phil 331- It is only when an act complained of, which may include a legislative enactment, directly involves illegal disbursement of public funds derived from taxation.

Maceda vs. Macaraig, 197 SCRA 771- When the issue involve the legality of expenditure of tax money, a taxpayer suit could be filed.