Tax I Syllabus SY 2016 2017 1 Atty.

Jon Ligon
Lyceum College of Law

PART I TAXATION IN GENERAL

CHAPTER I: GENERAL PRINCIPLES OF TAXATION

i. TAXATION

A. Definition 71 Am Jur 2nd 342

Readings: Are Taxes Evil? By Anthony Aguilar
Get to know about Boston Tea Party
B. Nature of Internal Revenue Law Hilado v CIR 100 Phil 288
C. Scope and Nature of Taxation
1. Scope 71 Am Jur 2nd 394-395
Sison v Ancheta 130 SCRA 654
citing C.J. John Marshall (McCulloch v Maryland)
and J. Holmes (Panhandle Oil Co. v Mississippi)
Reyes v. Almanzor 196 SCRA 322
2. Nature 71 Am Jur 2nd 397-398
S28 AVI, 1987Constitution
3. Cases CIR v Pineda 21 SCRA 105
Phil. Guaranty v CIR 13 SCRA 775
Collector v Yuseco 3 SCRA 313
CIR v Algue, Inc. L-28896 Feb 17, 1988
D. Aspects of Taxation 71 Am Jur 2nd 342
E. Underlying theory and basis 71 Am Jur 2nd 346-347
F. Principles of a sound tax system Chavez v Ongpin 186 SCRA 331
InternetReadings:
a.) Obama Tax Fainess Plan
http://obama.3cdn.net/b7be3b7cd08e587dca_v852mv8ja.pdf
b.) Tax Fairness, Goodluck w/ that
http://money.cnn.com/2009/04/20/pf/taxes/obama_tax_fairness/index.htm
c.) Transgender Tax Collectors
http://edition.cnn.com/2011/WORLD/asiapcf/04/14/pakistan.tax.collectors/index.html
?hpt=C1
d.) Tax Collectors Lifestyle in Ukraine
http://money.cnn.com/video/news/2014/04/30/n-ukraine-tax-office-secret-
luxury.cnnmoney/

G. Comparison with Police Power and Eminent Domain

1. Similarities
2. Distinctions 71 Am Jur 2nd 395-397
3. Cases Phil Match Co. v. Cebu 81 SCRA 99
Matalin v Mun. Council of Malabang 143 SCRA 404
Lutz v Araneta 98 Phil 48
NTC v CA 311 SCRA 508

ii. TAXES

A. Definition 71 Am Jur 2nd 343-346

B. Essential Characteristics of Taxes
C. Taxes distinguished from:
1. Debts 71 Am Jur 2nd 345-346
Caltex v COA 208 SCRA 726
Francia v IAC 162 SCRA 753
RP v Ericta and Sampaguita Pictures 172 SCRA 653
Tax I Syllabus SY 2016 2017 2 Atty. Jon Ligon
Lyceum College of Law

Domingo v Carlitos 8 SCRA 443

2. License Fees. 71 Am Jur 2nd 352-353
Progressive Dev. Corp. v QC 172 SCRA 629
PAL v Edu 164 SCRA 320
ESSO v CIR 175 SCRA 149
3. Special Assessments (now special levies under the 1991 Local
Government Code)
Apostolic Prefect v Treasurer of Baguio 71 Phil. 547
4. Tolls 71 Am Jur 351
5. Penalties NDC v CIR 151 SCRA 472
6. Custom duties

iii. CLASSIFICATION OF TAXES

A. As to subject matter 71 Am Jur 2nd 357-361

B. As to incidence 71 Am Jur 2nd 354
C. As to determination of amount 71 Am Jur 2nd 355
D. As to purposes
E. As to scope
F. As to graduation or rate

CHAPTER II: LIMITATION UPON THE POWER OF TAXATION

I. INHERENT LIMITATIONS

A. Public Purposes
1. Meaning of public purpose
2. Cases: Lutz v Araneta 98 Phil. 48
Pascual v Sec. Of Public Works 110 Phil. 331
B. Taxing power may not be delegated
1. In general Delegata potestas non potest delegari
2. Exceptions
3. Cases: Phil Comm. Satellite Corp. v. Alcuaz 180 SCRA 218
Meralco v. Prov. Of Laguna 306 SCRA 750
Pepsi-Cola Co. v City of Butuan 24 SCRA 789
Smith Bell & Co. v CIR, L-28271 July 25, 1975
C. Exemption of government agencies
1. Reason for the exemption
2. Exception
a. S27(C) as amended by RA 9337
b. S30(I) NIRC
c. S32(B)(7)(b)
3. Exemptions on GOCCs
a. Philippine Ports Authority vs. City of Iloilo GR No.
109791, July 14, 2003
b. MIAA vs. CA GR 155650 July 20, 2006
c. Philippine Fisheries Development Authority vs. CA GR
169836 July 31, 2007
D. International Comity
- in par parem, non habet imperium
E. Territoriality or Situs of Taxation
1. Meaning and scope of limitation
2. Situs of Taxation
a. Meaning
b. Determination of Situs
c. Situs of subjects of taxation
Tax I Syllabus SY 2016 2017 3 Atty. Jon Ligon
Lyceum College of Law

i. Persons S157-158, 1991 LGC

ii. Lex Situs or Lex Rei Sitae - Real Property
iii. Mobilia Sequuntur Personam - Personal Property
iv. Income
v. Business, Occupation, Transaction
vi. Transfer of property by death or gift
d. Multiple situs of taxation
3. Cases Manila Gas v. Collector 62 Phil 895
Vegetable Oil Corp. v Trinidad 45 Phil. 822
Wells Fargo Bank v Col 70 Phil. 325

II. CONSTITUTIONAL LIMITATIONS

A. Due process Clause

S1(1) AIII, 1987 Constitution
Com. of Customs v CTA & Campos Rueda Co. 152 SCRA 641
Phil Bank of Comm v. CIR 302 SCRA 241
Sison v Ancheta 130 SCRA 654
B. Equal Protection Clause
S1 AIII, 1987 Constitution
Ormoc Sugar Co. v. Treasurer of Ormoc City 22 SCRA 603
Villegas v. Hsui Chiong Tsai Pao 86 SCRA 270
Shell Co. v Vano 94 Phil. 388
Tiu v. CA 301 SCRA 279
C. Rule of Taxation shall be Uniform and Equitable
S28(1) AVI, 1987 Constitution
Pepsi Cola v Butuan City 24 SCRA 789
Manila Race Horse v dela Fuente, 88 Phil. 60
Sison v. Ancheta 130 SCRA 654
Tolentino v. Sec of Fiance 249 SCRA 628
D. Non-Impairment of Contracts
S10 AIII & S11, AXII, 1987 Constitution
CIR v Lingayen Gulf Electric Co. 164 SCRA 67
Misamis Oriental v CEPALCO, 181 SCRA 38
Meralco v. Prov. Of Laguna 306 SCRA 750
E. Non-imprisonment for non payment of poll tax
S20 AIII, 1987 Constitution.
F. Prohibition against taxation of religious, charitable entities
S28(3) AVI, 1987 Constitution
Dealing with the Pajeros Joaquin Bernas
http://opinion.inquirer.net/7518/dealing-with-the-
%e2%80%98pajeros%e2%80%99
Lladoc v CIR 14 SCRA 292
Province of Abra v Hernando 107 SCRA 1021
Lung Center v QC et. al. GR No. 144104, June 29, 2004
G. Prohibition against taxation of non-stock non-profit educational
institutions
S4(3) AXIV, 1987 Constitution
S30(H), NIRC
BIR Revenue Memorandum Circular (RMC) No. 45-95
CIR v. CA & YMCA 298 SCRA 83
H. Freedom of religious professional and worship
S5 AIII, 1987 Constitution
American Bible Society v Manila, 101 Phil. 386.
I. Passage of tax bills / Granting of tax exemption
S24 AVI, 1987 Constitution
S28(4) AVI, 1987 Constitution
Tax I Syllabus SY 2016 2017 4 Atty. Jon Ligon
Lyceum College of Law

Tolentino v Secretary of Finance 249 SCRA 628

J. Veto power of the President S27(2) AVI, 1987 Constitution
K. Non-impairment of SC Jurisdiction S5(2)(b) AVIII, 1987 Consti.

III. DOUBLE TAXATION

A. Definition and Nature. 71 Am Jur 2nd 362-365

B. Cases: Procter & Gamble Co. v Mun of Jagna 94 SCRA 894
Sanchez v CIR 97 Phil. 687
Punzalan v Mun Board of Manila 95 Phil. 46
C. Methods of avoiding the occurrence of double taxation
CIR v. SC Johnson & Sons, Inc. 309 SCRA 87

CHAPTER III: EXEMPTIONS FROM TAXATION

I. IN GENERAL
A. Definition
B. Kinds of Exemption
C. Rationale of giving tax exemption
D. Nature of power to grant tax exemption
E. Grounds for tax exemption
F. Examples of Exemption
1. Constitutional Exemption
2. Legislative grant of exemption
3. Exemption created by Treaty
G. Cases: CIR v Botelho
Shipping Corp. 20 SCRA 487
CIR v CTA, GCL Retirement Plan, 207 SCRA 487
CIR v Guerrero, 21 SCRA 180
Phil. Acetylene v CIR, 20 SCRA 1056
Maceda v Macaraig, Jr 197 SCRA 771
Sea-Land Service v. CA 357 SCRA 441

H. Tax Exemption vs. Tax Amnesty

1. Definition
2. People v Cataneda GR No. L-46881, Sept 15, 1988
3. Phil. Banking vs.CIR; GR No. 170574, Jan. 30, 2009
4. CIR v Marubeni; GR No. 137377 Dec 18, 2001
5. Sample Amnesty Program: RA No. 9480
I. Tax Exemption vs. Tax Avoidance vs. Tax Evasion
1. Definitions
2. CIR v. The Estate of Benigno P. Toda GR 147188, Sept 14, 2004
3. CIR vs. Arieta; GR. No. 164152 Jan. 21, 2010

II. CONSTRUCTION OF STATUTORY EXEMPTIONS

A. General rule
B. Applicability to Claims for Refund
C. When exemption statutes are liberally construed
D. Cases: E. Rodriguez, Inc. v Collector 28 SCRA 119
Republic Flour Mills v CIR, 31 SCRA 148
Wonder Mechanical Engineering v CTA 64 SCRA 555
Luzon Stevedoring Corp. v CTA 163 SCRA 647
Floro Cement v Hen. Gorospe 200 SCRA 480
CIR v Ledesma 31 SCRA 95
Resins, Inc. v Auditor Gen. 25, SCRA 754
Tax I Syllabus SY 2016 2017 5 Atty. Jon Ligon
Lyceum College of Law

CIR v. CA & YMCA 298 SCRA 83

CHAPTER IV: SOURCES AND CONSTRUCTION OF TAX LAWS

I. SOURCES OF TAX LAW

A. Statutes
B. Revenue Regulations
C. Revenue Memorandum Circulars/Orders
- BIR Revenue Administrative Order (RAO) No. 2-2001
D. BIR Rulings
- BIR Revenue Administrative Order (RAO) No. 2-2001
- Revenue Regulation 5-2012
E. Opinions of the Secretary of Justice
F. Legislative Materials
G. Court Decision

II. THE STATUTE

A. Existing Tax Law

1. National
a. National Internal revenue Code of 1997
b. Tariff and Customs Code
2. Local
a. Book II, 1991 Local Government Code

III. REVENUE REGULATIONS

A. BIR-RR
1. Authority to promulgate. S244
2. Specific provisions to be contained in RR. S245
3. What is the force and effect of RR?
Art. 7, Civil Code
Asturias Sugar Central v Comm., 29 SCRA 617

IV. BIR RULINGS

A. Power of CIR to Interpret Tax Laws. S4

B. Non-Retroactivity of Rulings S246
CIR v Burroughs Ltd., G.R. 66653. June 19, 1986
CIR v Mega Gen. Merchandising 166 SCRA 166
1. Exceptions
PBCOM vs. CIR 302 SCRA 241

V. CONSTRUCTION OF TAX LAW

A. General Rules of Construction of Tax Laws

Stevedoring v Trinidad, 43 Phil. 803
B. Mandatory vs. Directory Provisions
Serafica v Treasurer of Ormoc City 27 SCRA 110
C. Application of Tax Laws
Tax I Syllabus SY 2016 2017 6 Atty. Jon Ligon
Lyceum College of Law

MANDATORY REFERENCE

National Internal Revenue Code of 1997

Republic Act 8424

Amendments to Title II of NIRC of 1997

Republic Act No. 9294
Republic Act No. 9337
Republic Act No. 9257
Republic Act No. 9504

Other SUGGESTED REFERENCES:

Fundamentals of Taxation by De Leon
Philippine Income Tax by Mamalateo
Taxation and Jurisprudence by Justice Vitug
Income Tax, Law & Accounting by Virgilio Reyes
Other Tax Books/Reviewers
Note:
RR BIR Revenue Regulations
RMC BIR Revenue Memorandum Circulars