CORDILLERA CAREER DEVELOPMENT COLLEGE

COLLEGE OF LAW
LA TRINIDAD, BENGUET
TAX REVIEW COURSE OUTLINE
Second Semester SY 2016-2017

I. GENERAL PRINCIPLES OF TAXATION

A. Definition and concepts of taxation

1. Power of Taxation
Roxas y. Cia v. Court of Tax Appeals, L-25043, April 26, 1968
Antero M. Sison, JR., petitioner, vs. Ruben B. Ancheta, G.R. No. L-59431 July 25, 1984
Philippine Health Care Providers, Inc. v. CIR, GR No. 167330, Sept 18, 2009
CREBA Inc. v. Romulo, GR No. 160756, March 9, 2010

2. Power of taxation compared with other powers

Police power
Serafica v. City Treasurer of Ormoc, L-24813, April 28, 1968
Power of eminent domain
Lutz v. Araneta, 98 Phil 148

3. Theories and Bases of Taxation

Lifeblood theory
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
CIR v. Filinvest Development Corporation, 654 SCRA 56
Necessity theory
Benefits-protection theory (Symbiotic relationship)
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
Lorenzo v. Posadas, etc. 64 Phil. 353
NAPOCOR v. City of Cabanatuan, G.R. No. 149110, April 9, 2003
Jurisdiction over subject and objects

Other Cases:
Commissioner of Internal Revenue vs. Pineda, 21 SCRA 105
CIR v. Filinvest Development Corp., 654 SCRA 56

B. Nature of Taxation
Attribute of sovereignty
Pepsi-Cola Bottling Company of the Philippines v. Municipality of Tanauan, Leyte, 69
SCRA 460
Legislative in character and generally not delegated
(i) General rule
(ii) Exceptions
(a) Delegation to local governments (Sec 5, Art. X, PC)
(b) By the Constitution (Sec. 28(2). Art. X)
(c) Delegation to administrative agencies
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 -implementation that may call for some degree of discretionary
powers under a set of sufficient standards expressed by law -
Pelaez v. Auditor General, 15 SCRA 569
-or implied from the policy and purpose of the law Maceda v.
Macaraig, 223 SCRA 217

Petron versus Pililia, 198 SCRA 92

C. Purposes of Taxation

1. Primary purpose - Revenue-raising

2. Non-revenue/special or regulatory
Regulatory
Caltex Philippines v. COA, G.R. No, 92585, May 8, 1992
Tio v. Videogram, 151 SCRA 208
PAL V. Edu

Promotion of general welfare

Lutz v. Araneta, G.R. No. L-7859, December 22, 1955

Reduction of social inequity

Tool for economic growth
Protectionism

Other Cases:
Gaston v. Republic Bank, 153 SCRA 626

D. Principles of a Sound Tax System

1. Fiscal adequacy
2. Administrative feasibility
Diaz v. The Secretary of Finance, 654 SCRA 96
3. Theoretical justice

E. Scope and Limitations of taxation

Power of Taxation not absolute

1. Inherent limitations
a) Public purpose
Lutz v. Araneta, G.R. No. L-7859, December 22, 1955
Planters Product, Inc. v. FertiPhil Corp, GR No. 166006, March 14, 2008

b) Inherently legislative
(i) General rule
(ii) Exceptions
(a) Delegation to local governments
(b) Delegation to the President
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 (c) Delegation to administrative agencies

Pepsi v. Municipality of Tanauan, 69 SCRA 460

Pepsi v. City of Butuan, 24 SCRA 827

c) Territorial
Situs of Taxation
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
(d) International comity
(e) Exemption of government entities, agencies, and instrumentalities
Board of Assessment Appeals of Laguna v. CTA, GR No, L-18125, May 31, 1963
Mactan Cebu International Authority v. Marcos, GR No.120082, September 11,
1996
PFDA v. Municipality of Navotas, GR No. 150301, October 2, 2007
MIAA v. Court of Appeals, GR No. 155650, July 20, 2006
MIAA V. Pasay City, GR No. 163072, April 2, 2009
Republic of the Philippines v. Arlene Soriano, G.R. No.211666, 25 February 2015

Other Cases-limitations
Bagatsing v. Ramirez, 74 SCRA 306
Pascual v. Sec. of Public Works and Communications, 110 Phil. 331
Manila Electric Company v. Yatco, 69 Phil 89

2. Constitutional limitations
a) Provisions directly affecting taxation
(i) Prohibition against imprisonment for non-payment of poll tax
(ii) Uniformity and equality of taxation
(iii) Grant by Congress of authority to the president to impose tarif
rates
(iv) Prohibition against taxation of religious, charitable entities, and
educational entities
(v) Prohibition against taxation of non-stock, non-profit institutions
(vi) Majority vote of Congress for grant of tax exemption
(vii) Prohibition on use of tax levied for special purpose
(viii) Presidents veto power on appropriation, revenue, tarif bills
(ix) Non-impairment of jurisdiction of the Supreme Court
(x) Grant of power to the local government units to create its own
sources of revenue
(xi) Flexible tarif clause
(xii) Exemption from real property taxes
(xiii) No appropriation or use of public money for religious purposes

b) Provisions indirectly affecting taxation

(i) Due process
(ii) Equal protection
(iii) Religious freedom
(iv) Non-impairment of obligations of contracts

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 Cases:
CIR v. M.J. Lhuiller Pawnshop, Inc., GR No. 150947, July 15, 2003
CIR v. CA and Fortune, GR No. 119761, August 29, 1996
City of Manila v. Coca-Cola Bottlers Philippines, GR No. 181845, August 4, 2009
City of Baguio v. De Leon, 25 SCRA 938
ABAKADA Guro Party List v. Purisima, October 14, 2008
Association of Customs Brokers v. Manila, 93 Phil 107
Shell Company of Phil. Islands v. Mun. of Cordova, 94 Phil 339
CREBA v. Exec. Sec Romulo, GR No. 160756, March 9, 2010
Commissioner of Customs v. Hypermix Feeds Corporation, GR No. 179759, February
1, 2012
Judy Anne Santos v. People, GR No. 173176, August 26, 2008
American Bible Society v. City of Manila, 101 Phil 386
Angeles University v. City of Angeles, GR No. 189999, June 27, 2012
RMC 76-2003
Department of Finance Order No. 137-87, dated December 16, 1987
Lung Center of the Phil v. Quezon City, June 29, 2004
Abra Valley College v. Aquino, GR No. L-39086, June 15, 1988
Sison v. Ancheta, GR No. 59431, July 25, 1984
Ormoc Sugar Company v. Treasurer of Ormoc, GR No. 23794, February 17, 1968
Villegas v. Hiu Chiong Tsai Pao Ho, GR No. L-29646
Tolentino v.Secretary of Finance, GR No. 115455, August 25, 1994

F. Doctrines in Taxation

1. Prospectivity of tax laws

CIR v. Araneta, G.R. No. 185568, March 21, 2012
Exception Cebu Portland Cement v. CIR, G.R. No. 18649, February 27,
1965

2. Imprescriptibility

3. Double taxation
Definition Victoria Milling v. Mun of Victoria Negros Occidental, G.R.
No. L-21183,
September 27, 1968
Villanueva v. City of Iloilo, GR No. L-26521, December 28, 1968

4. Escape from taxation

(a) Shifting of tax burden
(b) Tax avoidance
(c) Tax evasion
(d) Capitalization
(e)Transformation

Cases:
Yutivo Sons Hardware v. CTA, G.R. No. L-13203, January 28, 1961
CIR v. Estate of Benigno Toda Jr., G.R. No. 78583, March 26, 1990
Republic v. Gonzales, G.R. No. L-17962, April 30, 1965
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 CIR v. Reyes, Nos. G.R. L-11558, November 25, 1958
Republic v. Heirs of Jalandoni, 20 Sept 1965
CIR v. American Rubber
CIR v. PLDT, GR 140230, December 15, 2005
Silkair Singapore v. CIR, GR No. 173594, February 6, 2008

5. Exemption from Taxation

a) Meaning of exemption from taxation
Principle of Strictissimi Juris - Sealand Service v. CA, G.R. No.
57828, June 14 1993
Rationale for the Application of Strictissimi Juris
Maceda v. Macaraig, G.R. No. 88291, June 8, 1993
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987
Exceptions to the Application of Strictissimi Juris
CIR v. Amoldus Carpentry Shop, Inc. G.R. No. 71122, March 25,
1988

b) Nature of tax exemption

c) Kinds of tax exemption
(i) Express
(ii) Implied
(iii) Contractual
d) Rationale/grounds for exemption
e) Revocation of tax exemption Mactan Cebu Intl Airport Authority v.
Marcos

Cases Tax Exemption

SeaLand Service v. CA, G.R. No. 57828, June 14, 1993
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987
CIR v. Amoldus Carpentry, Shop, Inc., G.R. No. 71122, March 25, 1998
Mactan Cebu Intl. Airport Authority v. Marcos
Province of Misamis Oriental v. Cagayan Electric Power & Light Co., Inc., G.R. No. 45355,
January 12, 1990
Commissioner of Internal Revenue vs. The Insular Life Assurance Co. Ltd., G.R. No. 197192, June 4, 2014

6. Compensation and set-off Philex Mining Corp v. CIR, August 29, 1998
See section 76, NIRC; Francia v. Intermediate Appellate Court, G.R.
No. 76749, June 28, 1988
Republic v. Mambulao, G.R. No. L-17725, February 28, 1962
Exception Domingo v. Garlitos, G.R. No. L-18849, June 29, 1963

7. Compromise

8. Tax amnesty
a) Definition
b) Distinguished from tax exemption

9. Construction and interpretation of:

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 a) Tax laws
Nature of Tax Laws
(i) General rule
(ii) Exception
Cases:
Hilado v. CIR, G.R. No. L-9408, October 31, 1956
Manila Railroad v. Collector of Customs, G.R. No. 10214, November
4, 1915
Hornbook Doctrine CIR v. CA, G.R. No. 115349, April 18, 1997

b) Tax exemption and exclusion

(i) General rule
(ii) Exception
Atlas Consolidated Mining and Development Corporation v. CIR,
640 SCRA 504
Commissioner of Internal Revenue Vs. Pilipinas Shell Petroleum
Corporation, GR No. 180402, February 10, 2016

c) Tax rules and regulations

(i) General rule only
d) Penal provisions of tax laws
e) Non-retroactive application to taxpayers

G. Sources of Tax Laws

People v. Licera, G.R. No. L-39990, July 22, 1975
Manila Railroad v. Collector of Customs, G.R. No.10214, November 4,
1915
CIR v. CA, G.R. No. 115349, April 18, 1997
Cebu Portland Cement v. CIR, G.R. No. 18649, Feb 27, 1965

H. Situs of Taxation
(a) Meaning
(b) Situs of income tax

I. Aspects/Stages of Taxation
1. Levy
2. Assessment and collection
3. Payment
4. Refund

J. Taxes
1. Definition, nature, and characteristics of taxes
Progressive Development Corp. v. Quezon City, G.R. No. L-36081,
April 24, 2989
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 2. Requisites of a valid tax

K. Tax as distinguished from other forms of exactions

1. Tarif
2. Toll
3. License fee
Progressive Development Corp v. Quezon City, G.R. No. L-36081, April
24, 1989
PAL v. Edu, G.R. L-41383, August 15, 1988
4. Special assessment
5. Debt

L. Kinds/Classification of taxes
1. As to object
a) Personal, capitation, or poll tax
b) Property tax
c) Privilege tax

2. As to burden or incidence
a) Direct
b) Indirect
Tolentino v. Secretary of Finance, GR No. 115455, October 30, 1995
Maceda v. Macaraig, 197 SCRA 771
Exxonmobil Petroleum and Chemical Holdings, Inc., Philippine
Branch v. CIR, 640 SCRA 203

3. As to tax rates
a) Specific
b) Ad valorem
c) Mixed
4. As to purposes
a) General or fiscal
b) Special, regulatory, or sumptuary

5. As to scope or authority to impose

a) National internal revenue taxes
b) Local real property tax, municipal tax

6. As to graduation
a) Progressive
b) Regressive
c) Proportionate

M. Tax Credit
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 Commissioner v, Internal Revenue v. Mirant (Philippines) Operations,
Corporation, 652 SCRA 80
Microsoft Philippines, Inc. vs. CIR, 647 SCRA 398

II. INCOME TAXATION

A. DEFINITION OF TERMS Chapter 1, Title II, Part II of NIRC

B. The Concept of Income

Definition Madrigal v. Raferty, G.R. No. 12287, August 8, 1918; Conwi v.
CIR, 213 SCRA 83

C. Income Tax Systems

1. Global Tax System
2. Schedular Tax System
3. Semi-schedular or semi-global tax system
Case: Sison v. Ancheta, G.R. No. L-59431, July 25, 1984

D. General Principles of Income Taxation in the Philippines Section 23,

Chapter II,
NIRC

Features of the Philippine income tax law

1. Direct tax
Commissioner v. Tours Specialist, 183 SCRA 402
2. Progressive Sec 28(1), Art III, 1987 Constitution
3. Comprehensive
4. Semi-schedular or semi-global tax system

E. Criteria in imposing Philippine income tax

1. Citizenship principle
2. Residence principle
3. Source principle

F. When income is taxable

Definition Taxable Income Section 31, NIRC
Tests in determining whether income is earned for tax purposes
CIR v. Isabela Cultural Corporation, GR No. 172231, February 12,
2007 (all events test)

G. Types of Taxable Income

o Compensation income
o Professional Income
o Business Income
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 o Passive Income
o Capital Gain

H. Sources of Income see also section 42, NIRC

1. Services
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
CIR V. Julian Baier-Nickel, GR No. 153793, August 29, 2006
2. Interest Income NDC v. CIR, 151 SCRA 472
3. Dividends
4. Rent and Royalties
Royalty v. Compensation for Services & Business Profits
CIR v. Smart Communications, GR No. 179045-46, August
25, 2010
5. Sale of Property
Re: Software RMC 44-2005; BIR Ruling DA-ITAD dated
February 26, 2008

I. Kinds of taxpayers
Taxpayer definition Sec 22(N), NIRC
1. Individual taxpayers/Tax on Individuals - Section 24 to 26, NIRC
2. Corporations/ Tax on Corporations Section 27 to 30, NIRC
Definition - Section 22B in relation to Revenue Regulations 10-
2012
Note Exemption Section 30, NIRC
3. Partnerships
4. General professional partnerships
5. Estates and trusts
6. Co-ownerships

J. Gross Income-Principles; Computations

Section 32, NIRC
1. Definition Section 32 (A), NIRC
CIR v. Filinvest Corporation, G.R. No.163653
CIR v. PAL, GR No. 160528, October 9, 2006

Gross income vis--vis net income vis--vis taxable income

Gross Income versus Gross Sales/Receipts

2. Inclusions to Gross Income Section 32(A)

Compensation for services
Gross income derived from the conduct of trade or business or
the exercise of a profession
Gains derived from dealings in property
Interests
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 Rents
Royalties
Dividends
Annuities
Prizes and Winnings
Pensions
Partners Distributive Shares from the Net Income of a General
Professional Partnership

3. Exclusions to Gross Income Section 32 (B)

4. Fringe Benefit Section 33, NIRC

CIR v, Mitsubishi, GR No. L-54908, January 22, 1990

5. Classification of income as to source

6. Sources of Income from Whatever Source

Gutierrez v. CIR, CTA case no. 65, August 21,1995
Javier v. CA, GR L-78953, July 31, 1991

7. The Rules and the Sources of Income subject to tax

a. Compensation income
Applicability of rules to Compensation Income and other
Benefits
Taxability of Compensation Income and the Application of the
Employers Convenience Rule Henderson v. Collector, 1 SCRA
649
Retirement Payments, Pension and Gratuities
RA 7641, RA 4917, Section 60B
Separation Payments PLDT v. CIR, GR No.157264, Section 60B
Leave Benefits
5, 13th Month pay and other bonuses
SSS/GSIS benefits
SSS/GSIS/Philhealth/Pag-ibig; Union dues RMC 27-2011
Fringe Benefits (Section 33, RR3-98, 5-2008, 5-2011 and 2012.
De Minimis benefits Section 33, Rev REgs, 3-9
b. Professional income
c. Income from business
d. Income from dealings in property
e. Passive income
Interest income
Dumaguete Cathedral Credit Cooperative v. CIR, GR No.
182722, January 22, 2012
Dividends
CIR v. CA and ANSCOR, GR No. 108576, January 20, 1999
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 Sale of Real Property classified as capital asset
Supreme Transliner Inc. v. BPI Family Savings Bank, GR
No. 165617, February 25, 2011
f. Annuities, proceeds from life insurance or other types of income
g. Prizes and awards
h. Pensions, retirement benefit, or separation pay
i. Income from other sources
Cancellation of indebtedness
Income from Lease and Leasehold improvements
Income from Installation Transactions
Banas c. CA, GR No. 102967, February 10, 2000

8. Situs of income taxation

9. ALLOWABLE Deductions from gross income Section 34 to 39, NIRC

a. General rules
b. Return of capital (cost of sales or services)

10. Deductions vis--vis Tax Credit

Principles on Tax Credit -
CIR v. Central Luzon Drug Corp., GR No. 159647, April 15, 2005
CIR v. Central Luzon Drug Corp., GR No. 148512, June 26, 2006;
Bicolandia Drug Corp., v. CIR, GR No. 142299, June 22, 2006; see
also CIR v. Central Luzon Drug Corp., GR No. 159610, June 2008, in
relation to RA 9267
Carlos Superdrug Corporation v. DSWD, GR No. 166494, June 29,
2007

11. Itemized deductions

Note general rule and conditions

a. General Business Expenses

The All-Events Test - CIR v. Isabela Cultural Corporation,
GR. No. 172231, February 12, 2007
Reasonableness Test - CIR V. General Foods, Inc. G.R. No.
143672,April 23, 2003
CM Hoskins v. CIR, G.R. No. L-24059, November 28, 1969
Capital expenditure v. Ordinary Expenditure
Rule on Proprietary Educational Institutions
Representation expenses
Substantation Rule and the Cohan Rule
Gancayco v. Collector, 1 SCRA 980
G theg

b. Interest

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 Tax Arbitrage Scheme Rev Reg 13-2000 GR. No. L-25399, July
29, 1969
Interest on Tax Delinquencies CIR v. Itogon Suyoc Mines

c. Taxes

d. Losses
Kinds:
Ordinary
Casualty losses
Gains and Losses from dealings in property
Ordinary Asset v. Capital Asset
China Banking Corporation v. Court of Appeals, GR
No. 125508, July 19, 2000
Losses from wash sales of stock or securities sec 34(D)(5)
Wagering losses
Abandonment Losses
Non-deductible losses
Net Operating Loss Carry-over (NOLCO
PICOP v. CIR, GR. No. L-106949, December 1, 1995
e. Bad debts
Philex Mining Corporation v. CIR, GR No. 148187, April 16, 2008

f. Depreciation
Basilan Estates, Inc., v. CIR, GR No. L-22492, September 5, 1997
Conwell Bros. v. Collector, CTA case no. 411
Italian Thai Development Public Company Ltd., v. CIR, CTA case no.
6172, November 12, 2002
Properties not subject to depreciation Limpan Investment Corp. v.
o CIR, L-21570, July 26, 1966; Section 106, RR No. 2

g. Depletion of Oil and Gas Wells and Mines

h. Charitable and other contributions

Rationale of exemption Lung Center of the Phil. V. Quezon
City,
GR No. 144104, June 29, 2004
PSE v. CIR, CTA Case No. 5995, October 15, 2002

Contributions deductible in full under Special Laws

o IBP- PD 81
o Development Academy of the Philippines PD 205
o Aquaculture Department of the Southeast Asian Fisheries and
Development Center (SEAFDEC) PD 292
o National Social Action Council PD 294
o National Museum, Library and Archives PD 373
o University of the Philippines and other State colleges and universities
o Philippine Rural Reconstruction Movement
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 o Cultural Center of the Philippines
o Trustees of the Press Foundation of Asia
o Humanitarian Science Foundation
o Artesian Well Funds (RA 1977)
o International Rice Research Institute
o DOST
o Donations of prizes and awards to athletes (RA 7549)

i. Research and Development

j. Contributions to pension trusts

Miguel J. Osorio Pension Foundation, Inc. v. CIR GR No.
162175, June 28, 2010

k. Deductions under special laws

Mercury Drug Corporation v. CIR, 654 SCRA 124
CIR C. Central Luzon Drug Corporation, GR No. 159610, June
12, 2008

12 . Optional standard deduction (OSD) RA 9504

13. Items not deductible Section 36, NIRC

Capital expenditure Alhambra Cigar v. Collector, GR No. L-223226,
November 28, 1967

14. Special Provisions for Insurance Companies Section 37, NIRC

15. Determination of Amount and Recognition of Gain or Loss

Section 40, NIRC

K. TAXATION OF INDIVIDUAL TAXPAYERS

resident citizens, non-resident citizens, and resident aliens

1. Personal and additional exemption for Individual Taxpayers

Section 35, NIRC
as amended by RA 9504
Note (R.A. No. 9504, Minimum Wage Earner Law)
General rule
Change of status Pansacola v. CIR, GR No. 159991, November
16, 2006

2. Taxation on compensation income

Inclusions
Exclusions
Deductions
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 3. Taxation of business income/income from practice of profession

4. Rules on Passive Income subject to Final Tax

Final Tax defined
Interest
CIR v. CA & CGL Retirement Plan, GR No. 95022, March
23, 2992
Royalties
Prizes and Winnings
Dividends
Afisco Insurance Corp. v. CA, GR No. 112675, January 25,
1999
Capital gains

5. Taxation of non-resident aliens engaged in trade or business

General rules
Cash and/or property dividends
Capital gains
Exclude: non-resident aliens not engaged in trade or business

6. Individual taxpayers exempt from income tax

Senior citizens
Minimum wage earners
Exemptions granted under international agreements

7. Tax Return and Payment Section 51, 56, Chapter IX, NIRC

L. TAXATION OF CORPORATIONS
Definition
Classification of Corporations/Special Types of Corporations
Tax Rates - Section 27 to 29, NIRC
Test in Determining Status of corporations
Law of Incorporation Test
Inclusions/Exclusions

China Banking Corporation vs. Commissioner of Internal Revenue, G.R. No. 175108. February
27, 2013.

1. Domestic Corporations
a. Tax payable
b. Regular tax
c. Minimum Corporate Income Tax (MCIT)
CREBA v. Exec. Sec. Romulo
Manila Banking Corporation v. CIR, GR No. 168118, August 28, 2006

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 CIR v. PAL, GR No. 180066, July 7, 2009
d. Improperly Accumulated Earnings Tax
Cyanamid Phils., v. CA, GR No. 108067, July 7, 2009
e. Allowable deductions
i) Itemized deductions
ii) Optional standard deduction
f. Taxation of passive income
i) Passive income subject to tax
ii)Passive income not subject to tax
g. Taxation of capital gains
h. Tax on Special Domestic Corporations
a. proprietary educational institutions and non-profit hospitals
b. Depositary Banks
i. Tax on government-owned or controlled corporations, agencies or
instrumentalities
j. Tax Returns and Other Administrative Requirements
Paseo Realty and Development Corp., v. CA, GR No. 119286,
October 13, 2004
CIR v. Mirant (Philippines) Operations Corporation, GR No.
171742, June 15, 2011
CIR v. PI. Management International Philippines, Inc., GR No.
160949, April 4, 2011

2. Resident Foreign Corporations

a. General rule
b. With respect to their income from sources within the Philippines
c. Minimum Corporate Income Tax
d. Tax on certain income
Exclude:
(i) International carrier
(ii) Ofshore banking units
(iii) Branch profits remittances
(iv) Regional or area headquarters and regional operating
headquarters of multinational companies
CIR v. British Overseas Airways Corp., GR No. L-65773-74, April 30,
1987

3. Non Resident Foreign Corporations

a. General rule
b. Tax on certain income
(i) Interest on foreign loans
(ii) Intercorporate dividends
(iii) Capital gains from sale of shares of stock not traded in the
stock

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 exchange
Exclude:
(i) Non-resident cinematographic film owner, lessor or distributor
(ii) Non-resident owner or lessor of vessels chartered by
Philippine
nationals
(iii) Non-resident owner or lessor of aircraft machineries and
other
equipment

4. Exemption from tax on certain corporations (income)

5. Partnerships
a. Taxation of partnerships
b. Taxation of general professional partnerships

6. Tax Returns and Payments Section 52, 56 Chapter IX, NIRC

M. ESTATES AND TRUSTS

Evangelista v. Collector, GR No. L-9996, October 15, 1957
Pascual v. Commissioner, GR No. L-78133, October 18, 1988
Tax Returns and Payments

N. Withholding tax PRINCIPLES

Tax collector CIR v. CA, GR No. 104151, March 10, 1995
Right of Withholding Agent to claim for refund CIR v. Smart
Communications, Inc. GR Nos. 179045-46, August 25, 2010

III. TRANSER TAXATION

A. ESTATE TAX
a. Basic principles
b. Definition
c. Nature
Lorenzo v. Posadas, GR No. L-43082, June 18, 1937
d. Purpose or object
e. Time and transfer of properties
f. Classification of decedent
g. Gross estate vis--vis net estate
Dizon v . CTA, GR No. 140944, April 30, 2008
h. Determination of gross estate and net estate
i. Composition of gross estate
j. Items to be included in gross estate
k. Deductions from estate
CIR v. CA and Pajonar, GR No. 123206, March 22, 2000
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 l. Exclusions from estate
m. Tax credit for estate taxes paid in a foreign country
n. Exemption of certain acquisitions and transmissions
o. Filing of notice of death
p. Estate tax return

B. DONORS TAX
a. Basic principles
b. Definition
c. Nature
d. Purpose or object
e. Requisites of valid donation
f. Transfers which may be constituted as donation
1) Sale/exchange/transfer of property for insufficient consideration
2) Condonation/remission of debt
g. Transfer for less than adequate and full consideration
h. Classification of donor
i. Determination of gross gift
j. Composition of gross gift
k. Valuation of gifts made in property
l. Tax credit for donors taxes paid in a foreign country
m. Exemptions of gifts from donors tax
n. Person liable
o. Tax basis

IV. VALUE ADDED TAX

A. Concept/Nature
Kapatiran v. Tan, GR NO. L-81311, June 30, 1988
Tolentino v. Secretary of Finance, August 25, 1994 (orig dec) and GR No.
115455, October 30, 1995 (Motion for Reconsideration)
ABAKADA Guro Party List v. Ermita, GR. No. 168056, September 1, 2005
CIR v. Magsaysay Lines, GR No. 146984, July 28, 2006
Philippine Acetylene v. CIR, August 17, 1967
CIR v. American Rubber, November 29, 1966
CIR v. John Gotamco and Sons, February 27, 1987
.

B. Characteristics/Elements of a VAT-Taxable transaction

C. Impact of tax
D. Incidence of tax
E. Tax credit method
F. Destination principle
G. Persons liable/VAT Person
H. VAT Exempt Person
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I. VAT on sale of goods or properties
1. Requisites of taxability of sale of goods or properties
Zero-rated transactions
Zero-rated sales of goods or properties, and efectively zero-
rated sales of
goods or properties
Zero-rated sale of services

Silicon Philippines, Inc. v. CIR, GR No. 172378, January 17,

2011
Microsoft Philippines, Inc. v. CIR, 644 SCRA 433
CIR v. Seksui Jushi Phils, Inc. GR No. 149671, July 21, 2006
Western Mindanao Power Corporation v. CIR, GR No. 181136,
June 13, 2012
Panasonic v. CIR, GR No. 178090, February 8, 2010
Hitachi v. CIR, GR No. 174212, October 20, 2010
CIR v. Manila Mining Corp., GR No. 153204, August 31, 2005
PAGCOR v. BIR, GR No. 172087, March 15, 2011

J. Doctrine on Effectively Zero-rated sales

CIR v. Acesite Hotel Corp., GR No. 147295, February 16, 2007

K. Transactions deemed sale

CIR v. Magsaysay Lines, GR No. 146984, July 28, 2006

L. VAT on Services
CIR v. Placerdome Tech Services (Phils), GR No. 164365, June 8, 2007
CIR v. American Express Phil Branch, GR No. 1526-0, June 29, 2005

M. Change or cessation of status as VAT-registered person

1. Subject to VAT
2. Not subject to VAT

N. VAT on importation of goods

O. VAT on sale of service and use or lease of properties
P. VAT exempt transactions Section 109, NIRC
1. Requisites
2. Exempt transaction, enumerated
Pawnshops-Tambunting Pawnshop Inc v. CIR, GR No. 179085,
January 21, 2010

Q. Zero-rated sales and VAT exempt sales distinguished

R. Input tax and output tax, defined
S. Sources of input tax

Page 18 of 36
T. Transitional Input Tax
Fort Bonifacio Development Corporation v. CIR, GR Nos. 158885 & 170580, April 2, 2009
Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue and
Revenue District Officer, etc., G.R. No. 173425. January 22, 2013.

U. Persons who can avail of input tax credit

CIR V. Eastern Telecommunications Phil, Inc., GR No. 163835, July 7, 2010
San Roque Power Corp v. CIR, GR No. 180345, November 25, 2009

V. Determination of output/input tax; VAT payable; excess input tax credits

W. Substantiation of input tax credits
X. Refund or tax credit of excess input tax
Y. Invoicing requirements
Z. Refund of VAT Section 112 v. Sec 229, NIRC
Southern Philippine Power Corporation v. CIR, GR No. 179632, October 19, 2011
CIR v. Mirant Pagbilan Corporation, GR No. 172129, September 12, 2008
CIR v. Aichi Forging Company of Asia, Inc. GR No. 184823, October 6, 2010
Silicon Philippines v. CIR, GR No. 172378, January 17, 2011
Commissioner of Internal Revenue vs. Team Sual Corporation, G.R. No. 205055, July 18, 2014
Nippon Express Phils. Corporation v. Commissioner of Internal Revenue, G.R. No.
185666,
4 February 2015
Silicon Philippines, Inc. v. Commissioner of Internal Revenue G.R. No173241, 25 March
2015
Eastern Telecommunications Philippines, Inc. v. CIR, G.R. No. 183531, 25 March 2015
Northern Mindanao Power Corporation v. CIR- G.R. No. 185115, 18 February 2015
Panay Power Corporation v. CIR- G.R. No. 203351, 21 January 2015
Cargill Philippines v. CIR G.R. No. 203774, 11 March 2015
Philippine National Bank v. CIR G.R. No. 206019; 18 March 2015
Commisioner of Internal Revenue Vs. Mirant Pagbilao Corporation, G. R. No.180434,
January 20, 2016
Silicon Philippines, Inc. Vs. Commissioner of Internal Revenue, GR No. 182737, March 2,
2016

AA. Filing of return and payment

BB. Withholding of final VAT on sales to government

CIR v. Ironcon Builders and Development Corp., GR No. 180042,
February 8, 201

V - Tax Administration and Enforcement

A. Definition Tax Administration

B. Stages or Processes of Taxation

a. Levy
b. Assessment
c. Payment

C. Administrative Agencies tasked to implement the Power of Taxation

Page 19 of 36
D. Rule-making authority of the Secretary of Finance

E. Power of the Commissioner to suspend the business operation of a

taxpayer

VI. TAX REMEDIES under the NIRC

A. Government remedies
1. As to Nature of Proceedings
Administrative Remedies in Detail
1. Tax Lien (Section 219, NIRC)
a. CIR v. NLRC, GR No. 74965, 9 November 1994
2. Compromise
3. Distant of personal property or garnishment of bank deposits
4. Levy of real properties
4. Forfeiture
5. Suspension if business operations
6. Enforcement of administrative fines

Judicial remedies
1. Civil Action
2. Criminal Action

Judicial Remedies in Detail (Section 220. NIRC)

1. Period within which the action may be filed
a. Civil Cases (Sections 203, 222, NIRC)
b. Criminal Cases (See: Title X, NIRC; Section 281, NIRC)
2. Where should these cases be filed?
a. Criminal Cases (See the impossible penalty vis-a-vis the
jurisdiction of courts)
b. Civil Cases (Consider the amount of tax sought to be collected
vis--vis the jurisdiction of courts, together with the provisions
of RA9282)
3. Cases:
a. Republic v. Hizon, GR No. 130430, 13 December 1999 (re approval of filing of
civil and criminal action)
b. CIR v. La Suerte Cigar, G.G. No. 144942, 4 July 2002 (Re participation of the
Office of the Solicitor General)

Page 20 of 36
 c. PNOC v. Court of Appeals, G.R. No. 109976, April 26, 2005*
d. Lim v. CA, GR. Nos. 48134-37, 18 October 1990, 190 SCRA 616 (re prescription
of criminal actions, Section 281, NIRC)
e. Marcos II v. CA, GR No. 120880, 5 June 1997 (re enforcement of tax liability
during pendency of probate proceedings)
f. Judy Anne Santos v. People, GR No. 173176, 26 August 2008

2. Remedies as to Procedure
Assessment and Collection
Collection without assessment

Assessment -
Concept of assessment
What constitutes assessment?
CIR v. Hon. Gonzales, GR No. 177279, October 13, 2010
CIR v. Enron Subic Power Corporation, GR No. 166387, January 19, 2009
relate with CIR v. BPI, GR No. 134052, April 17, 2007
CIR v. Pascor Realty, June 29, 1999
CIR v. Reyes, GR No. 159694, January 27, 2006
Principles
CIR v. Hon. Gonzalez and LM Camus Engineering
Corporation, GR No. 177279, October 13, 2010
Power of the Commissioner to make assessments and
prescribe
additional requirements for tax administration and
enforcement
Kinds of assessment
Statute of Limitation on Assessment of Internal Revenue
Taxes (Sections 202, 222, NIRC)
Rmo 20-90, Philippine Journalists Inc., v. CIR, GR No.
162852, December 16, 2004
CIR v. Kudos Metal Corporation, GR No. 178087, May 5, 2010
CIR v. CA AND CARNATION, GR No. 115712, February 25, 1999
RCBC v. CIR, GR No. 170257, September 7, 2011
Suspension of prescriptive period
Republic v. Hizon, December 13, 1999
BPI v. CIR, GR No. 139736, October 17, 2005
BPI v. CIR, GR No. 174942, March 7, 2008
When assessment is made
General provisions on additions to the tax
Assessment process
Estate of the Late Juliana Diez vda De Gabriel v. CIR, GR No. 155541,
January 27, 2004
CIR v. Reyes, GR No. 159694, January27, 2006
PNOC v. Court of Appeas, GR No. 109976, April 26, 2005
CIR v. Menguito, GR No. 16750, September 17, 2008 relate with CIR v.
Metro Star Superama, GR No. 185371, December 8, 2010
Commissioner of Internal Revenue vs. United Salvage and Towage (Phils), Inc., G.R. No.
197515, July 2, 2014

Page 21 of 36
 Commissioner of Internal Revenue Vs. GJM Philippines Manufacturing,
Inc., GR No. 202695, February 29, 2016 (BIR must prove receipt of notice
by TP)
Commissioner of Internal Revenue Vs. Liquigaz Philippines
Corporation/Liquigaz Philippines Corporation/Commissioner of Internal
Revenue, GR No. 215534/215557, April 18, 2016 (FDDA)
Necessity of Assessment before taxpayer can be prosecuted
for violation of the NIRC
Ungab v. Cusi, May 30, 1980
CIR v. CA, GR No. 119322, June 4, 1996
CIR v. Pascor Realty, June 29, 1999
CIR v. Hon. Gonzalez and LM Camus Engineering Corporation, GR No.
177279, October 13, 2010
]
Retroactivity CIR v. Reyes, GR No. 159694, January 27,
2006
Instances when pre-assessment is not required (Section 228)

Collection
Requisites
Prescriptive periods
Bank of the Philippine Islands vs. Commissioner of Internal
Revenue, G.R. No. 181836, July 9, 2014

Distraint of personal property including garnishment

Summary remedy of levy on real property
Forfeiture to government for want of bidder
Further distraint or levy
Tax lien
Compromise
Civil and criminal questions

B. Effects of failure to pay the tax on time: Additions to the tax (Chapter I,
Title X, NIRC)
1. Surcharges
a. Ordinary (Section 248A, NIRC)
Failure to pay tax on time as required by the tax code or
the regulations
Failure to pay the deficiency tax within the time fixed in the
notice
Filing of the return with the wrong office
b. Fraud Penalty (Section 248B, NIRC)
CIR v. Javier Jr., GR No. 78953, 31 July
1991 (199 SCRA 825)
c. Cases:
Page 22 of 36
 i. Imposition of Surcharge in mandatory

2. Interest (Section 249, NIRC)

a. In General
b. Deficiency Interest
c. Delinquency Interest
d. On Extended Payments
3. Compromise Penalties
4. Efect of failure to file information returns (Section 250, NIRC)

NOTES
a. No injunction to restrain collection of taxes (Sec. 218, NIRC)
b. Period within which the government could collect (Sections 203,
222, NIRC)
Case: Republic v. Hizon, GR No. 130430, 13 December 1999;
CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA 825); PNOC
v. CA, GR No. 109976, 26 April 2005; BPI v. CIR, GR No. 174942, 7
March 2008
c. Determination of prescription of collection within CTAs appellate
jurisdiction: CIR v. Hambrecht and Quist Philippines, GR No. 169225,
27 November 2010

C. Remedies available to taxpayers

Before Payment
1. Protest (Section 228, NIRC)
a. Requirements of a valid protest Rev. Regs. 12-85
b. Kinds of Protest CIR v. Philippine Global Communication, GR No.
167146, 31 October 2006
c. Efect of Failure to file Protest CIR v. Hon. Gonzalez, GR No.
177279, 13 October 2010
d. What should be protested? Allied Banking Corporation v. CIR, 5
February 2010
e. Efect of a protest on the period to collect deficiency taxes Cases:
CIR v. Wyeth Suaco Laboratories, GR No. 76281, 30 September
1991 and CIR v. Atlas Consolidated Mining, GR Nos. 31230-32, 14
February 2000
f. Failure if the BIR to act within the 180-day period See the
following: Lascona v. CIR, CTA Case 5777, 4 January 2000 vis--vis
Section 7 (2), RA 9282 and the Revised Rules of Procedure of the
CTA, AM No. 05-11-07-CTA; See also RCBC v. CIR (2007)
Page 23 of 36
 g. Administrative actions taken during the 180-day period Compare:
CIR v. Union Shipping, GR No. 66160, 21 May 1990, 185 SCRA 548
and CIR v. Isabela Cultural Corporation, GR No. 135210, 11 July
2001
h. Efect of a protest filed out of time Protectors Services v. CA, GR
No. 118176, 12 April 2000
i. Remedies from a denial of the protest
Appeal to the Court of Tax Appeals (RA 1125, as amended by
RA9282)
Fishwealth Canning Corporation v. CTR, G.R. No. 179343, 21
January 2010
Appeal to the CTA en bane should be preceded by a Motion for
Reconsideration (Commissioner of Customs v. Marina Sales,
Inc., G.R. 183868, 22 November 2010 Note: although a
customs case, the ptrinciples are applicable)
2. Compromise

After Payment
1. Refund (Section 229, NIRC)
a. Must be strictly construed against the taxpayer; Taxpayer
must show the legal and factual basis for the tax refund Case:
Citibank, NA v. Court of Appeals, GR No. 107434, 10 October
1997, 280 SCRA 459; FEBTC v. CIR, GR No. 138919, 02 May
2006; Commissioner of Internal Revenue v. Far East Bank e
Trust Co., G.R. No. 173854 dated March 16, 2010
b. Grounds for filing a claim for refund (See Section 229, See
also: Engtek Phils v. CIR, CTA Case No. 6644, 26 January
2005)
c. Procedure in filing a claim for refund
CIR v. Acosta, GR No. 154068, 3 August 2007
d. Period within which to file a claim for refund
General rule is two years from the date of payment Cases:
ACCRA Investments Corporation v. Court of Appeals, GR
No. 96322, 20 December 1991; CIR v. TMX Sales, 15
January 1992; CIR v. PhilAm Life, 29 May 1995; CIR v. CA
and BPI, GR No. 117254, 21 January 1999; CIR v. PNB, GR
No. 161997, 25 October 2005 (exception to the 2-year
period); CIR v. Primetown Property Group, GR No. 162155,
28 August 2007).
Commissioner of Internal Revenue vs. San Roque Power
Corporation/Taganito Mining Corporation vs. Commissioner of
Page 24 of 36
 Internal Revenue/Philex Mining Corporation vs. Commissioner
of Internal Revenue, G.R. No. 187485/G.R. No. 196113/G.R. No.
197156. February 12, 2013
o
In case of amended returns
In case of taxpayers contemplating dissolution Case: BPI
v. CIR, 28 August 2001; See also: Sections 52(c) and 56(a)
In case of VAT Refund (Please see topic on VAT)
e. Who has the personality to file a claim for refund?
1. CIR v. Proctor and Gamble, GR No. 66838, 2 December
1991**
2. CIR v. CA 20 January 1999
3. Silkair v. CIR, GR Nos. 171383 e 172379, 14 November
2008
4. CIR v. Smart Communications, GR No. 179045-46, 25
August 2010***
5. Exxonmobil Petroleum and Chemical Holdings v. CIR, GR
No. 180909, 19 January 2011
6. Silkair (Singapore) Pte., Ltd. v. Commissioner on Internal
Revenue, G.R. No. 166482, 25 January 2012***
f. Is setting-of of taxes against a pending claim for refund
allowed? The doctrine of equitable recoupmentCase: Philex
MiningCorp. V. CIR, GR No. 125704, 28 August 1998
g. Is automatic application of excess tax credits allowed? (Sec.
76) Please see Calamba Steel v. CIR, GR No. 151857, 28 April
2005; Systra Philippines v. CIR, GR No. 176290, 21
September2007; CIR v. BPI, GR No. 178490, 07 July 2009
(Irrevocability Rule)***; Philam Asset Management v. CIR, G.R.
Nos. 156637/162004, December 14, 2005); Asianworld
Properties Philippine Corporation v. CIR, GR No. 171766, 29
July 2010; CIR v. Philam Life and Gen. Ins. Co. GR No. 175124,
29 September 2010; CIR v. Mcgeorge Food Industries, GR No.
174157, 20 October 2010; CIR v. Mirant (Philippnes)
Operations Corporation, G.R. No. 171742, 15 June 2011 CIR v.
PL Management Inernational Philippines, Inc., G.R. No.
160949, April 4, 2011.
h. Efect of existing tax liability on a pending claim for refund
Case: CIR v. CA and Citytrust, GR No. 106611, 21 July 1994;
See also (CIR v. CItytrust Banking Corporation, 22 August, 22
August 2006).
i. Period of validity of a tax refund/credit (Sec. 230, NIRC)

Page 25 of 36
 i. Returns are not actionable documents for purposes of the
rules on civil procedure and evidence (See: Aguilar v. CIR,
CA Case dated 3- March 1990)
ii. Nature of a tax credit certificate (Pilipinas Shell
Petroleum Corporation v. CIR, GR No. 172598, 21
December 2007)
j. Refund and Protest are mutually exclusive remedies Case:
Vda. De San Agustin v. VIR, 10 September 2001
k. Is the taxpayer entitled to claim interest on the refunded tax?
(Sec. 79 (c) 2, NIRC)
Other Remedies
1. Action to Contest Forfeiture of Chattel (Sec. 231)
2. Redemption of Property Sold (Sec. 214)

D. Statutory offenses and penalties

E. Compromise and abatement of taxes

VII. Judicial Remedies (R.A. No. 1125, as amended, and the Revised Rules
of the
Court of Tax Appeals)

COURT OF TAX APPEALS

A. Nature
Commissioner of Internal Revenue v. Toledo, Power, Inc., G.R. No. 183880, January 20, 2014.
B. Legal Basis
C. Powers
D. Composition
E. Jurisdiction
Automatic Review Yaokasin v. Commissioner of Customs, GR No. 84111,
Decmber 22, 1989
Real Property cases decided by RTC not under CTA Juris Habawel v. CTA,
GR No. 174759, September 7, 2011
Final and Executory or Undisputed Assessments Republic v. Abella, GR
No. L-26989, February 20, 1981
Ancillary remedy Commissioner of Customs v. Alikpala, GR No. L-32542,
November 26, 1970
Silicon Philippines, Inc. Vs. Commissioner of Internal Revenue, GR No.
182737, March 2, 2016

Page 26 of 36
 Spouses Emmanuel D. Paquiao and Jinkee J. Paquiao Vs. The Court of Tax
Appeals (1st Division) and the Commission of Internal Revenue, GR No.
213394, April 6, 2016

F. Appeal Periods

G. Instances when decisions are final

Oceanic Wireless Network Inc., v. CIR, GR No. 148380, December 9, 2005
Commissioner v. Ayala Securities Corp., GR No, 29485, March 31, 1976
demand letter
Commissioner v. Union Shipping GR No. 66160, May 21, 1990 filing of a
judicial action
Allied Banking Corporation v. CIR, GR No. 175097, February 5, 2010 FAN,

New Issues cannot be raised for the first time on appeal

CIR v. Wander Philippines, Inc., GR No. 68375, April 15, 1988
Exceptions
Defense of prescription - Visayan Land Transportation v.
Collector, CTA case no. 1119, September 30, 1964
Errors of Admin Officials Commissioner v. Procter & Gamble
Phils., Mfg Corp, GR No. 66838, April 15, 1988 and see Commissioner
v. Procter & Gamble, GR No. 66838, December 2, 1991

H. Who can file appeal

I. Procedure after decision of the CTA

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

B. Judicial procedures
1. Judicial action for collection of
taxes a) Internal revenue taxes
b) Local taxes
(i) Prescriptive period
2. Civil cases
a) Who may appeal, mode of appeal, efect of appeal
(i) Suspension of collection of tax
a) Injunction not available to restrain collection
(ii) Taking of evidence
(iii) Motion for reconsideration or new
Page 27 of 36
 trial
b) Appeal to the CTA, en banc
c) Petition for review on certiorari to the Supreme Court
3. Criminal cases
a) Institution and prosecution of criminal actions
(i) Institution of civil action in criminal
action
b) Appeal and period to appeal
(i) Solicitor General as counsel for the people and
government officials sued in their official capacity
c) Petition for review on certiorari to the Supreme Court

C. Taxpayers suit impugning the validity of tax measures or acts of taxing

authorities
1. Taxpayers suit, defined
2. Distinguished from citizens 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

VIII LOCAL GOVERNMENT TAXATION

A. Local taxation
Nature of the local taxing power
1. Constitutional provision (Section 5, Article X)
2. Delegated power
a. City of San Pablo, Laguna v. Reyes, 25 March 1999
b. Meralco v. Province of Laguna, 5 May 1999
c. Mactan Cebu International Airport Authority v. Marcos, 11
September 1996
d. NAPOCOR v. City of Cabanatuan, 9 April 2003
3. Extent of the power of Congress in local taxation
a. City Government of Quezon City v. Bayantel, G.R. No. 162015,
March 6, 2006
4. Residual power tax (Section 186, LGC)
Fundamental principles on the exercise of the local taxing power
(Section 130, LGC)
Exercise of local taxing power

Page 28 of 36
 Camp John Hay Development Corp. v. Central Board of Assessment
Appeals

B. Common Limitations on the exercise of the local taxing power and the
principle of preemption. Exclusionary rule (Section 133, LGC)
The principle of preemption
Cases:
1. Province of Bulacan v. Court of Appeals, 27 November 1998
2. First Philippine Industrial Corporation v. CA, G.R. No. 125948,
December 29, 1998 (Section 133j; Local Tax on Common Carriers)
3. Palama Development Corporation v. Municipality of Malangas, GR
No. 152492, 16 October 2003 (Section 133e)
4. Batangas Power Corporation v. Batangas City, GR No. 152675, 28
April 2004 (Section 133g)
5. MIAA v. CA and Paranaque, GR No. 155650, 20 July 2006 (Section
133 o)
6. LTO v. City of Butuan, 20 January 2000 (re Section 133(l))
7. Philreca v. DILG, 10 June 2003 (re Section 133 n)
8. Petron Corporation v. Tiangco, GR no. 158881, 16 April 2008
(Petroleum Products)

C. Specific Taxing Powers of Local Government Units

Provinces
1. Scope of the taxing power (Section 134 vis--vis Sections 142 and
186, LGC)
2. Taxes that may be levied by provinces (Sections 135-141, LGC)
3. Cases:
a. Province of Bulacan v. Court of Appeals, 27 November 1998
(Sand and Gravel)
b. PBA v. CA, 8 August 2000 (Amusement)
c. Lepanto Consolidated Mining Corp. v. Ambanloc, 29 June
2010 (Sand and Gravel)
d. Smart Communications v. City of Davao, 16 September 2008
(Franchise)
e. Quezon City v. ABS-CBN Broadcasting, 6 October 2008
(Franchise)
f. San Juan v. Castro, GR No. 174617, 27 December 2007
(transfer of Real Property Ownership)
Municipalities

Page 29 of 36
 1. Scope of the taxing power (Section 142 vis--vis Sections 134 and
186, LGC)
2. Taxes that may be levies by municipalities (Sections 143-149, LGC)
a. Yamane v. BA Lepanto Condominium Corporation, G.R. No.
154993, 25 October 2005 re taxes on businesses
b. Ericson Telecommunications v. City of Pasig, GR No. 176667,
22 November 2007
3. Situs of the tax (Section 150, LGC)
Cities (Section 151, NIRC)
Barangays (Section 152, NIRC)
Common revenue raising powers
Community Tax

D. Remedies in Local Taxation

Remedies of the Government
1 . Angeles City v. Angeles City Electric Corporation, GR No. 166134, 29
June 2010 (Prohibition re injunction on tax collection not applicable to
local taxes)
2. Administrative
a. Local governments lien
b. Assessment by local treasurer (Section 194, LGC)
c. Distraint (Section 175, LGC)
d. Levy (Section 176, LGC)
a. Properties exempt from distraint and levy
3. Judicial
Period within which to collect (Section 194, LGC)
4. Other Provisions
Accrual of the tax (Section 166, LGC)
Time of Payment (Section 167, LGC)
Surcharges, Interests and Penalties

Remedies of the Taxpayer

1. Administrative
1. Appeal to the Secretary of Justice re newly enacted tax
ordinance (Section 187, LGC)
a. Drilon v. Lim, 4 August 1994
b. Jardine Davies v. Judge Alipose, 27 February 2003
2. Protest of the Assessment (Section 195, LGC)
a. Yamane v. BA Lepanto Condominium Corporation, G.R. no.
154993, 25 October 2005 re denial protest
Page 30 of 36
 3. Claim for refund (Section 196, LGC)
4. Remedies from a denial of the protest and refund
2. Judicial

E. Grant of tax exemption by local government units (Section 282 (b), IRR)
a. Tax Exemption v. Tax Incentive
Provicial Assesor of the Agusan Del Sur Vs. Filipinas Palm Plantation, Inc.
GR No. 183416, October 5, 2016 (exemption of cooperatives)

F. Real Property Taxation

1. Governing Law
2. Nature of Real Property Taxes National or Local?
3. Fundamental Principles (Section 198, LGC)
a. Appraisal at current fair market value and based on actual use:
Allied Banking Corporation v. Quezon City, GR No. 154126, 15
September 2006 in relation to Local Ass. Reg. 1-92
4. Properties Covered
a. Article 415, et seq, Civil Code
b. Caltex v. CBAA, 31 May 1982
c. Sta. Lucia Realty & Development, Inc. vs. City of Pasig, G.R. no. 166838, June 15,
2011
Capitol Wireless, Inc. Vs. The Provincial Treasurer of Batangas, the Provicial Asseso of
Batangas, The Municipal Treasurer of and Assessor of Nasugbu Batangas, GR No.
180110, May 30, 2016

5. Properties Exempt
a. Section 234, LGC
b. Section 238, LGC
c. Constitutional Exemptions
d. Cases
i. MIAA v. Paranaque, GR No. 155650, 20 July 2006; MIAA v.
Pasay GR No. 163072, April 2, 2009
ii. Lung Center of the Philippines v. QC., 29 June 2004
iii. LRTA v. CBAA, 12 October 2000
iv. NAPOCOR v. Province of Quezon, GR No. 171586, 15 July
2009;
NAPOCOR v. CBAA, GR No. 171470, 30 January 2009
v. Philippine Fisheries Development Authority v. CBAA, etc., G.R.
No. 178030, December 15, 2012
vi. City of Pasig v. Republic of the Philippines, GR No. 185023,
24 August 2011
vii. GR No. 180110, May 30, 2016
6. May LGUs grant exemption?
Page 31 of 36
 7. Who are liable for the Real Property Taxes
a. Ownership v. Use
b. Testate Estate of Concordia Lim v. Manila, 21 February 2000
c. Government Service Insurance System v. City Treasurer and City
Assessor of the City of Manila, G.R. No. 186242 23 December 2009
8. Procedure in Real Property Taxation
a. Lopez v. City of Manila, 19 February 1999
b. Declaration of real properties - whose duty?
c. Valuation by Assessors
Callanta v. Ombudsman, 30 January 1998
d. Preparation of Schedule of Fair Market Values
e. Enactment of a Real Property tax Ordinance
f. Levy annual ad valorem tax
1. Scope of the LGUs taxing power (Sec. 232, LGC)
a. Provinces 1 %; Cities, Municipalities in MM 2%
b. SEF 1%; Idle land tax 5%; Special Assessments
ii. Fix assessment levels
iii. Provide for appropriations
iv. Adopt Schedule of Fair Market Values
1. Fair Market Value and Assessed Value Whats the diference?

9. Remedies in Local Taxation

a. Remedies of the Government
i. Administrative
1. Contents of Assessment
a. Meralco v. Barlis, 2 February 2002
2. Who is entitled to the notice of assessment?
a. Talusan v. Tayag, G.R. No. 133698, 4 April 2001
ii. Judicial
1. Period within which to collect
iii. Other provisions
1. Accrual of the tax
2. Time of Payment
3. Surcharges, Interests and Penalties

10. Remedies of the Taxpayer

Page 32 of 36
 i. Administrative
1. Appeal to the Secretary of Justice re newly enacted tax
ordinance (Section 187, LGC)
a. Drilon v. Lim, 4 August 1994
b. Reyes v. Court of Appeals, 1999
c. Hagonoy Market Vendors Association v. Municipality of
Hagonoy, Bulacan, G.R. No. 137621. February 6, 2002
d. Ty v. Trampe, 1 December 1995
2. Appeal to the Board of Assessment Appeals, (Section 226,
252, LGC)
a. Systems Plus Computer College v. Caloocan City, G.R.
No. 146382, August 7, 2003
b. Olivare v. Marquez, G.R. No. 155591, September 22,
2004
3. Protest of the Assessment (Section 226,252, LGC)
a. Cagayan Robina v. Court of Appeals, 12 October 2000
b. Meralco v. Barlis, 18 May 2001
c. Meralco v. Barlis, 2 February 2002
d. Meralco v. Barlis, 29 June 2004
e. National Power Corporation v. Province of Quezon and
Municipality of Pagbilao, G.R. No. 171586 25 January 2010
National Power Corporation Vs. The Provincial Treasurer of
Benguet, et al., GR No. 209303, November 14, 2016
4. Claim for refund (Section 253, LGC)
a. Period
5. Remedies from a denial of the protest and refund
a. mandamus is not a proper remedy: Habawel v. Court of
Tax Appeals, G.R. No. 174759, 7 September 2011
6. Redemption of Property Sold (Section 261, LGC; City Mayor of
Quezon City v. RCBC, GR No. 171033, 3 August 2010)
ii. Judicial
1. Questioning tax sale: Aquino v. QC, GR No. 137534, 3 August 2006;
NHA v. Iloilo City, GR No. 172267, 20 August 2008
2. Writ of execution nt necessary - Coca-Cola Bottlers Philippines, Inc. vs.
City of Manila; Liberty M. Toledo, in her capacity as Officer-in-Charge
(OIC), Treasurer of the City of Manila; Joseph Santiago, in his capacity as
OIC, Chief License Division of the City of Manila; Reynaldo Montalbo, in
his capacity as City Auditor of the City of Manila, G.R. No. 197561, April
7, 2014

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 IX. TARIFF AND CUSTOMS LAWS

A. Scope of Tarif and Customs Laws

B. Meaning of Tarif and Customs Duties
C. Purpose for imposition
D. Agency tasked with enforcement of Tarif and Customs Laws
a. Powers and Functions of the Bureau of Customs
E. What may be the subject of custom duties?
F. Classification of goods
1. Taxable importation
2. Prohibited importation
3. Conditionally-free importation

G. Requirements of importation
1. Beginning and ending of importation
2. Obligations of importer
a) Cargo manifest
b) Import entry
c) Declaration of correct weight or value
d) Liability for payment of duties
e) Liquidation of duties
f) Keeping of records

H. Importation in violation of tax credit certificate

1. Smuggling
2. Other fraudulent practices

I. Classification of duties
1. Ordinary/regular duties
a) Ad valorem; methods of valuation
(i) Transaction value
(ii) Transaction value of identical goods
(iii) Transaction value of similar goods
(iv) Deductive value
(v) Computed value
(vi) Fallback value
b) Specific
2. Special duties
a) Dumping duties
b) Countervailing duties
c) Marking duties
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 d) Retaliatory/discriminatory
duties
e) Safeguard

J. Valuation of Goods
a. Home Consumption Value
b. Transaction Value (Republic Act No. 9135)
K. Flexible Tarif
L. Cases that may be decided by the Bureau of Customs
a. Customs Protest Cases
i. Procedure
ii. Case: Nestle Philippines v. Court of Appeals, G.R. No. 134114.
July 6, 2001
iii. Concept of Automatic Review
b. Seizure and Forfeiture Cases
i. Proceeding In Rem
ii. Primary Jurisdiction
iii. Search of Dwelling House
iv. Some Illustrative Cases: Mison v. Natividad, GR No. 82526, 11
September 1992; Provident Tree Farms v. Batario, GR No. 92285, 28
March 1994; Zuno v. Cabredo, A.M. No. RTJ-03-1779. April 30,
2003

M. Remedies
1. Government
a) Administrative/extrajudicial
(i) Search, seizure, forfeiture, arrest
b) Judicial
(i) Rules on appeal including jurisdiction
2. Taxpayer
a) Protest
b) Abandonment
c) Abatement and refund

Cases:
Pilipinas Shell Petroleum
Corporation Vs. Commission on
Customs, GR No. 195876, December
5, 2016 (abandonment)

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 END OF OUTLINE

Prepared by: Rosemary G. Limmayog-Saldo

Bases of Outline:
Syllabus/Coverage - BAR Exams for Taxation (from SC)
NIRC, Reviewer by Mamalateo
Course Outline of Atty. Jason Barlis, Reviewer (Taxation)
Supreme Court Decisions

Information regarding Philippine tax laws, issuance and cases can be seen from
the following government websites:
http://www.ntrc.gov.ph/13-tax-laws/120-ra-amendments-to-nirc
http://www.dof.gov.ph/index.php/directory/bureau-of-customs/
www.bir.gov.ph/

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