Professional Documents
Culture Documents
Institute of Law
TABLE OF CONTENTS
Trending Table
General Principles
Income Taxation
30
Transfer Taxes
55
Donor tax
66
Business Tax
SUBJECT HEADS:
ABELLA
NOEMI ACAIN
&
ERWIN LABAY
74
81
Tax Remedies
88
109
Local Taxation
122
MEMBERS:
CHRISTINA DE GUZMAN
CYD LIBUTAN
STRALENMER MORAN
SHEHERAZADEE
LABOR
1
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Personal exemptions
Deductibility of bad
debts
Proceeds of life
insurance policy
TOTAL
3
1
3
2
2
2
3
1
2001
2004
2006
1
1
1
1
1997
2006
2006
2006
1
1
1
1
2004
1997
1999
2000
2005
2007
1997
1998
2001
2004
2006
1997
1998
1999
2001
2005
2007
1999
2004
2005
1997
2003
1
INCOME TAXATION
2
2
1
1
2
1
1
1
1
1
1
1
1
1
1
2
2
1
1
1
1
7
4
2
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
2005
2007
2001
2005
2007
1997
2000
1997
2005
1998
1999
2001
2005
1998
2000
1997
2005
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1997
2003
2001
2003
2007
2003
2005
1998
2003
1998
2001
2007
1
1
1
1
1
1
1
1
1
1
1
1
2004
2005
2007
2000
1
1
1
1
3
1
1997
2000
2000
2005
2007
2001
1
1
1
2
1
1999
1998
2004
2007
2001
1
1
1
1
2000
4
3
2
2
2
2
2
2
2
3
2
2
2
1
2
1
3
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
gains tax
Interest received from
local/ foreign/ offshore
banks
Royalty income subject
to final tax
Final tax on cash
dividends
Minimum corporate
income tax (MCIT)
Procedures for the filing
of returns of domestic
corporation
Exemption from MCIT
Income from illegal
sources
Withholding agent
Income of an
international air carrier
Tax exemption given to
expatriates
Donors tax
2005
2002
2001
2001
2001
2001
2005
1
1
1
1
1999
2005
1
1
1
1
2005
1997
1998
1999
2000
2007
2000
2002
2004
2007
2000
2005
2001
2006
2003
2005
1
1
1
1
1
1
1997
2004
2003
1
1
1
1
2001
2007
2000
2007
2000
1
1
1
1
2001
2000
1997
2
2
2
2
1
4
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
2003
2004
2005
2006
1998
2002
2005
1998
2002
2005
2001
2002
2002
2005
2005
2006
2000
2005
2000
4
3
3
2
2
2
1
1
1
2000
2003
1
1
1
1
2000
2002
2002
1997
2005
2002
2007
2002
5
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
BIR Rulings
2007
2002
2007
Constitutionality of tax
ordinance appealable to
the Sec. of Finance
Professional tax
Exemption form real
property taxes
Constitutional provision
on revenues and assets
of non-stock, non-profit
educational institutions
Fundamental principles
governing real property
taxation which are
limitations on the taxing
power of LGUs
Definition of real
property subject to RPT
Constitutional provision
on RPTs
Properties exempt from
RPT under LGC
Classification of real
property for tax
purposes
1
LOCAL TAXATION
1
1
1
2
2000
2000
2007
2003
1
1
1
2
1
2005
2002
2005
2006
2000
2004
1
REAL PROPERTY TAXATION
1
1
1
1
1
3
2
1997
2000
1
1
2001
2003
2000
1
1
1
2
1
2002
2002
Marking duty,
discriminatory
countervailing duty,
dumping duty
Returning residents,
definition
Flexible tariff clause,
definition
Automatic review
procedure in BOC
Basis of dutiable value
Administrative remedy
of seizure
Exemption from custom
duties
1994
2005
2000
2002
2003
2001
2002
2005
1997
1
1
1
1
2005
1999
2
2
6
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Commissioner
Jurisdiction of CTA on
deficiency tax
assessment
Jurisdiction of CTA over
decisions of City Board
of Assessment Appeals
Ancillary jurisdiction of
CTA to issue writ of
injunction or prohibition
2004
2005
1
1
1999
2002
GENERAL PRINCIPLES
7
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
TAXATION
The inherent power of the
sovereign, through the legislature,
to impose burdens upon subjects
and objects within its jurisdiction for
the purpose of raising revenues to
carry out the legitimate objects of
the government.
THEORIES IN TAXATION
1. Lifeblood Theory
Taxes are the lifeblood of the
government and their prompt and
certain availability is an imperious
need (Bull vs. United States, 295 US
247). This implies that:
1) The BIR is justified in availing of
the most expedient remedy in
the collection of the tax (CIR
vs. Pineda)
2) The BIR is not bound by the
mistakes, errors, or omissions
of its agents (thus, the Doctrine
of Estoppel does not apply to
the collection of taxes) (Rivera
vs. Fernandez)
3) No court other than the CTA
may enjoin the collection of
taxes.
Taxes are the lifeblood of the
nation, without revenue raised from
taxation; the government will not
survive, resulting in detriment to
society.
Without
taxes,
the
government would be paralyzed for
lack of motive power to activate and
operate it (CIR vs. Algue, 158 SCRA
9).
This ruling also gave rise to the
DOCTRINE
OF
SYMBIOTIC
RELATIONSHIP between the State
and its citizen.
DOCTRINE
OF
RELATIONSHIP
SYMBIOTIC
8
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
9
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Levying,
Assessment, Payment)
a. Levying/Imposition of the tax.
This is essentially legislative. It
refers to the enactment of tax laws
or statutes.
10
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
OF THE LEGISLATIVE
POWER TO TAX (SPASM)
a. Subjects or Objects of Taxation Refers to the Coverage and the
kind or nature of the tax.
They may be persons (natural or
juridical),
property
(real
or
personal); tangible or intangible),
businesses, transactions, rights or
privileges.
It is inherent in the power to tax
that a state be free to select the
subjects of taxation, and it has
been
repeatedly
held
that
inequalities which result from a
singling out of one particular class
11
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
12
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
B.
Purpose
Compensation
Persons Affected
C.
Power
Purpose
Amt. of exaction
Taxation
To levied for the purpose of raising
revenues
No limits
No special or direct benefit is received
by the taxpayer other than that the
government secures the general
welfare of the citizens.
Recognized the obligations imposed
by of
Taxes paid form part of the public
funds
Taxation
To raise public funds
General benefit of the citizens
Applies to all persons, property and
excises that may be subject thereto
Taxation
Exercise of the taxing power
To raise government fund
No limits
Police Power
To promote public welfare through regulation
Limited to the cost of regulation, issuance of
the license or surveillance
No direct benefited, yet a healthy economic
standard of society is maintained.
Does not apply to police power
Allows merely the restraint on the exercise of
property rights.
Eminent Domain
Taking of property for public use
Just compensation is given to the owner of
the expropriated property
Only particular property is comprehended.
License
Exercise of police power
Imposed for regulatory purposes
Limited to the cost of regulation, issuance of
the license or surveillance
EXCEPT: when the fees are imposed for the
purpose of regulating non-useful business,
occupation, or activity, the amount may now
13
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Imposition
Scope
Effect of
payment
Non-
D. Taxation
Not limited to land
As a rule, cannot be made a personal liability
of the persons assessed
Is based wholly on benefits
It is exceptional both as to time and locality. A
charge imposed only on the property owners
benefited is a special assessment rather than
a tax.
E.
Taxation
It is a demand of sovereignty for the purpose
of raising public revenues.
F.
Taxation
It is a civil liability. Person is criminally liable
only when he fails to satisfy his civil obligation
to pay taxes
Special Assessment
Can be levied only on land
Personal liability
The imposition of a charge on all property in a
prescribed area is a tax not an assessment
although the purpose is to make a local
improvement on street or highway.
Toll
It is a demand of proprietorship, an amount
charged for the cost and maintenance of the
property used
Penalty
It is a punishment for the commission of a crime.
TAX
DEBT
Basis
Law
Contract or judgment.
Effect of non-payment
Imprisonment (except in case of poll tax)
No imprisonment
Generally payable in money
Mode of Payment
Payable in money, property or services
Assignability
Not assignable
Assignable
Set off
15
Academics Heads: Philip & Berto
Taxation Law Heads: Noemi Acain & Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
SET-OFF
PURPOSES OF TAXATION
a. Primary to raise revenues
Reasons:
1. Lifeblood theory
2. Taxes
are
not
contractual
obligations but arise out of duty to
the government.
3. The government and the taxpayers
are not mutually creditors and
debtors of each other.
b. Secondary/non-revenue
purposes (RIPE)
16
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
ON
THE
TAXING
must
public
purpose
18
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
19
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
g. Transfer
taxresidence
citizenship of the taxpayer
location of property
or
or
Destination
5. Tax-exemption
of
the
Government as a matter of
It must be based on
SUBSTANTIAL distinctions
b.
It must APPLY to both
present and future conditions
c.
It must be GERMANE to the
purposes of the law
d.
It must apply EQUALLY to
all members of the same class
Substantial distinction - it must be
real, material and not superficial
distinction (See cases of Punzalan,
Association of Customs Brokers, Hiu
Tsong Pao, Ormoc Sugar)
3. UNIFORMITY OF TAXATION
The rule of taxation shall be
uniform and equitable. (Art. 6, Sec.
28(1) of the Constitution)
to
UNIFORMITY
AND
DISTINGUISHED
EQUALITY IN
TAXATION
EQUALITY
UNIFORMITY IN
TAXATION
accomplished when
the burden of the
tax falls equally and
impartially upon all
the persons and
property subject to it
A tax is considered
uniform when it
operates with the same
force/effect in every
place where the subject
may be found.
Equitability is
achieved when the
burden of taxation
falls to those better
able to pay.
SYSTEM
OF
22
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
7.
BILLS
TO
ORIGINATE
EXCUSIVELY FROM THE HOUSE OF
REPRESENTATIVES
All appropriation, revenue or tariff
bills, bills authorizing the increase of
the public debt, bills of local application
and private bills, shall originate
exclusively
in the House of
Representatives, but the senate may
propose or concur with amendments.
(Art. 3, Sec. 24, of the Constitution)
NOTE: It is the BILL and not the LAW
that should originate from the lower
house. In other words, if the final
version is substantially that bill passed
by the Senate, for as long as the
initiatory bill was commenced by the
lower house, it is valid.
8.
THE
VETO
POWER OF THE PRESIDENT
9.
PRESIDENTS
DERIVATIVE POWER TO TAX
23
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
TAXATION
AND THE FREEDOM OF THE
PRESS
TAXATION AND
FREEDOM OF RELIGION
24
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Thus,
the
records
of
the
Constitutional Commission reveal that
what is exempted is not the institution
itself; those exempted from real estate
taxes are lands, buildings and
improvements actually, directly and
exclusively
used
for
religious,
charitable or educational purposes.
Exclusive
is
defined
as
possessed and enjoyed to the
exclusion of others; debarred from
participation or enjoyment; and
exclusively is defined, in a manner
to exclude; as enjoying a privilege
exclusively. If real property is used for
one or more commercial purposes, it is
not exclusively used for the exempted
purposes but is subject to taxation.
The words dominant use or principal
use cannot be substituted for the
words used exclusively without doing
violence to the Constitution and the
law.
Solely is synonymous with
exclusively.
However,
the
income
of
whatever kind and nature from any
of their properties, real of personal
or from any of their activities for
profit regardless of the disposition
made of such income shall be
subject to tax. (Sec. 30, par. E and
last par., NIRC).
25
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
STOCK,
NON-PROFIT
EDUCATIONAL INSTITUTIONS
All revenues and assets of nonstock, non-profit educational institution
used actually, directly and exclusively
for educational purposes shall be
exempt from taxes and duties. Upon
the dissolution and cessation of the
corporate existence of such institution,
their assets shall be disposed of in the
manner provided by law. (Art. 14,
Sec.4 (3) of the Constitution)
Subject
to
the
conditions
prescribed by law, all grants,
endowments, donation or contributions
used actually, directly and exclusively
for educational purposes shall be
exempt from tax. (Art. 14, Sec.4 (4) of
the Constitution)
ART. 14 DISTINGUISHED FROM
ART. 6 OF THE 1987 CONSTITUTION
ART
14,
SEC. 4(3)
GRANTEE Non-stock,
non-profit
educational
institution
TAXES
Income tax
COVERED Custom
duties
Property
tax ( DECS
Order No.
137-87)
ART
6,
SEC. 28(3)
Religious,
educational,
charitable
institutions
Property tax
14.
NO
PUBLIC
MONEY OR PROPERTY USED FOR
A PARTICULAR SECT, PRIEST,
RELIGIOUS MINISTER, OR OTHER
RELIGIOUS
TEACHER
OR
DIGNITARY
(Art.
6,Sec.29(1)
Constitution)
GEN. RULE: No public money or
property
shall
be
appropriated,
applied, paid or employed directly or
GRANT OF TAX
EXEMPTIONS
No law granting any tax
exemption shall be passed without
the concurrence of a majority of all
the members of Congress. (Art. 6,
Sec.28 (4) of the Constitution)
He who claims
as exemption must be able to
justify his claim by the clearest
grant of organic or statute law by
words too plain to be mistaken. If
ambiguous, there is no exemption.
3.
He who claims
should
prove
by
proof that he is
exemption
convincing
exempted.
4.
rule; tax
exception.
5.
Taxation is the
exemption is the
Tax exemption
must be strictly construed against
26
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Constitutional
exemption is self-executing.
7.
Tax
exemptions are personal.
the
Strict
TAX AMNESTY
TAX EXEMPTION
It is a general
pardon given to
all taxpayers
16.
GRANT OF
POWER OF TAXATION TO LOCAL
GOVERNMENT UNITS
Each local government unit shall
have the power to create its own
sources of revenues and to levy taxes,
fees and charges subject to such
guidelines and limitations as the
Congress may provide, consistent with
the basic policy of local autonomy.
Such taxes, fees and charges shall
accrue exclusively to the local
governments. (Art. 10, Sec. 5,
Constitution)
Congress cannot abolish the local
governments power to tax as it
cannot abrogate what is expressly
granted by the fundamental law.
17. SPECIAL FUND
All money collected on any tax
levied for a special purpose shall be
treated as a special fund and paid out
for such purpose only. If the purpose
for which a special fund was created
has been fulfilled or abandoned, the
balance, if any, shall be transferred to
the general funds of the government.
(Art. 6, Sec.29 (3), Constitution)
18.
SUPREME
COURTS
JURISDICTION OVER TAX CASES
(Art. VIII, Sec. 5)
27
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
DIRECT
INDIRECT
GENERAL
SPECIAL
Imposed solely
government
to
raise
revenue
for
the
NATIONAL
LOCAL
PERSONAL
PROPERTY
PROGRESSIVE
REGRESSIVE
DOUBLE TAXATION
Double taxation- strictly, taxing twice
the same object/subject, same taxing
jurisdiction, same purpose, same tax,
same year ("direct duplicate");
should one of these is not the same,
i.e., say not same year, then it is called
("indirect duplicate")
In either case, there is no law
which prohibits the same. There is not
even a prohibition by the constitution
as you say it.
However, in case of direct
duplicate, if it amounts to confiscation
of property for being unjust,
oppressive, or unfair, then it is
unconstitutional not on the ground of
2. INDIRECT
28
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
3. DOMESTIC
4. INTERNATIONAL
taxation
Arises when the taxes
are Imposed by the local
or national government
Refers to the imposition
of comparable taxes in
two or more states on
the same taxpayer in
respect of the same
subject matter and for
identical periods.
TREATY
AS
A
MODE
OF
ELIMINATING DOUBLE TAXATION
1. EXEMPTION METHOD - the
income or capital which is taxable in
the state of source or situs is
exempted in the state of residence.
The focus is on the income or the
credit itself.
2. CREDIT METHOD the tax paid in
the state of source is credited against
the tax levied in the state of residence.
It focuses upon the tax.
FORMS
OF
ESCAPE
TAXATION (ESCATE)
1. Shifting
2. Capitalization
3. Transformation
4. Avoidance
5. Exemption
6. Evasion-unlawful
FROM
A. Shifting
Process by which tax burden is
transferred from statutory taxpayer
(impact of taxation) to another
(incident of taxation) without violating
the law.
Illustration: Value added tax. The
seller is required by law to pay the
tax, but the burden is actually
shifted or passed on to the buyer.
Impact of taxation point on which
tax is originally imposed.
29
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
As to form:
1. Express: Expressly granted by
organic or statute law
2. Implied: When particular persons,
properties, or excises are deemed
exempt as they fall outside the
scope of the taxing provision itself.
DOCTRINE
IMPRESCRIPTIBILITY
As to extent:
1. Total: Connotes absolute immunity.
2. Partial: One where a collection of a
part of the tax is dispensed with.
As to object:
1. Personal: granted directly in favor
of certain persons
2. Impersonal: granted directly in
favor of a certain class of property
TAX EVASION vs. TAX AVOIDANCE
TAX EVASION
Connotes fraud
through the use of
pretenses and
forbidden devices
to lessen or
defeat taxes
Scheme used
outside of those
lawful means
TAX AVOIDANCE
Legal means used
by the taxpayer to
reduce taxes
OF
30
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
PRINCIPLE OF PROSPECTIVITY OF
TAX LAWS
The general rule under the Civil
Code that laws shall have prospective
application applies to tax laws.
Retroactive application of
revenue laws may be allowed if it will
not amount to denial of due process.
TAXPAYERS SUIT - Requires illegal
expenditure of public money.
NATIONAL TAXATION
A. INCOME TAXATION
Definitions
1. Income Tax tax on all yearly
profits arising from property,
possessions, trade or business, or
as a tax on a persons income,
emoluments, profits and the like
(61 CJS 1559)
tax on income, whether
gross or net. (27 Am. Jur. 308)
Income
All wealth which
flows into the
taxpayer other
than as a mere
return of capital.
Flow of Wealth
Source of wealth
Capital
Fund or property
which can be used
in producing goods
or services
Fund or property
Wealth
31
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
32
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
d. Trusts
e. Partnerships
INDIVIDUALS
Situs of Taxation (Who are taxable?)
1. Resident Citizen
2. Non-resident Citizen
A non-resident citizen means, a
Filipino citizen:
a. who establishes to the satisfaction
of the Commissioner the fact of
their physical presence abroad with
a definite intention to reside
therein;
b. who leaves the Philippines during
the taxable year to reside abroad,
either as an immigrant or for
employment on a permanent basis;
c. who works and derives income
from
abroad
and
whose
employment thereat requires him to
be physically present abroad most
of the time during the taxable year;
d. who is previously considered as a
non-resident and who arrives in the
Philippines at anytime during the
taxable year to reside thereat
33
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
A seaman is considered as an
OCW
provided
the
following
requirements are met:
1. Receives compensation for
services rendered abroad as a
member of the complement of a
vessel; and
2. Such
vessel
is
engaged
exclusively
in
international
trade.
CORPORATIONS
Jurisdiction to Taxation (who are
taxable?)
1. Domestic Corporation created
or organized in the Philippines. or
under its law [Sec. 22(C)]
2. Resident Foreign Corporation
engaged in trade or business within
the Philippines [Sec. 22(H)]
3. Non-resident
Foreign
Corporation not engaged in
trade or business within the
Philippines [Sec. 22(I)]
Corporation
Includes:
1. Partnerships, no matter how
created or organized;
2. Joint-stock companies;
3. Joint accounts (cuentas en
participacion)
4. Associations; or
5. Insurance companies [Sec. 22
(B)].
Excludes:
1. General
professional
partnerships;
2. Joint venture or consortium
formed for the purpose of
34
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
35
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
FROM
36
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
37
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
governing
38
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
(b)
AND
NECESSARY
Necessary
Expense
those
expenses appropriate and helpful in
the
development
of
taxpayer's
business.
Ordinary Expense those expenses
in the normal or usual in the line of
business.
Requisites for Business Expenses
to be deductible
1. ordinary and necessary;
2. paid or incurred w/in the taxable
year;
3. paid or incurred in carrying on a
trade or business;
4. Substantiated with official receipts
or other adequate records.
5. If subject to withholding taxes,
proof of payment to the BIR must
be shown.
6. Must be reasonable under the
circumstances.
39
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
TYPES
OF
40
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
in
or
fires,
the
replacement cost to restore the
property to its normal operating
condition, but in no case shall the
deductible loss be more than the
net book value of the property
before the casualty.
The excess over the net book
value immediately before the
casualty should be capitalized,
subject to depreciation over the
remaining useful life of the
property.
3. Capital losses deductible only to
the extent of capital gains
a. Losses from sale/ exchange of
capital assets.
b. Losses resulting from securities
becoming worthless and which
are capital assets.
c. Losses from short sale of
properties.
d. Losses due to failure to
exercise privilege or option to
buy/ sell property.
Special Kinds of Losses
1. Wagering Losses deductible
only to the extent of gain/ winnings.
[Sec. 34(D)(6)]
2. Losses on Wash Sales of Stocks
not deductible because these are
artificial loss
Wash sales a sale or other
disposition of stock or securities
where
substantially
identical
securities
are
acquired
or
41
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
deductible
expense from gross income.
6. Loss of useful value of capital
assets due to changes in
business conditions deductible
up to the extent of actual loss
sustained (after adjustment for
improvement, depreciation and
salvage value).
7. Losses from sales or exchanges
of property between related
taxpayers losses of this nature
are not deductible but gains are
taxable.
8. Losses of farmers if incurred in
the operation of farm business, it is
deductible.
e. BAD DEBTS
Requisites to be deductible
1. Valid, subsisting and legally
demandable
(NOTE:
the
taxpayer is the CREDITOR);
2. Debt
must
be
actually
ascertained to be worthless and
uncollectible as of the end of
the taxable year;
3. Obligation is not between
related parties [Sec. 36(B)];
4. Debt is expensed within the
year (actually charged off from
the books of accounts of the
taxpayer) and
5. Debt
is
connected
with
taxpayers profession, trade or
business.
EQUITABLE
BENEFIT
DOCTRINE
OF
TAX
42
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
DEPRECIATION
Includes:
1. The gradual diminution in the
service or useful value of
tangible property due from
exhaustion, wear and tear and
normal obsolescence.
2. Amortization of the value of
intangible assets with definitely
limited duration.
AND
OTHER
Requisites to be deductible
1. Must be reasonable;
2. Must be on property used in the
conduct of the business;
3. Must be expensed (charged off)
during the taxable year; and
4. Schedule of allowance must be
attached to the return.
Requisites to be deductible
1. The contribution/ gift must be
actually paid.
2. Given to the organizations
specified in the code.
3. The Net Income of the
organization must not inure to
the benefit of any private
stockholder/ individual.
Partial Deduction
43
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
44
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Requisites to be deductible
1. The taxpayer must be an individual;
2. The amount of premiums shall not
exceed P2,400 per family;
3. Such family must have a gross
income of not more than P250,000
for the taxable year; and
4. In the case of married taxpayers,
only the spouse claiming the
additional
exemption
for
dependents shall be entitled to this
deduction.
Who may avail of the deduction
a. individual taxpayers earning purely
compensation income during the
year.
b. individual
taxpayer
earning
business income or in the practice
of his profession whether availing
of itemized or optional standard
deductions during the year.
c. individual
taxpayer
earning
compensation
and
business/
practice of profession during the
year
PERSONAL EXEMPTIONS
Amounts of Personal Exemptions
[Sec. 35]
1. Single
individual
or
married
individual judicially decreed as
legally separated with no qualified
dependents: P20,000
2. Head of the family: P25,000
3. Each married person: P32,000
Head of the Family
1. Unmarried or legally separated
person with one or both parents, or
one or more brothers or sisters, or
one or more legitimate, recognized
natural or legally adopted children
living with and dependent upon the
taxpayer for their chief support; and
2. Where such brother / sister or
children are not more than 21 years
of age, unmarried and not gainfully
employed,
or
where
such
45
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
to
not
the
of
46
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
4.
5.
Tax Rates
2.
3.
(4)
INCOME
PREFERENTIAL
RATES
SUBJECT
TO
OR
SPECIAL
Accumulated
means taxable
Adjusted by:
1. Income exempt from tax
2. Income excluded from gross
income
3. Income subject to final tax
4. The amount of net operating loss
carry-over deducted.
47
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
48
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
49
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
the
fringe
benefit
GROSSED
UP DIVISOR
66%
67%
68%
RATE
1998
34% FWT
1999
33% FWT
2000
32% FWT
onwards
Fringe Benefits not subject to FBT
A. Fringe benefits not considered as
gross income 1. if it is required or necessary to
the business of employer
2. if it is for the convenience or
advantage of employer
50
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Exception:
If the basis for computation of the
fringe benefits tax is the depreciation
value, the zonal value or the fair
market value, only the actual fringe
benefits tax paid shall constitute a
deductible expense for the employer.
The value of the fringe benefit shall not
be deductible and shall be presumed
to have been tacked on or actually
claimed as depreciation expense by
the employer. Provided, however, that
if the aforesaid zonal value or fair
market value of the said property is
greater than its cost subject to
depreciation, the excess amount shall
be allowed as a deduction from the
employer's gross income as fringe
benefit expense. (Sec. 2.33[D], Rev.
Reg. No. 3-98)
(8) OPTIONAL CORPORATE
INCOME TAX
Optional Rate: 15% of Gross income
Requisites
A. Authorized by the President
(effective January 1, 2000),
upon recommendation of the
Secretary of Finance.
B. Conditions precedent to grant of
Presidents authority
1. A tax effort ratio of 20% of
GNP;
2. A ratio of 40% of income tax
to total tax revenue;
3. A VAT tax effort of 4% of
GNP
4. A 0.9% ratio of Consolidated
Public
Sector
Financial
Position to GNP.
C. Option
available
only
to
corporations with the following
ratio:
Cost of sales
51
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Gross
receipts
sources
sales
from
or =55%
all
D. Once
elected,
option
is
irrevocable for 3 consecutive
years
INCOME TAX INCIDENCE
ON SALES OR EXCHANGES OF
PROPERTY
Sale on Exchange of Ordinary
Assets
General rules of income taxation
apply to both as to the gain and as to
the loss.
Transaction Resulting in Taxable
Gains but Non-Recognition of
Losses
a. Sale or exchange between
related parties;
b. Wash sales by non-dealers of
securities and when not subject
to the stock transfer tax;
c. Exchanges not solely in kind in
merger and consolidation; and
d. Sales or exchanges that are not
at arms length.
Sale or Exchange of Real Property,
and Shares of Stocks of Domestic
Corporation Held as Capital Assets
Subject to Capital Gains Tax
1. On
real
property
each
independent transaction is subject
to the final tax of 6% on the gross
selling price or the fair market value
at the time of sale, whichever is
higher, regardless of gain or loss
2. Shares of stock of Domestic
Corporation not traded thru a local
exchange taxed at the rate of 5%
for net capital gains not over
P100T, and 10% in excess of
P100T.
Capital Loss
The loss incurred
from the sale or
exchange of
capital assets.
Individual
Corporation
Non-deductibility of Net Capital
losses
Capital losses shall be deducted
only to the extent of the capital gains;
hence, the net capital loss is not
deductible.
Ordinary losses are deductible
from capital gains but net capital loss
cannot be deducted from ordinary gain
or income;
Holding Period
The percentages
Capital gains and
of gain or loss to
losses are
be taken into
recognized to the
account shall be
extent of 100%.
the ff.:
(There is no
holding period)
a. 100% if the
capital assets has
been held for 12
mos. or less; and
b. 50% if the
capital asset has
been held for
more than 12
mos.
Net Capital Loss Carry-Over
There is a net
The net capital
capital loss carry
loss carry-over is
over, i.e., a net
not applicable
capital loss
sustained in a
taxable year in an
amount not in
excess of the net
income (before
exemptions) for
such year may be
deducted as a
short-term capital
loss (at 100%)
from the net
capital gains of
the next or
succeeding
taxable year but
not beyond such
period.
AND
53
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
A. Individual
1. Resident citizen;
2. Non-resident citizen on income
from within the Phil.;
3. Resident alien on income from
within the Phil.;
4. NRAETB on income from within
the Phil.
5. An individual (citizen / alien)
engaged in business or practice
of a profession within the Phil.
regardless of the amount of
gross income;
6. Individual
deriving
compensation
income
concurrently from two or more
employers at any time during
the taxable year;
7. Individual
whose
pure
compensation income derived
from sources within the Phil.
exceeds P60, 000.
B. Taxable Estate and Trust
C. General
Partnership
Professional
D. Corporations
1. Not exempt from income tax;
2. Exempt from income tax under
Sec. 30 of NIRC but has not
shown proof of exemption.
Individuals Exempt From Filing
Income Tax Return
1. Individual whose gross income
does not exceed total personal and
additional exemptions;
2. Individual with respect to pure
compensation income derived from
sources within the Philippines, the
income tax on which has been
correctly withheld;
3. Individual whose sole income has
been subjected to final withholding
income tax;
4. Individual who is exempt from
income tax.
54
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
TRANSFER TAXES
ESTATE TAX
Tax which the state exacts where
the property left by the decedent,
55
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
only
to
56
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
that foreign
Exemption)
country.
(Partial
2. TRANSFER IN CONTEMPLATION
OF DEATH
Includes:
1. transfer by trust or otherwise, in
contemplation of, or intended to
take effect in possession or
enjoyment at or after his death; or
2. transfer by trust or otherwise, with
retention or reservation of
a. the possession or enjoyment of
or the right to the income from
the property, or
b. the right, either alone or in
conjunction with any person, to
designate the person who shall
possess or enjoy the property or
the income there from.
Exception: in case of bona fide sale
for an adequate and full consideration
in money or money's worth
INCLUSIONS
IN
THE
GROSS
ESTATE
1. Decedents Interests
2. Transfer in Contemplation of Death
3. Revocable Transfer
4. Transfer under General Power of
Appointment
5. Proceeds of life insurance
6. Transfer
for
Insufficient
Consideration
7. Prior Interests
1. DECEDENTS INTEREST
It is to the extent of the interest in
property of the decedent at the time of
his death.
3. REVOCABLE TRANSFER
1. With reserved power to alter,
amend, revoke or terminate transfer, by trust or otherwise,
57
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
58
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
59
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
6. medical expenses;
7. amounts received by heirs
under RA 4917 (Retirement
Benefits)
8. Share of surviving spouse in
conjugal or community property.
B. For non-resident alien-decedent:
1. expenses,losses, indebtedness,
taxes, etc. (E-L-I-T)
2. transfers for public use;
3. vanishing deduction;
4. Share of surviving spouse in
conjugal or community property.
Funeral Expenses:
Actual funeral expenses or 5% of
the gross estate; or P200, 000,
WHICHEVER IS LOWEST
Note: Must be duly supported by
receipts or other evidence to show that
they were actually incurred.
Actual
funeral
expenses
not
confined to its ordinary or usual
meaning. They include:
a.
mourning
apparel of the surviving spouse and
unmarried minor children of the
deceases bought and used on
occasion of the burial;
b.
expenses
for the deceaseds wake, including
food and drinks;
c.
publication
charges for death notices;
d.
telecommu
nication expenses incurred in
informing relatives of the deceased;
e.
cost
of
burial plot, tombstones, monument
or mausoleum but not their upkeep.
In case the deceased own a family
estate or several burial lots, only
the value corresponding to the plot
where he is buried is deductible;
f.
interment
and/or cremation fees and charges;
and
g.
all
other
expenses
incurred
for
the
performance of the rites and
ceremonies incident to interment.
60
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
instrument
must
be
Unpaid mortgages:
1. The value of the property
mortgaged to the extent of the
decedents
interest
therein,
undiminished by such mortgage or
indebtedness, is included in the
GE;
2. The indebtedness must have been
contracted bona fide and for an
adequate and full consideration in
money or moneys worth;
3. Verification must be made as to
who was the beneficiary of the loan
proceeds.
4. If found to be merely an
accommodation loan, the value of
the unpaid loan must be included
as a receivable of the estate.
5. If there is a legal impediment to
recognize the same as receivable,
said unpaid mortgage shall not be
allowed as a deduction.
Taxes:
Includes those taxes that accrued
as of the death of the decedent AND
unpaid as of the time of death
The following are not deductible:
1. income tax on income received
after the death of the decedent;
2. property taxes not accrued after
death;
3. estate tax.
Losses
Requisites for deductibility:
1. arose from fire, storm, shipwreck or
other casualty, robbery, theft or
embezzlement;
2. not compensated by insurance or
otherwise;
61
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
REQUISITES (DIPINdot)
1. Death - the present decedent died
within five years from transfer of
the property from a prior decedent;
2. Inclusion of the property - the
property formed part of the GE
located in the Philippines of the
prior decedent, or of the taxable gift
of the donor within 5 years prior to
the present decedents death;
3. Previous taxation of the property
- the estate tax or donors tax on
the gift must have been finally
determined and paid;
4. Identity of the property - the
property must be identified as the
one received from the prior
decedent, or something acquired in
exchange therefore; and
5. No previous vanishing deduction
on the property was allowed to the
estate of the prior decedent.
Limitations as to
deduction allowable:
amount
of
62
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
63
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
64
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
65
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
DONORS TAX
Principles:
Donors tax is not a property tax,
but is a tax imposed on the transfer of
property by way of gift inter vivos
It does not apply unless and until
there is a completed gift
The transfer is perfected from the
moment the donor knows of the
acceptance of the donee
It is completed by the delivery of
the donated property, either actual or
constructive
Renunciation by the surviving
spouse of his/her share in the conjugal
partnership or absolute community
after the dissolution of the marriage is
subject to donors tax
General renunciation by an heir,
including the surviving spouse, of
his/her share in the hereditary estate is
not subject to tax, unless specifically
and categorically done in favor of
identified heir/s to the exclusion or
disadvantage of the other co-heirs in
the hereditary estate.
Php100,000
is
DONATION
Donation is an act of liberality
whereby
a
person
disposed
66
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
VALUATION
OF
PROPERTY
GIFTS
OF
legitimate,
illegitimate
adopted children
to the extent of the
Php10,000
or
first
67
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
Phil.
Donors tax
69
Academics Committee Heads: Philip and Berto
Taxation Law Head: Noemi Acain, Erwin Labay
Members: Chistina de Guzman, Ma. Karen Ulibas, Mary Joyce Sarangaya, Patrick John Malveda, Cyd
Libutan, Stralenmer Moran, Sheherazadee Labor
BUSINESS TAXES
VALUE ADDED TAX (VAT)
The VAT is a percentage tax
imposed at every stage of the
distribution process on the sale, barter,
exchange
(including
transactions
deemed by law as a sale), or lease of
goods, properties, or services in the
course of trade or business, or on the
importation of goods.
Nature of VAT
a) An indirect tax; hence, amount of
the tax may be shifted or passed
on to the buyer
b) A privilege tax; hence, the tax is
imposed not on the goods,
properties or services as such, but
on the sale, barter, exchange or
lease of goods or properties, or the
sale or performance of services for
a fee, remuneration, etc
c) A uniform tax computed at the rate
of 0% or 12% of the gross selling
price of goods or of gross receipts
realized from the sale of services
d) An ad valorem tax because it is
based on the gross selling price or
gross value in money, or gross
receipts
derived
from
the
transaction
e) A tax on the value added by every
seller as the goods, properties or
services pass along the distribution
chain, unless the seller is exempt.
Purposes of VAT system:
a. Realizing the system of taxing
goods and services;
b. Simplifying tax administration; and
c. Making the tax system more
equitable, to enable the country to
attain economic recovery.
c. EFFECTIVELY ZERO-RATED
TRANSACTIONS:
Sales to whom: persons or
entities exempted under special
laws or international agreements
to which the Philippines is a
signatory
2.) Zero-rated services:
a. Processing, manufacturing or
repacking of goods
For: persons doing business
outside the Philippines
When:
the goods
subsequently exported
e. Those
performed
for
an
enterprise whose export sales
exceed 70% of the annual
production, by subcontractors
and/or
contractors
duly
accredited by the Board of
Investments or the Export
Development
Council
in
processing,
converting
or
manufacturing goods;
f. Transport of passengers and
cargo by air or sea vessels from
the Philippines to a foreign
country;
are
EXEMPT
removes the VAT
only at the exempt
stage
the taxpayer is not
entitled to credit or
refund of the input
tax passed on to
him by the supplier,
etc.
and
persons
engaged
in
international shipping and air
transport operations;
21. Services of banks, non-bank
financial intermediaries performing
quasi-banking activities;
22. Sale or lease of goods, properties
or services where the gross annual
sales and/or receipts do not
exceed P1, 500,000.00;
Computation of the VAT:
1. for the Sale of Goods or Properties
12% of the gross selling
price or gross value in
money (effective February
1, 2006)
Gross selling price means the
total amount in money or its
equivalent which the purchaser
pays or is obligated to pay to the
seller in consideration of the
transaction, excluding the VAT
Note: such tax shall be paid by the
seller or the transferor
Tax Credits:
Output tax - the value-added tax due
on the sale or lease of taxable goods
or properties by any person required to
register
Input tax - the value-added tax due
from or paid by a VAT-registered
person in the course of his trade or
business on importation of goods or
local purchase of goods or services,
including lease or use of property, from
a VAT-registered person.
Creditable input tax: any input tax
evidenced by VAT invoice or official
receipt on the following transactions:
a. Purchase/Importation
1. for sale
2. for conversion into or intended
to form part of a finished
product for sale including
packaging materials
3. for use as supplies in the
course of business
4. for use as materials supplied in
the sale of services
5. for use in trade or business for
which
deduction
for
depreciation or amortization is
allowed
b. Purchase of services on which a
VAT has actually been paid
Creditable to:
1. the
purchaser
upon
consummation of the sale and
on importation of goods and
properties
2. The importer upon payment of
the VAT prior to the release of
the goods from Customs
custody
3. to the purchaser, lessee or
licensee upon payment of the
compensation, rental, royalty or
fee, in case of purchase of
credit
made
of the
sales
Withholding of VAT:
doing business
Philippines
in
the
4. Tax on franchises
a. franchises on radio and/or
television
broadcasting
companies whose annual gross
receipts of the preceding year
does not exceed 10 million
pesos 3%
b. franchises on electric, gas and
water utilities 2%
Note: the gross receipts must
be derived from the business
covered by the law granting the
franchise
Radio and TV broadcasting
companies shall have an option
to be registered as a VAT
taxpayer, provided that once the
option is exercised, it shall not
be revoked
5. Tax on overseas dispatch,
message and conversation
10% of gross receipts
transmitted
from
the
Philippines
payable by the person
paying for the services
rendered
paid to the person rendering
the services who is required
to collect and pay the tax
within 20 days after the end
of each quarter
Does not apply to:
a. the government
b. diplomatic services
c. public
international
organizations
enjoying
privileges and immunities
d. news services
6. Tax on banks and non-bank
financial
intermediaries
and
finance companies
a. on interest, commissions
and discounts from lending
activities as well as income
from financial leasing, based
on the remaining maturities
of instruments from which
the receipts are derived:
5 years or less
5%
More than 5 years 1%
b. on dividends and equity
shares in net income of
subsidiaries 0%
c. on royalties, rentals of
property and other items
treated as frosts income
5%
d. on net trading gains on
foreign
currency,
debt
securities, derivatives and
other similar instruments
5%
7. Amusement taxes
imposed on the proprietor,
lessee or operator of:
a. cockpits, cabarets, night or
day clubs 18%;
b. boxing exhibitions 10%;
exempt if the World or
Oriental Championships in
any division is at stake,
provided at least 1 of the
contenders is a Filipino
citizen and said exhibition is
promoted by a citizen or
corporation at least 60% of
the capital of which is owned
by such citizens;
c. professional basketball games
15%
d. jai-alai and racetracks 30%
8. Tax on winnings
a. from horse races 10%
Tax is based on the actual
amount paid to him after
deducting the cost of the ticket
b. from double, forecast/quiella
and trifecta bets 4%
c. on owners of winning race
horses 10% of the prizes
9. Tax on sale of shares of stock
listed and traded through the local
stock exchange or through initial
public offering (IPO)
sale made through the local
stock exchange, other than the
sale by a dealer in securities
of 1% of the gross selling price
through the IPO of shares of
stock in closely held corporations,
based on the gross selling price
sold in accordance with the
proportion of shares of stock sold
to the total outstanding shares
after the listing in the local stock
exchange:
-Up to 25% - 4%
-Over 25% but not over 33-1/3% 2%
-over 33-1/3 - 1%
1.
2.
3.
4.
5.
6.
7.
8.
Corporate documents
Commercial documents
Insurance policies
Deeds of sale
Special contracts
Maritime documents
Certificates Luxuries
Other
assignments
renewals
and
A. CORPORATE DOCUMENTS
1)
Original issue of shares of
stock (sec. 175)
a. Cost of imposition is borne
by the corporation originally
issuing the stock certificate
b. Revenue
Circular #47-97
Memorandum
Exemptions:
a.) bank notes issued for
circulation
b.) loan agreements and
promissory notes the
aggregate of which does
not exceed P250.00
executed by an individual
for his purchase, on
installment, of a house,
lot,
motor,
vehicle,
appliance or furniture, for
his personal use or that
of his family
Note: Renewal is also subject to
documentary stamp tax.
Note: renewal postponement of the
maturity of the obligation dealt with;
an extension of the time in which that
obligation may be discharged.
Note: Tax on renewal shall be at the
same rate as the tax on the original
document.
6) Upon acceptance of bills of
exchange and others (sec. 181)
Basis: Face value
Document taxable: any bill or
exchange or order for the payment
of money purporting to be drawn in
the foreign country but payable in
the Philippines.
7) Foreign bills of exchange and
letters of credit (sec. 182)
Basis: face value
Document taxable: all foreign bills
of exchange and letters of credit
drawn in but made payable outside
the Philippines.
8) Warehouse Receipts (sec. 189)
Basis: each warehouse receipt
be
6) Certificates (sec.188)
Certificate of damage or otherwise
issued by any public official in public
capacity for the purpose of giving info
or establishing proof of fact.
Basis: each document
D. DEEDS OF SALES
1) Sales, agreements to sell,
memoranda of sales, deliveries
or
transfer
of
due-bills,
certificates of obligation, or
shares or certificates of stock
(sec. 176).
Basis: Par value of due-bill,
certificate of obligation or stock
2) Deeds of sale and conveyances
of real property (sec. 196)
Basis: Tax rate based on amount
Property must be located in the
Philippines and deeds of partition &
deeds of redemption, taxable
E. SPECIAL CONTRACTS
2) Property insurance
(sec.184)
Basis: Premium charged
policies
similar
EXEMPTIONS:
a. Written Appearances- Written
appearances in any court by
any government official in his
official capacity
b. Fraternal
or
Beneficiary
Organization
Insurance
Policies of Annuities- Policies
of insurance of annuities made
by a fraternal or beneficiary
society, order, association or
cooperative company, operated
on the lodge system or local
cooperation plan and organized
and conducted solely by the
members thereof for the
exclusive benefit of each
member and not for profit
c. Government and Indigent
Documents filed in CourtPapers and documents filed in
courts by or for the national,
provincial, city or municipal
governments, affidavits of poor
persons for the purpose of
proving poverty
h. Certificates
of
the
Administration of Oaths for
Paper Authenticity-Certificates
of the administration of oaths to
a person as to the authenticity
of a paper required to be filed in
court by any person, whether
the proceedings be civil or
criminal
DOCUMENTARY
PAYMENT
STAMP
TAX
STAMP
TAXABLE
in
Tax
A. POWER TO ASSESS:
Starts with the self-assessment by
the taxpayer of his tax liability, filing of
the tax return, and payment of the
entire tax due shown on his return
Means Employed in the Assessment
of Taxes (Sec. 6, CTRP) (PEE BITS
PA)
1. Examination of tax returns
2. Use of the best evidence
obtainable
iii. erroneous.
The
return
made
by
the
Commissioner, in this instance, shall
be prima facie correct and sufficient for
all legal purposes.
2. Preparation of tentative findings
and holding of informal conference
(Notice of Informal Conference-NIC)
Soon after the completion of the
tax audit, the revenue officer will
render a written report stating:
a. the factual and legal basis of his
findings
b. whether the taxpayer agrees
with his findings
If the taxpayer is not amenable, the
taxpayer shall be informed in writing by
the Revenue District Officer or by the
Chief of the Division of the
discrepancies in the taxpayers liability
for the purpose of informal conference,
in order to afford the taxpayer with an
opportunity to present his side of the
case.
Note: If the taxpayer fails to respond
within 15 days from date of receipt of
the notice for informal conference, he
shall be considered in default
In such a case, the Revenue
District Officer of the Chief of the
Division shall endorse the case to the
Assessment Division for review and
issuance of deficiency tax assessment,
if warranted.
3.
Issuance
of
Preliminary
Assessment Notice (PAN)
It is a communication issued by the
Regional assessment Division, or any
other concerned BIR office, informing
a taxpayer who has been audited of
the findings of the BIR officer following
the review of these findings.
Delinquent Taxpayer
When the self-assessed tax per
return filed on the prescribed date
was not paid at all or was only
partially paid, or
Deficiency tax
The amount by which the income
tax as determined by the BIR
exceeds the amount shown as tax
per return, or
If no amount is shown or if no
return is made, then the amount by
which the tax as determined by the
BIR
exceeds
the
amounts
previously assessed (or collected
without
assessment)
as
a
deficiency
DELINQUENCY
Failure to pay the
tax due on the
date fixed by law
or indicated in
the assessment
notice or letter of
demand
DEFICIENCY
The amount still
due and
collectible from a
taxpayer upon
audit or
investigation.
The filing of a
civil action for its
collection in the
DELINQUENCY
TAX
Can be collected
also through
administrative
and judicial
remedies but has
to go through the
process of filing
the protest
against the
assessment by
the taxpayer and
denial of such
protest.
The filing of a
civil action at the
ordinary court for
ordinary court is
a proper remedy
collection may
be the subject of
a motion to
dismiss. In
addition, a
petition for
review must be
filed with the
CTA within the
30 days to toll
the running of
the prescriptive
period.
when
the
taxpayer
2. there must be
demand
for
(assessment);
a subsequent
its
payment
b. intending to
b.1.leave the Philippines;
or
b.2.remove his property
therefrom; or
b.3. hide or conceal his
property; or
c. he performs any act
tending to obstruct the
proceedings
for
collecting the tax due
Procedure
(a) Require the taxpayer or any
person having control of the
property to
1. sign a receipt covering
property distrained
2. obligate himself to preserve
the
same
intact
and
unaltered
3. not to dispose of the
property in any manner,
without the authority of the
Commissioner
(b) Where taxpayer or person in
possession refuses to sign:
of possession
Effected by
leaving a list of
distrained
property or by
service of a
warrant of
distraint or
garnishment
An immediate
step for
collection of
taxes
merely prohibited
from disposing of his
property
Effected by requiring
the taxpayer to sign a
receipt of the property
or by the revenue
officer preparing and
leaving a list of such
property
Not necessarily so.
LIEN
Directed against
the property
subject to the tax
Regardless of the
owner of the
property
DISTRAINT
Need not be
directed against
the property
subject to the tax
Property seized
must be owned
by the taxpayer
Levy
1. distraining
officer
shall
prepare a list of the property
distrained
2. in the presence of 2
witnesses, leave a copy in
the premises where the
property is located (Sec. 206
NIRC)
ACTUAL
DISTRAINT
Made only on
the property of
a delinquent
taxpayer
There is taking
CONSTRUCTIVE
DISTRAINT
Made on the property
of any taxpayer
whether delinquent or
not
The taxpayer is
Taxes
Penalties
Interests, and
Costs of sale
Limitation as to amount:
1. In case of financial incapacity: 10%
of the basic assessed tax
2. Other cases: 40% of the basic
assessed tax
The approval of the Evaluation
Board (composed of the CIR and
the Deputy Commissioners) is
required when:
1. The basic tax involved exceeds
Php1,000,000; or
2. The settlement offered is less than
the MCR
Note: The MCR may be less than the
prescribed rates of 10% or 40%, as the
case may be, provided it is approved
by the Evaluation Board
Limitation as to coverage:
1. With respect to the liability of the
taxpayer for surcharges as their
imposition is mandatory
2. In cases finally decided by the
courts
Compromise in criminal violations
All criminal actions may
compromised, except:
a. those already filed in court
b. those involving fraud.
be
Extent of discretion:
1. before the complaint is filed with
the prosecutors office:
the Commissioner has full
discretion to compromise except
those involving fraud;
2. after the complaint is filed with the
prosecutors office but before the
information is filed with the court:
the Commissioner can still
compromise
provided
the
prosecutor consented;
B. Interest:
a. Deficiency interest
20% per annum from the
date prescribed for its
payment until the full
payment thereof
EXCEPT:
a. assessments issued by regional
offices involving basic taxes of
Php500,000 or less; and
b. minor criminal violations.
b. Delinquency interest
Interest of 20% or the Manila
Reference rate, whichever is
higher, required to be paid in
case of failure to pay:
used by the
taxpayer
minimum amount
is generally not
less than
Php1,000
2. Prescription
governments
assess.
of
right
the
to
enforcement of invalid
unconstitutional law
or
Prescriptive
period
COLLECTION of taxes:
for
the
FRAUDULENT
RETURN
it merely implies a It is intentional
decision from the and deceitful with
truth or fact
the aim of
whether
evading the
intentional or not
correct tax due.
FALSE RETURN
Amended return
Allowed when:
1. the amendment is made within 3
years from the date of filing the
original return; and
2. no notice of audit or investigation of
such return has, in the meantime,
been actually served upon the
taxpayer.
Effect on prescription:
The prescriptive period starts to run
from the filing of the original return, if
the same is sufficiently complete to
enable the CIR to intelligently
determine the proper amount of tax to
be assessed.
However, where the amended
return is substantially different from the
original, the right to assess is counted
from the filing of the amended return.
Prescriptive period for the filing of
CRIMINAL ACTION: five (5) years
from the day of the commission of the
violation, and if not known, from the
discovery thereof and the institution of
judicial
proceedings
for
its
investigation and punishment.
Grounds for interruption of the
period:
1. When proceedings are instituted
against the guilty persons
It begins to run again if the
proceedings are dismissed for
reasons not constituting jeopardy
2. offender is
Philippines
absent
from
the
The
prevention
and
the
suspension of smuggling and other
frauds upon the customs
3.
4.
5.
6.
for
When importation
deemed terminated
begins
and
Fraudulent
Practices
(Criminal
Offense) against Custom Revenues
under Sec. 3602
1. Entry of imported articles by means
of any false or fraudulent invoice.
2. Entry of goods at less than the true
weight or measure.
3. Filling of any false or fraudulent
entry for the payment of drawbacks
or refund of duties.
Returning residents
Import Entry
BALIKBAYAN
Abandonment
It is the renunciation by an importer
of all his interest in the property rights
in the imported article. It may be
express or implied.
Smuggling or Unlawful Importation
Any person who shall fraudulently
import or bring into the Philippines, or
assist In doing so, any article, contrary
to law, or shall receive, conceal, buy,
sell, or in any manner facilitate the
transportation, concealment, or sale of
such article after importations, knowing
the same to have been imported
contrary to law, shall be guilty of
smuggling. (sec. 3601 TCC)
THE
TARIFF
OF
THE
A. ADMINISTRATIVE
1. Tax Lien (sec. 1204 TCC)
attaches
on
the
goods,
regardless of ownership, while
still in the custody or control of
the Government
Availed of when the importation
is
neither
prohibited
nor
improperly made.
2.
Administrative
Fines
and
Forfeitures
applied when the importation is
unlawful and it may be
exercised even where the
articles are not or no longer in
customs custody .UNLESS the
importation is merely attempted
in which case it may be effected
only while the goods are still
within the Customs jurisdiction
or in the hands of a person who
is aware thereof. (sec. 2531 and
2530 TCC)
Under Sec. 2530 (a), TCC in
order to warrant forfeiture, it is
not necessary that the vessel or
aircraft must itself carry the
contraband.
The
complementary if collateral use
Appeal with
CTA En Banc
the
Appeal by certiorari
with
the
Supreme
Court within 15 days
from notice.
If
the
decision
of
the
Commissioner or Sec. of Finance
is adverse to the protestant, he
may appeal to the CTA and SC
under the same procedure on the
other side.
5.
6.
7.
8.
9.
10.
11.
Port of Entry
A domestic port open to both
foreign and coastwise trade including
airport of entry (sec. 3514, TCC).
12.
Report of seizure to
Commissioner and Chairman,
Commission on Audit
Formal Hearing
If against the
importer he may
appeal
SETTLEMENT
CASES
OF
FORFEITURE
If against the
government it may
appeal
EXCEPTIONS:
1. the importation is absolutely
prohibited or
2. the surrender of the property to the
person offering to redeem would be
contrary to law or
3. when there is fraud. (sec.
2307,TCC)
B. FINES
1. Breach or a
2. Failure to supply or manifest
requirements provided by law (sec.
2521, TCC)
3. Unlawful loading and unloading of
cargoes (Secs. 2524, 2517,TCC)
4. Failure to produce all the crew
members
5. Failure to exhibit the documents
related to the vessel (Secs.
2519,2507,2508-2514, TCC)
LOCAL TAXATION
Power to
Revenue
Create
Sources
of
A. SURCHARGE
Articles
(DEMI)
to
Surcharge
The
fundamental
principles
governing the exercise of the taxing
and other revenue-raising powers of
LGUs are:
the LGC.
POWER
TO
GRANT
TAX
EXEMPTIONS (SEC. 192, LGC)
manufacturers,
assemblers,
and
other
other
financial
respective jurisdictions.
The proceeds of the community tax
actually and directly collected by the
city or municipal treasurer shall accrue
entirely to the general fund of the city
or municipality concerned.
Proceeds of the community tax
collected through the barangay
treasurers shall be apportioned as
follows: (Sec. 164)
50% accrues to the general fund of
the city or municipality concerned;
and
50% accrues to the barangay
where the tax is collected.
TAX REMEDIES UNDER THE LOCAL
GOVERNMENT CODE
Tax Remedies of Local Government
Units
1. Impose penalties (surcharges
and penalty interest) in case of
delinquency;
2. Avail local governments liens;
3. Administrative action through
distraint of goods, chattels and
other personal property; and
4. By judicial action.
Civil remedies for collection
1. tax lien;
2.
distraint;
3.
levy;
4.
civil action;
5.
purchase
of
property by LGUs for want of
bidder; property distrained not
disposed within 120 days from
date of distraint considered
sold to the LGU.
Note: Either of these remedies or all
may be pursued concurrently or
simultaneously at the discretion of the
local government unit concerned.
Tax lien
A. ADMINISTRATIVE
Prior to assessment:
1. Administrative appeal to the
Secretary of Justice; and
2. Action for declaratory relief
After an assessment:
1. Protest of the assessment
within 60 days from receipt
of assessment. Payment
under
protest
is
not
necessary; or
2. Action for refund within 2
years from payment of tax to
local revenue taxes the
supervening cause applies
in local taxation because the
period for the filling of claims
for refund is counted not
necessarily from the date of
payment but from the date
the taxpayer is entitled to a
refund or credit.
3. Right of redemption- 1 year
from the date of sale or
forfeiture. (SEC. 179, LGC)
B.JUDICIAL
a. Appeal
within 60 days from assessment
of provincial, city or municipal
assessor to Local Board of
Assessment Appeals;
FROM
6938
5. Machinery
&
equipment
for
pollution control and Environment
protection
Exemptions previously granted, (not
falling within the above enumeration)
are withdrawn.
FUNDAMENTAL PRINCIPLES IN
Assessment REAL PROP TAXES
(Art 198)
1. Current and fair market value is the
basis of appraisal
2. Uniformity in classification in each
local govt unit should be observed
3. Actual use of the property should
be the basis of classification
4. appraisal, assessment, levy and
collection should not be let to any
private person.
5. equitable
appraisal
and
assessment
PROCEDURE:
STEP 1 - DECLARATION OF REAL
PROPERTY
Declared by Owner or Administrator
(Sec 202-203)
If newly acquired property - filed
with assessor within 60 DAYS from
date of transfer a SWORN
statement containing FMV and
description of property
If improvement on real property filed
w/in
60
DAYS
upon
completion
or
occupation
(whichever is earlier) with a
SWORN statement containing FMV
and description of property
Declared by Provincial / City /
Municipal Assessor (Sec 204)
only when the person under
Sec 202 refuses or fails to make
the
declaration
within
the
prescribed time
No oath is required
IF FILING FOR EXEMPTION (Sec
206)
The person claiming exemptions
must file with assessor sufficient
documentary evidence to support
claim within 30 days from the date of
DECLARATION of property
If required evidence is not
submitted within 30 days, the property
will be listed as taxable in the roll.
If proven to be tax-exempt,
property will be dropped from the roll
Note: IF PROPERTY DECLARED
FOR THE FIRST TIME (Sec. 222)
If declared for 1st time, real
property shall be assessed for back
taxes for not more than 10 yrs prior to
the date of initial assessment taxes
shall be computed on the basis of
applicable schedule of values in force
during the corresponding periods
STEP 2: LISTING OF REAL
PROPERTY IN THE ASSESSMENT
ROLL
(Sec 205, 207)
All declarations shall be kept and
filed under a uniform classification
system to be established by the
provincial, city or municipal assessor.
STEP
3:
APPRAISAL
AND
VALUATION OF REAL PROPERTY
(Sec 212-214, 224-225)
Determining Fair Market Value
A. Land
1. Assessor of the province, city,
and
municipalities
gives
enacts
4. the schedule of
published or posted
an
FMV
is
B. Machinery
1. For Brand New machinery:
FMV is acquisition cost
PERIOD:
a. within five (5) yrs from the date
they become due
b. within ten (10) yrs. from discovery
of fraud, in case there is fraud or
intent to evade
PRESCRIPTION
SHALL
BE
SUSPENDED when: (Sec 270, LGC)
X
Tax
AND
REAL
PROPERTY
Within 15 days
SUPREME COURT
to administer oaths;
to receive evidence;
to summon witness by subpoena;
to inquire production of papers or
documents by subpoena duces
tecum;
5. to punish contempt;
6. to
promulgate
rules
and
regulations for the conduct of its
business;
7. to
assess
damage
against
appellant if appeal to CTA is found
to be frivolous or dilatory;
8. to suspend the collection of tax
pending appeal; and
9. to render decisions on cases
brought before it.
10. to issue order authorizing distrait
of personal property and levy of
real personal property.
DISTRAINT
OF
PERSONAL
PROPERTY AND LEVY OF REAL
PROPERTY
Upon the issuance of any ruling,
order or decision by the CTA favorable
to the national government, the CTA
shall issue an order authorizing the
BIR, through the commissioner:
APPELLATE
REVIEW BY
final
and
executory
assessments for taxes, fees,
charges
and
penalties.
Collection where the principal
amount of taxes and fees,
exclusive of charges and
penalties, claimed is less than
1 million pesos shall be tried
by the proper MTC and RTC;
2. Exclusive
appellate
jurisdiction in tax collection
cases -a) over appeals from the
judgments, resolutions or
orders of the RTC in tax
collection cases originally
decided by them;
b) over petitions for review
of
the
judgments,
resolutions or orders of
the RTC in the exercise
of
their
appellate
jurisdiction
over
tax
collection cases originally
decided by the MTC.
APPEAL
WHO MAY APPEAL?
Any party adversely affected by
a decision, ruling or inaction of the
CIR, Commissioner of Customs, Sec.
of Finance, Sec. of Trade and Industry
or Sec. of Agriculture or the RTC, may
file an appeal with the CTA:
1. within 30 days after receipt of
such decisions or
2. After the expiration of the period
fixed by law for action referred
to in Section 7(a) R.A. 9282, in
which case the inaction shall be
deemed a denial.
MODES OF APPEAL
EXCEPTIONS:
1. defense of prescription
REASON: this is a statutory
right (Visayan Land Transport
vs. Collector)
2. errors of administrative officials
REASON: State can never be
in estoppel and Lifeblood
Theory (CIR vs. Procter and
Gamble
Philippines,
Manufacturing Corp.)
NOTE: However, this was reversed by
the SC in the case of Commissioner
vs. Procter and Gamble, G.R. no.
66838, Dec. 2, 1991 Resolution, held
that in the absence of explicit
statutory provisions to the contrary,
the government must follow the
same rules of procedure which bind
private parties.
Collection of taxes may be
SUSPENDED pending appeal to the
CTA
GENERAL RULE: No appeal taken to
the CTA shall suspend the payment,
levy or distrait, and/or sale of any
property of the taxpayer.
EXCEPTIONS:
1. there must be showing that
collection of the tax may
jeopardize the interest of the
government and/or taxpayer;
2. deposit of the amount claimed
or file a surety bond for not
more that double the amount of
tax with the Court when
required; and
CAN
THE
CTA
COLLECTION OF TAXES?
ENJOIN