CONSTI

180 SCRA 496 (Daza v. Singson, G.R. No. 86344 December 21, 1989)

Facts:

The House of Representatives. Twenty four members of the Liberal Party formally resigned from that party

and joined the LDP, thereby swelling its number to 159 and correspondingly reducing their former party

to only 17 members.

On the basis of this development, the House of Representatives revised its representation in the

Commission on Appointments by withdrawing the seat occupied by the petitioner and giving this to the

newly-formed LDP. On December 5, 1988, the chamber elected a new set of representatives consisting of

the original members except the petitioner and including therein respondent Luis C. Singson as the

additional member from the LDP.

The petitioner came to the Supreme Court to challenge his removal from the Commission on

Appointments and the assumption of his seat by the respondent. Acting initially on his petition for

prohibition and injunction with preliminary injunction, we issued a temporary restraining order that same

day to prevent both the petitioner and the respondent from serving in the Commission on Appointments.

Briefly stated, the contention of the petitioner is that he cannot be removed from the Commission on

Appointments because his election thereto is permanent. His claim is that the reorganization of the House

representation in the said body is not based on a permanent political realignment because the LDP is not

a duly registered political party and has not yet attained political stability.

Issue:

Whether the question raised by the petitioner is political in nature and so beyond the jurisdiction of the

Supreme Court

Held:

No. The Court has the competence to act on the matter at bar. The issue involved is not a discretionary

act of the House of Representatives that may not be reviewed by us because it is political in nature. What

is involved here is the legality, not the wisdom, of the act of that chamber in removing the petitioner from

the Commission on Appointments.

The term political question connotes, in legal parlance, what it means in ordinary parlance, namely, a

question of policy. In other words, it refers to those questions which, under the Constitution, are to be

decided by the people in their sovereign capacity, or in regard to which full discretionary authority has

been delegated to the Legislature or executive branch of the Government. It is concerned with issues

dependent upon the wisdom, not legality, of a particular measure.

Even if we were to assume that the issue presented before us was political in nature, we would still not be

precluded from resolving it under the expanded jurisdiction conferred upon us that now covers, in proper

cases, even the political question. Article VII, Section 1, of the Constitution clearly provides:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as

may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving

rights which are legally demandable and enforceable, and to determine whether or not there has

been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any

branch or instrumentality of the Government.

Taada, et al., v. Angara, et al., G.R. No. 118295, May 2, 1997

Short Digest

FACTS

The suit was filed to nullify the concurrence of the Philippines Senate to the Presidents Ratification of the

Agreement establishing the World Trade Organization. It was contended that the agreement places

nationals and products of member countries on the same footing as Filipinos and local products in

contravention of the Filipino First Policy.

Petitioners maintained that this Agreement was an assault on the sovereign powers of the Philippines

because it meant that Congress could not pass legislation that would be good for national interest and

general welfare if such legislation would not conform to the WTO Agreement.

ISSUE

Whether the provisions of the WTO Agreement and its annexes limit, restrict, or impair the exercise of

legislative power by Congress.

HELD

While sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it

is however subject to limitations and restrictions voluntarily agreed to by the Philippines as a member of

the family of nations. One of the oldest and most fundamental rules in international law is pacta sunt

servanda international agreements must be performed in good faith. A treaty engagement is not a

mere moral obligation but creates a legally binding obligation on the parties xxx. A state which has

contracted valid international obligations is bound to make in its legislation such modifications as may be

necessary to ensure the fulfillment of the obligations undertaken.

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary

act, nations may surrender some aspects of their state power in exchange for greater benefits granted by

or derived from a convention or pact. After all, states, like individuals live with coequals, and in pursuit of

mutuality covenanted objectives and benefits, they also commonly agree to limit the exercise of their

otherwise absolute rights.

The sovereignty of a state therefore cannot in fact and in reality be considered absolute. Certain

restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family

of nations and (2) limitations imposed by treaty stipulations.

SC En Banc Text

I. THE FACTS

Petitioners Senators Taada, et al. questioned the constitutionality of the concurrence by the Philippine

Senate of the Presidents ratification of the international Agreement establishing the World Trade

Organization (WTO). They argued that the WTO Agreement violates the mandate of the 1987

Constitution to develop a self-reliant and independent national economy effectively controlled by

Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino

labor, domestic materials and locally produced goods. Further, they contended that the national

treatment and parity provisions of the WTO Agreement place nationals and products of member

countries on the same footing as Filipinos and local products, in contravention of the Filipino First

policy of our Constitution, and render meaningless the phrase effectively controlled by Filipinos.

II. THE ISSUE

Does the 1987 Constitution prohibit our country from participating in worldwide trade liberalization and

economic globalization and from integrating into a global economy that is liberalized, deregulated and

privatized?

III. THE RULING

[The Court DISMISSED the petition. It sustained the concurrence of the Philippine Senate of the Presidents

ratification of the Agreement establishing the WTO.]

NO, the 1987 Constitution DOES NOT prohibit our country from participating in worldwide trade

liberalization and economic globalization and from integrating into a global economy that is

liberalized, deregulated and privatized.

There are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine

concurrence in the WTO Agreement.

[W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises,

at the same time, it recognizes the need for business exchange with the rest of the world on the bases of

equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and

trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist

policy. It did not shut out foreign investments, goods and services in the development of the Philippine

economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and

investments into the country, it does not prohibit them either.In fact, it allows an exchange on the basis of

equality and reciprocity, frowning only on foreign competition that

is unfair.

xxx xxx xxx

[T]he constitutional policy of a self-reliant and independent national economy does not necessarily rule

out the entry of foreign investments, goods and services. It contemplates neither economic seclusion

nor mendicancy in the international community. As explained by Constitutional Commissioner Bernardo

Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence

on external assistance for even its most basic needs. It does not mean autarky or economic seclusion ; rather,

it means avoiding mendicancy in the international community. Independence refers to the freedom from

undue foreign control of the national economy, especially in such strategic industries as in the

development of natural resources and public utilities.

The WTO reliance on most favored nation, national treatment, and trade without discrimination

cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to

all WTO members. Aside from envisioning a trade policy based on equality and reciprocity, the

fundamental law encourages industries that are competitive in both domestic and foreign markets,

thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of

the gradual development of robust industries that can compete with the best in the foreign markets.

Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete

internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong

have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy

of laissez faire.

xxx xxx xxx

It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an

independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino

labor, products, domestic materials and locally produced goods. But it is equally true that such principles

while serving as judicial and legislative guides are not in themselves sources of causes of action.

Moreover, there are other equally fundamental constitutional principles relied upon by the Senate which

mandate the pursuit of a trade policy that serves the general welfare and utilizes all forms and

arrangements of exchange on the basis of equality and reciprocity and the promotion of industries

which are competitive in both domestic and foreign markets, thereby justifying its acceptance of said

treaty. So too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is

balanced by the adoption of the generally accepted principles of international law as part of the law of the

land and the adherence of the Constitution to the policy of cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the

WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its sovereign

duty and power. We find no patent and gross arbitrariness or despotism by reason of passion or

personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its

members, may even agree with petitioners that it is more advantageous to the national interest to strike

down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the

Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own

judicial power and duty. Ineludibly, what the Senate did was a valid exercise of its authority. As to whether

such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a

matter between the elected policy makers and the people. As to whether the nation should join the

worldwide march toward trade liberalization and economic globalization is a matter that our people

should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of

membership, should this be the political desire of a member.

4 SCRA 1 (Aytona v. Castillo et al., G.R. No. L-19313, January 19, 1962)

On December 29, 1961, Outgoing President Carlos Garcia appointed petitioner Dominador Aytona as ad

interim Governor of the Central Bank. Aytona took the corresponding oath. On the same day, at noon,

President-elect Diosdado Macapagal assumed office; and on the next day, he issued administrative order

no. 2 recalling, withdrawing, and cancelling all ad interim appointments made by former President Garcia.

There were all-in all, 350 midnight or last minute appointments made by the former President Garcia. On

January 1, President Macapagal appointed Andres Castillo as ad interim Governor of the Central Bank.

Aytona instituted a case (quo warranto) against Castillo, contending that he was validly appointed, thus

the subsequent appointment to Castillo by the new President, should be considered void.

ISSUE:

Whether or not the 350 midnight appointments of former President Garcia were valid.

RULING:

No. After the proclamation of the election of President Macapagal, previous President Garcia

administration was no more than a care-taker administration. He was duty bound to prepare for the

orderly transfer of authority the incoming President, and he should not do acts which he ought to know,

would embarrass or obstruct the policies of his successor. It was not for him to use powers as incumbent

President to continue the political warfare that had ended or to avail himself of presidential prerogatives

to serve partisan purposes. The filling up vacancies in important positions, if few, and so spaced to afford

some assurance of deliberate action and careful consideration of the need for the appointment and the

appointee's qualifications may undoubtedly be permitted. But the issuance of 350 appointments in one

night and planned induction of almost all of them a few hours before the inauguration of the new

President may, with some reason, be regarded by the latter as an abuse Presidential prerogatives, the

steps taken being apparently a mere partisan effort to fill all vacant positions irrespective of fitness and

other conditions, and thereby deprive the new administration of an opportunity to make the

corresponding appointments.

82 SCRA 30 (Peralta vs. COMELEC, G.R. No. L-47771 March 11, 1978)

SHORT

Facts:

Section 4 of the 1978 Election Code provides that the election period shall be fixed by the Commission on

Elections in accordance with Section 6, Article XII[C] of the Constitution. The period of campaign shall not

be more than forty-five days immediately preceding the election, excluding the day before and the day of

the election. Petitioners questioned the constitutionality of the 45-day campaign period because: (a) it

was decreed by the President and not by the Commission on Elections as provided by Section 6 of Article

XII-C and (b) the period should cover at least ninety days (90). They argue that Section 6 of Article XII-C of

the Constitution provides that the election period shall commence ninety days before the day of election

and shall end thirty days thereafter.

Issue: Whether or not the 45-day period is unconstitutional

Held:

The 45-day campaign period is constitutional. Although the campaign period prescribed in the1978

Election Code for the election of the representatives to the interim Batasang Pambansa is less than 90

days and was decreed by the President and not by the Commission on Elections as provided by Section 6

of Article XII-C of the Constitution, the same does not violate the Constitution, because under

Amendment 1, the manner of election of members of the interim Batasang Pambansa shall be prescribed

and regulated by law, and the incumbent President under Amendment No. 5, shall continue to exercise

legislative power until martial law shall have been lifted. Moreover, the election for members in the

interim Batasang Pambansa is an election in a state of emergency requiring special rules, and only the

incumbent President has the authority and means of obtaining information on the peace and order

condition of the country within which an electoral campaign may be adequately conducted in all regions

of the nation. But even assuming that it should be the Commission on Elections that should fix the period

of campaign, the constitutional mandate is complied with by the fact that the Commission has adopted

and is enforcing the period fixed in Section 4, Article 1, of the 1978 Election Code.

148 SCRA 659 (Ynot vs. IAC, G.R. No. 74457, March 20, 1987)

FACTS:

There had been an existing law which prohibited the slaughtering of carabaos (EO 626). To strengthen the

law, Marcos issued EO 626-A which not only banned the movement of carabaos from inter-provinces but

as well as the movement of carabeef. On 13 Jan 1984, Ynot was caught transporting 6 carabaos from

Masbate to Iloilo. He was then charged in violation of EO 626-A. Ynot averred EO 626-A as

unconstitutional for it violated his right to be heard or his right to due process. He said that the authority

provided by EO 626-A to outrightly confiscate carabaos even without being heard is unconstitutional. The

lower court ruled against Ynot ruling that the EO is a valid exercise of police power in order to promote

general welfare so as to curb down the indiscriminate slaughter of carabaos.

ISSUE:

Did EO 626-A violate the due process clause?

HELD:

Yes. The SC ruled that the EO is not valid as it indeed violates due process. EO 626-A created a

presumption based on the judgment of the executive. The movement of carabaos from one area to the

other does not mean a subsequent slaughter of the same would ensue. Ynot should be given to defend

himself and explain why the carabaos are being transferred before they can be confiscated. The SC found

that the challenged measure is an invalid exercise of the police power because the method employed to

conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly

oppressive. Due process is violated because the owner of the property confiscated is denied the right to

be heard in his defense and is immediately condemned and punished. The conferment on the

administrative authorities of the power to adjudge the guilt of the supposed offender is a clear

encroachment on judicial functions and militates against the doctrine of separation of powers. There is,

finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted

unlimited discretion in the distribution of the properties arbitrarily taken.

15 SCRA 569 (Pelaez vs. Auditor-General, G.R. No. L-23825, December 24, 1965)

FACTS:

From September 4, 1964 to October 29, 1964 the President of the Philippines issued executive orders to

create thirty-three municipalities pursuant to Section 69 of the Revised Administrative Code. Public funds

thereby stood to be disbursed in the implementation of said executive orders.

Suing as a private citizen and taxpayer, Vice President Emmanuel Pelaez filed a petition for prohibition

with preliminary injunction against the Auditor General. It seeks to restrain from the respondent or any

person acting in his behalf, from passing in audit any expenditure of public funds in implementation of

the executive orders aforementioned.

ISSUE:

Whether the executive orders are null and void, upon the ground that the President does not have the

authority to create municipalities as this power has been vested in the legislative department.

RULING:

Section 10(1) of Article VII of the fundamental law ordains:

The President shall have control of all the executive departments, bureaus or offices, exercise

general supervision over all local governments as may be provided by law, and take care that the

laws be faithfully executed.

The power of control under this provision implies the right of the President to interfere in the exercise of

such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of

the national government, as well as to act in lieu of such officers. This power is denied by the Constitution

to the Executive, insofar as local governments are concerned. Such control does not include the authority

to either abolish an executive department or bureau, or to create a new one. Section 68 of the Revised

Administrative Code does not merely fail to comply with the constitutional mandate above quoted, it also

gives the President more power than what was vested in him by the Constitution.

The Executive Orders in question are hereby declared null and void ab initio and the respondent

permanently restrained from passing in audit any expenditure of public funds in implementation of said

Executive Orders or any disbursement by the municipalities referred to.

ECON

Due Process

History of Due Process

Origin traceable to the Magna Carta in England which was wrung by the barons from Prince John in 1215.

The thrust of the Magna Carta was centered mainly on the procedural aspect of due process.

Concept of Due Process as enshrined in the Magna Carta says no man shall be taken or imprisoned or

disseized or outlawed, or in any manner destroyed; nor shall we go upon him, nor send upon him, but by

the lawful judgment of his peers or by the law of the land

It is centered more on the implementation of the law which has something to do with the procedural

aspect of the law. Concept was then exported to the US. Due process thus assumed another facet. It has

now two aspects: the SUBSTANTIVE and the PROCEDURAL.

What is due process?

No particular definition on what due process is in the constitution.

Is this a result of oversight or inadvertence in the part of the framers of the constitution? NO

Or is this rather omission intentional? YES

Framers deemed it prudent not to define the term due process otherwise there will be a tendency that the

courts will be bound to that definition. (read page 100 of cruz)

Can only describe, no exact definition.

Justice Fernando described due process as responsiveness to the supremacy of reason, obedience to

the dictates of justice.

Justice Frankfurter said it is the embodiment of the sporting idea of fair play.

Section 1 Article 3 of the 1987 Constitution

No person shall be deprived of life, liberty or property without due process of law.

PERSON

Definition of person as used in the Sec. 1 Art. 3

Refers to natural persons like human beings including both citizen and alien. It includes not only property

rights but as well as their right to life and liberty.

Does it include juridical persons (corporations and partnerships)? YES, they are covered by the protection

but only insofar as their property is concerned (property rights).

DEPRIVATION

What does it mean?

To deprive is to take away forcibly, to prevent from possessing, enjoying or using something. As

applied to due process, deprivation connotes denial of the right to life, liberty or property.

How about if there is no taking of a property or a right? In that there is already an imposition of a

prohibition in the exercise of ones right. There is only a prohibition in respect to the enjoyment of the

thing owned by a person. Wouldnt it amount to deprivation within the purview of Sec. 1 Art 3 of the 1987

constitution? YES

Deprivation does not only mean actual dispossession in that it would also include imposition of

order or prohibition in the exercise of ones right.

What is prohibited is deprivation of life, liberty or property without due process of law.

If a person commits a crime and upon trial he was found guilty as charged then the court may

deprive him of his liberty by sentencing him to suffer imprisonment. Is this allowed? YES

Even if there was deprivation, what is important is that there is observance of due process.

If ones property is taken for public use then upon payment of just compensation and for public

purpose then the deprivation is deemed allowed.

LIFE

Not only refers to our physical or animal existence but also refers to our enjoyment of god-given

faculties than can make his life worth living.

Ex. You have talent to sing government cannot deprive you that.

LIBERTY

It means freedom. What is protected in Sec. 1 Article 3 is our freedom to do what is right.

Ex. Although you have the freedom of speech, you cant insult or tell someone that he has a face that only

his mother can love. You cannot use it to the detriment or prejudice of the rights of others.

PROPERTY

Sec. 1 Art. 3 also protects our property rights.

Property refers to anything that is capable of ownership and be the subject of contract. It may be real

properties like lands and buildings or personal property like laptops and cellphones, it may be an

intangible property which cannot be perceived by our senses.

What about public office? Is this protected by Sec. 1 Art. 3? Would it count in the purview of property as

used in the law? NO

Similarly, a license or a franchise cannot be considered as property as used in the law because these may

be revoked by the state in the exercise of its police power.

Due process has two aspects: SUBSTANTIVE DUE PROCESS & PROCEDURAL DUE PROCESS

SUBSTANTIVE DUE PROCESS

This has something to do with the intrinsic validity of a law.

Focal point of the inquiry is not on the enforcement of the law but on the intrinsic validity thereof.

Inquirys central point is the existence or absence of a valid governmental purpose such that if

congress would enact a law then we can attack the same that it does not comply with the substantial

aspect of due process if such law does not have a lawful subject.

Ex. A law prohibiting a person from sleeping in his private room.

PROCEDURAL DUE PROCESS

It has something to do with the manner by which the law is enforced.

It is expressed in the immortal cry of Themistocles to Eurybiades: Strike, but hear me first!

In one case, Daniel Webster said that the justice that procedural due process guarantees is the

one which hears before it condemns, which proceeds upon inquiry and renders judgement only after trial.

Twin Requirement of Procedural due process

1. Notice

2. Hearing

Essential Elements of Procedural Due Process. Neither of these elements can be eliminated

without running afoul of the constitutional guaranty.

(case of Ynot vs.IAC)

Requirement of procedural due process in judicial proceedings:

1. There must be an impartial court or tribunal clothed with judicial power to hear and

determine the matter before it.

In our legal system, the jurisdiction of the courts is defined by law such that not all cases can be heard by

the municipal trial court.

If the judge is bias or he or his immediate family has pecuniary interest or has some relation by fourth

degree consanguinity or affinity to any of the parties, he must inhibit himself from the case (137 of the

rules of court). (refer to cruz)

If also the judge happens to be the guardian, trustee or executor of an estate and the case is pending in

his sala, he must inhibit himself.

What is your recourse if you already perceived that the judge is already biased? Then the situation is not

covered by the provision under rule 137. You cant see anything that can inhibit the judge (not related or

no pecuniary interest etc.) so what should you do to move for inhibition? Pangita bikil with the judge so

you have reason for inhibition

2. Jurisdiction must be lawfully acquired over the person of the defendant and over the

property which is the subject matter of the proceeding.

If it is a civil case, how can the court validly acquire jurisdiction over the person of the defendant where

the action is an action in persona (collection of a sack of money), personal action?

An Action in persona means that it only affects the private rights of the parties, it does not affect

the right of the public or the whole world then jurisdiction is acquired by the court upon service of

summons upon the person of the defendant. Or even without the formal summons but the defendant

voluntarily submits himself to the jurisdiction of the court by filing an answer. But if the defendant filed a

motion to dismiss because the court has no jurisdiction over me, then he is not said to have submitted

himself to the jurisdiction of the court. With regards to the plaintiff, when it files the complaint he validly

subjects himself to the jurisdiction of the court.

If the civil case is an action quasi in rem or something which affects the property or the right of the

general public, then jurisdiction may be acquired by the court through publication of the complaint in the

newspaper of general circulation.

Ex. Nullity of marriage... summons may be had through publication in the newspaper of general

circulation.

Ex. Actions involving property rights, parcel of land. Summons through publication.

What if the case is a penal case? How can the court acquire jurisdiction over the person of the accused?

The court acquires jurisdiction as soon as the accused is placed under arrest (upon the arrest of

the person)

3. The defendant must be given an opportunity to be heard.

What is required is only an opportunity to be heard. It is enough that the court affords someone a

chance to be heard such that the person goes away with the chance given, then it amount to have waived

the chance to be heard.

In civil cases, after service of summons, the defendant did not file an answer, then the court may declare

the defendant in default and can now render judgement by default. Actual hearing is not necessary.

Trial type hearing is not always necessary or required. In criminal cases this is always required but in

labor cases, it is not a requirement. It may be decided on the basis of the position papers of both parties (

ejectment cases also.)

Are there instances where the requisite of notice and hearing is validly dispensed with without violation of

due process?

EXCEPTION

Cancellation of passport of a person sought for the commission of a crime

Preventive suspension of a civil servant facing administrative charges

Distraint of properties for tax delinquency

Padlocking or restaurants found to be insanitary or of theatres showing obscene movies

Abatement of nuisance per se (represents immediate danger to the welfare of the community

When administrative agencies are exercising their quasi-legislative functions

(see reviewer, 9)

What if the case involves a case with a public official and that during the pendency of the case, that

person is place under preventive suspension for 30 days? Is the preventive suspension violative of

procedural due process? NO. It is an exception to the rule.

Similarly the issuance of temporary restraining order is valid.

If it appears in the complaint that a grave or irreparable damage will be suffered by the applicant

before the matter could be heard on notice, the court may issue such without prior hearing a TRO.

Also the cancellation of the issuance of passport who is sought in the commission on offense may be had

even without the opportunity to controvert the charges.

Also, issuance of warrant of arrest is valid.

Also, attachment of property for tax delinquency is valid.

Closure of restaurants which was found unsanitary is valid.

4. Judgment must be rendered upon lawful hearing.

Section 14 Article 8 of the 1987 Constitution

No Decision shall be rendered by any court without expressing therein clearly and distinctly the

facts and the law on which it is based.

No petition for review or motion for reconsideration of a decision of the court shall be refused

due course or denied without stating the legal basis thereof.

Means that the decision should mention or particularize the facts obtaining in a given case,

the evidence presented as well as the law relied upon by the court in coming up with a particular

decision.

What about the minute resolution issued by the supreme court? YES it is valid because.

If you pass petition for certiorari, the SC will send out a 1 page resolution called minute

resolution.

How about the publication requirement, is it required for procedural due process? YES

How about appeal in a given case, is this part of procedural due process or within the constitution?

It depends, as a rule, appeal is not a constitutional right. It is only a statutory right. Meaning

you can only file an appeal if there is a law or a rule allowing you to pursue the remedy of an appeal.

Conversely, where the law does not allow you to file an appeal, then you cannot invoke denial of due

process.

It is not an integral part of procedural due process.

Ex. Collection suit where the amount is less than 100K, court renders judgement and makes them

pay...(administrative circular 8-8-7 of SC) cannot apply remedy of appeal for defendant.

Section 2 Article 8 of the 1987 Constitution

The Congress shall have the power to define, prescribe, and apportion the jurisdiction of the

various courts but may not deprive the SC of its jurisdiction over cases enumerated in section 5 thereof.

Appeal may be afforded by congress through enactment of law, conversely can also pass a law denying a

person appeal. But it should not deprive SC of its appellate jurisdiction over the cases enumerated in

section 5 article 8.

(refer to Sec. 5 Art. 8 for the cases)

____________________________________________

Why is publication required? To give notice to the public of the existence of such law.

APPEAL

The right to appeal is not essential to the right to a hearing. Except when guaranteed by the

Constitution, appeal may be allowed or denied by the legislature in its discretion.

EXCEPTION

SECTION 5(2) ARTICLE 8 OF THE 1987 CONSTITUTION

1. All cases in which the constitutionality or validity of any treaty, international or executive

agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in

question.

2. All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in

relation thereto.

3. All cases in which the jurisdiction of any lower court is in issue.

4. All criminal cases in which the penalty imposed is reclusion perpetua or higher.

5. All cases in which only an error or question of law is involved.

Preliminary investigation

Is this an integral part of procedural due process? It depends... If penalty imposable is

imprisonment ranging from 4 yrs 2 months and 1 day.... this is a matter of right.

ADMINISTRATIVE DUE PROCESS

REQUISITES:

1. The right to hearing, which includes the right to present ones case and submit evidence in

support thereof.

2. The tribunal must consider the evidence presented

3. The decision must have something to support itself.

4. The evidence must be substantial.

5. The decision must be rendered on the evidence presented at the hearing, or at least contained in

the record and disclosed to the parties affected.

6. The tribunal or body or any of its judges must act on its or his own independent consideration of

the law and facts of the controversy and not simply accept the views of a subordinate in arriving

at a decision.

7. The board or body should, in all controversial questions, render its decision in such a manner that

the parties to the proceeding can know the various issues involved, and the reason for the

decision rendered.

EQUAL PROTECTION

PERSONS PROTECTED

Includes or is available to all natural persons as well as juridical (partnerships or

corporation). Artificial persons are entitled to the protection only insofar as their property is concerned.

As to natural persons, it includes the citizens as well as the foreigners. Generally, foreigners are

accorded with the equal protection of the law in the same manner as the citizens.

Term equal protection like due process is not particularly defined in the constitution. The purpose

of the intentional ambiguity is to provide for more adjustability to the swiftly moving facts of our

changing society.

Equal protection of the law does not mean that laws should be given a universal application

or laws must be equally applied to all persons. If there is universal application of law, it would result to

inequality.

Ex. Distribution of matured magazines (FHM, Playboy, etc)

If there is a law prohibiting the distribution and sale of these magazines even to adult persons, it would be

unfair and would result to inequality.

Universal application is not required. Such that equal protection of the law is served when

there is already equality among equals. In other words, there is already observance of equality under

the law if persons or things belonging to the same class must be treated alike both as to the rights

conferred and the obligations or responsibilities imposed.

The equal protection of the law would permit a valid classification but peripheral or

superficial distinctions is not a valid ground or requirement in order to have a valid classification.

There is already valid observance of equal protection of the law if the distinction is based upon

substantial differences. And far more important is that substantive equality is not enough. Such that

even if the law appear on its face to be valid or fair, the same law will be declared as invalid if in the

application thereof, there is inequality. It is important that the law must be applied and enforced equally.

According to Cruz, the law may be invalidated if it is administered with an evil eye and uneven

hand, so as to unjustly benefit some and prejudice others.

Yick Wo v. Hopkins

Ordinance giving license to establishment of laundries in an American city was annulled by the

U.S. Supreme Court. SC said law is valid but not in the implementation. I allowed further classification.

Only Chinese is discriminated. (see also People vs. Vera: in the implementation thereof there is a valid

inequality)

Equal protection of the law does not mean universal application of the law. It simply means that

all persons or things must be treated right both as to the right conferred and responsibilities

imposed. But generally, superficial difference is not a valid ground for any classification such that there

yet not be a valid classification on the basis of once skin color or on the basis on the color of hair or

forehead.

There are instances where physical difference may be a valid ground for differentiation.

Ex. Women prohibited to be hired as porters.

Joining the armed forces with height requirement..

Beauty contest

Classification MUST, as an INDESPENSABLE requisite, NOT BE ARBITRARY. Equal protection of the law

allows classification provided that the requirements are met:

1. Must be based upon substantial distinctions

Ex. Differentiation bet. Men and women for purposes of prohibiting women from being employed as

porters, then it is valid.

Differentiate alien from citizen. Citizen has more solicitude for the national interest. Alien allegiance to

local state is merely transient.

(see Quinto vs. COMELEC, there is a valid differentiation between an elected public official and an

appointed public official. Appointed public officials are deemed ipso facto resign upon [meaning they

are considered resigned from their post the moment they file their CoCs.] SC said that appointed

officials are deemed ipso facto resign upon filing of their certificate of candidacy while elected officials

are not.) 1987 admin code, prohibition on appointed official may not engage on partisan activity

Lagman vs. Ochoa

SC said there is no substantial difference or distinction bet. Arroyo admin vis-a-vis past admin.

Arroyo admin may not be treated as a class on its own.

School alliance vs quisumbing

Stipulation giving higher salaries to foreign bases instructors and housing allowances. Not valid

classification bet. foreign and local teachers. Not better. Must be based on substantial distinction.

2. Must be germane to the purpose of the law

Must have some relevance to the purpose of the law or objective to be accomplished.

Ex. Women law percentage in bar exam whereas men have higher. Not germane to the law. No showing

men are more intelligent.

Dumlao v comelec

Law prohibiting official who retired from service, 65, from seeking elective post.

Sc: valid classification. Relevant of purpose of law that is geared towards having new blood in governance.

The youth can perform better than oldies in providing public service.

3. Must not be limited to existing conditions only

Ormoc v municipal treasurer (violative)

Imposing tax on ormoc sugar. Invalid cause it was limited to present condition. Under ordinance, name

was specifically mentioned thereby if there is new sugar company, it will not be assessed by the ordinance

because there was a name (ormoc sugar inc.) There was violation because it was but limited to the present

condition. Would not apply to new companies.

Luz v araneta, held imposition for rehab of sugar industry. Imposed on all those engaged in sugar

industry.

4. Must apply equally to all members of the class

While it true that there is valid a classification bet. imported vis a vis local cigarettes, law still invalid if

between the same there is a distinction.

Ex. Higher tax rate on champion, lower tax rate on hope, invalid.

Law invalid because rule states that all persons or things belonging to the same class shall be treated

alike, must be equally applied.

Lagman v ochoa

Arroyo was singled out. Cannot be treated any differently to past admins.

Yecho v hopkins

Sc: law is valid but in the implementation it is invalid. I allowed further classification. Only Chinese is

discriminated.

Tata v doe

Validity of RA 8180 oil price law. Sec 5, amount equivalent to. Violative. Prejudicial to new players.

Where does equal protection originated?

National Taxes in the Philippines

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the

sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro

sales and other forms of conditional sale.

Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing

the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

Examples of documentary stamp tax are those that are charged on bank promissory notes, deed of sale,

and deed of assignment on transfer of shares of corporate stock ownership.

Donors Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property

between two or more persons who are living at the time of the transfer. Donors tax is based on a

graduated schedule of tax rate.

Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs

and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to

testamentary disposition. Estate tax is also based on a graduated schedule of tax rate.

Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on

a persons income, emoluments, profits and the like. Self-employed individuals and corporate taxpayers

pay quarterly income taxes from 1st quarter to 3rd quarter. And instead of filing quarterly income tax on

the fourth quarter, they file and pay their annual income tax return for the taxable year. Individual income

tax is based on graduated schedule of tax rate, while corporate income tax in based on a fixed rate

prescribe by the tax law or special law.

Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or

services in the course of trade or business whose gross annual sales or receipts do not exceed the amount

required to register as VAT-registered taxpayers. Percentage taxes are usually based on a fixed rate. They

are usually paid monthly by businesses or professionals. However, some special industries and

transactions pay percentage tax on a quarterly basis.

Value Added Tax is a business tax imposed and collected from the seller in the course of trade or

business on every sale of properties (real or personal) lease of goods or properties (real or personal) or

vendors of services. It is an indirect tax, thus, it can be passed on to the buyer, causing this to increase the

prices of most goods and services bought and paid by consumers. VAT returns are usually filed and paid

monthly and quarterly.

Excise Tax is a tax imposed on goods manufactured or produced in the Philippines for domestic sale or

consumption or any other disposition. It is also imposed on things that are imported.

Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation

income. This tax is what employers withheld in their employees compensation income and remit to the

government through the BIR or authorized accrediting agent.

Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and

is creditable against the income tax due of the payee for the taxable quarter year. Examples of the

expanded withholding taxes are those that are withheld on rental income and professional income.

Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not

creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes

the full and final payment of the Income Tax due from the payee on the said income. An example of final

withholding tax is the tax withheld by banks on the interest income earned on bank deposits.

Withholding Tax on Government Money Payments is the withholding tax withheld by government

offices and instrumentalities, including government-owned or -controlled corporations and local

government units, before making any payments to private individuals, corporations, partnerships and/or

associations.

Local Taxes in the Philippines

Tax on Transfer of Real Property Ownership tax imposed on the sale, donation, barter, or on any

other mode of transferring ownership or title of real property.

Tax on Business of Printing and Publication tax on the business of persons engaged in the printing

and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others

of similar nature.

Franchise Tax tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of

one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming

receipt, or realized, within its territorial jurisdiction.

Tax on Sand, Gravel and Other Quarry Resources tax imposed on ordinary stones, sand, gravel, earth,

and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted

from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its

territorial jurisdiction.

Professional Tax an annual professional tax on each person engaged in the exercise or practice of his

profession requiring government examination.

Amusement Tax tax collected from the proprietors, lessees, or operators of theaters, cinemas, concert

halls, circuses, boxing stadia, and other places of amusement.

Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of,

Dealers, or Retailers in, Certain Products an annual fixed tax for every truck, van or any vehicle used

by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled

spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by

the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly, within the

province.

Tax on Business taxes imposed by cities, municipalities on businesses before they will be issued a

business license or permit to start operations based on the schedule of rates prescribed by the local

government code, as amended. Take note that the rates may vary among cities and municipalities. This is

usually what businesses pay to get their Business Mayors Permit.

Fees for Sealing and Licensing of Weights and Measures fees for the sealing and licensing of weights

and measures at such reasonable rates as shall be prescribed by the sangguniang bayan of the

municipality or city.

Fishery Rentals, Fees and Charges rentals, fees or charges imposed by the municipality/city to

grantees of fishery privileges in the municipal/city waters, e.g., fishery privileges to erect fish corrals,

oysters, mussels or other aquatic beds or bangus fry areas and others as mentioned in the local

government code, as amended.

Community Tax tax levied by cities or municipalities to every inhabitant of the Philippines eighteen (18)

years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30)

consecutive working days during any calendar year, or who is engaged in business or occupation, or who

owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who

is required by law to file an income tax return. Community tax is also imposed on every corporation no

matter how created or organized, whether domestic or resident foreign, engaged in or doing business in

the Philippines.

Taxes that may be levied by the barangays on stores or retailers with fixed business

establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos

(P50,000.00) or less, in the case of cities and Thirty thousand pesos (P30,000.00) or less, in the case of

municipalities, at a rate not exceeding one percent (1%) on such gross sales or receipts.

Service Fees or Charges fees or charges that may be collected by the barangays for services rendered

in connection with the regulations or the use of barangay-owned properties or service facilities, such as

palay, copra, or tobacco dryers.

Barangay Clearance a reasonable fee collected by barangays upon issuance of barangay clearance a

document required for many government transactions, such as when applying for business permit with

the city or municipality.

Classification of Taxpayers

Income of taxpayers, with distinction based on the amount of income subject to tax, or applicable tax

rates, or both are classified as follows:

A. Individuals:

1. Citizens of the Philippines:

a. Residents of the Philippines [Secs. 23 (A) and 24 (A)]

i. Filipinos residing in the Philippines

ii. Filipinos living abroad but without intention of residing there permanently. [Sec. 22 (E)]

b. Not Residents of the Philippines [Secs. 23 (B) and 24 (A)]

i. One has intention to reside permanently abroad

c. OFW and Seaman [Sec. 23 (C) and 24 (A)]

2. Aliens

a. Residents of the Philippines

b. Not Residents of the Philippines [Secs. 22 (G); 23 (D); 25 (A) and (B)

i. Non-resident alien engaged engaged in trade and business in the Philippines

ii. Non- resident alien engaged in trade or business in the Philippines

c. Aliens employed by multinational companies, offshore banking units and petroleum contractors and

subcontractors.

3. Estates and Trusts

B. Corporations:

1. Domestic Corporations (Sec. 27)

Domestic Corporations are liable to pay corporate income tax from sources within or without.

2. Foreign Corporations

a. Resident Corporations - foreign corporations engaged in trade or business in the Philippines;

b. Non- resident corporations - foreign corporations not engaged in business or trade in the

Philippines.

3. Partnerships

a. Taxable Partnership

b. Exempt Partnership

1. General Professional Partnership (GPP)

2. Joint Venture or Consortium undertaking construction activity, or engaged in petroleum

operations with operating contract with the government.

Tax Rates

Tax Rate

A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and

Practice of Profession

Amount of Net Taxable

Income Rate

Over But Not Over

P10,000 5%

P10,000 P30,000 P500 + 10% of the Excess over P10,000

P30,000 P70,000 P2,500 + 15% of the Excess over P30,000

P70,000 P140,000 P8,500 + 20% of the Excess over P70,000

P140,000 P250,000 P22,500 + 25% of the Excess over P140,000

P250,000 P500,000 P50,000 + 30% of the Excess over P250,000

P500,000 P125,000 + 32% of the Excess over P500,000 in 2000 and

onward

Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the

first installment to be paid at the time the return is filed and the second installment 15 of the same year at

on or before July the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office

(RDO) where the taxpayer is registered.

Tax Rate Taxable Base

1. Domestic Corporations:

a. In General 30% (effective

Jan. 1, 2009)

Net taxable income from all sources

b. Minimum Corporate Income Tax* 2% Gross Income

c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable

Income

2. Proprietary Educational Institution 10% Net taxable income provided that the

gross income from unrelated trade,

business or other activity does not

exceed 50% of the total gross income

3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the

gross income from unrelated trade,

business or other activity does not

exceed 50% of the total gross income

4. GOCC, Agencies &

Instrumentalities

a. In General 30% Net taxable income from all sources

b. Minimum Corporate Income Tax* 2% Gross Income

c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable

Income

5. National Gov't. & LGUs

a. In General 30% Net taxable income from all sources

b. Minimum Corporate Income Tax* 2% Gross Income

c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable

Income

6. Taxable Partnerships

a. In General 30% Net taxable income from all sources

b. Minimum Corporate Income Tax* 2% Gross Income

c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable

Income

7. Exempt Corporation

a. On Exempt Activities 0%

b. On Taxable Activities 30% Net taxable income from all sources

8. General Professional Partnerships 0%

9. Corporation covered by Special

Laws

Rate specified

under the

respective special

laws

10. International Carriers 2.5% Gross Philippine Billings

11. Regional Operating Head 10% Taxable Income

12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign

Currency Transaction

30% On Taxable Income other than

Foreign Currency Transaction

13. Foreign Currency Deposit Units

(FCDU)

10% Gross Taxable Income On Foreign

Currency Transaction

30% On Taxable Income other than

Foreign Currency Transaction

*Beginning on the 4th year immediately following the year in which such corporation commenced its

business operations, when the minimum corporate income tax is greater than the tax computed using the

normal income tax.

Passive Income

1. Interest from currency deposits, trust funds and deposit substitutes 20%

2. Royalties (on books as well as literary & musical composition) 10%

- In general 20%

3. Prizes (P10,000 or less ) 5%

- In excess of P10,000 20%

4. Winnings (except from PCSO and lotto) 20%

5. Interest Income of Foreign Currency Deposit 7.5%

6. Cash and Property Dividends

- To individuals from Domestic Corporations 10 %

- To Domestic Corporations from Another Domestic Corporations 0%

7. On capital gains presumed to have been realized from sale, exchange or

other disposition of real property (capital asset) 6%

8. On capital gains for shares of stock not traded in the stock exchange

- Not over P100,000 5%

- Any amount in excess of P100,000 10%

9. Interest Income from long-term deposit or investment in the form of

savings, common or individual trust funds, deposit substitutes, investment

management accounts and other investments evidenced by certificates

Upon pretermination before the fifth year , there should be imposed on the

entire income from the proceeds of the long-term deposit based on the

remaining maturity thereof:

Holding Period

Exempt

- Four (4) years to less than five (5) years 5%

- Three (3) years to less than four (4) years 12%

- Less than three (3) years 20%

B. For Non-Resident Aliens Engaged in Trade or Business

1. Interest from currency deposits, trust funds and deposit substitutes 20%

2. Interest Income from long-term deposit or investment in the form of

savings, common or individual trust funds, deposit substitutes, investment

management accounts and other investments evidenced by certificatesUpon

pretermination before the fifth year, there should be imposed on the entire

income from the proceeds of the long-term deposit based on the remaining

maturity thereof:Holding Period:

Exempt

-Four (4) years to less than five (5) years 5%

-Three (3) years to less than four (4) years 12%

-Less than three (3) years 20%

3. On capital gains presumed to have been realized from the sale, exchange

or other disposition of real property 6%

4. On capital gains for shares of stock not traded in the Stock Exchange

- Not over P100,000 5%

- Any amount in excess of P100,000 10%

C) For Non-Resident Aliens Not Engaged in Trade or Business

1. On the gross amount of income derived from all sources within the

Philippines 25%

2. On capital gains presumed to have been realized from the exchange or

other disposition of real property located in the Phils. 6%

3. On capital gains for shares of stock not traded in the Stock Exchange

- Not Over P100,000 5%

- Any amount in excess of P100,000 10%

D) On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or

Area Headquarters and Regional Operating Headquarters (ROH), Offshore Banking Units (OBUs),

Petroleum Service Contractor and Subcontractor

On the gross income in the Philippines of Aliens Employed by Regional

Headquarters (RHQ) or Area Headquarters and Regional Operating

Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service

Contractor and Subcontractor

15%

E) General Professional Partnerships

General Professional Partnerships 0%

F) Domestic Corporations

1) a. In General on net taxable income 30%

b. Minimum Corporate Income Tax on gross income 2%

c. Improperly Accumulated Earnings on improperly accumulated taxable

income 10%

2) Proprietary Educational Institution and Non-profit Hospitals 10%

- In general (on net taxable income) 10%

- If the gross income from unrelated trade, business or other activity

exceeds 50% of the total gross income from all sources 30%

4) GOCC, Agencies & Instrumentalities

a. In General - on net taxable income 30%

b. Minimum Corporate Income Tax on gross income 2%

c. Improperly Accumulated Earnings on improperly accumulated taxable

income 10%

5) Taxable Partnerships

a. In General on net taxable income 30%

b. Minimum Corporate Income Tax on gross income 2%

c. Improperly Accumulated Earnings on improperly accumulated taxable

income 10%

6) Exempt Corporation

a. On Exempt Activities 0%

b. On Taxable Activities 30%

8) Corporation covered by Special Laws Rate specified

under the

respective special

laws

G) Resident Foreign Corporation

1) a. In General on net taxable income 30%

b. Minimum Corporate Income Tax on gross income 2%

c. Improperly Accumulated Earnings on improperly accumulated taxable

income 10%

2) International Carriers on gross Philippine billings 2.50%

3) Regional Operating Headquarters on gross income 10%

4) Corporation Covered by Special Laws Rate specified

under the

respective special

laws

5) Offshore Banking Units (OBUs) on gross income 10%

6) Foreign Currency Deposit Units (FCDU) on gross income 10%

Difference between Direct and Indirect Taxes

The difference between a direct and indirect tax is complicated because it truly depends on whether you

are asking from a "legal" or an "economic" perspective.

From an Economic Perspective

In economics,

A direct tax will refer to any levy that is both imposed and collected on a specific group of

people or organizations. An example of direct taxation would be income taxes that are collected

from the people who actually earn their income.

Indirect taxes are collected from someone or some organization other than the person or entity

that would normally be responsible for the taxes. A sales tax, for instance, would not be

considered a direct tax because the money is collected from merchants, not from the people who

actually pay the tax (the consumers).

In this economic context, the law may actually determine the person or entities from which the tax will be

collected, but has nothing to do with how that tax burden is distributed in the market. Who bears the

economic burden of the tax itself will be determined by market forces and can be calculated by

comparing the price of the goods after the tax has been imposed with the price of the goods prior to the

tax being in place.

For example, if the price of a gallon of gasoline was $2.50 without taxes and the government suddenly

imposed a $0.40 tax, the economic forces of supply and demand would ultimately decide how this new

burden is distributed between buyers and sellers. For instance, the price could increase to $2.75 per gallon

after the tax, with buyers absorbing $0.25 of the increase and sellers the remaining $0.15. The law may

have imposed the tax but the marketplace ultimately decided how it would be distributed.

From a Legal Perspective

In a legal sense, the meaning of direct and indirect taxes changes:

A direct tax, according to the U.S. Constitution, applies only to property and poll taxes. These

direct taxes are based on simple ownership or existence.

Indirect taxes are imposed upon a broad range of abstract ideas, including rights, privileges, and

activities.

In this sense, a tax on the sale of property would be considered an indirect tax while the tax actually owed

on the property would be direct.

To put this in perspective, an income tax is technically an indirect tax levied against people, corporations,

and other legal entities recognized by the legal system. There are a number of systems in existence to

help collect this income tax, from a simple flat tax to a more complex progressive system. This indirect tax

on individuals is typically based upon total income minus legally permitted deductions. For corporations

(for-profit corporations), the corporate income tax is based upon the net income or total revenue minus

all expenses.

Another Explanation

The basis of classifying taxes into direct and indirect taxes is who ultimately bears the burden of a tax.

(a) Direct tax:

When (i) liability to pay a tax and (ii) the burden of that tax falls on the same person, the tax is called a

direct tax.

A direct tax is the tax whose burden is borne by the person on whom it is imposed, i.e., its burden cannot

be shifted to others. For example, (i) Income tax is a direct tax because the person whose income is taxed

is liable to pay the tax directly to the government and bear the burden of the tax himself. Other examples

of direct tax are (ii) corporate taxIt is levied on profit of corporations and companies, (iii) Wealth taxIt

is imposed on property of individuals depending upon the value of property. (iv) Gift taxIt is paid to the

government by the recipient of gift depending on value of gift, (v) Estate dutyIt is charged from

successor of inherited property.

Similarly (vi) Expenditure tax and (vii) Fringe benefit tax (imposed by state govt.) are other examples of

direct taxes. It is difficult to avoid direct taxes as they are levied directly on income and property of

persons who pay directly to the government.

Merits of direct taxes:

(i) Direct taxes help in reducing disparities in income and wealth of people,

(ii) They are economical because cost of collection for government is relatively low,

(iii) Social and economic Justice is achieved to some extent because direct taxes are based on

ability to pay.

Direct taxes are generally considered progressive taxes because they are based on the ability to pay. A

progressive tax is one the rate of which increases with rise in income and decreases with fall in income.

(b) Indirect tax:

When

(i) liability to pay a tax is on one person and

(ii) (ii) the burden of that tax falls on some other person, the tax is called an indirect tax.

NIRC 1997 and its amendments

R.A.

No.

TITLE

Date of Approval

Date of Effectivity

R.A.

8424

The National Internal Revenue Code of 1997 December 11, 1997 January 1, 1998

R.A.

8761

An Act Imposing The Value-Added Tax on

Certain Services Beginning January 1, 2001,

Amending for the Purpose Section 5 of R.A.

No. 8424 and for Other Purposes.

February 15, 2000 January 1, 2001

R.A.

9010

An Act To Further Defer The Imposition Of

The Value-Added Tax On Certain Services,

Amending For The Purpose Section 5 of R.A.

No. 8424, As Amended by R.A. No. 8761.

February 27, 2001 January 1, 2003

R.A.

9224

An Act Rationalizing the Excise Tax on

Automobiles, Amending for the Purpose the

National Internal Revenue Code of 1997,

and for Other Purposes.

August 29, 2003 October 4, 2003 (published

on September 18, 2003)

R.A.

9238

An Act Amending Certain Sections of the

National Internal Revenue Code of 1997, as

Amended, by Excluding Several Services

from the Coverage of the Value-added Tax

and Re-imposing the Gross Receipts Tax on

Banks and Non-bank Financial

Intermediaries Performing Quasi-Banking

Functions and Other Non-Bank Financial

Intermediaries Beginning January 1, 2004.

Lapsed into law on Feb.

5, 2004 without the

signature of the

President in accordance

with Article VI, Section

27(1) of the

Constitution.

January 1, 2004

R.A.

9243

An Act Rationalizing the Provisions on the

Documentary Stamp Tax of The National

Internal Revenue Code of 1997, as

Amended, and for Other Purposes.

February 17, 2004 March 20, 2004

R.A.

9294

An Act Restoring the Tax Exemption of

Offshore Banking Units (OBUs) and Foreign

Currency Deposit Units (FCDUs), Amending

for the Purpose Section 27(D)(3) and

Section 28, Paragraphs (A)(4) and (A)(7)(b)

of the National Internal Revenue Code, as

Amended.

Approved by the

President on April 28,

2004

May 21, 2004

R.A.

9334

An Act Increasing the Excise Tax Rates

Imposed on Alcohol and Tobacco Products,

Amending for the Purpose Sections 131,

141, 142, 143, 144, 145 and 288 of the

National Internal Revenue Code of 1997, as

Amended.

December 31, 2004

January 1, 2005

R.A.

9337

An Act Amending Sections 27, 28, 34, 106,

107, 108, 109, 110, 111, 112, 113, 114, 116,

117, 119, 121, 148, 151, 236, 237 and 288 of

the National Internal Revenue Code of

1997, as Amended, and for Other Purposes.

Approved on May 24,

2005.

Its effectivity clause

provides that it shall take

effect July 1, 2005 but due

to a TRO filed by some

taxpayers. The law finally

took effect November 1,

2005 when the TRO was

finally lifted by the

Supreme Court

R.A.

9361

An Act Amending Section 110(B) of the

National Internal Revenue Code of 1997, as

Approved on November

21, 2006

December 13, 2006

(published on November

Amended, and for Other Purposes. 28, 2006)

R.A.

9504

An Act Amending Sections 22, 24, 34, 35, 51

and 79 of Republic Act No. 8424, As

Amended, Otherwise Known as the National

Internal Revenue Code of 1997.

Approved on June 17,

2008 and took effect on

July 6, 2008.

July 6, 2008

R.A.

10001

Publishing the full text of Republic Act No.

10001 entitled "An Act Reducing Taxes on

Life Insurance Policies, Amending for this

Sections 123 and 183 of the National

Internal Revenue Code of 1997, as

Amended."

Approved February 23,

2010

R.A.

10021

An Act to Allow the Exchange of

Information By The Bureau of Internal

Revenue On Tax Matters Pursuant to

Internationally-Agreed Tax Standards,

Amending Section 6(F), and 270 Of The

National Internal Revenue Code, As

Amended and For Other Purposes.

Approved March 8,

2010

R.A.

10026

An Act Granting Income Tax Exemption To

Local Water Districts by Amending Section

27 (C) of the National Internal Revenue

Code of 1997 As Amended, and Adding

Section 289-A To The Code For the

Purposes.

Lapsed into law on

March 11, 2010 without

the signature of the

President, in accordance

with Article VI, Section

27 (1) of the

Constitution.)

Full Text is provided by a separate PDF and DOCX file.

Brief Summary

The National Internal Revenue Code of 1997 (NIRC) is the basic law governing taxation by the national

government. In addition to providing the organization and functions of the Bureau of Internal Revenue,

the NIRC provides the imposition of the following taxes:

income tax;

estate tax;

donors tax;

value-added tax;

excise tax; and

Documentary stamp tax.

The NIRC also provides the remedies available to the government in case of non-payment of a tax as well

as the remedies available to a taxpayer who erroneously pays a tax or is being assessed a tax.

The NIRC was embodied in Republic Act No. 8424 (known as the Tax Reform Act of 1997), which

introduced comprehensive amendments to the National Internal Revenue Code of 1977 (as embodied in

Presidential Decree No. 1158). The NIRC became effective on January 1, 1998 (although the

implementation of certain provisions, such as those relating to the imposition of value-added tax on

certain services, were deferred to a later date).

Lands Covered by CARP

Section 3. Section 4 of Republic Act No. 6657, as amended, is hereby further amended to read as follows:

"SEC. 4. Scope. -The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial

arrangement and commodity produced, all public and private agricultural lands as provided in

Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable

for agriculture: Provided, That landholdings of landowners with a total area of five (5) hectares and below

shall not be covered for acquisition and distribution to qualified beneficiaries.

"More specifically, the following lands are covered by the CARP:

"(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture.

No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the

approval of this Act until Congress, taking into account ecological, developmental and equity

considerations, shall have determined by law, the specific limits of the public domain;

"(b) All lands of the public domain in excess of the specific limits as determined by Congress in

the preceding paragraph;

"(c) All other lands owned by the Government devoted to or suitable for agriculture; and

"(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products

raised or that can be raised thereon.

"A comprehensive inventory system in consonance with the national land use plan shall be instituted by

the Department of Agrarian Reform (DAR), in accordance with the Local Government Code, for the

purpose of properly identifying and classifying farmlands within one (1) year from effectivity of this Act,

without prejudice to the implementation of the land acquisition and distribution."

Tax Shield

Investopedia

A reduction in taxable income for an individual or corporation achieved through claiming allowable

deductions such as mortgage interest, medical expenses, charitable donations, amortization and

depreciation. These deductions reduce taxpayers' taxable income for a given year or defer income taxes

into future years.

Tax shields vary from country to country, and their benefits will depend on the taxpayer's overall tax rate

and cash flows for the given tax year.

For example, because interest on debt is a tax-deductible expense, taking on debt can act as a tax shield.

Tax-efficient investing strategies are a cornerstone of investing for high-net-worth individuals and

corporations, whose annual tax bills can be very high. The ability to use a home mortgage as a tax shield

is a major benefit for many middle-class people whose homes are a major component of their net worth.

What are the allowable deductions from gross income according to BIR?

Except for taxpayers earning compensation income arising from personal services rendered under an

employer-employee relationships where the only deduction provided that the gross family income does

not exceed P250,000 per family is the premium payment on health and/or hospitalization insurance, a

taxpayer may opt to avail any of the following allowable deductions from gross income:

a. Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals and

gross income for corporations; or

b. Itemized Deductions which include the following:

Expenses

Interest

Taxes

Losses

Bad Debts

Depreciation

Depletion of Oil and Gas Wells and Mines

Charitable Contributions and Other Contributions

Research and Development

Pension Trusts

In addition, individuals who are either earning compensation income, engaged in business or deriving

income from the practice of profession*** are entitled to personal and additional exemptions as

follows:

***it answers the question whether PE is applicable only in Compensation or also business.

Personal Exemptions:

For single individual or married individual judicially decreed as legally separated with no qualified

dependents P 50,000.00

For head of family P 50,000.00

For each married individual *P 50,000.00

Note: In case of married individuals where only one of the spouses is deriving gross income, only such

spouse will be allowed to claim the personal exemption.

Additional Exemptions:

For each qualified dependent, a P25,000 additional exemption can be claimed but only up to 4

qualified dependents

The additional exemption can be claimed by the following:

The husband who is deemed the head of the family unless he explicitly waives his right in favor

of his wife

The spouse who has custody of the child or children in case of legally separated spouses.

Provided, that the total amount of additional exemptions that may be claimed by both shall not

exceed the maximum additional exemptions allowed by the Tax Code.

The individuals considered as Head of the Family supporting a qualified dependent

The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be

claimed if:

Family gross income yearly should not be more than P 250,000

For married individuals, the spouse claiming the additional exemptions for the qualified

dependents shall be entitled to this deduction

Functions and Powers of BIR

1. Assessment and collection of all national internal revenue taxes, fees and charges.

2. Enforcement of all forfeitures, penalties, fines and execution of judgments in all cases decided in its

favor by the Court of Tax Appeals and the ordinary courts

3. Administer supervisory and police powers conferred by National Internal Revenue Code as amended by

R.A. 8424 or other laws.

(Extended?)

1. To interpret tax laws and decide tax cases;

2. To obtain information, and to summon, examine and take testimony of persons;

3. To make assessments and prescribe additional requirements for tax administration and enforcement;

4. To conduct inventory - taking, surveillance and to prescribe presumptive gross sales and receipts;

5. To terminate taxable period;

6. To prescribe real property values;

7. To inquire into bank deposit accounts;

8. To accredit and register tax agents;

9. To prescribe additional procedural or documentary requirements; and

10. To delegate power to subordinates. (Sec. 4 to 8, NIRC)

Functions and Power of Bureau of Customs

1. Prevent smuggling and other frauds

2. Control vessels/aircrafts doing foreign trade

3. Enforce tariff and customs laws

4. Control the handling of foreign mails for revenues and prevention purposes

5. Control import and export cargoes

6. Jurisdiction over forfeiture and seizure cases

(Extended?)

a. The assessment and collection of the lawful revenues from imported articles and all other dues, fees,

charges, fines and penalties accruing under the tariff and customs laws.

b. The prevention and suppression of smuggling and other frauds upon the customs.

c. The supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign

commerce.

d. The general supervision, control and regulation of vessels engaged in the carrying of passengers and

freight or in towage in coastwise trade and in the bays and rivers of the Philippines.

e. The prohibition and suppression of unnecessary noises, such as explosion of gasoline engines, the

excessive blowing of whistles or sirens, and other needless and disturbing sounds made by water craft in

the ports of the Philippines or in parts of rivers included in such ports.

f. The exclusion, if the conditions of traffic should at any time so require, of vessels of more than one

hundred and fifty tons from entering, berthing or mooring in the Pasig River.

g. The admeasurement, registration, documenting and licensing of vessels built or owned in the

Philippines, the recording of sales, transfers and encumbrances of such vessels, and the performance of all

the duties pertaining to marine registry.

h. The inspection of Philippine vessels, and supervision over the safety and sanitation of such vessels.

i. The enforcement of the lawful quarantine regulations for vessels entering Philippine ports.

j. The enforcement of the tariff and customs laws and all other laws, rules and regulations relating to the

tariff and customs administration.

k. The licensing of marine officers who have qualified in the examination required by law to be carried on

Philippine vessels, the determination of the qualifications of pilots, the regulation of this service, and the

fixing of the fees which they may charge.

l. The supervision and control over the handling of foreign mails arriving in the Philippines, for the

purpose of the collection of the lawful duty on dutiable articles thus imported and the prevention of

smuggling through the medium of such mails.

Powers and Functions of the Court of Tax Appeals

The CTA shall exercise jurisdiction as follows:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other

matters arising under the National Internal Revenue or other laws administered by the Bureau of

Internal Revenue;

2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other

matters arising under the National Internal Revenue Code or other laws administered by the

Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period

of action, in which case the inaction shall be deemed a denial;

3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided

or resolved by them in the exercise of their original or appellate jurisdiction;

4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or

other money charges, seizure, detention or release of property affected, fines, forfeitures or other

penalties in relation thereto, or other matters arising under the Customs Law or other laws

administered by the Bureau of Customs;

5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate

jurisdiction over cases involving the assessment and taxation of real property originally decided

by the provincial or city board of assessment appeals;

6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review

from decisions of the Commissioner of Customs which are adverse to the Government under

Section 2315 of the Tariff and Customs Code;

7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,

commodity or article, and the Secretary of Agriculture in the case of agricultural product,

commodity or article, involving dumping and countervailing duties under Section 301 and 302,

respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No.

8800, where either party may appeal the decision to impose or not to impose said duties.

b. Jurisdiction over cases involving criminal offenses as herein provided:

1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National

Internal Revenue Code or Tariff and Customs Code and ot