De La Salle University

Collage of Law
Course Syllabus AY 2015 to 2016 Tax I
Atty. Shirley C. Tuazon
I.

General Principles of Taxation

A. Definition and concept of taxation
B. Nature of taxation
C. Characteristics of taxation
D. Power of taxation compared with other powers
1. Jurisprudence:
Gerochi vs. Doe, GR No. 159796, July 17, 2007
E. Purpose of taxation
F. Principles of sound tax system
G. Theory and basis of taxation
H. Stages of taxation
I. Definition, nature and characteristics of taxes
J. Requisites of a valid tax
K. Tax as distinguished from other form of exactions
1. Tarif
2. Toll
3. License fee
4. Special Assessment
5. Debt
L. Kinds of taxes
1. As to object
2. As to burden or incidence
3. As to tax rates
4. As to purpose
5. As to scope or authority to impose
6. As to graduation
7. Jurisprudence
Silkair (Singapore) Pte Ltd vs. CIR, GR 166482, January 25, 2012
M. Doctrines in taxation
1. Prospectivity of tax laws
2. Imprescriptibility
3. Double taxation
4. Escape from taxation
a. Shifting of tax burden
a. Tax avoidance
b. Tax evasion
c. Jurisprudence
i. CIR vs. Estate of Benigno Toda, GR 147188, September 14, 2004
2. Exemption from taxation
a. Meaning of exemption from taxation
b. Nature of tax exemption
c. Kinds of tax exemption
d. Rationale/grounds for exemption
e. Revocation of tax exemption
f. Jurisprudence
CIR vs. Acesite (Philippines) Hotel Corporation, G.R. No. 147295, February 16,
2007

Digital Telecommunications Phils. Inc. vs. Province of Pangasinan, GR No.

152534, February 23, 2007
Silkair (Singapore) PTE, Ltd vs. CIR, GR No. 173594, February 6, 2008
Davao Oriental Electric Cooperative vs. The Province of Davao Oriental, GR
No. 170901, January 20, 2009
NAPOCOR vs. CBAA, LBAA of La Union, et al, GR No. 171470, January 30, 2009
CIR vs. PAL, GR No. 160528, October 9, 2006
San Pablo Manufacturing Corporation vs. CIR, GR No. 147749, June 22, 2006
PAL vs. CIR, GR 198759, July 1, 2013
3. Compensation and set-of
4. Compromise
5. Tax amnesty
6. Construction and Interpretation of :
a. Tax laws
b. Tax exemption and exclusion
c. Tax rules and regulations
d. Penal provisions of tax laws
e. Non-retroactive application to taxpayers
f. Jurisprudence
CIR vs. San Miguel Corporation, GR 184428, November 23, 2011
N. Scope and limitation of taxation
1. Inherent limitations
a. Public purpose
b. Inherently legislative
c. Territorial
i. Situs of Taxation
d. International Comity
e. Exemption of government entities, agencies, and instrumentalities
f. Jurisprudence
Gomez vs. Palomar, L-23645, October 29, 1968
Lutz vs. Araneta, L-7859, December 22, 1955
Bagatsing vs. Ramirez, L-41631, December 17, 1976
Pepsi Cola Bootling Co vs. City of Butuan, 24 SCRA 789
Osmena vs. Orbos, G.R. No. 99886, March 31, 1993
Villegas vs Hiu Chiong Tsai Pao Ho, 86 SCRA 270
Philippine Fisheries Development Authority vs. CA, GR No. 150301,
October 2, 2007
Deutsche Bank AG Manila Branch vs. CIR, GR No. 188550, August 19, 2013
City of Pasig vs. Republic, GR 185023, August 24, 2011
Phil. Fisheries Development Authority vs. CBAA, GR 178030, December 15,
2010
2. Constitutional limitations
a. Due Process
b. Equal Protection
c. Uniformity and Equality of Taxation
d. Progressive Taxation
e. Non-Impairment of obligations of contracts
f. Bills to Originate from the House of Representatives
g. Freedom of the Press
h. Prohibition against imprisonment for non-payment of poll tax
i. Grant by Congress of authority to the president to impose tarif rates
j. Prohibition against taxation of religious, charitable entities and educational
entities

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Tax exemptions granted to Non-stock, Non-Profit Educational Institutions

Majority vote of Congress for grant of tax exemption
Prohibition on use of tax levied for special purpose
President veto power on appropriation, revenue and tarif bills
Non-impairment of jurisdiction of the Supreme Court
Grant of power to the local government units to create its own sources of revenue
Flexible tarif clause
Exemption from real property taxes
No appropriation or use of public money for religious purposes
Jurisprudence
Villegas vs Hiu Chiong Tsai Pao Ho, 86 SCRA 270
Reyes vs Almanzor 196 SCRA 322
Gomez vs. Palomar, L-23645, October 29, 1968
Cagayan Electric Power & Light vs. CIR, GR 60126, September 25, 1985
Manila Electric Co vs. City Government of San Pablo, 306 SCRA 750
Tolentino vs. Secretary of Finance, GR 155455, August 25, 1994
Province of Abra vs. Hernando 107 SCRA 104
Abra Valley College vs. Aquino 162 SCRA 106
Lung Center of the Phils vs. Quezon City, GR 144104, June 29, 2004
CIR vs. Bishop of the Missionary District of the Philippines, L-19445, August
31, 1965
CIR vs. CA, GR 124043, October 14, 1998 (read also: YMCA of Manila vs. CIR
33 Phil 217)
Sison vs. Ancheta, L-59431, July 25, 1984
Ormoc Sugar Company vs. The Treasurer of Ormoc City, 22 SCRA 603
Lladoc vs. CIR 14 Phil 292
Bishop of Nueva Segovia vs. Provincial Board of Ilocos Norte 51 Phil 352

II. Income Taxation

Based on the provisions of the National Internal Revenue Code (NIRC) of 1997, as
amended RA 9504
A. General Principles of Philippine Income Tax
1. Income
a. Definition
b. Nature
c. When is income taxable?
i. Existence of Income
ii. Realization of Income
iii. Recognition of Income
iv. Methods of Accounting
d. 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 Doctrine of Proprietary Interest
iv. Severance Test
v. All Events Test
2. Income Taxation
3. Income tax systems
4. Features of the Income Tax Law
5. Criteria in imposing Income Tax
6. Types of Income Tax
7. Taxable Periods
8. Kinds of Taxpayers

a. Individual Taxpayers
Minimum Wage Earner RMC 7-2014
b. Corporations
c. Partnerships
d. General Professional Partnerships
e. Estates and Trust
f. Co-ownerships
B. Gross Income
1. Definition
2. Concept of income from whatever source derived
3. Gross Income vis-a-vis Net Income vis-a-vis Taxable Income
4. Classification of Income as to source
5. Sources of income subject to Tax
a. Compensation Income
b. Fringe Benefits
c. Professional Income
d. Income from Business
e. Income from Dealings in Property
i. Types of properties
ii. Types of gains from dealings in property
Ordinary Income vis-a-vis Capital Gain
Actual Gain vis-a-vis Presumed Gain
Long Term Capital vis-a-vis Short Term Capital Gain
Net Capital Gain vis-a-vis Net Capital Loss
Computation of the amount of gain or loss
Income tax treatment of capital loss
Dealings in real property situated in the Philippines
Dealings in shares of stock of Philippine Corporations
Sale of Principal Residence
Exchange of Property
iii. Passive investment income
Interest Income
Dividend Income
Royalty Income
Rental Income
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 any source whatever
j. Situs of Income taxation
6. Exclusions from Gross Income
a. Rationale for the exclusions
b. Taxpayers who may avail of exclusions
c. Exclusions vis-a-vis Deductions and Tax Credit
d. Under the Constitution
e. Under the Tax Code
f. Under Special Laws
7. Deductions from Gross Income
a. General Rules
b. Return of Capital (cost of sales or services)
c. Itemized Deduction
i. Expenses
ii. Interest

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D.
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F.

G.

iii. Taxes
iv. Loses
v. Bad Debts
vi. Depreciation
vii. Charitable and other contributions
viii.Research and Development
ix. Contributions to pension trusts
x. Deductions under special laws
d. Optional Standard Deduction RR 16-2008
e. Personal and Additional Exemption
f. Items not Deductible
g. Exempt Corporations
h. Jurisprudence
i. CIR vs. Isabela Cultural Corporation G.R. No. 172231, February 12,
2007
ii. Carmelino Pansacola vs. CIR, GR No. 159991, November 16, 2006
iii. RR 16-2008
Taxation of Resident Citizens, Non-Resident Citizens and Resident Aliens
1. General Rule
2. Taxation on Compensation Income
a. Inclusions
b. Deductions
3. Taxation of Business Income and Income from practice of profession
4. Taxation of Passive Income
5. Jurisprudence and Relevant Issuances
a. RR 11-2012
b. RR 8-2012
c. RMC 20-2011
d. RR 10-2008
Taxation of Non Resident Aliens Engaged in Trade or Business
Taxation of Non Resident Aliens Not Engaged in Trade or Business
Individual Taxpayers Exempt from Income Tax
1. Senior Citizens
a. R.A. 9994
b. M.E. Holding Corporation vs. CA, GR No. 160193
c. CIR vs. Cental Luzon Drug Corporation, GR No. 159610
d. Bicolandia Drug Corp vs. CIR, GR No. 142299
e. Carlos Superdrug Corp vs. DSWD, GR No. 166494
2. Minimum Wage Earners RA 9504, RMC 23-2011
3. Exemptions granted under international agreements
Taxation of Domestic Corporations
1. Tax Payable
a. Regular Tax
b. Minimum Corporate Income Tax (MCIT)
i. Jurisprudence
Chamber of Real Estate and Builders Association vs. Romulo et.,
al, GR No. 160756
CIR vs. PAL, GR 179259, September 25, 2013
CIR vs. St. Lukes Medical Center, GR 195909, September 26,
2012
2. Allowable Deductions RR 1-2009, RR 1-2007
3. Taxation of Passive Income
4. Taxation of Capital Gains
5. Tax on proprietary educational institutions and hospitals
4. Tax on government-owned or controlled corporations, agencies or instrumentalities

H. Taxation of resident foreign corporations

1. General rule
2. With respect to income from sources within the Philippines
3. Minimum Corporate Income Tax
4. Tax on Certain Income
5. Jurisprudence and Relevant Issuances
a. CIR vs. Citytrust Investment Phils, Inc., GR No. 139786
b. South African Airways vs. CIR, GR No. 180356
c. RA 10378; RR 15-2013
6. International Carriers
7. Ofshore Banking Units
8. Branch Profit Remittance
9. Regional or Area Headquarters and Regional Operating Headquarters of Multi
National Companies
I. Taxation of Non Resident Foreign Corporations
1. General Rule
2. Tax on certain income
J. Improperly Accumulated Earnings Tax (IAET)
K. Exemptions form tax on Corporations
L. Taxation of General Professional Partnership
M. Withholding Tax RR 2-98
1. Concept
2. Kinds of Withholding
3. Time of Withholding
4. Jurisprudence and Relevant Issuances
a. RR 12-2013
b. CIR vs. SMART Communications, Inc. GR No. 179045-46, August 25, 2010
N. Tax Return and Payment
O. Estates and Trusts
Grading System
Class Standing 25%
MidTerms
35%
Finals
40%