Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
IN TAXATION
TAX 1
1) Cebu Portland Cement v. CTA, L-29059, 15 Dec 1987, 156 SCRA 535 (Lifeblood
of the Government)
2) Mun. of Makati v. CA, et al, L-89898, 01 Oct 1990, 190 SCRA 206 (Exempt from
execution)
3) CIR v. Algue, Inc. et al, L-28896, 17 Feb 1988, 158 SCRA 9 (Lifeblood Theory;
Rationale is Symbiotic Relationship; timeliness of assessment / collection;
effect of warrant of distraint & levy; deductibility of promotional expense) 3
4) BPI Family Savings Bank v. CA et al, 330 SCRA 507, G.R. No. 122480 April 12, 2000
(Mutual Observance of fairness & honesty; claim for refund due to losses, how
to prove entitlement)4
b. Principles of a Sound Tax System
1. Fiscal Adequacy
2. Theoretical Justice
3. Administrative Feasibility
4. Will the non-observance of these principles invalidate the tax law?
No, unless other inherent and constitutional limitations are infringed.
c. Scope of Taxation
1
What is the concept of taxation? It can be viewed in two ways, namelya) as a power to
tax and (b) as the act or process by which taxing power is exercised.
2
What is the theory or underlying basis of taxation? It is a necessity without which no
government could exist; revenues collected are intended to finance government and its
activities. It can reach what traditionally are within police power measures to attain:
i. Social justice
ii. Equitable distribution of wealth
iii. Economic progress
iv. Protection of local industries, public welfare and the like
3
The substantive issue here is the deductibility of P75,000 promotional fees paid by Algue
to certain individuals who were also its stockholders and who rendered services so that
Algue would earn commission fees. The procedural issue whether or not Allgue seasonably
filed its appeal to the CTA from receipt of Warrant of Distraint and Levy. Due to a special
circumstance, this case presents an excepted to the rule that a Warrant of Distraint and Levy
is “proof of the finality of the assessment” and “renders hopeless a request for
reconsideration,” being “tantamount to an outright denial thereof and makes the said request
deemed rejected.”
4
This is a claim for tax refund due to losses, which was denied by the CTA allegedly for
failure to present the Annual Income Tax Return of the following year, which would show
whether the overpaid taxes had not been credited in that year’s tax liability.
1
1. No attribute of sovereignty is more pervading,
unlimited, plenary, comprehensive and supreme
2. Wide spectrum of the power to tax reaches every
trade or occupation, every object of industry, use or enjoyment, every
species of possession
3. Imposes burden, if not followed could result to
seizure and penalty
4. Pervasive affecting constantly and consistently all
relations of life
5. It also involves the power to destroy per Justice
Marshall [but Justice Holmes said no while the US SC sits]
5) CIR v Tokyo Shipping Co, 244 SCRA 332, G.R. No. L-68252 May 26, 1995 [Claim for
Refund of tax on GPB from charter of vessel; claim for refund construed
strictississimi juris finding of fact by CTA that vessel left without sugar laden; 15
years lapsed without refund though at one point lawyer of BIR said it was approved;
kill the goose that lay the golden eggs]
d. Limitation of Taxation
1. Inherent Limitations
a. Public Purpose
b. Legislative in Nature
c. Territorial
d. International Comity
6) CIR v Mitsubishi Metal Corp, 181 SCRA 214, 22 Jan 1990 [Exemption of Japanese
govt owned bank does not extend to Jap corp, who in turn lent the loan to a local
company; exemption construed strictississimi]
2. Constitutional Limitations
Directly affecting taxation
a. Non-imprisonment for non-payment of poll tax
b. Rule of taxation should be uniform and equitable;
progressive system of taxation to evolve; authorized
President to fix limits by Congress
c. Exempt charitable and religious institution from property
tax
d. Exempting law must be passed by majority of all members
of Congress
e. Special purpose tax should be used for said purpose and
excess to revert to general fund
f. Veto power of the President
g. Review power of the SC
h. Grant of power to local government
i. Exemption of non-stock, non-profit educational
institution, etc from taxes
2
Indirectly affecting taxation
a. Due Process and Equal Protection Clauses
b. Police Power and Eminent Domain higher, can override
constitutional rights, subject to limitations
1) Due Process
1) Separation of Church and State
1) Non-impairment clause of contracts
1) Free exercise and enjoyment of religious profession
7) Phil Bank of Communications v. CIR, et al, 302 SCRA 241, G.R. No. 112024
January 28, 1999 [Summary collection does not infringe due process
8) Sison v. Ancheta, GR 59431, 25 Jul 1984 [Uniformity, Equal Protection and Due
Process Clauses not violated when BP 135 adopted gross income taxation)
[when the tax “operates with the same force and effect in every place where the
subject may be found”. It was held to comply with uniformity requirement; “Equality
and uniformity in taxation means that all taxable articles or kinds of property of the
same class shall be taxed at the same rate.]
9) Reyes v. Almanzor, 196 SCRA 322 G.R. Nos. L-49839-46 April 26, 1991
(Arbitrary valuation violated Due Process
10) Nitafan et al v. CIR, GR 78780, 23 Jul 1987 (Salaries of justices & Judges are not
exempt from income tax)
11) PAL v. Sec of Finance, GR 115852, 25 Aug 1994 (Withdrawal of PAL’s exemption
from VAT without being mentioned in title not violative of bill embracing one
subject)
12) Tolentino v Sec of Finance & CIR, GR 11545, 64 SCAD 352, 235 SCRA 630 (Does
VAT law violate the “progressivity rule of taxation” given that VAT is
regressive?; equality & uniformity rule?)
13) ABAKADA Guro v. Exec Secretary, 469 SCRA 1, etc 1 Sep 2005 & 18 Oct 2005
G.R. No. 168056 September 1, 2005
e. Aspects of Taxation
Levy
14) CIR v. Botelho Shipping Corp, 20 SCRA 487 R. Nos. L-21633-34 June
29, 1967 (tax exemptions granted to particular class persons)
15) Tan v. Del Rosario, Jr.5 237 SCRA 324(1994) G.R. No. 109289 October 3, 1994
(Legislative discretion to determine nature (kind), subject (purpose), extent
(rate), coverage (subject), land situs (place), SNITS is valid;
f. Classification of Taxes
5
Tan v. Del Rosario, 237 SCRA 324 (1994) – This is a challenge to the validity of Simplified
Net Income Taxation applied to general professional partnerships; uniformity of taxation
merely requires that all subjects or objects of taxation similarly are to be treated alike both in
privileges and liabilities.
3
According to subject matter (Capitation Tax, Property Tax, Excise
Tax)
According to burden or incidence (Direct or indirect)
16) Maceda v. Macaraeg 223 SCRA 217 G.R. No. 88291 May 31, 1991
17) ABAKADA Guro v. Exec Secretary, GR 168056 1 Sep 2005 & 18 Oct 2005
19) PAL v. Romeo Edu, GR 41383, 15 Aug 1998 164 SCRA 320 (exempt from taxes)
20) ESSO Std Eastern v CIR GR 28508-9, 7 Jul 1989 175 SCRA 149 (Margin Fee a
license – police power, not taxing)
21) Lozano v. Energy Regulatory Board, GR 95119-21, 18 Dec 1990 192 SCRA 363
(OPSF not a tax)
23) Procter & Gamble v. Mun of Jagna, 94 SCRA 894, (nature and amount of license)
G.R. No. L-24265 December 28, 1979
24) Golden Ribbon Lumber v City of Butuan, 12 SCRA 611 (non payment is illegal)
G.R. No. L-18534 December 24, 1964
Toll
25) City of Ozamis v Lumapas, 65 SCRA 33 G.R. No. L-30727 July 15, 1975
26) Apostolic Prefect v Treasurer of Baguio, 71 PHIL 547 GR No. L-47252 April
18, 1941
27) Victoria Millling v Phil Ports Authority, GR 73705 27 Aug 1987, 153 SCRA 317
(share of govt from earnings of arrastre and stevedoring from contractual
compensation not tax)
28) CIR v Prieto 109 PHIL 592 G.R. No. L-13912 September 30, 1960
4
h. Interpretation and Construction of Tax Statutes
How are tax laws interpreted or construed?
a. Rules of Statutory Construction are applied, legislative
intent is primordial
b. In case of doubt, construed in favor of taxpayer
c. But for exemptions, construed against taxpayer
i. Except when it applies to government
ii. Special class of subjects under special conditions
iii. When the law says so
29) CIR v CA, Central Vegetable Mfg Co & CTA, GR 107135, 23 Feb 1999
30) Luzon Stevedoring v CTA, GR 30232, 29 Jul 1988, 163 SCRA 647
31) CIR v. Gotamco & Sons, GR 31092, 27 Feb 1987, 148 SCRA 36
32) CIR v. CA, CTA and Ateneo de Manila, GR 115349, 18 Apr 1997, 271 SCRA 605
How are the rules applied? Apply first the doctrine that imposition
is a burden thus construed strictly vs. govt, then if applicable, the
burden shifts to taxpayer to prove he is exempt.
i. Classifications of Exemptions
Express
i. Section 30 of NIRC
ii. Section 105 of Tariffs and Customs Code
iii. Special Laws, like the Omnibus Investment Code
Implied or by Omission
33) Prov of Mizamis Oriental v. Cagayan Electric, GR 45355, 12 Jan 1990, 181 SCRA
38
34) CIR v. CA, ROH Auto Products Phils & CTA, GR 108358, 20 Jan 1995, 240 SCRA
368
5
36) CIR v. DLSU - GR Nos 196596, November 9, 2016, G.R. No. 198841 and G.R. No.
198941
37) Hydro Resources v CA, GR L-80276 21 Dec 1990, 192 SCRA 604 [ad valorem tax
imposed by law passed after transfer of ownership not applicable; contract of sale
subject to suspensive condition; LC issued prior to law is not subject to ad valorem;
no retro effect unless stated by law]
38) Central Azucarera de Don Pedro v. CTA, 20 SCRA 344 G.R. Nos. L-23236 and L-
23254 May 31, 1967 [interest on deficiency tax was imposed by a law passed after
the deficiency was incurred is not a retroactive application]
39) Yes, Lorenzo v. Posadas 64 Phil 353 G.R. No. 43082. June 18, 1937;
40) Smietanka v First Trust Savings Bank, 257 US 602; Law on Federal
Taxation, Vo; 1 p.154
41) CIR v. Benguet Corp, 463 SCRA 28 (2005) G.R. Nos. 134587 & 134588 July 8,
2005
42) CIR v. Burmeisters & Wain Scandinavian, GR 153205 Jan 2007
Non-retroactive
43) CIR v. Ayala Securities Corp, GR L-29485, 21 Nov 1989 – tax on undue
accumulation of income does not prescribe because the law imposing does not
provide for the fixed period within which to file a tax return; the SC reconsidered its
earlier decision dated April 8, 1976; see Sec 29, NIRC
May taxes prescribe? No, but the law can provide for its
prescription, such as NIRC, Customs and LGC
6
Direct Duplicate Taxation – same taxing authority, same year,
same taxes but applying to some of the properties
Indirect Duplicate Taxation – when otherwise
44) Pepsi Cola v. Tanauan, 69 SCRA 460 G.R. No. L-31156. February 27, 1976
[mun ordinance impose .01 per gallon per RA is not undue delegation;
no double taxation; not specific tax]
45) CIR v. SC Johnson & Sons, 309 SCRA 87 (1999) G.R. No. 127105 June
25, 1999 [Most favored nation clause; double taxation; claim for refund
in the nature of exemption; construction of RP-US tax Treaty – tax rate
on royalty US v Germany, international juridical double taxation
defined]
i. Treaty
ii. Reciprocity
iii. Tax Credit
46) CIR v. Rufino, GR L-33665-68, 27 Feb 1987, 148 SCRA 42, [tax exempt merger of
two corporations]
47) Delpher Trades Corp v IAC, 157 SCRA 349 G.R. No. L-69259 January 26,
1988 [tax exempt transfer of property to a corporation resulting to control]
48) CIR v. Benigno Toda, 438 SCRA 290 (2004) G.R. No. 147188 September 14,
2004 – meaning of fraud; tax avoidance / evasion
49) Collector v. UST, 104 PHIL 1062 – (rejected this common law doctrine)
7
Are compromises allowed? Yes by the BIR under NIRC and by Customs
under TCCP. NO similar provisions under the LGC, thus Civil Code applies
suppletorily
Are tax laws political in nature? No, it applies to territory and not by
reason of occupying forces.
8
Final Withholding Tax is a kind of withholding tax which is
prescribed only for certain payors and is not creditable against the
income tax due of the payee for the taxable year. Income tax withheld
constitutes the full and final payment of the Income Tax due from the
payee on the said income.
53) CIR v. Pascor Realty & Dev Corp, 309 SCRA 402 (1999) G.R. No. 128315. June 29,
1999, Meaning of Assessment; is assessment prejudicial to filing a tax evasion case?
54) Marcos II v. CA, 270 SCRA 47(1997) G.R. No. 120880 June 5, 1997 Burden of
Proof on taxpayer to prove erroneous assessment; inapplicability of the statute on
non-claims under the Rules of Court to taxes
55) Meralco Securities Corp v. Savellano, 117 SCRA 804 G.R. No. L-36181 October
23, 1982 (BIR cannot be compelled by Mandamus to issue assessment)
Enforce forfeitures, penalties & fines, execute decision of CTA & ordinary
courts
59) Sy Po v CTA, GR No. 81446, 18 Aug 1988 (best evidence to support assessment);
60) CIR v. Hantex Trading GR L-136975, 31 Mar 2005;
61) Aurelio P. Reyes v. Coll of Internal Revenue, CTA No. 42, 26 Jul 1956 and
62) William Li Yao v. Coll, CTA No. 30, 30 Jul 1956 (use of net worth method)
63) Bache & Co. v. Ruiz, 37 SCRA 823 (requirement for a search warrant)
9
64) CIR v. CA, ROH Auto Products Phil Inc and CTA, GR No. 108358, 20 Jan 1995,
240 SCRA 368 (Nature of administrative rules and regulations)
65) CIR v. CA, CTA and Fortune Tobacco Corp, GR No. 119761, 29 Aug 1996, 261
SCRA 236 (Extent of BIR Interpretative rule)
66) Soriano etal v CIR G.R. No. 184450, January 24, 2017 "plain meaning rule"
(or verba legis in statutory construction)
67) CIR v. Burroughs Ltd, GR No. 66653, 19 Jun 1986, 142 SCRA 324 (Effect of
revocation of ruling)
68) PBC v. CIR, GR No. 112024, 29 Jan 1999 (wrong interpretation will not prejudice
the government)
69) ABS-CBN v. CTA & CIR, GR No. 52306, 12 Oct 1981 (circulars or rulings,
prospective)
71) CIR v. Burmeisters & Wain Scandinavian, GR No. 153205, Jan 2007 – Non-
retroactivity of BIR ruling; 0% VAT on export of services
72) CIR v. BOAC 149 SCRA 395 – Source of income of airlines – sale of airline tickets of
an offline carrier considered income derived from Phil by majority SC; source rule
discussed; minority considered airline tickets as contract of carriage or service, thus
situs is where rendered; characterization becomes moot given the new provision on
2 ½ % Phil Gross Billings regardless of where sold or paid provided cargo or
passenger originates from Phil. [Read RA 10378, 29 Mar 2013, amending Sec 28(A)
(3)(b), NIRC]
73) NDC v CIR, 151 SCRA 472 (1987) – Source of interest income – Exemption strictly
construed; Sec 37 (now Sec 42) – income from sources within the Philippines
applied; also exclusions from gross income.
4. Meaning of Income
74) Fisher v. Trinidad GR No. 17518, 30 Oct 1922, 43 Phil 973 – Income defined;
stock dividends construed
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of wealth. “The fact is that property is a tree, income is the fruit; labor is a tree,
income the fruit; capital is a tree, income is the fruit.” Madrigal spouses reported
income from conjugal partnership separately resulting to lower tax due. SC said
under the law at the time they should report jointly. The partnership is not a
business partnership; right of spouses inchoate. [Under current income tax law,
spouses report their income jointly but income tax liability is computed separately.]
76) CONWI v. CTA, GR No. 48532, 31 Aug 1992, 213 SCRA 83 – Income may be defined
as an amount of money coming to a person or corporation within a specified time,
whether as payment for services, interest or profit from investment. Unless
otherwise specified, it means cash or its equivalent. Income can also be thought of as
a flow of the fruits of one’s labor. The issue here is which exchange rate to use on $-
denominated salaries of P&G employees earned abroad. RR issued by Sec of Finance
required application of floating rate is applicable in this case but not the CB Circular.
Thus, refund claim is denied.
78) Limpan Investment Corp v. CIR, 17 SCRA 703 (1966) – constructive receipt of rent
income deposited in court in 1957 withdrawn in 1958
79) Fernandez v. CIR 29 SCRA 553 – Book error not income - liability to an insurance
company overstated, thus when corrected the net worth went up. This is not taxable.
80) Rutkin v. US, 343 US 130 – claim of right doctrine – illegally acquired (extortion) is
income
81) Eisener v. Macomber, 252 US 189; CIR v. CA 301 SCRA 52 – Severance test theory
– separation from capital of something which is of exchangeable value, refers to
taxability of stock dividends
82) Helvering v. Horst. 311 US 112, Control test – power to procure the payment of
income and enjoy the benefit thereof determines who is subject to tax on coupon
bond donated to his son.
83) BIR Ruling 029 – 1998 – Economic benefit principle – exception to the rule that
no income is earned when there is merely an increase in the value of the property
84) CIR v. Lednicky, 11 SCRA 603 – Partnership Theory – the right to tax income
emanates from partnership in the production of income by providing protection,
resources, incentives and climate to produce income. [Was income tax paid to
foreign government by resident alien deductible though income exclusively came
from the Philippines? No.]
85) CIR v. Isabela Cultural Corp GR No. 17223, 12 Feb 2007 – All Events Test applied
in recognizing income or liability under accrual method of accounting. Expenses
incurred in prior year cannot be claimed as expense in another. For a taxpayer using
the accrual method, the determinative question is, when do the facts present
themselves in such a manner that the taxpayer must recognize income or expense?
The accrual of income and expense is permitted when the all-events test has been
met. This test requires: (1) fixing of a right to income or liability to pay; and (2) the
availability of the reasonable accurate determination of such income or liability.
Citizens Aliens
11
Residents Residents
Non-residents Non-residents
Engaged in business
Not engaged
Resident citizens
All sources – compensation, business and other income, (except
passive income & capital gains – subject to final taxes)
Readings / Questions:
86) Tan v. Del Rosario 237 SCRA 324 (1994) Global Taxation
RR No. 2-98, as amended by RR 8-98, 12-98, 3-99, 8-2000, 10-2000, 6-2001, 12-
2001, 3-2002 and 14-2003 on withholding taxes
12
of a corporation who are not employees of said corporation is
considered as seller of services, hence also subject to VAT.
How is taxable income computed? (Sec 31, NIRC)
Gross compensation, less personal and additional exemptions and premiums
on health and hospitalization (subject to conditions)
Business and other income taxed at net taxable income (net income = GI less
deductions under Sec 34, NIRC)
Above items subject to 5, 10, 15, 20, 25, 30 to 32% graduated tax rates (10k,
30K, 70K, 140K, 250K, 500K)
Passive Income
Royalties – 20% (except books, literary, musical at 10%)
Prizes exceeding 10K – 20% (except Lotto, PCSO); 10K or less subject to
ordinary rates
Other winning – 20%
Interest (peso) – 20%
Interest (foreign) – 7.5%
Interest (5 years) – exempt
Interest Pre-term, < 3 years – 20%; <4 years – 12%; <5 years – 5%
Dividends from domestic corp and taxable partnership, 10%
Stock dividend, CIR v CA, 301 SCRA 152
Recipient other than shareholder, Bachrach v. Siefert, 87 Phil 483
Treasury Stock, CIR v. Manning 65 SCRA 14
Dividends from foreign corp – subject to regular income tax
Dealings in properties classified as capital assets
Capital gains from sale of real property located in Phil – 6% or 5% to
32% (option when sold to government)
RR 13-99 – Exemption of residence from CGT
Other capital gains – 5% to 32%
Sale of stocks of Domestic Corp
Listed and thru Stock Exchange – exempt from income tax but subject
to ½ of 1% (non-deductible from gross income) See Sec 127
Not listed or if listed, not thru stock exchange – 5%, 10% (100k,
>100k)
See Rev Reg No. 2-82, 29 Mar 1982 – taxation of sales of shares of
stocks classified as capital assets
See RR 7-2003 – capital assets vs ordinary assets
Cash reward to informers – 10%, max of 1M (see Sec 282, NIRC)
Non-resident Citizen
From within Phil – same rules as to resident citizen
Without Phil – exempt
Resident Alien
Same rules as to resident citizen, but only on income earned from within
Phil
Non-resident Alien
Engaged in business (183 days) – same as resident alien with respect to
compensation, business, other income and passive income, but not
entitled to additional exemption, except: dividends from domestic corp –
20% (Sec 25(A)(2)
Not engaged – 25% on gross income (but entitled to preferred rates for
sale of shares of stocks and real property)
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Dividends from domestic corp – 25%
Royalties, prizes & winnings – 25%
Employed by OBU, RHQ/ ROHQ, MNC, petroleum service
contractors / subcon (same treatment to Filipino of same rank & job
– 15% based on gross income of non-residents, whether individual or
corp from transactions with depositary banks under expanded
foreign currency deposit system – exempt from income tax, Sec 27
(D)(3))
14
Prizes / winnings >P10K, except from PCSO, etc
Dividends
Royalties
Interest
Capital Gains from sale or exchange of shares of stock (outside of stock
exchanges);
Capital gains from sale of real property (held as capital asset)
Compensation from ROHQ/RHQ, OBU, etc
Informer’s reward
TAX BASE AND TAX RATES APPLICABLE TO CORP (Sec 27 -30, NIRC)
Meaning of Corp or partnership
90) Sharing not taxable – Pascual v. CIR, 166 SCRA 560 (1988)
91) Co-ownership is not taxable, Ona v. CIR, 45 SCRA 74;
92) Obillos v. CIR, 139 SCRA 436 (1985); cited Ona, Evangelista cases
93) Afisco Insurance v. CIR, GR No. L-112675, 25 Jan 1999; taxed as a
corporation the pool of insurance companies.
94) Joint Emergency Operations – Coll v. Batangas, 54 OG 6724
95) Power of Attorney for operation of mining claims deemed partnership –
Philex Mining v. CIR, GR No. 148187, 16 Apr 2008
Kinds of Corporation
Domestic (Sec 27)
Profit-oriented (32%); effective July 1, 2005 – 35%; effective January 1,
2009 – 30% per RA 9337
Proprietary educational and non-profit hospital – 10% of taxable income,
except passive income; contrast with a tax exempt non-stock and non-
profit educational institution; See Art. XIV, Sec 3(3) of the Constitution;
96) Central Mindanao State Universtiy v. Dept of Agrarian Reform 215 SCRA
86 (1992); and
97) Abra Valley College, Inc. v. Aquino, 162 SCRA 106 (1988)
Government Corps – SSS, GSIS, PHIC, PCSO & PAGCOR (Pagcor now
taxable under RA 9337)
15
On Passive Income
Royalty – 20%
Interest / Yield from bank deposits, deposit substitutes, Trust Fund
and similar arrangement – 20%
99) [CIR v. Solidbank, GR No. 148191, 25 Nov 2003 – GRT v. FWT – no double
taxation; accrued v. constructive]
Interest Income (expanded foreign currency) – 7.5%
Interest Income of depositary banks from deposits in foreign
currency & loans to residents – 10%
Interest income from non-residents, whether individual or corp –
exempt
Interest (5 years or more maturity) – exempt; if pre terminated <3-
20%, <4 – 12%, <5 – 5%
Interest passed on by parent company to its subsidiaries on
reimbursement basis is not taxable to parent company. The real
lender is the banks. [CTA Case No. 7086, 10 Jan 2008]
Dividends from domestic corp and taxable partnership – exempt
from regular income tax [See Sec 73, NIRC]
Dividends from foreign corp subject to regular income tax
2% MCIT BASED ON GROSS INCOME (see Rev Reg 9-98, 25 Aug 1998)
Beginning immediately on the 4th taxable year from start of operations; compare
tax based on 30% and 2% of Gross income whichever is higher. Carry
Forward of Excess MCIT vs regular tax for 3 immediately succeeding years
Relief due to prolonged labor disputes, force majeure, and other legit buss
reverses
Gross Income means Gross Sales less sale returns, discounts & allowances &
Cost of Goods Sold (CGS). CGS include all expenses to produce the goods to
16
bring them to their present location & use. For trading or merchandising, CIF
& duties; for manufacturing, cost of goods manufactured and sold, cost of
producing finished goods; for seller of services, Gross Receipts less sales
returns, discounts, allowances & cost of services, facilities, salaries, benefits,
equipment, rent, supplies; for banks, include interest expense.
100) CREBA Inc v. Exec Secretary, et al – GR NO. 160756, 09 March 2010 (Validity
of imposition of MCIT and other related issues)
17
15% on dividends from domestic corp provided a tax credit = to 33% if granted
to non-resident corp for tax deemed paid
104) CIR v. Procter & Gamble, 204 SCRA 378, GR No. 66838, 02 Dec 1991, Persons
liable to tax v. persons subject to tax; rate of tax at 15% v. 35%
10% IMPROPERLY ACCUMULATED EARNINGS TAX (IAET) See Rev Reg No. 2-2001,
12 Feb 2001 implementing Sec 29 of NIRC)
Applies to domestic corporations; Exemptions
Publicly held corp
Banks & Non-bank Financial Institution
Insurance Companies
General Professional Partnerships
Non-taxable Joint Venture
PEZA, CDA entities
Prima facie evidence of purpose to avoid payment of tax, if personal holding or
investment company
Evidence determinative if permitted to accumulate beyond the reasonable needs
of the purpose to avoid tax upon shareholders unless contrary is proved
Dividend must be declared and paid within 1 year from close of tax year,
otherwise tax shall be paid within 15 days thereafter
How computed: Taxable Income during the year + Exempt, exclusions, final tax,
NOLCO less dividends & income tax paid, and reasonable needs x 10%
Reasonable needs include anticipated needs:
100% of paid up capital
Definite expansion with board resolution
Loan Agreements
LWC requirements, meet competition, anticipated losses or reverses, hazards
and emergencies
Legal Prohibition
Subsidiaries of foreign corp earmarked for investments
Investments if unrelated business, bonds and long term securities are not
deemed reasonable
105) Bardahl Formula and Immediacy Test (Cyanamid Phils Inc v. CA 332 SCRA
639, 2000)
IAET is only imposed once on specific earnings but still subject to dividends tax
to individuals
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substantial evidence to prove that it fails under classification and that
income is used actually, directly and exclusively for educational purposes.
(See Rev Memorandum Circular No. 76-2003, 14 Nov 2003)
Government Educational Institutions
Farmers or other mutual typhoon or fire insurance co., mutual ditch, irrigation or
coop telegraph, only fees, assessments are for meeting expenses
Farmers fruit growers association for marketing products
Notwithstanding the foregoing, income of whatever kind or nature from
properties or activities conducted for profit regardless of disposition shall be
subject to tax
106) Interest Income of religious org subject to tax regardless of disposition;
bank deposits are personal property (BIR Ruling 512, 21 Oct 1998, Ruling
No 58, 05 Apr 1991); Rental income is taxable regardless of disposition
(CIR v. CA 298 SCRA 83, 14 Oct 1998)
107) Gain from sale of land & bldg of religious org used for same purpose is an
isolated transaction, thus exempt from income tax; its rents, dividends,
interest, profits from businesses are taxable.
(Manila Polo Club, CTA No. 293, 31 August 1959; BIR Rulings No. 569, 29
Nov 1988; No. 115, 2 Apr 1992)
108) Application of Sec 30 (H) – YMCA, CIR v. CA 298 SCRA 83 – YMCA’s
income is not exempt from income tax. It is not an educational institution
referred to in the constitution.
Sec 32 (B) EXCLUSIONS FROM GROSS INCOME – Excluded and exempts from
taxation
Life insurance proceeds payable to heirs or beneficiaries, but if held by
insurer to pay interest, the interest is taxable; Question: If beneficiary is
the taxpayer itself, are the proceeds taxable or not? Justice dimaampao
says yes.
Return of premiums or cash surrender value under diff types of life
insurance
Gifts, bequests, devices of property, but income from such property & gifts,
etc or income from any property, in case of transfer of divided interests,
are taxable
Compensation for injuries or sickness, plus damages whether by suit or
agreement
Exempt by treaty
Retirement, pensions, gratuities, etc. under RA 7641 and from reasonable
private benefit plan (50 / 10 / once; non-diversion of corpus & profits)
Amount received as consequence of separation due to sickness / death, other
physical disability, or causes beyond control
109) PLDT v CIR GR No. 157264, 31 Jan 2008 – separation pay due to redundancy.
Proof of receipt by employees of the pay and the remittance of the withholding tax to
the BIR are material to the claim for refund of erroneously paid withholding tax on
19
separation pay. Also, it must be shown that employees declared the income and the
tax paid to the BIR through withholding. “Section 10. Claims for tax credit or refund.
– Claims for tax credit or refund of income tax deducted and withheld on income
payments shall be given due course only when it is shown on the return that the
income payment received was declared as part of the gross income and the fact of
withholding is established by a copy of the statement duly issued by the payer to the
payee (BIR Form NO. 1743.1) showing the amount paid and the amount of tax
withheld thereon.”
Motion for New Trial & Liberal application of the CTA rules of court
discussed. Petition denied. [See new Rules of Court for CTA issued in
2005]
20
Prizes and awards to athletes from local and international competition
recognized by local sports association [cross reference to Other
Percentage Tax, Title V, NIRC]
13th Month pay & other benefits under this paragraph, not more P30K such
as government employees under RA 6686, benefits not covered by PD
851 as amended by MO No. 28, 13 Aug 1986, productivity incentives and
Christmas bonus. Ceiling increased to P82K under RA 9504
SSS, GSIS, Medicare, Pag-ibig, Union Dues by individuals
Gains from sale of bonds, debentures, certificate of indebtedness with
maturity of >5 years
Gains from redemption of mutual funds company shares defined in Sec 22
(BB)
ALLOWABLE DEDUCTIONS
21
respondent has proved that the payment of the fees was
necessary and reasonable in the light of the efforts exerted by
the payees in inducing investors and prominent businessmen
to venture in an experimental enterprise and involve
themselves in a new business requiring millions of pesos.
This was no mean feat and should be, as it was, sufficiently
recompensed [see Algue case, supra]
Must be connected with business, except:
Contributions / donations
Premium on health / hospitalization
These are allowed to corporations, individuals, partnerships
112) Must be incurred during the year, [CIR v. Isabela Cultural Corp, GR No.
172231, 12 Feb 2007] – All events test applied in determining whether
expenses booked on accrual basis should be claimed as deductible
expense]
113) Must be substantiated (ESSO v. CIR 175 SCRA 149 (1989)], see Cohan
Rule – there is showing that expenses were incurred but cannot be
ascertained due to absence of documentary evidence (RMC 23-2000)
RR No. 6-2018 - requirements for deductibility of certain
expenses,
RR No. 11-2018 and 14-2018- relative to withholding of
Income Tax
115) Barcelon, Roxas Securities v. CIR, GR No. 157064 07 Aug 2006 – Assessed for
deficiency income tax for failure to withhold tax, assessment barred by
prescription.
Specific Deductions
Salaries, bonuses, emoluments, allowances, incentives, Fringe
Benefits
22
Rental (without equity, operating lease)
116) Advertising expenses are period costs deductible in the year incurred or
paid. However, they may be considered capital expenditures if so
substantial in promoting a single brand (CIR v. General Foods, 401
SCRA 545)
Entertainment, amusement, recreation, subject to ceiling
Travel Expense
Excess over 1st class not deductible, subject to FBT
Excess over fixed allowance $150 / 100 not deductible, taxable to
employee or to FBT
Home leave not taxable to employee
Family expenses taxable to employee to be deductible to employer
Meals & Housing
Generally taxable to employee, except when for the convenience
of the employer or form part of Fringe Benefits of the employee
Cash Advance / Reimbursement system
Entertainment, amusement or recreation (EAR) facilities
Directly related to business
Directly in furtherance of business
Not contrary to law, etc
Ceiling, ½ % or1% of Net sales or net revenues
Substantiation in the name of taxpayer & subject to w/tax, where
applicable
Only one athletic club per officer
Guests other than company officers, etc
Exclusions from EAR
Treated as compensation or Fringe Benefit
Charitable or fund raising events
Bona fide business meetings of directors, etc
Business league or professional organization meet
Promotion, Ad and marketing
Shifting to other accounts to hide –prohibited
Separate item in ITR or note to FS
Taxes
Connected with trade or business, except
117) Income Tax – Local [ Not an item of operating expenses because it does
not help generate revenue, nor does it redound to benefit of customers,
23
thus not to be considered in fixing rates of public utility (Republic v.
Meralco, GR No. 141369, 14 Nov 2002)
118) Income tax paid to foreign government (tax credit / deduction)
CIR v. Lednicky 11 SCRA 604 – Partnership Theory – the right to tax
income emanates from partnership in the production of income by
providing protection, resources, incentives and climate to produce
income. [Was income tax paid to foreign government by resident alien
deductible though income exclusively came from the Phils? No.]
Gift & Estate Tax
Special Assessment or special levy under the Local Govt Code
[Real Property Taxation]
If allowed, as deductible and subsequently refunded, Tax
Benefit rule applies
Limitations on tax credit
119) CIR v. Central Luzon Drug Corp (Mercury) 456 SCRA 414 (2005) –
20% Senior Citizens discount is a tax credit deductible from tax liability
Losses
Fires, shipwreck, theft other casualties
Connected with trade or business
Not compensated by insurance or otherwise
Not claimed in the estate tax return
Declared within 30 to 90 days with BIR
NOLCO – Sec 34(D)(3) (see Rev Reg 14-2001, 27 Aug 2001)
Losses from wash sales of stock & securities (Sec 38)
What are wash sales and how are they treated for income tax
purposes?
Capital losses (Sec 39)
Bad Debts (See Rev Reg No. 5-99, 10 Mar 1999, as amended by Rev
Reg No. 25-2002, 19 Nov 2002 amending Sec. 3 of RR No. 5-99)
120) Charged off during the year (see PRC v. CIR 256 SCRA 667)
Connected with business
Not related parties
Effort to collect failed
Legal debt
121) Power of attorney for operation of mining claims deemed partnership;
write off of bad debts not warranted; it was investment, thus not debt;
alleged debtor has not filed for bankruptcy; assumed guaranteed
obligations were not yet due – Philex Mining v. CIR GR No. 148187, 16
Apr 2008
Tax Benefit Rule applies
Depreciation
122) Definition – Gradual diminution in the useful service value of tangible
property used in business (Basilan Estates Inc v. CIR, 21 SCRA 17,
1967
Methods of depreciation [straight line, sum of years digits, etc]
Depletion
Definition – Exhaustion of natural resources like mines, oil and
gas wells as a result of production or severance from such
mines or wells.
24
Charitable & Other Contributions
Requisites [ See RR 13-98 and Sec 13 (C) of RR 2-2003]; What
are the requirements for the deductibility of donations for
income tax purposes?
123) (Mariposa Properties Inc v. CIR, CTA Case No. 6402, 13 Feb 2007) In
deciding on the BIR’s disallowance of deduction for donations made to a
private foundation, the CTA required the donor to prove compliance of
both the donor and the donee with the requirements for deductibility of
donations. Hence, for failure of the donor to present proof that the
foundation’s income tax return and audited financial statements, as well
as the annual information report of the foundation were submitted to
BIR as required in the regulations, the deduction for donations was
disallowed. Deductible in full and subject to limitations
Donations by PEZA registered entity to Province of Batangas for
national priority project of NEDA is exempt from donor’s tax,
deductible in full and not subject to DST [DA 026-2008, 22
Jan 2008]
25
What are the tax implications of merger, consolidation & acquisition of 80% of
the assets?
What are the requisites for taxable and tax free transfer of property resulting to
majority ownership of the corporation?
When stocks or securities are subsequently sold, how are gains or losses
computed?
Guidelines on Monitoring of Tax – Free exchange of property for shares [Rev
Reg No. 18-2001]
Implementing guidelines of Sec 40 [RMO 32-2001 & RMO 17-2002]
Tax consequences of tax-free exchange of property for shares of stock of
controlled corporation per Sec 40 (C)(2) [See Rev Memorandum Ruling
No. 1-2001, 29 Nov 2001]
Tax consequences of De Pacto Merger re Sec 40 (C)(2) and (6)(B) [See Rev
Memo Ruling No. 1-2002]
Determination of substituted basis of property transferred and shares
received [See Rev Memo Ruling No. 2-2002];
124) CIR v. Rufino, GR No. L-33665-68, 27 Feb 1987, 148 SCRA 42 – [ tax
exempt merger of two corporations]
125) Delpher Trades Corp v. IAC, 157 SCRA 349,- [tax exempt transfer of
property to a corporation resulting to control]
126) CIR v. Benigno Toda, 438 SCRA 290 (2004) – meaning of fraud; tax
avoidance / evasion
See De Leon’s NIRC Annotated Vol 1, 2003 ed discussions of Sec 40.
How are inventories treated? (Sec 41)
Income from sources within the Philippines (Sec 42)
127) CIR v. BOAC 149 SCRA 395 – Source of income of airlines – [ sale of
airline tickets of an offline carrier considered income from Phil by
majority of SC; source rule discussed; minority considered airline tickets
as contract of carriage or service, thus situs is where rendered;
characterization becomes moot given the new tax provision on 2 ½ %
Phil Gross Billings regardless of where sold or paid provided cargo or
passenger originates from Phil]
128) NDC v. CIR, 151 SCRA 472 (1987) – Source of interest income –
[Exemption strictly construed; Sec 37 (now Sec 42) – Income from
sources within the Philippines applied; also exclusions from gross
income.
26
double taxation explained; question of law v. of facts; Rules 41, 45 and
56; local taxation.
27
Beneficiary – if he / she received income from the trust during the
taxable year pursuant to the trust agreement
Grantor – if revocable or held for grantor’s benefit or to his designate
Control test – power to procure the payment of income and enjoy
the benefit thereof determines who is subject to tax on
coupon bond donated to his son. Helvering v. Horst. 31 US
112
Deductions – same as Estate
Estates and Trusts entitled to deductions
Personal exemption – P 20,000 (sec 62)
Distribution to heir during the year; If no distribution, subsequent
distribution of said income no longer taxable to heirs
Distribution to guardian for the benefit of infant
Administered in foreign country is taxable in the Philippines in the
hands of the trust but no longer taxable in the hands of the
beneficiary when distributed to him. These distributions are not
allowed as deductions from the taxable return of the trust.
Read BIR Ruling 003-05 – taxation of trusts under common
trust funds.
TAX 2
D) Transfer Taxes - (Secs. 84 to 104 of the NIRC as amended by RA
10963)
28
1. Definition – Sec 104, NIRC – includes real and
personal properties, whether tangible or intangible, or mixed, wherever
situated.
2. Rate of Tax (Sec 84) – 6% of net estate
3. The Law that governs the imposition of Estate Tax –
(Sec. 3, RR 2-2003) – It is a well-settled rule that estate taxation is
governed by the statute in force at the time of death of the decedent. The
estate tax accrues as of the death of the decedent and the accrual of the
tax is distinct from the obligation to pay the same. Upon the death of the
decedent, succession takes place and the right of the State to tax the
privilege to transmit the estate vests instantly upon death.
4. Is Estate Tax a Property Tax or Excise Tax?
Separate Opinion of Justice Bersamin in CIR vs. Pilipinas Shell,
134) GR No. 188497 dated February 19, 2014
29
137) Dizon vs. CTA (GR No. 140944 dated April 30, 2008)
c. Claims against insolvent persons
d. Unpaid Mortgages, Taxes and Casualty Losses
i. Rules
e. Property Previously Taxed (Vanishing Deductions)
i. Requisites for deductibility
ii. Rationale for grant
f. Transfers for Public Use
g. Family Home – P10,000,000
h. Amount Received by Heirs Under Republic Act No. 4917
F. Other Matters
1. Who is liable to pay? [Sec. 91 (D)]
138) Estate of Vda. De Gabriel vs. CIR (GR No. 155541 dated January 27, 2004)
a. Discharge of Executor or Administrator from Personal Liability
(Sec. 92)
b. Liability of Heirs
139) CIR vs. Pineda (21 SCRA 105)
2. Payment Before Delivery by Executor Sec. 94
140) Marcos II vs. CA 273 SCRA 47
3. Duties of Certain Officers (Sec. 95)
4. Restitution of Tax Upon Satisfaction of Outstanding Obligations (Sec.
96)
5. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights
(Sec. 97)
141) PNB vs. Santos, GR No. 208295 dated December 10, 2014
Donor’s Tax
1. Definition
2. Composition of Gross Gift (Secs. 98 and 104)
3. Tax Rate (Sec. 99[A]) – 6% of total gifts in excess of P250,000 exempt
gift made during the calendar year
30
4. Contributions to a candidate, political party or coalition of parties for
campaign purposes governed by Election Code (Sec. 99[B])
C. Other Matters
1. Rule on Political Contributions [Sec. 99B]
Secs. 13 and 14 RA No. 7166
RR No. 7-2011 dated February 16, 2011
RMC 30-2016 dated March 14, 2016
144) Abello vs. CIR, GR No. 120721 dated February 23, 2005
2. Transfer for Less than adequate and full consideration (Sec. 100)
– where property, other than real property, is transferred for
less than an adequate and full consideration in money or money’s
worth,….deemed a gift subject to donor’s tax; exception: if made
in the ordinary course of trade or business …. will be
considered as made for an adequate and full consideration in
money or money’s worth.
(RR No. 6-2008 on shares of stock as amended by RR 6-2013)
145) Philamlife vs. SOF, GR No. 210987 dated November 24, 2014
4. Tax Credit for Donor’s Taxes paid to a Foreign Country [Sec. 101
(C)]
5. The Law that governs the imposition of Donor’s Tax
(Sec. 11 RR No. 2-03)
6. Renunciation of share in the conjugal partnership or absolute
community; and, hereditary estate (Sec. 11 RR No. 2-03)
7. Capacity to Buy
146) Sps. Evono CTA EB Case No. 705 dated June 4, 2012
I. VAT In General
a. Nature and characteristic of VAT in general
31
Sec. 4.105.-2 of RR No. 16-05
147) CIR vs. Magsaysay Lines GR No. 146984, July 28, 2006
148) CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
b. VAT as an indirect tax
149) Contex vs. CIR GR No. 151135 dated July 2, 2004
c. Persons Liable (Sec. 105)
(1) Persons liable in general
150) CIR vs. CA & CMS GR No. 125355, March 30, 2000
(2) Who are required to register for VAT
Sec. 236(G), [Sec. 9.236-1 of RR No. 16-05]
(3) Optional VAT Registration (Sec. 236 H) [Sec. 9.236-1 of RR No. 16-05]
d. Meaning of the phrase “in the course of trade of business” (Sec. 105)
Sec. 4.105-3 of RR No. 16-05
CIR vs. Magsaysay Lines GR No. 146984 dated July 28, 2006
e. Exceptions to the Rule of Regularity
f. Output Tax vs. Input Taxes
(1) Sources of Input Tax (Sec. 110 A)
(2) Excess Output or Input Tax (Sec. 111 B)
(3) Rule on Input Tax on Capital Goods (Sec. 4.110-3 of RR No. 16-05)
(4) Substantiation of Input Tax Credits (Sec. 4.110-8 of RR No. 16-05)
32
Philippine Healthcare Providers vs. CIR GR No. 168129 April 24,
2007
2. VAT on Importations
a. VAT Imposition on Importation (Sec. 107)
a. Exempt Importations under Sec. 109
b. Transfer of Goods by Tax-exempt Persons (Sec. 107 B)
c. Amendments of Section 109 on Enumerated VAT-exempt
Transactions under Rep. Act No. 10963 (TRAIN)
33
VI. Other Matters
a. Invoicing Requirements
(Sec. 113) [Sec. 4.1113-1 of RR No. 16-05]
b. Information which must be contained (Sec. 113)
c. Consequences of Issuing Erroneous VAT Invoice
(Sec. 113) [ RR No. 4.113-4 of RR No. 16-05]
d. Filing of Monthly and Quarterly VAT Returns and Payment of VAT
(Sec. 114)
e. Amendments of Section 114 under Rep. Act No. 10963 (TRAIN)
on Changes in Filing to Quarterly Filing of VAT Return
f. Withholding VAT (Sec. 114 C) [Sec. 4.114-2 of RR No. 16-05 as
amended by Sec. 22 of RR No. 4-07]
(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]
I. Legal Provisions
a. Rep. Act No. 9238
b. Rev. Regs. No. 9-2004
c. Sections 116-128, NIRC
34
Increase in rate from ½ of 1% to 6/10 of 1%
(3) Tax on IPOs
G. Remedies
a. Overview
165) CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9,
2016
b. Letter of Authority / Audit Notice
169) CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)
170) SMI-ED Technology Corporation, Inc. vs. CIR, GR No. 175410 dated
November 12, 2014
171) CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9,
2016
35
4. Certain Powers of the Commissioner/BIR in relation to a tax audit/tax
assessment:
1. Prescription in General
a. Rationale/Construction/Interpretation
175) CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007)
1. Wrong Form/Return
176) Butuan Sawmill, Inc. vs. CTA (GR No. L-20601, February 28, 1966)
2. Amended Return
177) CIR vs. Phoenix (GR No. L-19727, May 20, 1965)
36
3. Defective Return
7. Estoppel
37
198) CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8,
2010
199) CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
200) CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9,
2016)
201) Samar-I Electric Cooperative vs. CIR, GR No. 193100 dated December
10, 2014
202) Nava vs. CIR (GR No. L-19470, January 30, 1965)
203) Barcelon, Roxas Securities vs. CIR, (GR No. 157064, dated August 7,
2006)
Protesting an assessment
RR No. 18-2013
204) BPI vs. CIR (GR No. 139736, October 17, 2005)
2. Contents of a valid protest
RR No. 18-2013
3. Protest against a PAN / FAN
RR No. 18-2013
205) Prulife of UK Insurance Corp vs. CIR(CTA Case No. 6774 dated
September 11, 2007)
206) CIR vs. First Express Pawnshop (GR Nos. 172045-06 dated June 16,
2009)
Sec. 228
RR No. 18-2013
RR No. 18-2013
38
207) CIR vs. Liquigaz Philippines Corporation, GR No. 215534 dated April
18, 2016
208) Oceanic Wireless Network, Inc. vs. CIR (GR No. 14380, dated
December 9, 2005)
211) Yabes vs. Flojo (GR No. L-46954, July 20, 1982)
213) CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001)
Sec. 228
RR No. 18-2013
214) Lascona Land vs. CIR (GR No. 171251, March 5, 2012)
215) RCBC vs. CIR (GR No. 168498, April 24, 2007)
216) PAGCOR vs. BIR, GR No. 208731 dated January 27, 2016
217) Fishwealth Canning Corp. vs. CIR (GR No. 179343 dated January 21,
2010)
218) Allied Banking Corporation vs. CIR (GR No. 175097 dated February
5, 2010)
RR No. 18-2013
219) RCBC vs. CIR (GR No. 168498, April 24, 2007)
220) Marcos II vs. CA (GR No. 120880 dated June 5, 1997)
221) Republic vs. Ker (18 SCRA 208)
222) Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004)
39
223) CIR vs. Metro Star Superama, Inc., G.R. No. 185371, December 8,
2010
224) CIR vs. Concepcion (22 SCRA 1058)
Secs. 205-217
225) Republic vs. Hizon (GR No. 130430. December 13, 1997)
226) CIR vs. Hambrecht & Quist Philippines, Inc. (GR No. 169225
November 17, 2010)
c. Forfeiture
d. Tax lien
229) Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145)
Rule 10, Revised Rules of the CTA, AM No. 05-11-07-CTA dated November
22, 2005, as amended on September 16, 2008
40
Revenue Memorandum Order No. 42-10 dated May 4, 2010.
230) Spouses Pacquiao vs. the CTA, GR No. 213394 dated April 6, 2016.
3. Judicial Remedies
Sec. 205
Secs. 220-221, NIRC
232) Republic vs. Hizon (GR No. 130430 December 13, 1997)
233) Fernandez Hermanos vs. CIR (GR No. L-21551, September 30, 1969)
234) PNOC vs. CIR (GR No. 109976, April 26, 2005)
235) Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996)
236) BPI vs. CIR (GR No. 137002, July 27, 2006)
238) Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11,
2006)
41
240) CIR vs. CA (257 SCRA 200)
241) CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)
b. Compromise Penalty
243) CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September
14, 2004)
244) Republic vs. Patanao (GR No. L-22356, July 21, 1967)
245) Castro vs. CIR (GR No. L-12174, April 26, 1962)
f. Probable Cause
247) People vs. Mendez (CTA Criminal Case Nos. O-013 &O-015, January 5,
2011)
248) People vs. Kintanar (CTA Criminal Case No. O-030 dated August11,
2010)
249) People vs. Santos (CTA Criminal Case No. O-012dated January16,
2013)
250) People vs. Spouses Castillo (CTA CTA Criminal Case No. O-219 dated
October 7, 2013)
252) CIR vs. AcesitePhils. (GR No. 147295, February 16, 2007)
42
2. Taxpayer/withholding agent
257) Koppel (Phils) vs. CIR (GR No. L-10550, September 19, 1961)
258) CIR vs. Meralco, GR No. 181459 dated June 9, 2014
259) CIR vs. Far East Bank GR No. 173854 March 15, 2010
260) CIR vs. Concepcion (22 SCRA 1058)
261) CIR vs. CA (234 SCRA 348)
262) PNB vs. CIR (GR No. 206019 dated March 18, 2015
263) CIR vs. PNB, GR No. 180290 dated September 29, 2014
43
Sec. 52 (C), NIRC
277) BPI vs. CIR (GR No. 144653, August 28, 2001)
278) CIR vs. PNB (GR No. 161997, October 25, 2005)
279) BDO vs. Republic, GR No. 198756 dated August 16, 2016
Sec. 79(C)(2)
280) GuaguaElectric Light vs. CIR (GR No. L-23611, April 24, 1967)
44
Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005,
as amended on September 16, 2008
282) Philamlife vs. Secretary of Finance (GR No. 210987 dated November
24, 2014)
283) CIR vs. CTA and Petron Corporation, GR No. 207843 dated July 15,
2015
284) Banco De Oro vs. Republic (GR No. 198756, January 13, 2015) and
resolution on the Motion for reconsideration (GR No. 198756 dated
August 16, 2016)
b. Civil/Criminal Cases
6. Jurisdiction of CTA EB
8. Appeal to the SC
45
A. Authority of CIR to abate taxes
2. Conditions
288) Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017
B. Power to compromise
289) CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)
I. Bureau of Customs
a. Functions of the BOC (Section 202, CMTA)
b. Powers & Functions of the BOC Commissioner (Section 201, CMTA)
c. Functions of Deputy Commissioners (http://customs.gov.ph/offices/)
III. Importation
a. Importation (Section 102(z), CMTA)
b. Exportation (Section 102(s), CMTA)
c. Article subject to Duty (Section 204, CMTA)
d. Liability for Duties & Taxes (Section 405, CMTA)
e. Importation Documents
(1) Single Administrative Document
(2) Bill of Lading/Airway Bill
(3) Supplemental Declaration on Valuation
(4) Discharge Port Survey
(5) Tax Credit Certificate
(6) Tax Debit Memo
(7) Certificate of Origin
(8) Other Documents Required by BOC
46
a. Advance Ruling System
b. CAO No. 3-2016 on Establishment of an Advance Ruling System for
Valuation and Rules of Origin)
c. Commission Order No. 2017-01 Procedure on Application for an Advance
Ruling on Tariff Classification related to Importation or Exportation of
Goods
d. Basis of Tariff Classification (ASEAN Harmonized Tariff Nomenclature
(AHTN) 2017 effective 28 July 2017
VIII. ATRIG
a. Section 131, NIRC
b. Section 172, NIRC
c. Section 268(C), NIRC
d. Revenue Regs. No. 2-2016
e. RMC 48-2002
47
(8) Seizure or Release of Goods (Section 1116, CMTA)
I. LOCAL AND REAL PROPERTY TAXATION Republic Act No. 7160, Local
Government Code (LGC) of 1991, as amended Implementing Rules
and Regulations of the LGC
LOCAL TAXATION
I. PRELIMINARY MATTERS
iv. Procedure for Approval of and Effectivity of Tax Ordinances (Sec. 187)
(8) Hagonoy Market vs. Mun. Of Hagonoy GR No. 137621, Feb. 6, 2002
v. Publication (Sec. 188)
II. Victorias Milling Co., Inc. vs. Municipality of Victorias – L-21183, September 27, 1968
48
a. Scope of taxing powers (Sec. 128)
b. Fundamental Principles (Sec. 130)
Film Development Council of the Philipines vs. Colon Heritage Realty,
GR No. 203754 dated June 16, 2015.
c. Definitions (Sec. 131)
d. Common Limitations
i. Income Tax
1. Correlate with Sec. 143 (f)
ii. Documentary Stamp Tax
iii. Transfer Taxes
a) Correlate with Sec. 135
iv. Customs Duties
v. Taxes, Fees and Charges (TFC) on Goods Passing Through the Territorial
Jurisdiction of LGUs
1. Correlate with Sec. 155
(10) Panaligan vs. City of Tacloban – GR No. L-9319, September 27, 1957
(11) Palma Development Corp vs. Municipality of Malangas – GR No.
152492, October 16, 2003
vi. TFC on products sold by marginal farmers of fishermen
b) Definition of Marginalized Fishermen (Sec. 122)
(12) City of Cebu vs. IAC 144 SCRA 710
vii. Taxes on BOI-registered enterprises
III. Excise taxes under the NIRC/TFC on Petroleum Products
(13) Petron Corp. Vs. Mayor Tobias Tiangco – GR No. 158881, April 16,
2008
(14) Province of Bulacan vs. CA – GR No. 126232, November 27, 1998
(15) Batangas City vs. Pilipinas Shell Petroleum Corporation – GR No.
187631 dated July 8, 2015.
ix. Percentage taxes and VAT
(a) Pepsi Cola Bottling vs. Municipality of Tanuan
69 SCRA 460
(17) Matalin Coconut Co, Inc. vs. The Municipal Council of Malabang,
Lanao del Sur, GR No. L-28138 August 13, 1986
(18) Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137, April
10, 2013
x. Taxes on transportation contractors and common carriers
(19) First Philippine Industrial Corporation vs. CA – GR No. 125948,
December 29, 1998 City of Manila vs. Colet, GR No. 120051,
December 10, 2014
xi. Taxes on premiums
xii. TFC for registration of motor vehicles and issuance of licenses for driving
1. Correlate with Sec. 458 (3)(vi) of the LGV and Art. 99(a)(3)(vi) of
the IRR of the LGC
(20) LTO vs. City of Butuan – GR No. 131512, January 20, 2000
xiii. Taxes, Fees, or Charges on Philippine Products Actually Exported;
b) Correlate with Sec. 143 (c)
IV. TFC on CBBEs under RA No. 6810 and RA 6983
V. TFC on the National Government, its agencies and instrumentalities and
LGUs
(21) Philippine Fisheries Dev’t Authority vs. CA GR No. 169836, GR No.
July 31, 2007
(22) Mactan Cebu International Airport Authority vs. Marcos – GR No.
120082, Sept. 11, 1996
(23) MIAA vs. CA – GR No. 155650, July 20, 2006
(24) MIAA vs. City of Pasay – GR No. 163072, April 2, 2009
(25) City of DavaoCity vs. RTC – GR No. 127383, August 18, 2005
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(To be discussed together with Secs.232 and 234 on Real Property Tax)
b. Municipalities
i. Business Taxes (Sec. 143)
(34) Ericsson Telecommunication vs. City of Pasig GR No. 176667,
November 22. 2007
(35)Yamane vs. BA Lepanto – GR No 154992, October 25, 2005
(36) City of Manila vs. Coca Cola Bottlers, GR No. 181845, August 4, 2009
(37) Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 (read also case decided by the CTA
Division)
(38)Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan de
Oro, GR No. 191761, November 14, 2012.
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(compare with current LGC provisions and IRR provisions on
rolling stores)
d. Barangay
(i) Tax on retailers (Sec.
152 a)
(ii) Service Fees or
Charges (Sec. 152 b)
(iii) Barangay Clearance
(Sec. 152 c)
(iv) Other Fees (Sec. 152 b)
f. Other Matters
i. Public Hearings Necessary? (Art. 324 IRR of the LGC vs. Sec. 187)
(43) Figuerres vs. CA, GR No. 119172, March 25, 1999
ii. Authority to Adjust Tax Rates (Sec. 191)
(44) Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 (read also case decided by the CTA
Division)
(45) Mindanao Shopping Destination Corporation vs. Duterte, GR No.
211093 dated June 6, 2017
iii. Authority to Grant Tax Exemptions (Sec. 192)
iv. Withdrawal of Tax Exemption Privileges (Sec. 193)
(46) PLDT vs. City of Davao GR No. 143867, August 22, 2001
(47) NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
v. Community Tax
1. Who may impose(Sec. 156)
2. Individuals Liable to pay (Sec. 157)
3. Juridical Persons Liable to Community Tax (Sec. 158)
4. Exemptions (Sec. 159)
5. Place of Payment (Sec. 160)
6. Time of Payment (Sec. 161)
7. Community Tax Certificate (Sec. 162)
8. Presentation of CTC on certain occasions (Sec. 163)
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IV. COLLECTION OF TAXES AND REMEDIES
a. Collection of Taxes
(e) Tax Period and Manner of Payment (Sec. 165)
(f) Accrual of Tax (Sec. 166)
(g) Time of Payment (Sec. 167)
(h) Surcharges and Penalties (Sec. 168)
(48) NPC vs. City of Cabanatuan, GR No. 177332 dated October 1, 2014
v. Interests on Other Unpaid Revenues (Sec. 169)
vi. Collection of Local Revenues by Treasurer (Sec. 170)
vii. Examination of Books of Accounts and Pertinent Records (Sec. 171)
c. Taxpayer’s Remedies
Question Constitutionality of Ordinance (Sec. 187)
(49) Drilon vs. Lim GR No. 111249, August 4, 1994
(50) Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan de
Oro, GR No. 191761, November 14, 2012.
(51) Smart Communications, Inc. vs. Municipality of Malvar, GR No.
204429, GR No. 204429 dated February 18, 2014.
Publication (Sec. 188)
(52) Coca-Cola Bottlers vs. City of Manila - GR No. 156252, June 27, 2006
Periods of Assessment and Collection (Sec. 194)
Protest of Assessment (Sec. 195)
(53) San Juan vs. Castro – GR No. 174617, December 27, 2007
(54) PLDT vs. City of Balanga, CTA EB Case No. 413, June 3, 2009
(55)China Banking vs. City Treasurer of Manila, GR No. 204117 dated
July 1, 2015 – (jurisdiction issue)
Appeal to the CTA
Claim for Refund (Sec. 196)
(56)Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 (read also case decided by the CTA
Division)
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(57)Mindanao Shopping Destination Corp. Vs. Davao City, CTA AC No. 6,
May 31, 2011
vii. Is injunction available?
(58)Angeles City vs. Angeles Electric Corporation, GR No. 166134 dated
June 29, 2010.
I. PRELIMINARY MATTERS
a. Definition of Real Property Tax
(1) Villanueva vs. City of Iloilo, L-26521, December 28, 1968
b. Who should pay the real property tax?
(2) Baguio vs. Busuego, GR No. 29772, September 18, 1980
(3) NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
(4) NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution)
(5) GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242,
December 23, 2009
c. Fundamental Principles (Sec. 198)
d. Important Definitions (Sec. 199)
i. Real Property for RPT Purposes (415 NCC)
ii. Machineries
(6) Mindanao Bus vs. City Assessor and Treasurer L-17870, Sept. 29,
1962
(7) Caltex Philippines, Inc. vs. CBAA – GR No. 50466, May 31, 1982
(8) Manila Electric Co. vs. CBAA L-47943, May 31, 1982
(9) Manila Electric Company vs. The City of Assessor and City Treasurer
of Lucena City, GR No. 166102 dated August 5, 2015.
(10) Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No.
183416 dated October 5, 2016.
(11) Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas, GR No.
180110 dated May 30, 2016.
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(16) Testate Estate of Concordia Lim vs. City of Manila – GR No. 90639,
February 21, 1990)
(17) Patalinghug vs. CA, GR No. 104786, January 27, 1994 LRTA vs. CBAA
– GR No. 127316, October 12, 2000
(18) Allied Banking Corporation vs. Quezon City Government – GR No.
154126, October 11, 2005
v. Assessment Levels (Sec. 218)
vi. General Revision of Assessments and Property Classification (Sec. 219)
vii. Valuation of Real Property (Sec. 220)
(19) Allied Bank vs. Quezon City Government – GR No. 154126, October
11, 2005
viii. Date of Effectivity of Assessment or Reassessment (Sec. 221)
ix. Assessment of Property Subject to Back Taxes (Sec. 222)
(20) Sesbreno v. CBAA, 270 SCRA 263
x. Notification of New or Revised Assessment (Sec. 223)
(21) Manila Electric Company vs. The City of Assessor and City Treasurer
of Lucena City, GR No. 166102 dated August 5, 2015.
xi. Appraisal and Assessment of Machinery (Sec. 224)
xii. Depreciation Allowance for Machinery (Sec. 225)
h. Condonation of RPT
i. Condonation and Reduction of RPT (Sec. 276)
ii. Condonation or Reduction of RPT by President (Sec. 277)
54
(37) City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014
(38) Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No.
183416 dated October 5, 2016.
IV. REMEDIES
a. Local Government Unit’s Remedies
i. Date of Accrual of Tax (Sec. 246)
ii. LGU’s Lien (Sec. 257)
iii. Interest on Unpaid RPT (Sec. 255)
iv. Period to Collect (Sec. 270)
1. Suspension of Period to Collect
v. Levy on Real Property (Sec. 258)
1. Advertisement and Sale (Sec. 260)
(39) Puzon vs. Abelera 169 SCRA 789
(40) Spouses Tan vs. Bantequi GR No. 154027 October 24, 2005
vi. Redemption of Property Sold (Sec. 261)
vii. Purchase of Property by the Local Government Units for Want of Bidder
(Sec. 263)
viii. Court Action for Collection (Sec. 266)
b. `Taxpayer’s Remedies
i. Action Assailing Validity of Tax Sale (Sec. 267)
ii. Action Involving Ownership (Sec. 268)
iii. Payment under Protest (Sec. 252)
(41) Manila Electric Company vs. The City of Assessor and City Treasurer
of Lucena City, GR No. 166102 dated August 5, 2015.
(42) Ramie Textile vs. Mathay - 89 SCRA 586 Ty vs. Trampe – GR No.
117577, December 1, 1995
(43) Olivarez vs. Marquez - 438 SCRA 679
(44) NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
(45) NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution)
(46) Camp John Hay Development Corp. vs. CBAA, GR No. 169234, October
2, 2013. (include concurring opinion of Justice Carpio)
(47) NPC vs. Municipal Government of Navotas, GR No. 192300 dated
November 24, 2014
(48) City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014
55
(49) CE Casecnan Water and Energy Company, Inc. vs. The Province of
Nueva Ecija, GR No. 196278 dated June 17, 2015.
(50) NPC vs. Provincial Treasurer of Benguet, GR No. 209303 dated
November 14, 2016.
iv. Refunds (Sec. 253)
(51) Allied Banking vs. Quezon City Government – GR No. 154126,
September 15, 2006 – Motion for Clarification of Decision
v. Assessment Appeals
1. Appeal with the LBAA (Sec. 226)
(52) City Government of Quezon City vs. Bayan Telecommunications – GR
No. 162015, March 6, 2006
(53) Systems Plus Computer College of Caloocan vs. Local Government of
Caloocan, GR No. 146382. August 7, 2003
(54) Fels Energy, Inc. vs. Province of Batangas GR No. 168557, February
16, 2007
2. Action by the LBAA (Sec. 229)
3. Appeal to the CBAA (Sec. 229)
4. Appeal to the CTA En Banc
5. Effect of Appeal on Payment of RPT (Sec. 231)
2. Criminal cases
a. Exclusive original jurisdiction
b. Exclusive appellate jurisdiction in criminal cases
3. Criminal cases
a. Institution and prosecution of criminal actions
1) Institution on civil action in criminal action
b. Appeal and period to appeal
1) Solicitor General as counsel for the People and government
officials sued in their official capacity
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c. Petition for review on certiorari to the Supreme Court
III. Taxpayer’s suit impugning the validity of tax measures or acts of taxing
authorities
1. Taxpayer’s suit, defined
2. Distinguished from citizen’s suit
3. Requisites for challenging the constitutionality of a tax measure or act of
taxing authority
a. Concept of locus standi as applied in taxation
b. Doctrine of transcendental importance
c. Ripeness for judicial determination
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