TAXATION REVIEW

Syllabus
Atty Agnes Santos

I. GENERAL PRINCIPLES
a. Taxation Defined
i. CIR v Algue Inc. et al GR No. L-28896, 02-17-1988
ii. CIR v Tokyo Shipping Co Ltd etc GR No. 68252, 05-26-1995
iii. BPI Family Savings Bank Inc v. CA et al GR No. 122480, 04-12-
2000
b. Taxes Defined
i. A forced charge
ii. Pecuniary burden payable in money
iii. Levied by the Legislative body of the State
iv. Assessed in accordance with some reasonable rule of
apportionment (Sec 28[1], Art. VI, 1987 Constitution)
v. Imposed by the State on persons, property or services within its
jurisdiction
vi. Levied for public purpose
c. Nature of the Taxing Power
i. MCIAA v Marcos et al GR No. 120082, 09-11-1996
ii. Philippine Guaranty Co Inc v CIR GR No L-22074, 09-06-1965
iii. Philippine Bank of Communications v CIR et al GR No. 119024,
01-28-1999
d. Purposes and Objectives of Taxation
e. Theories of Taxation
f. Scope of Legislative Taxing Power
g. Power of Judicial Review in Taxation
h. Aspects of Taxation
i. Basic Principles of a Sound Tax System
j. Taxation distinguished from Police Power and Eminent Domain
k. Taxes distinguished from other Impositions

II. LIMITATIONS OF TAXING POWER

a. Inherent Limitations of Taxing Power
i. Situs or Territoriality of Taxing Power
ii. Public Purpose of Taxes
iii. International Comity
iv. Non-Delegability of the Taxing Power
v. Exemption of Government from Taxes
b. Constitutional Limitations
i. Due Process of Law
ii. Equal Protection of the State
iii. Freedom of Speech and of the Press
iv. Non-Infringement of Religious Freedom
v. Non-Impairment of Contracts
 vi. Non-Imprisonment for Debt or Non-payment of Poll Tax
vii. Origin of Appropriation, Revenue and Tariff Bills
viii. Uniformity, Equitability and Progressivity of Taxation
ix. Delegation of Legislative Authority to Fix Tariff Rates, Import and
Export Quotas
x. Tax Exemption of Properties Actually, Directly and Exclusively
used for Religious, Charitable and Educational Purposes
xi. Voting Requirements in Connection with the Legislative Grant of
Tax Exemption
xii. Non-Impairment of Supreme Courts jurisdiction in Tax Cases
xiii. Tax Exemption of Revenues and Assets, including Grants,
Endowments, Donations or Contributions to Educational
Institutions

III. DOUBLE TAXATION AND TAX EXEMPTIONS

a. Double Taxation
i. Definition
ii. Prohibition against Double Taxation
iii. Kinds
iv. Means employed to avoid Double Taxation
b. Tax Exemptions
i. Kinds
ii. Principles governing tax exemptions
c. Tax Avoidance, Tax Evasion, Tax Fraud

IV. TAX LAWS AND REGULATIONS

a. Nature
b. Interpretation
i. Mandatory and Directory Provisions
ii. Power of the Commissioner to Interpret Tax Laws and Decide Tax
Cases
c. Sources
i. Tax Regulations
ii. Tax Rulings
1. Non-Retroactivity of Rulings
2. Legislative Adoption of Rulings
iii. Tax Treaties and International Agreements

V. TAX ADMINISTRATION AND ENFORCEMENT

a. Agencies involved in Tax Administration
i. Bureau of Internal Revenue
1. Agents and Deputies for Collection of National Internal
Revenue
2. Powers and Duties of the BIR
3. Powers and Duties of the Commissioner
a. Power to Interpret Tax Laws and Decide Tax Cases
 b. Power to Obtain Information, to Summon, Examine
and Take Testimony of Persons
c. Power to Make Assessments
i. Nature and Kind of Assessments
ii. Means Employed to Make an Assessment
1. Examination of Tax Returns
2. Best Evidence Obtainable
3. Inventory Taking, Surveillance and
Presumptive Gross Sales and
Receipts
4. Termination of Taxable Period
5. Fixing Real Property Values
6. Inquiry on Bank Deposits
7. Accreditation and Registration of
Tax Agents

VI. National Internal Revenue Code

a. INCOME TAX
i. General Principles
1. Tax on Individuals
2. Tax on Corporations
3. Estates and Trusts
4. Improperly Accumulated Earnings Tax
5. Exemptions from Tax on Corporations
ii. Gross Income
1. Income subject to Final Tax
iii. Allowable Deductions
iv. Accounting Periods and Methods of Accounting
v. Income Tax Returns filing and deadlines
vi. Withholding on Wages
b. ESTATE AND DONORS TAXES
i. Gross Estate
1. Deductions from Gross Estate
2. Deadline for filing
ii. Donors Taxes
1. Imposition of the Tax
2. Rates of Tax
3. Transfers for less than adequate consideration
c. VALUE-ADDED TAX
i. Nature of the VAT
ii. Persons Liable
1. VAT on Sale of Goods or Properties
a. Zero-rated sale of goods or properties
2. VAT on Sale of Services
a. Zero-rated sale of services
iii. Exempt Sales
 iv. Tax Credits
1. Transitional / Presumptive Input Tax
2. Tax Refund / Tax Credit of Excess Input Taxes
v. Invoicing Requirements
vi. Power of Commissioner to Suspend Business Operations of
Taxpayer
d. PERCENTAGE TAX
i. Tax on Persons Exempt from VAT
ii. Percentage Tax on Domestic Carriers
iii. Percentage Tax on International Carriers
iv. Percentage Tax on Franchises
v. Percentage Tax on Communications originating from Philippines
vi. Percentage Tax on Banks and Non-Bank Financial Intermediaries
vii. Percentage Tax on Life Insurance Premiums
viii. Percentage Tax on Foreign Insurance Companies
ix. Amusement Taxes
x. Tax on Winnings
xi. Tax on Sale of Shares of Stocks traded through the Stock
Exchange
xii. Returns and Deadlines
e. REMEDIES
i. Rule on No Injunction to Restrain Tax Collection Sec 218
ii. Period of Limitation Upon Assessment and Collection
iii. Authority of the Commissioner to Compromise, Abate and Refund
or Credit Taxes
iv. REMEDIES OF THE GOVERNMENT
1. Remedies for Collection of Delinquent Taxes
2. Constructive Distraint of Property
3. Summary Remedies
v. REMEDIES OF THE TAXPAYER
1. Exceptions
2. Suspension of Running of Statute of Limitations
3. Protesting an Assessment
4. Recovery of Tax Erroneously or Illegally Collected
f. COMPLIANCE REQUIREMENTS
i. Keeping of Books of Accounts
ii. Administrative Provisions
g. CRIMINAL PROVISIONS UNDER THE NIRC
 LOCAL AND REAL PROPERTY TAXATION
Republic Act No. 7160, Local Government Code (LGC) of 1991, as amended
Implementing Rules and Regulations of the LGC

LOCAL TAXATION

I. PRELIMINARY MATTERS

a. Power to Tax of Local Government Units

i. Sec. 5 Art. X, 1987 Constitution (compare with 1935 and 1973 provisions)

ii. Sec. 129, LGC

-Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA 460
-Mactan Cebu International Airport Authority vs. Marcos GR No.120082,
Sept.11, 1996
-Manila Electric Company vs. Province of Laguna GR No. 131359, May
5, 1999
-NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
-City Government of Quezon City vs. Bayan Telecommunications GR
No.162015, March 6, 2006

iii. Local Taxing Authority (Sec. 132)

1. Construction of Tax Ordinances (Sec.5b)
-Petron Corp. vs. Mayor Tobias Tiangco GR No. 158881, April 16, 2008

iv. Procedure for Approval of and Effectivity of Tax Ordinances (Sec.187)

-Hagonoy Market vs. Mun. of Hagonoy GR No.137621, Feb. 6, 2002

v. Publication (Sec.188)

b. Other Preliminary Matters

i. Residual Powers of LGUs

-Power to Levy Other Taxes, Fees or Charges (Sec.186)

ii. Doctrine of Pre-emption or Exclusionary Rule

-Victorias Milling Co., Inc. vs. Municipality of Victorias- L-21183,
September 27, 1968

II. GENERAL PROVISIONS

a. Scope of taxing powers (Sec. 128
b. Fundamental Principles (Sec.130)
c. Definitions (Sec.131)
d. Common Limitations
i. Income Tax
1. Correlate with Sec.143 (f)
ii. Documentary Stamp Tax
iii. Transfer Taxes
1. Correlate with Sec.135
iv. Customs Duties
v. Taxes, Fees and Charges (TFC) on Goods Passing Through the Territorial
Jurisdiction of LGUs
1. Correlate with Sec.155

- Panaligan vs. City of Tacloban GR No. L-9319, September 27, 1957

- Palma Development Corp vs. Municipality of Malangas GR No.152492,
October 16, 2003

vi. TFC on products sold by marginal farmers of fishermen

1. Definition of Marginalized Fishermen (Sec.122)
-City of Cebu vs. IAC 144 SCRA 710

vii. Taxes on BOI-registered enterprises

viii. Excise taxes under the NIRC/TFC on Petroleum Products

-Petron Corp. Vs. Mayor Tobias Tiangco GR No. 158881, April 16,
2008
-Province of Bulacan vs. CA GR No. 126232, November 27, 1998

ix. Percentage taxes and VAT

-Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA 460
- Matalin Coconut Co, Inc. vs. The Municipal Council of Malabang,
Lanao del Sur, GR No. L-28138 August 13, 1986

x. Taxes on transportation contractors and common carriers

-First Philippine Industrial Corporation vs. CA GR No. 125948,
December 29, 1998

xi. Taxes on premiums

xii. TFC for registration of motor vehicles and issuance of licenses for driving

1. Correlate with Sec.458 (3)(vi) of the LGV and Art. 99(a)(3)(vi) of the
IRR of the LGC
-LTO vs. City of Butuan GR No. 131512, January 20, 2000

xiii. Taxes, Fees, or Charges on Philippine Products Actually Exported;

1. Correlate with Sec. 143(c)
 xiv. TFC on CBBEs under RA No. 6810 and RA 6983

xv. TFC on the National Government, its agencies and instrumentalities and
LGUs
- Philippine Fisheries Devt Authority vs. CA GR No.169836, July 31,
2007
-Mactan Cebu International Airport Authority vs. Marcos GR No.
120082, Sept. 11, 1996
-MIAA vs. CA GR No. 155650, July 20, 2006
-MIAA vs. City of Pasay GR No.163072, April 2, 2009
- Davao City vs. RTC GR No. 127383, August 18, 2005

III. TAXING AND OTHER REVENUE RAISING POWERS OF LGUS

a. Provinces
i. Local Transfer Tax (Sec.135)
ii. Business Tax on Printing and Publication (Sec.136)
iii. Franchise Tax (Sec.137)
-NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
-Quezon City vs. ABS-CBN GR No.166408, October 6, 2008