PCU Bar Operations 2019
TAXATION LAW LAST MINUTE TIPS
TAX EXEMPTION OF EDUCATIONAL
INSTITUTION
Guide: Is it nonstock / proprietary
a. If proprietary = taxable (preferential
rate only of 10% on the income)
b. If nonstock / non-profit
i. Use in educational purposes
(Exempted from Income Tax
and VAT)
ii. If used other than educational
purposes it will be
TAXABLE
 In the case of CIR vs De Lasalle
Issue: W/N DLSU’s income and revenues
proved to have been used actually, directly, and
exclusively for educational purposes are exempt
from duties and taxes
Ruling: Article XIV, Section 4 (3) of the
Constitution refers to 2 kinds of institutions; (1) non-
stock, non-profit educational institutions and (2)
proprietary educational institutions. DLSU falls on
the first category. The difference is that The tax
exemption granted to non-stock, non-profit
educational institutions is conditioned only on the
actual, direct and exclusive use of their revenues and
assets for educational purposes. While tax
exemptions may also be granted to proprietary
educational institutions, these exemptions may be
subject to limitations imposed by Congress.
The tax exemption granted by the Constitution to
non-stock, non-profit educational institutions, unlike
the exemption that may be availed of by proprietary
educational institutions, is not subject to limitations
imposed by law.
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Article XIV, Section 4 (3) does not require that the
revenues and income must have also been sourced
from educational activities or activities related to the
purposes of an educational institution. The phrase all
revenues is unqualified by any reference to the
source of revenues. Thus, so long as the revenues
and income are used actually, directly and
exclusively for educational purposes, then said
revenues and income shall be exempt from taxes
and duties.
Court laid down the requisites for availing the tax
exemption under Article XIV, Section 4 (3), namely:
(1) the taxpayer falls under the classification non-
stock, non-profit educational institution; and
(2) the income it seeks to be exempted from taxation
is used actually, directly and exclusively for
educational purposes.
We find that unlike Article VI, Section 28 (3)
of the Constitution (pertaining to charitable
institutions, churches, parsonages or convents,
mosques, and non-profit cemeteries), which exempts
from tax only the assets, i.e., "all lands, buildings,
and improvements, actually, directly, and exclusively
used for religious, charitable, or educational
purposes...," Article XIV, Section 4 (3) categorically
states that "all revenues and assets... used actually,
directly, and exclusively for educational purposes
shall be exempt from taxes and duties."
TAX EXEMPTION OF EDUCATIONAL
INSTITUTION VS RELIGIOUS AND VS
CHARITABLE INSTITUTIONS
 Exemption of Revenue and Assets for
Educational Institution vs Exemption of Real
Estate for Religious and Charitable Institution
 Exemption on Income Tax and VAT
 PCU Bar Operations 2019
TAXATION LAW LAST MINUTE TIPS

 Exemption on Import Duties PRELIMINARY ASSESSMENT NOTICE (PAN)

WAIVER OF PRESCRIPTION
For a VALID Waiver, it should have:
1. like a contract where there is CONSENT
(there is voluntary offer of Taxpayer and
valid acceptance of BIR, made known to
each other)
2. Offer and Acceptance should be within the 3
year prescription period
3. Should be signed by authorized representative by
the board of directors in terms for corporation
4. Should be signed by authorized BIR officer
5. Should have three dates indicating the (1) year of
audit, (2) until when to audit, (3) date of issuance
of waiver
NOTES:
 Power of BIR to Audit Taxpayers
filed returns:
General Rule: 3 years from filing
Exemption: 10 years from discovery
of fraud by BIR.
 CIR vs Next Mobile
o Both Taxpayer and BIR are at
fault in issuance of waiver,
hence prescription does not
set in.
 If BIR is only at fault, the Taxpayer
can still question the assessment, if
there is partial payment, only the
unpaid assessment can be questioned
/ FINAL ASSESSMENT NOTICE (FAN)
For a PAN/ FAN, it should have:
1. the facts and the law should be stated
2. date when the Taxpayer should pay
3. the amount of taxes assessed
NOTES:
 If TP denies acceptance of FAN, BIR
shoulders the burden of proof of
service of PAN/ FAN
 Registered mail = upon 5 days
deemed received
 Issuance of PAN is pre-requisite of
FAN, otherwise FAN will be VOID =
GENERAL RULE
 EXEMPTIONS OF NOT ISSUING
PAN
 Mathematical error
 Withholding tax
 Excess Creditable WT (if
carried over and claimed for
refund)
 Deficiency Excise Tax
 Buyer is Tax Exempt and
Seller is Taxable
 Can BIR can Collect without issuance
of PAN/ FAN? Yes, if it based on
falsity, omission, fraud
LETTER OF AUTHORITY (LOA) / LETTER
NOTICES (LN)

For a LOA/ LN to be VALID, it should have:

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TAXATION LAW LAST MINUTE TIPS

1. Name of Revenue Officer / Group 1. Not licensed by the SEC

Supervisor who will render the audit
2. Period covered of the audit
3. Type of taxes to be audited
4. Date of Issuance
5. Signed by authorized BIR officer
NOTES:
 In case there is a change in the Revenue
Officer / Examiner, a new LOA should
be issued, otherwise INVALID
 If beyond 30 days the LOA was issued,
there should be revalidation of LOA
 If only notice or agreement was issued,
still considered INVALID
 In the case of Medicard
o Ruling: Violates due process
because what was issued was
only a LN instead of LOA (as
specified in the tax code)
Hence, assessment is VOID.
o LOA’s validity is 30 days upon
date of issuance (should be
served to Tax payer within 30
days, otherwise LOA/LN is
VOID)
VALUE ADDED TAX
For a VAT ZERO RATED to be applied by the
Seller of Service / Goods:
 Provider of service should prove that
the receiver is a foreign entity (not
doing business in the Philippines)
How to prove that an entity is not
doing business in the Philppines:
2. No exclusive agent in the
Philippines
 Provider of goods:
1. Zero rated Sales Invoice was
issued
2. Documents proved that delivered
abroad
3. It was paid for in foreign currency
by the foreign buyer
 If any of above is not complied
with, it cannot be considered
Zero-rated VAT Sale
CTA JURISDICTION
 Taxpayer has 30 days to file petition
for review upon receipt of denial of
BIR OR lapse on 180 days which the
BIR should act on the protest
 CTA Division has jurisdiction on the
petition for review filed by the
Taxpayer
 After CTA Division rendered its
decision Motion for Recon or Motion
for New Trial should be filed by the
taxpayer if Petition for review is
denied within 15 days upon receipt of
denial to CTA En Banc
 Motion for Recon or Motion for New
Trial is under the Jurisdiction of CTA
En Banc
 If Motion for New Trial is granted and
there is new decision issued by CTA
Division, Taxpayer should file a new
motion for recon before going up to
CTA En Banc

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CONFIDENTIALITY NOTICE: The contents of this document and any attachments herewith are intended solely for the PCU
College of Law Alumni who are taking the bar Examinations this November 2019 and may contain confidential and/or
privileged information and may be legally protected from disclosure.
 PCU Bar Operations 2019
TAXATION LAW LAST MINUTE TIPS

LOCAL GOVERNMENT UNIT

 Supreme Court Ruled that IRA

(Internal Revenue Allotment), share
of local government on taxes
includes Customs duties
 Constitution said that LGU has
power of taxation subject to limit
impose by the Congress, but the
disposition of the taxes they made is
the sole discretion of the LGU not by
Congress
 Constitution does not say that there is
a limitation as to what taxes will be
included in the IRA

FINAL ADVICES:

ALWAYS GIVE THE LEGAL BASIS

Follow the LIRAC = Legal Issue, Rule
Application, Conclusion

USE BLUE INK PEN

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CONFIDENTIALITY NOTICE: The contents of this document and any attachments herewith are intended solely for the PCU
College of Law Alumni who are taking the bar Examinations this November 2019 and may contain confidential and/or
privileged information and may be legally protected from disclosure.