SAINT LOUIS UNIVERSITY

A Bonifacio Street
2600 Baguio City,
Philippines
Tel Nos (+6374) 442.3043 • 443.2001 • 444.8246 to 48
Fax (+6374) 442.2842
www.slu.edu.ph

Member • Association of Southeast Asian Institutions of Higher Learning (ASAIHL)

(ASEACCU) • Association of Southeast and East Asian Catholic Colleges and Universities

• Association of Catholic Universities of the Philippines (ACUP)

• Catholic Educational Association of the Philippines (CEAP)
• International Federation of Catholic Universities (IFCU)
School of Law • Philippine Association of Colleges and Universities (PACU)
• Philippine Accrediting Association of Schools, Colleges and Universities (PAASCU)

SYLLABUS IN TAXATION LAW

Department Course Name/Title Course Number Semester

CommercialOffered Year
and Tax Level
Laws Offered1 Credit Units
Taxation
Pre-requisites (if any) Law 313
Course Description First Semester Third Year
3
Constitutional Law 1
This course is a study of the general principles of taxation and statutory prov
pertinent revenue regulations.

Learning Outcomes
By the end of the semester, the students should be able to:
a. Explain the basic general principles in taxation as well as its limitations, the
essential concepts and principles in income taxation for both individuals and
corporate taxpayers.
b. Examine the facts of a given case, find the relevant facts and the key issues,
identify and apply the legal rules and principles involved, and generate
appropriate responses.
c. Evaluate and argue problems related to income taxation involving individuals
and corporations.
d. Learn basic concepts related to taxation of estates and trusts.
e. Learn the administrative requirements in income taxation

Course Requirements and Grading Plan

a. Two quizzes per term
b. Recitations
c. Midterm and Final Departmental Exams
d. Preparation of Income Tax Return
Grades per term will be computed as follows: 50% CS + 50% Examination. The CS
portion is composed of at least two quizzes, group work and graded recitations. For
the Finals, it includes the CS includes Quizzes and Recitation.

Course Outline

A. GENERAL PRINCIPLES OF TAXATION

1. Taxation: Its general concepts

a. Taxation as a power
i. Nature of the power of taxation
ii. Inherent Power
iii. Supreme, Plenary, Unlimited, Comprehensive
iv. Power to destroy vis-à-vis Power to Build
v. Cases:
 Sison v. Ancheta, 130 SCRA 654
 Philippine Health Care Providers, Inc. v. CIR,
18 September 2009
vi. Importance of taxation and the Lifeblood Doctrine
Cases:
 Commissioner v. Algue, 17 February 1988
 NAPOCOR v. City of Cabanatuan, G.R. No. 149110,
April 9, 2003
vii. Justifications for the exercise of the taxing power
 Benefits Received Theory
 Necessity Theory
 Symbiotic Theory
viii. Characteristics of the Power of Taxation
ix. Power of Taxation compared with other powers
x. Objectives of taxation
x.1.Revenue
x.2.Non-revenue
x.2.a.Regulation/ As an implement of Police Power
Cases:
 PAL v. Edu, 15 August 1988
 Tio v. Videogram, 151 SCRA 208
 Ferrer, Jr., Vs. City Mayor Herbert Bautista,
Et.Al., G.R. No. 210551, June 30, 2015
 Smart Communications Inc., vs. Municipality of
Malvar, Batangas, G.R. No. 204429, February 18,
2014 (Tax vs. Fee)
 Drugstores Association of the Philippines,
Inc. and Northern Luzon Drug Corporation v. National
Council on Disability Affairs, et al., G.R. No. 194561;
14 September 2016

x.2.b.General Welfare
Case: Lutz v. Araneta, 98 Phil 148

2
 x.2.c.Reduction of Social Inequity
x.2.d.Protectionism (re Special Duties under the Tariff
and Customs Code; See also RA 8800 re Safeguard
Measures Act)
x.2.e.As an implement of the Power of Eminent Domain
Case: CIR v. Central Luzon Drug Corporation, April 15,
2005
x.2.f. Influence individual conduct
Case: National Federation of Independent Business v.
Sebelius, 567 U.S. 519 (2012)

b. Taxation as a process
ii. Stages in the tax process
i.1.Levy/imposition
i.2.Collection
iii. Principles of a sound tax system
ii.1. Fiscal Adequacy
ii.2. Administrative Feasibility
Case: Diaz v. Secretary of Finance, GR No. 193007,
19 July 2011
ii.3. Theoretical Justice
ii.3.a. Article VI, Section 28, Constitution

2. The concept and characteristics of taxes

a. Enforced
b. Proportionate Contribution
c. Levied by law-making body
d. Having territorial jurisdiction
e. Personal in nature
f. Purpose—raising money and other public needs

3. Taxes, in general
a. Tax as distinguished from other forms of exactions
i. Tariff
ii.Toll
iii.License fee
iv. Special assessment
v. Debt
b. Kinds of taxes
i. As to object
i.1.) Personal, capitation, or poll
tax i.2.) Property tax
i.3.) Privilege tax
ii.As to burden or incidence
ii.1.) Direct
ii.2.) Indirect
iii.As to tax rates
iii.2.) Specific
 iii.3.) Ad valorem
iii.4.) Mixed
iv. As to purposes
iv.1.) General or fiscal
iv.2.) Special, regulatory, or sumptuary
v. As to scope or authority to impose
v.1.) National – internal revenue taxes
v.2.) Local – real property tax, municipal tax
vi. As to graduation
vi.1.) Progressive
vi.2.) Regressive
vi.3.)
Proportionate

4. Limitations on the exercise of the taxing power

a. Inherent Limitations
i. Public Purpose
Cases:
 Planters Products Inc. v. Fertiphil Corporation, GR
No. 166006, 14 March 2008
 Pascual v. Secretary of Public Works, 110 Phil 331
 Lutz v. Araneta, supra
 Gomez v. Palomar, 25 SCRA 827
ii. Inherently legislative
ii.1. Coverage, Object, Nature, Extent, Situs
Cases:
 Pepsi v. Municipality of Tanauan, 69 SCRA 460
 Pepsi v. City of Butuan, 24 SCRA 789
ii.2. Exceptions to non-delegation
ii.2.a.LGUs
Ferrer, Jr., Vs. City Mayor Herbert Bautista, Et.Al., G.R.
No. 210551, June 30, 2015
ii.2.b. Allowed by the Constitution
ii.2.c.Purely Administrative Functions
iii. Territoriality
iii.1. Situs of taxation
iii.1.a. Meaning
iii.2. Situs of income tax
iii.2.a. From sources within the Philippines
iii.2.b. From sources without the Philippines
iii.2.c. Income partly within and partly without
the Philippines
iii.3. Situs of property taxes
iii.3.a. Taxes on real property
iii.3.b. Taxes on personal property
iii.4. Situs of excise tax
iii.4.a. Estate tax
iii.4.b. Donor’s tax
iii.5. Situs of business tax
 iii.5.a. Sale of real property
iii.5.b. Sale of personal property
iii.5.c. Value-Added Tax (VAT)
iv. International Comity
v. Tax exemption of the government
Cases:
 LRTA v. CBAA, 12 October 2000
 MCIAA v. Marcos, 11 September 1996
 MIAA v. Paranaque, GR No. 155650, 20 July 2006;
MIAA v. Pasay City, GR No. 163072, 02 April 2009

b. Constitutional Limitations
i. Due Process Clause
Cases:
 CREBA v. Exec. Sec. Romulo, March 9, 2010
 City of Manila v. Coca-Cola Bottlers Philippines, GR
No. 181845, 4 August 2009 (Direct Duplicate Taxation
 Villegas v. Hiu Chiong Tsai Pao Ho, 10 November 1978
 City of Baguio v. De Leon, 25 SCRA 938
 Sison v. Ancheta, supra
 CIR v. CA and Fortune, GR No. 119761, 29 August 1996
 CIR v. M.J. Lhuiller Pawnshop, Inc. G.R. No. 150947,
July 15, 2003

ii. Equal Protection Clause and the Rule on Uniformity of

Taxation
 Commissioner of Customs v. Hypermix
Feeds Corporation, GR No. 179579, 01 February
2012
 ABAKADA Guro Party List v. Purisima, 14 October
2008 (Rational Basis Test)
 Association of Customs Brokers v. Manila, 93 Phil 107
 Shell v. Vano, 94 Phil 387
 Kapatiran v. Tan, 30 June 1988
 Tan v. Del Rosario, 3 October 1994
 Tio v. Videogram, supra
 Ormoc Sugar Central v. Ormoc Treasurer, 17
February 1968
 Philreca v. DILG, 10 June 2003
 Judy Anne Santos v. People, GR No. 173176,
26 August 2008
 Ferrer, Jr., Vs. City Mayor Herbert Bautista, Et.Al.,
G.R. No. 210551, June 30, 2015
 British American Tobacco v. Camacho, G.R. No.
163583, 20 August 2008 and 15 April 2009
 Drugstores Association of the Philippines, Inc. and
Northern Luzon Drug Corporation v. National Council on
Disability Affairs, et al., G.R. No. 194561; 14 September
2016
  Mindanao Shopping Destination Corporation, et.al. v.
Duterte, 06 June 2017

iii. Freedom of Religion

iii.1. Free Exercise Clause
 American Bible Society v. City of Manila,
101 Phil 386
 Tolentino v. Secretary of Finance
 Re: Letter of Tony Q. Valenciano, Holding
of Religious Rituals at the Hall of Justice Building
in Quezon City, AM No 10-4-19-SC, 07 March
2017
iii.2. Non-establishment Clause
 Re: Letter of Tony Q. Valenciano, Holding
of Religious Rituals at the Hall of Justice Building
in Quezon City, AM No 10-4-19-SC, 07 March
2017
iv. Uniformity, Equitability and Progressivity of Taxation
 Tolentino v. Secretary of Finance, 25 August 1994
 City of Baguio v. De Leon, 25 SCRA 398
 Ferrer, Jr., Vs. City Mayor Herbert Bautista, Et.Al.,
G.R. No. 210551, June 30, 2015
 British American Tobacco v. Camacho, G.R. No.
163583, 15 April 2009

v. Non-imprisonment for non-payment of poll taxes

vi. Non-impairment clause
 Casanova v. Hord, 8 Phil 125
 Cagayan Power and Light Co. v. CIR, GR No.
60126, September 25, 1985
 MERALCO v. Province of Laguna, G.R. No.
131359, May 5, 1999**
 RCPI v. Provincial Assessor of South Cotabato, GR
No. 144486, 13 April 2005
 City Government of Quezon City v. Bayantel, G.R.
No. 162015, March 6, 2006
 Smart Communications v. City of Davao,
16 September 2008
 Quezon City v. ABS-CBN Broadcasting, 6 October
2008
vii. Tax exemption of traditionally exempted taxpayers
 Lladoc v. CIR, 14 Phil 292
 Abra Valley College v. Aquino, 15 June 1988
 Herrera v. QC Board of Assessment Appeals,
30 September 1961
 Bishop of Nueva Segovia v. Provincial Board of
Ilocos Norte, 51 Phil 352
 Lung Center of the Philippines v. QC, 29 June 2004
 CIR vs. St. Luke's Medical Center, Inc., G.R.
Nos. 195909 and 195960 dated 26 September 2012
(Test of
 charity: St/ Luke’s is not a charitable institution, although it
is a NSNPI. Why?)
viii. Tax exemption of non-stock, non-profit educational
institutions
 CIR v. De La Salle University, GR No.
196596, 09 November 2016
 Angeles University v. City of Angeles, GR No.
189999, 27 June 2012
 RMC 44-2016
 RMC 76-2003; RMO 20-2013, RMO 28-2013; RMO 34-
2014
 Department of Finance Order No. 137-87, dated Dec.
16, 1987
 CIR v. CA, 14 October 1998 (YMCA)
 Hon. Kim S. Jacinto-Henares, in her official
capacity as Commissioner of the Bureau of Internal
Revenue v. St. Paul College of Makati, G.R. No. 215383;
08 March 2017
 CIR v. Ateneo De Manila University, CTA Case
No. 7246, 11 March 2010

ix. Origin of Revenue, Appropriation and Tariff Bills

 ABAKADA Guro Party List, et al., v. The Honorable
Executive Secretary Eduardo Ermita, et al., G.R. No.
168056, 1 September 2005
x. Flexible Tariff Clause
 ABAKADA Guro Party List, et al., v. The Honorable
Executive Secretary Eduardo Ermita, et al., G.R. No.
168056, 1 September 2005
xi. Non-impairment of SC’s Jurisdiction
xii. Taxation by LGUs
xiii. Voting Requirement re: Grant of Tax Exemptions
c. The Doctrine of Judicial Non-interference
d. Taxpayer’s Suit
i. Rene A.V. Saguisag, et al. v. Executive Secretary Paquito N.
Ochoa, Jr., et al., G.R. Nos. 212426; 12 January 2016
ii. Public Interest Center v. Roxas, 31 January 2007
5. Forms of Escape from Taxation
a. Resulting to Losses government’s revenue
i. Tax Evasion
ii. Tax Avoidance
iii. Tax Exemption
iii.1. Meaning of exemption from taxation
iii.2. Nature of tax exemption
iii.3. Kinds of tax exemption
iii.3.1. Express
iii.3.2. Implied
iii.3.3. Contractual
iii.4. Rationale/grounds for exemption
 iii.5. Revocation of tax exemption
iii.6. Compromise vs Tax Exemption
iv. Definition of Tax Amnesty
v. Tax amnesty vs Tax Exemption
vi. Tax Exemption vs. Tax Assumption
* Mitsubishi Corporation v. CIR, 05 June 2017

b. Not Resulting to Losses

i. Shifting
i.1.Ways of shifting the tax burden
i.2.Taxes that can be shifted
i.3.Meaning of impact and incidence of taxation
ii. Capitalization
iii. Transformation

c. Illustrative Cases:
 Republic v. Heirs of Cesar Jalandoni, 20 Sept 1965
 CIR v. Yutivo and Sons (1961)
 CIR v. Norton and Harrison, 31 August 1964
 Philippine Acetylene v. CIR, 17 August 1967 (compare with
CIR v. Pilipinas Shell Corporation, GR No. 188497, 19 February
2014)
 CIR v. American Rubber, 29 November 1966
 CIR v. John Gotamco and Sons, 27 February 1987
 Maceda v. Macaraig, 31 May 1991, 8 June 1993
 CIR v. PLDT, GR 140230, 15 December 2005
 Silkair Singapore v. CIR, GR No. 173594, 6 February 2008
 Contex v. CIR, G.R. No. 151135, July 2, 2004
 CIR v. Phil Asoc. Smelting and Refining Corporation, G.R.
No. 186223, 01 October 2014.
 Chevron vs. CIR, September 2015
 CIR v. Seagate Technology (Phils.), GR No. 153866,
11 February 2005
 CIR v. Estate of Benigno Toda Jr., G.R. No.
147188. September 14, 2004
 John Hay Peoples Alternative Coalition v. Lim, et al., G.R.
No. 119775, October 24, 2003

6. Rules of Construction of Tax

Laws Cases:
 CIR v. CA and Ateneo, 18 April 1997
 Commissioner of Internal Revenue v. SM Prime Holdings, Inc.,
G.R. No. 183505, 26 February 2010

7. Tax laws

a. General rule
b. Exception
 a. Tax exemption and exclusion
(i)General rule
(ii)Exception
b. Tax rules and regulations
a. General rule only

e. Penal provisions of tax laws

f. Non-retroactive application to taxpayers
(i) Exceptions

g. The Concept of Tax Laws

a. Nature
b. Sources
i. Constitution
ii. Statutes
iii. Issuances by the Secretary of Finance
iv. Administrative Issuance by the BIR
1. CIR v. CA and Fortune, GR No. 119761, 29 August 1996
2. PB Com v. CIR, 28 January 1999
3. CIR v. San Roque Power Corporation, G.R. No. 187485.
February 12, 2013; Taganito Mining Corporation v. CIR, G.R.
No. 196113. February 12, 2013; Philex Mining Corporation
v. CIR, G.R. No. 197156. February 12, 2013 (See also:
Ruling on the Motion for Reconsideration dated 08 October
2013)
v. Tax Ordinances
vi. Tax Treaties
1. CIR v. SC Johnson and Son, 26 June 1999
2. Deutsche Bank AG Manila Branch vs. Commissioner
of Internal Revenue, 19 August 2013
3. Air Canada v. Commissioner of Internal Revenue, G.R.
169507; 11 January 2016 (tax treaty was used in justifying
the taxability of the income of a foreign corporation)
4. Exchange of Notes : Mitsubishi Corporation v. CIR, 05
June 2017

c. Some principles involving taxation

i. Prospectivity
1. CIR v. Acosta, GR154068, 3 August 2007
ii. No Estoppel Against the Government
1. CIR v. Petron Corporation, GR No. 185568, 21 March 2012
iii. Imprescriptibility
iv. Double Taxation
1. Strict sense
2. Broad sense
3. Constitutionality of double taxation
4. Modes of eliminating double taxation
 i. Nursery Care Corporation; Shoemart, Inc.;
Star Appliance Center, Inc.; H&B, Inc.;
Supplies Station, Inc.; and Hardware
Workshop, Inc. Vs. Anthony Acevedo, in his
capacity as The Treasurer of Manila; And the
City of Manila,
G.R. No. 180651, July 30, 2014, J. Bersamin

v. No Set-Off
1. Philex Mining Corp v. CIR, August 29, 1998
2. Point of Interest: Section 76, NIRC

INCOME TAXATION

BASIC CONCEPTS OF PHILIPPINE INCOME TAXATION

vi. The Concept of Income

1. Income, defined
a. Conwi v. CIR, 213 SCRA 83
2. Capital, defined
3. Income v. Capital
a. Madrigal v. Rafferty, 38 Phil 414
vii. Tests Applied in Determining the Existence of Income
1. Severance Test/Realization Test
2. Tax Benefit Rule
3. The Economic Benefit Test or the doctrine of
proprietary interest
4. Claim of Right Doctrine
5. Income from Whatever Source
viii. Requisites for the Taxability of an Income
1. Existence of a Gain
2. Realization of a Gain
a. Actual
b. Constructive (e.g. Sec 26, 73D)
c. Presumptive (e.g. Sec 24 d)
3. Gain must not be excluded (Section 32B)
ix. The Philippine Income Tax System
1. Types of Income Tax Systems
a. Schedular System v. Global System
i. Sison v. Ancheta, GR No. L-59431, 25 July 1984
ii. Discussion on semi-global; or semi-
schedular tax system
b. Schedular Rates of Taxes v. Schedular System
2. The Philippine Income Tax System as a Semi-
Global/Mixed System
x. Criteria in Imposing Philippine Income Taxes
1. Place Where Income was Earned
2. Residency
 3. Citizenship
xi. The Income Taxpayers and the General Principles of their
Taxability (Tax Situs for Income Tax Purposes)
1. Section 23 of the NIRC
2. Individual Taxpayers (Sections 24-26)
a. Please see RA 10963, TRAIN Law
3. Corporations (Sections 27 to 30)
a. Please see RA 9337
4. Estates and Trusts (Sections 60-66)
5. Definition of Terms Under Section 22
xii. Source of Income (Section 42)
1. Services
a. CIR v. Marubeni Corp., GR No. 137377, 18
December 2001
b. CIR v. Juliane Baier-Nickel, GR No. 153793, 29
August 2006
2. Interest Income
a. NDC v. CIR, 151 SCRA 472
3. Dividends
4. Rent and Royalties
a. Royalty v. Compensation for Services & Business Profits
i. CIR v. Smart Communications, GR No.
179045- 46, 25 August 2010
5. Sale of Property
a. Real Property
b. Personal Property—“passage of title” test
c. Tax treatment of properties produced within but
sold without or produced without but sold within
d. Special Rules Re Software: RMC 44-2005;
BIRRuling DA-ITAD 13-08 dated February 26,
2008.

DETERMINATION OF GROSS INCOME AND THE RULES

ON INCLUSION AND EXCLUSION FROM GROSS INCOME

A. The Concept of Gross Income

a. Gross Income, definition
i. CIR v. Filinvest Development Corporation, GR No. 163653,
19 July 2011
b. Gross Income v. Gross Sales/Receipts
B. The General Rules on Inclusion and Exclusion of Income Items (Sections
31, 32A and 32B)
a. RA No. 10963 amended Section 32B; GSIS, SSS, Medicare and
Other Contributions, Gains from the Sale of Bonds, Debentures
or other Certificate of Indebtedness and Gains from Redemption of
Shares in Mutual Fund are still excluded from the Gross
Income.
b. Income exempt under treaty
 i. CBK Power Company Limited v. CIR, GR No. 193383-84,
14 January 2015
C. The Rules as Applied to Compensation Income and Other Benefit
a. Taxability of Compensation Income and the Application of
the Employer’s Convenience Rule
i. Henderson v. Collector, 1 SCRA 649
b. Retirement Payments, Pensions and Gratuities
i. RA 7641, RA 4917, Section 60B
c. Separation Payments
i. PLDT v. CIR, GR No. 157264, 31 January 2008
d. Leave Benefits
e. 13th Month Pay and other bonuses
i. Republic Act No. 10653, approved 12 February 2015
(adjustment of ceiling to Php82,000). But see TRAIN,
adjusting further to Php90,000
f. SSS/GSIS Benefits
g. SSS/GSIS/PhilHealth/Pag-ibig/Union Dues
i. RMC 27-2011 – for benefits granted during the effectivity of
RA No. 8424
h. Fringe Benefits (Section 33, Rev. Regs. 3-98 and 10-2000)
1. Amended under RA 10963 – 35% rate
2. De Minimis Benefits (RR 2-98, 3-98, 5-2008 and 5-2011
and 8-2012)
3. Revenue Regulations No. 1-2015 dated January 5, 2015
4. Commissioner of Internal Revenue V. Secretary of
Justice and Philippine Amusement and Gaming
Corporation,
G.R. No. 177387, November 09, 2016

D. The Rules as Applied to Trade/Business or Professional Income

1. See RA 10963
2. Rules on income earned by Self-employed individuals
3. Rules on income earned by Mixed Income Earners
4. Revenue Regulation 8-2018
E. The Rules as Applied to Passive Income
a. Royalties, prizes and winnings
i. See RA No. 10963 (prizes from PCSO and Lotto winnings)
b. Interest Income from bank deposits and deposit substitutes
i. On Philippine Currency
ii. On Foreign Currency
See RA No.
10963 iii. Long-term investments
i. On Deposit Substitutes
1. Banco De Oro, et al. v. Republic of the Philippines,
GR No. 198756, 13 January 2015, (resolving motion
for reconsideration 16 August 2016)
ii. Interest Income from Cooperative Banks
1. RMC 47-2011
 2. Dumaguete Cathedral Credit Cooperative v. CIR, GR
No. 182722, 22 January 2012
c. Dividends
i. CIR v. CA and ANSCOR, G.R. No. 108576, January 20, 1999
ii. Commissioner of Internal Revenue v. Goodyear Philippines, Inc.,
G.R. No. 216130; 3 August 2016
iii. Section 73B
d. Sale of Real Property classified as capital asset
i. Forced sales
ii. Sale of principal residence
iii. Who is liable? Philippines, Represented by the Department of
Public Works and Highways vs. Arlene R. Soriano, G.R. No.
211666, February 25, 2015
iv. Alternative taxation in case of sale to government
v. (Note: If the property sold is an ordinary asset: CIR v. UCPB,
GR No. 179063, 23 October 2009)
vi. Issues re foreclosed properties:
1. RMC 55-2011 (CGT on foreclosure sales)
2. Supreme Transliner Inc. v. BPI Family Savings Bank, G.R.
No. 165617, 25 February 2011
vii. RMC 007-12
e. Sale of shares of stocks not listed or traded in the stock exchange
i. Tax Treatment was amended under RA No. 10963
ii. Rev. Regs. 6-2013, 11 April 2013
iii. Rev. Regs. 9-2018
F. The Rules as Applied to Other Sources of Income
a. Cancellation of Indebtedness
b. Income from Lease and Leasehold Improvements
c. Income from Installment Transactions
i. Banas v. CA, G.R. No. 102967. February 10, 2000
d. Income from Long-Term Construction Projects
G. Exclusions by reason of special laws
a. Jaime N. Soriano vs. Secretary of Finance and the Commissioner
of Internal Revenue, G.R. No. 184450, January 24, 2017
(applicable to benefits granted before the effectivity of RA 10963)

DEDUCTIONS FROM GROSS INCOME

A. The Concept of Allowable Deductions

a. Deductions, defined
b. Deductions v. Exclusions
c. Deductions v. Cost
d. Deductions, when allowed
e. Deductions v. Tax Credit
i. CIR v. Central Luzon Drug Corp., GR No. 159647, 15 April 2005
ii. CIR v. Central Luzon Drug Corp., GR No. 148512, 26 June 2006
and Bicolandia Drug Corp. v. CIR, GR No. 142299, 22 June 2006
(See
 also: CIR v. Central Luzon Drug Corp., GR No. 159610, June 2008, in
relation to RA9257)
iii. Carlos Superdrug Corporation v. DSWD, GR No. 166494, 29
June 2007
B. Kinds of Allowable Deductions
C. The Optional Standard Deduction (RA9504)
a. See RA 10963 – OSD of General Professional Partnership
D. Methods of Recognizing exepnses
a. Accrual
b. Crop Accounting Method
i. CIR v. Lancaster Philippines, 12 July 2017
E. Itemized Deductions: Concepts, Kinds, Rules and Requisites
a. General Business Expenses
i. The All-Events Test
1. CIR v. Isabela Cultural Corporation, GR No. 172231,
12 February 2007
2. ING Bank N.V. v. Commissioner of Internal Revenue, G.R.
No. 167679; 22 July 2015

ii. Capital Expenditure v. Ordinary Expenditure

iii. Rule re: Proprietary Educational Institutions
iv. Reasonableness Test
1. CIR v. General Foods, Inc., G.R. No. 143672. April 24, 2003
2. CM Hoskins v. CIR, GR No. L-24059, 28 November 1969
v. Representation Expenses, Rev. Regs. 10-2002
vi. Substantiation Rule and the Cohan Rule
1. Gancayco v. Collector, 1 SCRA 980
2. H. Tambunting, Inc. vs. CIR, 29 July 2013: Its reliance on
withholding tax returns, cash vouchers, lessor’s
certifications, and the contracts of lease was futile because
such documents had scant probative value. As the CTA En
Banc succinctly put it, the law required Tambunting to
support its claim for deductions with the corresponding
official receipts issued by the service providers concerned.
b. Bad Debts
i. Philex Mining Corporation v. CIR, GR No. 148187, 16 April 2008
ii. Tax Benefit Rule
iii. Revenue Regulation 25-2002
c. Interests
i. Requisites for Deductibility
ii. Tax Arbitrage Scheme
1. Rev. Regs. 13-2000
iii. On Capital Expenditure
iv. Rules re: deductibility
v. Interest on tax delinquencies
1. CIR v. Itogon Suyoc Mines, GR No. L-25399, 29 July 1969
d. Taxes
i. Requisites for Deductibility
 ii. Deductible Taxes
iii. Non-deductible taxes
e. Depreciation
i. Properties subject to depreciation
ii. Allowable modes of depreciation
f. Depletion
g. Losses
i. Ordinary Losses
1. H. Tambunting, INc. vs. CIR, 29 July 2013
ii. Capital Losses
iii. Special Losses
iv. Other Kinds of Losses
v. NOLCO
1. Rev. Regs. 14-2001
1. PICOP v. CIR, GR No. L-106949, 1 December 1995
2. 75% interest retention rule
vi. Casualty Losses
1. RMO 31-2009, 16 October 2009
vii. Requisites for Deductibility of each kind of loss
h. Charitable Contributions
i. With Limitation
ii. Deductible in Full
i. Pension Trusts
j. Research and Development Costs
F. Other Forms of Deductions

SPECIAL INCOME TAX TREATMENT OF GAINS AND LOSSES FROM DEALINGS IN PROPERTY

A. Background of the Special Rules

B. Ordinary Assets v. Capital Assets
a. China Banking Corporation v. Court of Appeals, G.R. No. 125508. July
19, 2000
b. Revenue Regulation 07-2003
C. Rules on Ordinary Gains and
Losses
D. Special Rules on Capital Transactions (Capital Gains and Losses)
a. Rules on Real Property classified as capital asset
b. Rules on gains/losses from sale of shares of stocks not listed or traded
in the stock exchange by non-dealers in securities
c. Rules regarding other capital assets
i. Loss Limitation Rule
ii. Holding Period Rule
iii. Net Capital Loss Carry-Over (NCLCO) Rule
E. Special Capital Transactions
F. Wash Sales
a. Revenue Regulations 6-2008, April 22, 2008
G. Installment Sales v. Deferred Sales
a. Banas v. CA, G.R. No. 102967. February 10, 2000
 H. Instances when gains are taxable but losses are non-deductible
I. Instances when gains and losses are not recognized for tax purposes
a. Section 40, NIRC
b. CIR v. Filinvest Development Corporation, G.R. No. 163653, 19 July 2011

TAXATION OF INCOME OF INDIVIDUAL TAXPAYERS

A. Classification of Individual Income Taxpayers and the Factors Affecting

Their Taxability
B. Rules Applicable to Returnable Income
a. Classification of income earners
i. Compensation Income Earners
ii. Self-employed Individuals/Professioanls
iii. Mixed Income Earners
b. See RA No. 10963
C. Rules Applicable to Passive Income
D. Personal Exemptions (Please see RA 9504 and RA
10754) (This exemption was removed under RA No. 10963)
E. Taxation of Alien Individual Employed by Regional or Area Headquarters and
Regional Operating Headquarters of Multinational Companies, Offshore Banking
Units and Petroleum Service Contractor and Subcontractor.
F. Taxation of Married Individuals
G. Taxation of Minors
H. Tax Returns and Other Administrative Requirements

TAXATION OF INCOME OF CORPORATE TAXPAYERS

A. Definition of a Corporation
B. Tests in Determining the Existence of a Corporate Taxpayer
C. The Tests Applied to Partnerships, Co-ownerships and Estates
a. Ona v. CIR, 45 SCRA 74
b. Pascual and Dragon v. CIR, 166 SCRA 560
c. Obillos v. CIR, 139 SCRA 436
d. Afisco Insurance Corp. v. CIR, 1999
e. Evangelista v. CIR, 102 Phil 140
D. Kinds of Corporations
a. Domestic Corporation
b. Resident Foreig Corporation
i. Air Canada v. Commissioner of Internal Revenue, G.R. 169507;
11 January 2016
c. Non-resident Foreign Corporation
I. Rules Applicable to Returnable Income
a. Please See R.A. 9337
J. Rules Applicable to Passive Income
a. Tax Sparing Rule
i. CIR v. Proctor and Gamble, 204 SCRA 378
E. Taxes Peculiar to Corporations
 a. Minimum Corporate Income Tax
i. CREBA v. Exec. Sec. Romulo, supra
ii. Manila Banking Corporation v. CIR, GR No. 168118, 28 August 2006
iii. CIR v. PAL, GR No. 180066, 7 July 2009
b. Optional Corporate Income Tax
c. Improperly Accumulated Earnings Tax
i. Cyanamid Phils. v. CA, G.R. No. 108067, January 20,
2000 (Immediacy Test)
F. Special Corporations
a. Exempt Organizations and Corporations
i. RA 10963 (Removal of PCSO from the list)
ii. Section 30, NIRC
iii. CIR v. St. Luke’s Medical Center, Inc., GR No. 195909,
195960, 26 September 2012**
iv. RMC 51-2014
v. PAGCOR v. BIR, GR No. 172087, 15 March 2011
vi. Philippine Amusement and Gaming Corporation vs. Bureau of
Internal Revenue Supreme Court (En Banc), G.R. No. 215427
promulgated December 10, 2014
b. Corporations enjoying preferential tax rates
i. Domestic
ii. Foreign
1. Branch Profit Remittance Tax
2. Gross Philippine Billings
a. British Overseas Airways Corp. v. CIR, 149 SCRA
395 vis-à-vis Section 23 A (3) (b) and Rev. Regs.
15-2002
b. South African Airways v. CIR, GR No. 180356,
February 16, 2010
c. RA No. 10378, or the Act Recognizing the Principle
of Reciprocity as Basis for the Grant of Income Tax
Exemptions to International Carriers, an
international carrier doing business in the
Philippines may avail itself of exemption from tax
on GPB from carriage of persons and their excess
baggage, provided its home country also grants
income tax exemption to Philippine carriers.
Considering that Qatar grants a reciprocal tax
exemption to Philippine air carriers under its
Income Tax Law, A Co. is exempt from income tax
on its GPB from the carriage of persons and their
excess baggage. The exemption does not apply to
transport of cargo and mail.
G. Tax Returns and Other Administrative Requirements
a. Paseo Realty and Development Corp. v. CA, G.R. No. 119286, October
13, 2004
b. CIR v. Mirant (Philippines) Operations Corporation, G.R. No. 171742,
15 June 2011
c. CIR v. PL Management International Philippines, Inc., G.R No. G.R.
No. 160949, April 4, 2011.
TAXATION OF ESTATES AND TRUSTS

A. Taxation of Income of Estates

B. Taxation of Income of Trusts
a. Miguel J. Ossorio Pension Foundation, Inc. v. CA and CIR, GR No.
162175, 28 June 2010
C. Tax Returns and Other Administrative Requirements