Taxation is often described as the "lifeblood of the government." Without it, the State cannot fund its operations, provide for the public welfare, or maintain its existence. Under Philippine jurisprudence, the power to tax is considered an attribute of sovereignty—it is plenary, unlimited, and supreme.

However, this "strongest of all powers of the government" is not absolute. To protect the citizenry from potential abuse and to maintain a balance of power, the law imposes two distinct categories of restrictions: Inherent Limitations and Constitutional Limitations.

I. Inherent Limitations of Taxation

Inherent limitations are those restrictions that exist by the very nature of the power of taxation itself. They do not need to be written into a constitution to be effective; they are co-existent with the State.

1. Requirement of Public Purpose

The proceeds of a tax must be used for the common good or the general welfare of the inhabitants. Taxation cannot be used to enrich a private individual or a specific private enterprise.

The Test: If the tax proceeds are used for a purpose that provides a benefit to the public at large, the requirement is met, even if a private party receives an incidental benefit.

2. Non-Delegability of the Taxing Power

The power to tax is purely legislative. Under the principle of Potestas delegata non delegari potest (what has been delegated cannot be further delegated), Congress cannot pass the buck to the Executive or Judicial branches.

Exceptions:
- Local Government Units (LGUs): Under the Constitution (Art. X, Sec. 5), LGUs have the power to create their own sources of revenue.
- Delegation to the President: Congress may authorize the President to fix tariff rates, import/export quotas, and tonnage dues within specified limits (Flexible Tariff Clause).
- Administrative Implementation: The Bureau of Internal Revenue (BIR) may issue regulations to implement tax laws, provided they do not expand or diminish the law.

3. Territoriality (Situs of Taxation)

The State can only tax persons, property, or business activities that are within its jurisdiction. This is based on the principle that the power to tax is based on the protection provided by the State to the taxpayer.

Situs Rules:
- Real Property: Taxed where it is located (Lex rei sitae).
- Personal Property: Traditionally taxed where the owner resides (Mobilia sequuntur personam).
- Income: Taxed where the service is rendered or where the income is earned.

4. International Comity

Based on the principle of sovereign equality among states, one state cannot exercise its taxing power over another. A state does not tax the property or income of a foreign government or its diplomatic representatives (e.g., embassies and ambassadors).

5. Exemption of Government Entities

The government generally does not tax itself. Taxing the government would merely involve taking money from one pocket and putting it into another, creating unnecessary administrative costs. However, this is not absolute; Congress may choose to tax government-owned or controlled corporations (GOCCs) performing proprietary (non-sovereign) functions.

II. Constitutional Limitations of Taxation

Constitutional limitations are those specifically provided for in the 1987 Philippine Constitution. These act as a "bill of rights" for the taxpayer.

1. General Constitutional Limitations

These are broad protections that apply to all laws, including tax measures:

Due Process Clause: Tax laws must not be arbitrary, oppressive, or confiscatory. There must be a valid law, and the taxpayer must be given a chance to be heard.
Equal Protection Clause: All persons under similar circumstances must be treated alike. Classification of taxpayers is allowed as long as it is based on substantial distinctions.
Non-Impairment of Obligations of Contracts: The State cannot pass a tax law that revokes a valid tax exemption previously granted as part of a contract.

2. Specific Constitutional Limitations

The Constitution provides specific mandates regarding the structure and application of taxes:

Article VI, Section 28(1): "The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation."

Uniformity: All taxable articles or properties of the same class shall be taxed at the same rate.
Equity: The tax burden should be distributed according to the taxpayer's ability to pay.
Progressivity: As the income or resources of the taxpayer increase, the tax rate should also increase (e.g., the Individual Income Tax table).

3. Exemptions for Religious, Charitable, and Educational Institutions

Under Art. VI, Sec. 28(3), lands, buildings, and improvements actually, directly, and exclusively (ADE) used for religious, charitable, or educational purposes are exempt from real property taxes.

Note: This exemption applies to property tax, not necessarily to income tax on their profit-generating activities.

4. Non-Imprisonment for Non-Payment of Poll Tax

No person shall be imprisoned for debt or non-payment of a poll tax (e.g., the Community Tax Certificate or "Cedula"). While you cannot be jailed for not paying the Cedula, you can be jailed for non-payment of other taxes like income tax, which is considered tax evasion.

5. Other Procedural Constraints

Origin of Revenue Bills: All appropriation, revenue, or tariff bills must originate exclusively in the House of Representatives, though the Senate may propose amendments (Art. VI, Sec. 24).
Veto Power: The President has the power to veto specific items in a revenue or tariff bill without vetoing the entire act (Item-Veto).
Grant of Tax Exemptions: No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of Congress (Art. VI, Sec. 28[4]).
Supreme Court Review: The Supreme Court has the power to review the constitutionality or validity of any tax, impost, or assessment (Art. VIII, Sec. 5).

Summary Table: Inherent vs. Constitutional

Feature	Inherent Limitations	Constitutional Limitations
Source	Nature of State Sovereignty	1987 Constitution
Basis	Necessity for State survival	Protection of individual rights
Examples	Public purpose, Territoriality	Due process, Uniformity, Progressivity
Flexibility	Generally fixed by legal doctrine	Can be changed via Constitutional amendment

Conclusion

The power of taxation in the Philippines is a delicate balancing act. While the "Lifeblood Doctrine" ensures that the State has the resources to function, the Inherent and Constitutional limitations ensure that the exercise of this power does not become an instrument of tyranny. A valid tax must not only be enacted by the proper authority but must also respect the fundamental rights and territorial boundaries defined by law.