Mindanao State University

College of Law
MSU–IIT Extension Class
Iligan City

SYLLABUS*
Tax 1 – Income Taxation

2nd Semester, A.Y. 2016-2017

Judge Jamel T. Mamutuk

III – Arellano
Thursday, 6:00 – 8:00 pm

Suggested References:

1. Vitug & Acosta, Tax Law and Jurisprudence

2. Dimaampao, Tax Principles and Remedies
3. Dimaampao, Basic Approach to Income Taxation
4. Aban, Law on Basic Taxation in the Philippines
5. Domondon, Taxation vol. I (General Principles)
6. Sabanan, Taxation Law Reviewer
7. Valencia & Roxas, Income Taxation
8. Casasola, National Internal Revenue Code Annotated
9. Mamalateo, Philippine Income Tax
10. Mamalateo, Reviewer on Taxation

1st Session: February 2, 2017

I. General Principles of Taxation

A. Definition and concept of taxation

 Paseo Realty and Development Corporation vs. CA, G.R. No. 119286, October 13, 2004
B. Nature of taxation
 CREBA, Inc. vs. Romulo, G.R. No. 160756, March 9, 2010
 The Philippine Guaranty Co., Inc. vs. CIR, G.R. No. L-22074, April 30, 1965
 National Power Corporation vs. City of Cabanatuan, G.R. No. 149110, April 9, 2003
C. Characteristics of taxation
 Sison vs. Ancheta, G.R. No. L-59431, July 25, 1984
 Tio vs. Videogram Regulatory Board, G.R. No. L-75697, June 18, 1987
D. Power of taxation compared with other powers
1. Police power
2. Power of eminent domain
E. Purpose of taxation
1. Revenue-raising
 Philippine Airlines, Inc. vs. Edu, G.R. No. L-41383, August 15, 2988
2. Non-revenue/special or regulatory
 Lutz vs. Araneta, G.R. No. L-7859, December 22, 1955
 Osmeña vs. Orbos, G.R. No. 99886, March 31, 1993

*adopted from the 2016 Bar Examinations’ Coverage for Law on Taxation
 Tax 1 Syllabus / Page 2
2nd Session: February 9, 2017

F. Principles of sound tax system

1. Fiscal adequacy
 Chavez vs. Ongpin, G.R. No. 76778, June 6, 1990
2. Administrative feasibility
3. Theoretical justice

G. Theory and basis of taxation

1. Lifeblood theory
 CIR vs. Algue, G.R. No. L-28896, February 17, 1988
2. Necessity theory
3. Benefits-protection theory (Symbiotic relationship)
4. Jurisdiction over subject and objects

H. Doctrines in taxation
1. Prospectivity of tax laws
 Hydro Resources vs. CA, G.R. No. 80276, December 21, 1990
2. Imprescriptibility
 CIR vs. Ayala Securities Corporation, G.R. No. L-29486, November 21, 1980

3rd Session: February 16, 2017

3. Double taxation
a) Strict sense
b) Broad sense
c) Constitutionality of double taxation
d) Modes of eliminating double taxation
 Victorias Milling vs. Municipality of Victoria, Negros Occidental, G.R. No. L-21183,
September 27, 1968
 Villanueva vs. City of Iloilo, G.R. No. L-26521, December 28, 1968

4. Escape from taxation

a) Shifting of tax burden
(i) Ways of shifting the tax burden
(ii) Taxes that can be shifted
(iii) Meaning of impact and incidence of taxation
b) Tax avoidance
c) Tax evasion

5. Exemption from taxation

a) Meaning of exemption from taxation
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
 Tax 1 Syllabus / Page 3

4th Session: February 23, 2017

6. Compensation and set-off

7. Compromise
8. Tax amnesty
a) Definition
b) Distinguished from tax exemption
9. Construction and interpretation of:
a) Tax laws
(i) General rule
(ii) Exception
b) Tax exemption and exclusion
(i) General rule
(ii) Exception
 Sea-Land Service, Inc. vs. CA, G.R. No. 122605, April 30, 2001
c) Tax rules and regulations
(i) General rule only
d) Penal provisions of tax laws
e) Non-retroactive application to taxpayers
(i) Exceptions

5th Session: March 2, 2017

I. Scope and limitation of taxation

1. Inherent limitations
a) Public purpose
 Pascual vs. Secretary of Public Works, G.R. No. L010405, December 29, 1960
b) Inherently legislative
(i) General rule
(ii) Exceptions
(a) Delegation to local governments
(b) Delegation to the President
(c) Delegation to administrative agencies
c) Territorial
(i) Situs of taxation
(a) Meaning
(b) Situs of income tax
(1) From sources within the Philippines
(2) From sources without the Philippines
(3) Income partly within and partly without the Philippines

(c) Situs of property taxes

(1) Taxes on real property
(2) Taxes on personal property
(d) Situs of excise tax
(1) Estate tax
(2) Donor’s tax
 Tax 1 Syllabus / Page 4

(e) Situs of business tax

(1) Sale of real property
(2) Sale of personal property
(3) Value-Added Tax (VAT)
d) International comity
e) Exemption of government entities, agencies, and instrumentalities

6th Session: March 9, 2017

2. Constitutional limitations
a) Provisions directly affecting taxation
(i) Prohibition against imprisonment for non-payment of poll tax
(ii) Uniformity and equality of taxation
 Tolentino vs. Secretary of Finance, G.R. No. 115455, October 30, 1995
(iii) Grant by Congress of authority to the president to impose tariff rates
(iv) Prohibition against taxation of religious, charitable entities,
and educational entities
 American Bible Society vs. City of Manila, G.R. No. L-9637, April 30, 1957
(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) President’s veto power on appropriation, revenue, tariff bills
(ix) Non-impairment of jurisdiction of the Supreme Court
(x) Grant of power to the LGUs to create its own sources of revenue
(xi) Flexible tariff 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
 Ormoc Sugar Company vs. Treasurer of Ormoc, G.R. No. L-23794 (1968)
(iii) Religious freedom
(iv) Non-impairment of obligations of contracts

J. Stages of taxation
1. Levy
2. Assessment and collection
3. Payment
4. Refund