TAXATION 1

COURSE SYLLABUS

A. GENERAL PRINCIPLES OF TAXATION

I. TAXATION

A. Definition
B. Nature of Internal Revenue Law
CASE:

1. Hilado v CIR, G.R. No. L-9408, October 31, 1956 100 Phil 288

C. Scope and Nature of Taxation (or the characteristics of Taxing Power)

i. Sec. 28, Art. VI, 1987 Constitution
CASES:
1. Sison v Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654-
2. Phil. Guaranty v CIR, G.R. No. L-22074, April 30, 1965, 13 SCRA 775-
3. Tio v Videogram Regulatory Board, G.R. No. 75697 (1987)
4. Republic v Caguioa G.R. No. 168584 (2007)-tax exemption
5. CIR v Algue, Inc., L-28896, Feb. 17, 1988

D. Underlying Theory and Basis; Lifeblood Theory; Necessity Theory; Benefit-Received

Principle
CASES:
1. Commissioner v. Algue, G.R. No. L-28896, February 17, 1988, 158
SCRA 9
2. Lorenzo v. Posadas, G.R. No. 43082, June 18, 1937, 64 Phil 353
3. Paseo Realty & Development Corporation v. CA, G.R. No. 119286
(2004)
4. NPC v. Cabanatuan, GR149110, April 19,2003
5. YMCA vs CIR

E. Purpose of Taxation
i. General/Fiscal/Revenue
CASES:
1. Napocor v Province of Albay G.R. No. 87479, 4 June 1990
2. Tolentino v. Secretary of Finance, G.R. No. 115455, August 8,
1994, 235 SCRA 630; 249 SCRA 628
ii. Non-revenue/Special or Regulatory
CASES:
1. Southern Cross Cement Corporation v. Cement Manufacturers
Association of the Philippines, et al., G. R. No. 158540 (2005)
2. Osmena v. Orbos, G.R. No. 99886, March 31, 1993, 220 SCRA
703
3. PAL v Edu, G.R. No. L-41383, 164 SCRA 320

F. Principles of a Sound Tax System

i. 1987 Constitution, Art. VI, Section 28(1)

CASES:
1. Chavez v Ongpin, G.R. No. 76778, June 6, 1990, 186 SCRA 33
 2. Taganito Mining v CIR CTA Case 4702 April 28, 1995

G. Comparison with Police Power and Eminent Domain

CASES:
1. Roxas v. CTA, G.R. No. L-25043, April 26, 1968, 23 SCRA 276
2. LTO v. City of Butuan, G.R. No. 131512, Jan. 20, 2000
3. Lutz v. Araneta, G.R. No. L-7859, December 22, 1955, 98 Phil 48
4. NTC v. CA, G.R. No. 127937, July 28, 1999, 311 SCRA 508
5. Matalin v Mun. Council of Malabang, 143 SCRA 404
6. Gerochi v Department of Energy G.R. No. 159796, July 17, 2007

II. LIMITATIONS UPON THE POWER OF TAXATION

A. INHERENT LIMITATIONS

i. Public Purposes

CASES:

1. Planters Products, Inc. v. Fertiphil Corporation, 548 SCRA 485

2. Lutz v Araneta, G.R. No. L-7859, December 22, 1955, 98 Phil. 48
3. Pascual v Sec. of Public Works, G.R. No. L-10405, December 29, 1960, 110 Phil. 331
4. Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G.R. No. 159647
(2005)

ii. Non-delegation of Taxation Power

1. Delegata potestas non potest delegari

2. Sec 5, Art. X, 1987 Constitution
3. Sec. 28(2), Art. VI, 1987 Constitution
4. Sec. 401, Tariff and Customs Code, as amended / Sec 1608 Customs Modernization and
Tariff Act (CMTA)

CASES:

1. Phil Comm. Satellite Corp. v Alcuaz, G.R. No. 84818, December 18, 1989, 180 SCRA
218
2. LTO v. City of Butuan, G.R. No. 131512, January 20, 2000
3. City Government of Quezon City v. Bayantel, G.R. No. 162015, Mar. 6, 2006
4. Garcia v. Executive Secretary, G.R. No. 101273, July 30, 2012, 210 SCRA 219
5. Osmena v. Orbos, G.R. No. 99886, March 3, 1993, 220 SCRA 703
6. CIR v. CA, G.R. No. 119761, August 29, 1996
7. Abakada Guro Party List v. Ermita

iii. Exemption of Government Agencies

1. Secs. 27(C) and 30(I), NIRC

2. Sec 32(B)(7)(b)
3. Executive Order 93
4. PD 1931
5. Sec. 133(O), Local Government Code

CASES:
 1. Maceda v. Macaraig, G.R. No. 88291, June 8, 1993, supra
2. Mactan Cebu Airport v. Marcos, G.R. No. 120082, Sept. 11, 1996
3. Manila International Airport Authority v. CA G.R. No. 155650. July 20, 2006
4. MCIAA vs. City of Lapu-Lapu G.R. No. 181756. June 15, 2015
5. Collector v. Bisaya Land Transportation, 105 Phil. 338 (1959)
6. PEZA vs Lapu Lapu City, G.R. No. 184203, November 26, 2014

iv. Territoriality of Taxation

CASES:
1. ACMDC vs CIR
2. Manila Gas v. Collector, G.R. No. L-42780, January 17, 1936, 62 Phil 895
3. Vegetable Oil Corp. v Trinidad, G.R. No. 21475, March 26, 1924, 45 Phil. 822
4. Wells Fargo Bank v Col, G.R. No. L-46720, June 28, 1940, 70 Phil. 325
5. CIR v. BOAC, G.R. Nos. L-65773-4, April 30, 1987, 149 SCRA 395
6. Collector v. Lara, G.R. No. L-9456 & L-9481, January 6, 1958, 102 Phil 813

v. International Comity

1. In par parem, non habet imperium

2. Sec. 2, Art. 2, 1987 Constitution

CASES:

1. Mitsubishi Corp. v. CIR, CTA Case 6139, Dec. 17, 2003

B. CONSTITUTIONAL LIMITATIONS

a. Uniformity and Equality Clause

CASES:

1. Ormoc Sugar Co. vs. Treasurer of Ormoc City, G.R. No. L-23794, February 18, 1968
2. CIR v. SM Prime Holdings, Inc., 613 SCRA 774
3. PAGCOR v. CIR, 645 SCRA 338
4. Phil. Trust BL Company v. Yatco, 69 Phil 420
5. CREBA, Inc. v. Exec. Sec. Romulo, 614 SCRA 605
6. Roxas v. CTA, 23 SCRA 276
7. British Tobacco v. CIR, 562 SCRA 511
8. Punsalan v. City of Manila, 95 Phil 46
9. Juan Luna Subdivision, Inc. v. Sarmiento, 91 Phil 371
10. Pepsi Cola Bottling Co., Inc. v. City of Butuan, 24 SCRA 789

b. Non-impairment of Contract Clause

CASES:

1. MERALCO vs. Province of Laguna, G.R. No. 131359, May 5, 1999

2. Mactan Cebu International Airport Authority v. Marcos, 261 SCRA 667
3. Tolentino v. Sec. of Finance, 235 SCRA 630

c. Due Process Clause

CASES:

1. Reyes vs Almanzor
 2. PB Communications v. CIR, 302 SCRA 241
3. Tanada v. Tuvera, 136 SCRA 27
4. CIR v. Metro Star Superama, Inc., 637 SCRA 633

d. Tax exemptions of religious, educational and charitable institutions/organizations from property tax

CASES:

1. CIR v. YMCA, 298 SCRA 83

2. Lladoc v. CIR, 14 SCRA 292
3. Hodges v. Mun. Board of Iloilo City, 19 SCRA 28
4. Lung Cancer of the Philippines v. QC, 433 SCRA 119
5. St. Luke's Medical Center, Inc. v. CIR, 682 SCRA 66
6. Angeles University Foundation v. City of Angeles, 675 SCRA 359
7. CIR vs DLSU, GR No. 196596, November 9,2016
8.
e. Free Exercise of Religous Profession and Worship

CASES:

1. American Bible Society v. City of Manila, 101 Phil 386

2. Tolentino v. Secretary of Finance, 235 SCRA 630

f. Non- Imprisonment for Non-payment of Poll Tax

1. Sec. 20, Art. III, 1987 Constitution

g. Passage of Tax Bills/ Granting of Tax Exemption

1. Sec. 24, Art. VI, 1987 Constitution
2. Sec. 28(4), Art. VI, 1987 Constitution

h. Veto Power of the President

1. Sec. 27(2), Art. VI, 1987 Constitution
2. Veto Message for RA 10963 (TRAIN Law)
3. Veto Message for RA 11213 (Tax Amnesty Law)
4.Veto Message for RA 11534(CREATE Law)

i. Non-impairment of SC Jurisdiction
1. Sec. 2 Art VIII, 1987 Constitution
2. Sec. 5(2)(b), Art. VIII, 1987 Constitution

III. STAGES OR ASPECTS OF TAXATION

1. Levy

2. Assesment and Collection

CASES:

1. CIR v. United Salvage & Towage (Phils.) Inc., 729 SCRA 113
2. Alhambra Cigar & Cig. Mfg., Co. v. Collector, 105 Phil 1337
3. CIR v. The Stanley Works Sales (Phils.), Inc. 743 SCRA 642
4. Ungab v. Cusi, Jr., 97 SCRA 877
5. CIR v. Pascor Realty Development Corp., 309 SCRA 402
6. CIR v. Hantex Trading, 454 SCRA 301
 7. CIR v. BPI, 411 SCRA 456

3. Payment

Case:

1. First Lepanto Taisho Ins. Corp. v. CIR, 695 SCRA 639

IV. TAXES
A. Definition
B. Essential Characteristics of Taxes
CASES:
1. Tan v. Del Rosario, G.R. No. 109289, October 3, 1994, 237 SCRA 324
2. Gaston v. Republic Planters Bank, G.R. No. 77194 (1988)
C. Taxes distinguished from:
i. Debts
CASES:
1. Caltex v COA, G.R. No. 92585, May 8, 1992, 208 SCRA 726
2. Republic v. Mambulao Lumber Company, G.R. No. L-17725, 4
SCRA 622
3. Philex Mining v. CIR, G.R. No.125704, August 28, 1998-
4. Domingo v Garlitos, G.R. No. L-18994, June 29, 1963, 8 SCRA
443
ii. License Fees

CASES:
1. Progressive Dev. Corp. v QC, G.R. No. L-36081, April 24, 1989,
172 SCRA 629
2. Ferrer, Jr. V. Bautista, G.R.No. 210551, June 30, 2015
3. Gonzalo Sy Trading vs. Central Bank of the Phil., G.R. No. L-
41480 (1976)
4. Angeles University Foundation vs City of Angeles

iii. Special Assessments/Levies

1. Sec. 240, RA 7160
CASE:
1. Apostolic Prefect v Treasurer of Baguio, G.R. No. L-47252,
April 18, 1941, 71 Phil. 547
iv. Tolls
CASE:
1. City of Ozamis v. Lumapas, GR No. L-30727, July 15, 1975
2. Diaz vs Secretary of Finance
v. Penalties
CASE:
1. NDC v CIR 151, G.R. No. L-53961, June 30, 1987, SCRA 472
vi. Customs Duties
V. DOCTRINES IN TAXATION
1. Prospectivity of tax laws-Section 246, Tax Code
CASES:
1. CIR v. Acosta, 529 SCRA 177
2. CIR v. CA, G.R. No. 117982. February 6,1997
a. Revenue Regulations
Non-retroactivity
CASES:
1. CIR v. Filinvest Dev't. Corp., 654 SCRA 56
2. Supreme Transliner, Inc. v. BPI Family Savings Bank, Inc., 644 SCRA 59
3. CIR v. CA, 267 SCRA 557
4. CIR v. Burroughs, Inc., 142 SCRA 324
5. British American Tobacco, Inc. v. Camacho, 562 SCRA 511

b. BIR Rulings or Administrative Rulings

CASES:
1. Phil Bank of Communications v. CIR, 302 SCRA 241
2. Team Energy Corp. v. CIR, GR No. 197760
3. CIR v. Burroughs, Inc., 142 SCRA 324
4. CIR v. Aichi Forging Co. Of Asia, Inc., 632 SCRA 422
2. Imprescriptibility of taxes
CASES:
1. CIR v. Ayala Securities Corp., G.R. No. L-29485, November 21, 1980, 189 Phil 159-168
2. Commissioner v. Standard Chartered Bank, G.R. No. 192173 (2015)
3. Principle of Exhaustion of Administrative remedies in taxation
CASES:
1. Silicon Phils., Inc. v. CIR, 717 SCRA 30
2. City of Lapu-Lapu v. PEZA, 742 SCRA 524
3. Comm. Of Customs v. Oilink Int'l. Corp., 728 SCRA 469
4. Double taxation
Modes of eliminating double taxation:
a) Tax exemption
b) Tax credit
c) Tax deduction
d) Tax discount
e) Tax treaties
f) Principle of Reciprocity
 CASES:
1. CIR v. SC Johnson & Son, Inc., 309 SCRA 87
2. Manufacturer’s v Meer G.R. No. L-2910 June 29, 1951
3. Ericsson Telecommunications vs. City of Pasig
a. Direct duplicate taxation
CASES:
1. Ericsson Telecommunications, Inc. v. City of Pasig, 538 SCRA 99
2. Nursery Care Corp. v. Acevedo, 731 SCRA 280
b. Indirect duplicate taxation
CASES:
1. CIR v. SC Johnson & Son, Inc., 309 SCRA 87
2. La Suerte Cigar & Cig. Factory v. CA, 739 SCRA 489
3. Villanueva v. City of Iloilo, 26 SCRA 578
4. Compania General de Tabacos de Filipinos v. City of Manila, 8 SCRA 367
5. CIR v. Solidbank Corp., 416 SCRA 436
c. Tax pyramiding
CASES:
1. People v. Sandiganbayan, 467 SCRA 137
2. CIR v. American Rubber Co., 18 SCRA 842
5. Escapes from taxation
a. Shifting of tax burden
CASES:
1. CIR v. Pilipinas Shell Petroleum Corp., 717 SCRA 53
2. Phil. Acetylene Co., Inc. v. CIR, 20 SCRA 1056
b. Tax avoidance
CASES:
1. Gala v. Ellice Agro Industrial Corp., 418 SCRA 431
2. Heng Tong Textiles Co., Inc. v. CIR, 24 SCRA 767
3. Delpher Trades Corp. v. IAC, 157 SCRA 349
c. Tax evasion
CASE:
1. CIR v. Estate of Benigno Toda, Jr., 438 SCRA 290
6. Exemption from taxation
CASES:
1. John Hay Special Economic Zone v. Lim, 414 SCRA 356
2. CIR v. Phil. Associated Smelting & Refining Corp., 737 SCRA 328
Grounds of exemption
CASES:
1. Batangas Power Corp. v. Batangas City & NPC, GR No. 152675, April 28, 2004
 2. Tolentino v. Sec. Of Finance, 235 SCRA 630
Kinds of tax exemptions:
a) Express:
1. CIR v. MERALCO, 725 SCRA 384
2. Western Minolco Corp. v. CIR, 124 SCRA 121
b) Implied or by inferences
1. John Hay Special Economic Zone v. Lim, 414 SCRA 356
c) Contractual
CASE:
1. MCIAA v. Marcos, 261 SCRA 667
Nature of tax exemption
CASE:
1. FELS Energy, Inc. v. Province of Batangas, 516 SCRA 186
Revocation of tax exemption
CASES:
1. A. Tolentino v. Sec. of Finance, 235 SCRA 630
2. Provincial Treasurer of Province of Misamis Oriental v. Cagayan Electric Power &
Light Co., Inc., 181 SCRA 38
3. Batangas Power Corp. v. Batangas City & NPCX, 428 SCRA 250
4. Phil. Basketball Asso. v. CA, 337 SCRA 358
Construed strictly against the taxpayer
CASES:
1. MCIAA v. Marcos, 261 SCRA 667
2. CIR v. Phil. American Accident Ins. Co., Inc., 453 SCRA 668
3. NPC v. City of Cabanatuan, 401 SCRA 259

8. Compromise
CASE:
1. Wonder Mechanical Engineering Corp. v. CA, 64 SCRA 555
9. Tax Amnesty
CASES:
1. People v. Castañeda, 165 SCRA 327
2. Asia International Auctioneers, Inc. v. CIR, 682 SCRA 49
3. Special Economic Zone v. Lim, 414 SCRA 356
10. Doctrine of Equitable Recoupment
CASE:
1. Collector v. Univ of Sto. Tomas, G.R. No. 11274, 104 Phil. 1062
11. Taxpayer’s Suit
 CASE:
1. Bagatsing v. San Juan, GR No. 97787, Aug 1, 1996, 329 Phil. 8-15
2. Gonzales vs. Marcos, G.R. No. L-31685. July 31, 1975
VI.CONSTRUCTION AND INTERPRETATION OF TAX LAWS
A. General Rules of Construction of Tax Laws

CASES:

1. Stevedoring v Trinidad, G.R. No. L-18316, September 23, 1922, 43 Phil. 803
2. Lorenzo v. Posada, G.R. No. L-43082, June 18, 1937, 64 Phil 353
3. Umali v. Estanislao, G.R. No. 104037, May 29, 1992, 209 SCRA 446
4. CIR v. Solidbank, G.R. No. 148191, Nov. 25, 2003
5. Collector v. La Tondena, G.R. No. L-10431, April 30, 1964, 5 SCRA 665

B. Mandatory vs. Directory Provisions

CASES:

1. Serafica v Treasurer of Ormoc City, G.R. No. L-24813, April 28, 1969, 27 SCRA 110
2. Roxas v. Rafferty, G.R. No. 12182, March 27, 1918, 37 Phil 958
3. Pecson v. CA, G.R. No. 115814, May 26, 1995, 222 SCRA 580

C. Application of Tax Laws

i. Art. 2, Civil Code

CASES:

1. CIR v. CA, G.R. No. 119761, August 29, 1996

2. CIR v. Michel Lhuillier, G.R. No. 150947, July 25, 2003
3. CIR v. Benguet Corp., G.R. No. 134587, July 8, 2005

D. SOURCES OF TAX LAWS

A. Constitution
B. Statutes
i. RA 8424, as amended
ii. Customs Modernization and Tariff Act (CMTA)
iii. Book II, Local Government Code
iv. Special Laws
C. Administrative Issuances
i. Revenue Regulations
ii. Revenue Memorandum Orders
iii. Revenue Memorandum Circulars
iv. Revenue Administrative Orders
v. Revenue Delegation of Authority Orderss
vi. BIR Rulings
D. Tax/Revenue Ordinances
E. Case Laws(SC/CTA)
F. Legislative Materials
G. Tax treaties and international agreements
VI.NATIONAL INTERNAL REVENUE CODE OF 1997, as amended by RA 10963(TRAIN Law)
and RA 11534(CREATE Law)

A. Organization and Functions of the BIR

i. Rule-making authority of the Secretary of Finance
1. Authority of the Secretary of Finance to promulgate rules and regulations
CASE: Secretary of Finance vs Lazatin

2. Specific provisions to be contained in rules and regulations

ii. Jurisdiction, Powers and Functions of the CIR- Sections 2-18, 21, 244-246, NIRC
1. Powers and duties of BIR-Sec. 2
2. Power of the CIR to interpret tax laws and decide cases
 Rulings of first impression-RAO No. 1-99
 See list of “no ruling areas”
3. Non-retroactivity of rulings-Sec. 246
 RR No. 5-2012 and RMC No. 22-2012

CASES:
1. CIR v. CA, CTA, and Fortune Tobacco Corporation, 261 SCRA 236 (1996),
2. Marcos v CA, 339 Phil 253, 271-273 (1997)
3. Philippine Bank of Communications v. CIR, 203 SCRA 241 (1999)
4. Secretary of Finance v La Suerte Cigar, GR No. 166498, June 11, 2009
5. ABS-CBN Broadcasting Corporation v. CTA, 108 SCRA 142
6. CIR v. Hedcor Sibulan, Inc. - G.R. No. 209306 (2017)
7. Mitsubishi Cor-Manila Br. V CIR, GR No. 175772, Jun 5, 2017
8. Oceanic Wireless Network v. CIR - G.R. No. 148380 (2005)
9. Commissioner of Customs vs. Hypermix Feeds Corp., GR No. 179579, 2012
10. Deutsche Knowledge Services vs. CIR, GR No. 197980, 2016

iii. Chief Officials of the BIR-Section 3, NIRC

B. Income taxation

Read:
 RR 2-40(Income Tax Regulations)
 RR 10-2008
 RR 2-98, as amended(recently by RR 11-2018, RR 1-2019 and RR 2-2021)
 RA 10963 (2018) TRAIN Law
 Presidential Veto Message on RA 10963
 Revenue Regulations No. 1-2019
 Revenue Regulations No. 8-2018
 Revenue Regulations No. 11-2018
 Revenue Regulations No. 14-2018
 Revenue Regulations No. 15-2018
 Revenue Memorandum Order No. 23-2018
 Revenue Memorandum Circular No. 32-2018
 Revenue Memorandum Circular No. 50-2018
 Revenue Memorandum Circular No. 51-2018
  RA 11534-CREATE Law
 Presidential Veto message on RA 11534
 RR 3-2021
 RR 5-2021

i. Income tax systems-Global, Schedular, Semi-schedular or Semi-Global

ii. Features of the Philippine income tax law
iii. Criteria in imposing Philippine income tax
a. Sec. 23, NIRC
1. Nationality/Citizenship
2. Residence
3. Source

CASES:
1. Tan v. Del Rosario, 237 SCRA 324
2. CIR v. BOAC, 149 SCRA 395
3. South African Airways v. CIR, 612 SCRA 665
4. Alexander Howden & Co., Ltd. v. Collector13 SCRA 601
5. CIR v. Baier-Nickel, 500 SCRA 87

iv. Types of Philippine income tax

v. Taxable period
vi. Kinds of taxpayers
vii. Meaning of Income
1. Sec. 32(A), NIRC
2. Sec. 36, Revenue Regulations No. 02-40

CASES:
1. Madrigal v. Rafferty, 38 Phil. 414
2. Fisher vs Trinidad, 43 Phil 973
3. Chamber of Real Estate and Builders’ Association vs. Romulo
4. Conwi v. CTA, 213 SCRA 83
5. CIR v. Manila Jockey Club, Inc., G.R. Nos. L-13887 & L-13890, June 30, 1960
6. Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue, G.R. No. 228539
(2019)
7. CIR v. BOAC, 149 SCRA 395
8. CIR v. Tours Specialist, 183 SCRA 402

viii. When income is taxable

a. Existence of income
b. Realization of income
c. Recognition of income
d. Cash method of accounting versus Accrual method of accounting
 CASES:
1. CIR vs Lancaster Philippines, GR No. 183408, 2017
2. CIR v. Manila Electric Company, CTA EB No. 773, November 13, 2012
3. Republic v. Dela Rama, 18 SCRA 861
4. CIR v. Javier, 199 SCRA 824

ix. Tests in determining whether income is earned for tax purposes

a. Realization test
b. Claim of right doctrine or doctrine of ownership, command or control
c. Economic benefit test, doctrine of proprietary interest
d. Severance test
e. All events test
CASES:
1. CIR v. CA, CTA & Anscor, 301 SCRA 152 (1999)
2. CIR vs Citytrust Investment Phils., GR No. 139786, 2006
3. CIR vs Isabela Cultural Corporation, GR No. 172231, 2007

x. Classification of income-Sections 24, 25,27 and 28

xi. Situs of Income Taxation-Section 42
VII. GROSS INCOME: INCLUSIONS AND EXCLUSIONS
A. In General
i. Income from Whatever Source

1. Secs. 31 - 32, NIRC

2. Sec. 61, RR No. 02-40
CASE:
a. Gutierrez v. Collector, G.R. Nos. L-9738 & L-9771, May 31,
1957 101 Phil 713
ii. Situs of Income
1. Sec. 42, NIRC
2. Secs. 152 - 165, RR No. 02-40
iii. From Sources Within the Philippines
1. Sec. 42 (A) and (B), NIRC
CASES:
a. CIR v. BOAC, G.R. No. L-65773-74, April 30, 1987, 149 SCRA
395
b. CREBA vs Romulo
c. NDC v. CIR, G.R. No. L-53961, June 30, 1987, 151 SCRA 472
d. Air Canada v. CIR, CTA EB No. 86. Aug. 26, 2005
e. CIR v. CTA, G.R. No. 81446, August 18, 1988, 127 SCRA 9
f. CIR v. Marubeni, G.R. No. 137377, December 18, 2001
g. CIR v. Baier-Nickel, G.R. No. 165793, August 29, 2006
h. Manila Electric v. Yatco, G.R. No. 45697, November 1, 1939 69
Phil 89
i. Phil. Guaranty v. CIR, G.R. No. L-22074, Apr. 30, 1965
 iv. From Sources Without the Philippines
1. Sec. 42(C), NIRC
v. Partly Within/Without the Philippines

1. Sec. 42(E), NIRC

B. Compensation Income
i. In General
1. Sec. 32(A), NIRC
2. Rep. Act No. 10963 (TRAIN Law), Dec. 19, 2017
3. Revenue Regulations No. 11-2018, Jan. 31, 2018, as amended by RR 14-
18
4. Revenue Memorandum Circular No. 050-18, May 11, 2018
5. Sec. 2.78.1(A), Revenue Regulations No. 2-98
6. Sec. 2.83.5, Revenue Regulations No. 10-2008
7. Sec. 2.83.6, Revenue Regulations No. 2-98
8. Revenue Memorandum Circular No. 34-2008
9. CASES:
a. Henderson v. Collector, 1 SCRA 649;
b. CIR v. Castaneda, G.R. No. 96016, October 17, 1991, 203
SCRA 72
c. Polo v. CIR, G.R. No. L-78780, July 23, 1987
d. Endencia v. David, G.R. No. L-6355-56, July 23, 1987, 93 Phil
696
e. Kuenzle v. CIR, G.R. No. L-18840, May 29, 1969, 28 SCRA 365

ii. Fringe Benefits

1. Sec 33, NIRC
2. Revenue Regulations Nos. 3-98, 8-2000, 10-2000, 05-2008, 05-2011
3. Revenue Regulations No. 11-2018
4. Revenue Memorandum Circular No. 88-2012, December 27, 2012

iii. Exclusions:
1. Compensation for Injuries or Sickness
a. Sec. 32(B)(4), NIRC
2. 13th Month Pay and Other benefits
a. Sec. 32 (7)(e), NIRC
CASE:
i. CIR v. Castaneda, G.R. No. 96016, October 17, 1991,
203 SCRA 72
 3. Income Exempt Under Treaty
a. Sec. 32(B)(5), NIRC
CASE:
i. Reagan v. CIR, G.R. No. L-26379, December 27, 1969,
30 SCRA 968

C. Pensions/Retirement Benefits/Separation Pay

i. In General
1. Sec. 32(A)(10), NIRC
ii. Exclusions:
1. Sec. 32(6)(a-f), NIRC
2. Sec. 2.78.1(B)(1-12), RR No. 02-98
3. RA 4917
4. RA 7641
CASES:
a. CIR v. CA, G.R. No. 96016, Oct 17, 1991, 203 SCRA 72
b. CIR v. GCI Retirement, G.R. No. 95022, March 23, 1992, 207
SCRA 487
c. In re Zialcita, AM No. 90-6-015-SC, Oct. 18, 1990

D. Gains Derived from Dealings in Property

i. In General
1.Sec. 32(A)(3), NIRC
2.Sec 39 (A)(1), NIRC
3.Sec 40 (A), (B), and (C), NIRC
4. RR No. 06-08, April 22, 2008, as amended by RR No. 16-12, RR No. 06-

a. and RR No. 20-20

5.RR No. 07-03
6.RMC No. 35-17
ii. Exclusion:
1.Shares of Stocks Traded in PSE
i Sec. 127, NIRC, as amended by Bayanihan 2
ii RR No. 23-20

E. Business Income/ Income from Exercise of Profession

i. In General
1. Sec 32(A)(2), NIRC
2. Sec 27 (E)(4), NIRC
3. Sec 22(CC), NIRC
4. Secs. 36-38, 43-47, RR No. 02-40
 ii. Exclusions:
1. Income Exempt Under a Treaty
2. Income Derived by Governmental/Political Subdivision from Exercise of
Essential Government Function

F. Other Items of Gross Income

i. Interest Income
1. In General
a. Sec. 32(A)(4), NIRC
b. RMO No. 63-99 (see BIR Ruling DA 701-07, Dec. 28, 2007)
c. RR No. 14-2012; RMC No. 77-2012; RMC No. 81-2012

CASE:
i. CIR v. Filinvest Development Corporation, G.R. No.
163653, July 19, 2011
2. Exclusions:
a. Sec. 32(B)(7)(a), NIRC
CASES:
i. CIR v. Mitsubishi Metal, G.R. No. L-54908, January 22,
1990, 181 SCRA 214
ii. NDC v. CIR, G.R. No. L-53961, June 30, 1987
ii. Rentals/Leases
1. Sec. 32(A5), NIRC
2. Secs. 74, 49 and 58, Revenue Regulations No. 2
3. Revenue Regulations 19-86

CASE:
a. Limpan v. CIR, G.R. No. L-21570, July 26, 1966, 17 SCRA 70
iii. Royalties
1. Sec. 32(A)(6), NIRC
2. Sec 42(A)(4)(a) to (g)

CASE:
a. CIR v. SC Johnson, G.R. No. 127105, June 25, 1999
iv. Dividends
1. In General
a. Sec. 32(A)(7), NIRC
b. Secs. 57 and 71, 250-253, RR No. 02-40
c. Revenue Memorandum Circular No. 31-90
d. Sec. 73(C,D), NIRC

CASES:
 i. CIR v. Manning, G.R. No. L-28398, August 6, 1975, 66
SCRA 14
ii. CIR v. CA, G.R. No. 108576, Jan. 20, 1999
2. Exclusions:
a. Income Exempt Under Tax Treaty
b. Passive Income of Foreign Government
i. BIR Ruling No. 103-2012, February 21, 2012
v. Annuities and Insurance Proceeds
1. In General
a. Sec. 32(A)(8), NIRC
b. Sec. 48, RR No. 02-40
2. Exclusions:
a. Proceeds from Life Insurance
i. Sec. 32(B)(1), NIRC
ii. Sec. 62, RR No. 02-40
CASE:
1. Oriente Fabrica v. Posadas, G.R. No. 34774,
September 21,1931 56 Phil 147
b. Return of Premium Paid
i. Sec. 32(B)(2), NIRC
ii. Sec. 48, RR No. 02-40
c. Compensation for Injuries or Sickness
i. Sec. 32(B)(4), NIRC
ii. Sec. 63, RR No. 02-40
vi. Prizes and Winnings/Awards/Rewards
1. In General
a. Sec. 32(A)(9), NIRC
b. Sec. 282, NIRC
c. Revenue Memorandum Order No. 12-93
d. RR No. 016-10
e. RMO No. 046-11
f. BIR Ruling DA-013-04

CASE:
i. CIR v. COA, G.R. No. 101976, Jan. 29, 1993
2. Exclusions:
a. Sec. 24(B)(1), NIRC
b. 32(B)(7)(c), NIRC
c. Sec 32(B)(7)(d). NIRC
vii. Other Sources
1. Condonation of indebtedness
2. Tax Refund
3. Receipt of tax refunds/credit
 2. Sec. 42(E), NIRC

B. Compensation Income
i. In General
10. Sec. 32(A), NIRC
11. Rep. Act No. 10963 (TRAIN Law), Dec. 19, 2017
12. Revenue Regulations No. 11-2018, Jan. 31, 2018, as amended by RR 14-
18
13. Revenue Memorandum Circular No. 050-18, May 11, 2018
14. Sec. 2.78.1(A), Revenue Regulations No. 2-98
15. Sec. 2.83.5, Revenue Regulations No. 10-2008
16. Sec. 2.83.6, Revenue Regulations No. 2-98
17. Revenue Memorandum Circular No. 34-2008
18. CASES:
a. Henderson v. Collector, 1 SCRA 649;
b. CIR v. Castaneda, G.R. No. 96016, October 17, 1991, 203
SCRA 72
c. Polo v. CIR, G.R. No. L-78780, July 23, 1987
d. Endencia v. David, G.R. No. L-6355-56, July 23, 1987, 93 Phil
696
e. Kuenzle v. CIR, G.R. No. L-18840, May 29, 1969, 28 SCRA 365

iv. Fringe Benefits

1. Sec 33, NIRC
2. Revenue Regulations Nos. 3-98, 8-2000, 10-2000, 05-2008, 05-2011
3. Revenue Regulations No. 11-2018
4. Revenue Memorandum Circular No. 88-2012, December 27, 2012
v. Exclusions:
1. Compensation for Injuries or Sickness
a. Sec. 32(B)(4), NIRC
2. 13th Month Pay and Other benefits
a. Sec. 32 (7)(e), NIRC
b. CASE:
i. CIR v. Castaneda, G.R. No. 96016, October 17, 1991,
203 SCRA 72
3. Income Exempt Under Treaty
a. Sec. 32(B)(5), NIRC
b. CASE:
i. Reagan v. CIR, G.R. No. L-26379, December 27, 1969,
30 SCRA 968
E. Pensions/Retirement Benefits/Separation Pay
i. In General
1. Sec. 32(A)(10), NIRC
ii. Exclusions:
1. Sec. 32(6)(a-f), NIRC
2. Sec. 2.78.1(B)(1-12), RR No. 02-98
3. RA 4917
4. RA 7641
5. CASES:
a. CIR v. CA, G.R. No. 96016, Oct 17, 1991, 203 SCRA 72
b. CIR v. GCI Retirement, G.R. No. 95022, March 23, 1992, 207
SCRA 487
c. In re Zialcita, AM No. 90-6-015-SC, Oct. 18, 1990
TAX 1 COURSE SYLLABUS|ATTY. MAE DIANE M. AZORES,CPA 23