Professional Documents
Culture Documents
TAXATION LAW I
Course Outline Part 3
Income Taxation Fundamental Matters
General References:
Republic Act No. 8424
Revenue Regulations No. 2-40
Revenue Regulations No. 2-98
Jurisprudence
I. INCOME TAXATION
A. Definition
B. Basis
1. Lifeblood Doctrine (Necessity Theory)
2. Symbiotic Relationship (Benefits-Protection Theory)
a. Partnership Theory
CIR vs. Lednicky; G.R. Nos. L-18169, L-18262, L-21434, 31 July 1964
b. Protection Theory
CIR vs. BOAC; G.R. Nos. L-65773-74, 30 April 1987
c. Theory of Favorable Business Climate
CREBA vs. Romulo; G.R. No. 160756, 09 March 2010
C. Systems
1. Global
2. Schedular
3. Mixed (Semi-Global or Semi-Schedular)
A. Definition
B. Nature
C. Functions (Purposes)
Case: Madrigal vs. Rafferty; G.R. No. L-12287, 07 August 1918
V. INCOME
A. Concept
Revenue Regulations No. 2, Sec. 36
Sec. 32(A), NIRC
a. Income vs. Capital
b. Return on Capital vs. Return of Capital
Cases:
1. Fisher vs. Trinidad; G.R. No. L-17518, 30 October 1922
2. Conwi vs. CTA; G.R. No. 48532, 31 August 1992
3. Eisner vs. Macomber; 252 U.S. 189 (1920)
4. CREBA vs. Romulo; supra.
J. All-Events Test
CIR vs. Isabela Cultural Corp.; G.R. No. 172231, 12 February 2007
c. Realization Principle
Realization vs. Recognition
Sec. 38, Revenue Regulations No. 2-40
A. Compensation
B. Business Income (Exercise of Profession)
C. Passive Income
D. Capital l
1. Classification of Taxpayers
A. INDIVIDUAL
1. Citizen
a. Resident Citizen
b. Nonresident Citizen
2. Alien
a. Resident Alien
b. Nonresident Alien Engaged in Trade or Business within the
Philippines
c. Nonresident Alien Not Engaged in Trade or Business within the
Philippines
B. CORPORATION
1. Domestic Corporation
2. Foreign Corporation
a. Resident Foreign Corporation
b. Nonresident Foreign Corporation
C. PARTNERSHIP
Ordinary Partnership
General Professional Partnership
Joint Venture and Consortium
Case:
Madrigal vs. Rafferty; supra.
D. ESTATE
E. TRUST
F. CO-OWNERSHIP
B. ACCOUNTING METHODS
1. General Methods
a. Accrual Basis
b. Cash Basis
2. Installment Method
3. Deferred Payment Method
4. Percentage of Completion Method
5. Outright and Spread-Out Methods
6. Crop Year Basis
7. Hybrid Method
Consolidated Mines vs. CTA; G.R. Nos. L-18843 & L-18844
Filipinas Synthetic Fiber vs. CA; G.R. Nos. 118498 & 124377, 12
October 1999
C. TRANSFER PRICING
D. ARMS LENGTH PRINCIPLE
IX. WITHHOLDING TAX SYSTEM
B. WITHHOLDING OF VAT
C. WITHHOLDING AGENT
D. CASES
D. TIMIE OF WITHHOLDING
E. RETURN AND PAYMENT