1. The two statements can be reconciled on three levels.

First, the imposition of a valid tax could not

be judicially restrained merely because it would prejudice the taxpayers property. Second, an
illegal tax could be judicially declared invalid and should not work to prejudice a taxpayers
property. Third, J. Marshalls view refers to a valid tax while J. Holmes view refers to an invalid
tax.
The power to tax involves the power to destroy. This maxim only means that the power to tax
includes the power to regulate even to the extent of prohibition or destruction of businesses. The
reason is that the legislature has the inherent power to determine who to tax, what to tax and
how much tax is to be imposed. Pursuant to the regulatory purpose of taxation, the legislature
may impose tax in order to discourage or prohibit things or enterprises inimical to the public
welfare.
Taxation is a destructive power which interferes with the personal and property rights of the
people and takes from them a portion of their property for support of the government. 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 kill 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.
2. Yes. In CIR VS. CENTRAL LUZON DRUG CORPORATION [456 SCRA 413], the Supreme Court stated
that the taxation power can be used as an implement for the exercise of the power of eminent
domain. It noted that the tax credit granted to private establishments giving senior citizen
discounts can be deemed as their just compensation for private property taken by the State for
public use. Under Ra 9257, it now specifically provides that the senior citizens discount should
now be treated as a deductible expense.
3. The basic principles are the following:
a. Fiscal Adequacy The source of government revenue must be sufficient to meet
governmental expenditures, legitimate expenses and other public needs
b. Administrative feasibility taxes should be capable of just and effective
administration that even an ordinary taxpayer may comprehend.
c. Theoretical Justice a good tax system must be based on the taxpayers ability to pay.
The higher the income, the higher the tax.
4. In PHILIPPINE COCONUT PRODUCERS FEDERATION VS. PCGG [178 SCRA 236], the Supreme Court
held that the coconut industry is one of the major industries supporting the national economy. It
is therefore, the States concern to make it a strong and secure source not only of the livelihood
of a significant segment of the population but also of export earnings the sustained growth of
which is one of the imperatives of economic stability.
Tax are not merely to raise revenues to support the government but also to provide means for
the rehabilitation and the stabilization of a threatened industry which is so affected with public
interest as to be within the police power of the State. This coconut industry gives employment to
thousands of Filipinos; hence it is imbued with public interest.

5. No there was no invalid delegation.

The tests to determine whether or not there is invalid delegations are the sufficient standard test
and the completeness test.
In the case at bar the law delegating to the President upon recommendation of the Secretary of
Finance passed the completeness test and the sufficient standard test. The grounds on which the
President may raise the vat to 12% are based exclusively on any of the 2 conditions which the
legislature itself has identified. It has passed the completeness test since the law crafted by the
legislature itself has laid ample conditions before the President can increase the vat. It also has
passed the sufficient standard test since it has pegged the increase of the vat at 12%; hence, the
President cannot impose any other rate higher than that provided by the law. In sum, the
President has no discretion when to impose the increase and on what grounds other than that
specified by the law. All that is left for the President to do is to implement the law upon
recommendation of the Secretary of Finance when any of the grounds provided by the legislature
are present.
Clearly, under the circumstances, the legislature has mapped out the grounds and boundaries
before the President can exercise the power delegated to him.
Lastly, there is no undue delegation of legislative power but only of the discretion as to the
execution of a law. This is constitutionally permissible. Congress did not delegate the power to
tax but the mere implementation of a tax law. The intent and will to increase the VAT rate to 12%
came from Congress and the task of the President is to simply execute the legislative policy.
6. The salaries and allowances received by Larry are not subject to Philippine income tax. P qualifies
as a non-resident citizen because he leaves the Philippines for employment requiring him to be
physically present abroad most of the time during the taxable year. A non-resident citizen is only
taxable on his income derived from sources within the Philippines. The salaries and allowances of
Larry are received by him from being employed abroad and are incomes without the Philippines.
These are compensation for services rendered outside the Philippines.
However, P is taxable on rental income for the lease of his Philippine residence because this is an
income derived from within the country, the leased property being located within the Philippines.
7. All of the income above will be exempt from taxation. Under Article 14, Section 4, all the income
derived by the non-stock, non-profit educational institution will be exempt from taxation
provided they are used actually, directly, and exclusively for educational purposes. The donation
is likewise exempt from the donors tax subject to the provisions of RA No. 8424. What is
significant here is the use of the funds and not its source. As long as it is used actually, directly,
and exclusively for educational purposes all the income above is exempt from taxation.
If it is a proprietary educational institution, all of its income stated above will be subject to the
income tax. The exemption provided under the 1987 Constitution only extends to non-stock, nonprofit educational institutions. Since the school is a proprietary educational institution, it does not
qualify for the said tax exemption.

8. Since the planned sale involves a real property classified as a capital asset, the material
considerations to take into account to compute the income tax are:
a) The gross selling price of the property; or
b) Whichever is higher between the current fair market value as determined by:
i. Zonal Value prescribed zonal value of real properties as determined by the
CIR; or
ii. Assessed Value the fair market value as shown in the schedule of values of the
Provincial and City assessors (Sec. 24 D [1], NIRC)
The income tax is computed as 6% of the tax base which is in the nature of a final capital gains
tax. (Sec 24 (D)(1), NIRC). However, since the property to be sold is a principal residence and the
purpose is to construct a new principal residence, I will advise Mr. Belen that the sale can be
exempt from 6% capital gains tax if he is willing to comply with the following conditions:
a) He must utilize the proceeds of sale in acquiring a new principal residence within 18
months from the date of disposition;
b) That the historical cost or adjusted basis of the real property sold or disposed shall be
carried over to the new principal residence built or acquired
c) He should notify the Commissioner of his intention to avail of the exemption within 30
days from date of sale;
d) He should open an escrow account with a bank and deposit the 6% capital gains tax due
on the sale. If he complies with the utilization requirement he will be entitled to get back
his deposit upon showing that the proceeds have been fully utilized within 18 months;
otherwise, the deposit will be applied against the capital gains tax due. (Sec 24 (D)(2),
NIRC)
e) That the said exemption can only be availed of once every ten (10) years; and
f) Provided, finally, that if there is no full utilization of the proceeds of sale or disposition,
the portion of the gain presumed to have been realized from the sale or disposition shall
be subject to capital gains t ax.
9. Tax avoidance is the tax saving device within the means sanctioned by law. This method should
be used by the taxpayer in good faith and at arms length.
Tax evasion, on the other hand, is a scheme used outside of those lawful means and when availed
of, it usually subjects the taxpayer to further or additional civil or criminal liabilities.
Tax evasion has three factors:
a. The end to be achieved which is the payment of less taxes than that known by the
taxpayer to be legally due, or the non-payment thereof;
b. An accompanying state of mind which is described as being evil or in bad faith; and
c. A course of action or failure of action which is unlawful.

10. The income tax liability of Y cannot be compensated with the amount owed by the Government
as just compensation for his property expropriated by the government. The set-off of the income
tax liability of Y and the amount owed by the government for just compensation contradicts the
lifeblood theory. Taxes are of distinct kinds, essence and nature than ordinary obligations. Taxes
are compulsory in nature. Taxes and debts cannot be the subject of compensation because the
government and Y are not mutually creditors and debtors of each other and a claim for taxes is
not a debt, nor demand, nor contract, nor judgment which is allowed to be set-off.
However, by way of exception, taxes can only be set-of or be compensated if the following requisites
concur:
a. Both the obligation from the government and the taxpayer are due and demandable; and
b. It is full liquidated.