POLICE POWER: Taxation is no longer This case, of course, is ultimately not just about
envisioned as a measure merely to raise cement. For respondents, it is about love of
revenue to support the existence of the country and the future of the domestic industry
government; taxes may be levied with a in the face of foreign competition. For this
regulatory purpose to provide means for the Court, it is about elementary statutory
rehabilitation and stabilization of a threatened construction, constitutional limitations on the
industry which is affected with public interest as executive power to impose tariffs and similar
to be within the police power of the state. measures, and obedience to the law. Just as
much was asserted in the Decision, and the
NO OFFSET: It is settled that a taxpayer may same holds true with this present Resolution.
not offset taxes due from the claims that he
may have against he government. Taxes POWER OF PRESIDENT TO IMPOSE TARIFF
cannot be the subject of compensation because RATES: Without Section 28(2), Article VI, the
the government and taxpayer are not mutually executive branch has no authority to impose
creditors and debtors of each other and a claim tariffs and other similar tax levies involving the
for taxes is not such a debt, demand, contract importation of foreign goods. Assuming that
or judgment as is allowed to be set-off. Section 28(2) Article VI did not exist, the
Batangas Power Corp. v. Batangas City, G.R. enactment of the SMA by Congress would be
No. 152675, April 28, 2004 voided on the ground that it would constitute an
undue delegation of the legislative power to tax.
SOCIAL JUSTICE AND EQUITABLE The constitutional provision shields such
DISTRIBUTION OF WEALTH: In recent years, delegation from constitutional infirmity, and
the increasing social challenges of the times should be recognized as an exceptional grant of
expanded the scope of state activity, and legislative power to the President, rather than
taxation has become a tool to realize social the affirmation of an inherent executive power.
justice and the equitable distribution of wealth,
economic progress and the protection of local QUALIFIERS: This being the case, the
industries as well as public welfare and similar qualifiers mandated by the Constitution on this
objectives. Taxation assumes even greater presidential authority attain primordial
significance with the ratification of the 1987 consideration: (1) there must be a law; (2) there
Constitution. Thenceforth, the power to tax is no must be specified limits; and (3) Congress may
longer vested exclusively on Congress; local impose limitations and restrictions on this
legislative bodies are now given direct authority presidential authority.
to levy taxes, fees and other charges pursuant
to Article X, section 5 of the 1987 Constitution. POWER EXERCISED BY ALTER EGOS OF
Southern Cross Cement Corp. v. Cement PRES: The Court recognizes that the authority
Manufacturers Association of the Phils., G.R. delegated to the President under Section 28(2),
No. 158540, Aug. 3, 2005 Article VI may be exercised, in accordance with
legislative sanction, by the alter egos of the
(HOLY CRAP, CHECK OUT THE INTRO!!!! ^.^) President, such as department secretaries.
Indeed, for purposes of the Presidents exercise
Cement is hardly an exciting subject for of power to impose tariffs under Article VI,
litigation. Still, the parties in this case have Section 28(2), it is generally the Secretary of
done their best to put up a spirited advocacy of Finance who acts as alter ego of the President.
their respective positions, throwing in The SMA provides an exceptional instance
everything including the proverbial kitchen sink. wherein it is the DTI or Agriculture Secretary
At present, the burden of passion, if not proof, who is tasked by Congress, in their capacities
has shifted to public respondents Department of as alter egos of the President, to impose such
Trade and Industry (DTI) and private measures. Certainly, the DTI Secretary has no
respondent Philippine Cement Manufacturers inherent power, even as alter ego of the
Corporation (Philcemcor),[1] who now seek President, to levy tariffs and imports.
reconsideration of our Decision dated 8 July
2004 (Decision), which granted the petition of TARIFF COMMISSION AND DTI SEC ARE
AGENTS: Concurrently, the tasking of the Tariff What are these limitations and restrictions that
Commission under the SMA should be likewise are material to the present case? The entire
construed within the same context as part and SMA provides for a limited framework under
parcel of the legislative delegation of its which the President, through the DTI and
inherent power to impose tariffs and imposts to Agriculture Secretaries, may impose safeguard
the executive branch, subject to limitations and measures in the form of tariffs and similar
restrictions. In that regard, both the Tariff imposts.
Commission and the DTI Secretary may be
regarded as agents of Congress within their POWER BELONGS TO CONGRESS: the
limited respective spheres, as ordained in the cited passage from Fr. Bernas actually states,
SMA, in the implementation of the said law Since the Constitution has given the President
which significantly draws its strength from the the power of control, with all its awesome
plenary legislative power of taxation. Indeed, implications, it is the Constitution alone which
even the President may be considered as an can curtail such power. Does the President
agent of Congress for the purpose of imposing have such tariff powers under the Constitution
safeguard measures. It is Congress, not the in the first place which may be curtailed by the
President, which possesses inherent powers to executive power of control? At the risk of
impose tariffs and imposts. Without legislative redundancy, we quote Section 28(2), Article VI:
authorization through statute, the President has The Congress may, by law, authorize the
no power, authority or right to impose such President to fix within specified limits, and
safeguard measures because taxation is subject to such limitations and restrictions as it
inherently legislative, not executive. may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other
When Congress tasks the President or his/her duties or imposts within the framework of the
alter egos to impose safeguard measures under national development program of the
the delineated conditions, the President or the Government. Clearly the power to impose
alter egos may be properly deemed as agents tariffs belongs to Congress and not to the
of Congress to perform an act that inherently President.
belongs as a matter of right to the legislature. It CIR v. Central Luzon Drug Corp., G.R. No.
is basic agency law that the agent may not act 159647, April 15, 2005
beyond the specifically delegated powers or
disregard the restrictions imposed by the EMINENT DOMAIN: The concept of public use
principal. In short, Congress may establish the is no longer confined to the traditional notion of
procedural framework under which such use by the public, but held synonymous with
safeguard measures may be imposed, and public interest, public benefit, public welfare,
assign the various offices in the government and public convenience. The discount privilege
bureaucracy respective tasks pursuant to the to which our senior citizens are entitled is
imposition of such measures, the task actually a benefit enjoyed by the general public
assignment including the factual determination to which these citizens belong. The discounts
of whether the necessary conditions exists to given would have entered the coffers and
warrant such impositions. Under the SMA, formed part of the gross sales of the private
Congress assigned the DTI Secretary and the establishments concerned, were it not for RA
Tariff Commission their respective functions in 7432. The permanent reduction in their total
the legislatures scheme of things. revenues is a forced subsidy corresponding to
the taking of private property for public use or
There is only one viable ground for challenging benefit.
the legality of the limitations and restrictions
imposed by Congress under Section 28(2) As a result of the 20 percent discount imposed
Article VI, and that is such limitations and by RA 7432, respondent becomes entitled to a
restrictions are themselves violative of the just compensation. This term refers not only to
Constitution. Thus, no matter how distasteful or the issuance of a tax credit certificate indicating
noxious these limitations and restrictions may the correct amount of the discounts given, but
seem, the Court has no choice but to uphold also to the promptness in its release. Equivalent
their validity unless their constitutional infirmity to the payment of property taken by the State,
can be demonstrated. such issuance -- when not done within a
reasonable time from the grant of the discounts
-- cannot be considered as just compensation. 5. As to transfer of property rights
Taxation involves transfer of public
Besides, the taxation power can also be funds or money; Police Power does not
used as an implement for the exercise of the contemplate a transfer but merely
power of eminent domain. Tax measures are restraint on property taken or destroyed.
but enforced contributions exacted on pain of
penal sanctions and clearly imposed for a v. POWER OF EMINENT DOMAIN (code:
public purpose. In recent years, the power to NCAPA)
tax has indeed become a most effective tool to
realize social justice, public welfare, and the 1. As to nature Taxation is the power to
equitable distribution of wealth. raise revenue; Eminent Domain is the
taking of property for public use.
2. As to compensation Compensation for
a.6. Characteristics of a Sound Tax System taxation takes the form of a general
benefit to the public; in eminent domain,
there must be just compensation.
1. Fiscal Adequacy meet requirements of 3. As to applicability of non-impairment of
government contracts clause It applies in taxation;
2. Theoretical Justice progressivity; it does not apply in eminent domain.
based on taxpayers ability to pay 4. As to persons affected Taxation
3. Administrative Feasibility enforcement affects all subject to the States
should be effective and simple jurisdiction; eminent domain affects only
the particular property.
a.7. Aspects of Taxation 5. As to authority Taxation is exercised
by the government; Eminent Domain
may be exercised by private entities
1. Levy determine persons, property or exercising public functions.
excises to be taxed, their amount and
due date, time and manner (taxation B. Limitations of the Taxing Power
proper)
2. Collection manner of enforcement; b.1. Inherent Limitations
includes assessment and administration
by BIR (subordinate legislation) (tax (1) Public Purpose this is presumed
administration) Gomez v. Palomar, G.R. No. L-23645, Oct. 29,
1968
a.8. Taxation distinguished
The eradication of a dreaded disease is a public
v. POLICE POWER (code: PABAT) purpose, but if by public purpose the petitioner
means benefit to a taxpayer as a return for what
1. As to purpose Taxation is to raise he pays, then it is sufficient answer to say that
revenue; Police Power is to promote the only benefit which the taxpayer is
public welfare. constitutionally entitled is that derived from his
2. As to amount Taxation has no limit; enjoyment of the privileges of living in an
Police Power is limited to the cost of organized society, established and safeguarded
regulation, issuance of license or by the devotion of taxes to public purposes
surveillance Pascual v. Secretary of Public Works, G.R. No.
3. As to benefits Taxation offers no L-10405, Dec. 29, 1960
special or direct benefit other than
benefit to the general public; Police In accordance with the rule that the taxing
Power is to promote a healthy economic power must be exercised for public purposes
standard. only, money raised by taxation can be
4. As to applicability of non-impairment of expanded only for public purposes and not for
contracts clause It applies in taxation; the advantage of private individuals.
It does not apply in police power,
EXCEPT if the grant of franchise was for Public funds may be used for a public
a valuable consideration. purpose. The right of the legislature to
appropriate funds is correlative with its right to o Resident Citizens taxed on all sources
tax, under constitutional provisions against of income inside or outside the
taxation except for public purposes and Philippines (based on nationality
prohibiting the collection of a tax for one principle)
purpose and the devotion thereof to another o Non-resident Citizens taxed on all
purpose, no appropriation of state funds can be sources within the Philippines
made for other than a public purpose. Aliens
a) Due Process and Equal Protection Clause Art. VI, Section 26. (1) Every bill passed by the
Congress shall embrace only one subject which
Art. III, Section 1. No person shall be deprived shall be expressed in the title thereof.
of life, liberty, or property without due process
of law, nor shall any person be denied the equal (2) No bill passed by either House shall be
protection of the laws. come a law unless it has passed three readings
on separate days, and printed copies thereof in
b) Freedom of the Press its final form have been distributed to its
Members three days before its passage, except
Art. III, Section 4. No law shall be passed when the President certifies to the necessity of
abridging the freedom of speech, of expression, its immediate enactment to meet a public
or of the press, or the right of the people calamity or emergency. Upon the last reading of
peaceably to assemble and petition the a bill, no amendment thereto shall be allowed,
government for redress of grievances. and the vote thereon shall be taken immediately
thereafter, and the yeas and nays entered in
c) Religious Freedom the Journal.
Art. XII, Section 11. No franchise, certificate, or (2) The Congress may, by law, authorize the
any other form of authorization for the operation President to fix within specified limits, and
of a public utility shall be granted except to subject to such limitations and restrictions as it
citizens of the Philippines or to corporations or may impose, tariff rates, import and export
associations organized under the laws of the quotas, tonnage and wharfage dues, and other
Philippines, at least sixty per centum of whose duties or imposts within the framework of the
capital is owned by such citizens; nor shall such national development program of the
franchise, certificate, or authorization be Government.
exclusive in character or for a longer period
than fifty years. Neither shall any such franchise (3) Charitable institutions, churches and
or right be granted except under the condition personages or convents appurtenant thereto,
that it shall be subject to amendment, alteration, mosques, non-profit cemeteries, and all lands,
or repeal by the Congress when the common buildings, and improvements, actually, directly,
good so requires. The State shall encourage and exclusively used for religious, charitable, or
equity participation in public utilities by the educational purposes shall be exempt from
general public. The participation of foreign taxation.
investors in the governing body of any public
utility enterprise shall be limited to their (4) No law granting any tax exemption shall be
proportionate share in its capital, and all the passed without the concurrence of a majority of
executive and managing officers of such all the Members of the Congress.
c) Progressive System (Sec. 28 (1), Art. VI) 1) Exercise original jurisdiction over cases
affecting ambassadors, other public ministers
d) ART Bill and consuls, and over petitions for certiorari,
prohibition, mandamus, quo warranto, and
Art. VI, Section 24. All appropriation, revenue or habeas corpus.
tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills, (2) Review, revise, reverse, modify, or affirm on
shall originate exclusively in the House of appeal or certiorari, as the law or the Rules of
Representatives, but the Senate may propose Court may provide, final judgments and orders
or concur with amendments. of lower courts in:
h) Congress concurrence (Sec. 28 (4), Art. (d) All criminal cases in which the penalty
VI) imposed is reclusion perpetua or higher.
Art. VIII, Section 5. The Supreme Court shall (6) Appoint all officials and employees of the
have the following powers: Judiciary in accordance with the Civil Service
Law. delegation of ascertainment of facts upon which
enforcement and administration of the increase
rate under the law is contingent. The legislature
TAX PAYERS SUIT proper when there is has made the operation of the 12% rate
illegal disbursement of public funds derived effective Jan. 1, 2006, contingent upon a
from taxation. But note that even if the taxpayer specified fact or condition. It leaves the entire
questions the constitutionality of the law, he is operation or non-operation of the 12% rate
not excused from paying his taxes because of upon factual matters outside the control of the
the life-blood theory. executive. It is the ministerial duty of the
President to immediately impose the 12% rate
l) Delegated authority to LGU upon the existence of any of the conditions
specified by Congress.
Art. X, Section 5. Each local government unit
shall have the power to create its own sources Is there violation of due process clause as it
of revenues and to levy taxes, fees and charges imposes an unfair and additional tax burden
subject to such guidelines and limitations as the on the people?Petitioners argue that the law
Congress may provide, consistent with the imposes an unfair and additional tax burden on
basic policy of local autonomy. Such taxes, the people as the law does not provide for the
fees, and charges shall accrue exclusively to rate to revert to the original 10% in case the
the local governments. conditions set forth are no longer satisfied and
as such, people wont know how much is the
Art. X, Section 6. Local government units shall rate from year to year. SC said that the law is
have a just share, as determined by law, in the clear and unambiguous. The fears of petitioner
national taxes which shall be automatically is merely speculative as the law itself does not
released to them. provide that the rate would go back to 10%.
m) Tax exemptions Does it violate the rule that ART bills should
exclusively originate from the House of
Art. XIV, Sec. 4 (3): All revenues and assets of Representatives? No violation. According to
non-stock, non-profit educational institutions petitioners, the amendments introduced to the
used actually, directly, and exclusively for NIRC did not come from the House, but from
educational purposes shall be exempt from the Senate. SC said that to begin with, it is not
taxes and duties. Upon the dissolution or the law but the revenue bill which is
cessation of the corporate existence of such required by the Constitution to originate
institutions, their assets shall be disposed of in exclusively in the House of Representatives. A
the manner provided by law. bill originating from the House may undergo
such extensive changes in the Senate that the
Sec. 30(H), NIRC: Exemptions from Tax on result may be a rewriting of the whole. At this
Corporations -- A nonstock and nonprofit point, what is important to note is that, as a
educational institution. result of the Senate action, a distinct bill may be
produced. To a insist that a revenue statute
NOTA BENE: Income from school canteens and not only the bill which initiated the
and bookstores which is incidental to the legislative process culminating in the enactment
schools primary purpose is included in the of the law must substantially be the same as
exemption. But such school canteens and the House bill would be to deny the Senates
bookstores must be owned by the school and power not only to concur with amendments
located in the school campus. but also to propose amendments. It would
ABAKADA Guro Party List v. Ermita, G.R. No. violate the coequality of legislative power of the
168056, Sept. 1, 2005 two houses of Congress and in fact make the
House superior to the Senate. What the
Is there undue delegation of legislative Constitution means is that the initiative for filing
power since the law gives the President revenue, tariff or tax bills, bills authorizing an
stand-by authority to raise the VAT rate to increase of public debt, private bills and bills of
12%? The authority does not refer to the power local application must come from the House of
of the President to fix tariff rates. Neither is it a Representatives on the theory that, elected as
delegation of legislative power. It is simply a they are from the districts, the members of the
House can be expected to be more sensitive to person, passed on to him by the seller, when he
the local needs and problems. On the other buys goods. Output tax meanwhile is the tax
hand, the senators, who are elected at large, due to the person when he sells the goods. In
are expected to approach the same problems computing the variables, there are three
from the national perspective. Both views are possible scenarios: (1) if the input and output
thereby made to bear on the enactment of such taxes charged are equal, then there is no
laws. payment required; (2) when output taxes
exceed the input taxes, the person shall be
Does the imposition of limitations on the liable for the excess; and (3) if the input taxes
amount of input tax that may be claimed exceed the output taxes, the excess shall be
constitute a deprivation of property without carried over to the succeeding quarter or
due process of law? There is no deprivation of quarters. The 70% limitation on input taxes
property because the input tax in excess of the does not mean that the establishments retain
output tax is carried over to succeeding quarter the input tax in excess of 70%. It only means
or quarters. In addition, a tax credit certificate that they can only credit their input tax up to the
may be applied for any unused input taxes, to extent of 70% of their output tax.
the extent that such input taxes have not been
applied against the input taxes. Such unused Does it violate uniformity and equitable
input tax may be used in payment of his other taxation? Uniformity in taxation means that all
internal revenue taxes. Moreover, input tax is taxable articles or kinds of property of the same
not property under the purview of the class shall be taxed at the same rate. Different
Constitution. It is merely a statutory privilege. articles may be taxed different amounts
provided that the rate is uniform on the same
Does it violate the equal protection clause class everywhere with all people at all times.
as the limitation on the creditable input tax The law is uniform as it provides a standard
is not based on real and substantial rate of 0% or 10% (or 12%) on all goods and
differences to meet a valid services. The law is also equitable as it is
classification? The equal protection clause equipped with a threshold margin. Thus the
does not require the universal application of the VAT rate of 0% or 10% (or 12%) does not apply
laws on all persons or things without distinction. to sales of goods or services with gross annual
This might in fact sometimes result in unequal sales or receipts not exceeding P1,500,000.00.
protection. What the clause requires is equality
among equals as determined according to a
valid classification. By classification is meant C. Tax
the grouping of persons or things similar to
each other in certain particulars and different c.1. Tax Defined, Characteristics
from all others in these same particulars.
Tax enforced proportional contributions,
Does violate the progressivity of tax generally payable in money, from persons,
laws? By its very nature, the VAT is regressive. property, rights and privileges levied by the
Nevertheless, the Constitution does not really legislative body of the State by virtue of its
prohibit the imposition of indirect taxes, like the sovereignty for the support of government and
VAT. What it simply provides is that Congress for public needs.
shall evolve a progressive system of taxation.
The constitutional provision has been c.2. Kinds of Taxes
interpreted to mean simply that direct taxes are As to subject or object
to be preferred and as much as possible,
indirect taxes should be minimized. personal>
propertyAs to who bears the burden
Does it violate the principle that tax
collection and revenue should be solely o direct
allocated for public purposes and o indirect
expenditures since VAT-registered CIR v. PLDT, G.R. No. 140230, Dec. 15, 2005
establishments are allowed to retain a
portion of the taxes they collect? No DIRECT v. INDIRECT TAX: based on the
violation. The input tax is the tax paid by a possibility of shifting the incidence of taxation.
Direct taxes are those that are exacted from the v. SPECIAL ASSESSMENT
very person who, it is intended or desired,
should pay them; impositions for which a 1. As to subject matter Tax is imposed
taxpayer is directly liable on the transaction or on persons, property and excises;
business he is engaged in. Indirect taxes are Special Assessment is levied only on
those that are demanded, in the first instance, land
from, or are paid by, one person in the 2. As to liability imposed upon taxpayer
expectation and intention that he can shift the Tax can be a personal liability or liability
burden to someone else; liability for the on property of the taxpayer; Special
payment falls on one person but the burden can Assessment cannot be made a personal
be shifted or passed on to another person, such liability of the person assessed
as when the tax is imposed ex. VAT, advance 3. As to purpose Tax is to generate
sales tax, compensating tax upon goods revenue; Special Assessment is based
before reaching the consumer who ultimately wholly on benefit.
pays for it. When the seller passes on the tax to 4. As to application Tax is of general and
his buyer, he, in effect, shifts the tax burden, uniform application; Special Assessment
not the liability to pay it, to the purchaser as part is exceptional both as to time and
of the price of goods sold or services rendered. locality.
As to determination of amount
1. As to nature - Tax is a demand of
o specific sovereignty for the purpose of raising
o ad valorem public revenue; Toll is a demand of
As to purpose ownership to defray the cost and
maintenance of the property.
o general
o special
As to rate v. PENALTY
o progressive
o regressive 1. As to kind of liability Tax is a civil
o proportional liability; Penalty is a punishment for the
As to imposing authority commission of a crime.
o national v. DEBT
o local
Art. VI, Sec. 28(4): No law granting any tax v. TAX AMNESTY
exemption shall be passed without the
concurrence of a majority of all the Members of 1. Tax exemption is prospective. Tax
the Congress. amnesty is retrospective.
2. Tax exemption is civil. Tax amnesty is
NOTA BENE: Therefore, the President cannot civil and criminal.
grant tax exemptions through executive 3. Tax exemptions cannot be granted
agreement. Tax treaties are entered into with without the concurrence of majority of
concurrence of the Senate. Congress. Tax amnesty is the
intentional overlooking by the
government of tax unpaid and is o Indirect double taxation one or more of
generally considered an executive act. the elements of double taxation are
absent
CIR v. Marubeni Corp., G.R. No. 137377, Dec.
18, 2001 NOTA BENE: Double taxation may be avoided
through various credit schemes specified under
TAX AMNESTY general pardon or intentional the NIRC and exemptions under tax treaties
overlooking by the State of its authority to entered into with foreign governments.
impose penalties on persons otherwise guilty of
evasion or violation of a revenue or tax law;
partakes of an absolute forgiveness or waiver
by the government of its right to collect what is
due it and to give tax evaders a chance to start
with a clean slate; never favored nor presumed
in law; construed strictly against the taxpayer
and liberally in favor of government.
KINDS: