UNIVERSITY OF NEGROS OCCIDENTAL RECOLETOS

SCHOOL OF LAW
Course Outline in Taxation II
Lorebette G. Grandea
2nd Semester, SY 2018-19
References:
The Law on Income Taxation by Benjamin D. Teodoro and Hector S. De Leon
The National Internal Revenue Code Annotated by de Leon, Sr. & de Leon, Jr.
Compendium of Tax Laws and Jurisprudence by Jose Vitug

I. INCOME TAXATION

A.General Principles of Income Taxation, Sec. 23

B. Concept of Income, taxable income

1. Definition, nature, kinds

a. Definition of income, taxable income

Sec. 31
CIR v. British Overseas Airway Corp., 149 SCRA 395 (1987)
Madrigal v. Rafferty, 38 Phil. 414 (1918)
Limpan Investment Corp. v. CIR, 17 SCRA 703 (1966)
Republic v. de la Rama, G.R. No. L-21108, 29 Nov. (1966)

b. Sources of Income

CIR v. Japan Airlines, 202 SCRA 450 (1991)

CIR v. BOAC, supra

c. Nature, distinguished from other taxes

Income tax v. property tax

Western Minolco Corp. v. CIR & CTA, G.R. No. L-61632, 16 Aug. 1983

d. Kinds: ordinary, capital

Sec. 22 (Z), 39 A

e. Periods and Methods of accounting for income and expenses

Calendar year, fiscal year

Sec. 22 (P,Q,R)
Chapter VIII, Sec. 43-47, 50

2. Computation of Taxable Compensation Income and Net Income

a. Items of gross income, Sec. 32 (A)

Compensation, CIR v. Henderson, 1 SCRA 649 (1961)

Gross income derived from the conduct of trade or business, Sec. 22
Gains derived from dealings in property, Rodriguez v. CIR, 28 SCRA 1119,
(1969)
Interests, royalties, prizes and winnings, Sec. 24 (B)
Rents/leases, Limpa v. CIR, supra.
Dividends, Republic v. de la Rama, supra.
CIR v. Manning, Simmons & CTA, G.R. No. L-28398, 6 Aug. 1975

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 Annuities, Art. 2021 NCC
Income from whatever source derived, CIR v. Javier, 199 SCRA 824 (1991)
Special items: recovery of accounts previously written off tax refunds

b. Allowable Deductions, Sec. 34 (A)

II. ESTATE AND DONOR’S TAX

A. Gross Estate, Sec. 84-85, 104, Deficiency defined, Sec. 93

Rev. Reg. Nos. 17-93, 02-2003

1. Inclusions

Decedent’s Interest, Art. 777, NCC

Transfers in Contemplation of Death, Art. 728-731, NCC
Alejandro v. Geraldez, 78 SCRA 245 (1977)
Dison v. Posadas, 57 Phil 465 (1932)
Vidal de Roces v. Posadaas, 58 Phil. 108

Revocable Transfer, Puig v. Peñaflorida, 16 SCRA 136 (1966)

Property Passing under a General Power of Appointment
Proceeds of Life Insurance, Sec. 85 (E)
Del Val v. Del Val, 29 Phil 534 (1915)
Prior Interests
Transfers for Insufficient Consideration

2. Deductions, Sec 86-97

a. Allowed to the Estate of a Citizen or a Resident, Sec. 86 (A)

Expenses, Losses, Indebtedness, and Taxes, requisites

Comm. v. CA, 328 SCRA 66 (2000)
Lorenzo v. Posadas, 64 Phil 353 (1937)
Sison v. Teodoro, 100 Phil 1055 (1957)
Johannes v. Imperial, 43 Phil 597 (1922)

Property Previously Taxed or Vanishing Deduction

Transfers for Public Use
Family Home
Standard Deduction
Medical Expenses
Amount Received by Heirs from Decedent’s Employer
Share in the Conjugal Property, Collector v. Fisher, 1 SCRA 93 (1961)
Tax Credit for Estate Taxes Paid to a Foreign Country, limitations
Collector v. Campos Rueda, 42 SCRA 23 (1971)

b. Allowed to Nonresident Estates, sec. 86 (B)

Expenses, Losses, Indebtedness, and Taxes, (note supra cases under a)

Property Previously Taxed or Vanishing Deduction
Transfers for Public Use
Shares in the Conjygal Property, Collector v. Fisher, supra.
Tax Credit for Estate Taxes Paid to a Foreign Country, limitations
Collector v. Campos Rueda, supra.

c. No Deductions to a Nonresident not an Citizen, Exceptions, Sec. 86 (D)

3. Exemptions, Notice of Death, Filing of Returns and Payment

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 De la Vina v. Collector, 65 Phil 236 (1938)

B. Donor’s Tax, Sec. 98-104, Rev. Reg. 17-93 and 02-2003

Purpose, Requisites, Coverage, Completion, Renunciation

1. Gift, Art. 725 & 728, NCC, Gross Gift, Deficiency defined, Sec. 104
2. Taxable Gifts, Tang Ho v. Board of Tax Appeals, 97 Phil 889 (1955)
3. Transfer for Less than Adequate or Full Consideration, Sec. 24D, 98, 100
Pirovano v. Commissioner, 14 SCRA 832 (1965)
4. Rates of Tax Payable by Donor, Beneficiary as Stranger, Sec. 99
5. Political Contributions, prohibited contributions
6. Cancellation of indebtedness without consideration
7. Exemption of certain gifts, Sec. 101
a. Gifts made by a resident, Sec. 101 A
b. Gifts made by a nonresident not a citizen, Sec. 101 B
c. Tax credit for donor’s taxes paid to a foreign country, Sec. 101 C

III. VAT

CIR v. Bicolandia Drug Corp., G.R. No. 148083, 21 July 2006

CIR v. Sekishui Jushi, Inc. G.R. No. 149671, 21 July 2006
CIR v. Magsaysay Lines 2006 G.R. No. 146984, 28 July 2006
CIR v. Trustworthy Pawnshop G.R. No. 149834, 2006

IV. LOCAL GOVERNMENT TAXATION

Book II, Title I, Sec. 128-164 Local Government Code

A. Nature of Authority of LGUs to impose taxes, Sec. 3 & 5, Art. X, 1987 Consti.

1. No inherent power to tax

Basco v. PAGCOR, 197 SCRA 52 (1991), supra

2. Legislative nature

a. Power to create revenues, Sec. 129

b. Local taxing authority, Sec. 132
c. Procedure for approval of local tax ordinance, Sec. 187
d. Publication and notice requirements, Sec. 188
e. Copy furnished to local treasurers, Sec. 189

B. Scope of Authority to Promulgate Revenue-Raising Measures, Sec. 129, 186

1. Authority of LGUs to adjust rates, Sec. 191

2. Power to grant tax exemptions, Sec. 192
3. Exceptions to withdrawn tax exemption privileges, Sec. 193

C. Fundamental Principles Governing the Exercise of Revenue-raising Measures

Sec. 130, Pepsi Cola v. City of Butuan, 24 SCRA 789 (1968), supra

D. Common Limitations of Taxing Powers of LGUs, Sec. 133; p. 443 Vitug & Acosta
R.A. 6810 & R.R. 6938 & BMBE

E. Scope of Taxing Powers of Provinces, Sec. 134-141

1. Tax on Transfer of Real Property Ownership, Sec. 135

2. Tax on Business of Printing and Publication, Sec. 136

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 3. Franchise Tax, Sec. 137
4. Tax on Sand, Gravel and other Quarry Products, Distribution, Sec. 138
5. Professional Tax, Sec. 139
6. Amusement Tax, Sec. 140
7. Annual Fixed Tax for Delivery Truck or Van of Manufacturers or Producers,
Wholesalers of Dealers, or Retailers in, Certain Products, Sec. 141

F. Scope of Taxing Powers of Municipalities, Sec. 142, note Situs, Sec. 150

1. Tax on Business, Sec., 143-147

2. Fess for Sealing and Licensing of Weights and Measures, Sec. 148
3. Fishery Rentals, Fees and Charges, Sec. 149

G. Scope of Taxing Powers of Cities, Sec. 151

H. Scope of Taxing Powers of Barangays, Sec. 152

I. Common Revenue-Raising Powers, Sec. 153

1. Public utility charges, Sec. 154

2. Toll Fees of Charges, Sec. 155
3. Community Tax, Sec. 156-164
4. RPT, Sec. 232

V. REAL PROPERTY TAXATION (RPT), Sec. 197-283

GSIS v. City Assessor of Iloilo City

A. Scope of Taxation, Sec. 197

B. Fundamental Principles, Sec. 198

C. Real / Immovable Property

1. Defined, Art. 415, NCC

2. Appraisal, Sec. 201, 224, 225
3. Classes for Assessment Purposes, Sec. 215
4. Special Classes of Real Property for Assessment, Sec. 216
5. Actual Use as Basis for Assessment, Sec. 217
6. Revision and property Classification, Sec. 219
7. Valuation, Sec. 220
8. Exemptions from RPT, Sec. 234

D. Assessment Appeals, Chapter 3, Title II, LGC

1. LBAA, Sec. 226-228

2. Action by the LBAA, Sec. 229
3. CBAA, sec. 230
4. Effect of Appeal on Payment of RPT, Sec. 231

E. Levy of Real Property, Sec. 232

1. Rates of Levy, Sec. 232

2. Additional Levy for Special Education Fund, Sec. 234
3. Additional Ad Valorem on Idle Lands, Sec. 236-237
4. Idle Lands Exempt from Tax, Sec. 238
5. Special Levy, Sec. 240-243
6. Remedies Against a Special Levy, Sec. 244
7. Accrual of Special Levy, Sec. 245

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 F. Collection of RPT, Chapter 6, Title II, LGC

1. Date and Accrual of Tax, Sec. 246

2. Collection, Sec. 247-249, 270
3. Discount for Advance Payment, Sec. 251
4. Payment in Installments, requisites, Sec. 250
5. Payment under Protest, Sec. 252
6. Refund of Overpayment, Sec. 253
7. Delinquency and Interests, Sec. 254-255
8. Remedies for the Collection of RPT, Sec. 256
a. Lien by LGU on Real Property, Sec. 257
b. Levy on Real Property, Sec. 258
9. Redemption of Real Property Sold, Sec. 261
10. Distribution of Proceeds, Sec. 271
11. Proceeds of Tax on Idle Lands, Sec. 273
12. Condonation or Reduction of RPT and Interest by the Sanggunian, Sec. 276
13. Condonation by the President, Sec. 277

VI. TARIFF AND CUSTOMS CODE (TCC)

A. The Bureau of Customs (BOC)

1. Officials, Sec. 601

2. Functions and jurisdictions, Sec. 602-603
3. Commissioner to Make Rules and Regulations, Sec. 608
4. Powers of President
a. To Subject Premises to Jurisdiction of BOC, Sec. 606
b. To Open and Close any port, Sec. 702

5. Importation
a. When it Begins and When Deemed Terminated, Sec. 1202
b. Liability of Importer for Duties, Sec. 1204
c. Importations by Governments, Sec. 1205
d. Jurisdiction of Collector over Imported Articles, Sec. 1206-1207
e. Abatements or Refunds, Sec. 1701-1708
f. Abandonment of Imported Articles, Sec. 1801-1802
g. Persons having police Authority, Sec. 2203
h. Administrative Proceedings
1. Protest and Payment Upon Protest, Sec. 2308
2. Protest Exclusive Remedy, Sec. 2309
3. Form and Scope of Protest, Sec. 2310
4. Decision or Action by Collector in Protest & Seizure Cases, Sec. 2312
5. Review of Commissioner, Sec. 2313
6. Supervisory Authority of Commissioner and Secretary of Finance in
Certain Cases, Sec. 2315
7. Authority of Commissioner to make Compromise, Sec. 2316
i. Judicial Proceedings
1. Supervision and Control Over Judicial Proceedings, Sec. 2401
2. Review by the Court of Tax Appeals, Sec. 2402
j. Disposition of Property in Customs Custody
1. Liable to Deterioration, Sec. 2607
2. Unfit for Use or Sale or Injurious to Public Health, Sec. 2608
3. Contraband, Sec. 2609
4. Unsold Articles for Want of Bidders, Sec. 2610
5. Smuggled Articles, Sec. 2611

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