(f) A tugboat is held not embraced and included in the term of passenger and/or cargo vessel under a tax

exemption provision because the former is neither designed nor used for carrying and/or transporting persons or goods by itself but is mainly employed for towing and pulling purposes. (g) But while the burden of proof is on the claimant to establish his right to exemption, there may be situation when he need not adduce further evidence to show that he is entitled to exemption

Exceptions. In the following cases, however tax exemption statutes are liberally construed: When the law itself expressly provides for a liberal construction, that is, in case of doubt, it shall be resolved in favor of exemption; and When the exemption is in favor of the government itself or its agencies, or of religious, charitable, and educational institutions because the general rule is that they are exempt from tax.

Tax Amnesty Much like a tax exemption is never favored nor presumed in law and if granted by statue, he terms of amnesty must be construed strictly against the taxpayer and liberally in favor of the government.

Nature Construction, Application and Sources of Tax Laws

Nature of internal revenue law (1) Internal revenue law are not political in nature. They are deemed to be the laws of the occupied territory and not of the occupying enemy. (2) The laws are civil and not penal in nature although there are penalties provided for their violation.

 Construction of tax laws (1) Legislative intention must be considered (2) Where there is doubt (3) Where language is plain (4) Where taxpayer claims exemption

Application of Tax Laws

Generally Prospective. The general rule is that tax laws are prospective in operation. The rule is that the nature and amount of the tax could not be foreseen and understood by the taxpayer at the time the transaction which the law seeks to tax was completed Exception. While is not favored, a statute may nevertheless operate retroactively provided it is expressly declared or is clearly the legislative intent. For instance, it has been the universal practice to increase taxes on income already earned; yet notwithstanding this retroactive operation, income taxes have not been successfully assailed as invalid.

Mandatory and Directory Provisions of Tax Laws The provisions of tax statues may be either: Mandatory those provisions intended for the security of the citizens or which are designed to ensure equality of taxation or certainty as to the nature and amount of each persons tax Directory those provisions designed merely for the information or direction of officers or to secure methodical and systematic modes of proceedings.

Sources of tax Laws These sources, aside from the pertinent provisions of the constitution are: (1) Legislative or statutes, including Presidential Decrees and Executive Orders on Taxation and Tax Ordinances; (2) Administrative rules and regulations and rulings or opinions of tax officials particularly the commissioner of Internal revenue, including opinions of the Secretary of Justice; and (3) Judicial Decisions.

Existing Tax Laws

National (a) The National Internal Revenue Code of 1997, which is the main statutory law on internal revenue taxes. (b) The Tariff and Customs Code of 1978; and (c) Special Laws, such as: 1. The sugar adjustment Act (C.A. No. 567, as amended.); 2. The narcotics Drugs Law (R.A. No. 953.); 3. The Law imposing travel tax (P.D. No. 118, as amended.); 4. The law imposing a private motor vehicle tax (Exec. Order No. 43.0; and 5. The law imposing energy taxes (Pres. Decrees No. 844 and 845, which amended R.A. No. 776 and 1937 [now P.D. No. 1464.], respectively; and B.P. Blg. 36.)

 Local (a) The Local Government Code (R.A. No. 7160.);and (b) the respective tax ordinances of provinces, cities municipalities, and barangays subject o the limitations provided in the Local Government Code.

 Other important laws (a) R.A. No. 1903 which punishes with deportation, tax evasion and willful refusal to pay taxes by aliens. (b) R.A. No. 1125 an act creating the Court of Tax Appeals; and (c) R.A. No. 2211 an act creating a Joint LegislativeExecutive Tax Commission, the Principal function of which is to examine and revise the existing tax system and tax policy structure

Authority of Secretary of Finance to Promulgate Rules and Regulations

Under Section 244 of he tax Code, it is provided that the Secretary of Finance upon the recommendation of the Commissioner of Internal Revenue, shall promulgate all needed rules and regulations for the effective enforcement of the provisions of the Code. The administrative power to provide regulations is likewise authorized by sections 79-B and 551 of the Revised Administrative Code. The most formal pronouncements of the Department of finance in this respect are known as Revenue Regulations. The power to recommend the promulgation of Internal revenue rules and regulations by the Secretary of the Finance is given only to the commissioner. He is not allowed by law to delegate such power to any of his subordinates.

Nature of Power to make Regulations

The power to make regulations is not the power to legislate in the true sense, and under the guise of regulation, legislation may not be enacted. The statute which is being administered may not be altered or added to by the exercise of a power to make regulations thereunder, such regulations cannot increase or decrease the requirements of the la, nor embrace matters not covered or intended to be covered by the statue.

Necessity and Function of Regulations

Regulations are deemed necessary to the proper enforcement and execution of laws. They are intended to clarify or explain the law and carry into effect its general provisions by providing the details of administration and procedure.

Requisites for Validity and Effectivity They must not be contrary to law and the Constitution (Art. 7, Civil Code.); and They must be published in the Official gazette.