UNIVERSITY OF NEGROS OCCIDENTAL RECOLETOS

COLLEGE OF LAW
Course Outline in Taxation I
Lorebette G. Grandea
1st Semester SY !"1#$1%
Re&eren'es(
La) o& *asi' Taxation in t+e ,+ili--ines ./ *en0amin *1 A.an
T+e La) on In'ome Taxation ./ *en0amin D1 Teo2oro an2 3e'tor S1 2e Leon
Com-en2ium o& Tax La)s an2 4uris-ru2en'e ./ 4ose Vitu5
I1 General ,rin'i-les o& Taxation
A. 6eanin5 Nature *asis C+ara'teristi's an2 ,ur-oses o& Taxation
11 6eanin5 o& tax taxation CIR 71 Al5ue 1%8 SCRA 9 :1988;
a. Taxation as an in+erent -o)er o& t+e state
A.a<a2a Guro ,art/ List 71 Ermita GR No1 1=8"%= 1 Se-t1 !""%

.1 Tax as a 5eneral term as a le5al term
Com-ania General 2e Ta.a'os 71 Cit/ o& 6anila 8 SCRA >=? :19=>;
'1 Tax 71 li'ense an2 re5ulator/ Fee
Osmena 71 Or.os !!" SCRA ?"> :199>;
,AL 71 E2u 1=# SCRA >!" :1988;
,ro5ressi7e De7elo-ment 71 @C 1?! SCRA =!9 :1989;
Tolentino 71 Se'1 o& Finan'e !#9 SCRA =!8 :199%;
Gero'+i 71 DOE G1R1 1%9?9= 1? 4ul/ !""?
21 Tax 71 s-e'ial assessment
Se'1 !#" R1A1 ?1="
Re-u.li' 71 *a'olo2$6ur'ia 6illin5 Co1 1? SCRA =>! :19==;
e. Tax 71 toll
Se'1 1%% R1A1 ?1="
f. Tax 71 -enalt/
Se's1 !#?$!81
g. Tax 71 tari&& an2 'ustoms 2uties
Gar'ia 71 Exe'uti7e Se'retar/ !11 SCRA !19 :199!;
h. O.li5ation to -a/ tax 71 o.li5ation to -a/ 2e.t
Art1 1!?9 1!9" NCC
Re-u.li' 71 6am.ulao Lum.er = SCRA 8%8 :19=!;
,+ilex 6inin5 71 CIR !9# SCRA =8? :1998;
Caltex 71 COA !"8 SCRA ?!= :199!;
Fran'ia 71 IAC 1=! SCRA ?%> :1988;
i. Tax 71 5o7ernment re7enue
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2. Essential C+ara'teristi's o& Tax
Caltex 71 COA i21
3. T+eor/ an2 *asis o& Taxation
LorenAo 71 ,osa2as =# ,+il >%> :19>?;
CIR 71 Al5ue su-ra1
4. ,ur-oses O.0e'ti7es o& Taxation
a1 General &is'al re7enue
CIR 71 Al5ue su-ra1
Osmena 71 Or.os su-ra1
,AL 71 E2u su-ra1
Tolentino 71 Se'retar/ o& Finan'e !>% SCRA =>" :199#;
b. Non$re7enue s-e'ial or re5ulator/
Osmena 71 Or.os su-ra1
Re-u.li' 71 *a'olo2$6ur'ia 6illin5 Co1 su-ra1
Tio 71 Vi2eo5ram Re5ulator/ *oar2 1%1 SCRA !"8 :198?;
LutA 71 Araneta 98 ,+il 1%" :19%%;
Caltex 71 COA su-ra1
Esso 71 CIR 1?% SCRA 1#9 :1989;
%1 Classi&i'ation o& Taxes
a. As to s'o-e o& t+e tax
National taxes lo'al taxes
*en5uet 71 C*AA !1" SCRA %?9 :199!;
b. As to )+o s+oul2ers t+e .ur2en o& t+e tax
Dire't taxes in2ire't taxes
Se'1 1"% B VAT
Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
,+ili--ine A'et/lene 71 CIR !" SCRA 1"%= :19=?;
6a'e2a 71 6a'arai5 19? SCRA ??1 :1991;
6a'e2a 71 6a'arai5 !!> SCRA !1? :199>;
CIR 71 4o+n Gotam'o 1#8 SCRA >= :198?;
c. As to t+e o.0e't or su.0e't matter o& t+e tax
,ro-ert/ -ersonal -oll or 'a-itation ex'ise
Villanue7a 71 Cit/ o& Iloilo != SCRA %?8 :19=8;
CIR 71 CA !#! SCRA !89 :199%;
Asso'1 o& Customs *ro<ers 71 6uni'i-al *oar2 9> ,+il 1"? :19%>;
d. As to t+e manner o& 'om-utin5 t+e tax
Title VI
A2 7alorem s-e'i&i'
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e. As to 5ra2uation or rate
11 -ro-ortional &lat rate
Se'1 !>> R1A1 ?1="
2. -ro5ressi7e 2i5ressi7e rate
Se'1 !# :A;
3. re5ressi7e Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
=1 As-e'ts o& taxation
a. Le7/ or im-osition ./ t+e le5islati7e .o2/
b. Colle'tion or a2ministration
'1 6et+o2s o& 'olle'tion( )it++ol2in5 s/stem
7oluntar/ assessment an2 -a/ment
assessment an2 -a/ment
7. Tax s/stems
a1 Classi&i'ation
Se'1 !8 :1; Art1 VI 198? Constitution
,ro5ressi7e s/stem re5ressi7e s/stem
,ro5ressi7e s/stem 71 -ro5ressi7e rate o& tax
Tolentino 71 Se'1 o& Finan'e su-ra1 su-ra1
.1 *asi' -rin'i-les o& a soun2 tax s/stem
C+a7eA 71 On5-in 18= SCRA >>1 :199";
*1 Nature an2 Limitations o& t+e ,o)er o& Taxation
1. Nature o& t+e -o)er o& taxation
a1 In+erent in so7erei5nt/
Roxas 71 CTA !> SCRA !?= :19=8;
Tana2a 71 An5ara !?! SCRA 18 :199?;
.1 Ex'lusi7el/ le5islati7e in nature
i1 Extent o& t+e le5islati7e -o)er to tax
Tan 71 2el Rosario !>? SCRA >!# :199#;
CIR 71 Santos !?? SCRA =1? :199?;
Sison 71 An'+eta 1>" SCRA =%# :198#;
Ca-atiran 71 Tan 1=> SCRA >?1 :1988;
Re/es 71 AlmanAor 19= SCRA >!! :1991;
ii1 Non$2ele5a.ilit/ o& -o)er to tax
Ex'e-t( 2e7ol7e2 -o)er to LGUs ex-ress 5rant in le5islati7e &ran'+ise
6a'e2a 71 ER* 19! SCRA >=> :199";
6a'e2a 71 6a'arai5 :1991; su-ra1
*as'o 71 ,AGCOR 19? SCRA %! :1991;
,e-si$Cola 71 Cit/ o& *utuan !# SCRA ?89 :19=8;
,AL 71 E2u su-ra1
'1 W+o ma/ Duestion t+e 7ali2it/ o& a tax measure or ex-en2iture o& taxes
LoAa2a 71 Comele' 1!" SCRA >>? :198>;
6a'e2a 71 6a'arai5 :1991; su-ra1
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GonAales 71 6ar'os =% SCRA =!# :19?%;
C+a7eA 71 ,CGG !99 SCRA ?## :1998;
c. Su.0e't to in+erent an2 'onstitutional limitations
2. In+erent Limitations
a1 ,ur-ose must .e -u.li' in nature
,as'ual 71 Se'1 o& ,u.li' Wor<s 11" SCRA >>1 :19=";
Tio 71 Vi2eo5ram Re5ulator/ *oar2 su-ra1
Gaston 71 R,* 1%8 SCRA =!= :1988;
.1 ,ro+i.ition a5ainst 2ele5ation o& taxin5 -o)er
ex'e-tions
i1 2ele5ation to LGUs
Se'1 % Art1 E 198? Constitution
*oo< II R1A1 ?1="
*as'o 71 ,AGCOR su-ra1
6a'e2a 71 6a'arai5 :1991; su-ra1
ii1 2ele5ation to t+e ,resi2ent
Se'1 !8 :!; Art1 VI 198? Constitution
Se'1 #"1 Tari&& an2 Customs Co2e
Gar'ia 71 Exe'uti7e Se'1 su-ra1
iii1 2ele5ation to a2ministrati7e a5en'ies
Osmena 71 Or.os su-ra1
6a'e2a 71 6a'arai5 :1991; su-ra1
6a'e2a 71 ER* su-ra1
'1 Exem-tion o& 5o7ernment entities a5en'ies an2 instrumentalities
Se'1 !? :C;
6a'tan Ce.u Air-ort 71 6ar'os su-ra1
6a'e2a 71 6a'arai5 su-ra1 su-ra1
E1 O1 9> an2 ,1 D1 19>1
21 International 'omit/
Se'1 ! Art1 II 198? Constitution
Tana2a 71 An5ara su-ra1
e1 Limitation o& territorial 0uris2i'tion
territorial 71 -ersonal 0uris2i'tion
CIR 71 *ritis+ O7erseas Air)a/ Cor-1 1#9 SCRA >9% :198?;
CIR 71 4a-an Airlines !"! SCRA #%" :1991;
Air Cana2a 71 CIR :CA; Case No1 =%?! !! De'em.er !""#
Iloilo *ottlers 71 Cit/ o& Iloilo 1=# SCRA ="? :1988;
>1 Constitutional Limitations
a1 Due -ro'ess o& la)
Se'1 1 Art1 III 198? Constitution
Tan 71 2el Rosario su-ra1
Sison 71 An'+eta su-ra1
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.1 EDual -rote'tion o& t+e la)s
Se'1 1 Art1 III 198? Constitution
Sison 71 An'+eta su-ra1
Ville5as 71 3iu C+ion5 Tsai ,ao 8= SCRA !?" :19?8;
Tan 71 2el Rosario su-ra1
CIR 71 CA F Al+am.ra In21 !=? SCRA %%? :199?;
Tiu 71 CA >"1 SCRA !?8 :1999;
c. Uni&ormit/ an2 eDuit/ in taxation
'lassi&i'ation o& tax-a/ers su.0e't or items to .e taxe2
Se'1 !8 :1; Art1 VI 198? Constitution
Tolentino 71 Se'1 o& Finan'e su-ra1 su-ra1
6la1 Ra'e 3orse 71 2ela Fuente 88 ,+il =" :19%1;
Eastern T+eatri'al 71 Al&onso 8> ,+il 8%! :19#9;
,e-si Cola 71 Cit/ o& *utuan su-ra1
S+ell 71 Vano 6un1 Treas1 o& Cor2o7a Ce.u 9# ,+il >89 :19%#;
Cit/ o& *a5uio 71 2e Leon !% SCRA 9>8 :19=8;
Ca-atiran 71 Tan su-ra1
Villanue7a 71 Cit/ o& Iloilo su-ra1
Asso1 o& Customs *ro<ers 71 6un1 *oar2 su-ra1
4. ,ro+i.ition a5ainst im-risonment &or non$-a/ment o& -oll tax
Se'1 !" Art1 III 198? Constitution
'ommunit/ tax 71 -oll tax
Se'1 1%=$1=# R1 A1 ?1="
5. ,ro+i.ition a5ainst im-airment o& o.li5ation o& 'ontra'ts
Se'1 1" Art1 III
Se'1 11 Art1 EII 198? Constitution
Tolentino 71 Se'1 o& Finan'e :199#; su-ra1
6. ,ro+i.ition a5ainst in&rin5ement o& reli5ious &ree2om
Se'1 % Art1 III 198? Constitution
Am1 *i.le So'iet/ 71 Cit/ o& 6anila 1"1 ,+il >8= :19%?;
Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
7. ,ro+i.ition a5ainst a--ro-riation o& -ro'ee2s o& taxation
Se'1 !9 Art1 VI 198? Constitution
Use o& tax le7ie2 &or a s-e'ial -ur-ose
Osmena 71 Or.os su-ra1
8. ,ro+i.ition a5ainst taxation o& reli5ious '+arita.le an2 e2u'ational entities
Se'1 !8 :>; Art1 VI 198? Constitution
A.ra Valle/ Colle5e 71 ADuino 1=! SCRA 1"= :1988;
9. ,ro+i.ition a5ainst taxation o& non$sto'< non$-ro&it e2u'ational institutions
Se'1 # :> #; Art1 EIV 198? Constitution
Se'1 !8 :>; Art1 VI Constitution
Se'1 !? :*; an2 >" :3;
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DOF Or2er No1 1>?$8? an2 1#9$9%
CIR 71 CA CTA an2 Y6CA !98 SCRA 8> :1998;
CIR 71 CA CTA an2 Ateneo !?1 SCRA ="% :199?;
10. Ot+ers
i1 Grant o& tax exem-tion :more on t+is un2er D#;
Se'1 !8 :#; Art1 VI 198? Constitution
C+a7eA 71 ,CGG su-ra1
ii1 Veto o& a--ro-riation re7enue or tari&& .ills
Se'1 !? :!; Art1 VI 198? Constitution
GonAales 71 6a'arai5 191 SCRA #%! :199";
iii1 Non$im-airment o& t+e 0uris2i'tion o& t+e Su-reme Court
Se'1 ! % :.; Art1 VIII 198? Constitution
CIR 71 Santos !?? SCRA =1? :199?;
San 6i5uel Cor-1 71 A7elino 89 SCRA =9 :19?9;
i71 Re7enue .ills s+all ori5inate &rom t+e 3ouse o& Re-resentati7es
Se'1 !# Art1 VI 198? Constitution
Tolentino 71 Se'1 o& Finan'e su-ra1 su-ra1
71 In&rin5ement o& -ress &ree2om
Se'1 !# Art1 III 198? Constitution
Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
7i1 Grant o& Fran'+ise
Se'1 11 Art1 EII 198? Constitution
Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
C1 Situs o& Taxation an2 Dou.le Taxation
1. 6eanin5 o& situs
2. Situs o& su.0e'ts o& taxation
Se'1 #! 1"#
CIR 71 *ritis+ O7erseas Air)a/ Cor-1 su-ra1
CIR 71 4a-an Airlines su-ra1
Wells Far5o *an< 71 Colle'tor ?" ,+il >!% :19#";
Tan 71 2el Rosario su-ra1
>1 6ulti-li'it/ o& Situs Colle'tor 71 2e Lara 1"! ,+il 81> :19%8;
#1 Dou.le Taxation
a1 6eanin5
CIR 71 S1C1 4o+nson an2 Son In'1 >"9 SCRA 8? :1999;
.1 Dou.le taxation in its .roa2 sense
Villanue7a 71 Cit/ o& Iloilo su-ra1
c. Constitutionalit/ o& 2ou.le taxation
Cit/ o& *a5uio 71 2e Leon su-ra1
,e-si Cola *ottlin5 71 Cit/ o& *utuan su-ra1
San'+eA 71 Colle'tor 9? ,+il =8? :19%%;
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Cit/ o& 6la1 71 Interislan2 Gas Ser7i'e 99 ,+il 8#? :19%=;
C-a1 General 2e Ta.a'os 71 Cit/ o& 6la1 su-ra1
D1 6eans o& A7oi2in5 an2 6inimiAin5 t+e *ur2en o& Taxation
1. S+i&tin5 o& tax .ur2en
a1 Wa/s o& s+i&tin5 t+e tax .ur2en
.1 Taxes t+at 'an .e s+i&te2
Se'1 1"%$VAT
c. 6eanin5 o& im-a't an2 in'i2en'e o& taxation
2. Tax e7asion
Elements o& tax e7asion
Re-u.li' 71 GonAales 1> SCRA =>> :19=%;
Se'1 !%#
3. Tax a7oi2an'e
Wa/s o& a7oi2in5 tax
Del-+er Tra2ers Cor-1 71 IAC 1%? SCRA >#9 :1988;
Yuti7o 71 CTA 1 SCRA 1=" :19=1;
4. Exem-tion &rom taxation
a1 meanin5 o& exem-tion &rom taxation
Green&iel2 71 6eer ?? ,+il >9# :19#=;
,LDT 71 Cit/ o& Da7ao >=> SCRA %!! :!""1;
,LDT 71 Cit/ o& Da7ao G1R1 1#>8=? 6ar'+ !% !"">
i1 'om-are2 )it+ tax remission 'on2onation
4uan Luna Su.21 V1 61 Sarmiento 91 ,+il >?1 :19%!;
Suri5ao Cor-1 6in1 71 Colle'tor 9 SCRA ?!8 :19=>;
ii1 tax amnest/
Commissioner 71 CA an2 RO3 Auto !#" SCRA >=8 :199%;
,eo-le 71 Castane2a 1=% SCRA >!? :1988;
,as'ual 71 CIR 1== SCRA %=" :1988;
Re-u.li' 71 IAC 19= SCRA >>% :1991;
CIR 71 6aru.eni Cor-1 >?! SCRA %?= :!""1;
iii1 VAT Aero$ratin5 Se'1 1"= :A; :!;
i71 ex'lusions 2e2u'tions Se'1 >! :*; >#
b. Cin2s o& tax exem-tion
Ex-ress or im-lie2 total or -artial
Exem-tion &rom 2ire't tax &rom in2ire't tax
Atlas FertiliAer 71 Commissioner 1"" SCRA %%=: 198";
Commissioner 71 ,+il1 A'e Line !% SCRA 91! :19=8;
Com1 71 RTN 6inin5 !"! SCRA 1>? :1991;G !"? SCRA %#9 :199!;
Caltex 71 COA su-ra1
c. Nature o& t+e -o)er to 5rant tax exem-tion
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*as'o 71 ,AGCOR su-ra1
6a'e2a 71 6a'arai5 :199>; su-ra1
d. Rationale &or tax exem-tion
Da7ao Li5+t 71 Com1 !! SCRA 1!! :19?!;
Tan Cim Cee 71 CTA ? SCRA =?" :19=>;
N,C 71 RTC ,resi2in5 4u25e Ca5a/an 2e Oro 19" SCRA #?? :199";
C+a7eA 71 ,CGG su-ra1
Da7ao Gul& 71 CIR !9> SCRA ?= :1998;
6a'e2a 71 6a'arai5 :199>; su-ra1
Tolentino 71 Se'1 o& Finan'e:199%; su-ra1
e. Nature o& tax exem-tion
Tolentino 71 Se'1 o& Finan'e :199%; su-ra1
,LDT 71 Cit/ o& Da7ao :!""1; su-ra1
6a'e2a 71 6a'arai5 :1991; su-ra1
,+il1 A'et/lene 71 Commissioner su-ra1
Won2er 6e'+ 71 CTA =# SCRA %%% :19?%;
Atlas FertiliAer 71 Com1 su-ra1
f. La)s 5rantin5 tax exem-tion in'enti7es
i1 Constitution
Se'1 !8 :>; Art1 VI an2 Se'1 # :> #; Art1 EIV 198? Constitution
A.ra Valle/ 71 ADuino su-ra1
ii1 tax statutes
Se'1 >" >! :*; 1"= 199
Se'1 1%9 an2 !># R1 A1 ?1="
Se'1 1"% Tari&& an2 Customs Co2e :TCC;
iii1 s-e'ial la)s
R1 A1 ?%#9
Com1 71 ,+il A'e Line su-ra1
i71 treaties
R,$US Tax Treat/
R,$German/ Tax Treat/
Com1 71 S1 C1 4o+nson su-ra1
Rea5an 71 CIR >" SCRA 9=8 :19=9;
Com1 71 ,4 Ciener =% SCRA 1#! :19?%;
g. Constru'tion o& statutes 5rantin5 tax exem-tion
i1 5eneral rule
,LDT 71 Cit/ o& Da7ao :!""1; su-ra1
Com1 71 CA an2 Y6CA !98 SCRA 8> :1998;
6isamis Oriental Asso'1 71 DOF !>8 SCRA => :199#;
Com1 o& Customs 71 ,+il A'et/lene Com-an/ >9 SCRA ?" :19?1;
6la1 Ele'tri' Co1 71 Vera :Ta.ios; =? SCRA >%! :19?%;
*en5uet Cor-1 71 C*AA su-ra1
Da7ao Gul& 71 CIR su-ra1
ii1 ex'e-tions
6a'e2a 71 6a'arai5 su-ra1 su-ra1
5rant to 5o7ernment an2 ot+er entities
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E1 Sour'es A--li'ation Inter-retation an2 A2ministration o& Tax La)s
1. Sour'es o& tax la)s
T+e Constitution NIRC TCC LGC
tax or2inan'eHlo'al tax 'o2es TuAon 71 CA !1! SCRA ?>9 :199!;
treaties Tana2a 71 An5ara su-ra1
s-e'ial la)s SCHCTAHCA 2e'isions
re7enue rules an2 re5ulations rulin5s an2 o-inions
a. 7ali2it/ o& re7enue rules an2 re5ulations
R6O 1$99
Tan 71 2el Rosario su-ra1
Com1 71 CA su-ra1
Umali 71 Estanislao !"9 SCRA ##= :199!;
La Suerte 71 CTA 1># SCRA !9 :198%;
Com1 71 CA !=1 SCRA !>= :199=;
b. e&&e'ti7it/ o& re7enue rules an2 re5ulations
R6C !"$8=
c. nature o& rulin5s e&&e'ts o& a 7oi2 rulin5
Se'1 # !##$!#=
Se'1 %11 an2 %19 TCC
CIR 71 CA !=? SCRA %%? :199?;
6isamis Oriental 71 DOF su-ra1
2. Inter-retation o& Tax La)s
a1 nature o& internal re7enue la)s
3ila2o 71 Colle'tor 1"" ,+il !88 :19%=;
Re-u.li' 71 Oasan 99 ,+il 9># :19%=;
6isamis Oriental 71 DOF su-ra
b. 'onstru'tion o& tax la)s
i1 rule )+en le5islati7e intent is 'lear
Umali 71 Estanislao su-ra1
LorenAo 71 ,osa2as su-ra1
ii1 rule )+en t+ere is 2ou.t
Colle'tor 71 La Ton2ena % SCRA ==% :19=!;
LorenAo 71 ,osa2as su-ra1
iii1 rule )+en lan5ua5e is -lain
c. a--li'ation o& tax la)s re7enue re5ulations rulin5s
t+e e&&e'ts o& re-eal
i1 a--li'ation o& tax la)s
Art1 ! NCC
Umali 71 Estanislao su-ra1
LorenAo 71 ,osa2as su-ra1
3i0o ,lantation 71 C* 1=# SCRA 19! :1988;
CIR 71 Fili-inas Cia 2e Se5uros 1"? ,+il 1"%% :19=";
Ce.u ,ortlan2 71 Colle'tor !% SCRA ?89 :19=8;
Comm1 71 RTN 6inin5 su-ra1
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ii1 a--li'ation o& re7enue re5ulations rulin5s
Se'1 !#=
Comm1 71 CA su-ra1
Comm1 71 6e5a General 1== SCRA 1== :1988;
A*S$C*N 71 CTA 1"8 SCRA 1#! :1981;
Comm1 71 Tele&un<en !#9 SCRA #"1 :199%;
d. man2ator/ an2 2ire'tor/ -ro7isions
Roxas 71 Ra&&ert/ su-ra1
Ara5on 71 Geor5e 8% ,+il !#= :19#9;
Tion5'o 71 ,V* !1! SCRA 1?= :199!;
,e'son 71 CA !!! SCRA %8" :199>;
3. En&or'ement A2ministration o& Tax La)s
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