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Tax 1 Pre-Week Notes

Taxation 1
By: Eric Recalde

Summary of Inherent/Constitutional Tax Exemptions

Particulars Assets Revenues Case Law References

Government Exempt from realty Exempt from income CIR vs. Bases
instrumentalities; tax, as recognized in tax, as recognized in Conversion and
Inherent limitation LGC, Sec. 234 NIRC, Sec. Development
(Ownership test), in 32(B)(7)(b); See also Authority, 2020
relation to Sec. 133(o) tax exemption of
certain GOCCs, NIRC, Manila International
Exempt from duties, Sec. 27(C) Airport Authority
see CMTA, Sec. (MIAA) v. CA, 2006
800(m) Exempt from local and subsequent airport
taxes, see LGC, Sec. cases
133(o)
Philippine Fisheries
Development Authority
v. CA, 2007 and
subsequent fishport
cases

MWSS v. Local
Government of
Quezon City, 2018;
MWSS v CBAA and
City of Pasay, 2021;
City of Lapu-Lapu v.
PEZA, 2014; Province
of Bataan v. PEZA,
2014
Foreign Governments; Exempt from realty Exempt from income CIR vs. Mitsubishi
international tax, see LGC, Sec. tax, as recognized in Metal Corporation,
organizations; Inherent 130(b)(4) NIRC, Sec. 32(B)(7)(a) 1990
limitation
Exempt from duties, Exempt from VAT, CIR vs. Gotamco &
see CMTA, Sec. NIRC, Sec. 112(K) Sons, Co., 1987
800(l)
Exempt from local
taxes, see LGC, Sec.
130(b)(4); exempt from
community tax, LGC,
Sec. 159

Non-stock, non-profit Exempt from realty Exempt from income CIR v. De La Salle
educational institution; tax, as recognized in tax, as recognized in University, Inc., 2016
See Constitution, Art. LGC, Sec. 234 (Use NIRC, Sec. 30
XIV, Sec. 4(3), and Art. Test) (Organization and Use Abra Valley College,
VI, Sec. 28(3) Test; Not subject to Inc. v. Aquino, et.al.,
Exempt from duties, Activity Test in last par. 1988; University of the
see also CMTA, Sec. of Sec. 30) Philippines v. City
800(t) Treasurer of Quezon
Exempt from VAT, City, 2019

Preweek Notes for Tax 1, Tax Exemptions by Prof. Eric Recalde. © 2021-2022 by Jurists Review Center Inc.
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 NIRC, Sec. 112(H)
Angeles University
Exempt from local Foundation vs. City of
taxes, see also LGC, Angeles, 2012
Sec. 130(b)(4)
Proprietary educational Exempt from realty With preferential
institution; See tax, as recognized in income tax treatment,
Constitution, Art. XIV, LGC, Sec. 234 (Use as provided in NIRC,
Sec. 4(3), but it Test) Sec. 27(B);
depends on Congress Organization and
and subject to limits Exempt from duties, Activity Test (with 50%
prescribed by law, and as provided in CMTA, threshold)
Art. VI, Sec. 28(3) Sec. 800(t)
Exempt from VAT for
educational services,
NIRC, Sec. 112(H),
subject to accreditation

LGC, Sec. 130(b)(4)

Religious and Exempt from realty Exempt from income CIR, v. St. Lukes
Charitable institutions; tax, as recognized in tax, as provided in Medical Center, Inc.,
See Constitution, Art. LGC, Sec. 234 NIRC, Sec. 30 2017
VI, Sec. 28(3) (Character Test and (Organization and
Use Test) Activity Test) Lung Center of the
Philippines v. Quezon
Exempt from duties, With preferential City, 2004; Bishop of
as provided in CMTA, income tax treatment, Nueva Segovia v.
Sec. 800(t) as provided in NIRC, Provincial Board of
Sec. 27(B); Ilocos Norte,1927
Organization and
Activity Test (with 50%
threshold)

Exempt from VAT on

importation and sale of
published materials,
NIRC, Sec. 112(R),
provided it is not
devoted for paid
advertisements

LGC, Sec. 130(b)(4)

Additional Notes:

a. Contributions/donations to these persons/organizations may be claimed as tax deduction by the

contributor or donor, subject to certain limitations and accreditation requirement, NIRC, Sec.
34(H);

b. Transfer is exempt from estate tax, NIRC, Sec. 86(A)(6); Sec. 86 (B)(4); Sec. 87(D); and
donor’s tax, NIRC, Sec. 101(A)(2).

Preweek Notes for Tax 1, Tax Exemptions by Prof. Eric Recalde. © 2021-2022 by Jurists Review Center Inc.
Copying, dissemination, storage, use, modification, uploading, and downloading without the express written
consent of Jurists Review Center Inc. is strictly prohibited and shall be subjected to criminal prosecution and
administrative charges, including the appropriate complaint with the Bar Confidant’s Office and IBP. Page 2 of 2