MANIFESTATION OF THE
LIFEBLOOD THEORY:
a) Rule of "No Estoppel against the Government."
It means that in the performance of its governmental functions, The State cannot
be estopped by the neglect of its agents/officers, Erroneous application and
enforcement of law by public officers do not block the subsequent correct
application of statutes.
b) Collection of taxes cannot be enjoined (stopped) by injunction.
Under section of the Tax Code (as amended), no court, except the Court of Tax
Appeals (through administrative remedies when collection could jeopardize the
interest of the government or taxpayer Section 11, RA 1125), shall have the
authority to grant an injunction to restrain the collection of any national internal
revenue tax, fee or charge imposed by the tax code.
Taxes are the lifeblood of the government Thus, it should be collected without
unnecessary delay. Its collection, however, should not be tainted with
arbitrariness.
This prohibition shall apply to all collection activities, including imposition and
collection of taxes, issuance of warrants of distraint and garnishment, and/or levy
on final decisions of the BIR on disputed assessments, cases filed before the CTA,
and the of property distrained or garnished (RMO 42-2010).
c.) Taxes could not be the subject of compensation or set-off.
Taxes cannot be subject to set-off or compensation since claim for taxes is not a
debt or contract. A distinguishing feature of a tax is that it is compulsory rather
than a matter of bargain. If taxes could be a subject of compensation or set off, it
can easily give rise to confusion and abuse, depriving the government of authority
over the manner by which taxpayers can credit and offset their tax liabilities.
In the case of Republic vs. Mambulao Lumber Co. (6 SCRA 622; Caltex Phils. vs.
COA-208 SCRA 726), the no set-off rule also states that taxes are not subject to
set-off or legal compensation because the government and the taxpayer are not
mutual creditor and debtor of each other. An exception to the rule is where both
MANIFESTATION OF THE LIFEBLOOD THEORY: 1
the claims of the government and the taxpayer against each other have already
become due, demandable and fully liquidated. In this case, compensation takes by
operation of law and both obligations are extinguished to their concurrent
amounts (Domingo v. Garlitos, 8 SCRA 443).
d) Right to select objects (subjects) of taxation
The power to tax is essentially legislative in nature. Hence, the right to select the
objects/subjects of taxation rests with the Congress. The matters within the
competence of the legislature include the determination of:
1) The subject or object to be taxed
2) The purpose of the tax as long as it is a public purpose.
3) The amount or rate of the tax.
4) Kind of tax
5) Apportionment of the tax
6) Situs of taxation
7) The manner, means, and agencies of collection of the tax.
e) A valid tax may result in the destruction of the taxpayer's property.
The power to tax includes the "power to destroy", where the tax is a valid tax. This
is so because a taxpayer could not seek the nullification of the valid tax solely
upon the premise that the tax will impoverish him. Likewise, the exercise of the
power to tax is "not destructive of taxpayer's property" where it is an invalid tax,
which violates the inherent or constitutional limitations. This is so because there is
a sympathetic court that shall come to the succor of the taxpayer and declare
such tax as invalid.
In McCulloh v. Maryland, U.S. Chief Justice Marshall declared that the power to
tax involves the power to destroy. This maxim only means that the power to tax
includes the power to regulate even to the extent of prohibition or destruction of
businesses. The reason is that the legislature has the inherent power to determine
who to tax, what to tax and how much tax is to be imposed. Pursuant to the
regulatory purpose of taxation, the legislature may impose tax in order to
discourage or prohibit things or enterprises inimical to the public welfare. For
instance, the legislature's imposition of prohibitive sin tax on cigarettes is
congruent with its purpose of discouraging the public form smoking cigarettes
which are hazardous to health.
MANIFESTATION OF THE LIFEBLOOD THEORY: 2
MANIFESTATION OF THE LIFEBLOOD THEORY: 3
