Instances when Preferred Non-Voting Stock are  

ALLOWED TO VOTE 
 

I​3​ AM SAD 
 
1. I​ncurring bond indebtedness (bonds payable) 
2. I​nvestment  of  corporate  funds  in  another  corporation  or  business 
purpose other than those stated in the Articles 
3. I​ncrease or decrease in capital stock 
4. A​mendment of the Articles of Incorporation 
5. M​erger or Consolidation 
6. S​ale,  disposition,  conveyance,  pledge  or  mortgage  of  all  or 
substantially all corporate property or assets 
7. A​doption and amendment of by-laws 
8. D​issolution of corporation 
 

Instances when Preferred Non-voting are  

NOT ALLOWED TO VOTE 
 

GRRADE 
 

  Required Vote 
1. G​ranting of compensation to ​directors  ⠀ Majority of OCS 
2. R​emoval of a ​director  ⠀ 2/3 of OCS 
3. R​atification of disloyalty of a ​director  ⠀ 2/3 of OCS 
4. A​pproval of management contract  ⠀ Majority Mng & Mgd 
5. D​istribution of stock dividends  ⠀ Majority BOD, 2/3 OCS 
6. E​lection of board of ​directors  ⠀ Plurality vote 
 
 Entities NOT ALLOWED to issue  
NO-PAR COMMON STOCK 
 
BP 68 RA 11232 

BLTBPI + PO 
 

1. B​uildings and ​L​oans associations 

2. T​rust companies 
3. B​anks 
4. P​ublic Utilities 
5. I​nsurance companies 
6. P​re-need Companies 
7. O​ther corporations authorized to access money from the public 

Entities NOT ALLOWED to be  

CLOSED Corporations 
 

I COME BSP 
 

1. I​nsurance companies 
2. C​orporations vested with public interest 
3. O​il companies 
4. M​ining companies 
5. E​ducational institutions 
6. B​anks 
7. S​tock exchange 
8. P​ublic utilities 
 Matters the Executive Committee  
CANNOT ACT UPON  
through majority vote of its members 
 

FA​3​D 
 

1. F​illing up of vacancies in the board 

2. A​pproval  of  any  corporate  act  ​requiring  shareholders’  vote  (I​3  AM 
SAD) 
3. A​mendment  or  repeal,  or  adoption  of  new  bylaws  (Majority  BOD, 
Majority OCS) 
4. A​mendment  or  repeal  of  any  resolution  of  BOD  which  are  ​not 
amenable or repeleable  
5. D​istribution of cash dividends to shareholders  
 

When Appraisal Right is AVAILABLE 

 

AIM-CSC 
 

1. A​mendment  to  the  Articles  that  has  the  effect  of  ​changing, 
restricting  the  rights  of  shareholders​, or authorizing ​preference over 
those outstanding shares 
2. I​nvestment  of  corporate  funds  in  another  corporation  ​other  than  the 
primary purpose 
3. M​erger or consolidation 
4. C​hanging the corporate term 
5. S​ale,  encumber,  pledge,  mortgage  or  other  disposition  of  all  or 
substantially all of the corporate property or assets 
6. I​n  Close  corporations,  upon  the  desire  of  the  stockholder  to  sell  his 
share to the corporation 
 
MATTERS USUALLY FOUND IN THE 
Articles of Incorporation  By-Laws ONLY 
NOT PAID  MOPPED IQ 
1. N​ame of the corporation *  1. M​eetings (time, place, manner 
of calling, conducting, for 
2. Principal ​O​ffice 
directors, for stockholders etc.) 
3. T​erm of existence * 
2. O​ther matters (catch-all) 
4. P​urpose clause (primary & 
3. P​roxies 
secondary) * 
4. P​enalties 
5. A​uthorized stock, no. of shares, 
par value, issue price of no-par  5. E​lections (time, manner, term of 
office) 
6. I​ncorporators (name, nationality, 
and residence)  6. D​uties, qualifications, and 
compensation of directors 
7. D​irectors (number, names, 
nationality, and residence)  7. I​ssuance of stock certificates 
  8. Q​uorum 
The following must be found in the  
Articles of Incorporation ONLY  
1. Classification of shares 
2. Provisions for founder’s shares 
3. Provisions for redeemable shares 
4. Capitalization of stock corporations 
5. Denial of pre-emptive right 
6. Nos. 1, 3, 4, above *** 
EITHER IN the Articles of Incorporation OR Bylaws 
1. Cumulative voting provision for nonstock corporations 
2. Higher quorum for board meetings 
3. Limiting, broadening, or denial of the right to vote 
4. Transferability of membership in a nonstock corporation 
5. Termination of membership in a nonstock corporation 
6. Election (manner, term) in a nonstock corporation 
7. Manner of distribution of assets in nonstock corporations upon 
dissolution 
8. Staggered board provision 
 

PERSONAL/EQUITABLE DEFENSES  
AVAILABLE AGAINST A 

HOLDER NOT IN DUE COURSE 

 

1. Absence or failure of consideration, partial or total 

2. Absence/Want of delivery or complete instrument 
3. Wrong date when payable on a fixed period after date 
4. Undated when payable on fixed period after sight 
5. Blank instrument without authority 
6. Fraud in inducement 
7. Acquisition of instrument by force, duress, fear or by unlawful 
means 
8. Negotiation in Breach of Faith 
9. Negotiation under circumstances that amount to fraud 
10. Mistake 
11. Forged indorsement or signature in a bearer instrument 
12. Intoxication 
13. Ultra vires acts of corporations where corporation ​has the power 
to issue but such was ​unauthorized​ for the purpose for which it 
was issued 
14. Want of authority of agent ​where he has apparent authority 
15. Absence/Want of delivery 
16. Illegality of contract due to the illegality of form or consideration 
17. Insanity when there is ​no notice of insanity 
18. Material alteration as to the ​original tenor 
 REAL/LEGAL/ABSOLUTE DEFENSES  
AVAILABLE AGAINST A 

HOLDER IN or NOT IN DUE COURSE 

 

1. Incomplete and Undelivered Instrument 

2. Duress amounting to forgery 
3. Fraud in factum  
4. Fraud in esse contractus 
5. Minority 
6. Insanity 
7. Ultra vires acts of corporations ​absolutely prohibited​ from 
issuing commercial papers 
8. Want of authority of agent, apparent or real 
9. Execution of instrument between public enemies 
10. Illegality of contract where it is a contract of instrument which is 
expressly made illegal by statute 
11. Forgery of signature ​of maker or acceptor 
12. Forged indorsement or signature ​in case of order instrument 
13. Material alteration as to ​the excess of the original amount 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 PASSIVE INCOME ON  
INDIVIDUALS 
 

  Citizen/  NRA  NRA 

RA  ETB  NETB 
Interest from PESO bank deposit  20%  20%  25% 
Yield  or monetary benefit from deposit  20%  20%  25% 
substitutes,  trust  funds,  or  similar 
arrangements 
Royalties, in general  20%  20%  25% 
For books, literary works, musical        
compositions  10%  10%  25% 
Prizes ​more than ​P10,000  20%  20%  25% 
Prizes ​less than​ P10,000  Include in ITR  25% 
Winnings  20%  20%  25% 
       
PCSO & Lotto Winnings ​if P10,000  Exempt  Exempt  25% 
or less 
Interest  income from a depositary bank  15%  Exempt  Exempt 
under ExFCUD system 
Interest  income from long-term deposit       
or investment ​of 5 years or more  Exempt  Exempt  25% 
Less than 3 years 20% 
3 years to <4 years 12% 
4 years to <5 years 5% 
Cash/Property  dividend  received  from  10%  20%  25% 
a domestic corporation 
Share  of  partner  in  after-tax  income  of  10%  10%  10% 
partnership,  organization,  JV,  or 
consortium taxable as a corporation 
 
 
 PASSIVE INCOME ON  
CORPORATIONS 
 

  DC/RFC  NRFC 
Interest on currency bank deposit  20%  30% 
Yield or any other monetary benefit from deposit     
substitutes and trust funds or similar arrangements  20%  30% 
Royalties  20%  30% 
Interest from a depositary bank under Ex-FCUD  7.5% RFC  Exempt 
15% DC 
 

INTERCORPORATE DIVIDENDS 
 

Payor  Recipient  Tax 

  Domestic Corporation  Not taxable 
Domestic  Resident Foreign Corporation  Not taxable 
Corporation  Nonresident Foreign Corporation  15% FWT 
 
 

CORPORATE CAPITAL GAINS TAX 

 

Transaction  Tax Base  Tax Rate 

Sale of Shares of a DC     Seller is DC 15% 
Seller is FC 
Not traded in the LSE  Net Capital Gain  Gain below P100k 5​ % 
  Gain, excess P100k ​10% 

Traded in the LSE  Gross Selling Price  6/10 of 1% 

Sale of Real Property as a     
Capital Asset  Highest of GSP,   
Domestic Corp — Seller  Zonal, Assessor’s  6% 
Value 
RFC — Seller  Gain on sale   
(included in ITR)  30% 
NRFC — Seller  Gain on sale (FT)  30% 
 

 
 

SPECIAL CORPORATIONS 
 

  Situs  Tax Rate 

Private Educational Institutions  Taxable Net Income,   
& Nonstock/Nonprofit  World  10% 
Hospitals 
Resident ​International  Gross Philippine Billings  2.5% 
Carriers 
Nonresident ​Cinematographic  Gross Income,   25% 
Film​ Owner/Lessor  Philippines 
Nonresident Owner/Lessors of  Gross Income from   
Vessels  Rentals, Leases, Charter  4.5% 
fees in the Philippines 
Nonresident Owner/Lessor of  Gross Income from   
Aircrafts, Machineries, and  Rentals, Leases, Charter  7.5% 
Equipment  fees in the Philippines 
Offshore banking units  Interest income - FC trxns  10% 
Subcontractor of service  Taxable Net Income,   
contractor engaged in  Philippines  8% 
petroleum 
ECOZONE​ Enterprise  Gross Income, Philippines  5% 
 
 

TAXABILITY OF GOCCs 
 

GENERAL RULE:  
All GOCCs are taxable like any other corporation 
 

EXCEPTIONS: 
GSIS, SSS, PHIC, PDIC and LOCAL WATER DISTRICT 
 
 
 
 
 
 FRINGE BENEFITS TAX 
 
 

Benefit Received  Monetary Value  Formula 

Cash  Amount of cash given   
by ER to EE   
 
Property  The ​higher ​of FMV, 
Monetary Value 
Zonal, or Assessed 
÷  
Value 
Gross Up Divisor  
Usufruct  Depreciation Value÷2  x 
  FBT Rate 
Personal (5 years UL) 
Real (20 years UL) 
Interest  Forgone Interest Rate 
(12% – Interest given) 
 

FRINGE BENEFITS TAX RATES 

 
 

  Grossed Up Divisor  FBT Rate - FWT 

2018 Onwards  65%  35% 
NRA-NETB  75%  25% 
Aliens employed by  85%  15% 
OBU 
Special Aliens  85%  15% 
   
 

INCOME TAX RETURN 

 
For Individuals, Estates & Trusts 
 

BIR FORM  
Quarterly ITR 
1701Q  Filed in DUPLICATE Copies 

BIR FORM  
Annual ITR 
 
1701  Filed in DUPLICATE Copies 

PARTS OF 1701Q & 1701 

  1701Q  1701 
Part 1  Background Information on Taxpayer/Filer 
Part 2  Background Info on Spouse  Total Tax Payable 
Part 3  Total Tax Payable  Details of Payment 
Part 4  Details of Payment  Background Info on Spouse 
Part 5  Computation of Tax Due 
(Schedules) 
  Sched 1​: For Graduated IT Rates  Sched 1​: Gross Compensation Income & 
Sched 2​: For 8% IT Rates  Tax Withheld 
Sched 3​: Tax Credits/Payments  Sched 2​: Taxable Compensation Income 
Sched 4​: Penalties  Sched 3​: Taxable Business Income 
Sched 4​: Ordinary Allowable Itemized 
Deductions 
Sched 5​: Special Allowable Itemized 
Deductions 
Sched 6: Computation of NOLCO 

Part 6  n/a  Summary of Income Tax Due 

Part 7  n/a  Tax Credits/Payments 
Part 8  n/a  Tax Relief Availment 
Part 9  n/a  Reconciliation of Net Income per 
Books against Taxable Income 
 
 
 
 
 
 
PENALTIES 
SURCHARGE  25%  50% 
Delinquency   Delinquency  
in good faith  in bad faith 

INTEREST  20%  12%  

Prior 2018  2018 Onwards​1 

Interest is applicable for both ​delinquencies​ and 
deficiencies 
 
Interest = P ​✕ ​R ​✕ ​T 
 
P = Tax proper (tax still due) 
R = 20% or 12% depending on the year 
T = time of delay from the deadline up to actual payment 
 
 
TRAIN law interest rate is ​double the rate set by 
1​

the Bangko Sentral ng Pilipinas​. Current rate is 6%. 

 
 

 
COMMON REMEDIES 
 

COMPROMISE  ABATEMENT 
Financial incapacity* 10% 
Other cases 40%  0% 
   
*with waiver of Bank Secrecy  Tax is totally obliterated or cancelled 

GROUNDS  GROUNDS 
✽Reasonable doubt as to the validity  ✽Tax is excessively or unjustly   
of the claim  assessed 
✽Clear inability of taxpayer to pay  ✽Cost > Benefits 
✽Payment appears to be erroneous