UB

COLLEGE OF LAW
TAX 1
COURSE OUTLINE

I. GENERAL PRINCIPLES OF TAXATION

A. Definition and concepts of taxation

1. Power of Taxation
Roxas y. Cia v. Court of Tax Appeals, L-25043, April 26, 1968
Antero M. Sison, JR., petitioner, vs. Ruben B. Ancheta, G.R. No. L-59431 July 25, 1984
Philippine Health Care Providers, Inc. v. CIR, GR No. 167330, Sept 18, 2009
CREBA Inc. v. Romulo, GR No. 160756, March 9, 2010

2. Power of taxation compared with other powers

Police power
Serafica v. City Treasurer of Ormoc, L-24813, April 28, 1969

Power of eminent domain

Lutz v. Araneta, 98 Phil 148, December 22, 1955

3. Theories and Bases of Taxation

Lifeblood theory
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
CIR v. Filinvest Development Corporation, 654 SCRA 56, July 19, 2011

Necessity theory
Benefits-protection theory (Symbiotic relationship)
Commissioner v. Algue, G.R. No. L-28896, February 17, 1988
Lorenzo v. Posadas, etc. 64 Phil. 353, June 18, 1937
NAPOCOR v. City of Cabanatuan, G.R. No. 149110, April 9, 2003

Jurisdiction over subject and objects

Other Cases:
Commissioner of Internal Revenue vs. Pineda, 21 SCRA 105, September 15, 1967
CIR v. Filinvest Development Corp., 654 SCRA 56

B. Nature of Taxation

Attribute of sovereignty
Pepsi-Cola Bottling Company of the Philippines v. Municipality of Tanauan, Leyte, 69
SCRA 460, February 27, 1976

Legislative in character and generally not delegated

(i) General rule
(ii) Exceptions
(a) Delegation to local governments
(b) Delegation to the President

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 (c) Delegation to administrative agencies

PPC versus Pililia, 198 SCRA 92, June 3, 1991

C. Purposes of Taxation

1. Primary purpose - Revenue-raising

2. Non-revenue/special or regulatory

Regulatory
Caltex Philippines v. COA, G.R. No, 92585, May 8, 1992
Tio v. Videogram, 151 SCRA 208
PAL V. Edu

Promotion of general welfare

Lutz v. Araneta, G.R. No. L-7859, December 22, 1955

Reduction of social inequity

Tool for economic growth
Protectionism

Other Cases:
Gaston v. Republic Bank, 153 SCRA 626

D. Principles of a Sound Tax System

1. Fiscal adequacy
2. Administrative feasibility
Diaz v. The Secretary of Finance, 654 SCRA 96
3. Theoretical justice

E. Scope and Limitations of taxation

Power of Taxation not absolute

1. Inherent limitations
a) Public purpose
Lutz v. Araneta, G.R. No. L-7859, December 22, 1955
Planters Product, Inc. v. FertiPhil Corp, GR No. 166006, March 14, 2008

b) Inherently legislative
(i) General rule
(ii) Exceptions
(a) Delegation to local governments
(b) Delegation to the President
(c) Delegation to administrative agencies

Pepsi v. Municipality of Tanauan, 69 SCRA 460

Pepsi v. City of Butuan, 24 SCRA 827

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 c) Territorial
Situs of Taxation
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
(d) International comity
(e) Exemption of government entities, agencies, and instrumentalities
Board of Assessment Appeals of Laguna v. CTA, GR No, L-18125, May 31, 1963
Mactan Cebu International Authority v. Marcos, GR No.120082, September 11,
1996
PFDA v. CA & Municipality of Navotas, GR No. 150301, October 2, 2007
MIAA v. Court of Appeals, GR No. 155650, July 20, 2006
MIAA V. Pasay City, GR No. 163072, April 2, 2009
Other Cases-limitations
Bagatsing v. Ramirez, 74 SCRA 306
Pascual v. Sec. of Public Works and Communications, 110 Phil. 331
Manila Electric Company v. Yatco, 69 Phil 89

2. Constitutional limitations
a) Provisions directly affecting taxation
(i) Prohibition against imprisonment for non-payment of poll tax
(ii) Uniformity and equality of taxation
(iii) Grant by Congress of authority to the president to impose tariff rates
(iv) Prohibition against taxation of religious, charitable entities, and
educational entities
(v) Prohibition against taxation of non-stock, non-profit institutions
(vi) Majority vote of Congress for grant of tax exemption
(vii) Prohibition on use of tax levied for special purpose
(viii) Presidents veto power on appropriation, revenue, tariff bills
(ix) Non-impairment of jurisdiction of the Supreme Court
(x) Grant of power to the local government units to create its own sources of revenue
(xi) Flexible tariff clause
(xii) Exemption from real property taxes
(xiii) No appropriation or use of public money for religious purposes

b) Provisions indirectly affecting taxation

(i) Due process
(ii) Equal protection
(iii) Religious freedom
(iv) Non-impairment of obligations of contracts

Cases:
CIR v. M.J. Lhuiller Pawnshop, Inc., GR No. 150947, July 15, 2003
CIR v. CA and Fortune, GR No. 119761, August 29, 1996
City of Manila v. Coca-Cola Bottlers Philippines, GR No. 181845, August 4, 2009
City of Baguio v. De Leon, 25 SCRA 938
ABAKADA Guro Party List v. Purisima, October 14, 2008
Association of Customs Brokers v. Manila, 93 Phil 107
Shell Company of Phil. Islands v. Mun. of Cordova, 94 Phil 339
CREBA v. Exec. Sec Romulo, GR No. 160756, March 9, 2010
Commissioner of Customs v. Hypermix Feeds Corporation, GR No. 179759, February
1, 2012
Judy Anne Santos v. People, GR No. 173176, August 26, 2008
American Bible Society v. City of Manila, 101 Phil 386
Angeles University v. City of Angeles, GR No. 189999, June 27, 2012
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 RMC 76-2003
Department of Finance Order No. 137-87, dated December 16, 1987
Lung Center of the Phil v. Quezon City, June 29, 2004
Abra Valley College v. Aquino, GR No. L-39086, June 15, 1988
Sison v. Ancheta, GR No. 59431, July 25, 1984
Ormoc Sugar Company v. Treasurer of Ormoc, GR No. 23794, February 17, 1968
Villegas v. Hiu Chiong Tsai Pao Ho, GR No. L-29646
Tolentino v.Secretary of Finance, GR No. 115455, August 25, 1994

F. Doctrines in Taxation

1. Prospectivity of tax laws

CIR v. Petron Corporation, G.R. No. 185568, March 21, 2012
Exception Cebu Portland Cement v. CIR, G.R. No. 18649, February 27, 1965

2. Imprescriptibility

3. Double taxation
Definition Victoria Milling v. Mun of Victoria Negros Occidental, G.R. No. L-21183,
September 27, 1968
Villanueva v. City of Iloilo, GR No. L-26521, December 28, 1968

4. Escape from taxation

(a) Shifting of tax burden
(b) Tax avoidance
(c) Tax evasion
(d) Capitalization
(e)Transformation

Cases:
Yutivo Sons Hardware v. CTA, G.R. No. L-13203, January 28, 1961
CIR v. Estate of Benigno Toda Jr., G.R. No. 78583, March 26, 1990
Republic v. Gonzales, G.R. No. L-17962, April 30, 1965
CIR v. Reyes, Nos. G.R. L-11558, November 25, 1958
Republic v. Heirs of Jalandoni, 20 Sept 1965
CIR v. American Rubber
CIR v. PLDT, GR 140230, December 15, 2005
Silkair Singapore v. CIR, GR No. 173594, February 6, 2008

5. Exemption from Taxation

a) Meaning of exemption from taxation
Principle of Strictissimi Juris - Sealand Service v. CA, G.R. No. 57828, June 14 1993
Rationale for the Application of Strictissimi Juris
Maceda v. Macaraig, G.R. No. 88291, June 8, 1993
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987
Exceptions to the Application of Strictissimi Juris
CIR v. Amoldus Carpentry Shop, Inc. G.R. No. 71122, March 25, 1988

b) Nature of tax exemption

c) Kinds of tax exemption
(i) Express

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 (ii) Implied
(iii) Contractual
d) Rationale/grounds for exemption
e) Revocation of tax exemption Mactan Cebu Intl Airport Authority v. Marcos
Cases Tax Exemption
SeaLand Service v. CA, G.R. No. 57828, June 14, 1993
Luzon Stevedoring v. CA, G.R. No. 58897, December 3, 1987
CIR v. Amoldus Carpentry, Shop, Inc., G.R. No. 71122, March 25, 1998
Mactan Cebu Intl. Airport Authority v. Marcos
Province of Misamis Oriental v. Cagayan Electric Power & Light Co., Inc., G.R. No. 45355,
January 12, 1990

6. Compensation and set-off Philex Mining Corp v. CIR, August 29, 1998
See section 76, NIRC; Francia v. Intermediate Appellate Court, G.R. No. 76749, June 28,
1988
Republic v. Mambulao, G.R. No. L-17725, February 28, 1962

Exception Domingo v. Garlitos, G.R. No. L-18849, June 29, 1963

7. Compromise

8. Tax amnesty
a) Definition
b) Distinguished from tax exemption

9. Construction and interpretation of:

a) Tax laws
Nature of Tax Laws
(i) General rule
(ii) Exception
Cases:
Hilado v. CIR, G.R. No. L-9408, October 31, 1956
Manila Railroad v. Collector of Customs, G.R. No. 10214, November 4, 1915
Hornbook Doctrine CIR v. CA, G.R. No. 115349, April 18, 1997

b) Tax exemption and exclusion

(i) General rule
(ii) Exception
Atlas Consolidated Mining and Development Corporation v. CIR, 640 SCRA 504

c) Tax rules and regulations

(i) General rule only
d) Penal provisions of tax laws
e) Non-retroactive application to taxpayers

G. Sources of Tax Laws

People v. Licera, G.R. No. L-39990, July 22, 1975
Manila Railroad v. Collector of Customs, G.R. No.10214, November 4, 1915
CIR v. CA, G.R. No. 115349, April 18, 1997
Cebu Portland Cement v. CIR, G.R. No. 18649, Feb 27, 1965

H. Situs of Taxation

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 (a) Meaning
(b) Situs of income tax

I. Aspects/Stages of Taxation
1. Levy
2. Assessment and collection
3. Payment
4. Refund

J. TAXES
1. Definition, nature, and characteristics of taxes
Progressive Development Corp. v. Quezon City, G.R. No. L-36081, April 24, 2989

2. Requisites of a valid tax

K. Tax as distinguished from other forms of exactions

1. Tariff
2. Toll
3. License fee
Progressive Development Corp v. Quezon City, G.R. No. L-36081, April 24, 1989
PAL v. Edu, G.R. L-41383, August 15, 1988
4. Special assessment
5. Debt

L. Kinds/Classification of taxes
1. As to object
a) Personal, capitation, or poll tax
b) Property tax
c) Privilege tax

2. As to burden or incidence
a) Direct
b) Indirect
Tolentino v. Secretary of Finance, GR No. 115455, October 30, 1995
Maceda v. Macaraig, 197 SCRA 771
Exxonmobil Petroleum and Chemical Holdings, Inc., Philippine Branch v. CIR, 640 SCRA
203

3. As to tax rates
a) Specific
b) Ad valorem
c) Mixed
4. As to purposes
a) General or fiscal
b) Special, regulatory, or sumptuary

5. As to scope or authority to impose

a) National internal revenue taxes
b) Local real property tax, municipal tax

6. As to graduation

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 a) Progressive
b) Regressive
c) Proportionate

M. Tax Credit
Commissioner v, Internal Revenue v. Mirant (Philippines) Operations, Corporation, 652 SCRA 80
Microsoft Philippines, Inc. vs. CIR, 647 SCRA 398

II. INCOME TAXATION

A. DEFINITION OF TERMS Chapter 1, Title II, Part II of NIRC

B. The Concept of Income

Definition Madrigal v. Rafferty, G.R. No. 12287, August 8, 1918; Conwi v. CIR, 213 SCRA 83

C. Income Tax Systems

1. Global Tax System
2. Schedular Tax System
3. Semi-schedular or semi-global tax system
Case: Sison v. Ancheta, G.R. No. L-59431, July 25, 1984

D. General Principles of Income Taxation in the Philippines Section 23, Chapter II,
NIRC

Features of the Philippine income tax law

1. Direct tax
Commissioner v. Tours Specialist, 183 SCRA 402
2. Progressive Sec 28(1), Art III, 1987 Constitution
3. Comprehensive
4. Semi-schedular or semi-global tax system

E. Criteria in imposing Philippine income tax

1. Citizenship principle
2. Residence principle
3. Source principle

F. When income is taxable

Definition Taxable Income Section 31, NIRC
Tests in determining whether income is earned for tax purposes
CIR v. Isabela Cultural Corporation, GR No. 172231, February 12, 2007 (all events
test)

G. Types of Taxable Income

o Compensation income
o Professional Income
o Business Income

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 o Passive Income
o Capital Gain

H. Sources of Income see also section 42, NIRC

1. Services
CIR v. Marubeni Corp., GR No. 137377, December 18, 2001
CIR V. Julian Baier-Nickel, GR No. 153793, August 29, 2006
2. Interest Income NDC v. CIR, 151 SCRA 472
3. Dividends
4. Rent and Royalties
Royalty v. Compensation for Services & Business Profits
CIR v. Smart Communications, GR No. 179045-46, August 25, 2010
5. Sale of Property
Re: Software RMC 44-2005; BIR Ruling DA-ITAD dated February 26, 2008

I. Kinds of taxpayers
Taxpayer definition Sec 22(N), NIRC
1. Individual taxpayers/Tax on Individuals - Section 24 to 26, NIRC
2. Corporations/ Tax on Corporations Section 27 to 30, NIRC
Definition - Section 22B in relation to Revenue Regulations 10-2012
Note Exemption Section 30, NIRC
3. Partnerships
4. General professional partnerships
5. Estates and trusts
6. Co-ownerships

J. Gross Income-Principles; Computations

Section 32, NIRC
1. Definition Section 32 (A), NIRC
CIR v. Filinvest Corporation, G.R. No.163653
CIR v. PAL, GR No. 160528, October 9, 2006

Gross income vis--vis net income vis--vis taxable income

Gross Income versus Gross Sales/Receipts

2. Inclusions to Gross Income Section 32(A)

Compensation for services
Gross income derived from the conduct of trade or business or the exercise of a
profession
Gains derived from dealings in property
Interests
Rents
Royalties
Dividends
Annuities
Prizes and Winnings
Pensions
Partners Distributive Shares from the Net Income of a General Professional
Partnership

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 3. Exclusions to Gross Income Section 32 (B)

4. Fringe Benefit Section 33, NIRC

CIR v, Mitsubishi, GR No. L-54908, January 22, 1990

5. Classification of income as to source

6. Sources of Income from Whatever Source

Gutierrez v. CIR, CTA case no. 65, August 21,1995
Javier v. CA, GR L-78953, July 31, 1991

7. The Rules and the Sources of Income subject to tax

a. Compensation income
Applicability of rules to Compensation Income and other Benefits
Taxability of Compensation Income and the Application of the Employers
Convenience Rule Henderson v. Collector, 1 SCRA 649
Retirement Payments, Pension and Gratuities
RA 7641, RA 4917, Section 60B
Separation Payments PLDT v. CIR, GR No.157264, Section 60B
Leave Benefits
5, 13th Month pay and other bonuses
SSS/GSIS benefits
SSS/GSIS/Philhealth/Pag-ibig; Union dues RMC 27-2011
Fringe Benefits (Section 33, RR3-98, 5-2008, 5-2011 and 2012.
De Minimis benefits Section 33, Rev REgs, 3-9
b. Professional income
c. Income from business
d. Income from dealings in property
e. Passive income
Interest income
Dumaguete Cathedral Credit Cooperative v. CIR, GR No. 182722, January 22,
2012
Dividends
CIR v. CA and ANSCOR, GR No. 108576, January 20, 1999
Sale of Real Property classified as capital asset
Supreme Transliner Inc. v. BPI Family Savings Bank, GR No. 165617,
February 25, 2011
f. Annuities, proceeds from life insurance or other types of income
g. Prizes and awards
h. Pensions, retirement benefit, or separation pay
i. Income from other sources
Cancellation of indebtedness
Income from Lease and Leasehold improvements
Income from Installation Transactions
Banas c. CA, GR No. 102967, February 10, 2000

8. Situs of income taxation

9. ALLOWABLE Deductions from gross income Section 34 to 39, NIRC

a. General rules
b. Return of capital (cost of sales or services)

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 10. Deductions vis--vis Tax Credit
Principles on Tax Credit -
CIR v. Central Luzon Drug Corp., GR No. 159647, April 15, 2005
CIR v. Central Luzon Drug Corp., GR No. 148512, June 26, 2006;
Bicolandia Drug Corp., v. CIR, GR No. 142299, June 22, 2006; see also CIR v. Central
Luzon Drug Corp., GR No. 159610, June 2008, in relation to RA 9267
Carlos Superdrug Corporation v. DSWD, GR No. 166494, June 29, 2007

11. Itemized deductions

Note general rule and conditions

a. General Business Expenses

The All-Events Test - CIR v. Isabela Cultural Corporation, GR. No. 172231,
February 12, 2007
Reasonableness Test - CIR V. General Foods, Inc. G.R. No. 143672,April 23,
2003
CM Hoskins v. CIR, G.R. No. L-24059, November 28, 1969
Capital expenditure v. Ordinary Expenditure
Rule on Proprietary Educational Institutions
Representation expenses
Substantation Rule and the Cohan Rule
Gancayco v. Collector, 1 SCRA 980

b. Interest
Tax Arbitrage Scheme Rev Reg 13-2000 GR. No. L-25399, July 29, 1969
Interest on Tax Delinquencies CIR v. Itogon Suyoc Mines

c. Taxes

d. Losses
Kinds
Ordinary incurred in trade or business
Casualty losses incurred by property connected with trade
See page 109
Requisites
Tax code Section 34D- actually sustained during the taxable year
must be taken up In the books/recognized as a loss during the
taxable year; contingent loss not allowed
Not compensated for by insurance
Except when the loss was not paid by insurance,
loss maybe taken up as deduction if it was
determined that the same was not paid or fully
paid/compensated Plaridel Surety Co v. collector,
GR No. L-21520, Dec. 11, 1967
Incurred in trade, profession or business
Property connected with the trade, business or
profession; loss arises from fire, storms, shipwrecks,
other casualties, robberies, theft or embezzlement

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 Exception ; NO loss shall be allowed as a deduction if at the time of
the filing of the return, such loss has been claimed as a deduction
for estate tax purposes in the estate tax return

City Lumber v. Domingo and CTA, GR No. L-18611, January 30,

1964
Casualty losses RMO 31-2009, October 16, 2009, note proof and time of
filingg/notice; Amount of loss RR No. 12-77
note section 39 to 40 of the NIRC (Special Treatment of
Gains and Losses from dealings in property- section 39 to 40 of NIRC; PAGE
127 SBN
-Ordinary Asset v. Capital Asset
China Banking Corporation v. Court of Appeals, GR No. 125508, July
19, 2000
-Capital losses section 34(D)(4), NIRC; page 127 SBN, SEE PAGE 130
=losses arising from sale or exchange of properties classified as
capital assets
o LIMITATIONS
-allowed only to the extent provided in section 39
-net capital loss carryover allowed except for corporations

Losses from wash sales of stock or securities sec 34(D)(5)

Wagering losses - sec 34(D)(6)
Abandonment Losses - sec 34(D)(6)
Non-deductible losses
Net Operating Loss Carry-over (NOLCO)- Section 34(D)(3), NIRC; Rev Reg
14-2001
Def net operating loss of the business or enterprise for any
taxable year immediately preceeding the current taxable year,
which had not been previously offset as deduction from gross
income.
Excess of allowable deductions over gross income of the
business in a taxable year
-Can be carried over as a deduction from gross income for the next
3 consecutive taxable years imm. Following the year of the loss
-Conditions any net loss incurred in a taxable year during
which the taxpayer was exempt from income tax shall not be
allowed as a deduction;
-NOLCO- allowed only if there has been no substantial
change in the ownership of the business or enterprise in that
-not less that 75%-NOMINAL VALUE OF outstanding
shares corp
-not less than 75% of the paid up capital

--for mines other than oil and gas wells NOLCO 5 years

PICOP v. CIR, GR. No. L-106949, December 1, 1995

Taxpayers entitled to NOLCO individuals except purely compensation earners;
DC and RFC subject to the normal income tax; special corporations subject to the preferential
tax rates (private ed inst; hospitals, reg operating headquarters)
e. Bad debts

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 Philex Mining Corporation v. CIR, GR No. 148187, April 16, 2008

f. Depreciation
Basilan Estates, Inc., v. CIR, GR No. L-22492, September 5, 1997
Conwell Bros. v. Collector, CTA case no. 411
Italian Thai Development Public Company Ltd., v. CIR, CTA case no.
6172, November 12, 2002
Properties not subject to depreciation Limpan Investment Corp. v.
o CIR, L-21570, July 26, 1966; Section 106, RR No. 2

g. Depletion of Oil and Gas Wells and Mines

h. Charitable and other contributions

Rationale of exemption Lung Center of the Phil. V. Quezon City,
GR No. 144104, June 29, 2004
PSE v. CIR, CTA Case No. 5995, October 15, 2002

Contributions deductible in full under Special Laws

o IBP- PD 81
o Development Academy of the Philippines PD 205
o Aquaculture Department of the Southeast Asian Fisheries and
Development Center (SEAFDEC) PD 292
o National Social Action Council PD 294
o National Museum, Library and Archives PD 373
o University of the Philippines and other State colleges and universities
o Philippine Rural Reconstruction Movement
o Cultural Center of the Philippines
o Trustees of the Press Foundation of Asia
o Humanitarian Science Foundation
o Artesian Well Funds (RA 1977)
o International Rice Research Institute
o DOST
o Donations of prizes and awards to athletes (RA 7549)

i. Research and Development

j. Contributions to pension trusts

Miguel J. Osorio Pension Foundation, Inc. v. CIR GR No. 162175, June 28, 2010

k. Deductions under special laws

Mercury Drug Corporation v. CIR, 654 SCRA 124
CIR C. Central Luzon Drug Corporation, GR No. 159610, June 12, 2008

12 . Optional standard deduction (OSD) RA 9504

13. Items not deductible Section 36, NIRC

Capital expenditure Alhambra Cigar v. Collector, GR No. L-223226, November 28, 1967

14. Special Provisions for Insurance Companies Section 37, NIRC

15. Determination of Amount and Recognition of Gain or Loss Section 40, NIRC
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K. TAXATION OF INDIVIDUAL TAXPAYERS
resident citizens, non-resident citizens, and resident aliens

1. Personal and additional exemption for Individual Taxpayers Section 35, NIRC
as amended by RA 9504
Note (R.A. No. 9504, Minimum Wage Earner Law)
General rule
Change of status Pansacola v. CIR, GR No. 159991, November 16, 2006

2. Taxation on compensation income

Inclusions
Exclusions
Deductions

3. Taxation of business income/income from practice of profession

4. Rules on Passive Income subject to Final Tax

Final Tax defined
Interest
CIR v. CA & CGL Retirement Plan, GR No. 95022, March 23, 2992
Royalties
Prizes and Winnings
Dividends
Afisco Insurance Corp. v. CA, GR No. 112675, January 25, 1999
Capital gains

5. Taxation of non-resident aliens engaged in trade or business

General rules
Cash and/or property dividends
Capital gains
Exclude: non-resident aliens not engaged in trade or business

6. Individual taxpayers exempt from income tax

Senior citizens
Minimum wage earners
Exemptions granted under international agreements

7. Tax Return and Payment Section 51, 56, Chapter IX, NIRC

L. TAXATION OF CORPORATIONS
Definition
Classification of Corporations/Special Types of Corporations
Tax Rates - Section 27 to 29, NIRC
Test in Determining Status of corporations
Law of Incorporation Test
Inclusions/Exclusions

China Banking Corporation vs. Commissioner of Internal Revenue, G.R. No. 175108. February
27, 2013.

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 1. Domestic Corporations
a. Tax payable
b. Regular tax
c. Minimum Corporate Income Tax (MCIT)
CREBA v. Exec. Sec. Romulo
Manila Banking Corporation v. CIR, GR No. 168118, August 28, 2006
CIR v. PAL, GR No. 180066, July 7, 2009
d. Improperly Accumulated Earnings Tax
Cyanamid Phils., v. CA, GR No. 108067, July 7, 2009
e. Allowable deductions
i) Itemized deductions
ii) Optional standard deduction
f. Taxation of passive income
i) Passive income subject to tax
ii)Passive income not subject to tax
g. Taxation of capital gains
h. Tax on Special Domestic Corporations
a. proprietary educational institutions and non-profit hospitals
b. Depositary Banks
i. Tax on government-owned or controlled corporations, agencies or
instrumentalities
j. Tax Returns and Other Administrative Requirements
Paseo Realty and Development Corp., v. CA, GR No. 119286, October 13, 2004
CIR v. Mirant (Philippines) Operations Corporation, GR No. 171742, June 15, 2011
CIR v. PI. Management International Philippines, Inc., GR No. 160949, April 4,
2011

2. Resident Foreign Corporations

a. General rule
b. With respect to their income from sources within the Philippines
c. Minimum Corporate Income Tax
d. Tax on certain income
Exclude:
(i) International carrier
(ii) Offshore banking units
(iii) Branch profits remittances
(iv) Regional or area headquarters and regional operating
headquarters of multinational companies
CIR v. British Overseas Airways Corp., GR No. L-65773-74, April 30, 1987

3. Non Resident Foreign Corporations

a. General rule
b. Tax on certain income
(i) Interest on foreign loans
(ii) Intercorporate dividends
(iii) Capital gains from sale of shares of stock not traded in the stock
exchange
Exclude:
(i) Non-resident cinematographic film owner, lessor or distributor
(ii) Non-resident owner or lessor of vessels chartered by Philippine
nationals
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 (iii) Non-resident owner or lessor of aircraft machineries and other
equipment

4. Exemption from tax on certain corporations (income)

5. Partnerships
a. Taxation of partnerships
b. Taxation of general professional partnerships

6. Tax Returns and Payments Section 52, 56 Chapter IX, NIRC

M. ESTATES AND TRUSTS

Evangelista v. Collector, GR No. L-9996, October 15, 1957
Pascual v. Commissioner, GR No. L-78133, October 18, 1988
Tax Returns and Payments

N. Withholding tax PRINCIPLES

Tax collector CIR v. CA, GR No. 104151, March 10, 1995
Right of Withholding Agent to claim for refund CIR v. Smart Communications, Inc. GR
Nos. 179045-46, August 25, 2010

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