Professional Documents
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COURSE OUTLINE1
Taxation II
1st Semester School year 2016-2017
LECTURER
Atty. Rosabel Socorro Teston-Balan
Phone No. 6323878
rstbalan25@gmail.com
SCHEDULE
Saturday
5:30-8:30 pm
GRADING
Quizzes/Participation 25%
Midterm Examination 30%
Final Examination
40%
Attendance
5%
COURSE DESCRIPTION: This course deals with the concepts and general principles
of transfer taxes (estate and donors), value added taxes, special excise taxes on
certain goods and other percentage and miscellaneous taxes including documentary
stamps tax, provided in the National Internal Revenue Code; Remedies available to
the government and the taxpayer; The Court of Tax Appeals; (Fundamentals of Local
Taxation, both under Local Tax Code and Real Property Tax Code); and the general
principles on Tariff and Customs duties.
COURSE OBJECTIVES:
After successfully completing this course, students will be able to:
1. Develop their legal skills in reading, understanding and applying complex and
dynamic tax legislation, case materials and taxation rulings.
2. Understand the principles and policies of the VAT system.
3. Explain the application of transfer taxes, DST and excise taxes
4. Be familiar and have a good appreciation of the remedies of government and
taxpayer
5. Have an overview and understanding of the Local Government Code and Tariff
and Customs Code
METHOD OF TEACHING
Socratic and case methods
Suggested References:
Ignatius Michael D. Ingles, Tax Made Less Taxing
Jose Vitug, A Compendium of Tax Law and Jurisprudence
Week 1
ESTATE TAX
1
Based on the course outline of Atty. Carlos G. Baniqued in Tax II, Ateneo de Manila University School of Law, as revised and updated by Atty. Terence Conrad H. Bello.
Week 2
V. DEDUCTIONS FROM GROSS ESTATE
Sec. 86, NIRC
A. Expenses, Losses, Indebtedness, Taxes, Etc. (ELITE)
1. Funeral Expenses
2. Expenses for Testamentary of Intestate Proceedings
3. Claims Against the Estate
Dizon v. Court of Tax Appeals, G.R. No. 140944, May 6, 2008
4. Claims Against Insolvent Persons
5. Unpaid Debts/Mortgages
6. Losses
B. Vanishing Deduction
C. Transfers for Public Use
D. Family Home
E. Standard Deduction
BIR Ruling 009-99, Jan. 22, 1999
F. Medical Expenses
G. Retirement Benefits and Separation Pay under NIRC Sec. 32(B)(6)(a) and
VI. FOREIGN TAX CREDITS
Sec. 86(E), NIRC
A. Per Country Limitation
B. Global Limitation
VII. SPECIAL RULES FOR NON-RESIDENT ALIENS
A. Meaning of Resident or Non-Resident
B. Inclusions in Gross Estate
Secs. 85 and 104, NIRC
C. Deductions from Gross Estate
Sec. 86(B) and (D), NIRC
D. Foreign Tax Credits
Sec. 86(E), NIRC
VIII. ADMINISTRATIVE PROVISIONS
A. Tax Rates
Sec. 84, NIRC
B. Notice of Death
Sec. 89, NIRC
C. Estate Tax Return
Sec. 90, NIRC
D. Payment of Estate Tax
Sec. 91, NIRC
E. Consequences of Non-Payment of Estate Tax
Secs. 248, 249, 94 to 97, NIRC
DONORS TAX
I. MEANING OF GIFT
Sec. 104, NIRC
Pirovano v. CIR, 14 SCRA 832 (1965)
II. VALUATION OF GIFTS
Sec. 102, NIRC
III. TRANSFER FOR LESS THAN ADEQUATE CONSIDERATION
Sec. 100, NIRC
IV. EXEMPT GIFTS
Sec. 101, NIRC
V. FOREIGN TAX CREDIT
Sec. 101(C), NIRC
CIR v. American Express Intl, Inc. (Phil.), G.R. 152609, June 29, 2005
CIR v. Burmeister & Wain Scandinavian Contractor Mindanao, Inc.,
G.R. 153205, Jan. 22, 2007
3. Meaning of Accounted for in Accordance with the Rules
and Regulations of the BSP
BIR Ruling No. 176-94
VAT Ruling No. 47-00, Oct. 26, 2000
C. Effectively Zero-Rated Transactions
1. Sale of Goods and Properties
Sec. 106(A)(2)(3), (5), (6) and (c), NIRC, as amended by Rep. Act No.
9337
Sec. 4.106-6, Rev. Regs. No. 16-2005, Sept. 1, 2005
2. Sale of Services
Sec. 106(B)(3), (4) and (5), NIRC, as amended by Rep. Act No. 9337
Sec. 4.108-6, Rev. Regs. No. 16-2005, Sept. 1, 2005
D. Exempt Transactions
Sec. 109(1), NIRC, as amended by Rep. Act. No. 9337
1. Coverage of Exemption
a. General Rule
Philippine Acetylene Co., Inc. v. CIR, 20 SCRA 1056 (1967)
Phil. National Police Multi-Purpose Cooperative, Inc. v. CIR, CTA
Case No. 4845, March 10, 1994
BIR Ruling No. 155-98, Oct. 21, 1998
BIR Ruling No. 47-99, April 13, 1999
VAT Ruling No. 009-07, June 21, 2007
BIR Revenue Regulation No 16-2011, effective January 1, 2012
b. Exception
CIR v. John Gotamco & Sons, Inc., 148 SCRA 36 (1987)
Maceda v. Macaraig, Jr., 223 SCRA 217 (1993)
2. Waiver of VAT Exemption/Election to be Subject to VAT
Sec. 109(2), NIRC, as amended by Rep. Act No. 9337
III. RATES OF VAT
A. For Output Tax
B. For Input Tax
C. Transitional Input Tax
D. Presumptive Input Tax
E. Final Withholding VAT on Government or GOCCs
Week 4
IV. TAX CREDITS & REFUNDS
A. Input Tax Credit
Sec. 110, NIRC, as amended by Rep. Act. No. 9337, as further amended by
Rep. Act. No. 9361
Sec. 4.110-1, Rev. Regs. No. 16-2005, Sept. 1, 2005
1. Persons Who Can Avail of the Input Tax Credit
Sec. 110(A)(1)(b) and (A)(2), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.110-2, Rev. Regs. No. 16-2005, Sept. 1, 2005
2. Special Rules on Amortization of Input Tax on Depreciable Goods
Sec. 110(A), proviso, NIRC, as amended by Rep. Act. No. 9337
Sec. 4.110-3, Rev. Regs. No. 16-2005, Sept. 1, 2005, as amended by Rev.
Regs. No. 4-2007, Feb. 7, 2007
3. Special Rules on Apportionment of Input Tax on Mixed Transactions
Sec. 110(A)(3), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.110-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as amended by Rev.
Regs. No. 4-2007, Feb. 7, 2007
CIR v Pilipinas Shell Petroleum Corporation SC First Division G.R. No. 188497
February 19,
2014
II. PAYMENT OF EXCISE TAXES
Sec. 130, NIRC
Sec. 131, NIRC, as amended by Rep. Act No. 9334
Secs. 132 140, NIRC
III. ADMINISTRATIVE REQUIREMENTS
Sec. 130(C), NIRC
Secs. 152 172, NIRC
DOCUMENTARY STAMP TAX
I. IN GENERAL
Sec. 173, NIRC
CIR v. Heald Lumber, 10 SCRA 372
Michel J. Lhuillier Pawnshop, Inc. v. CIR, G.R. No. 166786, May 3, 2006
II. TRANSACTIONS/DOCUMENTS SUBJECT TO DST
A. Original Issuance of Shares
Sec. 174, NIRC, as amended by Rep. Act No. 9243
B. Transfer of Shares
Sec. 175, NIRC, as amended by Rep. Act No. 9243
Compagnie Financiere Sucres et Deneres v. CIR, G.R. No. 133834, Aug. 28,
2006
C. Foreign-Issued Bonds, Debentures, Shares or Certificates of
Indebtedness, and Other Instruments
Sec. 176, NIRC
D. Issue and Transfer of Certificate of Interest in Property or Accumulations
Sec. 177, NIRC
E. Bank Checks, Drafts, Certificates of Deposit not Bearing Interest
Sec. 178, NIRC
F. Debt Instruments
Sec. 179, NIRC, as amended by Rep. Act No. 9243
Banco de Oro Universal Bank v. CIR, CTA Case No. 6588, Aug. 5, 2005
Belle Corp. v. CIR, CTA Case No. 6156, June 17, 2005
Filinvest Development Corp v CIR 16353 167687
G. Bills of Exchange or Drafts
Sec. 180, NIRC, as amended by Rep. Act No. 9243
H. Acceptance of Foreign-Drawn Bills of Exchange
Sec. 181, NIRC
I. Foreign Bills of Exchange and LCs
Sec. 182, NIRC
J. Life Insurance Policies
Sec. 183, NIRC, as amended by Rep. Act No. 9243
BIR Ruling No. DA-182-2005, April 20, 2005
K. Non-Life Insurance Policies
Sec. 184, NIRC
BIR Ruling No. DA-288-2005, June 27, 2005
L. Fidelity Bonds and Other Insurance Policies
Sec. 185, NIRC
M. Annuities and Pre-Need Plans
Sec. 186, NIRC, as amended by Rep. Act No. 9243
N. Indemnity Bonds
Sec. 187, NIRC
O. Certificates
Sec. 188, NIRC
P. Warehouse Receipts
Sec. 189, NIRC
Q. Jai-Alai, Horse Race, Lotto, etc.
Sec. 190, NIRC
R. Bills of Lading or Receipts
Sec. 191, NIRC
S. Proxies
Sec. 192, NIRC
T. Powers of Attorney
Sec. 193, NIRC
U. Leases of Real Property
Sec. 194, NIRC
V. Mortgages, Pledges and Deeds of Trust
Sec. 195, NIRC
W. Deed of Sale of Real Property
Sec. 196, NIRC
BIR Ruling No. DA-076-2005
BIR Ruling No. DA-084-2005, March 14, 2005
BIR Ruling No. DA-065-2005, Feb. 23, 2005
BIR Ruling No. DA-640-2004, Dec. 17, 2004
BIR Ruling No. DA-648-2004, Dec. 21, 2004
BIR Ruling 079-2014
CIR v Shell GR 192398 September 29, 2014
X. Charter Party and Similar Instruments
Sec. 197, NIRC
Y. Assignment, Transfer, and Renewal of Certain Instruments
Sec. 198, NIRC
III. TRANSACTIONS/DOCUMENTS NOT SUBJECT TO DST
Sec. 199, NIRC, as amended by Rep. Act No. 9243
BIR Ruling No. DA-244-2005, June 7, 2005
Belle Corp. v. CIR, CTA Case No. 6156, June 17, 2005
IV. PAYMENT OF DST
Sec. 200, NIRC
V. EFFECT OF NON-PAYMENT OF DST Sec. 201, NIRC
Week 6
RIGHTS AND REMEDIES OF THE GOVERNMENT UNDER THE NATIONAL
INTERNAL REVENUE CODE
I. EXAMINATION AND AUDIT OF RETURNS
A. Statutory Basis
Secs. 5 and 6, NIRC
II. BIRS INVESTIGATIVE AUTHORITY
A. Statutory Basis
1. Administrative Summons to Taxpayer
Sec. 5(C), (D), NIRC
Sec. 6(C), NIRC
2. Third-Party Summons
Sec. 5(B), (C), NIRC
B. Informers Reward
Sec. 282, NIRC
BIR Rul. No. 071-00, Dec. 18, 2000
Meralco Securities Corp. v. Savellano, 117 SCRA 804 (1982)
Fitness by Design, Inc. v. CIR, G.R. No. 177982, Oct. 17, 2008
III. BIRS POWER TO MAKE ASSESSMENTS
Sec. 11, Rep. Act. No. 1125, as amended by Rep. Act. No. 9282
Rule 10, Revised Rules of the CTA (S.C. A.M. No. 05-11-07-CTA, Nov. 2005)
E. Nature and Extent of Tax Lien
Sec. 219, NIRC
F. Compromise and Abatement
Sec. 204(A) and (B), NIRC
BIR Ruling No. 111-99, July 22, 1999
BIR Ruling No. 059-01, Dec. 20, 2001
V. IMPOSITION OF SURCHARGE, INTEREST, AND COMPROMISE PENALTY
A. Civil Penalties
Sec. 248, NIRC
Secs. 250-252, NIRC
Secs. 4 & 5, Rev. Regs. No. 12-99, Sept. 6, 1999
CIR v. Javier, Jr., 199 SCRA 824, 831 (1991)
CIR v. Japan Air Lines, 202 SCRA 450, 458 (1991)
PICOP v. CIR, CTA Case No. 3215, Feb. 15, 1987
CIR v. Pilipinas Shell Petroleum Corporation, CTA E.B. No. 64 (CTA Case
No. 6003), April 28, 2006
BIR Ruling No. 002-95, Jan. 6, 1995
BIR Ruling No. 048-99, April 13, 1999
BIR Ruling No. 205-99, Dec. 28, 1999
BIR Ruling No. 078-98, May 28, 1998
B. Interest
Sec. 249, NIRC
Sec. 5, Rev. Regs. No. 12-99, Sept. 6, 1999
Cagayan Electric v. CIR, 138 SCRA 629 (1985)
Republic v. Heras, 32 SCRA 507, 513-514 (1970)
C. Compromise Penalty
Sec. 6, Rev. Regs. No. 12-99, Sept. 6, 1999
CIR v. Lianga Bay Logging Co., Inc., 193 SCRA 86, 92-93 (1991)
Atlas Consolidated Mining & Dev. Corp. v. CIR, CTA Case No. 5671, Aug.
29, 2002
Week 9
RIGHTS AND REMEDIES OF TAXPAYER UNDER THE NATIONAL INTERNAL
REVENUE CODE
I. AMEND TAX RETURN
Sec. 6(A), NIRC, last paragraph
Rev. Mem. Cir. No. 40-2003, July 3, 2003
II. PROTEST ASSESSMENT
A. Procedure
Rev. Regs. No. 12-85, Nov. 27, 1985
Sec. 3, Rev. Regs. No. 12-99, Sept. 6, 1999
B. Notice of Informal Conference
Revenue Regulations 18-2013
Revenue Memorandum Circular 11-2014
C. Preliminary Assessment Notice (PAN) Sec. 228, NIRC
Pier 8 Arrastre and Stevedoring Services v. CIR, CTA Case No. 3789, Aug.
1,1991
1. Exceptions
Sec. 228(a) to (e), NIRC
2. Effect of Failure to Receive PAN
Week 12
VII. STATUTE OF LIMITATIONS
A. Period to Assess
Secs. 203, 222, 223 NIRC
1. When is an Assessment Deemed Made?
Basilan Estates, Inc. v. CIR, 21 SCRA 17 (1967)
2. Effect of Filing an Amended Return
CIR v. Phoenix Assurance Co., Ltd., L-19127, May 20, 1965
3. Effect of Filing a Wrong Return
Butuan Sawmill, Inc. v. CTA, L-20601, Feb. 28, 1966
4. How Prescriptive Period is Counted
CIR v. Primetown Prop. Group, Inc., G.R. No. 162155, August 28,
2007
5. Ordinary Prescription
Sec. 203, NIRC
6. Extraordinary Prescription
a. False/Fraudulent Return or No Return
Sec. 222(a), NIRC
Taligaman Lumber Co., Inc. v. CIR, 4 SCRA 842, 847 (1962)
Aznar v. CTA, 58 SCRA 519 (1974)
CIR v. BF Goodrich Phil., Inc., 303 SCRA 546 (1999)
CIR v. Ayala Hotels, CA-G.R. SP No. 70025, April 19, 2004
b. Waiver of Prescriptive Period
Sec. 222(b), NIRC
Republic v. Acebedo, 22 SCRA 1356 (1968) CIR v. CA, et. al., 303
SCRA 614 (1999)
Philippine Journalists, Inc. v. CIR, 447 SCRA 214 (2004)
Pfizer, Inc. v. CIR, CTA Case No. 6135, April 21, 2003
c.
Suspension of Prescriptive Period
Sec. 223, NIRC
Continental Micronesia, Inc. - Phil. Branch v. CIR, CTA Case
No. 6191, March 22, 2006
B. Period to Collect
Secs. 203, 222, 223, NIRC
Ormoc Sugar Co., Inc. v. Mun. Board of Ormoc City, L-24322, July 21, 1967
Asiatic Integrated Corporation v. Alikpala, 72 SCRA 285
Matalin Coconut Co. v. Mun. Council of Malabang, 143 SCRA 404
C. Common Limitations on Taxing Powers of LGUs
Sec. 133, LGC
Prov. of Bulacan v. CA, G.R. No. 126232, Nov. 27, 1998
Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. 90776 June 3, 1991
San Miguel Corp. v. Mun. Council of Mandaue, L-30761, July 11, 1973
Cagayan Electric Power and Light Co., Inc. vs. City of Cagayan de Oro
G.R. No. 191761. November 14, 2012.
II. SCOPE OF TAXING POWERS OF LGUS
A. Province
Secs. 135-141, LGC
B. Municipality
Secs 142-143, LGC
C. City
Sec. 151, LGC
Art. 237, IRR
D. Barangay
Sec. 152, LGC
III. COMMUNITY TAX CERTIFICATE (CTC)
A. Who are liable
Secs. 157-159, LGC Art. 246, IRR
B. Exemptions
Sec. 159, LGC
C. Place and time of payment of tax
Secs. 160-161, LGC
IV. TIME, MANNER AND PLACE OF PAYMENT OF LOCAL BUSINESS TAX
A. Time of payment
1. General rule
Secs. 165-167, LGC
2. In case of new ordinance levying new tax or increasing rates
Sec. 166, LGC
3. In case of retirement of business
Sec. 145, LGC Art. 241, IRR
B. Manner of payment
Sec. 146, LGC Art. 242, IRR
Standard Vacuum Oil Co. v. Antigua, 96 Phil. 909
Ali Nam v. City of Manila, 109 Phil. 808
C. Place of payment
1. Location of branch or sales outlet
Sec. 150(a), LGC Art. 243, IRR
2. Allocation to 2 or more LGUs
Sec. 150(b) to (e), LGC Art. 243, IRR
3. Sales by route trucks or vans
Art. 243(d), IRR
V. ENACTMENT OF TAX ORDINANCES AND OTHER REVENUE
MEASURES
A. Public hearing
Sec. 186, last proviso, LGC Sec. 187, LGC
Art. 275, IRR
Figueras v. CA, G.R. No. 119172, March 25, 1999
Tuzon v. CA, 212 SCRA 739, 745 (1992)
B. Publication