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COLLEGE OF LAW
TAXATION LAW 1
Atty. Martin Ignacio D. Mijares
Course Description
This is a course on the general principles of taxation and on the Philippine income taxation of
individuals, corporations, estates, and trusts.
Course Coverage
! General principles of taxation and of income taxation
! Income taxation of:
o Individuals;
o Corporations; and
o Estates and trusts
! Accounting periods and methods
! Withholding tax
! Organization and function of the Bureau of Internal Revenue (BIR)
Course Outline
PART I
A.
B.
C.
D.
E.
F.
G.
I.
J.
Aspects of Taxation
Aban, pp. 12-13
Vitug & Acosta, pp. 25-26
De Leon & De Leon, Fundamentals, p. 8
Classification of Taxes
Aban, pp. 14-28
Vitug & Acosta, pp. 26-31
De Leon & De Leon, Fundamentals, pp. 14-30
Double Taxation
Aban, pp. 113-118
De Leon & De Leon, Fundamentals, pp. 56-61
Forms of Escape from Taxation
Aban, pp. 124-128
Aban, pp. 118-124
De Leon & De Leon, Fundamentals, pp. 62-70
De Leon & De Leon, Fundamentals, pp. 71-87
CIR v. The Estate of Benigno P. Toda, Jr., G.R. No. 147188, September 14, 2004
Interpretation and Construction of Tax Statutes
Vitug & Acosta, pp. 31-39
Other Significant Doctrines in Taxation
Vitug & Acosta g, pp. 39-48
De Leon & De Leon, Fundamentals, pp. 88-100
PART II
A.
B.
INCOME TAXATION
General Principles
1.
Overview of Income Taxation
a.
History of Philippine income tax law
b.
Sources of income taxation
Revenue Administrative Order No. 2-01 (October 22, 2001)
c.
Features of our income tax law
2.
General Principles of Income Taxation
Section 23, Tax Code (unless otherwise stated, section references are to the 1997
Tax Code)
3.
Scope of Income Taxation
a.
Definition of a Taxpayer, Section 22(N), Tax Code
b.
Definition of a Person, Section 22(A), Tax Code
c. Definition of other terms, Section 22, Tax Code
Taxation of Individuals
1.
Individual Taxpayers
a.
Citizens
(1) Resident Citizens
(2) Non-resident Citizens, Section 22(E), Tax Code
b.
Alien
(1) Resident Alien
Section 22(F), Tax Code
Section 5, Revenue Regulations (Rev. Regs.) No. 2
(2) Non-resident Aliens
Section 22(G), Tax Code
Section 25(A), Tax Code
Section 25(B), Tax Code
Atty. Martin Ignacio D. Mijares | TAXATION LAW 1
2.
3.
4.
C.
Taxation of Corporations
1.
Corporate Taxpayers
a.
Definition of a Corporation
Section 22(B), Tax Code
(1) Partnerships
Rev. Regs. No. 10-12 (June 1, 2012)
Articles 1767-1769, Civil Code of the Philippines (Civil Code)
Lorenzo Ona v. CIR, G.R. No. L-19342, May 25, 1972
Evangelista v. Collector, G.R. No. L-9996, October 15, 1957
Afisco Insurance Corporation v. CIR, G.R. No. 112675, January 25,
1999
Rizal Theatrical Co., Inc. v. CIR, CTA Case No. 3463, April 24, 1989
(2) Co-ownership
Article 484, Civil Code
Pascual v. CIR, G.R. No. 78133, October 18, 1988
b.
Domestic Corporation, Section 22(C)
c.
Foreign Corporation, Section 22(D)
d.
Resident Foreign Corporation, Section 22(H)
e.
Non-resident Foreign Corporation, Section 22(I)
2.
Tax on Domestic Corporation
a.
Definition of a Domestic Corporation
Section 22(B), (C), Tax Code
Obillos v. CIR, G.R. No. G.R. No. L-68118, October 29, 1985
b.
Tax Rate and Tax Base
Section 27(A), Tax Code
Section 31, Tax Code
c.
Passive Income
Section 27(D), Tax Code
Section 22(Y), Tax Code
d.
Proprietary Educational Institutions and Hospitals
Section 27(B), Tax Code
CIR v. St. Lukes Medical Center, Inc., G.R. No. 195909 and 195960,
September 26, 2012
e.
Government-Owner or Controlled Coporations (GOCCs)
Section 27(C), Tax Code
f.
Minimum Corporate Income Tax (MCIT)
Section 27(E), Tax Code
Rev. Regs. 9-98 (August 25, 1998), as amended by Rev. Regs. No. 12-2007
(October 10, 2007)
The Manila Banking Coporation v. CIR, G.R. No. 168118, August 28, 2006
CIR v. Philippine Airlines, G.R. No. 180066, July 7, 2009
3.
Tax on Resident Foreign Corporations
a.
Definition
Section 22(B), (C), (D), (H), Tax Code
b.
Meaning of Engaged in Trade or Business
Section 3(d), RA No. 7042 (Foreign Investments Act of 1991)
Island Power Corporation v. CIR, CTA Case No. 5922, May 17, 2004
N.V. Reederij Amsterdam and Royal Interocean Lines v. CIR, G.R. No. L46029, June 23, 1988
c.
Tax Rate and Tax Base
Section 28(A)(1), Tax Code
Atty. Martin Ignacio D. Mijares | TAXATION LAW 1
4.
4.
5.
D.
E.
F.
G.
Deductions
Section 34, Tax Code
Section 36(A), Tax Code
Sections 119-120, Rev. Regs. No. 2
1.
Expenses
Section 34(A), Tax Code
a.
Business expenses
Section 34(A)(1) and (2), Tax Code
CIR v. Isabela Cultural Corporation, G.R. No. 172231, February 12, 2007
CIR v. General Foods (Phils) Inc., G.R. No. 143672, April 24, 2003
Atlas Consolidated Mining & Development Corporation v. CIR, G.R. No. L26911, January 27, 1981
Zamora v. Collector, G.R. No. L-15290, May 31, 1963
Calanoc v. Collector, G.R. No. L-15922, November 29, 1961
Gutierrez v. Collector, G.R. No. L-19537, May 20, 1965
Rev. Regs. No. 10-2002 (July 10, 2002)
b.
Interest
Section 34(B), Tax Code
Kuenzle & Streiff, Inc. v. CIR, G.R. No. L-12010, October 20, 1959
Paper Industries Corporation of the Philippines v. CA, G.R. Nos. 106949-50,
December 1, 1995
CIR v. Vda. De Prieto, G.R. No. L-13912, September 30, 1960
Rev. Regs. No. 13-2000 (November 20, 2000)
c.
Taxes
Section 34(C), Tax Code
CIR v. Lednicky, et al., G.R. No. L-18169, July 31, 1964
CIR v. Bicolandia Drug Corporation, G.R. No. 148083, July 21, 2006
d.
Losses
Section 34(D), Tax Code
Sections 93-101, Rev. Regs. No. 2
Rev. Regs. No. 12-77 (October 6, 1977)
Revenue Memorandum Order (RMO) No. 31-2009 (October 16, 2009)
BIR Ruling No. 214-2012 (March 28, 2012)
Paper Industries Corporation of the Philippines v. CA, supra
Rev. Regs. No. 14-2001 (August 27, 2001)
e.
Bad debts
Section 34(E), Tax Code
Philex Mining Corporation v. CIR, G.R. No. 148187, April 16, 2008
Philippine Refining Company v. CA, G.R. No. 118794, May 8, 1996
Rev. Regs. No. 5-99
Rev. Regs. No. 25-2002
f.
Depreciation
Section 34(F), Tax Code
Basilan Estates, Inc. v. CIR, G.R. No. L-22492, September 5, 1967
Limpan Investment Corporation v. CIR, G.R. No. L-21570, July 26, 1966
Rev. Regs. No. 12-2012
Bulletin F
Annex A, Rev. Regs. No. 19-86
g.
Depletion of oil and gas wells and mines
Section 34(G), Tax Code
Atty. Martin Ignacio D. Mijares | TAXATION LAW 1
h.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
10
2.
3.
4.
5.
/nothing follows
Modes of instruction
! Recitations
! Lectures
Grading Criteria
Attendance
Class participation
Mid-term examination
Final examination
Total
5%
20%
35%
40%
100%
Students will render themselves ineligible for a passing grade if they are absent from class more
than the allowed absences for this course pursuant to applicable provisions of the DLSU
Student Handbook.
Suggested References
! NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED (TAX CODE)
! Benjamin B. Aban, LAW OF BASIC TAXATION IN THE PHILIPPINES, Latest Revised Edition,
National Books Store, Inc.
! Hector S. De Leon and Hector S. De Leon, Jr., THE FUNDAMENTALS OF TAXATION, 2012
Edition, Rex Books Store, Inc.
! Hector S. De Leon and Hector S. De Leon, Jr., THE LAW ON INCOME TAXATION, 2013
Edition, Rex Book Store
! Jose C. Vitug and Ernesto D. Acosta, TAX LAW AND JURISPRUDENCE, 2006 Edition, Rex
Book Store, Inc.
! Decisions of the Supreme Court and Court of Tax Appeals
! BIR issuances, including Revenue Regulations, Revenue Memorandum Orders,
Revenue Memorandum Circulars, BIR Rulings, and other issuances
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