Taxation Goofy Final

Taxation Law 1 Reviewer 2011
3. Constitutional Limitations
Due Process of Law
Equal Protection of the Laws
Rule of Uniformity and Equity in Taxation
Prohibition against imprisonment for non-payment of poll tax
Prohibition against impairment of obligations of contracts
Prohibition against appropriation of proceeds
Prohibition against taxation of religious, charitable and educational entities
Prohibition against taxation of non-stock, non-profit educational institutions
Others
Grant of tax exemption
Veto of appropriation, revenue or tariff bills
Non-impairment of the jurisdiction of the Supreme Court
Revenue bills shall orginate from the House of Representative
Infringement of Press Freedom
Grant of Franchise
a. Due process of law
There must be a valid law

Tax measure should not be unconscionable and unjust as to amount to confiscation of
property
Tax statute must not be arbitrary as to find no support in the Constitution
When does the power of taxation impinge the due process clause?
The due process clause may be invoked where a taxing statute is so arbitrary that it finds no
support in the Constitution, as where it can be shown to amount to a confiscation of property,
[Reyes v. Almanzor, 196 SCRA 322].
Sec. 1, Art. III, 1987 Constitution
No person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied equal protection of the laws.
REQUIREMENTS OF DUE PROCESS IN TAXATION
1) Tax must be for a Public purpose
2) Imposed within the Territorial jurisdiction
3) No arbitrariness or oppression in
A) assessment, and
B) collection
DUE PROCESS IN TAXATION DOES NOT REQUIRE
1) Determination through judicial inquiry of
A) property subject to tax
B) amount of tax to be imposed
2) Notice of hearing as to:
A) amount of the tax
B) manner of apportionment
Tan v. del Rosario, supra.
The due process clause may correctly be invoked only when there is a clear contravention of
inherent or constitutional limitations in the exercise of tax power.
It has been held that where the assailed tax measure is beyond the jurisdiction of the state,
or is not for a public purpose, or in case a retroactive statute is so harsh an unreasonable , it is
subject to attack on due process grounds.
Niel S. Defensor UNOR-SCHOOL OF LAW
Page16
Sison v. Ancheta, supra.

It is undoubted that the due process clause may be invoked where a taxing statute is so
arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown
to amount to the confiscation of property. That would be a clear abuse of power. It then becomes
the duty of this Court that such an arbitrary act amounted to the exercise of an authority not
conferred. That property calls for the application of the Holmes dictum The power to tax is not the
power to destroy while this Court sits.

b. Equal protection of the laws
No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied equal protection of the laws. Sec. 1, Art. III, 1987 Constitution
Sison v. Ancheta, supra.
The taxing power has the authority to make reasonable and natural classification for
purposes of taxation, but the governments act must not be prompted by spirit of hostility, or at the
very least discrimination that finds no support in reason. It suffices then that the laws operate
equally and uniformly on all persons under similar circumstances or that all persons must be
treated in the same manner, the conditions not being different both in privileges conferred and
liabilities imposed, [Sison v. Ancheta, 130 SCRA 654].
Villegas vs, Hiu Chiong Tsai Pao HoGR L-29646, 10 November 1978
Facts: The Municipal Board of Manila enacted Ordinance 6537 requiring aliens (except those
employed in the diplomatic and consular missions of foreign countries, in technical assistance
programs of the government and another country, and members of religious orders or
congregations) to procure the requisite mayors permit so as to be employed or engage in trade in
the City of Manila. The permit fee is P50, and the penalty for the violation of the ordinance is 3 to 6
months imprisonment or a fine of P100 to P200, or both.
Issue: Whether the ordinance imposes a regulatory fee or a tax.
Held: The ordinances purpose is clearly to raise money under the guise of regulation by exacting
P50 from aliens who have been cleared for employment. The amount is unreasonable and excessive
because it fails to consider difference in situation among aliens required to pay it, i.e. being casual,
permanent, part-time, rank and-file or executive.
[ The Ordinance was declared invalid as it is arbitrary, oppressive and unreasonable, being applied
only to aliens who are thus deprived of their rights to life, liberty and property and therefore
violates the due process and equal protection clauses of the Constitution. Further, the ordinance
does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion, thus
conferring upon the mayor arbitrary and unrestricted powers. ]
The court cannot freely delve into those matters which, by constitutional fiat, rightly rest on
legislative judgment. Of course, where a tax measure becomes so unconscionable and unjust as to
amount to confiscation of property, courts will not hesitate to strike it down, for, despite all its
plenitude, the power to tax cannot override constitutional proscriptions.
The legislative intent to increasingly shift the income tax system towards the schedular
approach in the income taxation of individual taxpayers and to maintain, by and large, the present
global treatment on taxable corporations, we certainly do not view this classification to be arbitrary
and inappropriate.
CIR v. CA & Alhambra Ind., 267 SCRA 557 (1997)
Tiu v. CA, 301 SCRA 278 (1999)
The Constitutional right to equal protection of the law is not violated by an executive order,
issued pursuant to law, granting tax and duty incentives only to businesses within the secured
area of the Subic Special Economic Zone and denying them to those who live within the Zone but
outside such fenced in territory. The Constitution does not require absolute equality among
residents. It is enough that all persons under like circumstances or conditions are given the same
privileges and required to follow the same obligations. In short, a classification based on valid and
reasonable standards does not violate the equal protection clause.
We find real and substantial distinctions between the circumstances obtaining inside and
those outside the Subic Naval Base, thereby justifying a valid and reasonable classification.
c. Uniformity and equity in taxation
Page16
Sec. 28 c, Art. VI of the Constitution provides that the rule of taxation shall be uniform and
equitable.
Uniformity in Taxation

The concept of uniformity in taxation implies that all taxable articles or properties of the same class
shall be taxed at the same rate. It requires the uniform application and operation, without
discrimination, of the tax in every place where the subject of the tax is found. It does not, however,
require absolute identity or equality under all circumstances, but subject to reasonable
classification.
Equity in Taxation
The concept of equity in taxation requires that the apportionment of the tax burden be, more or
less, just in the light of the taxpayers ability to shoulder the tax burden and, if warranted, on the
basis of the benefits received from the government. Its cornerstone is the taxpayers ability to pay.
Classification of taxpayers, subject or items to be taxed
REQUISITES OF A VALID CLASSIFICATION (S A G E )
1. It must be based on substantial distinction.
2. Germane/relevant to the purpose of the law/ordinance.
3. Applies not only to the present condition, but also to future substantially identical conditions.
4. Equally applicable to all members of the same class.
Tolentino v. Sec. of Finance, supra., supra.
The constitution does not really prohibit the imposition of indirect taxes which like VAT are
regressive. What is simply provides is that the congress shall evolve a progressive system of
taxation. Indeed, the mandate of congress is not to prescribe, but to evolve a progressive tax
system. Otherwise, sales taxes, which perhaps are the oldest form indirect tax would have been
prohibited.
Mla. Race Horse v. dela Fuente, 88 Phil 60 (1951)
Ordinance No. 3065-tax on license stables, license fees for boarding stable for race horses.
Tax assessed on the owners of the boarding stables for race horses is valid because there is equity
and no arbitrary classification even no such tax imposed on boarding stables for other types of
horses.
The owners of the stables are class by themselves, and are appropriately taxed when other
kinds are taxed less or not at all, considering that equity in taxation is generally conceived in terms
of liability In relation to the benefits received by the tax payer. Race horses as devoted to gambling,
their owners derive fat income, and such demands heavy burden of resource from the government
such as police supervision. Hence, taking into everything into account, the differentiation against
which the plaintiffs complain conform to the practical dictates of justice and equity, and is not
discriminatory within the meaning of the constitution.
Not valid or discriminatory when other boarding stables for race horses with the same
number of horses were made to pay less or not at all.
Eastern Theatrical v. Alfonso, 83 Phil 852 (1949)
An ordinance which imposes a fee on the price of every admission ticket sold by the cinema,
theaters, and boxing exhibitions is valid because same class, same rate.
Equality and uniformity in taxation means that all taxable articles or kinds or property of the
same class shall be taxed at the same rate. The taxing power has the authority to make reasonable
and natural classifications for purposes of taxation, and the appellant cant point out what places of
amusement taxed by the ordinance do not constitute a class by themselves and which can be
confused with those not included in the ordinance.
Shell v. Vano, Mun. Treas. of Cordova, Cebu, 94 Phil 389 (1954)

A municipal ordinance imposing an occupation tax on the profession or occupation of
installation manager is valid even there is only one person with such occupation in the
municipality. A person cant challenge the validity of an ordinance as being discriminatory since he
is only one adversely effected because all other installation managers who may come within the
jurisdiction of the municipality would be subject to tax under the ordinance.
Page16
Pepsi Cola v. City of Butuan, supra.

Valid classification of taxes are not full met by the city ordinance which imposes a tax upon
the sale of merchandise payable only by agent/consignee of any outside dealer of such
merchandise while the sales of the local dealers regardless of the amount would be exempt.

What the ordinance tax is the occupation itself regardless who or how many exercise it. It
will be applicable to any person/firm who may come to exercise such calling.
City of Baguio v. de Leon, 25 SCRA 938 (1968)
Equality and uniformity of taxation, means that, all taxable articles or kinds of property of
the same class be taxed at the same rate. The taxing power has the authority to make reasonable
and natural classification for purposes of taxation. To satisfy this requirement, it is enough that the
statute applies equally to all persons, forms and corporations placed in similar situation.
Kapatiran v. Tan, supra.
VAT law does not discriminate unduly against custom brokers who are subject to said tax.
Villanueva v. City of Iloilo, supra.
An ordinance exacting tax on apartment owners/operators are violative of rule of uniformity
of taxation because (a) R.A. 2264 does not empower cities to impose apartment taxes, (b) it is
oppressive and unreasonable for it penalizes owners of tenement houses who fail to the pay tax, (c)
it constitutes not only double taxation, but treble at that, and (d) that it violates the rule of
uniformity of taxation.
Asso. of Customs Brokers v. Mun. Board, supra.
An ordinance which imposes tax upon owners of vehicles operating inside Manila is an
infringement of rule of uniformity of taxation as ordained by the constitution because it does not
distinguish the vehicle for hire or for private use, neither does it distinguish vehicle registered in the
City of Manila or outside.
The owners of vehicles residing outside Manila who also use the streets are not made to share
the corresponding burden. In this case, those owners of the vehicles which use the streets of
Manila, regardless whether they are citizen or not fall within the same class.
5. Prohibition against imprisonment for non-payment of poll tax
No person shall be imposed for debt or non-payment of poll tax. [Sec. 20, Art. III, Constitution]
The non-imprisonment rule applies to non-payment of poll tax which is punishable only by a
surcharge, but not to other violations like falsification of community tax certificate and nonpayment of other taxes.
Poll tax
Poll tax is a tax of fixed amount imposed on residents within a specific territory regardless of
citizenship, business or profession. e.g. community tax
community tax v. poll tax

Sec. 156-164, R. A. 7160
156. Community Tax-Cities or Municipalities may levy a community tax in accordance with the
provisions of this article.
157. Individual Liable to Community Tax-Every inhabitants of the Philippines 18 yrs or over
that has been regularly employed on a wage or salary base for at least 30 days....
158. Juridical Persons Liable to CT- Every Corp no matter how created or organize, domestic or
foreign, engaged in or doing business in the Phils.
159. Exemptions-1.Diplomatic and consular representatives, 2.Transient visitors staying not more
than 3 months

No law impairing the obligation of contracts shall be passed.
The obligation of a contract is impaired when its terms or conditions are changed by law or by party
without the consent of the other, thereby weakening the position or rights of the latter.
Page16
6. Prohibition against impairment of obligation of contracts

An example of impairment by law is when a later taxing statute revokes a tax exemption based on
a contract. But this only applies when the tax exemption has been granted for a valid consideration.
A later statute may revoke exemption from taxation provided for in a franchise because the
Constitution provides that a franchise is subject to amendment, alteration or repeal.
Sec. 11, Art. XII, 1987 Constitution
No franchise, certificate, or any other form of authorization for the operation of a public
utility shall be granted except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by
such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a
longer period than fifty years. Neither shall any such franchise or right be GRANTED except under
the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in public utilities by the
general public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be citizens of the Philippines.
Tolentino v. Sec. of Finance, (1994) supra.
CREBA contends Imposition of the VAT on the sales and leases of real estate by virtue of
contracts entered into prior to the effectivity of the law. However, the Non-impairment of Contract
Clause has never been thought as limitation on the exercise of the States power of taxation save
only where a tax exemption has been granted for a valid consideration.
Oposa Vs. Factoran
Police power prevails over the non-impairment clause
La Insular Vs. Manchuca
A lawful tax on a new subject or an increased tax on an old one, does not interfere with a
contract or impairs its obligation.
The non-impairment clause applies only to contracts and not to a franchise.

The non-impairment clause applies to taxation but not to police power and eminent domain.
Furthermore, it applies only where one party is the government and the other, a private
individual.
As a rule, the obligation to pay tax is based on law. But when, for instance, a taxpayer enters into a
compromise with the BIR, the obligation of the taxpayer becomes one based on contract
The rule does not apply to public utility franchises. According to Sec 11, Art XI of the constitution,
no public utility franchise or right shall be granted except under the condition that it shall be
granted that it is subject to amendment, alteration or repeal by the Congress when the common
good so requires.
Congress could impair the companys legislative franchise by making it liable for income tax. The
Constitution provides that a franchise is subject to amendment, alteration or repeal by the Congress
when the public interest so requires.
When can a grant of tax-incentive be taken away by the government without
violating the rule on non-impairment of contracts?
It depends on whether the grant is unilaterally or bilaterally given by the government. If
unilaterally given, there is no impairment. It constitutes a mere revocation of a grant of privilege. If
bilaterally given, there is impairment (Art. III, Sec. 10, Constitution). Exception: In case of grant of
franchise to public utilities when common good so requires (Art. XII, Sec. 11, Constitution)

The free exercise and enjoyment of religious profession and worship, without discrimination
or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or
political rights.
Am. Bible Society v. City of Manila, 101 Phil 386 (1957)
Page16
7. Prohibition against infringement of religious freedom

No law shall be made respecting an establishment of religion, or prohibiting the free exercises
thereof.

The payment of license fees for the distribution and sale of bibles by a non-stock, non-profit,
missionary organization at minimal profit suppresses the constitutional right of free exercise of
religion which is guaranteed by the Constitution.
But a tax on the sale of religious materials is not unconstitutional because it is imposed after
the activity (sale) taxed is done.
The power to impose a license tax on the exercise of these freedoms is indeed as potent as
the power of censorship which this Court has repeatedly struck down
A tax on the income of one who engages in religious activities is different from a tax on property
used or employed in connection with those activities.
8. Prohibition against appropriation of proceeds of taxation
No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.
-taxes can only be levied for public purpose
Sec. 29, (2) Art. VI, 1987 Constitution
No public money or property shall be appropriated, applied, paid, or employed directly or
indirectly, for the use, benefit, or support of any church, denomination, sectarian institution or
system of religion, or of any priest, preacher, minister or other religious teacher, or dignitary as
such except when such priest, preacher, minister or dignitary is assigned to the armed forces, or to
any penal institution, or government orphanage or leprosarium.
(Sec. 29 (3) ART VI) Use of tax levied for a special purpose
All money collected on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
government.
-Separation of the Church and State
*
If a President of the Philippines spent a special fund for a general purpose, he can be
charged with culpable violation of the Constitution.
Osmena v. Orbos, supra.

OPSF as a special fund may be placed in a special trust.
9. Prohibition against taxation of religious, charitable and educational entities
Sec. 28 (3), Art. VI, 1987 Constitution
Charitable institutions, churches and personages or convents appurtenant thereto,
mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
This is an exemption from real property tax only.
Public Cemeteries are exempt from the payment of taxes.
The term exclusively used for religious purposes does not necessarily mean total or absolute
use for religious, charitable and educational purposes. Even is the property is incidentally used for
said purposes, the tax exemption will apply.
Abra Valley College v. Aquino, 162 SCRA 106 (1988)
The exemption in favor of property used exclusively for charitable or educational purpose is not
limited to property actually indispensable therefore, but extends to facilities which are incidental to
and reasonably necessary for the accomplishment of said purpose.
Lung Center of the Philippines v. Quezon City G.R. 144104, June 29, 2004
Petitioner failed to discharge its burden to prove that the entirety of its real property is actually,
directly, and exclusively used for charitable purposes. Thus the court ruled that portions of the land
leased to private interties as well as those parts of the hospital leased to private individuals are not
exempt from taxes.
Page16
Province of Abra v. Hernando 107 SCRA 104

To be exempt from realty taxation, there must be proof of actual, direct and exclusive use of
lands, buildings and improvements for religious or charitable purposes.

To determine whether an enterprise is a charitable institution/entity or not, the elements which
should be considered include the statute creating the enterprise, its corporate purposes, its
constitution and by-laws, the methods of administration, the nature of the actual work performed,
the character of the services rendered, the indefiniteness of the beneficiaries, and the use and
occupation of the properties. a charitable institution does not lose its character as such and its
exemption from taxes simply because it derives income from paying patients, whether out-patient,
or confined in the hospital, or receives subsidies from the government, so long as the money
received is devoted or used altogether to the charitable object which it is intended to achieve; and
no money inures to the private benefit of the persons managing or operating the institution. (Lung
Center of the Philippines v. QC, GR 144104, 29 June 2004)
10.Prohibition against taxation of non-stock, non-profit educational institutions
Sec. 4 (3, 4), Art. XIV, 1987 Constitution
All revenues and assets of non-stock, non-profit educational institutions used actually,
directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the
dissolution or cessation of the corporate existence of such institutions, their assets shall be
disposed of in the manner provided by law.
Requisites For Exemption:
1) It must be a private educational institution
2) It must be non-stock and non-profit
3) Its assets (property) and revenues (income) must be used actually, directly and exclusively for
educational purposes
RULES:
1) If the first requisite is absent (meaning, its a government educational institution), it is
nonetheless exempt from income tax
2) If the second requirement is absent (meaning, it is stock and profit) as long as the third
requirement is present, it is nonetheless exempt from real estate tax
3) If the third requirement is absent, as long as it is non-stock and non-profit, it is nonetheless
exempt from income tax
4) If the third requirement is absent, but it is private and non-profit, it is subject to income tax, but
at the preferential rate of ten percent (10%)
> Under the present tax code, for a private educational institution to be exempt from the
payment of income tax, all it has to be is non-stock and non-profit. However, a governmental
educational institution is exempt from income tax without any condition
EXEMPTION DOES NOT EXTEND TO:
1) Income derived by these educational institutions from their property, real or personal, and
2) From activities conducted by them for profit regardless of the disposition made on such income
Sec. 27 (B) NIRC

(B) Proprietary Educational Institutions and Hospitals. - Proprietary educational institutions and
hospitals which are nonprofit shall pay a tax of ten percent (10%) on their taxable income except
those covered by Subsection (D) hereof: Provided, that if the gross income from unrelated trade,
business or other activity exceeds fifty percent (50%) of the total gross income derived by such
educational institutions or hospitals from all sources, the tax prescribed in Subsection (A) hereof
shall be imposed on the entire taxable income. For purposes of this Subsection, the term 'unrelated
trade, business or other activity' means any trade, business or other activity, the conduct of which
is not substantially related to the exercise or performance by such educational institution or
hospital of its primary purpose or function. A 'Proprietary educational institution' is any private
school maintained and administered by private individuals or groups with an issued permit to
operate from the Department of Education, Culture and Sports (DECS), or the Commission on
Higher Education (CHED), or the Technical Education and Skills Development Authority (TESDA), as
the case may be, in accordance with existing laws and regulations.
Page16
Sec. 28 (3), Art. VI, Constitution

exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
(Property Tax Exemption)

SEC. 30. Exemptions from Tax on Corporations. - The following organizations shall not be
taxed under this Title in respect to income received by them as such:.
(H) A nonstock and nonprofit educational institution;
Note however the last paragraph of Sec. 30, which states: Notwithstanding the provisions
in the preceding paragraphs, the income of whatever kind and character of the foregoing
organizations form any of their property, real or personal, or from any of their activities
conducted for profit, regardless of the disposition made of such income, shall be subject to
tax imposed under this Code.
Department of Finance Order 145-85

Non-stock, non-profit educational institutions are exempt from taxes on all their revenues and
assets used actually, directly and exclusively for educational purposes.
However, they shall be subject to internal revenue tax on income from trade, business or other
activity, the conduct of which is not related to the exercise or performance by such educational
institutions of its educational purposes or functions.
Interest income shall be exempt only when used directly and exclusively for educational
purposes. To substantiate this claim, the institution must submit annual information return and duly
audited financial statement. A certification of actual utilization and the Board resolution or the
proposed project to be funded out of the money deposited in banks shall also be submitted.
Department of Finance Order 137-87
An educational institution means a non-stock, non-profit corporation or association duly
registered under Philippine law, and operated exclusively for educational purposes, maintained and
administered by a private individual or group offering formal education, and with an issued permit
to operate by the DECS.
Revenues derived from and assets used in the operation of cafeteria/canteens, dormitories, and
bookstores are exempt from taxation provided they are owned and operated by the educational
institution as ancillary activities and the same are located within the school premises.
CIR v. CA, CTA and YMCA, 298 SCRA 83 (1998)
In this case, the SC held that the income derived by YMCA from leasing out a portion of its
premises to small shop owners, like restaurants and canteen operators, and from parking fees
collected from non-members are taxable income
ARTICLE XIV AND ARTICLE VI COMPARED

Art. XIV, Sec. 4 (3)
Art. VI Sec. 28(3)
Page16
CIR v. CA, CTA and Ateneo, 271 SCRA 605 (1997)

Petitioner asserted that Ateneo de Manila University in conducting researches and studies of
social organizations and cultural values thru one of its unit, the Institute for Philippines Culture thus
subject to 3% independent contractors tax under Sec. 205 of NIRC to wit:
Sec. 25: Contractors, proprietors or operators of dockyards and othersA contractors tax of 3%
of the gross receipts is hereby imposed on the following.
(16) Business agents and other independent contractors, except persons, associations and
corporations under contract for embroidery and apparel for export, as well as their agents and
contractors, and except gross receipts of or from a pioneer industry registered with the Board of
Investments under provision of R.A. 5168
According to the CIR the contractor the term independent contractor is not specifically defined
so as to de limit its scope, so much that any person who renders physical and mental service for a
fee, is now indubitably considered as an independent contractor liable to 3% contractors tax.
According to petitioner, Ateneo has the burden of proof to show its exemption from the coverage of
the law.
The court held that Ateneo is mandated by law to undertake research activities to maintain its
university status. In fact, the researches carried out by IPC is not on business or profit but on social
sciences studies of Philippine Society. Since the university can only finance limited number of IPC
research projects, private respondents occasionally accept sponsorships from international
organizations, private foundations and governmental agencies. These sponsorships are subject to
the terms and conditions set by Ateneo such as no proprietary or commercial purpose research is
done, topic confined to university academic agenda, and the absolute right to publish and
ownership of the results conducted by IPC.

Grantee
Taxes Covered
TAX
Donors Tax
Non-stock,
non-profit,
educational institution
Income tax
Custom Duties
Property Tax
OTHER TAXES
Exempted Institution
Religious,
educational,
charitable, institutions
Non-stock, non-profit
educational Institution
All
grants,
endowments,
donations, contributions used,
actually,
exclusively,
for
educational purposes shall be
exempt from tax. Art. XIV, Sec.
4 (4)
Only transfers to social welfare,

cultural
and
charitable
institution are exempt from
estate tax.
Estate Tax
Property Tax
Bases
Sec. 87 R.A. 8424
11. Others
i.
Grant of tax exemption (more on this under D4)

No law granting any tax exemption shall be passed without the concurrence of a majority
of all the Members of the Congress.
RULES ON VOTE REQUIREMENT
1) Law granting any tax exemption = (absolute majority)
2) Law withdrawing any tax exemption= (Relative majority)
* Tax exemption, amnesties, refunds are considered in the nature of tax exemptions.
* A law granting such needs approval of the absolute majority of the Congress
Chavez v. PCGG, supra.
PCGG a body created by the executive department cannot enter into agreement with the
Marcos to exempt the properties of the latter considered as ill-gotten wealth because it is only
congress can do such.
ii. Veto of appropriation, revenue or tariff bills
The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object,
[Sec. 27(2), Art. VI, Constitution].
Gonzales v. Macaraig, 191 SCRA 452 (1990)
An item in a bill refers to particulars, details, the distinct and severable parts of a bill. In
budgetary legislation, an item is an invalid sum of money dedicated to a stated purpose.
iii. Non-impairment of the jurisdiction of the Supreme Court
Sec. 5 (2b), Art. VIII, 1987 Constitution
The Supreme Court shall have the power to review, revise, reverse, modify or affirm on appeal or
certiorari, all cases involving the legality of any tax imposed, assessment, or toll, or any penalty
imposed in relation thereto.
Congress cannot take away from the Supreme Court the power given to it by the Constitution as the
final arbiter of the tax cases.
CIR v. Santos, 277 SCRA 617 (1997)

Lower Courts (CFI) has the authority to decides questions of constitutionality of a law does
not extend on deciding questions which pertains to legislative policy.
Page16
The decisions of BIR are appealable to CTA. Court of Tax Appeals may be appealed to the Court of
Appeals. Decision rendered by the CA may be elevated to the Supreme Court.

San Miguel Corp. v. Avelino, 89 SCRA 69 (1979)
CFI judge has the authority to pass upon the validity of a city tax ordinance even after its
validity ahd been contested before the Secretary of Justice who rendered a decision thereon. The
decision of Sec. Justice that the ordinance in questions I of doubtful validity is not a declaration
that it is unlawful.
iv. Revenue bills shall originate from the House of Representatives
Sec. 24, Art. VI, 1987 Constitution
All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of
local application, and private bills shall originate exclusively in the House of Representatives, but
the Senate may propose or concur with amendments.
It is not the revenue law but the revenue bill which is required by the constitution to
originate exclusively in the House of Representative.
Tolentino v. Sec. of Finance, supra., supra.

The Constitution simply requires that there must be that initiative coming from the House of
Representatives relative to appropriation, revenue and tariff bills on the theory that, elected as they
were from the districts, the members of the House can be expected to be more sensitive to the
local needs and problems.
It is not the law, but the revenue bill, which is required by the Constitution to originate
exclusively in the HR, because a bill originating in the House may undergo such extensive change in
the Senate that result may be rewriting of the whole, and a distinct bill may be produced.
(amendment by substitution)
The Constitution does not also prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, as long as action by the Senate is withheld until
receipt of said bill
v. Infringement of press freedom
No law shall be passed abridging the freedom of speech, of expression, or of the press, or
the right of the people peaceably to assemble and petition the government for redress of
grievances.
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a
privilege, much less a constitutional right. It is imposed on the sale, barter, lease or exchange of
goods or properties or the sale or exchange of services and the lease of properties purely for
revenue purposes. To subject the press to its payment is not to burden the exercise of its right any
more than to make the press pay income tax or subject it to general regulation is not to violate its
freedom under the Constitution. (PPI v. de Ocampo GR 115931, 30 October 1995)
Sec. 11, Art. XII, 1987 Constitution

No franchise, certificate, or any other form of authorization for the operation of a public
utility shall be granted except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by
such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a
longer period than fifty years. Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in public utilities by the
general public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be citizens of the Philippines.
Page16
vi. Grant of Franchise

Tax exemptions included in the grant of a franchise may be revoked by another law as it is
specifically provided in the Constitution that the grant of any franchise is always subject to
amendment, alteration, or repeal by the Congress when the common good so requires.

Congress may withdraw tax exemption granted to any corporations or GOCCs such as PAL. The
law could take back the privilege anytime without offense to the constitution. By granting
exemptions, the State does not forever waive the exercise of its sovereign prerogative.
C. Situs of Taxation and Double Taxation
The power to tax is limited only to persons, property or businesses within the jurisdiction or
territory of the taxing power.
EXCEPT:
A) Where the tax laws operate outside territorial jurisdiction
1) TAXATION of resident citizens on their incomes derived from abroad
B) Where tax laws do not operate within the territorial jurisdiction of the State
1) When exempted by treaty obligations
2) When exempted by international comity
1. Meaning of situs
Situs- place where a thing is considered for taxation. It is necessary for the exercise of
dominion/authority of a state over a subject matter.
The determination of the situs of taxation depends on various factors including the:
1. Nature of the tax;
2. Subject matter thereof (e.g. persons, property, act or or activity);
3. Possible protection and benefit that may accrue both to the government and the
taxpayer;
4. Residence or citizenship of the taxpayer; and
5. Source of income.
2. Situs of subjects of taxation
KIND OF TAX
Personal or Community Tax
Real Property Tax
Personal Property Tax
SITUS
Residence or domicile of the taxpayer
Location of the property
TANGIBLE: where it is physically located or
permanently kept (Lex Rei Sitae)
INTANGIBLE: Subject to Sec 104 of the NIRC * and the
principle of Mobilia Sequuntur Personam **
Sales Tax
Income Tax
Place of Business
Where the act is performed or where occupation is
pursued
Where the sale is consummated
Consider: (1) citizenship, (2) residence,
(3) source of income (Sec 42, 23, NIRC of 1997)
Transfer Tax
Residence or citizenship of the taxpayer

or location of the property
Donors Tax
Location of the property

and the citizenship of the donor (Sec 98, NIRC 1997)
Estate Tax
Location and citizenship of the decedent.(Sec 85,

NIRC)
Franchise Tax
state which granted the franchise
*Lex Rei Situs -where the property is located

* Mobilia Sequuntur Personam movables follow the person. According to this maxim, the
situs of personal property is the domicile of the owner. This is a merely a fiction of law intended for
convenience and not to be controlling where justice does not demand it.
** the following intangible properties are considered as properties with a situs in the Philippines:
a. Franchise which must be exercised in the Philippines
Page16
Business Tax
Excise or Privilege Tax

b. Shares, obligations or bonds issued by any corporation or sociedad anonima organized or
constituted in the Philippines in accordance with its laws.
c. Shares, obligations or bonds issued by any foreign corporation 85% of business which is
located in the Philippines
d. Shares, obligations, or bonds issued by any foreign corporation if such shares, obligations or
bonds have acquired a business situs in the Philippines; and
e. Shares or rights in any partnership business or industry established in the Philippines.
Sec. 42, 104
CIR v. British Overseas Airway Corp., supra.
Revenue derived by an of-line international carrier without any flight from the Philippines,
from ticket sales through its local agent are subject to tax on gross Philippine billings
CIR v. Japan Airlines, supra.
JAL made PAL its sales ticket agent in the Philippines. For the source of income to be
considered coming from the Philippines, it is sufficient that the income is derived from the activities
within this country regardless of the absence of flight operations within Philippine territory.
Wells Fargo Bank v. Collector, 70 Phil 325 (1940)
The shares of stock are subject to Philippine inheritance tax considering that the decedent
was domiciled in California
All subjects of taxation similarly situated are to be treated alike both in privileges confirmed
and liabilities imposed.
3. Multiplicity of Situs, Collector v. de Lara, 102 Phil 813 (1958)
CIR v. De Lara, 102 Phil 813
The Supreme Court did not subject to estate and inheritance taxes the shares of stock
issued by Philippine corporations which were left by a non-resident alien after his death.
Considering that he is a resident of a foreign country, his estate is entitled to exemption from
inheritance tax on the intangible personal property found in the Philippines. This exemption is
granted to non-residents to reduce the burdens of multiple taxation, which otherwise would subject
a decedents intangible personal property to the inheritance tax both in his place of residence and
domicile and the place where those are found.
This is, therefore, an exception to the decision of the Supreme Court in Wells Fargo v. CIR.
This has since been incorporated in Sec. 104 of the NIRC.
Sec. 104, NIRC- No tax shall be collected for intangible personal property if the decedent at time
of his death was citizen and resident of a foreign country.
Multiplicity of suits
Multiplicity of situs, or the taxation of the same income or intangible subjects in several taxing
jurisdictions, arises from various factors:
1. The variance in the concept of domicile for tax purposes;
2. Multiple distinct relationships that may arise with respect to intangible personal
property; or
3. The use to which the property may have been devoted all of which may receive the
protection of the laws of jurisdictions other than the domicile of the owner thereto.
The remedy to avoid or reduce the consequent burden in case of multiplicity of situs is either to:
1. Provide exemptions or allowance of deduction or tax credit for foreign taxes; or
2. Enter into tax treaties with other States.
Definition: Taxing the same person, property, business, object twice when it should only be taxed
once.
Is Double Taxation Prohibited In The Phils?
Page16
4. Double Taxation
No, there is no Constitutional prohibition against double taxation. It is not favored but
permissible. (Pepsi Cola Bottling Co. v. City of Butuan, GR L-22814, 28 August 1968)
Double taxation becomes obnoxious only when the taxpayer is taxed twice for the benefit
of the same government entity. (Commissioner vs. Lednicky (GR L-18169, L-18286, L21434; 31 July 1964)
1. Kinds of Double Taxation

a. Direct Double or Duplicate Taxation this is objectionable or prohibited because this
constitutes a violation of substantive due process.
ELEMENTS: (Villanueva v. City of Iloilo, supra)
Taxing twice
By the same taxing authority
Within the same jurisdiction or taxing district
For the same purpose
In the same taxing period
The same subject or object
Of the same kind or character of tax.
b. Indirect Duplicate Taxation not legally objectionable. The absence of one or more of the
above-mentioned elements makes the double taxation indirect.
EXAMPLES:
A) The taxpayers warehousing business although carried on in relation to the operation of its
sugar central is a distinct and separate taxable business.
B) A license tax may be levied upon a business or occupation although the land or property
used in connection therewith is subject to property tax.
C) Both a license fee and a tax may be imposed on the same business or occupation for selling
the same article and this is not in violation of the rules against double taxation.
D) When every bottle or container of intoxicating beverages is subject to local tax and at the
same time the business of selling such product is also subject to liquors license.
E) A tax imposed on both on the occupation of fishing and of the fishpond itself
c. Domestic this arises when the taxes are imposed by the local or national government
(within the same state)
d. International refers to the imposition of comparable taxes in two or more states on the
same taxpayer in respect of of the same subject matter for identical periods
a. Meaning
In its strict sense, referred to as direct duplicate taxation, double taxation means:
1.
Taxing twice;
2.
by the same taxing authority;
3.
within the same jurisdiction or taxing district;
4.
for the same purpose;
5.
in the same year or taxing period;
6.
same property in the territory.
CIR v. S.C. Johnson and Son, Inc., 309 SCRA 87 (1999)
Double Taxationtakes place when a person is resident of a contracting state and derives
income from, or owns capital in the other contracting state and both states impose tax on that
income or capital.
b. Double taxation in its broad sense
Villanueva v. City of Iloilo, supra.

An ordinance imposing a municipal tax on tenement houses was challenged because the
owners already pay real estate taxes and also income taxes under the NIRC. The Supreme Court
held that there was no double taxation , so long as it does not violates any other constitutional
provision. The same tax may be imposed by the National Government as well as the local
government. There is nothing inherently obnoxious in the exaction of license fees or taxes with
Page16
In its broad sense, referred to as indirect double taxation, double taxation is taxation other than
direct duplicate taxation. It extends to all cases in which there is a burden of two or more
impositions.

respect to the same occupation, calling or activity by both the state and a political subdivision
thereof. Further, a license tax may be levied upon a business or occupation although the land used
in connection therewith is subject to property tax.
b. Constitutionality of double taxation
City of Baguio v. de Leon, supra.
The argument against double taxation may not be invoked where one tax is imposed by the
state and the other imposed by the city, it being widely recognized that there is nothing inherently
obnoxious in the requirement that license fees or taxes be exacted with respect to the same
occupation, calling or activity by both the state and a political subdivision thereof. And where the
statute or ordinance in question applies equally to all persons, firms and corporations placed in a
similar situation, there is no infringement of the rule on equality.
Pepsi Cola Bottling v. City of Butuan, supra.
An ordinance imposing sales tax on agents/consignee selling merchandise from outside
dealers does not amount to double taxation. Double taxation, in general, is not forbidden by our
fundamental law. However, the ordinance is arbitrary to other member of the same taxable class
hence the law violates the rule of uniformity in taxation.
There is no constitutional prohibition
against double taxation in the Philippines. It is something not favored but is permissible, provided
that the other constitutional requirements is not thereby violated
Sanchez v. Collector, 97 Phil 687 (1955)
A license tax may be levied upon a business or occupation although the land or property
used therein is subject to property tax. The state may collect an ad volarem tax on property used in
a calling, and at the same time impose a license tax on the pursuit of that calling, the imposition of
the later kind of tax that being no sense as double tax.
City of Mla. v. Interisland Gas Service, 99 Phil 847 (1956)
The fees paid by the defendant under a city ordinance was a license fee, in the exercise of
police power and not under its inherent power of taxation, and double taxation is not prohibited in
our constitution.
Cpa. General de Tabacos v. City of Mla., supra.
Both license fee and a tax may be imposed on the same business or occupation, or for selling
the same article, this is not being a violation of the rule against double taxation.
Doctrines On Double Taxation
1) Direct Double Taxation (DDT) is not allowed because it amounts to confiscation of property
without due process of law
2) You can question the validity of double taxation if there is a violation of the Equal protection
clause or Equality or Uniformity of Taxation
3) All doubts as to whether double taxation has been imposed should be resolved in favor of the
taxpayer
D. Means of Avoiding and Minimizing the Burden of Taxation
1. Shifting of tax burden
SHIFTING
Shifting is the transfer of the burden of a tax by the original payer or the one on whom the
tax was assessed or imposed to someone else.
Process by which such tax burden is transferred from statutory taxpayer to another without
violating the law.
1) FORWARD SHIFTING
- When the burden of the tax is transferred from a factor of production through the factors of
distribution until it finally settles on the ultimate purchaser or consumer.
Example:
- Manufacturer or producer may shift tax assessed to wholesaler, who in turn shifts it to the
retailer, who also shifts it to the final purchaser or consumer
-
Page16
a. Ways of shifting the tax burden

2) BACKWARD SHIFTING
- When the burden of the tax is transferred from the consumer or purchaser through the
factors of distribution to the factors of production.
Example:
- Consumer or purchaser may shift tax imposed on him to retailer by purchasing only after the
price is reduced, and from the latter to the wholesaler, or finally to the manufacturer or
producer.
3)ONWARD SHIFTING
- When the tax is shifted two or more times either forward or backward
Example:
- Thus, a transfer from the seller to the purchaser involves one shift; from the producer to the
wholesaler, then to retailer, we have two shifts; and if the tax is transferred again to the
purchaser by the retailer, we have three shifts in all.
b. Taxes that can be shifted
Sec. 105-VAT
Only indirect taxes may be shifted: VAT, professional tax, amusement tax, customs duties
c. Meaning of impact and incidence of taxation
Impact of taxation is the point on which a tax is originally imposed. In so far as the law is
concerned, the taxpayer is the person who must pay the tax to the government. He is also termed
as the statutory taxpayer-the one on whom the tax is formally assessed. He is the subject of the
tax.
Incidence of taxation is that point on which the tax burden finally rests or settle down. It takes place
when shifting has been effected from the statutory taxpayer to another.
Relationship between impact, shifting, and incidence of a tax
The impact is the initial phenomenon, the shifting is the intermediate process, and the
incidence is the result. Thus, the impact in a sales tax (i.e. VAT) is on the seller
(manufacturer) who shifts the burden to the customer who finally bears the incidence of the
tax.
Impact is the imposition of the tax; shifting is the transfer of the tax; while incidence is the
setting or coming to rest of the tax.
2. Tax evasion
It is also known as tax dodging

It is punishable by law.
Tax evasion is the use by the taxpayer of illegal or fraudulent means to defeat or lessen the
payment of tax.
Elements of tax evasion

Tax evasion connotes the integration of three factors:
1.
The end to be achieved. Example: the payment of less than that known by the
taxpayer to be legally due, or in paying no tax when such is due.
2.
An accompanying state of mind described as being evil, in bad faith, willful, or
deliberate and not accidental.
3.
A course of action (or failure of action) which is unlawful.
EVIDENCE TO PROVE TAX EVASION

Since fraud is a state of mind, it need not be proved by direct evidence but may be proved
from the circumstances of the case.
Republic v. Gonzales, 13 SCRA 633 (1965)
Page16
INDICIA of FRAUD IN TAX EVASION

o Failure to declare for taxation purposes true and actual income derived from business for
two (2) consecutive years; or
o Substantial under-declaration of income tax returns of the taxpayer for four (4) consecutive
years coupled with unintentional overstatement of deductions

The Supreme Court affirmed the assessment of a deficiency tax against Gonzales, a private
concessionaire engaged in the manufacture of furniture inside the Clark Air Base, for underdeclaration of his income. SC held that the failure of the taxpayer to declare for taxation purposes
his true and actual income derived from his business for two consecutive years is an indication of
his fraudulent intent to cheat the government of taxes due to it.
Sec. 254-Attempt to Evade or Defeat Tax-Any person willfully attempts in any manner to evade
or defeat any tax imposed under this code of the payment thereon shall, in addition to other
penalties provided by law, upon conviction thereof, be punished by a fine of not less then Php
30,000.00 but not more than Php 100,000.00 and suffer imprisonment of not less than 2 years but
not more than 4 years. Provided, that the conviction or acquittal obtained under this Section shall
not be a bar to the filing of a civil suit for the collection of taxes.
3. Tax avoidance
Tax avoidance is the exploitation by the taxpayer of legally permissible alternative tax rates
or methods of assessing taxable property or income in order to avoid or reduce tax liability. It is
politely called, tax minimization and is not punishable by law
Ways of avoiding tax (minimizing or escaping tax)
1.
2.
3.
4.
5.
6.
Shifting
Capitalization
Evasion
Exemption
Transformation
Avoidance
Note: With the exception of evasion, all are legal means of avoiding taxes.
What is TRANSFORMATION?
The manufacturer in an effort to avoid losing his customers, maintains the same selling price
and margin of profit, not by shifting the tax burden to his customers, but by improving his method
of production and cutting down or other production cost, thereby transforming the tax into or earn
through the medium of production.
Delpher Traders Corp. v. IAC, 157 SCRA 349 (1988)
The Supreme Court upheld the estate planning scheme resorted to by the Pacheco family in
converting their property to shares of stock in a corporation which they themselves owned and
controlled. By virtue of the deed of exchange, the Pacheco co-owners saved on inheritance taxes.
The Supreme Court said the records do not point to anything wrong and objectionable about this
estate planning scheme resorted to. The legal right of the taxpayer to decrease the amount of what
otherwise could be his taxes or altogether avoid them by means which the law permits cannot be
doubted.
Yutivo v. CTA, 1 SCRA 160 (1961)
The intention to minimize taxes, when used in the context of fraud, must be proven by clear
and convincing evidence amounting to more than mere preponderance. Mere understatement of
tax in itself does not prove fraud.
4. Exemption from taxation
a. meaning of exemption from taxation
1. Principle Governing Exemptions

In the construction of tax statutes, exemptions are not favored and are construed strictissimi
juris against the taxpayer.
One who claims exemption should prove by convincing proof that he is exempted.
Taxation is the rule and exemption is the exemption
Exemption is not presumed
Page16
It is the grant of immunity to particular persons or corporations or to persons or corporations of

a particular class from a tax which persons and corporations generally within the same state or
taxing district are obliged to pay. It is an immunity or privilege; it is freedom from a financial charge
or burden to which others are subjected.
Constitutional grants of tax exemption are self executing

Tax exemption are personal and cannot be delegated.
Exemption generally covers direct tax, unless otherwise provided.
Exemption is allowed only if there is a clear provision there for.
It is not necessarily discriminatory as long as there is a reasonable foundation or rational
basis.
Exemptions are not presumed, but when public property is involved, exemption is the rule
and taxation is the exemption.
Greenfield v. Meer, 77 Phil 394 (1946)

PLDT v. City of Davao, 363 SCRA 522 (2001)
with the passing of LGC which grant taxing power to the Local Government, all exemptions
granted to all persons, whether natural or juridical, including those which in the future might be
granted, are withdrawn unless the law granting the exemption expressly states that the exemption
also applies to local taxes.
PLDT v. City of Davao, G.R. 143867, March 25, 2003
Legal effect of the constitutional grant to local governments simply means that in
interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of
municipal corporations.
i. compared with tax remission, condonation
There is a tax condonation or remission when the State desists or refrains from exacting,
inflicting or enforcing something as well as to reduce what has already been taken. The
condonation of a tax liability is equivalent to and is in the nature of a tax exemption. Thus, it should
be sustained only when expressed in the law.
Tax exemption, on the other hand, is the grant of immunity to particular persons or corporations
of a particular class from a tax of which persons and corporations generally within the same state
or taxing district are obliged to pay. Tax exemptions are not favored and are construed strictissimi
juris against the taxpayer.
Juan Luna Subd. V. M. Sarmiento, 91 Phil 371 (1952)
The word remit means to desist or refrain from exacting, inflicting or enforcing something
as well as to restore what has already been taken. The remission of taxes due and payable to the
exclusion of taxes already collected does not constitute unfair discrimination. Such a set of taxes is
a class by itself and the law would be open to attack as class legislation only if all taxpayers
belonging to one class were not treated alike.
Surigao Corp. Min. v. Collector, 9 SCRA 728 (1963)
The condonation of a tax liability is equivalent to and is in the nature of a tax exemption.
Thus, it should be sustained only when expressly provided in the law.
Condonation of taxes which are unpaid does not extend to refund of paid taxes.
For refund of taxes, in the suit for recovery of the payment of taxes as having been illegally
collected, the burden is upon the taxpayer to establish the facts which show the illegality of
the tax or that the determination thereof is erroneous.
ii. tax amnesty
Note:
Like tax exemption, tax amnesty is never favored nor presumed in law, and the terms of the
tax amnesty shall be strictly construed against the tax payer and liberally in favor of the
government.
Unlike tax exemption, tax amnesty has limited applicability as to cover a particular taxing
period or transaction only.
Commissioner v. CA and ROH Auto, 240 SCRA 368 (1995)
Page16
tax amnesty
Tax amnesty, being a general pardon or intentional overlooking by the State of its authority
to impose penalties on persons otherwise guilty of evasion or violation of a revenue to collect what
otherwise would be due it and, in this sense, prejudicial thereto. It is granted particularly to tax
evaders who wish to relent and are willing to reform, thus giving them a chance to do so and
thereby become a part of the new society with a clean slate.

People v. Castaneda, 165 SCRA 327 (1988)
To be entitled to the extinction of liability under PD370, the claimant must have (1)
voluntarily disclosed his previously untaxed income or wealth and paid the required 15% tax on
such previously untaxed income or wealth. In this case, claimant is not entitled since the disclosure
or previously untaxed income was not voluntarily but was a result of tax cases already pending.
Pascual v. CIR, 166 SCRA 560 (1988)
2 isolated transactions is not a case of partnership, hence petitioners are not liable for
corporate income tax. As they have availed of the benefits of tax amnesty as individual taxpayers
in these transactions, they are relieved of any further tax liability arising therefrom.
Republic v. IAC, 196 SCRA 335 (1991)
Tax amnesty payments bar an action for recovery of deficiency income taxes under PDs 23,
213, and 370. Even the deficiency tax assessment against the spouses were correct, since the
latter have already paid almost the equivalent amount to the Government by way of amnesty taxes
under P.D. 213, and were granted not merely an exemption, but an amnesty, for their past tax
failings, the Government is stopped from collecting the difference between the deficiency tax
assessment and the amount already paid by them as amnesty tax.
CIR v. Marubeni Corp., 372 SCRA 576 (2001)
He who claims exception (or an amnesty) from the common burden must justify his claim by
the clearest grant of organic or state law. It cannot be allowed to exist upon a vague implication. If
a doubt arises as to the intent of the legislature, that doubt must be resolved in favor of the state.
In this case, amnesty (EO 41) is given except (sec 4, b) those with income tax cases already
filed in court as of the effectivity thereof which is on August 22, 1986. Since the case against the
corporation was filed on Sept. 26, 1986, it is not disqualified to avail the amnesty for income tax
under EO 41.
iii. VAT zero-rating, Sec. 106 (A) (2)
R.A. 7716 (An act restructuring the value added tax (vat) system, widening its tax based and
enhancing its administration and for these purposes amending and repealing the relevant
provisions of the national internal revenue code, as amended, and for other purposes.)
"(b) transactions subject to zero-rate. The following services performed in the Philippines by VATregistered persons shall be subject to 0%:
"(1) Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported, where the services are paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP).
"(2) Services other than those mentioned in the preceding sub-paragraph, the consideration for
which is paid for in acceptable foreign currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP).
"(3) Services rendered to persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects the supply of such services
to zero rate.
"(4) Services rendered to vessels engaged exclusively in international shipping; and
Sec. 106 (A)(2) The following sales by VAT-registered persons shall be subject to zero percent
(0%) rate:
(a) Export Sales. - The term "export sales" means:
(1) The sale and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may
influence or determine the transfer of ownership of the goods so exported and paid
for in acceptable foreign currency or its equivalent in goods or services, and
Page16
"(5) Services performed by subcontractors and/or contractors in processing, converting, or

manufacturing goods for an enterprise whose export sales exceed seventy percent (70%) of total
annual production.

accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP);
(2) Sale of raw materials or packaging materials to a nonresident buyer for delivery to a
resident local export-oriented enterprise to be used in manufacturing, processing,
packing or repacking in the Philippines of the said buyer's goods and paid for in
acceptable foreign currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP);
(3) Sale of raw materials or packaging materials to export-oriented enterprise whose
export sales exceed seventy percent (70%) of total annual production;
(4) Sale of gold to the Bangko Sentral ng Pilipinas (BSP); and
(5) Those considered export sales under Executive Order NO. 226, otherwise known as
the Omnibus Investment Code of 1987, and other special laws.
(b) Foreign Currency Denominated Sale. - The phrase "foreign currency denominated sale"
means sale to a nonresident of goods, except those mentioned in Sections 149 and 150, assembled
or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP).
(c) Sales to persons or entities whose exemption under special laws or international agreements to
which the Philippines is a signatory effectively subjects such sales to zero rate.
iv. exclusions, deductions, Sec. 32 (B), 34
EXCLUSION
Exclusion refers to income received or earned but is not taxable as income because it is
exempted by law or by treaty. Such tax-free income is not to be included in the income tax
return unless information regarding it is specifically called for.
NIRC Sec. 32 (B) Exclusions from Gross Income. - The following items shall not be included in
gross income and shall be exempt from taxation under this title:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Proceeds from life insurance

Amount received by insured as return of premium
Gifts, bequests and devises
Compensation for injuries or sickness
Income exempt under treaty
Retirement benefits, pensions, gratuities, etc.
Income derived by foreign government
Income derived by the Philippine Government or its political subdivisions
Prizes and awards made primarily in recognition of religious, charitable, scientific,
educational, artistic, literary or civic achievement.
10. Prizes and awards in sports competitions sanctioned by the national sports associations
11. 13th month pay and other benefits not exceeding P30,000.00. Applies both to public and
private employees.
12. GSIS, SSS, Medicare and other contributions
13. Gains from the sale of bonds, debentures or other certificate of indebtedness. 5 eyars or
more. If maturity is less than 5 years, it is taxable.
14. Gains from redemption of shares in mutual fund. It must be emanate from the mutual fund.
NIRC SEC. 34. Deductions from Gross Income. - Except for taxpayers earning compensation
income arising from personal services rendered under an employer-employee relationship where no
deductions shall be allowed under this Section other than under subsection (M) hereof, in
computing taxable income subject to income tax under Sections 24 (A); 25 (A); 26; 27 (A), (B) and
(C); and 28 (A) (1), there shall be allowed the following deductions from gross income;
1. Expenses
2. Interest
3. Taxes
4. Losses
5. Bad debts
6. Depreciation
7. Depletion of oil and gas wells and mines
8. Charitable and other contributions
9. Research and development
Page16
DEDUCTIONS FROM GROSS INCOME

Deductions are items or amounts which the law allows to be deducted under certain
conditions from gross income in order to arrive at taxable income.

10. Pension trusts
11. Premium payments on health and/or hospitalization insurance of an individual taxpayer
Deduction v. exemption
Deduction is an amount allowed by law to be subtracted from gross income to arrive at
taxable income. Exemption from taxation is the grant of immunity to particular persons or
corporations or to persons or corporations of a particular class from a tax which others generally
within the same taxing district are obliged to pay.
Deduction v. exclusion
Deduction is an amount allowed by law to be subtracted from gross income to arrive at
taxable income. Exclusion refers to income received or earned but is not taxable as income
because exempted by law or by treaty. Such tax-free income is not to be included in the income tax
return unless information regarding it is specifically called for. [Section 61, Revenue Regulation 2]
Basic principles governing deductions
1. The taxpayer seeking a deduction must point to some specific provisions of the statute
authorizing the deduction; and
2. He must be able to prove that he is entitled to the deduction authorized or allowed.
Kinds of deductions
1. Itemized deduction which is available to individual and corporate taxpayers
2. Optional standard deduction which is available to individual taxpayers only, except a nonresident alien.
3. Special deductions which is available, in addition to the itemized deductions, to certain
corporations, i.e. insurance companies and propriety educational corporations.
Time within which to claim deduction
1. As a rule, if a taxpayer does not, within a year, deduct certain of his expenses, losses,
interests, taxes, or other charges, he cannot deduct them from the income of the next or
any succeeding year.
2. If he keeps his books on the cash receipts basis, the expenses are deductible in the year
they are paid.
3. If on the actual basis, then in the year they are incurred, whether paid or not.
Who may not avail of deductions form gross income?
1. Citizens and resident aliens whose income is purely compensation income.
* They are allowed personal and additional exemptions and deduction for premium
payments on
health and hospitalization insurance.
2. Non-resident aliens not engaged in trade or business in the Philippines
3. Non-resident foreign corporations.
Some rules on deduction
Itemized deduction may apply to corporate tax payer as well as individual taxpayer.
A corporation may avail only of the deduction from (1) to (10): premium payments on health
and/or hospitalization insurance is deductible only by an individual taxpayer.
A corporation may avail only of the itemized deductions: an individual, except a nonresident alien, may elect the itemized deductions or the optional standard deduction.
Thus, the optional standard deduction is not available to corporations.
An individual earning purely compensation income is not allowed itemized deductions,
except premium payments on health and/or hospitalization insurance. In addition, he is also
granted personal and additional exemptions.
An individual, who earns income other than purely compensation income, is allowed
personal additional exemptions in addition to the itemized deductions or the optional
standard deductions.
Two kinds of deduction available to individuals, except a non-resident alien
1. Itemized deduction
2. Optional standard deduction
Page16
Note: Optional standard deduction is not available to corporations.

b. Kinds of tax exemption

Express or implied, total or partial
Kinds of Tax Exemption According to Manner of Creation
1) Express or affirmative exemption
When certain persons, property or transactions are, by express provision, exempted from all
certain taxes, either entirely or in part.
2) Implied exemption or exemption by omission
When a tax is levied on certain classes of persons, properties, or transactions without
mentioning the other classes.
3) Contractual
Agreed to by the taxing authority in contracts lawfully entered into them under enabling
laws. (i.e.: treaty, licensing ordinance)
Kinds of Tax Exemption According to Scope or Extent
1) TOTALwhen certain persons, property or transactions are exempted, expressly or impliedly
from all taxes.
2) PARTIALwhen certain persons, property or transactions are exempted, expressly or impliedly
from certain taxes, either entirely or in part.
Exemption from direct tax, from indirect tax
A law granting exemption from direct tax does not exempt the subject form indirect tax.
Does the provision in a statute granting exemption from all taxes include indirect taxes?
No. As a general rule, indirect taxes are not included in the grant of such exemption unless it
is expressly stated.
Atlas Fertilizer v. Commissioner, 100 SCRA 556( 1980)
While the burden of proof is on the claimant to establish his right of exemption, there may
be situations when he need not to adduce further evidence to show that he is entitled to
exemption.
Commissioner v. Phil. Ace Line, 25 SCRA 912 (1968)
Every tax exemption implies a waiver of the right to collect what otherwise would be due to
the government. The Constitution does not bar tax exemption. Purpose of tax exemption is some
public benefit or interest, which the lawmaking body considers sufficient to offset the monetary loss
entailed in the grant of the exemption.
Com. v. RTN Mining, 202 SCRA 137 (1991); 207 SCRA 549 (1992)
When obvious inconsistency between an earlier law and latter law granting an exemption,
the court is compelled to abide by the maxim that all doubts granting exemption must be resolved
in favor of the taxing authority. Tax exemptions must be strictly construed and can only be given
force when the grant is clear and categorical.
Caltex v. COA, supra.
In claiming tax exemption, the burden of proof lies upon the claimant
It cannot be created by mere implication
It cannot be presumed that you are entitled to tax exemption
You must prove it
c. Nature of the power to grant tax exemption
2. Local governments
Municipal corporations are clothed with no inherent power to tax or to grant tax
exemptions. But the moment the power to impose a particular tax is granted, they also have the
power to grant exemptions therefrom unless forbidden by some provision of the Constitution or
the law.
The legislature may delegate its power to grant tax exemptions to the same extent
that it may exercise the power to exempt.
Page16
1. National government
The power to grant tax exemptions is an attribute of sovereignty for the power to
prescribe who or what persons or property shall be taxed implies the power to prescribe who or
what persons or property shall be taxed implies the power to prescribe who or what persons or
property shall not be taxed.

Basco v. PAGCOR [196 SCRA 52]
The power to tax of municipal corporations must always yield to a legislative act of Congress
which is superior, having been passed by the State itself. Municipal corporations are mere
creatures of Congress which has the power to create and abolish municipal corporations due to
its general legislative powers. If Congress can grant the power to tax, it can also provide for
exemptions or even take back the power.
Maceda v. Macaraig, (1993) supra.
In the case of property owned by the state or a city or other public corporations, the express
exception should not be construed with the same degree of strictness that applies to exemptions
contrary to the policy of the state, since as to such property exception is the rule and taxation the
exception.
d. Rationale for tax exemption
Rationale for granting tax exemptions
Its avowed purpose is some public benefit or interest which the lawmaking body considers
sufficient to offset the monetary loss entailed in the grant of the exemption.
The theory behind the grant of tax exemptions is that such act will benefit the body of the
people. It is not based on the idea of lessening the burden of the individual owners of
property.
Davao Light v. Com., 22 SCRA 122 (1972)

Facts: Davao Light is a grantee of a legislative franchise to install, operate and maintain an electric
light, heat
and power plant in the city of Davao, for 50 years. On two occasions, it imported electrical supplies,
materials
and equipment for installation in its power plant. The importations arrived in the port of Cebu City,
where the
Collector imposed custom duties and taxes amounting to P9,928. Davao Light paid under protest,
claiming it
is similarly tax-exempted as the National Power Corporation, which is allegedly posing as
competition to
Davao Light in its business.
Issue: Whether Davao Light is similarly tax-exempt as Napocor.
Tan Kim Kee v. CTA, 7 SCRA 670 (1963)

NPC v. RTC Presiding Judge, Cagayan de Oro, 190 SCRA 477 (1990)
Page16
Held: Davao Lights purpose in securing a franchise to establish and operate an electric plant and
power
stations was to engage in a business or profit-making venture, while Napocor was specifically
created to
undertake the development of hydraulic power nationwide and the production of power from other
sources,
for use of the government and the general public. In isolated sale of electric power to one
government-owned
plant (National Development Co., in Davao) would not be enough to classify the Napocor as a
competing
concern to Davao Lights enterprise. Napocors tax exemption (RA 358) was granted in order to
facilitate the
liquidation by said corporation of its liabilities, and the consequential release by the government
itself from its
obligation in the transactions entered into by the President on behalf of Napocor. Davao Light is not
entitled
to the same exemption privileges enjoyed by another operator without an express provision of the
law to that
effect. Exemption from taxation is never presumed. For tax exemption to be recognized, the grant
must be
clear and express. It cannot be made to rest on vague implications.

When conflict between general and special law arises, the special law prevails. When the law
does not distinguished as to the kinds of tax exemptions withdrawn, the plain meaning is that all
tax exemptions are covered.
Chavez v. PCGG [GR No. 130716, Dec. 6, 1998]
In a compromise agreement between the Philippine Government, represented by the PCGG,
and the Marcos heirs, the PCGG granted tax exemptions to the assets which will be apportioned to
the Marcos heirs. The Supreme Court ruled that the PCGG has absolutely no power to grant tax
exemptions, even under the cover of its authority to compromise ill gotten wealth cases. The grant
of tax exemptions is the exclusive prerogative of Congress.
In fact, the Supreme Court even stated that Congress itself cannot grant tax exemptions in
the case at bar because it will violate the equal protection clause of the Constitution.
Davao Gulf v. CIR, 293 SCRA 76 (1998)
A tax cannot be imposed unless it is supported by the clear and express language of a
statute; on the other hand, once the tax is unquestionably imposed, a claim of exemption from tax
payments must be clearly shown and based on language in the law too plain to be mistaken. Since
the partial refund authorized under Sec. 5, RA 1435, is in the nature of a tax exemption, it must be
construed strictissimi juris against the grantee. Hence, petitioners claim for refund based on
specific taxes it actually paid must expressly be granted in a statute stated in a language too clear
to be mistaken.
Tolentino v. Sec. of Finance,(1995) supra.
By granting exemptions, the State does not forever waive the exercise of its sovereign
prerogative.
e. Nature of tax exemption
1) It is a mere personal privilege of the grantee.
2) It is generally revocable by the government unless the exemption is founded on a contract which
is contract which is protected from impairment.
3) It implies a waiver on the part of the government of its right to collect what otherwise would be
due to it, and so is prejudicial thereto.
4) It is not necessarily discriminatory so long as the exemption has a reasonable foundation or
rational basis.
5) It is not transferable except if the law expressly provides so.
PLDT v. City of Davao, (2001) supra.
Applying the rule of strict construction to statutory provisions granting tax exemptions or
deductions would minimize differential treatment and foster fairness and equality of treatment
among taxpayers.
Phil. Acetylene v. Commissioner, supra.
In the construction of tax statutes, exemptions are not favored and are construed stictissimi
juris.
Atlas Fertilizer v. Com., supra.

The Secretary of Finance was convinced that the equipment imported were not only needed
for exclusive use in the manufacture of fertilizer but the same were actually used therefore thus
approving the application for exemption without adducing evidence that he is entitled for
exemption.
f.
Laws granting tax exemption, incentives
Page16
Wonder Mech v. CTA, 64 SCRA 555 (1975)

A tax exemption in the manufacture and sale of machines for making cigarettes paper does
not include the manufacture and sale of the products produced by these machines of the
manufacture and sale of other types of machines for cigarettes production.

i. Constitution
Sec. 28 (3), Art. VI and Sec. 4 (3, 4), Art. XIV, 1987 Constitution
Sec. 28 (3), Art. VI, Constitution . (Property Tax Exemption).
exclusively used for religious, charitable, or educational purposes shall be exempt from taxation
Sec. 4 (3, 4), Art. XIV, 1987 Constitution (Income tax, Property Tax, and Donors Tax
exemption)
All revenues and assets of non-stock, non-profit educational institutions used actually,
directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the
dissolution or cessation of the corporate existence of such institutions, their assets shall be
disposed of in the manner provided by law. Sec.4, (3)
Subject to the conditions prescribed by law, all grants, endowments, donations or
contributions used actually, directly, and exclusively for educational purposes shall be exempt from
tax. Sec. 4, (4)
Abra Valley v. Aquino, supra.
The test of exemption from taxation is the use of the property for the purpose mentioned in
the Constitution. The term exclusively uses does not necessarily means total or absolute use for
religious, charitable, educational purposes. Even if the property is incidentally and necessarily used
for the accomplishment of the said purposes, tax exemption will apply.
Lung Center of the Philippines v Quezon City, G.R. 144104, 433, June 29, 2004 SCRA 119
When the property is used for one or more commercial purposes, it is subject to taxation.
Portions of the land leased to the private entities as well as those parts of the hospital leased to
private individuals are not exempt from taxes.
ii. tax statutes
SEC. 30. Exemptions from Tax on Corporations . - The following organizations shall not be
taxed under this Title in respect to income received by them as such:
(A) Labor, agricultural or horticultural organization not organized principally for profit;
(B) Mutual savings bank not having a capital stock represented by shares, and cooperative bank
without capital stock organized and operated for mutual purposes and without profit;
(C) A beneficiary society, order or association, operating for the exclusive benefit of the members
such as a fraternal organization operating under the lodge system, or mutual aid association or a
nonstock corporation organized by employees providing for the payment of life, sickness, accident,
or other benefits exclusively to the members of such society, order, or association, or nonstock
corporation or their dependents;
(D) Cemetery company owned and operated exclusively for the benefit of its members;
(E) Nonstock corporation or association organized and operated exclusively for religious, charitable,
scientific, athletic, or cultural purposes, or for the rehabilitation of veterans, no part of its net
income or asset shall belong to or inures to the benefit of any member, organizer, officer or any
specific person;
(F) Business league chamber of commerce, or board of trade, not organized for profit and no part of
the net income of which inures to the benefit of any private stock-holder, or individual;
(G) Civic league or organization not organized for profit but operated exclusively for the promotion
of social welfare;
(H) A nonstock and nonprofit educational institution;
(I) Government educational institution;
(J) Farmers' or other mutual typhoon or fire insurance company, mutual ditch or irrigation company,
mutual or cooperative telephone company, or like organization of a purely local character, the
income of which consists solely of assessments, dues, and fees collected from members for the sole
purpose of meeting its expenses; and
(K) Farmers', fruit growers', or like association organized and operated as a sales agent for the
purpose of marketing the products of its members and turning back to them the proceeds of sales,
less the necessary selling expenses on the basis of the quantity of produce finished by them;
Page16
Sec. 30, 32 (B), 106, 199 Exemption Granted by NIRC (R.A. 7716)

Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from any
of their activities conducted for profit regardless of the disposition made of such income, shall be
subject to tax imposed under this Code.
NIRC Sec. 32 (B) Exclusions from Gross Income. - The following items shall not be included in
gross income and shall be exempt from taxation under this title:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Proceeds from life insurance

Amount received by insured as return of premium
Gifts, bequests and devises
Compensation for injuries or sickness
Income exempt under treaty
Retirement benefits, pensions, gratuities, etc.
Income derived by foreign government
Income derived by the Philippine Government or its political subdivisions
Prizes and awards made primarily in recognition of religious, charitable, scientific,
educational, artistic, literary or civic achievement.
10. Prizes and awards in sports competitions sanctioned by the national sports associations
11. 13th month pay and other benefits not exceeding P30,000.00. Applies both to public and
private employees.
12. GSIS, SSS, Medicare and other contributions
13. Gains from the sale of bonds, debentures or other certificate of indebtedness. 5 eyars or
more. If maturity is less than 5 years, it is taxable.
14. Gains from redemption of shares in mutual fund. It must be emanate from the mutual fund
Sec. 106 (A)(2) The following sales by VAT-registered persons shall be subject to zero percent
(0%) rate:
(a) Export Sales. - The term "export sales" means:
(b) Foreign Currency Denominated Sale. (c) Sales to persons or entities whose exemption under special laws or international agreements to
which the Philippines is a signatory effectively subjects such sales to zero rate.
NIRC SEC. 199. Documents and Papers Not Subject to Stamp Tax
(a) Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order,
association or cooperative company, operated on the lodge system or local cooperation plan and
organized and conducted solely by the members thereof for the exclusive benefit of each member
and not for profit.
(b) Certificates of oaths administered to any government official in his official capacity or of
acknowledgment by any government official in the performance of his official duties, written
appearance in any court by any government official, in his official capacity; certificates of the
administration of oaths to any person as to the authenticity of any paper required to be filed in
court by any person or party thereto, whether the proceedings be civil or criminal; papers and
documents filed in courts by or for the national, provincial, city or municipal governments; affidavits
of poor persons for the purpose of proving poverty; statements and other compulsory information
required of persons or corporations by the rules and regulations of the national, provincial, city or
municipal governments exclusively for statistical purposes and which are wholly for the use of the
bureau or office in which they are filed, and not at the instance or for the use or benefit of the
person filing them; certified copies and other certificates placed upon documents, instruments and
papers for the national, provincial, city, or municipal governments, made at the instance and for the
sole use of some other branch of the national, provincial, city or municipal governments; and
certificates of the assessed value of lands, not exceeding Two hundred pesos (P200) in value
assessed, furnished by the provincial, city or municipal Treasurer to applicants for registration of
title to land.
Sec. 159 and 234, R. A. 7160(Exemption Granted by the Local Taxing Authority)
Real Property Tax Exemption R.A. 7160 (Local Government Code)

Section 234. Exemption From Real Property Tax
Page16
Sec. 159, R.A. 7160. Community Tax Exemptions

SEC. 159. Exemptions. The following are exempt from the community tax:
(1) Diplomatic and consular representatives; and
(2) Transient visitors when their stay in the Philippines does not exceed three (3) months

(a)
(b)
(c)
(d)
(e)
Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted for consideration or otherwise to a
taxable person.
Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques,
non-profit or religious cemeteries, and all lands, buildings, and improvements actually,
directly and exclusively used for religious, charitable, or educational purposes.
All machineries and equipment that are actually, directly and exclusively use by local water
utilities and
government-owned or controlled corporations engaged in supply and distribution of water
and/or generation and transmission of electric power.
All real property owned by duly registered cooperatives as provided for under Republic Act
No. 6938.
Machinery and equipment used for pollution control and environmental protection.
Sec. 105, Tariff and Customs Code (TCC)

iii. special laws
R. A. 7549- An act exempting all prizes and awards gained from local and international sports
tournaments and competitions from the payment of income and other forms of taxes and for other
purposes
SECTION 1. All prizes and awards granted to athletes in local and international sports
tournaments and competitions held in the Philippines or abroad and sanctioned by their respective
national sports associations shall be exempt from income tax: provided, that such prizes and
awards given to said athletes shall be deductible in full from the gross income of the donor:
provided, further, that the donors of said prizes and awards shall be exempt from the payment of
donor's tax.
The benefits herein provided shall cover the XVIth Southeast Asian Games (SEA Games) held in
Manila from November 25 to December 5, 1991.
Com. v. Phil Ace Line, supra.
Goods obtained by the respondent shall be subject to compensating tax since sec. 14 of R.A. 1789
exempts only custom duties, consular fees and the special import tax.
R.A. 1789- An act prescribing the national policy in the procurement and utilization of reparations
and development loans from japan, creating a reparations commission to implement the policy,
providing funds therefor, and for other purposes.
Section 14. Exemption from Tax. All reparations goods obtained by the government shall be
exempt from the payment of all duties, fees and taxes. Reparations goods obtained by private
parties shall be exempt only from the payment of customs duties, consular fees and the special
import tax.
Tax treaty
iv. treaties
A tax treaty is one of the sources of our law on taxation. The Philippine government usually
enters into tax treaties in order to avoid or minimize the effects of double taxation. A treaty
has the force and effect of law.
RP-US Tax Treaty
RP-Germany Tax Treaty
Respondent was subjected to 25% withholding tax on royalty payments which he contested
claiming that it is entitled to The Most Favored Nation Tax Rate of 10% on royalties as provided in
the RP-US Tax treaty in relation to the RP-West Germany Tax Treaty.
According to petitioner, the taxes upon royalties under the RP-US Tax Treaty are not paid under
circumstances similar to those in the RP-West Germany Tax Treaty since there is no provision for a
Page16
Com. v. S. C. Johnson, supra.

20 percent matching credit in the former convention and private respondent cannot invoke the
concessional tax rate on the strength of the most favored nation clause in the RP-US Tax Treaty.
Petitioner's position is explained thus:
Under the foregoing provision of the RP-West Germany Tax Treaty, the Philippine tax paid on income
from sources within the Philippines is allowed as a credit against German income and corporation
tax on the same income. In the case of royalties for which the tax is reduced to 10 or 15 percent
according to paragraph 2 of Article 12 of the RP-West Germany Tax Treaty, the credit shall be 20%
of the gross amount of such royalty. To illustrate, the royalty income of a German resident from
sources within the Philippines arising from the use of, or the right to use, any patent, trade mark,
design or model, plan, secret formula or process, is taxed at 10% of the gross amount of said
royalty under certain conditions. The rate of 10% is imposed if credit against the German income
and corporation tax on said royalty is allowed in favor of the German resident. That means the rate
of 10% is granted to the German taxpayer if he is similarly granted a credit against the income and
corporation tax of West Germany. The clear intent of the "matching credit" is to soften the impact of
double taxation by different jurisdictions.
The RP-US Tax Treaty contains no similar "matching credit" as that provided under the RP-West
Germany Tax Treaty. Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar
circumstances as those obtaining in the RP-West Germany Tax Treaty. Therefore, the "most favored
nation" clause in the RP-West Germany Tax Treaty cannot be availed of in interpreting the provisions
of the RP-US Tax Treaty.5
Reagan v. CIR, 30 SCRA 968 (1969)
Com. v. PJ Kiener, 65 SCRA 142 (1975)
g. Construction of statutes granting tax exemption
1) Rule when legislative intent is clear
Tax statutes are to receive a reasonable construction with a view to carrying out their
purpose and intent. They should not be construed as to permit the taxpayer easily to evade the
payment of taxes.
2) Rule when there is doubt
No person or property is subject to taxation unless within the terms or plain import of a
taxing statute. In every case of doubt, tax statutes are construed strictly against the government
and liberally in favor of the taxpayer. Taxes, being burdens, are not to be presumed beyond what
the statute expressly and clearly declares.
3) Provisions granting tax exemptions
Such provisions are construed strictly against the taxpayer claiming tax exemption
i.
general rule
In the construction of tax statutes, exemptions are not favored and are construed strictissimi
juris against the taxpayer. The fundamental theory is that all taxable property should bear
its share in the cost and expense of the government.
Taxation is the rule and exemption.
He who claims exemption must be able to justify his claim or right thereto by a grant
express in terms too plain to be mistaken and too categorical to be misinterpreted. If not
expressly mentioned in the law, it must be at least within its purview by clear legislative
intent.
PLDT v. City of Davao, (2001) supra.
Misamis Oriental Assoc. v. DOF, 238 SCRA 63 (1994)

A law which gives exemption to coconut farmers and copra producers are not applicable to
coconut traders and copra traders. Sec. 103 of NIRC exempts from VAT the sale of agricultural
products in their original state if the sale is made by their primary producer.
Page16
Com. v. CA and YMCA, 298 SCRA 83 (1998)

Income derived from rentals of its real property leased out as restaurant and canteen are
subject to income tax. It is only exempt from property tax.

Com. of Customs v. Phil Acetylene Company, 39 SCRA 70 (1971)
Mla. Electric Co. v. Vera (Tabios), 67 SCRA 352 (1975)
Where a company is to pay for the property tax on its plant but not including poles, wires,
transformers and insulators forming part of the plant or installations, the exemptions does not
included compensating tax for the imports of poles, wires, transformers and insulators which is an
excise or privilege tax.
Benguet Corp. v. CBAA, supra.
Davao Gulf v. CIR, supra.
ii. exceptions
1. When the law itself expressly provides for a liberal construction thereof.
2. In cases of exemptions granted to religious, charitable and educational institutions or to the
government or its agencies or to public property because the general rule is that they are
exempted from tax.
Maceda v. Macaraig, supra., supra.
Petitioner cannot invoke the rule of strictissimi juris with respect to the interpretation of
statutes granting tax exemptions to the NPC. The rule on strict interpretation does not apply in the
case of exemptions in favor of a political subdivision or instrumentality of the government.
grant to government and other entities
Strict interpretation does not apply to the government and its agencies. The rule here is
exemption and the exemption is taxation.
E. Sources, Application, Interpretation and Administration of Tax Laws
1. Sources of tax laws
The Constitution,
NIRC
TCC
LGC
tax ordinance/local tax codes, Tuzon v. CA, 212 SCRA 739 (1992)
treaties, Tanada v. Angara, supra.
special laws,
SC/CTA/CA decisions
revenue rules and regulations
rulings and opinions
tax ordinance/local tax codes, Tuzon v. CA, 212 SCRA 739 (1992)
If the resolution is to be considered as a tax ordinance, it must be shown to have been enacted in
accordance with the requirements of the Local Government Code. These would include the holding
of a public hearing on the measure and its subsequent approval by the Secretary of Finance, in
addition to the usual requisites for publication of ordinances in general.
revenue rules and regulations
The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, shall
promulgate needful rules and regulations for the effective enforcement of the provisions of the
NIRC.
Rulings in the form of opinions are also given by the Secretary of Justice who is the Chief Legal
Officer of the Government.
Treaties
Page16
rulings and opinions

This is without prejudice to the power of the Commissioner of Internal Revenue to make rulings or
opinions in connection with the implementation of the provisions of the Internal Revenue laws,
including rulings on the classification of articles for sales tax and similar purposes.

International Agreements must be performed in good faith. A treaty engagement is not a mere
moral obligation but creates a legally binding obligation on the parties. (Doctrine of Pacta sunt
servanda)
a. validity of revenue rules and regulations
Requisites for validity of rules and regulations
1. They must not be contrary to law and the Constitution.
2. They must be published in the Official Gazette or a newspaper of general circulation.
RMO 1-99
Com. v. CA, supra.
Umali v. Estanislao, 209 SCRA 446 (1992)
La Suerte v. Court of Tax Appleals, 134 SCRA 29 (1985)
When an administrative agency renders an opinion by means of a circular or memorandum,
it merely interprets existing law and no publication is therefore necessary for its validity.
Construction by an executive branch of the government of a particular law, although not binding
upon courts, must be given weight as the construction came from the branch of the government
which is called upon to implement the law.
Com. v. CA, 261 SCRA 236 (1996)
The authority of the Minister of Finance, in conjunction with the Commissioner of Internal
Revenue, to promulgate rules and regulations for the effective enforcement of internal revenue
rules cannot be converted. Neither can it be disputed that such rules and regulations, as well as
administrative opinions and rulings, ordinarily should deserve weight and respect by the courts.
Much more fundamental than either of the above, however, is that all issuances must not override,
but must remain consistent with, the law they seek to apply and implement. Administrative rules
and regulations are intended to carry out, neither to supplant nor to modify, the law.
b. effectivity of revenue rules and regulations
RMC 20-86
Revenue Memorandum Circular 20-86 was issued to govern the drafting, issuance and
implementation of revenue tax issuances including:
1. Revenue Regulations;
2. Revenue and Memorandum Orders; and
3. Revenue Memorandum Circulars and Revenue Memorandum Orders.
Except when the law otherwise expressly provides, the aforesaid revenue tax issuances shall
not begin to be operative until after due notice thereof may be fairly assumed.
Due notice of said issuances may be fairly presumed only after the following procedures
have been taken:
1. Copies of tax issuance have been sent through registered mail to the following business and
professional organizations:
a. Philippine Institute of Certified Public Accountants;;
b. Integrated Bar of the Philippines;
c. Philippine Chamber of Commerce and Industry;
d. American Chamber of Commerce;
e. Federation of Filipino-Chinese Chamber of Commerce; and
f. Japanese Chamber of Commerce and Industry in the Philippines.
*however, other persons or entities may request a copy of the said issuances.
3. Effectivity date for enforcement of the new issuance shall take place thirty (30) days from
the date the issuance has been sent to the above-enumerated organizations.
c. nature of rulings, effects of a void ruling
Page16
2. The Bureau of Internal Revenue shall issue a press release covering the highlights and
features of the new tax issuance in any newspaper of general circulation.
Administrative rulings, known as BIR rulings, are the less general interpretation of tax laws
being issued from time to time by the Commissioner of Internal Revenue. They are usually
rendered on request of taxpayers to clarify certain provisions of a tax law. These rulings may
be revoked by the Secretary of Finance if the latter finds them not in accordance with the
law.
The Commissioner may revoke, repeal or abrogate the acts or previous rulings of his
predecessors in office because the construction of the statute by those administering it is
not binding on their successors if, thereafter, such successors are satisfied that a different
construction of the law should be given.
Rulings in the forms of opinion are also given by the Secretary of Justice who is the chief
legal officer of the Government.
Sec. 4, 244-246, NIRC

SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The
power to interpret the provisions of this Code and other tax laws shall be under the exclusive and
original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under this Code or other
laws or portions thereof administered by the Bureau of Internal Revenue is vested in the
Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals .
SEC. 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. - The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules
and regulations for the effective enforcement of the provisions of this Code.
(a) The time and manner in which Revenue Regional Director shall canvass their
respective Revenue Regions for the purpose of discovering persons and property liable
to national internal revenue taxes, and the manner in which their lists and records of
taxable persons and taxable objects shall be made and kept;
(b) The forms of labels, brands or marks to be required on goods subject to an excise
tax, and the manner in which the labelling, branding or marking shall be effected;
(c) The conditions under which and the manner in which goods intended for export,
which if not exported would be subject to an excise tax, shall be labelled, branded or
marked;
(d) The conditions to be observed by revenue officers respecting the institutions and
conduct of legal actions and proceedings;
(e) The conditions under which goods intended for storage in bonded warehouses shall
be conveyed thither, their manner of storage and the method of keeping the entries and
records in connection therewith, also the books to be kept by Revenue Inspectors and
the reports to be made by them in connection with their supervision of such houses;
(f) The conditions under which denatured alcohol may be removed and dealt in, the
character and quantity of the denaturing material to be used, the manner in which the
process of denaturing shall be effected, so as to render the alcohol suitably denatured
and unfit for oral intake, the bonds to be given, the books and records to be kept, the
entries to be made therein, the reports to be made to the Commissioner, and the signs
to be displayed in the business or by the person for whom such denaturing is done or by
whom, such alcohol is dealt in;
(g) The manner in which revenue shall be collected and paid, the instrument, document
or object to which revenue stamps shall be affixed, the mode of cancellation of the
same, the manner in which the proper books, records, invoices and other papers shall be
kept and entries therein made by the person subject to the tax, as well as the manner in
which licenses and stamps shall be gathered up and returned after serving their
purposes;
(h) The conditions to be observed by revenue officers respecting the enforcement of
Title III imposing a tax on estate of a decedent, and other transfers mortis causa, as well
as on gifts and such other rules and regulations which the Commissioner may consider
suitable for the enforcement of the said Title III;
Page16
SEC. 245. Specific Provisions to be Contained in Rules and Regulations. - The rules and
regulations of the Bureau of Internal Revenue shall, among other things, contain provisions
specifying, prescribing or defining:

(i) The manner in which tax returns, information and reports shall be prepared and
reported and the tax collected and paid, as well as the conditions under which evidence
of payment shall be furnished the taxpayer, and the preparation and publication of tax
statistics;
(j) The manner in which internal revenue taxes, such as income tax, including
withholding tax, estate and donor's taxes, value-added tax, other percentage taxes,
excise taxes and documentary stamp taxes shall be paid through the collection officers
of the Bureau of Internal Revenue or through duly authorized agent banks which are
hereby deputized to receive payments of such taxes and the returns, papers and
statements that may be filed by the taxpayers in connection with the payment of the
tax: Provided, however, That notwithstanding the other provisions of this Code
prescribing the place of filing of returns and payment of taxes, the Commissioner may,
by rules and regulations, require that the tax returns, papers and statements that may
be filed by the taxpayers in connection with the payment of the tax. Provided, however,
That notwithstanding the other provisions of this Code prescribing the place of filing of
returns and payment of taxes, the Commissioner may, by rules and regulations require
that the tax returns, papers and statements and taxes of large taxpayers be filed and
paid, respectively, through collection officers or through duly authorized agent banks:
Provided, further, That the Commissioner can exercise this power within six (6) years
from the approval of Republic Act No. 7646 or the completion of its comprehensive
computerization program, whichever comes earlier: Provided, finally, That separate
venues for the Luzon, Visayas and Mindanao areas may be designated for the filing of
tax returns and payment of taxes by said large taxpayers.
For the purpose of this Section, "large taxpayer" means a taxpayer who satisfies any of the
following criteria;
(1) Value-Added Tax (VAT). - Business establishment with VAT paid or payable of at least One
hundred thousand pesos (P100,000) for any quarter of the preceding taxable year;
(2) Excise Tax. - Business establishment with excise tax paid or payable of at least One million
pesos (P1,000,000) for the preceding taxable year;
(3) Corporate Income Tax. - Business establishment with annual income tax paid or payable of at
least One million pesos (P1,000,000) for the preceding taxable year; and
(4) Withholding Tax. - Business establishment with withholding tax payment or remittance of at
least One million pesos (P1,000,000) for the preceding taxable year.
Provided, however, That the Secretary of Finance, upon recommendation of the Commissioner, may
modify or add to the above criteria for determining a large taxpayer after considering such factors
as inflation, volume of business, wage and employment levels, and similar economic factors.
The penalties prescribed under Section 248 of this Code shall be imposed on any violation of the
rules and regulations issued by the Secretary of Finance, upon recommendation of the
Commissioner, prescribing the place of filing of returns and payments of taxes by large taxpayers.
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or reversal of any of the
rules and regulations promulgated in accordance with the preceding Sections or any of the rulings
or circulars promulgated by the Commissioner shall not be given retroactive application if the
revocation, modification or reversal will be prejudicial to the taxpayers, except in the following
cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are
materially different from the facts on which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
Sec. 519. Rules and Regulations. The Commissioner of Customs shall promulgate the rules and
regulations necessary for the implementation of this Title, subject to the approval of the Secretary
of Finance.
Page16
Sec. 511 and 519, TCC

Sec. 511. Rules and Regulations of the Commission. The Commission shall adopt and promulgate
such rules and regulations as may be necessary to carry out the provisions of this Code.

CIR v. CA, 267 SCRA 557 (1997)
Misamis Oriental v. DOF, supra.
Interpretative rules are designed to provide guidelines to the law which the administrative
agency is in charge of enforcing.
2. Interpretation of Tax Laws
a. nature of internal revenue laws
Nature of Internal revenue laws
1) Internal revenue laws are not political in nature.
2) Tax laws are civil and not penal in nature.
Civil not penal in nature
Tax laws are civil and not penal in nature, although there are penalties provided for their violation.
The purpose of tax laws in imposing penalties for delinquencies is to compel the timely payment of
taxes or to punish evasion or neglect of duty in respect thereof.
Not political in nature
Internal revenue laws are not political in nature. They are deemed to be laws of the occupied
territory and not of the occupying enemy.
Thus, our tax laws continued in force during the Japanese occupation
Hilado v. Collector, 100 Phil 288 (1956)
It is well known that our internal revenue laws are not political in nature and, as such,
continued in force during the period of enemy occupation and in effect were actually enforced by
the occupation government. Income tax returns that were filed during that period and income tax
payments made were considered valid and legal. Such tax laws are deemed to be the laws of the
occupied territory and not of the occupying enemy.
Republic v. Oasan, 99 Phil 934 (1956)
The war profits tax is not subject to the prohibition on ex post facto laws as the latter applies
only to criminal or penal matters. Tax laws are civil in nature.
Misamis Oriental v. DOF, supra
The Commissioner of Internal Revenue is not bound by the ruling of his predecessors.
Overruling decisions is inherent in the interpretation of laws.
b. construction of tax laws
i.
rule when legislative intent is clear
Rule when legislative intent is clear

Tax statutes are to receive a reasonable construction with a view to carrying out their
purpose and intent. They should not be construed as to permit the taxpayer easily to evade the
payment of taxes.
Umali v. Estanislao, supra.
Lorenzo v. Posadas, supra.
When proper, a tax statute should be construed to avoid the possibilities of tax evasion.
Construed this way, the statute, without resulting in injustice to the taxpayer, becomes fair to the
government.
Rule when there is doubt

No person or property is subject to taxation unless within the terms or plain import of a
taxing statute. In every case of doubt, tax statutes are construed strictly against the government
and liberally in favor of the taxpayer. Taxes, being burdens, are not to be presumed beyond what
the statute expressly and clearly declares.
Collector v. La Tondena, 5 SCRA 665 (1962)
Page16
ii. rule when there is doubt

While courts will not enlarge, by construction, the government's power of taxation they also
will not place upon tax laws so loose a construction as to permit evasions on merely fanciful and
insubstantial distinctions.
iii. rule when language is plain
When the language of the law is plain, the word should be given its ordinary meaning
The rule of strict construction as against the government is not applicable where the
language of the tax statue is plain and there is no doubt as to the legislative intent. In such case,
the words employees are to be given their ordinary meaning.
c. application of tax laws, revenue regulations, rulings and the effects of
repeal
i.
application of tax laws
Application of tax laws

General rule: Tax laws are prospective in operation because the nature and amount to the tax
could not be foreseen and understood by the taxpayer at the time the transactions which the law
seeks to tax was completed
Exception: While it is not favored, a statute may nevertheless operate retroactively provided it is
expressly declared or is clearly the legislative intent. But a tax law should not be given retroactive
application when it would be harsh and oppressive.
Art. 2, NCC
Umali v. Estanislao, supra.
It is of the utmost importance," said the Supreme Court of the United States, ". . . that the
modes adopted to enforce the taxes levied should be interfered with as little as possible. Any delay
in the proceedings of the officers, upon whom the duty is developed of collecting the taxes, may
derange the operations of government, and thereby, cause serious detriment to the public
Hijo Plantation v. CB, 164 SCRA 192 (1988)
CIR v. Filipinas Cia de Seguros, 107 Phil 1055 (1960)
Cebu Portland v. Collector, 25 SCRA 789 (1968)
Comm. v. RTN Mining, supra.
Inconsistencies between the law granting exemptions, the court should abide that all doubts
must be resolved in favor of the taxing authority, and against the one claiming such exemptions.
ii. application of revenue regulations, rulings
NIRC Sec. 246
Revocation, modification of revenue of any rules and regulations promulgated by the Sec. of
Finance or CIR shall not have retroactive effect if it will be prejudicial to the taxpayer, except:
1. where the taxpayer deliberately misstates or omits material facts from his return or in any
document required of him by the BIR
2. where the facts subsequently gathered by the BIR are materially different from the facts on
which the ruling is based
3. where the taxpayer acted in bad faith
Comm. v. CA, supra.
Page16
Comm. v. Mega General, 166 SCRA 166 (1988)

ABS-CBN v. CTA, 108 SCRA 142 (1981)

Comm. v. Telefunken, 249 SCRA 401 (1995)
d. mandatory and directory provisions
Directory provisions are those designed merely for the information or direction of office or
to secure methodical and systematic modes of proceedings.
Mandatory provisions are those intended for the security of the citizens or which are
designed to ensure equality of taxation or certainty as to the nature and amount of each
persons tax.
Roxas v. Rafferty, supra.

The omission to follow mandatory provisions renders invalid the act or proceeding to which it
relates while the omission to follow directory provisions does not involve such consequence.
Aragon v. George, 85 Phil 246 (1949)
Tiongco v. PVB, 212 SCRA 176 (1992)
Pecson v. CA, 222 SCRA 580 (1993)
3. Enforcement, Administration of Tax Laws
AGENCIES INVOLVED IN TAX ADMINISTRATION
1. BIR
2. Bureau of Customs
3. Provincial, city, and municipal assessors and treasurers
Page16
POWERS AND DUTIES OF THE BIR

1. Assessment and collection of all national internal revenue taxes, fees and charges
2. Give effect to and administer the supervisory and police power conferred to it by the Tax Code or
other laws
3. Enforcement of all forfeitures, penalties and fines in connection therewith
4. Execution of judgments in all cases decided in its favor by the Court of TaxAppeals and the
ordinary courts

Taxation Goofy Final

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Taxation Goofy Final

Transféré par

Droits d'auteur :

Formats disponibles

Taxation Law 1 Reviewer 2011

There must be a valid law

Niel S. Defensor UNOR-SCHOOL OF LAW

Sison v. Ancheta, supra.

Taxation Law 1 Reviewer 2011

Niel S. Defensor UNOR-SCHOOL OF LAW

Taxation Law 1 Reviewer 2011

Shell v. Vano, Mun. Treas. of Cordova, Cebu, 94 Phil 389 (1954)

Niel S. Defensor UNOR-SCHOOL OF LAW

Pepsi Cola v. City of Butuan, supra.

Taxation Law 1 Reviewer 2011

community tax v. poll tax

Sec. 10, Art. III, 1987 Constitution

Niel S. Defensor UNOR-SCHOOL OF LAW

6. Prohibition against impairment of obligation of contracts

Taxation Law 1 Reviewer 2011

The non-impairment clause applies only to contracts and not to a franchise.

Sec. 5, Art. III, 1987 Constitution

Niel S. Defensor UNOR-SCHOOL OF LAW

7. Prohibition against infringement of religious freedom

Taxation Law 1 Reviewer 2011

Osmena v. Orbos, supra.

Niel S. Defensor UNOR-SCHOOL OF LAW

Province of Abra v. Hernando 107 SCRA 104

Taxation Law 1 Reviewer 2011

Sec. 27 (B) NIRC

Niel S. Defensor UNOR-SCHOOL OF LAW

Sec. 28 (3), Art. VI, Constitution

Taxation Law 1 Reviewer 2011

Department of Finance Order 145-85

ARTICLE XIV AND ARTICLE VI COMPARED

Niel S. Defensor UNOR-SCHOOL OF LAW

CIR v. CA, CTA and Ateneo, 271 SCRA 605 (1997)

Taxation Law 1 Reviewer 2011

Only transfers to social welfare,

Sec. 87 R.A. 8424

Grant of tax exemption (more on this under D4)

Sec. 28 (4), Art. VI, 1987 Constitution

CIR v. Santos, 277 SCRA 617 (1997)

Niel S. Defensor UNOR-SCHOOL OF LAW

Taxation Law 1 Reviewer 2011

Tolentino v. Sec. of Finance, supra., supra.

Sec. 11, Art. XII, 1987 Constitution

Niel S. Defensor UNOR-SCHOOL OF LAW

vi. Grant of Franchise

Taxation Law 1 Reviewer 2011

Residence or citizenship of the taxpayer

Location of the property

Location and citizenship of the decedent.(Sec 85,

state which granted the franchise

*Lex Rei Situs -where the property is located

Niel S. Defensor UNOR-SCHOOL OF LAW

Taxation Law 1 Reviewer 2011

Niel S. Defensor UNOR-SCHOOL OF LAW

Taxation Law 1 Reviewer 2011

1. Kinds of Double Taxation

Villanueva v. City of Iloilo, supra.

Niel S. Defensor UNOR-SCHOOL OF LAW

Taxation Law 1 Reviewer 2011

Niel S. Defensor UNOR-SCHOOL OF LAW

a. Ways of shifting the tax burden

Taxation Law 1 Reviewer 2011

It is also known as tax dodging

Elements of tax evasion