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UNIVERSITY OF NEGROS OCCIDENTAL RECOLETOS - SCHOOL OF LAW

Course Outline in Taxation I
Lorebette G. Grandea
1st Semester, SY 2016-17
References:
Law of Basic Taxation in the Philippines by Benjamin B. Aban
The Law on Income Taxation by Benjamin D. Teodoro and Hector S. de Leon
Compendium of Tax Laws and Jurisprudence by Jose Vitug
I. General Principles of Taxation
A.Meaning, Nature, Basis, Characteristics and Purposes of Taxation
1. Meaning of tax, taxation, CIR v. Algue, 158 SCRA 9 (1988)
a. Taxation as an inherent power of the state
Abakada Guro Party List v. Ermita, GR No. 168056, 1 Sept. 2005
b. Tax as a general term, as a legal term
Compania General de Tabacos v. City of Manila, 8 SCRA 367 (1963)
c. Tax v. license and regulatory Fee
Osmena v. Orbos, 220 SCRA 703 (1993)
PAL v. Edu, 164 SCRA 320 (1988)
Progressive Development v. QC, 172 SCRA 629 (1989)
Tolentino v. Sec. of Finance, 249 SCRA 628 (1995)
Gerochi v. DOE, G.R. 159796, 17 July 2007
d. Tax v. special assessment
Sec. 240, R.A. 7160
Republic v. Bacolod-Murcia Milling Co., 17 SCRA 632 (1966)
e. Tax v. toll
Sec. 155, R.A. 7160
f. Tax v. penalty
Secs. 247-281
g. Tax v. tariff and customs duties
Garcia v. Executive Secretary, 211 SCRA 219 (1992)
h. Obligation to pay tax v. obligation to pay debt
Art. 1279, 1290 NCC
Republic v. Mambulao Lumber, 6 SCRA 858 (1962)
Philex Mining v. CIR, 294 SCRA 687 (1998)
Caltex v. COA, 208 SCRA 726 (1992)
Francia v. IAC, 162 SCRA 753 (1988)
i. Tax v. government revenue

LGG/UNO-R Law/Taxation I

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supra.. Macaraig. supra. Tio v. Philippine Acetylene v. City of Iloilo. 4. excise Villanueva v. Republic v. supra. supra. (1995) supra. As to graduation or rate LGG/UNO-R Law/Taxation I 2 . COA. 105 – VAT Tolentino v. Esso v.2. As to the manner of computing the tax Title VI Ad valorem. As to who shoulders the burden of the tax Direct taxes. Theory and Basis of Taxation Lorenzo v. Purposes. Osmena v. 26 SCRA 578 (1968) CIR v. 3. supra. Bacolod-Murcia Milling Co. supra. General. of Finance. Orbos. revenue CIR v. CA. CIR. Posadas. Sec. 20 SCRA 1056 (1967) Maceda v. CBAA. As to scope of the tax National taxes. 148 SCRA 36 (1987) c. Municipal Board. id. Non-revenue. PAL v. fiscal. indirect taxes Sec. of Customs Brokers v. As to the object or subject matter of the tax Property. Videogram Regulatory Board. 175 SCRA 149 (1989) 5. supra. CIR. Araneta. Edu. 151 SCRA 208 (1987) Lutz v. 98 Phil 150 (1955) Caltex v. 210 SCRA 579 (1992) b. Macaraig. specific e. 64 Phil 353 (1937) CIR v. Orbos. Objectives of Taxation a. personal. Secretary of Finance. special or regulatory Osmena v. poll or capitation. local taxes Benguet v. Tolentino v. Algue. Classification of Taxes a. 242 SCRA 289 (1995) Assoc. John Gotamco. 197 SCRA 771 (1991) Maceda v. 235 SCRA 630 (1994) b. 93 Phil 107 (1953) d. COA. Algue. Essential Characteristics of Tax Caltex v. 223 SCRA 217 (1993) CIR v.

supra. Collection or administration c. of Finance. 24 (A) 3.A. Aspects of taxation a. PAGCOR. 7160 2. 197 SCRA 52 (1991) Pepsi-Cola v. Sec. of Finance. VI. Tolentino v. Tan. flat rate Sec.. b. 237 SCRA 324 (1994) CIR v. Extent of the legislative power to tax Tan v. CTA. ERB. Non-delegability of power to tax Except: devolved power to LGUs. Nature and Limitations of the Power of Taxation 1. 28 (1). Inherent in sovereignty Roxas v. Ancheta. progressive rate of tax Tolentino v. supra. 277 SCRA 617 (1997) Sison v. Who may question the validity of a tax measure or expenditure of taxes LGG/UNO-R Law/Taxation I 3 . Edu. Ongpin. Basco v. 130 SCRA 654 (1984) Kapatiran v. 23 SCRA 276 (1968) Tanada v. Angara. 6. Tax systems a. Sec. 186 SCRA 331 (1990) B. Levy or imposition by the legislative body b. City of Butuan. R. 1987 Constitution Progressive system. 272 SCRA 18 (1997) b. 192 SCRA 363 (1990) Maceda v. supra. (1991) supra. express grant in legislative franchise Maceda v. Almanzor. 196 SCRA 322 (1991) ii. Exclusively legislative in nature i. digressive rate Sec. (1995) supra. Nature of the power of taxation a. Basic principles of a sound tax system Chavez v.1. Macaraig. proportional. Methods of collection: withholding system voluntary assessment and payment assessment and payment 7. progressive. 163 SCRA 371 (1988) Reyes v. c. Santos. Art. 24 SCRA 789 (1968) PAL v. del Rosario. 233. regressive system Progressive system v. Classification Sec. regressive.

Macaraig. supra. Macaraig. 1987 Constitution Sec. Sec. supra. (1991) supra. agencies and instrumentalities Sec. 1931 d. Constitutional Limitations a. 65 SCRA 624 (1975) Chavez v. e. Marcos. iii. personal jurisdiction CIR v. supra. Maceda v. Due process of law LGG/UNO-R Law/Taxation I 4 . 93 and P. Art. Purpose must be public in nature Pascual v. Japan Airlines. Tariff and Customs Code Garcia v. Orbos. 28 (2). Art. II. 158 SCRA 626 (1988) b.. VI. delegation to the President Sec. 120 SCRA 337 (1983) Maceda v. City of Iloilo. 1987 Constitution Book II. X. Maceda v. 149 SCRA 395 (1987) CIR v. CIR. 27 (C) Mactan Cebu Airport v. RPB. Prohibition against delegation of taxing power exceptions i. Macaraig. ii. British Overseas Airway Corp. 202 SCRA 450 (1991) Air Canada v. ERB. O. supra. Exemption of government entities. Art. Angara. (1991) supra.. 110 SCRA 331 (1960) Tio v. (CA) Case No. D. PCGG. Marcos. 5.. (1991) supra. 6572. 1987 Constitution Tanada v. Gaston v. Maceda v. Limitation of territorial jurisdiction territorial v. Gonzales v.A. Maceda v. delegation to administrative agencies Osmena v. International comity Sec. E. 401. supra.Lozada v. 299 SCRA 744 (1998) c. Subject to inherent and constitutional limitations 2. of Public Works. supra. 7160 Basco v. 22 December 2004 Iloilo Bottlers v. delegation to LGUs Sec. Inherent Limitations a. supra. 2. Comelec. 164 SCRA 607 (1988) 3. Macaraig. c. Executive Sec. Videogram Regulatory Board. supra. supra. PAGCOR. R.

267 SCRA 557 (1997) Tiu v. supra. 101 Phil 386 (1957) Tolentino v. Aquino. 1. A. CIR v. non-profit educational institutions LGG/UNO-R Law/Taxation I 5 . III. 86 SCRA 270 (1978) Tan v. Prohibition against impairment of obligation of contracts Sec. Prohibition against taxation of religious. Sec. Sec. of Cordova. 301 SCRA 278 (1999) c. Art.. 1987 Constitution community tax v. charitable and educational entities Sec. Tan. 6.Sec. Mun. 1987 Constitution Am. supra. 1987 Constitution Tan v. Ancheta. Art. Sec. supra. (1995) supra. City of Manila. Cebu. of Finance. of Finance. 1987 Constitution Use of tax levied for a special purpose Osmena v. III. Asso. Race Horse v. Prohibition against taxation of non-stock. Treas. CA & Alhambra Ind. III. 20. 4. Art. supra. Art. 94 Phil 389 (1954) City of Baguio v. Sison v. supra. of Finance. subject or items to be taxed Sec. 1. Art. Villanueva v. 1987 Constitution Tolentino v. Mla. supra. VI. 5. XII. 10. de Leon. Shell v. VI. Hiu Chiong Tsai Pao. Prohibition against appropriation of proceeds of taxation Sec. 1987 Constitution Tolentino v. 156-164. 8. R. Prohibition against imprisonment for non-payment of poll tax Sec. CA. dela Fuente. Alfonso. supra. 25 SCRA 938 (1968) Kapatiran v. III Sec. 162 SCRA 106 (1988) 9. Ancheta. City of Iloilo. Villegas v. 1987 Constitution Sison v. 28 (1). City of Butuan. 7160 5. 28 (3). 29. Bible Society v. supra. Prohibition against infringement of religious freedom Sec. 83 Phil 852 (1949) Pepsi Cola v. Orbos. Art. Vano. VI. Art. Equal protection of the laws Sec. (1994) supra. 1987 Constitution Abra Valley College v. Mun.. 11. del Rosario. supra. Board. Art. 88 Phil 60 (1951) Eastern Theatrical v. supra. 7. Art. of Customs Brokers v. Uniformity and equity in taxation classification of taxpayers. del Rosario. poll tax Sec. b. supra. III.

VI. Art.. of Finance. Art. Art. XIV. CA. Meaning of situs 2. Art.C. 11. v. CTA and Ateneo. CIR v. Meaning CIR v. Collector. Avelino. S. supra. Macaraig. Sec. Sec. 28 (4). (1995) supra. del Rosario. 3. VI. 70 Phil 325 (1940) Tan v. XII. CTA and YMCA. supra. 271 SCRA 605 (1997) 10. Grant of Franchise Sec. vi. Infringement of press freedom Sec. 5 (b). 28 (3). Inc. Johnson and Son. Japan Airlines. of Finance. revenue or tariff bills Sec. 104 CIR v. Constitution Sec. 191 SCRA 452 (1990) iii. 102 Phil 813 (1958) 4. Wells Fargo Bank v. v. Grant of tax exemption (more on this under D4) Sec. Art. Revenue bills shall originate from the House of Representatives Sec. C. 4 (3. 1987 Constitution Tolentino v. III. 1987 Constitution Tolentino v. 27 (B) and 30 (H) DOF Order No. Santos. Non-impairment of the jurisdiction of the Supreme Court Sec. 27 (2). Multiplicity of Situs. CA. 1987 Constitution Tolentino v. 2. Situs of subjects of taxation Sec. 137-87 and 149-95 CIR v. Art. 298 SCRA 83 (1998) CIR v. Sec. (1995) supra. 277 SCRA 617 (1997) San Miguel Corp. Double taxation in its broad sense LGG/UNO-R Law/Taxation I 6 . Others i.. VIII.Sec. of Finance. supra. Art. 1987 Constitution Sec. de Lara. 1987 Constitution Chavez v. 24. Veto of appropriation. 309 SCRA 87 (1999) b. VI. 24. Double Taxation a. Situs of Taxation and Double Taxation 1. VI.. Art. ii. supra. 89 SCRA 69 (1979) iv. PCGG. 4). 1987 Constitution CIR v. supra. 42. supra. Collector v. British Overseas Airway Corp. 1987 Constitution Gonzales v.

IAC. Constitutionality of double taxation City of Baguio v. 196 SCRA 335 (1991) CIR v. supra. Sec. tax amnesty Commissioner v. supra. 106 (A) (2) iv. M. compared with tax remission. total or partial Exemption from direct tax. 2003 i. City of Davao. City of Butuan. deductions.Villanueva v. 157 SCRA 349 (1988) Yutivo v. 9 SCRA 728 (1963) ii. Min. 32 (B). 105-VAT c. 372 SCRA 576 (2001) iii. c. 99 Phil 847 (1956) Cpa. IAC. Interisland Gas Service.R. supra.. Kinds of tax exemption Express or implied. Tax avoidance Ways of avoiding tax Delpher Traders Corp. Marubeni Corp. 254 3. Shifting of tax burden a. City of Mla. 77 Phil 394 (1946) PLDT v. 13 SCRA 633 (1965) Sec. 363 SCRA 522 (2001) PLDT v. 166 SCRA 560 (1988) Republic v. 143867. City of Davao. G. CTA. Tax evasion Elements of tax evasion Republic v. Exemption from taxation a. D. City of Iloilo. Sarmiento. condonation Juan Luna Subd.. Ways of shifting the tax burden b. March 25. Taxes that can be shifted Sec. from indirect tax LGG/UNO-R Law/Taxation I 7 . Sanchez v. Sec. de Leon. exclusions. 97 Phil 687 (1955) City of Mla. supra. 240 SCRA 368 (1995) People v. 34 b. VAT zero-rating. CIR. General de Tabacos v. Meaning of impact and incidence of taxation 2. CA and ROH Auto. v. meaning of exemption from taxation Greenfield v. v. V. Castaneda. v. Gonzales. Meer. 165 SCRA 327 (1988) Pascual v. Pepsi Cola Bottling v. Means of Avoiding and Minimizing the Burden of Taxation 1. Collector. 1 SCRA 160 (1961) 4. Collector. 91 Phil 371 (1952) Surigao Corp.

. Ace Line. A. 199 Sec. C. c. incentives i. City of Davao. treaties RP-US Tax Treaty RP-Germany Tax Treaty Com. 28 (3). Macaraig. PLDT v. CA and YMCA. City of Davao. of Finance. Aquino. CTA. supra. d. f. iv. Constitution Sec. 30 SCRA 968 (1969) Com. 293 SCRA 76 (1998) Maceda v. 159 and 234. CTA. Maceda v. Phil. 1987 Constitution Abra Valley v. Art. R. tax statutes Sec. 25 SCRA 912 (1968) Com. Nature of the power to grant tax exemption Basco v. 190 SCRA 477 (1990) Chavez v. Davao Gulf v. supra. DOF. CIR. (1991) supra. Sec. S. (1993) supra. 4 (3. 238 SCRA 63 (1994) LGG/UNO-R Law/Taxation I 8 . Macaraig. 64 SCRA 555 (1975) Atlas Fertilizer v. PCGG. v. Macaraig. 298 SCRA 83 (1998) Misamis Oriental Assoc. ii. 7 SCRA 670 (1963) NPC v. Wonder Mech v. 4). 30. Construction of statutes granting tax exemption i. v. XIV. VI and Sec. Acetylene v. Art. supra. special laws R.. (2001) supra. 100 SCRA 556( 1980) Commissioner v. v. (2001) supra. Phil. CIR. e. Cagayan de Oro. Tariff and Customs Code (TCC) iii. COA. PAGCOR. (1995) supra. v. 105. Sec. supra. 7160 Sec. RTN Mining. Commissioner. Laws granting tax exemption. Tolentino v. supra. Maceda v. supra. v. supra.Atlas Fertilizer v. 7549 Com. supra. 202 SCRA 137 (1991). RTC Presiding Judge. Phil Ace Line. Rationale for tax exemption Davao Light v. 65 SCRA 142 (1975) g. Com. Com.(1995) supra. PJ Kiener. 32 (B). 207 SCRA 549 (1992) Caltex v. Johnson. Nature of tax exemption Tolentino v. Reagan v. of Finance. 106. A. general rule PLDT v. Com. Commissioner. (1993) supra. v. 22 SCRA 122 (1972) Tan Kim Kee v.

Posadas. supra b. 5 SCRA 665 (1962) Lorenzo v. supra. grant to government and other entities E. supra. Electric Co. La Tondena. CA. 100 Phil 288 (1956) Republic v. del Rosario. construction of tax laws i. CA. rulings and opinions a. Tuzon v.Com. CA. effectivity of revenue rules and regulations RMC 20-86 c. Collector. TCC. v. Angara. validity of revenue rules and regulations RMO 1-99 Tan v. Vera (Tabios). Interpretation of Tax Laws a. 2. ii. Phil Acetylene Company. Application. 244-246 Sec. revenue regulations. supra. 39 SCRA 70 (1971) Mla. Tanada v. supra. rule when legislative intent is clear Umali v. DOF. 4. supra. effects of a void ruling Sec. 511 and 519. v. Lorenzo v. 267 SCRA 557 (1997) Misamis Oriental v. 261 SCRA 236 (1996) b. Oasan. NIRC. v. Posadas. Estanislao. rule when there is doubt Collector v. Umali v. rule when language is plain c. supra. application of tax laws. special laws. ii. supra. nature of rulings. LGC tax ordinance/local tax codes. Estanislao. TCC CIR v. Sources of tax laws The Constitution. supra. 212 SCRA 739 (1992) treaties. DOF. exceptions Maceda v. supra. nature of internal revenue laws Hilado v. 209 SCRA 446 (1992) La Suerte v. SC/CTA/CA decisions revenue rules and regulations. supra. 99 Phil 934 (1956) Misamis Oriental v. Com. rulings LGG/UNO-R Law/Taxation I 9 . of Customs v. CA. Sources. Macaraig. CBAA. supra. CIR. Davao Gulf v. v. CTA. 134 SCRA 29 (1985) Com. 67 SCRA 352 (1975) Benguet Corp. Interpretation and Administration of Tax Laws 1.. iii.

NCC Umali v. supra. 222 SCRA 580 (1993) 3. Rafferty. Telefunken. rulings Sec. CTA. George. Comm. 166 SCRA 166 (1988) ABS-CBN v. 85 Phil 246 (1949) Tiongco v. Lorenzo v.the effects of repeal i. CB. application of revenue regulations. PVB. CA. 212 SCRA 176 (1992) Pecson v. mandatory and directory provisions Roxas v. 25 SCRA 789 (1968) Comm. Estanislao. v. CA. 108 SCRA 142 (1981) Comm. supra. ii. supra. Enforcement. Posadas. 107 Phil 1055 (1960) Cebu Portland v. v. Mega General. 164 SCRA 192 (1988) CIR v. Aragon v. 246 Comm. v. Collector. v. Administration of Tax Laws LGG/UNO-R Law/Taxation I 10 . 249 SCRA 401 (1995) d. application of tax laws Art. RTN Mining. supra. Hijo Plantation v. Filipinas Cia de Seguros. 2. supra.