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TAXATION 1: FUNDAMENTALS OF TAXATION and INCOME TAX LAW COURSE OUTLINE By: ATTY. A.P. BONILLA I.

BOOK: Relevant Constitutional Provisions on Taxation and R.A. 8424 or the Tax Code

II. TEXTBOOK: No specific textbook is required. The student may use any textbook on the subject. III. JURISPRUDENCE: Additional cases may be assigned on any of the topics in the outline apart from those cited below. IV. TOPIC MODULES: A. Module on Constitutional Provisions on Taxation and Fundamentals of Taxation 1. Taxation as an Inherent Attribute of Sovereignty; Distinguished from other Powers/ Attributes of Sovereignty 2. Constitutional Provisions and Limitation on Taxation 3. Taxes as the Lifeblood of the State; Double Taxation; Tax Exemption; International Comity; Tax Evasion vs. Tax Avoidance; Aspects/Phases of taxation; Direct vs. Indirect Taxes; and other Basic Doctrines of taxation Cases: Gaston vs. Republic, 158 S 626 Planters Products vs. Fertiphil, G.R. No. 166006, March 14, 2008 John Hay Case, 414 S 356 CIR vs. SMC, G.R. No. 184428, Nov. 28, 2011 Pepsi vs. Tanauan, 69 S 461; Pepsi vs. Butuan, 24 S 789 Villanueva vs. Iloilo, 26 S 578 Swedish Match vs. Treasurer, G.R. No. 181277, July 3, 2013 Mactan vs. Marcos, 261 S 667 Villegas vs. Hiu, 86 S 270 American Bible vs. Manila, 101 P 386 City Assessor vs. Benevola, G.R. No. 152904, June 8, 2007 Prov. Of Abra vs. Hernando, 107 S 104 Abra Valley Coll. Vs. Aquino, 162 S 106 Herrera vs. QC, 3 S 186 CIR vs. CA & YMCA, 298 S 83 Deutsche Bank vs. CIR, G.R. No. 188550, Aug. 19, 2013 B. Module on Income Tax Basic Concepts and General Principles Secs. 22 & 23, 32, 40 & 42 of the Tax Code 1. Territoriality Principle and Nexus to the Situs; Tax Situs Rules 2. Return of Capital vs. Income; Income from Within and Without the Philippines 3. Exclusions from Gross Income 4. Various Types of Income: Active, Passive and Capital Gains and the Concept of Withholding Taxes 5. The Various Kinds of Taxpayers: Individual vs. Corporate; Schedular vs. Global Taxation Cases: Madrigal vs. Rafferty, 38 P 414 CIR vs. BOAC, 149 S 395 South African Airways vs. CIR, G.R. No. 180356, Feb. 16, 2010

C. Module on Income Taxation of Individuals Chapter 3 of the Tax Code; Secs. 33, 35 & 51 of the Tax Code 1. Citizens and resident aliens; non-resident citizens and aliens and the various types of incomes 2. Concept of Fringe Benefits and the Fringe Benefits Tax (FBT) 3. Personal Exemptions and Additional Dependents; Change of status rule; Optional Standard Deduction 4. Taxation of trusts and estates Chapter 10 of the Tax Code 5. Individual Tax Returns and Payment Requirements Cases: CIR vs. Baier-Nickel, G.R. No. 153793, Aug. 29, 2006 CIR vs. Ca & A. Soriano, 301 S 152 D. Module on Corporate Income Taxation Chapter 4 of the tax Code; Secs. 30,40, & 52 of the Tax Code 1. Domestic vs. Foreign Corporations; Definition of corporations in the Tax Code and Corporate Exemptions from Income Tax; Special Types of Corporations subject to special income tax rates (ROHQ and RHQ; Proprietary educational institutions and hospitals; FCDU and OBU and others) 2. The Normal or Regular 30% Corporate Income Tax and the MCIT 3. Other taxes on incomes: the IAET and the Branch Profits Remittance Tax 4. The tax sparing rule; the immediacy test 5. Tax-free exchanges 6. Corporate tax returns and tax payment requirements Cases: Obillos vs. CIR, 139 S 436 Pascual vs. CTA, G.R. No. 78133, Oct. 18, 1988 CIR vs. PAL, G.R. 179259, Sept 25, 2013 E. Allowable Deductions Chapter 7 of the Tax Code; Sec. 36 of the Tax Code 1. Optional vs. Itemized Deductions; what are not allowed as deductions 2. Concept of Ordinary and Necessary Expenses 3. Special Rules on deductibility of interest expense; losses and bad debts; taxes and charitable donations Cases: CIR vs. General Foods, G.R. No. 143672, April 24, 2003 CIR vs. Isabela Cultural Corp., G.R. No. 172231, Feb. 12, 2007 Philex Mining vs. CIR, G.R. No. 148187, April 16, 2008 F. Tax Remedies Titles VIII Chapters 1-111; Title IX Chapter 1; Title X Chapter 1 of the Tax Code 1. Powers of the CIR; Audit & Assessment 2. Collection remedies of government distraint & levy & garnishment; civil & criminal Actions; compromise & abatement 3. Statute of Limitations & Waiver of Prescription 4. Taxpayers Remedies Protest of assessment & claim for refund 5. Judicial Remedies CTA jurisdiction and appeal to the SC

Cases: Ungab vs. Cusi, 309 SCRA 402 CIR vs. Pascor, 309 S 402 Adamson vs. CIR, G.R. No. 120935, May 21, 2009 CIR vs. Primetown, G.R.No. 162155, Aug. 28, 2007 BPI vs. CIR, G.R. No. 174942, March 7, 2008 CIR vs. BPI, G.R. No. 134062, April 17, 2007 Phil. Journalists vs. CIR, G.R. No. 162852, Dec. 16, 2004 CIR vs. Kudos, G.R. No. 178087, May 5, 2010 Fishwealth Canning vs. CIR, G.R. No. 179343, Jan. 21, 2010 Collector vs.Suyoc, G.R. No. 11527, Nov. 25, 1958 Allied Banking vs. CIR, G.R. No. 175097, Feb. 5, 2010 CIR vs. Far East Bank, G.R. No. 173854, Mar. 15, 2010 RCBC vs. CIR, G.R. No. 170257, Sept. 7, 2011 CIR vs. Acesite, G.R. No. 147295, Feb. 16, 2007 Asia Intl Auctioneers vs. Parayno, G.R. No. 163445, Dec. 18, 2007