CHAPTER 4

Social, Political, Economic, and Cultural issues in Philippine

History

Module 12 (3 hours)
Title: Agrarian Reform Policies
Introduction:
Landlessness is the main source or rural poverty, and this issue is the legacy of
colonialism. (Robles,2007) For a long period of time, the agrarian system of the Philippines was
being controlled by the large landlords. Small farmers in the Philippines were struggling for their
rights to land and other natural resources thereby leading to a more difficult problem relating to
their daily living. Along with the different social injustices that we are facing, it is therefore
mandatory on the part of the government to build a nation where there is equitable land
ownership and empowered agrarian reform beneficiaries who are effectively managing their
economic and social development for a better quality of life. (DAR mission and vision)
This lesson presents the history of the Philippine land and agrarian reform programs. A
discussion on the historical background of various agrarian reform programs, that date back to
Spanish period up to the present times, will enable the Filipinos to understand the present
Comprehensive Agrarian Reform Program. (Manapat, et.al, 2010)
Learning Outcome:
At the end of this topic, you are expected to:
1. analyze the history of agrarian reforms in the country to be more aware of current land
reform issues, more importantly, the problem of land redistribution.
Learning Content:
Pre-Spanish Era
Private ownership is unknown to almost all of the people sojourning in the Philippines and a
system of communal ownership is enjoyed by many in terms of land ownership. The absence of
records will indicate this. However, there is no denial as to the land patterns that the Philippines
do have, to wit:
a. Those who engaged in shifting cultivation regarded all land as their public domain,
although they did not choose to cultivate all of the available land.
b. Those who practiced a type of living in an area for a long period of time follows private
ownership. However, no formalized procedures for recognizing private ownership was
ever introduced.
c. The pre-Spanish classes who lived in the community determined the land ownership
system.
 With regards to land ownership practices, distinction is to be made as to three types of
individuals living during this time. Noble men were free from the payment of tribute and can
possibly own lands. Freemen were entitled to cultivate lands but is required to pay annual fee of
one-half of the yield of their crops to the datu. Lastly, the dependents who can never hold lands
as they are regarded to serve only the datu.
Spanish Period (1521-1898)
The discovery of Magellan leading to the expedition of Miguel Lopez de Legazpi
colonizing the country brought changes to land system in the Philippines. Legazpi issued a major
policy recognizing all public lands as part of the public domain, regardless of local customs.
Private ownership was introduced. With this, every citizen was given the choice of land
to cultivate that is free from tax. Other lands were still considered to be communal in nature for
the collective needs of the community and there are those not cultivated that remained within the
disposal of the Spanish crown in accordance to whom (Spanish officials and friars) the same
may be granted which is known as encomienda.
The different changes brought about by the encomienda system gave rise to the issuance
of two Royal Decrees urging landowners to secure legal title of their land and the Maura Law
that granted landholders one year to secure legal title to their land or the same will be forfeited.
Due to failure on the part of peasant farmers to comply immediately with the law, they were left
without titles thereby leading to a situation where they ended up tenants in their own lands.
The different strategies of dispossessing peasants of their landholding is not limited only
to the above-mentioned situation. There are outright purchases of real estates at a lower price and
the grant of large tracts of lands to the friars. Injustices are present that later on propelled the
Filipino peasants to call for a revolution. Thus, the 1898 Philippine Revolution.

Philippine Revolutionary Government (1898-1899)

The establishment of the Philippine Republic by Emilio Aguinaldo is coupled with his
intention of confiscating large estates granted to friars. The standpoint of the government
established by Aguinaldo is to reclaim these lands because ownership of friars is of questionable
origin to think that landless peasants are in their constant agony claiming their own lands. This
controversy led to what is now known today as 1898 Philippine Revolution.
Unfortunately, Aguinaldo government was aborted with his own capture. With the
intrusion of a new colonial power, the issue relating to ownership of friar lands remained.
American Rule (1898-1935)
The ceasing of powers of the Spanish Government led to the colonial rule of the
Americans by virtue of the Treaty of Paris. The issue relating to landholdings became more
complicated for the reason that land records were destroyed and lost. For this reason, Torrens
system of land registration was introduced to solve the matter. However, despite earnest efforts
to solve the same, majority of the farmers did not resort to this solution. There is a failure to
really identify the cause of landlessness among Filipino famers that resulted to the increase in
tenancy rate and decrease in landownership by the Filipinos themselves.
By 1919, friar lands were disposed of by the then civil government but until 1977, friars
remained to be the biggest landholders in the country. Along with the different solutions offered
to solve the matter, the same were considered futile because Americans favored more few rich
landowners (hacienderos) to further cope up with their self-vested interest of supplying the
mother country of raw materials. This led to a great motivation on the part of thehacienderosto
acquire more lands intensifying production but at the peril of exploiting more the peasants.
Commonwealth Era (1935-1946)
With the set-up of this era came the implementation of the Rice Tenancy Act of 1933.
Primarily, this act regulates share-tenancy contracts by establishing minimum standards.
Accordingly, a better landlord relationship is envisioned having a 50-50 sharing of the crop,
regulation of interest to 10% per agricultural year, and particularly a safeguard against the whims
and caprices of the landlord. However, since the implementation of the act requires a petition of
the majority of the municipal councils, no petition was ever made. Due to these minor lapses as
to its implementation, President Manuel Quezon made its implementation mandatory in all
Central Luzon provinces. However, contracts were made to last only for a year and landowners
were able to unjustly dismiss tenants by the simple act of not renewing their contracts. Hence,
this created more agitation on the part of peasant organizations doing their obligations well but
were still dismissed despite their great service to till the soil.
In line with all the social unrest, the government was hereby motivated to incorporate in
its Constitution the integration of social justice provision.
Second Philippine Republic: Japanese Occupation (1941-1945)
The Hukbo ng Bayan Laban saHapon (HUKBALAHAP) was born under the Japanese
occupation. It was headed by Luis Taruc and was able to take advantage of the social unrest after
World War II. They were able to establish a “shadow” government in Central Luzon that
discredited the government in the eyes of the people. This, consequently, made them stronger
and closer to the people.

Third to Fifth Philippine Republic

Roxas Administration (1946-1948)
He proclaimed Rice Tenancy Act of 1933 effective all over the country. However, land
tenure was still noted as a problem and was noted to become more worse despite numerous
remedial measures. Among these measures was Republic Act 34 of 1946, otherwise known as
Tenant Act. This provided for a 70-30 sharing arrangement and further regulated share-tenancy
agreements.
Quirino Administration (1948-1953)
With the announcement of his two main objectives, that is, economic reconstruction of
the nation and restoration of faith and confidence of the people in the government, none of it
speaks of the making of agrarian reform law. He had little success with the continuance of the
programs previously implemented by his predecessor. Since social unrest is prevailing and none
was done to properly and effectively address the issue, the same led to unpopularity of his
administration.

Magsaysay Administration (1953-1957)

He introduced two land bills, that is, the Agricultural Tenancy Act of 1954 (R.A. 1199)
and the Land Reform Act of 1955 (R.A. 1400). The former Act shifts share tenancy to leasehold.
In the leasehold system, the tenant is paying a fixed amount to the landlord rather than a variable
amount. This consequently gave to the prohibition of ejecting tenants without further
pronouncement of the Court of Agrarian Relations as to the existence of just cause. On the other
hand, Land Reform Act of 1955 provided for the expropriation of private agricultural land over
300 hectares of contiguous areas, if owned by individuals. (Manapat, et.al, 2010) However, the
two acts were considered to be with lapses because although private lands were considered to be
subdivided to tenants at cost, lands having the area of less than 144 hectares were exempted.
Garcia Administration (1957-1961)
He did not make any pronouncement relating to agrarian reform his administration was
considered a “stalemate” between landlords and their allies in congress. (Manapat, et.al, 2010)
Macapagal Administration (1961-1965)
Under his administration, he introduced Agricultural Land Reform Code of 1963
otherwise known as R.A. 3844 providing for the purchase of private farmlands with the purpose
of distributing them in the form of small lots to landless tenants on easy payment terms. There is
the lowering of retention limits of landholdings to 75 hectares, be it a corporation or an
individual. However, the same was contended to be too high considering the growing population
density. Within the span of two years after it was implemented, no land was purchased due to the
reason also that peasants were unable to purchase the same. On the other hand, allocation of
budget for this was never enough thereby leading to a situation where less land was being
cultivated. Thus, this implies a declining situation relating to productivity of farmers.
Marcos Administration
During the first four years of Marcos, there is a vast change as to land purchase and
redistribution. However, no agrarian law was made thereby leading to the continuance of the
implementation of R.A. 6389. Further development and amendments were made at the latter part
of his term due to constant peasant upheaval. Among those changes are conversion of lands to
residential lands as a ground for dismissal of tenants, conversion of share tenancy to leasehold
tenancy with certain exceptions, the creation of the Department of Agrarian Reform, disturbance
compensation given to tenants just in case the land is converted to residential subdivision type,
increased financing for land reform program, and crediting of rentals in favor of the tenant
against just compensation.
Along with the declaration of Martial Law, he issued P.D. 2 declaring the Philippines as a
land reform area. To further implement land transfer, he issued Tenant Emancipation Act (P.D
27) that launch the Operation Land Transfer (OLT). The establishment of Land Bank of the
Philippines is another attestation of providing the needed incentives to affected landowners. With
the integration of P.D 27, landlords who owned more than seven hectares of land had to sell the
excess to the DAR, which in turn sells these to the landless farmers tilling the land. (Manapat,
et.al, 2010) However, another loophole was seen with this policy, that is, it exempted all
landholdings planted with export crops. Several limitations were seen along with the
implementation of Marcos’ land reform programs, these are: (a) narrow coverage as the same is
limited only to privately-owned lands, (b) protection for big landlords through schemes devised
by them like shifting the land to the planting of export crops, (c) heavy burden on farmer
beneficiaries like having 15 years only to pay the land, (d) little support services that later on
made many farmers to resort to mortgage, and lastly (e) weak farmers’ organizations because
they were branded as communists or subversives.
At the end of his administration, the efforts remained futile as the same were not
materialized. This made agrarian reform the rallying issue for the Aquino government.
(Manapat, et.al, 2010)
Aquino Administration (1986-1992)
Upon her assumption to office, she made described agrarian reform, to wit:
“the most fundamental and far reaching program of government for it adheres to the
economic well-being and dignity of many Filipinos.”
This pronouncement is a clear indication that she is making agrarian reform as the
centerpiece of her government. (Manapat, et.al, 2010) The unveiling of the Comprehensive
Agrarian Reform Program, led to the issuance of Comprehensive Agrarian Reform Law
otherwise known as R.A. 6657. This act is intended to promote social justice and
industrialization by providing the mechanism for its implementation and for other purposes.
(Manapat, et.al, 2010) However, due to limitation of the time within which the distribution of
land is to be made, others considered the policy as a failure as well.
Ramos Administration (1992-1998)
He worked fast on the implementation of CARP in order to meet its time limitation.
Despite his eager support for its implementation, the same lacks support funds to further
implement it. To answer this, he signed into law R.A 8532 to amend CARL and this paved way
for the extension of another ten-year period to fully implement the provisions of the law itself.
Estrada Administration (1998-2001)
 The launching of Magkabalikat para saKaunlarangAgrayo(MAGSASAKA) was for the
purpose of encouraging foreign investments to the agricultural sector and for the advancement in
technology relating to crop production. However, the same left agrarian reform to still be an
issue.
Arroyo Administration (2001-2010)
Under her administration, CARPER was signed into law. It was a consolidation of Senate
Bill 2666 and House Bill 4077. The former amended certain provisions of CARL and the latter
extended the time limit within which to achieve its goals.

Module 13 (3 hours)
Title: Evolution of the Philippine Constitution
Introduction:
The identity of a Filipino lies on knowing the history of the Philippines. Part of the topics
needed in knowing this identity is the evolution of the Philippine Constitution. Its importance
can be seen in the thought that a government can be properly administered with the existence of
a properly defined constitution. Hence, the study of its evolution.
Learning Outcomes:
At the end of the topic, you are expected to:
1. trace the evolution of the Philippine Constitution throughout the country’s history; and
2. discuss the distinct features of the different constitutions of the Philippines.
Learning Content:
The 1897 Biak-na-Bato Constitution
On March 22, 1897 at San Francisco de Malabon, Cavite where, the first presidential and
vice-presidential elections in Philippine history were held, although the election was only among
the Katipuneros and not the general population.
On November 1, 1897 at Biak-na-Bato in the town of San Miguel de Mayumo in
Bulacan, the Republic of Biak-na-Bato was established. The Biak-na-Bato had a constitution
drafted by Isabelo Artacho and Felix Ferrer.
This Constitution was patterned or copied after the Cuban Constitution immediately after
the transfer of government from Cavite to Bulacan.This Constitution was known as the
“Constitucion Provisional de la Republica de Filipinas” (Provisional Constitution of the
Philippines). It was originally written in and promulgated in the Spanish and Tagalog
language.Filipino revolutionaries adopted this Constitution to cater the needs of the present time.
Hence, it did not last long.
The 1899 Malolos Constitution (1899-1901)
 On January 20, 1899 at Barasoain Church in Malolos, Bulacan, Malolos Congress
proclaimed, enacted and ratified “Constitucion politica” ( Political Constitution). This document
was written in Spanish.
The making of the Malolos Constitution was pursuant to the provisions of the Tyddings-
Mcduffie Law, which provides that the Philippines must draft its own Constitution as a precedent
condition for the proclamation of Philippine Independence.
The Malolos Constitution was the first republican constitution in Asia written by People’s
Representative.
a. It declared that sovereignty resides exclusively in the people.
b. It stated basic civil rights.
c. It separated the church and state.
d. It called for a creation of an Assembly of Representatives to act as the legislative
body.
e. It called for a parliamentary republic as the form of government. The president was
elected for a term of four (4) years by a majority of the assembly.
Find a copy of the original document at this site:
https:/ / en.wikisource.org/wiki/Constitution_ of_ the_ Philippines_(1899)
The 1935 Constitution (1935-1943, 1945-1973)
The 1935 Constitution was written in 1934, approved and adopted by the Commonwealth
of the Philippines and later used by the Third Republic. It was written with an eye to meeting the
approval of the United States Government as well, so as to ensure that U.S. would live up to its
promise to grant the Philippines independence and not have a premise to hold onto its possession
on the grounds that it was too politically immature and hence unready for full, real
independence.
The original 1935 Constitution provided for unicameral National Assembly and the
President was elected to a six-year term without re-election. It was amended in 1940 to have a
bicameral Congress composed of a Senate and House of Representatives, as well the creation of
an independent electoral commission. The Constitution now granted the President a four-year
term with a maximum of two consecutive terms in office.
This is considered to be a preparatory step in granting complete and absolute independence
of the Philippine in July 4, 1946.
The 1973 Constitution (1973-1986)
The 1973 Constitution, promulgated after Marcos’ declaration of martial law, was
supposed to introduce a parliamentary-style government. Legislative power was vested in a
unicameral national assembly whose members were elected for six-years terms. The President
was ideally elected as the symbolic and purely ceremonial head of state chosen from among the
Members of the National Assembly for a six-year term and could be elected to an unlimited
number of terms. Upon election, the President ceased to be a Member of the national Assembly.
During his term, the President was not allowed to be a member of a political party or hold any
other office.
The 1973 Constitution was further amended in 1980 and 1981. In the 1980 amendment,
the retirement age of the members of judiciary was extended to 70 years. In the 1981
amendments, the false parliamentary system was formally modified into a French-style semi-
presidential system:
a. executive power was restored to the President;
b. direct election of the President was restored;
c. an Executive Committee composed of the Prime Minister and not more than 14 members
was created to “assist the President in the exercise of his powers and functions and in the
performance of his duties as he may prescribed:” and the Prime Minister was a mere head
of the Cabinet.

The last amendments in 1984 abolished the Executive Committee and restored the position of
Vice- President (which did not exist in the original, unamended 1973 Constitution).

While the 1973 Constitution ideally provided for a true parliamentary system, in practice,
Marcos had made use of subterfuge and manipulation in order to keep executive powers for
herself, rather than developing these to the Assembly and the cabinet headed by the Prime
Minister. The end result was the final form of the 1973 Constitution after all Amendments and
subtle manipulations-was merely the abolition of the Senate and a series of cosmetic rewordings
The old American-derived terminology was replaced by names more associated with
parliamentary government: for example, The House of Representatives became known as the
“Batasang Pambansa” (National Assembly), Department became “Ministries,” and their cabinet
secretaries became known as “cabinet ministries,” with the President’s assistant-the Executive
Secretary-now being styled the “Prime Minister.” Marcos supported parliamentary system in
practice functioned as an authoritarian presidential system, with all real power concentrated in
the hands of the President but with the premise that such was now constitutional.

The 1986 Freedom Constitution (1986-1987)

Immediately following the 1986 People Power Revolution that ousted Ferdinand E.
Marcos, President Corazon C. Aquino issued Proclamation No. 3 as a provisional constitution. It
adopted certain provisions from the 1973 Constitution while abolishing others. It granted the
President broad powers to recognize government and remove officials, as well as mandating the
president to appoint a commission to draft a new, more formal Constitution. Often called the
“Freedom Constitution,” this constitution was only intended as a temporary constitution to
ensure the freedom of the people and the return to democratic rule. A constitutional commission
was soon called to draft a new constitution for the country.

The 1987 Constitution (1987-Present)

 This is the present Constitution of the Philippines, wherein the branches of the
government are divided into three main departments: (a) The Executive, (b) The Legislative, and
(c) The Judiciary. The primordial principles adopted under this Constitution are the principle of
checks and balances and separation of powers with the introduction of the three Constitutional
Commissions. The constitution was ratified by a nationwide plebiscite on February 8, 1987.
The Constitution contains a preamble and eighteen self-contained articles with a section
numbering that resets for every article.
Contents of the Constitution:
Preamble
The preamble introduces the constitution and the source of sovereignty, the people. It
follows the pattern in past constitutions, including an appeal to God.
Article l – National Territory
The National Territory comprises the Philippine archipelago, with all the islands and
waters embraced therein, and all other territories over which the Philippines has sovereignty or
jurisdiction, consisting of its terrestrial, fluvial, and aerial domains, including its territorial sea,
the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around,
between, and connecting the islands of the archipelago, regardless of their breadth and
dimensions, form part of the internal waters of the Philippines.
Article II - Declaration of Principles and the State
Article II lays out the basic social and political creed of the Philippines, particularly the
implementation of the constitution and sets forth the objectives of the government.
Article III – Bill of Rights
Article III enumerates specific protections against the abuse of state power, most of which
are similar to the provisions of the U.S. Constitution.
Article IV – Citizenship
Article IV defines the citizenship of Filipinos. It enumerates two kinds of citizens: natural-
born citizens and naturalizes citizens. Natural-born citizens are those who are citizens from birth
without having to perform any act to acquire or protect Philippine citizenship. The Philippines
follows a jus sanguinis system where citizenship is mainly acquired through blood relationship
with Filipino citizens.
Natural- born citizenship forms an important part of the political system as only natural-
born Filipinos are eligible to hold high offices, including all elective offices beginning with a
representative in the House of representatives up to the President.
Article V – Suffrage
 Article V mandates various age and residence qualifications to vote and a system of secret
ballots and absentee voting. It also mandates a procedure for overseas and disabled and illiterate
Filipinos to vote.
Article VI – Legislative Department
Article VI for a bicameral legislature called the Congress composed of the Senate and House
of representatives. It vests upon Congress, among others, the power of investigation and inquiry
in aid of legislation, the power to declare the existence of a state of war, the power of the purse,
the power of taxation, and the power of eminent domain.
Article VII – Executive Department
Article VII provides for a presidential form of government where the executive power is
vested on the President. It provides for the qualification, terms of office, election, and power and
functions of the President. It also provides for a Vice-President and for presidential line of
succession.
Article VIII – Judicial Department
Article VIII vests the judicial power upon the Supreme Court and other lower courts as may
be established by law (by Congress). While the power to appoint justices and judges still reside
with the President, The President may only appoint nominees pre selected by the Judicial and
Bar Council, a body composed of the Chief Justice of the Supreme Court, the Secretary of
Justice, the Chairs of the Senate and House Committees on Justice, and representatives from the
legal profession.
Article IX – Constitutional Commission
Article IX establishes three constitutional commissions: the Civil Service Commission,
the Commission on Elections, and the Commission onAudit.
Article X – Local Government
Article X pursues for local autonomy and mandates Congress to enact a law for the local
government, now currently the Local Government Code.
Article XI – Accountability of Public Officers
Article XI establishes the Office of Ombudsman which is responsible for investigating
and prosecuting government officials. It also vests upon the Congress the power to impeach the
President, the Vice-president, members of the Supreme Court, and the Ombudsman.
Article XII – National Economy and Patrimony
Article XIII – Social Justice and Human Rights
Article XIV – Education, Science and Technology, Arts, Culture and Sports
Article XV – The Family
Article XVI – General Provisions
Article XVII – Amendments or Revisions
Article XVIII – Transitory Provisions

Module 14 (3 hours)
Title: Taxation

Introduction:

The very reason why does government exists is because of taxes. We can finance our
governmental activities though revenues and for this reason, it is incumbent on our part to know
the origin and nature of our taxing system in the Philippines.
Learning Outcomes:
At the end of the topic, you are expected to:
1. analyze the issues in Philippine taxation through history.
2. propose recommendations or solutions to present-day problems.
3. trace the root causes and how we anticipate future scenarios in Philippine setting.

Learning Content:
What is Taxation?
Taxation refers to compulsory or coercive money collection by levying authority, usually
a government. The term “taxation” applies to all types of involuntary levies, from income to
capital gains to estate taxes. Though taxation can be a noun or verb, it is usually referred to as an
act; the resulting revenue is usually called “tax.”
Taxation is a means by which government finance their expenditure by imposing charges
on citizens and corporate entities.
Taxation refers to the practice of a government collecting money from its citizens to pay
for public services. Without taxation, there would be no public libraries or parks, bridges
government building or schools, etc.
Taxation is different from other forms of payment, like payment for purchase of goods
and services, because taxation does not require consent from the payor and the payment is not
directly tied to goods bought or services rendered.
What are taxes?
Taxes are mandatory contributions of everyone to raise revenue for nation-building. The
revenue is used to pay for our doctors, teachers, soldiers, and other government personnel and
officials, as well as for building schools, hospitals, roads, and other infrastructure.
Legal Bases of Philippine Taxation
1. Constitution

Article VI, section 28 of the Constitution states that “the rule of taxation shall be
uniform and equitable” and that “Congress shall evolve a progressive system of taxation.

1. National Law

a. National Internal Revenue Code - enacted as Republic Act No. 8424 or the Tax
Reform Act of 1997.
b. Republic Act No. 10963 or the Tax Reform for Acceleration and inclusion Act of
2017.
c. Republic Act No. 7160 or the Local Government Code of 1991, and those sourced
from proceeds collected by virtue of a local ordinance.
Taxes imposed by the national level are collected by the Bureau of Internal Revenue
(BIR), while those imposed at the local level are collected by a local treasurer’s office.
The Powers and Duties of the Bureau of Internal revenue (BIR)
1. Reduction and collection of all internal revenue taxes, fees and charges.
2. Enforcement of all forfeitures, penalties, and fines connected therein, including the
execution of judgements in all cases decided in its favor by the Court of Tax
Appeals and the ordinary courts.
3. It shall also give effect to the administer supervisory and police powers coferred to
it by the National Internal Revenue Code and special laws.
Kinds of Taxes:
Taxes can either be direct or indirect.
Direct taxes are those that are paid from income and properties. Examples include
personal and corporate income taxes, property and capital taxes.
Indirect taxes are collected based on consumption. Example include excise taxes,
VAT, percentage tax, and documentary stamp tax (DST).
a. Direct Taxes
Income tax- is a direct tax paid by an individual or organization imposed on:
 Compensation Income - Salaries, wages, taxable bonuses, fringe –
 Business Income - Practice of profession, trades, gains from sale and assets,
and other income not covered by compensation
 Passive Income – Tax on deposits, royalties, and dividend
b. Indirect Taxes
 1. Value–Added Tax is a type of indirect tax imposed on goods and services. The VAT
rate since 2006 is 12%. Both imported and domestic goods and services are covered
by VAT, but there are many exemptions. Imposed on persons or entities/transactions:
who sell or lease goods, properties or services in the course of trade or business and
are the list of exemption can be found in Section 109 of the Tax Code.
2. Percentage Tax is a business tax imposed on persons or entities/transactions: who
sell or lease goods, properties or services in the course of trade or business and are
exempt from VAT under Section 109 of the National Internal Revenue Code, as
amended, whose gross annual sales and/or receipts do not exceed Php 1,919,500 and
who are not VAT-registered; and, engaged in business specified in Title V of the
National Internal Revenue.

3. Excise Tax is an indirect tax on selected goods that have negative externalities and
are non-essentials. Excise tax can be either specific or ad valorem.
 Specific is based on weight, volume capacity, or any other physical unit of
measurement.
 Ad valorem (literally meaning “according to value’) is based on selling price
or other specified value. This is a measure to discourage too much
consumption of scarce resources and limit the bad effects of some products.
These are the commodities subject to excise taxes: Sin products (alcohol and
tobacco), petroleum, miscellaneous articles (automobiles, jewelry, perfume,
and toilet waters, yachts, and other vessels intended for pleasure or sports),
and mineral products.
Brief History of Philippine Taxation
Taxation in Spanish Philippines
The mark of the start of the initial existence of taxation in the Philippines started with the
imposition of tributes. There were problems faced by government officials in its collection due to
the nature of settlements in the Philippines. This calls for the creation of pueblos where Filipinos
were gathered and awarded plots to till. Later on, these settlements were placed under the
management of encomenderos.
To meet the demands of the payment of tributes, Filipinos increased their production.
They were able to pay the tribute partly in cash and partly with their produce. Out of this
transaction, the conquest of the Philippines was financed.
The economy of the Philippines was improved through the Galeeon Trade. On the other
hand, tax collection was still poor and to subsidized the finances in the Philippines, different
goods were delivered in the Philippines through the galleon trade.
In 1884, the payment of tribute was stopped and a poll tax through cedula personal was
collected. The payment of cedula was progressive, thus making it cumbersome on the part of
peasants to pay. Through the payment of cedula, tax collection greatly increased and was
considered to be the main source of income.
Direct and indirect taxes were also imposed. Another source of income by the
government is monopoly. This made it possible for the colony to create a surplus of income that
made it self-sufficient without the need for the situado real and even contributed to the Treasury
of Spain. (Candelaria, 2018)
Income tax is also present in the form of forced labor. However, in the end of 17 th
century, the collection of income taxes became lighter because of increase in death rate and flight
to mountains. By the end of 19th century, this tax was reduced to a personal service that lessen
the burden of what is to be paid. This will give us a notion that taxation system during this period
can be summed up to a situation where peasants are heavily burdened by it and the co-elites as
principals being less burdened by it.
It is mindful to include in our discussion a primary source, particularly the account of
Mariano Herbosa when he wrote to Rizal about taxes.
Taxation under the Americans
The Americans who acquired the Philippines aimed to make the economy self-sufficient
by running the government with the smallest possible sum of revenue and create surplus in the
budget. (Candelaria, 2018)
Few changes were incorporated like the introduction of real estate tax which has been
considered as land taxes. This faced a lot of criticisms specially on the part of landed elite who
took means to evade their taxes. To solve the problem relating to the collection of land taxes, the
Internal Revenue Law of 1904 was introduced. Accordingly, it prescribed ten major sources of
revenue, like SIN taxes, income tax imposed to corporations like banks, and the like.
The cedula went through a lot of changes with the new law. other taxes were also
introduced such as industria tax for transactions or activities. Underwood-Simmons Tariff Act
was passed but this reduces the revenue derived from export taxes. To cope up with this, tax
receipts were increased. With all of the succeeding introduction of other sources of revenue, the
same problem remains, that is, we cannot still support the expenditures of the government.
Taxation during the Commonwealth
Under this, surtax rate was added to income taxes. Cedula taxes were actually abolished
and later a residence tax was imposed. The drafting of the National Internal Revenue Code took
place. However, despite several efforts to solve the issues regarding the tax burden shouldered by
the peasant, the same remains and at the outbreak of World War II, economic development is
still far-fetched.
Fiscal Policy from 1946 to Present
After the war, rehabilitation funds is needed to cope up with the result of it. Despite the fact that
independence of the country has been declared, dependency towards the Americans is imminent
since we need to rehabilitate what has been destroyed. The regressive nature of tax system was
still present even up to the time of Marcos administration despite numerous efforts to cater
economic development. However, during the time of Corazon Aquino, tax reform programs were
initiated. Hence, VAT is introduced. This was signed in 1986 and was put into effect in 1988.
Economic growth was somehow seen during the time of Ramos administration. The short-lived
administration of Estrada did not constitute any change in the tax system. Large deficits were felt
during Arroyo administration due to the fact that large expenditure was allowed without
increasing tax collection. Hence, this prompted the government to devise new source of revenue,
thus, the E-VAT. Under the time of Benigno Aquino III, excise taxes were the main focus
thereby strengthening the cause for SIN taxes. Now, with the present administration promising
for tax reform, it is hoped that the same will result in the much-desired economic development.
Evaluation:
Name: ___________________________ Course & Curriculum Year/ Section: ______
Date: ____________________________ RATING: ___________________________

Test l. Read each question carefully, and then write the answer that best fits the question on the
blank.
____1. It is the imposition of duties or contributions from the people’s income, property, business
practice of profession and purchase of commodities.
A. customs B. duties C. income D. taxation
____2. The sum of money collected for our use of a road, bridge, and highway?
A. assessment B. tax C. toll D. tour fees
____3. Which term refers to duties payable on goods, whether imported or exported?
A. assessment B. revenue C. subsidiary D. tariff
____4. Interest income from bank deposits, deposit substitutes, trust funds, and other similar products is
taxed at the rate of:
A. 10% B. 15% C. 20% D. 25%
____5. It is the use of illegal means to defeat or lessen the payment of tax.
A. Tax Avoidance B. Tax Evasion C. Tax Exemption D. Tax Form
____6. A tax according to subject matter or object which is imposed on property, whether real or
personal, in proportion either to its value, or in accordance with some other reasonable methods of
appointment.
A. customs B. duties C. property D. taxation
____7. A tax according to graduation or rate based on the rate of which increases as the tax base or
bracket increases. Example are income tax, donor’s tax and estate tax.
A. Municipal B. National C. Progressive D. Proportional
____8. A progressive tax takes the largest percentage of income from which group?
A. high- income B. low-income C. middle-income D. no –income
____9. Royalties, except on books, literary works and musical compositions, are taxed at the rate of:
A. 10% B. 15% C. 20% D. 25%
____10. It is the use of illegal permissible means to reduce tax liability.
A. Tax Avoidance B. Tax Evasion C. Tax Exemption D. Tax Form
Test ll. True or False. Read the sentence before you answer. Write true if the statement is correct,
false if the statement is wrong.
________ 1. A flat tax can be considered regressive because it takes a greater portion of income from
 those in lower income group.
________ 2. Agricultural income is an exempted income.
________ 3. The Philippine income tax system is a proportional tax.
________ 4. Gift is not taxable at all.
________ 5. A proportional income tax takes the same percentage of income from all income groups.
________ 6. Tax exemption is the use of illegal reduce of tax liability.
________ 7. A regressive tax takes a smaller share of income from low-income groups that from high-
income groups.
________ 8. A proportional income tax takes the same percentage of income from all income groups.
________ 9. The Philippine income tax system is a proportional tax.
________ 10. A flat tax can be considered regressive because it takes a greater portion of income from
those in lower income groups.