CONSOLIDATED SYLLABUS

IN TAXATION

TAX 1

A. General Principles of Taxation

a. Concept1Underlying Basis2 and Purpose
1. Taxation, Taxes Defined
2. Attributes or Characteristics of Taxes

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, namelya) 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.

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 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]

e. Exemption of Government from tax

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

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 Indirectly affecting taxation
a. Due Process and Equal Protection Clauses
b. Police Power and Eminent Domain higher, can override
constitutional rights, subject to limitations

Distinguish Taxation from Police Power and Eminent Domain

Taxation is subordinate to:

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;

Assessment & Collection

Payment

f. Classification of Taxes

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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.

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 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

According to determination of amount (Ad Valorem, Specific)

18) Tan v Mun of Pagbilao GR 14264, 30 Apr 1963 7 SCRA 887

According to purpose (General, Special)

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)

According to authority imposing the tax (National, Local)

22) Meralco Securities v. Central Board of Assessments Appeals, GR L-47245, 31

May 1982 114 SCRA 260 (Real Property under Real Property Tax Code, a
national tax; This is no longer true under the Local Government Code)

According to graduation (tax base / tax rate) – (Progressive,

regressive, etc)

g. Distinguished from other exactions

License

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

Special Assessments (Now, Special Levy under the Local

Government Coe)

26) Apostolic Prefect v Treasurer of Baguio, 71 PHIL 547 GR No. L-47252 April
18, 1941

Debt or an ordinary obligation

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

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 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

i. Government is impliedly not subject to tax but it

can tax itself
ii. Equity
iii. Contractual

33) Prov of Mizamis Oriental v. Cagayan Electric, GR 45355, 12 Jan 1990, 181 SCRA
38

j. Instances Exemptions construed liberally

The law says so
Special classes of persons under special circumstances

34) CIR v. CA, ROH Auto Products Phils & CTA, GR 108358, 20 Jan 1995, 240 SCRA
368

In favor of the government, etc

35) Maceda v. Macaraeg, 197 SCRA 77

Exemptions granted to traditional exemptees, such as religious /

charitable

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 36) CIR v. DLSU - GR Nos 196596, November 9, 2016, G.R. No. 198841 and G.R. No.
198941

k. Certain Doctrines in Taxation

Prospectivity of tax laws

How may tax laws be applied? General rule, prospective, but the
law can provide that it has retro effect and it is still valid, except if
too harsh and oppressive as to violate due process clause of the
constitution.

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]

May tax laws be given retroactive effect?

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

Is the government bound by the errors of its agents? While the

government is not bound by the error of its agent in issuing a
ruling, in the interest of justice and fair play, reversal of ruling may
not be given retro effect

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

February 01, 2020

Double Taxation
What is double taxation? Is it valid or constitutional?

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 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]

Measures to avoid double taxation

i. Treaty
ii. Reciprocity
iii. Tax Credit

Means of escaping taxation – tax avoidance / tax evasion

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

Is equitable recoupment allowed though prescription has set in?

49) Collector v. UST, 104 PHIL 1062 – (rejected this common law doctrine)

Set off of taxes (compensation)– 02-01-2020

50) Philex Mining v. CIR,L-125704, 28 Aug 1998 (General rule: no offsetting)

[Refundable VAT v. Excise tax);
51) CIR v ESSO Standard, 172 SCRA 369 18 Apr 1989, 172 SCRA 623 [ Offset of
Percentage Tax and amusement taxes v. matured back pay certificates];
52) Domingo v. Garlitos, 8 SCRA 443 [1963] (exception: allowed)[Estate and
Inheritance Taxes v specifically appropriated fund for the payment of obligation to
the estate]

Taxpayer suit may be filed

When disbursement of public funds involved

BUT NOT to enjoin COMELEC to call election

Funds were not raised through taxation
Maceda v. Macaraeg, 197 SCRA 771 [Exemption of NPC from taxes]

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 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.

l. DEFINITIONS OF DIFFERENT TAXES UNDER THE NIRC

Capital Gains Tax is a tax imposed on the gains presumed to have

been realized by the seller from the sale, exchange or other disposition
of capital assets located in the Philippines, including pacto de retro
sales and other forms of conditional sale.

Documentary Stamp Tax is a tax on documents, instruments, loan

agreements and papers evidencing the acceptance, assignment, sale or
transfer of an obligation, rights or property incident thereto.

Donor’s Tax is a tax on a donation or gift, and is imposed on the

gratuitous transfer of property between two or more persons who are
living at the time of the transfer.

Estate Tax is a tax on the right of the deceased person to transmit

his / her estate to his / her lawful heirs and beneficiaries at the time of
death and on certain transfers which are made by law as equivalent to
testamentary disposition.

Income Tax is a tax on all yearly profits arising from property,

profession, trades or offices or as a tax on a person’s income,
emoluments, profits and the like.

Percentage Tax is a business tax imposed on persons or entities who

sell or lease goods , properties or services in the ordinary course of
trade or business whose gross annual sales or receipts do not exceed
P1.5million and are not VAT-registered.

Value-Added Tax is a business tax imposed and collected from the

seller in the course of trade or business on every sale of properties
(real or personal) lese of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus it can be passed on to the
buyer.

Withholding Tax on Compensation is the tax withheld from

individuals receiving purely compensation income.

Expanded Withholding Tax is a kind of withholding tax which is

prescribed only for certain payors and is creditable against the income
tax due of the payee for the taxable quarter / year.

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 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.

Withholding Tax on Government Money Payments is the tax

withheld by government offices and instrumentalities, including
government owned or controlled corporations and local government
units, before making any payments to private individuals,
corporations, partnerships and / or associations.

B. THE NATIONAL INTERNAL REVENUE CODE

a. Taxes imposed under the NIRC (Sec 21, NIRC)

b. Bureau of Internal Revenue (Sec 2 to 20, NIRC)

Powers and duties of the Bureau of Internal Revenue

Exclusive and original power of the CIR to interpret tax laws,
subject to review by the Secretary of Finance
Assess and Collect

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

56) Republic v CA 366 SCRA 489(2001);

57) Aznar v CIR 58 SCRA 519(1974);
58) CIR v. Benigno Toda 438 SCRA 290 (2004) (meaning of fraud)

Effect police powers

Obtain information, etc

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)

3. BIR Rules and Regulations

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 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)

70) CIR v. Benguet Corporation, 463 SCRA 28 (2005) – Non-retroactivity of ruling;

while government is not bound by the error of its agents issuing ruling, in the
interest of justice and fair play, it may be not given retroactive effect (same holding in
Sy Po v. CTA, GR No. 81446, 18 Aug 1988;

71) CIR v. Burmeisters & Wain Scandinavian, GR No. 153205, Jan 2007 – Non-
retroactivity of BIR ruling; 0% VAT on export of services

C. INCOME TAXATION (Secs 22 to 83, NIRC)

1. Definition of Terms (Sec 22, NIRC)

2. General Principles (Sec 23, NIRC and cross refer to Sec 42)
3. RR 8-2018 – implementing the Income Tax provisions of TRAIN law

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

75) Madrigal v. Rafferty GR No. 12287, 07 Aug 1918, 38 Phil 14 – Functions of

income tax – The aim has been to mitigate the evils arising from the inequalities of
wealth by a progressive scheme of taxation, which places the burden on those best
able to pay; income distinguished from capital. Income as contrasted with capital or
property is to be the test. The essential difference between capital and income is
that capital is a fund; income is a flow. Capital is wealth, while income is the service

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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.

77) Javier v. CA 199 SCRA 824 – received by mistake in income

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.

5. INCOME TAXPAYERS [KINDS]

Individuals (Sec 24 to 26, NIRC)

Citizens Aliens

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Residents Residents
Non-residents Non-residents
Engaged in business
Not engaged

Corporate Taxpayers (Sec 27 to 30, NIRC)

Kinds of Corporation
Domestic (Sec 27)
Foreign (Sec 28)
Resident – engaged in business
Non-resident

Others whose activities or ventures considered as

corporation for income tax purposes

Estate under judicial settlement – must be under judicial administration;

entitled to deduction for single individual; allowed to deduct distribution
to heirs.

Trusts – irrevocable both as to corpus and as to income

6. TAX BASE AND TAX RATES FOR INDIVIDUALS

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

RR 3-98, as amended – Fringe Benefits Tax

87) Coll v. Henderson 1 SCRA 649 – Convenience of employer rule

Overtime / Transportation Allowance & Duty Allowance on night / graveyard shift /
outstation or out of town allowance for carrying on the business of employer are not
subject to FBT being for the convenience of employer. Moreover, when they are pre-
computed on daily basis and paid while on assignment, they likewise not subject to
income tax and WT. [DA 013-2008, 16 Jan 2008]

What is compensation income?

What are fringe benefits? (See Sec 33, NIRC)
What is meant by ordinary income? (Sec 22, NIRC)
How is compensation of directors of corporation taxed? Effect if directors
are not employees of the corporations? If not employed, taxed like a
business income. [RMC 34-2008, 15 Apr 2008 – fees paid to directors

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 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))

Estates and Trusts (Sec 60 to 66, NIRC)

CATEGORIES OF INCOME OF INDIVIDUAL TAXPAYERS

Compensation
Fringe Benefits
Income from Trade / Business
Exercise of Profession
Passive Income
Other Dealings in Property

COMPUTATION OF INCOME TAX DUE OF INDIVIDUAL WHO EARNS BUSINESS,

COMPENSATION AND OTHER INCOME
Gross Sales / Receipts
Less: Sales Returns & Discounts
Net Sales
Less: Cost of Sales / Service
Gross Income from business or exercise of profession
Compensation income (purely compensation income is not entitled to business
deductions)
Other Income (other than those subject to final tax)
Total Gross Income
Less: Itemized Deductions or optional standard deduction
Personal and additional exemptions
Taxable Income
Tax Due (Tax table 5% to 32%)
Creditable W/Tax
Tax still due / refund

TYPE OF GROSS INCOME OF INDIVIDUALS SUBJECT TO 5% TO 32% TAX

Compensation
Trade / Business
Exercise of Profession
Prizes / Winnings – P 10K or less
Capital gains on real property sold to government – 6% or 5% to 32%
Other capital gains from dealings in property [except those subject to 6% final
tax on land and 5% or 10% final tax on shares of stocks and ½ of 1% transaction
tax on shares of stocks traded and sold through the stock exchanges; see below
Capital gains other than from real property and shares of stocks are still subject
to the rules on long term and short term investments, i.e. 1 year or less and over
1 year holding period; loss carry over and deduction rules of capital loss v.
capital gains and ordinary income only.

INCOME OF INDIVIDUALS SUBJECT TO FINAL TAX

Passive Income

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

GENERAL PROFESSIONAL PARTNERSHIP (Sec 26)

Exempt from income tax as a corporation but its partners are taxable on their
share whether distributed or not
88) Its exclusion is a classification clause not an exemption thus construed in
favour of taxpayer, CIR v. Ledesma, 31 SCRA 95, 30 Jan 1970
89) Sison v. Ancheta and Tan v. Del Rosario, supra

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)

Foreign (Sec 28)

Resident – engaged in business
Non-resident
Others whose activities or ventures considered as corporation for
income tax purposes

TAXATION OF DIFFERENT TYPES OF INCOME OF DOMESTIC CORP – SUBJECT TO

TAX ON INCOME EARNED FROM ALL SOURCES (WITHIN & WITHOUT THE PHILS);
see
98) NV Reederif Amsterdam v. CIR GR No. 46029, 23 June 1988
On taxable income (other than passive income) – 34%, 33% or 32%
starting 2000, 35%; effective January 1, 2009 – 30% per 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

Capital gains from sale of real property located in the Phil – 6%

Where sale of land was made between PEZA-registered enterprises
subject to 5% preferential tax “ in lieu of all other taxes”, the same
is not subject to 6% CGT, VAT or DST [DA 025-2008, 22 Jan
2008]
Sale of real property held for investment by a holding company and
not engaged in real estate business is subject to 6% CGT & DST
but exempt from VAT [DA 011-2008, 15 Jan 2008]
Buyers of real property who are not engaged in trade or business are
required to withhold the creditable tax from the purchase price.
If seller already remitted the tax, there is no more obligation to
pay the tax or the penalty, [DA 02-2008, 08 Jan 2008]
Sale of stocks of domestic corp
Listed and thru stock exchange – exempt from income tax, but
subject to business tax at ½ of 1% of gross (Sec 127)
IPO of a taxpayer granted with legislative air transport
franchise is not subject to IPO tax because of ipso facto
provision in its franchise that levels the playing field with
competition. The competition franchise provides that it shall
pay 2% franchise tax or basic corp income tax whichever is
lower, ‘in lieu of other taxes’. The issuance of shares of stocks
is likewise not subject to DST. [DA 05-2008, 9 Jan 2008]
Not listed or if listed, not trade thru stock exchange – 5%, 10%
(100K, >100k)
See RR 7-2003 Capital assets v. Ordinary Assets

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)

15% OF GROSS INCOME IS AN OPTION TO CORPORATION

Tax effort ratio = 20% of GNP
Income tax collected = 40% total revenues
VAT = 4% of GNP
Consolidated Public Sector Financial Position = 0.9% of GNP

RESIDENT FOREIGN CORPORATION

30% effective January 1, 2009 – same as domestic corp, except that taxable
income should come from Phil sources
International Carrier – 2 ½ of Gross Phil Billings (GPB)
Air Carrier – continuous and uninterrupted flight originating from Phil
regardless of place of issue and payment, exchange with other airlines;
but in transhipment, only the leg from Phil
Shipping – originating from Phil up to final destination; regardless of sale or
payment of document
101) CIR v. Tokyo Shipping Co. GR No. L-68252, 25 May 1995 [Claim for refund of
tax on GPB from charter or vessel; claim fro refund construed stricticissimi 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]
10% - Offshore banking units – income from foreign transactions with local and
resident banks, including from foreign loans with residents
15% - Branch profits remittances based on total profits applied or earmarked for
remittance without deduction of tax component paid via withholding system
Except activities registered with PEZA
102) Items of income = rent, dividends, salaries, remuneration, capital gains, royalty,
etc if not effectively connected with the conduct of its trade or business in the Phils
[see CIR v. Marubeni, 177 SCRA 500]
10% - RHQ, AHQ, ROHQ – Sec 22 DD & EE, NIRC, for definitions
20% - on interests & royalties
7.5% - on interest income from expanded foreign currency denominated units in
a depositary bank
10% - on interest from depositary bank
5% to 10% - capital gains on sale of shares of stocks
Inter-corporate dividends from domestic corp - exempt

NON-RESIDENT FOREIGN CORPORATION

30% effective January 1, 2009 based on gross income
25% on cinema film owner, lessor or distributor
4 ½ % on rentals to owners or lessor of chartered vessels to Phil residents
7 ½ % rentals of aircraft, machineries & other equipment
20% on foreign loans contracted on or after Aug 1, 1988
capital gains on sale of shares of stocks -5% to 10% or ½ of 1% if sold through
stock exchange
Royalty – subject to tax treaty
103) Most favored nation clause CIR v. SC Johnson & Sons 309 SCRA 87 (1999)

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

EXEMPT CORPORATIONS (Sec 30, NIRC)

Labor, agricultural & horticultural not principally for profit
Non-stock, non-profit mutual and coop banks for mutual purpose & without
profit
Beneficiary society, order, association, frat benefits of members
Exclusive cemetery for members
Non-stock religious, charitable, scientific, cultural no income inures to its
members or any specific person. (Art VI, Sec 28(3), Constitution) grants
exemption to religious, non-profit cemeteries, charitable, educational covers
property tax)
NGOs engaged in micro financing are subject to income tax regardless of
disposition because these are not the registered activities that are exempt
[RR 14-2007, 11 Dec 2007]
Business league, chamber or trade association
Civic league, org
Non-stock, non-profit educational institutions [Art XIV, Sec 4(3) of
Constitution) are exempt from duties and taxes, all revenues and assets;

18
 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.

MEANING OF TAXABLE INCOME (Sec 31) – ITEMS OF GROSS INCOME LESS

DEDUCTIONS AND PERSONAL EXEMPTIONS, IF ANY, AUTHORIZED BY NIRC OR
SPECIAL LAWS

Sec 32 (A) Definitions of Gross Income, includes compensation for services,

conduct of trade or business or profit, gains from dealings in property,
interest, rents, royalties, dividends, annuities, prizes, winnings, pensions,
partners’ distributive share in general professional partnership

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.”

CTA Circular 1-95 states in part:

1. The party who desires to introduce as evidence such

voluminous documents must, after motion and approval by the
Court, present (a) a Summary containing, among others, a
chronological listing of the numbers, dates and amounts covered by
the invoices or receipts and the amounts of tax paid; and (b) a
Certification of an independent Certified Public Accountant attesting
to the correctness of the contents of the summary after making an
examination, evaluation and audit of the voluminous receipts and
invoices xxx

2. The method of individual presentation of each and

every receipt, invoice or account for making, identification and
comparison with the originals thereof need not be done before the
Court or Clerk of Court anymore after the introduction of the
summary and CPA certification. It is enough that the receipts,
invoices, vouchers or other documents covering the said
accounts or payment to be introduced in evidence must be pre-
marked by the party concerned and submitted to the Court in
order to be made accessible to the adverse party who desires to
check and verify the correctness of the summary and CPA
certification. Likewise, the originals of the voluminous receipts,
invoices and accounts must be ready for verification and comparison
in case of doubt on the authenticity thereof is raised during the
hearing or resolution of the formal offer of evidence. (Emphasis and
underscoring supplied)

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]

Social security, retirement, gratuities, pensions received by Filipinos or aliens

who reside permanently in the Philippines from foreign government,
other institution, public or private
Received by any person residing in Phil from US Veterans Admin
SSS, GSIS benefits and gratuities
Income by foreign government, their financing institutions & international
finance institution
Income from public utility and essential functions of Phil government and
political subdivisions
Prizes & awards as recognitions for religious, charitable, scientific,
educational, art, literary, civic if selection is without action on his part to
enter the contest or proceedings and does not require substantial future
service

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

Itemized Deductions (Sec 34, NIRC)

10% Optional Standard Deductions (OSD) (Sec 34 (L), Amended
pursuant to RA 9504, 07 Jul 2008, now 40%, includes
corporation
Allowed only to citizens and resident aliens engaged in business
or profession
No need to support expenses
Election irrevocable for the year
Unless indicated, itemized is deemed elected
Premiums on medical & hospitalization (Sec 34 M)
Personal Exemptions (Sec 35)
Personal and additional exemptions

Not allowed to claim deductions

Individuals receiving compensation income (except premiums on
medical / hospitalization subject to limitations and personal and
additional exemptions)
Non-resident aliens not engaged in trade or business
Aliens (also Filipinos similarly situated) employed in ROHQ, AHQ,
OBU, Petroleum contractors
Non-resident Foreign Corporations
Income subject to Final Tax

Itemized Deductions (Sec 34)

110) There must be a law allowing them (Atlas Consolidated Mining v. CIR
102 SCRA 246)
Requisites: Ordinary, necessary, reasonable, not against law, etc
Ordinary and necessary means reasonable
111) It appeared sale of property was effected by a broker hence bonus to
company officer disallowed (Aguinaldo v. CIR, 112 SCRA 136, 1982)
Fees paid to broker to induce investors are reasonable and
deductible (On the substantive issue, SC allowed the
deduction as reasonable citing Rev Reg No. 2. It is worth
noting at this point that most of the payees were not in the
regular employ of Algue, nor were they its controlling
stockholders. The Solicitor General is correct when he says
that the burden is on the taxpayer to prove the validity of
claimed deduction. In the present case, however, we find that
the onus has been discharged satisfactorily. The private

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

Subject to withholding tax, where applicable

114) FEBTC V. CA, CTA & BIR, 477 SCRA 49 (Dec 2005) – To sufficiently
support claims for tax refund of excess creditable withholding tax, BIR
Form 1743 must be submitted, Confirmation Receipts and ITRs are not
sufficient. Having failed to do so, the claims were correctly denied.
Under withholding tax system, it is the payor who withholds the tax and
not the payee. The OR/CR did not indicate the nature and amount of the
payment. “The findings of fact of the CTA, a special court exercising
particular expertise on the subject of tax, are generally regarded as final,
binding and conclusive upon this Court, especially if these are
substantially similar to the findings of the CA which is normally the
arbiter of questions of fact. The findings shall not be reviewed nor
disturbed on appeal, unless a party can show that these are not
supported by evidence or when the judgment is premised on a
misapprehension of facts, or when the lower courts failed to notice
certain relevant facts which if considered would only justify a different
conclusion.

Income payments to registered enterprises availing of the

Income Tax Holiday are not subject to Creditable
Withholding Tax [DA 030-2008 23 Jan 2008]

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

Interest – Use, forbearance or detention of money [see Rev Reg 13-

2000, 20 Nov 2000 – Requisites]
There is debt, and interest is agreed in writing
Paid or incurred in connection with business during the year
Legally due
Not between related parties
Not incurred for petroleum operations
Not capitalized
Limitations on interest – interest is reduced by 41% (42%
effective 01 Jul 2005);
39% and 38% of interest income subject to final w/tax
Interest of business taxes not subject to limit
Although cash basis, interest paid in advance deductible only in
the year debt is paid in full or correspondingly to amortized
principal

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]

Research and Development

Requisites for deductibility
Limitations on deductions

Pension Trust Contributions

Nature and requisites
Limitation on deduction
Excess retirement plan assets reverted back to the employer
company is subject to income tax [DA 020-2008, 17 Jan
2008]

Items not deductible (Sec 36)

Personal and living expenses
Capital Expenditures
Premium on insurance where beneficiary is the payor –
taxpayer
Losses between related parties

Special provisions re: income and deductions of insurance companies

(Sec 37)
Losses from Wash Sales of Stock or securities (Sec 38)
Capital gains and losses (Sec 39) [See Rev Reg No. 7-2003, 27 Dec
2003]

INCOME TAX TREATMENT ON THE SALE OR EXCHANGE OF PROPERTY (SEC 40)

General rule on recognition of gain or loss in a sale or exchange of property

Exceptions
Factors relevant to determination of gain or loss
How is gain or loss computed?
What is the basis to be used?
When are gains recognized, but not losses?
What are the two types of merger or consolidation under Sec 40?

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.

Accounting periods and accounting methods (Sec 43 to 50)

How are installment and deferred payment sales treated for income tax
purposes?
Accounting Methods (Sec 43)
What accounting methods are acceptable to BIR
What are accounting periods and their relevance
How are leases treated for income tax, VAT and withholding purposes?
Two types of leases: (1) Full payout lease – it’s treated as capital lease –
subject to VAT the full amount of lease and to 2% WT if payor is top
10,000 taxpayer; also subject to depreciation on the part of the lessee-
buyer and (2) FMV or residual lease – treated as operating lease, the
monthly rentals are subject to VAT and WT. See BIR Ruling No. 9-2007
and Rev Reg 19-86
129) Ericsson v. Pasig City 538 SCRA 99, 22 Nov 2007- Accrual accounting
of income; financial reporting system; gross receipts v. gross income;

26
 double taxation explained; question of law v. of facts; Rules 41, 45 and
56; local taxation.

Returns and Payments for individuals and corporations [Sec 51 to 59]

What returns should be filed
Who are required to file the returns
When, where and how are returns filed and the tax paid
Effects if returns are not file don time or not at all
What happens in case of excess creditable withholding for corporation?
130) Philam Asset Management Inc v. CIR 477 SCRA 761, 14 Dec 2005 –
Under Sec 76 of the NIRC, a taxable corporation with excess quarterly
income tax payments may apply for either a tax refund or a tax credit, but
not both. The choice of one precludes the other. Failure to indicate a
choice, however, will not bar a valid request for a refund, should this
option be chosen later on. [ 1997 and 1998 ITR]. Issues are: “Whether
or not the failure of the petitioner to indicate in its annual income tax
return the option to refund its creditable withholding tax is fatal to its
claim for refund”; [NO] and “Whether or not the presentation in evidence
of the petitioner’s annual income tax return for the succeeding calendar
year is a legal requisite in a claim for refund of unapplied creditable
withholding tax” [NO] But if it is clear that an option was made although
the box is not filled up, that choice shall prevail. [Narrated history of
recent NIRC amendments]
131) CIR v. Meralco, 535 SCRA 399, 10 Oct 2007 – Filing of ITR with excess
payment applied for credit and refund; proof required. Note the
amendments to the law applied in this case under 1986 NIRC v. 1997
NIRC provisions

Estates and Trusts (Secs 60 to 66, NIRC)

The taxes imposed on individuals apply to income of estates and of any property
held in trust, including:

Income accumulated in trust for unborn or unascertained persons with

contingent interest or for future distribution according to the terms of
the will or trust
Income to be distributed currently by fiduciary to beneficiaries, and income
collected by guardian to be held or distributed per court order
Income received by estates of deceased person during period of admin or
settlement proceedings
Trust holding employee retirement plan is not taxable subject to conditions
under Sec 60(B). Any amount received by said employee or distribute in
excess of his contribution is taxable to him. But under Sec 32 (B)(6)(a) if
the conditions for its exclusion are present, the excess may also be
exempt from income tax.

Estate – refers to the mass of property [assets and liabilities] left by a

decedent
Taxable as a separate taxpayer like an individual if under judicial testate
or intestate proceedings, otherwise, income from said property is taxable
to the heirs; it follows the status of the decedent
Trust – property held by one person for the benefit of another
Taxable -
Trust – if income is to be accumulated or if the trustee has discretion
to accumulate or distribute to beneficiaries

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.

Other Income Tax Requirements (Secs 67 to 73)

How are dividends taxed? (Sec 73)

Quarterly corporate income tax, Annual declaration and quarterly payments of

income tax (Secs 74 to 77)
132) State Land Investment Corp v. CIR, GR No. 171956, 18 Jan 2008 –
Excess creditable tax may be refunded or credited at the option of the
taxpayer under former Sec 69, now Sec 76. Under then Sec 69, excess
taxes may be credited in the following year only, after then need to be
claimed for refund within two (2) years from payment which SIC did. MR
filed with CTA included 1999 & 2000 ITRs showing losses, thus 1997
excess tax credit could not have been applied in 1999, Doctrines: SC is
not trier of facts but if lower court mis-appreciated facts or failed to
notice facts that could change conclusion, then it can review facts.
Solutio indebiti applied against government. Refund granted. Note:
counting of 2 years starts from the filing of final return.

Irrevocability of option to claim credits for excess withholding taxes vs refund

(Sec 76)
133) Rhombus Energy Inc v. CIR Gr 206362, Aug 01, 2018

Withholding on Wages (Secs 78 to 83)

TAX 2
D) Transfer Taxes - (Secs. 84 to 104 of the NIRC as amended by RA
10963)

I. Nature of Transfer Taxes

II. Estate Tax

A. Nature of Estate Tax

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

(1) Composition of the Gross Estate

1. Sec 104 NIRC – Definitions
2. Sec 5, RR 2-2003 – Valuation of Gross Estate
3. Who are subject to estate taxes?
c. Filipino citizens and resident aliens – on properties within and
without the Philippines
d. Non-resident aliens – properties which at the time of his death
were situated in the Philippines – (Sec 86 [B] NIRC – net estate of
non-resident decedent, not a citizen of the Philippines)
1) Rule on Reciprocity
2) Rules on Intangible Personal Property
135) CIR vs. Campos Rueda (42 SCRA 23)
136) CIR vs. Fisher (1 SCRA 93)

4. Gross Estate (Secs. 85 and 104)

a. Valuation Rules (Sec. 5 of RR No. 2-03)
1. Real Property (Sec 88 NIRC)
2. Personal Property (applicability of RR No. 6-2013)
3. Shares of Stock
4. Usufruct (Sec 88 NIRC)
(A). Decedent’s Interest
(B). Transfer in Contemplation of Death
(C). Revocable Transfer
(D). Property Passing Under General Power of Appointment -
Correlate with Sec. 87
(E). Proceeds of Life Insurance
(F). Prior Interest
(G) Transfers for Insufficient Consideration
(H).Capital of Surviving Spouse

(2) Deductions Allowed to Estate (Sec. 86 NIRC)

1. Allowed to Residents and Citizens
a. Standard Deduction – P5,000,000
b. Claims against the Estate
- Requisites for deductibility
i. Simple Loan
ii. Unpaid obligation from purchase of goods
iii. Court Settlement

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

2. Allowed to Nonresident aliens (See also Sec. 86 D)

a. Limitation (Sec. 7 RR No. 2-03) Correlate with Sec. 86(D) on tax
credits for estate taxes paid to foreign country

B. Exemption of certain acquisitions and

transmissions (Sec 87)

C. Estate Tax Returns and Payment of Tax (Secs.

90 and 91)
1. When required and contents
2. Time of Filing / Extension of time to file
3. Place of Filing
4. Time of Payment / Extension of time to pay
5. CPA Certification

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

A. Nature of Donor’s Tax

142) Lladoc vs. Vs. CIR ( 14 SCRA 292)
143) Pirovano vs. CIR (14 SCRA 232)

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])

B. Composition of the Gross Gifts (Sec. 104)

1. Residents and Citizens
2. Non-resident alien
a. Rule on Reciprocity
b. Rules on Intangible Personal Property
3. Corporations
4. Valuation of Gifts made in property (Sec. 102)
5. Exemption of Certain Gifts (Sec. 101[A])
a. Residents and Citizens
b. Non-resident aliens
c. Corporations

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

D. Filing and Payment of Returns (Sec. 103) / (Sec. 13 RR No. 2-03)

1. Requirements
2. Time and Place of Filing
3. Notice of Donation – Exemption from Donor’s Tax (Sec 13 [C], RR
No. 2-03)

E) Value-Added Tax - (Secs. 105 to 115 of the NIRC as amended by

RA 10963)

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)

II. Vatable Transactions

1. Vatable Sale on Goods & Services

a. Definition of goods and services (Sec. 106 and Sec. 108)
b. VAT base for goods and services (Sec. 106 and Sec.108)
c. Meaning of gross selling price and gross receipts (Sec. 106 and
Sec.108)
d. Rules on sales of Real Property
(1) Rule on Sales on Instalment [RR No. Sec. 4.106-3 of RR No. 16-05
as amended by Sec. 3 of RR No. 4-07]
(2) Rule on sale of real property use in business (Sec. 14 (l) of RR No.
4-07)
(3) Correlate with Sec. 109 on exempt sales of Real Property
(4) Amendments of Section 109 on Enumerated VAT-exempt
Transactions under Rep. Act No. 10963 (TRAIN) on Threshold of
Real Property exempt from VAT.
e. Transactions deemed sale (Sec. 106 B)
(1) Rationale of Imposition
(2) Enumeration – Sec. 4.106-7 RR No. 16-05
(3) Tax Base of Transactions Deemed Sale
f. Rules for Certain Services
(1) Common Carriers
Sec. 4.108-2 Nos. 11 and 12 of RR No. 16-05
Sec. 4.108-3 of RR No. 16-05
(2) Lease of Properties
Sec. 4.108-3 of RR No. 16-05
Lease of Residential Units - [Sec. 4.109-1 (B)(q) of RR No. 16-05]
Amendments of Section 109 on Enumerated VAT-exempt
Transactions under Rep. Act No. 10963 (TRAIN) on Threshold of
Lease of Residential Units exempt from VAT.
(3) Professional Services
(4) Medical Services
Sec. 4.109-1 (B)(g) 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)

III. Zero-rated Sales & VAT-exempt Transactions

a. Nature of Zero Rated Sales
b. Zero Rated Sale of Goods (Sec. 106)
c. Zero Rated Sale of Services (Sec. 108 B)
151) CIR vs. American Express GR No. 152609 dated June 29, 2005
152) CIR vs. Burmeister and Wain GR No. 153205 dated Jaunary22, 2007
153) CIR vs. Acesite GR No. GR No. 147295 dated February 16, 2007
d. Automatic zero-rate vs. Effectively zero-rate
154) CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
155) CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9,
2005
e. Destination principle and cross border doctrine
156) CIR vs. American Express GR No. 152609 dated June 29, 2005
157) CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9,
2005
f. Zero Rated Sales vs. Exempt Sales
158) CIR vs. Cebu Toyo Corp. GR No. 149073 dated February 16, 2005
g. Enumeration of Exempt Transactions (Sec. 109)
Sec. 4.109-1 (B) of RR No. 16-05
h. Exempt Persons vs. Exempt Transactions
CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
i. Amendments under Rep. Act No. 10378
j. Amendments of Section 106 on Enumerated Export Sales under Rep.
Act No. 10963 (TRAIN) & the Vetoed Provisions
k. Amendments of Section 108 on Enumerated Zero-Rated Services
under Rep. Act No. 10963 (TRAIN) & the Vetoed Provisions
l. Amendments of Section 109 on Enumerated VAT-exempt
Transactions under Rep. Act No. 10963 (TRAIN)

IV. Transitional & Presumptive Input Taxes

a. Sec. 4.111-1 of RR No. 16-05
159) Fort Bonifacio Development vs. CIR GR No. 158885 dated April 2, 2009

V. VAT Claim for Refund

a. Compare with Sec. 204 and 229
b. Grounds
c. Periods
160) Contex vs. CIR GR No. 151135 dated July 2, 2004
161) Atlas Consolidated Mining vs. CIR GR Nos. 141104 and 148763 June 8, 2007
162) CIR vs. Mirant Pagbilao Corp. GR No. 172129 dated September 12, 2008
163) Northern Mini Hydro vs. CIR CTA Case No. 7257 dated May 28, 2009
d. 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.

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]

F. Other Percentage Taxes

I. Legal Provisions
a. Rep. Act No. 9238
b. Rev. Regs. No. 9-2004
c. Sections 116-128, NIRC

II. 3% Percentage Taxes

a. Tax on Persons Exempt from VAT (Section 116)
b. Amendments of Section 116 under Rep. Act No. 10963 (TRAIN) on
Increase in Threshold to P3M.

III. Distinct Percentage Taxes

a. Common Carriers Tax
(1) Domestic Section 117
(2) International Section118
(3) Amendments under Rep. Act No. 10378
b. Tax on Franchises Section119
c. Overseas Communication Tax Section120
d. Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking
Functions
(1) Section121
(2) RMC 69-2003
164) China Banking Corporation vs. CA, CTA and CIR, G.R. No. 146749 and
G.R.147938 dated June 10, 2003
e. Other Non-Bank Financial Intermediaries Section122
f. Tax on Life Insurance Premiums Section123
g. Tax on Agents of Foreign Insurance Companies Section124
h. Amusement Taxes Section125
i. Tax on Winnings Section126
j. Stock Transaction Tax Section 127
(1) Stock Transaction Tax
(2) Amendments of Section 127 under Rep. Act No. 10963 (TRAIN) on

34
 Increase in rate from ½ of 1% to 6/10 of 1%
(3) Tax on IPOs

IV. Return & Payment of Percentage Taxes

a. BIR Form 2551M
b. BIR Form 2551Q for Section120
c. BIR Form 2552 for Section127
d. BIR Form 1600 WP for Section126
e. BIR Form 1600

G. Remedies

Assessment and Collection of Internal Revenue Taxes

1. Tax Audit Process / Assessment Process

a. Overview

165) CIR vs. Fitness By Design, Inc., GR No. 215957 dated November 9,
2016
b. Letter of Authority / Audit Notice

Sec. 6(A) (as amended by RA 10963) and Sec. 13 of the NIRC

Revenue Audit Memorandum Order No. 1-00 (Service of Letter of
Authority only)
Revenue Memorandum Order No. 43-90 dated September 20, 1990 (as
cited in the SC Cases)
Revenue Memorandum Order No. 44-2010 dated May 12, 2010
Revenue Memorandum Order No. 69-2010 dated August 11, 2010
166) CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010
167) CIR vs. De La Salle, GR No. 198841 dated November 9, 2016
168) Medicard Philippines, Inc. vs. CIR, GR No. 222743 dated April 5, 2017

c. Number of times a taxpayer may be audited

Sec. 235 of the NIRC

2. Preservation of Books of Accounts and tax records

Sec. 235 of the NIRC

RR No. 17-2013 dated September 27, 2013
RR No. 5-2014 dated July 30, 2014

3. Tax Assessment in General

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:

a. Power of the Commissioner to assess deficiency tax / best evidence

obtainable

Sec. 6(B) of the NIRC

Revenue Memorandum Circular No. 23-00 dated November 27, 2000
172) Bonifacia SyPo vs. CTA (164 SCRA 524)
173) Fitness By Design, Inc. vs. CIR (GR No. 177982 dated October 17,
2008)

b. Power to issue SubpoenaDucesTecum

Secs. 5(C) and 266 of the NIRC

Revenue Memorandum Order No. 045-10 dated May 12, 2010
Revenue Memorandum Order No. 10-13 dated April 17, 2013
Revenue Memorandum Order No. 08-14 dated January 29, 2014

c. Power to Inquire into Bank Deposit Accounts

Sec. 6(F) of the NIRC, as amended by RA No. 10021

Prescriptive period to assess and collect

1. Prescription in General

a. Rationale/Construction/Interpretation

174) Republic vs. Ablaza (108 Phil 1105)

b. Counting of periods(Art. 13 of NCC vs. Sec. 31 of Revised Admin
Code)

175) CIR vs. Primetown Property Group (GR No. 162155, August 28, 2007)

2. Prescriptive period to Assess and Collect

a. Period for Assessment – General Rule/Ordinary Prescription

Sec. 203 of the NIRC

b. Period for Collection – General Rule

Sec. 222(c) of the NIRC

c. Matters that may affect the prescriptive period

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

178) CIR vs. Gonzales (18 SCRA 757)

4. False Return, Fraudulent Return, Omission to File a

Return/Extraordinary Prescription

Sec. 222(a) of the NIRC

Sec. 248(B) of the NIRC
179) Aznar vs. CTA (58 SCRA 519)
180) CIR vs. Asalus Corporation (GR No. 22150 dated February 22, 2017)
181) CIR vs. Philippine Daily Inquirer, Inc., (GR No. March 22, 2017)
182) CIR vs. Fitness By Design, Inc., (GR No. 215957 dated November 9,
2016)

5. Suspension of the prescriptive period

Secs. 223 and 91(B) of the NIRC

183) Republic vs. Ker (18 SCRA 208)
184) CIR vs. United Salvage and Towage (Phils.), Inc. (GR No. 197515
dated July 2, 2014) -compare with Republic vs. Ker
185) Continental Micronesia, Inc. – Phil. Branch vs. CIR (CTA Case No.
6191, March 22, 2006)
186) BPI vs. CIR (GR No. 139736, October 17, 2005)
187) CIR vs. BASF Coating + Inks Phils., Inc. (GR No. 198677 dated
November 26, 2014)

6. Waiver of the Statute of Limitations

New Requirements under RMO 14-2016 dated April 4, 2016

188) Phil. Journalists, Inc. vs. CIR (GR No. 162852, December 16, 2004)
189) CIR vs. Kudos Metal (GR No. 178087, May 5, 2010)
190) RCBC vs. CIR (GR No. 170257, September 7, 2011)
191) CIR vs. Next Mobile, Inc. (GR No. 212825 dated December 29, 2015)

7. Estoppel

192) CIR vs. Suyoc (104 Phil. 819)

Requisites of a valid assessment

Sec. 228 of the NIRC

RR No. 12-99, as amended by RR No. 18-2013

1. Due Process and Pre-assessment Notice

193) Collector vs. Benipayo (4 SCRA 182)

194) CIR vs. Enron Subic (GR No. 166387 dated January 19, 2009)
195) CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)
196) A Brown Co., Inc. vs. CIR (CTA Case No. 6357, June 7, 2004)
197) CIR vs. Menguito (GR No. 167550, September 17, 2008)

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

2. Modes of Service of Assessments

3. When Assessment Deemed made / Assessments sent by registered

mail

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

1. Reinvestigation vs. Reconsideration

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

Sec. 228 and RR No. 18-2013

4. Submission of relevant documents / 60-day period

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)

Decision / Inaction on the Pending Protest

1. The 180-day period to Decide

Sec. 228
RR No. 18-2013

2. Final Decision on a Disputed Assessment (“FDDA”)

a. Contents of a Valid FDDA

RR No. 18-2013

38
207) CIR vs. Liquigaz Philippines Corporation, GR No. 215534 dated April
18, 2016

3. Actions tantamount to a Denial of the Pending Protest

208) Oceanic Wireless Network, Inc. vs. CIR (GR No. 14380, dated
December 9, 2005)

209) Advertising Associates vs. CA (133 SCRA 765)

210) CIR vs. Algue (158 SCRA 9)

211) Yabes vs. Flojo (GR No. L-46954, July 20, 1982)

212) CIR vs. Union Shipping (185 SCRA 547)

213) CIR vs. Isabela Cultural Corp. (GR No. 135210, July 11, 2001)

4. Inaction during the 180-day period / Appeal to the Court of Tax

Appeals

Sec. 228
RR No. 18-2013

Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22,

2005, as amended on September 16, 2008

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)

5. Administrative Appeal with the CIR

RR No. 18-2013

6. Assessment Becomes Final and Executory for Failure to Protest

/Appeal

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)

Collection / Remedies of the Government

1. Prescriptive period to collect

Secs. 222(c) and 222(a)

2. Administrative remedies / Summary Remedies

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)

a. Distraint of personal property

Secs. 205-207, 217, 208-209, 210, 212, NIRC

Revenue Memorandum Circular No. 5-01 dated February 19, 2001

b. Levy of Real Property

Secs. 205-207, 217, 208-209, 213-214, NIRC

c. Forfeiture

Sec. 215, NIRC

227) Castro vs. CIR (GR No. L-12174, April 26, 1962)

d. Tax lien

Sec. 219, NIRC

Republic vs. Enriquez (166 SCRA 608)

228) CIR vs. NLRC (238 SCRA 42)

229) Hong Kong Shanghai Bank vs. Rafferty (39 SCRA 145)

e. No injunction to restrain collection of taxes

Sec. 218, NIRC

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.

231) Tridharma Marketing Corporation vs. CTA, GR No. 215950 dated

June 20, 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)

Statutory Offenses and Penalties

1. Civil Penalties / Surcharge / Interest

Secs. 247-251, NIRC

RR No. 12-99, as amended by RR No. 18-2013

a. Mandatory Imposition of Penalties

235) Phil. Refining Co. vs. CA (GR No. 118794 dated May 8, 1996)
236) BPI vs. CIR (GR No. 137002, July 27, 2006)

b. 25% and 50% Surcharge

Sec. 248 and RR No. 12-99 as amended by 18-2013

237) Castro vs. CIR (GR No. L-12174, April 26, 1962)

c. Applicable Interest Rate

Sec. 249 as amended by RA 10963

d. When penalties may be waived

238) Lhuillier Pawnshop vs. CIR (GR No. 166786 dated September 11,
2006)

2. Crimes / Offenses / Penalties / Forfeitures

Secs. 220-221, 224-226, NIRC

Secs. 253-281, NIRC
Revenue Memorandum Circular No. 101-90 dated November 26, 1990

a. Precondition before a criminal case may be filed

239) Ungab vs. Cusi (97 SCRA 877)

41
 240) CIR vs. CA (257 SCRA 200)
241) CIR vs. Pascor Realty (GR No. 128315 dated June 29, 1999)

b. Compromise Penalty

a. Nature and enforcement

Revenue Memorandum Order No. 7-15 dated January22, 2015

242) CIR vs. Liangga Bay Logging (GR No. L-35266, January 21, 1991)

c. Elements of tax evasion

243) CIR vs. The Estate of Benigno Toda, Jr. (GR No. 147188, September
14, 2004)

d. Persons liable in case taxpayer is a juridical entity

e. Payment of tax in criminal cases

Sec. 253 (a), NIRC

Sec. 205 (b) last paragraph

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

246) BIR vs CA, GR No. 197590 dated November 25, 2015

g. Crimes under Secs. 254 and 255

h. Civil liability in criminal cases

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)

i. Prescription of violations of the NIRC

251) Lim vs. CA (190 SCRA 616)

Claims for refund and credit of taxes/Remedy AFTER payment

1. Basis of Tax Refunds

252) CIR vs. AcesitePhils. (GR No. 147295, February 16, 2007)

42
2. Taxpayer/withholding agent

253) CIR vs. Procter &Gamble (204 SCRA 377)

254) CIR vs. Smart Communications, Inc. (GR Nos. 179045-46, August 25,
2010)
255) Honda Cars Philippines, Inc. vs. Honda Cars TechnicalSpecialist and
Supervisors Union (GR No. 204142 datedNovember 19, 2014)
256) CIR vs. Philippine Associated Smelting and Refining Corporation, GR
No. 186223 dated October 1, 2014

3. Requisites for a valid claim for refund / Creditable Withholding Tax

Cases

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

4. Refunds where written claim is not needed

Sec. 204 (3), NIRC

Sec. 229, NIRC
264) Vda de San Agustin vs. CIR, GR No. 138485, September 10, 2001

5. Refunds of Corporate taxpayers/Irrevocability Rule

Sec. 76, NIRC

265) ACCRA Investments vs. CA (204 SCRA 957)
266) CIR vs. TMX Sales (205 SCRA 184)
267) SystraPhils. Inc. vs. CIR (GR No. 176290, September 21, 2007)
268) SithePhils. Holdings vs. CIR (CTA Case No. 6274, April 4, 2003)
269) BPI-Family Savings Bank, Inc. vs. CA, CTA and CIR (GR No. 122480,
April 12, 2000)
270) Philam Asset Management, Inc. vs. CIR (GR Nos. 156637/162004,
December 14, 2005)
271) CIR vs. BPI (GR No. 178490, July 7, 2009)
272) Asia World Properties vs. CIR (GR No. 171766, July 29, 2010)
273) IMPSA Construction Corporation vs. CIR (CTA EB Case No. 685, May
24, 2011)
274) CIR vs. Rhombus Energy Incorporated (CTA EB Case No. 803, October
11, 2012)
275) Winbrenner&Inigo Insurance Brokers, Inc. (GR No. 206526 dated
January 28, 2015)
276) Republic vs. Team (Phils.) Energy Corporation, (GR No. 188016 dated
January 14, 2015) – read also concurring opinion of CJ Sereno

6. Rule in case of Merger/Corporate taxpayers contemplating dissolution

43
 Sec. 52 (C), NIRC
277) BPI vs. CIR (GR No. 144653, August 28, 2001)

7. When 2 year period does not apply

278) CIR vs. PNB (GR No. 161997, October 25, 2005)

8. Remedy of the taxpayer

Sec. 229, NIRC

RA No. 9282, as amended by RA No. 9503

Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22,

2005, as amended on September 16, 2008

a. CIR renders a decision

b. CIR does not render a decision

c. Appeal to the CTA

9. Interest on Tax Refunds

279) BDO vs. Republic, GR No. 198756 dated August 16, 2016
Sec. 79(C)(2)

10. Issuance of Tax Credit Certificate

Secs.203 (C), 230, NIRC

RR No. 05-00 dated July 19, 2000
RR No. 14-11 dated July 29, 2011

a. Tax Credit, Tax Credit Certificate, Tax Debit Memo

b. Sources of Tax Credit

c. Uses of Tax Credit

d. Sale / Assignment of Tax Credit

e. Validity, Conversion and Validation

f. Forfeiture of Cash Refunds / Tax Credit

11. Erroneously Refunded Tax

280) GuaguaElectric Light vs. CIR (GR No. L-23611, April 24, 1967)

The Court of Tax Appeals

RA No. 9282, as amended by RA No. 9503

44
 Revised Rules of the CTA, AM No. 05-11-07-CTA dated November 22, 2005,
as amended on September 16, 2008

1. Why was the CTA created?

281) Philippine Refining Co. vs. CA (256 SCRA 661

2. Weight given to CTA decisions

3. Composition of the Court (No. of Divisions and Justices, the CTA En

Banc)

4. Reversal of Decisions of CTA Division

5. Jurisdiction of CTA Division

a. Constitutionality/Validity of Regulations/Tax Laws

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

285) Adamson vs. CA (GR No. 120935, May 21, 2009)

286) CIR vs. Hambrecht & Quist Philippines, Inc., G.R. No. 169225,
November 17, 2010
287) City of Manila vs. Grecia-Cuerdo, GR No. 175723 dated February 4,
2014.

6. Jurisdiction of CTA EB

7. Suspension of Collection of Tax

8. Appeal to the SC

Abatement of Tax / Tax Compromise

Secs. 7 and 204, NIRC

RR No. 13-01
RR No. 30-02
RR No. 8-04
RR No. 4-12
RR No. 9-13

45
 A. Authority of CIR to abate taxes

1. Grounds for abating taxes and penalties

2. Conditions

288) Asiatrust Development Bank, Inc. vs. CIR, GR No. April 19, 2017

B. Power to compromise

1. Cases that can be compromised

2. Cases that cannot be compromised

3. Timing of payment of amount offered as compromise

4. Basis for acceptance of compromise settlement and rates

289) CIR vs. Azucena T. Reyes (GR No. 159694, January 27, 2006)

H. Customs Modernization and Tariff Act (RA 10863)

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/)

II. Tariff Commission

a. Functions of the Tariff Commission (Section 1603, CMTA)
b. Chief Officials of the TC (Section 1600, CMTA)

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

IV. Types of Importation

a. Freely Importable Goods (Section 116, CMTA)
b. Regulated Importation (Section 117, CMTA)
c. Prohibited Importation (Section 118, CMTA)
d. Restricted Importation (Section 119, CMTA)

V. Tariff Classification & Advance Ruling

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

VI. Tariff Valuation & Advance Ruling

a. Advance Ruling System
b. CO No. 2017-01 on Procedure on Application for an Advance Ruling on
Tariff Classification related to Importation or Exportation of Goods
c. Tariff Valuation Method (Section 701-706, CMTA)
(1) Transaction Value System
(2) Transaction Value of Identical Goods System
(3) Transaction Value of Similar Goods
(4) Deductive Value
(5) Computed Value
(6) Fallback Value
d. Basic Computation of Customs Duties & Taxes
e. Basics of Importation
(1) The nature of the product to be imported to the Philippines
(2) The dutiable value of imported goods as basis of customs duty
(3) The duty rate applicable to the product
(4) The preferential tariff rate under Free Trade Agreement, if the goods
is subject thereto
(5) The taxability of the imported goods under the NIRC.

VII. Special Types of Entry

a. Balikbayan boxes
b. Postal Items
c. Returning Residents/OFWs

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

IX. BOC Powers

a. Release & Limitations
b. BOC Powers
(1) Selectivity System (Section 420, CMTA)
(2) Customs Formalities on Goods Declaration
Documentary Check
On-Intrusive Inspection
Physical Examination
(3) Requirements for Search, Seizure & Arrest (Section 214, CMTA)
(4) Complement of Exercise of Police Authority (Section 216-224, CMTA)
(5) Customs Jurisdiction & Doctrine of Hot Pursuit (Section 300, CMTA)
(6) Customs Control (Section 302-202, CMTA)
(7) Forfeiture (Section 1115, CMTA)

47
 (8) Seizure or Release of Goods (Section 1116, CMTA)

X. Special Duties & Measures

a. Compulsory Acquisition (Section 709, CMTA)
b. Marking Duty(Section 710, CMTA)
c. Anti-Dumping Duty(Section 711, CMTA)
d. Safeguard Measures(Section 712, CMTA)
e. Countervailing Duty(Section 713, CMTA)
f. Discriminatory Measures(Section 714, 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

a. Power to Tax of Local Government Units

i. Sec. 5 Art. X, 1987 Constitution (compare with 1935 and 1973
provisions)
ii. Sec. 129, LGC
(3) Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA
460
(4) Mactan Cebu International Airport Authority vs. Marcos
– GR No. 120082, Sept. 11, 1996
(5) Manila Electric Company vs. Province of Laguna – GR No.
131359, May 5, 1999
(6) NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
(7) City Government of Quezon City vs. Bayan
Telecommunications – GR No. 162015, March 6, 2006
(8) Film Development Council of the Philipines vs. Colon
Heritage Realty, GR No. 203754 dated June 16, 2015.

iii. Local Taxing Authority (Sec. 132)

1. Construction of Tax Ordinances (Sec. 5b)
(9) Petron Corp. vs. Mayor Tobias Tiangco – GR No. 158881,
April 16, 2008

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)

b. Other Preliminary Matters

i. Residual Powers of LGUs -Power to Levy Other Taxes, Fees or Charges
(Sec. 186)
ii. Doctrine of Pre-emption or Exclusionary Rule

II. Victorias Milling Co., Inc. vs. Municipality of Victorias – L-21183, September 27, 1968

II. GENERAL PROVISIONS

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

49
 (To be discussed together with Secs.232 and 234 on Real Property Tax)

III. TAXING AND OTHER REVENUE RASING POWERS OF LGUS

a. Provinces
(a) Local Transfer Tax (Sec. 135)
(b) Business Tax on Printing and Publication (Sec.
136)
(c) Franchise Tax (Sec. 137)
(26) NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
(27) Quezon City vs. ABS-CBN GR No. 166408. October 6, 2008
(28) City of Iriga vs. Camarines Sur III Electric Cooperative, Inc., GR No.
192945, September 5, 2012
(29) Smart Communications vs. City of Davao – GR No. 155491,
September 16, 2008
(Also read decision on Motion for Reconsideration dated July 21, 2009)
(d) Tax on Sand, Gravel and Quarry Resources
(Sec. 138)
(30) Municipality of San Fernando vs. Sta. Romana L-GR No. 30159, Mar.
31, 1987
(31) Province of Bulacan vs. CA – GR No. 126232, November 27, 1998
v. Professional Tax (Sec. 139)
1. Definition of Professionals (Sec. 238 (f) IRR of the LGC)
2. Professional practices his profession in several places (Sec. 228 (b) IRR
of LGC)
vi. Amusement Tax (Sec. 140) as amended by RA No. 9640 dated May 21,
2009
(32) Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137, April
10, 2013 (Compare with old case of PBA vs. CA GR No. 119122,
August 8, 2000)
(33) Alta Vista Golf and Country Club vs. The City of Cebu, GR No. 180235
dated January 20, 2016
vii. Annual Fixed Tax on Delivery Trucks / Vans (Sec. 141)

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.

1. Catch all provision – Sec. 143 (h)

2. Rates of Tax within Metropolitan Manila (Sec. 144)
3. Retirement of Business (Sec. 145)
(39) Mobil Phils. vs. City Treasurer of Makati GR No. 154092, July 14,
2005
4. Payment of Business Taxes (Sec. 146)
5. Situs of Tax (Sec. 150) – Where to pay business tax?
(40) Shell Co vs. Mun. Of Sipocot – 105 Phil. 1263
(41) Phil. Match vs. City of Cebu – L-30745 – Jan. 18, 1978
(42) Iloilo bottlers vs. City of Iloilo GR No. 52019 – Aug. 18, 1988

50
 (compare with current LGC provisions and IRR provisions on
rolling stores)

a. With Branch or Sales Outlet

b. No Branch Sales or Outlet
c. With Factories, Project Offices, Plants and Plantations
d. Plantation Located at a place other than the place where
factory is located
e. Two (2) or more factories, project offices, plants or
plantations in different localities
f. See also IRR for rules on rolling stores (See Art. 243 of the
IRR of the LGC)
6. Fees and Charges (Sec. 147)
7. Others (Sec. 148 and Sec. 149)

c. Cities (Sec. 151)

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)

e. Common Revenue Raising Powers

i. Service Fees and Charges (Sec. 154)
ii. Public Utility Charges (Sec. 155)
iii. Toll Fees or Charges (Sec. 156)

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)

51
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)

b. Remedies of the Government

(i) Local Government’s
Lien (Sec. 173)
(ii) Civil Remedies (Sec.
174)
(iii) Distraint (Sec. 175)
(iv) Levy of Real Property
(Sec. 176)
(v) Advertisement and
Sale (Sec. 178)
(vi) Redemption of
Property Sold (Sec. 179)
(vii) Purchase of Property
by LGU for want of bidder (Sec. 181)
(viii) Resale of Real Estate
Tax for TFC
(ix) Judicial Action (Sec.
183)
(x) Further Distraint and
Levy (Sec. 184)
(xi) Personal Property
Exempt from Distraint or Levy (Sec. 185)

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.

REAL PROPERTY TAXATION

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.

iii. Actual Use

(12) Patalinghug vs. CA, GR No. 104786, January 27, 1994
iv. Appraisal
v. Assessment
vi. Assessed Value

e. Appraisal of Real Property (Sec. 201)

(13) Sesbreno v. CBAA, 270 SCRA 263
f. Declaration of Real Property
i. By Owner or Administrator (Sec. 202)
ii. In case improvements are made (Sec. 203)
iii. By Assessor (Sec. 204)
iv. Notification of Transfer of Real Property Ownership (Sec. 208)

g. Assessment of Real Property

i. Preparation of Schedule of Fair Market Values (Sec. 212)
(14) Lopez vs. City of Manila, GR No. 127139 February 19, 1999
ii. Classes of Real Property for Assessment (Sec. 215)
iii. Special Classes of Real Property (Sec. 216)
(15) City Assessor of CebuCity vs. Association de Benevola de Cebu – GR
No. 152904, June 8, 2007
iv. Actual Use as Basis for Assessment (Sec. 217)

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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)

II. IMPOSITION OF REAL PROPERTY TAX

a. Power to Levy Real Property Tax (Sec. 232)
b. Rates of Levy (Sec. 233)
(22) Allied Bank vs. Quezon City Government – GR No. 154126, October
11, 2005
c. Exemptions from RPT (Sec. 234)
i. Proof of Exemption from RPT (Sec. 206)
(23) Provincial Assessor of Marinduque vs. CA – GR No. 170532, April 4,
2009
ii. Constitutional Provisions on RPT Exemption
1. Sec. 28, Art. VI
(24) Lung Center of the Philippines vs. QC – 433 SCRA 119
2. Sec. 4(3), Art. XIV
(25) Fels Energy, Inc. vs. Province of Batangas GR No. 168557, February
16, 2007
(26) Philippine Fisheries Dev’t Authority vs. CA GR No. 169836, GR No.
July 31, 2007
(27) Mactan Cebu International Airport Authority vs. Marcos – GR No.
120082, Sept. 11, 1996
(28) MIAA vs. CA – GR No. 155650, July 20, 2006
(29) Mactan-Cebu International Airport Authority vs. City of Lapu-Lapu –
GR No. 181756 dated June 15, 2015
(30) Provincial Assessor of Marinduque vs. CA – GR No. 170532, April 4,
2009
(31) NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
(32) NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution)
(33) GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242
December 23, 2009
(34) City of Pasig vs. Republic, GR No. 185023 dated August 24, 2011
(35) Republic vs. City of Paranaque, GR No. 191109 dated July 28, 2012
(36) Angeles University Foundation vs. City of Angeles, GR No. 189999
June 27, 2012

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 (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.

d. Additional Levy for SEF (Sec. 235)

e. RPT on Idle Lands (Sec. 236)
i. Coverage of Idle Lands (Sec. 237)
ii. Idle Lands Exempt from Tax (Sec. 238)
f. Special Levies (Sec. 240)
i. Ordinance Imposing Special Levy (Sec. 241)
ii. Publication and Public Hearing (Sec. 242)
iii. Fixing Amount of Special Levy (Sec. 243)
iv. Taxpayers Remedies (Sec. 244)
v. Accrual of Special Levy (Sec. 245)

III. COMPUTATION OF REAL PROPERTY TAX

a. Date of Accrual (Sec. 246)
b. Notice of Time of Collection (Sec. 249)
c. Payment of RPT in Instalments (Sec. 250)
d. Tax Discount for Advanced Prompt Payment (Sec. 251)

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

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 (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)

J. COURT OF TAX APPEALS

Republic Act 1125 The Act that Created the Court of Tax Appeals (CTA), as
amended, and the Revised Rules of the Court of Tax Appeals

I. Jurisdiction of the Court of Tax Appeals

1. Exclusive appellate jurisdiction over civil tax cases
a. Cases within the jurisdiction of the Court en banc
b. Cases within the jurisdiction of the Court in divisions

2. Criminal cases
a. Exclusive original jurisdiction
b. Exclusive appellate jurisdiction in criminal cases

II. Judicial Procedures

1. Judicial action for collection of taxes
a. Internal revenue taxes
b. Local taxes
1) Prescriptive period
2. Civil cases
a. Who may appeal, mode of appeal, effect of appeal
1) Suspension of collection of tax
a) Injunction not available to restrain collection
2) Taking of evidence
3) Motion for reconsideration or New trial
b. Appeal to the CTA, en banc,
a. Petition for review on certiorari to the Supreme Court

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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