TAXATION LAW

I. General Principles of Taxation

A. Definition and concept of taxation

Describe the power of taxation. May a legislative body enact laws to raise
revenues in the absence of a constitutional provision granting said body the
power of tax? Explain.

SUGGESTED ANSWER:

The power of taxation is inherent in the State being an attribute of sovereignty. As an

incident of sovereignty, the power to tax has been described as unlimited in its range,
acknowledging in its very nature no limits, so that security against its abuse is to be
found only in the responsibility of the legislature which imposes the tax on the
constituency who are to pay it. [Mactan Cebu International Airport Authority v. Marcos,
261 SCRA 667, (1996)].

Being an inherent power, the legislature can enact laws to raise revenues even without
the grant of said power in the Constitution. It must be noted that Constitutional
provisions relating to the power of taxation do not operate as grants of the power of
taxation to the Government, but instead merely constitute limitations upon a power
which would otherwise be practically without limit. [Cooley, Constitutional Limitations,
1927 8th Ed., p. 787] (BAR 2005)

Which statement below expresses the lifeblood theory? (2012 BAR)

a) The assessed taxes must be enforced by the government.

b) The underlying basis of taxation is government necessity, for without taxation, a
government can neither exist nor endure;
c) Taxation is an arbitrary method of exaction by those who are in the seat of power;
d) The power of taxation is an inherent power of the sovereign to impose burdens upon
subjects and objects within its jurisdiction for the purpose of raising revenues.

SUGGESTED ANSWER:

b) The underlying basis of taxation is government necessity, for without taxation, a

government can neither exist nor endure.

Taxes are the lifeblood of the government, for without taxes, the government can
neither exist nor endure. A principal attribute of sovereignty, the exercise of taxing
power derives its source from the very existence of the state whose social contract with
its citizens obliges it to promote public interest and common good. The theory behind
the exercise of the power to tax emanates from necessity; without taxes, government
cannot fulfill its mandate of promoting the general welfare and well-being of the people.
(National Power Corporation vs. City of Cabanatuan)

Which theory in taxation states that without taxes, a government would be

paralyzed for lack of power to activate and operate it, resulting in its destruction?
(2011 Bar Question)

(A) Power to destroy theory

(B) Lifeblood theory
(C) Sumptuary theory
(D) Symbiotic doctrine

SUGGESTED ANSWER:
(B) Lifeblood theory.

Discuss the meaning and the implications of the following statement:

“Taxes are the lifeblood of government and their prompt and certain availability is
an imperious need."

ANSWER:

The phrase, “taxes are the lifeblood of government, etc." expresses the underlying basis
of taxation which is governmental necessity, for indeed, without taxation, a government
can neither exists nor endure. Taxation is the indispensable and inevitable price for
civilized society: without taxes, the government would be paralyzed. This phrase has
been used, for instance, to justify the validity of the laws providing for summary
remedies in the collection of taxes. As a consequence of the above rule, an injunction
against the assessment and collection of taxes is generally withheld be the laws
imposing such taxes. Even when it is not so, under procedural laws such an injunction
may not be obtained as held in the case of Valley Trading Co. vs. CFI (G.R. No. 49529,
31 March 1989), where the Supreme Court ruled that the damages that may be caused
to the taxpayer by being made to pay the taxes cannot be said to be as irreparable as it
would be against the government’s inability to collect taxes. (BAR 1991)