AQUINAS UNIVERSITY

COLLEGE OF LAW
Legazpi City

OUTLINE IN TAXATION LAW

General Principles of Taxation
I.

Taxation
A. Theory and basis of taxation
1. Necessity Theory
2. Lifeblood Theory
3. Benefits-Received Principle
CASES:
1. Commissioner of Internal revenue v. Algue., et.al. L28896, Feb 17, 1988
2. Commissioner of Internal Revenue v. Tokyo Shipping
Co., Ltd., et.al. G.R. No. 68252, May 26, 1995)
3. BPI-Family Savings Bank Inc., v. Court of Appeals, et.al.
G.R. Mo. 122480, April 12, 2000
4. Philippine Bank of Communications v. CIR, et.al. G.R.
No. 119024, Jan. 28, 1999
B. Purposes of taxation
1. Revenue or fiscal
2. Regulation
3. Promotion of General Welfare
4. Reduction of Social Inequality
5. Encourage Economic Growth
6. Protectionism
C. Principles of a Sound Tax System
1. Fiscal Adequacy
Chavez v. Ongpin., et.al. G.R. No. 76778, June 6, 1990
2. Equality or Theoretical Justice
3. Administrative Feasibility
D. Taxation Distinguished from Police Power and Eminent Domain
E. Taxes distinguished from other impositions
a. Toll
b. Penalty
c. Compromise Penalty
d. Special Assessment
e. License Fee
f. Margin Fee
g. Debt
Philex Mining Corporation v. CIR G.R. No. 125704,
August 28, 1998
Gerochi,et,al. vs. Department of Energy, et.al., G.R No.
159796, July 17, 2007

II.

F. Scope of the Legislative taxing Power

CASE;
Roxas, et.al. v. CTA L-25043, April 26, 1968
Philippine Health care Providers, Inc. v. CIR G.R. No.
167330, September 18, 2009
G. Power of Judicial Review in Taxation
CASE:
1. CIR v. Lingayen Gulf Electric Power Co., L-23771, Aug. 4,
1968
2. CIR vs. Santos etc. etla. G.R. No. 119252, Aug. 18, 1997
H. Nature of the power of Taxation
1. Inherent in Sovereignty
2. Legislative in Nature
3. Subject to Constitutional & Inherent Limitations
CASES:
1. Mactan Cebu International Airport Authority v. Marcos
etc. G.R. No. 120082, Sept. 11, 1996
2. Luzon Stevedoring Corp. vs. CTA, et.al. L-30232, July
29, 1988
I. Essential Characteristics of tax
CASES:
1. De Borja v. Gella L-18330, July 31, 1963
2. Tan Tiong Bio v. CIR,L-15778, April 23, 1962
Limitations upon the Power of Taxation
A. Inherent Limitations
1. Public Purpose
Lutz v. Araneta, 98 Phil. 148
Gomez v. Palomar et.al. G.R.no. 23645, Oct 29, 1968
Planters Produvts Inc. Vs. Fertiphil Corporation, G.R. No.
166006, March 14, 2008
2. Non-Delegability
Gracia v. Executive Secretary et.al. G.R. No. 101273, July
3, 1992
3. Exemption of Government Agencies
4. International Comity
B. Constitutional Limitations
1. Due process of law
2. Equal protection of Laws
3. Rule of Uniformity and equity in taxation
4. Prohibition against impairment of obligations and contracts
5. Prohibition against imprisonment for non payment of a poll
tax
6. Prohibition against taxation of real property used for
religious, charitable & educational entities
7. Prohibition against taxation of the revenues and assets of
non-stock, non-profit educational institutions

8. Restrictions on the appropriation of proceeds of taxation

9. Prohibition against infringement of religious freedom
10. Others
CASES:
1. Tolentino v. The Secretary of Finance et.al. G.R. No.
115455, Aug. 25, 1994
2. Sison Jr. v. Ancheta et.al. G.R. No. 59431, July 25, 1984
3. British American Tobacco vs. Camacho, et.al. G.R. No.
163583, April 15, 2009
4. Abakada Guro Party Lit., et.al vs. Ermita, G.R. No.
168056, September 1, 2005
5. Villegas v. Hiu Chiong Tsai Pao Ho et.al.(L-29646, Nov.
10, 1978
6. Province of Abra v. Hernando. Etc. et.al. L-49336 Aug.
31, 1981
7. CIR v. Lingayen Gulf Electric Power Co., Inc. L-23771,
Aug. 4, 1988
8. Punsalan v. Municipal Board f the City of manila 95 Phil
46
9. Coconut Oil Refiners Association, Inc., et.al. vs. Torres
et.al. G.R No. 132527, July 29, 2005
10.
Ormoc Sugar Co., Inc v. Treasurer of Ormoc City,
et.al. L-23794, Feb 17, 1968
11.
Philippine Airlins v. The Secretary of Finance G.R.
No. 115852, Aug. 25, 1994
12.
American Bible Society v. City of Manila , 101 Phil
386
13.
Cagayan Electric Power & Light Co., Inc. v. CIR
G.R. No. 60126, Sept. 25,1985
14.
Abra Valley College Inc. v. Aquino et.al. L-39086,
June 15, 1988
15.
The Roman Catholic Bishop of Nueva Segovia v.
Provincial Board of Ilocos Norte 51 Phil 352
16.
CIR v. Bishop of the Missionary District of the
Philippine Island et. Al. L-19445, Aug 31, 1965
17.
Aguilar v. CIR, CA-GR No. SP-16432, march 30,
1990
18.
CIR v. Court of Appealset.al. G.R.No. 124043, Oct
14,1998
19.
C ollector of Internal Revenue v. Court of Tax
Appeal, et.al. G.R. No. 124043, October 14, 1998
20.
Smart Communications, Inc. vs. The City of Davao,
et.al. G.R. No. 155491, September 16, 2008

III.

Situs of Taxation

IV.

Double taxation
1. Definition
2. Constitutionality of Double taxation
3. Means of avoiding pr minimizing the Burden of taxation
a. Shifting
b. Evasion
c. Avoidance
CASES:
1. CIR vs. BPI G.R. No 147375, June 26, 2006
2. The City of Manila et.al. vs. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 181845, August 4, 2009
3. Victorias Milling Co. v. Municipality of Victorias,
Negros Occidental, L-21183, Sept 27, 1968
4. CIR v. S.C. Johnson and Son, Inc. G.R.No. 127105,
June 25, 1999
5. Villanueva v. City of Iloilo, L-26521, Dec 28, 1968
6. Pepsi Cola Bottling Co., of the Philippines Inc., v. City
of Butuan, et.al., L-22814, Aug. 28, 1968
7. Serafica v. Treasurer of Ormoc City, et.al. L-24813,
April 28, 1969
8. CIR v. Procter & Gamble Philippine manufacturing
Corp., et.al. G.R. No. 66838, Dec. 2, 1991
9. CIR vs. Citytrust Investment Phils., Inc. G.R. No.
139786, September 27, 2006
10. Ericsson Telecoomunications, Inc. vs. City of Pasig,
et.al. G.R. No. 176667, November 22, 2007
11. CIR vs. Philippine Long Distance Company, G.R.
No. 140230, Dec 12, 2005

V.

Tax pyramiding
CASE: People vs. Sandiganbayan, G.R. No. 152532, August 16,
2005
Exemption
1. Nature of the Power to Grant tax Exemptions
2. Tax Remission/Condonation
3. Tax Amnesty
CASES:
1. The City of Iloilo, et.al vs. Smart Communications, Inc. G.R.
No. 167260,February 17, 2009
2. Surigao Consolidated Mining Co., Inc. v. Collector of Internal
Revenue, et.al. L-14878, Dec 26, 1963
3. Republic vs. Caguioa, G.R. No. 168584, October 15, 2007
4. Visayan Cebu Terminal co., Inc. v. CIR, L-19530 &L-19444,
Feb. 27, 1965

VI.

5.
6.
7.
8.

Maceda vs. Macaraig, Jr. et.al. G.R. No. 88291, May 31, 1991
CIR v. Court of Appeals G.R. No. 102967, Feb. 10, 2000
Republic v. Heirs of Cesar Jalandoni, L-18384, Sept 20, 1965
San Pablo Manufacturing Corporation vs. CIR G.R. No.
147749, June 22, 2006
9. PhilippineBanking Corporation vs. CIR, G.R. No. 170574,
January 30, 2009
VII. Source s of tax Laws
VIII. Construction of Tax laws
A. Nature of internal revenue laws
B. General rules of construction of tax laws
1. Rule when legislative intent is clear
2. Rule when there is doubt
3. Provisions granting exemptions
IX. Tax Administration and Enforcement
A. Agencies Involved in Tax Administration
B. Agents and Deputies for Collection of National Internal Revenue
Taxes
C. The Bureau of Internal Revenue
1. Powers and Duties
a. Interpret tax laws and decide cases
b. Examination of books of accounts
c. power to assess and collect
i. Power to examine tax returns
ii. Assessment based on Best Evidence Obtainable
iii. Power to conduct inventory taking,
surveillance, and to
issue presumptive gross sales/receipts
iv. Termination of taxable period
v. Fixing of real property values
vi. Accredit tax agents
vii.Enforcement of police powers
viii. Authority to abate and compromise tax
liabilities
C. The rule on estoppel in relation to tax administration
D. Assessments and its governing principles
a. Definition
b. Governing principles
c. When is an assessment deemed made
d. Kinds of Assessment
e. Statute of Limitation in the assessment of taxes
f. Instances when the running of the prescriptive period is
suspended
g. Procedure in the issuance of an Assessment (Revenue
Regulations No. 12-99)
h. Instances when a pre-assessment notice is not required
i. Is assessment necessary before a taxpayer could be
prosecuted for violation of the NIRC?

TAX REMEDIES
A.Tax remedies
1. importance
2. Classification
B. Remedies Available to taxpayers
a. BEFORE PAYMENT
1. Protest
* Requirements of a valid protest
*Failure of the BIR to act within the 180-day period
*Administrative actions taken during the 180-day period
* Effect of a protest filed out of time
* Remedies from a denial of a protest
2. Compromise
b. AFTER PAYMENT
1. Refund
* Requirements for Claims for refund
* Period within which to file a claim for refund
* Doctrine of Equitable Recoupment
*Effect of existing tax liability on a pending claim for
refund
* tax Credit vs. Tax refund
* Period of validity of a tax refund/tax credit
* Is the taxpayer entitled to claim interest on the tax
refunded?
C. REMEDIES AVAILABLE TO THE GOVERNMENT
1. No injunction to restrain tax collection
2. Statute of Limitation in the Collection of taxes
3. Remedies available
a. Tax Lien
b. Compromise
c. Distraint/Levy
d. Civil action
e. Criminal action
f. Forfeiture
g. Suspension of business operation
h. Enforcement of Administrative fines

INCOME TAXATION
I.
A.
B.
C.
II.
A.
B.
C.
D.

Salient Features of the Present Income Tax System

Individual Income Taxation
Corporate Income Taxation
Common Features
INCOME TAX
Definition of Income
Income vs. Capital
Sources of Income
Income tax, its basis, nature and function

E.
F.

III.

Requisites for Income to be Taxable

Doctrines on Determination of Taxable Income
a.
Severance test Theory
b.
Claim of Right Doctrine
c.
Ownership, Command or Control of Income
d.
Doctrine of Proprietary Interest
e.
Doctrine of Actual Receipt
f.
Doctrine of Constructive Receipt

GROSS INCOME
A.
General Statutory Definition
B.
Gross Income taxation vs. Net Income Taxation; its Advantages and
Disadvantages
C.
Exclusions from Gross Income
a.
Reasons for exclusion
b.
Exclusions
i.
Proceeds of Life Insurance
ii.
Amount received as return of
premium
iii.
Gifts, bequests, and devises
iv.
Compensation for injuries or
sickness
v.
Income Exempt under Treaty
vi.
Retirement benefits, pensions,
gratuities, etc.
vii.
Miscellaneous Items
1.
Income derived by foreign
government
2.
Income derived by the government
or its
political subdivisions
3.
Prizes and awards
4.
Prizes and Awards in sports
competition
5.
13th month pay and other benefits
6.
GSIS, SSS medicare and other
contribution
7.
Gains from the sale of Bonds,
Debentures or
other Certificate of indebtedness
8.
Gains from redemption of shares in
mutual
fund
IV.
INDIVIDUAL INCOME TAXATION
A.
Classification of Individual Taxpayers
1.Resident Citizen (RC)
2.Non-Resident Citizen (NRC)
3.Resident Alien (RA)
4. Non-Resident Alien (NRA)
5. Non-Resident alien not Engaged in Trade or Business
B.
General Principles of Income Taxation
C.
Categories of Income
D.
Compensation Income
1.Definition

2. Basis/test
3.Requisites for taxability
4.Forms of Compensation
E.

G.

V.

FRINGE BENEFIT
1. What is a Fringe Benefit?
2 .Benefits not subject to FBT
3 .Benefits which are considered necessary to the business of the
employer or
are granted for the convenience of the employer
4. Nature of Fringe Benefits tax
5. Purpose of FBT
6. Who Should pay the FBT?
7. Why is FBT collected from the employer?
8. FBT is not an additional tax on the employer.
9. Benefits subject to FBT
10. Who are considered as Managers?Supervisors? Rank and File?
F.
Allowable Deduction from Gross Income
1.Personal Exemption
2. Premium Payments on Health and/or Hospitalization Insurance
BUSINESS/TRADE/PROFESSIONAL INCOME
1.Income Covered
2. Income derived by professionals from the practice of profession
3.Interest Income
4. Rental Income
5. Dividend Income
6. Taxability /non-taxability of a Stock Dividend
7. Passive Investment Income
CORPORATE INCOME TAXATION
A.
Definition under the NIRC
B.
Major groups of Corporation for Income tax Purposes

1. Domestic Corporation
* Special Domestic Corporation
a. Private Educational Institution
b. Non-profit Hospital
2. Resident Foreign Corporation
* Special Resident Foreign Corporation
a. International Carriers
b. Offshore Banking Unit (OBU)
c. Foreign Currency Deposit Unit (FCDU)
3. Non-Resident Foreign Corporation
*Special Non-resident Foreign Corporation
a. NR lessor of Cinematographic Film
b. NR-lessor of vessels chartered by Philippine Nationals
c. NR- lessor of aircraft, machinery and equipment
C.
Minimum Corporate Income Tax (MCIT)
a.
Rationale of MCIT
b.
Nature of Minimum Corporate Income Tax
c.
MCIT is not an additional tax to the regular or normal income
tax
d.
Coverage of the MCIT
e.
When does a corporation start to be covered by the MCIT?
f.
Suspension of the payment of MCIT

g.
h.
i.

How is MCIT computed?

When is the MCIT reported and paid
Can the company claim the MCIT it paid as a deduction from

j.

income?
What is the carry forward provision under the MCIT?

gross

D.

Improperly Accumulated Earnings Tax (IAET)

a.
Rationale of IAET
b.
What is the touchstone of Liability?
c.
Determination of reasonable needs of the business
d.
What constitute accumulation of earnings for the reasonable
needs of the
business?
e.
Coverage of IAET?
f.
What are closely held Corporations
g.
Corporations not subject to IAET
h.
Prima facie instances of accumulation of profits beyond the
reasonable
needs of a business and indicative of purpose to avoid income
tax upon
shareholders
E.
PARTNERSHIPS TAXED AS CORPORATIONS
a.
Partnership Defined
b.
Taxable Partnership
c.
Exempt partnership
d.
Elements constitutive of taxable partnerships
e.
Examples of unregistered partnership taxable as corporations
f.
Rules on Co-Ownership
g.
General Professional partnership distinguished from a general
partnership
F.
Joint Venture
G.
Other Corporate Tax Rates
a.
Rates on Sale of Shares of Stocks
b.
Gross Income Tax
c.
Branch Profit Remittance Tax
H.
Tax-Sparing Credit Rule
I.
Tax Exempt Corporations under the NIRC
VI.
ALLOWABLE DEDUCTIONS FROM GROSS INCOME
a.
Basic Principles
b.
The COHAN Rule Principle
c.
Deductions vs. Exclusions
d.
Deductions vs. Personal Exemptions
e.
Deductions allowed under the NIRC
i.
Optional Standard Deduction
ii.
Itemized Deduction
iii.
Personal & additional exemptions
iv.
Extraordinary deductions
1.
Those allowed to Insurance companies
2.
Deductions allowed to estates and trusts
availing of
itemized deductions of income currently
distributed to beneficiaries.

VII.
a.

b.

3.
Losses from wash sales of stocks or
securities
4.
Certain capital losses but only from capital
gains
5.
Deductions allowed to private educational
institution
ITEMIZED DEDUCTIONS
BUSINESS EXPENSE
i.
Requisites for Deductibility
ii.
Kinds of Business Expense
1.
Compensation for Personal Services
2.
Travelling Expenses
3.
Representation & Entertainment Expenses
4.
Advertising & promotional Expenses
5.
Rent Expense
6.
Cost of Material & Supplies
7.
Repairs
INTEREST
i.
ii.
iii.
iv.

c.

d.

Definition
Requisites for deductibility
Deductible Interest Expense
Non-deductible Interest Expense

TAXES
i.
ii.
iii.

Nature and Scope

Requisites for Deductibility
Tax Deduction vs. Tax Credit

i.
ii.
iii.
iv.
v.
vi.

Definition
Kinds of Losses
Special Kinds of Losses
Requisites for Deductibility
Non-deductible Losses
Net Operating Loss Carry Over

LOSSES

(NOLCO)
e.

BAD DEBTS
i.
ii.
iii.

f.
g.

Definition
Requisites for deductibility
Measure of Bad debts Deductible

DEPRECIATION
i.
ii.

Definition
Requisites for Deductibility

i.
ii.

Definition
Theory and Purpose of Depletion

DEPLETION

Allowance
h.

iii.
Who are entitled?
iv.
Requisites for deductibility
CHARITABLE & other CONTRIBUTIONS
i.
Kinds
ii.
Entitled
iii.
Requisites for Deductibility
iv.
Contributions deductible in Full
v.
Contribution subject to Limitation

vi.

Deductible under Special Laws (IN

FULL)
i.
j.

RESEARCH & DEVELOPMENT EXPENDITURE

i.
In General
ii.
Limitations on Deduction
PENSION TRUST CONTRIBUTION
i.
Nature
ii.
Requisites for Deductibility
iii.
Treatment of Income from Pension

Plan
iv.
v.

Deductible Payments to Pension Trust

Special Deductions allowed to

Insurance Companies
k.
ITEMS NOT DEDUCTIBLE
VIII.
ESTATES AND TRUST
a.
Estate
b.
Trust
i.
Taxable Trusts
ii.
Rules on taxability
c.
Computation of Tax on estate and trust
IX.
CAPITAL TRANSACTION
a.
Definition of Capital Asset
b.
Construction and Interpretation of Capital Assets
c.
Factors/tests determinative of capital or ordinary asset
d.
Guidelines in determining whether a particular property is a
capital asset or
ordinary asset (Revenue Regulations No. 7-2003)
e.
Rules on Disposition of Principal Residence
f.
Special Rules on capital Transactions
g.
Special Capital Transactions
X.
INCOME TAX RULES ON DEALINGS IN PROPERTY
a.
Capital Gains from Sale or other Disposition of Real property
b.
Gains and Losses from Dealings in property
i. Rules on real property classified as capital assets
ii. Rules on gains and losses from sale of shares of
stocks not listed in
the stock exchange
iii. Rules regarding other capital assets
Loss limitation rule
Holding Period Rule
Net Capital Loss Carry Over (NCLCO) Rule
c.Special capital transactions
d. Wash Sales
e. Installment Sales v. Deferred Sales
XI.
a.
b.

TAXPAYERS REQUIRED TO FILE INCOME TAX RETURNS

Income tax returns, In general
Kinds of Income tax Returns
i.
Individual Income tax returns
ii.
Corporate Income tax returns
iii.
Returns of Foreign Corporations
iv.
Capital gains tax returns
v.
Withholding tax returns

vi.

Returns of general professional

partnership

c.
d.
e.
General
f.

vii.
Fiduciary Returns
viii.
Information returns
ix.
Electronically filed returns
Individuals required to file a return
Substituted Filing of Income tax Returns
Corporations No matter How created or Organized including
professional partnerships
Estate and Trusts engaged in Trade of Business

CASES:
1
2
3
4
5
6
7
8
9
10
11
12
13
14

15
16
17
18
19
20
21
22
23
24

CIR VS. PETRON CORPORATION;GR No. 185568, March 21, 2012

LASCONA LAND CO. INC. VS. CIR;GR No. 171251, March 5, 2012
CIR vs. PILIPINAS SHELL PETROLEUM CORP;GR No. 188497, April 25, 2012
ACCENTURE INC. vs. CIR;GR NO. 190102, July 11, 2012
ANGELES UNIVERSITY FOUNDATION vs. CITY OF ANGELES et.al.
GR No. 189999, June 27, 2012;
CITY OF IRIGA VS. CAMARINES SUR ELECTRIC COOP., INC.GR NO. 192945,
September 5, 2012
CIR vs. Philippine Global Communication Inc.GR NO. 167146, October 31,
2006
PROTECTORS SERVICES, INC. vs. CA and CIRGR No. 118176, April 12, 2000
CIR vs. First Express Pawnshop Company Inc.GR No. 172045-46, June 16,
2009
BANK OF THE PHILIPPINE ISLANDS vs. CIR GR No. 139736, October 17,
2005
UNITED AIRLINES INC. VS. CIR;GR No. 178788, September 29, 2010
FILINVEST DEVT CORP. VS. CIR;GR No. 146941, August 9, 2007
CIR vs. AICHI FORGING COMPANY OF ASIA INC.;GR No. 184823, October 6,
2010
PANASONIC COMMUNICATIONS IMAGING CORPORATION OF THE PHILS. Vs.
CIR
GR No. 178090, February 8, 2010;
BELLE CORP vs. CIR;GR No. 181298, January 10, 2011
CIR vs. HANTEX TRADING CO., INC.;GR No. 136975, March 31, 2005
CIR vs. METRO STAR SUPERAMA, INC.;GR No. 185371, December 8, 2010
CIR vs. KUDOS METAL CORPORATION;GR No. 178087, May 5, 2010
CIR vs. Hon. Raul M. Gonzales, et.al.;GR No. 177279, October 13, 2010
CIR vs. AZUCENA T. REYES;GR No. 159694, January 27, 2006
CIR vs. PASCOR REALTY & DEVT CORP.;GR NO. 128315, June 29, 1999
JUDY ANNE L. SANTOS VS. PEOPLE OF THE PHIL et.al.;GR No. 173176,
August 26, 2008
REPUBLIC OF THE PHILS. VS. FERDINAND MARCOS II et.al.;GR Nos. 130371
and 130855 August 4, 2009
CIR vs. PHILIPPINE GLOBAL COMMUNICATION INC.;GR No. 167146, October
31, 2006

TRANSFER TAXES
I.

II.

III.

Transfer Taxes (Revenue Regulation No. 2-2003)

A. Modes of Property Transfer
1. Gratuitous Transfer
a. Fact of Death
- Subject to Estate tax
b. Donation
- Subject to Donors Tax
2. Onerous Transfer
a. Normal Course of Business (Sale or Exchange)
- Subject to Business Tax (VAT/ Percentage
Taxes & Excise taxes)
b. Casual Transfer
- Capital gains tax
B. Nature of Transfer Taxes
Estate Tax
A. Definition
B. Nature/Basis/ Accrual/law applicable
C. Justification for Imposition
1. Redistribution of wealth theory
2. Benefit-received theory
3. Privilege or state partnership theory
4. Ability to pay theory
D. Classification of Decedent
1. Citizen
2.Resident Alien
3. Non-resident alien
E. Gross Estate
1. Rules in the valuation of gross estate
a. General Rule
b. Real properties
c. Personal properties
d. stocks, bonds & other securities
2. Additions to the gross estate
3. Exemptions from Estate tax
F. Deductions from Gross Estate
1. From estate of citizens and Resident alien decedents
2. From non-resident alien decedents
G. Net Taxable estate and Estate tax
H. Tax Credit for Foreign Estate tax
I. Administrative provisions
1. Procedures for settlement of Estate tax
2. Safeguards for the Payment of Estate tax
Donors Tax (Revenue Regulations No. 2-2003)
A. Definition of Donation
B. Nature of Donation

C. Kinds of Donation
1. Donation Mortis Causa
2. Donation Inter-Vivos
D. Donors Tax
1. Definition
2. Nature
3.Purposes
F. Classification of Donor
1. Citizen or Resident Alien
2. Non-resident Alien
G. Gross Gift
1. Valuation
2. Of Citizen and resident alien donors
3. Of non-resident alien donors
4. Exemptions from Gift Tax/Deductions from Gross Gift
H. net Gift and Donors Tax
I. tax Credit for Donors taxes paid to a Foreign Country
J. Filing and payment of Donors Tax
CASES:
1. CIR vs. CA et.alGR No. 123206, March 22, 2000
2. Rafael Arsenio s. Dizon vs. CTA, et.al.GR No. 140944, April
30, 2008
3. Sps. Alvaro Pastor Jr. and Ma. Elena De Pastor vs. CA
et.al.GR No. L-56340,
June 24, 1983
4. Ferdinand Marcos II vs. CA et.alGR No. 120880, June 5, 1997
5. Estate of the late Juliana Diaz Vda de Gabriel GR No.
155541,
January 27, 2004
6. CIR vs. Azucena T. Reyes; GR No. 159694 January 27, 2006
7. Lydia Sumipat et.al. vs. Brigido Banga;GR No. 155810,
August 13, 2004
8. Manuel Abello et.al vs. CIR et.al.;GR No. 120721, February
23, 2005
9. Sps. Agripino Gestopa vs. CA et.al.;GR No. 111904 October
5, 2000
10.The Estate of Hilario M. Ruiz vs. CA et.al;GR No. 118671,
January 29, 1996
IV.

V.

BUSINESS TAX
A.Nature and Concept
B. Classifications under the Tax Code
1. Value-Added tax
2. Percentage tax
3. Excise Tax
VALUE ADDED TAX (Revenue Regulation No. 16-2005)
A.Definition/nature/characteristics
B. Evolution of Present VAT System
C. How the VAT System Works

D. VAT v. percentage tax

E. Basic Formula
F. Elements of VAT system
1. Input VAT
2. Output VAT
G. VAT Taxable persons
1. Persons subject to VAT
2. Persons becoming liable to VAT
3. VAT Exempt persons
H. VAT Transactions
1. Regular VAT taxable transactions (12% effective February 1,
2006)
a. Sale or exchange of services
b. sale of goods or properties
c. Importation
d. Deemed-Sale transactions
2.Zero-rated transactions (0%)
a. Definition
b. Sales subject to Zero Percent Rate
*Export Sales
* Foreign Currency Denominated Sale
c. Services performed in the Philippines subject to zerorate
d. Effectively Zero rated transactions
* effectively zero rated sales
* effectively zero rated services
3. VAT exempt Transactions
a. Coverage
b. Reasons for Exemptions
c. Effects on Exempt Transactions
I.VAT requirements
1. Registration/Grounds for cancellation/invoicing
2. Filing and payment of VAT returns
3. Effect of Collecting VAT by a Non-VAT person
4. Treatment of Businesses with VAT taxable and Non-VAT
taxable
transactions
5. Transactions with government agencies
6. Procedures for claiming refunds or tax credits
VI.

PERCENTAGE TAXES
A. Concept and nature
B. Businesses Subject to percentage tax
1. Carriers and Keepers of garages
2. Franchise
3. Overseas dispatch or message from the Phil.
4. Bank and non-bank financial intermediaries

5.
6.
7.
8.

VII.

Life insurance companies

Amusement places
Sale of shares of stocks in a local stock exchange
Small business with annual sales of P1,500,000 ( now
1,919,500) and below
C. Withholding of percentage tax
EXCISE TAX
A.Definition
B. Classifications
C. Purposes
D. Goods subject to Excise tax
E. Filing of Return and payment of tax

LOCAL TAXATION
I.Local taxation
a. Nature of the Local taxing power
b. Fundamental principles governing local taxation
CASES:
1. City Government of Quezon City v. Bayantel GR No.
162015, March 6, 2006
2. Mactan Cebu International Airport Authority v. Marcos
September 11, 1996
3. City of San Pablo Laguna v. reyes March 25, 1999
II. Common limitation in the exercise of local taxing power and the principle of
preemption/exclusionary rule
CASES:
1. Batangas Power Corporation v. Batangas City;GR No.
152675 April 28, 2004
2. First Philippine Industrial Corporation vs. CA G.R. No.
125948 December 29, 1998
3. Petron Corporation v. Tiangco G.R. No. 158881, April 16,
2008
III. Specific taxing powers of Local Government Units
1. Provinces
2. Municipalities
3. Cities
4. Barangays
5. Common revenue raising powers
6. Community Tax
IV. Remedies in Local Taxation
A.Remedies available to the Government
1. Administrative
* tax lien
*assessment by local treasurer
* Distraint/levy
2. Judicial
3. Others
* Accrual of the tax
* time of payment

* surcharges, interest and penalties

B. Remedies Available to the taxpayer
1. Administrative
* appeal to the Secretary of Justice
* protest of the assessment
* Claim for refund
*Remedies from denial of the protest
2. Judicial
V. Grant of Tax Exemption by LGUs

REAL PROPERTY TAXATION

A.Governing law
B. Nature of Real Property taxes
C. Fundamental principles
D. Properties covered and Those which are exempted
E. Liability for real property taxes
F. Grant of Tax Exemption
G. Procedures in real property taxation
H. Remedies
1. Government
2. Taxpayer
CASES:
1. MIAA v. Paranaque GR No. 155650 July 20, 2006;
2. Lung Center of the Philippines v. Quezon City June 29, 2004
3. Meralco v. Barlis February 2, 2002
4. Reyes vs. Court of Appeals 1999
5. Systems Plus Computer College v. Caloocan City GR No. 146382,
August 7, 2003
6. NHA vs. Iloilo City GR No. 1772267 August 20, 2008

TARIFF & CUSTOMS LAWS

A.Meaning & Scope of Tariff and Customs Laws
B. Governing Laws
C. Agency tasked with enforcement of Tariff & Custom Laws
D. What may be the subject of custom duties
E. Concept & Relevance of Importation
F. Classification of Goods for Importation purposes
G. Kinds of Customs Duties
H. Valuation of Goods
1. Home Consumption Value (HCV)
2. Transaction Value
I. Flexible Tariff
J. seizure and Forfeiture cases
CASES:
1. Mison v. Natividad GR No. 82526, September 11, 1992
2. Nestle Philippines v. Court of Appeals G.R. No. 134114, July 6,
2001
3. Provident Tree Farms v. Batario G.R. No. 92285, March 28, 1994