TAX REVIEW TRANSFER TAXES- are those imposed upon the gratuitous disposition of private property.

-are those taxes levied on the transmission of property from the decedent to his heirs or from a donor to a donee. ESTATE TAXATION- is the tax levied on the transmission of the estate of the deceased to his lawful heirs. KINDS OF DEATH TAXES 1) Estate Tax- is a tax on the right of the deceased person to transmit his estate. -estate tax accrues only upon the death of the decedent or when succession takes place. It is based on the entire net estate . -not a direct tax on property nor capitation tax( not a tax on property or transferee) but an excise tax.. 2) Inheritance Tax- is the tax on the right of the heirs or beneficiaries to receive the estate of the deceased person. (According to Sababan , there is no inheritance tax in the Philippines) PURPOSE OF ESTATE TAX (BRA-P) 1)-BENEFIT –RECEIVED THEORY-the government performs and renders services for the distribution of the estate of the decedent-(one of the purposes why the government collect estate tax) 2)-REDISTRIBUTION OF WEALTH THEORY- the estate tax is imposed to reduce the property received by the successor-why? , so that the wealth will be distributed equally in society. 3)-ABILITY TO PAY THEORY- the receipt of inheritance creates the ability to pay the ( inheritance tax) 4)-PRIVELEGE THEORY-inheritance is not a right but a privilege given by the state. TIME AND TRANSFER OF PROPERTY- at the time of death of the decedent CLASSIFICATION OF DECEDENT 1)-resident decedent 2)-non resident alien decedent GROSS ESTATE -total value of the property ( WON real/personal)-tangible/intangible belonging to the decedent at the time of death. In case non-resident alien decedent- only the property situated in the Phils. NET ESTATE- it means the gross estate less allowable deductions less ½ of the net share of SS.

EXTENT OF INTEREST – at the time of death(decedent’s interest) EXTENT OF TRANSFER-after death or before his death The right on the income of the property / possession/ enjoyment (heir) The right to designate the person who shall possess or enjoy the property or income(decedent)

CAPITAL OF SS- not included in the gross estate under estate tax ITEMS INCLUDED IN THE GROSS ESTATE RC/NRC/RA -REAL PROPERTY -TANGIBLE PERSONAL PROPERTY -INTANGIBLE PERSONAL PROPERTY w/in and w/o w/in and w/o w/in and w./o NRA w/in w/in w/in except if there’s Reciprocity RECIPROCITY RULE-states that when a Filipino is not taxable in that foreign country ,the foreigner is likewise not taxable under Phil. Law.

DEDUCTIONS FROM GROSS ESTATE FM-JUCCUC 1)funeral expenses 2)medical expenses 3)judicial expenses 4)unpaid taxes 5)claims against insolvent person 6)claims against the decedent estate 7)unpaid mortgages indebtedness 8)casualty losses

FAST-N-TV 9)family home 10)amounts received by the heirs 11)standard deduction equivalent to 1 M 12)Transfer for public use 13)Net share of the SS 14)tax credit of estate tax paid to a foreign country 15) Vanishing deduction GEN. terminate it.alter .POWER OFAPPOINTMENT-decedent is the transferee or recipient of property. The property here is owned by Y already and it will form part of the GE of Y. -here the beneficiary may not transfer the property in revocable transfer until the death of decedent.no transfer) 2 kinds a)by trust in contemplation in possession or enjoyment at after death-(after the death) b)by trust or in contemplation w/c he has to retain for his life and does not end before his death. Y died w/ the property in his possession but it is still registered in the name of X. REVOCABLE TRANSFER-decedent is the transferor. COMPOSITION OF GROSS ESTATE DT2R –P3 1)Decedent’s interest-at the time of decedent 2)Transfer in contemplation of death-the transfer is made at the thought of death.-during the lifetime 3)Transfer for insufficient consideration-these are transfer made in contemplation of death. Ex: X has a parcel of land and he transferred the property to Y through a GPA.(no death . Transferred during lifetime. The decedent transfers by trust or enjoyment of the thing to another subject to his right to revoke / or w/o notifying the transferee. -transfer made by decedent during his lifetime but at the time of death. he may revoke . revocable transfer and property passing through GPA What is the value included in GE? . Thereafter.

more than 3 years but less than 4 years 20%-more than 4 years but less than 5 years VANISHING DEDUCTIONS’ computation Initial basis over the value of GE of 2nd decedent x the expenses. The remaining 500k is included in the GE of A . And the estate tax paid in the foreign country is deductible against the Philippine estate tax.b)by trust in contemplation in possession or enjoyment at after death-(after the death) c)by trust or in contemplation w/c he has to retain for his life and does not end before his death. 4)Revocable Transfer 5)Property passing under the GPA 2 parties under GPA 1)Transferor or donor-the one who made the GPA 2)Transferee or done-the one given GPA Value to be included in the GE under GPA -a)will . . executor –if irrev=excluded in GE 7)Prior Interest-applies to PRE-TTIR Either as . or irrev = included in GE If Beneficiaries other than estate. administrator. losses = 2nd deduction Initial deduction minus 2nd deduction = final basis Final deduction x vanishing deduction rates = vanishing deduction ESTATE TAX CREDIT – is the net taxable estate of the resident decedent w/c includes the NTE wherever located. administrator.-during the lifetime 6)Proceeds of Life Insurance -extent of proceeds is up to the amount receivable by the property of the deceased. **The net taxable estate outside the Philippines is paying both foreign estate tax and Philippine estate tax. administrator . the difference between fair market value and consideration Ex: A has a land valued at 1M . executor-if rev=included in GE If Beneficiaries other than estate. If Beneficiaries are estate. executor -WON rev.w/in 1 year from death of the 2nd decedent 80%-more than 1 year but less than 2 years 60%-more than 2 years but less than 3 years 40%. executor. administrator. a)Proceeds of Insurance b)Transfer in contemplation of death c)revocable transfer VANISHING RATES 100%.ANS: the excess fair market value of the property at the time of death -also. A sold it for only 500k.

What may be donated? Ans.a form of ownership where 2 or more people share the title of an asset equally at the same time. so long as there is a taxable estate. The number of estate beneficiary is immaterial so long as the value of GE is more than 200k . -The transfer is revocable by the donor at will during his lifetime. DONOR’S TAX DONOR’S TAX – is an excise tax on the privilege of the donor to give or to transfer the property by way of a gift inter vivos. The transfer is VOID if the donor survives the done.JOINT TENANCY.it takes effect upon the death of the donor.( not subject to donor’s tax but subject to estate tax) -It is subject to estate tax because there is no ownership to the donee or no transfer of title. ***Estate taxation does not consider WON there is primary or contingent beneficiary ( the beneficiary next in line to the primary).it takes effect during the lifetime of the donor. It is not a property tax. -It is the tax on the voluntary transfer of property w/o consideration.( subject to donor’s tax) . . 2) DONATION INTER VIVOS. There is an estate tax imposed in joint tenancy. The donor retains ownership or title to the property. estate tax is imposable. Gift –is a voluntary transfer of property from one person to another w/o consideration or compensation. there is an estate tax if the primary beneficiary dies before collecting his share. DONATION VS GIFT Donation-an act of liberality whereby one person ( donor) disposes a thing or a right gratuitously for another who accepts it. DONATION SUBJECT TO DONOR’S TAX CADD+ 1)capacity of the donor 2)acceptance by the donee 3)donative intent 4)delivery of the thing KINDS OF DONATION 1)DONATION MORTIS CAUSA. Therefore. It partakes the nature of the testamentary disposition and is equivalent to a transfer in contemplation of death. a thing or a right may be donated.Donation inter vivos of 100k or less are not subject to donor’s tax -likewise those declared exempt by special law and the Tax Code are not subject to donor’s tax. **No transfer can be made if no estate tax paid by the heirs and no showing that the estate tax is paid on the property.

scheduler tax rate is the basis Dowry exemption.are the only persons subject to estate tax. acceptance shall be made in writing.w/in only – real. -if not listed. -acceptance may be made in the same deed of donation or separate instrument and during the lifetime of the donor. **Renunciation of inheritance is not subject to donor’s tax VALUATION Money-the amount is the valuation Personal Property-FMV of the gift Real Property-FMV as determined by CIR Shares of Stock-if listed in stock exchange.the average between the high quoted price and the low quoted price.deduction to a cash gift on account of marriage Gen. Rule: Any contribution in cash or in kind to any political candidate is not subject to donor’s tax Exception: the donor and done comply w/ the requirements of filing tax returns -Donations in kind to politicians are subject to 5% withholding tax. TAX RATE of Donor’s Tax -30% if stranger and 2%-15% in favour of relatives.JURIDICAL AND NATURAL PERSONS are subject to donor’s tax.may be made orally .if donee is not a stranger . Gen Rule: Gift is incomplete because of the donor’s reservation power. bonds of any corporation.the book value of the stock INTANGIBLE PROPERTIES -shares.RA 6610 NATURAL PERSONS. intangible personal and tangible properties. . If not. FORMS OF DONATION 1)MOVABLE DONATION. may be made written. oral donation requires simultaneous delivery of a thing or of the document representing the right donated. 2)IMMOVABLE DONATION-must be in public instrument .obligations . -However. Exception: Gift is complete because 1) the donor renounces the power to reserve 2)there is a fulfilment of a condition of the donor to the donee or there is a happening of some event or contingency. PROPERTIES INCLUDED IN DONOR’S 1) RC. Of contributions to COMELEC. donation is VOID. domestic or foreign. . -political contributions are considered gifts therefore subject to donor’s tax. -if the value is more than 5k .w/in and w/o 2) NRA.

to donor’s tax. personal. **Degressive Tax – the increase in tax rate is not proportional to the increase of tax base.renunciation of the SS share of CPG or ACP (EXCEPT: general renunciation by the heir including SS is not subj. tangible or mixed. ITEMS DEEMED GIFT OR DONATION (DR-PT) . religious institution -encumbrances donated if assumed by the donee in the deed of donation -donations made to entities under special law -donations made not to stranger of not more than 100k NON-PROFITABLE EDUCATIONAL /CHARITABLE INSTITUTION.an indirect tax imposed on the consumption of a specific list of goods or products . spouse. Indirect vs Direct Tax -The former refers to tax where the burden is transferred to another (VAT) and the latter is a tax where the burden is not transferred to another but directly to the taxable person ( Income Tax) Progressive Vs Regressive Tax -The former happens when the tax base increases the tax rate increases while the latter happens when the tax base decreases the tax rate increases. . they should be deducted from the gross gift.a non-stock entity w/o paying dividends governed by trustees w/o compensation. Except: Real property considered capital assets(Sec 24-d/ sec. So. w/in the lineal -w/in the 4th degree of consanguinity in collateral line -adopted child is not a stranger-2%-15% -business organization is considered stranger -30% Exemptions from gift are not exclusion but deductions.Debt condoned or remitted .transfer made in trust . EXCISE TAX.Gross gifts. intangible. -GGEDDDEx: Dowry exemption=Php 10. sister.000 (gifts made on account of marriage)b4 celebration or w/in 1 year -gifts made to national government -gifts made to non –profit educational and charitable .100) Stranger is not a brother.Property subjected to final capital gains tax (EXCEPT real property considered as capital assets) . unless it is categorically done in favour of identified heirs) Note: Real Properties considered as capital assets are not subject to donor’s tax since they were subject to CGT.real.

public interest and requirement of due process of law . Police Power has 2 limitations ( PR).DUTY TEST VS GENERAL WELFARE TEST The former is a test applied to determine the public purpose of the law WON appropriation or expenditure of public funds is in relation to the duty of the State whereas the latter is a test applied in order to determine the public purpose of a tax measure whether the law providing it directly promotes the welfare of the community in equal measures. constitutional limitation. AS TO IMPAIRMENT OF OBLIGATIONS AND CONTRACTS under the Constitution Power of Taxation is inferior on Non-Impairment Contractual Clause whereas w/ regard to police Power and Eminent Domain are superior on Non-impairment clause under the Constitution. . Inherent restriction and contractual relations.public use and just compensation. SIMILARITIES OF THE 3 INHERENT POWERS OF THE STATE -WALE –PIE1)Ways in w/c the State interferes w/ the private right and property of the people 2) Attributes of sovereignty and emanates from necessity 3) Legislative in nature 4)Exists independently of Constitution 5)Presuppose compensation 6)Inherent power of the State 7)Exercise by the LGU’s DIFFERENCES OF THE 3 INHERENT POWERS OF THE STATE DEFINITION Power of Taxation is the taking of property to support the government. the person affected is the owner of the property only. AS TO LIMITATIONS Power of Taxation has 3 limitations (CIC). Police Power has no benefits since it restrains and regulates rights . with regard to Eminent Domain . and Eminent Domain has 2 limitations ( PJ). The benefit in Eminent Domain is the payment of just compensation on the owner of the property AS TO THE PERSON AFFECTED Power of Taxation and Police Power share the same community of individuals as the person affected . and Police Power is the enactment of laws for the general welfare of the people. Eminent Domain and Police Power’s purposes are the taking of property for public use . AS TO PURPOSE Power of taxation ‘s purpose is to collect revenue to support the government . AS TO BENEFITS With regard to Power of Taxation is the Benefit Received Theory . Eminent Domain is the taking of private property for public use for just compensation.

Police Power transfers no rights to property and on Eminent Domain . it may be exercised not only by the government but also by private corporation and private individual. the money paid becomes public funds. in terms of Police power and Eminent domain need due delegation before it can be exercised by LGU. the only difference is w/ regard to Eminent Domain .just and effective administration 3) Theoretical Justice – tax law is based upon the ability to pay theory 3 STAGES OF TAXATION -LAP1)Levy or Imposition .tax payment is imposed upon the benefits received by the taxpayer 2) Ability to Pay Approach. CHARACTERISTICS OF A SOUND TAX SYSTEM -FAT1) Fiscal Adequacy – sources of revenue must be adequate 2)Administrative Feasibility – tax revenue is based upon convenient . however. AS TO AUTHORITY THAT EXERCISE THE POWER The power of taxation.AS TO EFFECT OF TRANSFER OF PROPERTY On Power of Taxation . However. when? -BBRRADS-P 1)Benefit received by majority of people 2)Building of roads 3)Respond to calamities 4)Realize governmental goals 5)Address public needs 6)Development of youth 7)Support of inventors 8)Promotion of science and technology What are the approaches of Tax Burden Distribution? -BA1)Benefit Approach. there is a right of transfer to property.tax payment is based upon the ability to pay by taxpayer. When should public purpose of tax law exist? -TPU and TLE1) when tax proceeds is being used 2)when tax law is enacted Who determines public purpose of tax law? -CS1) Congress 2)Sanggunian of LGU’s TaX Measure is for public use . AS TO DELEGATION Power of Taxation does not need delegation since it is inherent . police power and eminent domain are exercised by the Government.

bargain -reduce inequalities -use as implement in the exercise of police power -check inflation -key instrument on social control -provides incentives -promotes science and inventions ELEMENTS OF TAX SYSTEM -PuTaTa1) Public Tax Consciousness.2)Assessment or Collection 3)Payment of Tax Levy and Assessment are called impact of tax and Payment is the incidence of Tax.Tax rate. STATE POLICIES UNDER RA 8424 -PPEC1)promote sustainable economic growth through rationalization under Philippine tax system 2)provide an equitable relief to taxpayer 3)ensure that the gov’t. What is the Power of Taxation . PURPOSE OF TAXATION -PSC1) Primary – to raise revenue 2)Secondary ( RAP) -regulate the conduct of business -achieve economic ability -promote local industries 3) Compensatory (STRUCK-PP) -strengthen anemic enterprise -tools of int’l. provides the needs of the people 4)create a robust environment for business When is the power of taxation begins? -from the moment a State is born w/ the concurrence of TGPS (territory. population and sovereignty) . government. tax base .it is the attribute of sovereignty and emanates from necessity as a power. as a process-it is a legislative act to raise income to defray the necessary expenses of the gov’t.Voluntary compliance of tax obligations 2)Tax Structure.it refers to the inherent power of the State to demand enforced contribution for public purpose to support the government. tax subject and other tax events in relation to revenue productivity and tax progressivity 3) Tax Administration – involves assessment. collection and enforcement of taxes.

FUNDAMENTAL PRINCIPLES OF TAXATION -JACUE1)Just 2)Ability to Pay 3)Convenient 4)Uniform and Equitable OBJECTS OF TAXATION-BITRAPPP1)businesses 2)interests 3)transactions 4)rights 5)acts 6)persons 7)support 8)survival SCOPE OF TAXATION -D-CUPS1) power to destroy 2)comprehensive 3)unlimited 4)plenary 5)supreme .w/o money the government cannot deliver services to the people.CHARACTERISTICS OF TAXATION -PENIST1)public purpose 2)exaction payable to money 3)not absolute because it is subject to CIC 4)inherently legislative 5)subjectt for international comity 6)territorial Also –PINET 1)public purpose 2)international comity 3)non-delegation of power 4)exemption of government 5)territoriality UNDERLYING PRINCIPLES BEHIND POWER OF TAXATION -PBL1)Principle of Necessity – the existence of government is a necessity and w/o the means of support it cannot continue. 2)Benefit –Received Theory – there is a reciprocal and mutual duty of support and protection between the government and the people 3) Lifeblood Doctrine.

object. the government cannot exist w/o taxation. likewise . What is taxation and economic efficiency? -INCOME EFFECT. inherent restrictions and contractual limitations. What is the strongest? -The power of taxation because w/o this power the 2 other powers cannot be exercised. When does the power of taxation include the power to destroy? -CPA1)when it involves (CONES). The bill shall originate not a law . revenue and tariff bills shall originate from the Lower House . coverage. modify and substitute. Who exercise the power of taxation? LLP1)Legislative Body 2)LGU’s 3)President What is ecology of taxation? -It refers to the relationship between taxation and the community and environment on question of (PS3). Is the power of taxation absolute? No. extent and situs of taxation. survival and sustenance. revise. support. CANONS OF TAX CCEP1)Convenient to pay .makes people economically efficient -SUBSTITUTION EFFECT-makes people economically inefficient May the police power be exercised through taxation? -Yes. What is fluxion of taxation? -FECIt refers to the flow . it is subject to (CIC). amend.constitutional limitations. nature. 2)when it involves the power to grant exemptions or condonations 3)when it involves administrative and judicial remedies Among the 3 inherent powers of the State. however the Senate may (ARMS).What is a legislative act? A legislative act is an act to enact tax law by the law making body What is the Origination Rule? Origination Rule is that (ART) appropriation. on question of population. because taxes are imposed for the promotion of the general welfare of the public. evolution and changes of taxation.

2)Certain and not arbitrary 3)Economical to collect 4)Proportionate to one’s ability to pay ELEMENTS OF VALID TAX PLM5 1)Payable in money 2)Levied by the Legislature 3)must not violate CIC 4)must be uniform and equitable 5)must have jurisdiction over the object of taxation (the power imposing it) 6)must be for public purpose 7)must be proportionate in character BASIC USES OF TAX -Sinn 1)Serves as means to serve people 2)indispensable for state’s survival 3)necessary to preserve state’s sovereignty 4)needed to deliver the basic needs of citizenry CLASSIFICATION OF TAX AS TO PURPOSE 1) Fiscal.if buyer is exempted on both taxes (indirect or direct). Silkair Case. the additional amount is not a tax but part of the price and the airline had to pay as purchaser. .levied w/o specific purpose 2)Regulatory-intended to achieve economic goal AS TO SUBJECT MATTER PEP1)Personal (Poll or Capitation) 2)Excise 3)Property AS TO INCIDENCE 1)Direct (Income Tax)-burden cannot be shifted to another 2)Indirect (VAT)-allowed to transfer the burden to another Philippine Acetylene case. Vs Collector – the payor and not the consumer is entitled to tax refund. Gotamco case.tax exemption is applicable only in direct tax and not to indirect tax. Cebu Portland Cement Co. the remedy of seller is to file a tax refund from the government.Even if seller passed on to a tax exempt airline the burden of tax. Filpride Resources Inc Vs CIR –the importer is entitled to tax credit certificate if the buyer is exempted on both taxes (indirect and direct).

tax base decreases 5)Progressive Tax. (Mas malawak ang revenue sa tax)-Revenue includes. AS TO RATE MPD-RP 1)Mixed Tax.Tax rate increases. still the purchaser is VATABLE because the VAT is part of the price. wire. AS TO AMOUNT1)Specific Tax – No assessment is required because the subject of tax is listed to their general classification( Tax on gasoline .combination of progressive and regressive 2)Proportion / Flat Rate. fees. penalties. it includes all kinds of imposition including custom duties. taxes. the latter is a product of tax. income. forfeitures. LPG) -based on volume.single or unitary rate – VAT 12% 3)Degressive Tax. (Tax on properties and automobile) -based on the value of the property subject to tax EXCISE TAX – an indirect tax imposed upon consumption of goods or products.Assessment is necessary to determine the amount to be paid.petroleum . quantities of goods to be tax 2)Ad Valorem Tax. weights.the increase in tax rate is not proportionate to the increase of tax base 4)Regressive Tax. -Tax is imposed on different subjects and objects whereas custom duties are imposed on exported and imported goods only . Tax Vs Tariff -The former focuses not only on importation and exportation goods but also on domestic products while The latter focuses only on exportation or importation of goods -Tax is broader in terms . whereas. Tax Refund is not applicable to License Fee Why is it important to know WON national or local tax yan? DAK1) to apply the correct administrative rules 2)to determine the correct prescription 3)to know the applicable tax remedies Tax vs Revenue -The former is an amount to be imposed while the latter is an amount to be collected -The former is one of the kinds of revenues. charges.If seller is VAT exempt and the purchaser is non-VAT. tax base increases AS TO AUTHORITY 1)National 2)Local Internal Revenue Tax – under NIRC only License Fees – Not under NIRC.Tx rate increases.

not subject to CIC (why? Because it is an exercise of police power) -no exemption (exemption from tax does not include regulatory fees). prescription under NCC or ROC Consequence if a tax is a debt -if the prescription is under NCC or ROC . with interest when stipulated or when in default -prescription under NIRC . -current data. the tax due is considered a debt. purpose of license is regulation -taxing power . payable in money or in kind -not subject to set-off. BRPP -permanent. not self –assessing -subject to CIC. then tax is a debt -if the case is filed before the CA and not the CTA Ex: If the government and the taxpayer entered into a valid compromise agreement. subject to set-off -no interests except if delinquent. no imprisonment for non-payment -payable in money. based on contract -not assignable . power to license does not include power to tax -self assessing. exemption is not allowed from regulatory fees. revocable -power to tax includes power to license. assignable -with imprisonment for non-payment .Tax Vs License -purpose of tax is revenue . So. police power -unlimited. it must be filed w/ the CA and not the CTA. with limits (based on necessity ) -BITRAPPP . imposed by government or private individual -based on governmental needs. determined by the cost of property Tax Vs Debt -based on law. demand of proprietorship -imposed by government. . quarter’s data ( preceding year) TEST to determine WON the imposition is tax or license IEA1)intent of imposition 2)effect “ 3)amount “ KINDS OF LICENSES 1) imposed to regulatory USEFUL OCCUPATION 2)imposed to regulatory NON-USEFUL OCCUPATION 3) “ for REVENUE only Tax Vs Toll BID-demand of sovereignty.

collection may be done judicially or administratively .property tax levied on the property assessed and confined to improvements . not a tax Tax Vs Penalty Pati-to raise revenue. there is a contractual assent to be covered by the imposition of franchise tax Tax vs Margin Fee -the purpose is to raise revenue. exemption is qualified -general application. to regulate the conduct (through punishment) -impose by gov’t. may not be made a personal liability of the person assessed. grant of funds -tax. Land -may be made a personal liability of the person assessed. principle of equity supports collection of charges -legal charge for special privilege. payable in money or in kind Tax vs Franchise Tax -forced charge.is not a tax. assessment is mandatory -collection may be done in ordinary court.Special Assessment Tax. exceptional in application -imposition on real property is tax. remaining amount of tax liability not yet settled -assessment is not necessary. but a measure to curb the excessive demands upon our foreign reserves Fee VS Charge -imposed by law or ordinance. imposition or contribution. pecuniary aid -collection of funds . the purpose is to stabilize the currency Margin Fee. based on benefits received -exemption from tax does not include exemption from special assessment. imposed by gov’t or private individual -arises from law. arises from law or contract -payable in money . -based on necessity. imposed for payment of service or task -police power supports collection of fees. pecuniary burden Delinquent Tax vs Deficiency Tax EACS-entire amount of tax liability. Tax Vs Special Assessment -BITRAPPP. imposition on real property is assessment Tax Vs Subsidy -pecuniary imposition.

UNIFORMITY. There is violation of due process of taxation. Privileges under a contract are protected by the non-impairment clause under Consti.-subject to 25% surcharge and 20% interest per annum and compromise penalty.restrictions on the taxing power by previously existing contracts entered by government w/ another party Saf-Franchise tax -Service contract on petroleum -Agreement w/ ADB *Tax Exemptions granted under a contract are not assignable .all taxable articles of property of the same class shall be taxed at the same rate . stockholders may be held liable for unpaid taxes of a dissolved corporation. . when? VVASTA1) Violative of the inherent restriction 2)violation of requisite of public purpose 3)applied retroactively 4)subject or object of taxation is outside the territorial jurisdiction of the taxing authority 5)taxpayer is not given an opportunity to be heard 6)amounts to confiscation of property CONSTITUTIONAL LIMITATIONS OF TAX 1 INHERENT LIMITATIONS Penist 1)public purpose 2)inherently legislative in character 3)non-delegation of power 4)exemption of government 5)territorial in character 6)subject to international comity Inherent Power.-Churchill case. not subject to surcharge but only interest and compromise penalty Gen Rule: Tax Delinquency of a corporation cannot be enforced against stockholders. Exception: If its appears that the corporate assets have passed into the hands of the stockholders . *The burden of taxation cannot be transferred from one person to another by PRIVATE AGREEMENT.it is a power w/c is an authority possessed w/o being given by another CONTRACTUAL LIMITATIONS.

5 Non-delegable powers of CIR -RICAA1) recommend revenue regulation to Sec of Finance 2)issue BIR rulings of first impression 3)cancel tax liability 4)accept or reject compromise proposal 5)assign or re-assign tax personnel where excisable goods are kept. KINDS OF TAXES -TTLCS1)tariff 2)toll 3)license 4)custom duties 5)special assessment KINDS OF REVENUES FFPICT 1)forfeiture 2)fee 3)penalty 4)income 5)charge 6)tax DOCTIRNE OF THE MOST FAVORED NATION CLAUSEA doctrine that establishes the principle of equality by international treatment that allows taxpayer to avail more liberal provisions in another tax treaty. . TAX LAW-a law that provides assessment and collection of taxes to support the government. CLASSIFICATION STATUTE -the power of the government to select subjects of taxation CLASS LEGISLATION. International Treaty will prevail over a tax law DOCTRINE OF SOVEREIGN EQUALITYA doctrine that establishes that the property of a foreign government may not be subject to taxation by another State. difference in tax treatment between well off and relatively less.a law that discriminates against others.Horizontal Equity vs Vertical Equity -those who are similarly situated in life should be taxed similarly. Tax law is a special law and prevails over NCC or ROC as general law.

CIR’s interpretation is not binding upon the court but given great weight. *CIR. REVENUE BILLS.Tax cannot be imposed w/o clear and express words . Tax law is construed strictly against the government and liberally in favour of the taxpayer. expressly and unambiguously. PRINCIPLE IN PARI MATERIA-different statutes w/ same object should be construed in reference to each other. of Justice has a power to interpret tax law but subject to review by the Courts of Justice. of Finance.has the original and exclusive power to interpret tax law but subject to review by Sec. Hornbook Doctrine.bills whose purpose is to raise money by taxation. TYPES OF REVENUE BILLS -RCBC-SL 1)Revenue regulation . *Sec .4 BASIC TAX LAWS IN THE PHILS -LRT-N 1)local tax code (pd 231) 2)real property tax code (pd 464) 3)tariff and customs code of 1978 ( pd 1964) 4) nirc of 1997 ( ra 8424) SOURCES OF TAX SELAT-C-RJ1)statutes and PD 2)EO and BP 3)local ordinances 4)administrative issuance or BIR ruling 5)tax treaties or conventions 6)constitution 7)revenue regulations of DOF 8)judicial decisions NATURE OF TAX LAW PERN-C 1)civil in nature and character 2)political in nature when gov’t and people are concerned 3)not penal in nature since they don’t define crimes 4) ex post facto law does not apply to taxation 5)remain effective during war Tax is construed clearly.

issued by CIR -clarify or explain tax law. specific application 2 classifications of BIR rulings 1) w/o established precedent. Doctrine of Judicial Non. and interpretations of CIR w/ respect to the provisions of NIRC) 2)w/ established precedent.a doctrine w/c the courts cannot inquire into a taxing act or the advisability or expediency of a tax measure. and interpretations . practical and necessary for law enforcement 4)published in OG 5)within the authority 5)not contrary to law. of Finance w/c define rules and regulations for effective enforcement of the provisions of NIRC. w/o publication -issued by Sec of Finance. opinions. do not have force and effect of law ( administrative opinions) -general application. advisory service to taxpayer (not conclusive) -have a force and effect of law.Interference . opinions.2)circular 3)bir or administrative ruling 4)court decisions 5)statutes 6)legislative materials REVENUE REGULATIONS. constitution DIFFERENCE BETWEEN REVENUE REGULATIONS AND BIR RULINGS -whig-c -w/ publication .rulings of first impression( rulings. Requisites of Revenue Regulations -CRUP WN1) conform to legal provisions of law 2)reasonable 3)useful. .issuances signed by the Sec.reiterations of previous rulings. Taxes are imprescriptible PRINCIPLE OF STRICTISSIMI JURIS -taxation is the rule and the exemption is the exception Rule 2: Tax exemptions must be strictly construed against taxpayer and liberally in favour of government.

POWERS OF CIR -I-DDDREAMM-PPPACCC-MO 1)interpret the provisions of NIRC (ORIGINAL AND EXCLUSIVE POWER OF CIR) 2) decide tax cases relative to DROP 3)delegate power to subordinate officer w/ rank equivalent to division chief 4)divide the Phils into revenue districts 5)refund/ credit IR taxes 6)examine tax returns / determine tax due 7)accredit tax agents 8)make assessment 9)make a return in behalf of taxpayer 10)prescribe real estate values 11)prescribe presumptive gross sales 12)prescribe additional procedural or documentary requirements for tax administration 13)administer oath and take testimony 14)change a tax period 15)compromise tax liability of taxpayer 16)conduct inventory/surveillance . receipts and certificates to proper officials 2)issuance of receipts and clearances 3)giving effects and administering supervisory or police power conferred by NIRC 4)submit annual report to Congress 5)assessment and collection of taxes 6)assign of internal revenue officers 7)enforcement of fees. penalties and judgments decided by the Courts in its favour in all cases. POWERS OF BIR PIGSA2. forfeitures.E 1)provisions and distributions of forms.a doctrine where the State is not stopped by neglect.When is tax exemption construed in favour of of the taxpayer? -WE3R-when the law provides for exemption -exemptions in favour of gov’t -exemptions in favour of traditional exemptees -exemptions in favour special classes of taxpayers -retirement laws DOCTRINE OF ESTOPPEL . errors or mistake of its agents in the performance of its governmental functions.

17)make arrest and seizures 18)obtain information and to summon .

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