COVERAGE

LAW ON TAXATION
2015 BAR EXAMINATIONS

9. General Principles of Taxation

1.
2.
3.
4.
5.

6.

7.

8.

Definition and concept of taxation

Nature of taxation
Characteristics of taxation
Power of taxation compared with other powers
1. Police power
2. Power of eminent domain
Purpose of taxation
1. Revenue-raising
2. Non-revenue/special or regulatory
Principles of sound tax system
1. Fiscal adequacy
2. Administrative feasibility
3. Theoretical justice
Theory and basis of taxation
1. Lifeblood theory
2. Necessity theory
3. Benefits-protection
theory
(Symbiotic
relationship)
4. Jurisdiction over subject and objects
Doctrines in taxation
1. Prospectivity of tax laws
2. Imprescriptibility
3. Double taxation
1) Strict sense
2) Broad sense
3) Constitutionality of double taxation
4) Modes of eliminating double taxation
4. Escape from taxation
1) Shifting of tax burden
(1) Ways of shifting the tax burden
(2) Taxes that can be shifted
(3) Meaning of impact and incidence of
taxation
2) Tax avoidance
3) Tax evasion

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(1) Exceptions
I.

Scope

and

limitation

of

5. Exemption from taxation

taxation
1) Meaning of exemption from taxation
1. Inherent limitations
2) Nature of tax exemption
1) Public purpose
3) Kinds of tax exemption
2) Inherently legislative
(1) Express
(1)
General rule
(2) Implied
(2) Exceptions
(3) Contractual
(1) Delegation to
4) Rationale/grounds for exemption
local
5) Revocation of tax exemption
governments
6. Compensation and set-of
(2) Delegation to
the President
7. Compromise
(3) Delegation to
8. Tax amnesty
administrativ
1) Definition
e agencies
2) Distinguished from tax exemption
3) Territorial
9. Construction and interpretation of:
(1)
Situs
of
1) Tax laws
taxation
(1) General rule
(1) Meaning
(2) Exception
(2) Situs
of
2) Tax exemption and exclusion
income tax
(1) General rule
(1) From
sources
(2) Exception
within the
3) Tax rules and regulations
Philippine
(1) General rule only
s
4) Penal provisions of tax laws
5) Non-retroactive application to taxpayers

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Law on Taxation

(5) Prohibition against taxation

of
non-stock,
non-profit
institutions
Philippines
(6) Majority vote of Congress
(3) Income partly within and
for grant of tax exemption
partly
without
the
(7) Prohibition on use of tax
Philippines
levied for special purpose
(3) Situs of property taxes
(8) Presidents veto power on
(1) Taxes on real property
appropriation,
revenue,
tarif bills
(2) Taxes
on
personal
property
(9) Non-impairment
of
jurisdiction of the Supreme
(4) Situs of excise tax
Court
(1) Estate tax
(10) Grant of power to the local
(2) Donors tax
government units to create
(5) Situs of business tax
its own sources of revenue
(1) Sale of real property
(11) Flexible tarif clause
(2) Sale
of
personal
(12) Exemption
from
real
property
property taxes
(3) Value-Added Tax (VAT)
(13) No appropriation or use of
4) International comity
public money for religious
5) Exemption of government entities,
purposes
agencies, and instrumentalities
2) Provisions indirectly afecting
2. Constitutional limitations
taxation
1) Provisions directly afecting taxation
(1) Due process
(1) Prohibition
against
(2) Equal protection
imprisonment for non-payment
(3) Religious freedom
of poll tax
(4) N
(2) Uniformity and equality of
on-impairment
taxation
of obligations of
(3) Grant by Congress of authority
contracts
J.
to the president to impose tarif
Stages
of
rates
taxation
(4) Prohibition
against
1. Levy
taxation of religious,
2. Assessment and collection
charitable entities, and
educational entities
3. Payment

(2) From sources without the

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Law on Taxation

4. Refund
11.
Definition, nature, and characteristics of taxes
12.
Requisites of a valid tax
13. Tax as distinguished from other forms of exactions
1. Tarif
2. Toll
3. License fee
4. Special assessment
5. Debt
14.
Kinds of taxes
1. As to object
1) Personal, capitation, or poll tax
2) Property tax
3) Privilege tax
2. As to burden or incidence
1) Direct
2) Indirect
3. As to tax rates
1) Specific
2) Ad valorem
3) Mixed
4. As to purposes
1) General or fiscal
2) Special, regulatory, or sumptuary
5. As to scope or authority to impose
1) National internal revenue taxes
2) Local real property tax, municipal tax
6. As to graduation
1) Progressive
2) Regressive
3) Proportionate
II. National Internal Revenue Code (NIRC) of 1997, as amended

1. Income taxation
1. Income tax systems
1) Global tax system
2) Schedular tax system
3) Semi-schedular or semi-global tax system
2. Features of the Philippine income tax law

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(61) Special class of

1) Direct tax
2) Progressive
3) Comprehensive
4) Semi-schedular or semi-global tax system
3. Criteria in imposing Philippine income tax
1) Citizenship principle
2) Residence principle
3) Source principle
4. Types of Philippine income tax
5. Taxable period
1) Calendar period
2) Fiscal period
3) Short period
6. Kinds of taxpayers
1) Individual taxpayers
(9) Citizens
(1) Resident citizens
(2) Non-resident citizens
(35) Aliens
(1) Resident aliens
(2) Non-resident aliens
(1) Engaged in trade or business
(2) Not engaged in trade or business

individual
employees
(1) Minimum wage
earner
2) Corporations
(9) Domestic
corporations
(35) Foreign
corporations
(1) Resident
foreign
corporations
(2) Non-resident
foreign
corporations
(61) Joint venture and
consortium
3) Partnerships
4) General
professional
partnerships
5) Estates and trusts
6) Co-ownerships
7. Income taxation
1) Definition
2) Nature
3) General principles

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2) Concept
of
income
from
whatever source derived
8. Income
3) Gross income vis--vis net
1) Definition
income vis--vis taxable income
2) Nature
4) Classification of income as to
source
3) When income is taxable
(1) Gross income and taxable
(1) Existence of income
income from sources within
(2) Realization of income
the Philippines
(1) Tests of realization
(2) Gross income and taxable
(2) Actual vis--vis constructive
income from sources without
receipt
the Philippines
(3) Recognition of income
(3) Income partly within or
(4) Methods of accounting
partly
without
the
(1) Cash
method
vis--vis
Philippines
accrual method
5) Sources of income subject to tax
(2) Installment payment vis--vis
(1) Compensation income
deferred payment vis--vis
(2) Fringe benefits
percentage completion (in
(1) Special treatment of
long-term contracts)
fringe benefits
4) Tests in determining whether income
(2) Definition
is earned for tax purposes
(3) Taxable and non-taxable
(1) Realization test
fringe benefits
(2) Claim of right doctrine or
(3) Professional income
doctrine
of
ownership,
(4) Income from business
command, or control
(5) Income from dealings in
(3) Economic benefit test, doctrine
property
of proprietary interest
(1) Types of properties
(4) Severance test
(1) Ordinary assets
(5) All events test
(2) Capital assets
9. Gross income
(2) Types of gains from
1) Definition
dealings in property

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(3) Royalty income
(4) Rental income
(1) Ordinary income vis--vis capital
(1) Lease of personal property
gain
(2) Lease of real property
(2) Actual gain vis--vis presumed gain
(3) Tax treatment of
(3) Long term capital gain vis--vis
short-term capital gain
(1) Leasehold
improvements
by
(4) Net capital gain, net capital loss
lessee
(5) Computation of the amount of gain
(2) VAT
added
to
or loss
rental/paid
by
the
(6) Income tax treatment of capital
lessee
loss
(3)
Advance
rental/long
(1) Capital loss limitation rule
term lease
(applicable
to
both
(7) Annuities, proceeds from life
corporations and individuals)
insurance or other types of
(2) Net
loss
carry-over
rule
insurance
(applicable only to individuals)
(8) Prizes and awards
(7) Dealings in real property situated in
(9) Pensions, retirement benefit, or
the Philippines
separation pay
(8) Dealings in shares of stock of
(10) Income
from
any
source
Philippine corporations
whatever
(1) Shares listed and traded in the
(1) Forgiveness of indebtedness
stock exchange
(2) Recovery
of
accounts
(2) Shares not listed and traded in
previously written-of when
the stock exchange
taxable/when not taxable
(9) Sale of principal residence
(3) Receipt of tax refunds or
(6) Passive investment income
credit
(1) Interest income
(4) Income from any source
(2) Dividend income
whatever
(1) Cash dividend
(5) Source rules in determining
(2) Stock dividend
income
from
within
and
without
(3) Property dividend
(1) Interests
(4) Liquidating dividend

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descent
(5) Amount received through
(2) Dividends
accident
or
health
(3) Services
insurance
(4) Rentals
(6) Income exempt under tax
treaty
(5) Royalties
(7) Retirement
benefits,
(6) Sale of real property
pensions,
gratuities,
etc.
(7) Sale of personal property
(8) Winnings,
prizes,
(8) Shares of stock of domestic corporation
and
awards,
(6) Situs of income taxation (see page 2
including those in
under inherent limitations, territorial)
sports competition
(7) Exclusions from gross income
(6) Under special laws
(1) Rationale for the exclusions
(1) Personal
Equity
and
(2) Taxpayers who may avail of the
Retirement Account
exclusions
(8) Deductions from gross income
(3) Exclusions
distinguished
from
(1) General rules
deductions and tax credit
(1) Deductions must be paid
(4) Under the Constitution
or incurred in connection
(1) Income derived by the government
with
or its political subdivisions from the
the taxpayers trade,
exercise of any essential
business or profession
governmental function
(2) Deductions
must
(5) Under the Tax Code
be supported by
(1) Proceeds of life insurance policies
adequate receipts
(2) Return of premium paid
or invoices (except
(3) Amounts received under life
standard
insurance, endowment or
deduction)
annuity contracts
(3) Additional
requirement
relating to withholding
(4) Value of property acquired by
gift, bequest, devise or
(2) Return of capital (cost of
sales or services)

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(11) Training expenses

(1) Sale of inventory of goods by
manufacturers and dealers of
properties
(2) Sale of stock in trade by a real
estate
dealer
and
dealer
in
securities
(3) Sale of services
(3) Itemized deductions
(1) Expenses
(1) Requisites for deductibility
(1) Nature: ordinary and necessary
(2) Paid and incurred during taxable
year
(2) Salaries, wages and other forms of
compensation for personal
services actually rendered,
including the grossed-up monetary
value of the fringe benefit
subjected to fringe benefit tax
which tax should have been paid
(3) Travelling/transportation expenses
(4) Cost of materials
(5) Rentals and/or other payments for
use or possession of property
(6) Repairs and maintenance
(7) Expenses under lease agreements
(8) Expenses for professionals
(9) Entertainment/Representation
expenses
(10) Political campaign expenses

(2) Interest
(1) Requisites

for
deductibility
(2) Non-deductible interest
expense
(3) Interest
subject
to
special rules
(1) Interest
paid
in
advance
(2) Interest periodically
amortized
(3) Interest expense
incurred
to
acquire property
for
use
in
trade/business/p
rofession
(4) Reduction
of
interest
expense/interest
arbitrage
(3) Taxes
(1) Requisites
for
deductibility
(2) Non-deductible taxes
(3) Treatments
of
surcharges/interests/fine
s for delinquency
(4) Treatment of special
assessment
(5) Tax
credit
vis--vis
deduction

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(4) Optional standard deduction
(1) Individuals, except non(4) Losses
resident aliens
(1) Requisites for deductibility
(2) Corporations, except non(2) Other types of losses
resident
foreign
corporations
(1) Capital losses
(3) Partnerships
(2) Securities becoming worthless
and
additional
(3) Losses on wash sales of stocks or(5) Personal
securities
exemption (R.A. No. 9504,
(4) Wagering losses
Minimum Wage Earner Law)
(5) Net Operating Loss Carry-Over
(1) Basic personal exemptions
(NOLCO)
(2) Additional exemptions for
(5) Bad debts
taxpayer with dependents
(1) Requisites for deductibility
(3) Status-at-the-end-of-theyear rule
(2) Efect of recovery of bad debts
(4) Exemptions claimed by
(6) Depreciation
non-resident aliens
(1) Requisites for deductibility
(6)
Items not deductible
(2) Methods of computing depreciation
(1) General rules
allowance
(2) Personal, living or family
(1) Straight-line method
expenses
(2) Declining-balance method
(3) Amount paid for new
(3) Sum-of-the-years-digit method
buildings
or
for
(7) Charitable and other contributions
permanent
(1) Requisites for deductibility
improvements
(2) Amount that may be deducted
(capital
(8) Contributions to pension trusts
expenditures)
(1) Requisites for deductibility
(4) Amount
expended
in
(9)Deductions under special laws
restoring property (major
repairs)

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and other benefits
not exempt
(4) Directors fees
(2) Non-monetary
compensation
(1) Fringe benefit not
subject to tax
(35) Exclusions
(1) Fringe benefit subject
to tax
(2) De minimis benefits

(5) Premiums paid on life

insurance
policy
covering life or any
other
officer
or
employee
financially
interested
(6) Interest
expense,
bad debts, and
losses from sales
of
property
between
related
parties
(7) Losses from sales or
exchange or property
(8) Non-deductible interest
(9) Nondeductible taxes
(10)
Non-deductible
losses
(11)
Losses from wash
sales
of
stock
or
securities
(7) Exempt corporations
(1) Propriety
educational
institutions
and
hospitals
(2) Government-owned or
controlled corporations
(3) Others
10. Taxation of resident citizens, non-resident
citizens, and resident aliens
1) General rule that resident citizens
are taxable on income from all
sources within and without the
Philippines
(9) Non-resident citizens
2) Taxation on compensation income
(9) Inclusions
(1) Monetary compensation
(1) Regular salary/wage
(2) Separation pay/retirement
benefit
not
otherwise
exempt
(3) Bonuses, 13th month pay,

(3) 13th month pay and

3)

other benefits, and

payments
specifically
excluded
from
taxable
compensation
income
(61) Deductions
(1) Personal
exemptions
and
additional
exemptions
(2) Health
and
hospitalization
insurance
(3) Taxation
of
compensation
income
of a minimum wage
earner
(1) Definition
of
statutory minimum
wage
(2) Definition
of
minimum
wage
earner
(3) Income
also
subject
to
tax
exemption: holiday
pay, overtime pay,
night-shift
diferential,
and
hazard pay
Taxation
of
business
income/income from practice
of profession

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engaged in trade or business
12. Individual taxpayers exempt from
4) Taxation of passive income
income tax
(i) Passive income subject to final
1) Senior citizens
tax
2) Minimum wage earners
(1) Interest income
3) Exemptions
granted
under
(9)Treatment of income from
international agreements
long-term deposits
13. Taxation of domestic corporations
(2) Royalties
1) Tax payable
(3) Dividends from domestic
(1) Regular tax
corporations
(2) Minimum Corporate Income
(4) Prizes and other winnings
Tax (MCIT)
(35) Passive income not subject to
(1)
Imposition of MCIT
final tax
(2) Carry forward of excess
5) Taxation of capital gains
minimum tax
(1) Income from sale of shares of
(3) Relief from the MCIT
stock of a Philippine corporation
under certain conditions
(1) Shares traded and listed in
(4) Corporations
exempt
the stock exchange
from the MCIT
(2) Shares not listed and traded
(5) Applicability of the MCIT
in the stock exchange
where a corporation is
(35) Income from the sale of real
governed both under
property
situated
in
the
the regular tax system
Philippines
and a special income
(61) Income from the sale,
tax system
exchange,
or
other
2) Allowable deductions
disposition of other capital
(1) Itemized deductions
assets
(2) Optional
standard
11. Taxation of non-resident aliens engaged
deduction
in trade or business
3) Taxation of passive income
1) General rules
(1) Passive income subject to
2) Cash and/or property dividends
tax
3) Capital gains
Exclude: non-resident aliens not

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2) With respect to their income from
sources within the Philippines
(1) Interest from deposits and
3) Minimum Corporate Income Tax
yield, or any other
4) Tax on certain income
monetary benefit from
(1) Interest from deposits and
deposit substitutes and
yield, or any other
from trust funds and similar
monetary benefit from
arrangements and royalties
deposit substitutes, trust
(2) Capital gains from the sale
funds and similar
of shares of stock not
arrangements and
traded
in
the
stock
royalties
exchange
(2) Income derived under the
(3) Income derived under the
expanded foreign currency
expanded foreign currency
deposit system
deposit system
(3) Capital gains from
(4) Inter-corporate dividends
sale of shares of
(5) Capital gains realized from
stock not traded in
the sale, exchange, or
the stock exchange
disposition of lands and/or
(4) Inter-corporate dividends
buildings
Exclude:
(2) Passive income not subject to
(1) International carrier
tax
(2) Offshore banking units
4) Taxation of capital gains
(3) Branch
profits
(1) Income from sale of shares of
remittances
stock
(4) Regional
or
(2) Income from the sale of real
area
property
situated
in
the
Philippines
headquarters
(3) Income from the sale,
and
regional
exchange,
or
other
operating
disposition of other capital
headquarters
assets
of
5) Tax on proprietary educational
multinational
institutions and hospitals
companies
6) Tax
on
government15. Taxation of non-resident foreign
owned or controlled
corporations
corporations,
1) General rule
agencies
or
2) Tax on certain income
instrumentalities
(1) Interest on foreign loans
14. Taxation of resident foreign corporations
(2) Inter-corporate dividends
1) General rule

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(3) Capital

16.
17.
18.
19.
20.

Law on Taxation

3) Withholding of VAT
4) Filing of return and payment

gains from
of taxes withheld
sale of shares of
(1) Return and payment in
stock not traded in
case
of
government
the stock exchange
employees
Exclude:
(2) Statements and returns
(1) Non-resident
5) Final withholding tax at
cinematographic
filmsource
owner,
lessor
or
6) Creditable withholding tax
distributor
(1) Expanded
withholding
(2) Non-resident owner or
tax
lessor
of
vessels
(2) Withholding
tax
on
chartered by Philippine
compensation
nationals
7) Timing of withholding
(3) Non-resident owner or
lessor
of
aircraft
B. Estate tax
machineries and other
1. Basic principles
equipment
2. Definition
Improperly accumulated earnings of
3. Nature
corporations
4. Purpose or object
Exemption from tax on corporations
5. Time and transfer of properties
Taxation of partnerships
6. Classification of decedent
Taxation of general professional
partnerships
7. Gross estate vis--vis net estate
Withholding tax
8. Determination of gross estate
and net estate
1) Concept
9. Composition of gross estate
2) Kinds
10. Items to be included in gross
(1) Withholding of final tax on
estate
certain incomes
11. Deductions from estate
(2) Withholding of creditable
tax at source
12. Exclusions from estate

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Law on Taxation
tax
14. Person liable
13. Tax credit for estate taxes paid in a
15. Tax basis
foreign country
14. Exemption of certain acquisitions
4. Value-Added Tax (VAT)
and transmissions
1. Concept
15. Filing of notice of death
2. Characteristics/Elements of a
16. Estate tax return
VAT-Taxable transaction
3. Impact of tax
3. Donors tax
4. Incidence of tax
1. Basic principles
5. Tax credit method
2. Definition
6. Destination principle
3. Nature
7. Persons liable
4. Purpose or object
8. VAT on sale of goods or
5. Requisites of valid donation
properties
6. Transfers which may be constituted
1) Requisites of taxability of
as donation
sale of goods or properties
1) Sale/exchange/transfer
of
9. Zero-rated sales of goods or
property
for
insufficient
properties, and efectively zeroconsideration
rated
sales
of
goods
or
2) Condonation/remission of debt
properties
7. Transfer for less than adequate and
10. Transactions deemed sale
full consideration
1) Transfer, use or consumption
8. Classification of donor
not in the course of business
9. Determination of gross gift
of goods/properties originally
10. Composition of gross gift
intended for sale or use in
11. Valuation of gifts made in property
the course of business
12. Tax credit for donors taxes paid in
2) Distribution or transfer to
a foreign country
shareholders, investors or
13. Exemptions of gifts from donors
creditors

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Law on Taxation
14. Zero-rated sale of services
3) Consignment of goods if actual 15. VAT exempt transactions
1) VAT exempt transactions, in
sale not made within 60 days
general
from date of consignment
2) Exempt
transaction,
4) Retirement from or cessation of
enumerated
business with respect to inventories
16. Input tax and output tax, defined
on hand
11. Change or cessation of status as VAT- 17. Sources of input tax
registered person
1) Purchase or importation of
goods
1) Subject to VAT
2) Purchase of real properties for
(1) Change of business activity
which a VAT has actually been
from VAT taxable status to
paid
VAT-exempt status
3) Purchase of services in which
(2) Approval
of
request
for
VAT has actually been paid
cancellation of a registration
4) Transactions deemed sale
due to reversion to exempt
5) Presumptive input
status
6) Transitional input
(3) Approval
of
request
for
cancellation of registration due18. Persons who can avail of input tax
credit
to desire to revert to exempt
status
after
lapse
of
319. Determination of output/input tax;
VAT payable; excess input tax
consecutive years
credits
2) Not subject to VAT
1) Determination of output tax
(1) Change
of
control
of
a
2) Determination of input tax
corporation
creditable
(2) Change in the trade or corporate
3) Allocation of input tax on mixed
name
transactions
(3) Merger or consolidation of
4) Determination of the output
corporations
tax and VAT payable and
12. VAT on importation of goods
computation of VAT payable
1) Transfer of goods by tax exempt
or excess tax credits
persons
20. Substantiation of input tax credits
13. VAT on sale of service and use or lease
21. Refund or tax credit of excess input
of properties
tax
1) Requisites for taxability

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1) Who may claim for refund/apply for

issuance of tax credit certificate

to file claim/apply for
issuance of tax credit certificate
3) Manner of giving refund
4) Destination principle or cross-border
doctrine
22. Invoicing requirements
1) Invoicing requirements in general
2) Invoicing and recording deemed sale
transactions
3) Consequences of issuing erroneous
VAT invoice or VAT official receipt
23. Filing of return and payment
24. Withholdin

2) Period

g of final VAT on
sales

to

government E. Tax
remedies

under

the NIRC

1. Taxpayers remedies
1) Assessment
(9) Concept of assessment
(1) Requisites
for

valid
assessment
(2) Constructive methods of
income determination
(3) Inventory method for income
determination
(4) Jeopardy assessment
(5) Tax delinquency and tax
deficiency
(2) Power of the Commissioner to
make
assessments
and
prescribe
additional

requirements
for
tax
administration
and
enforcement
(1) Power of the
Commissione
r to obtain
information,
and
to
summon/exa
mine,
and
take
testimony of
persons
(61) When assessment is made
(1) Prescriptive period for
assessment
(1) False,
fraudulent,
and
non-filing
of
returns
(2) Suspension of running of
statute of limitations
(4) General
provisions
on
additions to the tax
(1) Civil penalties
(2) Interest
(3) Compromise penalties
(5) Assessment process
(1) Tax audit
(2) Notice
of
informal
conference
(3) Issuance of preliminary
assessment notice
(4) Notice
of
informal
conference
(5) Issuance of preliminary
assessment notice
(6) Exceptions to issuance
of
preliminary
assessment notice
(7) Reply to preliminary
assessment notice

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Law on Taxation

(2) In

case of inaction by
Commissioner within 180
(8) Issuance of formal letter of
days from submission of
demand and assessment
documents
notice/final
assessment
(3) Efect of failure to appeal
notice
2) Collection
(9) Disputed assessment
(1) Requisites
(10) Administrative decision on a
(2) Prescriptive periods
disputed assessment
(3) Distraint of personal property
(6) Protesting assessment
including garnishment
(1) Protest
of
assessment
by
(1) Summary
remedy
of
taxpayer
distraint
of
personal
(1) Protested assessment
property
(2) When to file a protest
(1) Purchase
by
the
(3) Forms of protest
government
at
sale
upon distraint
(4) Content and validity of
protest
(2) Report of sale to the
Bureau
of
Internal
(2) Submission of documents within
Revenue (BIR)
60 days from filing of protest
(3) Constructive distraint to
(3) Efect of failure to protest
protect the interest of
(4) Period provided for the protest to
the government
be acted upon
(4) Summary remedy of levy on
(7) Rendition
of
decision
by
real property
Commissioner
(1) Advertisement and sale
(1) Denial of protest
(2) Redemption of property
(1) Commissioners
actions
sold
equivalent to denial of protest
(3) Final deed of purchaser
(1) Filing of criminal action
(5) Forfeiture to government for
against taxpayer
want of bidder
(2) Issuing a warrant of
(1) Remedy of enforcement of
distraint and levy
forfeitures
(2) Inaction by Commissioner
(1) Action
to
contest
(8) Remedies of taxpayer to action by
forfeiture
of
chattel
Commissioner
(2) Resale of real estate taken
(1) In case of denial of protest
for taxes

2015 Bar Examination Coverage 19

Law on Taxation

(2) Necessity of proof for

claim or refund
(3) Burden of proof for
destroyed
claim of refund
(4) Disposition
of
funds
(4) Nature of erroneouslyrecovered
in
legal
paid
tax/illegally
proceedings or obtained
assessed collected
from forfeiture
(5) Tax refund vis--vis tax
(6) Further distraint or levy
credit
(7) Tax lien
(6) Essential requisites for
claim of refund
(8) Compromise
(5)
Who
may claim/apply for tax
(1) Authority
of
the
refund/tax credit
Commissioner
to
compromise and abate taxes
(1) Taxpayer/withholding
agents of non-resident
(9) Civil and criminal actions
foreign corporation
(1) Suit to recover tax based on
(6) Prescriptive
period
for
false or fraudulent returns
recovery
of
tax
erroneously
3) Refund
or illegally collected
(1) Grounds and requisites for refund
(7) Other
consideration
(2) Requirements for refund as laid
afecting tax refunds
down by cases
2. Government remedies
(1) Necessity of written claim
1) Administrative remedies
for refund
(1) Tax lien
(2) Claim
containing
a
(2) Levy and sale of real
categorical
demand
for
property
reimbursement
(3) Forfeiture of real property
(3) Filing of administrative
to the government for want
claim for refund and the
of bidder
suit/proceeding before the
(4) Further distraint and levy
CTA within 2 years from
(5) Suspension of business
date of payment
operation
regardless of any
(6) Non-availability
of
supervening cause
injunction
to
restrain
(3) Legal basis of tax refunds
collection of tax
(4) Statutory basis for tax refund
2) Judicial remedies
under the tax code
3. Statutory ofenses and penalties
(1) Scope of claims for refund
1) Civil penalties

(3) When property to be sold or

2015 Bar Examination Coverage 20

Law on Taxation

(1) Surcharge
(2) Interest
(1) In general
(2) Deficiency interest
(3) Delinquency interest
(4) Interest on extended payment
4. Compromise and abatement of taxes
1) Compromise
2) Abatement
6. Organization and Function of the Bureau of Internal Revenue
1. Rule-making authority of the Secretary of Finance
1) Authority of Secretary of Finance to promulgate rules and regulations
2) Specific provisions to be contained in rules and regulations
3) Non-retroactivity of rulings
2. Power of the Commissioner to suspend the business operation of a
taxpayer
III. Local Government Code of 1991, as amended

1. Local government taxation

1. Fundamental principles
2. Nature and source of taxing power
1) Grant of local taxing power under the local government code
2) Authority to prescribe penalties for tax violations
3) Authority to grant local tax exemptions
4) Withdrawal of exemptions
5) Authority to adjust local tax rates
6) Residual taxing power of local governments
7) Authority to issue local tax ordinances
3. Local taxing authority
1) Power to create revenues exercised through Local Government Units
2) Procedure for approval and efectivity of tax ordinances
4. Scope of taxing power
5. Specific taxing power of Local Government Units
1) Taxing powers of provinces
(1) Tax on transfer of real property ownership
(2) Tax on business of printing and publication
(3) Franchise tax
(4) Tax on sand, gravel and other quarry services
(5) Professional tax

2015 Bar Examination Coverage 21

Law on Taxation

(1)
(6) Amusement tax
(7) Tax on delivery truck/van
2) Taxing powers of cities
3) Taxing powers of municipalities
(1) Tax on various types

6.
7.

8.

9.

of
businesses
(2) Ceiling
on
business
tax
impossible
on
municipalities
within Metro Manila
(3) Tax on retirement on business
(4) Rules on payment of business
tax
(5) Fees and charges for regulation
& licensing
(6) Situs of tax collected
4) Taxing powers of barangays
5) Common revenue raising powers
(1) Service fees and charges
(2) Public utility charges
(3) Toll fees or charges
6) Community tax
Common limitations on the taxing powers
of LGUs
Collection of business tax
1) Tax period and manner of payment
2) Accrual of tax
3) Time of payment
4) Penalties on unpaid taxes, fees or
charges
5) Authority of treasurer in collection
and inspection of books
Taxpayers remedies
1) Periods of assessment and collection
of local taxes, fees or charges
2) Protest of assessment
3) Claim for refund of tax credit for
erroneously or illegally collected tax,
fee or charge
Civil remedies by the LGU for collection of
revenues
1) Local
governments
lien
for
delinquent taxes, fees or charges
2) Civil remedies, in general

Administrative action

p
e
r
t
y

t
a
x

1. Fundamental principles
2. Nature of real property tax
3. Imposition of real property tax
1) Power to levy real property tax
2) Exemption from real property tax

2015 Bar Examination Coverage 22

Law on Taxation

(3) Notice

of
time
for
collection of tax
4. Appraisal and assessment of real property
3) Periods within which to collect
tax
real property tax
1) Rule on appraisal of real property at fair
4) Special rules on payment
market value
(1) Payment of real property
2) Declaration of real property
tax in installments
3) Listing of real property in assessment
(2) Interests on unpaid real
rolls
property tax
4) Preparation of schedules of fair market
(3) Condonation
of
real
value
property tax
(1) Authority of assessor to take
5) Remedies
of
LGUs
for
evidence
collection of real property tax
(2) Amendment of schedule of fair
(1) Issuance of notice of
market value
delinquency
for
real
5) Classes of real property
property tax payment
6) Actual use of property as basis of
(2) Local governments lien
assessment
(3) Remedies in general
7) Assessment of real property
(4) Resale of real estate
(1) Assessment levels
taken for taxes, fees or
charges
(2) General revisions of assessments
and property classification
(5) Further levy until full
payment of amount due
(3) Date of efectivity of assessment or
reassessment
6. Refund or credit of real property
(4) Assessment of property subject to tax
back taxes
1) Payment under protest
(5) Notification of new or revised
2) Repayment
of
excessive
assessment
collections
8) Appraisal and assessment of machinery 7. Taxpayers remedies
5. Collection of real property tax
1) Contesting an assessment of
value of real property
1) Date of accrual of real property tax and
special levies
(1) Appeal to the Local
Board
of
Assessment
2) Collection of tax
Appeals
(1) Collecting authority
(2) Appeal to the Central
(2) Duty of assessor to furnish local
Board
of
Assessment
treasurer with assessment rolls
Appeals

2015 Bar Examination Coverage

23

(3) Efect of payment of tax

b. Payment of real property tax under protest
(1) File protest with local treasurer
(2) Appeal to the Local Board of Assessment Appeals
(3) Appeal to the Central Board of Assessment Appeals
(4) Appeal to the CTA
(5) Appeal to the Supreme Court
IV. Tariff and Customs Code of 1978, as amended

1. Tarif and duties, defined

2. General rule: all imported articles are subject to duty.
1. Importation by the government taxable
3. Purpose for imposition
4. Flexible tarif clause
5. Requirements of importation
1. Beginning and ending of importation
2. Obligations of importer
1) Cargo manifest
2) Import entry
3) Declaration of correct weight or value
4) Liability for payment of duties
5) Liquidation of duties
6) Keeping of records
6. Importation in violation of tax credit certificate
1. Smuggling
2. Other fraudulent practices
7. Classification of goods
1. Taxable importation
2. Prohibited importation
3. Conditionally-free importation
8. Classification of duties
1. Ordinary/regular duties
Law on Taxation

2015 Bar Examination Coverage 24

Law on Taxation

1) Ad valorem; methods of valuation

(1) Transaction value
(2) Transaction value of identical goods
(3) Transaction value of similar goods
(4) Deductive value
(5) Computed value
(6) Fallback value
2) Specific
2. Special duties
1) Dumping duties
2) Countervailing duties
3) Marking duties
4) Retaliatory/discriminatory duties
5) Safeguard
9. Remedies
1. Government
1) Administrative/extrajudicial
(1) Search, seizure, forfeiture, arrest
2) Judicial
(1) Rules on appeal including jurisdiction
2. Taxpayer
1) Protest
2) Abandonment
3) Abatement and refund
V. Judicial Remedies (R.A. No. 1125, as amended, and the Revised
Rules of the Court of Tax Appeals)

1. Jurisdiction of the Court of Tax Appeals

1. Exclusive appellate jurisdiction over civil tax cases
1) Cases within the jurisdiction of the court en banc
2) Cases within the jurisdiction of the court in divisions
2. Criminal cases
1) Exclusive original jurisdiction
2) Exclusive appellate jurisdiction in criminal cases
2. Judicial procedures
1. Judicial action for collection of taxes
1) Internal revenue taxes

2015 Bar Examination Coverage 25

Law on Taxation

2) Local taxes
(1) Prescriptive period
2. Civil cases
1) Who may appeal, mode of appeal, efect of appeal
(1) Suspension of collection of tax
a) Injunction not available to restrain collection
(2) Taking of evidence
(3) Motion for reconsideration or new trial
2) Appeal to the CTA, en banc
3) Petition for review on certiorari to the Supreme Court
3. Criminal cases
1) Institution and prosecution of criminal actions
(1) Institution of civil action in criminal action
2) Appeal and period to appeal
(1) Solicitor General as counsel for the people
government officials sued in their official capacity
3) Petition for review on certiorari to the Supreme Court

and

C. Taxpayers suit impugning the validity of tax measures or acts of taxing

authorities
1. Taxpayers suit, defined
2. Distinguished from citizens suit
3. Requisites for challenging the constitutionality of a tax measure or
act of taxing authority
1) Concept of locus standi as applied in taxation
2) Doctrine of transcendental importance
3) Ripeness for judicial determination
IMPORTANT NOTES:

1. This listing of covered topics is not intended and should not be used by the law
schools as a course outline. This was drawn up for the limited purpose of ensuring
that Bar candidates are guided on the coverage of the 2015 Bar Examinations.

2. All Supreme Court decisions - pertinent to a given Bar subject and its listed
topics, and promulgated up to March 31, 2015 - are examinable materials within
the coverage of the 2015 Bar Examinations.