CONSTITUTIONAL LAW

Fundamental Powers of the State

Characteristics:
1. Inherent in the State
2. Exercised primarily by the legislature
BASIC PRINCIPLES OF POLITICAL LAW Police Power
Separation of Powers  A requirement by the COMELEC upon surveyors to submit the names of
Separation of powers demands that proper respect be accorded the other those who commission for election surveys is a valid exercise of police
departments of the government power.
Sovereignty Eminent Domain
 Sovereignty resides in the people, and government authority emanates Eminent domain inherent right of the State to condemn private property to
from them. public use upon payment of just compensation
Judicial Review Who may exercise?
Expanded power of judicial review (judicial supremacy) power to determine if 1. Congress
there has been a grave abuse of discretion amounting to lack/excess of 2. By delegation:
jurisdiction on the part of a branch/instrumentality of the Government a. Administrative bodies
 Questions on grave abuse of discretion amounting to lack/excess of b. LGUs
jurisdiction may be the subject of a petition for certiorari. c. Private enterprises performing public services
 The SC may review the sufficiency of the factual basis of the Requisites for the exercise of eminent domain:
proclamation of martial law or the suspension of the privilege of the 1. Due process of law
writ or the extension thereof. 2. Public use
 This proceeding is sui generis.  The fact that only a few could benefit from the expropriation does
Requisites not diminish its public use character.
1. Actual case/controversy existing case/controversy which is both ripe for 3. Just compensation
resolution and susceptible of judicial determination, and is not  Just compensation is determined as of the date of the taking.
conjectural/anticipatory or seeks to resolve hypothetical/vain  The ascertainment of what constitutes just compensation is a
constitutional problems judicial prerogative.
 The court CANNOT take cognizance of a case where there is no Taxation
law to which it could apply.  Money collected on tax levied for a special purpose shall be treated as a
 The court will NOT settle cases of mere speculation of injury. special fund and paid out for such purpose only.
 The issues must NOT be moot and academic (or, because of  If the purpose for which a special fund was created has been
subsequent developments, have become moot and academic). fulfilled, the balance (if any) shall be transferred to the general
Moot and academic ceases to present a justiciable controversy funds of the Government.
so that a declaration thereon would be of NO practical use or
value
BILL OF RIGHTS
EXC: (a) There is a grave violation of the Constitution; (b) an
Due Process
exceptional character of the situation and paramount public
Concept of Right to Life, Liberty and Property
interest is involved; (c) the constitutional issue raised
Right to life right of an individual to his/her body in its completeness
requires formulation of controlling principles to guide the
Right to liberty right to exist and be free from arbitrary personal restraint or
bench, the bar, and the public; and (d) the case is capable of
servitude
repetition yet evasive of review
 One’s employment is a property right.
2. Constitutional question is raised by the proper party
Kinds of Due Process
 To be a proper party, one must have legal standing.
Substantive
Legal standing party’s personal and substantial interest in a
Requisites:
case where he/she has sustained (or will sustain) direct injury
1. Interests of the public
as a result of the act being challenged
2. Lawful means
EXCs:
Procedural
1. Minors, as represented by their parents
Judicial
2. Citizen suit
Requisites:
 Any citizen may file a petition for the enforcement
1. Impartial court/tribunal clothed with judicial power to hear and
of environmental rights.
determine the matter before it
3. Constitutional question is raised at the earliest possible opportunity
 The test is whether the intervention of the judge tends to prevent
4. Decision on the constitutional question is the very lis mota
the proper presentation of the case or the ascertainment of the
 The first 2 requisites are the most important.
truth in the matter where he/she interposes his/her questions or
Operative Fact Doctrine
comments.
 Certain legal effects of the statute prior to its declaration of
2. Jurisdiction lawfully acquired over the person of the defendant and
unconstitutionality may be recognized.
over the property subject matter of the proceeding
Political Question Doctrine
3. Defendant is given an opportunity to be heard
Political question question concerned with issues dependent upon the
 Not all cases require a trial-type hearing.
wisdom of a particular measure
4. Judgment is rendered upon lawful hearing
Types:
Administrative
1. Questions which under the Constitution are to be decided by the
Requisites: (R I P E De De Know)
people in their sovereign capacity
1. Right to a hearing
2. Questions in regard to which full discretionary authority has been
EXC: Cancellation of a passport of a person sought for the
delegated by the Constitution to the legislative/executive branch
commission of a crime, where NO abuse of discretion is committed
 Foreign relations must be regularly decided by the executive
by the Secretary of Foreign Affairs
branch WITHOUT challenge/interference by the judiciary.
2. Tribunal/body acts on its own independent consideration of the law
 If an action before the court presents a political question, then the
and the facts of the controversy
court must dismiss the action.
3. Tribunal/body considers the evidence presented  Private property CANNOT be taken for public use without just
4. Evidence is substantial compensation.
5. Decision has something to support itself Abandonment of Intended Use and Right to Repurchase
6. Decision is rendered on the evidence contained in the record and  if land is expropriated for a particular purpose with the condition that,
disclosed to the parties when the purpose is abandoned the property shall revert to the former
7. Decision is rendered in a manner that the parties can know the issues owner, then the former owner can re-acquire the property.
involved and the reason for the decision rendered Searches and Seizures
Levels of Scrutiny Concept of Privacy
Hierarchy of rights:  The right to liberty includes the concept of privacy.
1. Life and liberty Concept of a Search
2. Property  [Consti] The right of the people to be secure in their persons, houses,
Equal Protection papers and effects against unreasonable searches and seizures is
Concept inviolable.
 All persons/things similarly situated must be treated alike.  [Comprehensive Dangerous Drugs Act] In cases where the seized item is
Requisites for Valid Classification a dangerous drug, the apprehending team having initial custody and
1. Substantial distinctions which make for real differences control of the drug shall, immediately after seizure and confiscation,
2. Germane to the purpose of the law physically inventory and photograph the same in the presence of the
3. NOT limited to existing conditions only accused or the person/s from whom such items were confiscated or
4. Applies equally to all members of the same class seized (or his/her representative/counsel), a representative from the
Levels of Scrutiny media and the Department of Justice (DOJ), and an elected public
Tests to determine valid classification: official.
Used if classification involves FUNDAMENTAL rights  Inventory and photograph must be made at the place of arrest.
Strict scrutiny
(e.g., Secs. 2-6, Bill of Rights) or suspect classes Requisites of a Valid Warrant
Used if classification does NOT involve suspect 1. Probable cause
Intermediate
classes or fundamental rights, but requires 2. Particular description of the place to be searched, and the persons or
scrutiny
heightened scrutiny (e.g., gender, legitimacy) things to be seized
Rational basis Used in all other subjects  The Commissioner of Immigration may issue warrants of arrest.
Freedom of Expression Warrantless Searches
Concept 1. Prohibited articles in plain view
Continuum of Thought, Speech, Expression, and Speech Acts Requisites:
 No law shall be passed abridging the freedom of speech/expression, of 1. Prior valid intrusion
the press, or the right of the people peaceably to assemble and petition 2. Evidence is immediately apparent
the government for redress of grievances. 2. Search of moving vehicles
Types of Regulation 3. Stop-and-frisk
Prior Restraint and Subsequent Punishment 4. Airport search
Aspects of freedom of expression: 5. Search incident to a lawful arrest
1. Freedom from censorship or prior restraint Warrantless Arrests and Detention
2. Freedom from subsequent punishment Warrantless arrests:
EXCs: 1. In flagrante delicto
1. Sale/exposure of obscene materials which depict/describe  A “buy-bust” operation is a valid in flagrante arrest.
patently offensive “hard core” sexual conduct 2. Hot pursuit
2. Criticism of official conduct which tends to obstruct the  A tip alone is INSUFFICIENT to constitute probable cause.
administration of justice 3. Escaped prisoner
Tests of valid governmental interference: Exclusionary Rule
1. Dangerous tendency rule  Evidence obtained in violation of the right against unreasonable
2. Balancing of interests test searches and seizures is INADMISSIBLE.
3. Clear and present danger rule whether the words are used in such  Failure to question the validity of the arrest does not affect the
circumstances and of such a nature as to create a clear and present admissibility of the illegally seized items.
danger that they will bring about the substantive evils that the State Effects of Unreasonable Searches and Seizures
has the right to prevent 1. Evidence obtained is inadmissible
Specificity of Regulation and Overbreadth Doctrine 2. Public officer/employee is liable for damages
Void-for-vagueness doctrine a law is facially invalid if men of common Effects of Illegal Detention
intelligence must necessarily guess at its meaning and differ as to its  A public officer/employee may be held liable for damages for violating
application constitutional rights.
Overbreadth doctrine a statute/regulation is void for overbreadth if it
offends the constitutional principle that a government purpose to control or
prevent activities constitutionally subject to state regulation cannot be
COMPOSITION AND POWERS OF THE GOVERNMENT ORGANS
achieved by means that sweep unnecessarily broadly and thereby invade Legislative Department
protected freedoms Legislative Power
Facial challenge a party may challenge the validity of a statute, even though Scope and Limitations
as applied to him it is not unconstitutional, which might nevertheless be Limitations:
unconstitutional if applied to others not before the Court whose activities are 1. Bill of rights
constitutionally protected 2. Prohibition against laws granting title of royalty/nobility
Speech Regulation in relation to Election 3. On appropriation measures:
 Political advertising does NOT include matters falling within the scope a. By law
of personal opinion. Appropriation law statute the primary and specific purpose of
Rights during Expropriation which is to authorize the release of public funds from the
Just Compensation Treasury
 b. For a public purpose
c. NOT in favor of a sect, church, denomination, sectarian institution,
or system of religion
d. NOT in favor of a religious teacher or dignitary as such
EXC: Assigned to the Armed Forces, or to a penal institution,
government orphanage, or leprosarium
e. Contains specific appropriations of money
f. Does NOT increase appropriations recommended by the President
for operation of the government (as specified in the budget)
 The form, content, and manner of preparing the budget shall
be prescribed by law.
g. Does NOT transfer appropriations
 The President, Senate President, Speaker of the House, Chief
Justice, or head of a Constitutional Commission may be
authorized by law to augment an item in the general
appropriations law for their respective offices from savings
in other items of their respective appropriations.
h. Procedure in approving appropriations for Congress shall strictly
follow the procedure for other departments and agencies
i. Disbursement of discretionary funds appropriated for particular
officials shall be supported by appropriate vouchers and subject to
guidelines prescribed by law
j. Provisions must relate specifically to a particular appropriation
therein (in case of a general appropriations bill)
General appropriation law passed annually, to provide for the
financial operations of the government during one fiscal period
 The provisions shall be limited in its operation to the
appropriation to which it relates.
k. In case of special appropriations:
i. Specifies the purpose for which it is intended
ii. Supported by funds available (as certified by the National
Treasurer) or to be raised by a corresponding revenue
proposal therein
4. On taxation:
a. Taxes must be uniform and equitable
Exemptions from taxation:
1. Lands, buildings, and improvements used actually,
directly, and exclusively for religious, charitable, and
educational institutions
2. Revenues and assets of non-stock, non-profit educational
institutions used actually, directly, and exclusively for
educational purposes
3. Grants/endowments/donations/contributions used
actually, directly, and exclusively for educational purposes
(subject to conditions prescribed by law)
b. Tax exemptions shall be passed with the concurrence of majority
of all members of Congress
5. On laws affecting the Supreme Court (SC):
a. Advice and concurrence of the SC (if law increases its appellate
jurisdiction)
b. Does NOT undermine the security of tenure (if law reorganizes the
judiciary)
Chambers of Congress; Composition
Senate
 The Senate consists of 24 members.
House of Representatives
 The House of Representatives consists of not more than 250 members.
District Representatives and Questions of Apportionment
Legislative apportionment determination of the number of representatives
which a political subdivision may send to a legislative body
 Apportionment shall be made in accordance with the number of
respective inhabitants, based on a uniform and progressive ratio.
Limitations:
1. A city with 250,000+ inhabitants is entitled to 1+ representative
2. A province is entitled to 1+ representative
 The Congress shall make a reapportionment of legislative districts
within 3 years following the return of every census.
Reapportionment realignment/change in legislative districts
brought about by changes in population and mandated by the
constitutional requirement of equality of representation
Party-List System
[Party-List System Act] Party-list system mechanism of proportional
representation in the election of representatives to the House of
Representatives from national, regional, and sectoral parties/organizations
Parameters in determining the number of seats for party-list representatives:
1. [Consti] 20% allocation the combined number of all party-list
congressmen shall NOT exceed 20% of the total membership of the
House of Representatives
2. 2% threshold parties garnering 2+% of the total valid votes cast for the
party-list system are qualified to have a seat
3. 3-seat limit each qualified party, regardless of the number of votes it
obtained, is entitled to a maximum of 3 seats
4. Proportional representation additional seats which a qualified party is
entitled to shall be computed in proportion to their total number of
votes
Electoral Tribunals and the Commission on Appointments
Nature
 The Senate and House of Representatives Electoral Tribunals
(SET/HRET) are each composed of 3 SC Justices and 6 members of the
house concerned chosen based on proportional representation from
the political parties.
 The Commission on Appointments is composed of the Senate President,
as ex officio Chairman, 12 Senators, and 12 Members of the House of
Representatives, elected by each House based on proportional
representation from the political parties registered under the party-list
system.
Powers
 The SET/HRET is the sole judge of contests relating to the election,
returns, and qualifications of a senator/representative.
 The SET/HRET has jurisdiction over the issue of citizenship as a
qualification.
Requisites for exercise of jurisdiction of the electoral tribunal:
1. Petition is filed before it
2. Candidate is considered a member of the House concerned
a. Valid proclamation
b. Oath-taking before the Speaker of the House and in open
session
c. Assumption of office
Powers of Congress
1. Legislative powers
a. Enact laws
b. Amend laws
c. Repeal laws
Legislative Inquiries and Oversight Functions
2. Legislative investigation
 A witness may be detained until the legislative inquiry ends (i.e.,
completion of Committee Report or adjournment of Congress)
Instances when legislative inquiry terminates:
1. Approval/disapproval of the Committee Report
2. Expiration of 1 Congress
Non-legislative
3. Act as Board of Canvassers in election of President
Power of Impeachment
4. Impeachment
 The Justices of the SC are impeachable officers.
 The House of Representatives has sole power to initiate cases of
impeachment.
Executive Department
Powers of the President
 The President may amend/revoke political agreements entered into by
his/her predecessors.
General Executive and Administrative Powers
Executive power power to enforce and administer the laws
 The executive power shall be vested in the President.
  He/she shall ensure that the laws be faithfully executed. Treaty Executive agreement
Power of Appointment May create new Must be traceable to an
In General international obligations authorization under the
 Regular members of the Judicial and Bar Council (JBC) shall be Constitution, or a statute/treaty
appointed by the President with the consent of the Commission on Requires ratification Does NOT require ratification
Appointments. On the same level as a Inferior to a statute
Limitations on the Exercise/Power statute
Limitations on the power to appoint: Powers relative to Appropriation Measures
1. Spouse/relatives within the 4th civil degree CANNOT be appointed as  The President has the power to contract/guarantee foreign loans.
members of Constitutional Commissions, Ombudsman, secretaries, Requisites:
undersecretaries, or chairmen/heads of bureaus/offices 1. Concurrence of the Monetary Board
Nepotism favoritism by the appointing authority towards relatives 2. Subject to limitations provided by law
2. Ad interim appointments cease to be valid if disapproved by the 3. Information on foreign loans shall be made available to the
Commission on Appointments or upon the next adjournment of public
Congress Delegated Powers
 If the appointment ceases to be valid upon the next adjournment Tariff powers authority of the President to fix duties and imposts within
of Congress, the appointment is deemed “by-passed” through specified limits, subject to limitations and restrictions the Congress imposes,
inaction. and within the framework of the national development program of the
3. Prohibition against midnight appointments a President (or acting government
President) CANNOT make appointments 2 months before the next Emergency powers powers of the President to carry out a declared national
presidential elections and up to the end of his term policy in times of national emergency
EXCs: Residual Powers
1. Member of the SC  The President has unstated residual powers implied from the grant of
2. Temporary appointments to executive positions when executive power necessary for him/her to comply with his/her
continued vacancies therein will prejudice public service or constitutional duties.
endanger public safety Veto Powers
Power of Control and Supervision  If the President does not approve a bill presented to him/her, he/she
Control power of an officer to alter, modify, nullify, or set aside what a may veto it.
subordinate officer had done in the performance of his/her duties  Lump-sum appropriations to be tapped as a source of funding for
 The President may affirm/modify/reverse the administrative decisions multiple purposes violate the veto power of the President.
of subordinate officials and employees. Judicial Department
Emergency Powers Judicial Power
Authority to declare a state of Authority to exercise emergency  Judicial power includes the duty of the courts of justice to settle actual
emergency powers controversies involving rights which are legally demandable and
Emanates from powers as Chief Requires delegation from Congress enforceable.
Executive  Judicial power includes the important public function of clarifying the
Commander-in-chief Powers values embedded in our legal order anchored on the Constitution, laws,
Calling Out Powers and other issuances by competent authorities.
 The President may call out the armed forces to prevent/suppress  Judicial power is vested in the SC and lower courts established by law.
lawless violence, invasion, or rebellion. Judicial and Bar Council
Declaration of Martial Law and Suspension of the Privilege of the Writ of Composition
Habeas Corpus; Extension 1. Ex-officio chairman (Chief Justice)
 The President may place the PH (or a part thereof) under martial law, or  If he/she is absent because of his/her impeachment, the most
suspend the privilege of the writ of habeas corpus. Senior Justice of the SC, who is NOT an applicant for Chief Justice,
Requisites: should participate in the deliberations for the selection of
1. Invasion/revellion nominees for the vacant post and preside over the proceedings.
2. Public safety requires it 2. Ex-officio members
 Martial law, or the suspension of the privilege of the writ, must a. Secretary of Justice
NOT exceed 60 days. b. Representative of Congress
 Within 48 hours from the proclamation/suspension, the President 3. Regular members
shall submit a report in person/writing to the Congress. a. Retired Justice of the SC
 The Congress voting jointly may revoke such proclamation or b. Representative of the Integrated Bar of the PH
suspension. c. Representative of the private sector
Executive Clemency d. Professor of law
 The President may grant reprieves, commutations, and pardons, and Powers
remit fines and forfeitures. 1. Recommend appointees to the Judiciary
 The President may grant amnesty. 2. Other functions the SC assigns to it
 Pardon does NOT necessarily involve the reinstatement of the public The Supreme Court
officer. Composition
Diplomatic Powers  The SC is composed of 1 Chief Justice and 14 Associate Justices.
 The President is the sole authority in matters of foreign policy and Powers
foreign relations. Powers:
 The State has the right to expel aliens from its territory. 1. Promulgate rules concerning:
 A treaty or international agreement is valid and effective only when a. The protection and enforcement of constitutional rights
concurred in by 2/3 of the Senate. b. Pleading, practice, and procedure in courts
 The power to enter into an executive agreement is a quintessential and c. Admission to the practice of law
non-delegable presidential power. d. The Integrated Bar
e. Legal assistance to the underprivileged
2. Appoint officials and employees of the judiciary
3. Assign judges temporarily
4. Administrative supervision over all courts and personnel thereof
5. Original jurisdiction over:
a. Cases affecting ambassadors, other public ministers, and consuls
b. Petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus
6. Appellate jurisdiction over cases involving:
a. Constitutionality/validity of a treaty, international/executive
agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation
b. Legality of tax/impost/assessment/toll (or a penalty imposed in
relation thereto)
c. Jurisdiction of a lower court
d. Imposed penalty of reclusion perpetua or higher
e. Involves only a question of law
Instances when the SC may review findings of fact:
1. Findings of fact are conflicting
2. Judgment is based on a misapprehension of facts
3. Conclusion is grounded entirely on speculations, surmises, or
conjectures
4. Inference is manifestly mistaken/impossible/absurd
5. Grave abuse of discretion
6. Court of Appeals went beyond the issues of the case, and the
findings are contrary to the admissions of the parties
 The SC may also review such cases on certiorari.
7. Exclusive jurisdiction over contests relating to the election, returns, and
qualifications of the President and Vice-President
Constitutional Commissions
Powers
 Each Commission may promulgate its own procedural rules.
 The rules CANNOT modify substantive rights.
 The COMELEC may resolve matters involving the ascertainment of the
identity of the political party and its legitimate officers.
Powers of the COA:
1. Define the scope of its audit and examination, and establish techniques
and methods therefor
2. Promulgate accounting and auditing rules and regulations
3. Determine, prevent, and disallow irregular/unnecessary expenditures
of government funds
4. Ascertain if public funds were utilized for the purpose for which they
had been intended by law
5. Decide administrative cases involving expenditure of public funds
Composition of Members
1. CSC Chairman and 2 Commissioners
2. COMELEC Chairman and 6 Commissioners
3. COA Chairman and 2 Commissioners
The Ombudsman and the Office of the Special Prosecutor
 The Ombudsman possesses full administrative disciplinary authority.
 [Ombudsman Act] The Ombudsman has administrative
jurisdiction over elective and appointive officials of the
Government and its subdivisions, instrumentalities, and agencies,
including GOCCs and their subsidiaries.
 Preventive suspension may be imposed by the Ombudsman
or his/her Deputy.
Grounds:
1. Neglect in the performance of duty
2. Dishonesty
3. Oppression
4. Grave misconduct
5. Charge against the officer/employee warrants
removal from the service
6. Continued stay in office of the officer/employee may
prejudice the case filed against him/her
 The Ombudsman exercises jurisdiction over employees of
GOCCs only with original charters.
EXCs:
1. Officials who may be removed only by impeachment
2. Members of Congress
3. Judiciary
 The Special Prosecutor, upon the order of the Ombudsman, may
conduct preliminary investigations and direct the filing of criminal cases
with the Sandiganbayan.
Administrative Agencies
Rule-Making Power
Quasi-legislative power authority to fix the details in the enforcement of a
policy set out in the law
Adjudicatory Power
 The appellate administrative agency may conduct additional hearings in
the appealed case, if necessary.
Fact-Finding, Investigative, Licensing and Rate-Fixing Powers
Investigatory power power to require production of books, papers, etc., or
attendance of witnesses and to compel their testimony
Local Governments
Powers
 [LGC] A provision on a power of a LGU shall be liberally interpreted in
its favor.
General Welfare Clause
 LGUs shall exercise the powers essential to the promotion of the
general welfare.
 Barangays shall exercise powers necessary/appropriate/incidental to
efficient and effective provision of the maintenance of the katarungang
pambarangay.
 Municipalities have the power to regulate the operation of tricycles.
 Cities shall exercise powers necessary/appropriate/incidental to
efficient and effective provision of the basic services and facilities also
available to the municipality and the province.
Eminent Domain
 A LGU may exercise the power of eminent domain pursuant to an
ordinance.
 There must be a valid and definite offer made to the owner.
 The amount to be paid is determined based on the time of the
taking of the property.
 The LGU may immediately take possession of the property upon
making a deposit of 15% of the fair market value of the property
based on the current tax declaration of the property.
Taxing Power
 The power to impose a tax/fee/charge shall be exercised by the
sanggunian through an appropriate ordinance.
 The city may levy taxes/fees/charges which the province/municipality
may impose.
 Barangays may levy taxes/fees/charges on stores/retailers with gross
receipts of the preceding calendar year of up to P50k (in cities) or P30k
(in municipalities).
Closure and Opening of Roads
 A LGU may close/open a local road, alley, park, or square falling within
its jurisdiction pursuant to an ordinance.
Legislative Power
 Local legislative power shall be exercised by the sangguniang
panlalawigan (for the province), panlungsod (for the city), bayan (for
the municipality), and barangay (for the barangay).
QUALIFICATIONS, DISQUALIFICATIONS, AND SELECTION OF
THE PRESIDENT, SENATORS, MEMBERS OF THE HOUSE OF
REPRESENTATIVES, JUSTICES AND JUDGES, THE
OMBUDSMAN, AND CONSTITUTIONAL COMMISSIONERS
President
Qualifications:
1. Natural-born citizen
2. 40+ years of age on the day of the election
3. Able to read and write
4. Registered voter
5. Resident of the PH for 10+ years immediately preceding such election
 The President shall be elected by direct vote of the people. 2. Aggregate period of the length of service as commissioner and the
 The regular election for President shall be held on the 2nd Monday of unexpired portion of the term of the chairman does NOT exceed 7
May. years
Senate  The commissioners CANNOT be reappointed or appointed in an acting
Qualifications of members: capacity.
1. Natural-born citizen Reappointment second appointment to the same office
2. 35+ years of age on the day of the election Qualifications of Members
3. Able to read and write 1. Common qualifications among commissioners:
4. Registered voter in the district in which he/she shall be elected, and a a. Natural-born Filipinos
resident thereof for 2+ years immediately preceding the day of the b. 35+ years of age
election c. Have NOT been candidates in the immediately preceding election
 The members shall be elected at large. 2. Specific to the CSC proven capacity for public administration
 The regular election of the senators shall be held on the 2nd Monday of 3. Specific to the COMELEC:
May. a. Holders of a college degree
House of Representatives b. Majority must be members of the Philippine Bar engaged in the
Qualifications of members: practice of law for 10+ years
1. Natural-born citizen 4. Specific to the COA either: (1) CPAs with 10+ years of auditing
2. 25+ years of age on the day of the election experience; or (2) members of the Philippine Bar with 10+ years
3. Able to read and write practice of law
4. Registered voter in the district in which he/she shall be elected, and a  The members must NOT belong to the same profession.
resident thereof for 1+ year immediately preceding the day of the
election IMMUNITY OF THE PRESIDENT, PRIVILEGES OF SENATORS
 The regular election of the senators and members of the House of
Representatives shall be held on the 2nd Monday of May.
AND MEMBERS OF THE HOUSE OF REPRESENTATIVES
Party-List System Presidential Immunity
 The enumeration of sectors under the Constitution and the Party-List  The President is immune from suit.
System Act is NOT exclusive. EXC: Act does NOT arise from official conduct
 Registration under the party-list system may be cancelled on the  The validity of his/her acts can be tested by an action against
ground of misrepresentation only if the misrepresentation relates to a other executive officials.
qualification as a party-list group. Legislative Privileges
 Nominees of sectoral parties/organizations which are by their nature 1. Freedom from arrest a member of Congress shall, in all offenses
economically marginalized and underrepresented must either belong to punishable by NOT more than 6 years imprisonment, be privileged from
the sector or have a track record of advocacy for the sector. arrest while the Congress is in session
Judiciary 2. Privilege of speech a member of Congress CANNOT be questioned nor
Qualifications: be held liable in any other place for a speech/debate in the Congress (or
1. Of proven competence, integrity, probity, and independence in a committee thereof)
 A member of the SC who has not filed his/her statements of
assets, liabilities, and net worth for 8 years is considered to lack STRUCTURE OF GOVERNMENT
proven integrity. Functions
2. Additional qualifications for members of the SC: Functions of the CSC:
a. Natural born citizen 1. Establish a career service
b. 40+ years of age 2. Integrate all human resources development programs for all levels and
c. For 15+ years a judge, or engaged in the practice of law in the PH ranks
3. Additional qualifications for members of lower collegiate courts: 3. Adopt measures to promote morale, efficiency, integrity,
a. Natural born citizen responsiveness, progressiveness, and courtesy in the civil service
b. Member of the Philippine Bar 4. Institutionalize a management climate conducive to public
 Congress may prescribe other qualifications. accountability
4. Additional qualifications for members of lower courts: 5. Strengthen the merit and rewards system
a. Citizen Functions of the COMELEC:
b. Member of the PH Bar 1. Submit a comprehensive report to the President and Congress on the
 Congress may prescribe other qualifications. conduct of each election/plebiscite/initiative/referendum/recall
 The JBC CANNOT impair the appointing power of the President by 2. Recommend to the President the grant of pardon, amnesty, parole, or
resorting to clustering of nominees (i.e., only one person can be suspension of sentence for violation of election laws, rules, and
appointed per cluster). regulations
Ombudsman  It is the duty of the COA to examine, audit, and settle accounts
 The Ombudsman is appointed to a term of 7 years without pertaining to the revenue and receipts of, and expenditures/uses of
reappointment. funds and property owned or held in trust or pertaining to, the
Constitutional Commissioners Government.
 The appointment of members is for a fixed term of 7 years without  A corporation funded out of public funds is under the audit
reappointment. jurisdiction of the COA.
 Appointments to vacancies are only for the unexpired portion of  In reviewing the act of a government agency’s auditor in
the term of the predecessor. disallowing a disbursement, the COA is not limited to the grounds
Rules in case a commissioner is appointed as chairman: relied upon by the auditor with respect to such disallowance.
1. Vacancy in the position of chairman resulting from death, resignation, Functions of municipal corporations:
disability, or removal by impeachment 1. Serve as an instrumentality of the State in carrying out governmental
functions
2. Act as an agent of the community in the administration of local affairs
 The Solicitor General has the duty to represent the government.
General duties of public officers:
1. To be accountable to the people
2. To serve the people with utmost responsibility, integrity, loyalty, and
efficiency
3. To act with patriotism and justice
4. To lead modest lives
5. To submit a declaration under oath of his/her assets, liabilities, and net
worth upon assumption of office and as often thereafter as required by
law
6. To owe the State and the Constitution allegiance at all times
Powers and Privileges
Powers of public officers:
1. Ministerial power power the discharge of which is imperative
2. Discretionary power power wherein the officer has the right to decide
how and when the duty shall be performed
Privileges of the President:
1. Official residence
2. Salary
 The salary must be determined by law.
 The salary CANNOT be decreased during his/her tenure.
 An increase in the salary shall take effect only after the expiration
of the term of the incumbent.
3. Executive privilege right of the President and high-level executive
branch officials to withhold information from Congress, the courts, and
ultimately, the public
Kinds:
1. Presidential communications privilege refers to presidential
communications
 The doctrine of operational proximity limits the scope of
the presidential communications privilege.
 The doctrine, however, is NOT conclusive.
2. Deliberative process privilege refers to materials that comprise
part of a process by which governmental decisions and policies
are formulated
 [UN Charter] The officers of the UN, and representatives of its
members, enjoy privileges and immunities necessary for the
independent exercise of their functions.
 A World Health Organization officer is entitled to the privileges and
immunities of diplomatic envoys.
Checks and Balances
Principle of checks and balances a department of the government may resist
encroachments, upon its prerogatives or to rectify mistakes/excesses,
committed by the other departments
PROCESS OF LEGISLATION
 Every bill passed by Congress shall embrace only 1 subject which shall
be expressed in the title thereof.
 A bill passed by either House must pass 3 readings on separate days
before it becomes a law.
 Printed copies of the bill in its final form must be distributed to its
Members 3 days before its passage.
EXC: President certifies necessity of immediate enactment to
meet a public calamity or emergency
NATURAL RESOURCES
Nationalist and citizenship requirement provisions:
1. For use and enjoyment of the nation’s marine wealth in its archipelagic
waters, territorial sea and exclusive economic zone only Filipinos
2. For co-production, joint venture or production sharing agreements
Filipinos or corporations/associations 60% of whose capital is Filipino
owned
 The President may enter into agreements with foreign-owned
corporations involving technical/financial assistance for large-scale
exploration, development, and utilization of mineral oils according to
general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the
country.
AMENDMENT AND REVISION OF THE CONSTITUTION
Amendment Revision
Change WITHOUT altering a basic Change that alters a basic principle
principle in the Constitution in the Constitution, or the
substantial entirety thereof
Generally affects only the specific Generally affects several provisions
provision being amended of the Constitution
Tests applied in determining a revision:
1. Quantitative test examines only the number of provisions affected
2. Qualitative test examines the effects of the proposed change
Procedure to amend/revise the Constitution:
1. Proposal adoption of the suggested change in the Constitution
A proposed amendment may come from:
1. Congress, by a vote of ¾ of its members
2. A constitutional convention
 Congress may, by a vote of 2/3 of its members, call a
constitutional convention.
 Congress may, by a majority vote of its members, submit
to the electorate the question of calling such a
convention.
3. The people, through the power of initiative
 A petition of 12+% of the total number of registered
voters must be made, of which every legislative district
must be represented by 3+% of the registered voters
therein.
 Congress shall provide for the implementation of the
exercise of this right.
 Such an amendment CANNOT be authorized within 5
years after the ratification of the Constitution nor oftener
than once every 5 years thereafter.
 A proposed revision may only come from either Congress or a
constitutional convention.
2. Ratification of a majority of the votes cast in a plebiscite
 The plebiscite shall be held not earlier than 60 days nor later than
90 days after the approval of such amendment/revision (or after
the certification by the Commission on Elections (COMELEC) of the
sufficiency of the petition, in case of people’s initiative).
 The Preamble states: “We, the sovereign Filipino people,
imploring the aid of Almighty God, in order to build a just and
humane society and establish a government that shall embody
our ideals and aspirations, promote the common good, conserve
and develop our patrimony, and secure to ourselves and to our
posterity the blessings of independence and democracy under the
rule of law and a regime of truth, justice, freedom, love, equality,
and peace, do ordain and promulgate this Constitution.”
INTERNATIONAL LAW
SOURCES OF INTERNATIONAL LAW
Article 38, International Court of Justice Statute
[Statute of the ICJ] Sources of international law:
1. Primary
a. Treaties
 In the absence of a constitution, citizens remain protected
by international agreements which the revolutionary
government does not repudiate upon accession to power.
b. International customs
c. General principles of law recognized by civilized nations
2. Secondary
a. Judicial decisions
b. Teachings of most highly qualified publicists of various nations
Relationship with Domestic Law
Theories as to adoption of international law:
1. Transformation requires that an international law principle be
transformed into domestic law through a constitutional mechanism
2. Incorporation international law is adopted as part of municipal law by
operation of law, WITHOUT a positive act to adopt it
LABOR LAW AND
SOCIAL LEGISLATION
FUNDAMENTAL PRINCIPLES
Legal Basis
1987 Constitution
Constitutional provisions on labor:
1. State policies
a. The State shall promote a just and dynamic social order that will
ensure the prosperity and independence of the nation and free
the people from poverty through policies that provide adequate
social services, promote full employment, a rising standard of
living, and an improved quality of life for all.
b. The State shall promote social justice in all phases of national
development.
c. The State values the dignity of every person and guarantees full
respect for human rights.
d. The State affirms labor as a primary social economic force.
 The State shall protect the rights of workers and promote
their welfare.
e. The State recognizes the role of women in nation-building, and
shall ensure the fundamental equality before the law of women
and men.
f. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.
2. Bill of rights
a. NO person shall be deprived of life/liberty/property without due
process of law, nor shall any person be denied the equal
protection of the laws.
B. NO involuntary servitude shall exist except as punishment for a
crime whereof the party shall have been duly convicted.
C. NO law impairing the obligation of contracts shall be passed.
D. NO law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances.
e. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall NOT be abridged.
f. All persons shall have the right to a speedy disposition of their
cases before all judicial/quasi-judicial/administrative bodies.
3. Social justice
a. The Congress shall give highest priority to the enactment of
measures that protect and enhance the right of all people to
human dignity, reduce social, economic, and political inequalities,
and remove cultural inequities by equitably diffusing wealth and
political power for the common good.
 To this end, the State shall regulate the ownership, use, and
disposition of property.
b. The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and
self-reliance.
c. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and
equality of employment opportunities for all.
 It shall guarantee the rights of all workers to SELF-
ORGANIZATION, collective bargaining and negotiations, and
PEACEFUL CONCERTED ACTIVITIES, including the RIGHT TO
STRIKE in accordance with law.
 Workers shall be entitled to security of tenure, humane
conditions of work, and a living wage.
 Workers shall participate in policy and decision-making
processes affecting their rights and benefits as may be
provided by law.
 The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to
foster industrial peace.
 The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and
growth.
 This, along with Sec. 18 of Art. II, is the principal protection-
to-labor clause.
d. The State shall protect working women by providing safe and
healthful working conditions, taking into account their maternal
functions, and such facilities and opportunities that will enhance
their welfare and enable them to realize their full potential in the
service of the nation.
e. The State shall establish a special agency for disabled persons for
their rehabilitation, self-development, and self-reliance, and their
integration into the mainstream of society.
Civil Code
Civil Code (NCC) provisions on labor:
1. Every person must, in the exercise of his/her rights and the
performance of his/her duties, act with justice, give everyone his/her
due, and observe honesty and good faith.
2. Every person who, contrary to law, willfully or negligently causes
damage to another shall compensate the latter for the same.
3. Any person who willfully causes loss or injury to another in a manner
contrary to morals, good customs, or public policy shall compensate the
latter for the damage.
4. The relations between capital and labor are NOT merely contractual.
They are so impressed with public interest that labor contracts must
yield to the common good.
 Such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor, and similar subjects.
5. Neither capital nor labor shall act oppressively against the other or
impair the interest/convenience of the public.
6. In case of doubt, labor legislation and labor contracts shall be construed
in favor of the safety and decent living for the laborer.
7. No contract which practically amounts to involuntary servitude shall be
valid.
8. The laborer’s wages shall NOT be subject to attachment/execution,
except for debts incurred for food, shelter, clothing, and medical
attendance.
9. The employer shall neither seize nor retain an article belonging to the
laborer.
10. Dismissal of laborers shall be subject to the supervision of the
government, under special laws.
Labor Code
 [LC] Rights and benefits under the Labor Code apply to all workers.
EXC: Otherwise provided therein
Persons not covered by the Labor Code:
1. Corporate officers involved in intra-corporate disputes under
the Securities Regulation Code
2. Local water districts
3. Employees of government-owned/-controlled corporations
(GOCCs)
4. [Consti] Government agencies covered by the civil service rules
5. Foreign governments
6. International agencies
 [LC] The State shall afford protection to labor, promote full 1. Simple illegal recruitment
employment, ensure equal work opportunities regardless of sex, race, 2. [Migrant Workers Act] Illegal recruitment involving economic sabotage
or creed, and regulate the relations between workers and employers. a. Large-scale illegal recruitment committed by a person or with
 The State shall assure the rights of workers to self-organization, another person AGAINST 3+ persons
collective bargaining, security of tenure, and just and humane b. Syndicated illegal recruitment committed BY 3+ persons
conditions of work. conspiring with one another
State Policy towards Labor Economic Prohibited
Simple
Security of Tenure sabotage practices
(See “Labor Code”) 12 years and 1 Life 6 years and 1
Imprisonment
Social Justice day – 20 years imprisonment day – 12 years
Social justice humanization of laws and equalization of social and economic Fine P1M – P2M P2M – P5M P500k – P1M
forces by the State so that justice in its rational and objectively secular Accessory penalties:
conception may at least be approximated 1. Deportation (if the offender is an alien)
 Social justice should only be applied to correct an injustice. 2. Automatic revocation of license/registration
Equal Work Opportunities Illegal Recruitment as distinguished from estafa
(See “Labor Code”) Illegal recruitment Estafa
Right to Self-organization and Collective Bargaining Malum prohibitum Malum in se
State policies: Liability of Local Recruitment Agency and Foreign Employer
1. To ensure the participation of workers in decision and policy-making  If the recruitment/manning agency is a juridical being, the corporate
processes affecting their rights officers shall themselves be liable.
Tripartism mechanism by which policies are laid down through a  The officers must have had control/management/direction of
process where the State gives equal rights to workers and employers their business.
to participate in the formulation of policies Solidary Liability
National Tripartite Industrial Peace Council national conference of  The provision holding them solidarily liable must be incorporated in the
representatives of workers and employers contract for overseas employment.
2. To provide an adequate administrative machinery for the expeditious  Such incorporation is required for approval of the contract.
settlement of labor/industrial disputes Theory of Imputed Knowledge
3. To ensure industrial peace Theory of imputed knowledge ascribes the knowledge of the agent to the
4. Promote and emphasize the primacy of free collective bargaining and principal
negotiations as modes of settling labor/industrial disputes  It CANNOT ascribe the knowledge of the principal to the agent.
5. Promote free trade unionism as an instrument for the enhancement of
democracy and the promotion of social justice and development POST-EMPLOYMENT
6. Foster the free and voluntary organization of a strong and united labor Employer-Employee Relationship
movement Tests to Determine Existence
7. Promote the enlightenment of workers concerning their rights and 1. Four-fold test
obligations as union members and employees a. Selection and engagement of the employee
 To encourage a truly democratic method of regulating the relations b. Existence of the power to control the employee’s conduct
between the employers and employees by agreements freely entered  The employer must be able to control the means, methods,
through collective bargaining, a court or administrative agency/official and the result of the work.
CANNOT set/fix terms of employment. c. Payment of wages
EXC: Otherwise provided under the Labor Code d. Power of dismissal
Construction in Favor of Labor 2. Economic reality test
 Doubts in the implementation and interpretation of the Labor Code  An additional juridical relationship between the employer and
(and its implementing rules and regulations) shall be resolved in favor employee does NOT extinguish the employer-employee relationship.
of labor. Legitime Subcontracting as distinguished from Labor-only Contracting
EXC: Rights of management entitled to respect and enforcement in  The SOLE may prohibit the contracting-out of labor to protect the rights
the interest of fair play of workers.
Labor Code provision on Civil Code provision on  In so prohibiting, he/she may make distinctions between labor-
construction in favor of labor construction in favor of labor only contracting and job contracting to prevent a violation or
Pertains only to the implementation Pertains to labor legislation and circumvention of the Labor Code.
and interpretation of the Labor labor contracts
Legitimate subcontracting Labor-only contracting
Code
There is an employer- NO employer-employee
Burden of Proof and Quantum of Evidence
employee relationship relationship between the
 When the evidence in labor cases is in equipoise, doubt is resolved in between the contractors principal and the contractor’s
favor of the employee. and its employees employees
 In administrative/quasi-judicial proceedings, the quantum of proof is Valid NOT valid
substantial evidence. Elements
Requisites of permissible contracting/subcontracting arrangements:
RECRUITMENT AND PLACEMENT 1. Substantial capital or investment in the form of tools, equipment, and
Illegal Recruitment machinery
Elements  Capital must be P5M+ in order to be substantial.
1. Person has NO valid license/authority to engage in the recruitment and 2. Contractor/subcontractor is engaged in an independent business and
placement of workers undertakes to perform the job/work on its own responsibility,
EXC: Person commits prohibited practices according to its own manner and method
2. Person engages in recruitment and placement, or in prohibited 3. In performing the work, the contractor/subcontractor is free from the
practices control/direction of the principal in all matters connected with the work
Types
4. Service agreement ensures compliance with all the rights and benefits
for the employees of the contractor/subcontractor under labor laws
5. Registration with the DOLE
Elements of labor-only contracting:
1. Contractor does NOT have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others
2. Workers recruited and placed by the contractor perform activities
directly related to the principal business of the employer
Termination by Employer
Requisites for Validity
 Statutory due process protects employees from being unjustly
terminated.
Substantive Due Process
 An employer can only terminate the services of a regular employee for
just/authorized cause.
Other valid causes for termination of employment:
1. Violation of union security clause
2. Union officer knowingly participates in an illegal strike
3. Employee knowingly participates in committing illegal acts
during a strike
4. Disease
Requisites:
1. Employee is suffering from a disease
2. Continued employment is:
a. Prohibited; or
b. Prejudicial to his/her health or the health of
his/her co-employees
3. COMPETENT public health authority issues a medical
certificate that the disease CANNOT be cured within 6
months
 An employee may present countervailing medical
certificates.
Just Causes
1. Serious misconduct or willful disobedience by the employee in
connection with his/her work
 Misconduct must be committed with wrongful intent.
Requisites of disobedience:
1. Employee’s conduct is willful/intentional, characterized by a
wrongful and perverse attitude
2. Order violated is reasonable and lawful, made known to the
employee, and pertains to the duties for which he/she has
been engaged to discharge
2. Gross and habitual neglect of duties
3. Breach by the employee of the trust reposed in him/her by his/her
employer (or the latter’s representative)
Requisites:
1. Employee holds a position of trust and confidence
2. Act justifying the loss of trust and confidence
3. Act is in relation to his/her work
4. Crime against the person of his/her employer (or the latter’s immediate
family member or representative)
5. Analogous causes
 Abandonment is a form of neglect of duty.
 There must be a clear intention on the part of the employee
to sever the employer-employee relationship, manifested by
an overt act.
 Mere absence is NOT abandonment.
 A complaint for illegal dismissal praying for
reinstatement NEGATES abandonment.
EXC: Antecedent acts of the employee palpably
display otherwise
 Notices in abandonment cases must be sent to employee’s
last known address per record of the company.
 Incompetence/inefficiency/ineptitude is an analogous cause.
Authorized Causes
1. Installation of labor-saving devices
2. Redundancy
 There must be adequate proof of redundancy.
 Advertisement on hiring for a new position similar to the alleged
redundant position is proof that the position is NOT redundant.
3. Retrenchment to prevent losses
4. Closure of business operations
 The closure of only a department of the business operations is
allowed.
EXC: Closing is to circumvent the Labor Code provisions on
termination of employment
 Separation pay is only required if closure of business is NOT due to
serious business losses or financial reverses.
Procedural Due Process
Requirements in just cause termination and termination due to disease:
1. First written notice containing a statement of the causes for
termination
 In abandonment cases, the first notice must direct the employee
to explain why he/she should not be declared as having
abandoned his/her job.
 After serving the first notice, the employer should schedule and
conduct a hearing.
EXC: Termination on the ground of abandonment
Ample opportunity to be heard meaningful opportunity given
to the employee to answer the charges against him/her and
submit evidence in support of his/her defense
 A formal hearing/conference is not mandatory.
EXCs:
1. Requested by the employee in writing
2. Substantial evidentiary disputes exist
3. Company rule/practice requires it
4. Similar circumstances
Rights of the employee during the hearing:
1. Defend himself/herself personally, with assistance of a
representative/counsel of his/her choice
2. Explain and clarify his/her defenses to the charge/s
against him/her
3. Present evidence in support of his/her defenses
4. Rebut the evidence presented against him/her by the
management
 The hearing could be used by the parties as an opportunity
to come to an amicable settlement.
 If the employee does not answer, the hearing should still
proceed.
2. Second written notice (notice of termination)
 Due process in termination due to other authorized causes is deemed
complied with upon service of a written notice on the employees and
the DOLE 1+ month before the intended date of termination.
 The employer may not require the employees to be dismissed to
report for work during the 1-month notice period.
 The employees, however, must still be paid.
 Due process for termination of probationary employment due to failure
to qualify as a regular employee consists of making the reasonable
standards expected of the employee known to him/her at the time of
his/her engagement.
Preventive Suspension
 Preventive suspension is justified only where the employee’s continued
presence in the company premises during the investigation poses a
serious and imminent threat to the life/property of the employer/co-
workers.
 Preventive suspension is only for a maximum for 30 days.
 During the 30-day period, the worker is NOT entitled to wages and
benefits.
 Preventive suspension lasting longer than 30 days, without
extensions, amounts to constructive dismissal.
Illegal Dismissal
 The employee may contest the validity of his/her dismissal.
Kinds
No Just or Authorized Cause
 Substantive due Procedural due Status of termination
process observed? process observed?
  Legal
 
Illegal
 
  Ineffectual
 In this case, the
employee will be
awarded nominal
damages.
Rules on the amount of nominal damages:
1. If based on just cause P30k
2. If based on authorized cause P50k
Constructive Dismissal
Instances of constructive dismissal:
1. Demotion in rank or diminution in pay
2. Continued employment is rendered impossible/unreasonable/unlikely
3. Clear discrimination/insensibility/disdain by an employer becomes
unbearable to the employee that it could foreclose any choice by him
or her except to forego continued employment
Burden of Proof
 The burden of proving the validity of the dismissal of the employee
rests on the employer.
Liability of Officers
 Corporate officers are NOT liable for the illegal termination of a
corporation's employees.
Reliefs from Illegal Dismissal
1. Reinstatement without loss of seniority rights and other privileges
Options of the employer in implementing reinstatement:
1. Actual reinstatement employee is reinstated to his/her position
2. Payroll reinstatement employee is reinstated to the payroll
without requiring him/her to report back to his/her work
Instances where separation pay in lieu of reinstatement should be
awarded:
1. Doctrine of strained relations continued relationship between
the employer and the employee is NO LONGER viable due to
the strained relations and antagonism between them
 Strained relations should be invoked if the nature of the
position requires that trust and confidence be reposed by
the employer upon the employee occupying it, as would
make reinstatement adversely affect efficiency,
productivity, and performance of the latter.
2. Employee is beyond the compulsory retirement age, and
reinstatement would unjustly prejudice their employer
2. Backwages
 Backwages are computed from the time compensation was
withheld from the employee up to the time of reinstatement.
3. Other benefits (or their monetary equivalent) from the time
compensation was withheld up to the time of actual reinstatement
Money Claims arising from Employer-Employee Relationship
1. Labor standards benefits
2. Separation pay
Rules on separation pay:
1. In case of installation of labor-saving devices or redundancy 1
month, or 1 month for every year of service, whichever is
higher
2. In case of disease, retrenchment, or closure not due to serious
business losses 1 month, or ½ month for every year of service,
whichever is higher
3. In case of illegal dismissal 1 month for every year of service
3. [Wage Rationalization Act] Wage increases
4. [SSS Law] Social security benefits
5. Financial assistance
6. Salaries corresponding to the unexpired term of the employment
contract
7. Nominal damages (in case of termination due to lack of procedural due
process)
8. Legal interest on monetary awards
9. Benefits granted by the employer to the employees
10. Retirement pay
When Not Deemed Dismissed; Employee on Floating Status
 Bona fide suspension of operation of a business for a period not
exceeding 6 months, or fulfillment by the employee of a military/civic
duty, shall NOT terminate employment.
 Placing an employee under floating status for more than 6 months
amounts to constructive dismissal.
 The employee must be given work for him/her not to be
considered under floating status.
Instances where floating status takes place among security
guards:
1. Security agency’s clients decide NOT to renew their
contracts with the agency, resulting in a situation where
the available posts are less than the number of guards in
the roster
2. Contracts for security services stipulate that the client
may request the agency for replacement of guards
assigned to it, and there are NO available posts under the
agency’s existing contracts to which the replaced guards
may be placed
Termination by Employee
With Notice to the Employer
Resignation voluntary act of an employee who finds himself/herself in a
situation where he/she believes that personal reasons cannot be sacrificed in
favor of the exigency of the service so much so that he/she must dissociate
himself/herself from his/her employment
 The employee must serve a written notice on the employer 1+ month in
advance.
EXCs:
1. Serious insult by the employer
2. Inhuman treatment
3. Commission of a crime by the employer against the employee
4. Analogous causes
 Resignation letters similarly worded and of same tenor with each other
are waivers/quitclaims.
 Such letters are insufficient to prove that there was valid
separation from work.
 Acceptance of the withdrawal of the resignation is the employer’s sole
prerogative.
Without Notice to the Employer
 The employee CANNOT claim illegal dismissal if the employer does
not accept withdrawal of an accepted resignation.
Distinguish Voluntary Resignation and Constructive Dismissal
Voluntary resignation Constructive dismissal
Employee voluntarily gives up his Employee is compelled to give up
or her position his/her position
Retirement
[LC] Compulsory retirement retirement upon reaching 65 years old
 The optional retirement age of underground mine workers is 50 years
old.
 The compulsory retirement age is 60 years old.
 Retirement at an earlier age must be voluntarily consented to by the
employee.
Retirement benefits:
1. Those earned under existing laws
2. Those earned under agreement
 If there is no agreement, an employee, upon reaching 60+ (but
not beyond 65) years old, who has served 5+ years in the
establishment, is entitled to retirement pay equivalent to ½+
month salary for every year of service.
½ month salary salary for 22.5 days
LABOR RELATIONS
Right to Self-Organization
 It is unlawful to restrain, coerce, discriminate against, or unduly
interfere with employees and workers in their exercise of the right to
self-organization.
 An employee has the right NOT to join a union.
EXC: Union security clause in the CBA
Union security agreement which imposes upon employees
the obligation to acquire/retain union membership
Closed shop enterprise in which, by agreement between
the employer and his/her employees, NO person may be
employed unless he/she is a member of the union
 There is union shop when new regular employees
must join the union within a certain period.
Maintenance of membership shop union members as of
the date of the CBA or thereafter must maintain union
membership as a condition for continued employment
Closed shop Maintenance of membership shop
Employer is Employee is obliged to maintain
obliged to hire union membership as a condition
only union for continued employment
members
Requisites for valid termination of employment pursuant
to a union security clause:
1. Union security clause is applicable
2. Union requests for the enforcement of the union
security provision in the CBA
3. Sufficient evidence to support the union’s decision
to expel the employee from the union
EXC to the EXC: Employee objects to union membership on
the ground of religious belief
Labor organization union/association of employees which exists for collective
bargaining or of dealing with employers concerning terms of employment
Legitimate labor organization labor organization registered with the DOLE
Modes of creation of labor organizations:
1. Independent registration
Requirements:
1. P50 registration fee
2. Copies of the constitution and by-laws of the union
3. Names of members comprising 20+% of all employees in
the bargaining unit (if independent union)
4. Proof of affiliation of 10+ locals/chapters, each of which is
a recognized collective bargaining agent in the
establishment (if federation)
5. Annual financial reports (if in existence for 1+ years)
 The Bureau of Labor Relations (BLR) shall act on applications
for registration within 30 days from filing.
Grounds for cancellation of registration:
1. Misrepresentation, false statement, or fraud in
connection with the:
a. Adoption of the constitution and by-laws; OR
b. Election of officers
2. Voluntary dissolution
3. Voluntary cancellation by the organization itself
Requisites:
1. 2/3 vote in a meeting called to dissolve the
organization
2. Application to cancel registration is attested to by
the president thereof
 A petition for cancellation of union registration does NOT
suspend the proceedings for certification election, NOR
prevents the filing of a petition therefor.
2. Chartering of local chapter or chartered local
Reportorial requirements:
1. Its constitution and by-laws
2. List of officers
3. List of members at least once a year or whenever required by the
BLR
4. Annual financial report within 30 days after the close of every
fiscal year
 Failure to comply therewith shall subject the erring officers or
members to appropriate penalty.
 The legal personality of a union CANNOT be the subject of a collateral
attack.
Who May or May Not Exercise the Right
 Persons employed in commercial, industrial, and agricultural
enterprises in the private sector may join/form/assist a labor
organization.
EXCs:
1. Managerial employees employees vested with the powers to
lay down and execute management policies, or hire, assign,
transfer, discipline, suspend, or discharge employees
Requisites:
1. Regularly directs the work of 2+ employees therein
2. Has the authority to fire and hire employees
Managerial employee Managerial employee under
under labor standards labor relations
Includes supervisory EXCLUDES supervisory
employees employees
2. Members of cooperatives
3. Confidential employees
Requisites for aliens:
1. Valid permit issued by the DOLE
2. Alien is a national of a country which grants the same/similar
rights to Filipinos
 An employee is considered as such for purposes of membership in
a labor union beginning on his/her first day of service.
Doctrine of Necessary Implication
 Confidential employees are disqualified from joining,
forming, or assisting a labor organization by necessary
implication (i.e., because they are privy to sensitive and
highly confidential records).
Commingling or Mixture of Membership
 Employees outside the bargaining unit, who are included as union
members, are automatically deemed removed.
Rights and Conditions of Membership
1. Members may elect their officers
2. Members may determine questions of major policy
3. Members are entitled to reports of financial transactions
4. Labor organization and its officers must inform its members on the
provisions of the collective bargaining agreement (CBA)
5. Special assessments and other extraordinary fees CANNOT be checked
off from an amount due to an employee
EXC: Authorization
Nature of Relationship
Member-Labor Union
 The relationship between the union and its members is that of principal
and agent (members – principal; union – agent).
Labor Union Federation
Federation (national union) the mother union
 The federation, acting for and in behalf of its affiliate, is an agent, while
the affiliate is the principal.
 An independent local union is a separate and distinct voluntary
association.
Equity of the incumbent federations and national unions continue to
maintain their existing affiliates regardless of nature of the industry and
location of the affiliates
Disaffiliation
 An affiliate union may disaffiliate from its federation.
Substitutionary Doctrine
Substitutionary doctrine employees CANNOT revoke a validly executed CBA
with their employer by changing their bargaining agent
Rights of Labor Organizations
1. To own property
2. To collect reasonable membership fees and assessments
3. To be furnished audited financial statements within 30 days from
receipt of the request or within the freedom period
4. To sue and be sued in its name
 A foreign individual/entity can only give assistance to a labor
organization with prior permission by the SOLE.
 Union members/organizers CANNOT be arrested/detained for union
activities without previous consultations with the SOLE.
EXC: Commission of a crime
Check Off, Assessment, Agency Fees
 Extraordinary fees CANNOT be checked off from an amount due to an
employee.
EXC: Authorized by a written resolution of majority of all members in
a general membership meeting duly called for the purpose
 Attorney’s fees CANNOT be imposed on a member of the contracting
union.
 Such fees may be charged only against the union funds in an
amount agreed upon by the parties.
Agency fee reasonable fee which the SEBA may collect from its non-members
Collective Bargaining
Requisites of collective bargaining:
1. Employer-employee relationship
2. Bargaining agent has the majority support of the members of the
bargaining unit
3. Lawful demand to bargain
Procedure:
1. Party desiring to negotiate shall serve a written notice with a statement
of its proposals
2. Other party shall make a reply thereto within 10 days
3. NCMB shall call the parties to conciliation meetings (if dispute is NOT
settled)
 The NCMB shall encourage the parties to submit their case to a
voluntary arbitrator.
 Parties CANNOT do an act which may disrupt/impede the early
settlement of the disputes.
Duty to Bargain Collectively
Duty to bargain collectively obligation to meet and convene promptly and
expeditiously in good faith to negotiate an agreement with respect to terms
and conditions of employment
 It is the duty of both the employer and the bargaining union to bargain
collectively.
 The duty does NOT compel any party to agree to a proposal.
Collective Bargaining Agreement
CBA contract incorporating the agreement reached after negotiations with
respect to terms of employment
 The CBA must be posted for 5 days before ratification, in 2 conspicuous
places in the establishment.
 The posting requirement is the responsibility of the employer.
 Ratification of the CBA by majority of the workers in the bargaining unit
makes the same binding on all employees therein.
 Parties to the CBA shall submit copies thereof to the BLR or the DOLE
Regional Office for registration.
 The Regional Office shall furnish the BLR with a copy of the CBA.
 The CBA is the law between the parties.
 A CBA is imbued with public interest.
 A CBA is construed liberally.
 Only provisions embodied therein should be interpreted.
 Separation pay may be awarded upon resignation if stipulated in the
CBA.
 Separation pay and retirement benefits may be paid at the same time if
the former is provided in a CBA and the latter in a separate retirement
plan.
 Termination of employment based on a retirement plan in the CBA NOT
individually consented to by the employee amounts to illegal dismissal.
Lifetimes of a CBA:
1. Representation aspect 5 years
2. All other provisions 3 years
 If such other provisions are renegotiated during the 5-year period,
their lifetime shall be only up to the said 5-year period.
Automatic retroaction of the CBA an agreement on the other
provisions entered into within 6 months from the expiry of the term
of such other provisions, shall retroact to the day immediately
following such date
Automatic renewal clause (evergreen clause) pending renewal of the CBA,
the parties are bound to keep the status quo and to treat the terms and
conditions embodied therein still in full force and effect during the 60-day
freedom period and until a new agreement is negotiated and ultimately
concluded and reached by the parties
EXC: (as to the status quo provision) Representational issue
Mandatory Provisions in a Collective Bargaining Agreement
1. Grievance procedure
Grievance machinery mechanism for adjustment and resolution of
grievances arising from the interpretation/implementation of a CBA
and of company personnel policies
 For an issue arising from the interpretation/implementation of
a CBA to be grievable, the violation of the CBA must NOT be
gross.
Gross violation of the CBA flagrant/malicious refusal by a
party to comply with the economic provisions thereof
 Disputes arising from wage distortions shall be resolved
through the grievance procedure.
 Grievances submitted to the grievance machinery NOT settled
within 7 calendar days are automatically referred to voluntary
arbitration.
Voluntary arbitrator (VA) person accredited by the NCMB as
such, or named in the CBA by the parties to act as such
 A VA is NOT part of the governmental unit or labor
departments personnel.
2. Proportionate sharing scheme on the cost of voluntary arbitration
3. No strike-no lockout clause
EXC: Strikes grounded on unfair labor practices (ULPs)
Unfair Labor Practices
Nature, Aspects
Unfair labor practices acts which violate the constitutional right of workers to
self-organization, are inimical to the legitimate interests of labor and
management, disrupt industrial peace, and hinder the promotion of healthy
and stable labor-management relations
 The Labor Arbiter shall give utmost priority to the hearing and
resolution of cases involving unfair labor practices.
 Criminal prosecution for ULP can only be instituted with a final
judgment by the Labor Arbiter finding that ULP was committed.
Aspects:
1. Civil
2. Criminal
Company union labor organization whose formation/function/administration
was assisted by an ULP
By Employers
1. Yellow dog contract contract which exacts from workers that they shall
NOT join/belong to a labor organization or attempt to organize one
during employment (or that they shall withdraw therefrom if they are
already members thereof) as a condition of employment
2. Interference with, or restraint/coercion of, employees in the exercise of
their right to self-organization
 The test is whether the employer has engaged in conduct which
may interfere with the free exercise of the rights to self-
organization and collective bargaining.
Totality of conduct doctrine expressions of opinion by an
employer, though innocent, may be ULP because of the history
of the employer’s labor relations or anti-union bias
 Dismissal of union officers which threatens the existence of the
union constitutes union-busting.
3. Interference with the formation/administration of a labor organization,
including the giving of support to it (or its organizers/supporters)
4. Discrimination:
a. To encourage/discourage membership in a labor organization; OR
 b. For having given or being about to give testimony under the Labor  Bonus is NOT demandable.
Code EXCs:
5. Violation of duty to bargain collectively 1. Bonus is a company policy/practice
Runaway shop relocation motivated by anti-union animus rather 2. Bonus is additional compensation which the employer agreed
than for business reasons to give without condition
Surface bargaining going through the motions of negotiating without 3. Stipulated in an employment contract or CBA
legal intent to reach an agreement EXC to the EXC: Amount of bonus is dependent upon the
Blue-sky bargaining making exaggerated/unreasonable proposals realization of profits
6. Payment of negotiation/attorney’s fees to the union or its officers or Change of Working Hours
agents as part of the settlement of an issue in a dispute  Employers may control the time when workers should report for work
7. Gross violation of CBA and perform their respective functions.
 Only officers/agents of entities, who have participated in or ratified Bona fide Occupational Qualifications
ULPs, are criminally liable.  Employers may impose qualifications based on race, sex, age, national
By Labor Organizations origin, civil status, or physical appearance if the same are actual
1. Restraint/coercion of employees in the exercise of their right to self- qualifications for performing the job.
organization Requisites to justify a bona fide occupational qualification:
2. Cause (or attempt to cause) an employer to discriminate against an 1. Qualification is reasonably related to the essential operation of
employee the job involved
3. Violation of duty to bargain collectively (for bargaining representatives) Reasonable business necessity rule qualification must reflect
4. Ask for or accept negotiation/attorney’s fees from employers as part of an inherent quality reasonably necessary for satisfactory job
the settlement of an issue in a dispute performance
5. Gross violation of CBA 2. Factual basis for believing that all (or substantially all) persons
6. Featherbedding causing (or attempting to cause) an employer to pay or meeting the qualification would be unable to properly perform
deliver (or agree to pay/deliver) things of value, as an exaction, for the duties of the job
services not performed (or not to be performed) Post-employment Restrictions
1. Non-compete clause
MANAGEMENT PREROGATIVE  A non-compete clause is valid as long as there are reasonable
limitations as to time, trade, and place.
Limitations on the exercise of management prerogatives:
 Regular courts have jurisdiction over breach of a non-compete
1. Law
clause.
2. CBA
2. Confidentiality and non-disclosure clause
3. General principles of fair play and justice
3. Non-solicitation clause
4. Should be done in good faith
4. Non-recruitment/anti-piracy clause
Discipline
5. Inventions assignment clause (intellectual property clause)
 The employer may instill discipline among its employees.
 The employer may insist on an agreement with the employee for
Components:
certain prohibitions to take effect after the termination of their
1. Right to promulgate rules and regulations
employer-employee relationship.
2. Right to impose penalty
Marriage between Employees of Competitor-employers
3. Right to choose which penalty to impose
 The employer may require that a woman employee NOT get married TO
4. Right to impose heavier penalty than what the company rules prescribe
AN EMPLOYEE OF A COMPETITOR-EMPLOYER as a condition for, or
5. Right to determine who to punish
continuation of, employment.
6. Right to discipline
7. Right to dismiss
Transfer of Employees JURISDICTION AND RELIEFS
Kinds of transfer: Labor Arbiter
1. Movement from one position to another of equivalent rank, level, or Jurisdiction of the Labor Arbiter as distinguished from the Regional Director
salary, without a break in the service Exclusive original jurisdiction of the labor arbiter:
2. Movement from one office to another within the same business a. Claims arising from employer-employee relations exceeding P5k
establishment EXC: Claims for employees compensation, social security, and
3. Reorganization PhilHealth and maternity benefits
4. Promotion advancement from one position to another involving  Before the rules on concurrence and preference of credits shall
increase in duties and responsibilities as authorized by law apply, there should first be a binding in rem proceeding where the
Promotion Transfer claims of all creditors would be adjudicated.
Scalar ascent to another Lateral movement to another b. Cases filed by workers involving terms and conditions of employment, if
position, higher in rank or position of equivalent rank/salary accompanied with a claim for reinstatement
salary Department of Labor and Employment Regional Directors
5. Demotion employee is relegated to a subordinate or less important Jurisdiction
position constituting a reduction to a lower grade/rank with a  The DOLE Regional Director has jurisdiction over claims for recovery of
corresponding decrease in duties and responsibilities monetary claims and benefits which do NOT exceed P5k NOR seek
 Transfer of employees is valid. reinstatement.
EXC: Demotion in rank Requisites for exercise of jurisdiction:
Productivity Standards 1. Claim is presented by an employee
 The employer may prescribe standards of productivity. 2. Money claim does NOT exceed P5k
 An employee is guilty of gross inefficiency if he/she fails to measure up 3. Claimant is no longer being employed
to the standard set by the employer.  Appeal is made to the NLRC.
 Gross inefficiency is analogous to gross neglect of duty. Recovery and Adjudicatory Power
Bonus Visitorial and enforcement power Adjudicatory power
 Bonus is a management prerogative. Inspection of establishments and Hearing and deciding claims for
 issuance of orders to compel recovery of wages, simple
compliance with labor laws and money claims, and other
regulations benefits
Appeal is made to the SOLE Appeal is made to the NLRC
Department of Labor and Employment Secretary
Jurisdiction
1. Original and exclusive jurisdiction:
a. Petition to assume jurisdiction over national interest cases
b. Petition to certify national interest cases to the NLRC for
compulsory arbitration
c. Petition to suspend effects of termination
d. Contempt cases
2. Appellate jurisdiction:
a. BLR Director in its original jurisdiction
b. Med-Arbiter in inter-union cases
c. DOLE Regional Director (in certain cases)
d. POEA in administrative cases involving violations of recruitment
rules and regulations, or against land-based OFWs, seafarers, and
principals/employers (except money claims)
Visitorial and Enforcement Powers
Visitorial powers of the SOLE or his/her representatives:
1. To question an employee, and investigate a fact/condition/matter to
determine violations, or which may aid enforcement, of labor laws
 The SOLE (or his/her representatives) may issue compliance
orders based on the findings of labor employment and
enforcement officers or safety engineers.
 They shall issue writs of execution for the enforcement of their
orders.
EXC: Employer contests the findings of the officer and raises
issues supported by documentary proofs NOT considered
during inspection
2. To inquire into the financial activities of legitimate labor organizations
and examine their records to determine compliance/non-compliance
with the law and to prosecute violations of the law, the union
constitution, and by-laws.
 The SOLE may order stoppage of work or suspension of operations of
an establishment if noncompliance with the law or rules and
regulations poses grave and imminent danger to the health and safety
of workers in the workplace.
Prescription of Actions
Money Claims
 Money claims and benefits arising from an employer-employee
relationship prescribe in 3 years.
Illegal Dismissal
 An action for illegal dismissal prescribes in 4 years.
Illegal Recruitment
[Migrant Workers Act] Prescriptive periods:
1. Simple illegal recruitment 5 years
2. Illegal recruitment involving economic sabotage 20 years
TAXATION LAW
GENERAL PRINCIPLES
Constitutional Limitations on Taxation
1. Due process
2. Equal protection
 If groupings of individuals/classes are characterized by substantial
distinctions that make real differences, one class may be treated
differently from another.
3. Religious freedom
 Public money CANNOT be appropriated/paid for the benefit of a
sect, church, denomination, sectarian institution, or system of
religion, or of a religious teacher/dignitary as such.
EXC: For a priest/preacher/minister/dignitary assigned to the
armed forces, penal institution, government orphanage, or
leprosarium
4. Prohibition against laws impairing the obligation of contracts
5. Prohibition against imprisonment for non-payment of poll tax
6. Bills should originate exclusively in the House of Representatives
7. President’s veto power
8. Delegated authority to the President to impose tariff rates
9. Prohibition against taxation of real property of charitable institutions,
churches, convents, mosques, non-profit cemeteries, parsonages, and
lands, buildings, and improvements actually, directly, and exclusively
used for religious/charitable/educational purposes
 If only portions of such properties are used actually, directly, and
exclusively, only these portions are exempt from tax.
10. Prohibition against taxation of revenues and assets of non-stock, non-
profit educational institutions actually, directly, and exclusively used for
educational purposes
11. Rule of taxation shall be uniform and equitable
12. Congress shall evolve a progressive system of taxation
13. Majority vote of Congress for tax exemptions
14. Prohibition on use of tax levied for special purpose
15. Judicial power to review legality of tax
NATIONAL TAXATION
Income Tax
Definition, Nature, and General Principles
Purposes of income tax:
1. To raise revenue to defray the expenses of the government
2. To mitigate the evils arising from inequalities of wealth by a progressive
scheme of taxation which places the burden on those best able to pay
Income Tax Systems
Global
Global (unitary) tax system all items of gross income, deductions, personal
and additional exemptions are reported in one income tax return (ITR), and a
single tax is imposed on all income
Schedular
Schedular tax system different types of activities or tax bases are subjected
to different types of tax rates
Others
Semi-global semi-schedular system certain passive income and capital gains
are subject to final taxes, while other items of income are added to arrive at
the gross income
Features of the Philippine Income Tax Law
1. Direct
2. Progressive
3. Semi-global/semi-schedular
4. Comprehensive
Criteria in Imposing Philippine Income Tax
Citizenship
Citizenship principle (nationality principle) a citizen of PH is subject to
Philippine income tax on his/her worldwide income (if he/she resides in PH)
or only on his/her income from sources within PH (if he/she qualifies as a
nonresident citizen)
[Consti] Citizens of PH:
1. Citizens at the time of adoption of the 1987 Constitution
2. Persons whose fathers/mothers are citizens
3. Persons born before Jan. 17, 1973 of Filipino mothers, and who elect
Philippine citizenship upon reaching majority age
4. Persons naturalized in accordance with law
Residence
Residence principle (domicile principle) a resident alien is liable to pay
Philippine income tax on his/her income from sources within PH, but is
exempt from tax on his/her income from sources outside PH
Source
 [NIRC] A non-resident alien (NRA) or non-resident foreign corporation
(NRFC) is liable to pay Philippine income tax on income from sources
within PH.
General Principles of Income Taxation
Overseas contract worker Filipino who holds a job outside the Philippines, is
registered with the Philippine Overseas Employment Administration, and has
a valid overseas employment certificate
Domestic corporation (DC) corporation incorporated in accordance with year), for a price exceeding P1k, or a disposition of real property,
Philippine laws (regardless of foreign equity) the initial payments do not exceed 25% of the selling price, the
Types of Philippine Income Taxes income may be returned on the basis and in the same manner.
1. Net income tax (NIT) Recognition of Income
2. Minimum corporate income tax (MCIT)  Recognition of income depends on the method of accounting.
3. 8% tax Tests in Determining Whether Income Is Earned for Tax Purposes
4. Withholding tax Realization Test
a. Creditable withholding tax (CWT)  Stock dividends are NOT income when the stockholder merely holds
b. Final withholding tax (FWT) more shares representing the same equity interest in the corporation
i. On certain passive investment income paid to residents that declared stock dividends.
ii. On income payments made to non-residents Claim of Right Doctrine or Doctrine of Ownership, Command or Control
5. Fringe benefits tax (FBT) on fringe benefits of supervisory/managerial Claim of right doctrine if the taxpayer receives earnings under a claim of right
employees and without restriction as to its disposition, such earnings are considered
6. Branch profit remittance tax (BPRT) income
7. Tax on improperly accumulated earnings of corporations (IAET) Economic Benefit Test or Doctrine of Proprietary Interest
8. Gross income tax (GIT) Economic benefit test income realized is taxable only to the extent that the
9. Intercorporate dividends tax (ICDT) taxpayer is economically benefited
Kinds of Taxpayers Severance Test
1. Individuals Severance test income is recognized when there is separation of something
a. Citizens of exchangeable value
i. Resident Methods of Accounting
ii. Non-resident Distinguish: Cash and Accrual Method
b. Aliens Cash method Accrual method
i. Resident Income is recognized Income is recognized when earned
ii. Non-resident when received (regardless of whether there is a cash receipt)
1. Engaged in trade/business Expense is recognized Expense is recognized when incurred
2. Not engaged in trade/business when paid
2. Corporations Special Method: Installment, Deferred Payment, Percentage of Completion
a. Domestic (in Long-Term Contracts)
b. Foreign  Sales of realty and casual sales of personalty may be reported in
i. Resident installment basis.
ii. Non-resident Deferred-payment sales sales in which the initial payment during the
“Corporations” include: tax year in which the sale was made exceeds 25% of the selling price
1. Partnerships  Persons whose gross income is derived in whole/part from long-term
2. Associations contracts shall report such income upon the basis of percentage of
3. Insurance companies completion.
4. Joint-stock companies Long-term contract building/installation/construction contract
5. Joint accounts covering a period of more than 1 year
Taxable Period Situs of Income
 A taxable period is always 12 months. Classification of income as to source:
Calendar period from January 1 to December 31 1. Income from sources within PH
 Individuals are required to use a calendar period. a. Interests derived from sources within PH
Fiscal period 12 months ending on the last day of any month other than  Interest issued by a bank in PH is income within PH.
December 31 b. Interests on interest-bearing obligations of residents
Concept of Income c. Dividends from a domestic corporation
Definition d. Dividends from a foreign corporation
Income Capital  If less than 50% of the gross income of such corporation for
Flow of services rendered by that capital by the Fund of property the 3-year period (ending with the close of the taxable year)
payment of benefit rendered by a fund of capital existing at an before the declaration of such dividends (or for such part of
in relation to such fund through a period instant of time such period as the corporation has been in existence) was
Service of wealth Wealth derived from sources within PH, only an amount
When Income Is Taxable proportionate to the ratio of [gross income of the
Existence of Income corporation from sources within PH : total income] shall be
Conditions when income becomes subject to income tax: considered as derived from sources within the PH.
1. Existence of income e. Compensation for labor or personal services performed in PH
2. Income is NOT EXEMPT from income tax f. Rentals and royalties from property located in PH (or from an
3. Income is received/realized during the taxable year interest in such property)
Realization of Income g. Income from sale of real property located in PH
 Increase in the value of a property is NOT income. h. Income from sale of shares in a domestic corporation
 A person who regularly disposes of personal property on an installment i. Income from sale of other personal property sold in PH
plan may return as income therefrom that proportion of the installment 2. Income from sources without PH
payments actually received in that year, which the gross profit realized 3. Income from sources partly within and partly without PH
(or to be realized when payment is completed) bears to the total  In case of gross income derived from sources partly within and
contract price. partly without PH, the taxable income is computed by deducting
 If, in a casual disposition of personal property (other than deductions apportioned thereto and a ratable part of any
property of a kind which would properly be included in the deduction which cannot definitely be allocated.
inventory of the taxpayer if on hand at the close of the taxable Gross Income
Definition taxable dividend, the amount so distributed in cancellation/redemption
Gross income all income derived from whatever source of the stock shall be taxable income.
Distinguish: Gross Income, Net Income, and Taxable Income Royalty Income
Gross income Net income Taxable income Royalty payment received for the use of patents
[gross sales or receipts Income after tax [gross income - Rental Income
- cost of sales] deductions] [Revenue Regulation] Options of the lessor in reporting income from
Sources of Income subject to Tax improvements made by a lessee:
Compensation Income 1. Outright method report at the time when the improvements are
 Benefits furnished by the employer for his/her convenience, or which completed
are necessary in his/her trade/business, are NOT compensation income. 2. Spread out method spread the estimated depreciated value of the
Fringe Benefits improvement at the termination of the lease over the life of the lease
Fringe benefit benefit granted in cash/kind by an employer to a managerial  If the lease is terminated, and the lessor comes into possession of the
or supervisory employee property before the time originally fixed, the lessor is considered to
Professional Income receive additional income.
 [Revenue Regulation] Professional income shall be subject to CWT rates  If the building is destroyed before the lease expires, the lessor may
prescribed. deduct as loss the amount previously reported as income (less salvage
Income from Business value) to the extent that such loss was not compensated by insurance.
Doing business continuity of commercial dealings and arrangements, and the Annuities and Proceeds from Life Insurance or Other Types of Insurance
performance of acts/works or the exercise of the functions normally incident  Proceeds of life insurance policies taken by a corporation on the life of
to and in progressive prosecution of the purpose and object of its an executive to indemnify it against loss in case of his/her death do NOT
organization constitute taxable income.
Income from Dealings in Property Prizes and Awards
Distinguish Ordinary Asset and Capital Asset  Prizes and winnings are subject to passive income only when awarded
Ordinary asset Capital in games of chance.
asset Pensions, Retirement Benefit, or Separation Pay
1. Stock in trade; All other  Pension is taxable to the extent of the amount received.
2. Property which would be included in the inventory of properties EXC: Bureau of Internal Revenue (BIR) approved pension plan
the taxpayer if on hand at the close of the year; held by Income from Any Source
3. Property held for sale in the ordinary course of trade the  The source of the income may be legal/illegal.
or business; taxpayer
Condonation of Indebtedness
4. Property used in trade/business subject to allowance
Cancellation/forgiveness of debt may amount to:
for depreciation; OR
1. Payment – when a person performs service for a creditor who cancels
5. Real property used in trade/business
 The fair market value (FMV) of shares which are listed but sold, his/her debt – which is taxable; or
bartered, or exchanged outside the local stock exchange is the closing 2. A gift – exempt from income tax
price on the day the shares are sold/bartered/exchanged (or the day Recovery of Accounts Previously Written Off
nearest thereto, if no sale is made in the local stock exchange on the Tax benefit rule recovered bad debts should be part of gross income in the
day of sale, barter, or exchange). year of recovery
Types of Gains Other instances where the tax benefit rule applies:
Net capital gain excess of the gains from sales/exchanges of capital assets 1. Casualty losses claimed as deductions but subsequently recovered
over the losses from such sales/exchanges Receipt of Tax Refunds or Credit
 Gains/losses are computed based on the FMV at the time of sale. 2. Refunds of taxes claimed as deductions
Special Rules pertaining to Income or Loss from Dealings in Property EXCs:
classified as Capital Asset (Loss Limitation Rule, Loss Carry-over Rule, 1. Estate and donor’s tax
Holding Period Rule) 2. Income taxes
Holding periods: 3. Stock transaction tax
1. If asset has been held for more than 12 months recognize 50% of the 4. Taxes NOT allowed as deductions
gain/loss Exclusions
2. Otherwise recognize 100% of the gain/loss 1. Return of premium
Tax-Free Exchanges 2. Life insurance proceeds
1. Party to a merger/consolidation exchanges property solely for stock in 3. Compensation for personal injuries or sickness, and damages received
the other party on account of such
2. Shareholder exchanges stock in a party to a merger/consolidation solely 4. Gifts, bequests, and devises
for stock in the other party EXC: Income from such property
3. Security holder of a party to a merger/consolidation exchanges 5. Prizes and awards made primarily in recognition of religious, charitable,
securities in the corporation solely for stock/securities in the other scientific, educational, artistic, literary, or civic achievement
party Requisites:
4. Person exchanges property to a corporation for stock or unit of 1. Person was selected without any action on his/her part
participation in the corporation, and thereby gains control (alone or 2. Person is NOT required to render substantial future services as
with up to 4 other persons) of the corporation a condition to receiving the prize/award
Passive Investment Income 6. Prizes and awards in sports competitions sanctioned by the national
Interest sports associations
Interest earning derived from depositing/lending money 7. PCSO/Lotto winnings NOT EXCEEDING P10k
Dividend 8. Minimum wage, and holiday pay, overtime pay, night shift differential
 If a corporation cancels/redeems stock issued as a dividend at such pay, and hazard pay of minimum wage earners
time and in such manner as to make the distribution and 9. De minimis benefits
cancellation/redemption essentially equivalent to the distribution of a De minimis benefit Limitation
Monetized unused vacation leave 10 days
 of private employees  SSS and GSIS benefits in excess of the mandatory contributions
Monetized vacation and sick leave are taxable.
of government officials and NONE 20. Dividends issued by a domestic corporation in favor of a domestic or
employees resident corporation
Medical cash allowance to P1,500/employee/semester 21. [Personal Equity and Retirement Account (PERA) Act] Income earned by
dependents of employees OR P250/month a contributor from investments and reinvestments of his/her PERA
Rice subsidy P2k OR 1 sack of 50 kg/month 22. Contributions to labor unions
not exceeding P2k 23. Campaign contributions exempt from donor’s tax
Laundry allowance P300/month Rationale
Gifts given during Christmas and 1. They represent return of capital
P5k
major anniversaries
2. They are subjected to another kind of internal revenue tax
Uniform/clothing allowance P6k
3. They are exempted from income tax under the Constitution, tax treaty,
Actual medical benefits
Tax Code, or a general/special law
Achievement awards in the form
Taxpayers Who May Avail
of tangible property other than
cash or gift certificate P10k Exclusion Taxpayer who may avail
Total benefits received by an Life insurance proceeds
employee pursuant to CBA and Retirement benefits, etc. Beneficiary
productivity incentive scheme
Daily meal allowance for overtime 25% of basic minimum wage Compensation for injuries/sickness Estate
10. 13th month pay, Christmas bonus, productivity incentive bonus, and Insured
other benefits (but only up to P90k) Return of premium
 De minimis benefits are NOT computed in determining the P90k Gifts, bequests, and devises Recipient
Income exempt under treaty Person specified in the treaty
ceiling.
Distinguish: Exclusions, Deductions, and Tax Credits
EXC: Excess of the de minimis benefits over their respective
ceilings Exclusions Deductions Tax Credits
Income received/earned Included in the Foreign taxes paid
11. Benefits from the Social Security System (SSS), Government Service
but are NOT taxable gross income beforehand but are
Insurance System (GSIS), and US Veterans Act
because of exemption by but are later claimed as credits against
12. Retirement benefits and pensions
virtue of a law/treaty deducted to Philippine income tax to
Requisites for those in the private sector: arrive at net arrive at the tax due and
1. If received pursuant to a private retirement plan income payable
a. Employed with the same employer for 10+ continuous Limitations on amount of total foreign tax credit:
years 1. taxable income in the foreign country x Philippine income tax
b. 50+ years old total taxable income
c. No part of the fund is used by the employer for purposes (for each foreign country where tax has been paid, adding them all)
other than for the benefit of the employee 2. total taxable income abroad x Philippine income tax
d. BIR has approved the private retirement plan total taxable income
2. If without private retirement plan Exclusions under the Constitution
a. 60+ years old  Proprietary educational institutions, including those cooperatively
b. Employed with the same employer for 20+ continuous owned, may likewise be entitled to the exemptions of non-stock, non-
years profit educational institutions, subject to the limitations provided by
13. Separation pay due to causes beyond the control of the employee law including restrictions on dividends and provisions for reinvestment.
 Attorney’s fees and costs of suit received on account of illegal  Subject to conditions prescribed by law, all grants, endowments,
dismissal are EXEMPT from tax. donations, or contributions used actually, directly, and exclusively for
EXC: Amount which exceeds actual damages educational purposes shall be exempt from tax.
14. Income from sale of principal residence Deductions
Requisites: 1. [NIRC] Optional standard deduction (OSD); OR
1. Principal residence of the seller  Optional standard deduction for a corporation is 40% of the gross
 For nonresidents, “principal residence” refers to where income.
he/she has the intention of returning to.  A taxpayer who elected to avail of the OSD must signify in his, her,
2. Seller informs the BIR within 30 days from the sale that he/she or its return such intention.
will avail of the exemption  It must be elected in the first quarterly return.
3. Proceeds must be fully used in acquiring a new principal  Otherwise, he/she/it shall be considered as having availed
residence within 18 months himself of the itemized deductions.
 The exemption can only be availed of once every 10 years.  The choice (or itemized deductions, by default) is irrevocable
 The historical cost is considered in determining how much will be for the rest of the year.
exempt. 2. Itemized deductions
 If the property is co-owned, the seller can only claim a. Expenses
exemption up to the extent of his/her share therein.  Expenses must be ordinary.
15. Income earned by the government in the exercise of governmental Ordinary normal
functions  Taxes paid by a tenant to/for a landlord are deductible.
16. Income exempt under treaty  Advertising expenses to stimulate current sale are
17. Income earned from deposits/investments in the PH, by: (1) foreign deductible.
government; (2) financing institution owned, controlled, enjoying  Purchases of tangible property to be used in trade/business
refinancing from foreign government; and (3) international/regional are NOT deductible as business expenses.
financial institution established by foreign government b. Interest
18. Interest from long term deposit with a maturity of 5 years EXCs:
19. Contributions to government remittances (e.g., SSS, GSIS) 1. Paid (or to be paid) to a related person
 Related persons: 2. If donor is a corporation up to 5% of taxable income
1. Members of a family before the contribution
 The family includes only ascendants, EXC: If the donation is to finance government priority
descendants, spouse, and siblings. projects
2. Between a corporation and an individual who  In such cases, it shall be fully deductible.
owns more than 50% of its stock g. Depreciation
EXC: Distributions in corporate liquidation Ways of depreciating assets:
3. Between corporations where more than 50% of 1. Straight-line method
the stock of each is owned by the same individual 2. Diminishing method allocating the value of the asset in a
4. Between grantor and a fiduciary of a trust specific period of years
5. Between fiduciaries of trusts having the same Allowed depreciation periods:
grantor 1. For real properties from 15-25 years
6. Between the fiduciary and a beneficiary of the 2. For tangible personal properties 5 years
trust h. Depletion
2. Debt is incurred to finance petroleum exploration i. Pensions paid to employees
 Interest paid in advance through discount by a taxpayer j. Research and development fees
reporting income on the cash basis can only be deducted in  Research expenses of compensation income earners (CIEs)
the year the debt is paid. for starting a business are deductible from their eventual
Tax arbitrage rule deductible interest expense shall be reduced business income.
by 33% of the interest income of the taxpayer subjected to General Rule
FWT  CIEs are NOT entitled to deductions.
c. Taxes  Deductions can only be claimed against income from trade, business, or
EXC: Stock transaction tax exercise of profession.
d. Losses Concept of Return of Capital
EXCs:  Costs of goods purchased for resale, with proper adjustment for
1. Tax-free exchanges opening and closing inventories, are deducted from gross sales in
2. Casualty loss has been claimed as a deduction from the computing gross income.
gross estate Distinguish: Itemized Deductions and Optional Standard Deduction
 In case of casualty loss of a depreciable asset, the whole Itemized deductions Optional standard deduction
book value of the asset remaining may be deducted from Must be supported by Need not be supported by documents
the gross income for the year when the loss occurred, in documents
addition to the depreciation expense for that year. Requirements for Deductible Items
Net operating loss carry over (NOLCO) loss of a taxpayer shall Requisites of itemized deductions:
be carried over as a deduction for 3 years 1. Necessary in business
 NOLCO is allowed only if there has been NO substantial Necessary appropriate and helpful to the taxpayer
change in the ownership of the business/enterprise. 2. Paid/incurred during the taxable year
No substantial change in the ownership 75+% of the 3. Reasonable in amount
shares or paid-up capital of the corporation is held by  Bad debts must be worthless and charged off.
or on behalf of the same persons Additional requisites for losses:
e. Bad debts 1. Caused by theft, robbery, embezzlement, or natural calamity
f. Contributions 2. Loss is NOT compensated for by insurance
i. Donations to institutions operating exclusively for charitable, Items Not Deductible
religious, or educational purposes 1. Losses from sales/exchanges of property between related persons
ii. Donations to the government under Sec. 36(B) of the NIRC
Amounts: 2. Advertising expenses to stimulate future sale
1. If donor is an individual up to 10% of taxable income 3. Expenses to maintain sales
before the contribution 4. Bribes and kickbacks
5. Cost of improvements
EXC: Intangible drilling costs

Income Tax on Individuals

Kind of taxpayer Source of income Kind of income and tax
Within Without Passive income Capital Capital gains Fringe benefits All other income
PH PH sourced within gains on on sale of
PH listed under sale of real shares of a
the succeeding property domestic
table located in corporation
PH NOT traded
Resident citizen YES
1. CIE FWT 6% FWT 15% FWT 35% FWT NIT
2. Self-employed
individual/professional
(SEI/SEP)
a. Gross sales or FWT 6% FWT 15% FWT N/A 1. NIT; OR
receipts do NOT 2. 8% of gross sales/receipts
exceed P3M in excess of P250k
(at the option of the taxpayer)
 b. Gross sales or
receipts exceed NIT
P3M
3. Mixed income earner 1. On compensation income
(MIE) (see No. 1)
2. On self-employment
income (see No. 2)
35% FWT
Non-resident citizen
Resident alien
(same rules as resident citizen)
NRA engaged in trade or
YES NO
business (NRAETB)
NRA NOT engaged in trade
25% FWT 25% FWT
or business (NRANETB)
Resident Citizens, Non-Resident Citizens, and Resident Aliens Passive income of individuals Tax rate
Coverage Prizes and winnings
Non-resident citizens: - PCSO and Lotto winnings of a NRAETB EXEMPT
1. Citizen who proves to the satisfaction of the CIR their physical presence - Other winnings exceeding P10k 20%
abroad with a definite intention to reside therein Interest on bank deposit
2. Citizen who leaves the PH for employment on a permanent basis
3. Citizen who derives income from abroad which requires him/her to be - Peso currency 20%
- Foreign currency 15%
physically present abroad most of the time during the year
EXC: Non-resident
 A seaman who is a citizen and who receives compensation for
- Long-term deposit
services rendered as a member of the complement of a vessel
engaged exclusively in international trade is treated as an - Pre-terminated on the 4th year 5%
overseas contract worker. - Pre-terminated on the 3rd year 12%
4. Immigrant - Pre-terminated before the 3rd year 20%
 An alien who comes to PH for a definite purpose which may be Royalties
promptly accomplished is NOT a resident. - For literary and musical compositions 10%
Taxation on Compensation Income - Others 20%
Inclusions Dividends from domestic corporations
(See “Compensation Income”) - Received by a citizen or resident alien 10%
Exclusions - Received by a non-resident alien engaged in 20%
 The first P250k is exempt from tax. trade/business
 A citizen previously considered as a nonresident and who arrives in PH Taxation of Capital Gains
to reside permanently therein shall be treated as a nonresident for the Income from Sale of Shares of Stock of a Philippine Corporation
taxable year in which he/she arrives with respect to his/her income  The tax base of sale of unlisted shares shall be (FMV + adjusted asset) –
from sources abroad until his/her arrival. liabilities.
 A resident citizen who becomes a nonresident during the taxable year Basis of FMV:
shall be treated as a resident for the whole taxable year. 1. Per tax declaration;
Taxation of Business Income/Income from Practice of Profession 2. Per zonal valuation; or
 Business income shall be subject to tax less all deductions incurred 3. Independent appraiser (whichever is higher)
during the business.  Capital gains on sale of listed shares are subject to stock transaction tax
Schedular at 0.6% of the gross selling price.
 The tax base for the graduated rates is taxable income.  The sale/exchange can only be registered in the corporate books if
8% Option receipt of payment of tax is filed with and recorded by the stock
 SEIs/SEPs may avail of either the graduated rates or an 8% tax. transfer agent or secretary of the corporation.
 The choice is irrevocable within the year. Persons exempt from capital gains tax on shares:
Rules on availing the 8% tax rate: 1. Dealers in securities
1. Gross sales/receipts do NOT exceed P3M  Gains from shares held as ordinary assets shall be subject to either
 Gross receipts do NOT include returnable deposits. the NIT or 8% tax.
2. Taxpayer signifies intention to use the 8% tax rate in the 1st 2. Investors in shares of a mutual fund company
quarter of the percentage/income tax return 3. Persons specifically exempt from national internal revenue taxes under
 If he/she fails to do so, he/she is deemed considered to special laws
have chosen the schedular option. Income from Sale of Real Property situated in the Philippines
3. First P250k is NOT subject to tax  The tax base of sale of real property shall be the gross selling price or
EXC: Mixed income earners the market value, whichever is the highest.
Taxpayers who cannot avail of the 8% tax rate:  In case of foreclosure sales, CGT is due upon consolidation of the title in
1. VAT-registered taxpayers favor of the buyer.
2. Taxpayers subject to percentage taxes other than those under Sec. 116  The buyer pays the CGT.
of the NIRC  Expropriation of real properties classified as capital assets may be taxed
3. Individuals enjoying income tax exemption at either 6% or under the schedular rate, at the option of the taxpayer.
4. Partners of a general professional partnership  If there is no full utilization of the proceeds of a sale of principal
EXC: As to other income residence, CGT will be applied to the following portion: (unused
Taxation of Partners in a General Professional Partnership proceeds / selling price) x tax base for CGT.
 Partners in a general professional partnership shall be taxed only in Income from Sale, Exchange, and Other Disposition of Other Capital Assets
their individual capacities.  Gains from shares of foreign corporations shall be subject to NIT or 8%
 Partners CANNOT claim deductions from their distributive share. tax.
Taxation of Passive Income Non-resident Aliens Engaged in Trade or Business
Indicators of being engaged in trade/business in PH:
1. Stays in PH for an aggregate period of more than 180 days
2. Principle of habituality if an alien regularly enters into commercial
transactions in PH, then he/she is engaged in trade/business
3. Puts up a branch of his/her business in PH
4. Appoints an agent
5. Hires employees
Non-resident Aliens Not Engaged in Trade or Business
 NRAs not engaged in trade/business have no deductions.
Aliens Employed by Regional Headquarters, Regional Operating
Headquarters, Offshore Banking Units, and Petroleum Service Contractors
 Emoluments received by aliens employed by regional headquarters
(RHQs) and regional operating headquarters (ROHQs) established in PH
by multinational companies, and those received by aliens employed by
offshore banking units (OBUs) established in PH, from such
headquarters or OBUs registered with the SEC on/before January 1,
2018, shall be taxed at 15%.
 Emoluments received by aliens who are permanent residents of a
foreign country but are employed and assigned in PH by a foreign
service contractor/subcontractor engaged in petroleum operations in
PH registered with the SEC on/before January 1, 2018 shall be taxed at
15%.
Individual Taxpayers Exempt from Income Tax
[Omnibus Investments Code] Pioneer enterprises:
1. Registered enterprise engaged in producing/processing goods or raw
materials that have been or are NOT being produced in PH on a
commercial scale
2. Registered enterprise which produces non-conventional fuels or
equipment which uses non-conventional sources of energy, or uses or
converts to non-conventional fuels or sources of energy in its
production/processing operations
3. Registered enterprise engaged in agricultural, forestry, and mining
activities (or the industrial aspects of food processing, if appropriate)
pre-determined by the Bureau of Investments (BOI) (in consultation
with the appropriate department) to be feasible and highly essential to
attaining the national goal in relation to a declared specific food and
agricultural program for social benefits of the project
4. Registered enterprise which uses a system of producing/transforming a
raw material into another or finished goods new and untried in PH
 The final product in such instances must involve the use and processing
of domestic raw materials when available, taking into account the risk
and magnitude of the investment.
Non-pioneer enterprises registered producer enterprises other than pioneer
enterprises
Minimum Wage Earner
[NIRC] Minimum wage earner worker who is paid NOT more than the
statutory minimum wage
 [NIRC] Minimum wage is fixed by the Regional Tripartite Wage and
Productivity Board.
Income of a minimum wage earner subject to tax:
1. Excess taxable income
2. Benefits in excess of the P90k ceiling
Exemptions Granted under International Agreements
 Services rendered to persons/entities whose exemption under special
laws or international agreements to which PH is a signatory effectively
subjects the supply of such services to 0%.

Income Tax on Corporations

Source of income Kind of income and tax
Passive income
Kind of taxpayer Without Capital gains on sale of Capital gains on sale of shares of a domestic
Within PH listed under the
PH land/buildings in PH corporation NOT traded
succeeding table
DC YES 6% FWT 15% FWT
Resident foreign FWT
corporation (RFC) FWT (for rates, see RFC: Taxation of Capital
YES NO (under all other income)
Gains)
NRFC 30% FWT
Kind of income and tax
Kind of
Inter-corporate dividends from domestic Improperly accumulated Branch profits
taxpayer All other income
corporations earnings remittances
DC 10% FWT N/A 1. RCIT; OR
EXEMPT 2. MCIT of 2% of gross income (if
RFC 15% FWT
N/A higher)
NRFC 15% FWT N/A 30% FWT
 Upon recommendation of the SOF, the President may allow DCs and  Yearly advances in substantial sums made to corporate officers
RFCs the option to be taxed at 15% GIT. who are stockholders indicate a purpose to avoid tax.
Domestic Corporations Proprietary Educational Institutions and Non-profit Hospitals
Taxation – In General  Proprietary educational institutions and non-profit hospitals whose
Regular Corporate Income Tax (RCIT) gross income from unrelated trade/activity does NOT exceed 50% of
 The rate of RCIT is 30%. the total gross income are subject to 10% NIT.
Minimum Corporate Income Tax (MCIT) Non-profit NO net income/asset accrues to a specific person
 MCIT is imposed beginning the 4th year of operations. Inurements:
Taxation of Passive Income 1. Payment of compensation/salaries/honorarium to
Passive income of corporations Tax rate organizers
Interest on bank deposit 2. Payment of exorbitant/unreasonable compensation to
- Peso currency 20% employees
- Foreign currency 15% 3. Provision of welfare aid and financial assistance to members
Royalties 20% 4. Donation
Taxation of Capital Gains 5. Purchase of goods/services in excess of the FMV from an
(See “RCs, NRCs, and RAs: Taxation of Capital Gains”) entity where a trustee/officer has an interest
Improperly Accumulated Earnings Tax 6. Assets distributed to trustees/organizers/officers/members
 If a corporation has accumulated income beyond the reasonable needs upon dissolution
of the business, the 10% improperly accumulated earnings tax shall be Government-owned or Controlled Corporations, Agencies, Instrumentalities
imposed. Exempted GOCCs:
1. GSIS
2. SSS 1. Organized refers to its corporate form
3. Philippine Health Insurance Corporation (PHIC) 2. Operated regular activities must be exclusively for charity
4. Local water districts 2. Mutual savings banks without capital stock
5. PhilHealth 3. Cooperative banks without capital stock
6. Pag-IBIG 4. Non-stock, non-profit educational institutions
Foreign Currency Deposit Units 5. Government educational institution
 Interest income from a depository bank under the expanded foreign 6. Cemetery companies owned and operated exclusively for its members
currency deposit system (EFCDS) is subject to 15% FWT. 7. Beneficiary societies/orders/associations operating for the exclusive
 Income derived by a depository bank under the EFCDS from foreign benefit of the members
currency transactions with local commercial banks are exempt from all 8. Civic leagues/organizations operated exclusively for social welfare
taxes.  The exclusivity test applies to civic leagues/organizations.
EXC: Interest income from foreign currency loans granted by a 9. Labor/agricultural/horticultural organizations
depository bank 10. Organizations of a purely local character, the income of which consists
 The same shall be subject to a final income tax of 10%. solely of assessments, dues, and fees from members solely for meeting
Resident Foreign Corporations its expenses
 For a foreign corporation to be considered engaged in trade/business, 11. Associations organized and operated as sales agent for marketing the
business transactions must be continuous. products of its members
Taxation – In General 12. Business league chambers of commerce or boards of trade
Regular Corporate Income Tax (RCIT) EXC: Part of its income inures to an individual
(See “Income Tax on Corporations”) 13. Certain GOCCs
Minimum Corporate Income Tax (MCIT) 14. Regional area headquarters
Entities EXEMPT from MCIT:  Income exempted from tax are those which are derived according to
1. International carriers the primary purposes of the said organizations.
2. OBUs EXCs:
3. ROHQs 1. Income from their properties
Branch Profit Remittance Tax (BPRT) 2. Income from their activities conducted for profit
Branch profit remittance tax tax on branch profit remitted by a branch of a [Constitution] EXC to the EXC: Income of non-stock, non-profit
foreign corporation to its head office educational institution used for educational purposes
Taxation of Passive Income Tax on Other Business Entities: General Partnerships, General Professional
 Passive income of RFCs are taxed at the same rates as those of DCs. Partnerships, Co-ownerships, Joint Ventures, and Consortia
Taxation of Capital Gains Partnerships NOT considered as corporations for tax purposes:
Tax rates on capital gains on sale of shares not traded: 1. General professional partnership (GPP) partnership exclusively
1. Gains NOT over P100k 5% established for the exercise of the common profession of the partners,
2. Gains in excess of P100k 10% and no part of its income is derived from trade/business
Resident Foreign Corporations subject to Preferential Tax Rates  A general professional partnership is EXEMPT from tax.
International Carriers 2. Joint ventures or consortia formed to undertake construction projects
 Reciprocity requires that Philippine carriers operating in the Home or engage in energy operations pursuant to an operating/consortium
Country of an international carrier are actually enjoying the income tax agreement under a service contract with the government
exemption.  [Special Economic Zone Act] A business enterprise within the ECOZONE
Foreign Currency Deposit Units and Offshore Banking Units shall pay 5% GIT in lieu of all other taxes.
 Interest income from a depository bank under the EFCDS is subject to Rules on remittance:
7.5% FWT. 1. 3% to the national government
 Income derived by a foreign currency deposit unit (FCDU) under the 2. 2% to the treasurer’s office of the municipality/city where the
ECFDS from foreign currency transactions with nonresidents, OBUs in enterprise is located
PH, and local commercial banks shall be EXEMPT from all taxes. Filing of Returns and Payment
Regional or Area Headquarters and Regional Operating Headquarters  [NIRC] Failure to file return is punishable by a fine of P10k+ and
 ROHQs are subject to 10% NIT. imprisonment of 1-10 years.
Non-resident Foreign Corporations (NRFC) Individual Return
Taxation of NRFC in General Who Are Required to File; Exceptions
(See “Income Tax on Corporations”) Persons NOT required to file ITRs:
NRFCs subject to Preferential Tax Rates 1. Those whose taxable income does not exceed P250k
NRFC Tax Tax base EXC: Engaged in business or practices a profession
rate 2. CIEs
Owner/lessor of vessel 4.5% Gross rentals and lease EXC: Those with 2+ employers at any time during the taxable year
and charter fees from PH 3. Those whose sole income has already been subjected to FWT
Cinematographic film owner, 25% Gross income from PH 4. Minimum wage earners
lessor, or distributor Substituted Filing
Lessor of equipment 7.5% Gross rentals and fees  The certificate of withholding filed by the respective employers, duly
from PH
stamped ‘received’ by the BIR, shall be tantamount to the substituted
Corporations Exempt from Tax
filing of ITRs by CIEs from only 1 employer in PH for the calendar year,
Organizations exempt from net income tax:
the income tax of which has been withheld correctly by the said
1. Non-stock, non-profit corporations/associations organized and
employer.
operated exclusively for religious/charitable/scientific/athletic/cultural
When and Where to File
purposes or for the rehabilitation of veterans
 A CIE required to file an ITR must file it by April 15 of the following year.
Non-stock no part of income is distributed as dividends, and profit as
 An employer who files an ITR for his/her employee must file it by
incident of operations shall be used for the furtherance of its
February 28.
purpose
Elements of the exclusivity test:
 A SEI/SEP/MIE shall file quarterly returns on May 15, August 15, and Fringe benefits NOT taxable:
November 15. 1. Fringe benefits authorized and exempted from tax under special laws
 He/she shall file an annual return on/before May 15 of the 2. Contributions of the employer to retirement, insurance, and
following year. hospitalization benefit plans for the benefit of the employee
Corporate Returns 3. De minimis benefits privileges of small value offered by an employer to
Quarterly Income Tax an employee
 A corporation must file a tax return after each quarter. 4. Fringe benefits necessary to the trade, business, or profession of the
Final Adjustment Return employer
If the sum of the quarterly returns is not equal to the total tax due, the 5. Fringe benefits for the convenience/advantage of the employer
corporation shall:  The FBT rate is 35%.
1. Carry over excess credit; OR  The rate is imposed on the grossed-up monetary value of fringe
2. Be credited/refunded with the excess amount benefit furnished/granted by the employer to the employee.
When and Where to File  The grossed-up monetary value of the fringe benefit shall be
 A corporation must file its quarterly return within 60 days after the determined by: monetary value of the fringe benefit / 65%.
close of each quarter. EXC: NRANETB
 A corporation must file its final adjustment return on April 15 (if it  In such cases, the grossed-up monetary value shall be
follows a calendar year) or on the 15th day of the 4th month after the determined by: actual monetary value of the fringe benefit /
close of the taxable year (if it follows a fiscal year). (100% - applicable rate)
Return of Corporations Contemplating Dissolution or Reorganization  FBT is payable by the employer.
[Revenue Regulation] Requirements to be submitted to the BIR: Duties of a Withholding Agent
1. Short period return 1. Deduct and withhold tax
2. Copy of the resolution for its dissolution 2. File return
3. Income statement covering the beginning of the year up to dissolution 3. Pay tax to the treasurer of the city/municipality where he/she resides
4. Balance sheet at the date of dissolution or has his/her place of business
5. Names and addresses of shareholders and their holdings Donor’s Tax
6. Value and a description of assets received in liquidation by each Basic Principles, Concept, and Definition
shareholder Donor’s tax levied upon the transfer of property by gift
 The corporation must also secure a tax clearance from the BIR.  Donor’s tax is a transfer tax.
Return on Capital Gains Realized from Sale of Shares of Stock and Real  Donor’s tax shall not apply until there is a completed gift.
Estate  The same classification of taxpayers, situs rules, and rules on IPP for
 The return for sale/exchange of stock not traded must be filed within estate tax apply.
30 days after each transaction.  Donor’s tax is 6% of the net gift in excess of P250k.
 The seller must file a final consolidated return of all transactions  Net gift is computed as follows: [gross gift – authorized
during the year. deductions].
Withholding Tax  Donor’s tax is computed by calendar year.
Concept  Donor’s tax is computed on a cumulative basis (i.e., in computing
 If the employer fails to deduct and withhold the tax as required, and the tax for each donation, include in the gross gift previous gifts
thereafter the tax against which such tax may be credited is paid, the made during the calendar year).
employer shall be liable for any penalty or addition to the tax otherwise Requisites of a Valid Donation
applicable in respect of such failure to deduct and withhold.  There is delivery if the subject matter is within the dominion and
Final Withholding Tax control of the donee.
Income subject to FWT:  The donation must be inter vivos to be subject to donor’s tax.
1. Passive income  The donation must be made gratuitously and voluntarily.
2. Capital gains Transfers which May Be Considered as Donation
Creditable Withholding Tax  Renunciation by the surviving spouse of his/her share in the conjugal
CWT FWT partnership or absolute community is subject to donor’s tax.
Transactions subjected thereto are Transactions subjected thereto Sale, Exchange, or Transfer of Property for Less than Adequate and Full
still subjected to another type of shall NO LONGER be subject to Consideration; Exception
tax other taxes  In case of a transfer for less than adequate consideration, [FMV -
[NIRC] Income subject thereto Does NOT form part of the gross consideration received] shall be deemed a gift.
forms part of the gross income income EXCs:
Tax withheld shall be claimed as a Tax withheld represents the true 1. Transfer made in the ordinary course of business
tax credit tax due Requisites:
Expanded Withholding Tax 1. Bona fide transaction
Requisites for application of expanded withholding tax: 2. Arm’s length
1. Expense is paid by the withholding agent, which is income to the 3. Free from donative intent
recipient thereof subject to income tax 2. Property transferred is a real property classified as a capital
2. Income is fixed/determinable at time of payment asset
3. Income is listed in the regulations Condonation or Remission of Debt
4. Recipient is a resident liable to income tax  If a creditor cancels the debt, the amount of the debt is a donation to
5. Withholding agent is a resident the debtor.
Withholding Tax on Compensation Renunciation of Inheritance; Exception
 The tax to be withheld must be determined in accordance with the Implications of renunciation by an heir of his/her share in the estate:
rules and regulations prescribed by the SOF, upon recommendation of 1. If renunciation is general NOT subject to donor’s tax
the CIR. 2. If renunciation is to a specified heir, to the exclusion of other co-heirs
 Withholding is not required if the total compensation income does NOT subject to donor’s tax
exceed the statutory minimum wage (or P5,000/month, if higher). Classification of Donor
Fringe Benefits Tax
1. Resident/citizen  An ecozone is deemed in law as foreign soil.
2. Non-resident alien  Sales to an ecozone are deemed as exports.
Determination of Gross Gift Persons Liable to Value-added Tax
Composition of Gross Gift 1. Seller of goods
1. If the donor is a resident/citizen all property 2. Seller of services
2. If the donor is a nonresident alien properties situated in PH only 3. Importer of goods
Valuation of Gifts Made in Property Course of trade/business regular conduct/pursuit of a commercial/economic
 In case of real property, the amount of the gift shall be whichever is activity, including transactions incidental thereto
higher of: (1) the FMV as determined by the CIR; or (2) the FMV as  A NRA seller of services is NOT required to have regularity of conduct in
shown in the schedule of values fixed by the Provincial and City order to be considered as “in the course of trade or business”.
Assessors. Imposition of Value-added Tax
 The FMVs shall be determined at the time of gift. On Sale of Goods or Properties
 The value of each share of stock is [assets of the corporation / # of Tax Base: Gross Selling Price
shares].  The VAT rate on sale of goods is 12% of the gross selling price.
Exemption of Certain Gifts Transactions Deemed Sale
Exempted gifts: 1. Transfer/use/consumption NOT in the course of business of
1. General renunciation by an heir of his/her share in the hereditary goods/properties originally intended for in the course of business
estate 2. Transfer of inventory to: (1) shareholders/investors as share in the
2. Transfer made in the ordinary course of business profits of the VAT-registered person; or (2) creditors in payment of debt
3. In favor of educational/charitable/religious institution/organization 3. Consignment (if actual sale is not made within 60 days following the
Requisites: date such goods were consigned)
1. Only up to 30% of the transfers is used for administration 4. Inventories of taxable goods existing as of retirement/cessation
purposes Change or Cessation of Status as Value-added Tax-registered Person
2. Institution/organization is non-stock Grounds for cancellation of VAT registration:
4. Political contribution duly reported to the BIR 1. Taxpayer makes written application and can show that gross sales or
Requisites: receipts (except those from VAT-exempt transactions) for the next 12
1. For campaign purposes months will NOT exceed P1.5M
2. Made within the official campaign period 2. Taxpayer ceased to carry on his/her trade/business, and does NOT
3. Subject to 5% CWT expect to recommence any trade/business within the next 12 months
4. Candidate has filed a statement of contribution and On Importation of Goods
expenditures (SOCE)  In the case of tax-free importation of goods into PH by persons, entities,
 Unutilized/excess campaign funds are NOT exempted. or agencies exempt from tax where such goods are subsequently
5. To or for the use of the national government transferred in PH to non-exempt persons/entities, the transferees shall
Tax Credit for Donor’s Taxes Paid to a Foreign Country be considered the importers thereof, who shall be liable for internal
 The amount of tax credit shall be limited to the (total net gifts outside revenue tax on the importation.
PH / total net gifts worldwide) x amount of tax paid in PH. On Sale of Services and Use or Lease of Properties
Filing of Return and Payment  The VAT rate on sale of services or use/lease of properties is 12% of the
 Donor’s tax return must be filed within 30 days after donation. gross receipts.
Contents of the return: Zero-Rated and Effectively Zero-Rated Sales of Goods or Properties, and
1. Gifts made during the calendar year Services
2. Deductions claimed and allowable Zero-rated sales Effectively zero-rated sales
3. Previous net gifts made during the calendar year Export sales Sales to persons whose exemption under special
4. Name of the donee laws or international agreements to which PH is a
5. Such further information as may be required signatory effectively subjects the sales to zero rate
Value-added Tax For the benefit
For the benefit of the PURCHASER
Nature and Characteristics of Value-added Tax of the SELLER
 VAT is 12%. Export sales of goods:
 VAT is a business tax. 1. Sale and actual shipment of goods from PH to a foreign country paid for
Tax on Value Added in acceptable foreign currency (or its equivalent in goods/services), and
 VAT is a tax on the “value added”. accounted for
Sales Tax 2. Sale of raw/packaging materials to:
VAT tax on the sale/barter/exchange/lease of goods and services in PH and a. Non-resident buyer for delivery to a resident enterprise to be
the importation of goods into PH used in manufacturing/processing/packing/repacking in PH
Tax on Consumption buyer’s goods and paid for in acceptable foreign currency (or its
 VAT is a tax on consumption. equivalent in goods/services) and accounted for; OR
Indirect Tax; Impact and Incidence of Tax b. Export-oriented enterprise whose export sales exceed 70% of
 VAT is an indirect tax. production
Tax Credit Method 3. Export sales under special laws
 Input tax shall be creditable against the output tax. a. [Omnibus Investments Code] To bonded manufacturing
Zero-rated transactions Exempt transactions warehouses of export-oriented enterprises
NOT subject to VAT at all stages NOT subject to VAT only at one stage b. To registered export traders operating bonded trading
of the transaction of the transaction warehouses supplying raw materials for manufacturing export
Input VAT may be credited Input VAT CANNOT be credited products
against output VAT against output VAT c. To BOI-registered producers whose products are 100% exported
Destination Principle and Cross-border Doctrine 4. [NIRC] Sale of goods, supplies, equipment, and fuel to persons engaged
Cross-border doctrine no VAT shall form part of the cost of goods destined in international shipping or international air transport
outside of the territorial border of the taxing authority EXC: (as to (2) and (3)) Successful establishment and implementation of an
enhanced VAT refund system thant refunds creditable input taxes within
 90 days from filing the application with the BIR, and all VAT refund claims Input and Output Tax
as of December 31, 2017 are fully paid in cash by December 31, 2019 Input tax VAT on purchase of goods/services
Zero-rated sales of services: Output tax VAT on the sale of goods/services
1. Processing/manufacturing/repacking goods for other persons, Refund or Tax Credit of Excess Input Tax; Procedure
subsequently exported and paid for in acceptable foreign currency  Input tax evidenced by a VAT invoice or official receipt on purchase or
2. Services by contractors/subcontractors in processing, converting, or importation of goods or for purchase of services is creditable against
manufacturing goods for an enterprise whose export sales exceed 70% output tax.
of total annual production Instances where one can avail of a VAT refund:
3. Services to a person engaged in business conducted outside PH or to a 1. Zero-rated and effectively zero-rated sales
non-resident not engaged in business and who is outside PH, and paid 2. Cessation of business/VAT-status
for in acceptable foreign currency  Administrative claim for refund shall be filed within 2 years from the
4. Services to persons/entities whose exemption under special laws or close of the quarter when the zero-rated transaction occurred.
international agreements effectively subjects such services to 0% rate  For unused input VAT upon retirement/change/cessation of status
5. Services to persons engaged in international shipping or international as VAT-registered taxpayer, the claim shall be filed within 2 years
air transport operations pertaining to the transport of goods and from the date of cancellation of VAT registration.
passengers from a Philippine port directly to a foreign port (or vice  Cases for refund of creditable input tax should be decided within 90
versa) days from the filing of the documents in support of the application with
6. Transport of passengers and cargo by sea/air carriers from PH to a the BIR.
foreign country  The previous 120-day period shall apply only to transactions
7. Sale of power/fuel generated through renewable sources of energy before December 30, 2018.
Value-added Tax-exempt Transactions  In case of denial of the claim, the taxpayer may appeal with the
1. Sale/importation of agricultural and marine food products in their CTA within 30 days from receipt of the decision.
original state, livestock, and poultry, and breeding stock and genetic  Willful neglect of the CIR to act on the application is punishable.
materials  Amortization of input VAT on goods purchased/imported in a calendar
 “Original state” includes products which have undergone the month for trade or business for which deduction for depreciation is
simple process of preparation/preservation for the market. allowed is only allowed until 2021.
2. Sale/importation/printing/publication of books, and of newspapers, Compliance Requirements
magazines, reviews, or bulletins which appear at regular intervals with Registration
fixed prices for subscription and sale, and are NOT devoted principally  Persons whose gross sales/receipts for the past 12 months have
to the publication of paid ads exceeded P3M (or are reasonably believed to exceed P3M) must
3. Sale of real properties NOT primarily held for sale/lease register for VAT.
4. Sale of real properties used for low-cost/socialized housing Invoicing Requirements
5. Sale of residential dwellings < P2M VAT-registered persons must issue:
6. Sale of gold to the Bangko Sentral ng Pilipinas 1. A VAT invoice for every sale/barter/exchange of goods
7. Sale of drugs/medicines for diabetes, high cholesterol, and 2. A VAT official receipt for every lease of goods, and for every sale,
hypertension barter, or exchange of services
8. Export sales by persons NOT VAT-registered Filing of Returns and Payment
9. Educational services by private educational institutions accredited by  A VAT return covering the amount of his/her gross sales/receipts and
the DepEd, CHED, and TESDA, and by government educational purchases for the prescribed taxable quarter must be filed by the
institutions taxable person within 25 days following the close of the quarter to
10. Services rendered by individuals pursuant to an employer-employee which it relates.
relationship Withholding of Final Value-added Tax on Sales to Government
11. Medical, dental, hospital, and veterinary services  Beginning January 1, 2021, the VAT withholding system in sales to the
EXC: Rendered by professionals government shall shift from final to creditable.
12. Services subject to percentage tax Administrative and Penal Sanctions
13. Importation of personal and household effects belonging to persons Act Sanction
coming to settle in PH or Filipinos who are now residents/citizens of Failure to issue receipts/invoices
other countries Failure to file VAT return and pay VAT
5+ days closure of
14. Importation of professional instruments and implements, tools of trade, Understatement of taxable sales or
establishment
wearing apparel, domestic animals, and personal household effects receipts by 30+%
EXC: Vehicles and goods for use in manufacture and merchandise Failure to register for VAT when
15. Transport of passengers by international carriers required VAT without the benefit of
16. Transactions exempt under international agreements Non-VAT-registered person issues input tax credit
EXC: Granted under the Petroleum Exploration Concessionaires invoice/receipt showing his/her 50% surcharge
17. Assessments and charges collected by homeowners’ and condominium Taxpayer Identification Number
Other percentage taxes
followed by the word “VAT”
corporations
VAT-registered person fails to display
18. Lease of residential units with monthly rental < P15k
prominently the term “VAT-exempt
19. Sale/lease of goods < P3M VAT
Sale” on an invoice/receipt for a VAT-
20. [Senior Citizens’ Act] Sale to senior citizens exempt transaction
21. [RA 10754] Sale to persons with disability Tax Remedies under the National Internal Revenue Code
22. Money received in trust which do NOT belong to the recipient and Assessment of Internal Revenue Taxes
which do NOT redound to his/her benefit Prescriptive Period for Assessment
23. Services rendered by PAGCOR General Rule
Type of income VATable?  The right to assess must be exercised within 3 years from: (1) when the
Compensation return was filed; or (2) the last day for filing the return, whichever is
NO
Income of SEI/SEP NOT exceeding P3M later.
Income of SEI/SEP exceeding P3M YES
  If the date on which assessment is due to prescribe falls on a
Saturday, the government has until the next succeeding business
day within which to assess the tax.
 If the taxpayer files an amended return substantially different
from the original return, the period is counted from the filing of
the amended return.
 Books of accounts of persons shall be preserved by them for a
period beginning from the last entry in each book until the last
day of the prescriptive period for assessment.
 An assessment notice is deemed issued once the demand letter or
notice is released/mailed/sent by the CIR to the taxpayer.
EXCs:
1. Before the expiration of the period, CIR and the taxpayer
agreed to the assessment of the tax after such time
Requisites:
1. In writing
2. Signature of the taxpayer and date of execution appear
on the face of the waiver
3. Signature of the BIR officer appears on the waiver
4. Executed in 3 copies
 The dates of execution and of acceptance must be
within the original prescriptive period.
EXC: CIR and the taxpayer are in pari delicto
2. False/fraudulent/no return
 The prescriptive period is 10 years from the discovery of
the falsity/fraud/omission.
 If a return is filed in the wrong venue, it is deemed as if no
return was filed.
 Alternatively, the BIR may file a return on behalf of the
taxpayer.
Distinguish: False Returns, Fraudulent Returns, and Non-Filing of Returns
Suspension of Statute of Limitations
Grounds:
1. Taxpayer is out of PH
2. Taxpayer CANNOT be located in the address given by him/her in the
return filed upon which a tax is being assessed/collected
EXC: Taxpayer informs the CIR of a change in address
3. Warrant of distraint/levy is served upon the taxpayer, his/her
authorized representative, or a member of his/her household with
sufficient discretion, and NO property could be located
4. Period during which the CIR cannot make the assessment, or beginning
distraint/levy or a proceeding in court, and for 60 days thereafter
5. CIR and the taxpayer agreed in writing for the extension of the
assessment
Taxpayer’s Remedies
Protesting an Assessment
Period to File Protest
 The taxpayer may protest the FLD/FAN within 30 days from receipt
thereof.
 If the 30th day falls on a holiday/weekend, the 30-day period shall
end on the next working day.
Kinds of Protest – Request for Reconsideration or Reinvestigation
Request for reconsideration Request for reinvestigation
Plea for a re-evaluation on the Plea for a re-evaluation on the
basis of existing records basis of additional evidence
Submission of Supporting Documents
 Supporting documents may be submitted upon filing the request for
reinvestigation.
 Otherwise, the documents shall be submitted within 60 days from
the filing of the protest.
 The BIR CANNOT determine the supporting documents to be
submitted.
Effect of Failure to File Protest
 If the taxpayer fails to file a valid protest against the FLD/FAN, the
assessment shall become final, executory, and demandable.
Action of the Commissioner on the Protest Filed
Possible actions for the CIR on the protest:
1. Denial
Instances equivalent to denial:
1. Enforcement of collection
2. Issuance of a final demand letter from the BIR, reiterating to
the taxpayer the immediate payment of a tax deficiency
assessment
3. Referral of request for reinvestigation to the Solicitor General
2. Grant
3. Partly grant
4. Inaction
Period to Act upon or Decide on Protest Filed
Type of protest Period
Reinvestigation 180 days from submission of supporting documents
Reconsideration 180 days from filing
Remedies of the Taxpayer in case of Denial or Inaction of the Commissioner
1. Appeal to the CTA division
2. Await the final decision of the CIR (in case of inaction)
Effect of Failure to Appeal
 If the taxpayer fails to appeal, the decision/assessment becomes final
and executory.
EXC: BIR does NOT act within the 180-day period, and the taxpayer
opts to wait until it decides
Recovery of Tax Erroneously or Illegally Collected
 A refund check/warrant must be claimed within 5 years from mailing or
delivery thereof.
 A tax credit certificate must be used within 5 years from issuance.
Periods for Filing a Claim for Refund or Issuance of a Tax Credit Certificate
 The claim must be filed within 2 years from payment of the tax/penalty.
Rules in determining date of payment:
1. For corporate income tax date of filing of the final adjustment
return or annual ITR
2. For FWT date of actual remittance (or last day of the month
after the quarter when withholding was made, if earlier)
3. For CWT date of filing of the ITR of the payee (or last day for its
filing, if earlier)
4. For DST date of occurrence of taxable transaction
 A judicial claim must also be filed within the same period.
 The claimant must first file an administrative claim before
filing a judicial claim.
Distinguish from Input Value-Added Tax Refund
 Refund of tax erroneously or
illegally collected
Judicial claim MUST be filed
within 2 years from payment of
tax/penalty
Input VAT refund
Judicial claim may be filed within 30
days from receipt of the decision
denying the administrative claim

Income tax Donor’s tax Deduction from

income tax
If income is derived from governmental functions – EXEMPT
If donation is by a CIE
Government – NOT deductible
Otherwise – TAXABLE
EXEMPT

Government educational Income derived as such – EXEMPT If donation is by a SEI,

institution
Charitable/religious
institution
Non-stock, non-profit
educational institution
Proprietary educational
institution or hospital
SEP, or MIE –
DEDUCTIBLE by 10% of
Income from activities conducted for profit – TAXABLE taxable income before
donation
Income from real properties – TAXABLE
If donation is by a
If income is ADE used for religious, charitable, or Gift/bequest/devise, but only up to 30% corporation –
educational purpose – EXEMPT thereof is used for administration DEDUCTIBLE by 5% of
purposes – EXEMPT taxable income before
donation
Otherwise – TAXABLE
Otherwise – TAXABLE
If donation is for a
If income from unrelated activity DOES NOT EXCEED 50% of government priority
total income – TAXABLE AT 10% project – DEDUCTIBLE
in FULL
Otherwise – TAXABLE at NIT rate

JUDICIAL REMEDIES f. Decisions of the SOF on customs cases elevated to him/her

Jurisdiction of the Court of Tax Appeals
Exclusive Original and Appellate Jurisdiction over Civil Cases
Cases within the original jurisdiction of the CTA division:
1. [RA 9282] Tax collection cases involving final and executory
assessments for taxes and fees where basic tax is P1M+
 If the basic tax is less than P1M, the RTC has jurisdiction over
cases within Metro Manila where the basic tax exceeds P400k (or
outside Metro Manila where the basic tax exceeds P300k).
 Otherwise, jurisdiction is with the Municipal Trial Courts.
2. Constitutionality of tax laws/regulations
EXC: Local tax cases
3. Injunction to enjoin collection of taxes
Cases within the appellate jurisdiction of the CTA:
1. [NIRC] Decisions of the SOF involving the validity of tax laws
2. [RA 9282] Division:
a. Decisions of the CIR involving matters arising under laws
administered by the BIR
EXC: Government entity disputes a tax assessment
b. Inaction by the CIR involving matters arising under laws
administered by the BIR, when the NIRC provides a specific period
of action
c. Decisions/orders/resolutions of the RTCs in local tax cases
originally decided by them
d. Appeals from the RTC in tax collection cases
e. Decisions of the Commissioner of Customs (COC) involving
matters arising under the laws administered by the Bureau of
Customs (BOC)
automatically for review from decisions of the COC adverse to the
government
g. Decisions of the Secretary of Trade and Industry (nonagricultural
products/commodities/articles) and the Secretary of Agriculture
(agricultural products/commodities/articles) involving dumping
and countervailing duties, and safeguard measures, where either
party may appeal the decision to impose or not to impose said
duties
3. En banc:
a. Resolutions of the CTA division on motions for reconsideration
b. Petitions for review from the RTC in tax collection cases
c. Decisions of the CBAA involving the assessment and taxation of
real property originally decided by the LBAA
 The CTA has jurisdiction to issue writs of certiorari.
Instances:
1. Interlocutory order of the RTC in cases falling within the
appellate jurisdiction of the CTA
2. Acts of the CIR, COC, SOF, CBAA, and Secretary of Trade and
Industry on tax-related problems
Exclusive Original and Appellate Jurisdiction over Criminal Cases
 The CTA has exclusive original jurisdiction over violations of laws
administered by the BIR/BOC where amount claimed is P1M+.
 If the amount claimed is less than P1M, or there is no amount
claimed, it exercises appellate jurisdiction.
 The offense/felony shall be tried by the regular courts.