1.

Concept, Underlying Basis and Purpose

A. DEFINITION OF TAXATION
Taxation has been defined as the power by which the sovereign raises revenue to defray
the necessary expenses of government. It is a way of apportioning the cost of government
among those who in some measure are privileged to enjoy the benefits and must therefore
bear its burdens.
Q: Define taxation.
A: It is an inherent power by which the sovereign:
1. through its law-making body
2. raises income to defray the necessary expenses of government
3. by apportioning the cost among those who, in some measure are privileged to enjoy
its benefits and, therefore, must bear its burdens. (51 Am.Jur. 34)
Note: Simply stated, the power of taxation is the power to impose burdens on subject and
objects within its jurisdiction.

B.THEORY AND BASIS OF TAXATION

Q: What are the theories in taxation?
A: The theories underlying the power of taxation are the following:
1. Lifeblood theory (Necessity theory)
2. Benefits-protection theory (Doctrine of Symbiotic Relationship)

Lifeblood Theory/Necessity Theory

Q: Discuss the meaning and the implications of the statement: Taxes are the lifeblood of
the government and their prompt and certain availability is an imperious need.
A: The phrase expresses the underlying basis of taxation which is governmental necessity, for indeed,
without taxation, a government can neither exist nor endure.
Taxation is a principal attribute of sovereignty. The exercise of the 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 the public good.
In the case of Valley Trading Co. v. CFI G.R. No. 495529, March 31, 1989, the Supreme Court ruled that
the damages that may be caused a taxpayer by being made to pay the taxes cannot be said to be as
irreparable as it would negate the Government ability to collect taxes. (1991 Bar Question)
Benefits-Protection Theory/
Symbiotic Relationship Doctrine
Q: What is the Benefits-Protection Theory (Symbiotic Relationship Doctrine) in taxation?
A: It involves the power of the State to demand and receive taxes based on the reciprocal duties of
support and protection between the State and its citizen.
Every person who is able must contribute his share in the burden of running the government. The
government for its part is expected to respond in the form of tangible and intangible benefits intended
to improve the lives of the people and enhance their material and moral values. (CIR v. Algue, G.R. No.
L-28896, February 17, 1988)
Special benefits to taxpayers are not required. A person cannot object to or resist the payment of taxes
solely because no personal benefit to him can be pointed out arising from the tax. (Lorenzo v. Posadas,
64 Phil. 353)

Q: What are the principles involving the doctrine of symbiotic relationship/benefits

protection?
A: It is a legal duty on the part of the citizen to pay taxes to support the Government.
On the other hand, it is a reciprocal duty on the part of the Government to provide protection and
benefits.

Inherent Attribute of Sovereignty

Q: Why is the power of taxation considered inherent in nature?
A: It is inherent in character because its exercise is guaranteed by the mere existence of the state. It
could be exercised even in the absence of a constitutional grant. The power to tax proceeds upon the
theory that the existence of a government is a necessity and this power is an essential and inherent
attribute of sovereignty, belonging as a matter of right to every independent state or government
(Pepsi-Cola Bottling Co. of the Philippines V. Municipality of Tanauan, Leyte, G.R. No. L-31156, February
27, 1976).

No sovereign state can continue to exist without the means to pay its expenses; and that for those
means, it has the right to compel all citizens and property within its limits to contribute, hence, the
emergence of the power to tax. (51 Am. Jur. 42)
The moment a state exists, the power to tax automatically exists.
Basis: The Life-blood Doctrine.

Without taxes, the government would be paralyzed for lack of motive power to activate and operate
it. Hence, despite the natural reluctance to surrender part of ones earned income to the taxing
authorities, every person who is able must contribute his share in the running of the government.
(CIR v. Algue, G.R. No. L-28896, February 17, 1988)
Manifestations:
1. Imposition even in the absence of constitutional grant
2. States right to select objects and subjects of taxation
3. No injunction to enjoin collection of taxes.
4. Taxes could not be the subject of compensation and set-off.
5. A valid tax may result in destruction of property.

Q: May a legislative body enacts laws to raise revenues in the absence of constitutional
provisions granting said body the power of tax? Explain.
A: Yes. It must be noted that Constitutional provision relating to the power of taxation do not operate
as grants of the power of taxation to the government, but instead merely constitute a limitation upon a
power which would otherwise be practically without limit. (2005 Bar Question)

Q: Distinguish National Government from Local Government Unit as regards the

exercise of power of taxation.
A:
1. National Government inherent

2. Local Government Unit not inherent since it is merely an agency instituted by

the State for the purpose of carrying out in detail the objects of the government;
can only impose taxes when there is:
a. Constitutionally mandated grant
b. Legislative grant, derived from the 1987 Constitution, Section 5, Article X.