COURSE SYLLABUS

Course Code/Name BASIC TAXATION LAW

VISION

An internationally recognized private non-sectarian university committed to academic excellence, transformational and
innovative education.

MISSION

To attain its vision, the University lives-up to the following:

1. Build and embrace a sustainable research culture among students, faculty, and non-teaching staff in support of its
academic programs and community extension thrusts. RESEARCH

2. Develop the talents and potentials of the students towards the practice of professions to be responsive to the changing
local and global industry requirements. INSTRUCTION

3. Capacitate a community guided by the university extension program and be a catalyst for social transformation.
EXTENSION

4. Develop a community of God-centered, nationalistic, and globally competitive professionals with proactive values and
attitudes. VALUES

MISSION
INSTITUTIONAL LEARNING OUTCOMES
1 2 3 4

Few years after graduation, the graduate should:

1. LEADERSKIP SKILL. Work collaboratively and proactively in multidisciplinary and multicultural teams √ √ √ √
and take leadership roles with a deep sense of integrity, duty and responsibility.

2. ENTREPRENEURIAL SKILL. Exhibit entrepreneurial competence by creating business ideas and

√ √ √ √
manage the functional areas (operation, marketing, finance, human resource) and other business
strategies for economic and social development.

3. ANALYTICAL AND CREATIVE THINKING SKILL. Exercise critical and creative thinking in providing √ √ √ √
strategic solutions and informed decisions to creatively tackle discipline-related problems.

4. DIGITAL PROFICIENCY SKILL. Demonstrate literacy, fluency, and mastery of the digital landscape √ √ √ √
and of various innovative applications of technology for effective professional practice.

5. DATA ANALYTICS SKILL. Apply data-based reasoning in professional practice by accurately and
√ √ √ √
proficiently translating data into abstract concepts using computing technology tools to optimize
industry operations.

6. COMMUNICATION SKILL. Communicate clearly and effectively using written, oral, and non-verbal
√ √ √ √
communication through mastery of the five-macro skills (listening, reading, writing, speaking
viewing).

7. PROACTIVE ATTITUDE SKILL. Adapt positive, reflective, and respectful professional behavior by
√ √ √ √
recognizing different value systems, undertaking controllable actions, and formulating innovative
solutions to future challenges.

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 Program Educational Objectives and Relationship to the Institutional Learning Outcomes

I. PROGRAM EDUCATIONAL OBJECTIVES Institutional

Learning Outcomes
The Juris Doctor program aims to produce lawyers who:
1 2 3 4 5 6 7

1. Advanced and coherent knowledge, skills and values in a specialized, interdisciplinary or

√ √ √
multidisciplinary field study for professional work and life-long learning (PQF Level 8)

2. Innovative, creative work and research in the field of law with practical knowledge, skills, and
values necessary for the application of the law, delivery of legal services, and promotion of social
√ √ √ √
justice and public interest, especially to the marginalized, with the values of ethical lawyering and
public service (PQF Level 8);

3. High degree of independence with minimal supervision when in law practice or in teams of multi-
disciplinary field (PQF Level 8); √ √ √ √ √

4. Demonstrate leadership behaviors such as effective strategic thinking/planning, collaboration, √ √ √ √

problem solving, and consensus building. (PQF LEVEL 8)

5. Demonstrate significant level of expertise-based autonomy and accountability to professional

leadership for innovation, research and/or development management in highly specialized or
interdisciplinary or multi-disciplinary field. (PQF LEVEL 8)
√ √ √ √ √ √ √

Program Outcomes and Relationship to Program Educational Objectives

II. PROGRAM OUTCOMES Program Educational

Objectives

1 2 3 4 5
Graduates of the Juris Doctor program are expected to:

1. demonstrate knowledge and understanding of fundamental rules and standards of substantive

√ √ √
and procedural law.
√ √

2. understand the structure of the Philippine legal system, including how law is made, changed, and √ √ √
interpreted.

3. conduct effective legal research using a variety of sources, tools, and strategies. √ √ √ √ √

4. be able to perform legal analysis by applying relevant law to facts in order to identify, evaluate,
√ √ √
and resolve the legal aspects of clients’ problems.

5. able to communicate effectively speak to a variety of audiences, both orally and in writing. √ √ √

6. understand the moral, ethical, and professional responsibilities that guide and govern lawyers. √ √ √ √

[Link] a lawyer’s responsibility to society and the law’s role in promoting social justice. √ √ √

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III. Course Information

Course Code JD 901

Course Title BASIC TAXATION LAW

Credit THREE (3) UNITS

Pre-Requisite Constitutional Law I

Co-Requisite NA

Duration One Semester

Course Description The course covers the constitutional aspects of taxation, and general principles of income, transfer
and local taxation. The course also provides a general survey of concepts and principles underlying the
key taxes provided in the National Internal Revenue Code, as amended. (LEB MO No. 24)

IV. Course Outcomes (COs) and Relationship to Program Outcomes:

Course Outcomes (CO) Program Outcomes*

The student should be able to: 1 2 3 4 5 6 7

Define and understand Partnership and the Obligations of Partners as well as to Third √ √ √ √
1
Persons;

Understand the Effects of Dissolution and Enumerate the Causes of Dissolution, and √ √ √ √
2
study Limited Partnership;

Define and understand Agency and the Obligations of Principal and Agent, and the √ √ √ √
3
know the Modes to Extinguish Agency;

Understand Express and Implied Trust including its Prescription; √ √ √ √

4

5 Apply the principles learned in the subject when students become members of the bar √ √ √ √
and practice law.

* Level: I – Introductory E-Enabling D-Demonstrating

V. MODE OF COURSE DELIVERY

Face to Face/ In-person

VI. Contact Hours and Indicative Student Workload

Face to Face Session: 48 contact hours

Individualized learning shall be allotted in the preparation for the course, reading of the provided instructional books or materials,
and review of lecture/cases, assessment/activities and other learning resources to be accessed through the
[Link] or the Teams Class.

VII. Faculty Information

Name of Faculty ATTY. MARIA HELEN P. FIGUES, CPA

Email Address mhelenfigues@[Link] Mobile No. 0967-351-7118

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Class Schedule FRIDAY 6:30-9:30pm Consultation FRIDAY 5:00-6:00pm
Schedule

VIII. Course Coverage

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3 I. HISTORY OF TAXATION 1. To know the concept of Recitations Discussion D

partnership; and/or other
II. DEFINITION OF TAXATION classroom
i. Taxation vis-à-vis Tax 2. To know the rules in determining activities
➢ Southern Luzon Drug Corporation v. the existence of partnership as well
DSWD, et. al., G.R. No. 199669, April as apply the principles in given
25, 2017 cases;
➢ Paseo Realty and Development
Corporation v. CA, G.R. No. 119286, 3. To understand partnership by
October 13, 2004. estoppel;
➢ Pelizloy Realty Corporation v.
4. To distinguish Partnership from
Province of Benguet, G.R. No. 183137,
Joint Venture;
April 10, 2013.
[Link] understand professional
III. NATURE OF THE POWER OF
partnership.
TAXATION
i. Inherent prerogative of the
sovereignty
a. Basis
b. Manifestations

➢ Refer to: Concurring and Dissenting

Opinion of Justice Leonen in Manila
Memorial Park Inc. et. al v. Secretary of
DSWD and DOF, G.R. No. 175356,
December 3, 2013.

ii. Legislative in character

a. Basis
b. Scope: To determine—
i. Purpose(s)
ii. Subjects and objects of taxation
(within its jurisdiction)
iii. Amount and rate of tax
iv. Kind of tax to be collected
v. Apportionment of the tax
vi. Manner and mode of enforcement
and collection
vii. Situs of taxation
viii. Grant tax exemption or condonation
ix. Provision of administrative and
judicial remedies that may be availed
by the taxpayers and government

iii. Subject to constitutional and

inherent limitations (see discussion
outline below)

IV. BASIS OF TAXATION (Necessity

Theory)
i. Necessity to serve the people
ii. Necessity to protect the people
V. IMPORTANCE OF TAXES – Lifeblood
Doctrine

VI. THEORIES OF TAXATION

i. Lifeblood Theory

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➢ CIR v. Metro Star Superama Inc.,

G.R. No. 185371, December 8, 2010
citing CIR v. Algue, G.R. No. L-28896,
February 17, 1988.
ii. Necessity Theory
iii. Benefits received or compensation
theory
iv. Benefits received Theory/Reciprocity
Theory/Symbiotic Theory (Doctrine of
Symbiotic Relationship)
1. Support by the taxpayers
2. Protection and benefits by the
government
➢ Southern Luzon Drug Corporation v.
DSWD, et. al., G.R. No. 199669, April
25, 2017

3 VII. PURPOSE AND OBJECTIVE OF

TAXATION
i. The Four (4) R’s of Taxation
1. Revenue
2. Redistribution
3. Re-pricing- i.e. sin taxes, as a way to
change behavior
4. Representation- demand for
accountability from the government on
taxes collected.

ii. Primary: revenue raising

iii. Secondary: non-revenue raising
1. Regulation – e.g. to protect local
industries against unfair competition
Holmes dictum (McCulloch v. Maryland,
4 Wheat, 3164L ed. 579, 607) vis-à-vis
Marshall Disctum (Panhandle Oil C. v.
Mississippi, 277 US 218).
How were the doctrines reconciled?
➢ Reyes v. Almanzor et. al., G.R. Nos.
L-49839-46, April 26, 1991
2. Promotion of general welfare-
implementation of the police power
3. Reduction of social inequality
(Redistribution)
4. Encourage economic growth

VIII. SCOPE OF TAXATION

i. Unlimited
ii. Comprehensive
iii. Plenary
iv. Supreme
➢ Pepsi Cola Bottling
Philippines Company v. Municipality of
Tanauan et. al., G.R. No. L-31156
February 27, 1976.
➢ Tio v. Videogram Regulatory
Board, G.R. No. 75697, June 19, 1987.

IX. ASPECTS OF TAXATION

i. Levy or imposition (Legislation)
ii. Administration (Tax Administration)
Agencies involved:
1. Bureau of Internal Revenue (BIR)
2. Bureau of Customs (BOC)
3. Provincial, City, and Municipal
Assessor and Treasurers

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X. BASIC PRINCIPLES OF A
SOUND TAX SYSTEM
i. Fiscal adequacy
ii. Theoretical justice or equity
(Section 28[1], Article VI, 1987
Constitution)
iii. Administrative feasibility
iv. Economic efficiency

XI. TAXATION DISTINGUISHED FROM

POLICE POWER AND EMINENT DOMAIN
➢ Planters Products Inc. v. Fertiphil
Corp., G.R. No. 166006 March 14,
2008.
➢ CIR v. Central Luzon Corporation,
G.R. No. 159647, April 15, 2005.
➢ Carlos Superdrug Corporation v.
Department of Social Welfare and
Development, G.R. No. 166494, June
29, 2007, 553 Phil. 120 (2007)
➢ Manila Memorial Park, Inc. and La
Funeraria Paz-Sucat, Inc v. Secretary of
DSWD and DOF, G.R. No. 175356,
December 3, 2013.

XII. TAXES, DEFINED

i. Internal revenue taxes
ii. Local/municipal taxes
iii. Tariff and customs duties
iv. Taxes and tax incentives
under special laws

3 XIII. ESSENTIAL
CHARACTERISTICS AND ATTRIBUTES
OF TAXES
i. Enforced contribution
ii. Generally payable in money
iii. Proportionate in character
iv. Levied on person, property
or the exercise of a right or privilege
v. Levied by the State which
has jurisdiction over the subject or
object of taxation
vi. Levied by the lawmaking
body of the State
vii. Levied for public purpose/s

XIV. CLASSIFICATION OF
TAXES
i. As to Subject Matter or
Object
ii. As to Who Bears the Burden
iii. As to the Determination of
Amount
iv. As to Purpose
v. As to the Scope or Authority
Imposing the Tax
vi. As to Graduation or Rate

XV. TAXES DISTINGUISHED

FROM OTHER IMPOSITIONS
i. License or permit fee
ii. Toll fee
iii. Compromise penalty
iv. Special assessment
v. Debt

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vi. Subsidy
vii. Revenue
viii. Internal revenue
ix. Customs duties
x. Tariff

XVI. LIMITATIONS OF THE POWER OF

TAXATION
i. Inherent Limitation
1. Public purpose
 Pascual v. Secretary of Public
Works et. al., G.R. No. L-10405
 Lutz v. Araneta, et. al., G.R. No.
L-7859, December 22, 1955
2. Non-delegation of the legislative
power to tax
3. Exemption from taxation of
government entities
 NPC v. Province of Pangasinan, G.R.
No. 210191, March 4, 2019.
 Metropolitan Waterworks & Sewarage
System v. Quezon City, G.R.
No.194388, November 7, 2018.
 PAGCOR v. BIR, G.R. No. 215427,
December 10, 2014.
 CIR v. PAGCOR, G.R. No. 177387.
November 9, 2016.
4. International comity
5. Territorial jurisdiction

ii. Constitutional Limitations

[Link]
a. Revenue bill must originate
exclusively in the House but the Senate
may propose with amendments –
lawmaking process
b. Concurrence of a majority of ALL the
members of Congress for the passage
of a law granting tax exemption
c. Rule of uniformity and equity in
taxation
d. Progressive system of taxation
e. Exemption of religious, charitable and
educational entities, non-profit
cemeteries, and churches from property
taxation
i. Philippine Heart Center v. LGU of
Quezon City, G.R. No. 225409, March
11, 2020
ii. Mitsubishi Corporation-Manila Branch
vs CIR G.R. 175772 dated 5 June 2017
iii. CIR v. St. Luke’s Medical Center
(SLMC), G.R. No. 203514. February 13,
2017
iv. Abra Valley College Inc., v. Aquino,
G.R. No. L-39086 June 15, 1988
v. American Bible Society v. City of
Manila, G.R. No. L-9637, April 30, 1957
vi. City Assessor of Cebu City v.
Association of Benevola de Cebu Inc.,
G.R. No. 152904, June 8, 2007

f. Exemption of non-stock, non-profit

educational institutions from taxation
i. Jacinto-Henares v. St. Paul College of
Makati, G.R. No. 215383 (Resolution),
March 8, 2017
ii. CIR v. De La Salle University, G.R.

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Nos. 196596, 198841, 198941,

November 9, 2016
3
g. Non-imprisonment for non-payment
of a poll tax
h. Non-impairment of the jurisdiction of
the SC in tax cases

2. Indirect
a. Due process of law
i. Chamber of Real Estate and Builders’
Associations’ Inc. v. Romulo et. al.,
G.R. No. 160756, March 9, 2010
b. Equal protection of the laws
i. People v. Cayat, G.R. No. L-45987
ii. Associations’ Inc. v. Romulo et. al.,
G.R. No. 160756, March 9, 2010
iii. Ormoc Sugar Company v. Conejos
et. al., G.R. No. L-23794, February 17,
1968
iv. Tiu v. CA, G.R. No. 127410 January
20, 1999

c. Non-impairment of the obligation of

contracts
d. Non-infringement of religious
freedom
e. No appropriation for religious
purposes
f. Non-infringement of the freedom of
the press
g. Power of the President to veto any
particular item/s in a revenue or tariff
bill

XVII. SITUS OF TAXATION

➢ Air Canada v. CIR, January 11, 2016,
G.R. No. 169507, January 11, 2016

XVIII. DOUBLE TAXATION

i. Meaning of double taxation
1. Strict sense
2. Broad sense

ii. Instances of double taxation

iii. Constitutionality of double taxation
1. General rule
2. Exception

XIX. FORMS OF ESCAPE FROM

TAXATION
i. Six (6) Basic Forms
ii. Definition of terms
1. Shifting, in general
a. Impact of taxation
b. Incidence of taxation
c. Relations among impact, shifting and
incidence
d. Kinds: i. Forward shifting
ii. Backward shifting
iii. Onward shifting
2. Capitalization
3. Transformation
4. Exemption
5. Tax avoidance
6. Tax evasion

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iii. Distinction between tax evasion and

tax avoidance
iv. Elements of tax evasion
v. Evidence to prove tax evasion
XX. EXEMPTION FROM TAXATION
i. Exemption, defined
ii. Nature of tax exemption
a. Personal privilege
b. Generally revocable
c. Waiver on the part of the government
d. Not necessarily discriminatory

iii. Nature of the power to grant tax

exemption
iv. Rationale of tax exemption
v. Grounds for tax exemption
vi. Kinds of tax exemption
vii. Examples of tax exemption
viii. Construction of tax exemption
statutes
ix. Tax amnesty, defined
➢ CIR v. Covanta Energy Philippine
Holdings, Inc., G.R. No. 203160,
January 24, 2018
x. Tax remission of tax condonation,
defined

XXI. NATURE, CONSTRUCTION

AND APPLICATION OF TAX LAWS
i. Nature of internal revenue
law
ii. Construction of tax laws
iii. Application of tax laws
iv. Mandatory and directory
provisions of tax laws
v. Authority of the Secretary of
Finance to promulgate rules and
regulations
vi. Nature and power to make
regulations
March vii. Necessity and function of
15, regulations
2024 viii. Requisites for validity and
effectivity of regulations
ix. Force and effect of
regulations
x. Administrative rulings and
opinions
xi. Administrative
interpretation and the courts

3 xii. Power of the Secretary of Finance to

Revoke the Rulings of his predecessor
xiii. Non-retroactivity of repeal of
regulations or rulings, and its
exceptions
xiv. Decisions of the Supreme Court and
the Court of Tax Appeals

XXII. SOURCES OF TAX LAWS

i. Constitution
ii. Legislations/statutes (R.A.,
P.D., E.O.)
iii. Administrative rules and

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regulations, rulings or opinions of tax

officials
iv. Judicial decisions
v. Tax treaties or agreements

INCOME TAXATION- General

Overview

I. DEFINITION OF INCOME TAX

II. NATURE OF INCOME TAX
III. PURPOSES OF INCOME TAX
IV. BRIEF HISTORICAL BACKGROUND
OF PHILIPPINE INCOME TAXATION
V. SOURCES OF INCOME TAX LAW
VI. DEFINITION OF TERMS
VII. GENERAL PRINCIPLES OF INCOME
TAXATION IN THE PHILIPPINES
VIII. SYSTEMS OF INCOME TAXATION
IX. KINDS OF INCOME TAX METHODS

3 X. FEATURES OF OUR PRESENT INCOME

TAXATION (RA No. 8424, RA No. 9504,
RA No. 9337, R.A. No. 10963) –
Comprehensive Tax Situs
1. Basic Features of Individual Income
Taxation
2. Basic Features of Corporate Income
Taxation
3. Criteria Used – comprehensive
system of imposing income tax

XI. SOURCES OF INCOME

XII. CRITERIA TO DETERMINE IF
INCOME IS TAXABLE
XIII. KINDS OF TAXABLE INCOME OR
GAIN
1. Capital Gains
2. Ordinary gains

XIV. GROSS INCOME

1. Inclusions – Section 32A
2. Exclusions – Section 32B

XV. SITUS OF INCOME (Section 42)

XVI. EXCLUSIONS FORM GROSS
INCOME

1. Proceeds of Life Insurance Policy

2. Amount Received as Return of
Premium
3. Gifts, Bequests, Devises
4. Compensation for injuries or sickness
5. Income exempt under treaty
6. Retirement benefits, Pensions,
Gratuities
7. Miscellaneous Items
a) Prizes and awards given in
recognition of Religious, Charitable,
Scientific, Educational, Artistic, Literary,
or Civic achievements.
b) Prizes and awards in sports
competitions
c) Income derived by the Government
or its political subdivisions from the
exercise of any essential governmental
function or from any public utility.
d) Income derived from investments in
the Philippines by Foreign Government

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or Financing Institutions
e) Gains derived from redemption of
shares of stock issued by a Mutual Fund
Company

f) Contributions to GSIS, SSS,

PAG-IBIG, and Union Dues
g) Benefits in the form of 13th
month pay and other benefits
h) Gains derived from the sale,
exchange, retirement bonds debentures
or other certificate of indebtedness with
a maturity of more than five (5) years.

XVII. ALLOWABLE DEDUCTIONS

1. Deduction vs. Exemption
2. Deduction vs. Exclusion
3. Basic principles governing deductions
4. Kinds of allowable deductions
i. Itemized deductions (Section 34A-K
and 34M)
ii. Optional Standard Deduction of forty
percent (40%) of the Gross Income.

XVIII. NON-DEDUCTIBLE ITEMS,

(Section 36A and 36B)
Jurisprudence:
1. Mandanas et. Al. v. Ochoa, G.R. No.
199802, April 10, 2019.
2. Soriano v. Secretary of Finance, G.R.
No. 184450. January 24, 2017 (En
Banc)
3. Madrigal v. Rafferty, G.R. No. 12287,
3 August 7, 1918, 38 Phil. 415
4. Commissioner of Internal Revenue
vs. Filinvest Development Corporation,
G.R. No. 167689, July 19, 2011.
5. Baier-Nickel v. CIR, G.R. No.
156305, February 17, 2003.
6. CIR v. Baier-Nickel, G.R. No.
153793, August 29, 2006.
7. CIR v. Marubeni Corporation, G.R.
No. 137377, December 18, 2001.
8. Tuazon vs. Lingad, 58 SCRA 170.
9. Republic v. De la Rama, G.R. No. L-
21108, 18 SCRA 861.
10. CIR v. Pilipinas Shell Petroleum
Corporation, G.R. No. 188497, April 25,
2012.
11. Renato Diaz and Aurora Ma. F.
Timbol v. the Secretary of Finance and
the CIR, G.R. No. 193007; July 19,
2011.
12. Philippine Amusement and Gaming
Corporation (PAGCOR) v. BIR, G.R. No.
172087, March 15, 2011.
13. United Airlines, Inc. v. CIR, G.R.
No. 178788, September 29, 2010.
14. CIR v. Smart Communication, Inc.,
G.R. No. 179045-46, August 25, 2010.
15. Miguel G. Osorio Pension
Foundation, Incorporated v. CA and
CIR, G.R. No. 162175, June 28, 2010.

INCOME TAXATION for

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INDIVIDUALS

I. TAXABLE INDIVIDUALS
a) Resident Citizen
b) Non-resident Citizen [Section 22 (E),
NIRC]
c) Resident Alien
d) Non-resident alien
e) Special Employees
f) Estates and Trusts

II. INCOME TAX RATES – Options

available for self-employed individuals
under TRAIN Law

III. INCLUSIONS (Gross Income for

Individuals)
1. Compensation Income
i. Definition
➢ First Lepanto Taisho Insurance
Corporation v. CIR, G.R. No. 197117,
3 April 10, 2013
ii. Kinds:
iii. Doctrine of Cash Equivalent
iv. Mode of Compensation Income
Collection/Payment
v. Fringe Benefits
1. Definition
2. Kinds of Fringe Benefits
[HEVHIMEHEL]
3. Computation of Fringe Benefits Tax
a. Burden of FBT: Employer
b. Grossed Up Monetary Value for:
i. Special Employees
ii. NRA-NETB

3 4. Exemption from Fringe Benefit Tax

a. De Minimis Benefits
b. Contributions of the employer for the
benefit of the employee to retirement,
insurance and hospitalization benefits
plan
c. Employer’s convenience rule
d. FB which are authorized or exempted
from tax under special laws

2. Business or Professional Income

i. Applicable tax rates: 0-35% or 8%
ii. Conditions for the options to
be taxed at 8% of gross sales or
receipts will apply

3. Passive Income
i. Taxation at Source
a. Final Withholding Tax
b. Creditable Withholding Tax
➢ ING Bank N.V. vs. Commissioner
of Internal Revenue, G.R. No.
167679, July 22, 2015

ii. Transactions Subject to Final

Withholding
➢ Banco De Oro, et. al. vs. Republic of
the Philippines, et. al., G.R. Nos.
198756, January 13, 2015

4. Capital Gains

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a. Sale of Shares of Stocks NOT listed

and traded in the local exchange OR
listed but NOT traded in local stocks
exchange
b. Sale of Real Property located in the
Philippines
c. Sale of other “capital assets”
d. Conditionally Exempt from Payment
of CGT
e. Exempt entities from CGT
➢ Republic v. Spouses Salvador, G.R.
No. 205428, June 7, 2017

5. Other income
a. Rent income other than royalties
b. Interest income other than interest
income on bank deposit
➢ Banco De Oro, et al vs. Republic of
the Philippines et. al. (En Banc), G.R.
No. 198756, August 16, 2016
c. Dividend income
d. Income from other sources
and this include:
i. Bad debts recovered
ii. Illegal gains derived from
gambling
iii. Tax refunds
iv. Compensation for private
property expropriated by the
government for public use
v. Damages
vi. cancellation of indebtedness

3 IV. INCOME TAX COMPUTATION

V. TAX on NRA-NETB
VI. EXCLUSIONS
➢ Confederation for Unity, Recognition
and Advancement of Government
Employees (COURAGE) et. al. v. CIR,
G.R. Nos. 213446 & 213658, (En Banc)
July 3, 2018

VII. DEDUCTIONS
A. Pure Compensation Income
Earner
B. Earning Business or
Professional Income
➢ Itemized Deduction or
Optional Standard Deduction

VIII. INDIVIDUALS NOT REQUIRED TO

FILE INCOME TAX RETURN

IX. PROCEDURE FOR FILING OF ITR

3 INCOME TAXATION for

CORPORATIONS

I. INTRODUCTION AND DEFINITION OF

TERMS
II. TAXABLE CORPORATIONS
A. Domestic Corporation (“DC”)
B. Resident Foreign Corporation (“RFC”)
C. Non-Resident Foreign Corporation
(“NRFC”)
D. Filing of an Income Tax Return (ITR)

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Jurisprudence:
1. CIR v. Deutsche Knowledge Services
PTE. LTD., G.R. No. 234445, July 15,
2020 (proof of NRFC status)
2. Howden v. CIR (G.R. No. L-1392,
April 14, 1965)

III. PARTNERSHIPS AND CO-

OWNERSHIPS

Co-ownership
General Rule
Exceptions:

Partnership- Two (2) Types of

Partnership under the Tax Code
Summary of Tax Liabilities of
Partnerships
Liability of Partners
Jurisprudence:
1. Evangelista et. al. v. CIR, G.R. No. L-
9996, October 15, 1957.
2. Obillos et. al. v. CIR, G.R. No. L-
68118, October 29, 1985.

IV. INCOME TAX EXEMPT ENTITIES

Jurisprudence:
1. CIR v. Federation of Golf Clubs in the
Philippines, G.R. No. 226449, July 28,
2020.
2. CIR v. First E-bank Tower
Condominium Corporation, G.R. No.
215801, January 15, 2020.
3. CIR v. The Club Filipino Inc. de Cebu
(en banc), G.R. No. L-12719, May 31,
1962.
4. CIR v. Manila Lodge No. 761 of the
Benevolent and Protective Order of
Elks, G.R. No. L-11176, June 29, 1959.

3 V. TYPES/CLASSIFICATIONS
OF INCOME
a. Inclusions to Gross Income:
All income derived from whatever
source, including but not limited to the
following (Sec. 32); (Key: C-
G2IR2DAP3 )
1. Compensation for services
rendered;
2. Gross income from profession, trade
or business;
3. Gains from dealings in property;
4. Interests;
5. Rents;
Kinds:
i. Operating Lease
ii. Finance Lease

[Link];
Concept –
Kinds-
A. Stock Dividends
B. Property Dividends
C. Liquidating Dividends
D. Disguised Dividends

7. Annuities;
8. Prizes and winnings;

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b. Capital Gains
1. Sale of Shares of Stocks NOT listed
and traded in the local exchange OR
listed but NOT traded in local stocks
exchange
2. Sale of Real Property located in the
Philippines

c. Exclusions to Gross Income

VI. DEDUCTIONS
a. Allowable Deductions
i. Itemized Deductions (Ex-In-Ta-Lo-
Ba-Cha-Re-Pen-Dep-Dep)
1. Expenses
2. Interest
3. Taxes
4. Losses
5. Bad debts
6. Charitable Contributions
7. Research and development costs
8. Pension contributions
9. Depreciation and amortization
10. Depletion of oil, gas, wells, and
mines

ii. Optional Standard Deduction

(“OSD”)

b. Additional Requirements for

Deductibility of Certain Payments

VII. TAX RATES

1. Rules
2. Conditions to be satisfied to avail of
the 15% optional corporate tax:
3. 2% Minimum Corporate Income Tax
Carry Forward of Excess Minimum Tax
Relief from the MCIT under certain
conditions:
4. Special Rules
a. Special Domestic Corporations
b. Special Resident Foreign
Corporations
c. Special Non-Resident Foreign
Corporations
5. Passive Income (These incomes must
be derived from the Philippines)

VIII. TAX ON IMPROPERLY

ACCUMULATED EARNINGS
1. Coverage
2. Corporations Subject to Improperly
Accumulated Earnings Tax (IAET)
3. Exceptions to IAET
4. Evidence of Purpose to Avoid Income
Tax
5. Computation of Improperly
Accumulated Taxable Income

Jurisprudence:
1) CIR v. Pilipinas Shell Petroleum
Corporation, G.R. No. 188497, February
19, 2014.

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2) Deutsche Bank-AG Manila Branch v.

CIR, G.R. No. 188550, August 19,
2013.
3) CIR v. General Foods (Phils.), Inc.,
G.R. No. 143672, April 24, 2003.
4) The Late Lino Gutierrez substituted
by Andrea C. vda. De Gutierrez et. al.
v. Collector (now commissioner) of
Internal Revenue, G.R. No. l-19537,
May 20, 1965.
5) CIR v. Isabela Cultural Corporation,
G.R. No. 172231, February 12, 2007.
6) H. Tambunting Pawnshop, Inc. v.
CIR, G.R. No. 173373, July 29, 2013.
7) Plaridel Surety and Insurance
Company, v. CIR, G.R. No. L-21520,
December 11, 1967.
8) Philippine Refining Company (now
known as "Unilever Philippines [PRC],
Inc."), v. CA, CTA, and the CIR, G.R.
No. 118794, May 8, 1996.
9) China Banking Corporation v. CA,
CIR and CTA, G.R. No. 125508, July 19,
2000.
10) CIR v. Bicolandia Drug Corporation
(formerly known as Elmas Drug Co.),
G.R. No. 148083, July 21, 2006.
11) Kuenzle & Streiff, Inc., v. The
Collector [now Commissioner] of
Internal Revenue, G.R. Nos. L-12010
and L-12113, October 20, 1959.
12) Paper Industries Corporation of the
Philippines (PICOP), v. CA, CIR, and
CTA, G.R. Nos. 106949-50, December
1, 1995.
13) Hospital de San Juan de Dios, Inc.,
v. CIR, G.R. No. L-31305 may 10,
1990.
14) CIR, v. Central Luzon Drug
Corporation, G.R. No. 159610, June 12,
2008.
15) CIR v. Philippine Airlines, Inc.
(PAL), G.R. No. 179259, September 25,
2013

3 ACCOUNTING PERIOD; METHODS

OF ACCOUNTING; TAX RETURNS
AND PAYMENT OF TAX
A. Accounting Period
B. Taxable year
Accounting periods
i. Calendar year – January 1 to
December 31
ii. Fiscal year – an accounting period of
twelve (12) months ending on the last
day of any month other than December.

C. Methods of accounting
i. Cash Basis
ii. Accrual Method
iii. Mixed/Hybrid
iv. Any other method which clearly
reflects the income

D. Long-term contracts
i. Treatment of income from long-term
contracts

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a) Percentage of completion basis

b) Completed contract basis

E. Sales of dealers in personal property

Treatment of sales of realty and casual

sales of personality
These include:
a) Casual sale or other casual
disposition of personal property (other
than property included in the inventory
at the close of the taxable year) for a
price exceeding P1000; and
b) Sale or other disposition of
real property.

F. Termination of leasehold
G. Allocation of income and
deductions

FILING OF TAX RETURN AND PAYMENT

OF THE TAX
H. Tax Return –
i. BIR Form 1700 and 1701 –
Annual Income Tax Returns for
Individuals
ii. BIR Form No. 1702 – Annual
Income Tax Returns for Corporations
and Partnerships
iii. BIR Form No. 1800 –
Donor’s Tax Return
iv. BIR Form No. 1801 – Estate
Tax Return

3 I. Persons Required to File

Income Tax Return
A. Individual
B. Taxable Estate and Trust
C. General Professional
Partnership
D. Corporation

J. Individuals Exempt from

Filing Income Tax Return

K. Substituted filing of Income

tax Returns by Employees Receiving
Purely Compensation Income.
Requisites:
Individuals not qualified for substituted
filing (still required to file)

L. Place Of Filing

M. Due Dates of filing and

Payment of Tax

N. Extension Of Time To File

Return

O. Return Of Husband And

Wife

P. Persons Under Disability

Q. Return Of Estate And Trust

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And Partnership
R. Tax Returns of General
Professional Partnerships (GPP)

S. Self-employed Individuals

T. Corporate returns
Declaration of quarterly corporate
income tax
Fiscal adjustment return

U. Computation of income tax

Formula:
All Income for taxable year less exclusions =
Gross Income
Less Allowable deductions = Taxable Income
Multiply with appropriate tax rate = Income
Tax Due
Less Creditable Withholding tax or Tax Credits
= Net Income Tax Payable

Jurisprudence:
1. MARIA CARLA PIROVANO v. THE CIR,
G.R. No. L-19865, July 31, 1965.
2. CARMELINO F. PANSACOLA v. CIR,
G.R. No. 159991, November 16, 2006.
3. C. M. HOSKINS & CO., INC. v. CIR,
G.R. No. L-24059, November 28, 1969.
4. JOSE LEDESMA v. THE COLLECTOR
OF INTERNAL REVENUE and THE
PROVINCIAL TREASURER OF
OCCIDENTAL NEGROS, G.R. No. L-
15014, October 2, 1920.
5. ESSO STANDARD EASTERN, INC.,
(formerly, Standard-Vacuum Oil
Company) v. THE CIR, G.R. Nos. L-
28508-9, July 7, 1989.
6. VISAYAN CEBU TERMINAL CO., INC.
v. COLLECTOR OF INTERNAL REVENUE,
G.R. No. L-12798, May 30, 1960.
7. CIR v. CARLOS PALANCA, JR., G.R.
No. L-16626, October 29, 1966.
8. PHILEX MINING CORPORATION v.
CIR, G.R. No. 148187, April 16, 2008.
9. FERNANDEZ HERMANOS, INC. v. CIR
and CTA, G.R. No. L-21551, September
30, 1969.
10. CONSOLIDATED MINES, INC. v.
CTA and CIR, G.R. Nos. L-18843 and L-
18844, August 29, 1974.
11. ANTONIO ROXAS, EDUARDO ROXAS
and ROXAS Y CIA v. CTA and CIR, G.R.
No. L-25043, April 26, 1968.
12. EUFEMIA EVANGELISTA et. al. vs.
THE COLLECTOR OF INTERNAL
REVENUE and THE CTA, G.R. No. L-
9996, October 15, 1957.
13. ALEXANDER HOWDEN & CO., LTD.,
H. G. CHESTER & OTHERS, ET AL. v.
THE COLLECTOR (NOW
COMMISSIONER) Of INTERNAL
REVENUE, G.R. No. L-19392, April 14,
1965.
14. MARUBENI CORPORATION
(formerly Marubeni — Iida, Co., Ltd.) v.
CIR AND CTA, G.R. No. 76573,
September 14, 1989.
15. CHAMBER OF REAL ESTATE AND
BUILDERS' ASSOCIATIONS, INC. v. THE
HON. EXECUTIVE SECRETARY ALBERTO

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ROMULO, THE HON. ACTING

SECRETARY OF FINANCE JUANITA D.
AMATONG, and THE HON. CIR
GUILLERMO PARAYNO, JR., G.R. No.
160756, March 9, 2010.
16. CIR v. WANDER PHILIPPINES, INC.
AND THE COURT OF TAX APPEALS, G.R.
No. L-68375, April 15, 1988.
17. CYANAMID PHILIPPINES, INC. v.
CA, CTA and CIR, G.R. No. 108067,
January 20, 200

-end-

*The total of 48 hours of in-person learning modality consisting of discussion, recitation, and other classroom activities.

IX. Grading System

Actual Percentage Grade Transmuted Grade Remarks Actual Percentage Grade Transmuted Grade Remarks

95-100% 1.0 Passed 84% 2.1 Passed

94% 1.1 Passed 83% 2.2 Passed
93% 1.2 Passed 82% 2.3 Passed
92% 1.3 Passed 81% 2.4 Passed
91% 1.4 Passed 80% 2.5 Passed
90% 1.5 Passed 79% 2.6 Passed
89% 1.6 Passed 78% 2.7 Passed
88% 1.7 Passed 77% 2.8 Passed
87% 1.8 Passed 76% 2.9 Passed
86% 1.9 Passed 75% 3.0 Passed
85% 2.0 Passed Less than 75% 3.1 -5.0 Failed

A grade of “INC.” shall be given to a student who has a passing grade in a particular course but failed to take the final
examination or failed to submit certain academic requirements such as term papers, research report, etc. An “INC” must be
completed within one year, otherwise, the INC shall automatically become 5.0 or failure. The reckoning period of such shall be
after the term when the course was enrolled.

Components of Periodic Assessment

The components of Periodic Assessment shall be as follows:

General and Professional

Major Written Exams (Term Examinations) - 70%

Deportment - 10%
Progressive Assessment (quiz, reporting, symposium, workshop, others) - 30%
Total 100%

X. Classroom Policies

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1. Attendance- Regular attendance of classes is required.
2. Submission of Assessment Tasks - Should be on time; late submittal of coursework’s will not be accepted, or where
there is a valid justification, its acceptance is upon the faculty discretion subject to reasonable grade penalties.
3. Major Examination -Will be administered as scheduled. No special exam will be given unless with a valid reason subject to
the approval of the Dean of the College.
4. Course Portfolio -Is required and will be collected at the end of the semester. Lost documents will not be given due credit.
5. Language of Instruction-Lectures, discussion, and documentation will be in English except in Filipino Subjects.
6. Academic Integrity- Cheating during examination, copying another student’s assignment & report, submission of reports
copied from other sources/ materials (plagiarism) are strictly prohibited. Anyone caught guilty of any or all of these
violations will be sanctioned according to what is provided for in the Student’s Handbook.
7. Wearing of prescribed ID/ Dress and Grooming Codes-Wearing of the official prescribed uniform and ID inside the
University must be strictly observed. Fridays and Weekends are considered wash day; thus, proper dress code and grooming
is a requirement.
8. Grave misconduct -Any form of disrespect to your teacher or to others will not be tolerated and is meted corresponding
sanction.
9. Consultation Schedule- A consultation schedule with the instructor is posted at the Faculty Office. It is recommended that
the student avail of these services by setting an appointment to confirm the instructor’s availability.

XI. Resources and References

References:

The Fundamentals of Taxation-Hector De Leon

Other Books- Dimaampao, Domondon
Chanrobles and LawPhil for Jurisprudences

Suggested Readings and References:

Cases and jurisprudence from the Supreme Court website.

PRINTED

WEBSITES

JOURNALS

Verified as to the Availability of Resources:

AILEEN BASIGA-CATACUTAN, MSLS

________________________________________
Director of Academic Resource Center

Course Title: Date of Effectivity: Prepared by: Approved by:

BASIC TAXATION JANUARY 2024

LAW
ATTY. MARIA HELEN P. ATTY. JOSEPH RANDI C.
Date Revised: NA FIGUES, CPA TORREGOSA
Dean

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