Tax 1 Syllabus

For Law 129 – A (Taxation 1)
(UP Diliman and UP BGC Classes of Professor Marissa O. Cabreros)
SYLLABUS
TAX 1 – GENERAL PRINCIPLES AND INCOME TAXATION
I. COURSE IDENTIFICATION
A Course Code Law 129-A
B Course Title Taxation 1
C Course Credit 3 units
D Course Classification Core, Bar
E Course Prerequisite n/a
II. COURSE DESCRIPTION
The course covers the study of the fundamentals of taxation, and the provisions of the
National Internal Revenue Code (NIRC), as amended on the organization and functions
of the Bureau of Internal Revenue (Title I) and income taxation (Title II), including:
1. Constitutional basis and philosophy of Taxation

Nature and theories of taxation
Classification of taxes
Inherent and constitutional limitations
Taxation as tool of social development.
2. Organization of the BIR and the Court of Tax Appeals
Hierarchy
Function to Collect Taxes
Power to promulgate rules
Power to implement rules and penalize for violation
Supervision and appeal process
3. Income taxation
Situs of income
Classification of taxpayers, and income taxation of each class
Gross income and exclusions
Capital assets and ordinary assets
Passive income
Compliance requirements
III. GRADUATE ATTRIBUTES
The intended learning outcomes (ILOs) of this course are aligned with the following
attributes of a UP Law Graduate:
A. LIFETIME ATTRIBUTES – Long Term Outcomes
1. Highly ethical. They will not resort to illegal, immoral, or inappropriate means to
gain advantage in any legal proceeding or transaction.
2. Socially mindful. They are prepared to render legal services pro bono to the
underserved sectors, and fill the inequality gaps arising from poverty before the
courts or government agencies.
3. Exceptionally competent. They can formulate effective, convincing, and legally

sound arguments, documents, decisions, or legislative or administrative issuances,
through an (a) integrated, (b) analytical, (d) creative and (e) complex analysis of
the law, jurisprudence, and relevant legal principles.
4. Willing leaders and servants. They do not forget that they are scholars of the
people, and are therefore able and willing to assume leadership roles in view of
establishing structures for a just, orderly, and equitable society.
Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 1

5. Thinkers and innovators in law. They keep abreast with national and international
developments, and provide leadership and inspiration in the development of new
legal frontiers, cross-border concerns, and forward thinking in a technologically-
evolving world.
6. Committed to the rule of law. They live by the norm that no one is above the law,
with due regard to the principles of rehabilitative justice, bias for the poor, and
compassion.
B. ATTRIBUTES OF PRACTICE READY GRADUATES - JD Program Outcomes
7. A graduate of the College of Law must be able to pass the bar.
8. Able to refer to the provisions of the Constitution with sufficient familiarity and
formulate an opinion on the constitutionality or legality of laws, processes,
transactions, and public interest issues.
9. Able to formulate an argument or position on any legal issue in a logical and

organized manner, including identifying the law involved, and interpreting and
applying it to particular facts, relying on stock knowledge and the results of
inquiries using reliable research methods.
10. Able to formulate/compose initiatory pleadings for filing in courts and quasi-
judicial forums, including judicial affidavits, fully compliant with formal and
substantive requirements.
11. Able to appear before the court or quasi-judicial agencies with satisfactory skills
in witness and evidence presentation, and oral argumentation.
12. Able to formulate basic commercial documents and other contracts, including
deeds of sale, lease contacts, and loans and mortgages, that provide clearly for the
rights and obligations of the parties, and the procedures to govern breach of
contract and other conflict areas.
13. Able to invoke the general principles and provide immediate preliminary opinion
on: family law and succession, citizenship, property registration, jurisdiction of
courts, human rights, labor standards law, income and estate taxation, provisional
remedies, weight and sufficiency of evidence, graft and corrupt practices, limited
liability of corporations, elements of common crimes including estafa, theft,
falsification, cybercrimes, etc.
14. Able to develop expertise in any field of law through continuing education,
academic pursuit, and sustained and intense law practice in the area of interest,
including environmental law, international law, civil and political rights; social
developmental law, intellectual property, competition law, banking and finance,
labor relations, international taxation, financial technology, health and law,
writing and research, the academe, and others.
15. Able to engage clients in view of developing long term client-lawyer relationship
built on efficient and competent service, and trust and confidence based on highest
ethical standards.
16. Able to express by clear actions partiality for the underprivileged and willingness
to providing them with quality legal services.

IV. GENERAL INTENDED LEARNING OUTCOMES
Knowledge Skills Values
Have a working Be able to interpret the Intellectual integrity and
knowledge of the basic rules according to rules discipline.
principles of taxation, of construction of tax
and concepts and laws based on Develop a sense of
definitions of income jurisprudence, either for compliance with tax laws
taxation. or against the taxpayer arising from an understanding
or the taxing authority; of its role in nation building.
apply these basic
concepts and principles To be critical of the taxing
to specific cases in order authority of the government in
to determine whether an view of the principles on the
income, transaction, or interpretation of tax laws, and
person is liable to the its inherent and Constitutional
payment of tax. limitations.
Develop the ability to

understand or build a
framework (mind map)
of a tax regime as a
means of understanding
the basic concepts and
principles of the taxes
covered by the course
Be able to answer
taxation law questions
clearly and concisely, in
preparation for the Bar
Exams.
Understand the Be able to determine Creativity and innovation

underlying transaction how income taxation combined with a strong sense
being taxed apply to different of social responsibility,
transactions. honesty and integrity by
promoting compliance with
To be able to uncover tax laws, enforced with due
the real transaction process and in accordance
behind a business deal with other Constitutional
and therefore determine requirements.
the correct rate of
taxation.
Understand the rationale Develop an
for why certain tax rules understanding of
apply to certain business and changing
businesses or industry structures and
transactions, e.g. tax on be able to explain why
practice of profession, these are taxed in a
on transactions dealing certain way; or whether
with capital assets, etc… these should be taxed
differently according to
the State’s social and/or
development objectives
Formulate an opinion on
whether or whether
these should be taxed
differently according to

the State’s social and/or
development objectives
Understand how other Correlate and connect

areas of law and other rules and principles in
disciplines affect other areas of law and
taxation rules other disciplines to tax
rules and principles.
Have a general • Be able to argue for or Appreciates that taxation is a
understanding of the against the validity of a tool for development and
implication of tax law; and the validity social change, and uses it as
government policy and of the executive’s tax such
global events to the assessments and
reform and development collections, and issuance
of Philippine taxation of implementing rules.
• Correlate taxation law
and its application to the
political milieu of the
country.
• See the connection
between government
social and development
policy and how
Philippine taxation is
framed.
• Be able to reconcile
the policy objectives of
tax laws and how these
are framed, interpreted
and implemented.
PART A: GENERAL PRINCIPLES OF TAXATION
Intended Learning Outcomes

Upon completion of Part A of the syllabus, students of this course must understand and be able to
apply the following fundamental concepts:
Nature, scope, and purpose of taxation; theory and Imprescriptibility; situs; double taxation; tax
basis of taxation; the elements of taxation; avoidance versus evasion; tax amnesty;
characteristics of the taxing power; requisites of compromise and abatement; tax exemption.
valid taxation; and principles of a sound tax
system.
Distinguishing taxation from other inherent Inherent and constitutional limitations of taxation.
powers of the State; tax versus other forms of
government exactions.
Sources of tax laws; stages or aspects of taxation; Construction and interpretation of tax laws, rules
kinds of taxes; double taxation; impact and and regulations; prospectivity of tax laws;
incidence of taxation. organization and function of the Bureau of
Internal Revenue; organization and jurisdiction of
the Court of Tax Appeals
Timeline: Weeks One to Four

WEEK ONE
I. TAXATION
A. Definition
B. Nature of Internal Revenue Law
- Hilado v CIR, G.R. No. L-9408, October 31, 1956 100 Phil 288
C. Scope and Nature of Taxation (or the characteristics of Taxing Power)
- Sec. 28, Art. VI, 1987 Constitution
- Sec. 5, Art. X, 1987 Constitution
- Sison v Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654
- Phil. Guaranty v CIR, G.R. No. L-22074, April 30, 1965, 13 SCRA 775
- Tio v Videogram Regulatory Board, G.R. No. 75697 (1987)
- Republic v Caguioa G.R. No. 168584 (2007)
D. Underlying Theory and Basis; Necessity Theory; Benefit-Received Principle
- Commissioner v. Algue, G.R. No. L-28896, February 17, 1988, 158 SCRA9
- Lorenzo v. Posadas, G.R. No. 43082, June 18, 1937, 64 Phil 353
- Paseo Realty & Development Corporation v. CA, G.R. No. 119286 (2004)
E. Purpose of Taxation
General/Fiscal/Revenue
- Napocor v Province of Albay G.R. No. 87479, 4 June 1990
- Tolentino v. Secretary of Finance, G.R. No. 115455, August 8, 1994, 235 SCRA 630;
249 SCRA 628
Non-revenue/Special or Regulatory
- Southern Cross Cement Corporation v. Cement Manufacturers Association of the
Philippines, et al., G. R. No. 158540 (2005)
- Osmena v. Orbos, G.R. No. 99886, March 31, 1993, 220 SCRA 703
- PAL v Edu, G.R. No. L-41383, 164 SCRA 320
F. Principles of a Sound Tax System
- Chavez v Ongpin, G.R. No. 76778, June 6, 1990, 186 SCRA 331
- 1987 Constitution, Art. VI, Section 28(1)
G. Comparison with Police Power and Eminent Domain
- Roxas v. CTA, G.R. No. L-25043, April 26, 1968, 23 SCRA 276
- LTO v. City of Butuan, G.R. No. 131512, Jan. 20, 2000
- Lutz v. Araneta, G.R. No. L-7859, December 22, 1955, 98 Phil 48
- NTC v. CA, G.R. No. 127937, July 28, 1999, 311 SCRA 508
II. TAXES
A. Definition
B. Essential Characteristics of Taxes
- Tan v. Del Rosario, G.R. No. 109289, October 3, 1994, 237 SCRA 324
- Gaston v. Republic Planters Bank, G.R. No. 77194 (1988)
C. Taxes distinguished from:
1. Debts
- Caltex v COA, G.R. No. 92585, May 8, 1992, 208 SCRA 726
- Republic v. Mambulao Lumber Company, G.R. No. L-17725,
4 SCRA 622
- Philex Mining v. CIR, G.R. No.125704, August 28, 1998
- Domingo v Garlitos, G.R. No. L-18994, June 29, 1963, 8 SCRA 443
2. License Fees
- Progressive Dev. Corp. v QC, G.R. No. L-36081, April 24, 1989,
172 SCRA 629
- Ferrer, Jr. V. Bautista, G.R.No. 210551, June 30, 2015
- Gonzalo Sy Trading vs. Central Bank of the Phil., G.R. No. L-41480 (1976)
3. Special Assessments/Levies
- Apostolic Prefect v Treasurer of Baguio, G.R. No. L-47252, April 18, 1941,
71 Phil. 547
- Sec. 240, RA 7160
4. Tolls
5. Penalties
- NDC v CIR 151, G.R. No. L-53961, June 30, 1987, SCRA 472

6. Customs Duties
D. Escape from Taxation; Tax Evasion; Tax Avoidance
- Sec. 254, NIRC
- Republic v. Gonzales, G.R. No. L-17962, April 30, 1965, 13 SCRA 633
- Delpher Traders v. IAC, G.R. No. L-69259, January 26, 1988, 157 SCRA 349
- CIR v. Lincoln Philippine Life, G.R. No. 119176, Mar. 19, 2002
E. Shifting of Tax Burden
WEEK TWO
III. SOURCES OF TAX LAW
A. Constitution
B. Statutes
- RA 8424, as amended by RA 9337, RA 9504, etc.
- Tariff and Customs Code, as amended
- Book II, Local Government Code
- Special Laws
C. Administrative Issuances
- Revenue Regulations
- Secs. 244 – 245, NIRC
- Art. 7, Civil Code
- CIR v. Seagate Technology, G.R. No. 153866, February 11, 2005
- CIR v. San Miguel Corporation, G.R. No. 184428, November 23, 2011
- CIR v. Fortune Tobacco, G.R. No. 180006, September 28, 2011
- BIR Rulings
- Secs. 4, 246, NIRC
- CIR v Mega Gen. Merchandising, G.R. No. L-69136, September 30, 1988,
166 SCRA 166
- PBCOM vs. CIR, G.R. No. 112024, January 28, 1999, 302 SCRA 241
- Customs Regulations
- COC and the District Collector of the Port of Subic v. Hypermix
Feeds Corporation, G.R. No. 179579, Feb. 1, 2012
D. Tax/Revenue Ordinances
-Hagonoy Market Vendor v. Municipality of Hagonoy, G.R. No. 137621, February
6, 2002
-Jardine Davies v. Aliposa, G.R. No. 118900, February 27, 2003
E. Tax Treaties
- Tanada v. Angara, G.R. No. 118295, May 2, 1997
- Deutsche Bank AG Manila Branch v. CIR, G.R. No. 188550, August 19, 2013
F. Case Laws (SC/CTA)
G. Legislative Materials
IV. LIMITATIONS UPON THE POWER OF TAXATION
INHERENT LIMITATIONS
A. Public Purposes
- Lutz v Araneta, G.R. No. L-7859, December 22, 1955, 98 Phil. 48
- Pascual v Sec. of Public Works, G.R. No. L-10405, December 29, 1960,
110 Phil. 331
- Commissioner of Internal Revenue v. Central Luzon Drug Corporation,
G.R. No. 159647 (2005)
B. Delegation of Taxation Power
- Sec 5, Art. X, 1987 Constitution
- Sec. 28(2), Art. VI, 1987 Constitution
- Art. VI, Sec. 23(2), 1987 Constitution

- Sec. 401, Tariff and Customs Code, as amended
- Phil Comm. Satellite Corp. v Alcuaz, G.R. No. 84818, December 18, 1989,
180 SCRA 218
- LTO v. City of Butuan, G.R. No. 131512, January 20, 2000
- City Government of Quezon City v. Bayantel, G.R. No. 162015, Mar. 6, 2006
- Garcia v. Executive Secretary, G.R. No. 198554, July 30, 2012, 210 SCRA 219
- Osmena v. Orbos, G.R. No. 99886, March 3, 1993, 220 SCRA 703
- CIR v. CA, G.R. No. 119761, August 29, 1996
C. Exemption of Government Agencies
- Secs. 27(C) and 30(I), NIRC
- Executive Order 93
- PD 1931
- Sec. 133 (o), Local Government Code
- Maceda v. Macaraig, G.R. No. 88291, June 8, 1993, supra
- Mactan Cebu Airport v. Marcos, G.R. No. 120082, Sept. 11, 1996
- Collector v. Bisaya Land Transportation, 105 Phil. 338 (1959)
D. Territoriality or Situs of Taxation
- Manila Gas v. Collector, G.R. No. L-42780, October 4, 1958, 62 Phil 895
- Vegetable Oil Corp. v Trinidad, G.R. No. 21475, March 26, 1924, 45 Phil. 822
- Wells Fargo Bank v Col, G.R. No. L-46720, June 28, 1940, 70 Phil. 325
- CIR v. BOAC, G.R. Nos. L-65773-4, April 30, 1987, 149 SCRA 395
- Collector v. Lara, G.R. No. L-9456 & L-9481, January 6, 1958, 102 Phil 813
E. International Comity
- Sec. 2, Art. 11, 1987 Constitution
- Tanada v. Angara, G.R. No. 118295, May 2, 1997
- Mitsubishi Corp. v. CIR, CTA Case 6139, Dec. 17, 2003
WEEK THREE
CONSTITUTIONAL LIMITATIONS
A. Due Process Clause

- Sec. 1, Art. III, 1987 Constitution
- Com. of Customs v CTA & Campos Rueda Co., 152 SCRA 641
- Phil Bank of Comm v. CIR, G.R. No. 112024, January 28, 1999, 302 SCRA 241
- Sison v Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654
B. Equal Protection Clause
- Ormoc Sugar Co. v. Treasurer of Ormoc City, G.R. No. L-23794, February 18, 1968,
22 SCRA 603
- Villegas v. Hui Chiong Tsai Pao, G.R. No. L-29646, November 10, 1978,
86 SCRA 270
- Shell Co. v Vano, G.R. No. L-6093, Februrary 24, 1954, 94 Phil. 388
- Tiu v. CA, G.R. No. 127410, January 20, 1999, 301 SCRA 278
- Phil. Rural Electric v. Secretary, G.R. No. 143706, June 10, 2003
C. Rule of Taxation shall be Uniform and Equitable
- Sison v. Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654
- Tolentino v. Sec of Finance, G.R. No. 115455, October 30, 1995, 249 SCRA 628
- City of Baguio v. De Leon, G.R. No. L-24756 (1968)
- Churchill v Concepcion, GR No. 11572, 22 September 1916
D. Non- Impairment of Contracts
- Sec. 10, Art. III & Sec. 11, Art. XII, 1987 Constitution
- Tolentino v. Sec of Finance (supra)
- Misamis Oriental v CEPALCO, G.R. No. L-45355, January 12, 1990, 181 SCRA 38
- Phil. Rural Electric v. Secretary, G.R. No. 143076, June 10, 2003, supra
E. Non- Imprisonment for Non-payment of Poll Tax
F. Prohibition against Taxation of Religious and Charitable Institutions
- Sec. 28(3), Art. VI, 198Constitution

- Lladoc v CIR, G.R. No. L-19201, June 16, 1965, 14 SCRA 292
- Apostolic Prefect v. City Treasurer of Baguio, G.R. No. L-47252 (1941)
- Abra Valley College v. Aquino, G.R. No. L-39086, June 15, 1988, 162 SCRA 106
- Lung Center of the Philippines v. Quezon City, G.R. No. 144104 (2004)
G. Prohibition against Taxation of Non-stock Non-profit Educational Institutions
- Sec. 4(3), Art. XIV, 1987 Constitution
- Secs. 27(B) and 30(H), NIRC
- CIR v. CA & YMCA, G.R. No. 124043, October 14, 1998, 298 SCRA 83
- De La Salle University, Inc. v. CIR, C.T.A. EB Case No. 671, June 8, 2011
(C.T.A. Case No. 7303)
H. Freedom of Religious Worship; non-establishment of religion
- Sec 29, Art. VI, 1987 Constitution
- Sec. 5, Art. III, 1987 supra
- American Bible Society v Manila, G.R. No. L-9637, April 30, 1957, 101 Phil. 386
- Aglipay v Ruiz, G.R. No. L-45459, March 13, 1937
I. Passage of Tax Bills/ Granting of Tax Exemption
- Sec. 24, Art. VI, 1987 Constitution
- Tolentino v Secretary of Finance, G.R. No. 115455, August 8, 1994, 249 SCRA 628
J. Veto Power of the President
K. Non-impairment of SC Jurisdiction
- Sec. 2 Art VIII, 1987 Constitution
- Sec. 5(2)(b), Art. VIII, supra
WEEK FOUR
V. CONSTRUCTION OF TAX LAWS
A. General Rules of Construction of Tax Laws

- Stevedoring v Trinidad, G.R. No. L-18316, September 23, 1922, 43 Phil. 803
- Lorenzo v. Posada, G.R. No. L-43082, June 18, 1937, 64 Phil 353
- Umali v. Estanislao, G.R. No. 104037, May 29, 1992, 209 SCRA 446
- CIR v. Solidbank, G.R. No. 148191, Nov. 25, 2003
- Collector v. La Tondena, G.R. No. L-10431, April 30, 1964, 5 SCRA 665
B. Mandatory vs. Directory Provisions
- Serafica v Treasurer of Ormoc City, G.R. No. L-24813, April 28, 1969, 27 SCRA 110
- Roxas v. Rafferty, G.R. No. 12182, March 27, 1918, 37 Phil 958
- Pecson v. CA, G.R. No. 115814, May 26, 1995, 222 SCRA 580
C. Application of Tax Laws
- CIR v. CA, G.R. No. 119761, August 29, 1996
- CIR v. Michel Lhuillier, G.R. No. 150947, July 25, 2003
- CIR v. Benguet Corp., G.R. No. 134587, July 8, 2005
VI. EXEMPTIONS FROM TAXATION
A. In General
- Greenfield v. Meer, G.R. No. 156, September 27, 1946, 77 Phil 394
- Basco v. PAGCOR, G.R. No. 91649, May 14, 1991, 196 SCRA 52
- CIR v Botelho Shipping Corp., G.R. Nos. L-216334-34m June 29, 1967, 20 SCRA 487
- Phil. Acetylene v CIR, G.R. No. L-19707, August 17, 1967, 20 SCRA 1056
- PLDT v. Davao City, G.R. No. 143867, August 22, 2001
B. Compared with Other Terms
• Tax Remission/Condonation
- Surigao Con. Min. v. Collector, G.R. No. L-14878, December 26, 1963, 9 SCRA 728
• Compromise and Tax Amnesty

- RA 9480 / RA 11213
- CIR v. CA, G.R. No. 119761, August 29, 1996, 240 SCRA 368
- CIR v. Marubeni, G.R. No. 137377, December 18, 2001

• Exclusion/Deduction
- Sec. 32(B), NIRC
- Sec. 34, NIRC
C. Construction of Tax Exemptions

- CIR v CA & YMCA, G.R. No. 124043, October 14, 1998, 298 SCRA 83
- CIR v. CA, G.R. No. 124043, October 14, 1998
- Misamis Oriental Asso. V. DOF, G.R. No. 108524, November 10, 1994,
238 SCRA 63
- Nestle Phils. v. CA, G.R. No. 134114, July 6, 2001
- Maceda v. Macaraig, G.R. No. 88291, May 31, 1991, 196 SCRA 771;
- Maceda v. Macaraig, G.R. No. 88291, June 8, 1993, 223 SCRA 217
VII. OTHER DOCTRINES IN TAXATION
A. Prospectivity of Tax Laws

• San Miguel Corporation v. CIR, CTA Case Nos. 7052 and 7053, Oct. 18, 2011
• CIR v. CA and Alhambra Industries, Inc., G.R. No. 117982. February 6, 1997
• Republic v. Fernandez, G.R. No. L-9141 (1956)
• Central Azucarera v. CTA, G.R. No. L-23236 (1967)
• Sec. 246, NIRC
B. Imprescriptibility of Taxes
- CIR v. Ayala Securities Corp., G.R. No. L-29485, November 21, 1980,
189 Phil 159-168
- Commissioner v. Standard Chartered Bank, G.R. No. 192173 (2015)
C. Double Taxation
- Procter & Gamble Co. v Mun of Jagna, G.R. No. L-24265, December 28, 1979,
94 SCRA 894
- Punzalan v Mun Board of Manila, G.R. No. L-4817, May 26, 1954,
95 Phil. 46
- CIR v. SC Johnson & Sons, Inc., G.R. No. 127105, June 25, 1999, 309 SCRA 87
D. Power to Tax Involves the Power to Destroy
- Sison v. Ancheta, G.R. No. 59431, July 25, 1984, 130 SCRA 654
E. Doctrine of Equitable Recoupment
- Collector v. University of Sto. Tomas, G.R. No. 11274, 104 Phil. 1062
G. Taxpayer’s Suit
- Bagatsing v. San Juan, G.R. No. 97787, August 1, 1996, 329 Phil. 8-15
VIII. FUNCTIONS OF THE BIR; JURISDICTION OF THE COURT OF TAX APPEALS
A. Powers and Duties of the BIR ; Interpret Tax Laws and Decide Tax Cases
• Sections 2-18, 21, 244-246, Tax Code
• CIR v. CA, CTA, and Fortune Tobacco Corporation, 261 SCRA 236 (1996),
• Marcos v CA, 339 Phil 253, 271-273 (1997)
• Philippine Bank of Communications v. CIR, 203 SCRA 241 (1999)
• Secretary of Finance v La Suerte Cigar, GR No. 166498, June 11, 2009
• ABS-CBN Broadcasting Corporation v. CTA, 108 SCRA 142
• CIR v. Hedcor Sibulan, Inc. - G.R. No. 209306 (2017)
• Mitsubishi Cor-Manila Br. V CIR, GR No. 175772, Jun 5, 2017
• Oceanic Wireless Network v. CIR - G.R. No. 148380 (2005)
B. Chief Officials of the BIR

• Section 3, Tax Code
C. The Court of Tax Appeals

• Composition : Section 1, RA No. 1125 (June 16, 1954), as amended by RA Nos. 9282
(March 30, 2004) and 9503 (June 12, 2008) Section 2, RA No. 1125, as amended by
RA Nos. 9282 and 9503

• Jurisdiction : Section 7, 11, 18, and 19, RA No. 1125 as amended by RA No. 9282
• CIR v. General Foods (Phils) Inc., GR No. 143672, Apr 24, 2003
• Eastern Telecommunications Phils v. CIR, GR No. 183531, Mar 25, 2015
• Nippon Express (Phil) Corp v. CIR, GR No. 185666, Feb 4, 2015
PART B: INCOME TAXATION
Intended Learning Outcomes

Upon completion of Part B of the syllabus, students of this course must understand and be able to apply
the following concepts of income taxation:
Meaning of income; gross revenue, gross income, Capital asset and ordinary asset; ordinary income,
exclusion from gross income; (net) taxable capital gains, and passive income; taxation of
income; realization of income; income versus capital gains
capital
Classification of taxpayers; concept of corporation Capital expenditure and revenue expenditure;
under taxation law versus corporation law, allowable deductions from gross income;
partnership; residence; situs of income; worldwide allowable deductions per class of taxpayer;
versus territorial taxation limitations and requirements for deductibility of
expenses; deduction and tax credit.
Income taxation of the various types of taxpayers Special types of income taxes: improperly
based on types of income; income tax systems; accumulated earnings tax, fringe benefits tax,
factors that affect taxation; tax deferment (tax-free minimum corporate income tax
exchange)
Purpose and types of withholding taxes Income taxation of trusts
Relevant income tax periods Basic income tax compliance requirements
Timeline: Weeks Five to Fourteen
WEEK FIVE
I. BASIC STRUCTURAL AND DEFINITIONAL CONCEPTS
A. Income
• Meaning of Income
- Sec. 32(A), NIRC
- Sec. 36, Revenue Regulations No. 2
- Conwi v. CTA, 213 SCRA 83
- CIR v. Manila Jockey Club, Inc., G.R. Nos. L-13887 & L-13890, June 30, 1960
- Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue, G.R. No. 228539 (2019)
- Madrigal v. Rafferty, 38 Phil. 414
- CIR v. BOAC, 149 SCRA 395
• Severance or Realization
- CIR v. CA, CTA & Anscor, 301 SCRA 152 (1999)
• Command or Control of Income; Imputed Income

• Section 41, Rev. Regs. No. 2
• Recovery of Capital Investment

- Sec. 40(A), NIRC
- Section 36, Rev. Regs. No. 2
• Windfall Receipts
- Javier v. Ancheta, CTA Case No. 3393, July 27, 1983
• Recovery of Deducted Items: Tax Benefit Principles

• Section 34(E)(1), NIRC
• Indirect Receipts – Cancellation of Indebtedness and Discharge by Third Parties

- Section 50, Rev. Regs. No. 2
• Income from Unlawful Activities; Amounts Received Under Claim of Right

- CIR v. Manila Electric Company, CTA EB No. 773, November 13, 2012
Case studies on taxability of ill-gotten wealth forfeited by the government:
- Republic v. Sandiganbayan, GR. No. 152154, July 15, 2003;
- Marco Jr. v. Republic, GR No. 189434, April 25, 2012;
- Marcos v. Republic, G.R. No. 213027, Jan 18, 2017; Republic v. Marcos, Sandiganbayan Case
No 0141, Dec 19, 2019.
B. Income Tax
C. When is Income Taxable?
- Secs. 43-44, NIRC
- Secs. 51-53, Revenue Regulations No. 2
- Republic v. Dela Rama, 18 SCRA 861
- CIR v. Tours Specialist, 183 SCRA 402
- CIR v. Javier, 199 SCRA 824
D. Capital Gain; Ordinary Gain; Presumed Gain
- Capital Gain
- Ordinary Gain
- Business Income
- Income from Trade/Practice of Profession
- Passive Income
- Other Forms
- Presumed Gain
- Sec. 24(D), NIRC
E. Income Tax Systems
- Global Tax System
- Schedular Tax System
- Sison v. Ancheta, GR L-59431, July 25, 1984
- Semi-schedular or Semi-global Tax System
F. Criteria in Imposing Philippine Income Tax
- Nationality/Citizenship
- Residence
- Source
- Sec. 23, NIRC
G. Tax Treaties
WEEK SIX
II. GROSS INCOME: INCLUSIONS AND EXCLUSIONS
• Income from Whatever Source

- Secs. 31-32, NIRC
- Gutierrez v. Collector, G.R. Nos. L-9738 & L-9771, May 31, 1957 101 Phil 713
• Situs of Income
- Sec. 42, NIRC
• From Sources Within the Philippines

- Sec. 42 (A,B), NIRC
- CIR v. BOAC, G.R. No. L-65773-74, April 30, 1987, 149 SCRA 395
- NDC v. CIR, G.R. No. L-53961, June 30, 1987, 151 SCRA 472
- Air Canada v. CIR, CTA EB No. 86. Aug. 26, 2005
- CIR v. CTA, G.R. No. 81446, August 18, 1988, 127 SCRA 9

- CIR v. Marubeni, G.R. No. 137377, December 18, 2001
- CIR v. Baier-Nickel, G.R. No. 165793, August 29, 2006
- Manila Electric v. Yatco, G.R. No. 45697, November 1, 1939 69 Phil 89
- Phil. Guaranty v. CIR, G.R. No. L-22074, Apr. 30, 1965
• From Sources Without the Philippines

- Sec. 42(C), NIRC
• Partly Within/Without the Philippines

- Sec. 42(E), NIRC
B. Compensation Income
- Sec. 32(A), NIRC
- Rep. Act No. 10963 (TRAIN Law), Dec. 19, 2017
- Revenue Regulations No. 11-2018, Jan. 31, 2018, as amended by RR 14-18
- Revenue Memorandum Circular No. 050-18, May 11, 2018
- Sec. 2.78.1(A), Revenue Regulations No. 2-98
- Sec. 2.78.1(A), Revenue Regulations No. 2-98
- Sec. 2.83.5, Revenue Regulations No. 10-2008
- Sec. 2.83.6, Revenue Regulations No. 2-98
- Revenue Memorandum Circular No. 34-2008
- Henderson v. Collector, 1 SCRA 649; Convenience of the Employer Rule
- CIR v. Castaneda, G.R. No. 96016, October 17, 1991, 203 SCRA 72
- Polo v. CIR, G.R. No. L-78780, July 23, 1987
- Endencia v. David, G.R. No. L-6355-56, July 23, 1987, 93 Phil 696
- Kuenzle v. CIR, G.R. No. L-18840, May 29, 1969, 28 SCRA 365
• Fringe Benefits
- Revenue Regulations Nos. 3-98, 8-2000, 10-2000, 05-2008, 05-2011
- Revenue Regulations No. 10-2002
- Revenue Memorandum Circular No. 88-2012, December 27, 2012
• Exclusions:
• Compensation for Injuries or Sickness

- Sec. 32(b)(4), NIRC
• 13th Month Pay and Other benefits
- Sec. 32 (7)(b,e), NIRC
- CIR v. Castaneda, G.R. No. 96016, October 17, 1991, 203 SCRA 72
• Income Exempt Under Treaty

- Sec. 28(b)(4), NIRC
- Reagan v. CIR, G.R. No. L-26379, December 27, 1969, 30 SCRA 968
C. Pensions/Retirement Benefits/Separation Pay

- Sec. 32(A)(10), NIRC
• Exclusions:
- Sec. 32(6)(a-f), NIRC
- Sec. 2.78.1(B)(1-12), Revenue Regulations No. 2-98
- RA 4917; RA 7641
- CIR v. CA, G.R. No. 96016, October 17, 1991, 203 SCRA 72
- CIR v. GCI Retirement, G.R. No. 95022, March 23, 1992, 207 SCRA 487
- In re Zialcita, AM No. 90-6-015-SC, Oct. 18, 1990
D. Passive Income
1. Interest Income
- Sec. 32(A)(4), NIRC
- Revenue Memorandum Order 63-99 (see BIR Ruling DA 701-07, Dec. 28, 2007
- RR 14-201; RMC 77-2012; RMC 81-2012
- CIR v. Filinvest Development Corporation, G.R. No. 163653, July 19, 2011

• Exclusions:
- Sec. 32(B)(7)(a), NIRC
- CIR v. Mitsubishi Metal, G.R. No. L-54908, January 22, 1990, 181 SCRA 214
- NDC v. CIR, G.R. No. L-53961, June 30, 1987
2. Rentals/Leases
- Sec. 32(A5), NIRC
- Secs. 74, 49 and 58, Revenue Regulations No. 2
- Revenue Regulations 19-86
- Limpan v. CIR, G.R. No. L-21570, July 26, 1966, 17 SCRA 70
3. Royalties
- Sec. 32(A)(6), NIRC
- CIR v. SC Johnson, G.R. No. 127105, June 25, 1999
4. Dividends
- Sec. 32(A)(7), NIRC
- Secs. 58 and 71, 250-253, Revenue Regulations No. 2
- Revenue Memorandum No. 31-90
- Sec. 73(C,D), NIRcC
- CIR v. Manning, G.R. No. L-28398, August 6, 1975, 66 SCRA 14
- CM Hoskins v. CIR, G.R. NO. L-24059, November 28, 1969, 30 SCRA 434
- CIR v. CA, G.R. No. 108576, Jan. 20, 1999
• Exclusions:
- Income Exempt Under Tax Treaty
- Passive Income of Foreign Government
- BIR Ruling 103-2012, February 21, 2012
5. Annuities and Insurance Proceeds

- Sec. 32(A)(8), NIRC
• Exclusions:
• Proceeds from Life Insurance
- Sec. 32(B)(1), NIRC
- El Oriente Fabrica v. Posadas, G.R. No. 34774, September 21,1931 56 Phil 147
• Return of Premium Paid
- Sec. 32(B)(2), NIRC
• Compensation for Injuries or Sickness
- Sec. 32(B)(4), NIRC
6. Prizes and Winnings/Awards/Rewards

- Sec. 32(A)(9), NIRC
- Sec. 282, NIRC
- Revenue Memorandum Order No. 12-93
- Revenue Regulations No. 016-10; Revenue Memorandum Order No. 046-11
- BIR Ruling DA-013-04
- CIR v. COA, G.R. No. 101976, Jan. 29, 1993
• Exclusions:
- Sec. 24(B)(1), NIRC
Sports Competition Prizes
- Sec. 32(B)(7)(d), NIRC
7. Other Types of Passive Income

- Found Treasure
- Tax Refund; Revenue Memorandum Circular 13-80;
Revenue Regulations No. 014-11
- Recovery of Bad Debt Previously Deducted; Sec. 50, Rev Reg No. 2
- Damages
- Ramnani v. CTA, CA-GR SP No. 42873, January 8, 1998

- Informer’s Reward
- Penid v. Virata, G.R. No. L-44004, March 25, 1983
WEEK SEVEN
E. Gains Derived from Dealings in Property

- Secs. 32(A)(3), 39-40, NIRC
- RR 6-2008, April 22, 2008, as amended by RR 16-2012 and RR 20-20
- Revenue Memorandum Circular No. 035-17
• Exclusions:
Shares of Stocks Traded in PSE
- Sec. 127, NIRC
F. Business Income/ Income from Exercise of Profession

- Secs. 32(A)(2), 27(E), NIRC
- Secs. 36-38, 43-47, Revenue Regulations No. 2
• Exclusions:
- Income Exempt Under a Treaty
- Income Derived by Governmental/Political Subdivision from Exercise of Essential
Government Function
G. Partner’s Distributive Share of the Gross Income of General Professional Partnerships

- Sec. 32(A)(11), NIRC
H. Exclusions under Special Laws

- RA 9040
III. TAXPAYERS
A. General Principles
- Sec. 23, NIRC
B. Scope of Income Taxation

- Definition of a Taxpayer (Sec. 22(N), NIRC); classification of taxpayers
- Definition of a Person (Sec. 22(A), NIRC)
- Who is a “Person liable to tax”
- CIR v. Procter & Gamble, G.R.No. 66838, December 2, 1991
- Silkair (Singapore) Pte. Ltd. v. CIR, G.R. No. 184398, February 25, 2010
IV. INDIVIDUALS: CLASSIFICATION, BASES AND RATES
• Citizens
- Sec. 23(A-D), NIRC
- Secs. 1 and 2, Art. IV, 1987 Constitution
• Resident Citizens
- Sec. 23(E), NIRC
• Non-Resident Citizens
- Secs. 22(E), 23(B), NIRC
o Overseas Filipino Workers

- Sec. 23(C), NIRC
• Resident Alien
- Secs. 22(F), 24(B), NIRC
• Non-Resident Alien Engaged in Trade or Business

- Secs. 22(G), 25(A), NIRC

• Non-Resident Alien Not Engaged in Trade or Business

- Secs. 25(B), NIRC
• Special Aliens
- Secs. 25(C-E), NIRC
- Veto Message on RA 10963
- RR 8-2018
• Classifications of Individuals as to income earning

-Compensation earner
- Minimum Wage Earner (Secs. 22(H) and 24, last paragraph, NIRC)
- Coverage of exemption (RR 1-18, RR 8-2018)
- Rank and File Employee
- Managerial/Supervisory Employee
- Self-Employed and/or Professionals (SEPs)
-Mixed income earner
A. Resident Citizens and Resident Aliens; taxation

- In General
- RR 1-2019
- RR 8-2018
- RR 11-2018
- RR 14-2018
- RR 15-2018
- RMO 23-2018
- RMC 32-2018
- RMC 50-2018
- RMC 51-2018
- Taxable Income Taxation
- Gross Income Taxation
-Qualified to Opt for 8%
-Not qualified to 8%
Regular Graduated Rate vs. 8% Option
-Compensation
-Purely Self-Employed and/or Professionals
-Mixed Income Earner
• Passive Income:
• Interest, Royalties, Prizes and Other Winnings

- Secs. 24(B)(1), 22(FF), NIRC
- Revenue Regulations No. 14-2012, November 7, 2012
WEEK EIGHT
• Dividends
- Sec. 24(B)(2), NIRC
- Sec. 73, NIRC
• Capital Gains on Shares of Stocks

- Sec. 24(C), NIRC
- Revenue Regulation No. 6-2008, as amended by Revenue Regulation No. 1-2019, and
Revenue Regulation No. 8-2018, and Revenue Regulation 20-2020
- Benguet Corporation v. CIR, CTA Case No. 5324, July 2, 1998
• Capital Gains on Real Property

- Art. 415, New Civil Code
- Sec. 24(D), NIRC
- Revenue Regulations Nos. 8-98, 13-99, as amended by 14-2000 and 6-01
- Sale of Principal Residence (Sec. 24(D), NIRC)
- Requisites for exemption (Sec. 24(D), NIRC)
- Revenue Regulation No. 8-98
o Socialized Housing
- Secs. 19, 20, 32, RA 7279
- Secs. 93, 188, NIRC
B. Non-Resident Citizens (Sec. 22(E), NIRC)

C. Non-resident Alien
• engaged in trade or business (Sec. 25(A), NIRC)
- Taxable Income Taxation
- Gross Income Taxation
- Passive Income
- Capital Gains Sec. 25(3)
• not engaged in trade or business (Sec. 25(B), NIRC)
- Sec. 25(B)
D. Special Aliens
- Sec. 25(C-E), NIRC
- Veto Message on RA 10963
- RR 8-2018
E. Minimum Wage Earners (MWE)

- Secs. 22(H), 24, NIRC
- Coverage of exemption (RR 10-08, RR 8-2018)
- Soriano v. Secretary of Finance, G.R. No. 184450, January 24, 2017
F. Members of General Professional Partnership

- Sec. 26, NIRC
V. TAX ON CORPORATIONS: BASES AND RATES
- Sec. 22(B), NIRC

• Partnerships (Arts. 1767-1769, New Civil Code)
- Lorenzo Ona v. CIR, G.R. No. L-19342, May 25, 1972
- Evangelista v. Collector, G.R.No. L-9996, October 15, 1957
- Afisco Insurance Corp. v. CIR, G.R.No. 112675, Jan. 25, 1999
- CIR v. Batangas Tayabas Bus Co., 102 Phil 822
• General Professional Partnership
- Secs. 22(B), 26, 73(D), NIRC
- Tan v. Del Rosario and CIR, G.R.No. L-109289, October 3, 1994
• Co-ownership
- Revenue Memorandum Circular No. 003-12, January 11, 2012
- Revenue Memorandum Circular No. 89-12, December 27, 2012
- Obillos v. CIR, L-68118, Oct. 29, 1985
- Reyes v. Commissioner, 24 SCRA 198
- Gatchalian v. Collector, 67 Phil 666
- Pascual v. CIR, 166 SCRA 560
- Solidbank v. CIR, CTA Case No. 4868, June 19, 1997
• Joint Venture; Exempt v. Taxable

- Revenue Regulation No. 10-2012, June 1, 2012

WEEK NINE
a. Domestic Corporations
• Taxable Income
- Sec. 27(A), NIRC
• Special Corporations
• Private Educational Institutions and Non-profit Hospitals
- Sec. 27(B), NIRC
- CIR v. St. Luke’s Medical Center, Inc., G.R. Nos. 195909 and 195960, September 26,
2012)
• Government-owned and controlled corporations
- Sec. 27(C), NIRC
• Passive Income:
• Interest, Royalties
- Sec. 27(D)(1, 3), NIRC
• Dividends
- Sec. 27(4), NIRC
• Capital Gains
- Sec. 27(D)(2, 5), NIRC
b. Resident Foreign Corporations
• Taxable Income
- Sec. 28(A), NIRC
- Secs. 22(B), (C), (D), (H), NIRC
-
• Meaning of “Engaged in Trade or Business”
- Section 3(d), RA No. 7042 (Foreign Investments Act of 1991)
- Island Power Corporation v. CIR, CTA EB No. 26, March 6, 2006
- NV Reederit v. CIR, G.R. No. 46029, June 23, 1988, 162 SCRA 487
- B. Van Zuiden Bros. Ltd. vs. GTVL Manufacturing Industries, Inc., G.R. No. 147905, 28 May
2007
• Special Resident Foreign Corporations
• International Carriers
-Sec. 28(A)(3), NIRC
-RA 10378, March 7, 2013
-RR 15-2013
- CIR v. British Overseas Airways Corporation, G.R. No. L-65773, April 30, 1987
- South African Airways v. CIR, G.R. No. 180356, February 16, 2010
- RR No. 15-2002, May 20, 2002
• Offshore Banking Units (OBUs)/Foreign Currency Deposit Units (FCDUs)

-Sec.28(A)(4), NIRC
-RR 10-98
• Regional or Area Headquarters (RHQ) and Regional Operating Headquarters (ROHQ)

- Sec. 22(DD), (EE), NIRC
- Sec. 28(A)(6), NIRC

• Tax Rate and Tax Base
- Sec. 28(A)(1), NIRC
- Sec. 31, NIRC
• Passive Income Sec. 28(A)(7), NIRC
o Interest, Yields, Royalties

- Sec. 28(A)(7)(a-b), NIRC
o FCDU Income
o Dividends
- Sec. 28(A)(7)(d), NIRC
o Capital Gains from Sale of Shares
o Intercorporate Dividends
- Sec. 28(A)(7)(c), NIRC
o MCIT (Sec. 28(A)(2), NIRC
Subsidiary v. Branch of a Foreign Corporation

Branch Profit Remittance Tax (BPRT)
- Sec. 28(A)(5), NIRC
- Revenue Memorandum Circular 55-80
- Bank of America v. CIR, GR 10392, July 21, 1994, 234 SCRA 302
- Marubeni v. CIR, 177 SCRA 500
- Campania General de Tabacos, CTA 4451, Aug 23, 1993
- Shinko Electric Industries Co. Ltd. v. CIR, CTA Case 8213, February 10, 2014
- CIR v. United Parcel Service Co. (Phil. Branch), CTA Case No. 721, May 16, 2012
WEEK TEN
c. Non-resident Foreign Corporations

- Sec. 22(I), NIRC
• Taxable Income
- Sec. 28(B)(1)
• Tax Rate and Tax Base

- Sec. 28(B)(1), NIRC
• Passive Income:
o Interest
- Sec. 28(B)(5)(a), NIRC
o Dividends
- Sec. 28(B)(5)(b), NIRC
- CIR v. Procter and Gamble, 160 SCRA 650; 204 SCRA 377
- CIR v. Wander Philippines, 160 SCRA 573
- Marubeni v. Commissioner, 177 SCRA 500
o Capital Gains
- Sec. 28(B)(5)(c), NIRC
• Special Non-Resident Foreign Corporations

- Sec. 28(B)(2),(3) and (4)
- Non-resident Cinematographic Film Owner, Lessor or Distributor
(Sec. 28(B)(2), NIRC)

- Non-resident Owner of Lessor of Vessels Chartered by Philippine Nationals (Sec.
28(B)(3), NIRC
- Non-resident Owner or Lessor of Aircraft, Machineries and Other Equipment (Sec.
28(B)(4), NIRC
d. Minimum Corporate Income Tax (MCIT)

- Tax Rate and Base (Sec. 27(E )(1) and 28(A)(2)
- RR No. 9-98, August 25, 1998, as amended by RR 12-2007, October 10, 2007
- Carry forward Excess Minimum Tax(Sec. 27(E)(2)
- Gross Income
- Chamber of Real Estate and Builders’ Associations, Inc. v. Romulo, G.R. No. 160756,
March 9, 2010
- The Manila Banking Corporation v. CIR, G.R. No. 168118, August 28, 2006
- CIR v. Philippine Airlines, G.R. No. 180066, July 7, 2009
e. Improperly Accumulated Earnings Tax

- Sec. 29(A) and (B)(1), NIRC
- Corporations subject to IAET (Sec. 29(B)(1)
- Exceptions (Sec. 29)B)(2)
- Evidence of Purpose to Avoid Income Tax (Sec. 29(C), NIRC)
- RMC No. 35-2011, March 14, 2001
- Improperly Accumulated Taxable Income (Sec. 29(D))
- Cyanamid Phils. v. CA, GR 1008067, Jan. 20, 2000
- Manila Wine Merchants v. CIR, GR L-26145, Feb. 25, 1984
- Basilan Estates, Inc. v. CIR, G.R. No. L-22492, September 5, 1967
f. Exemption from Tax on Corporations; Corporations Taxed at Preferential Rates

- Sec. 30, NIRC
- Sec. 27(B), NIRC
- RMC No. 35-2012, August 3, 2012
• Educational Institutions
- Abra Valley Colleges v. CFI, G.R.No.L-39086, June 15, 1988
- CIR v. CA, CTA and YMCA of the Philippines, G.R. No. 124043, October 14, 1998
- Ateneo de Manila University v. CIR, CTA Case No. 7246 and 7293, March 11, 2010
- CIR v. De La Salle University, Inc., G.R. No. 196596, November 9, 2016
• Cooperatives
-Dumaguete Cathedral Credit Cooperative (DCCCO) v. CIR, G.R. N. 182722,
January 22, 2010
• Hospitals
- CIR v. St. Luke’s Medical Center, G.R. No. 195960, September 26, 2012
- Sec. 30(E) vs. Sec. 30(G), NIRC
VI. TAX ON PARTNERSHIPS
A. Taxation of Ordinary/Business Partnerships (Sec. 22(B), NIRC)

B. Taxation of General Professional Partnerships (Sec. 26, NIRC)
WEEK ELEVEN
VII. ORDINARY ASSETS AND CAPITAL ASSETS
A. Capital Asset v. Ordinary Asset

- Secs. 24(D), 39, NIRC
- Tuazo vs. Lingad, 58 SCRA 170
- Calasanz vs. CIR, G.R. No. L-26284, Oct. 9, 1986
- Ferrer vs. Collector, 5 SCRA 1022

- Roxas vs. CIR, G.R. No. L-25043, Apr. 26, 1968
B. Treatment of Sale or Exchange of Ordinary Assets
C. Treatment of Sale or Exchange of Capital Assets which are not Real Property and Shares of Stock
- Secs. 39(A), 40, NIRC
- Calasanz vs. CIR, 144 SCRA 664
- Net Capital Gain and Net Capital Loss; Holding Period
D. Treatment of Sale or Exchange of Capital Assets which are Real Property

Capital Tax on Presumed Gain
- Secs. 6(E), 24(A), 24(D)(1), NIRC
E. Foreclosure Sales of Real Property

- Revenue Memorandum Order Nos. 29-86, 16-88, 27-89 and 6-92
Redemption period
F. TAX-FREE EXCHANGES AND OTHER TAX-EXEMPT TRANSACTIONS
1. In General
- W.C. Ogan and Bohol Land Transportation Co., G.R. No. 49102, May 30, 1949
- Revenue Regulations No. 18-2001, Nov. 13, 2001
- Revenue Memorandum Order 32-2001, Nov. 28, 2001
- Revenue Memorandum Order (RMO) No. 17-2016
2. Merger or Consolidation
- Sec. 40(C)(2) and (6)(b), NIRC
- CIR vs. Rufino, 148 SCRA 42
o De Facto Merger
- Revenue Memorandum Ruling 1-2002, Apr. 25, 2002
3. Exchange of Property for Shares of Stock
- Sec. 40(C)(2), NIRC
- Liddell & Co., Inc. vs. Collector, 2 SCRA 632
- Revenue Memorandum Ruling No. 1-2001, Nov. 29, 2001
4. Other Tax-Exempt Transactions
o Deeds of Trusts
o Transfers by Mistakes
- Sec. 196, NIRC
Transfers of Rights;
Rescinded Contracts;
Equitable Mortgage
Condominium Corporations
Miscellaneous Exempt Transactions
- Sec. 24(D), NIRC
- RA 6657
- Revenue Regulations No. 7-2011, February 16, 2011
- Revenue Memorandum Circular No. 32-2012, July 16, 2012
5. Administrative Requirements
- Revenue Memorandum Order No. 32-2001, Nov. 29, 2001
G. COSTS; DEDUCTIONS AND EXEMPTIONS
• Return of Capital; Cost of Goods Sold
• Deductions in General
- Sec. 34, NIRC
- CIR v. General Foods, G.R. No. 143672, April 24, 2003
- Commissioner v. Philippine Acetylene, G.R. No. L-22443, May 29, 1971, 39 SCRA 70

• Revenue Expenditures vs. Capital Expenditures
- Esso Standard v. CIR, G.R. Nos. L-28508-9, July 7, 1989, 176 SCRA 149
- Atlas Consolidated Mining & Development Corp. v. CIR, G.R. No. L-26911, Jan. 27, 1981
- CIR v. Isabela Cultural Corporation, G.R. No. 172231, Feb. 12, 2007
- Kepco Phil Corp. v. CIR, G.R. No. 179356, Dec. 14, 2009
- Tambunting v. CIR, G.R. No.173373, July 29, 2013
WEEK TWELVE
• Kinds of Deductions
- Itemized
- Optional Standard
- Sec. 34(L), NIRC
- RR No. 16-2008
- RR No. 2-2010
- RMC No. 16-2010
- Special Deductions
• Limitations and Substantiation

- Sec. 34, NIRC
- M.E. Holding Corporation v. Court of Appeals, G.R. No. 160193, March 3, 2008,
547 RA 389
• Allocation
- Sec. 50, NIRC
- Yutivo Sons v. CIR, G.R. No. L-13203, January 28, 1961, 1 SCRA 160
• Additional Requirements for deductibility of certain payments; withholding

- Sec.34(J), NIRC
- RMO 38-83
- RR 12-2013
• Allowable Deductions
- Secs. 24(A), 25(A), 26, 27(A,B,C), 28(A)(1), 45, NIRC
o Ordinary/Necessary Business Expenses

- Atlas Consolidated v. CIR, G.R. Nos. 141104 & 148763, June 8, 2007, 102
SCRA 246
- Aguinaldo Industries v. Collector, G.R. No. L-29790, February 25, 1982, 112
SCRA 136
- Goodrich v. Collector, CTA Case No. 468, June 8, 1965
- Kuenzle v. CIR, G.R. No. L-18840, May 29, 1969, 28 SCRA 365
- Sec. 34(2), NIRC
o Interest Expense
- Sections 34(B), 36(B), NIRC
- Paper Industries v. CA, G.R. Nos. 106494-50, December 1, 1995, 250 SCRA
434
o Taxes
- Secs. 34(3,4), NIRC; Tax Benefit Rule
- Secs. 80-83, 84 par. 1, 85, 92, Revenue Regulations No. 2
- CIR v. Lednicky, G.R. No. L-18169, July 31, 1964
- Gutierrez v. Collector, G.R. No. L-19537, May 20, 1965, 14 SCRA 33
- Mercury Drug Corporation v. CIR, G.R. No. 164050, July 20, 2011, 654 SCRA 124
o Losses
- Sec. 34(D), NIRC

- Fernandez Hermanos v. CIR, G.R. No. L-21551, L-21557, L-24972, L-24978,
September 30, 1969, 29 SCRA 552
- China Bank v. CA, G.R. No. 125508, July 19, 2000, 336 SCRA 178
- Phil. Sugar Estate v. Collector, G.R. No. 45189, May 26, 1939, 60 Phil 565
- Paper Industries v. CA, G.R. Nos. 106494-50, December 1, 1995, 250 SCRA
434
o Bad Debts
- Sec. 34 (E), NIRC
- Revenue Regulations Nos. 5-99 and 25-02; Tax Benefit Rule
- Philex Mining Corporation v. CIR, G.R. No. 125704, August 28, 1998, 551
SCRA 428 (2008)
- Collector v. Goodrich, G.R. No. L-22265, December 22, 1967, 21 SCRA 1336
- Metro Inc. v CIR, CTA Case 6356, June 9, 2009
o Cost Recovery, Depreciation and Amortization

- Sec. 34(F), NIRC
- Revenue Regulations 19-86
- Revenue Regulations 12-2012; Bulletin “F”; Annex “A”, RR No. 19-86;
RMC 2-2013
- RMC 70-2010
- Basilan Estates v. CIR, G.R. No. L-22492, September 5, 1967, 21 SCRA 17
- Limpan Investments Corp. v. CIR, G.R. No. L-21570, July 26, 1966
o Depletion
- Sec. 34(G), NIRC
- Consolidated Mines v. CTA, G.R. Nos. L-18843 & 18844, 58 SCRA 618
- Esso Standard Eastern v. CIR, G.R. Nos. L-28508-9, July 7, 1989, 176 SCRA
o R&D Expenses
- Sec. 34(I), NIRC
WEEK THIRTEEN
o Charitable and Other Contributions

- Sec. 34(H), NIRC
- Revenue Regulations No. 13-9820 (April 11, 2008)
- RMC No. 88-07
- E.O. 7
- BIR-NEDA Regulations Nos. 1-81 and 1-82
o Contribution to a Pension Trust

- Sec. 34(J), NIRC
- RMC No. 39-2014
- Non-Deductible Expenses/Losses
- Sec. 36, NIRC
- Atlas Consolidated v. CIR, G.R. No. L-26911, Jan. 27, 1981
- Gancayco v. Collector, G.R. No. L-13325, April 20, 1961, 1 SCRA 980
o Losses between Related Taxpayers

- Sec. 36(B), NIRC
o Losses on Wash Sales

- Section 34(D)(5), NIRC

o Loss from Short Sale of Property; Failure to Exercise Option

-Sec. 39(F), NIRC
Wagering Loss
- Sec. 34(D)(6), NIRC
o Abandonment Loss
- Sec. 34(D)(7), NIRC
o NOLCO
- Sec. 34(D)(3)
- RR No. 14-01
o Loss Due to Voluntary Removal of Buildings, Scrapping of Old Machinery, etc.

- Sec. 97, RR No. 2
o Obsolescence
- Sec. 110, RR No. 2
o Illegal Expenses
- Sec. 34(1), NIRC
- Callanoc v. Collector, 3 SCRA 517
- 3M Philippines v. CIR, G.R. No. 82833, Sept. 26, 1988
o Special Deductions
- Sec. 37, NIRC
o Deductions for Individuals
o Optional Standard Deductions

- Sec. 34(L), NIRC
- RR No. 2-2014
- RR No. 2-2010
o Deductions under Special Laws

- Senior Citizen’s Discount
- RR 7-10, as amended by RR 8-10 and RR 11-15, implementing RA 9994
- Sales Discounts for Persons with Disability
- RR 1-09; RR 5-17, as amended by RR 9-19; RMC 38-12
X. TAX ON ESTATES AND TRUSTS
A. Application of Tax
- Articles 1440-1457, New Civil Code
- Secs. 60-66, NIRC
- Secs. 207-213, NIRC
- RMC No. 39-2014, May 12, 2014
- CIR v. CA, G.R. No. 95022, March 23, 1992
B. Exception (Sec. 60(B), NIRC)
C. Computation and Payment
- Sec. 60(C), NIRC
- In General (Sec. 60(C)(1), NIRC)
- Consolidation of income of two or more trusts (Sec. 60(C )(2), NIRC)
- Taxable income (Sec. 61, NIRC)
- Exemption allowed to Estates and Trusts (Sec. 62, NIRC)
- Revocable trusts (Sec. 63, NIRC)
- Income for benefit of grantor (Sec. 64(A), NIRC)
- Meaning of “in the discretion of the grantor” (Sec. 64(B), NIRC)
- CIR v. Visayas Electric, 23 SCRA 715

- CIR v. CA, GCL Retirement Plan 207 SCRA 487
WEEK FOURTEEN
XI. ACCOUNTING PERIODS AND METHODS
Calendar Year v. Fiscal Year

- Secs. 22, 43-47, NIRC
Recognition of Income
Long Term Contracts
- Sec. 48, NIRC
Installment Sales
- Secs. 49-50, NIRC
Termination of Leasehold
- Sec. 49, NIRC
- Consolidated Mines v. CTA, GR L-18844, Aug. 29, 1974
- Filipinas Synthetic v. CA, 316 SCRA 480
Recording of Income and Expenses/Keeping of Books

- Revenue Regulations Nos. 17-13, 4-14
- CIR v. Wyeth Suaco, 202 SCRA 135
- Consolidated Mines v. CTA, G.R. No. 18843, August 29, 1974; 58 SCRA 618
- CIR v. Isabela Cultural Corp., G.R. No. 172231, Feb. 12, 2007
- CIR v. Lancaster, G.R. No. 183408, July 12, 2017
XII. WITHHOLDING OF TAXES
Withholding tax on compensation; creditable withholding tax; final withholding tax
- Secs. 57-58, 78-83, NIRC

- Revenue Regulations Nos. 2-98, as amended
- RR 11-2018, RR 14-2018, RR 1-2019, and RR 7-2019
- CIR v. Wander Philippines, GR L-68375, Apr. 15, 1988
- Banco Filipino Savings and Mortgage Bank v. Court of Appeals, 548 Phil 32 (2007)
- Philam Asset Mgt. Inc. V. CIR, 477 SCRA 761
- Asiaworld Properties Phil.Corp. v. CIR, G.R. No.171766, July 29, 2010
- BDO v Republic, GR No. 198756, Aug 16, 2016
- CIR v. La Flor dela Isabela, GR No. 211289, Jan 14, 2019
XIII. RETURNS AND PAYMENT OF TAXES
a. In General
- NIRC, secs. 24-28, 33, 51-52, 55, 74-77
- RMC 31-2019
b. Individuals
c. Corporations
- CIR v. TMX Sales, 205 SCRA 18
- ACCRA Investment v. CA, 204 SCRA 957
- San Carlos Milling v. CIR, 228 SCRA 135

Tax 1 Syllabus

Uploaded by

Copyright:

Available Formats

You might also like

Tax 1 Syllabus

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tax 1 Syllabus

Uploaded by

Copyright:

Available Formats

For Law 129 – A (Taxation 1)

(UP Diliman and UP BGC Classes of Professor Marissa O. Cabreros)

II. COURSE DESCRIPTION

1. Constitutional basis and philosophy of Taxation

III. GRADUATE ATTRIBUTES

A. LIFETIME ATTRIBUTES – Long Term Outcomes

3. Exceptionally competent. They can formulate effective, convincing, and legally

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 1

B. ATTRIBUTES OF PRACTICE READY GRADUATES - JD Program Outcomes

7. A graduate of the College of Law must be able to pass the bar.

9. Able to formulate an argument or position on any legal issue in a logical and

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 2

Develop the ability to

Understand the Be able to determine Creativity and innovation

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 3

Understand how other Correlate and connect

PART A: GENERAL PRINCIPLES OF TAXATION

Intended Learning Outcomes

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 4

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 5

III. SOURCES OF TAX LAW

IV. LIMITATIONS UPON THE POWER OF TAXATION

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 6

A. Due Process Clause

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 7

V. CONSTRUCTION OF TAX LAWS

A. General Rules of Construction of Tax Laws

VI. EXEMPTIONS FROM TAXATION

• Compromise and Tax Amnesty

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 8

C. Construction of Tax Exemptions

VII. OTHER DOCTRINES IN TAXATION

A. Prospectivity of Tax Laws

VIII. FUNCTIONS OF THE BIR; JURISDICTION OF THE COURT OF TAX APPEALS

B. Chief Officials of the BIR

C. The Court of Tax Appeals

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 9

PART B: INCOME TAXATION

Intended Learning Outcomes

I. BASIC STRUCTURAL AND DEFINITIONAL CONCEPTS

• Command or Control of Income; Imputed Income

• Recovery of Capital Investment

• Recovery of Deducted Items: Tax Benefit Principles

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 10

• Indirect Receipts – Cancellation of Indebtedness and Discharge by Third Parties

• Income from Unlawful Activities; Amounts Received Under Claim of Right

II. GROSS INCOME: INCLUSIONS AND EXCLUSIONS

• Income from Whatever Source

• From Sources Within the Philippines

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 11

• From Sources Without the Philippines

• Partly Within/Without the Philippines

• Compensation for Injuries or Sickness

• Income Exempt Under Treaty

C. Pensions/Retirement Benefits/Separation Pay

Consolidated Tax Cluster Syllabus for Tax 1 ver. 31 Aug 2020 12

5. Annuities and Insurance Proceeds

6. Prizes and Winnings/Awards/Rewards