JUSTICE DIMAAMPAO
LAST MINUTE LECTURE
TAXATION
CUSTOMS MODERNIZATION AND TARIFF ACT (RA 10863)
FAVORITE BAR QUESTIONS [SIFTS]
- Smuggling
- Importation
- Flexible Tariff Clause
- Transaction Value
- Special Customs Duties
SMUGGLING
- Refers to the fraudulent act of importing any goods into the Philippines,
- or the act of assisting in receiving, concealing, buying, selling, disposing or
transporting such goods, with full knowledge that the same has been
fraudulently imported, or the fraudulent exportation of goods.
- Goods referred to under this definition shall be known as smuggled goods
OUTRIGHT SMUGGLING
- The goods are imported without complete customs prescribed
importation documents
TECHNICAL SMUGGLING [FFE-NKQQW]
- Technical Smuggling refers to the act of importing goods into the country by
means of fraudulent, falsified or erroneous declaration of the goods to its
nature, kind, quality, quantity or weight, for the purpose of reducing or
avoiding payment of prescribed taxes, duties and other charge
- Current events:
o Shabu recent case = considered technical smuggling
IMPORTATION
- act of bringing in of goods from a foreign territory into Philippine territory,
whether for consumption, warehousing, or admission as defined in this Act
- Sec. 103. When Importation Begins and Deemed Terminated.
- BEGINS: Importation begins when the carrying vessel or aircraft enters the
Philippine territory with the intention to unload therein.
- TERMINATED: Importation is deemed terminated when:
1. IF DUTIABLE - The duties, taxes and other charges due upon the
goods have been paid or secured to be paid, at the port of entry
unless the goods are free from duties, taxes and other charges and
legal permit for withdrawal has been granted: or
2. IF DUTY FREE - In case the goods are deemed free of duties,
taxes and other charges, the goods have legally left the jurisdiction
of the Bureau.
Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE
FLEXIBLE TARIFF CLAUSE
- Read in relation to Art 6, Section 28, par 2 of the Consti
- Criteria:
o General Welfare
o National Security
o National Economy – deleted already in the new law
- Flexible Clause refer to the power of the President upon recommendation of
the National Economic and Development Authority (NEDA):
1. to increase, reduce or remove existing protective tariff rates of
import duty, but in no case shall be higher than 100% ad valorem;
2. to establish import quota or to ban importation of any commodity
as may be necessary; and
3. to impose additional duty on all import not exceeding 10% ad
valorem, whenever necessary
- GR: Taxation cannot be delegated
o E: When the Constitution allows delegation – such as Tariff Powers
delegated to the President
- Flexible – simply means to increase or decrease
METHODS THAT MAY BE USED IN MAKING ASSESSMENT [TIS-DCF]
1. Transaction value
o Price actually paid or payable for the goods when sold for export to
the PH
2. Transaction value of identical goods
o The dutiable value shall be the transaction value of identical goods
sold for export to the Philippines and exported at or about the same
time as the goods being valued.
o Identical goods - refer to goods which are the same in all respects,
including physical characteristics, quality and reputation.
3. Transaction value of similar goods
o the dutiable value shall be the transaction value of similar goods
sold for export to the Philippines and exported at or about the same
time as the goods being valued.
o Similar goods - refer to goods which, although not alike in all
respects, have like characteristics and similar component materials
which enable them to perform the same functions and to be
commercially interchangeable
4. Deductive value
o
5. Computed Value
6. Fall back value
1
SPECIAL CUSTOMS DUTIES [MDS-CD] EXEMPTION
1. Marking Duty - RETURNING RESIDENTS
2. Dumping Duty o shall refer to nationals who have stayed in a foreign country for a
- When goods from a different country are imported to the Philippines at a low period of at least 6 months
price, the importer has to pay additional amount - New threshold amount:
3. Safeguard duty (new) o 150k – stayed abroad for less than 5 years (150-5)
4. Countervailing duty o 250k – stayed abroad for less than 10 years (250-10)
- Goods being imported in the Philippines enjoy subsidy in the country where o 350k – stayed abroad for more than 10 years (350 – more than 10)
it came from, the importer shall pay the amount of subsidy enjoyed by it - It shall not be in commercial quantities
5. Discriminatory Duty - It is not intended for barter, sale or for hire
- Power belong to impose DD belongs to the President
- 100% threshold amount.
- If Philippine goods are discriminated against, the President can impose
additional amounts.

SUMMARY REMEDIES
- Section 1134
- Old law: No remedies of distraint, levy and constructive distraint
- New law:
o Now, they are available
o Enforcement of tax lien is no longer in the new law
- New administrative remedies
o Distraint
o Levy
o Constructive distraint

COMPROMISE
- Forfeiture proceedings cannot be compromise
o E: only surcharges and fines

AUTOMATIC REVIEW
- Decision of the Secretary of Finance shall be automatic upon the Bureau
o Expanded jurisdiction of CTA law: Decision of SF shall be
appealable to the CTA à OPINION OF DIMAAMPAO
o « ü Customs law: The decision of the SF is final on the Bureau
of customs hence no longer appealable à FOLLW THIS VIEW
- Generalia specialibus non derogat – general provision must yield to special
law
o So, which will prevail? The jurisdiction of the CTA law or the
new law?
- 2 views:
• A new law may repeal a previous law. Hence,
CMTA law applies
• It may still be appealed to the CTA under the
maxim “special law may prevail over a general
law.” The CMTA being a general law, it is the
law on the expanded jurisdiction (special law)
which prevails

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 2

TAX REMEDIES DISTRAINT VS LEVY

4 MAJOR TAX LAW DISTRAINT LEVY

- NIRC Personal Property Real Property
- LG taxation ü Constructive Distraint X
- RPT
- Customs duties PRESCRIPTIVE PERIOD
- SECTION 203
o If the return has been amended:
REMEDIES OF THE GOVERNMENT - Substantial amendment:
1. TAX LIEN • Reckoning period is from the filing of the
2. DISTRANT amended return
3. LEVY - Not substantial:
• Filing of original return
NIRC LGT RPT CUSTOMS - Grounds to suspend running of PP
DUTIES o Waiver of the State of Limitations
TAX LIEN ü ü ü X - RMO 20-90
(no longer - The one signing the written waiver must be DULY
available AUTHORIZED
here) - If it is signed by an accountant who was not authorized
DISTRAINT ü ü X ü by the board = X
(Subject of (now - Must be approved by the BIR
distraint is PP) available – - Made before the expiration of the PP
constructive - Must be in writing
and actual - Criminal cases PP
distraint) o 5 years from the discovery of such violation AND the institution of
LEVY ü ü ü ü judicial proceedings
(new – now - Judicial proceedings – includes referral of the case to
available as the city prosecutor
admin
remedy)

JURISPRUDENCE

If there are 2 claimants over such property, who is preferred?

- The claim of the government predicated on TAX LIEN is SUPERIOR over
other claims

Distraint or levy will eventually result in a public sale

- Is notice to the delinquent tax payer indispensable?
o Yes. Personal notice is mandatory. Publication is not enough.
o This is a proceeding in personam and without personal notice to
the
o Hence, personal notice to the delinquent tax payer is mandatory
despite publication of the public sale

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 3

ADMINISTRATIVE REMEDIES OF THE TAXPAYER COMPROMISE
- What cases cannot be compromised? (EXCLUSIVE LIST) – [AFP- CREW]
NIRC LGT RPT CUSTOMS 1. Criminal cases ACTUALLY FILED in court
DUTIES 2. FINAL JUDGMENT of the court
PROTEST ü ü ü ü - If the request for compromise is based on doubtful
30d 60d 30d from 15d from validity = X COMPROMISE ANYMORE
payment payment - If the request for compromise is financial inability = ü
BIR Local STILL COMPROMISE
Treasurer Customs 3. PAYMENT in installment approved by the BIR
Commissioner - Once you agree to this kind of arrangement, you can no
longer ask for compromise
PUP PUP 4. CRIMINAL FRAUD
REFUND ü ü ü ü - Contrary to public policy
2y from 2y from 2y from 12 months 5. REFORM
payment payment or payment or from date of - Either a request for reinvestigation or reconsideration
from date he from date he payment of - ü estopped already
is entitled is entitled duties and 6. ESTATE TAX cases
thereto thereto taxes 7. WITHHOLDING tax case
(supervening (supervening - Expressio union est exclusio alterius
events are events are
considered) considered) GROUNDS FOR COMRPORMISE
COMPROMISE ü X X ü 1. Doubtful validity
With the o Jeopardy assessment
approval of o « Assessment based on BEST EVIDENCE OBTAINED
the - Best evidence obtained
_________ • Documents or records
- What may comprise or sources of best evidence
obtained? [COA]
1. Corporate Documents or records of
accounting
PROTEST 2. Other taxpayers similarly situated
- NIRC - Request for investigation or reconsideration with the BIR 3. Agencies of the government – records that
- LGT - Filed with the Local treasurer they may have given such as BSP, BOC,
- RPT – payment under protest is required Tariff Commission
- Customs – payment under protest (PUP) to the Customs Commissioner - Why are these doubtful?
rd
o Old rule: Protest with the Collector of Customs • Because they come from 3 persons
o New rule: Protest the ruling of the Commissioner of Customs • In tax compromise cases,
- What are the instances when the BIR may make
REFUND best evidence obtained? [FINE]
- NIRC – 2y from payment 1. False report submitted by the TP
o Regardless of any supervening event or cause 2. Incomplete report
- LGT – 2y from payment or date he is entitled thereto 3. No report at all
o ü supervening events are considered 4. Erroneous report
- RPT – 2y from payment or date he is entitled thereto 2. Financial incapacity
o ü supervening events are considered
- Customs - 12 months from date of payment of duties and taxes

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 4

SOME CASES
- NOVEL ISSUE
o CIR VS LIQUIGAS
- The decision of the BIR commissioner on disputed
assessment is not valid if it does not state the law and
facts of the case
- Does that carry with it nullity of the FAN?
o NO. It does not affect the validity of the FAN
as long as the FAN clearly states the fact and
the law
- 180 day period
o If no decision has been rendered (INACTION)
- LASCONA LAND DOCTRINE
o If there is such inaction on the part of the
BIR, these are the 2 MUTUALLY
ALTERNATIVE REMEDIES:
1. Appeal within 30d from the lapse or the
expiration of the 180d period OR
2. Wait for the decision and then appeal within
30d after receipt of the decision to the CTA
TAX REFUND
229 – Refund of Internal Revenue 112
Taxes EXCEPT VAT Refund/ Credit of VAT
Summary: TP à BIR à CTA (Div) à Summary: TP à BIR à CTA (Div) à
MR à CTA (En Banc) à SC MR à CTA (En Banc) à SC
2 years from date of payment – file 2 years from the close or end of the
written claim with BIR taxable quarter when such sales
were made – file written claim with
BIR
*No period for the BIR to render a
decision *ü period for BIR to render a
decision (120d)
2 years from date of payment AND If a decision has been rendered from
30d from receipt of decision from BIR 30d from receipt of the decision à
– petition for review to the CTA you may file a petition for review with
division the CTA (42)
If no decision has been rendered
within the 120d period à 30d from
the lapse of the 120 period (42)
Mandatory to file a MR of the CTA Mandatory to file a MR of the CTA
division within 15d division within 15d
CTA En Banc CTA En Banc
SC SC
Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE
If the one filing the refund is a CORPORATE TAX PAYER
- Count the 2-year period from the date of Final Adjustment Return (FAR)
st nd
o Disregard the 1 , 2 and quarterly return
o There is only payment in contemplation of law upon the filing of
the FAR
- What if there is a leap year?
o Do not apply the civil code
o Lex posterior derogat.. – the recent law prevails the old law
- Administrative law: 1 year = 12 months regardless of
leap year
- Jurisprudence on period
o If the BIR does not render a decision à ü appeal
o For VAT à Wait for 120d to appeal
- When a TP files a written claim for refund for VAT à it
must make sure that the documents are complete
- Reckoning date of the 120d period to appeal is the day
of submission of the complete documents
- When is the 120d period mandatory? When is it optional?
o Mandatory: AICHI DOCTRINE
- October 6, 2010
- It is mandatory because of the principle of exhaustion of
administrative remedies – wait for the decision of the
BIR before you can appeal to the CTA division
o Optional:
- December 10, 2003 - October 6, 2010
(12/10/3-10/6/10)
- X need to wait for lapse of 120-day period to appeal
- « Petition for review to the CTA was filed beyond the 2-year period from the
close of the taxable quarter when such sales were made
o As long as the appeal was filed within 30d from the receipt of the
decision or lapse of 120d = ü considered on time
o The 2 year period does not apply in a claim for refund involving
VAT
- REMEMBER! MR is MANDATORY!
o 15 days to file MR
o CTA Div à MR à CTA division à Appeal to CTA En Banc
o If the MR is denied, what is the period to file an appeal?
- 15d from receipt of decision denying MR
o PROHIBITED
- MR of BIR decision is prohibited
o MANDATORY
- MR of the decision of the CTA division is mandatory
before going to the CTA En Banc
o OPTIONAL
- MR of CTA En Banc decision is optional before going to
the SC
5
 - The CTA is a specialized court. It is designated to
EXTRA NOTES: resolve tax issues.
- EXCISE TAX
o BERSAMIN CASE: Excise tax on petroleum products is
essentially a tax on property RTC INTERLOCUTORY ORDER
- KNOW THE JURISDICTION OF THE CTA - It can now be taken cognizance of by the CTA En Banc
- « DOCUMENTARY STAMP TAX - Via Rule 65 (GAD)
o Refund of DST
o Reckoning period of refund: CTA DIV. INTERLOCUTORY ORDER
- Date of payment – date of imprinting such documentary - Pacquiao Case
stamp on the taxable document - CTA Div interlocutory order à it may be appealed to the SC via 65 (GAD)
o Not with the CTA En Banc
- But X allowed CTA Div (IO) à SC via 45
JURISDICTION
DECISION OF THE SF ON AUTOMATIC REVIEW CASES
« 8 DECISIONS APPEALABLE TO THE CTA [BIR-CTA-SC] - Appealable to the CTA
- Decision of the BIR
- Inaction of the BIR DECISION OF THE SF ON BIR RULING, CIRCULARS, ORDER
- Decision of the RTC on tax case - August 16, 2016
- Decision of the Customs Commissioner o Beyond the cut-off
- Decision of the Secretary of Trade and Industry on Countervailing and o It is appealable to the CTA now!!!
Dumping duties involving non-agri products - Before this, it was appealable to the OP
- Sec. of Agriculture Products involving Agri products on the impositing of
countervailing and d CTA EN BANC
- Decision of the SF on automatic review cases - X annulment of judgment of CTA division (from beda pre-week)
- Decision of the CBAA
DECISIONS APPEALABLE TO THE CTA [FLAW]
TAKE NOTE: 1. FINAL decision
- Directly appealed to the CTA En Banc 2. LETTER of demand
o RTC (AJ over local tax cases) o AYALA CASE – denial of request for
- E: RPT cases decided by the RTC (from beda pre- reinvestigation/reconsideration = ü final action appealable to the
weel) CTA
o CBAA 3. ACTION in court
- 30d o When an action is filed in court, then it will result to the denial of
- The others request for R/R = ü appealable to the CTA
o CTA in division 4. WARNING that this is the last demand

JB CASE: PAGCOR CASE « BAR QUESTION:

- Where do you appeal? - Request for reconsideration was filed. The BIR made no action or decision.
- Generial specialbus non derogat The BIR filed an action in court instead of rendering a decision on the
- PD 242 request for reconsideration. What are your remedies?
o Confers upon the SJ to resolve controversies involving agencies o The BIR is under no obligation to render a decision.
of the government o The filing of an action in court amounted to an implied denial of
- PAGCOR insists that it should be settled by the SJ the request for reinvestigation or reconsideration
- SC: o Remedy: Appeal the denial to the CTA in division
o PAGCOR is not correct! o What about the case filed in court?
o PD 242 took effect on July 9, 1973 = SJ - File a motion to dismiss because such case is
o RA 1125 took effect on June 16, 1954 = CTA premature since there is a pending appeal
o ü If you apply generalia specialibus non derogate = CTA has
jurisdiction

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 6

PACQUIAO CASE
- GR: No injunction rule
o E: In the CTA in the exercise of AJ
- 2 requisites for grant of injunction
o Collection shall jeopardize the interest of the government or the tax FAVORITE BAR QUESTION:
payer - Aggregate period of more than 180 days
o Bond o It does not say continuous or uninterrupted
- Cash bond or
- surety bond not more than 2x the amount of the value of o As long as the stay of the RA is more than 180d, he is considered
property a NRA-ETB
- GR: Bond is needed! o If more than 180d (NRA-ETB) = ü claim tax deduction
o E: The Pacquiao case is an exception to the above rule – no need
for bond in the following cases REQUISITES OF TAXABLE INCOME [PNR]
- COLLECTOR VS ABELLENA 1. Profit or gain
o If the method employed by the BIR in the 2. Not excluded by law or treaty
collection of his taxes is NOT valid or is 3. Realized whether constructively or actually
improper or unjust
o INVALID COLLECTION NOT TAXABLE [PALMS] – not taxable because there is no gain or profit
- COLLECTOR VS ZULUETA 1. Proceeds of life insurance
o If the tax has already prescribed 2. Amount return of premium
o PRESCRIPTION - Return of capital
o JB: If the bond required is 5x the net 3. Liquidating dividend
worth à the bond may be - Return of capital
dispensed with 4. Moral and exemplary damages
o Reason: The court is requiring a bond to restrain the collection of - They do not constitute gain
taxes is INCONSISTENT, ABSURD AND ILLOGICAL if the tax is 5. Stock dividend
improperly or unjustly collected or it has prescribed - No gain or profit
- Mere surplus of capital account

CONSTITUTE GAIN BUT THEY ARE EXCLUDED ITEMS BECAUSE OF LAW

INCOME TAX [GRAFTERS]
1. Gifts
INDIVIDUAL CORPORATE - Donations IV and MC are excluded although they constitute gain
- IV = donation
SOURCES Income from within Income from within
- MC =
- E: RC – within - E: DC – within
2. Retirement Gain
and without and without
- Requisites:
TAX BASE Net income (with deduction) Net income (with o 50 years of age at the time of retirement
- E: NRA-NETB – deductions) o Only 1x
Who can claim gross (flat 25%) - E: NRFC – o Reasonable private benefit plan
deductions? gross o At least 10 years of service
TAX RATE Graduating/Progressive rate Uniform – 30% 3. Awards and prizes
– 5-32% - If it is received by an athlete:
FILING OF ITR ü need to file ITR ü need to ITR o Even must be sanctioned by the National Sports
- E: NRA-NETB – - E: NRFC – taxed Association
taxed at a final at a final tax rate - If received in recognition of SCRA-LIC
tax rate hence the hence the FT 1. No condition
final tax withheld withheld 2. Not required to perform an act to join the contest
constitutes final constitutes final 4. Investment by FOREIGN government
tax payment tax payment th
5. « 13 month pay which may include Christmas bonus

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 7

 - 82k threshold CAPITAL GAINS TAX – 6%
- RECENT CASE: - The subject is a capital asset
o MW earners that receive benefits in excess of 82k are - It must be a real property
still considered as MW earners. o It is not used in trade or business
o They are still exempted from the filing of ITR o If used in T/B = ordinary
o He is only liable to pay for the excess - Tax Base:
6. EXCHANGE o Higher amount between the gross selling price and the zonal
- Bonds, notes, cert of stock – term is more than 5 years à any gain derived value
from such exchange, notes, cert of stock or indebtedness = EXEMPT § E: Low cost housing programs in the government – no
7. Gain derived from the REDEMPTION OF SHARES OF STOCK issued by Mutual need to make any comparison
Finance Company • E to E: It has been the subject of public sale
8. SEPARATION pay à the amount paid by the highest bidder
- It is exempt as long as it is received on account of circumstances beyond shall be the basis of the 6% CGT
the control of the EE
- Ex. Terminal Leave Pay Section 24 (D) – Section 27 (D)(5) –
INDIVIDUAL TP DOMESTIC CORPORATION
DERIVED FROM WHATEVER SOURCES[MRT –CID] – ü TAXABLE Subject Subject of sale must be a capital asset, specifically RPT not
- Basis: CLAIM OF RIGHT DOCTRINE – all other items derived from other used in T/B
sources are taxable. The enumeration of the items of gross income is not
exclusive. This is also the reason why illegal gains are taxable Real Property «Covers specific real
1. « Payment by MISTAKE properties NOT used in T/B :
o GR: Not taxable - Lands
§ E: ü taxable because of the CONTROL TEST – even if - Buildings
it is received by mistake, if you have control over the (See BEQ#4)
disposal of such amount, it shall be taxable TP/SELLER Applies to INDIVIDUAL Applies to DOMESTIC
2. RECOVERY BAD DEBTS written off TP/SELLER CORPORATION
o H e receives a tax benefit. It reduces his previous tax liability.
3. TAX REFUND SALE Includes: Only UNCONDITIONAL sale
o The fund refunded must be a taxable tax. It reduces the - Unconditional
taxpayer’s tax liability - Conditional Sale
4. CANCELLATION OR FORGIVENESS OF INDEBTENESS - Pacto de retro sale
o It may amount to compensation if income if the cancellation or SELLER IS Seller has the option to avail X available if the seller is a DC
forgiveness is made in consideration of services rendered GOVERNMENT of either:
5. ILLEGAL gains (including - 6% CGT or
o Pursuant to the test of CLAIM OF RIGHT GOCC) - progressive rate of
6. DAMAGES 5-32%
o Damages = representing lost earnings are subject to tax TAX ü tax avoidance scheme X tax avoidance scheme
o Damages in the nature of moral and exemplary or compensatory AVOIDANCE provided provided
damages = X gain SCHEME
(Family home/ principal
residence - see BEQ #2) – see
below
TAX RATE 6% Final Tax
TAX BASE Gross selling price or zonal value, whichever is higher
Imposable on « Imposed on PRESUMED GAIN
- Gain by legal fiction or presumptive gain principle
- The tax base is gross selling price or zonal value,
hence take note that NO DEDUCTION IS ALLOWED!
-

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 8

 - « PRINCIPAL RESIDENCE o Affidavit explaining the circumstances about the nature of the
o The seller wants to sell his house and lot. He is asking you if there event
is a tax avoidance scheme that he can use. What will be your
advice? INTEREST INCOME FROM EXPANDED FOREIGN CURRENCY DEPOSIT SYSTEM
§ He can say that it is a sale of his PRINCIPAL
RESIDENCE provided the following requisites are Indivdiual Corporate
present: RESIDENT ü taxable ü taxable
§ Requisites: [U-18-30-10-E] NON-RESIDENT Exempt Exempt
1. Proceeds of the sale must be USED to
construct or purchase a new principal
residence DE MINIMIS BENEFITS – [CHEG]
2. The construction must be made within 18- - They are exempt because it is given to promote:
months from the date of sale 1. Contentment
3. 30d notice to the BIR from the date of sale 2. Heath
4. 10-year period – the exemption can only be 3. Efficiency
availed of once every 10 years 4. Good wills
5. «RR 17-2003 – Escrow agreement - They are of relatively small value
o The buyer and seller and authorized
agent bank and the revenue district 11 TAX EXEMPT DE MINIMIS BEENFITS [GOCC- REAL – PCG]
officer in charge must execute an 1. Gift
escrow agreement whereby the 6% o Christmas gift – 5k
CGT shall be deposited under an o Major anniversary gift – 5k
escrow account with the bank o
th
13 month pay – 82k
o Within 30d from the lapse of the 18 o Christmas Bonus – 82k
month period, the seller must prove 2. Overtime pay
that he used the amount for the o Including meal allowance – not more than 25% of the MW
constitution of a new principal 3. Cash benefits
residence à once proven, he can o Medical benefits given to dependents – 125k/month
withdraw the amount deposit in the 4. Clothing or uniform benefit
escrow account o 5k/yr
5. Rice subsidy/ allowance
o 1500/month
POSSIBLE QUESTIONS ON ENUMERATION: 6. E
o X more than 10k
ORDINARY ASSETS [PARIS] 7. Actual medical benefits of the
1. Property primarily held for sale to customers in the ordinary course of T/B o X more than 10k/year
2. Allowance for depreciation used in T/B – the asset must be depreciable 8. Laundry allowance
3. Real property used in T/B o 300 pesos/month
4. Inventory asset held in connection with T/B 9. & 10. Private employees/ Government Employees
5. Stock in trade which may be properly included in the inventory o Private employees
§ Exempt only up to the monetized value of the unused 10d VL
REQUISITES FOR DEDUCTIBILITY OF BUSINESS EXPENSES [BOYS] credits during the taxable year
1. Paid or incurred in carrying on the BUSINESS of the Tax Payer § So, SL credits are not exempt
2. ORDINARY AND NECESSARY to the business o Government Employees
3. Paid or incurred during the taxable YEAR § Monetized value of LEAVE CREDITS
4. It must be SUPPORTED by the record, documents or receipts • It makes no distinction anymore – whether vacation or
sick leave credits, irrespective of the number of days = ü
exempt
- CASUALTY LOSSES o Is there no violation of the equal protection of the laws?
§ NO! Because government employees render public service

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 9

10. Benefits granted under the CBA § What has been WITHDRAWN à
- Benefits under the CBA, including benefits under the productivity incentive • INCOME TAXABLE FROM OTHER
scheme, is exempt up to 10k RELATED SERVICES
• What comprises the other related
PERSONAL EXEMPTION services?
- Applies only to individuals o [ABJS]
- BASIC personal exemption - 50k 1. Accredited or licensed bingo or casino
o Regardless if the TP is single, head of family or married operations by private persons
- For every qualified dependent child (X more than 4) – 25K 2. Junket operations
o If the one who is claiming are legally separated spouse à it is the 3. Shows demo units
one who has the custody of the child who can claim the additional
personal exemption AIR CANADA CASE
- Who can claim the additional personal exemption if they are married? - Offline international air carriers which have no landing rights in the PH can
o GR: Head of the family – usually the husband still be taxed in the PH
o E: If the husband does not earn any income (palamunin) à it is the - Tax rate is 30%
wife who can claim it - Tax base is taxable income
• The wife shall ask the husband to execute a - Deductions are allowed
waiver in favor of the wife and thereafter, the - Purpose for this rule?
wife can claim the additional personal o PROTECTION THEORY
exemption o Because such airline receives protection from the PH government
o The flow of wealth came from the PH
« PERSONS WITH DISABILITY (PWD) o In consideration of such protection, the flow of wealth should share
- RA 10754 the burden of the government (BOAC CASE)
- Allows TP to claim 25k additional personal exemption if his dependent is a - LIMITATION
PWD o Subject to such limitations of the RP-CANADA tax treaty – not more
- Qualifications: than ½ of 1% of the gross revenues earned from the sale of
1. Filipino citizen tickets in the PH
2. PH resident o Pacta sunt servanda
3. Regardless of age - We can impose tax on the income of offline international airlines but it is
th
4. Relative within the 4 degree of C/A subject to treaties
5. Living with and dependent upon the TP for support
ST. LUKE’S CASE
CORPORATE TAXPAYERS - Requisites for exemption: [NOON]
- Exempt GOCC 1. Non-stock corporation
o PAGCOR exemption 2. Organized exclusively for charitable purposes
§ The SC ruled that PAGCOR is still EXEMPT à 3. Operated exclusively for charitable purposes (X present)
• from its INCOME DERIVED FROM GAMING 4. No part of its net income or asset shall belong to it or inured to the
OPERATIONS benefit of any member/organizer/officer or any specific person
• Reason: PAGCOR is exempt because it pays - St. Luke’s = X qualified as charitable hospital
5% franchise tax in lieu of all other taxes
including corporate income taxes
• What compromises gaming operations? YMCA
o [CM-DR] - It can be taxed on the rent income of the lease of its property
1. Casino operations - Income derived from whatever kind or character from its properties real or
2. Mobile bingo operations personal
3. Dollar pit operations
4. Regular bingo operations LA SALLE CASE - NON-STOCK NON-PROFIT EDUCATIONAL INSTITUTION
- Art 14, Sect 4 par 3
- Constitutional test of exemption: USE it is not the ownership

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 10

 - Estate Tax
2
FINAL TAX [BI D] o ü allowed
1. Branch Profit Remittance Tax (BPRT) o 5 years = judicial settlement of estate
o 15% o 2 years = extra judicial settlement of estate
o Derived from business effectively conducted in the PH
o Germany-RP Treaty MOST PROBABLE QUESTION ON GENERAL PRINCIPLE
§ The tax treaty prevails – 10%
2. Interest income from bank deposit 3 INSTANCES WHEN TAXES MAY BE THE SUBJECT OF SET-OFF
- From bank deposit - GR: taxes are not subject to set off or compensation because they are not
3. « Interest income from DEPOSIT SUBSTITUTES ordinary obligations
- It is an alternative form of obtaining funds from the public other than o E: It must involve claim for refund [LCD]
deposits 1. Necessary to ascertain the liability of the TP or
- Borrowing from more than 20 individual or corporate lenders at any 2. Correctness of the return is an issue or
one time 3. Existence of deficiency tax
- Sources: [BPI]
o Bankers acceptance DIRECT DOUBLE TAXATION/ OBNOXIOUS DT [JAP-SKY]
o Promissory notes 1. Same taxing JURISIDCTION
o Instrument with recourse 2. Same taxing AUTHORITY
4. Dividend Income 3. Same PURPOSE
- Subject to final tax hence need not be reported 4. Same SUBJECT
- Dividend income subject to FT: 5. Same KIND
o Individual Taxpayers 6. Same taxable YEAR
o NRFC
- Exempt? TAX EXEMPT INSTRUMENTALITY
o All are exempt - PNRC
§ Domestic to domestic - PEZA
§ Domestic à RFC - MIAA
§ RFC à Domestic - MCIAA
o E: NRFC = ü taxable - GSIS
- REQUISITES FOR EXEMPTION: [NEVEA]
PAYMENT OF TAXES 1. Not integrated within the department or bureau
- 30d period 2. Endowed with some but not all corporate powers
o Donor’s Tax 3. Vested with jurisdiction or special functions by law
- Monthly period 4. Enjoys operational autonomy
o VAT 5. Administers special funds
- Quarterly payment
o Corporate Tax Payers TAX AVOIDANCE MAY BE ASKED
o Local Tax
o Real Property Tax
- 6-month period CITIZEN’S SUIT
o Estate Tax - Distinguish Taxpayer’s Suit and Citizen’s Suit
- Annual payment of tax
o Individual TP TP SUIT CITIZEN’S SUIT
o On or before April 15 Illegal disbursement of public funds The plaintiff filing the case is just an
instrument of the public concern – it
Is extension allowed? does not involve disbursement of
- Local Government Tax public funds
o Extension of 6 months = ü allowed
- Income Tax
o ü reasonable extension allowed

Dugs JUSTICE DIMAAMPAO LAST MINUTE LECTURE 11