S CBA R STAG NO TES Page 2 of 76

PRE-WEEK [2020/21] BRAVO BASTE!

CONSTITUTIONAL LAW
of just contribution
compensa
I. BASIC PRINCIPLES IN POLITICAL LAW
tion
Q. What is the principle of separation of powers? Purpose Promotion For some Maintenance
of the intended of the
A: Under our constitutional order, the legislative general public use government
branch enacts law, the executive branch implements welfare
the law, and the judiciary construes the law. In
reality, however, the powers are not as strictly
What is Both liberty Only property rights
confined or delineated to each branch. "[T]he
being and
growing complexity of modern life, the multiplication
regulated property
of the subjects of governmental regulation, and the
increased difficulty of administering the laws" require
the delegation of powers traditionally belonging to Who may Governmen Governme Government
the legislative to administrative agencies. The
exercise t only nt and only
legislature may likewise apportion competencies or
some
jurisdictions to administrative agencies over certain private
conflicts involving special technical
entities
expertise. (Provincial Bus Operators Association v.
Department of Labor, GR No. 202275, July 17, Property Destroyed Wholesome; intended for
2018) taken because it public use or purpose
is noxious
Q: When is there a violation of the separation of or intended
powers? for noxious
purpose
A: Broadly speaking, there is a violation of the
separation of powers principle when one branch of Compens Intangible Full and Protection
government unduly encroaches on the domain of ation altruistic fair and public
another. US Supreme Court decisions instruct that feeling of equivalent improvements
the principle of separation of powers may be violated contributing of the for taxes paid
in two (2) ways: firstly, "one branch may interfere to general property
impermissibly with the other’s performance of its welfare expropriat
constitutionally assigned function"; and ed
"alternatively, the doctrine may be violated when
one branch assumes a function that more properly
is entrusted to another." In other words, there is a
violation of the principle when there is impermissible II. BILL OF RIGHTS
(a) interference with and/or (b) assumption of
another department’s functions. (Belgica v. Ochoa, Q: Define “due process of law.”
G.R. No. 208566, November 19, 2013)
A: No person shall be deprived of life, liberty, or
Q: Distinguish the fundamental powers of the property without due process of law, nor shall any
state. person be denied the equal protection of the laws.
(Sec. 1, Art. III, 1987 Constitution)
A:
We have consistently held that the essence of due
Police Eminent Taxation process is simply an opportunity to be heard, or an
Power Domain opportunity to explain one’s side or an opportunity to
seek for a reconsideration of the action or ruling
State Regulation Forcible Demand by complained of. For as long as the parties are given
action of liberty acquisitio the State from the opportunity to present their cause of defense,
and n of the members their interest in due course as in this case, it cannot
property PRIVATE of society of be said that there was denial of due process. (Reyes
property their v. The Office of the Ombudsman, G.R. No. 208243,
upon proportionate June 05, 2017)
payment share and
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Q: What are the kinds of due process?
A: There are two kinds of due process: (1)
Substantive due process; and (2) procedural due
process.
Q: What are the requisites of substantive due
process?
A: The requisites of substantive due process are:
1. The interests of the public in general, as
distinguished from those of a particular
class, which require the intervention of the
State (Lawful subject); and
2. The employment of means which are
reasonably necessary for the
accomplishment of the purpose and not
unduly oppressive on individuals (Lawful
means). (City of Manila v. Laguio, G.R. No.
118127, April 12, 2005)
Q: How to determine substantive due process?
A: There are three ways to determine substantive
due process, namely: rational basis test;
intermediate review; and strict scrutiny.
1. Using the rational basis examination, laws
or ordinances are upheld if they rationally
further a legitimate governmental interest;
2. Under intermediate review, governmental
interest is extensively examined and the
availability of less restrictive measures is
considered; and
3. Applying strict scrutiny, the focus is on the
presence of compelling, rather than
substantial, governmental interest and on
the absence of less restrictive means for
achieving that interest. (White Light
Corporation v. City of Manila, G.R. No.
122846, January 20, 2009)
Q: What are the requisites of procedural due
process?
A: The minimum requirements of procedural due
process in judicial proceedings are:
1. There must be an impartial and competent
court or tribunal clothed with judicial power
to hear and determine the matter before it;
2. Jurisdiction must be lawfully acquired over
the person of the defendant or over the
property which is the subject of the
proceeding;
3. The parties must be given an opportunity to
be heard; and
4. A proper judgment must be rendered upon
lawful hearing. (El Banco Espanol v.
Page 3 of 76
BRAVO BASTE!
Palanca, G.R. No. L-11390, March 26,
1918)
The cardinal principles of due process in
administrative proceedings are:
1. Right to a hearing;
2. Tribunal must consider evidence presented;
3. Evidence must be substantial;
4. Decision must be supported by law and fact;
5. Decision must be based on evidence
adduced at the hearing or at least contained
in the records and disclosed to parties;
6. The board or judge must act on its or his
own independent consideration of facts and
law of the case, and not simply accept the
view of the subordinate in arriving at a
decision; and
7. The decision must be rendered in such a
manner that parties to controversy can
know various issues involved and the
reason for the decision rendered. (Ang
Tibay v. Court of Industrial Relations, G.R.
No. 46496, February 27, 1940)
Q: Give the concept of “equal protection of the
laws.”
A: It does not demand absolute equality among
residents; it merely requires that all persons shall be
treated alike, under like circumstances and
conditions both as to privileges conferred and
liabilities enforced. The equal protection clause is
not infringed by legislation which applies only to
those persons falling within a specified class, if it
applies alike to all persons within such class, and
reasonable grounds exists for making a distinction
between those who fall within such class and those
who do not. (Ichong v. Hernandez, G.R. No. L-7995,
May 31, 1957)
Q: What are the requisites for a valid
classification?
A: The requisites are:
1. Such classification rests upon substantial
distinctions;
2. It is germane to the purposes of the law;
3. It applies equally to all members of the same
class; and
4. It is not limited to existing conditions only.
(Spouses Imbong v. Ochoa, Jr., G.R. No.
204819, April 8, 2014)
Q: What are the three levels of test that are
applied in equal protection cases? Explain.
A: The three levels of test applied in equal protection
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
cases are as follow:
First, the STRICT SCRUTINY TEST which is
applied when the legislative classification
disadvantages a subject class or impinges upon a
fundamental right, the statute must fall unless the
government can show that the classification serves
a compelling governmental interest.
Second, the INTERMEDIATE SCRUTINY TEST,
when the classification, while not facially invidious,
gives rise to recurring constitutional difficulties or
disadvantages a quasi-suspect class. The law must
not only further an important government interest
and be related to that interest. The justification must
be genuine and must not depend on broad
generalizations.
Lastly, the RATIONALITY TEST, if neither the strict
nor the intermediate scrutiny is appropriate, the
statute will be tested for mere rationality. The
presumption is in favor of the classification, the
reasonableness and fairness of state action and of
legitimate grounds of distinction.
Q: Is freedom of expression absolute?
A: No. Freedom of expression is not absolute, nor is
it an unbridled license that gives immunity for every
possible use of language and prevents the
punishment of those who abuse this freedom.
(Chavez v. Gonzales, G.R. No. 168338, February
15, 2008)
Q: What are the different types of regulation in
relation to freedom of expression?
A:
a. Prior restraint and subsequent
punishment
It refers to the official government restrictions on the
press or other forms of expression in advance of
actual publication or dissemination.
Freedom from prior restraint is largely freedom from
government censorship of publications, whatever
the form of censorship, and regardless of whether it
is wielded by the executive, legislative and judicial
branch of the government. Thus, it precludes
governmental arm that required approval of a
proposal to publish; licensing or permits as
prerequisites to publication including the payment of
license taxes for the privilege to publish; and even
injunctions against publication. Even the closure of
the business and printing offices of certain
newspapers, resulting in the discontinuation of their
Page 4 of 76
BRAVO BASTE!
printing and publication, are deemed as previous
restraint or censorship. Any law or official that
requires some form of permission to be had before
publication can be made, commits an infringement
of the constitutional right, and remedy can be had at
the court. (Chavez v. Gonzales, G.R. No. 168338,
February 15, 2008)
b. Content based and content neutral
restrictions
Content-based restrictions are imposed because of
the content of the speech and are, therefore, subject
to the clear-and-present danger test. For example,
a rule such as that involved in Sanidad v. Comelec,
prohibiting columnists, commentators, and
announcers from campaigning either for or against
an issue in a plebiscite must have compelling reason
to support it, or it will not pass muster under strict
scrutiny. These restrictions are censorial and
therefore they bear a heavy presumption of
constitutional invalidity. In addition, they will be
tested for possible overbreadth and vagueness.
Content-neutral restrictions, on the other hand, like
Sec. 11(b) of R.A. No. 6646, which prohibits the sale
or donation of print space and air time to political
candidates during the campaign period, are not
concerned with the content of the speech. These
regulations need only a substantial governmental
interest to support them. A deferential standard of
review will suffice to test their validity. The clear-
and-present danger rule is inappropriate as a test for
determining the constitutional validity of laws, like
Sec. 11(b) of R.A. No. 6646, which are not
concerned with the content of political ads but only
with their incidents. To apply the clear-and-present
danger test to such regulatory measures would be
like using a sledgehammer to drive a nail when a
regular hammer is all that is needed.
The test for this difference in the level of justification
for the restriction of speech is that content-based
restrictions distort public debate, have improper
motivation, and are usually imposed because of fear
of how people will react to a particular speech. No
such reasons underlie content-neutral regulations,
like regulation of time, place and manner of holding
public assemblies under B.P. Blg. 880, the Public
Assembly Act of 1985. (Osmeña v. COMELEC, 288
SCRA 447, March 31, 1998)
Q: What are some limitations on the exercise of
the power of Eminent Domain?
A: Private property can be taken from its owner but
subject to the following conditions:
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
1. That the private property is taken for public
use;
2. That the owner of the said property should
be paid just compensation;
3. That due process of law shall be observed
in the taking of the said property; and
4. That the taking shall only be exercised by
the State or by those whom the power has
been lawfully delegated.
Q: What is the meaning of “public use in eminent
domain proceedings?
A: This Court has ruled that the taking to be valid
must be for public use. There was a time when it
was felt that a literal meaning should be attached to
such a requirement. Whatever project is undertaken
must be for the public to enjoy, as in the case of
streets or parks. Otherwise, expropriation is not
allowable. It is not anymore. As long as the purpose
of the taking is public, then the power of eminent
domain comes into play . . . It is accurate to state
then that at present whatever may be beneficially
employed for the general welfare satisfies the
requirement of public use. (Heirs of Juancho
Ardona v. Reyes, G.R. No. L-60549, October 26,
1983)
Q: Does the word “taking” mean actual physical
seizure or appropriation of property?
A: The word “taking” includes either physical seizure
or appropriation of the property, or to the limitation
of the use of the property. (Stearns v. Minnesota,
179 U.S. 223). The fact therefore that a land has
become non-suitable for use because it is adjacent
to an airport where airplanes take off over land at
low levels, is equivalent to taking. Hence, it is a
ground to be paid just compensation.
Q: When can there be a valid search?
A: A search may be conducted by law enforcers only
on the strength of a search warrant validly issued by
a judge. Articles which are the product of
unreasonable searches and seizures are
inadmissible as evidence. Search warrants to be
valid must particularly describe the place to be
searched and the persons or things to be seized.
(People v. Aruta, G.R. No. 120915, April 3, 1998)
Q: What are the instances that warrantless
searches may be effected?
A: A warrantless search may be effected in the
following cases:
1. Searches incidental to a lawful arrest;
Page 5 of 76
BRAVO BASTE!
2. Visual searches are made of moving
vehicles at checkpoints;
3. Searches of prohibited articles in plain view;
4. Enforcement of customs law;
5. Consented searches;
6. Stop and frisk (People v. Monaco, 285
SCRA 703);
7. Routine searches at borders and ports of
entry (US v. Ramsey, 431 U.S. 606 [1977]);
8. Searches of businesses in the exercise of
visitorial powers to enforce police
regulations (New York v. Burger, 482 U.S.
691 (1987]);
9. Search of passengers made in airports; and
10. Exigent and emergency circumstances.
(People v. De Garcia, 233 SCRA 716
[1994])
III. COMPOSITION AND POWERS OF THE
GOVERNMENT ORGANS
Legislative Department
Q: Is the delegation of legislative power
allowed?
A: As a rule, it is not allowed. Purely legislative
power, which can never be delegated, has been
described as the authority to make a complete law
— complete as to the time when it shall take effect
and as to whom it shall be applicable — and to
determine the expediency of its enactment.
However, there are recognized limitations or
exceptions which are:
1. Delegation of tariff powers to the President
under Section 28 (2) of Article VI of the
Constitution;
2. Delegation of emergency powers to the
President under Section 23 (2) of Article VI
of the Constitution;
3. Delegation to the people at large;
4. Delegation to local governments; and
5. Delegation to administrative bodies.
(Abakada Guro Party List v. Ermita, G.R.
No. 168056, September 1, 2005)
Q: What are the requisites for a valid delegation
of legislative power?
A: In every case of permissible delegation, there
must be a showing that the delegation itself is valid.
It is valid only if the law (a) is complete in itself,
setting forth therein the policy to be executed,
carried out, or implemented by the delegate; and (b)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
fixes a standard — the limits of which are sufficiently
determinate and determinable — to which the
delegate must conform in the performance of his
functions. (Abakada Guro Party List v. Ermita, G.R.
No. 168056, September 1, 2005)
Q: Until when should the period of imprisonment
under the Congress’ power of contempt last?
A: The period of imprisonment under the inherent
power of contempt by the Senate during inquiries in
aid of legislation should only last until the termination
of the legislative inquiry under which the said power
is invoked.
The legislative inquiry of the Senate terminates on
two instances:
1. Upon the approval or disapproval of the
Committee Report; or
2. Upon the expiration of one (1) Congress.
(Balag v. Senate of the Philippines, G.R.
No. 234608, July 3, 2018)
Q: What are the requirements for a valid budget
re-alignment?
A: The requirements are:
1. There is a law authorizing the President, the
President of the Senate, the Speaker of the
House of Representatives, the Chief Justice
of the Supreme Court, and the heads of the
Constitutional Commissions to transfer
funds within their respective offices;
2. The funds to be transferred are savings
generated from the appropriations for their
respective offices; and
3. The purpose of the transfer is to augment an
item in the general appropriations law for
their respective offices. (Syjuco v. Abad,
G.R. No. 209135, July 1, 2014)
Q: What is the extent of the Congress’ power of
oversight?
A: Congressional oversight must be confined to the
following:
1. Scrutiny based primarily on Congress'
power of appropriation and the budget
hearings conducted in connection with it, its
power to ask heads of departments to
appear before and be heard by either of its
Houses on any matter pertaining to their
departments and its power of confirmation;
and
2. Investigation and monitoring of the
implementation of laws pursuant to the
power of Congress to conduct inquiries in
Page 6 of 76
BRAVO BASTE!
aid of legislation. (Abakada Guro Party List
v. Purisima, G.R. No. 166715, August 14,
2008)
Any post-enactment measure allowing legislator
participation beyond oversight is bereft of any
constitutional basis and hence, tantamount to
impermissible interference and/or assumption of
executive functions. (Belgica v. Ochoa, G.R. No.
208566, November 19, 2013)
Q: How are impeachment proceedings initiated?
A: The initiation starts with the filing of the complaint
which must be accompanied with an action to set the
complaint moving. It refers to the filing of the
impeachment complaint coupled with Congress’
taking initial action of said complaint. The initial
action taken by the House on the complaint is the
referral of the complaint to the Committee on
Justice. (Gutierrez v. House of Representatives,
G.R. No. 193459, February 15, 2011)
Q: Distinguish between impeachment and quo
warranto proceedings.
A: Quo warranto and impeachment are two distinct
proceedings, although both may result in the ouster
of a public officer. Strictly speaking, quo warranto
grants the relief of "ouster", while impeachment
affords "removal."
A quo warranto proceeding is the proper legal
remedy to determine a person's right or title to a
public office and to oust the holder from its
enjoyment. It is the proper action to inquire into a
public officer's eligibility or the validity of his
appointment. Under Rule 66 of the Rules of Court, a
quo warranto proceeding involves a judicial
determination of the right to the use or exercise of
the office.
Impeachment, on the other hand, is a political
process undertaken by the legislature to determine
whether the public officer committed any of the
impeachable offenses, namely, culpable violation of
the Constitution, treason, bribery, graft and
corruption, other high crimes, or betrayal of public
trust. It does not ascertain the officer's eligibility for
appointment or election, or challenge the legality of
his assumption of office. Conviction for any of the
impeachable offenses shall result in the removal of
the impeachable official from office. (Republic v.
Sereno, G.R. No. 237428, June 19, 2018)
Q: May quo warranto and impeachment proceed
independently and simultaneously?
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
A: Yes. Aside from the difference in their origin and
nature, quo warranto and impeachment may
proceed independently of each other as these
remedies are distinct as to (1) jurisdiction (2)
grounds, (3) applicable rules pertaining to initiation,
filing and dismissal, and (4) limitations. (Republic v.
Sereno, G.R. No. 237428, June 19, 2018)
Executive Department
Q: What are the four (4) groups of officers whom
the President shall appoint under the
Constitution?
A: These are:
a. First, the heads of the executive
departments, ambassadors, other public
ministers and consuls, officers of the armed
forces from the rank of colonel or naval
captain, and other officers whose
appointments are vested in him in this
Constitution;
b. Second, all other officers of the Government
whose appointments are not otherwise
provided for by law;
c. Third, those whom the President may be
authorized by law to appoint;
d. Fourth, officers lower in rank whose
appointments the Congress may by law vest
in the President alone. (Sarmiento v. Mison,
G.R. No. L-79974, December 17, 1987)
By following the accepted rule in constitutional and
statutory construction that an express enumeration
of subjects excludes others not enumerated, it would
follow that only those appointments to positions
expressly stated in the first group require the
consent (confirmation) of the Commission on
Appointments. (Sarmiento v. Mison, G.R. No. L-
79974, December 17, 1987)
Q: What are the elements of a valid
appointment?
A: The following are the elements of a valid
appointment:
1. Authority to appoint and evidence of the
exercise of the authority;
2. Transmittal of the appointment paper and
evidence of the transmittal;
3. A vacant position at the time of
appointment; and
4. Receipt of the appointment paper and
acceptance of the appointment by the
appointee who possesses all the
qualifications and none of the
disqualifications.
Page 7 of 76
BRAVO BASTE!
The concurrence of all these elements should
always apply, regardless of when the appointment is
made, whether outside, just before, or during the
appointment ban. There is no valid appointment if
the process lacks even one step. (Velicaria-Garafil
v. Office of the President, G.R. No. 203372, June 16,
2015)
Q: Is the midnight appointment ban applicable to
appointments in the Judiciary?
A: No. Given the background and rationale for the
prohibition in Section 15, Article VII, we have no
doubt that the Constitutional Commission confined
the prohibition to appointments made in the
Executive Department. The framers did not need to
extend the prohibition to appointments in the
Judiciary, because their establishment of the JBC
and their subjecting the nomination and screening of
candidates for judicial positions to the unhurried and
deliberate prior process of the JBC ensured that
there would no longer be midnight appointments to
the Judiciary. (De Castro v. Judicial and Bar Council,
G.R. No. 191002, March 17, 2010)
Q: What is the doctrine of qualified political
agency?
A: The doctrine of qualified political agency
essentially postulates that the heads of the various
executive departments are the alter egos of the
President, and, thus, the actions taken by such
heads in the performance of their official duties are
deemed the acts of the President unless the
President himself should disapprove such acts.
(Manalang-Demigillo v. Trade and Investment
Development Corp. of the Phils., G.R. No. 168613,
March 5, 2013)
Q: May the President prevent a member of the
armed forces from testifying before a legislative
inquiry?
A: Yes. The President has constitutional authority to
do so, by virtue of her power as commander-in-chief,
and that as a consequence a military officer who
defies such injunction is liable under military justice.
At the same time, we also hold that any chamber of
Congress which seeks the appearance before it of a
military officer against the consent of the President
has adequate remedies under law to compel such
attendance. Any military official whom Congress
summons to testify before it may be compelled to do
so by the President. If the President is not so
inclined, the President may be commanded by
judicial order to compel the attendance of the
military officer. Final judicial orders have the force of
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
the law of the land which the President has the duty
to faithfully execute. (Gudani v. Senga, G.R. No.
170165, August 15, 2006)
Q: What is the extent of the Supreme Court’s
judicial review of the factual basis for the
proclamation of a state of martial law and/or
suspension of the privilege of the writ of habeas
corpus?
A: The Supreme Court's review is confined to the
sufficiency, not accuracy, of the information at hand
during the declaration or suspension; subsequent
events do not have any bearing insofar as the
Court's review is concerned. Falsities of and/or
inaccuracies in some of the facts stated in the
proclamation and the written report are not enough
reasons for the Court to invalidate the declaration
and/or suspension as long as there are other facts
in the proclamation and the written Report that
support the conclusion that there is an actual
invasion or rebellion and that public safety requires
the declaration and/or suspension. (Lagman v.
Medialdea, G.R. No. 231658, July 4, 2017)
Q: Can the President grant executive clemency
in administrative cases?
A: Yes. The Constitution does not distinguish
between which cases executive clemency may be
exercised by the President, with the sole exclusion
of impeachment cases. By the same token, if
executive clemency may be exercised only in
criminal cases, it would indeed be unnecessary to
provide for the exclusion of impeachment cases
from the coverage of Article VII, Section 19 of the
Constitution. Following petitioner's proposed
interpretation, cases of impeachment are
automatically excluded inasmuch as the same do
not necessarily involve criminal offenses. (Llamas v.
Orbos, G.R. No. 99031, October 15, 1991)
Constitutional Commissions
Civil Service Commission (CSC)
Q: Is the identity of the complainant material in
the acquisition of jurisdiction over an
administrative case by the CSC?
A: The identity of the complainant is immaterial to
the acquisition of jurisdiction over an administrative
case by the CSC. The law is quite clear that the CSC
may hear and decide administrative disciplinary
cases brought directly before it or it may deputize
any department or agency to conduct an
investigation. (Civil Service Commission v. Court of
Page 8 of 76
BRAVO BASTE!
Appeals, G.R. No. 176162, October 9, 2012)
Q: May the CSC take cognizance of an
administrative case filed against an official or
employee of a chartered state college or
university?
A: The CSC may take cognizance of an
administrative case filed directly with it against an
official or employee of a chartered state college or
university. This is regardless of whether the
complainant is a private citizen, or a member of the
civil service and such original jurisdiction is shared
with the Board of Regents of the school. (Civil
Service Commission v. Court of Appeals, G.R. No.
176162, October 9, 2012)
Commission on Elections (COMELEC)
Q: How should the COMELEC decide a case in
exercising its quasi-judicial powers?
A: When the COMELEC is exercising its quasi-
judicial powers such as in the present case, the
Commission is constitutionally mandated to decide
the case first in division, and en banc only upon
motion for reconsideration. (Eriguel v. Commission
on Elections, G.R. No. 190526, February 26, 2010)
Q: Does the COMELEC have jurisdiction to
decide on the validity of the expulsion of an
incumbent Member of the House of
Representatives from the winning party-list
organization that he represents?
A: No. His expulsion from the party-list organization
is not a mere intra-corporate matter because it
necessarily affects his title as member of Congress.
A party-list nominee must have been, among others,
a bona fide member of the party or organization for
at least ninety (90) days preceding the day of the
election. It is for the HRET to interpret the meaning
of the requirement of bona fide membership in a
party-list organization. (Lico v. Commission on
Elections, G.R. No. 205505, September 29, 2015)
Q: What is the duty of the COMELEC as regards
COCs filed in due form?
A: The duty of the COMELEC to give due course to
COCs filed in due form is ministerial in character,
and that while the COMELEC may look into patent
defects in the COCs, it may not go into matters not
appearing on their face. The question of eligibility or
ineligibility of a candidate is thus beyond the usual
and proper cognizance of the COMELEC. (Cerafica
v. Commission on Elections, G.R. No. 205136,
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
December 2, 2014)
Commission on Audit (COA)
Q: What is the limitation on COA’s jurisdiction
over money claims filed against the
government?
A: COA’s authority over money claims is limited to
liquidated claims, or those determined or readily
determinable from vouchers, invoices, and such
other papers within reach of accounting officers.
(Province of Aklan v. Jody King Construction and
Development Corp., G.R. No. 197592, November
27, 2013)
Q: When can money claims against the
government be filed directly with the courts?
A: Money claims against the government need not
be filed with COA first, and may be filed directly with
the courts, if the case falls under any of the
exceptions to the rule on exhaustion of
administrative remedies, such as when there is
unreasonable delay or official inaction that will
irretrievably prejudice the complainant, or where the
question involved is purely legal. (Vigilar v. Aquino,
G.R. No. 180388, January 18, 2011)
IV. JUDICIAL REVIEW
Q: When can the power of judicial review be
invoked?
A: As a rule, "the constitutionality of a statute will be
passed on only if, and to the extent that, it is directly
and necessarily involved in a justiciable controversy
and is essential to the protection of the rights of the
parties concerned." (Provincial Bus Operators
Association of the Philippines v. Department of
Labor and Employment, G.R. No. 202275, July 17,
2018)
Q: What are the requisites of judicial review?
A: The requisites of judicial review are:
1. There is an actual case or controversy
involving legal rights that are capable of
judicial determination;
2. The parties raising the issue must have
standing or locus standi to raise the
constitutional issue;
3. The constitutionality must be raised at the
earliest opportunity; and
Page 9 of 76
BRAVO BASTE!
4. Resolving the constitutionality must be
essential to the disposition of the case.
(Provincial Bus Operators Association of the
Philippines v. Department of Labor and
Employment, G.R. No. 202275, July 17,
2018)
Q: Is there an exception to the actual case or
controversy requirement?
A: Yes, in case of a facial challenge in Free Speech
cases. "On its face" invalidation of statutes results in
striking them down entirely on the ground that they
might be applied to parties not before the Court
whose activities are constitutionally protected. It
constitutes a departure from the case and
controversy requirement of the Constitution and
permits decisions to be made without concrete
factual settings and in sterile abstract contexts.
(Southern Hemisphere Engagement Network, Inc. v.
Anti-Terrorism Council, G.R. No. 178552, October 5,
2010)
Q: What are the exceptions to the moot and
academic principle?
A: Courts will decide cases, otherwise moot and
academic, if:
1. There is a grave violation of the
Constitution;
2. The exceptional character of the situation
and the paramount public interest is
involved;
3. When constitutional issue raised requires
formulation of controlling principles to guide
the bench, the bar, and the public; and
4. The case is capable of repetition yet
evading review. (David v. Macapagal-
Arroyo, G.R. No. 171396, May 3, 2006)
Q: What are the exceptions to the legal standing
requirement?
A: The exceptions are:
1. The issues raised in the petition are of
transcendental importance.
As an exception to the standing requirement, the
transcendental importance of the issues raised
relates to the merits of the petition. Thus, the party
invoking it must show, among others, the presence
of a clear disregard of a constitutional or statutory
prohibition. (Francisco, Jr. v. Fernando, G.R. No.
166501, November 16, 2006)
2. Non-traditional petitioners, such as:
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
a. Taxpayers, where there must be a
claim of illegal disbursement of
public funds or that the tax measure
is unconstitutional;
b. Voters, where there must be a
showing of obvious interest in the
validity of the election law in
question;
c. Concerned citizens, where there
must be a showing that the issues
raised are of transcendental
importance which must be settled
early; and
d. Legislators, where there must be a
claim that the official action
complained of infringes their
prerogatives as legislators.
(Provincial Bus Operators
Association of the Philippines v.
Department of Labor and
Employment, G.R. No. 202275,
July 17, 2018)
3. The concept of third-party standing. Under
this concept, actions may be brought on
behalf of third parties provided the following
criteria are met:
a. "the [party bringing suit] must have
suffered an 'injury-in-fact,' thus
giving him or her a 'sufficiently
concrete interest' in the outcome of
the issue in dispute";
b. "the party must have a close
relation to the third party"; and
c. "there must exist some hindrance to
the third party's ability to protect his
or her own interests." (Provincial
Bus Operators Association of the
Philippines v. Department of Labor
and Employment, G.R. No. 202275,
July 17, 2018)
4. The rights of third parties may be raised in
overbreadth analysis.
Ordinarily, a particular litigant claims that a statute is
unconstitutional as applied to him or her; if the
litigant prevails, the courts carve away the
unconstitutional aspects of the law by invalidating its
improper applications on a case to case basis.
Moreover, challengers to a law are not permitted to
raise the rights of third parties and can only assert
their own interests. In overbreadth analysis, those
rules give way; challenges are permitted to raise the
rights of third parties; and the court invalidates the
entire statute "on its face", not merely "as applied
for" so that the overbroad law becomes
Page 10 of 76
BRAVO BASTE!
unenforceable until a properly authorized court
construes it more narrowly. The factor that motivates
courts to depart from the normal adjudicatory rules
is the concern with the "chilling"; deterrent effect of
the overbroad statute on third parties not
courageous enough to bring suit. The Court
assumes that an overbroad laws "very existence
may cause others not before the court to refrain from
constitutionally protected speech or expression." An
overbreadth ruling is designed to remove that
deterrent effect on the speech of those third parties.
(Spouses Romualdez v. Commission on Elections,
G.R. No. 167011, April 30, 2008)
Q: What are the exceptions to the “lis mota”
requirement?
A: The exceptions are:
1. When a facial review of the statute is
allowed, as in cases of actual or clearly
imminent violation of the sovereign rights to
free expression and its cognate rights; or
2. When there is a clear and convincing
showing that a fundamental constitutional
right has been actually violated in the
application of a statute, which are of
transcendental interest. The violation must
be so demonstrably and urgently egregious
that it outweighs a reasonable policy of
deference in such specific instance. The
facts constituting that violation must either
be uncontested or established on trial. The
basis for ruling on the constitutional issue
must also be clearly alleged and traversed
by the parties. Otherwise, this Court will not
take cognizance of the constitutional issue,
let alone rule on it. (Parcon-Song v. Parcon,
G.R. No. 199582, July 7, 2020)
Political question doctrine
Q: Can political questions be reviewed by the
court?
A: Yes. When political questions are involved, the
Constitution limits the determination to whether or
not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the
part of the official whose action is being questioned.
If grave abuse is not established, the Court will not
substitute its judgment for that of the official
concerned and decide a matter which by its nature
or by law is for the latter alone to decide. (Marcos v.
Manglapus, G.R. No. 88211, September 15, 1989)
"Yet, in the exercise thereof, the Court is to merely
check whether or not the governmental branch or
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
agency has gone beyond the constitutional limits of
its jurisdiction, not that it erred or has a different
view". (Llamas v. Orbos, G.R. No. 99031, October
15, 1991)
V. SUPERVISION OF COURTS
Q: What is the administrative supervision over
lower courts?
A: The Supreme Court has the power or authority to:
a. Assign temporarily judges of lower courts to
other stations as public interest may require;
b. Shall not exceed six (6) months without the
consent of the judge concerned;
c. Order a change of venue or place of trial to
avoid a miscarriage of justice;
d. Appoint all officials and employees of the
Judiciary in accordance with the Civil
Service Law;
e. Supervision over all courts and the
personnel thereof;
f. Discipline judges of lower courts or order
their dismissal.
Note: The qualifications of judges of lower courts as
stated by the Constitution are minimum
requirements. The JBC may determine or add more
qualifications when such policies are necessary and
incidental to the function conferred in the
Constitution. (Villanueva v. JBC, G.R. No. 211833,
April 7, 2015)
VI. POWERS OF THE SUPREME COURT
Q: What are the powers of the Supreme Court?
A: The Supreme Court shall have the following
powers:
1. Exercise original jurisdiction over cases
affecting ambassadors, other public
ministers and consuls, and over petitions for
certiorari, prohibition, mandamus, quo
warranto, and habeas corpus.
2. Review, revise, reverse, modify, or affirm on
appeal or certiorari, as the law or the Rules
of Court may provide, final judgments and
orders of lower courts in:
1. All cases in which the constitutionality or
validity of any treaty, international or
executive agreement, law, presidential
Page 11 of 76
BRAVO BASTE!
decree, proclamation, order, instruction,
ordinance, or regulation is in question.
2. All cases involving the legality of any
tax, impost, assessment, or toll, or any
penalty imposed in relation thereto.
3. All cases in which the jurisdiction of any
lower court is in issue.
4. All criminal cases in which the penalty
imposed is reclusion perpetua or higher.
5. All cases in which only an error or
question of law is involved.
3. Assign temporarily judges of lower courts to
other stations as public interest may require.
Such temporary assignment shall not
exceed six (6) months without the consent
of the judge concerned.
4. Order a change of venue or place of trial to
avoid a miscarriage of justice.
5. Promulgate rules concerning the protection
and enforcement of constitutional rights,
pleading, practice, and procedure in all
courts, the admission to the practice of law,
the integrated bar, and legal assistance to
the under privileged. Such rules shall
provide a simplified and inexpensive
procedure for the speedy disposition of
cases, shall be uniform for all courts of the
same grade, and shall not diminish,
increase, or modify substantive rights.
Rules of procedure of special courts and
quasi-judicial bodies shall remain effective
unless disapproved by the Supreme Court.
6. Appoint all officials and employees of the
Judiciary in accordance with the Civil
Service Law. (Sec. 5, Art. VIII, 1987
Constitution)
Q: May quo warranto be filed against all public
officials?
A: Quo warranto may be filed against all public
officials. Section 5 of Article VIII does not limit the
Court's quo warranto jurisdiction only to certain
public officials or that excludes impeachable officials
therefrom. (Republic v. Sereno, G.R. No. 237428,
June 19, 2018)
Q: When can a petition for quo warranto be filed?
A: Quo warranto is appropriate when the eligibility of
the official is disputed. As the Court previously held,
"where the dispute is on the eligibility to perform the
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
duties by the person sought to be ousted or
disqualified a quo warranto is the proper action."
(Republic v. Sereno, G.R. No. 237428, June 19,
2018)
Q: Does the Supreme Court have the authority to
supervise or regulate the legal education?
A: The Supreme Court has no authority to supervise
or regulate legal education. It is a reality that the
Rules of Court, in prescribing the qualifications in
order to take the bar examinations, had placed a
considerable constraint on the courses offered by
law schools. Adjustments in the curriculum, for
instance, is a compromise which law schools
apparently are willing to take in order to elevate its
chances of graduating future bar examinees. It is in
this regard that the relationship between legal
education and admissions to the bar becomes
unmistakable. This, however, does not mean that
the Court has or exercises jurisdiction over legal
education. Compliance by law schools with the
prescribed core courses is but a recognition of the
Court's exclusive jurisdiction over admissions to the
practice of law — that no person shall be allowed to
take the bar examinations and thereafter, be
admitted to the Philippine Bar without having taken
and completed the required core courses. (Pimentel
v. Legal Education Board, G.R. No. 230642,
September 10, 2019)
Q: Can judicial privilege be invoked in
impeachment proceedings against the members
of the Supreme Court?
A: Judicial privilege cannot be invoked in
impeachment proceedings against Members of the
Supreme Court. Nevertheless, the traditional
application of judicial privilege cannot be invoked to
defeat a positive Constitutional duty. Impeachment
proceedings, being sui generis, is a Constitutional
process designed to ensure accountability of
impeachable officers, the seriousness and
exceptional importance of which outweighs the
claim of judicial privilege. To be certain, the Court, in
giving utmost importance to impeachment
proceedings even as against its own Members,
recognizes not the superiority of the power of the
House of Representatives to initiate impeachment
cases and the power of the Senate to try and decide
the same, but the superiority of the impeachment
proceedings as a Constitutional process intended to
safeguard public office from culpable abuses.
(Agcaoili v. Marcos, G.R. No. 232395, July 3, 2018)
Page 12 of 76
BRAVO BASTE!
VII. QUALIFICATIONS, DISQUALIFICATIONS
AND SELECTION OF THE PRESIDENT,
SENATOR, MEMBERS OF THE HOUSE OF
REPRESENTATIVES, JUSTICES AND JUDGES,
THE OMBUDSMAN AND MEMBERS OF THE
CONSTITUTIONAL COMMISSIONS
Q: What are the qualifications of the President
and the Vice President?
A: They must be:
1. Natural-born citizen of the Philippines;
2. A registered voter;
3. Able to read and write;
4. At least forty (40) years of age on the day of
the election; and
5. A resident of the Philippines for at least ten
(10) years immediately preceding such
election. (Sec. 2, Art. VII, 1987 Constitution)
Q: What are the prohibitions on the President
and the Vice President?
A: They:
1. Shall not receive any other emoluments
from the government or any other source.
(Sec. 6, Art. VII, 1987 Constitution)
2. Unless otherwise provided in the
constitution, shall not hold any other office
or employment. (Sec. 13, Art. VII, 1987
Constitution)
Exceptions:
a. The Vice-President being
appointed as a member of the
cabinet.
b. The Vice-President acting as
President when one has not yet
been chosen or qualified.
3. Shall not directly or indirectly:
a. practice any other profession;
b. participate in any business; or
c. be financially interested in any contract
with, or in any franchise or special
privilege granted by the government or
any subdivision, agency, or
instrumentality thereof, including
government-owned or controlled
corporations or their subsidiaries. (Sec.
13, Art. VII, 1987 Constitution)
4. Strictly avoid conflict of interest in the
conduct of their office. (Sec. 13, Art. VII,
1987 Constitution)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
5. May not appoint (a) spouse; or (b) relatives
by consanguinity or affinity within the fourth
civil degree as members of Constitutional
Commissions, or the Office of the
Ombudsman, or as Secretaries,
Undersecretaries, chairmen or heads of
bureaus or offices, including government-
owned or controlled corporation and their
subsidiaries. (Sec. 13, Art. VII, 1987
Constitution)
Q: What are the qualifications and term of a
Senator and a Member of the House of
Representatives?
A:
a. Senate
Qualifications:
a. Natural-born citizen
b. At least thirty-five (35) years old on the day
of the election
c. Able to read and write
d. A registered voter
e. Resident of the Philippines for at least two
(2) years immediately preceding the day of
the election
Term of Office: For six (6) years and a term limit of
two (2) consecutive terms
b. House of Representatives
Qualifications:
a. Natural-born citizen
b. At least twenty-five (25) years old on the day
of the election
c. Able to read and write
d. A registered voter in the district he seeks to
represent (not needed if party-list
representative)
e. A resident of the said district for at least one
(1) year immediately preceding the day of
the election (not needed if party-list
representative)
Term of Office: Three (3) years and a term limit of
three (3) consecutive terms
Rules on Apportionment of Legislative Districts
under the 1987 Constitution
1. Legislative districts shall be made in
accordance with the number of respective
inhabitants on the basis of a uniform and
progressive ratio;
2. Each city with not less than two-hundred
fifty thousand (250,000) inhabitants shall be
entitled to at least one (1) representative;
Page 13 of 76
BRAVO BASTE!
3. Each province, irrespective of the number of
inhabitants, is entitled to at least one (1)
representative;
4. The legislative district shall compose as far
as practicable a contiguous compact and
adjacent territory;
5. Reapportionment of legislative districts by
congress within three (3) years following the
return of every census.
The power to create provinces cannot be delegated
to a regional or legislative body because it can result
in the creation of legislative districts. (Sema v.
COMELEC, G.R. No. 177597, July 16, 2008)
Party-List Representatives – They shall constitute
twenty percent (20%) of the total number of
representatives, elected through a party-list system
of registered national, regional, and sectoral parties
or organizations.
Q: What are the inviolable parameters to
determine the winners in a Philippine party-list
election?
A: To determine the winners in a Philippine-style
party-list election, the Constitution and Republic Act
No. 7941 mandate at least four (4) inviolable
parameters. These are:
First, the twenty percent (20%) allocation - the
combined number of all party-list congressmen shall
not exceed twenty percent (20%) of the total
membership of the House of Representatives,
including those elected under the party list.
Second, the two percent (2%) threshold - only
those garnering a minimum of two percent (2%) of
the total valid votes cast for the party-list system are
"qualified" to have a seat in the House of
Representatives.
Third, the three-seat limit - each qualified party,
regardless of the number of votes it actually
obtained, is entitled to a maximum of three (3) seats;
that is, one (1) "qualifying" and two (2) additional
seats.
Fourth, proportional representation - the
additional seats which a qualified party is entitled to
shall be computed "in proportion to their total
number of votes." (Veterans Federation Party v.
COMELEC, G.R. No. 136781, October 6, 2000)
Disqualified Parties:
1. Religious sects;
2. Foreign organizations;
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
3. Advocating violence or unlawful means;
4. Receiving support from any foreign
government, foreign political party,
foundation, organization, whether directly or
through any of its officers or members or
indirectly through third parties for partisan
election purposes;
5. Violating or failing to comply with laws, rules
or regulations relating to elections;
6. Declaring untruthful statements in its
petition;
7. Ceased to exist for at least one (1) year; or
8. Failing to participate in the last two (2)
preceding elections or fails to obtain at least
2 per centum (2%) of the votes cast under
the party-list system in the two (2) preceding
elections for the constituency in which it has
registered.
Q: What are the inhibitions and disqualifications
for a Senator and a Member of the House of
Representatives?
A: They:
1. May not hold any other office or
employment in the government during his
term without forfeiting his seat (Sec. 13, Art.
VI, 1987 Constitution)
2. May not be appointed to any office created
or whose emoluments were increased
during the term for which he was elected
(Sec. 13, Art. VI, 1987 Constitution)
3. Shall not be financially interested, directly or
indirectly, in any contract with, or franchise
or special privilege granted by the
government during his term of office (Sec.
14, Art. VI, 1987 Constitution)
4. Shall not intervene in any matter before any
office of the government when it is for his
pecuniary benefit or where he may be called
upon to act on account of his office (Sec. 14,
Art. VI, 1987 Constitution); and
5. Cannot personally appear as counsel
before any court, electoral tribunal, quasi-
judicial and administrative bodies during his
term of office. (Sec. 14, Art. VI, 1987
Constitution)
Q: What are the qualifications and tenure of the
Justices of the Supreme Court?
A:
Qualifications:
a. Natural-born Citizen;
b. At least forty (40) years of age;
c. Fifteen (15) years or more as a judge of a
lower court or has been engaged in the
Page 14 of 76
BRAVO BASTE!
practice of law in the Philippines for the
same period; and
d. Person of proven competence, integrity,
probity, and independence. (Sec. 7(3), Art.
VIII, 1987 Constitution)
Tenure: They shall hold office during good behavior
until they reach the age of seventy (70) or become
incapacitated to discharge their duties. (Sec. 11, Art.
VIII, 1987 Constitution)
Prohibition: The Members of the Supreme Court
and of other courts established by law shall not be
designated to any agency performing quasi-judicial
or administrative functions. (Sec. 12, Art. VIII, 1987
Constitution)
Q: How are appointments in the Judiciary made?
A: The Judicial and Bar Council (JBC) shall have the
principal function of recommending appointees to
the judiciary. It may exercise such other functions
and duties as the Supreme Court may assign to it.
(Sec. 8(5), Art. VIII, 1987 Constitution)
The Members of the Supreme Court and judges of
lower courts shall be appointed by the President
from a list of at least three (3) nominees preferred by
the JBC for every vacancy. Such appointments need
no confirmation. For the lower courts, the President
shall issue the appointment within ninety (90) days
from the submission of the list (Sec. 9, Art. VIII, 1987
Constitution).
The appointment for a member of the Supreme
Court must be made ninety (90) days from when the
vacancy occurs (Sec 4(1), Art. VIII, 1987
Constitution).
Q: What are the qualifications of the
Ombudsman?
A: The qualifications are:
1. Natural born citizen of the Philippines;
2. At least forty (40) years old at time of
appointment;
3. Of recognized probity and independence;
4. Member of the Philippine bar;
5. Must not have been candidate for any
elective office in the immediately preceding
election; and
6. Must have been for ten (10) years or more,
a judge OR engaged in the practice of law in
the Philippines. (Sec. 8, Art. XI, 1987
Constitution)
Q: What are the disqualifications and
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
prohibitions on the Ombudsman and his/her
deputies?
A: The Ombudsman and his/her deputies, during
their tenure cannot:
1. Hold any other office or employment;
2. Engage in the practice of any profession;
3. Engage in the active management or control
of any business which in any way may be
affected by the functions of his office; or
4. Be financially interested, directly or
indirectly, in any contract with, or in any
franchise or privilege granted by, the
Government, its subdivisions, agencies or
instrumentalities, including GOCCs or their
subsidiaries. (Sec. 8, Art. XI, in relation to
Sec. 2, Art. IX-A, 1987 Constitution)
Q: What is the composition and the
qualifications of the Members of the
Constitutional Commissions?
A:
a. Civil Service Commission (CSC)
Composition: A Chairman and two (2)
Commissioners (Sec. 1(1), Art. IX-B, 1987
Constitution)
Qualifications:
a. Natural-born citizens of the Philippines;
b. At the time of their appointment, at least
thirty-five (35) years of age;
c. With proven capacity for public
administration; and
d. Must not have been candidates for any
elective position in the election immediately
preceding their appointment. (Sec. 1(1), Art.
IX-B, 1987 Constitution)
Q: What are the prohibitions to the members of
the Civil Service Commission?
A:
a. No officer or employee in the civil service
shall engage directly or indirectly, in any
electioneering or partisan political activity
(Sec. 2(4), Art. IX-B, 1987 Constitution);
b. No candidate who has lost in any election
shall within one (1) year after such election,
be appointed to any office in the
Government or any GOCC or in any of its
subsidiaries (Sec. 6, Art. IX-B, 1987
Constitution);
c. No elective official shall be eligible for
appointment or designation in any capacity
to any public office or position during his
tenure (Sec. 7, Art. IX-B, 1987 Constitution);
Page 15 of 76
BRAVO BASTE!
d. Unless otherwise allowed by law OR by the
primary functions of his position, no
appointive official shall hold any other office
or employment in the Government or any
subdivision, agency or instrumentality
thereof including GOCCs or their
subsidiaries (Sec. 7, Art. IX-B, 1987
Constitution); and
e. No elective or appointive public officer or
employee shall receive additional, double,
or indirect compensation, unless specifically
authorized by law, nor accept without the
consent of the Congress, any present,
emolument, office, or title of any kind from
any foreign government. (Sec. 8, Art. IX-B,
1987 Constitution)
b. Commission on Elections (COMELEC)
Composition: A Chairman and six (6)
Commissioners (Sec. 1(1), Art. IX-C, 1987
Constitution).
Qualifications:
a. Must be natural-born citizens;
b. At least thirty-five (35) years of age;
c. Holders of a college degree;
d. Have not been candidates in the
immediately preceding election;
e. Majority, including the Chairman, must be
members of the Philippine Bar who have
been engaged in the practice of law for at
least ten (10) years. (Sec. 1(1), Art. IX-C,
1987 Constitution)
c. Commission on Audit (COA)
Composition: A Chairman and two (2)
Commissioners (Sec. 1(1), Art. IX-D, 1987
Constitution)
Qualifications:
a. Natural born Filipino citizens;
b. At least thirty-five (35) years of age at the
time of their appointment;
c. certified public accountants with not less
than ten (10) years of auditing experience,
or members of the Philippine Bar who have
been engaged in the practice of law for at
least ten (10) years;
must not have been candidates for any elective
position in the elections immediately preceding their
appointment. (Sec. 1(1), Art. IX-D, 1987
Constitution)
Note: At no time shall all members belong to the
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
same profession. (Sec. 1(2), Art. IX-D, 1987
Constitution)
Q: What are the prohibitions to the members of
Constitutional Commissions?
A: No member of the Constitutional Commission
shall, during their tenure:
1. Hold any other office or employment. It
applies to both public and private offices
and employment;
2. Engage in the practice of any profession;
3. Engage in the active management or control
of any business which in any way may be
affected by the functions of his office; or
4. Be financially interested, directly or
indirectly, in any contract with, or in any
franchise or privilege granted by, the
Government, its subdivisions, agencies or
instrumentalities, including GOCCs or their
subsidiaries. (Sec. 2, Art. IX-A, 1987
Constitution)
VIII. STATE IMMUNITY FROM SUIT,
PRIVILEGES OF MEMBERS OF THE
CONGRESS
Q: When is a suit against a public official
deemed to be a suit against the state?
A: The doctrine of state immunity from suit applies
to complaints filed against public officials for acts
done in the performance of their duties. The rule is
that the suit must be regarded as one against the
State where the satisfaction of the judgment against
the public official concerned will require the State
itself to perform a positive act, such as appropriation
of the amount necessary to pay the damages
awarded to the plaintiff.
The rule does not apply where the public official is
charged in his official capacity for acts that are
unlawful and injurious to the rights of others. Public
officials are not exempt, in their personal capacity,
from liability arising from acts committed in bad faith.
Neither does it apply where the public official is
clearly being sued not in his official capacity but in
his personal capacity, although the acts complained
of may have been committed while he occupied a
public position. (Lansang v. CA, G.R. No. 102667,
February 23, 2000)
Q: What is Presidential Immunity?
Page 16 of 76
BRAVO BASTE!
A: The President as such cannot be sued, enjoying
as he does immunity from suit. But the validity of his
acts can be tested by an action against other
executive officials. (Carillo v. Marcos, G.R. No. L-
21015, March 24, 1924)
The immunity of the President from suit is personal
to the President. It may be invoked by the President
only and not by any other person. (Soliven v.
Makasiar, 167 SCRA 393)
The concept is clear and allows no qualifications or
restrictions that the President cannot be sued while
holding such office. (De Lima v. President Duterte,
G.R. No. 227635, October 15, 2019)
Immunity is co-extensive with tenure and covers
only official duties. After tenure, the Chief Executive
cannot invoke immunity from suit for civil damages
arising out of acts done by him while he was
President which were not performed in the exercise
of official duties. (Estrada v. Desierto, G.R. No.
146710, March 2, 2001)
Q: What are the Legislative Privileges?
A:
1. Immunity from Arrest - A Senator or
Member of the House of Representatives
shall, in all offenses punishable by not more
than six (6) years imprisonment, be
privileged from arrest while the Congress is
in session. (Sec. 11, Art. VI, 1987
Constitution)
2. Speech and Debate Clause - Members of
the Congress shall not be questioned nor be
held liable in any other place for any speech
or debate in the congress or in any
committee thereof.
While the immunity of a Member of Congress is
absolute and thus even the Supreme Court cannot
discipline a lawyer-senator for remarks made
against the court, it does not shield said member
from the authority of Congress to discipline its own
members. (Defensor-Santiago v. Pobre, A.C. No.
7399, August 25, 2009)
IX. STRUCTURE OF GOVERNMENT
The Philippines is a democratic and republican
State. Sovereignty resides in the people and all
government authority emanates from them. (Sec. 1,
Art. II, 1987 Constitution)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
The Philippines is a republic with a presidential form
of government wherein power is equally divided
among its three branches: EXECUTIVE,
LEGISLATIVE, and JUDICIAL DEPARTMENTS.
X. PROCESS OF LEGISLATION
Q: What are the bills that must originate from the
House of Representatives?
A: The bills that must originate in the House are:
1. Appropriation Bills;
2. Revenue Bills - One specifically designed
to raise money or revenue through
imposition or levy;
3. Tariff bills - One that specifies the rates or
duties to be imposed on imported articles;
4. Bills authorizing the increase of Public
debt - One which creates public
indebtedness such as bills for the issuance
of bonds and other forms of obligations;
5. Bills of local application
-A bill of local application, such as one
asking for the conversion of a municipality
into a city, is deemed to have originated
from the House provided that the bill of the
House was filed prior to the filing of the bill
in the Senate; even if in the end, the Senate
approved its own version. (Tolentino v.
Secretary of Finance, G.R. No. 115455,
October 30, 1995); and
6. Private bills - One affecting purely private
interest, such as one granting a franchise.
Q: What is the process of law-making?
A: The process is as follows:
I. First Reading
1. Filing and Calendaring of the bill by the
Secretary where it is given a corresponding
number.
2. Title, bill number, and author/s’ name/s are
read on the floor.
3. Referral of the bill to the appropriate
committee.
4. The committee shall conduct public
hearings and consultative meetings.
Page 17 of 76
BRAVO BASTE!
5. Approval without any amendments, or
approval with changes, or recommendation
of substitution or consolidation with similar
bills filed.
6. Committee report with its approved bill
version is submitted to the Committee on
Rules to be calendared for Second
Reading.
II. Second Reading
1. Senators/Members of the House of
Representatives vote on the second reading
version of the bill.
2. If approved, the bill is calendared for third
reading.
III. Third Reading
1. Printed copies of the bill’s final version are
distributed to the members of each House
of Congress.
2. Only the title of the bill is read on the floor.
3. Nominal voting (Yeas and Nays) shall be
conducted.
4. If passed, the approved bill shall be referred
to the other House for concurrence.
IV. Bicameral Conference
• If the versions of both Houses of Congress
are compatible, the final version’s enrolled
form is printed.
• If there are differences, a bicameral
conference committee shall be instituted to
reconcile the disagreeing provisions.
• The Conference Committee shall then
submit a report on the reconciled version of
the bill, duly approved by both Chambers.
V. Transmittal of the Bill to the President
• Copies of the bill, signed by the Senate
President and the Speaker of the House of
Representatives and certified by both the
Secretary of the Senate and the Secretary
General of the House, are transmitted to the
President.
VI. President’s Action
• Signs it into law or vetoes it and sends it
back to the Senate/House of
Representatives with a veto message.
VII. Congressional Action on the Vetoed Bill
• If the Congress decides to override the veto,
the House and the Senate shall proceed
separately to reconsider the bill or the
vetoed items of the bill.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
• If the bill or its vetoed items is passed by a
vote of two-thirds (2/3) of the Members of
each House, such bill or items shall become
a law.
Q: What are the reasons for the “three readings
on three separate days” rule?
A: To inform the legislators of the matters they shall
vote on and to notify them that a measure is in
progress through enactment process. (Abas Kida v.
Senate, G.R. No. 196271, October 18, 2011)
Presidential Veto
Every bill passed by Congress shall be presented to
the President before it becomes law. To approve, he
shall sign it. Otherwise, he shall veto the bill. (Sec.
27(1), Art. VI, 1987 Constitution)
The President shall transmit to House where the bill
originated. If, after such reconsideration, two-thirds
(2/3) of all the members of such House shall agree
to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall
likewise be reconsidered, and if approved by two-
thirds (2/3) of all the members of that House, it shall
become law.
Item/Line Veto
General Rule: If the President disapproves of a
provision in a bill approved by congress, he must
veto the entire bill.
Exceptions: The President is allowed to item-veto
in these types of bills: (ART)
1. Appropriation
2. Revenue, and
3. Tariff bills.
Q: What is the Enrolled Bill Doctrine?
A: The signing of a bill by the Speaker of the House
and the President of the Senate and its certification
by the secretaries of both Houses of Congress that
such bill was passed are conclusive of its due
enactment. (Arroyo v. De Venecia, G.R. No.127255,
August 14, 1997)
XI. NATURAL RESOURCES
Q: What is the Regalian Doctrine under the 1987
Constitution?
Page 18 of 76
BRAVO BASTE!
A: Under the Regalian Doctrine, which is embodied
in our Constitution, all lands of the public domain
belong to the State, which is the source of any
asserted right to any ownership of land. All lands not
appearing to be clearly within private ownership are
presumed to belong to the State. Accordingly, public
lands not shown to have been reclassified or
released as alienable agricultural land or alienated
to a private person by the State remain part of the
inalienable public domain. Unless public land is
shown to have been reclassified as alienable or
disposable to a private person by the State, it
remains part of the inalienable public domain.
Property of the public domain is beyond the
commerce of man and not susceptible of private
appropriation and acquisitive prescription.
Occupation thereof in the concept of owner no
matter how long cannot ripen into ownership and be
registered as a title. (Federation of Coron v.
Secretary of DENR, G.R. No. 247866, September
15, 2020)
Q: What are the limitations on the disposition of
the State of alienable lands of the public
domain?
A:
1. Only agricultural lands of the public domain
may be alienated;
2. Only Filipino citizens may acquire lands not
more than twelve (12) hectares by
purchase, homestead or grant or lease no
more than five hundred (500) hectares.
Private corporations may lease not more
than one-thousand (1,000) hectares for
twenty-five (25) years and renewable for
another twenty-five (25) years (Sec. 3, Art.
XII, 1987 Constitution);
3. The exploration, development and
utilization (EDU) of all natural resources
shall be under the full control and
supervision of the State either by directly
undertaking such EDU or through
coproduction, joint venture, or production
sharing agreements with qualified persons;
4. The use and enjoyment of the marine
wealth of the archipelagic waters, territorial
sea, and the EEZ shall be reserved for
Filipino citizens;
5. Utilization of natural resources in rivers,
lakes, bays and lagoons may be allowed
only on a ‘small scale’ to Filipino citizens or
cooperatives—with priority for subsistence
fishermen and fish workers. (Sec. 2, Art. XII,
1987 Constitution)
Q: What are the rules in the conveyance of
 S CBA R STAG NO TES Page 19 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

private lands? of the constitutional prohibition, the Court's

A: Private lands can only be conveyed to: pronouncements on the invalidity of the Contract of
1. Filipino citizens; and Sale should be set aside. (Hulst v. PR Builders, G.R.
2. Corporations or associations incorporated 156364, September 25, 2008)
in the Philippines, at least sixty percent
(60%) of whose capital is owned by Filipino Q: What are the citizenship and/or equity
citizens. (Sec. 7, Art. XII, 1987 Constitution) requirements for economic activities under the
Constitution?
Exceptions:
a. In intestate succession, where an alien heir A:
of a Filipino is the transferee of private land Activity Citizenship and/or Equity
(Sec. 7, Art. XII, 1987 Constitution); Requirements
b. A natural-born citizen of the Philippines who Exploration of 1. Filipino citizens
has lost his Philippine citizenship may be a natural 2. Domestic Corporations
transferee of private land, subject to resources (60% Filipino owned)
limitation provided by law. Hence, land can Operation of 1. Filipino citizens
be used only for residential purposes. In this Public Utilities 2. Domestic Corporations
case, he only acquires derivative title. (Sec. (60% Filipino owned)
7, Art. XII, 1987 Constitution). However, a Acquisition of 1. Filipino citizens
former natural born Filipino citizen who alienable lands 2. Domestic Corporations
became a citizen of other countries may of the public (60% Filipino owned)
acquire land for business and other domain 3. Former natural-born citizens
purposes. (Sec. 5, R.A. No. 8179); and of RP (as transferees with
c. Foreign states may acquire land but only for certain legal restrictions)
embassy and staff residence purposes. 4. Alien heirs (as transferees)
Practice of 1. Filipino citizens only (natural
Q: Are there remedies available in order to
ALL persons)
recover private lands from disqualified aliens?
professions 2. Congress may, by law,
otherwise prescribe
A: Yes. The remedies are:
Mass Media 1. Filipino citizens
1. Escheat proceedings;
2. Domestic Corporations
2. Action for Reversion under the Public Land
(100% Filipino owned)
Act; and
Advertising 1. Filipino citizens
3. An action by the former Filipino owner to
2. Domestic Corporations
recover the land
(70% Filipino owned)
Although the sale of a lot to an alien violated the Educational 1. Filipino citizens
constitutional prohibition on aliens acquiring land, Institution 2. Domestic Corporations
the acquisition by succession by Filipino citizens (60% Filipino owned)
qualified to acquire lands, can no longer be
impugned on the basis of the invalidity of the initial Exception: Schools
transfer. The flaw in the original transaction is established by religious
considered cured and the title of the transferee is groups and mission boards.
deemed valid considering that the objective of the Congress may, by law,
constitutional proscription against alien ownership of increase Filipino requirements
lands, that is to keep our lands in Filipino hands, has for ALL educational institutions
been achieved. (Republic v. Register of Deeds, G.R. Other Congress may, by law, reserve
158230, July 16, 2008) economic to Filipino citizens or to
activities Domestic Corporations (60%
Considering that the rights and liabilities of the Filipino owned or higher)
parties under the Contract to Sell is covered by the certain investment areas.
Condominium Act wherein petitioner as unit owner
was simply a member of the Condominium Q: May the State enter into service contracts
Corporation and the land remained owned by with foreign-owned corporations?
respondent, then the constitutional proscription
against aliens owning real property does not apply A: Yes, but subject to the strict limitations in the last
to the present case. There being no circumvention two paragraphs of Section 2, Article XII of the 1987
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Constitution. Financial and technical agreements
are a form of service contract. Such service
contracts may be entered into only with respect to
minerals, petroleum and other mineral oils. The
grant of such service contracts is subject to several
safeguards, among them: (1) that the service
contract be crafted in accordance with a general law
setting standard or uniform terms, conditions and
requirements; (2) the President be the signatory for
the government; and (3) the President report the
executed agreement to Congress within thirty (30)
days. (La Bugal B'laan Tribal Assoc. v. DENR, G.R.
No. 127882, December 1, 2004)
Q: What are the safeguards to be observed in
relation to the grant of such service contracts?
A: The grant of such service contracts must be
subject to the following safeguards:
1. It must be in accordance with a general law;
2. the President must be the signatory for the
government;
3. the President must report the executed
agreement to Congress within thirty (30)
days. (La Bugal-B’laan Tribal Association,
Inc. v. Ramos, G.R. 127882, January 27,
2004)
XII. AMENDMENT AND REVISION OF THE
CONSTITUTION
Q: Distinguish between amendment and
revision.
A: Revision broadly implies a change that alters a
basic principle in the constitution, like altering the
principle of separation of powers or the system of
checks-and-balances. There is also revision if the
change alters the substantial entirety of the
constitution, as when the change affects substantial
provisions of the constitution. On the other hand,
amendment broadly refers to a change that adds,
reduces, or deletes without altering the basic
principle involved. Revision generally affects several
provisions of the constitution, while amendment
generally affects only the specific provision being
amended. (Lambino v. COMELEC, G.R. No.
174153, October 25, 2006)
Q: How do we determine whether a proposal
involves an amendment or revision?
A: By using a two-part test:
1. Quantitative test — The court examines
only the number of provisions affected and
Page 20 of 76
BRAVO BASTE!
does not consider the degree of the change.
Whether the proposed change is so
extensive in its provision as to change
directly the “substance entirety” of the
Constitution by the deletion or alteration of
numerous provisions; and
2. Qualitative test — Inquires into the
qualitative effects of the proposed change in
the Constitution. The main inquiry is
whether the change will “accomplish such
far-reaching changes in the nature of our
basic governmental plan as to amount to a
revision.” (Lambino v. COMELEC, G.R. No.
174153, October 25, 2006)
Q: What are the steps to give effect to
amendment or revisions?
A: The steps are:
1. Proposal of amendments or revision;
2. Submission of the proposed amendments
or revision to the people; and
3. Ratification
Q: What are the ways of proposing amendments
to the Constitution?
A: Amendments to the Constitution may be
proposed through:
1. Constituent Assembly - The Congress by
itself, acting as a Constituent Assembly,
may propose amendments by three-fourths
(3/4) vote of all its Members (Sec. 1, Art.
XVII, 1987 Constitution);
Note: Since the Constituent Assembly owes
its existence to the Constitution, the courts
may determine whether the Assembly has
acted in accordance with the Constitution.
2. Constitutional Convention - The
Congress may, by a vote of two-thirds (2/3)
of all its Members, call a constitutional
convention, or by a majority vote of all its
Members, submit to the electorate the
question of calling such a convention (Secs.
1(2) and 3, Art. XVII, 1987 Constitution); or
3. People’s Initiative (Sec. 2, Art. XVII, 1987
Constitution)
Requirements:
1. The petition must have at least twelve
per centum (12%) of the total number of
registered voters as signatories, of
which every legislative district must be
represented by at least three per
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
centum (3%) of the registered voters
therein.
Elements: (1) the people must author
and thus sign the entire proposal. No
agent or representative can sign on
their behalf; and (2) the proposal must
be embodied in a petition. These
essential elements are present only if
the full text of the proposed
amendments is first shown to the
people who express their assent by
signing such a complete proposal in a
petition. (Lambino v. Commission on
Elections, G.R. No. 174153, October
25, 2006)
2. Initiative on the Constitution may be
exercised only after five (5) years from
the ratification of the 1987 Constitution
and only once every five (5) years
thereafter.
Q: How is People’s Initiative exercised?
A: First, there must be an adequate implementing
legislation. The Congress has approved R.A. No.
6735, or the Initiative and Referendum Law,
however, the Supreme Court ruled in Santiago v.
Commission on Elections (G.R. No. 127325, March
19, 1997), that R.A. No. 6735 is inadequate to cover
the system of initiative on amendments to the
Constitution and have failed to provide sufficient
standard for subordinate legislation.
Q: What are the ways of proposing revisions?
A: Revisions to the Constitution may be proposed
through:
1. Constituent Assembly - The Congress by
itself, acting as a Constituent Assembly,
may propose amendments by three-fourths
(3/4) vote of all its Members (Sec. 1, Art.
XVII, 1987 Constitution); or
2. Constitutional Convention - The
Congress may, by a vote of two-thirds (2/3)
of all its Members, call a constitutional
convention, or by a majority vote of all its
Members, submit to the electorate the
question of calling such a convention.
(Secs. 1(2) and 3, Art. XVII, 1987
Constitution)
Q: When does the amendment or revision take
effect?
A: Any amendment to, or revision of, this
Page 21 of 76
BRAVO BASTE!
Constitution under Section 1 hereof (Constituent
Assembly or Constitutional Convention) shall be
valid when ratified by a majority of the votes cast in
a plebiscite which shall be held not earlier than sixty
(60) days nor later than ninety (90) days after the
approval of such amendment or revision.
Any amendment under Section 2 hereof (People’s
Initiative) shall be valid when ratified by a majority of
the votes cast in a plebiscite which shall be held not
earlier than sixty (60) days nor later than ninety (90)
days after the certification by the Commission on
Elections of the sufficiency of the petition. (Sec. 4,
Art. XVII, 1987 Constitution)
Note: Since Section 4 of Article XVII, says that any
amendment or revision ‘shall be valid when ratified’,
the date of effectivity of any amendment or revision
should be the same as that of the date of ratification,
that is, the day on which the votes are cast.
However, the amendments themselves might
specify otherwise. (Bernas, J. (2009). 1987
Philippine Constitution: A Commentary, p. 1382.)
INTERNATIONAL LAW
I. SOURCES OF INTERNATIONAL LAW
Q: What are the sources of international law?
A: Under Article 38 of the Statute of the International
Court of Justice, the PRIMARY sources are:
1. International conventions, whether general
or particular, establishing rules expressly
recognized by the contesting states;
2. International custom, as evidence of a
general practice accepted as law; and
3. The general principles of law recognized by
civilized nations.
The SUBSIDIARY or SECONDARY sources are:
1. Judicial decisions; and
2. The teachings of the most highly qualified
publicists of the various nations.
Note: The decision of the Court has no binding force
except between the parties and in respect of that
particular case. (Art. 59, Statute of the International
Court of Justice)
II. RELATIONSHIP WITH DOMESTIC LAW
Q: What is the concept of auto-limitation?
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
A: Under the principle of auto-limitation, any state
may by its consent, express or implied, submit to a
restriction of its sovereign rights. (Reagan v. CIR,
G.R. No. L-26379, December 27, 1969)
Q: What is the relationship between reciprocity
and the principle of auto-limitation?
A: When the Philippines enters into treaties,
necessarily, these international agreements may
contain limitations on Philippine sovereignty. The
consideration in this partial surrender of sovereignty
is the reciprocal commitment of other contracting
states in granting the same privilege and immunities
to the Philippines. (Tañada v. Angara, G.R. No.
118295, May 2, 1997)
Q: How can international law become part of the
domestic law?
A: Under the 1987 Constitution, international law
can become part of the sphere of domestic law
either by transformation or incorporation. The
transformation method requires that an international
law be transformed into a domestic law through a
constitutional mechanism such as local legislation.
The incorporation method applies when, by mere
constitutional declaration, international law is
deemed to have the force of domestic law.
(Pharmaceutical and Health Care Association v.
Duque III, G.R. No. 173034, October 9, 2007)
Q: How do treaties become part of the
Philippines’ legal system?
A: Treaties become part of the law of the land
through transformation pursuant to Article VII,
Section 21 of the Constitution which provides that
"[n]o treaty or international agreement shall be valid
and effective unless concurred in by at least two-
thirds of all the members of the Senate." Thus,
treaties or conventional international law must go
through a process prescribed by the Constitution for
it to be transformed into municipal law that can be
applied to domestic conflicts. (Pharmaceutical and
Health Care Association v. Duque III, G.R. No.
173034, October 9, 2007)
Q: How should the local courts deal with
conflicts between international law and
domestic law?
A: The doctrine of incorporation is applied whenever
municipal tribunals (or local courts) are confronted
with situations in which there appears to be a conflict
between a rule of international law and the
provisions of the constitution or statute of the local
Page 22 of 76
BRAVO BASTE!
state. Efforts should first be exerted to harmonize
them, so as to give effect to both since it is to be
presumed that municipal law was enacted with
proper regard for the generally accepted principles
of international law in observance of the
Incorporation Clause in the above-cited
constitutional provision. In a situation, however,
where the conflict is irreconcilable and a choice has
to be made between a rule of international law and
municipal law, jurisprudence dictates that municipal
law should be upheld by the municipal courts for the
reason that such courts are organs of municipal law
and are accordingly bound by it in all circumstances.
(Secretary of Justice v. Lantion, G.R. No. 139465,
January 18, 2000)
Q: Is international law which has been
incorporated in the domestic sphere supreme
over the national or municipal law?
A: No. The doctrine of incorporation, as applied in
most countries, decrees that rules of international
law are given equal standing with, but are not
superior to, national legislative enactments.
Accordingly, the principle lex posterior derogat priori
takes effect — a treaty may repeal a statute and a
statute may repeal a treaty. In states where the
constitution is the highest law of the land, such as
the Republic of the Philippines, both statutes and
treaties may be invalidated if they are in conflict with
the constitution. (Secretary of Justice v. Lantion,
G.R. No. 139465, January 18, 2000)
Q: What is the nature of extradition
proceedings?
A: Extradition has thus been characterized as the
right of a foreign power, created by treaty, to
demand the surrender of one accused or convicted
of a crime within its territorial jurisdiction, and the
correlative duty of the other state to surrender him to
the demanding state. It is not a criminal proceeding.
Even if the potential extraditee is a criminal, an
extradition proceeding is not by its nature criminal,
for it is not punishment for a crime, even though such
punishment may follow extradition. It is sui generis,
tracing its existence wholly to treaty obligations
between different nations. (Government of
Hongkong Special Administrative Region v. Olalia,
Jr., G.R. No. 153675, April 19, 2007)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
LABOR LAW
FUNDAMENTALPRINCIPLES
What are the rights of employees under the 1987
Constitution? (1996, 1998, 2009 Bar)
The Constitution grants to employees are the rights:
1. To a living wage;
2. To humane working conditions;
3. To self-organization;
4. To security of tenure;
5. To engage in peaceful concerted activities,
which include the right to strike, following the
law;
6. To collective bargaining negotiations with
management; and
7. To participate in policy and decision-making
processes affecting their rights and benefits
as may be provided by law (Article XIII, Sec.
3)
Principle of Co-determination (2007 & 2008 Bar)
Bar Q: Explain the extent of the workers right to
participate in policy and decision- making process
as provided under Article XIII, Section 3 of the
Philippine Constitution. Does it include membership
in the Board of Directors of Corporation?
A: Under Art. XIII, Sec. 3 of the Constitution, the
workers shall participate in policy and decision-
making affecting their rights, duties, welfare and
benefits, through labor-management councils and
membership in safety committee and other
committees of similar nature. Such participation by
the union in the said committees is not in the nature
of a co-management control of the business What is
granted by law is participation and representation.
The workers’ rights do not include membership in
the Board of Directors of a Corporation (See Meralco
v. Meralco Employees, G.R. No. 127598, January
27, 1999). Such right also includes participation in
the formulation of a Code of Discipline(PAL vs
NLRC, GR No. 85985, 13 Aug 1993).
Labor contracts are impressed with public
interest.
All labor contracts must yield to the common good,
however 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. (Art.
Page 23 of 76
BRAVO BASTE!
1700, Civil Code)
Case: The DOLE and LTRFB issued circulars
mandating the part-fixed, part-performance-based
compensation system for provincial PUB drivers and
conductors, The fixed component shall not be lower
than the applicable minimum wage in the region.
The performance-based component shall be based
on the net income of the operator or bus company
and on employee safety record on the road.
Do DOLE Department Order No. 118-12 and the
LTFRB Memorandum Circular No. 2012-001
impair public utility bus operators’ right to non-
impairment of the obligation of contracts
specifically the agreement on commission or
boundary basis for the salaries of drivers and
conductors?
No. By statutory declaration, labor contracts are
impressed with public interest and, therefore, must
yield to the common good. Labor contracts are
subject to the police power of the State. Department
Order No. 118-12 was issued to grant bus drivers
and conductors minimum wages and social welfare
benefits. Further, it also intends to promote road and
traffic safety. (The Provincial Bus Operators
Association of the Philippines (PBOAP) v. DOLE
G.R. No. 202275, 17 July 2018)
LABOR PROTECTION
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 (Art. XIII, Sec. 3,
1987 Constitution).
What is the purpose of affording protection to
labor?
The purpose is to place labor on an equal plane with
management with all its power and influence in
negotiating for the advancement of his interest and
the defense of his rights. (Philippine Airlines, Inc vs.
Santos Jr. et al., GR No. 77875,0 4 February 1993)
What are some of these principles promoting
protection to labor?
These protection to labor principles include:
1. Statutory minimum standards (minimum wage
rates; maximum work hours and work days;
occupational safety & health standards; mandatory
leave benefits)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
2. Social legislation benefits (SSS, ECC, female
surgical leave; VWCI leave; paternity leave; solo
parent leave)
3. Security of tenure
4. Doubts to be resolved in favor of labor
5. Non-diminution principle
6. Unlawful discrimination (on account solely of
gender, age, disability, and in salaries)
7. Access to courts and quasi-judicial bodies
(summary proceedings; non-technical procedures,
and no docket fees required)
Extent and limits of the protection
The principle of protection extends upon an
employee who is abused by the employer or by the
union leadership or their respective representatives.
Exceptions:
1. Protection to labor is not a license to
condone wrongdoings.
Example: Employee charged with theft,
even if acquitted of the charge on reasonable doubt,
may be validly dismissed for serious misconduct or
loss of trust and confidence in him.
2. Where both parties have violated the law,
neither party is entitled to protection. (PAMBUSCO
Employees Union vs. Court of Industrial Relations,
68 Phil. 591).
Example: Both management and union are
guilty of ULP against each other, or of violations
of the CBA, or of illegal strike and lock out.
3. The care and solitude in the protection of the
rights of workers cannot justify disregarding facts in
the construction of the text of applicable rules in
order to arrive at a disposition in favor of an
employee (PAL vs NLRC, G.R. No. 87698, 24
September 1991).
Example: The company-funded retirement plan
expressly stipulated that the computation of the
retirement benefits shall be based on the
employee's notional Philippine salary, not on
the actual salary received by the employee
while assigned overseas. The meaning of the
retirement plan was plain and clear. (Gerlach vs
Reuters, GR No. 148542, 17 January 2005).
4. Should not be used as sword to oppress
employers (Agabon vs NLRC, G.R. No. 158693
17 November 2004)
Example: Where the dismissal is for a just cause,
Page 24 of 76
BRAVO BASTE!
the lack of statutory due process should not
nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should
indemnify the employee for the violation of his
statutory rights (ibid).
OFWs
The State shall afford full protection to labor,
local and overseas, organized and unorganized...
(Art. XIII, Sec. 3.). Thus, labor laws regulate pre-
employment activities like recruitment of OFW
Do you know that:
• only licensed placement agencies may engage in
recruitment of OFWs?
• recruitment violations by agencies may cover
administrative aspect (which may result in
suspension or cancellation of recruitment
license) and criminal sanction (against the
persons who committed the illegal act).
• The administrative and criminal actions may
proceed independently of each other (Section,
77, 2016 Revised POEA Rules and Regulations);
• The main gist of illegal recruitment is "any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and
includes referring, contract services, promising
or advertising for employment abroad, whether
for profit or not, when undertaken by non-
licensee or non-holder of authority" but it also in
includes other prohibited acts (which could be
committed even by licensed recruiters), such as:
contract substitution without the POEA's
approval and to the prejudice of the OFW;
withholding of travel documents; failure to deploy
without valid reasons; and failure to reimburse
documentation and processing expenses;
• illegal recruitment is malum prohibitum offense
and thus good faith is not allowed as a defense
(People vs Valenciano, GR No. 180926, 10
December 2008).
• A complaint for illegal recruitment could be filed
and tried in the place of residence of the
offended parties (Sto. Tomas vs Salac, GR
Nos.184298-99, 13 November 2012), even if
none of the elements of the crime occurred in
such place.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Bar Q: A was approached for possible overseas
deployment to Dubai by X, an interviewer of job
applicants for Alpha Personnel Services, Inc., an
overseas recruitment agency. X required A to submit
certain documents (passport, NBI clearance,
medical certificate) and to pay P25,000 as
processing fee. Upon payment of the said amount to
the agency cashier, A was advised to wait for his
visa. After five months, A visited the office of Alpha
Personnel Services, Inc. during which X told him that
he could no longer be deployed for employment
abroad. A was informed by the Philippine Overseas
Employment Administration (POEA) that while
Alpha Personnel Services, Inc. was a licensed
agency, X was not registered as its employee,
contrary to POEA Rules and Regulations. Under
POEA Rules and Regulations, the obligation to
register personnel with the POEA belongs to the
officers of a recruitment agency.
a) May X be held criminally liable for illegal
recruitment? Explain.
Answer:
No. Being an unregistered employee of a
recruitment agency, by itself, is not one of the
prohibited acts of illegal recruitment.
b) May the officers having control, management or
direction of Alpha Personnel Services, Inc. be held
criminally liable for illegal recruitment? Explain.
Answer:
No. Under Sec. 6 of RA 8042, the failure to actually
deploy without valid reasons constitutes an act of
illegal recruitment. But the Question does not state
that the non-deployment is without valid reason.
The Question does not also state that there has
been a demand by A to X reimburse expenses
incurred by him in connection with his
documentation and processing for purposes of
deployment, and that there has been refusal or
failure of the agency to reimburse said expenses.
Since illegal recruitment is a criminal offense, any
doubt should be resolved in favor of the presumed
innocence of the accused.
Bar Q: Maryrose Ganda’s application for the
renewal of her license to recruit workers for
overseas employment was still pending with the
Philippine Overseas Employment Administration
Page 25 of 76
BRAVO BASTE!
(POEA). Nevertheless, she recruited Alma and her
three sisters, Ana, Joan and Mavic, for employment
as housemaids in Saudi Arabia. Maryrose
represented to the sisters that she had a license to
recruit workers for overseas employment. Maryrose
also demanded and received P30,000.00 from each
of them for her services. However, Maryrose’s
application for the renewal of her license was
denied, and consequently failed to employ the four
sisters in Saudi Arabia.
The sisters charged Maryrose with large scale
illegal recruitment. Testifying in her defense,
Maryrose declared that she acted in good faith
because she believed that her application for the
renewal of her license would be approved. Maryrose
adduced in evidence the Affidavits of Desistance
which the four private complainants had executed
after the prosecution rested its case. In the said
affidavits, they acknowledged receipt of the refund
by Maryrose of the total amount of P120,000.00 and
indicated that they were no longer interested to
pursue the case against Maryrose. Resolve the
case with reasons.
Answer
Illegal recruitment is a mala prohibita offense.
Hence, good faith is not a defense. The
circumstance that the application for recruitment
license was already pending with the POEA does
not legitimize the unlawful act of recruitment without
a license.
The Affidavit of Desistance and the
acknowledgement receipt for the return of the of the
P120,000 merely affect the civil liability and not the
criminal liability of Maryanne. Payment of money is
not an element of the crime. The Affidavit of
Desistance could not undo the testimonies already
presented by the complaining witnesses to which
they have been cross examined.
Maryrose's defenses are not valid, and she could be
convicted if proof beyond reasonable doubt is
adduced.
MANAGEMENT PREROGATIVES
Concept
Every employer has the inherent right to regulate,
according to his own discretion and judgment, all
aspects of employment, including hiring, work
assignments, working methods, the time, place and
manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline,
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
dismissal, and recall of employees.
The only limitations to the exercise of this
prerogative are those imposed by labor laws and the
principles of equity and substantial justice (Peckson
vs Robinson Supermarket Corp. GR No. 198534, 03
July 2013).
What are some of these management
prerogatives?
They include the following:
1. Right to hire, and set terms
2. Right to discipline, including what penalty to
impose (termination, suspension, demotion,
transfer, forfeiture of benefits) and who to punish
3. Right to prescribe work standards, including work
schedule
4. Right to transfer position and location of work
5. Right to impose rules and regulations, including
code of discipline with defined offenses and
corresponding penalties
6. Right to re-organize the business (implement
redundancy and retrenchment programs; close the
business; sell the business; merge the business)
7. Right to prescribe post-employment restrictions
(non-compete clause; non-disclose clause; post-
training commitment)
May management impose productivity
standards to determine efficiency of
employees?
Yes. The SC has held that an employer is entitled to
impose productivity standards for its employees and
its non-compliance therewith may result to
termination from work. “Gross inefficiency” is
analogous to “gross and habitual neglect of duty” a
just cause of dismissal the Labor Code, for both
involve specific acts of omission on the part of the
employee resulting in damage to the employer 's
business (Telephilippines vs Jacolbe, GR No.
233999, 18 Feb 2019).
Do you know that the management’s right
extends to changing the working hours of its
employees?
Employers have the freedom and prerogative,
according to their discretion and best judgment, to
regulate and control the time when workers should
report for work and perform their respective
functions. (Manila Jockey Club Employees Labor
Union – PTGWO, v. Manila Jockey Club, Inc., G. R.
No. 167760 March 7, 2007)
Is a non-compete clause valid in a contract of
Page 26 of 76
BRAVO BASTE!
employment?
Yes, provided that the prohibition is for a limited
period and applies within a specified geography only
(see Consulta vs CA, GR No. 145443, 18 March
2005)
Do you know that compliance to the company
rules is required even if the employee intends to
challenge its validity?
The employees must comply with company rules
even if they intend to challenge the validity of the
same in the proper forum. To disregard a company
rule, on the pretext it is illegal, will be to risk
disciplinary sanction n including possible dismissal
for insubordination (GTE Directories vs Sanchez
G.R. nos.76219, 27 May 1991)
EMPLOYER-EMPLOYEE RELATIONSHIP
Do you know that in determining Employer-
Employee Relationship, the yardstick would
primarily be the 4 fold test and the economic
dependency test?
The Four-Fold Test has the following elements:
1.The selection and engagement of the employee
2.Payment of wages
3.Power of dismissal
4.The power to control the employee with respect to
the means and methods by which the work is to be
accomplished.
The power to control is the most decisive element.
Economic Dependency Test.
Sometimes, the economic dependency test is also
utilized in conjunction with the 4-fold test). The test
asks the question whether the totality of the
circumstances would indicate that the alleged
worker is dependent on the employer for his
continued livelihood on a regular basis. If the
answer is in the affirmative, an employment
relationship would be held to exist.
Reminder!
Do you know that---
In determining employer-employee relationship,
the yardstick would primarily be the 4-fold test
and the economic dependency test (and other
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
statutory provisions like the Civil Code definitions of
partnership and contract for a piece of work), never
the "necessary or desirable" criterion
enunciated in Art. 295 of the Labor Code. Art. 295
presupposes an employment relationship, and
merely distinguishes between different kinds of
employees according to tenure. It does not apply
when the employment relationship is disputed or
denied. (Atok Big Wedge Co. vs Sison, GR No.
163950, 08 August 2011)
Do you know that independent contractors are
not employees?
In the case of independent contractors, there is no
employer-employee relationship since the element
of control over the means and method of work is
missing. (Bernarte v. PBA, G.R. No. 192084,
September 14, 2011). Professional individuals are
oftentimes independent contractors.
The same element of control is missing in the
relationship of a franchisor and franchisee. (Tesoro
v. Metro Manila Retreaders, G.R. No. 171482,
March 12, 2014)
Do you know that labor tribunals have no
jurisdiction over claims by ecclesiastical
officers?
The Labor Code covers religious institutions and
non-profit organizations, because they are parties to
employer-employee relationship. (In Re: Petition for
Exemption from Coverage by the Social Security
System. Roman Catholic Archbishop of Manila v.
SSC, G.R. No. L-15-45, 20 January 1961)
However, the State may not interfere when it comes
to matters of ecclesiastical affairs or those that
relate to matters of faith, religious doctrines, worship
and governance of the congregation. (Pastor Austria
v. NLRC, G.R. No. 1245302, 16 August 1999)
Bar Q: Jose Lovina had been member of the board
of directors and Executive Vice President of San
Jose Corporation for 12 years. In 2008, the San Jose
stockholders did not elect him to the board of
directors nor did the board reappoint him as
Executive Vice President. He filed an illegal
dismissal complaint with a Labor Arbiter.
Contending that the Labor Arbiter had no jurisdiction
over the case since Lovina was not an employee,
the company filed a motion to dismiss.
Should the motion be granted?
A: I will grant the motion with respect to the claim for
board director, since that is an intra-corporate
Page 27 of 76
BRAVO BASTE!
dispute. But as regards the claim for Executive Vice
President, I would deny the motion since the facts
do not indicate that the said position is provided for
in the corporate by laws. Lovina as EVP is an
employee and his cause of action for illegal
dismissal is a labor dispute properly cognizable by
the Labor Arbiter.
EMPLOYER-INITIATED TERMINATION OF
EMPLOYMENT
Termination-at-will is considered anathema to the
public policies on labor protection espoused by the
Philippine Constitution and laws, and contractual
stipulations providing for such convenient dismissal
of employees are not upheld by Philippine courts
(Dagasdas vs Grand Placement & Services Agency,
GR No. 205727, 18 January 2017).
Termination at-will was not allowed in the case of the
General Manager of the Philippine branch of a
foreign airline (Basso vs Continental Micronesia, GR
Nos. 178382-83, 23 September 2015). A POEA-
approved contract stipulating a mutual pre-
termination clause provided a 3-month notice is
given was nonetheless upheld in a case involving a
college teacher deployed in Ethiopia (GBMLT
Manpower vs Malinao, GR No. 189262, 06 July
2015).
Do you know that --
• For blameworthy conduct to be a ground for
dismissal, the conduct must have work-relation.
An imputed offense must prejudice an
employer’s legitimate interest, such as its
disruption in its operations or breakdown in
discipline in the work place.
• Work-relation could be shown by such
circumstances as the offense being committed
within company premises or during office hours
and official company events, against the
employer’s representatives or co-employees, on
matters related to work (and not simply personal
transactions between employees), or against
company regulations which is harmful to
company interest and reputation.
• If the misconduct has its roots in work place
dynamics and, even if it happened outside
company premises and working hours, the same
could be valid ground for dismissal when it would
have deleterious effect on work discipline
(Stanfilco vs Tequillo, GR No. 209735, 17 July
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
2019). An employee was deemed lawfully
dismissed for sexually harassing a co-employee
in the company's ladies' dormitory
notwithstanding that the misconduct was
committed outside of working hours (Navarro II v
Damasco, GR No. 101875, 14 July 1995).
Fact of dismissal vs Legality of dismissal
Do you know that before an employer is tasked
to prove the legality of dismissal, the employee
must first establish the fact of dismissal?
Bar Q: During their probationary employment, eight
(8) employees were berated and insulted by their
supervisor. In protest, they walked out. The
supervisor shouted at them to go home and never to
report back to work. Later, the personnel manager
required them to explain why they should not be
dismissed from employment for abandonment and
failure to qualify for the positions applied for. They
filed a complaint for illegal dismissal against their
employer.
As a Labor Arbiter, how will you resolve the case?
A: I would dismiss the complaint. The employees
failed to prove the fact of dismissal. The
supervisor is not authorized to effect dismissal and
the personnel manager's act of issuing a notice of
charge is clear evidence that the employees have
not been dismissed yet. But since there is also no
abandonment (the filing of the complaint for illegal
dismissal negates such intent on the part of the
employees), I would order the employees to report
for work within 10 days from receipt of the decision
and for the company to accept them on the same
terms and conditions prior to the filing of the
complaint (Toledo vs New Mega Concrete GR No.
235006, 19 Feb 2020).
Just Causes
For serious misconduct to be a just cause for
dismissal, the following elements must concur:
1. The misconduct must be serious and not
merely trivial;
2. It must relate to the performance of the
employee's duties,
3. It must have been performed with wrongful
intent.
Page 28 of 76
BRAVO BASTE!
Loss of trust
In order to warrant the dismissal of fiduciary
rank-and-file employees based on misconduct for
loss of trust and confidence, the employer must
adduce proof of actual involvement in the alleged
misconduct for loss of trust and confidence.
However, "mere existence of a basis for believing
that the employee has breached the trust and
confidence of the employer" is sufficient for
managerial employees (Bravo v. Urios College, G.R.
NO. 198066, June 7, 2017)
Titles however are not conclusive indicators of
fiduciary functions. The actual duties discharged
by the employees are more decisive in determining
if they occupy trust-and-confidence positions.
Moreover, the offense attributed to the employee
must relate to loss of trust for this legal cause to
be relevant. Absenteeism for example, would not be
a trust issue and loss of and would may not be the
proper charge against a chronic absentee.
Willful disobedience
For insubordination to be a valid ground for
dismissal --
1. The employee's assailed conduct must
have been willful or intentional, the willfulness being
characterized by a "wrongful and perverse attitude";
and
2. The order violated must have been
reasonable, lawful, made known to the employee
and must pertain to the duties which he had been
engaged to discharge.
Do you know that----
• The refusal to obey a valid transfer order
constitutes willful disobedience of a lawful
order of an employer? Employees may object
to, negotiate and seek redress against
employers for rules or orders that they regard as
unjust or illegal. However, until and unless these
rules or orders are declared illegal or improper by
competent authority, the employees ignore or
disobey them at their peril. (Allied Banking Corp.
v. Galanida, G.R. No. 144412, 18 November
2003)
• Non-acceptance by an employee of
promotion is not tantamount to
insubordination. An employee cannot be
promoted, even if merely as a result of a transfer,
without his consent. There is no law that compels
an employee to accept a promotion for the
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
reason that a promotion is in the nature of a gift
or reward, which a person has a right to refuse
(Philippine Telegraph & Telephone Corporation
v. CA, G.R. No. 152057, 29 September 2003)
• It was also held that there was also no ground
for termination for violation of a company
policy When the unwritten policy was not
sufficiently made known to the employee (Manila
Broadcasting Co, vs NLRC, GR No. 1219755, 20
August 1998) and when the employee was
merely following the instructions of his supervisor
and his compliance was done in good faith (Coca
Cola Bottlers Phil vs Vital, GR No. 154384,13
September 2004)
• RA No. 11058 ("An Act Strengthening
Compliance with Occupational Safety and Health
Standards and Providing Penalties for Violations
Thereof") states that "the worker has the right of
refusal to work without threat or reprisal from the
employer if, as determined by the DOLE, an
imminent danger situation exists in the workplace
that may result in illness, injury or death, and
corrective actions to eliminate the danger have
not been undertaken by the employer (Sec.6, RA
11058).
• Similarly, an employee who refuses to be
vaccinated with covid-19 shot may not be
sanctioned or discriminated against by the
employer (DOLE Advisory No. 03, S. 2021).
Gross and habitual neglect by the employee of
his duties
Gross negligence connotes want of care in the
performance of one’s duties.
Habitual neglect implies repeated failure to perform
one’s duties for a period of time, depending upon the
circumstances. A single or isolated act of negligence
does not constitute a just cause for the dismissal of
the employee. (Premiere Development Bank v.
Mantal, G.R. No. 167716, 23 March 2006).
But habituality may not be required if the
company suffered substantial loss as result of the
employee's neglect, like the loss of a motorcycle
worth P46,000.00 in 2001 (LBC Express vs. Mateo,
G.R. 168215, 09 June 2009).
Do you know that abandonment may be a just
cause for termination of employment?
Page 29 of 76
BRAVO BASTE!
Abandonment is the deliberate and unjustified
refusal of an employee to resume his employment.
It constitutes neglect of duty and is a just cause for
termination of employment (Claudia’s Kitchen, Inc.
v. Tanguin, G.R. No. 221096, 28 June 2017)
To justify the dismissal of an employee based on
abandonment of work, there must be a showing of
overt acts clearly evidencing the employee's
intention to sever the employer employee
relationship. (DEMEX Rattancraft, Inc. v. Rosalio A.
Leron G.R. No. 204288, 08 November 2017)
Bar Q: Baldo was dismissed from employment for
having been absent without leave (AWOL) for eight
(8) months. It turned out that the reason for his
absence was his incarceration after he was
mistaken as his neighbor’s killer. Eventually
acquitted and released from jail, Baldo returned to
his employer and demanded reinstatement and full
backwages. Is Baldo entitled to reinstatement and
backwages? Explain your answer.
A: Yes. The prolonged absence of Baldo was not
due to any intent on his part to sever the employer-
employee relationship. Hence, he has the right to
demand reinstatement without loss of seniority
rights and other privileges.
But since the employer was likely not aware that
he had been incarcerated, it acted in good faith in
dismissing him. Baldo is not entitled to backwages
during his incarceration period given that he was
not illegally dismissed and he was also incapable
of rendering actual work during that time.
(Standard Electric Manufacturing Corporation v
Standard Electric Employees Union-NAFLU-KMU,
G.R. No. 166111, 25 August 2005, Magtoto v
NLRC G.R. No. G.R. No. L-63370 November 18,
1985).
What is the totality rule?
The totality of infractions or number of violations
committed during the period of employment shall be
considered in determining the penalty to be imposed
on the erring employee. The offenses committed by
him should not be taken singly and separately but in
their totality. Fitness for continued employment
cannot be compartmentalized into tight little cubicles
of aspects of character, conduct and ability separate
and independent of each other. (Valiao v. CA, G.R.
NO. 146621,30 July, 2004)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Preventive Suspension
Do you know that--
• Preventive suspension is not a disciplinary
penalty but merely a precautionary measure is
resorted to when the employee's continued
presence at the work place constitutes an
imminent threat to the safety or property of the
co-employees or the employer (Mandapat vs
Add Force Personnel Services, GR No. 180285,
06 July 2010).
• An alternative to preventive suspension is
temporary transfer while the disciplinary
proceedings are on-going and still to be
concluded (Mariano vs Martinez Memorial
Colleges. GR No. 194119, 13 April 2016).
• A preventive suspension cannot exceed 30 days
or be indefinite (Oriental Mindoro Electric Coop
vs NLRC, GR NO. 111905, 31 July 1995). The
employee must be reinstated, physically or on
payroll, after 30 days and until the disciplinary
proceedings are concluded. Otherwise, it would
be a case of constructive dismissal (Mandapat
vs Add Force Personnel Services, GR No.
180285, 06 July 2010).
DUE PROCESS
Do you know that:
• Case law has held that due process applies
not only to termination but also to
suspension (Montinola vs Philippine Airlines,
GR No. 198656, 08 September 2014), transfer,
and demotion (Jarcia Machine Shop vs NLRC,
GR No. 118045, 02 January 1997).
• A formal hearing is not an indispensable
requirement, nor is confrontation with witnesses.
It is sufficient that the employee is given the
chance to know the accusation and the evidence
against him, is allowed the opportunity to submit
his explanation and his own evidence, and the
case is resolved though evaluation of the
evidence (Perez vs PT & T, G.R. No. 152048,
07 April 2009).
• Company disciplinary hearings, like
administrative hearings in quasi-judicial
agencies, do not require full adversarial
proceedings. Company hearing are summary in
nature, with the employee being allowed to
Page 30 of 76
BRAVO BASTE!
submit supplemental evidence to argue his case
(Homeowners Savings and Loan Association vs
NLRC, GR No. 97067, 26 September 1996).
Bar Q: The Company lawyer sent a memo to the
employee informing him of the specific charges
against him and giving him an opportunity to explain
his side. In a subsequent letter, the employees was
informed that, on the basis of the results of the
investigation conducted, his written explanation, the
written explanation of other employees as well as
the audit report, the management has decided to
terminate his employment. The employee
contended that his termination was illegal for lack of
procedural due process. Is the employee’s
contention correct?
A: No, the employee was given reasonable
opportunity to be heard. He was informed of the
specifics of the charges (presumably this includes
copy of the audit report and witness statements),
was allowed to submit a written explanation, and the
evidence as evaluated.
A hearing and cross examination of witnesses are
not mandatory in company-level disciplinary
proceedings, and the absence of these features do
not violate due process.
AUTHORIZED CAUSES
These are grounds based on economic reasons.
Redundancy exists where the services of an
employee are in excess of what is reasonably
demanded by the actual requirement of the
enterprise.
What are the factors which may cause
redundancy?
1. Over hiring of workers;
2. Decrease in the volume of business; or
3. Dropping of a particular line or service
previously manufactured or undertaken by
the enterprise.
In redundancy, an employer must show that it
applied fair and reasonable criteria in determining
what positions have to be declared redundant.
(Manuel G. Acosta vs. Matiere SAS G.R. No.
232870, June 3, 2019)
Bar Q: A golf and country club outsourced the jobs
in its food and beverage department and offered the
affected employees an early retirement package of
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
1 ½ month’s pay for each year of service. The
employees who accepted the package executed
quitclaims. Thereafter, employees of a service
contractor performed their jobs. Subsequently, the
management contracted with other job contractors
to provide other services like the maintenance of
physical facilities, golf operations, and
administrative and support services. Some of the
separated employees who signed quitclaims later
filed complaints for illegal dismissal. Were they
validly dismissed?
A: Yes. The company's early retirement offer was
for a valuable consideration, higher than either
redundancy benefits (1 month for every year of
service) or mandatory retirement benefits (22.5 days
for every year of service). There was no
misrepresentation committed by the employer, and
the employees' acceptance of the benefits and
signing of quitclaims bind them.
The subsequent outsourcing of their functions is a
valid exercise of management prerogative. It does
not affect the validity of the early retirement.
Bar Q: Sampaguita Company wants to embark on a
retrenchment program in view of declining sales. It
identified five (5) employees that it needed to
separate. The
Retrenchment refers to the economic ground for
dismissing employees and is resorted to primarily to
avoid or minimize business losses. (D.O. No. 1467-
15 s.2015, Sec. 4(r))
Retrenchment is the reduction of personnel usually
due to financial returns so as to cut degrown on
costs of operations in terms of salaries and wages
to prevent bankruptcy of the company (J.A.T
General Services, Inc., et. al. v. NLRC, G.R. No.
148340, January 26, 2004)
What is the last in the first out rule?
There is no statutory provision which mandates the
priority use of the "last in, first out " (LIFO) rule
(Tierra International Construction Corporation vs
NLRC, GR No. 88912, 03 July 1992). It is however
considered a reasonable criterion rule. A lay off that
disregards an employee's record and length of
service would likely be considered illegal termination
of employment. (Charlie Hubilla vs. HSY Marketing
LTD., Co. G.R. No. 207354, 10 January 2018)
Page 31 of 76
BRAVO BASTE!
Bar Q: Sampaguita Company wants to embark on a
retrenchment program in view of declining sales. It
identified five (5) employees that it needed to
separate. The human resource manager human
resource manager seems to recall that she has to
give the five employees and the DOLE a 30-day
notice but she feels that she can give a shorter
notice. What will you advise her?
A: The prudent course of action is to comply with the
30-day notice period.
But if the employees agree to shorter period and the
employer pays them the equivalent salary for 30
days in lieu of the full 30-day notice, then the
arrangement is valid. The shorter period would be
beneficial to the employees, since they would have
more time to look for new jobs.
The effective date of the termination should be
maintained at the 30th day from notice (though the
employee would not be required to report for work) ,
and the one-month period should be included in the
computation of the service record (for purposes of
separation pay) and 13th month pay. Their SS/EC
and Philhealth contributions must still be remitted for
the same period,
Disease
For disease to be a valid ground for termination,
DO. No 147-15 provides that the following must be
present:
(i) The employee must be suffering from any
disease;
(ii) The continued employment of the employee
is prohibited by law or prejudicial to his
health as well as to the health of his co-
employees;
(iii) There must be a certification by a
competent public health authority that the
disease is incurable within a period of six (6)
months even with proper medical treatment.
If the foregoing elements are not complied with, the
employer cannot dismiss the employee but must
place him on extended medical leave. Payment for
sick leave would depend on whether the employee
has leave credits.
The Labor Code provision is not limited to
contagious diseases. The SC has applied it to non-
contagious disease such as stroke (Baby Bus, Inc.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
v. Minister of Labor, GR No. L-54223, 26 February
1988).
Do you know that:
• The burden is on the employer to prove that the
employee is suffering from a disease that is
prohibited by law or prejudicial to his health as
well as to the health of his co-employees.
Basically, this means the employer has to submit
the certification of a competent public health
authority (Crayons Processing vs Pula, GR No.
167727, 30 July 2007).
• The certification of a competent public health
authority applies to OFW cases, since the law
does not require that it be issued by a Philippine
public health authority could be issued by a
competent public health authority in the foreign
jurisdiction (Triple 8 Integrated Services vs
NLRC, GR No. 129584, 03 December 1998).
• A company doctor is not a competent public
health authority. The absence of the mandatory
certification of a competent public health
authority is not a mere procedural lapse. It
would render the dismissal illegal, for lack of valid
cause. (Manly Express, Inc. v. Payong, Jr., GR
No. 167462, 25 October 2002).
• D.O. 147-15 also states that an employee shall
not be terminated from work based on actual,
perceived, or suspected HIV status (DOLE DO.
No. 102, S. 2010) and Hepatitis B status (Dept.
Advisory No. 5, S. 2010). And an employee who
has or had tuberculosis shall not be
discriminated. He shall be entitled to work as long
as he is certified by the company's accredited
health provider as medically fit and shall be
restored to work as soon as his illness is
controlled (D.O. No. 75, S. 2005). The DOLE also
proscribes suspension, termination, or
discrimination on employees who refuse to be
inoculated with covid-19 vaccine.
Termination by the Employee
Resignation
Resignation is the voluntary act of quitting one’s
job.
A private sector employee has the absolute right to
resign, as the Constitution forbids involuntary
Page 32 of 76
BRAVO BASTE!
servitude. The employee’s act of resignation
however may constitute a breach of the employment
contract or a violation of the statutory 30-day prior
notice requirement. In such cases, the employee
may be held liable for damages even if the
resignation could not be subject to restraining order
or injunction. (see Eviota vs. Court of Appeals, G.R.
No. 152121, 29 July 2003).
Do you know that:
• A valid and effective resignation terminates the
employer-employee relationship.
• There is no statutory right to resignation
benefits.
• Resignation may be withdrawn even if the
employee called it “irrevocable”, as long as the
company has not accepted it, Once accepted, it
may no longer be withdrawn without the consent
of the employer (Intertrod Maritime Inc. vs NLRC,
G.R. No. 81087, 19 June 1991). But if the
withdrawal came before the acceptance,
insisting on the resignation would constitute
illegal dismissal (PNB vs Bulatao, GR No.
200972, 11 December 2019).
• Approval of resignation may be held in
abeyance if the employee has a pending
disciplinary case. It may also be disapproved on
valid grounds. An example is an airline’s
disapproval of a pilot’s application for early
retirement with benefits under the CBA, on the
ground that he had lost his employment status for
defiance of a return-to-work order (Philippine
Airlines vs Hassaran, G.R. No. 217730, 05 June
2017).
Retirement
Retirement is the act of permanently leaving one’s
employment, either upon attainment of a stipulated
age, length of service, or other qualifying
requirement.
Retirement terminates the employer-employee
relationship. A retired employee may claim
retirement benefits provided by law or stipulated
under the CBA (Producers Bank vs NLRC, GR No.
118069, 16 November 1998).
Retirement may be a result of an employee’s
voluntary act or the employer’s exercise of a
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
contractual right. But retirement may also be
independent of the employee’s will. It is either
imposed by law (upon the happening of the age
condition) or by contract (upon happening of age
and/or length of service conditions).
Do you know that:
• The statutory mandatory retirement age in the
private sector is 65 years, except for
underground and surface mine workers which is
60 years old (RA No. 8558 and RA No, 10757)
and professional jockeys which is 55 years old
(Arts. 302 & 302-A, Labor Code)
• An employee who reaches age 65 but with less
than five (5) years of service may be
compulsorily retired but he would not be entitled
to retirement benefits under the Labor Code. (see
Rules Implementing the Retirement Pay Law,
Section 4.2).
• Retirement pay under the Labor Code is distinct
from retirement benefit under the Social
Security Law. A qualified employee may file for
both kinds of retirement benefits.
LABOR-ONLY CONTRACTING
Labor-only contracting, which is totally prohibited,
refers to an arrangement where:
a.) i. The contractor or subcontractor does not have
substantial capital (paid up capital of P5M for
corporations, partnerships, and coops and “net
worth” of P5 for solo props), or
ii. The contractor or subcontractor does not have
investment in the form of tools, equipment,
machineries, supervision, work, premises
among, others, and
iii. The contractor’s or subcontractor’s
employees recruited and placed are performing
activities which are directly related to tea in
business operation of the principal; or
b.) The contractor or subcontractor does not
exercise the right to control over the
performance of the work of the employee
(Section 5, D.O. No. 174, Series of 2017)
Elements:
In a labor-only contracting, the following elements
Page 33 of 76
BRAVO BASTE!
are present:
a. The contractor or subcontractor does not have
substantial capital or investment to actually perform
the job, work, or service under its own account and
responsibility; and
b. The employees recruited, supplied or placed by
such contractor or subcontractor perform activities
which are directly related to the main business of the
principal. (Norkis Trading Corporation v. Buena
Vista, G.R. No. 182018, October 10, 2012)
Bar Q: Sta. Monica Plywood Corporation entered
into a contract with Arnold for the milling of
lumber as well as the hauling of waste wood
products. The company provided the equipment
and tools because Arnold had neither tools and
equipment nor capital for the job. Arnold, on the
other hand, hired his friends, relatives and
neighbors for the job. Their wages were paid by
Sta. Monica Plywood Corp. to Arnold, based on
their production or the number of workers and
the time used in certain areas of work. All work
activities and schedules were fixed by the
company. Is Arnold a job contractor? Explain
briefly.
A: No. In two cases decided by the Supreme Court,
it was held that there is "job contracting" where (1)
the contractor carries on an independent business
and undertakes the contract work in his own
account, under his own responsibility according to
his own manner and method, free from the control
and direction of his employer or principal in all
matters connected with the performance of the work
except as to the results thereof; and (2) the
contractor has substantial capital or investment in
the form of tools, equipment, machineries, work
premises and other materials which are necessary
in the conduct of his business. [Lim v. NLRC, 303
SCRA 432 (1999); Baguio v. NLRC, 202 SCRA
465(1991)]
In the problem given, Arnold did not have sufficient
capital or investment for one. For another Arnold
was not free from the control and direction of Sta.
Monica Plywood Corp. because all work activities
and schedules were fixed by the company.
Therefore, Arnold is not a job contractor. He is
engaged in labor-only contracting.
Bar Q: Jolli-Mac Restaurant Company (Jolli-Mac)
owns and operates the largest food chain in the
country. It engaged Matiyaga Manpower
Services, Inc. (MMSI), a job contractor registered
with the Department of Labor and Employment,
to provide its restaurants the necessary
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
personnel, consisting of cashiers, motorcycle
delivery boys and food servers, in its operations.
The Service Agreement warrants, among others,
that MMSI has a paid- up capital of
P2,000,000.00; that it would train and determine
the qualification and fitness of all personnel to
be assigned to Jolli-Mac; that it would provide
these personnel with proper Jolli-Mac uniforms;
and that it is exclusively responsible to these
personnel for their respective salaries and all
other mandatory statutory benefits. After the
contract was signed, it was revealed, based on
research conducted, that MMSI had no other
clients except Jolli-Mac, and one of its major
owners was a member of the Board of Directors
of Jolli-Mac.
a. Is the Service Agreement between Jolli-
Mac and MMSI legal and valid? Why or
why not?
A: No, it is not legal and valid because MMSI is
engaged in labor-only contracting. For one, the
workers supplied by MMSI to Jolli-Mac are
performing services which are directly related to the
principal business of Jolli-Mac. This is so because
the duties performed by the workers are integral
steps in or aspects of the essential operations of the
principal. (Baguio, et al. v. NLRC, et al., 202 SCRA
465 [1991]; Kimberly Independent Labor Union, etc.
v. Drillon, 185 SCRA 190 [1990]. For another, MMSI
was organized by Jolli-Mac itself to supply its
personnel requirements (San Miguel Corporation v.
MAERC Integrated Services, Inc., et al., 405 SCRA
579 [2003]).
b. If the cashiers, delivery boys and food
servers are not paid their lawful salaries,
including overtime pay, holiday pay, 13th
month pay, and service incentive leave
pay, against whom may these workers
file their claims? Explain.
A: They may file their claims against Jolli-Mac. A
finding that MMSI is a “labor-only contractor” is
equivalent to declaring there is an employer-
employee relationship between Jolli-Mac and the
workers of MMSI (Associated Anglo American
Tobacco Corp. v. Clave, 189 SCRA 127 [1990],
Industrial Timber Corp. v. NLRC, 169 SCRA 341
[1989]).
The liability of Jolii-Mac vis-a-vis the workers of
MMSI is for a comprehensive purpose, i.e., not only
for the unpaid wages but for all claims under the
Labor Code and ancillary laws (San Miguel Corp. v.
Maerc Integrated Services, Inc., et el., 405 SCRA
579 [2003]).
Page 34 of 76
BRAVO BASTE!
Job/Independent Contractor v. Labor Only
Contractor
A Job contractor is supposed to carry out an
independent business. It provides for a specific
service for the principal and the personnel. The
tasks to be performed by the deployed workers are
those that are not usually directly related to the
principal’s business. A labor-only contractor, on the
other hand, refers to supply of labor or manpower
only and the workers deployed perform tasks that
are usually directly related to the principal’s
business operation
Q. Reach-All, a marketing firm with operating capital
of P5M, supplies sales persons to pharmaceutical
companies to promote their products in hospitals
and doctors' offices. Reach-All trained these sales
persons in the art of selling but it is the client
companies that taught them the pharmacological
qualities of their products. Reach-All’s roving
supervisors monitored, assessed, and supervised
their work performance. Reach-All directly paid their
salaries out of contractor's fees it receives. Under
the circumstances, can the sales persons demand
that they be absorbed as employees of the
pharmaceutical firms?
A: No, because Reach All is an independent
contractor and its sales persons are its own
employees.
Reach All runs an independent business (marketing
and promotion) and maintains its own set of clients.
It exercises control over the work performance of the
sales persons, through the sales trainings it gives
and the monitoring of their work by the roving
supervisors. It is also the one paying them salaries.
Hence, Reach All is an independent contractor.
LABOR ORGANIZATIONS
Types of labor organizations
A labor or employee organization need not be
registered with the DOLE for it to be a 'legal'
organization. Registration however vests a labor
organization with legal personality.
A labor organization need not be a "union", defined
as an employee organization created with the
purpose of seeking collective bargaining with an
employer regarding terms and conditions of
employment. However, only a union certified as a
collective bargaining agent has the right to
demand collective bargaining. Such demand must
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
be met by the employer.
A “workers association” is organized for the
purpose of mutual help and protection of its
members. It is not prohibited from negotiating with
employers on terms and conditions of employment.
But since it does not have the right to demand
collective bargaining), an employer is not legally
obliged to negotiate with it. It cannot also file a
petition for certification election, or participate as a
contending labor organization. Since a workers
association does not have for its purpose the intent
to pursue collective bargaining, its members need
not be employed by the same employer (Samahan
ng mga Manggagawa sa Hanjin Shipyard vs BLR
and Hanjin Heavy Industries - GR No. 21145, 14
October 2015).
A workers association can represent its members in
a labor suit against its employer, even if the
employer is a cooperative (Nueva Ecija Coop
Employees Assn.vs NLRC, GR No. 116066, 24 Jan
2000).
Types of unions
A local union is one which operates at the
enterprise level. A federation or national union
operates on nationwide level, and must have as
members at least 10 registered local unions that are
certified bargaining agents.
An independent union is one which has its own
registration with the DOLE.
In contrast, a chartered local derives its registration
from the charter certificate issued by the federation
which the latter submits to the Regional Office.
Chartering has less stringent requirements (e.g., no
need for 20% minimum membership). Chartering
has been allowed by the SC in Electromat
Manufacturing vs DOLE, to encourage unionization
and affiliation with federations or national unions
thereby increasing the local union's bargaining
power (Lagunzad, GR No. 172699, 27 July 2011).
The authority of the DOLE to allow chartering has
been upheld (ibid.).
A chartered local may nonetheless subsequently
secure its own DOLE registration. The relationship
between a federation and the local union is generally
understood to be that of agency, with the local as the
principal and the federation as the agent. A ‘trade
union center” is not allowed by law to create a local
or chapter (SMC Employees union- PTGWO vs
SMPPEU-PDP, G.R. No. 17115, 12 September
Page 35 of 76
BRAVO BASTE!
2007).
Do you know that unions cannot deny
membership on arbitrary and discriminatory
grounds?
Art. 253 of the Labor Code provides that all workers
shall have the right to form, join, or assist labor
organizations of their own choosing. A union, which
is subject to police power of the state, cannot deny
membership to an employee on any ground other
than the usual terms and conditions under which
membership or continuation of union membership is
made available to other members. (Salunga v. CIR,
21 SCRA 216 [1967])
It is considered unfair labor practice for any person
to restrain, coerce, discriminate against or unduly
interfere with employees and workers in their
exercise of the right to self-organization (Art. 257,
Labor Code) and likewise for a union to restrain or
coerce employees in the exercise of their right to
self-organization (Art. 260 [a], Labor Code)
Bar Q: How does the government employees’ right
to self-organization differ from that of the employees
in the private sector?
A: Government employees do not have the right
to demand collective bargaining, since the terms
and conditions of their employment are set by
Congress. Moreover, they do not have the right to
strike (which includes picketing, mass leaves,
overtime boycott, and work slow down).
REPRESENTATION ISSUES
A bargaining unit refers to a group of employees
sharing mutual interests within a given employer
unit, comprised of more or less all of the entire body
of employees in the employer unit or any specific
occupational or geographical grouping within such
bargaining unit (Book V, Rule I Sec., Rules to
Implement the Labor Code).
The object of bargaining unit is to identify the
employee group which could negotiate with the
employer on terms and conditions of employment.
The law’s preference is for the employer unit,
meaning all eligible employees within the same
enterprise. The underlying premise is that the larger
the bargaining unit, the greater is the strength of the
employee organization.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Do you know that:
There are several factors used to determine the
appropriateness of a bargaining unit. These include:
(i) will of the employees (as could be
demonstrated in their membership in the
same union) or the Globe doctrine
(ii) affinity or unity of employees' interest, such
as substantial similarity of work and duties or
similarity of compensation and working
conditions;
(iii) prior collective bargaining history; and,
(iv) similarity of employment status (Holy
Child Catholic School vs Sto. Tomas, GR No.
179146, 23 July 2013).
A “bargaining agent” or “bargaining
representative” is the union either recognized
voluntarily by the employer or certified by the DOLE
to be the exclusive representative of the employees
within the bargaining unit.
The most common form of determining bargaining
agent status is through certification elections.
A certification proceeding, even though initiated by
a petition, is not a litigation but an investigation of
a non-adversarial and fact-finding character. The
object of the proceedings is merely the
determination of proper bargaining units and the
ascertainment of the will and choice of the
employees in respect of the selection of a
bargaining representative. (Samahan ng mga
Manggagawa vs SAMMA Corporation, GR No.
16741, 13 March 2009).
In a certification election, the employer's role has
been described as a mere bystander. (Art. 271,
Labor Code). Supposedly, it has no legal standing to
oppose the petition or appeal the Med-Arbiter's
orders related thereto. (Samahan ng mga
Manggagawa vs SAMMA Corporation, GR No.
16741, 13 March 2009). It is however entitled to
notices from the Med-Arbiter.
Bar Q: Can an employer legally oppose the
inclusion of confidential employees in the bargaining
unit of rank-and-file employees or of supervisory
employees?
A: Yes. The bystander rule does not prohibit an
employer from asserting its legitimate interest that it
Page 36 of 76
BRAVO BASTE!
must only deal with the representative of the
appropriate bargaining unit.
Jurisprudence holds that confidential employees are
ineligible to join, assist, or form any labor
organization. By the nature of their functions, they
assist and act in a confidential capacity to, or have
access to confidential matters of, persons who
exercise managerial functions in the field of labor
relations. Allowing them to join union would expose
the company to serious disadvantage, and would
not be fair.
What are the bars to PCE?
• One year bar - A PCE cannot be allowed within
one (1) year from the entry of voluntary
recognition or the final results of a consent or
certification elections. This means there should
only be one (1) CE within 12 months. The
purpose is to allow the bargaining agent and the
company to negotiate (without distraction) a CBA
within 12 months (Sec. 18, DO. No. 40-03). It
must be stressed that the one-year ban
presupposes the actual conduct of a valid
election The ban does not apply if the PCE is
denied due course (R Transport Corp vs
Laguesma, GR No. 106830, 16 Nov 1993). The
ban likewise does not apply if there is failure of
election (i.e., less than a majority voted in the
CE). In the latter case, another election may be
done within six (6) months.
• Deadlock bar – Once the one-year bar has
lapsed, a PCE may be filed by another union.
But it may still be barred if the management and
the bargaining union are in a deadlock. A
“deadlock” means the parties have stopped
negotiating by themselves, and filed request for
mediation/conciliation or notice of strike or lock
out with through the NCMB or the Secretary of
DOLE. The deadlock bar is meant to allow the
parties to focus on concluding a CBA that has
been mired in a stalemate (see NACUSIP vs
Trajano, GR No. 69485, 10 April 1992) The
deadlock contemplated by the law is a genuine
deadlock, not a feigned one done to preclude
the entry of a challenger union.
• Contract bar – When the one-year period had
lapsed and a deadlock has been resolved, a CBA
may then be signed and ratified. Thereafter, it is
registered with the BLR. When there is a
registered CBA, the PCE may only be filed within
the last 60 days of the 5-year term of the CBA
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
(the so-called “freedom period”). No PCE may
be filed prior to the “freedom period”. It has also
been that no PCE may likewise be filed after the
“freedom period” with no new CBA being
concluded yet (National Congress of Unions in
the Sugar Industry vs Ferrer-Calleja, GR
No.89609, 27 January 1992).
Issues which do not suspend PCE
• Registration of petitioning union –The
“collateral attack” rule. Questions as to the
validity of a union’s registration can only be
raised in a petition for cancellation. This is
different from lack of DOLE registration or
cancellation of registration which had become
final, which are grounds for denial of a PCE.
• Pendency of the separate cancellation of
union registration proceeding - This is
because at the time the petition for certification is
filed, the petitioning union is presumed to
possess the legal personality to file the same
(Legend International Resorts vs Kilusang
Mangagagawa ng Legenda, GR No. 169754, 23
February 2011).
• Employee status issues– This pertains to
individual employees sought to be represented
by the bargaining unit (e.g., non-employees,
confidential employees). The Med-Arbiter may
still grant the PCE and order the conduct of
elections but may exclude these employees from
the list of eligible voters.
• Mixture of composition – The Med-Arbiter may
order the separation of the bargaining unit into
rank and file and supervisory, or else exclude the
disqualified employees from the list of eligible
voters (e.g., if the union represents the rank and
file, the supervisory employees will be expunged
from the list of voters).
• Ratification of new CBA– This circumstance
would not affect the PCE because this is not one
of the listed grounds for a denial of a PCE. The
right to file a PCE within the “freedom period”
must be upheld. If the rival union wins in the CE,
it would be the one to administer the CBA in
replacement of the former bargaining agent
(Oriental Tin Can Labor Union v Sec. of Labor,
GR No. 116751, 28 Aug 1998) or demand
renegotiations (SONEDCO Workers Free Labor
Union vs Universal Robina Corporation, GR No.
220383, 05 October 2016).
Page 37 of 76
BRAVO BASTE!
Bar Q: Llanas Corporation and Union X, the certified
bargaining agent of its employees, concluded a CBA
for the period January 1, 2000 to December 31,
2004. But, long before the CBA expired, members of
Union Y, the minority union, showed dissatisfaction
with the CBA under the belief that Union X was a
company union. Agitated by its members, Union Y
filed a Petition for a Certification Election (PCE) on
December 1, 2002. Will the petition prosper?
A: Assuming that the CBA was registered, the PCE
will not prosper. Under the contract bar rule, no
certification election shall be conducted outside of
the 60-day "freedom period" of the 5-year term of the
CBA.
Bar Q: Are probationary employees entitled to vote
in a certification election among rank and file
employees? Why of why not?
A: Yes. Any employee, whether employed for a
definite period or not, shall, beginning on his first day
of service, be considered an employee for purposes
of membership in any labor union (Art. 229 [c], Labor
Code. All rank- and-file employees, probationary or
permanent, belong to the same bargaining unit
inasmuch as they have a community of interest.
Note: Even employees whose dismissals are still
under litigation (i.e., there is yet no final judgment
that the dismissal is legal) have the right to vote in a
certification election. This is because there is no
conclusive severance yet of the employer-employee
relationship.
But if the employee has resigned, retired, or been
retrenched and the complaint filed is only for
separation or retirement benefits (in short, purely
money claims), the employer-employee relationship
is conclusively severed. He no longer has a right to
participate in the CE or be covered by the CBA
(except if his cause of action emanates from the
CBA).
JURISDICTION AND REMEDIES
Labor dispute
Labor dispute includes any controversy or matter
concerning terms and conditions of employment or
the association or representation of persons in
negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment,
regardless of whether the disputants stand in the
proximate relation of employer and employee
(Article 219 (L), Labor Code).
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
In most cases, there is no labor dispute in the
absence of employer-employee relationship. This
means that the dispute will not be resolved by labor
agencies This would also mean that the dispute will
not be governed by labor laws and procedures.
The last clause of the statutory definition
("regardless of whether the disputants stand in the
proximate relation of employer and employee")
pertains to cases where employer-employee
relationship is not required but the law
nonetheless lays the jurisdiction with the Arbitration
Branch of the NLRC:
• OFW-applicant’s action for damages against
the recruitment agency, in case the latter fails
without good reason to deploy the applicant
(Sec.10. Migrant Workers Act; o. 162419, 10
July 2007; Stolt-Nielsen Transportation vs
Medequillo, GR No. 177498, 18 January 2012);
• OFW’s claims for damages against the
placement agency, notwithstanding the
Supreme Court’s holding that there was no
perfected contract in the absence of meeting of
minds on the aspect of salary (Dumez vs
NLRC, GR No. 82340, 12 August 1991).
• OFW cases against the recruitment agency,
even if the foreign principal which is the
employer is not impleaded (Sameer Overseas
Placement Agency vs Cabiles, GR No. 170139,
05 August 2014);
• Cases against corporate officers impleaded in
their personal capacity (Art.97 [b], Labor Code;
Princess Talent Center Production vs
Masagca, GR No. 191310, 11 April 2018).
• Cases of employees against labor-only
contractor or LOC, as the legal employer is the
principal/client and the LOC is merely an agent
(Art. 106, Labor Code).
• Cases of employees of independent
contractors against the principal (which could
even be a government entity), for employment-
related money claims for the period of
assignment under the service contract between
the principal and the independent contractor
(Art. 97 [b]; Labor Code; Philippine Fisheries
Development Authority v. NLRC, G.R. No.
94825, 04 September 1992; Department of
Agriculture vs NLRC, GR No. 104269, 01
Page 38 of 76
BRAVO BASTE!
November 1993). But if the cause of action is
illegal dismissal without claims for unpaid
salaries, the employees of the contractor
cannot implead the government agency (Hugo
vs Light Rail Transit Authority, GR No. 181866,
18 March 2010).
Do you know that labor tribunals would have no
jurisdiction over claims of non-employees?
These include:
• Independent contractors (Sara vs Agarrado,
GR No. 73199, 26 October 1998)
• Corporate officers, on intra-corporate
controversies (Nacpil vs International
Broadcasting Corp. GR No. 144767, 21
March 2002)
• Partners (cf. Sy vs Court of Appeals, GR No.
142293, 27 February 2003)
• Ecclesiastical officers, on ecclesiastical
affairs (Pasay City Alliance Church vs
Benito GR No. 226908, 28 November
2019).
Bar Q: Atty. Renan, a CPA-lawyer and Managing
Partner of an accounting firm, was ousted from the
firm for sexual harassment. The complained acts
were recorded by authenticated video footage from
the CCTV installed in the accounting firm's office
premises. Atty. Renan filed with the Arbitration
Branch of the NLRC an illegal dismissal case with
claims for damages against the firm. Will the case
prosper? Reasons.
A: No, the complaint will not proper. A law partner
is not an employee. In the absence of employer-
employee relationship, the Labor Arbiter has no
jurisdiction to entertain a complaint of a partner
against a partnership for his expulsion from the
accounting firm.
Injunction by regular courts
The existence of a "labor dispute" will also prevent
regular courts from exercising jurisdiction over labor
standards and occupational safety cases. Thus, "no
inferior court or entity shall issue temporary or
permanent injunction or restraining order or
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
otherwise assume jurisdiction over any case
involving the enforcement orders issued in
accordance with [Art. 128] of the Labor Code (Art.
128[d]. Labor Code).
In cases of wage orders, "'no preliminary or
permanent injunction or temporary restraining order
may be issued by any court, tribunal or other entity
against any proceedings before the Commission or
the Regional Boards." (Art. 126, Labor Code).
And in case of strikes and lock outs, "no temporary
or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall
be issued by any court or entity, except as otherwise
provided in Articles 225 and 278 of this Code" (Art.
266, Labor Code).
The seeming exception to this rule is when the
rights of "innocent bystander" are affected, as
when the employees of another company are
prevented by strikers and picketers employed by
another company from getting in and out of their
office located on the same premises ( see MSF Tire
& Rubber vs CA, GR No. 128630, 05 August 1999
which cited the precedents in PAFLU vs Cloribel and
Liwayway Publications, Inc. v. Permanent Concrete
Workers Union).This is not exactly an exception
because the injunction is predicated on the absence
of a labor dispute between the strikers/picketers and
the third party company.
"Reasonable connection"
Not all claims by employees against the employer
would be a labor case.
Only those claims which arise from or in connection
with the employment relationship, and those which
can be resolved by reference to labor laws, can be
filed with labor tribunals. Otherwise stated, there
must be a “reasonable causal connection”
between the claim asserted and employee-
employer relation (Indophil Textile Mills vs
Adviento, GR No. 171212, 04 August 2014). Absent
such a link, the complaint will be cognizable by the
regular courts in the exercise of their general civil
jurisdiction.
What are the cases with which the Labor Arbiter
exercises original and exclusive jurisdiction?
1. ULP cases
2. Termination disputes
3. If accompanied with a claim for
reinstatement, those cases that workers
Page 39 of 76
BRAVO BASTE!
may file involving wages, rates of pay, hours
of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and
other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article
264 of the Labor Code, including questions
involving the legality of strikes and lockouts;
6. Except claims for employees compensation
not included in the next succeeding
paragraph, social security, medicare and
maternity benefits, all other claims arising
from employer-employee relations,
including those of persons in domestic or
household service, involving an amount
exceeding P5,000.00, whether or not
accompanied with a claim for reinstatement;
7. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties pursuant to Republic Act No. 6727
8. Enforcement of compromise agreements
when there is noncompliance by any of the
parties pursuant to Article 227 (now 233) of
the Labor Code, as amended;
9. Money claims arising out of employer-
employee relationship or by virtue of any law
or contract, involving Filipino workers for
overseas deployment, including claims for
actual, moral, exemplary and other forms of
damages as provided by Section 10 of RA
8042, as amended by RA 10022; and
10. Other cases as may be provided by law
Bar Q Company A and Union B had a 3-year CBA
that expired on June 12, 1990. Negotiations proved
futile so the unresolved issues were referred to a
Labor Arbiter. Is the referral to the Labor Arbiter
valid? If not valid, what would the proper course of
action for the parties?
A. No. Unresolved issues in the collective
bargaining negotiations are not among the cases
within the jurisdiction of the Labor Arbiter.
The parties may instead refer the deadlock to:
(a) the NCMB for conciliation and mediation
(Art. 261 [b - c], Labor Code);
(b) declare a deadlock and file a notice of
strike or lock out (Art. 278[c], Labor Code);
(c) refer the case to voluntary arbitration (Art.
261[c]) and Art. 275, Labor Code) or,
(d) file a petition for assumption of
jurisdiction (Art.278[g], Labor Code), in
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
case the company is engaged in an industry
indispensable to the national interest.
DOLE Regional Office now has jurisdiction over
labor-related issues between a domestic helper
and his or her employer regardless of the
amount
All labor-related disputes shall be elevated to the
DOLE Regional Office having jurisdiction over the
workplace without prejudice to the filing of a civil or
criminal action in appropriate cases. The DOLE
Regional Office shall exhaust all conciliation and
mediation efforts before a decision shall be rendered
(Art. VII, Sec. 37, RA No. 10361).
Who has the jurisdiction over cases of dispute
between two officers and the Board of
Directors?
- A dispute between two officers and the Board of
Directors is considered an intra-cooperative dispute.
As such, it falls within the jurisdiction of the regular
courts and not of the Labor Arbiter.
- An appeal of the outright dismissal of a petition for
certiorari against an interlocutory order of a lower
court becomes moot and academic where, during its
pendency, judgment on the merits has been
rendered in the main case and has become final and
executory. (Celso F. Pascual, SR. v. Caniogan
Credit and Development Cooperative G.R. No.
172980, 22 July 2015)
Bar Q. Engr. Salvador was hired by PhilIndo
Textiles, a manufacturer of thread for weaving, as
Civil Engineer in charge of maintaining its facilities.
Two years later, he begun experiencing recurring
weakness and dizziness. He was later diagnosed
with Chronic Poly Sinusitis, and thereafter, with
moderate, severe and persistent Allergic
Rhinitis. He was advised by his doctor to totally
avoid house dust mite and textile dust as it will
transmute into health problems. Eventually, he got
so sick he could no longer report for work on a
regular basis. Given his condition, his services were
terminated for disease under Art. 299 [284] of the
Labor Code.
Despite receipt of the statutory separation benefits,
Engr. Salvador filed a complaint for damages with
the Regional Trial Court alleging that he contracted
such occupational disease by reason of the gross
negligence of the company to provide him with a
safe, healthy and workable environment.
Specifically, he alleged that on several occasions he
had recommended to management to put in place
Page 40 of 76
BRAVO BASTE!
several remedial measures that would minimize, if
not, eradicate the health hazards attendant in the
work place. However, said recommendation was
turned down by management due to high cost.
The company filed a motion to dismiss, averring lack
of jurisdiction inasmuch as the cause of action is
grounded on Book IV of the Labor Code (Health,
Safety, and Social Welfare Benefits), specifically the
provisions on Occupational Health and Safety
(Chapter II, Arts. 168-171) and therefore the claims
for damages lie within the jurisdiction of the Labor
Arbiter under Art. 224[a][4] of the Labor Code. Engr.
Salvador countered that jurisdiction is properly laid
with the RTC, since he is not seeking separation pay
differential or reinstatement as relief.
If you are the RTC judge, would you grant or deny
the motion to dismiss. Explain.
A: I would deny the motion to dismiss. Engr.
Salvador's cause of action is anchored on the
allegation that by reason of the gross negligence of
the company to provide him with a safe, healthy and
workable environment, he contracted the illness.
The cause of action is quasi-delict. It is a basic tenet
that jurisdiction over the subject matter is
determined by the allegations pleaded in the
complaint. Jurisdiction of a court cannot be made to
depend upon the defenses made by a defendant in
his answer or motion to dismiss (Indophil Textile
Mills vs Adviento, GR No. 171212, 04 August 2014).
Non-lawyers may appear before the Labor
Arbiter or the Commission, provided:
1. If they represent themselves
2. If they represent their organization or
members thereof
What are the grounds for a labor injunction to
issue?
The NLRC may issue an injunctive writ to enjoin an
illegal activity under Art. 264 (old) of the Labor Code;
as an ancillary remedy to avoid irreparable injury to
the rights of a party in an ordinary labor dispute
pursuant to Rule X, 2011 NLRC Rules of Procedure,
as amended; and to correct the Labor Arbiter’s
grave abuse of discretion pursuant to Rule XII of the
2011 NLRC Rules of Procedure, as amended.
Moreover, for a labor injunction to issue, it must be
proven under Art. 218(e) Labor Code:
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
a. That the prohibited or unlawful acts have been
threatened and will be committed and will be
continued unless restrained;
b. That substantial and irreparable injury to the
complainant’s property will follow;
c. That greater injury will be inflicted upon
complainant by the denial of relief than will be
inflicted upon defendants by the granting of relief;
d. That complainant has no adequate remedy at law;
and
e. That public officers charged with the duty to
protect the complainant's property are unable or
unwilling to furnish adequate protection.
Distinguish the jurisdiction of a Labor Arbiter
from that of the NLRC. (2015 Bar)
As to jurisdiction, the Labor Arbiter can hear and
resolve cases under Art. 224 of the Labor Code,
money claims under Sec. 7 of R.A. 10022; and
referred wage distortion disputes in unorganized
establishments, as well as the enforcement of
compromise agreements pursuant to the 2011
NLRC Rules of Procedure, as amended. On the
other hand, the NLRC reviews decisions rendered
by the LA; decisions or orders rendered by the RD
under Art. 129 of the Labor Code; and conducts
compulsory arbitration in certified cases.
As to the power to issue a labor injunction, the NLRC
can issue an injunctive writ. On the other hand, the
Labor Arbiter cannot issue an injunctive writ.
What is the jurisdiction of the National Labor
Relations Commission? (1995 Bar)
1. Exclusive Original Jurisdiction:
a. Certified labor disputes causing or likely to cause
a strike or lockout in an industry indispensable to
national interest, certified to it by the Secretary of
Labor or the President for compulsory arbitration;
b. Injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any
or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute
which, if not restrained or performed forthwith may
cause grave or irreparable damage to any party;
Page 41 of 76
BRAVO BASTE!
c. Injunction in strikes or lockouts under Art. 264 of
the Labor Code;
d. Contempt cases;
Exclusive Appellate Jurisdiction
a. All cases decided by the Labor Arbiters [Sec.
217(b), Labor Code]
b. Cases decided by the Regional Offices of DOLE
in the exercise of its adjudicatory function. (Art. 129,
Labor Code)
Periods of appeal
Decision, awards, or orders of the Labor Arbiter shall
be final and executory unless appealed to the
Commission by any or both parties within 10
calendar days.
Order of Reinstatement by the Labor Arbiter is
immediately executory
Insofar as the reinstatement aspect is concerned,
the decision of the Labor Arbiter reinstating an
employee shall be immediately executory, even
pending appeal.
Motions for reconsideration not served on the
adverse party do not toll the running of the
reglementary period for filing an appeal. Upon lapse
of the reglementary period, the judgment sought to
be reconsidered becomes immutable. (Alejandro
Ceprado Jr. v. Nationwide Security and Allied
Services, Inc. G.R. No. 175198, 23 September
2015)
Where a tribunal renders a decision substantially
reversing itself on a matter, a motion for
reconsideration seeking reconsideration of this
reversal, for the first time, is not a prohibited second
motion for reconsideration. The Amended Decision
is an entirely new decision which supersedes the
original decision, for which a new motion for
reconsideration may be filed again. (Cristobal v.
PAL G.R. No. 201622, 4 October 2017)
A dismissed employee whose case was favorably
decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining
order, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement and it is
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
mandatory on the employer to comply therewith.
(Garcia vs. Philippine Airlines, Inc., G.R. No. 164856
January 20, 2009)
An order for reinstatement does not need a writ
of execution
To require the application for and issuance of a writ
of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run
counter to the very object and intent of Art. 223 of
the Labor Code, i.e., the immediate execution of a
reinstatement order. (Pioneer Texturizing Corp. vs.
NLRC, G.R. No. 118651 October 16, 1997)
Two ways an employee may be reinstated:
1. An employee may be admitted back to work
under the same terms and conditions
prevailing or prior to his dismissal or
separation
2. Reinstated in the payroll at the option of the
employer
When and how can a writ of execution be
issued?
When: within five (5) years from the date it becomes
final and executory
How: motu proprio or on motion of any interested
party
BUREAU OF LABOR RELATIONS (BLR)
Jurisdiction of the Bureau of Labor Relations
1. Inter-union disputes
Any conflict between and among legitimate
labor unions involving representation
questions for purposes of collective
bargaining or to any other conflict or dispute
between legitimate labor unions (D.O. No.
40-03, as amended by A-I, Rule I, Sec. 1 (y))
2. Intra-union disputes or inter- union disputes
Any conflict between and among union
members, including grievances arising from
any violation of the rights and conditions of
membership, violation of or disagreement
over any provision of the union’s
constitution and by-laws, or disputes arising
from chartering or affiliation of union (D.O.
No. 40-03, as amended by A-I, Rule I, Sec.
Page 42 of 76
BRAVO BASTE!
1 (cc))
Intra-union & inter -union Disputes Bar Question
(2002)
Bar Q. Arty. Facundo Veloso was retained by Welga
Labor Union to represent it in the collective
bargaining negotiations. It was agreed that Atty.
Veloso would be paid in the sum of P200,000.00 as
attorney's fees for his assistance in the CBA
negotiations.
After the conclusion of the negotiations. Welga
Labor Union collected from its individual members
the sum of P500.00 each to pay for Atty. Veloso's
fees and another sum of P500 each for services
rendered by the union officers. Several members of
the Welga Labor Union approached you to seek
advice whether or not the collection of the amount
assessed on the individual members to answer for
the Attorney's fees was valid.
A: The assessment of P500.00 from each union
member as professional fees for union negotiation is
not valid. Art. 228(b) of the Labor Code prohibits
such exaction from individual union members.
However, such negotiation fees could be sourced
from union funds.
BLR Director exercises original and appellate
jurisdiction over the following cases
Exclusive and original jurisdiction:
a. Complaints and petitions involving the
application for registration, revocation or
cancellation of registration of federations,
national unions, industry unions, trade union
centers and their local chapters/chartered
locals, affiliates and member organizations
b. Complaints and petitions involving the
application for registration, revocation or
cancellation of registration of federations,
national unions, industry unions, trade union
centers and their local chapters/chartered
locals, affiliates and member organizations;
c. Request for examination of books of
accounts of said labor organizations under
Article 289 of the Labor Code;
d. Contempt cases
Can the Bureau of Labor Relations certify a
union as the exclusive bargaining representative
after showing proof of majority representation
through union membership cards without
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
conducting an election? (1998 Bar)
A: The Bureau of Labor Relations cannot certify a
union as the exclusive collective bargaining
representative after showing proof of majority
representation through union membership cards
without conducting a certification election. The
Labor Code (in Arts. 256, 257 and 258) provides
only for a certification election as the mode for
determining the exclusive collective bargaining
representative if there is a question of
representation in an appropriate bargaining unit.
Some disgruntled members of Bantay Labor Union
filed with the Regional Office of the DOLE a written
complaint against their union officers for
mismanagement of union funds. The Regional
Director did not rule in the complainants' favor. Not
satisfied, the complainants elevated the Regional
Director's decision to the NLRC. The union officers
moved to dismiss on the ground of lack of
Jurisdiction. Are the union officers correct? Why?
(2001 Bar).
A: Yes. NLRC has no jurisdiction over the appealed
ruling since the appellate authority over decisions of
the Regional director involving examination of union
accounts is expressly conferred upon the Bureau of
Labor Relations of DOLE by the Rule of Procedure
on Mediation Arbitration (Barles vs. Bitonio, G.R.
No. 120270, June 16, 1999).
DEPARTMENT OF LABOR: REGIONAL
DIRECTOR
What are the Visitorial and Enforcement Powers
exercised by the DOLE Regional Director?
For purposes of enforcement of the Labor Code and
of any labor law, wage order or rules and regulations
issued pursuant thereto: Access to employer’s
records and premises at any time of the day or night
whenever work is being undertaken therein, and the
right to copy therefrom, to question any employee
and investigate any fact, condition or matter which
may aid in the enforcement of this Code and of any
labor law, wage order or rules and regulations
issued pursuant thereto. (Labor Code, Art. 128)
Enforcement power includes
1. Issuance of compliance order
2. Issuance of writs of execution
The visitorial power of the Secretary of Labor
and Employment or his or her authorized
representatives shall be implemented through
the following:
Page 43 of 76
BRAVO BASTE!
a. Routine inspection – refers to the process
of evaluating compliance with labor laws
and social legislation jointly undertaken by
the Labor Inspector and the representatives
of the employer and the employees using
the prescribed Inspection List
b. Complaint inspection - refers to the act of
validating compliance with labor laws and
social legislation by the Secretary of Labor
and Employment or his/her duly authorized
representative
c. Occupational Safety and Health
Standards Investigation – refers to the
process of determining the existence of
imminent danger, dangerous occurrence
and accident resulting in disabling injury or
other analogous circumstances within the
workplace based on a report information.
(D.O. 183, S. 2017: Revised Rules on the
Administration and Enforcement of Labor
Laws Pursuant to Article 128 of the Labor
Code, As Renumbered, Rule II)
Work Stoppage Order (WSO)
The Secretary of Labor and Employment or his/her
duly authorized representatives may direct to stop,
wholly or partly, the work or operation of any unit or
department of an establishment when non-
compliance with occupational safety and health
standards poses imminent danger to health and
safety of the employees in the workplace
When can WSO be issued?
Under exceptional circumstances, the Secretary of
Labor and employment may issue an industry-wide
WSO. (D.O. 183, S. 2017: Revised Rules on the
Administration and Enforcement of Labor Laws
Pursuant to Article 128 of the Labor Code, As
Renumbered, Rule VIII, Sec. 1)
When can WSO be lifted?
Upon receipt by the Regional Director of proof and
certification from the safety officer of the employer
or DOLE-accredited safety practitioner or consultant
that the cause of the imminent danger has been
abated. (D.O. 183, S. 2017: Revised Rules on the
Administration and Enforcement of Labor Laws
Pursuant to Article 128 of the Labor Code, As
Renumbered, Rule VIII, Sec. 2)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Elements that must concur in order for the
Regional Director to exercise his adjudicatory
powers under Article 129 of the Labor Code
1. The claim is presented by an employee or
person employed in domestic or household
service, or househelper under the Code;
2. The claimant, no longer being employed,
does not seek reinstatement; and
3. The aggregate money claim of the employer
or housekeeper does not exceed five
thousand pesos (₱5,000) (Labor Code, Art.
129)
Department of Labor Secretary
Powers of the Secretary
1. DOLE Secretary possesses the power to
suspend effects of termination pending
resolution of the dispute, PROVIDED:
a. There is prima facie finding of the DOLE
official before whom such dispute is pending
that the termination may cause a serious
labor dispute; or
b. Is in implementation of a mass lay-off (Labor
Code, Art. 292)
2. DOLE Secretary exercises appellate jurisdiction;
3. Voluntary Arbitration
4. Visitorial and Enforcement Powers
Bar Q: Inggo is a drama talent hired on a per drama
“participation basis” by DJN Radio Company. He
worked from 8:00 a.m. until 5:00 p.m., six days a
week, on a gross rate of P80.00 per script, earning
an average of PhP 20,000.00 per month. Inggo filed
a complaint before the Department of Labor and
Employment (DOLE)against DJN Radio for illegal
deduction, non-payment of service incentive leave,
and 13th month pay, among others. On the basis of
the complaint, the DOLE conducted a plant level
inspection.
The DOLE Regional Director issued an order ruling
that Inggo is an employee of DJN Radio, and that
Inggo is entitled to his monetary claims in the total
amount of P30,000.00. DJN Radio elevated the
case to the Secretary of Labor who affirmed the
order. The case was brought to the Court of
Appeals. The radio station contended that there is
no employer-employee relationship because it was
the drama directors and producers who paid,
supervised, and disciplined him. Moreover, it argued
that the case falls under the jurisdiction of the NLRC
and not the DOLE because Inggo’s claim exceeded
Page 44 of 76
BRAVO BASTE!
PhP 5,000.00.
[a] May DOLE make a prima facie determination
of the existence of an employer-employee
relationship in the exercise of its visitorial and
enforcement powers?
A: Art. 128(b) of the Labor Code authorizes the
Secretary of DOLE or his representatives to make a
prima facie determination of the existence of an
employer-employee relationship in the exercise of
his visitorial and enforcement powers. This authority
must be conceded, since the employment nexus is
the threshold issue before the DOLE could proceed
to make findings of compliance or non-compliance
with labor standards.
[b] If the DOLE finds that there is an employee-
employer relationship, does the case fall under
the jurisdiction of the Labor Arbiter considering
that the claim of Inggo is more than PhP5,000.00.
Explain.
A: The PhP 5,000.00 limit has been deleted by the
amendatory law. As long as there is no issue on
termination, the DOLE Regional Office/Secretary
can assume jurisdiction over money claims
regardless of amount in the course of inspection.
NATIONAL CONCILIATION AND MEDIATION
BOARD(NCMB)
An agency attached to DOLE principally in-charge of
the settlement of labor disputes through conciliation,
mediation, and promotion of voluntary approaches
to labor dispute prevention and settlement. (Revised
NCMB Manual Rules of Procedure for Conciliation
and Preventive Mediation Cases, Rule III, No. 23)
How should wage distortion be resolved (1) In
case there is a collective bargaining agreement
and (2) in case there is none? Explain briefly.
(2002 Bar)
A: According to Art. 124 of the Labor Code, in case
there is a collective bargaining agreement, a dispute
arising from wage distortions shall be resolved
through the grievance machinery provided in the
CBA, and if remains unresolved, through voluntary
arbitration.
In case there is no collective bargaining agreement
the employers and workers shall endeavor to correct
such distortions. Any dispute arising therefrom shall
be settled through the National Conciliation and
Mediation Board and if it remains unresolved after
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
ten calendar days of conciliations, then the dispute
is referred to the appropriate branch of the National
Labor Relations Commission.
What are preventive mediation cases?
Those potential labor dispute subject for conciliation
and mediation assistance sought by either or both
parties or upon the initiative of the NCMB to avoid
the occurrence of actual labor dispute. (Revised
NCMB Manual Rules of Procedure for Conciliation
and Preventive Mediation Cases, Rule III, No. 28)
Where and how should a request for preventive
mediation, notice of strike or lockout be filed?
With the Regional Branch having jurisdiction over
the workplace of the union members through
personal service or by registered mail/private
couriers. (Revised NCMB Manual Rules of
Procedure for Conciliation and Preventive Mediation
Cases, Rule IV, Sec. 4)
Who may file a request for Preventive Mediation,
Notice of Strike or Lockout?
a. The president or any authorized
representative of a certified or duly
recognized bargaining representative in
cases of bargaining deadlocks and unfair
labor practices.
b. In the absence of a certified or duly
recognized bargaining representative, the
president or any authorized representative
of a legitimate labor organization in the
establishment on grounds of unfair labor
practice.
c. The employer or any authorized
representative in cases of bargaining
deadlocks and unfair labor practices
(Revised NCMB Manual Rules of Procedure
for Conciliation and Preventive Mediation
Cases, Rule IV, Sec. 3)
Do you know that:
• When the NCMB declares a notice of strike as
"appropriate for preventive mediation", the
effect of that declaration is to drop the case from
the docket of notice of strikes, as provided in
Rule 41 of the NCMB Rules, as if there was no
notice of strike. During the pendency of
Page 45 of 76
BRAVO BASTE!
preventive mediation proceedings, no strike
could be legally declared (PAL vs Secretary of
Labor, GR No. 88210, 23 January 1991).
• "Information and statements made at
conciliation proceedings shall be treated as
privileged communication and shall not be
used as evidence in the Commission.
Conciliators and similar officials shall not testify
in any court or body regarding any matters taken
up at conciliation proceedings conducted by
them." (Art. 239, Labor Code; Nissan Motors
Philippines, Inc. v. Secretary of Labor G.R. Nos.
158190-91, 21 June 2000)
Voluntary Arbitration
The mandatory jurisdiction of the grievance and VA
covers two (2) cases:
1) interpretation or implementation of collective
bargaining agreements; and
2) those arising from the interpretation or
enforcement of company personnel
policies.
In an illegal dismissal case anchored on an invalid
enforcement of the union security clause, the
Supreme Court ruled that company's claims for
restitution against the union which initiated the
enforcement of the closed shop provision cannot be
adjudicated by the Labor Arbiter The claim is rooted
in the CBA provision mandating such
reimbursement, and thus jurisdiction lies with the
Voluntary Arbitrator (Del Monte Phil vs Saldivar, GR
No. 158620, 11 October 2006).
Bar Q: Company C, a toy manufacturer, decided to
ban the use of cell phones in the factory premises.
In the pertinent Memorandum, management
explained that too much texting and phone-calling
by employees disrupted company operations. Two
(2) employees members of Union X were
terminated from employment due to violation of the
memorandum-policy. The union countered with a
prohibitory injunction case (with prayer for the
issuance of a temporary restraining order) filed with
the Regional Trial Court, challenging the validity
and constitutionality of the cell phone ban. The
company filed a motion to dismiss, arguing that the
case should be referred to the grievance machinery
pursuant to an existing Collective Bargaining
Agreement with Union X, and eventually to
Voluntary Arbitration. Is the company correct?
Explain.
 S CBA R STAG NO TES Page 46 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

A: Yes. The RTC has no jurisdiction over labor

disputes and in fact it is prohibited from issuing an
injunction in such cases (Art. 266, Labor Code). Any act arising from
the violation of the
The ban on cell phone is a "labor dispute" defined provisions of RA 7877 3 years
as basically as any "controversy or matter (Anti-Sexual
concerning terms and conditions of employment". Harassment Act of
It is a grievance "arising from the interpretation or 1995)
enforcement of company policies" (Art. 273, 1st
par, Labor Code) and must be resolved initially
though the grievance machinery and, if unresolved CLAIMS
at that level, with the Voluntary Arbitration. Money claims arising
from employer- 3 years from the time
But since the employees have been terminated, employee relations the cause of action
jurisdiction over the illegal dismissal case would accruing during the accrued
pertain to the Labor Arbiter (Silva vs NLRC, GR No. effectivity of the Code
110226, 19 June 1997) unless the CBA specifically Money claims accruing 1 year from the date of
provides that termination disputes should also be prior to the effectivity effectivity of the Code
referred to grievance and VA (Art. 275, Labor of the Code
Code)

Do you know that: Claim for 3 years

Withholding of tax on CBA benefits, even if they
arise from the implementation of a CBA provision on
allowance and submitted to Voluntary Arbitration, is
beyond the jurisdiction of the VA since the tax code
provides for a specific remedy with the BIR
Commissioner .Under paragraph 1, Section 4 of the
NIRC, the CIR shall have the exclusive and
original jurisdiction to interpret the provisions of
the NIRC and other tax laws, subject to review by
the Secretary of Finance (Honda Cars vs Honda
Cars Specialists & Supervisors’ Union, G.R. No.
204142, 19 November 2014).
PRESCRIPTION OF OFFENSES AND CLAIMS
Offenses/Claims Prescription
OFFENSES
Offenses penalized 3 years
under the Labor Code
Unfair Labor Practices 1 year from the accrual
arising from Book V of such unfair labor
practice
compensation
Exceptions to the rule that no claim for
compensation shall be given due course unless
said claim is filed with the System within three
(3) years from the time the cause of action
accrued
Rules of Procedure for the Filing and Disposition of
the Employees’ Compensation Claims, Rule 3, Sec.
4 (b): Claims filed beyond the 3-year prescriptive
period may still be given due course, provided that:
1. A claim was filed for Medicare, retirement
with disability, burial, death claims, or
life(disability) insurance, with the GSIS
within three (3) years from the occurrence of
the contingency.
2. In the case of the private sector
employees, a claim for Medicare, sickness,
burial, disability or death was filed within
three (3) years from the occurrence of the
contingency.

3. In any of the foregoing cases, the

Illegal Recruitment 5 years
employees’ compensation claim shall be
filed with the GSIS or the SSS within a
reasonable time as provided by law.
Illegal Recruitment
cases involving 20 years Do you know that:
economic sabotage
• All money claims arising from an employer-
 S CBA R STAG NO TES Page 47 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

employee relation are covered by the 3-year

prescriptive period mandated by Article 306 of
the Labor Code, and not by Article 1144 of the
Civil Code which provides for a 10-year
prescriptive period for written agreements. Thus,
Article 306 of the Labor Code applies to the
retiree's money claim, which is based on a
provision of the Collective Bargaining Agreement
(CBA) on retirement and separation benefits and
is a consequence of employer-employee relation
(De Guzman vs CA, GR No. 132257, 12 October
1998).

• In the case where the employee was allowed to

work beyond age 65, it was ruled that the
reckoning of the prescriptive period for retirement
benefits claims shall be from refusal of the
demand, not from the date the employee attained
age 65 (Dela Salle Araneta vs Bernardo, GR No.
190809, 13 February 2017).

Bar Q: A, a driver for a bus company, sued his

employer for non-payment of commutable service
incentive leave credits upon his resignation after five
years of employment. The bus company argued that
A was not entitled to service incentive leave since
he was considered a field personnel and was paid
on commission basis and that, in any event, his
claim had prescribed. If you were the Labor Arbiter,
how would you rule? Explain.

A: I would rule in favor of the driver. It has been ruled

by the Supreme Court that bus driver and bus
conductors are not field personnel, since their work
could be monitored by the company and their work
hours could be reasonably ascertained. They follow
a fixed route from the point-of-origin origin bus
terminal to the destination bus terminal, and their
location could be monitored by technology as well
as by random inspection by inspectors (Dasco et al.
vs. Philtranco, G. R. No. 211141, June 29, 2016).
Since they are not field personnel, the circumstance
that they are paid on commission basis would not
negate their right to SIL pay.

The defense of prescription does not lie because the

SC has also ruled that when it comes to SIL pay the
prescription only starts when the employee
demands its monetization and the employer refuses
the demand. In this case, prescription only begun
when the employer resisted the suit for SIL pay.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
TAXATION LAW
BASIC PRINCIPLES IN TAXATION IN THE
CONSTITUTION
Constitutional Limitations
Due Process (Sec. 1, Art. III, 1987 Constitution)
The due process clause may be invoked where a
taxing statute is so arbitrary that it finds no support
in the Constitution, as where it can be shown to
amount to a confiscation of property. (Reyes v.
Almanzor, G.R. Nos. L-49839-46 April 26, 1991)
Equal protection of law (Sec. 1, Art. III, 1987
Constitution)
No person or class of persons shall be deprived
of the same protection of laws enjoyed by other
persons or other classes in the same place and in
like circumstances. (Phil. Rural Electric
Cooperative Association, Inc. v. DILG, 403 SCRA
558)
Uniformity and equity in taxation (Sec. 28(1),
Art. VI, 1987 Constitution)
All the taxable persons or property of the same
class shall be taxed at the uniform or same rate.
There is uniformity of taxation when the tax
operates within the same force and effect on this
subject wherever found. (Churchill v. Concepcion,
24 Phil 969)
However, the taxing power has the authority to
make reasonable classifications for purposes of
taxation. Inequalities resulting from singling out of
one particular class for taxation or exemption do
not infringe any constitutional limitation.
(Chamber of Real Estate and Builder’s
Associations, Inc., v Executive Secretary Romulo,
G.R. No. 160756, March 9, 2010)
Non-infringement of religious freedom (Sec. 5,
Art. III, 1987 Constitution)
To require such religious groups to pay taxes would
impair their free exercise and enjoyment of religious
freedom and worship, as well as its rights and
dissemination of religious beliefs. (American Bible
Society vs. City of Manila, 101 Phil 396)
Non-appropriation of public funds or property
for the benefit of any church, sect, or system of
religion etc. (Sec. 29(2), Art. VI, 1987 Constitution)
The Constitution strictly prohibits public money from
being appropriated, applied, paid, or used, directly
or indirectly, for the use, benefit, or support of any
sect, church, denomination, sectarian institution, or
Page 48 of 76
BRAVO BASTE!
system of religion.
Exemption of lands, buildings and
improvements actually, directly and exclusively
used for religious, charitable or educational
purposes (Sec. 28(3), Art. VI, 1987 Constitution)
▪ Charitable, educational and religious
institutions are exempt from property tax on the
lands, buildings, and improvements actually,
directly and exclusively used for charitable,
educational and religious purposes.
▪ Under the NIRC, religious and charitable
institutions are exempt from income tax only for
income received by them as such. Income
received from the use of their properties, real
or personal, is subject to income tax regardless
of the disposition. (Sec. 30[E], NIRC)
Exemption from taxes of the revenues and
assets of non-profit, non-stock educational
institutions including grants, endowments,
donations or contributions for educational
purposes (Sec. 4(3 and 4), Art. XIV, Sec. 28, Art.
VI, 1987 Constitution)
▪ All of the revenues and assets derived by the
non-stock, nonprofit educational institution will
be exempt from taxation provided they are
used actually, directly and exclusively for
educational purposes.
▪ Article XIV, Section 4 (3) does not require that
the revenues and income must have also been
sourced from educational activities or activities
related to the purposes of an educational
institution. The phrase all revenues is
unqualified by any reference to the source of
revenues.
▪ Thus, when a non-stock, non-profit educational
institution proves that it uses its revenues
actually, directly, and exclusively for
educational purposes, it shall be exempted
from income tax, VAT, and LBT (local business
tax). On the other hand, when it also shows
that it uses its assets in the form of real
property for educational purposes, it shall be
exempted from RPT (real property tax). (CIR V
DLSU, G.R. 196596, November 9, 2016)
▪ The donation is, likewise, exempt from the
donor's tax if actually, directly and exclusively
used for educational purposes, provided not
more than 30% of the donation is used by the
donee for administration purposes. The donee,
being a non-stock, nonprofit educational
institution, is a qualified entity to receive an
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
exempt donation subject to conditions
prescribed by law (Section 4, Par. 4, Article
XIV, 1987 Constitution, in relation to section
101(a)(3), NIRC).
▪ This exemption covers only non-stock, non-
profit educational institution.
▪ The last paragraph of Section 30 of the NIRC
is declared as unconstitutional ONLY WITH
RESPECT TO A NON-STOCK, NON- PROFIT
EDUCATIONAL INSTITUTION.
▪ Proprietary Educational institutions are entitled
only to a preferential rate of 10% provided not
more than 50% of the income comes from
unrelated business activity.
▪ This exemption does not cover income taxes
derived by religious or charitable institutions.
Application of 10% Preferential Tax Rate on
Proprietary Educational Institutions
It will apply only if its gross income from unrelated
trade, business, or activity does not exceed 50% of
its total gross income. Otherwise, it will be subject
to the regular tax rate of 30%. Once subject to
regular tax rate, proprietary educational institution
may be subject to MCIT. (Sec 27, NIRC)
Can a non-profit, non-stock educational
institution refuse to settle the assessment of a
local government for its building permit?
No. While there is incidental revenue to the local
government unit, the imposition of a Building Permit
partakes of a regulatory nature. The imposition of
Building Permit fee is an exercise of police power to
ensure compliance with the standards under the
Building Code to protect the public from any danger.
(Angeles University Foundation v. City of Angeles)
Effect on the tax-exempt status of a charitable
or religious institution if it engages in activities
conducted for profit
It does not lose its tax-exempt status for its non-
profit activities. However, its income from activities
conducted for profit, regardless of its disposition,
shall be subject to income tax. (RMC 67-2012; CIR
v. St. Luke’s, 2012)
Concurrence of a majority of all members of
congress for the passage of a law granting tax
exemption (Sec. 28(4), Art. VI, 1987 Constitution)
▪ Absolute majority is required for the grant of
tax exemption (majority of all the members).
Page 49 of 76
BRAVO BASTE!
▪ However, only relative majority (majority of
quorum) is required in the withdrawal by
Congress of such tax exemption previously
granted.
COMPROMISE OF TAX LIABILITY
Compromise of Civil Liability
As a general rule, the civil liability cannot be
compromised. There are only two exceptions.
First, when the assessment is of doubtful validity, in
which case, the Commissioner can compromise to
not less than 40% of the basic assessed tax. And
second, when the taxpayer is financially incapable
to pay the liability, in which case, it can be
compromised to not less than 10% of the basic
assessed tax.
The law allows compromises lower- than-the-above
rates but the approval of a collegial board called the
National Evaluation Board composed of the four
deputy commissioners and the commissioner is
required. The same is true for all compromises,
where the basic tax involved exceeds P1 million.
(Section 204, NIRC)
Compromise of Criminal Liability
The general rule is all criminal liabilities can be
compromised. There are only two exceptions, i.e.,
first, when a case is already filed in court and,
second, when the case involves fraud. (Section 204,
NIRC)
Can the President compromise taxes?
No. The National Internal Revenue Code vests in
the Commissioner of Internal Revenue the power
and authority to compromise tax liability. (Section
204, NIRC)
TAX EXEMPTION
Statutes granting tax exemptions are construed
strictissimi juris against the taxpayer and liberally in
favor of the taxing authority. A claim of tax
exemption must be clearly shown and based on
language in law too plain to be mistaken (Diageo
Philippines, Inc. vs. CIR, 685 SCRA 168, November
12, 2012).
A claim for a tax refund/credit is in the nature of a
claim for an exemption and the law is construed in
strictissimi juris against the one claiming it and in
favor of the taxing authority. (Metro Manila
Shopping Mecca Corp. vs. Toledo, 697 SCRA 425,
June 05, 2013)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
TAXING AUTHORITY
Jurisdiction, power, and functions of the
Commissioner of Internal Revenue
Powers and Duties of the BIR
1. To assess and collect national internal
revenue taxes, fees and charges;
2. To enforce all forfeiture, penalties, and
fines connected with the assessment
and collection of taxes, fees and
charges;
3. To execute judgment in all cases
decided in its favor by the CTA and the
ordinary courts; and
4. To effect and administer the supervisory
and police powers conferred upon it by
the NIRC and other special laws (Sec. 2,
NIRC).
Powers of the Commissioner of Internal
Revenue (CIR)
1. Power to interpret tax laws and decide
tax cases (Sec. 4, NIRC);
2. Power to obtain information and to
summon/examine and take testimony of
persons (Sec. 5, NIRC); and
3. Power to make assessments and
prescribe additional requirements for tax
administration and enforcement (Sec. 6,
NIRC).
Power to decide tax cases includes the power to
decide:
1. Disputed assessments;
2. Refunds of internal revenue taxes,
fees or other charges;
3. Penalties imposed in relation to the
above; and
4. Other matters arising under the
NIRC.
Note: Decisions of the CIR are subject to the
exclusive appellate jurisdiction of the CTA.
Power to inquire bank deposits by the
Commissioner of Internal Revenue
As a general rule, bank deposits of an individual
taxpayer may not be disclosed by a commercial
bank to the Commissioner. However, the
Page 50 of 76
BRAVO BASTE!
Commissioner is authorized to look into the bank
deposits of:
▪ A decedent, to determine his gross estate
▪ Any taxpayer who has filed an application
for compromise of his tax liability by reason
of financial incapacity to pay his tax liability.
▪ A specific taxpayer or taxpayers subject of
a request for the supply of tax information
from a foreign tax authority pursuant to an
international convention or agreement on
tax matters to which the Philippines is a
signatory or a party of: Provided, That the
information obtained from the banks and
other financial institutions may be used by
the Bureau of Internal Revenue for tax
assessment, verification, audit and
enforcement purposes. (Sec. 3, RA 10021)
Power of the Commissioner that cannot be
delegated (R-I-C-A)
▪ Power to recommend the promulgation of
rules and regulations by the Secretary of
Finance
▪ Power to issue rulings of first impressions
or to reverse, revoke, or modify any existing
ruling of the Bureau
▪ Power to compromise or abate tax liability
except matters which may be compromised
by the Regional Evaluation Board and
National Evaluation Board
▪ Power to assign or reassign internal
revenue officer to establishments where
articles subject to excise tax are produced
or kept (Sec. 7, NIRC)
Can the power of the Commissioner to issue
ruling of first impression be delegated?
NO. Section 7 of the Tax Code of 1997, as
amended, explicitly provides for the non-delegability
of the Commissioner’s power to issue rulings of first
impression or to reverse, revoke or modify any
existing ruling of the BIR. These refer to the rulings,
opinions and interpretations of the Commissioner
with respect to the provisions of the NIRC and other
tax laws without established precedents. (RAO No.
1-99, February 5, 1999)
 S CBA R STAG NO TES Page 51 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

INCOME TAX Nos. L-65773-74, 30 April 1987)

Criteria in imposing Philippine income tax What is the doctrine of situs of taxation?
1. Citizenship Principle – A citizen of the A: No state may tax anything not within its
Philippines residing in the Philippines is taxable on jurisdiction without violating the due process clause
all income derived from sources within and without of the constitution. The taxing power of a state does
the Philippines while a nonresident citizen is taxable not extend beyond its territorial limits, but within
only on income derived from sources within the such limits it may tax persons, property, income, or
Philippines. business (Manila Gas Corporation v. Collector of
Internal Revenue, G.R. No. 42780, 17 January
2. Residence Principle – All income derived by 1936)
persons residing in the Philippines, whether citizens
or aliens, whether domestic or foreign corporations, Sources of income (Section 42, NIRC)
shall be subject to income tax on the income derived
from sources within the Philippines. Items of Situs of Taxation (Source of
Gross income)
3. Source principle – All income derived from Income
sources within the Philippines shall be subject to
income tax. Interest Residence of the debtor or
obligor
General Principles of Income Taxation in the
Philippines (Section 23, NIRC) Dividends If received from a domestic
corporation – income within the
Taxpayer Within Without Philippines
(taxable (taxable
sources of sources of If received from a foreign
income) income) corporation – income within the
Philippines unless less than
Resident ✓ ✓ 50% of the gross income of such
Citizen foreign corporation for the 3-year
period ending with the close of its
Non-resident ✓ taxable year preceding the
Citizen declaration of such dividends
was derived from sources within
Resident Alien ✓
or Non- the Philippines
resident Alien Services Place of performance of services
Domestic ✓ ✓ Rentals and Location or use of the property or
Corporation Royalties interest in such property
Foreign ✓ Sale of Real Location of real property
Corporation Property
(whether
engaged or not Sale of TANGIBLE
in trade in the Personal
Philippines) Property PRODUCER/MANUFACTURER

• Partly Within, Partly

Without – if
What is the concept of “income from whatever manufactured/produced
source derived or income from any source within, but sold without
whatever?”
It is a legislative policy to include all income not • Partly Within, Partly
expressly exempted within the class of taxable Without – if
income under our laws. (Commissioner of Internal
Revenue vs. British Overseas Airways Corp, G.R.
 S CBA R STAG NO TES Page 52 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

manufactured/produced produced by the taxpayer without and sold within

without but sold within the Philippines, shall be treated as derived partly
from sources within and partly without the
PURCHASE/SOLD Philippines. Since, Ms. B is an alien individual, then
under the NIRC, she is only taxable on her income
• Place of sale (Without): derived from sources within the Philippines. Hence,
Purchased within and only proportionate part of the income from the sale
sold without of ready-to-wear-goods of Ms. B is taxable within
the Philippines which is the income partly within the
• Place of sale (Within): Philippines.
Purchased without and sold
1999 BAR QUESTION
within Q: A Co., a Philippine corporation, has an executive
INTANGIBLE (P) who is a Filipino citizen. A Co. has a subsidiary
in Hong Kong (HK Co.) and will assign P for an
• General Rule: Place of indefinite period to work full time for HK Co. P will
sale bring his family to reside in HK and will lease out his
residence in the Philippines. The salary of P will be
• Exception: Gain on sale shouldered 50% by A Co. while the other 50% plus
of shares of stock in a housing, cost of living and educational allowances
domestic corporation of P's dependents will be shouldered by HK Co. A
Co. will credit the 50% of P's salary to P's Philippine
Gain on Income within the Philippines bank account. P will sign the contract of
sale of regardless of where the shares employment in the Philippines. P will also be
shares of are sold receiving rental income for the lease of his
stock in a Philippine residence. Are these salaries,
domestic allowances, and rentals subject to the Philippine
income tax?
corporation
A: The salaries and allowances received by P
are not subject to Philippine income tax while the
2015 BAR QUESTION rental income is subject to Philippines Income tax.
Q: Ms. C, a resident citizen, bought ready-to-wear Under Section 22(E) of the NIRC, P qualifies as a
goods from Ms. B, a nonresident citizen. a) If the non-resident citizen because he leaves the
goods were produced from Ms. B's factory in the Philippines for employment requiring him to be
Philippines, is Ms. B's income from the sale to Ms. physically present abroad most of the time during
C taxable in the Philippines? Explain. b) If Ms. B is the taxable year.
an alien individual and the goods were produced in
her factory in China, is Ms. B's income from the sale Since P is a non-resident citizen, under Sec 23 of
of the goods to Ms. C taxable in the Philippines? the NIRC, he is taxable only for his income derived
Explain. from sources within the Philippines.

A: a) Yes, Ms. B’s income from sale of ready-to-
wear-goods to Ms. C is taxable within the
Philippines. Under Section 23 (B) of the NIRC, a
non-resident citizen is taxable only on income
derived from sources within the Philippines. Since
the goods are produced and sold within the
Philippines, then under the NIRC, the source of
income of Ms. B is within the Philippines. Hence,
Ms. B’s income from sale of ready-to-wear-goods is
taxable within the Philippines.
A: b) Yes, but only proportionate part of the income.
Under Section 42 (E) of the NIRC, gains, profits,
and income from the sale of personal property
The salaries and allowances received from being
employed abroad are incomes derived from sources
without the Philippines, because the services were
rendered outside of the Philippines (Section 42,
NIRC). Hence, not taxable in the Philippines. While
the rental income for the lease of his Philippine
residence is an income derived from within the
Philippines, the leased property being located in the
Philippines. (Section 42, NIRC) Hence, taxable.
How does income differ from capital? (1995 Bar
Question)
The essential difference between capital and
income is that capital is a fund; income is a flow. A
fund of property existing at an instant of time is
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
called capital. A flow of services rendered by that
capital by the payment of money from it or any other
benefit rendered by a fund of capital in relation to
such fund through a period of time is called an
income. Capital is wealth, while income is the
service of wealth. (Vicente Madrigal vs. James
Rafferty, G.R. No. L-12287, August 7, 1918)
When income is taxable
1. Existence of income – there can never be an
income taxation without the existence of income. A
mere expectation of profit is not an income
(Capuno, R., 2020)
2. Realization of income - Mere increase in the
value of property is not considered as income for tax
purposes since it is an unrealized increase in
capital. Under the realization principle, revenue is
generally recognized when both of the following
conditions are met:
a. The earning process is complete or virtually
complete
b. An exchange has taken place (Manila Mandarin
Hotels, Inc. v. CIR, CTA Case No. 5046, March 24,
1997).
3. Recognition of income - When income is
considered received for Philippines income tax
purposes:
a. If actually or physically received by taxpayer; or
b. If constructively received by taxpayer. If and
when there are substantial limitations or conditions
under which payment is to be made, such does not
constitute constructively realized.
What are the tests in determining whether an
income is earned for tax purposes?
1. Realization income/Severance test -
There is no taxable income until there is a
separation from capital of something of
exchangeable value, thereby supplying the
realization or transmutation which would
result in the receipt of income.
2. Economic Benefit Test – Any economic
benefit to the employee that increases his
net worth, whatever may have been the
mode by which it is effect, is taxable.
3. Claim of Right Doctrine – a taxable gain
is conditioned upon the presence of a claim
of right to the alleged gain and the absence
of a definite unconditional obligation to
Page 53 of 76
BRAVO BASTE!
return or repay that which would otherwise
constitute a gain.
Cash Method versus Accrual Method of
accounting
The accrual method relies upon the taxpayer’s right
to receive amounts or its obligation to pay them, in
opposition to actual receipt or payment, which
characterizes the cash method of accounting.
Amounts of income accrue where the right to
receive them become fixed, where there is created
an enforceable liability. Similarly, liabilities are
accrued when fixed and determinable in amount,
without regard to indeterminacy merely of time of
payment. (CIR v. Isabela Cultural Corporation, G.R.
No. 172231, 2007)
What are the instances where taxable income
shall be computed on the basis of calendar year
method?
1. If the taxpayer's annual accounting period is
other than a fiscal year, as defined in Section
22(Q); or
2. If the taxpayer has no annual accounting period;
or
3. If the taxpayer does not keep books; or
4. If the taxpayer is an individual.
(Section 43, NIRC)
Who are not qualified to the option to be taxed
at 8% flat income tax rate?
The following individuals are not qualified to avail
the 8% Income tax rate and correspondingly shall
be taxed based on the graduated income tax rates
prescribed under Section 24 (A) (2) (a) of the NIRC,
as amended:
1. Purely Compensation Income Earners; or
2. VAT-registered payer, regardless of the amount
of gross sales/receipts; or
3. Taxpayers exempt from VAT or other
percentage taxes whose gross sales/ receipts
and other non-operating income exceed the P
3Million VAT Threshold during the taxable year;
or
4. Taxpayer who is subject to Other percentage
taxes under Title V of the Tax Code, as amended
except those subject under Section 116 of the
same Title; or
5. Partners of a General Professional Partnership;
or
6. Individual enjoying income tax exemption; and
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
7. Individual person who is exempted from income
tax such as those registered Barangay Micro
Business Enterprises (BMBE). (RMC-50-2018;
Q: 16: A: 16, RMO-23-2018)
GROSS INCOME
What is gross income for income tax purposes?
(1995 bar question)
Except when otherwise provided in this Title, gross
income means all income derived from whatever
source, including (but not limited to) the following
items: (1) Compensation for services in whatever
form paid, including, but not limited to fees, salaries,
wages, commissions, and similar items; (2) Gross
income derived from the conduct of trade or
business or the exercise of a profession; (3) Gains
derived from dealings in property; (4) Interests; (5)
Rents; (6) Royalties; (7) Dividends; (8) Annuities;
(9) Prizes and winnings; (10) Pensions; and (11)
Partner's distributive share from the net income of
the general professional partnership. (Section 32
(A), NIRC)
What is meant by taxable income? (2000 bar
question)
Taxable income means the pertinent items of gross
income specified in this Code, less the deductions,
if any, authorized for such types of income by this
Code or other special laws. (Section 31 of the NIRC,
as amended by Train Law)
What is meant by Net Income?
Net Income means gross income less allowable
deductions. (Dimaampao, 2018)
1979 BAR QUESTION
Q: Mr. Juan, while relaxing in his living room, picked
up the telephone which had just rung. The voice at
the other end, after asking for the name and
address of Mr. Juan, announced that he, Mr. Juan,
had just won a prize of P5, 000. Within the week, his
prize arrived through mails.
The program was sponsored by a manufacturing
company. The choice of Mr. Juan was done by the
announcer who picked up the telephone directory,
flicked to a page therein and ran down his fingers to
the 29th name on the page.
Is the amount he received considered part of
taxable income as this term is defined in Sec. 31 of
the NIRC? Reason out your answer.
A: Yes, the amount received shall be considered as
part of taxable income. Under Section 31 of the
Page 54 of 76
BRAVO BASTE!
NIRC, as amended by the TRAIN law, taxable
income means the pertinent items of gross income
specified in this Code, less the deductions, if any,
authorized for such types of income by this Code or
other special laws.
The amount of the prize being less than P10, 000
shall not be subject to final tax. (Sec. 24 (B) (1),
NIRC OF 1997) Rather, it shall be included in gross
income of the taxpayer less the deductions, if any,
authorized for such type of income and shall be
subjected to the schedular rate. (Sec. 24 (A) (1) (c))
Condonation of indebtedness
1. Condonation which results to income – If
services are performed for a creditor who, in
consideration for those services, cancels the debt,
income equal to the amount of the cancelled debt is
realized by the debtor as compensation for its
services.
2. Condonation which results to a taxable gift –
When the creditor, without receiving any equivalent,
renounces the enforcement of the obligation in favor
of the debtor, it is considered as a gift which shall
not be included in the latter’s gross income but is
subject to donor’s tax.
1997 BAR QUESTION
Q: An insolvent company had an outstanding
obligation of P100, 000 from a creditor. Since it
could not pay the debt, the creditor agreed to accept
payment through dacion en pago a property which
had a market value of P30, 000. In the dacion en
pago document, the balance of the debt was
condoned.
a. What is the effect of the discharge of the unpaid
balance of the obligation on the debtor corporation?
b. Insofar as the creditor is concerned, how is he
affected tax-wise as a consequence of the
transaction?
A: a. The condonation of the unpaid balance of the
obligation has the effect of a donation made on the
part of the creditor. It is obvious that the creditor
merely desires to benefit the debtor and without any
consideration therefore cancels the debt, the
amount of the debt cancelled is a gift from the
creditor to the debtor and need not be included in
the latter’s gross income (Sec. 50, Rev. Regs. No.
2).
b. For the difference of P70, 000.00, the creditor
shall be subject to donor’s tax at the applicable rates
provided for under the National Internal Revenue
Code (6% based on net gifts under Train Law).
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
ORDINARY ASSET VS CAPITAL ASSET
a. Ordinary assets – refer to properties held by the
taxpayer used in connection with his trade or
business which includes the following: [SOUR]
i. Stock in trade of the taxpayer or other property of
a kind which would properly be included in the
inventory of the taxpayer if on hand at the close of
the taxable year;
ii. Property held by the taxpayer primarily for sale to
customers in the ordinary course of trade or
business;
iii. Property used in the trade or business of a
character which is subject to the allowance for
depreciation provided in the NIRC; and
iv. Real property used in trade or business of the
taxpayer. (Sec. 39 [A][1], NIRC)
b. Capital assets - properties of a taxpayer other
than ordinary assets. (Sec. 39 [A][1], NIRC)
In general, the following are the tax
consequences when a capital asset is sold:
1. Sale of Shares of Stock not Traded in the
Stock Exchange – Subject to capital gains tax (final
tax) of 15% based on net capital gains realized
during the taxable year from the sale, barter,
exchange, or other disposition of shares of stock in
a domestic corporation, except shares sold, or
disposed of through the stock exchange (Section 24
(C) of the NIRC, as amended by train law) and
Documentary Stamp tax (Section 175 of NIRC, as
amended by Train law)
A loan of shares to another party without any
consideration falls under the "disposition" of shares
of stock which is subject to capital gains tax. (CIR v.
Oder, G.R. No. 192023, November 21, 2018)
2008 BAR QUESTION
Q: John McDonald, a U.S. citizen residing in Makati
City, bought shares of stocks of a domestic
corporation whose shares are listed and traded in
the Philippine Stock Exchange, at the price of P 2,
000,000.00. Yesterday, he sold the shares of stocks
through his favorite Makati stockbroker at a gain of
P 200, 000.
1. Is John McDonald subject to Philippine Income
Tax on the sale of his shares through his
stockbroker? Is he liable for any other tax? Explain
2. If John McDonald directly sold the shares to his
best friend, who is another U.S. Citizen residing in
Page 55 of 76
BRAVO BASTE!
Makati, at a gain of P200, 000. Is he liable for
Philippine Income Tax? If so, what is the tax base
and rate?
A: 1. No, John McDonald is exempt from Philippine
income from his sale of shares of stocks of a
domestic corporation that are listed and traded in
the Philippine Stock Exchange by express provision
of law (Sec. 24[c], NIRC,). However, he is subject to
the stock transaction tax equivalent to six tenth of
one percent (6/10 of 1%) of the gross selling price
or gross value in money of the shares of stock sold
or exchanged (Sec. 127[A] of NIRC, as amended by
Train Law).
2. Yes, John McDonald will be subject to Philippine
income tax on the Php 200,000 gain arising from his
direct sale of the listed shares of stocks of a
domestic corporation to his friend residing in Makati.
An alien individual, whether or not a resident of the
Philippines, is taxable on income derived from
sources within the Philippines (Sec. 23[D], NIRC).
Gain from the sale of shares of stock in a domestic
corporation shall be treated as derived entirely from
sources within Philippines, regardless of where the
said shares are sold (Sec. 42(E), NIRC). The tax
base is net capital gains, and the rate is 15% final
tax (capital gains tax) (Section 24 (c) of NIRC, as
amended by Train Law)
2. Sale of Real Property classified as capital
asset – Capital gains tax (final tax) of 6% based on
the gross selling price or current fair market value
as determined in accordance with Section 6(E) of
this Code, whichever is higher, is hereby imposed
upon capital gains presumed to have been realized
from the sale, exchange, or other disposition of real
property located in the Philippines, classified as
capital assets, including pacto de retro sales and
other forms of conditional sales, by individuals,
including estates and trusts (Section 24 (D) of the
NIRC) and Documentary Stamp Tax (Section 196
of NIRC, as amended by Train Law)
Presumed gain in case of sale of Real property
classified as capital asset
Gain from sale of real property located in the
Philippines classified as capital asset shall be
subject to CGT of 6% based on the Gross Selling
Price (GSP) or Fair Market Value (FMV), whichever
is higher, regardless of whether or not there is an
actual gain or actual loss. This is because the gain
in such sale is presumed by law. (NIRC, Sec. 24 [D])
Sale of Principal Residence
The sale of principal residence, however, is not
subject to CGT provided the proceeds of which are
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
utilized in acquiring or constructing a new principal
residence within 18 calendar months from date of
sale or disposition, and the taxpayer notifies the CIR
within 30 days from the date of sale of his intention
to avail the exemption. This can be availed of only
once every 10 years. If there is no full utilization, the
portion of the gains presumed to have been realized
shall be subject to capital gains tax. (R.R. No. 14-
00)
2014 BAR QUESTION
Q: Hopeful Corporation obtained a loan from
Generous Bank and executed a mortgage on its real
property to secure the loan. When Hopeful
Corporation failed to pay the loan, Generous Bank
extrajudicially foreclosed the mortgage on the
property and acquired the same as the highest
bidder. A month after the foreclosure, Hopeful
Corporation exercised its right of redemption and
was able to redeem the property. Is Generous Bank
liable to pay capital gains tax as a result of the
foreclosure sale? Explain.
A: No, Generous Bank is not liable to pay capital
gains tax (CGT). In the case of Supreme Transliner,
Inc., v. BPI Family Savings Bank, Inc. G.R. No.
165617, February 25, 2011, 644 SCRA 59, the
Supreme Court held that Revenue Regulations No.
4-99 expressly provides that if a mortgagor
exercises his right of redemption within one year
from the issuance of the certificate of sale, no CGT
shall be imposed because no sale or transfer of real
property was realized. It is only in case of non-
redemption by Hopeful Corporation that the
obligation to pay CGT arises, which shall be based
on the bid price of the highest bidder. The tax will
be imposed only upon the expiration of the one-
year period of redemption.
Another point: The obligation to pay the CGT
would primarily fall on the mortgagor, Hopeful
Corporation, and not on Generous Bank. Hence,
Generous Bank is not liable to pay CGT.
3. Sale of real property to the government or any
of its political subdivisions or GOCCs by an
INDIVIDUAL taxpayer (not available to a non-
individual taxpayer)
The individual taxpayer has the option to treat the
capital gain as subject to CGT or Net Income Tax if
the buyer of the real property is the Government or
any of its political subdivisions or GOCCs. (Section
24 (D), NIRC) and Documentary stamp tax (Section
196 of NIRC, as amended by Train Law)
4. Sale of other capital assets (other than
section 24 C and D) – Inclusion of gross income
Page 56 of 76
BRAVO BASTE!
Section 32 (A) Gains derived from dealings in
property.
Holding Period
In case of individual taxpayers, only the following
percentage of the gain or loss recognized upon the
sale or exchange of a capital asset shall be taken
into account in computing the net capital gain, net
capital loss, and net income:
Holding Period Percentage taken
into account
If the capital asset has
been held for not more
than 12 months 100%
If the capital asset has
been held for more
than 12 months 50%
(Sec. 39 [B], NIRC)
Holding period is not applicable to the
following:
1. In case the taxpayer is a corporation, the capital
gain and loss are to be reported in the full amount
regardless of the number of years the capital asset
is held.
2. Shares of stock of Domestic Corporation not
traded at the local stock exchange under Section
24(C) of NIRC.
3. Real properties classified as capital asset under
Section 24(D)(1) of NIRC.
4. In case the asset is classified as an ordinary asset
What are tax free exchanges?
Tax-free exchanges refer to those instances
enumerated in Section 40 (C) (2) of the NIRC that
are not subject to Income Tax, Capital Gains Tax,
Documentary Stamp Tax and/or Value-added Tax,
as the case may be. In general, there are two kinds
of tax-free exchange:
a. Transfer to a controlled corporation- No gain or
loss shall be recognized if property is transferred to
a corporation by a person in exchange for stock or
unit of participation in such corporation of which as
a result of such exchange said person, alone or
together with others, not exceeding four persons,
gains control of said corporation. (Section 40[C](2),
NIRC)
 S CBA R STAG NO TES Page 57 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

b. Merger or Consolidation- No gain or loss shall be only to prove that taxes were withheld.
recognized if in pursuance of a plan of merger or Certificates of Final Taxes Withheld issued by the
consolidation: Agent Banks are sufficient evidence to establish the
withholding of the taxes. Applying the
i. a corporation, which is a party to a merger pronouncement in the case of Commissioner of
or consolidation, exchanges property solely Internal Revenue v. Philippine National Bank,
for stock in a corporation, which is a party PAL need not prove the remittance to the
to the merger or consolidation (Property for Bureau of Internal Revenue of the final
Stocks); or withholding tax on its interest from currency
bank deposits to be entitled to tax refund. The
ii. a shareholder exchanges stock in a same principles used to rationalize the ruling
corporation, which is a party to the merger apply to final withholding taxes: (i) the payor-
or consolidation, solely for the stock of withholding agent is responsible for the
another corporation, a party to the merger withholding and remitting of the income taxes;
or consolidation (Stocks for Stocks); or (ii) the payee-refund claimant has no control
over the remittance of the taxes withheld from
iii. a security holder of a corporation, which is its income; (iii) the Certificates of Final Tax
a party to the merger or consolidation, Withheld at Source issued by the withholding
exchanges his securities in such agents of the government are prima facie proof
corporation, solely for stock or securities in of actual payment by payee-refund claimant to
the government itself and are declared under
another corporation, a party to the merger
perjury.
or consolidation (Securities for Stocks).
(Section 40[C](2) of the NIRC)
EXCLUSIONS FROM GROSS INCOME
PASSIVE INVESTMENT INCOME
What is the rationale for exclusion?
They are exclusions from the gross income either
Philippine Airlines, Inc. (PAL) vs Commissioner
because they are:
of Internal Revenue, G.R. No. 206079-80.
1. Exempt from income tax under the law; or
Ponente: Justice Marvic Leonen, (UST Dean’s
2. Exempt from income tax under a tax treaty; or
circle 2019)
3. Mere returns of capital.
Under Presidential Decree No. 1590, as amended
by Section 22 of Republic Act No. 9337, PAL is only Who may avail exclusions?
All kinds of taxpayers, whether individuals, estates,
subject to Corporate Income Tax and Value Added
trusts or corporations, may avail of the exclusions.
Tax and is exempt from all other taxes, including
taxes on interest earned from deposits. Moreover,
Presidential Decree No. 1590 provides that any EXCLUSIONS DEDUCTION
excess payment over taxes due from PAL shall (Sec. 32 [B], NIRC) (Sec. 34, NIRC)
either be refunded or credited against its tax liability
for the succeeding taxable year. PAL is entitled to a It refers to a flow of It refers to amounts
tax refund or tax credit if excess payments are made wealth to the taxpayer which the law allows to
on top of the taxes due from it. Considering that PAL which are not treated be deducted from
is not liable to pay the tax on interest income from
as part of gross gross income in order
bank deposits, any payments made for that purpose
income, for purposes to arrive at net income.
is in excess of what is due from it. Thus, if PAL
erroneously paid for this tax, it is entitled to a refund. of computing the
taxpayer’s taxable
The taxes on interest income from bank income.
deposits are in the nature of a withholding tax.
When a particular income is subject to a final
withholding tax, it means that a withholding Pertains to the Pertains to the
agent will withhold the tax due from the income computation of gross computation of net
earned to remit it to the Bureau of Internal
income income
Revenue. The liability for remitting the tax is on the
withholding agent. To claim a refund, PAL needs
 S CBA R STAG NO TES Page 58 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

Something received or Something spent or the amounts received through accident or health
earned by the taxpayer paid in earning gross insurance or Workmen’s Compensation Act as
which do not form part income compensation for personal injuries or sickness, and
of gross income the amounts of any damages received whether by
suit or agreement on account of such injuries or
sickness. They are not income and are merely
compensation for injuries or sickness suffered.

EXCLUSIONS UNDER THE NIRC Examples of non-taxable and taxable

compensation for damages:
1. Life insurance proceeds (Sec. 32 [B] [1], NIRC)
They are not considered as income because they Non-taxable Taxable
partake the nature of an indemnity or compensation compensation for compensation for
rather than gain to the recipient. The following are damages damages
the conditions for the exclusion of life insurance
proceeds from gross income: Personal (physical) Actual damages for
a. Proceeds of life insurance policies; injuries or sickness loss of anticipated
b. Paid to the Heirs or beneficiaries; (e.g. hospital bills profits (e.g. salary loss
shouldered by the awarded by the court
c. Upon the Death of the insured; employer on account on account of injuries
of the employee’s or sickness)
d. Whether in a single Sum or otherwise. accident)
If the insured outlives the policy, and no such death
occurs, the proceeds of life insurance in excess of 5. Income exempt under treaty (NIRC, Sec. 32 B
the amount of the premium are taxable (Sec. 32 [5])
[B](2), NIRC). Also, if the amounts of the life Income of any kind, to the extent required by any
insurance proceeds are held by the insurer under treaty obligation binding upon the Government of
an agreement to pay interest thereon, the interest the Philippines.
payments shall be included in the gross income.
Most Favored Nation Clause
2. Amount received by insured as return of This grants to the contracting party treatment not
premium (Sec. 32 [B][2], NIRC) less favorable than which has been or may be
The amount of premium returned is not income but granted to the most favored among other countries.
mere return of capital. If the insured dies and the
It allows the taxpayer in one state to avail of more
beneficiary receives the life insurance proceeds, liberal provisions granted in another tax treaty to
these are not taxable income because they are which the country of residence of such taxpayer is
excluded from gross income as proceeds from life also a party; provided that the subject matter of
insurance. But if the insured does not die and taxation is the same as that in the tax treaty under
survives the designated period, the amount which the taxpayer is liable (CIR v. SC Johnson and
pertaining to the premiums he paid are excluded Son Inc., G.R. No. 127105, June 25, 1999).
from gross income, but the excess shall be The similarity in the circumstances of payment of
considered part of his gross income. taxes is a condition for the enjoyment of most
favored nation treatment precisely to underscore
3. Gifts, bequests and devises (Sec. 32 [B][3], the need for equality of treatment.
NIRC)
Only the value of property acquired by gift, bequest, 6. Retirement Benefits, Pensions, Gratuities,
devise, or descent is excluded from gross income. etc. (Sec. 32 [B][6], NIRC)
The income derived from such property shall be The following are the retirement benefits, pensions,
included in gross income. gratuities, etc. that are excluded from gross income:
However, income from such property in cases of a. Retirement benefits under R.A. 7641
transfers of divided interest, is included in gross
income. b. Social security benefits, retirement
gratuities, pensions and other similar
4. Compensation for injuries or sickness (NIRC, benefits received by resident or non-
Sec. 32 B [4]) resident citizens or resident alien from
The NIRC expressly excludes from gross income
 S CBA R STAG NO TES Page 59 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

Foreign government agencies and other registered with and

institutions, private or public approved by the BIR.
c. Retirement received by officials and
employees of private firms, whether Terminal pay/ Separation pay (Sec. 32 [B][6][b],
individual or corporate, in accordance with NIRC)
a Reasonable private benefit plan Any amount received by an official or employee or
maintained by the employer by his heirs from the employer as a consequence of
separation of such official or employee from the
d. Benefits from the US Veterans service of the employer because of death, sickness
Administration or other physical disability or for any cause beyond
the control of the said official or employee shall be
e. GSIS benefits excluded from his gross income.
f. SSS Note: The phrase “for any cause beyond the control
g. Separation pay of the said official or employee” means that the
separation or termination of the employee must be
Retirement benefits received under RA 7641(The involuntary (e.g. an employee who is terminated for
Retirement Pay Law) and those received by officials just and authorized cause(s) under the Labor Code)
and employees of private firms under a reasonable or not initiated by him (e.g. Voluntary resignation).
private benefit plan (RPBP) maintained by the
employer under RA 4917 (now Section 32(B)(6)(a)
of NIRC) are excluded from gross income subject to 6. Miscellaneous items:
income tax.
A. Income derived by foreign government – to be
REQUISITES FOR EXEMPTION exempt from tax, income derived by foreign
government must be:
With RPBP (RA 4917) Without RPBP (RA
7641) i. An income derived from investments in the
Philippines;
Retiring official or Retiring employee
employee must be at must be at least sixty ii. Derived from bonds, loans or other domestic
least fifty (50) years old (60) years old but not securities, stocks or interests on deposits in banks;
at the time of more than 65 years of and
retirement. age at the time of
iii. The recipient of such income from investment in
retirement.
the Philippines must be a foreign government,
Retiring official or Retiring employee financing institutions owned, controlled or financed
employee must have must be in the service by foreign government, regional or international
financing institutions established by foreign
been in the service of of same employer
government (NIRC, Sec. 32 B [7][a]).
the same employer for continuously for at
at least ten (10) years. least five (5) years. B. Income Derived by the Government or its
Political Subdivisions. - Income derived from any
Retiring employee
public utility or from the exercise of any essential
shall not have
governmental function accruing to the Government
previously availed of of the Philippines or to any political subdivision
the privilege under a thereof.
retirement benefit plan
of the same or another C. Prizes and awards - Prizes and awards shall be
employer. exempted from tax if:
i. Primarily in recognition of Scientific, Civic, Artistic,
The employer Religious, Educational, Literary, or Charitable
maintains a achievement [SCAR-CEL];
reasonable private
benefit plan which is ii. The recipient was selected without any action on
his part to enter the contest or proceeding; and
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
iii. He is not required to render substantial future
services as a condition to receiving the prize or
award. (Sec. 32 B [7]c,).
Note: the SCARCEL does not include Sports
Competition. Prizes and awards in sports
competition are subject to different requisites for
exemption under Sec. 32 B [7]d of the NIRC.
D. Prizes and awards in sports competitions –
Prizes and awards in sports competition are exempt
from gross income if the same are granted to
athletes in local and international sports
tournaments and competitions which must be
sanctioned by their national sports associations
(NIRC, Sec. 32 B [7] [d]). National sports
associations are those duly accredited by the
Philippine Olympic Committee.
1996 BAR QUESTION
Q: Onyoc, an amateur boxer, won in a boxing
competition sponsored by the Gold Cup Boxing
Council, a sports association duly accredited by the
Philippine Boxing Association. Onyoc received the
amount of P500, 000 as his prize which was
donated by Ayala Land Corporation. The BIR tried
to collect income tax on the amount received by
Onyoc and donor’s tax from Ayala Land
Corporation, which taxes, Onyoc and Ayala Land
Corporation refuse to pay. Decide.
A: The prize will not constitute a taxable income to
Onyoc; hence, the BIR is not correct in imposing the
income tax. R.A. No. 7549 explicitly provides that
“All prized and awards granted to athletes in local
and international sports tournaments and
competitions held in the Philippines or abroad and
sanctioned by their respective national sports
associations shall be exempt from income tax.”
Neither is the BIR correct in collecting the donor’s
tax from Ayala Land Corporation. The law is clear
when it categorically stated that the donor of said
prizes and awards shall be exempt from the
payment of the donor’s tax.
E. 13th month pay and other Benefits - Gross
benefits received by officials and employees of
public and private entities may be excluded from
gross income provided that the total exclusion shall
not exceed P90, 000, as increased by TRAIN Law.
Any excess therefrom is subject to Normal Income
Tax (schedular rate). (NIRC, Sec. 32 B [7] e).
The P90,000 threshold shall only apply to the 13th
month pay and other benefits such as amount given
in excess of the de minimis benefits, and in no case
Page 60 of 76
BRAVO BASTE!
apply to other compensation received by an
employee under an employer-employee
relationship such as basic salary.
De minimis benefits
The following are the de minimis benefits:
a. Monetized unused vacation leave credits of
private employees not exceeding 10 days
during the year;
b. Monetized unused vacation and sick leave
credits paid to government officials or
employees
c. Medical cash allowance to dependents of
employees, not exceeding P1, 500 per
employee per semester or P250 per month;
d. Rice subsidy of P2, 000 or one 50-kg sack
of rice per month worth not more than P2,
000;
e. Uniforms and clothing allowance not
exceeding P6, 000 per annum;
f. Actual medical assistance not exceeding
P10, 000 per annum;
g. Laundry allowance not exceeding P300 per
month;
h. Employees’ achievement awards, which
must be in the form of tangible personal
property other than cash or gift certificates,
with an annual monetary value not
exceeding P10,000 received by the
employee under an established written plan
which does not discriminate in favor of
highly paid employees;
i. Gifts given during Christmas and major
anniversary celebrations not exceeding
P5,000 per employee per annum;
j. Daily meal allowance for overtime work and
night/graveyard shift not exceeding 25% of
the basic minimum wage; and
k. Benefits received by an employee by virtue
of a Collective Bargaining Agreement
(CBA) and productivity incentive schemes,
provided the total annual monetary value
received from both CBA and productivity
incentive schemes combined do not exceed
P10, 000 per employee per taxable year.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
All other benefits given by employers which are not
included in the above enumeration shall not be
considered as “de minimis” benefits. (Revenue
Memorandum Circular 50-2018)
Treatment of excess de minimis benefits
It shall be included as part of the “other benefits” as
de minimis benefits which is subject to the P 90,000
ceiling under Section 32 (B)(7)(e)(iv) of the NIRC,
as amended by Train Law.
Any amount in excess of the P 90,000
If the recipient is a rank-and-file employee, the
amount in excess of P 90,000 – included in the
gross compensation income subject to normal
income tax.
If the recipient is managerial/supervisory employee,
the amount in excess of P 90,000 – subject to fringe
benefit tax (Revenue Regulations No. 5-2011;
Revenue Memorandum Circular No. 20-2-11)
F. GSIS, SSS, Medicare and Other
Contributions. - GSIS, SSS, Medicare and Pag-
Ibig contributions, and union dues of individuals.
G. Gains from the Sale of Bonds, Debentures or
other Certificate of Indebtedness. - Gains
realized from the same or exchange or retirement of
bonds, debentures or other certificate of
indebtedness with a maturity of more than five (5)
years.
H. Gains from Redemption of Shares in Mutual
Fund. - Gains realized by the investor upon
redemption of shares of stock in a mutual fund
company as defined in Section 22 (BB) of this Code.
EXCLUSIONS UNDER THE CONSTITUTION
All revenues and assets of non-stock, non-profit
educational institutions used actually, directly, and
exclusively for educational purposes shall be
exempt from taxes and duties. (Section 4 (3)(4),
XIV, 1987 Philippine Constitution)
DEDUCTIONS FROM GROSS INCOME
Deductions for income tax purposes partake of the
nature of tax exemptions; hence, if tax exemptions
are strictly construed, then deductions must also be
strictly construed (Commissioner of Internal
Revenue v. General Foods (Phils.), Inc, G.R.
Page 61 of 76
BRAVO BASTE!
143672, April 24, 2003)
Deductions from gross income refer to the items or
amount allowed by Tax Code or special law to be
subtracted from the gross income in order to arrive
at the taxable income which is the tax base of the
normal/net income tax or regular corporate income
tax.
General Rule
In order to be deductible, the following requisites
must be present:
1. The expense must be ordinary and
necessary;
2. It must be paid or incurred within the
taxable year;
3. It must be paid or incurred in carrying on or
which are directly attributable to the
development, management, operation,
and/or conduct of the trade, business, or
exercise of a profession;
4. The amount must be reasonable;
5. It must be substantiated with sufficient
evidence, 6. It is not contrary to law, public
policy, or morals; and
6. The tax required to be withheld on the
amount paid or payable must have been
paid to the BIR by the taxpayer, who is
constituted as a withholding agent of the
government.
In general, there shall be allowed at the option of the
taxpayer, itemized deduction, or an Optional
Standard Deduction (OSD) at a rate of 40%.
Basis of 40% OSD:
Taxpayer Tax base
Individual taxpayer Gross sales/receipts
Corporation Gross income
However, no deductions shall be allowed to:
1. Individual taxpayers earning compensation
income arising from personal services rendered
under an employer-employee relationship; and
2. Those who opted to be taxed at 8% income tax
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
rate on their income from business/practice of
profession. (Section 8, Revenue Regulations No. 8,
2018)
Concept of return of capital
The mere return of capital is allowed as deduction
from gross income in order to arrive at income
subject to tax. While general, the nomenclature of
“cost of sales or cost of goods sold” is applied, the
return of capital has different components
depending upon the nature of the business being
taxed. (Domondon, 2013)
Income tax is levied by law only on income, hence,
the amount representing return of capital should be
deducted from proceeds of sales and should not be
subject to income tax.
Itemized Deductions
Except for taxpayers earning compensation income
arising from personal services rendered under an
employer-employee relationship where no
deductions shall be allowed under this Section, in
computing taxable income subject to income tax
under Sections 24(A); 25(A); 26; 27(A), (B), and (C);
and 28(A)(1), there shall be allowed the following
deductions from gross income:
1. Expenses
2. Interest
3. Taxes
4. Losses
5. Bad debts
6. Depreciation
7. Depletion of oil and gas wells and mines
8. Charitable and other contributions
9. Research and development
10. Contributions to pension trusts
Classification of expenses:
1. Ordinary expenses refer to any expense that is
normal or usual in relation to the taxpayer’s
business and the surrounding circumstances.
2. Necessary expenses refer to the appropriate
and helpful expenses in the development of the
taxpayer’s business and those intended to minimize
losses or to increase profits.
3. Business expense refers to the expenditure
related to the business that is deductible in the year
incurred, in the same taxable year.
4. Capital expense refers to the expenditure that
Page 62 of 76
BRAVO BASTE!
improves or adds to the value of your property or
equipment. It is not immediately deductible. It is
deductible over time, such as in the form of
depreciation.
Substantiation requirement (Sec. 34(A)(1)(b),
NIRC)
No deduction from gross income shall be allowed
unless the taxpayer shall substantiate with sufficient
evidence, such as official receipts or other adequate
records:
1. The amount of the expense being deducted; and
2. The direct connection or relation of the expense
being deducted to the development, management,
operation and/or conduct of the trade, business or
profession of the taxpayer.
Additional requirements for deductibility
General Rule
An income payment which is otherwise deductible
under the Code shall be allowed as a deduction
from the payor's gross income ONLY if it is shown
that the income tax required to be withheld has been
PAID to the Bureau in accordance with Secs. 57
and 58 of the Code.
Exception
A deduction will also be allowed in the following
cases where no withholding of tax was made:
(A) The payee reported the income and pays the tax
due thereon and the withholding agent pays the tax
including the interest incident to the failure to
withhold the tax and surcharges, if applicable, at the
time of the audit/investigation or
reinvestigation/reconsideration.
(B) The recipient/payee failed to report the income
on the due date thereof, but the withholding
agent/taxpayer pays the tax, including the interest
incident to the failure to withhold the tax, and
surcharges, if applicable at the time of
audit/investigation or reinvestigation or
reconsideration.
(C) The withholding agent erroneously
underwithheld the tax but pays the difference
between the correct amount and the amount of tax
withheld including the interest incident to such error
and surcharges, if applicable, at the time of the audit
investigation or reinvestigation/reconsideration.
(Revenue Regulation No. 6-2018)
 S CBA R STAG NO TES Page 63 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

The Cohan Rule Principle itemized deduction; or

when the taxpayer fails
If there is showing that expenses have been to elect in his first
incurred but the exact amount thereof cannot be quarter income tax
ascertained due to the absence of documentary return, the option to
evidence, it is the duty of the BIR to make an
avail OSD as his mode
estimate of deduction that may be allowed in
of allowable deduction
computing the taxpayer’s taxable income bearing
heavily against the taxpayers whose inexactitude is (irrevocable for the
of his own making. A disallowance of 50% of the taxable year).
taxpayer’s claimed deduction is valid. (RMC 23-
2000)
What are the items that are not deductible in
Distinguish itemized deductions and Optional
computing net income?
Standard Deduction (OSD)
In computing net income, no deduction shall be
Itemized deductions OSD
allowed with respect to:
Refer to the allowable Refers to the standard
1. Personal, living or family expenses;
deductions as deduction in an
enumerated under amount not exceeding
2. Any amount paid out for new buildings or for
Section 34 of the 40% of the gross permanent improvements, or betterments made to
NIRC. income of individuals, increase the value of any property or estate;
other than nonresident
aliens, or corporations, 3. Any amount expended in restoring property or in
in lieu of the making good the exhaustion thereof for which an
deductions allowance is or has been made;
enumerated under
Subsections A-J of 4. Premiums paid on any life insurance policy
Section 34 of the covering the life of any officer or employee, or of any
NIRC. person financially interested in any trade or
business carried on by the taxpayer, individual or
It must be It requires no proof of corporate, when the taxpayer is directly or indirectly
substantiated by expenses incurred a beneficiary under such policy;
receipts. because the allowable
deduction is a fixed 5. Losses from sales or exchanges of property
between related parties;
percentage not
exceeding 40% of
6. Losses from wash sales of stock or securities
gross sales or receipts unless the claim is made by a dealer in stock or
or gross income as the securities and with respect to a transaction made in
case may be. the ordinary course of the business of such dealer;
It can be availed by all General Rule: It can 7. Non-deductible taxes
taxpayers except be availed by all
those subject to tax on taxpayers who are 8. Non-deductible losses
gross income (NRA- subject to tax based on
NETB or NRFC). net income and not on 9. Non-deductible interest
gross income. (Section 36, NIRC)

Exception: When the Marcelo Doctrine

taxpayer is subject to
tax based on gross A loss in one line of business is not permitted as a
income; or when under deduction from gain in another line of business
the law, the taxpayer is (Marcelo Steel Corporation v. CIR, G.R. No. No. L-
mandated to use 12401, October 31, 1960)
 S CBA R STAG NO TES Page 64 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

Withholding Tax ISSUES:

1. Whether petitioner ING Bank may validly avail
Concept itself of the tax amnesty granted by Republic Act No.
It is a method of collecting income tax in advance 9480;
from the taxable income of the recipient of income. 2. Whether petitioner ING Bank is liable for
In the operation of the withholding tax system, the deficiency withholding tax on accrued bonuses for
payee is the taxpayer, the person on whom the tax the taxable years 1996 and 1997.
is imposed, while the payor, a separate entity, acts
no more than an agent of the government for the HELD:
collection of the tax in order to ensure its payment. 1. Yes. Qualified taxpayers with pending tax cases
(Bank of America v. Commissioner, [234 SCRA may still avail themselves of the tax amnesty
320]) program. Thus, the provision in BIR Revenue
Memorandum Circular No. 19-2008 excepting
Time of Withholding "issues and cases which were ruled by any court
(even without finality) in favor of the BIR prior to
The obligation of the payor/employer to deduct and amnesty availment of the taxpayer" from the
withhold the related withholding tax arises at the benefits of the law is illegal, invalid, and null and
time the income was paid or accrued or recorded as void. The duty to withhold the tax on compensation
an expense in the payor's/employer's books, arises upon its accrual.
whichever comes first (ING Bank N.V. vs.
Commissioner of Internal Revenue, G.R. No. 2. Yes. We hold that the obligation of the
167679, July 22, 2015). payor/employer to deduct and withhold the related
withholding tax arises at the time the income was
ING Bank N.V. vs. Commissioner of Internal paid or accrued or recorded as an expense in the
Revenue, G.R. No. 167679, July 22, 2015 payor's/employer's books, whichever comes first.
Petitioner ING Bank accrued or recorded the
FACTS: ING Bank, the Philippine branch of bonuses as deductible expense in its books.
Internationale Nederlanden Bank N.V., a foreign Therefore, its obligation to withhold the related
banking corporation incorporated in the withholding tax due from the deductions for accrued
Netherlands. bonuses arose at the time of such accrual and not
at the time of actual payment.
Petitioner ING Bank asserts that it is "qualified to
avail of the tax amnesty under Section 5 [of Distinguish Creditable Withholding tax with
Republic Act No. 9480] and not disqualified under Final Withholding tax.
Section 8 [of the same law]."
Final Creditable
Furthermore, Petitioner ING Bank claims that it is Withholding Withholding tax
not liable for withholding taxes on bonuses accruing Tax
to its officers and employees during taxable years
1996 and 1997. It maintains its position that the As to the The amount Taxes withheld on
liability of the employer to withhold the tax does not amount of of income tax certain income
arise until such bonus is actually distributed. tax withheld by payments are
Petitioner ING Bank further argues that the Court of withheld the intended to equal
Tax Appeals' discussion on Section 29(j) of the withholding or at least
1993 National Internal Revenue Code and Section agent is approximate the
3 of Revenue Regulations No. 8-90 is not applicable
constituted tax due of the
to the issue in this case.
as a full and payee on said
In petitioner's case, bonuses were determined final payment income.
during the year (1996 and 1997) but were of the income
distributed in the succeeding year. No withholding tax due from
of income tax was effected but the bonuses were the payee on
claimed as an expense for the year. Since the the said
bonuses were not subjected to withholding tax income.
during the year they were claimed as an expense,
the same should be disallowed.
 S CBA R STAG NO TES Page 65 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

As to the The liability The liability rests What are the obligations of a withholding agent?
obligation for payment primarily on the
to or taxpayer. 1. To collect taxes as well as the payment thereof
withhold withholding on behalf of the government (Collection and/or
taxes of the tax Withholding of taxes and filing of the necessary tax
returns);
rests
primarily on
2. To claim a refund of erroneously or illegally
the payor as withheld taxes and the responsibility to return the
a withholding same to the principal taxpayer (Commissioner of
agent. Internal Revenue vs. Smart Communication, Inc.,
G.R. Nos. 179045-46, 25 August 2010)

As to the The payee is The income 2007 BAR QUESTION

need to not required recipient is still Q: Weber Realty Company which owns a three-
hectare land in Antipolo entered into a Joint Venture
file an to file an required to file an
Agreement (JVA) with Prime Development
income income tax income tax return, Company for the development of said parcel of land.
tax return return for the as prescribed in Weber Realty as owner of the land contributed the
particular Sec. 51 and Sec. land to the Joint Venture and Prime Development
income. 52 of the NIRC, as agreed to develop the same into a residential
amended. subdivision and construct residential houses
thereon. They agreed that they would divide the lots
between them.
As to All income Those income
Does the JVA entered into by and between Weber
coverage subject to payments and Prime create a separate taxable entity? Explain
final taxes covered by briefly.
(i.e. passive Expanded
income, Withholding A: The JVA entered into between Weber and Prime
gross income tax [Revenue does not create a separate taxable entity. The joint
of NRA- Regulations venture is formed for the purpose of undertaking
NETB); 11-2018]; and construction projects; hence, is not considered as a
corporation for income tax purposes. (Section 22
Fringe Income (B), NIRC).
benefit tax payments
covered by Q: Are the allocation and distribution of the saleable
compensation lots to Weber and Prime subject to income tax and
income to expanded withholding tax? Explain briefly.

A: No. The allocation and distribution of the saleable

Who is a withholding agent?
A withholding agent is any person or entity who is in
control of the payment subject to withholding tax
and therefore is required to deduct and remit taxes
withheld to the government. (BIR Website)
He is merely a tax collector, not a taxpayer. If a
withholding agent was assessed for deficiency
withholding tax under the Code, as such, it is being
held liable in its capacity as a withholding agent and
not its personality as a taxpayer. (CIR v. CA, G.R.
No. 104151 March 10, 1995)
lots to Weber and Prime is a mere return of their
capital contribution. The income tax and the
expanded withholding tax is not due on a capital
transaction because no income is realized from it.
(BIR Ruling No. DA-192-2001, October 17, 2011).
Q: Is the sale by Weber or Prime of their respective
shares in the saleable lots to third parties subject to
income tax and to expanded withholding tax?
Explain briefly.
A: Yes. The sale by Weber and Prime of their
respective shares to third parties is a closed and
completed transaction resulting in the realization of
income, subject to income tax and to the expanded
withholding tax.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
FILING OF RETURNS AND PAYMENTS
Individual Returns
The following INDIVIDUALS are REQUIRED to file
an income tax return:
(a) Every Filipino citizen residing in the Philippines;
(b) Every Filipino citizen residing outside the
Philippines, on his income from sources within the
Philippines;
(c) Every alien residing in the Philippines, on income
derived from sources within the Philippines; and
(d) Every nonresident alien engaged in trade or
business or in the exercise of profession in the
Philippines. (Section 51 (A) (1), NIRC)
(e) A citizen of the Philippines and any alien
individual engaged in business or practice of
profession within the Philippine shall file an income
tax return, regardless of the amount of gross income
(Section 51 (A) (2), NIRC)
(f) An employee is required to file an Annual Income
Tax Return for compensation earned within the
same taxable year from multiple employers,
whether successive or concurrent, regardless of the
of the amount compensation (Q:51:A:51, RMC-50-
2018)
Example: 1. A works as accountant in ABC
Corporation and at the same time, during the
taxable year, he also works as a part time professor
at San Sebastian College (Multiple employers).
2. A works in ABC Corporation as an Administrative
Staff for 3 months, later within the same taxable
year, he resigned from the company and was hired
by XYZ Corporation as an accounting clerk for the
remaining taxable year. (Successive employers)
The following INDIVIDUALS shall NOT be
REQUIRED to file an income tax return:
(a) An individual whose taxable income does not
exceed Two hundred fifty thousand pesos
(P250,000) under Section 24(A)(2)(a): Provided,
That a citizen of the Philippines and any alien
individual engaged in business or practice of
profession within the Philippine shall file an income
tax return, regardless of the amount of gross
income;
(b) An individual with respect to pure compensation
income, as defined in Section 32 (A)(1), derived
Page 66 of 76
BRAVO BASTE!
from sources within the Philippines, the income tax
on which has been correctly withheld under the
provisions of Section 79 of this Code: Provided,
That an individual deriving compensation
concurrently from two or more employers at any
time during the taxable year shall file an income tax
return.
(c) An individual whose sole income has been
subjected to final withholding tax pursuant to
Section 57(A) of this Code; and
(d) A minimum wage earner as defined in section 22
(HH) of this Code or an individual who is exempt
from income tax pursuant to the provisions of this
Code and other laws, general or special. (Section
51 (A) (2), NIRC)
NOTE: The foregoing notwithstanding, any
individual not required to file an income tax return
may nevertheless be required to file an information
return pursuant to rules and regulations prescribed
by the Secretary of Finance, upon recommendation
of the Commissioner. (Section 51 (A) (3), NIRC)
SUBSTITUTED FILING
Substituted filing applies only if all of the following
requirements are present:
1. The employee received purely
compensation income, regardless of
amount during the taxable year.
2. That the compensation was received from
only one employer in the Philippines for
the calendar year.
3. The income tax of which has been withheld
correctly by the said employer (tax due
equals tax withheld).
4. The employer files the annual information
return (BIR Form No. 1604-C).
In lieu of BIR Form No. 1700, the Certified List of
Employees Qualified for Substituted Filing of ITR
with information regarding the name of
compensation earner, TIN, compensation paid, tax
due and tax withheld, filed by the employer with the
concerned BIR office and stamped “Received” by
the latter shall be tantamount to the substituted filing
of ITRs by concerned employees (BIR Form No.
2316)
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Income Tax on Corporations
A corporation for income tax purposes shall:
1) Include:
a. Partnerships;
b. Joint stock companies;
c. Joint accounts (cuentas en participacion);
d. Associations; and
e. Insurance companies.
2) Not include:
a. General Professional Partnerships (GPP)
NOTE: The distributive share of each partner in a
general professional partnership shall form part of
partner’s gross income in its individual tax returns
subject to graduated income tax rates.
b. A joint venture or consortium formed for purposes
of undertaking construction projects
c. A joint venture or consortium formed for the
purpose of engaging in petroleum, coal, geothermal
and other energy operations pursuant to an
operating or consortium agreement under a service
contract with the government (Sec. 22 (B), NIRC)
Normal corporate income tax (NCIT)
An income tax of thirty percent (30%) shall be
imposed upon the taxable income derived during
the taxable year from all sources within and without
the Philippines for DC.
Minimum corporate income tax (MCIT)
The MCIT is equal to 2% of the gross income of the
corporation at the end of the taxable quarter, except
income exempt from income tax and income subject
to final withholding tax.
A corporation should pay the MCIT whenever its
normal corporate income tax (NCIT) is lower than
the MCIT, or when the firm reports a net loss in its
tax return. Conversely, the NCIT is paid when it is
higher than the MCIT. (Dimaamapo, 2015)
Therefore, the taxable due for the taxable year will
be NCIT (30% of taxable income) or MCIT (2% of
gross income), whichever is HIGHER.
The MCIT covers domestic and resident foreign
corporations which are subject to the 30% normal
corporate income tax; hence, corporations which
are subject to special corporate taxes do not fall
within the coverage of the MCIT.
Page 67 of 76
BRAVO BASTE!
The MCIT is imposed beginning on the fourth
taxable year immediately following the year in which
the corporation commenced its business
operations.
Carry-forward of the excess of MCIT
1. The excess of MCIT over the NCIT shall be
carried forward on an annual or quarterly basis.
2. The excess shall be credited against the NCIT
due for the three (3) immediately succeeding
taxable years.
3. Any excess not credited in the next three years
shall be forfeited.
4. Carry forward (annually or quarterly) is possible
only if MCIT is greater than NCIT.
5. The maximum amount that can be credited is only
up to the amount of the NCIT, there can be no
negative NCIT.
Improperly Accumulated Earnings Tax
Domestic corporations as defined under the Tax
Code and which are classified as closely-held
corporations are subject to 10% improperly
accumulated earnings tax on their improperly
accumulated earnings. (Sec. 29(A), NIRC)
Closely-held Corporations
These are corporations, at least 50% in value of the
outstanding capital stock of which or at least 50% of
the total combined voting power of all classes of
stock entitled to vote is owned directly or indirectly
by or not more than 20 individuals. (Sec. 4, RR No.
2-2001)
Rationale: IAET is imposed in the nature of a
penalty to the corporation for the improper
accumulation of its earnings and as a form of
deterrent to the avoidance of tax upon shareholders
who are supposed to pay dividends tax on the
earning distributed to them by the corporation. If the
earnings and profits were distributed, the
shareholders would be liable for tax on dividends.
(Commissioner v. Ayala Securities Corp., 101
SCRA 231)
Section 29 (D) of the NIRC provides that the term
'improperly accumulated taxable income' means
taxable income adjusted by: a. Income exempt from
tax; b. Income excluded from gross income; c.
Income subject to final tax; and d. The amount of
net operating loss carry-over deducted;
And reduced by the sum of: a. Dividends actually or
constructively paid; and b. Income tax paid for the
taxable year.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Prima facie instances of accumulation of profits
beyond the reasonable needs of a business
1. Investment of substantial earnings and profits of
the corporation in unrelated business or in stock or
securities in unrelated business.
2. Investment in bonds and other long-term
securities. 3. Accumulation of earnings in excess of
100% of paid-up capital, not otherwise intended for
the reasonable needs of the business (Sec. 7, RR
No. 2-2001)
DONOR’S TAX
It is a tax imposed on the exercise of the donor’s
right during lifetime to transfer property to others in
the form of gift. Hence, donor’s tax is not a property
tax, but is an excise tax on the transfer of property
by way of gift inter vivos. (RR 12-2018)
Gift in Relation to Donor’s Tax
It covers not only “direct gifts” but also “indirect
gifts.” Examples of indirect gifts are: condonation of
indebtedness due to mere liberality of the creditor;
transfer of property without consideration; sales,
exchanges and other dispositions of property for a
consideration to the extent that the value of the
property transferred exceeds the value in money or
money’s worth of the consideration received
therefor; and renunciation of an inheritance in favor
of another co-heir.
Transfers and transactions constituting
donation
1. Campaign Contributions- Only those donations
contributions declared with the COMELEC and that
have been spent during the campaign period as set
by the COMELEC are exempt from donor’s tax.
Donations utilized before or after the campaign
period are subject to donor’s tax and not deductible
as political contribution on the part of the donor.
2. Cancellation of Indebtedness- If a creditor merely
desires to benefit a debtor and without any
consideration cancels the debt, the amount of the
debt is a gift to the debtor and the creditor shall be
liable to pay donor’s tax.
3. Renunciation of Inheritance
General renunciation by an heir of his/her share in
the inheritance is not subject to donor’s tax. Special
Page 68 of 76
BRAVO BASTE!
Renunciation is subject to donor’s tax.
4. Renunciation of the Surviving Spouse of the
share on the Conjugal Partnership or Absolute
Community
2013 Bar Exam Question
In the settlement of the estate of Mr. Barbera who
died intestate, his wife renounced her inheritance
and her share of the conjugal property in favor of
their children. The BIR determined that there was a
taxable gift and thus assessed Mrs. Barbera as a
donor.
Was the BIR correct?
Yes. The BIR is correct that there is a taxable gift as
to the renunciation by Mrs. Barbera, the surviving
spouse, of her share in the conjugal partnership.
This is a transfer of property without any
consideration which takes effect during the lifetime
of the wife and thus should be qualified as a taxable
gift. (RR No. 2-2003).
However, The BIR is incorrect with regard to Mrs.
Barbera’s renunciation of her share in the
inheritance during the settlement of the estate as
this is a general renunciation not subject to donor’s
tax.
5. Transfer of Property for insufficient consideration
General Rule: When the property is transferred for
less than an adequate and full consideration, the
amount by which the fair market value of the
property exceeded the value of consideration shall
be deemed a gift and shall be included in computing
the amount of gifts made during the calendar year.
Exceptions:
▪ Where property transferred is real property located
in the Philippines considered as capital asset;
Reason: The transfer is not subject to donor’s tax
but to a capital gains tax.
▪ Where the sale, exchange or other transfer of
property made in the ordinary course of business
which is
(1) bona fide, (2) at arm’s length, and (3) free from
any donative intent
Reason: This shall be considered as made for an
adequate and full consideration.
 S CBA R STAG NO TES Page 69 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

In the Philippines ● Not more than thirty percent (30%) of said

Real Personal Properties Outside gifts shall be used by such donee for
Decede Properti Tangibl Intangible the administration purposes;
nt es e Philippine
s ● The educational institution is incorporated
RC / / / / as a non-stock entity, paying no dividends;
NRC / / / /
RA / / / / ● Governed by trustees who receive no
NRA w/ / / x compensation, and
reciproci X ● Devotes all its income, whether students'
ty
fees or gifts, donations, subsidies or other
NRA w/o / / / x
forms of philanthropy, to the
reciproci
ty accomplishment and promotion of the
DC / / / / purposes enumerated in its Articles of
RFC / / / / Incorporation.
NRFC / / / x
2002 Bar Exam Question
Reciprocity Rule
On December 6, 2001, LVN Corporation donated a
It applies only to a NRA donor and only on his piece of vacant lot situated in Mandaluyong City to
intangible personal properties located in the an accredited and duly registered non-stock, non-
Philippines. For the reciprocity rule to apply, a donor profit educational institution to be used by the latter
must be a citizen and resident of a foreign country in building a sports complex for students.
that does not impose donor’s tax or grants
exemption thereto. A. May the donor claim in full as deduction from its
gross income for the taxable year 2001 the amount
Exclusions in Gross Gift and Exempt Donations of the donated lot equivalent to its fair market
value/zonal value at the time of the donation?
1. Gifts to the National Government or any entity Explain your answer.
created by its agencies which is not conducted for
profit, or to any political subdivision; No. The donor is not entitled to claim as full
deduction the fair market value/ zonal value of the
2. Gifts to an educational and/or charitable, lot donated. The amount of any charitable
religious, cultural or social welfare institution, contribution of property other than money shall be
accredited NGO, trust, philanthropic or research based on the acquisition cost of said property. (Sec.
organization; provided that not more than 30% shall 34 (H) NIRC)
be used by the donee for administration purposes.
B. In order that donations to non-stock, non-profit
3. Encumbrances on the property donated if educational institution may be exempt from the
assumed by the donee in the deed of donation; donor’s gift tax, what conditions must be met by the
donee? (3%)
4. Donations made to entities exempted under
special laws. In order that donations to non-stock, non-profit
educational institution may be exempt from the
Donation to Non-Stock, Non-Profit Private donor’s gift tax, it is required that not more than thirty
Educational Institutions percent (30%) of said gifts shall be used by such
donee for administration purposes. (Sec. 101(A)(3),
The following conditions must occur in order that all NIRC)
grants, donations and contributions to non-stock,
non- profit private educational institutions may be
exempt from the donor's tax under Section 101 (a)
of the NIRC:
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
VALUE-ADDED TAX
Nature and Characteristic of Value Added Tax
Tax on Value Added
The tax is so called because it is imposed on the
value not previously subjected to VAT, i.e., on the
value added to the goods or services at each stage
of the distribution chain. (De Leon, 2011)
Tax on Consumption
VAT is a tax on consumption levied on the sale,
barter, exchange or lease of goods or properties
and services in the Philippines and on the
importation of goods into the Philippines. (RR 16-
05)
VAT as Indirect Tax
VAT is an indirect tax and the amount of tax may be
shifted or passed on to the buyer, transferee or
lessee of the goods, properties or services. (Section
105, NIRC)
The liability for the payment of the indirect taxes lies
only with the seller of the goods or services, not in
the buyer thereof. Thus, one cannot invoke one’s
exemption privilege to avoid the passing on or the
shifting of the VAT to him by the
manufacturers/suppliers of the goods purchased.
Hence, it is important to determine if the tax
exemption granted to a taxpayer specifically
includes the indirect tax which is shifted to him as
part of the purchase price, otherwise it is presumed
that the tax exemption embraces only those taxes
for which the buyer is directly liable. (CIR vs. PLDT,
GR No. 140230, 2005)
2016 Bar Question
Pursuant to Sec. 11 of the "Host Agreement"
between the United Nations and the Philippine
government, it was provided that the World Health
Organization (WHO), "its assets, income and other
properties shall be: a) exempt from all direct and
indirect taxes." Precision Construction Corporation
(PCC) was hired to construct the WHO Medical
Center in Manila. Upon completion of the building,
the BIR assessed a 12% VAT on the gross receipts
of PCC derived from the construction of the WHO
building. The BIR contends that the 12% VAT is not
a direct nor an indirect tax on the WHO but a tax
that is primarily due from the contractor and is
therefore not covered by the Host Agreement. The
WHO argues that the VAT is deemed an indirect tax
Page 70 of 76
BRAVO BASTE!
as PCC can shift the tax burden to it. Is the BIR
correct? Explain.
No. The BIR is incorrect.
While it is true that VAT is an indirect tax, the Host
Agreement, in specifically exempting the WHO from
"indirect taxes," contemplates taxes which, although
not imposed upon or paid by the Organization
directly, form part of the price paid or to be paid by
it. The 12% VAT is an indirect tax whose burden
was shifted by PCC to WHO, thus, it is evident that
BIR is incorrect. (CIR, vs. John Gotamco & Sons,
Inc. and the Court of Tax Appeals, G.R. No. L-
31092 February 27, 1987)
The Destination Principle; Cross Border
Doctrine
Under the Destination Principle, the goods and
services are taxed only in the country where these
are consumed and in connection with the said
principle, the Cross-Border Doctrine mandates that
no VAT shall be imposed to form part of the cost of
the goods destined for consumption outside the
territorial border of the taxing authority. (Atlas
Consolidated Mining v CIR, G.R. Nos. 141104&
148763, June 8, 2007)
Elements of VAT Taxable Transaction
1. It must be done in the ordinary course of trade or
business;
2. There must be a Sale, barter exchange, lease of
properties, or rendering of services; and
3. It is not VAT-exempt or VAT zero-rated. (Ingles,
2015)
Persons Liable to Pay Value-Added Tax
1. Any person, who in the course of his trade
or business, sells, barters, exchanges, or
leases goods or properties, or renders
services; and
2. Any person who imports goods (Sec. 105,
NIRC), whether it is done in the course of
trade/business or not.
The phrase “in the course of trade or business”
means the regular conduct or pursuit of a
commercial or an economic activity, including
transactions incidental thereto.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Exceptions to the Rule of Regularity
As stated, the transaction must be done in the
course of trade or business to be subject to VAT.
The transaction must be characterized as a regular
or habitual conduct. However, the following are
exceptions to this rule:
1. Importation
In general, VAT is imposed on goods brought into
the Philippines, whether for business or not.
The VAT on importation is paid by the importer prior
to the release of such goods from customs custody.
(Section 4.107-1(b) Revenue Regulation N0.16-
2005)
2. Transactions incidental to the Course of
Trade or Business
3. Services performed in the Philippines by
Non-Resident Person
4. Transaction Deemed Sale
2014 Bar Question
Masarap Kumain, Inc. (MKI) is a Value-Added Tax
(VAT)-registered company which has been
engaged in the catering business for the past 10
years. It has invested a substantial portion of its
capital on flat wares, table linens, plates, chairs,
catering equipment, and delivery vans. MKI sold its
first delivery van, already 10 years old and idle, to
Magpapala Gravel and Sand Corp. (MGSC), a
corporation engaged in the business of buying and
selling gravel and sand. The selling price of the
delivery van was way below its acquisition cost. Is
the sale of the delivery van by MKI to MGSC subject
to VAT?
Yes. The sale of the delivery van is subject to VAT
being a transaction incidental to the catering
business which is a VAT-registered activity of MKI.
The phrase “in the course of trade or business”
means the regular conduct or pursuit of a
commercial or an economic activity, including
transactions incidental thereto, by any person. (Sec.
105, NIRC) The sale of the fully-depreciated vehicle
that has been used in business is subject to VAT as
an incidental transaction, although such sale may
be considered isolated. (Mindanao II Geothermal
Partnership vs CIR)
Page 71 of 76
BRAVO BASTE!
On Sale of Goods or Properties
Tax Base: Gross Selling Price
The total amount of money or its equivalent which
the purchaser pays or is obligated to pay to the
seller in consideration of the sale, barter or
exchange of the goods or properties, excluding the
value-added tax. The excise tax, if any, on such
goods or properties shall form part of the gross
selling price. (Sec. 106 (A)(1), NIRC)
Allowable Deductions from the Gross Selling Price
A. Sales Returns and Allowances may be
deducted on the quarter in which the refund
was made or a credit memorandum or
refund was issued.
B. Sales Discounts granted and indicated in
the invoice at the time of sale and the grant
of which does not depend upon the
happening of a future event may be
excluded within the same quarter it was
given. (Sec. 106 (D), NIRC)
Transactions Deemed Sale
There is no actual sale of goods but such
transactions are subject to VAT.
The following transactions shall be deemed sale:
(1) Transfer, use or consumption not in the course
of business of goods or properties originally
intended for sale or for use in the course of
business;
(2) Distribution or transfer to:
(a) Shareholders or investors as share in the profits
of the VAT-registered persons; or
(b) Creditors in payment of debt;
(3) Consignment of goods if actual sale is not made
within sixty (60) days following the date such goods
were consigned; and
(4) Retirement from or cessation of business, with
respect to inventories of taxable goods existing as
of such retirement or cessation. (Sec. 106 (B),
NIRC)
The following circumstances shall, among others,
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
give rise to transactions "deemed sale";
▪ Change of ownership of the
business. There is a change in the
ownership of the business when a single
proprietorship incorporated; or the
proprietor of a single proprietorship sells his
entire business.
▪ Dissolution of a partnership and creation of
a new partnership which takes over the
business.
Changes in or Cessation of Status of a VAT-
registered Person.
VAT shall apply to goods or properties originally
intended for sale or use in business, and capital
goods which are existing as of the occurrence of the
following:
(1) Change of business activity from VAT taxable
taxable status to VAT-exempt status.
(2) Approval of a request for cancellation of
registration due to revertion to exempt status.
(3) Approval of a request for cancellation of
registration due to a desire to revert to exempt
status after the lapse of three (3) consecutive years
from the time of registration by a person who
voluntarily registered despite being exempt under
Section 109 of the Tax Code.
(4) Approval of a request for cancellation of
registration of one who commenced business with
the expectation of gross sales or receipts exceeding
P3,000,000.00 but who failed to exceed this amount
during the first twelve months of operation. (RMC
39-2018)
The following change in or cessation of status of
VAT registered person are not subject to Output
VAT:
(i) Change of control of a corporation
(ii) Change in the trade or corporate name
(iii) Merger or consolidation of corporations
On Importation of Goods
Transfer of goods by Tax exempt persons
(Technical Importation)
In the case of tax-free importation of goods into the
Page 72 of 76
BRAVO BASTE!
Philippines by persons. Entities or agencies exempt
from tax where such goods are subsequently sold,
transferred or exchanged in the Philippines to non-
exempt persons or entities, the purchasers,
transferees or recipients thereof shall be considered
as the importer and held liable for payment of VAT
and other internal revenue tax for such importation.
(Section 107(b), NIRC)
Zero-Rated Sale
A zero-rated sale of goods or properties is a sale,
barter or exchange of goods or properties of a VAT-
registered person subject to zero percent (0%) VAT.
1. Export Sales
a. Sale and actual shipment of goods from the
Philippines to a foreign country, paid for in
acceptable currency, and accounted for in
accordance with the rules and regulations of the
BSP
b. Sale of raw materials or packaging materials to a
non-resident buyer for delivery to a resident local
export-oriented enterprise to be used in
manufacturing, processing, packing, or repacking in
the Philippines of the said buyer’s goods, paid for in
acceptable currency, and accounted for in
accordance with the rules and regulations of the
BSP
c. Sale of raw materials or packaging materials to
an export-oriented enterprise whose export sales
exceed 70% of total annual production
d. Transactions considered constructively exported
under Art. 23 of EO 226
e. Sale of goods, supplies, equipment, and fuel to
persons engaged in international shipping or air
transport operations: Provided that the goods,
supplies, equipment and fuel shall be used
exclusively for international shipping or air transport
operations.
2. Effectively Zero-Rated Sales
Services rendered to persons or entities whose
exemption under special laws or international
agreements to which the Philippines is a signatory
effectively subjects the supply of such services to
zero percent (0%) rate.
Under the TRAIN LAW foreign currency
denominated sale is now a sale subject to twelve
percent (12%) VAT.
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
Value-Added Tax Exempt Transactions
New items that are VAT Exempt under the TRAIN
Law (Section 109, NIRC)
a. Sale of lease of goods and services to
senior citizens and persons with
disabilities
b. Transfer of property in merger or
consolidation pursuant to Section 40
(C)(2)
c. Association dues, membership fees and
other assessments and charges by
home owners association and
condominium corporations
d. Sale of gold to the BSP
e. Sale of drugs and medicines for
diabetes, high cholesterol and
hypertension beginning 01 January
2019
f. Sale or lease of goods or properties or
the performance of services other than
transactions in the preceding
paragraph, the gross annual sales
and/or receipts do not exceed the
amount of P3, 000, 000 (Sec. 34, RA
10963)
Difference between Zero-Rated Entities and
VAT- Exempt Entities
Zero-rated:
(1) It is a taxable transaction but does not result in
an output tax.
(2) The input VAT on the purchases of a VAT-
registered person with zero-rated sales may be
allowed as tax credits or refunded.
(3) Persons engaged in transactions which are
zero-rated, being subject to VAT, are required to
register.
VAT-exempt:
(1) Not subject to output tax.
(2) The seller in an exempt transaction is not entitled
to any input tax on his purchases despite the
issuance of a VAT invoice or receipt.
Page 73 of 76
BRAVO BASTE!
(3) Registration is optional for VAT- exempt
persons.
Input and Output Tax
Input Tax means the value added tax due from or
paid by a VAT-registered person in the course of his
trade or business on importation of goods or local
purchase of goods or services, including lease or
use of property from a VAT-registered person.
(Section 110, NIRC)
Output Tax means the value-added tax due on the
sale or lease of taxable goods or properties or
services by any person registered or required to
register under Section 236. (Section 110, NIRC)
Tax Credit Method
The Tax Credit Method relies on invoices wherein
an entity can credit against or subtract from the VAT
charged on its sales or outputs the VAT paid on its
purchases, inputs and imports.
If at the end of a taxable quarter the output taxes
charged by a seller are equal to the input taxes
passed on by the suppliers, no payment is required.
It is when the output taxes exceed the input taxes
that the excess has to be paid. If, however, the input
taxes exceed the output taxes, the excess shall be
carried over to the succeeding quarter or quarters.
Should the input taxes result from zero-rated or
effectively zero-rated transactions or from the
acquisition of capital goods, any excess over the
output taxes shall instead be refunded to the
taxpayer or credited against other internal revenue
taxes. (CIR v. Seagate Technology, G.R. NO.
153866, 2005)
Refund or Tax Credit of Excess Input Tax;
Procedure
Requisites for Claim of Refund of Input Tax
1. The taxpayer claimant must be VAT-
Registered;
2. There must be zero-rated or effectively
zero-rated sales;
3. Input taxes are incurred or paid;
4. Such input taxes are attributable to zero-
rated or effectively zero-rated sales;
5. The input taxes are not applied against
other output VAT liability; and
 S CBA R STAG NO TES
PRE-WEEK [2020/21]
6. The claim for refund must be filed within the
prescriptive period.
Prescriptive Period to File Administrative Claim for
Refund of Input Tax- 2 years after the close of the
taxable quarter when the sales were made.
Enhanced VAT Refund System
The Commissioner is given 90 days from the date
of submission of official receipts or invoices
and other documents in support of the
application for refund.
Should the Commissioner find the refund not
proper, he must state in writing the legal and factual
basis of his denial.
In case of partial or full denial of refund, the taxpayer
is given 30 days from receipt of denial to appeal
with the CTA.
Failure on the part of any official, agent, or
employee of the BIR to act on the application within
90 days, a corresponding penalty shall be imposed.
(Sec. 4.112-1, RR 26-2018)
Note: Under the TRAIN Law, the provision on
inaction has been removed. The law is currently
silent on what the remedy is if there is no decision
within the 90-day period of the BIR.
Nonetheless, prior to the amendment, the rule is
that the 120-day period (now 90-day) is mandatory
and jurisdictional. Failure to comply with the period
violates the doctrine of exhaustion of administrative
remedies and renders the petition premature and
without cause of action, with the effect that the CTA
does not acquire jurisdiction over the petition. (CIR
v San Roque Power Corporation, G.R. No. 187485,
February 12, 2013)
Mandatory VAT Registration
Any person who, in the course of trade or business,
sells, barters or exchanges goods or properties or
engages in the sale or exchange of services shall
be liable to register if:
a. His gross sales or receipts for the past
twelve (12) months, other than those that
are exempt under Section 109 (A) to (U),
have exceeded Three Million Pesos
(P3,000,000.00): or
b. There are reasonable grounds to believe
that his gross sales or receipts for the next
Page 74 of 76
BRAVO BASTE!
twelve (12) months, other than those that
are exempt under Section 109 (A) to (U),
will exceed Three Million Pesos (P3,
000,000.00).
VAT registration is optional for any person who is
VAT-exempt under Sec. 109 of the NIRC or those
whose gross annual sales or receipts did not
exceed P3, 000,000.
Any person who elects to register under optional
registration shall not be allowed to cancel his
registration for the next three (3) years.
Invoicing Requirement
A VAT registered person shall issue:
a. A VAT invoice for every sale, barter or
exchange of goods or properties; and
b. A VAT official receipt for every lease of
goods or properties and for every sale,
barter or exchange of services.
A VAT-registered person may issue a single
invoice/ receipt involving VAT and Non-VAT
transactions provided that the invoice or receipt
shall clearly indicate the break-down of the sales
price between its taxable, exempt and zero-rated
components and the calculation of the Value-Added
Tax on each portion of the sale shall be shown on
the invoice or receipt.
Withholding of Final VAT on Sales to
Government
The government or any of its political subdivisions,
instrumentalities or agencies, including
government-owned or controlled corporations
(GOCCs) shall, before making payment on account
of each purchase of goods and/or services taxed at
twelve percent (12%) VAT pursuant to Sections 106
and 108 of the Tax Code, deduct and withhold a
Final VAT due at the rate of five percent (5%) of the
gross payment.
The five percent (5%) final VAT withholding rate
shall represent the net VAT payable of the seller
while the remaining seven percent (7%) effectively
accounts for the standard input VAT for sales of
goods or services.
The government or any of its political subdivisions,
instrumentalities or agencies including GOCCs, as
well as private corporation, individuals, estates and
 S CBA R STAG NO TES Page 75 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

trusts, whether large or non-large taxpayers, shall FLD/FAN within thirty (30) days from date of receipt
withhold twelve percent (12%) VAT with respect to by filing a request for reconsideration or
the following payments: reinvestigation with the BIR.

1) Lease or use of properties or property rights REQUEST FOR

owned by non-residents; and RECONSIDERATION
2) Other services rendered in the Philippines
by non-residents. A claim for reevaluation
of the assessment
based on existing
Filing of Returns and Payment records without need of
additional evidence.
Every person liable to pay VAT shall file a quarterly
It may involve a
return of the amount of his gross sales or receipts question of fact or law or
within 25 days following the close of the taxable both.
quarter: Provided, however, That VAT-registered
It does not toll the
persons shall pay VAT on a monthly basis. (Section
statute of limitations.
114(A), NIRC)
REQUEST FOR
REINVESTIGATION
A claim for
reevaluation of the
assessment based on
newly discovered or
additional evidence.
It may also involve a
question of fact or law
or both.
It tolls the statute of
limitations.

Administrative and Penal Sanctions

For requests for reinvestigation, the taxpayer shall
The Commissioner or his authorized representative
submit all relevant supporting documents in support
is hereby empowered to suspend the business
of his protest within sixty (60) days from date of filing
operations and temporarily close the business
of his letter of protest; otherwise, the assessment
establishment of any person for any of the following
shall become final.
violations:
Remedies of the taxpayer in case of denial or
(A) In the case of a VAT-registered Person. –
inaction of the Commissioner
(1) Failure to issue receipts or invoices;
A. By the CIR’s duly authorized representative
1. If the protest is denied, in whole or in part, the
(2) Failure to file a value-added tax return as
taxpayer may either:
required under Section 114; or
a. appeal to the CTA within 30 days from date of
receipt of the said decision; or
(3) Understatement of taxable sales or receipts by
b. elevate his protest through request for
thirty percent (30%) or more of his correct taxable
reconsideration to the CIR within 30 days from date
sales or receipts for the taxable quarter.
of receipt of the said decision. No request for
reinvestigation shall be allowed in administrative
(B) Failure of any Person to Register as Required
appeal and only issues raised in the decision of the
under Section 236.
CIR’s duly authorized representative shall be
entertained by the CIR.
The temporary closure of the establishment shall be
for the duration of not less than five (5) days and
These options are mutually exclusive.
shall be lifted only upon compliance with whatever
requirements prescribed by the Commissioner in
2. If the protest is not acted upon, the taxpayer may
the closure order. (Section 115 of the NIRC)
either:
a. appeal to the CTA within 30 days after the
expiration of the 180-day period; or
JUDICIAL REMEDIES
b. await the final decision of the CIR’s duly
authorized representative on the disputed
Remedies against Assessment Notices
assessment.
Administrative Protest
These options are mutually exclusive.
The taxpayer or its authorized representative or tax
agent may protest administratively against the
 S CBA R STAG NO TES Page 76 of 76
PRE-WEEK [2020/21] BRAVO BASTE!

B. By the CIR collection, before the five-year period for

expires: period agreed upon.
1. If the protest or administrative appeal, as the case
may be, is denied, in whole or in part, the taxpayer NOTE: The period agreed upon may be extended by
may appeal to the CTA within 30 days from date of subsequent written agreements made before the
receipt of the said decision. Otherwise, the period previously agreed upon.
assessment shall become final, executory and
demandable.

A motion for reconsideration of the CIR’s denial of

the protest or administrative appeal, as the case
may be, shall not toll the 30-day period to appeal to
the CTA.

2. If the protest or administrative appeal is not acted

upon, the taxpayer may either:
a. Appeal to the CTA within 30 days from after the
expiration of the 180- day period; or
b. Await the final decision of the CIR on the disputed
assessment and appeal such final decision to the
CTA within 30 days after the receipt of a copy of
such decision.

These options are mutually exclusive.

Assessments are deemed final when:

1. The taxpayer failed to file a protest 30 days from
receipt of the assessment.
2. After the 180-day period and the CIR has not yet
acted on the protest, the taxpayer fails to appeal it.
3. After 30 days from the receipt of the decision of
the CIR the taxpayer fails to appeal.

Prescriptive Periods

General Rule:

The right to assess must be done within 3 years from

the date of:
1. Actual filing of the return, or
2. From the last date prescribed by law for the filing
of such return, whichever is later.

The prescriptive period to collect taxes due is five

years from the date of assessment.

Exceptions:
1. False or fraudulent return with intent to evade
the tax: within 10 years from discovery
without need of assessment
2. Failure or omission to file return: within 10
years from discovery without need of
assessment
3. Where a waiver of statute of limitations in
writing executed before the expiration of the
period of assessment of taxes, or for