Taxation Review:

Day One

General Principles:

1. Definition of Taxation – must contain that it is a legislative function, for public purpose,
purpose of raising revenue.
2. Purpose of Taxation
a. What are the purposes of taxation?
b. Does it have the power to destroy?
c. Intervention of the Supreme Court to prevent taxation to have the power to destroy
3. Distinction of Taxation, Eminent Domain and Police Power
4. Distinction between taxes and other forms of exactions
5. Theory : Benefits Received Theory, Necessity Theory and Lifeblood Doctrine.

Day Two

1. Jurisdiction over subject and objects

2. Principle of a Sound Tax System (FAT) (Fiscal Adequacy, Administrative Feasibility,
and Theoritical Justice)
3. Whether or not the absence of any of the above immediate FAT render the Tax law
unconstitutional?
4. What are the inherent limitations of Taxation?
a. What is public purpose?
b. Can power of taxation be delegated?
c. Local government? Customs and Tariffs?
d. Bureau of Internal Revenue and its administrative function?
e. What is International Comity?
f. Can Government tax itself?
g. Territorial Jurisdiction.

Day Three

1. What are the Constitutional Limitations?

a. Due Process and its two (2) aspects: Substantive and Procedural.
b. Substantive due process, how is it violated?
c. Equal Protection Clause
d. What are the requistites of Equal Protection?
e. What are religious freedom?
f. Explain the non-impairment clause and distinguish which contracts can be impaired
by the government (Those not protected by the impairment clause)?
g. Non-imprisonment for non-payment of poll tax.
h. Uniformity and Equality of Taxation. Explain the progressive system of taxation.
i. Delagated authority to the President to impose tariff rates.
j. Exemptions under Article VII Sec. 28 of the Philippine Constitution. Covers only real
properties which are actually, directly, and exclusively used for charitable, religious,
or educational purposes.
k. Prohibition against taxation of non-stock, non-profit Educational Institutions.
l. Grant of tax exemptions
m. Article VII Sec. 29
n. Bills that should originate from the lower house. Can it be revised, amended by the
Senate? Can a totally different tax bill because it was totally revised by the senate but
originated from the lower house be valid?
o. President’s Power to veto Appropriation,Revenue and Tariff Bills
p. Judicial Power to Review Legality of Tax Bills.
q. Grant of Power to the Local Government.

Day Four:

1. Stages or Aspects of Taxation

2. Requisites of a Valid Tax
 3. Kinds of Taxes with respect to…. All kinds of taxes
4. GENERAL CONCEPTS IN TAXATION
a. Prospectivity of tax laws
b. Imprescriptibility
c. Situs of taxation
d. Double taxation
i. Strict sense
ii. Broad sense
iii. Tax treaties as relief from double taxation
e. Tax evation and tax avoidance
f. Shifting of tax burden
g. Exemption from taxation
h. Equitable recoupment
i. Prohibition on compensation and set-off
j. Compromise
k. Tax amnesty
5.Constuction and Interpretion of Tax Laws, Rules and Regulations.

General Principle Cases:

1.CIR vs. Pineda GR No. L-22734

2. CIR vs. CTA G.R. No. 1066611
3. Commissioner vs. Algue, Inc. GR No. L-28896
4. YMCA vs. CIR GR No. L-7988
5. Ferdinand Marcos II vs. CA GR No. 120880
6. Philippine Bank of Communication vs. CIR GR No. 112024
7. Talento vs. Escalada GR No. 180884
8. Camp John Hay vs. Central Board of Assessment Appeals GR No. 169234
9.Visayas Geothermal vs. CIR, GR No. 197525
10. CIR vs. United Salvage and Towage GR No. 197515
11. Lutz vs. Araneta L-7859
12. Gomez vs. Palomar L-23645
13. Francia vs. IAC GR No. L-67649
14. Domingo vs. Garlitos GR No. L-18994
15. Tio vs. Videogram Regulatory Board GR No. 75697
16. Bagatsing vs. Ramirez L-41631
17. Board of Assessment of Laguna vs. CTA L-18125
18. Osmena vs. Orbos GR No. 99886
19. Villegas vs. Hiu Chiong Tsai Pao Ho GR No. L-29646
20. National Development Co. vs. Cebu City GR No. 51593
21. CIR vs. CA GR No. 119761
22. Eastern Teathrical Co. vs. Alfonso 83 Phil 852
23. Manila Race Horse Trainers Assn., Inc. vs. de la Fuente 88 Phil 60
24. City of Baguio vs. de Leon GR No. L-24756
25. Sison vs. Ancheta L-59431
26. Ormoc Sugar Co. vs. Treasurer of Ormoc City GR No. l-23794
27. Kapatiran ng Mga Naglilingkod sa Pamahalaan ng Pilipinas vs. Tan GR No.81311
28. Cagayan Electric Power and Light vs. Commissioner GR No. 60126
29. Tolentino vs. Sec. of Finance GR No. 115455
30. Abakada vs. Ermita GR No. 168056
31. Pagcor vs. BIR GR No. 172087
32. Abra Valley College vs. Borgonia GR No. L-39086
33. Lladoc vs. CIR 14 Phil 292
34. Bishop of Nueva Segovia vs. Provincial Board of Ilocos Norte 51 Phil 352
35. Esso Standard Eastern vs. Acting Commissioner of Customs L-21841
36. Villanueva vs. City of Iloilo GR No. L-26521
37. Ungab vs. Cusi GR No. L-41919-24
38. Adamson vs. CA GR No. 120395
39. CIR vs. Pascor GR No. 128315
40. CIR vs. CA GR No. 119322

Income Taxation:
 1. Definition, nature, and general principles
a. Income tax systems
i. Global
ii. Schedular
b. Features of the Philippine income tax law
c. Criteria in imposing Philippine income tax
i. Citizenship
ii. Residence
iii. Source
d. General principles of income taxation
e. Types of Philippine income taxes
f. Kinds of taxpayers
g. Taxable period
2. Concept of income
a. When income is taxable
i. Existence of income
ii. Realization of income
iii. Recognition of income
b. Tests in determining whether income is earned for tax purposes
i. Realization test
ii. Claim of right doctrine or doctrine of ownership, command or control
iii. Economic benefit test or doctrine of proprietary interest
iv. Severance test
d. Methods of accounting
i. Distinguish: cash and accrual method
ii. Special method: installment, deferred payment, percentage of completion (in
long-term contracts)
e. Situs of Income
3. Gross income
a. Definition
b. Distinguish: gross income, net income, and taxable income
c. Sources of income subject to tax
i. Compensation income
ii. Fringe benefits
iii. Professional income
iv. Income from business
v. Income from dealings in property
(a) Distinguish ordinary asset and capital asset
(b) Types of gains
(c) Special rules pertaining to income or loss from dealings in property
classified as capital asset (loss limitation rule, loss carry-over rule, holding
period rule)
(d) Tax-free exchanges
vi. Passive investment income
(a) Interest
(b) Dividend
(c) Royalty income
(d) Rental income
vii. Annuities and proceeds from life insurance or other types of insurance
viii. Prizes and awards
ix. Pension, retirement benefit, or separation pay
x. Income from any source
(a) Condonation of indebtedness
(b) Recovery of accounts previously written off
(c) Receipt of tax refunds or credit
d. Exclusions
i. Distinguish: exclusions, deductions, and tax credits
ii. Exclusions under the Constitution
4. Deductions
a. General rule
b. Concept of return of capital
 c. Distinguish: itemized deductions and optional standard deduction
d. Requirements for deductible items
e. Items not deductible
5. Income tax on individuals
a. Resident citizens, non-resident citizens, and resident aliens
i. Coverage
ii. Taxation on compensation income
(a) Inclusions
(b) Exclusions
iii. Taxation of business income/income from practice of profession
(a) Schedular
(b) 8% option
iv. Taxation of partners in a general professional partnership
v. Taxation of passive income
vi. Taxation of capital gains
(a) Income from sale of shares of stock of a Philippine corporation
(b) Income from sale of real property situated in the Philippines
(c) Income from sale, exchange, and other disposition of other capital
assets
b. Non-resident aliens engaged in trade or business
c. Non-resident aliens not engaged in trade or business
d. Aliens employed by regional headquarters, regional operating headquarters, offshore
banking units, and petroleum service contractors
e. Individual taxpayers exempt from income tax
i. Minimum wage earner
ii. Exemptions granted under international agreements
6. Income tax on corporations
a. Domestic corporations
i. Taxation - in general
(a) Regular Corporate Income Tax (RCIT)
(b) Minimum Corporate Income Tax (MCIT)
(c) Taxation of passive income
(d) Taxation of capital gains
(e) Improperly accumulated earnings tax
ii. Proprietary educational institutions and non-profit hospitals
iii. Government-owned or controlled corporations, agencies, instrumentalities
iv. Foreign currency deposit units
b. Resident foreign corporations
i. Taxation - in general
(a) Regular Corporate Income Tax (RCIT)
(b) Minimum Corporate Income Tax (MCIT)
(c) Branch Profits Remittance Tax (BPRT)
(d) Taxation of passive income
(e) Taxation of capital gains
ii. Resident foreign corporations subject to preferential tax rates
(a) International carriers
(b) Foreign currency deposit units and offshore banking units
(c) Regional or area headquarters and regional operating headquarters
c. Non-resident foreign corporations (NRFC)
i. Taxation of NRFC in general
ii. NRFCs subject to preferential tax rates
d. Corporations exempt from income tax
e. Tax on other business entities: general partnerships, general professional partnerships,
co-ownerships, joint ventures, and consortia
7. Filing of returns and payment
a. Individual return
i. Who are required to file; exceptions
ii. Substituted filing
iii. When and where to file
b. Corporate returns
i. Quarterly income tax
ii. Final adjustment return
 iii. When and where to file
iv. Return of corporations contemplating dissolution or reorganization
c. Return on capital gains realized from sale of shares of stock and real estate
8. Withholding tax
a. Concept
b. Final withholding tax
c. Creditable withholding tax
i. Expanded withholding tax
ii. Withholding tax on compensation
d. Fringe benefits tax
e. Duties of a withholding agent
Tax 2

ESTATE TAX

1. Basic principles, concept, and definition

2. Classification of decedent
3. Composition of gross estate
a. Items to be included in determining gross estate
i. Decedent's interest
ii. Transfers in contemplation of death
iii. Revocable transfers
iv. Property passing under a general power of appointment
v. Proceeds of life insurance
vi. Prior interests
vii. Transfers for insufficient consideration
b. Allowable deductions from gross estate
c. Exclusions from gross estate and exemptions of certain acquisitions and transmissions
d. Tax credit for estate taxes paid to a foreign country
e. Filing of estate tax returns and payment of estate tax

2. DONOR'S TAX

1. Basic principles, concept, and definition

2. Requisites of a valid donation
3. Transfers which may be considered as donation
a. Sale, exchange, or transfer of property for less than adequate and full consideration;
exception
b. Condonation or remission of debt
c. Renunciation of inheritance; exception
4. Classification of donor
5. Determination of gross gift
a. Composition of gross gift
b. Valuation of gifts made in property
c. Exemption of certain gifts
6. Tax credit for donor's taxes paid to a foreign country
7. Filing of return and payment

3. VALUE-ADDED TAX

1. Nature and characteristics of value-added tax

a. Tax on value added
b. Sales tax
c. Tax on consumption
d. Indirect tax: impact and incidence of tax
e. Tax credit method
f. Destination principle and cross-border doctrine
2. Persons liable to value-added tax
3. Imposition of value-added tax
a. On sale of goods or properties
i. Tax base: gross selling price
ii. Transactions deemed sale
iii. Change or cessation of status as value-added tax-registered person
b. On importation of goods
c. On sale of services and use or lease of properties
4. Zero-rated and effectively zero-rated sales of goods or properties, and services
5. Value-added tax-exempt transactions
6. Input and output tax
7. Refund or tax credit of excess input tax; procedure
8. Compliance requirements
a. Registration
b. Invoicing requirements
c. Filing of returns and payment
 d. Withholding of final value-added tax on sales to government
e. Administrative and penal sanctions
9. Cases:
a. Tolentino vs. Sec. of Finance GR No. 115455
b. Abakada vs. Ermita GR No. 168056
CIR vs. CA and COMASERCO G.R. No. 125355, March 30, 2005
CIR vs. SM Prime Holding Inc., Feb. 2/26/2010
CIR vs. Magsaysay Lines G.R. No. 146984 July 28, 2006
CIR vs. Seagate G.R. No. 153866 February 11, 2005
CIR vs. American Express G.R. No. 152609 June 29, 2005
Atlas Consolidated Mining vs. CIR GR Nos. 141104 and
148763 June 8, 2007
CIR vs. Mirant Pagbilao Corp GR No. 172129 dated September
12, 2008
2
CIR vs. SAN ROQUE POWER GR No. 187485 dated February
12, 2013
4. Amendments of Section 112 under Rep. Act No. 10963
(TRAIN) on Change of Period from 120 to 90 days and No
Inaction Provisions and Penalties for BIR Inaction. (See Sec 2
RR 13-2018 amending Sec 4.112-1 of RR 16-2005)
VI. Other Matters
1. Invoicing Requirements
(Sec. 113) [Sec. 4.1113-1 of RR No. 16-05]
Microsoft Phils., Inc. vs. CIR, GR No. 180173 dated April 6,
2011
Coca-Cola Bottlers Philippines, Inc. vs. CIR, GR No. 222428
dated February 19, 2018
Silicon Phils., Inc. vs. CIR, GR No. 172378 dated January 17,
2011
2. Information which must be contained (Sec. 113)
3. Consequences of Issuing Erroneous VAT Invoice
(Sec. 113) [ RR No. 4.113-4 of RR No. 16-05]
4. Filing of Monthly and Quarterly VAT Returns and Payment
of VAT (Sec. 114)
Amendment of the TRAIN Law
5. Summary Lists of Sales and Purchases (RR No. 1-2012)
6. Amendments of Section 114 under Rep. Act No. 10963
(TRAIN) on Changes in Filing to Quarterly Filing of VAT Return
(See Sec 2 RR 13-2018 amending Sec 4.114-1 of RR 16-2005)
7. Withholding VAT (Sec. 114 C) [Sec. 4.114-2 of RR No. 16-
05 as amended by Sec. 22 of RR No. 4-07 and RR 13-2018]
(1) Government payments
(2) Amendments of Section 114 under Rep. Act No. 10963
(TRAIN) on Change from Final Withholding VAT to Creditable
Withholding VAT on Government Payments
(3) Services Rendered by Non-residents
(4) Withholding VAT Returns/Time of Payment
(5) Power of the Commissioner to Suspend Business
Operations (Sec.5) [Sec. 4.115-1 of RR No. 16-05]
Corporation (PSALM) vs. CIR, GR No. 198146 dated August 8,
2017
4. PERCENTAGE TAXES: CONCEPT AND NATURE

5. EXCISE TAX: CONCEPT AND NATURE

6. DOCUMENTARY STAMP TAX: CONCEPT AND NATURE

7.TAX REMEDIES UNDER THE NATIONAL INTERNAL REVENUE CODE

1. Assessment of internal revenue taxes

a. Procedural due process in tax assessments
i. Letter of authority and tax audit
ii. Informal conference
iii. Preliminary assessment notice
iv. Formal letter of demand and final assessment notice
v. Disputed assessment
vi. Administrative decision on a disputed assessment
vii. Appeal from an administrative decision on disputed assessment
b. Requisites of a valid assessment
c. Tax delinquency and tax deficiency
d. Prescriptive period for assessment
i. General rule
ii. Distinguish: false returns, fraudulent returns, and non-filing of returns
iii. Suspension of statute of limitations
2. Taxpayer's remedies
a. Protesting an assessment
i. Period to file protest
ii. Kinds of protest - request for reconsideration or reinvestigation
iii. Submission of supporting documents
iv. Effect of failure to file protest
v. Action of the Commissioner on the protest filed
(a) Period to act upon or decide on protest filed
(b) Remedies of the taxpayer in case of denial or inaction of the
Commissioner
(c) Effect of failure to appeal
b. Recovery of tax erroneously or illegally collected
i. Grounds, requisites, and periods for filing a claim for refund or issuance of a tax
credit certificate
ii. Proper party to file claim for refund or tax credit
iii. Distinguish from input value-added tax refund
c. Power of Commissioner of Internal Revenue to compromise
d. Non-retroactivity of rulings

3. Government remedies for collection of delinquent taxes

a. Requisites
b. Prescriptive periods; suspension of running of statute of limitations
c. Administrative remedies
i. Tax lien
ii. Distraint and levy
iii. Forfeiture of real property
iv. Suspension of business operation
v. Judicial remedies
d. No injunction rule; exceptions
4. Civil penalties
a. Delinquency interest and deficiency interest
b. Surcharge
c. Compromise penalty
d. Fraud penalty

8. LOCAL TAXATION
A. LOCAL GOVERNMENT TAXATION
1. Fundamental principles
2. Nature and source of taxing power
a. Grant of local taxing power under the Local Government Code
b. Authority to prescribe penalties for tax violations
c. Authority to grant local tax exemptions
d. Withdrawal of exemptions
e. Authority to adjust local tax rates
f. Residual taxing power of local governments
3. Scope of taxing power
4. Specific taxing power of local government units
5. Common revenue raising powers
6. Community tax
7. Common limitations on the taxing powers of local government units
8. Requirements for a valid tax ordinance
9. Taxpayer's remedies
a. Protest
b. Refund
c. Action before the Secretary of Justice
10. Assessment and collection of local taxes
a. Remedies of local government units
b. Prescriptive period