TAXPAYERS SUIT- a case where the act complained of directly involves the illegal disbursement of public funds derived

from taxation> courts discretion to allow > Taxpayers have sufficient interest of p r e v e n t i n g the illegal expenditures of money raised by taxation (NOT DONATIONS ANDCONTRIBUTIONS)> A taxpayer is not relieved from the obligation of payinga tax because of hisbelief that it is being misappropriated by certain officials > A t a x p a y e r h a s n o l e g a l s t a n d i n g t o q u e s t i o n executive acts that do notinvolve the use of public funds.REQUISITES FOR A TAXPAYERS PETITION1) That money is being extracted and spent in violationof specific constitutionalprotections against abuses of legislative power 2) That public money is being deflected to any improper purpose3) That the petitioner seeks to restrain respondents fromwasting public fundsthrough the enforcement of an invalid or unconstitutionallaw.KILOS BAYAN vs. GUINGONA> The Supreme Court has discretion whether or not toentertain taxpayers suitand could brush aside lack of locus standiCONCEPTS RELATIVE TO PUBLIC PURPOSE1) Inequalities resulting from the singling out of oneparticular class for taxationor exemption infringe no constitutional limitation It is inherent in the power to tax that the legislatureis free to select thesubject of taxationn individual taxpayer need not derive direct benefits fromthe tax The paramount consideration is the welfare of thegreater portion of the population3) Public purpose is continually expanding. Areas formerly leftto private initiative now loose their boundaries and maybe undertaken by the government, if it is to meet theincreasing social challenges of the times4) Public purpose is determined at the time of enactmentof the tax law and notat the time of implementationNTERNATIONAL COMITY- Based on tradition, practice or customDOCTRINE OF INCORPORATION > T h e P h i l i p p i n e s a d o p t s the generally a c c e p t e d principles of international lawas part of the law of the land > I f a tax law violates certain principles o f international law, then it is not onlyinvalid but also unconstitutionalGROUNDS FOR TAX EXEMPTION OF FOREIGNGOVERNMENT PROPERTY 1) Sovereign equality of States2) Usage among States3) Immunity from suit of a StateNONDELEGATION OF THE POWER TO TAXGENERAL RULE:- The power of taxation is peculiarly and exclusivelylegislative, therefore, itmay not be delegatedEXCEPTIONS:1) Delegation to the President2) Delegation to local government units3) Delegation to administrative unitsPOWERS WHICH CANNOT BE DELEGATED1) Determination of the subjects to be taxed2) Purpose of the tax3) Amount or rate of the tax4) Manner, means and agencies of collection5) Prescription of the necessary rules with respecttheretoDELEGATION TO THE PRESIDENT> Congress may authorize, by law, the President to fix,within specified limitsand subject to such limitations and restrictions as it mayimpose1) Tariff rates2) Import and export quotas3) Tonnage and wharfage dues4) Other duties and import within the nationaldevelopment program of thegovernment> There must be a law authorizing the President to

fixtariff rates> The delegation of power must impose limitations andrestrictions andspecify the minimum as well as the maximum tariff ratesTERRITORIAL JURISDICTIONRULES:> Tax laws cannot operate beyond a States territoriallimits> The government cannot tax a particular object of taxation which is notwithin its territorial jurisdiction.> Property outside ones jurisdiction does not receive anyprotection of the State > If a law is passed by Congress, Congress must alwayssee to it that the object or subject of taxation is within theterritorial jurisdiction of the taxing authoritySITUS OF TAXATION Place of taxationRULE:- The State where the subject to be taxed has a situsmay rightfully levy andcollect the tax> In determining the situs of taxation, you have toconsider the nature of thetaxesExample:1) POLL TAX, CAPITATION TAX, COMMUNITY TAX> Residence of the taxpayer 2) REAL PROPERTY TAX OR PROPERTY TAX> Location of the property> We can only impose property tax on the properties of aperson whoseresidence is in the Philippines.EXCEPTIONS TO THE TERRITORIALITY RULEA)Where the tax laws operate outside territorialjurisdiction1) TAXATION of resident citizens on their incomesderived from abroadB)Where tax laws do not operate within the territorialjurisdiction of the State1) When exempted by treaty obligations2) When exempted by international comitSITUS OF TAX ON REAL PROPERTY- LEX REI SITUS or where the property is locatedREASON: The place where the real property is located givesprotection to thereal property, hence the property or its owner shouldsupport thegovernment of that placeSITUS OF PROPERTY TAX ON PERSONALPROPERTY- MOBILIA SEQUNTUR PERSONAM= movables follow the owner = movables follow the domicile of the owner RULES:1) TANGIBLE PERSONAL PROPERTY- Where located, usually the owners domicile2) INTANGIBLLE PERSONAL PROPERTYG. R. Domicile of the owner EXCEPTION: The situs location not domicile> Where the intangible personal property has acquired abusiness situs in another jurisdiction*> The principle of Mobilia Sequntur Personam is onlyfor purposes of convenience. It must yield to the actual situs of suchproperty.*> Personal intangible properties which acquiresbusiness situs here in thePhilippines1) Franchise which is exercised within the Philippines2) Shares, obligations, bonds issued by a domesticcorporation3) Shares, obligations, bonds issued by a foreigncorporation, 85% of its business isconducted in the Philippines4) Shares, obligations, bonds issued by a foreigncorporation which shares of stock or bonds acquire situs here5) Rights, interest in a partnership, business or industryestablished in the Philippines> These intangible properties acquire business situshere in the Philippines, you cannot apply the principle of Mobilia Sequntur Personam because the propertieshave acquired situs here.- The location where the income earner resides in thesitus of taxationB) NATIONALITY THEORY- The country where the income earner is a citizen is thesitus of taxationC) SOURCE RULE- The country which is the source of the income or wherethe activity thatproduced the income took place is the situs of taxationSITUS OF TAX ON INTEREST INCOME> The residence of the borrower who pays the

interestirrespective of theplace where the obligation was contractedCIR vs. BOAC> Revenue derived by an of-line international carrier without any flight from the Philippines, from ticket salesthrough its local agent are subject to tax on grossPhilippine billingsSITUS OF EXCISE TAX> Where the transaction performedHOPEWELL vs. COM. OF CUSTOMS> The power to levy an excise upon the performance of an act or the engaging in an occupation does notdepend upon the domicile of the person subject to theexercise, nor upon the physical location of the propertyor in connection with the act or occupation taxed, butdepends upon the place on which the act is performed or occupation engaged in.Thus, the gauge of taxability does not depend on thelocation of the office, but attaches upon the place wherethe respective transaction is perfected andconsummatedCONSTITUTIONAL LIMITATIONSI.DUE PROCESS > D u e p r o c e s s m a n d a t e s t h a t n o p e r s o n s h a l l b e deprived of life, liberty, or property without due process of law.PEPSI COLA vs. MUN. OF TANAUAN- REQUIREMENTS OF DUE PROCESS IN TAXATIO 1) Tax must be for a Public purpose2) Imposed within the Territorial jurisdiction3) No arbitrariness or oppression inA) assessment, andB) collectionDUE PROCESS IN TAXATION DOES NOT REQUIRE1)Determination through judicial inquiry of A) property subject to taxB) amount of tax to be imposed2) Notice of hearing as to:A) amount of the taxB) manner of apportionmentREQUISITES OF DUE PROCESS OF LAW1) There must be a valid law2) Tax measure should not be unconscionable andunjust as to amount toconfiscation of property3) Tax statute must not be arbitrary as to find no supportin the constitution > When is deprivation of life, liberty or p r o p e r t y done in accordancewith due process of law?1) If done under authority of a law that is valid or of theconstitution itself 2) After compliance with fair and reasonable methods of procedure prescribedby law.> If properties are taxed on the basis of an invalid law,such deprivation is aviolation of due processREMEDY ask for refund> To justify the nullification of a tax law, there must be aclear andunequivocal breach of the constitution> There must be proof of arbitrarinessNSTANCES WHEN THE TAX LAW MAYBE DECLAREDAS UNCONSTITUTIONAL[C, O, N, U]1)If it amounts to confiscation of property without dueprocess2)If the subject of taxation is outside of the jurisdiction of the taxing state3)The law maybe declared as unconstitutional if it isimposed not for apublic purpose4)If a tax law which is applied retroactively, imposesunjust andoppressive taxes.> A tax law which denies a taxpayer a fair opportunityto assert his substantialrights before a competent tribunal is invalid> A taxpayer must not be deprived of his property for non-payment of taxeswithout1) notice of liability2) sale of property at public auction> The validity of statute maybe contested only by onewho will sustain a directinjury in consequence of its enforcement> A violatio n o f th e in herent lim itatio ns on taxatio n would contravene theconstitutional injunctions against deprivation of propertywithout due processof law> Th er e mus t b e pro of o f arb itra riness , o th er wiseapply the presumption of constitutionality> Du e pro cess requires h ea ring b efor e a dop tion of legislative rules

byadministrative bodies of interpretative rulings. (Misamisvs. DFA)> Compliance with strict procedural requirements mustbe followed effectivelyto avoid a collision course between the states power totax and the individualrecognized rights (CIR vs. Algue)> The due process clause may correctly be invokedonly when there is a clear contravention of inherent or constitutional limitations inthe exercise of taxpower. (Tan vs. del Rosario)> SUBSTATNTIVE DUE PROCESS requires that a taxstatute must be within theconstitutional authority of Congress to pass and that it bereasonable, fair andjust> PROC EDURAL DUE PR OCES S requires notic e and hearing or at least anopportunity to be heardEQUAL PROTECTION CLAUSE> All persons, all properties, all businesses should betaxed at the same rate> prohibits class legislation> prohibits undue discriminationEQUALITY IN TAXATION (UNIFORMITY)> Equ ality in taxatio n r equ ir es tha t a ll subjec ts or objects of taxation similarlysituated should be treated alike or put on equal footingboth on the privilegeconferred and liabilities imposed> All taxable articles of the same class shall be taxedat the same rat> The Doctrine does not require that persons or properties different in fact betreated in law as though there were the same. What itprohibits is classlegislation which discriminates against some and favorsothers> As long as there are rational or reasonable groundsfor doing so, Congressmay group persons or properties to be taxed and it issufficient if all members of the same class are subject tothe same rate and the tax is administered impartiallyupon them.REQUISITES OF A VALID CLASSIFICATION (S A