THE FRATERNAL ORDER OF UTOPIA

ATENEO DE MANILA UNIVERSITY

SCHOOL OF LAW
SINCE 1964

“For tomorrow shall cast a myriad of mighty storms that only

those with firm determination and Utopian vision do survive.”

LAW PERTAINING TO THE STATE AND ITS RELATIONSHIP WITH ITS CITIZENS

POLITICAL LAW

What are the requisites for a valid exercise of police power?

1. Lawful Subject - The subject of the measure is within the scope of police power, and
the activity or property sought to be regulated affects the public welfare. The interest
of the public, generally as compared to a particular class, requires interference by the
State; and
2. Lawful Means - The means employed are reasonably necessary for the accomplishment
of the purpose, and not unduly oppressive on individuals. Both the end and the means
must be legitimate. (US v. Toribio, G.R. No. L-5060)

What are the requisites for a valid exercise of eminent domain?

1. The property taken must be private property;

2. There must be genuine necessity to take the private property;
3. The taking must be for public use;
4. There must be payment of just compensation; and
5. The taking must comply with due process of law. (Manotok v. National Housing
Authority, G.R. No. L-55166-67)

What are the three tests used in equal protection cases?

Requires that the classification be shown to be rationally related

Rational Basis
to serving a legitimate state interest.

Requires that the classification serves an important state interest

Intermediate Scrutiny
and is at least substantially related to serving that interest.

Requires that the government proves that the classification is

Strict Scrutiny necessary to achieve a compelling state interest and that it is the
least restrictive means to protect such interest.
(Serrano v. Gallant, G.R. No. 167614)

When can a statute be declared as void for vagueness?

When it lacks comprehensible standards that men of common intelligence must necessarily
guess at its meaning and differ in its application. Such a statute is void because it violates
due process for failure to accord persons, especially the parties targeted by it, fair notice of
what conduct to avoid. (Romualdez v. Sandiganbayan, G.R. No. 152259)

What are the requisites for a valid classification under the equal protection clause?

1. The classification must be based on substantial distinctions which make real

differences;
2. It must be germane to the purposes of the law;
3. It must not be limited to existing conditions only; and
4. It must apply equally to each member of the class. (Central Bank Employees
Association v. BSP, G.R. No. 148208)

Page 1 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

Is the judge required to personally examine the complainant and his witnesses in
issuing arrest warrants?

No. The judge is only required to (1) personally evaluate the report and the supporting
documents submitted by the prosecutor regarding the existence of probable cause, and on
the basis thereof, he may already make a personal determination of the existence of probable
cause; and (2) if he is not satisfied that probable cause exists, he may disregard the
prosecutor's report and require the submission of supporting affidavits of witnesses to aid him
in arriving at a conclusion as to the existence of probable cause. (Leviste v. Hon. Alameda,
G.R. No. 182677)

What is the rule regarding searches conducted on vehicles at checkpoints?

Searches conducted at police or military checkpoints are not illegal per se, provided that the
vehicle is neither searched nor its occupants subjected to a body search, and the inspection
of the vehicle is merely limited to a visual search. An extensive search without warrant could
only be resorted to if the officers conducting the search had probable cause to believe before
the search that either the motorist was a law offender or that they would find the
instrumentality or evidence pertaining to the commission of a crime in the vehicle to be
searched. (Sapi v. People, G.R. No. 200370) (J. Leonen's concurring opinion in the case of People v. Guerrero
and Taino v. CA, citing Obra v. CA)

What are the requisites for the issuance of a search warrant and a warrant of arrest?

1. A determination of probable cause;

2. The determination of probable cause was made personally by a judge;
3. The determination by the judge was based on an examination under oath or affirmation
of the complainant and the witnesses he may produce;
4. The complainant and/or witnesses testified to facts within their personal knowledge;
and
5. The warrant issued must particularly describe the place to be searched or the persons
or things to be seized. (People v. Francisco, G.R. No. 129035)

How can election-related speech be regulated by the COMELEC?

The regulation must only be with respect to the time, place, and manner of the rendition of
the message. In no situation may the speech be prohibited or censored on the basis of its
content. (Diocese of Bacolod v. COMELEC, G.R. No. 205728)

What happens when the public purpose of an expropriated property ceases to exist?

There would no longer be a cogent point for the government’s retention of the expropriated
land. Consequently, once the purpose is terminated or peremptorily abandoned, the former
owner may seek its reversion, subject to the return of the just compensation received. (Vda.
De Ouna v. Republic, G.R. No. 168770)

When can the President exercise his or her calling-out power?

The President may resort to this extraordinary power whenever it becomes necessary to
prevent or suppress lawless violence, invasion, or rebellion. (David v. Arroyo, G.R. No.
171396)

What are the limitations on the declaration of martial law and the suspension of the
privilege of the writ of habeas corpus?

1. A time limit of 60 days subject to possible extension;

2. Review and possible revocation by Congress; and
3. Review and possible nullification by the Supreme Court. (Lagman v. Medialdea, G.R.
No. 231658)

What is the rule on the President’s veto powers?

Generally, the President must veto a bill in its entirety or not at all. However, the President
shall have the power to veto any particular item or items in an appropriation, revenue, or

Page 2 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

tariff bill, but the veto shall not affect the item or items to which he does not object. (Bengzon
v. Drilon, G.R. No. 103524 & Gonzalez v. Salvador, G.R. No. 113105)

Can Congress cite Justices of the Court of Appeals in contempt during legislative
hearings?

No. Only the Supreme Court has administrative supervision over all courts and court
personnel. By virtue of this power, no other branch of the government may intrude into this
power, without running afoul the doctrine of separation of powers. (Maceda v. Vasquez, G.R.
No. 102781)

What are the requisites for the courts to exercise its power of judicial review?

1. An actual and appropriate case and controversy exists;

2. A personal and substantial interest of the party raising the constitutional question;
3. The exercise of judicial review is pleaded at the earliest opportunity; and
4. The constitutional question raised is the very lis mota of the case. (Arceta v. Hon.
Mangrobang, G.R. No. 152895)

What are the qualifications of the President and Vice-President?

1. A natural-born citizen of the Philippines;

2. A registered voter, able to read and write;
3. At least 40 years of age on the day of the election; and
4. A resident of the Philippines for at least 10 years immediately preceding such election.
(PHIL. CONST., art. VII, Sec. 2)

What are the qualifications of the members of Constitutional Commissions?

1. Natural-born citizen;
2. 35 years old on election day;
Civil Service 3. Not a candidate for any elective position in the election immediately
Commission preceding appointment; and
4. With proven capacity for public administration. (PHIL. CONST., art. IX-
B, Sec. (1))

1. Natural-born citizen;
2. 35 years old on election day;
3. Not a candidate for any elective position in the election immediately
Commission preceding appointment;
on Elections 4. College degree holder; and
5. The Chairman and majority should be members of the bar who have
been engaged in the practice of law for at least 10 years. (PHIL.
CONST., art. IX-C, Sec. 1(1))

1. Natural-born citizen;
2. 35 years old on election day;
3. Not a candidate for any elective position in the election immediately
preceding appointment; and
Commission
4. Must either be a:
on Audit
a. CPA with at least 10 years of auditing experience; or
b. Member of the Bar engaged in practice of law for at least 10
years (at no time shall all members belong to the same
profession). (PHIL. CONST., art. IX-D, Sec. 1(1))

What are the qualifications of district representatives of the House of

Representatives?

The candidate must be:

1. A natural-born citizen;
2. 25 years old on election day;
3. Able to read and write;

Page 3 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

4. A registered voter in district in which he shall be elected; and

5. A resident thereof for not less than one (1) year immediately preceding election day.
(PHIL. CONST., art. VI, Sec. 6)

What are the qualifications of party-list nominees of the House of Representatives?

The nominee must be:

1. A natural-born citizen of the Philippines;
2. At least 25 years of age on the day of the election or in case of a nominee of the youth
sector, he must at least be 25 but not more than 30 years old on the day of the
election;
3. Able to read and write;
4. A registered voter;
5. A resident of the Philippines for a period of not less than one (1) year immediately
preceding the day of the election; and
6. A bona fide member of the party or organization which he seeks to represent for at
least 90 days preceding the day of the election. (Party-List System Act, Sec. 9)

What are the prohibitions imposed on the members of Congress under the
Constitution?

1. The member of the Congress shall neither hold any other office or employment in the
government during his term without forfeiting his seat, nor be appointed to an office
which have been created or the emoluments thereof increased during the term for
which he was elected (PHIL. CONST., art. VI, Sec. 13);
2. The member of the Congress shall neither appear personally as a counsel before any
court of justice, quasi-judicial and other administrative bodies, and the Electoral
Tribunal, nor be interested, directly or indirectly, in any contract with, or in any
franchise or special privilege granted by the Government (PHIL. CONST., art. VI, Sec.
14); and
3. The member of the Congress shall not intervene in any matter before any office of the
Government for his pecuniary benefit or where he may be called upon to act on account
of his office. (PHIL. CONST., art. VI, Sec. 14)

What are the requisites to invoke executive privilege?

1. The protected communication must relate to a quintessential and non-delegable

presidential power;
2. The communication must be authored or solicited and received by a close advisor of
the President or the President himself. The judicial test is that an advisor must be in
operational proximity with the President; and
3. There is no adequate showing of a compelling need that would justify the limitation of
the privilege and of the unavailability of the information elsewhere by an appropriate
investigating authority. (Neri v. Senate Committee on Accountability of Public Officers
and Investigations, G.R. No. 180643)

Is the rule that a bill must be read three times on separate days absolute?

No. This can be dispensed with when the President certifies the necessity of its immediate
enactment to meet a public calamity or emergency. (Tolentino v. Secretary of Finance, G.R.
No. 115455)

What is the enrolled bill doctrine?

This doctrine states that the signing of the bill by the Speaker of the House and the President
of the Senate, and the certification by the secretaries of both Houses of Congress that it was
passed are conclusive of the bill’s due enactment. (Arroyo v. De Venecia, G.R. No. 127255)

What are financial and technical agreements?

They are service contracts between the President and foreign-owned corporations wherein
the foreign corporation is authorized to undertake rendition of a whole range of integrated
and comprehensive services, ranging from the discovery to the development, utilization and

Page 4 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

production of minerals or petroleum products–not just mere technical or financial assistance.

(La Bugal v. DENR, G.R. No. 127882)

What is the citizenship and equity requirement to own and manage mass media, and
to engage in the advertising industry?

The ownership and management of mass media shall be limited to citizens of the Philippines,
or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.
Only Filipino citizens or corporations or associations at least 70% of the capital of which is
owned by such citizens shall be allowed to engage in the advertising industry. (PHIL. CONST.,
art. XVI, Sec. 11)

What is an amendment?

It refers to an addition or change within the lines of the original constitution that will effect
an improvement, or better carry out the purpose for which it was framed. It refers to a change
that adds, reduces, or deletes without altering the basic principles involved. It affects only
the specific provision being amended. (Lambino v. Comelec, G.R. No. 174153)

What is a revision?

It refers to a change that alters a basic principle in the constitution, like altering the principle
of separation of powers or the system of checks-and-balances. There is also revision if the
change alters the substantial entirety of the constitution, as when the change affects
substantial provisions of the constitution. (Lambino v. Comelec, G.R. No. 174153)

INTERNATIONAL LAW

What are the four sources of international law?

1. General or Particular International Conventions, which establish rules expressly

recognized by the contesting states;
2. International Customs, as evidence of a general practice accepted as law;
3. General Principles of Law, recognized by civilized nations; and
4. Judicial decisions and teachings of the most highly qualified publicists. (ICJ Statute,
Art. 38(1))

Distinguish between the Monistic Theory and Dualist Theory.

International and domestic law belong only to one system of law.

Monistic Theory International law is automatically incorporated into each nation’s legal
system and that international law is supreme over domestic law.

International law and domestic law are distinct, each nation

ascertaining for itself and to what extent international law is
incorporated into its legal system, and that the status of international
law in the domestic system is determined by domestic law. Under this
Dualist Theory
view, when municipal law provides that international law applies in
whole or in part within our jurisdiction, it is but an exercise of the
authority of municipal law, an adoption or transformation of the rules
of international law.
(Government of the United States of America v. Purganan, G.R. No. 148571)

Distinguish between the Doctrines of Incorporation and Transformation.

The Doctrine of Incorporation applies when, by mere constitutional declaration, international

law is deemed to have the force of domestic law. In contrast, the Doctrine of Transformation
requires that an international law be transformed into a domestic law through a constitutional
mechanism such as local legislation. (Pharmaceutical and Health Care Association v. Duque
III, G.R. No. 173034)

Page 5 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

LABOR LAW

What is the four-fold test in determining the existence of an employer-employee

relationship?

1. Selection and engagement of the employee;

2. Payment of wages;
3. Power of dismissal; and
4. Employer’s power to control the employee’s conduct with respect to the means and
methods by which the work is to be accomplished. (Atok Big Wedge Company, Inc. v.
Gison, G.R. No. 169510)

What are the requisites of Serious Misconduct?

…such a grave and
aggravated character
1. There must be misconduct;
2. The misconduct must be of such an aggravated character;
3. It must relate to the performance of the employee’s duties; and
4. It must be shown that the employee becomes unfit to continue working for the
employer. (D.O. No. 147-15)

What are the substantive requisites of Retrenchment?

1. The retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and
real, or if only expected, are reasonably imminent as perceived objectively and in good
faith by the employer;
2. The employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to
security of tenure; and
3. The employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as employment status,
efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
(La Consolacion College of Manila v. Pascua, G.R. No. 214744)

What is the procedural due process requirement for the termination of an employee
for just causes and diseases?

If the dismissal is based on a just cause, the employer must give the employee two written
notices and a hearing or opportunity to be heard, if requested by the employee before
terminating the employment: (1) a notice specifying the grounds for which dismissal is sought
a hearing or an opportunity to be heard and after hearing or opportunity to be heard; and (2)
a notice of the decision to dismiss. (Protective Maximum Sec. Agency v. Fuentes, G.R. No.
169303)

Distinguish between voluntary resignation and constructive dismissal.

Voluntary resignation Constructive dismissal

It is the voluntary act of an employee who It is an involuntary resignation which is resorted

is in a situation where one believes that
personal reasons cannot be sacrificed in
favor of the exigency of the service, and
has no other choice but to dissociate from
employment. (Grande v. Philippine
Nautical Training College, G.R. No.
213137)
to because:
1. Continued employment is rendered
impossible, unlikely, or unreasonable;
2. When there is a demotion in rank and/or
a diminution in pay; or
3. When there is a clear act of
discrimination, insensibility or disdain by
an employer, which makes it unbearable
for the employee to continue his/her
employment. (Torreda v. Investment
and Capital Corporation of the
Philippines, G.R. No. 229881)

Page 6 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

What are the elements of a labor-only contracting arrangement?

1. i. The contractor or subcontractor does not have substantial capital; or

ii. The contractor or subcontractor does not have investments in the form of tools,
equipment, machineries, supervision, work premises, among others; and
iii. The contractor's or subcontractor's employees recruited and placed are performing
activities which are directly related to the main business operation of the principal; or
2. The contractor or subcontractor does not exercise the right to control over the
performance of the work of the employee. (D.O. No. 174-17, Sec. 5(a) & (b))

From when are backwages reckoned?

1. When reinstatement is ordered, compute the backwages from the time of dismissal
until the employee’s reinstatement;
2. When separation pay is ordered in lieu of the reinstatement or reinstatement is waived
by the employee, backwages is computed from the time of dismissal until the finality
of decision ordering separation pay; or
3. When separation pay is ordered after the finality of decision ordering reinstatement by
reason of a supervening that makes the award of reinstatement no longer possible,
backwages is computed from the time of dismissal until the finality of the decision
ordering separation pay. (Bani Rural Bank et. al. v. De Guzman, G.R. No. 170904)

What are the requisites of a valid strike?

1. The strike must be based on a valid and factual ground;

2. A notice of strike must be filed with the NCMB-DOLE;
3. A notice must be served to the NCMB-DOLE at least 24 hours prior to the taking of the
strike vote by secret balloting, informing said office of the decision to conduct a strike
vote, and the date, place, and time thereof;
4. A strike vote must be taken where a majority of the members of the union obtained
by secret ballot in a meeting called for the purpose, must approve it;
5. A strike vote report should be submitted to the NCMB-DOLE at least 7 days before the
intended date of the strike;
6. Except in cases of union-busting, the cooling-off period of 15 days, in case of unfair
labor practices of the employer, or 30 days, in case of collective bargaining deadlock,
should be fully observed; and
7. The 7-day waiting period/strike ban reckoned after the submission of the strike vote
report to the NCMB-DOLE should also be fully observed in all cases. (Labor Code, Art.
263)

Are officers and employees of GOCCs without original charters free to unionize for
purposes of collective bargaining?

Yes, officers and employees of GOCCs without original charters are covered by the Labor
Code, not the Civil Service Law. However, non-chartered government-owned or controlled
corporations are limited by law in negotiating economic terms with their employees. This is
because the law has provided the Compensation and Position Classification System, which
applies to all government-owned or controlled corporations, chartered or non-chartered.
(GSIS v. Villanueva, G.R. No. 210773)

What are the requisites of the Bona Fide Occupational Qualification (BFOQ) Rule?

1. The employment qualification is reasonably related to the essential operation of the

job involved; and
2. There is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job. (Star Paper
Corp. v. Simbol, G.R. No. 164774)

Page 7 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

What are the types of Illegal Recruitment?

Simple Illegal Recruitment Illegal Recruitment as Economic Sabotage

1. When the offender has no valid 1. When it is committed by a syndicate

license or authority required by law to
lawfully engage in the recruitment
and placement of workers; and
2. The offender undertakes any activity
within the meaning of "recruitment
and placement" defined under Article
13 (b) of the Labor Code. (People v.
Abordo, G.R. No. 179934)
if it is carried out by a group of three
or more persons conspiring or
confederating with one another; and
2. When it is committed on a large scale
if it is committed against three or
more persons individually or as a
group. (People v. Diaz, G.R. No.
112175)

Differentiate the jurisdictions of the Labor Arbiter and the Regional Director.

Labor Arbiter Regional Director

A money claim arising from employer-
employee relations, except SSS,
ECC/Medicare (Philhealth) claims, is within
the jurisdiction of a Labor Arbiter if:
1. The claim, regardless of amount, is
accompanied with a claim of
reinstatement; or
2. The claim exceeds P5,000, whether
or not there is a claim for
reinstatement. (Labor Code, Art.
263)
The Regional Director has jurisdiction if the
money claim:
1. Arose out of employer-employee
relationships;
2. Is not accompanied by a claim for
reinstatement; and
3. Does not exceed P5,000, whether or
not the claim arose from employer-
employee relationships. (Labor Code,
Art. 129)

What are the prescriptive periods of the following causes of action?

Within three years from the time the cause of

Claims arising from EER
Money claim is based on illegal dismissal
Unfair Labor Practice
Offenses under the Labor Code and rules
and regulations issued pursuant thereto
other than that of unfair labor practice
action accrued. (Labor Code, Art. 306)
Within four years from the time of his
dismissal within which to institute a
complaint. (Victory Liner, Inc. v. Race, G.R.
No. 164820)
Within one year from accrual of such unfair
labor practice. (Labor Code, Art. 306)
Within three years. (Labor Code, Art. 305)

Generally, five years. However, if it involves

Illegal Recruitment economic sabotage, then twenty years.
(Migrant Workers Act, Sec. 12)

TAXATION LAW

BASIC PRINCIPLES

Distinguish among the lifeblood, necessity, and benefits-received theories.

Taxes are the lifeblood of the government and so should be collected

without unnecessary hindrance. Without taxes, the government
Lifeblood theory
would be paralyzed for lack of the motive power to activate and
operate it. (CIR v. Algue, G.R. No. L-28896)

Page 8 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

What are the types of Illegal Recruitment?

Simple Illegal Recruitment Illegal Recruitment as Economic Sabotage

1. When the offender has no valid 1. When it is committed by a syndicate

license or authority required by law to
lawfully engage in the recruitment
and placement of workers; and
2. The offender undertakes any activity
within the meaning of "recruitment
and placement" defined under Article
13 (b) of the Labor Code. (People v.
Abordo, G.R. No. 179934)
if it is carried out by a group of three
or more persons conspiring or
confederating with one another; and
2. When it is committed on a large scale
if it is committed against three or
more persons individually or as a
group. (People v. Diaz, G.R. No.
112175)

Differentiate the jurisdictions of the Labor Arbiter and the Regional Director.

Labor Arbiter Regional Director

A money claim arising from employer-
employee relations, except SSS,
ECC/Medicare (Philhealth) claims, is within
the jurisdiction of a Labor Arbiter if:
1. The claim, regardless of amount, is
accompanied with a claim of
reinstatement; or
2. The claim exceeds P5,000, whether
or not there is a claim for
reinstatement. (Labor Code, Art.
263)
The Regional Director has jurisdiction if the
money claim:
1. Arose out of employer-employee
relationships;
2. Is not accompanied by a claim for
reinstatement; and
3. Does not exceed P5,000, whether or
not the claim arose from employer-
employee relationships. (Labor Code,
Art. 129)

What are the prescriptive periods of the following causes of action?

Within three years from the time the cause of

Claims arising from EER
Money claim is based on illegal dismissal
Unfair Labor Practice
Offenses under the Labor Code and rules
and regulations issued pursuant thereto
other than that of unfair labor practice
action accrued. (Labor Code, Art. 306)
Within four years from the time of his
dismissal within which to institute a
complaint. (Victory Liner, Inc. v. Race, G.R.
No. 164820)
Within one year from accrual of such unfair
labor practice. (Labor Code, Art. 306)
Within three years. (Labor Code, Art. 305)

Generally, five years. However, if it involves

Illegal Recruitment economic sabotage, then twenty years.
(Migrant Workers Act, Sec. 12)

TAXATION LAW

BASIC PRINCIPLES

Distinguish among the lifeblood, necessity, and benefits-received theories.

Taxes are the lifeblood of the government and so should be collected

without unnecessary hindrance. Without taxes, the government
Lifeblood theory
would be paralyzed for lack of the motive power to activate and
operate it. (CIR v. Algue, G.R. No. L-28896)

Page 8 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

The exercise of the power to tax emanates from necessity because,

without taxes, the government cannot fulfill its mandate of
Necessity theory
promoting the general welfare and well-being of the people. (CIR v.
Bank of Philippine Islands, G.R. No. 134062)

The government, for its part, is expected to respond in the form of

Benefits-received tangible and intangible benefits intended to improve the lives of the
theory people and enhance their moral and material values. (CIR v. Algue,
G.R. No. L-28896)

What are the principles of a sound tax system?

a. Fiscal adequacy - sources of revenues must be adequate to meet government

expenditures and their variations (Chavez v. Ongpin, G.R. No. 76778);
b. Theoretical justice - this is also called the ability-to-pay principle, where the tax burden
should be in proportion to the taxpayer’s ability to pay (PHIL. CONST., art. VI, Sec.
28(1)); and
c. Administrative feasibility - the tax system should be capable of being effectively
administered and enforced with the least inconvenience to the taxpayer. (Diaz v.
Secretary of Finance, G.R. No. 193007)

What are the requisites of direct double taxation?

When two taxes are imposed:

1. On the same property or subject matter;
2. For the same purpose;
3. By the same taxing authority;
4. Within the same territory, jurisdiction or taxing district;
5. During the same taxing period; and
6. Are of the same kind or character. (Swedish Match Phils., Inc. v. Treasurer of Manila,
G.R. No. 181277)

INCOME TAX

What are the rules on situs of income?

Income Situs

Interests Residence of the debtor

Dividends from a
Income within the Philippines
domestic corporation

Income within, if 50% or more of the gross income of the

foreign company (for the past 3 years) was derived from
sources within the Philippines.
Dividends from a foreign
corporation
Income without, if less than 50% of the gross income of the
foreign company (for the past 3 years) was derived from
sources within the Philippines.

Services Place of performance

Rentals Location of the property

Royalties Place of use or exercise

Sale of real property Location of realty

Sale of personal property Place of sale

Page 9 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

Gain of sale of domestic

Income within the Philippines
shares
(NIRC, Sec. 42)

What are the requisites for the deductibility of trade, business, or professional
expenses?

1. The expense must be ordinary and necessary;

2. It must have been paid or incurred during the taxable year;
3. It must have been paid or incurred in carrying on the trade or business of the taxpayer;
and
4. It must be supported by receipts, records or other pertinent papers. (CIR v. Isabela
Cultural Corporation, G.R. No. 172231)

Are membership fees and assessment dues considered as income on the part of the
entity levying them?

No. They are only capital as they only constitute contributions to and/or replenishment of the
funds for the maintenance and operations of the facilities offered by recreational clubs to their
exclusive members. They are funds held in trust by these clubs to defray their operating and
general costs. (Association of Non-Profit Clubs, Inc. v. CIR, G.R. No. 228539)

What are the requisites of the All-Events Test?

1. The fixing of a right to income or liability to pay; and

2. The availability of the reasonable accurate determination of such income or liability.
(CIR v. Isabela Cultural Corporation, G.R. No. 172231)

What is the Irrevocability Rule?

This rule provides that once the option to carry over excess quarterly income tax against
income tax due for the succeeding taxable years has been made, such option shall be
considered irrevocable for that taxable period and no application for cash refund or issuance
of a tax credit certificate shall be allowed therefor. (Rhombus Energy, Inc. v. CIR, G.R. No.
206362)

From what taxes are non-stock, non-profit educational institutions exempted?

A non-stock, non-profit educational institution shall be exempt from income tax, VAT, and
LBT if it proves that it used its revenues actually, directly, and exclusively for educational
purposes. On the other hand, it shall also be exempt from RPT if it proves that it actually,
directly, and exclusively used its real properties for educational purposes. (CIR v. DLSU, G.R.
No. 196596)

VALUE-ADDED TAX

Distinguish the Destination and Cross-Border principles.

Under the Destination Principle, goods and services are taxed only in the country where these
are consumed. On the other hand, the Cross-Border Principle mandates that no VAT shall be
imposed to form part of the cost of the goods destined for consumption outside the territorial
border of the taxing authority. (Atlas Consolidated Mining and Development Corporation v.
CIR, G.R. Nos. 141104 & 148763)

Distinguish Zero-Rated and VAT-exempt transactions.

In terms of the VAT computation, zero-rating and exemption are the same, but the extent of
relief that results from either one of them is not. In zero rating, there is total relief for the
purchaser from the burden of the tax. But in an exemption, there is only partial relief because
the purchaser is not allowed any tax refund of or credit for input taxes paid. (CIR v. Seagate
Technology Philippines, G.R. No. 153866)

Page 10 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

Distinguish the prescriptive periods of administrative and judicial claims for the
refund of input VAT.

Prescriptive Period

The administrative claim for input VAT refund must be filed within two
Administrative
years from the close of the taxable quarter when the relevant sales were
Claim
made. (CIR v. Mindanao II Geothermal Partnership, G.R. No. 191498)

The taxpayer can file judicial claim/appeal:

1. Within 30 days after the CIR denies the claim within the 90-day period;
Judicial Claim or
2. Within 30 days from the expiration of the 90-day period, if the
Commissioner does not act within such period. (NIRC, Sec. 112(C))

DONOR’S TAX

Are campaign contributions given to political candidates or parties subject to

donor’s tax?

No. Any contribution in cash or in kind to any candidate or political party or coalition of parties
for campaign purposes, duly reported to the Commission, shall not be subject to the payment
of any gift tax. (Synchronized National and Local Elections Law, Sec. 13)

REMEDIES

What are the remedies of the taxpayer if the CIR or his representative denies or
fails to act upon the former’s protest?

1. If the protest is wholly or partially denied by the CIR or his authorized representative,
the taxpayer may appeal to the CTA within 30 days from receipt of the whole or partial
denial of the protest;
2. If the protest is wholly or partially denied by the CIR's authorized representative, the
taxpayer may appeal to the CIR within 30 days from receipt of the whole or partial
denial of the protest; and
3. If the CIR or his authorized representative failed to act upon the protest within 180
days from submission of the required supporting documents, the taxpayer may appeal
to the CTA within 30 days from the lapse of the 180-day period. (PAGCOR v. BIR, G.R.
No. 208731)

Distinguish the prescriptive periods of the powers of the BIR to assess and collect.

If a false or fraudulent return has

If a regular return was made
been filed, or a return was not filed

Internal revenue taxes must be

assessed within 3 years after the:
1. Last day prescribed by law for
The tax may be assessed within 10
the filing of the return; or
Assessment years from the discovery of the falsity,
2. The day the return was filed, if
fraud, or omission. (NIRC, Sec. 222(a))
the return was filed beyond the
period prescribed by law.
(NIRC, Sec. 203)

If the BIR does not assess the

Internal revenue taxes may be
taxpayer, it may file a proceeding in
collected by distraint or levy or by a
court for the collection of such tax
Collection proceeding in court within 5 years
within 10 years from the discovery of
following the assessment of the tax.
the falsity, fraud, or omission. (NIRC,
(NIRC, Sec. 222(c))
Sec. 222(a))

Page 11 of 12
 THE FRATERNAL ORDER OF UTOPIA
Law Pertaining to the State and its Relationship with its Citizens Tips
Bar Operations 2020-2021

However, if the BIR assesses the

taxpayer, it must collect within 5 years
following the assessment of the tax.
(NIRC, Sec. 222(c))

Differentiate a Preliminary Assessment Notice (PAN) from a Final Assessment

Notice (FAN).

Contents Remedy of the Taxpayer

PAN A PAN contains the proposed The taxpayer should reply within 15
assessment, and the facts, law, rules days from receipt, otherwise, the CIR
and regulations, or jurisprudence on will finalize the assessment, and will
which the proposed assessment is issue a FAN.
based. It does not contain a demand
for payment, but usually requires the
taxpayer to reply within 15 days from
receipt.

FAN A FAN contains not only a computation The taxpayer must file an
of tax liabilities, but also a demand for administrative protest within 30 days
payment within a prescribed period. from the receipt of the FAN, otherwise,
the assessment shall become final,
executory, and demandable.
(CIR v. Transitions Optical Philippines, Inc., G.R. No. 227544)

Distinguish between a Request for Reconsideration and Request for Reinvestigation.

Reconsideration Reinvestigation

A plea for a re-evaluation of an assessment A plea for re-evaluation of an assessment on

on the basis of existing records without need the basis of newly-discovered evidence or
of additional evidence. additional evidence that a taxpayer intends
to present in the investigation.

It does not toll the running of the It interrupts the running of the statute of
prescription period for the collection of an limitations on the collection of the assessed
assessed tax. tax.
(CIR v. Philippine Global Communication, Inc., G.R. No. 167146)

Page 12 of 12