LYCEUM OF THE PHILIPPINES UNIVERSITY

COLLEGE OF LAW
COURSE SYLLABUS

Course Title: Taxation I Instructor:

No. of Units: 3 units Atty. Kathyrn Ang-Zarate
Semester/ AY: 1st Sem, AY 2021-2022

1. COURSE DESCRIPTION
This course discusses the general principles of taxation and statutory provisions on income
taxation, including pertinent revenue regulations. Key concepts covered include nature and
scope of taxation, its underlying theory and basis, and other general principles including
inherent and constitutional limitations on the power of taxation, double taxation, sources and
construction of tax laws. Income tax concepts include when income is taxable, gross income
and items that are statutorily included, excluded and exempt, deductible business expenses,
and the differing tax treatments for different types of income, individual compensation earners
versus self-employed taxpayers versus corporation.

This course consists of two (2) parts, Part 1 covers the General Principles of Taxation and Part
2 covers Income Tax.

2. OBJECTIVES
By the end of the term, the student will be able to:

2.1 Understand the general principles and doctrines of the power of taxation, and
answer what, where, when, why and how in relation to the power of taxation.
2.2 Know the inherent and constitutional limitations of the power of taxation and
distinguish the different kinds of taxes.
2.3 Learn about different kinds of income and the rules on whether the same should
be included or excluded as gross income; discover the different kinds of expenses
and the rules on whether the same can be deducted from gross income.
2.4 Differentiate the classes of taxpayers and its differing tax treatments.
2.5 Be acquainted with the filing and administrative requirements when paying income
tax.
2.6 Be able to fill up income tax return.

3. METHODOLOGY

This course will be an online distance learning course which will utilize both synchronous and
asynchronous instructions via available online platforms. Students are expected to check their
emails and/or the class boards for announcements.

Synchronous instruction will consist of live online classes with opportunity for students to ask
questions and engage in discussion using live chat and discussion boards. The traditional
Socratic method may also be employed using web conferencing tools, mobile or video chats,

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either individually or course-wide. Students are expected to study all materials assigned as
included in the course outline during synchronous classes.

Asynchronous instruction will consist of pre-recorded lectures or presentations, video or movie

showings, case studies, articles and other readings, forums and discussion boards, email
communication, virtual consultations, and others.

A periodic assessment will be implemented to assess the student on how well the instructional
method is working to enable the instructor and the students to adapt or adjust accordingly.
Assessments will consist of quizzes, polls, discussion boards, recitations, midterms and final
examinations.

4. MATERIALS, REFERENCES AND OTHER RESOURCES

4.1 National Internal Revenue Code of 1997, as amended by pertinent laws including
REPUBLIC ACT NO. 10963 or TRAIN Law and REPUBLIC ACT NO. 11534 or
CREATE Act
4.2 Book: Hector S. De Leon and Hector M. De Leon, Jr., The Fundamentals of
Taxation
4.3 Book: Any income tax book
4.4 Assigned Supreme Court Cases
4.5 Relevant Bureau of Internal Revenue issuances
4.6 Movies, Videos and Newspaper Articles
4.7 ALL SECTION REFERENCES BELOW IN THE SYLLABUS PERTAIN TO NIRC,
AS AMENDED, UNLESS OTHERWISE STATED

5. GRADING

Recitation, Class Participations, Papers and 30%

Quizzes
Midterms 30%
Finals 40%
TOTAL 100%

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 SESSION 1

PART I
TAXATION IN GENERAL
CHAPTER I – GENERAL PRINCIPLES OF TAXATION
I. TAXATION

1. Definition of Taxation
a. 71 Am Jur 2nd 342
2. Nature of Internal Revenue Laws
a. Hilado v. CIR, 100 Phil 288
3. Scope of Taxation
a. §28, Art. VI, 1987 Constitution
b. 71 Am Jur 2nd 394 – 395
c. 71 Am Jur 2nd 397-398
d. Chamber of Real Estate and Builders’ Association (CREBA) v. Romulo,
Amatong and Parayno, G.R. No. 160756, March 9, 2010
e. Sison v. Ancheta, 130 SCRA 654 (citing C.J. John Marshall [McCulloch v.
Maryland] and J. Holmes [Panhandle Oil Co. v. Mississippi])
f. Sarasola v. Trinidad, 40 Phil. 259, G.R. No. 14595, October 11, 1919
4. Underlying theory and basis
a. 71 Am Jur 2nd 346-347
b. CIR v. Algue, Inc. L-28896 Feb 17, 1988
5. Principles of a Sound Tax System
a. Abakada Guro Party List Officers v. Ermita, et. al., G.R. No. 168056,
September 1, 2005
b. Diaz and Timbol v. Secretary of Finance and the Commissioner of Internal
Revenue [G.R. No. 193007. July 19, 2011.]
6. Comparison with Police Power and Eminent Domain
a. Similarities and distinctions 71 Am Jur 2nd 395-397
b. Gerochi, et al. v. DOE, et al., G.R. No. 159796, July 17, 2007
c. Matalin Coconut Co., Inc. v. Mun. Council of Malabang, 143 SCRA 404
d. Lutz v. Araneta, 98 Phil 48
7. Stages or Aspects of Taxation

II. TAXES

1. Definition
a. 71 Am Jur 2nd 343-346
b. Republic v. Philippine Rabbit Bus Lines, Inc., G.R. No. L-26862, March 30,
1970
2. Essential Characteristics of Taxes
3. Taxes distinguished from:
a. Debts
i. 71 Am Jur 2nd 345-346

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 ii. Francia v. IAC, 162 SCRA 753
iii. Philex Mining Corp. v. CIR, CA, and CTA, G.R. No. 125704, August
28, 1998
b. License Fees
i. 71 Am Jur 2nd 352-353
ii. Progressive Dev. Corp. v. QC, 172 SCRA 629
c. Special Assessments (now special levies under the 1991 Local Government
Code)
i. Apostolic Prefect v. Treasurer of Baguio, 71 Phil. 547
d. Tolls
i. 71 Am Jur 2nd 351
ii. Diaz and Timbol v. The Secretary of Finance et al., G.R. No. 193007,
July 19, 2011 – See above II.5.b (Principles of Sound Tax Systems)
e. Penalties
i. NDC v. CIR, 151 SCRA 472
ii. CIR vs. LA FLOR DELA ISABELA, INC., [G.R. No. 211289. January
14, 2019.]
f. Custom duties

III. CLASSIFICATION OF TAXES

1. As to subject matter
a. 71 Am Jur 2nd 357 – 361
b. Capitation or poll taxes
c. Property taxes
d. Excise or license taxes
2. As to incidence or burden
a. 71 Am Jur 2nd 354
b. Direct Taxes
c. Indirect Taxes
3. As to determination of amount
a. 71 Am Jur 2nd 355
b. Specific taxes – Sec. 129, NIRC
c. Ad valorem taxes – Sec. 129, NIRC
4. As to purpose
a. 71 Am Jur 2nd 355 – 356
b. General or Fiscal
c. Special, Regulatory or Sumptuary
5. As to scope
a. National taxes
b. Local taxes
6. As to graduation or rate
a. Progressive
b. Regressive
c. Mixed
d. Proportionate

IV. DOCTRINES IN TAXATION

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1. Prospectivity of Tax Laws
a. Hydro Resources v. CA, G.R. No. 80276, December 21, 1990, 192 SCRA 604
2. Imprescriptibility of Taxes
a. CIR v. Ayala Securities Corporation, G.R. No. L-29485, November 21, 1980,
101 SCRA 231
3. Double Taxation
a. Definition and Nature. 71 Am Jur 2nd 362-365
b. Villanueva v. City of Iloilo, G.R. No. L-26521, December 28, 1968, 26 SCRA
578
c. Punsalan v. Mun Board of Manila 95 Phil. 46
d. The City of Manila, et al. v. Coca-Cola Bottlers Philippines Inc., G.R. No.
181845, August 4, 2009
4. Power to Tax involves the Power to Destroy
5. Doctrine of Equitable Recoupment
a. US v. Dalm, 494 U.S. 596 (1990)
6. Methods of avoiding the occurrence of double taxation
a. Tax Treaty
i. Deutsche Bank AG Manila Branch v. CIR [G.R. No. 188550. August
28, 2013.]
b. Tax Credit
i. CIR v. Lednicky, G.R. Nos. L-18169, L-18286, & L-21434, July 31,
1964
7. Taxpayer’s Suit
a. Nature and Concept
i. Land Bank v. Cacayuran, G.R. No. 191667, April 17, 2013
b. As distinguished from a citizen’s suit
i. Biraogo v. The Philippine Truth Commission of 2010, G.R. No.
192935, December 7, 2010
c. Requisites of a taxpayer’s suit challenging the constitutionality of a tax
measure or act of a taxing authority; concept of locus standi, doctrine of
transcendental importance and ripeness for judicial determination
i. Lozano v. Nograles, G.R. No. 187883, June 16, 2009

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 SESSION 2

CHAPTER II – LIMITATION UPON THE POWER OF TAXATION

I. INHERENT LIMITATIONS

1. Public Purpose
a. Pascual v. Sec. of Public Works, 110 Phil 331
2. Taxing power is inherently legislative
a. In general – Delegata potestas non potest delegari
b. Exceptions:
i. Local Government Units
1) Quezon City, et al. v. Bayantel, G.R. No. 162015, March 6,
2006
ii. Delegation to President –§28(2), Art. VI, 1987 Constitution
iii. Administrative Rate Fixing
1) Smith Bell & Co. v CIR, G.R. No. L-28271, July 25, 1975
3. Territoriality or Situs of Taxation
a. Meaning and scope of limitation
b. Situs of Taxation
i. Meaning
ii. Determination of Situs/Factors in determining Situs
iii. Situs of subjects of taxation
1) Persons §157-158, 1991 LGC
a) Community Tax – individuals and corporate
2) Lex Situs or Lex Rei Sitae - Real Property §42(A)(5) and (C)
(5), NIRC
3) Mobilia Sequuntur Personam - Personal Property §42(A)(6)
and (E), NIRC
4) Income
a) Interests - §42(A)(1) and (C)(1), NIRC
b) Dividends - §42(A)(2) and (C)(2), NIRC
i. Manila Gas v. Collector, 62 Phil 895 (G.R.
No. 42780, January 17, 1936)
c) Services - §42(A)(3) and (C)(3), NIRC
i. CIR v. Baier-Nickel, G.R. No. 153793, August
29, 2006
ii. CIR v. Marubeni Corporation, G.R. No.
137377, December 18, 2001
d) Rentals and Royalties - §42(A)(4) and (C)(4), NIRC
5) Business, Occupation, Transaction
a) Manila Electric Company v. Yatco, G.R. No. 45697,
November 1, 1939, 69 Phil 89
6) Transfer of property by death or gift
a) Wells Fargo Bank v. Col, 70 Phil. 325
7) Multiple situs of taxation

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 4. International Comity (in par parem, non habet imperium – An equal has no power over
an equal)

II. CONSTITUTIONAL LIMITATIONS

1. Due process Clause

a. §1, Art. III, 1987 Constitution
b. Com. of Customs v. CTA & Campos Rueda Co., 152 SCRA 641, G.R. No.
70648, July 31, 1987
2. Equal Protection Clause
a. §1, Art. III, 1987 Constitution
b. Ormoc Sugar Co. v. Treasurer of Ormoc City 22 SCRA 603, G.R. No. L-
23794. February 17, 1968
3. Rule of Taxation shall be Uniform and Equitable
a. §28(1), Art. VI, 1987 Constitution
b. British American Tobacco v. Camacho and Parayno, G.R. No. 163583, August
20, 2008 and April 15, 2009
4. Non-Impairment of Contracts
a. §10, Art. III & §11, Art. XII, 1987 Constitution
b. Imus Electric Co. v. CTA and CIR, G.R. No. L-22421, March 18, 1967
c. Phil. Rural Electric Cooperatives Association Inc., et al. v. DILG and DOF,
G.R. No. 143076, June 10, 2003
5. Non-imprisonment for non-payment of poll tax
a. §20, Art. III, 1987 Constitution
6. Prohibition against taxation of real property of charitable institutions, churches,
parsonages or convents, mosques and non-profit cemeteries
a. §28(3), Art. VI, 1987 Constitution
b. Abra Valley College, Inc. v. Aquino, G.R. No. L-39086, June 15, 1988, 162
SCRA 106
c. Lung Center v. QC et. al. G.R. No. 144104, June 29, 2004
7. Prohibition against taxation of non-stock non-profit educational institutions
a. §4(3), Art. XIV, 1987 Constitution
b. §30(H), NIRC
c. CIR v. CA & YMCA, 298 SCRA 83
d. CIR v. CA, CTA and Ateneo De Manila University, G.R. No. 115349, April 18,
1997
e. CIR v. DLSU, G.R. No. 196596, November 9, 2016
f. La Sallian Educational Innovators Foundation Inc. v. CIR, G.R. No. 202792,
February 27, 2019
8. Passage of tax bills
a. §24, Art. VI, 1987 Constitution
b. Tolentino v. Secretary of Finance 249 SCRA 628
a. Abakada Guro Party List Officers v. Ermita, et. al., G.R. No. 168056,
September 1, 2005 [See Sec. I (5)(a) – Principles of a Sound Tax System]
9. Granting of tax exemption
a. §28(4), Art. VI, 1987 Constitution
b. John Hay Peoples Alternative Coalition, et. al. v. Lim, et al., G.R. No. 119775,
October 24, 2003
10. Veto power of the President

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 a. §27(2), Art. VI, 1987 Constitution
11. Judicial Power to review legality of tax
a. §5(2)(b) AVIII, 1987 Constitution

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 SESSION 3

CHAPTER III – EXEMPTIONS FROM TAXATION

I. IN GENERAL

1. Definition
2. Kinds of Exemption
a. Express
b. Implied or by Omission
c. Contractual
3. Nature of power to grant tax exemption
4. Constitutional Exemption
5. Legislative grant of exemption
a. CIR v Botelho Shipping Corp. 20 SCRA 487, G.R. No. L-21633-34, June 29,
1967
b. CIR v CTA, GCL Retirement Plan, 207 SCRA 487, G.R. No. 95022. March 23,
1992
c. PAGCOR v. BIR, [G.R. No. 172087. March 15, 2011.]
d. Association of Non-profit Clubs, Inc. (ANPC) vs. BIR, G.R. No. 228539, June
26, 2019.
6. Exemption created by Treaty
7. Exemption of Government and Government Agencies
a. §27(C), NIRC
b. §30(I), NIRC
c. §32(B)(7)(b), NIRC
d. Philippine Ports Authority v. City of Iloilo, G.R. No. 109791, July 14, 2003
e. Philippine Fisheries Development Authority v. CA, G.R. No. 169836, July 31,
2007
f. City of Pasig v. Republic of the Philippines represented by PCGG [G.R. No.
185023. August 24, 2011.]

II. COMPROMISE, ABATEMENT AND TAX AMNESTY

1. Compromise §204 (A)

a. KEPCO PHILIPPINES CORPORATION vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. Nos. 225750-51. July 28, 2020.
b. RR 30-2002 as amended by RR 8-04
c. Cases which may be compromised
d. Cases which may not be compromised
e. Basis for Acceptance of Compromise Settlement
f. Delegation of power to compromise §7(c)
2. Abatement §204(B)
a. QATAR AIRWAYS COMPANY WITH LIMITED LIABILITY vs.
COMMISSIONER OF INTERNAL REVENUE, G.R. No. 238914. June 8,
2020.
b. RR 13-01 When may penalties be abated or cancelled
3. Definition and Sample Tax Amnesty Program: RA No. 9480

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 a. Philippine Banking Corporation vs. CIR, G.R. No. 170574, January 30, 2009
b. CS GARMENT, INC., vs. COMMISSIONER OF INTERNAL REVENUE, [G.R.
No. 182399. March 12, 2014.]
4. Voluntary Assessment Program/Last Priority in Audit
a. CIR v. Gonzalez et al., G.R. No. 177279, October 13, 2010

III. ESCAPE FROM TAXATION

1. Shifting of Tax Burden

2. Tax Avoidance vs. Tax Evasion
a. CIR v. The Estate of Benigno P. Toda, G.R. No. 147188, Sept 14, 2004
b. BIR vs. COURT OF APPEALS, et. al., [G.R. No. 197590. November 24,
2014.]

CHAPTER IV – SOURCES AND CONSTRUCTION OF TAX LAWS

I. SOURCES OF TAX LAW

1. Statutes
a. Existing Tax Laws
i. National – National Internal Revenue Code of 1997 as amended
ii. Local – Book II, 1991 Local Government Code
iii. Tariff and Customs Code
iv. BCDA Law
v. PEZA Law
vi. Omnibus Investment Law
2. Revenue Regulations
a. Authority to promulgate. §244, NIRC
b. Specific provisions to be contained in RR. §245, NIRC
c. Powers and duties of the BIR §2
d. Force and effect of RR? Art. 7, Civil Code
i. BPI Leasing Corp v. CA and CIR, G.R. No. 127624, November 18,
2003
ii. COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MICHEL
J. LHUILLIER PAWNSHOP, INC[G.R. No. 150947. July 15, 2003.]
3. BIR Issuances BIR Revenue Administrative Order (RAO) No. 2-2001
a. BIR Rulings
i. Rulings of first impression
ii. Rulings with established precedents
iii. Power of CIR to Interpret Tax Laws. §4, NIRC
iv. Non-Retroactivity of Rulings §246, NIRC
v. CIR v. Burroughs Ltd., G.R. L-66653. June 19, 1986
vi. CIR v. Philippine Health Care Providers, Inc., G.R. No. 168129, April
24, 2007
vii. Exceptions
viii. PBCOM vs. CIR 302 SCRA 241
b. Revenue Memorandum Rulings (RMR)
c. Revenue Travel Assignment Orders (RTAO)
d. Revenue Special Orders (RSO)

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 e. Revenue Memorandum Circulars (RMC)
f. Revenue Memorandum Orders (RMO)
g. Revenue Audit Memorandum Orders (RAMO)
h. Revenue Delegation of Authority Orders (RDAO)
i. Revenue Administrative Orders (RAO)
4. Opinions of the Secretary of Justice
5. Legislative Materials
6. Court Decision

II. CONSTRUCTION AND INTREPREATION OF TAX LAWS, EXEMPTIONS AND

REFUNDS

1. General Rules of Construction of Tax Laws

a. Luzon Stevedoring v Trinidad, 43 Phil. 803
b. Philippine Health Care Providers, Inc. v. CIR, G.R. No. 167330, September 18,
2009
2. Construction of Tax Exemptions
a. City of Iloilo v. Smart, G.R. No. 167260, February 27, 2009
b. Rodriguez, Inc. v Collector 28 SCRA 119
c. Wonder Mechanical Engineering v. CTA 64 SCRA 555
d. Republic Flour Mills v CIR, 31 SCRA 148, G.R. No. L-25602, February 18,
1970
3. Construction of Tax Refunds
a. Resins, Inc. v. Auditor Gen. 25, SCRA 754, G.R. No. L-17888, October 29,
1968
b. Kepco Philippines Corp. v. CIR GR No. 179356, December 14, 2009
4. Tax Rules and Regulations
5. Penal Provisions of Tax Laws
6. Non-Retroactive application

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 SESSION 4

PART II
INCOME TAX

Revenue Regulations No. 2-40 Consolidated Income Tax Regulations

CHAPTER I – GENERAL PRINCIPLES

I. OVERVIEW OF INCOME TAXATION

1. What is Income Tax?

a. Fisher v. Trinidad, 43 Phil 973
2. Philippine Income Tax Law
3. Income Tax Systems
a. Global Tax System
b. Schedular Tax System
c. Semi-schedular or semi-global Tax System
d. Progressive System
e. Regressive System
4. Features of Philippine Income Taxation
a. Direct
b. Progressive
c. Comprehensive
d. Semi-schedular or semi-global
e. American origin
5. Criteria in Imposing Income Tax
a. Citizenship
b. Residence
c. Source

II. GENERAL PRINCIPLES OF INCOME TAXATION §23, TAX CODE

1. Resident Filipino Citizen

2. Nonresident Filipino Citizen
3. Overseas Filipino contract worker or seaman
4. Resident or non-resident alien individual
5. Domestic corporation
6. Foreign corporation

CHAPTER II – CLASSIFICATION OF INCOME TAXPAYERS

I. SCOPE OF INCOME TAXATION

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 1. Definition of a Taxpayer §22(N), NIRC
2. Definition of a Person §22(A), NIRC
3. Who is a “Person liable to tax”
4. CIR vs. Procter & Gamble, G.R. No. 66838, December 2, 1991, 204 SCRA 378
5. Silkair (Singapore) PTE. LTD. v. CIR, G.R. No. 184398, February 25, 2010

II. INDIVIDUAL TAXPAYERS

1. Citizens §1 – §2, Art IV 1987 Constitution

a. Resident Citizens
b. Non-Resident Citizens §22(E), NIRC
2. Alien
a. Resident Alien §22(F), NIRC
b. §5 last par, Revenue Regulations No. 2
c. Non-resident Alien §22(G)
i. engaged in trade or business §25(A), NIRC
ii. not engaged in trade or business §25(B), NIRC
3. Estates and Trusts
a. Definition of Estates & Trusts, Art. 1440-1457, Civil Code
b. Application of Tax, §60, NIRC
c. CIR v. Visayan Electric, [G.R. No. L-22611. May 27, 1968.] 23 SCRA 715
d. CIR v. CA, CTA, GCL Retirement Plan, [G.R. No. 95022. March 23, 1992.]
207 SCRA 487

III. CORPORATIONS

1. Definition of a corporation §22(B), NIRC

a. One Person Corporations
b. Partnerships and Joint Ventures Art. 1767 – 1769, Civil Code
i. Lorenzo Oña v. CIR, G.R. No. L-19342, May 25, 1972, 45 SCRA 74
ii. Evangelista vs. Collector, G.R. No. L-9996, October 15, 1957, 102
Phil 140
iii. Afisco Insurance Corp vs. CIR, G.R. No. 112675, Jan 25, 1999, 302
SCRA 1
c. Co-ownership Art. 484 Civil Code
i. Pascual v. CIR, 166 SCRA 560
2. Domestic Corporation §22(C), NIRC
a. Proprietary Educational Institutions and Hospitals §27(B), NIRC
i. Commissioner v. St. Luke’s Medical Center, G.R. No. 195909,
September 26, 2012
b. Government-owned or -Controlled Corporation §27(C), NIRC
3. Foreign Corporation §22(D), NIRC
4. Resident Foreign Corporation §22(H), NIRC
a. International Air Carrier §28(A)(3)(a), NIRC
b. International Shipping §28(A)(3)(b), NIRC
c. Offshore Banking Units §28(A)(4), NIRC
d. Regional or Area Headquarters and Regional Operating Headquarters of
Multinational Companies §28(A)(6), NIRC

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 e. Subsidiary vs. Branch of a Foreign Corporation
5. Non-Resident Corporation §22(I), NIRC
a. Non-resident Cinematographic Film Owner, Lessor or Distributor §28(B)(2),
NIRC
b. Non-resident Owner or Lessor of Vessels Chartered by Philippine Nationals
§28(B)(3), NIRC
c. Non-resident Owner or Lessor of Aircraft, Machineries and Other Equipment
§28(B)(4), NIRC

IV. GENERAL PROFESSIONAL PARTNERSHIP S22(B)

a. Tan vs. Del Rosario and CIR, G.R. No. 109289, October 3, 1994

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 SESSION 5

CHAPTER III – TAX BASE & TAX RATES

(Assignment: Fill up Tax Matrix – See Annex A)

I. INDIVIDUALS

1. Resident Citizens & Resident Aliens §24

a. Taxable Income
b. Purely Self-Employed Individuals and/or Professionals §24(A)(2)(b) TRAIN
c. Mixed Income Earners §24(A)(2)(c) TRAIN
d. Read also Revenue Regulations No. 8-2018
e. Passive Income
i. Interest §24(B)(1); §27(D)(3); §28(A)(7)(b)
ii. Royalties §24(B)(1)
iii. Prizes & Other Winnings §24(B)(1)
iv. Dividends §24(B)(2)
f. Capital gains on shares of stocks §24(C)
g. Capital gains on real property §24(D)(1)
i. Exception: Sale of Principal Residence §24(D)(2); Read RR No. 13-99
as amended by RR 14-00
1. What is a Principal Residence §2.1, RR 13-99 as amended
2. Conditions for Exemption §3, RR 13-99, as amended
3. Consequence if requisites not met, §5, RR 13-99, as
amended
2. Non-Resident Aliens
a. Engaged in trade or business
i. Taxable Income §25(A)(1);
ii. Passive Income §25(A)(2); §27(D)(3) last paragraph
iii. Capital gains on Sale of Shares of Stock §24(C)
iv. Capital gains on Sale of Real Property §24(D)(1) & (2)
b. Not engaged in trade or business
i. All Income §25(B)
ii. Capital Gains on Sale of Shares of Stock §24(C) in relation to §25(B)
iii. Capital Gains on Sale of Real Property §25(B)
c. Special Aliens §25(F) in relation to §25(C) and President’s Veto; §4 of RR 8-
2018
i. Alien Individual Employed by Regional or Area Headquarters and
Regional Operating Headquarters of Multinational Companies
ii. Alien Individual Employed by Offshore Banking Units
iii. Alien Individual Employed by Petroleum Service Contractor and
Subcontractor
3. Minimum Wage Earners (MWE)
a. Definition §22(HH)
b. Taxation §24(A)(2)(a) last paragraph TRAIN, RR 8-2018
c. Coverage of exemption §3(B), last par RR 8-2018
4. Members of General Professional Partnership §26, §3(C), RR 8-2018

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II. Corporations

2. Domestic Corporations
a. In general, §27(A)
b. Special Corporations
i. Proprietary Educational Institutions and Hospitals §27(B)
1. What is proprietary?
ii. Government Owned and Controlled Corporations §27(C)
c. Passive Income
i. Interest and royalties §27(D)(1); §28(A)(7)(b)
ii. Dividends §27(D)(4)
d. Capital gains
i. Sale of Real Property classified as capital asset §27(D)(5)
ii. Sale of Shares of Stock not Traded in the Stock Exchange §27(D)(2)
iii. Sale of Shares of Stock Traded in the Stock Exchange §127(A)
e. Expanded Foreign Currency Deposit System §27(D)(3)
f. Minimum Corporate Income Tax (MCIT)
i. Tax Rate and Base §27(E)(1)
ii. Carry Forward Excess Minimum Tax §27(E)(2)
iii. Gross Income; Cost of Goods Sold; Cost of Goods Manufactured and
Sold; Cost of Services §27(E)(4)
1. Chamber of Real Estate and Builders’ Associations, Inc. v.
Romula, et al., G.R. No. 160756, March 9, 2010
2. The Manila Banking Corporation v. CIR, G.R. No. 168118,
August 28, 2006

3. Resident Foreign Corporations

a. In general, §28(A)(1)
b. Minimum Corporate Income Tax on Resident Foreign Corporations §28(A)(2)
c. Branch Profits Remittance Tax (BPRT) §28(A)(5)
d. Special Foreign Corporations
i. International Carriers §28(A)(3)(a)
ii. International Shipping §28(A)(3)(b)
iii. Offshore Banking Units §28(A)(4)
iv. Regional or Area Headquarters and Regional Operating Headquarters
§28(A)(6)
e. Passive income
i. Interest and Royalties §28(A)(7)
ii. Dividends §28(A)(7)(d)
f. Capital gains
i. Sale of Real Property Classified as a Capital Asset §28(A)(1)
ii. Sale of Shares of Stock Not Traded in the Stock Exchange §28(A)(7)
(c) in relation to §27(D)(2)
iii. Sale of Shares of Stock Traded in the Stock Exchange §127(A)
g. Income Derived under the Expanded Foreign Currency Deposit System §28(A)
(7)(b)
h. Branch Profit Remittance Tax
i. Marubeni Corp v. Commissioner, G.R. No. 76573, 14 September
1989, 177 SCRA 500

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 ii. Bank of America NT & SA vs. CA & CIR, G.R. No. 103092, July 21,
1994, 234 SCRA 302
4. Nonresident Foreign Corporation
a. In general, §28(B)(1)
b. Special Non-Resident Foreign Corporations
i. Non-resident Cinematographic Film Owner, Lessor or Distributor
§28(B)(2), NIRC
ii. Non-resident Owner or Lessor of Vessels Chartered by Philippine
Nationals §28(B)(3), NIRC
iii. Non-resident Owner or Lessor of Aircraft, Machineries and Other
Equipment §28(B)(4), NIRC
c. Passive Income
i. Interest on Foreign Loans §28(B)(5)(a)
ii. Dividends §28(B)(5)(b)
1. Commissioner v. Procter & Gamble PMC, G.R. No. 66838,
December 2, 1991, 204 SCRA 377
2. Commissioner v. Wander Phils., G.R. No. 68375, April 15,
1988, 160 SCRA 573
d. Capital gains
i. Sale of Real Property Classified as a Capital Asset §28(B)(1)
ii. Sale of Shares of Stock Not Traded in the Stock Exchange §28(B)(5)
(c)
iii. Sale of Shares of Stock Traded in the Stock Exchange §127(A)
5. Improperly Accumulated Earnings Tax (IAET) (repealed by CREATE)
a. Definition and Tax Rate §29(A) and (B)(1)
b. Corporations subject to IAET §29(B)(1)
c. Exceptions §29(B)(2)
d. Evidence of Purpose to Avoid Income Tax §29(C)
e. Improperly Accumulated Taxable Income §29(D)
6. Exemption from Tax on Corporation
a. Educational: Jesus Sacred Heart College v. Collector of Internal Revenue,
G.R. No. L-6807, May 24, 1954
b. Cooperatives: Dumaguete Cathedral Credit Cooperative (DCCCO) v. CIR,
G.R. No. 182722, January 22, 2010

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 SESSION 7

CHAPTER IV – INCOME

I. Taxable Income

1. Definition §31, NIRC, as amended by TRAIN

2. Sec 36 – 38, Regulations No. 2
3. Difference between Capital & Income
a. Madrigal v. Rafferty 38 Phil 14
4. Requisites for Income to be Taxable
a. Existence of income;
b. Realization of income;
i. Test in determining income / Doctrines on Determination of Taxable
income
1. Realization Test
a. Eisner v. Macomber, 252 US 89
b. Fisher v. Trinidad, 43 Phil 973
2. Doctrine of command or control of income
a. Helvering vs. Horst, 311 U.S. 112 (1940)
3. Claim of right doctrine or Doctrine of ownership
a. Commissioner vs. Javier, 199 SCRA 824
b. Commissioner vs. Wilcox, 327 U.S. 404 (1945)
c. James vs. US, 366 US 213 (1961) [overturning
Commissioner vs. Wilcox)
4. Income from whatever source
a. Gutierrez vs. Collector, G.R. Nos. L-9738 & L-9771,
May 31, 1957, 101 Phil 713
b. Forgiveness of Indebtedness, §50, Revenue
Regulations No. 2
c. Farmers & Merchants Bank v. CIR, 59 F2nd 912
ii. Actual vs. constructive receipt
1. Limpan Investment Corp. v. CIR, G.R. No. L-21570, July 26,
1966
c. Recognition of income;
d. Methods of accounting;
i. Cash method vs. accrual method
ii. Installment payment vs. deferred payment vs. percentage of
completion
e. Income is not exempt.

II. Gross Income

1. Definition §32(A), NIRC

2. Gross Income vs. Net Income vs. Taxable Income
3. Classification of Income subject to Tax
a. Compensation Income
i. Definition Sec 2.78.1 (A) RR 2-98; Read RR 8-2018
ii. Backwages

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 iii. Exception: Minimum Wage Earners §24(A), as amended by TRAIN
iv. Fringe Benefits §33(A) NIRC, as amended by TRAIN
1. Definition and Inclusions §33(B) NIRC, as amended by TRAIN
2. Rate §33(A) NIRC, as amended by TRAIN
3. Tax Base §33(A) NIRC, as amended by TRAIN
4. Exceptions §33(C) NIRC
a. Exempt under special laws
b. Contributions of employers to retirement, insurance
and hospitalization benefit plans
c. Benefits to Rank & File Employees
d. De Minimis Benefits
i. Definition of De Minimis Benefits §2.78.1(A)
(3), RR 2-98 as amended by RR 5-2008, 10-
2008, 5-2011, 8-2012, 1-2015 and RR 11-
2018
5. Collector v. Henderson, 1 SCRA 649
6. CIR v. Castaneda, G.R. No. 96016, Oct 17, 1991, 203 SCRA
72
b. Income from the exercise of profession
c. Income from business
i. See §43 – 47, Revenue Regulations No. 2
ii. BUREAU OF INTERNAL REVENUE (BIR) vs. FIRST E-BANK
TOWER CONDOMINIUM CORP., G.R. No. 215801. January 15,
2020.
d. Income derived from dealings in property
i. Types of Properties
1. Ordinary assets §39(A)(1)
2. Capital Assets §39(A)(1)
ii. Types of Income from dealings in property
1. Ordinary Income and Loss §22(Z)
2. Capital Gains and Loss
a. Net Capital Gain §39(A)(2)
b. Net Capital Loss §39(A)(3)
3. Holding Period §39(B)
4. Limitation on Capital Losses §39(C)
5. Net Loss Carry Over §39(D)
iii. Computation of gain or loss
1. General §40(A)
2. Basis for Determining Gain or Loss §40(B)
3. Exchange of Property
a. General Rule §40(C)(1)
b. Exceptions: No gain or loss in certain exchanges of
properties §40(C)(2)
c. Commissioner of Internal Revenue v. Filinvest
Development Corporation, G.R. No. 163653, July 19,
2011
d. Commissioner of Internal Revenue vs. Lucio l. Co, et
al., G.R. No. 241424. February 26, 2020.
e. Passive Income

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 i. Interest from Deposits, Deposit Substitutes, Trust Funds and Similar
Arrangements
ii. Dividends
1. Distribution of Dividends §73
a. Liquidating Dividend
b. Cash Dividend
c. Stock Dividend
d. Property Dividend
2. Wise & Co., Inc., et al., vs. Meer [G.R. No. 48231. June 30,
1947.]
3. CIR v. CA, CTA, & ANSCOR, G.R. No. 108576, January 30,
1999
4. Eisner v. Macomber, 252 US 89, supra
iii. Royalties
iv. Rental Income
1. Lease of personal property
2. Lease of real property
a. Leasehold improvements by lessee
b. Advance rent
f. Annuities, proceeds from life insurance or other type of insurance
g. Prizes and winnings
h. Pensions, retirement benefits or separation pay
i. Partner’s distributive share in a general professional partnership §26
j. Income from whatever source
i. Forgiveness of Debt
ii. Recovery of accounts previously written off
iii. Receipt of refund or credit
4. Exclusions from Gross Income
a. In general, §32(B), as amended by TRAIN
b. 13TH month pay and other benefits, §32(B)(7)(e), as amended by TRAIN
c. Sec 2.78.1 (B)(11) RR 2-98, as amended by RR 11-2018
d. CIR v. CA & Castaneda, G.R. No. 96016, Oct 17, 1991, 203 SCRA 72, supra
5. Source Rules
a. Interests §42(A)(1) and (C)(1)
b. Dividends §42(A)(2) and (C)(2)
c. Services §42(A)(3) and (C)(3)
d. Rentals §42(A)(4) and (C)(4)
e. Royalties §42(A)(4) and (C)(4)
f. Sale of Real Property §42(A)(5) and (C)(5)
g. Sale of Personal Property §42(E) in relation to §42(A)(6)
h. Sale of Shares of Stock of corporation

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 SESSION 8

CHAPTER V – DEDUCTIONS

I. Conditions for deductibility of business expenses

1. It must be ordinary and necessary §34(A)(1)(a)
a. Test of Deductibility
i. ESSO v. CIR, G.R. Nos. L-28508-9, July 7, 1989, 175 SCRA 149
ii. Zamora v. Collector 8 SCRA 163, G.R. No. L-15290, May 31, 1963
iii. Kuenzle & Streiff, Inc. v. CIR, G.R. No. L-18840, May 29, 1969
b. Test of Reasonableness
i. CM Hoskins & Co., Inc. v. Commissioner, G.R. No. L-24059,
November 28, 1969, 30 SCRA 434
ii. CIR v. General Foods (Phils), Inc., G.R. No. 143672, April 24, 2003
2. It must be paid or incurred during the taxable year §34(A)(1)(a)
a. CIR v. Isabela Cultural Corporation, G.R. No. 172231, February 12, 2007
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 profession §34(A)(1)(a), NIRC
a. CIR vs. CTA & Smith Kline & French Overseas Co (Phil Branch), 127 SCRA 9,
G.R. No. L-54108, January 17, 1984
b. Gutierrez v. Collector, 14 SCRA 33
4. It must be supported by adequate invoices or receipts §34(A)(1)(b), NIRC
a. Gancayco vs. Collector, 1 SCRA 980, G.R. No. L-13325, April 20, 1961
5. It is not contrary to law, public policy or morals; §34(A)(1)(c)
a. 3M Philippines, Inc. v. CIR, G.R. No. 82833, September 26, 1988
6. The tax required to be withheld on the expense paid or payable was remitted to the
BIR
a. Requirements for Deductibility §34(K) Revenue Regulations No. 12-13
revoked by RR No. 6-2018, reinstating §2.58.5 of RR 14-2002, as amended by
RR 17-2003
II. Types of Deductions
1. Itemized Deductions §34(A) to (J)
2. Optional Standard Deduction §34(L)
3. Special Deductions under the NIRC and special laws §37 and 38

III. Itemized Deductions

1. Interest
a. Requisites for Deductibility §34(B)(1)
b. Disallowed Interest on Tax Arbitrage §34(B)(1)

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 c. Exceptions §34(B)(2)
d. Optional Treatment of Interest Expense §34(B)(3)
i. Palanca v. CIR, G.R. No. L-16626, October 29, 1966, 18 SCRA 496
ii. Paper Industries Corp. (PICOP) v. CA, CIR & CTA, G.R. No. 106949-
50, December 1, 1995, 250 SCRA 434

2. Taxes
a. Requisites for Deductibility §34(C)(1)
b. Exceptions §34(C)(1)
c. Limitation on Deductions in case of NRAETB §34(C)(2)
i. CIR v. Lednicky, G.R. No. L-18169, July 31, 1964
d. Foreign Tax Credits
i. Persons allowed §34(C)(3)
ii. Limitations on Credit §34(C)(4)

3. Losses
a. Requisites for Deductibility §34(D)(1)
i. Marcelo Steel Corp. v. Collector, G.R. No. L-12401, October 31, 1960,
109 Phil 921
ii. Plaridel Surety & Ins Co v. CIR, G.R. No. L-21520. December 11,
1967, 21 SCRA 1187
iii. CIR v. Priscilla Estate, G.R. No. L-18282, May 29, 1964
b. Ordinary Loss v. Capital Loss
i. Limitation on Capital Losses §34(D)(4)(a)
ii. Securities Becoming Worthless §34(D)(4)(b)
iii. China Bank Corp vs. CA, CIR, CTA, G.R. No. 125508, July 19, 2000,
336 SCRA 178
c. Wash Sales §34(D)(5) & §38
d. Wagering Losses §34(D)(6)
e. Abandonment Losses §34(D)(7)
f. Net Operating Loss Carry Over (NOLCO) §34(D)(3), RR No. 14-2001
i. What is NOLCO?
ii. How does NOLCO work?
iii. When not allowable?
iv. PICOP v. CA, CIR & CTA, G.R. No. 106949-50, December 1, 1995,
250 SCRA 434, supra
4. Bad Debts
a. Requisites for Deductibility §34(E)(1)
i. Transactions between related parties §36(B) in relation to §34(E)(1)
ii. Recovery of bad debt previously written off
1. Tax Benefit Rule §34(E)(1)
b. Collector v. Goodrich International Rubber Co., G.R. No. L-22265, December
22, 1967, 21 SCRA 1336
c. Phil Refining Company v. CA, CTA and Commissioner, G.R. No. 118794, May
8, 1996, 326 Phil 680

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 SESSION 9

5. Depreciation
a. Requisites for Deductibility §34(F)(1)
b. Methods of Depreciation
i. Straight Line Method
ii. Declining Balance Method
iii. Sum of the Years Digit Method
c. Special Rules on Depreciation
i. Private Educational Institutions S34(A)(2)
ii. Petroleum Operations S34(F)(4)
iii. Mining Operations S34(F)(5)
iv. For Nonresident Aliens Engaged in Trade or Business or Resident
Foreign Corporation S34(F)(6)
d. Basilan Estate, Inc. v. Commissioner, 21 SCRA 17
e. Zamora v. Collector, 8 SCRA 163
f. US v. Ludley, 247 US 295
6. Depletion
a. In general, §34(G)(1)
b. US v. Ludley, 247 US 295, supra
7. Charitable & other Contributions
8. Requisites for Deductibility §34(H)(1)
a. Limited Deductibility §34(H)(1)
b. Deductible in Full §34(H)(2)
c. Roxas v. CTA, 23 SCRA 276
9. Research & Development §34(I)
10. Contribution to Pension Trust
a. Requisites for Deductibility §34(J)
IV. Optional Standard Deduction (OSD) §34(L), RR No. 16-08
1. Requisites for OSD
2. OSD for Individuals
3. OSD for Corporations
V. Premium Payments on Health/Hospitalization Insurance §34(M)
VI. Allowance for Personal & Additional Exemption §12, TRAIN
1. Personal Exemption §35(A)
a. Single
b. Married
c. Head of Family
d. Estates and Trusts §62
2. Additional Exemption for dependents §35(B)
3. Definition of “Dependent” §35(B)
4. In case of married individuals §35(B)
5. In case of legally separated spouses §35(B)
6. Change of Status §35(C)
7. Personal Exemption Allowable to Nonresident Alien Individual §35(D)
VII. Items not Deductible
1. General Rule §36(A)

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 a. Atlas Consolidated Mining Co. v. CIR, G.R. No. L-26911, January 27, 1981,
102 SCRA 246
b. Gancayco v. Collector, 1 SCRA 980, G.R. No. L-13325, April 20, 1961
2. Losses from sales or exchanges of property between related parties §36(B)

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 SESSION 10

CHAPTER VI – PARTNERSHIP

I. Taxation of General Partnership §22(B)

II. Taxation of General Professional Partnership §26

CHAPTER VII – ESTATES & TRUSTS

I. Application of Tax §60(A)

II. Exception §60(B)
III. Computation and Payment §60(C)
1. In general, §60(C)(1)
2. Consolidation of income of two or more trusts §60(C)(2)
3. Taxable Income §61
4. Exemption allowed to Estates and Trusts §62
5. Revocable trusts §63
6. Income for benefit of grantor §64(A)
7. Meaning of “in the discretion of the grantor” §64(B)

CHAPTER VIII – ACCOUNTING PERIODS AND METHODS OF ACCOUNTING

I. Accounting Periods
1. Taxable year §22(P)
a. Calendar year
b. Fiscal year §22(Q)
2. General Rule on computation of taxable income §43
3. Period in which items of Gross Income Included §44
4. Period in which Deductions and Credits taken §45
5. Change of Accounting Period §46
II. Accounting Methods
1. Cash receipts and disbursements method
a. CIR v. Isabela Cultural Corp, G.R. No. 172231, February 12, 2007
2. Accrual Method
a. Filipinas Synthetic Fiber Corp vs. CA, 316 SCRA 480
3. Long-term Contracts §48
4. Sec 44, Regulations No. 2
5. Installment Basis §49
6. Sec 51, Regulations No. 2

CHAPTER IX – WITHHOLDING TAXES

I. Concept of Withholding Tax

1. CIR v. Solidbank Corporation, G.R. No. 148191, November 25, 2003
II. Types of Withholding Tax
1. Withholding on Wages
a. Requirement for withholding §79(A)

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 b. Tax paid by recipient §79(B)
c. Refunds or credits §79(C)
d. Year-end adjustment §79(H)
e. Liability for tax §80
2. Withholding Tax at Source
a. Final Withholding Taxes §57(A)
i. RCBC v. CIR, G.R. No. 170257, September 7, 2011
b. Creditable Withholding Taxes or Expanded Withholding Tax §57(B)
i. Chamber of Real Estate and Builders’ Associations, Inc. v. Romulo, et
al., G.R. No. 160756, March 9, 2010
3. Withholding VAT §114(C)
4. Fringe Benefits Tax (FBT) §33

CHAPTER X – RETURNS AND PAYMENT OF TAX

I. Individuals
1. Income Tax Return
a. Who are required to file an Income Tax Return (ITR) §51(A)(1)
i. Married Individuals §51(D)
ii. Income of minor children §51(E)
iii. Individuals deriving purely compensation income
iv. Professionals and Self-employed individuals
1. In General, §74(A)
2. Quarterly ITR §74(B)
b. Who are not required to file an ITR §51(A)(2)
c. Substituted Filing of ITR by Employees Receiving Purely Compensation Income
§51-A, TRAIN
d. Venue of Filing of ITR §51(B)
e. Time of Filing of ITR §51(C)
f. Payment of income tax §56(A)
g. Installment payment §56(B)
2. Capital Gains Returns
a. For sale or exchange of shares of stock not traded in a local stock exchange
§51(C)(2)(a)
b. For sale of real property §51(C)(2)(b)
II. Corporations
1. Income Tax Return §52(A)
a. Quarterly Corporate Income Tax Return §75
b. Final Adjustment Return §76
i. Place of Filing §77(A)
ii. Time of Filing §77(B)
iii. Time of Payment §77(C)
1. United International Pictures, AB v. Commissioner of Internal
Revenue, G.R. No. 168331, October 11, 2012
2. Capital Gains Tax Return
3. Capital Gains Returns
a. For sale or exchange of shares of stock not traded in a local stock exchange
§52(D)
b. For sale of real property

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III. Estates and Trusts §65
IV. General Professional Partnerships §55
V. Withholding Tax Returns
1. Quarterly Returns and Payments of Tax Withheld §58(A)
2. Certificate of Tax Withheld §58(B)
3. Annual Information Return (Alpha List) §58(B)
4. Income of Recipient §58(D)

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 LYCEUM OF THE PHILIPPINES UNIVERSITY
ANNEX A INDIVIDUALS
CITIZENS ALIENS
Non-resident Non-resident not engaged
Non-resident incldg
Resident Resident engaged in trade or in trade or business
OFWs
business (NRERB) (NRANETB)
Self-Employed /
INCOME Compensation Professionals
<P3M
Source Within & Without the PH§24(A)(1)(a)
§24(A)(1)(b), §23(C) §24(A)(1)(c) §25(A)(1) §25(B)
Tax Base
§24(A)(1)(a) §24(A)(1)(b) §24(A)(1)(b) §24(A)(1)(c) §25(A)(1) §25(B)
Rate
§24(A)(2) §24(A)(1)(b)&(c) §24(A)(2) §24(A)(2) §25(A)(1) §25(B)
PASSIVE INCOME
Interest from
Peso Bank
deposits §24(B)(1) §24(B)(1) §24(B)(1) §25(A)(2) §25(B)

§24(B)(1) §24(B)(1) §24(B)(1)

FCDU/OBU
§24(B)(1) §27(D)(3) §24(B)(1) §27(D)(3) §27(D)(3)
§28(A)(7)(b) §28(A)(7)(b) §28(A)(7)(b)
Long-Term
Deposit §22 (FF) §24(B)(1) §24(B)(1) §24(B)(1) §25(A)(2) §25(B)
Royalties
§24(B)(1) §24(B)(1) §24(B)(1) §25(A)(2) §25(B)
Prizes & Winnings
§24(B)(1) §24(B)(1) §24(B)(1) §24(B)(1) §25(B)
Cash/Property
Dividends §24(B)(2) §24(B)(2) §24(B)(2) §25(A)(2) §25(B)
CAPITAL GAINS TAX
Real Property

Page | 28
 §24(D)(1) & (2) in
Classified as Capital §24(D)(1) §24(D)(1) §24(D)(1)
relation to §25(A) §25(B)
Asset §24(D)(2) §24(D)(2) §24(D)(2)
(1)
Shares of Stock not
§24(C) in relation
listed/traded in PSE §24(C) §24(C) §24(C) §25(B)
to §25(A)(2)
SPECIAL ALIENS
Aliens employed by:
Regional or area See §25(F) in
headquarters relation to §25(C)
See §25(F) in relation to §25(C) and
Offshore banking units and VETO;
VETO;
Petroleum service §4 RR 8-2018
§4 RR 8-2018
contractors

CORPORATION
FOREIGN CORPORATIONS
Domestic Resident Non-resident
TAXABLE INCOME
Source
§27(A) §28(A)(1) §28(B)
Tax Base
§27(A) §28(A)(1) §28(B)

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 §27(E)(1) §28(A)(2)

Rate §27(A) §28(A)(1)

§28(B)
§27(E)(1) §28(A)(2)
PASSIVE INCOME
Interest from
Bank deposits (Peso)
§27(D)(1) §28(A)(7)(a) §28(B)

FCDU/OBU §27(D)(3)
§27(D)(1) §28(A)(7)(a)
§28(A)(7)(b)
Long-Term Deposit §22 (FF)
§27(D)(1) §28(A)(7)(a) §28(B)

Foreign Loans NA NA §28(B)(5)(a) (subject to preferential tax

treaty rates)

Royalties §28(B) (subject to preferential tax treaty

§27(D)(1) §28(A)(1)
rates)

Prizes & Winnings §28(B) (subject to preferential tax treaty

§27(A) §28(A)(1)
rates)

§28(B)
Cash/Property Dividends
§27(A) §28(A)(7)(d) §28(B)(5)(b)
(subject to preferential tax treaty rates)
CAPITAL GAINS TAX
Real Property Classified as
Capital Asset §27(D)(5) §28(A)(1) §28(B)
Shares of Stock not listed/traded
in PSE §27(D)(2) §28(A)(7)(c) §28(B)(5)(c)

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BRANCH PROFIT
NA NA
REMITTANCE TAX (BPRT) §28(A)(5)
IMPROPERLY ACCUMULATED
NA NA
EARNINGS TAX (IAET) §29(A)

SPECIAL CORPORATIONS
International Carriers (Air or Sea)
§27(A)(3)
Offshore Banking Units
§27(A)(4)
Regional or Area Headquarters
§22(DD) §27(A)(5)(a)
Regional Operating
Headquarters §22(EE) §27(A)(5)(b)
Non-resident cinematographic
film owner, lessor or distributor §27(B)(2)
Non-resident owner or lessor of
vessels §27(B)(3)
Non-resident owner or lessor of
aircraft, machineries and §27(B)(4)
equipment
Proprietary Educational
Institutions and nonprofit
§27(B)
hospitals

TAXATION I
COURSE OUTLINE SY 2020-2021
ATTY. KATHYRN A. ZARATE
Page 31