I.

GENERAL PRINCIPLES OF TAXATION

A. Definition and concepts of taxation 

1. Power of Taxation
Roxas y. Cia v. Court of Tax Appeals, L-25043, April 26, 1968
Antero M. Sison, JR.,  petitioner,  vs. Ruben B. Ancheta, G.R. No. L-59431 July 25, 1984
Philippine Health Care Providers, Inc. v. CIR, GR No. 167330, Sept 18, 2009
National Power Corporation vs. Cabanatuan, Third Division Gr. No. 149110 April 9, 2003
CREBA Inc. v. Romulo, GR No. 160756, March 9, 2010

2.  Power of taxation compared with other powers

 Police power 
Serafica v. City Treasurer of Ormoc, L-24813, April 28, 1968
LTO vs. Butuan Gr No. 131512 January 20, 2000
Caltex vs. COA En banc Gr. No. 92585 May 8, 1992

 Power of eminent domain

Lutz v. Araneta, 98 Phil 148

3.  Theories and Bases of Taxation 

 Lifeblood theory 
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
CIR v. Filinvest Development Corporation, 654 SCRA 56
 Necessity theory
 Benefits-protection theory (Symbiotic relationship) 
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
Lorenzo v. Posadas, etc. 64 Phil. 353
NAPOCOR v. City of Cabanatuan, G.R. No. 149110, April 9, 2003
 Jurisdiction over subject and objects 
Other Cases:
Commissioner of Internal Revenue vs. Pineda, 21 SCRA 105
CIR v. Filinvest Development Corp., 654 SCRA 56 

B. Nature of Taxation 
 Attribute of sovereignty
Pepsi-Cola Bottling Company of the Philippines v. Municipality of Tanauan, Leyte, 69 SCRA 460
Mactan Cebu International Airport Authority vs. Marcos, The City of Cebu Gr No. 120082 Sept 11, 1996.
 Legislative in character and generally not delegated
i. General rule 
(ii) Exceptions 
  (a) Delegation to local governments 
  (b) Delegation to the President 
(c) Delegation to administrative agencies 
Petron versus Pililia, 198 SCRA 82 (92?)
Luzon Stevedoring Co. vs. Court of Tax Appeals 163 SCRA 647
197 SCRA 771

C.  Purposes of Taxation 

  1. Primary purpose - Revenue-raising 
Phil Bank of Communications vs. CIR GR. No. 112024, January 28, 1999

2. Non-revenue/special or regulatory 
o Regulatory
Caltex Philippines v. COA, G.R. No, 92585, May 8, 1992
Tio v. Videogram, 151 SCRA 208
PAL V. Edu

o Promotion of general welfare

Lutz v. Araneta, G.R. No. L-7859, December 22, 1955
o Reduction of social inequity
o Tool for economic growth
o Protectionism 
Other Cases:
Gaston v. Republic Bank, 153 SCRA 626
 D. Principles of a Sound Tax System
1. Fiscal adequacy 
2. Administrative feasibility 
Diaz  v. The Secretary of Finance, 654 SCRA 96
3. Theoretical justice 

E.  Scope and Limitations of taxation 

Power of Taxation not absolute
1. Inherent limitations 
1. Public purpose 
Planters Product, Inc. v. Ferti Phil Corp, GR No. 166006, March 14, 2008
Lutz v. Araneta, G.R. No. L-7859, December 22, 1955
Gomez v. Palomar 25 SCRA 827
Rep. v. Bacolod-Mursha milling Co. July 9, 1966
Phil Guaranty Co. Inc. v. Commissioner 13 SCRA 775

  b) Inherently legislative 
  (i) General rule 
  (ii) Exceptions 
  (a) Delegation to local governments 
  (b) Delegation to the President 
  (c) Delegation to administrative agencies 
Pepsi v. Municipality of Tanauan, 69 SCRA 460
Pepsi v. City of Butuan, 24 SCRA 827
  c) Territorial 
Situs of Taxation
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
(d) International comity 
  (e) Exemption of government entities, agencies, and instrumentalities 
Board of Assessment Appeals of Laguna v. CTA, GR No, L-18125, May 31, 1963
Mactan Cebu International Authority v. Marcos, GR No.120082, September 11, 1996
PFDA v. Municipality of Navotas, GR No. 150301, October 2, 2007
MIAA v. Court of Appeals, GR No. 155650, July 20, 2006
MIAA V. Pasay City, GR No. 163072, April 2, 2009
Other Cases-limitations
Bagatsing v. Ramirez, 74 SCRA 306
Pascual v. Sec. of Public Works and Communications, 110 Phil. 331 
Manila Electric Company v. Yatco, 69 Phil 89

2. Constitutional limitations 
a) Provisions directly affecting taxation 
(i) Prohibition against imprisonment for non-payment of poll tax 
  (ii) Uniformity and equality of taxation 
(iii) Grant by Congress of authority to the president to impose tariff rates 
  (iv) Prohibition against taxation of religious, charitable entities, and 
  educational entities 
(v) Prohibition against taxation of non-stock, non-profit institutions 
(vi) Majority vote of Congress for grant of tax exemption 
  (vii) Prohibition on use of tax levied for special purpose 
  (viii) President’s veto power on appropriation, revenue, tariff bills 
(ix) Non-impairment of jurisdiction of the Supreme Court 
(x) Grant of power to the local government units to create its own sources of  revenue 
  (xi) Flexible tariff clause 
  (xii) Exemption from real property taxes 
(xiii) No appropriation or use of public money for religious purposes 

  b) Provisions indirectly affecting taxation 

  (i) Due process 
  (ii) Equal protection 
  (iii) Religious freedom 
  (iv) Non-impairment of obligations of contracts 
Cases:
CIR v. M.J. Lhuiller Pawnshop, Inc., GR No. 150947, July 15, 2003
CIR v. CA and Fortune, GR No. 119761, August 29, 1996
 City of Manila v. Coca-Cola Bottlers Philippines, GR No. 181845, August 4, 2009
City of Baguio v. De Leon, 25 SCRA 938
ABAKADA Guro Party List v. Purisima, October 14, 2008
Association of Customs Brokers v. Manila, 93 Phil 107
Shell Company of Phil. Islands v. Mun. of Cordova, 94 Phil 339
CREBA v. Exec. Sec Romulo, GR No. 160756, March 9, 2010
Commissioner of Customs v. Hypermix Feeds Corporation, GR No. 179759, February 1, 2012
Judy Anne Santos v. People, GR No. 173176, August 26, 2008
American Bible Society v. City of Manila, 101 Phil 386
Angeles University v. City of Angeles, GR No. 189999, June 27, 2012
RMC 76-2003
Department of Finance Order No. 137-87, dated December 16, 1987
Lung Center of the Phil v. Quezon City, June 29, 2004
Abra Valley  College v. Aquino, GR No. L-39086, June 15, 1988
Sison v. Ancheta, GR No. 59431, July 25, 1984
Ormoc Sugar Company v. Treasurer of Ormoc, GR No. 23794, February 17, 1968
Villegas v. Hiu Chiong Tsai Pao Ho, GR No. L-29646
Tolentino v.Secretary of Finance, GR No. 115455, August 25, 1994

F. Doctrines in Taxation 
 1. Prospectivity of tax laws – 
CIR v. Araneta, G.R. No. 185568, March 21, 2012
Exception – Cebu Portland Cement v. CIR, G.R. No. 18649, February 27, 1965

 2. Imprescriptibility – as a general rule; Tax Code imposes limitations/prescriptive periods

Rep v. Ablaza 108 Phil 1105
Commissioner v. Ayala Securities Corporation 101 SCRA 231
Collector v. Bisaya Land Transpo Co., L-12100 May 29, 1958

 3. Double taxation 

Definition – Victoria Milling v. Mun of Victoria Negros Occidental, G.R. No. L-21183, 
September 27, 1968
Villanueva v. City of Iloilo, GR No. L-26521, December 28, 1968
*computations showing business taxes and income taxes tax base
PETRON CORPORATION, - versus - QUISUMBING, J G.R. No. 158881 (2nd Division)

4. Escape from taxation 

  (a) Shifting of tax burden 
(b) Tax avoidance 
  (c) Tax evasion 
(d) Capitalization
(e)Transformation
Cases:
Yutivo Sons Hardware v. CTA, G.R. No. L-13203, January 28, 1961
CIR v. Estate of Benigno Toda Jr., G.R. No. 78583, March 26, 1990
Republic v. Gonzales, G.R. No. L-17962, April 30, 1965
CIR v. Reyes, Nos. G.R. L-11558, November 25, 1958
Republic v. Heirs of Jalandoni, 20 Sept 1965
CIR v. American Rubber
CIR v. PLDT, GR 140230, December 15, 2005
Silkair Singapore v. CIR, GR No. 173594, February 6, 2008

5. Exemption from Taxation 

  a) Meaning of exemption from taxation 
 Principle of Strictissimi Juris - Sealand Service v. CA, G.R. No. 57828, June 14 1993
 Rationale for the Application of Strictissimi Juris
Maceda v. Macaraig, G.R. No. 88291, June 8, 1993
Floro Cement v. Gorospe 200 SCRA 480
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987

 Exceptions to the Application of Strictissimi Juris

CIR v. Amoldus Carpentry Shop, Inc. G.R. No. 71122, March 25, 1988

      b) Nature of tax exemption 

  c) Kinds of tax exemption 
  (i) Express 
 (ii) Implied 
  (iii) Contractual 
  d) Rationale/grounds for exemption 
  e) Revocation of tax exemption – Mactan Cebu Intl Airport Authority v. Marcos
Cases – Tax Exemption
SeaLand Service v. CA, G.R. No. 57828, June 14, 1993
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987
CIR v. Amoldus Carpentry, Shop, Inc., G.R. No. 71122, March 25, 1998
Mactan Cebu Int’l. Airport Authority v. Marcos
Province of Misamis Oriental v. Cagayan Electric Power & Light Co., Inc., G.R. No. 45355, January 12, 1990
SSS v. Bacolod City 115 SCRA 412
Cagayan Electric co v. Commissioner 138 SCRA 629
6. Compensation and set-off – Philex Mining Corp v. CIR, August 29, 1998
See section 76, NIRC; Francia v. Intermediate Appellate Court, G.R. No. 76749, June 28, 1988
Republic v. Mambulao, G.R. No. L-17725, February 28, 1962

Exception – Domingo v. Garlitos, G.R. No. L-18849, June 29, 1963

7. Compromise 
8. Tax amnesty 
  a) Definition 
  b) Distinguished from tax exemption 

 9. Construction and interpretation of: 

  a) Tax laws 
 Nature of Tax Laws
  (i) General rule 
    (ii) Exception 
Cases: 
Hilado v. CIR, G.R. No. L-9408, October 31, 1956
Manila Railroad v. Collector of Customs, G.R. No. 10214, November 4, 1915
Hornbook Doctrine – CIR v. CA, G.R. No. 115349, April 18, 1997

 b) Tax exemption and exclusion 

  (i) General rule 
(ii) Exception 
Atlas Consolidated Mining and Development Corporation v. CIR, 640 SCRA 504
 c) Tax rules and regulations 
  (i) General rule only 
  d) Penal provisions of tax laws 
  e) Non-retroactive application to taxpayers 

  G.  Sources of Tax Laws

People v. Licera, G.R. No. L-39990, July 22, 1975
Manila Railroad v. Collector of Customs, G.R. No.10214, November 4, 1915
CIR v. CA, G.R. No. 115349, April 18, 1997
Cebu Portland Cement v. CIR, G.R. No. 18649, Feb 27, 1965

H. Situs of Taxation 
  (a) Meaning 
  (b) Situs of income tax 

   I.  Aspects/Stages of Taxation 

1. Levy 
  2. Assessment and collection 
  3. Payment 
  4. Refund 

J.  TAXES
  1. Definition, nature, and characteristics of taxes 
Progressive Development Corp. v. Quezon City, G.R. No. L-36081, April 24, 2989

2. Requisites of a valid tax 

 K. Tax as distinguished from other forms of exactions 

   1. Tariff 
  2. Toll 
  3. License fee 
Progressive Development Corp v. Quezon City, G.R. No. L-36081, April 24, 1989
PAL v. Edu, G.R. L-41383, August 15, 1988
4. Special assessment 
  5. Debt 
 
 L. Kinds/Classification of taxes 
 1. As to object 
a) Personal, capitation, or poll tax 
  b) Property tax 
  c) Privilege tax 
PETRON CORPORATION, - versus - QUISUMBING, J G.R. No. 158881 (2nd Division)

 2. As to burden or incidence 

  a) Direct 
  b) Indirect 
Tolentino v. Secretary of Finance, GR No. 115455, October 30, 1995
Maceda v. Macaraig, 197 SCRA 771
Exxonmobil Petroleum and Chemical Holdings, Inc., Philippine Branch v. CIR, 640 SCRA 203

  3. As to tax rates 
 a) Specific 
  b) Ad valorem 
 c) Mixed 

  4. As to purposes 
 a) General or fiscal 
  b) Special, regulatory, or sumptuary 

  5. As to scope or authority to impose 

 a) National – internal revenue taxes 
 b) Local – real property tax, municipal tax 

6. As to graduation 
 a) Progressive 
  b) Regressive 
  c) Proportionate 

M. Tax Credit
Commissioner v, Internal Revenue v. Mirant (Philippines) Operations, Corporation, 652 SCRA 80
Microsoft Philippines, Inc. vs. CIR, 647 SCRA 398 

N.  NATIONAL TAXATION AND LOCAL TAXATION

THE NIRC (National Internal Revenue Code of 1997 as amended by subsequent laws)
Local Government Code

II.  INCOME TAXATION

A. DEFINITION OF TERMS – Chapter 1, Title II, Part II of NIRC

*implementing Regulation:  Revenue Regulation No. 2-98

B.  The Concept of Income

Definition – Madrigal v. Rafferty, G.R. No. 12287, August 8, 1918; Conwi v. CIR, 213 SCRA 83
1. Return on Capital
2. Distinction with other terms
3. Nontaxable and Taxable
 Definition – Taxable Income – Section 31, NIRC 
 Tests in determining whether income is earned for tax purposes 
CIR v. Isabela Cultural Corporation, GR No. 172231, February 12, 2007 (all events test)

d. Sources of income (Section 42, NIRC)

4. 1. Services
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
 CIR V. Julian Baier-Nickel, GR No. 153793, August 29, 2006

4.2. Interest Income NDC v. CIR, 151 SCRA 472

4.3. Dividends
4.4. Rent and Royalties
 Royalty v. Compensation for Services & Business Profits
CIR v. Smart Communications, GR No. 179045-46, August 25, 2010
4.5. Sale of Property
Re: Software – RMC 44-2005; BIR Ruling DA-ITAD dated February 26, 2008
e. Classification of Income
o Compensation income
o Professional Income
o Business Income
o Passive Income
o Capital Gain
f. Normal vs. Final Tax
f. Forms and valuation of income
f. Tax Accounting Periods
f. Rules of Accounting periods and methods of accounting (Sect 43-47 NIRC)
f. Methods of reporting income and expenses
f. Installment method of reporting income (Sect 49 b, c NIRC)
 Rules if Personal property
 Rules if Real property
l. Deferred payment method (Sect 44 & 48 NIRC)
l. Completed Contract and Percentage of completion method

C. Income Tax Systems

1. Global Tax System
2. Schedular Tax System
3. Semi-schedular or semi-global tax system
Case: Sison v. Ancheta, G.R. No. L-59431, July 25, 1984
*see basic summary of Philippine Income Tax & Summary of Groups of Income (p. 528 & 529 Income Taxation by Valencia & Roxas 6 th Ed.)

D. General Principles of Income Taxation in the Philippines – Section 23, Chapter II, NIRC
Features of the Philippine income tax law 
1. Direct tax 
Commissioner v. Tours Specialist, 183 SCRA 402
  2.  Progressive – Sec 28(1), Art III, 1987 Constitution 
 3.  Comprehensive 
  4.  Semi-schedular or semi-global tax system 

E.  Criteria in imposing Philippine income tax 

  1. Citizenship principle 
  2.  Residence principle 
  3.  Source principle
F. Kinds of taxpayers 
Taxpayer – definition – Sec 22(N), NIRC
  1. Individual taxpayers/Tax on Individuals - Section 24 to 26, NIRC
  2. Corporations/ Tax on Corporations – Section 27 to 30, NIRC
 Definition - Section 22B in relation to Revenue Regulations 10-2012
 Note Exemption – Section 30, NIRC
3.  Partnerships 
4.  General professional partnerships 
5. Estates and trusts 
6. Co-ownerships 

G.  Gross Income-Principles; Computations

Section 32, NIRC
   1. Definition – Section 32 (A), NIRC
CIR v. Filinvest Corporation, G.R. No.163653
CIR v. PAL, GR No. 160528, October 9, 2006

 Gross income vis-à-vis net income vis-à-vis taxable income 

 Gross Income versus Gross Sales/Receipts
 2. Inclusions to Gross Income – Section 32(A)
 Compensation for services
 Gross income derived from the conduct of trade or business or the exercise of a profession
 Gains derived from dealings in property
 Interests
 Rents
 Royalties
 Dividends
 Annuities
 Prizes and Winnings
 Pensions
 Partner’s Distributive Shares from the Net Income of a General Professional Partnership
 
3. Exclusions to Gross Income – Section 32 (B)
*Distinction between exclusions from Allowable deductions
4. Fringe Benefit – Section 33, NIRC
CIR v, Mitsubishi, GR No. L-54908, January 22, 1990
 
5. Classification of income as to source 
 
6.  Sources of Income from Whatever Source
Gutierrez v. CIR, CTA case no. 65, August 21,1995
Javier v. CA, GR L-78953, July 31, 1991

7. The Rules and the Sources of Income subject to tax

a. Compensation income 
Applicability of rules to Compensation Income and other Benefits
 Taxability of Compensation Income and the Application of the Employer’s Convenience Rule – Henderson v. Collector,
1 SCRA 649
 Retirement Payments, Pension and Gratuities
 RA 7641, RA 4917, Section 60B
 Separation Payments – PLDT v. CIR, GR No.157264, Section 60B
 Leave Benefits
 5, 13th Month pay and other bonuses
 SSS/GSIS benefits
 SSS/GSIS/Philhealth/Pag-ibig; Union dues – RMC 27-2011
 Fringe Benefits (Section 33, RR3-98, 5-2008, 5-2011 and 2012.  
 De Minimis benefits – Section 33, Rev REgs, 3-9
b. Professional income
c. Income from business
d. Income from dealings in property
  e. Passive income
 Interest income
Dumaguete Cathedral Credit Cooperative v. CIR, GR No. 182722, January 22, 2012
 Dividends
CIR v. CA and ANSCOR, GR No. 108576, January 20, 1999
 Sale of Real Property classified as capital asset
Supreme Transliner Inc. v. BPI Family Savings Bank, GR No. 165617, February 25, 2011
f. Annuities, proceeds from life insurance or other types of income
 g. Prizes and awards
 h. Pensions, retirement benefit, or separation pay
 i.  Income from other sources
Cancellation of indebtedness
Income from Lease and Leasehold improvements
Income from Installation Transactions
Banas c. CA, GR No. 102967, February 10, 2000

8. Situs of income taxation

9.  ALLOWABLE  Deductions from gross income – Section 34 to 39, NIRC

  a. General rules 
    b. Return of capital (cost of sales or services) 
 10.  Deductions vis-à-vis Tax Credit
Principles on Tax Credit -
CIR v. Central Luzon Drug Corp., GR No. 159647, April 15, 2005
CIR v. Central Luzon Drug Corp., GR No. 148512, June 26, 2006;
Bicolandia Drug Corp., v. CIR, GR No. 142299, June 22, 2006; see also CIR v. Central Luzon Drug Corp., GR No. 159610, June
2008, in relation to RA 9267
Carlos Superdrug Corporation v. DSWD, GR No. 166494, June 29, 2007

11. Itemized deductions 

Note general rule and conditions
  a. General Business Expenses
 The All-Events Test - CIR v. Isabela Cultural Corporation, GR. No. 172231, February 12, 2007 – 
 Reasonableness Test - CIR V. General Foods, Inc. G.R. No. 143672,April 23, 2003
CM Hoskins v. CIR, G.R. No. L-24059, November 28, 1969
 Capital expenditure v. Ordinary Expenditure
 Rule on Proprietary Educational Institutions
 Representation expenses
 Substantation Rule and the Cohan Rule
Gancayco v. Collector, 1 SCRA 980
b. Interest 
Tax Arbitrage Scheme – Rev Reg 13-2000 GR. No. L-25399, July 29, 1969
Interest on Tax Delinquencies – CIR v. Itogon Suyoc Mines
  c. Taxes 
d. Losses – 
 Kinds
Ordinary – incurred in trade or business
Casualty losses – incurred by property connected with trade 
See page 109 
 Requisites
Tax code –Section 34D- actually sustained during the taxable year – must be taken up In the
books/recognized as a loss during the taxable year; contingent loss not allowed
 Not compensated for by insurance
Except – when the loss was not paid by insurance, loss maybe taken up as
deduction if it was determined that the same was not paid or fully
paid/compensated – Plaridel Surety Co v. collector, GR No. L-21520, Dec. 11,
1967
 Incurred in trade, profession or business
 Property connected with the trade, business or profession; loss arises from
fire, storms, shipwrecks, other casualties, robberies, theft or embezzlement
Exception ; NO loss shall be allowed as a deduction if at the time of the filing of the return, such
loss has been claimed as a deduction for estate tax purposes in the estate tax return

City Lumber v. Domingo and CTA, GR No. L-18611, January 30, 1964
 Casualty losses – RMO 31-2009, October 16, 2009, note proof and time of filingg/notice; Amount of loss –
RR No. 12-77
 note section 39 to 40 of the NIRC (Special Treatment of 
 Gains and Losses from dealings in property- section 39 to 40 of NIRC; PAGE 127 SBN
-Ordinary Asset v. Capital Asset
China Banking Corporation v. Court of Appeals, GR No. 125508, July 19, 2000
-Capital losses – section 34(D)(4), NIRC; page 127 SBN, SEE PAGE 130
=losses arising from sale or exchange of properties classified as capital assets
 LIMITATIONS
-allowed only to the extent provided in section 39
-net capital loss carryover – allowed except for corporations  
 Losses from wash sales of stock or securities – sec 34(D)(5)
 Wagering losses - sec 34(D)(6)
 Abandonment Losses - sec 34(D)(6)
 Non-deductible losses
 Net Operating Loss Carry-over (NOLCO)- Section 34(D)(3), NIRC; Rev Reg 14-2001
Def – net operating loss of the business or enterprise for any taxable year immediately preceeding
the current taxable year, which had not been previously offset as deduction from gross income.
 Excess of allowable deductions over gross income of the business in a taxable year
-Can be carried over as a deduction from gross income for the next 3 consecutive taxable years
imm. Following the year of the loss
 -Conditions – any net loss incurred in a taxable year during which the taxpayer was
exempt from income tax shall not be allowed as a deduction;
-NOLCO- allowed only if there has been no substantial change in the ownership of the
business or enterprise in that
-not less that 75%-NOMINAL VALUE OF outstanding shares – corp
-not less than 75% of the paid up capital

--for mines other than oil and gas wells – NOLCO – 5 years
PICOP v. CIR, GR. No. L-106949, December 1, 1995
Taxpayers entitled to NOLCO – individuals except purely compensation earners; DC and RFC subject to the normal
income tax; special corporations subject to the preferential tax rates (private ed inst; hospitals, reg operating headquarters)
e. Bad debts 
Philex Mining Corporation v. CIR, GR No. 148187, April 16, 2008
f.  Depreciation 
 Basilan Estates, Inc., v. CIR, GR No. L-22492, September 5, 1997
 Conwell Bros. v. Collector, CTA case no. 411
 Italian Thai Development Public Company Ltd., v. CIR, CTA case no. 
6172, November 12, 2002
 Properties not subject to depreciation – Limpan Investment Corp. v. 
 CIR, L-21570, July 26, 1966; Section 106, RR No. 2
g. Depletion of Oil and Gas Wells and Mines

h. Charitable and other contributions 

 Rationale of exemption – Lung Center of the Phil. V. Quezon City, 
GR No. 144104, June 29, 2004
PSE v. CIR, CTA Case No. 5995, October 15, 2002

 Contributions deductible in full under Special Laws

 IBP- PD 81
 Development Academy of the Philippines – PD 205
 Aquaculture Department of the Southeast Asian Fisheries and Development Center (SEAFDEC) –
PD 292
 National Social Action Council – PD 294
 National Museum, Library and Archives – PD 373
 University of the Philippines and other State colleges and universities
 Philippine Rural Reconstruction Movement
 Cultural Center of the Philippines
 Trustees of the Press Foundation of Asia
 Humanitarian Science Foundation
 Artesian Well Funds (RA 1977)
 International Rice Research Institute
 DOST
 Donations of prizes and awards to athletes (RA 7549)
     
i.  Research and Development 

j.  Contributions to pension trusts 

Miguel J. Osorio Pension Foundation, Inc. v. CIR GR No. 162175, June 28, 2010

  k.  Deductions under special laws 

Mercury Drug Corporation v. CIR, 654 SCRA 124
CIR C. Central Luzon Drug Corporation, GR No. 159610, June 12, 2008

  12 . Optional standard deduction (OSD) – RA 9504

13. Items not deductible – Section 36, NIRC

Capital expenditure – Alhambra Cigar v. Collector, GR No. L-223226, November 28, 1967

  14. Special Provisions for Insurance Companies – Section 37, NIRC

15. Determination of Amount and Recognition of Gain or Loss – Section 40, NIRC

H. TAXATION OF INDIVIDUAL TAXPAYERS

 resident citizens, non-resident citizens, and resident aliens
  1. Personal and additional exemption for Individual Taxpayers – Section 35, NIRC 
as amended by RA 9504
 Note (R.A. No. 9504, Minimum Wage Earner Law) 
 General rule
 Change of status – Pansacola v. CIR, GR No. 159991, November 16, 2006
 Principle of reciprocity
2. Classification of Taxes on Individual
 Normal 
 Passive 
 Capital Gains tax
          3. Taxation of business income/income from practice of profession 

    4. Rules on Passive Income subject to Final Tax

 Final Tax defined
 Interest
CIR v. CA & CGL Retirement Plan, GR No. 95022, March 23, 2992
 Royalties
 Prizes and Winnings
 Dividends
Afisco Insurance Corp. v. CA, GR No. 112675, January 25, 1999
 Capital gains
  5. Taxation of non-resident aliens engaged in trade or business 
 General rules 
 Cash and/or property dividends 
 Capital gains 
 Exclude: non-resident aliens not engaged in trade or business 
      6. Individual taxpayers exempt from income tax 
 Senior citizens 
 Minimum wage earners 
 Exemptions granted under international agreements 
7.  Tax Return and Payment – Section 51, 56, Chapter IX, NIRC

I. TAXATION OF CORPORATIONS – 
 Definition
 Classification of Corporations/Special Types of Corporations
 Tax Rates - Section 27 to 29, NIRC
 Test in Determining Status of corporations
“Law of Incorporation Test” 
 Inclusions/Exclusions
China Banking Corporation vs. Commissioner of Internal Revenue,  G.R. No. 175108. February 27, 2013.
1. Domestic Corporations 
  a. Tax payable 
  b. Regular tax 
 c. Minimum Corporate Income Tax (MCIT) 
CREBA v. Exec. Sec. Romulo
Manila Banking Corporation v. CIR, GR No. 168118, August 28, 2006
CIR v. PAL, GR No. 180066, July 7, 2009

  d.  Improperly Accumulated Earnings Tax

Cyanamid Phils., v. CA, GR No. 108067, July 7, 2009 
 e. Allowable deductions 
  i) Itemized deductions 
  ii) Optional standard deduction 
  f. Taxation of passive income 
  i) Passive income subject to tax 
ii)Passive income not subject to tax
 g. Taxation of capital gains
   h. Tax on Special Domestic Corporations 
a. proprietary educational institutions and non-profit hospitals 
b. Depositary Banks
i.  Tax on government-owned or controlled corporations, agencies or 
 instrumentalities 
j.  Tax Returns and Other Administrative Requirements
Paseo Realty and Development Corp., v. CA, GR No. 119286, October 13, 2004
CIR v. Mirant (Philippines) Operations Corporation, GR No. 171742, June 15, 2011
 CIR v. PI. Management International Philippines, Inc., GR No. 160949, April 4, 2011

2. Resident Foreign Corporations

a.  General rule 
  b.  With respect to their income from sources within the Philippines 
  c.  Minimum Corporate Income Tax 
  d.  Tax on certain income 
  Exclude: 
 (i) International carrier 
  (ii) Offshore banking units 
(iii) Branch profits remittances 
(iv) Regional or area headquarters and regional operating 
headquarters of multinational companies 
CIR v. British Overseas Airways Corp., GR No. L-65773-74, April 30, 1987

3. Non – Resident Foreign Corporations

   a.  General rule 
  b. Tax on certain income 
 (i) Interest on foreign loans 
 (ii) Intercorporate dividends 
(iii) Capital gains from sale of shares of stock not traded in the stock 
  exchange 
Exclude: 
  (i) Non-resident cinematographic film owner, lessor or distributor 
  (ii) Non-resident owner or lessor of vessels chartered by Philippine 
nationals 
 (iii) Non-resident owner or lessor of aircraft machineries and other 
equipment 
  4. Exemption from tax on certain corporations (income)
  5.  Partnerships
a. Taxation of partnerships 
  b.  Taxation of general professional partnerships 
6. Tax Returns and Payments – Section 52, 56 Chapter IX, NIRC

J. ESTATES AND TRUSTS

Evangelista v. Collector, GR No. L-9996, October 15, 1957
Pascual v. Commissioner, GR No. L-78133, October 18, 1988
Tax Returns and Payments

K. Withholding Tax  System– PRINCIPLES

Tax collector – CIR v. CA, GR No. 104151, March 10, 1995
Right of Withholding Agent to claim for refund – CIR v. Smart Communications, Inc. GR Nos. 179045-46, August 25, 2010

III. BUSINESS AND TRANSFER TAXES

I. GENERAL INTRODUCTION

1. Review of Some Basic Principles of Taxation

2. Overview on the subject’s coverage

II. TRANSER TAXES

A.  ESTATE TAX
   a. Basic principles 
  b. Definition 
  c. Nature 
Lorenzo v. Posadas, GR No. L-43082, June 18, 1937
  d. Purpose or object 
  e. Time and transfer of properties 
  f.  Classification of decedent :
1. Citizen 2. Non-Resident Alien
  g. Gross estate vis-à-vis net estate 
Dizon v . CTA, GR No. 140944, April 30, 2008
  h. Determination of gross estate and net estate 
  i. Composition of gross estate 
 Zapanta vs. Posadas, supra; Balogui vs. Dangson, 53 Phil. 673 (transfers in contemplation of death)
  j. Items to be included in gross estate 
  k. Deductions from estate 
CIR v. CA and Pajonar, GR No. 123206, March 22, 2000
l.  Exclusions from estate 
m. Tax credit for estate taxes paid in a foreign country 
  n. Exemption of certain acquisitions and transmissions 
o. Disinheritance vs. Waiver of Rights to inherit
  o. Filing of notice of death 
  p. Estate tax return 

Related Revenue Issuances: Revenue Regulations (RR) No. 2-2003, 6-2013, 6-2014; Revenue Memorandum Order (RMO) Nos. 26-82, 31-82, 15-
2003; Revenue Memorandum Circular (RMC) Nos. 1-98, 34-2013; OPM-AS-APMD 2017-06-06; OPM-AS-APMD 2017-06-01

Related Laws: Commonwealth Act No. 466 – effective July 1, 1939; Republic Act No. 579 – effective September 15, 1950; Republic Act No. 6110 –
effective August 4, 1969; Presidential Decree No. 69 – effective January 1, 1973; Presidential Decree No. 1773 – effective January 16, 1981;
Presidential Decree No. 1994 – effective January 1, 1986; Republic Act No. 7499 – effective July 28, 1992; Republic Act No. 8424 – effective January
1, 1998

Codal Reference: Sec. 84 to Sec. 97 of the National Internal Revenue Code

https://www.bir.gov.ph/index.php/tax-information/estate-tax.html

B.  DONOR’S TAX

a. Basic principles 
  b. Definition 
  c. Nature 
* “egg donation” (US case)
  d. Purpose or object 
  e. Requisites of valid donation 
Republic of the Philippines v. Guzman, 326 SCRA 90 (2000); Tayoto v. Heirs of Cabalo Kusop, 184 SCRA 355 (1990).
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY, Petitioner, 
vs. THE SEC OF FINANCE and CIR, Respondents. G.R. No. 210987 November 24, 2014
  f.  Transfers which may be constituted as donation 
  1) Sale/exchange/transfer of property for insufficient consideration 
  2) Condonation/remission of debt 
g. Transfer for less than adequate and full consideration 
  h. Classification of donor 
  i. Determination of gross gift 
  j. Composition of gross gift 
  k. Valuation of gifts made in property 
  l. Tax credit for donor’s taxes paid in a foreign country 
  m. Exemptions of gifts from donor’s tax 
Not exempt: Lladoc vs. Commissioner L-19201, June 16, 1965; 14 SCRA 292
Abello vs. CA G.R. No. 120721. February 23, 2005 (Political contributions: Already exempt by RA 7166)
  n. Person liable 
  o. Tax basis
Please note that the donor’s tax rates will vary depending on the law applicable at the time of the gift. The pertinent laws are as
follow:
Commonwealth Act. No. 466 – effective July 1, 1939 to September 14, 1950
Republic Act No. 579 – effective September 15, 1950 to August 3, 1969
Republic Act No. 6110 – effective August 4, 1969 to December 31, 1972
Presidential Decree No. 69 – effective January 1, 1973 to January 15, 1981
Presidential Decree No. 1773 – effective January 16, 1981 to July 27, 1992
Republic Act No. 7499 – effective July 28, 1992 to December 31, 1997
Republic Act No. 8424 – effective January 1, 1998 to present

Note: 
Related Revenue Issuances: Revenue Regulations Nos. 2-2003, 6-2013, 6-2014; Revenue Memorandum Circular Nos. 63-2009 and 53-2013; OPM-
AS-APMD 2017-06-06; OPM-AS-APMD 2017-06-01

Codal Reference: Sec. 98 to Sec. 104 of the National Internal Revenue Code

Related Laws: Republic Act Nos. 579, 3062, 3676, 3850, 6110, 7499, 8424, 9159, 9275, 9500, 9647, 10066, 10072, 10073, 10083, 10174, 10390,
10618; Presidential Decree Nos. 69, 181, 205, 292, 294, 1773; Executive Order No. 419; Commonwealth Act No. 466
https://www.bir.gov.ph/index.php/tax-information/donor-s-tax.html
 III. BUSINESS TAXES

A.  VALUE ADDED TAX 

 A. Concept/Nature 
Kapatiran v. Tan, GR NO. L-81311, June 30, 1988
Tolentino v. Secretary of Finance, August 25, 1994 (orig dec) and GR No. 115455, October 30, 1995 (Motion for Reconsideration)
ABAKADA Guro Party List v. Ermita, GR. No. 168056, September 1, 2005
CIR v. Magsaysay Lines, GR No. 146984, July 28, 2006
Philippine Acetylene v. CIR, August 17, 1967
CIR v. American Rubber, November 29, 1966
CIR v. John Gotamco and Sons, February 27, 1987
. 
B. Characteristics/Elements of a VAT-Taxable transaction
C. Impact of tax 
D. Incidence of tax 
E. Tax credit method 
F. Destination principle 
G. Persons liable/VAT Person
H. VAT Exempt Person
I.  VAT on sale of goods or properties 
  1. Requisites of taxability of sale of goods or properties 
Zero-rated transactions 
 Zero-rated sales of goods or properties, and effectively zero-rated sales of 
goods or properties
 Zero-rated sale of services 

Silicon Philippines, Inc. v. CIR, GR No. 172378, January 17, 2011

Microsoft Philippines, Inc. v. CIR, 644 SCRA 433 
CIR v. Seksui Jushi Phils, Inc. GR No. 149671, July 21, 2006
Western Mindanao Power Corporation v. CIR, GR No. 181136, June 13, 2012
Panasonic v. CIR, GR No. 178090, February 8, 2010
Hitachi v. CIR, GR No. 174212, October 20, 2010
CIR v. Manila Mining Corp., GR No. 153204, August 31, 2005
PAGCOR v. BIR, GR No. 172087, March 15, 2011
 J.  Doctrine on Effectively Zero-rated sales – 
CIR v. Acesite Hotel Corp., GR No. 147295, February 16, 2007
K.  Transactions deemed sale 
CIR v. Magsaysay Lines, GR No. 146984, July 28, 2006
L.  VAT on Services
CIR v. Placerdome Tech Services (Phils), GR No. 164365, June 8, 2007
CIR v. American Express Phil Branch, GR No. 1526-0, June 29, 2005
M.  Change or cessation of status as VAT-registered person 
  1. Subject to VAT 
2. Not subject to VAT 
N.  VAT on importation of goods 
O.  VAT on sale of service and use or lease of properties 
P.  VAT exempt transactions – Section 109, NIRC
 1. Requisites
  2. Exempt transaction, enumerated
Pawnshops-Tambunting Pawnshop Inc v. CIR, GR No. 179085, January 21, 2010
 Q. Zero-rated sales and VAT exempt sales distinguished
R.  Input tax and output tax, defined 
 S. Sources of input tax 
 T.  Transitional Input Tax
Fort Bonifacio Development Corporation v. CIR, GR Nos. 158885 & 170580, April 2, 2009 
Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue and Revenue District Officer, etc., G.R. No.
173425. January 22, 2013.
U. Persons who can avail of input tax credit 
CIR V. Eastern Telecommunications Phil, Inc., GR No. 163835, July 7, 2010
San Roque Power Corp v. CIR, GR No. 180345, November 25, 2009
 V. Determination of output/input tax; VAT payable; excess input tax credits 
W. Substantiation of input tax credits 
 X.  Refund or tax credit of excess input tax 
Y. Invoicing requirements 
Z. Refund of VAT – Section 112 v. Sec 229, NIRC
Southern Philippine Power Corporation v. CIR, GR No. 179632, October 19, 2011
CIR v. Mirant Pagbilan Corporation, GR No. 172129, September 12, 2008
CIR v. Aichi Forging Company of Asia, Inc. GR No. 184823, October 6, 2010
Silicon Philippines v. CIR, GR No. 172378, January 17, 2011
AA. Filing of return and payment 
BB.  Withholding of final VAT on sales to government
CIR v. Ironcon Builders and Development Corp., GR No. 180042, February 8, 2010
Codal Reference: Title IV, Sections 105 to 115 of the National Internal Revenue Code of 1997, as amended
https://www.bir.gov.ph/index.php/tax-information/value-added-tax.html

B. PERCENTAGE TAX
1.  Business subject to other percentage taxes
2. Non-VAT business
3. Domestic Carriers
4. Minimum quarterly gross receipts
5.  Other percentage taxes
a.  Amusement Taxes
b.  Horse race winnings
c.  etc.
Related Revenue Issuances: RR No. 4-95, RR 7-95, RR No. 5-97, RR No. 2-98, RR No. 7-95, RR No. 6-2001, RR No. 12-2001, RR No. 4-2002, RR No. 26-
2002, RR No. 14-2003, RR No. 9-2004, RR No. 10-2004, RMC No. 6-2003, RMC No. 73-2004
Codal Reference: Sections 116 to 128 of the National Internal Revenue Code
https://www.bir.gov.ph/index.php/tax-information/percentage-tax.html

C. DOCUMENTARY STAMP TAX

1.           Nature of DST
2.           Documents exempt from DST
3. Whether or not the banks interbank call loans in the year 1997 are subject to DST.
Case: GR. 195147Commissioner Internal Revenue vs. PNB June 11, 2016

IV. TAX ADMINISTRATION AND REMEDIES under the NIRC (Title I, NIRC)

1.  The Bureau of Internal Revenue

 A. Rule-making authority of the Secretary of Finance 

 
B. Power of the Commissioner to suspend the business operation of a taxpayer 

2.  Tax Administration and Enforcement

A.  Definition – Tax Administration 

B.  Stages or Processes of Taxation

a. Levy
b. Assessment
c. Payment

C.  Administrative Agencies tasked to implement the Power of Taxation

3.  TAX REMEDIES (Title VIII, NIRC)

A. Government remedies 
1. As to Nature of Proceedings
 Administrative Remedies in Detail 
1. Tax Lien (Section 219, NIRC)
a. CIR v. NLRC, GR No. 74965, 9 November 1994
2. Compromise
3. Distant of personal property or garnishment of bank deposits
4. Levy of real properties
4. Forfeiture
5. Suspension if business operations
6. Enforcement of administrative fines

 Judicial remedies
 1. Civil Action
2. Criminal Action

 Judicial Remedies in Detail (Section 220. NIRC)

1. Period within which the action may be filed
a. Civil Cases (Sections 203, 222, NIRC)
b. Criminal Cases (See: Title X, NIRC; Section 281, NIRC)
2. Where should these cases be filed?
a. Criminal Cases (See the impossible penalty vis-a-vis the jurisdiction of courts)
b. Civil Cases (Consider the amount of tax sought to be collected vis-à-vis the jurisdiction of courts, together with the
provisions of RA9282)
3. Cases:
a. Republic v. Hizon, GR No. 130430, 13 December 1999 (re approval of filing of civil and criminal action)
b. CIR v. La Suerte Cigar, G.G. No. 144942, 4 July 2002 (Re participation of the Office of the Solicitor General)
c. PNOC v. Court of Appeals, G.R. No. 109976, April 26, 2005*
d. Lim v. CA, GR. Nos. 48134-37, 18 October 1990, 190 SCRA 616 (re prescription of criminal actions, Section 281,
NIRC)
e. Marcos II v. CA, GR No. 120880, 5 June 1997 (re enforcement of tax liability during pendency of probate
proceedings)
f. Judy Anne Santos v. People, GR No. 173176, 26 August 2008

2.  Remedies as to Procedure

 Assessment and Collection
 Collection without assessment

Assessment -  
 Concept of assessment 
What constitutes assessment?
CIR v. Hon. Gonzales, GR No. 177279, October 13, 2010
CIR v. Enron Subic Power Corporation, GR No. 166387, January 19, 2009 relate with CIR v. BPI, GR No.
134052, April 17, 2007
CIR v. Pascor Realty, June 29, 1999
CIR v. Reyes, GR No. 159694, January 27, 2006 
 Principles
CIR v. Hon. Gonzalez and LM Camus Engineering Corporation, GR No. 177279, October 13, 2010
 Power of the Commissioner to make assessments and prescribe 
additional  requirements for tax administration and enforcement 
 Kinds of assessment
 Statute of Limitation on Assessment of Internal Revenue Taxes (Sections 202, 222, NIRC)
Rmo 20-90, Philippine Journalists Inc., v. CIR, GR No. 162852, December 16, 2004
CIR v. Kudos Metal Corporation, GR No. 178087, May 5, 2010
CIR v. CA AND CARNATION, GR No. 115712, February 25, 1999
RCBC v. CIR, GR No. 170257, September 7, 2011
 Suspension of prescriptive period
Republic v. Hizon, December 13, 1999
BPI v. CIR, GR No. 139736, October 17, 2005
BPI v. CIR, GR No. 174942, March 7, 2008
 When assessment is made 
 General provisions on additions to the tax 
 Assessment process 
Estate of the Late Juliana Diez vda De Gabriel v. CIR, GR No. 155541, January 27, 2004
CIR v. Reyes, GR No. 159694, January27, 2006
PNOC v. Court of Appeas, GR No. 109976, April 26, 2005
CIR v. Menguito, GR No. 16750, September 17, 2008 relate with CIR v. Metro Star Superama, GR No.
185371, December 8, 2010
 Necessity of Assessment before taxpayer can be prosecuted for violation of the NIRC
Ungab v. Cusi, May 30, 1980
CIR v. CA, GR No. 119322, June 4, 1996
CIR v. Pascor Realty, June 29, 1999
CIR v. Hon. Gonzalez and LM Camus Engineering Corporation, GR No. 177279, October 13, 2010
 Retroactivity – CIR v. Reyes, GR No. 159694, January 27, 2006
Instances when pre-assessment is not required (Section 228)

Collection 
 Requisites 
  Prescriptive periods 
 Distraint of personal property including garnishment 
 Summary remedy of levy on real property 
 Forfeiture to government for want of bidder 
 Further distraint or levy 
 Tax lien
 Compromise
 Civil and criminal questions
 
B.  Effects of failure to pay the tax on time: Additions to the tax (Chapter I, Title X, NIRC)
1. Surcharges
a. Ordinary (Section 248A, NIRC)
 Failure to pay tax on time as required by the tax code or the regulations
 Failure to pay the deficiency tax within the time fixed in the notice
 Filing of the return with the wrong office
b. Fraud Penalty (Section 248B, NIRC)
 CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA 825)
c. Cases:
i. Imposition of Surcharge in mandatory

2. Interest (Section 249, NIRC)

a. In General
b. Deficiency Interest
c. Delinquency Interest
d. On Extended Payments
3. Compromise Penalties
4. Effect of failure to file information returns (Section 250, NIRC)

NOTES
a. No injunction to restrain collection of taxes (Sec. 218, NIRC)
b. Period within which the government could collect (Sections 203, 222, NIRC)
Case: Republic v. Hizon, GR No. 130430, 13 December 1999; CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA
825); PNOC v. CA, GR No. 109976, 26 April 2005; BPI v. CIR, GR No. 174942, 7 March 2008
c. Determination of prescription of collection within CTA’s appellate jurisdiction: CIR v. Hambrecht and Quist Philippines, GR No.
169225, 27 November 2010

C. Remedies available to taxpayers

Before Payment
1. Protest (Section 228, NIRC)
a. Requirements of a valid protest – Rev. Regs. 12-85
b. Kinds of Protest – CIR v. Philippine Global Communication, GR No. 167146, 31 October 2006
c. Effect of Failure to file Protest – CIR v. Hon. Gonzalez, GR No. 177279, 13 October 2010
d. What should be protested? – Allied Banking Corporation v. CIR, 5 February 2010
e. Effect of a protest on the period to collect deficiency taxes – Cases: CIR v. Wyeth Suaco Laboratories, GR No. 76281, 30
September 1991 and CIR v. Atlas Consolidated Mining, GR Nos. 31230-32, 14 February 2000
f. Failure if the BIR to act within the 180-day period – See the following: Lascona v. CIR, CTA Case 5777, 4 January 2000 vis-à-vis
Section 7 (2), RA 9282 and the Revised Rules of Procedure of the CTA, AM No. 05-11-07-CTA; See also RCBC v. CIR (2007)
g.  Administrative actions taken during the 180-day period – Compare: CIR v. Union Shipping, GR No. 66160, 21 May 1990, 185
SCRA 548 and CIR v. Isabela Cultural Corporation, GR No. 135210, 11 July 2001
h. Effect of a protest filed out of time – Protector’s Services v. CA, GR No. 118176, 12 April 2000
i. Remedies from a denial of the protest
 Appeal to the Court of Tax Appeals (RA 1125, as amended by RA9282)
 Fishwealth Canning Corporation v. CTR, G.R.  No. 179343, 21 January 2010
 Appeal to the CTA en bane should be preceded by a Motion for Reconsideration (Commissioner of Customs v. Marina
Sales, Inc., G.R. 183868, 22 November 2010 – Note: although a customs case, the ptrinciples are applicable)
      2. Compromise

After Payment
1. Refund (Section 229, NIRC)
a. Must be strictly construed against the taxpayer; Taxpayer must show the legal and factual basis for the tax refund –
Case: Citibank, NA v. Court of Appeals, GR No. 107434, 10 October 1997, 280 SCRA 459; FEBTC v. CIR, GR No. 138919,
02 May 2006; Commissioner of Internal Revenue v. Far East Bank e Trust Co., G.R. No. 173854 dated March 16, 2010
b. Grounds for filing a claim for refund (See Section 229, See also: Engtek Phils v. CIR, CTA Case No. 6644, 26 January
2005)
c. Procedure in filing a claim for refund
  CIR v. Acosta, GR No. 154068, 3 August 2007
d. Period within which to file a claim for refund
 General rule is two years from the date of payment – Cases: ACCRA Investments Corporation v. Court of
Appeals, GR No. 96322, 20 December 1991; CIR v. TMX Sales, 15 January 1992; CIR v. PhilAm Life, 29 May
1995; CIR v. CA and BPI, GR No. 117254, 21 January 1999; CIR v. PNB, GR No. 161997, 25 October 2005
(exception to the 2-year period); CIR v. Primetown Property Group, GR No. 162155, 28 August 2007). 
Commissioner of Internal Revenue vs. San Roque Power Corporation/Taganito Mining Corporation vs.
Commissioner of Internal Revenue/Philex Mining Corporation vs. Commissioner of Internal Revenue,  G.R. No.
187485/G.R. No. 196113/G.R. No. 197156. February 12, 2013

 In case of amended returns

 In case of taxpayers contemplating dissolution – Case: BPI v. CIR, 28 August 2001; See also: Sections 52(c)
and 56(a)
 In case of VAT Refund (Please see topic on VAT)
e. Who has the personality to file a claim for refund?
1. CIR v. Proctor and Gamble, GR No. 66838, 2 December 1991**                                                      
2. CIR v. CA 20 January 1999
3. Silkair v. CIR, GR Nos. 171383 e 172379, 14 November 2008
4. CIR v. Smart Communications, GR No. 179045-46, 25 August 2010***
5. Exxonmobil Petroleum and Chemical Holdings v. CIR, GR No. 180909, 19 January 2011
6. Silkair (Singapore) Pte., Ltd. v. Commissioner on Internal Revenue, G.R. No. 166482, 25 January 2012***
f. Is setting-off of taxes against a pending claim for refund allowed? – The doctrine of equitable recoupment—Case:
Philex MiningCorp. V. CIR, GR No. 125704, 28 August 1998
g. Is automatic application of excess tax credits allowed? (Sec. 76) – Please see Calamba Steel v. CIR, GR No. 151857, 28
April 2005; Systra Philippines v. CIR, GR No. 176290, 21 September2007; CIR v. BPI, GR No. 178490, 07 July 2009
(Irrevocability Rule)***; Philam Asset Management v. CIR, G.R. Nos. 156637/162004, December 14, 2005); Asianworld
Properties Philippine Corporation v. CIR, GR No. 171766, 29 July 2010; CIR v. Philam Life and Gen. Ins. Co. GR No.
175124, 29 September 2010; CIR v. Mcgeorge Food Industries, GR No. 174157, 20 October 2010; CIR v. Mirant
(Philippnes) Operations Corporation, G.R. No. 171742, 15 June 2011 CIR v. PL Management Inernational Philippines, 
Inc., G.R. No. 160949, April 4, 2011.
h. Effect of existing tax liability on a pending claim for refund – Case: CIR v. CA and Citytrust, GR No. 106611, 21 July
1994; See also (CIR v. CItytrust Banking Corporation, 22 August, 22 August 2006).
i. Period of validity of a tax refund/credit (Sec. 230, NIRC)
i. Returns are not actionable documents for purposes of the rules on civil procedure and evidence (See: Aguilar
v. CIR, CA Case dated 3- March 1990)
ii. Nature of a tax credit certificate (Pilipinas Shell Petroleum Corporation v. CIR, GR No. 172598, 21 December
2007)
j. Refund and Protest are mutually exclusive remedies – Case: Vda. De San Agustin v. VIR, 10 September 2001
k. Is the taxpayer entitled to claim interest on the refunded tax? (Sec. 79 (c) 2, NIRC)
Other Remedies
1. Action to Contest Forfeiture of Chattel (Sec. 231)
2. Redemption of Property Sold (Sec. 214)

D. Statutory offenses and penalties (Title X, NIRC)

E. Compromise and abatement of taxes 

V.  JUDICIAL REMEDIES

A. JURISDICTION OF THE COURT OF TAX APPEALS

Automatic Review – Yaokasin v. Commissioner of Customs, GR No. 84111, Decmber 22, 1989
Real Property cases decided by RTC not under CTA Juris – Habawel v. CTA, GR No. 174759, September 7, 2011
Final and Executory or Undisputed Assessments – Republic v. Abella, GR No. L-26989, February 20, 1981
Ancillary remedy – Commissioner of Customs v. Alikpala, GR No. L-32542,  November  26, 1970

B. PROCEDURE BEFORE THE CTA

Instances when decisions are final –

 Oceanic Wireless Network Inc., v. CIR, GR No. 148380, December 9, 2005
Commissioner v. Ayala Securities Corp., GR No, 29485, March 31, 1976 –demand letter
Commissioner v. Union Shipping GR No. 66160, May 21, 1990 – filing of a judicial action
Allied Banking Corporation v. CIR, GR No. 175097, February 5, 2010 –FAN, 

 New Issues cannot be raised for the first time on appeal 

   CIR v. Wander Philippines, Inc., GR No. 68375, April 15, 1988
Exceptions – 
Defense of prescription - Visayan Land Transportation v. Collector, CTA case no. 1119, September 30, 1964
Errors  of Admin Officials – Commissioner v. Procter & Gamble Phils., Mfg Corp, GR No. 66838, April 15, 1988 and see
Commissioner v. Procter & Gamble, GR No. 66838, December 2, 1991

C. PETITION FOR REVIEW ON CERTIORARI BEFORE THE SUPREME COURT

VI.  LOCAL TAXATION

A. Fundamental Principles (Section 130 LGC)
B. Nature and source of the taxing power
1. Constitutional provision (Section 5, Article X)
2. Delegated power
a. City of San Pablo, Laguna v. Reyes, 25 March 1999
b. Meralco v. Province of Laguna, 5 May 1999
c. Mactan Cebu International Airport Authority v. Marcos, 11 September 1996
d. NAPOCOR v. City of Cabanatuan, 9 April 2003
3. Extent of the power of Congress in local taxation
a. City Government of Quezon City v. Bayantel, G.R. No. 162015, March 6, 2006
4. Residual power tax (Section 186, LGC)

B. Common Limitations on the exercise of the local taxing power and the principle of preemption. Exclusionary rule (Section 133, LGC)
 The principle  of preemption
Cases:
1. Province of Bulacan v. Court of Appeals, 27 November 1998
2. First Philippine Industrial Corporation v. CA, G.R. No. 125948, December 29, 1998 (Section 133j; Local Tax on Common
Carriers)
3. Palama Development Corporation v. Municipality of Malangas, GR No. 152492, 16 October 2003 (Section 133e)
4. Batangas Power Corporation v. Batangas City, GR No. 152675, 28 April 2004 (Section 133g)
5. MIAA v. CA and Paranaque, GR No. 155650, 20 July 2006 (Section 133 o)
6. LTO v. City of Butuan, 20 January 2000 (re Section 133(l))
7. Philreca v. DILG, 10 June 2003 (re Section 133 n)
8. Petron Corporation v. Tiangco, GR no. 158881, 16 April 2008 (Petroleum Products)

C. Specific Taxing Powers of Local Government Units

 Provinces
1. Scope of the taxing power (Section 134 vis-à-vis Sections 142 and 186, LGC)
2. Taxes that may be levied by provinces (Sections 135-141, LGC)
3. Cases:
a. Province of Bulacan v. Court of Appeals, 27 November 1998 (Sand and Gravel)
b. PBA v. CA, 8 August 2000 (Amusement)
c. Lepanto Consolidated Mining Corp. v. Ambanloc, 29 June 2010 (Sand and Gravel)
d. Smart Communications v. City of Davao, 16 September 2008 (Franchise)
e. Quezon City v. ABS-CBN Broadcasting, 6 October 2008 (Franchise)
f. San Juan v. Castro, GR No. 174617, 27 December 2007 (transfer of Real Property Ownership)
 Municipalities
1. Scope of the taxing power (Section 142 vis-à-vis Sections 134 and 186, LGC)
2. Taxes that may be levies by municipalities (Sections 143-149, LGC)
a. Yamane v. BA Lepanto Condominium Corporation, G.R. No. 154993, 25 October 2005 re taxes on businesses
b. Ericson Telecommunications v. City of Pasig, GR No. 176667, 22 November 2007
3. Situs of the tax (Section 150, LGC)
o Cities (Section 151, NIRC)
o Barangays (Section 152, NIRC)
o Common revenue raising powers
o Community Tax
o Common limitations on the taxing powers of the Local Government units
o Requirements for a valid tax ordinance

D. Remedies in Local Taxation

 Remedies of the Local Government Unit
1 . Angeles City v. Angeles City Electric Corporation, GR No. 166134, 29 June 2010 (Prohibition re injunction on tax collection not
applicable to local taxes)
2.  Administrative
a.  Local government’s lien
b.  Assessment by local treasurer (Section 194, LGC)
 c.  Distraint (Section 175, LGC)
d.  Levy (Section 176, LGC)
a. Properties exempt from distraint and levy
3.  Judicial 
 Period within which to collect (Section 194, LGC)
4.  Other Provisions
 Accrual of the tax (Section 166, LGC)
 Time of Payment (Section 167, LGC)
 Surcharges, Interests and Penalties
 Remedies of the Taxpayer
5. Administrative
1. Appeal to the Secretary of Justice re newly enacted tax ordinance (Section 187, LGC)
a. Drilon v. Lim, 4 August 1994
b. Jardine Davies v. Judge Alipose, 27 February 2003 
2. Protest of the Assessment (Section 195, LGC)
a. Yamane v. BA Lepanto Condominium Corporation, G.R. no. 154993, 25 October 2005 re denial protest
3. Claim for refund (Section 196, LGC)
4. Remedies from a denial of the protest and refund
6. Judicial

E. Grant of tax exemption by local government units (Section 282 (b), IRR)
a. Tax Exemption v. Tax Incentive

F.   Real Property  Taxation

1.  Governing Law
2. Nature of Real Property Taxes – National or Local?
3. Fundamental Principles (Section 198, LGC)
a. Appraisal at current fair market value and based on actual use: Allied Banking Corporation v. Quezon City, GR No. 154126, 15
September 2006 in relation to Local Ass. Reg. 1-92
4. Properties Covered
a. Article 415, et seq, Civil Code
Cases :
a. G.R. 180110 Capitol Wireless, Inc. Vs. The Provincial Treasurer of Batangas, the Provicial Assessor of Batangas, The Municipal
Treasurer of and Assessor of Nasugbu Batangas May 30, 2016
b. G.r. 183416 Provicial Assesor of the Agusan Del Sur Vs. Filipinas Palm Plantation, Inc. October 5, 2016
c. Caltex v. CBAA, 31 May 1982
d. Sta. Lucia Realty & Development, Inc. vs. City of Pasig, G.R. no. 166838, June 15, 2011
5. Properties Exempt
a. Section 234, LGC
b. Section 238, LGC
c. Constitutional Exemptions
d. Cases
i. MIAA v. Paranaque, GR No. 155650, 20 July 2006; MIAA v. Pasay GR No. 163072, April 2, 2009
ii. Lung Center of the Philippines v. QC., 29 June 2004
iii. LRTA v. CBAA, 12 October 2000
iv. NAPOCOR v. Province of Quezon, GR No. 171586, 15 July 2009; 
NAPOCOR v. CBAA, GR No. 171470, 30 January 2009
v. Philippine Fisheries Development Authority v. CBAA, etc., G.R. No. 178030, December 15, 2012
vi. City of Pasig v. Republic of the Philippines, GR No. 185023, 24 August 2011
6. May LGUs grant exemption?
7. Who are liable for the Real Property Taxes
a. Ownership v. Use
b. Testate Estate of Concordia Lim v. Manila, 21 February 2000
c. Government Service Insurance System v. City Treasurer and City Assessor of the City of Manila, G.R. No. 186242 23 December
2009
8. Procedure in Real Property Taxation
a. Lopez v. City of Manila, 19 February 1999
b. Declaration of real properties -  whose duty?
c. Valuation by Assessors
Callanta v. Ombudsman, 30 January 1998
d. Preparation of Schedule of Fair Market Values
e. Enactment of a Real Property tax Ordinance
f. Levy annual ad valorem tax
1. Scope of the LGU’s taxing power (Sec. 232, LGC)
a. Provinces – 1 %; Cities, Municipalities in MM – 2%
 b. SEF – 1%; Idle land tax – 5%; Special Assessments
ii. Fix assessment levels
iii. Provide for appropriations
iv. Adopt Schedule of Fair Market Values
1. Fair Market Value and Assessed Value – What’s the difference?
9. Remedies of the Taxpayer
i. Administrative
1. Appeal to the Secretary of Justice re newly enacted tax ordinance (Section 187, LGC)
a. Drilon v. Lim, 4 August 1994
b. Reyes v. Court of Appeals, 1999
c. Hagonoy Market Vendors Association v. Municipality of Hagonoy, Bulacan, G.R. No. 137621. February 6,
2002
d. Ty v. Trampe, 1 December 1995
2. Appeal to the Board of Assessment Appeals, (Section 226, 252, LGC)
a. G.R. 209303 National Power Corporation Vs. The Provincial Treasurer of Benguet, et al.
November 14, 2016
b. Systems Plus Computer College v. Caloocan City, G.R. No. 146382, August 7, 2003
c. Olivare v. Marquez, G.R. No. 155591, September 22, 2004
3. Protest of the Assessment (Section 226,252, LGC)
a. Cagayan Robina v. Court of Appeals, 12 October 2000
b. Meralco v. Barlis, 18 May 2001
c. Meralco v. Barlis, 2 February 2002
d. Meralco v. Barlis, 29 June 2004
e. National Power Corporation v. Province  of Quezon and Municipality of Pagbilao, G.R. No. 171586 25
January 2010
4. Claim for refund (Section 253, LGC)
a. Period
5. Remedies from a denial of the protest and refund
a. mandamus is not a proper remedy: Habawel v. Court of Tax Appeals, G.R. No. 174759, 7 September 2011
6. Redemption of Property Sold (Section 261, LGC; City Mayor of Quezon City v. RCBC, GR No. 171033, 3 August 2010)
ii. Judicial
1. Questioning tax sale: Aquino v. QC, GR No. 137534, 3 August 2006; NHA v. Iloilo City, GR No. 172267, 20 August
2008

Prepared by:  ANDRES ARNOLD W. LAMPACAN, CPA, Llb., MPA

Bases of Outline including reference books for the subject:
1. National Internal Revenue Code (Codal Provisions)
2. Syllabus for the 2020 Bar Examinations (Bar Bulletin No. 6 S. 2020: J. Marvic MVF Leonen)
3. Course Outline of Atty. Rosemary G. Limmayog-Saldo citing the course outline of Atty. Jason Barlis, Reviewer (Taxation)
prepared for the CCDC College of Law
4. Income and Transfer and Business Taxation by Valencia and Roxas
5. Bar Reviewer in Taxation by Bisquera
6. Supreme Court Decisions (Internet websites)
7. NIRC and other tax laws by Casasola, et.al.
8. Taxation by Aralar
9. Taxation by Dimaampao