Reading For 2015 - 05 - 04-08 PDF

CONSTI
180 SCRA 496 (Daza v. Singson, G.R. No. 86344 December 21, 1989)
Facts:
The House of Representatives. Twenty four members of the Liberal Party formally resigned from that party
and joined the LDP, thereby swelling its number to 159 and correspondingly reducing their former party
to only 17 members.
On the basis of this development, the House of Representatives revised its representation in the
Commission on Appointments by withdrawing the seat occupied by the petitioner and giving this to the
newly-formed LDP. On December 5, 1988, the chamber elected a new set of representatives consisting of
the original members except the petitioner and including therein respondent Luis C. Singson as the
additional member from the LDP.
The petitioner came to the Supreme Court to challenge his removal from the Commission on
Appointments and the assumption of his seat by the respondent. Acting initially on his petition for
prohibition and injunction with preliminary injunction, we issued a temporary restraining order that same
day to prevent both the petitioner and the respondent from serving in the Commission on Appointments.
Briefly stated, the contention of the petitioner is that he cannot be removed from the Commission on
Appointments because his election thereto is permanent. His claim is that the reorganization of the House
representation in the said body is not based on a permanent political realignment because the LDP is not
a duly registered political party and has not yet attained political stability.
Issue:
Whether the question raised by the petitioner is political in nature and so beyond the jurisdiction of the
Supreme Court
Held:
No. The Court has the competence to act on the matter at bar. The issue involved is not a discretionary
act of the House of Representatives that may not be reviewed by us because it is political in nature. What
is involved here is the legality, not the wisdom, of the act of that chamber in removing the petitioner from
the Commission on Appointments.
The term political question connotes, in legal parlance, what it means in ordinary parlance, namely, a
question of policy. In other words, it refers to those questions which, under the Constitution, are to be
decided by the people in their sovereign capacity, or in regard to which full discretionary authority has
been delegated to the Legislature or executive branch of the Government. It is concerned with issues
dependent upon the wisdom, not legality, of a particular measure.
Even if we were to assume that the issue presented before us was political in nature, we would still not be
precluded from resolving it under the expanded jurisdiction conferred upon us that now covers, in proper
cases, even the political question. Article VII, Section 1, of the Constitution clearly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
Taada, et al., v. Angara, et al., G.R. No. 118295, May 2, 1997

Short Digest
FACTS
The suit was filed to nullify the concurrence of the Philippines Senate to the Presidents Ratification of the
Agreement establishing the World Trade Organization. It was contended that the agreement places
nationals and products of member countries on the same footing as Filipinos and local products in
contravention of the Filipino First Policy.
Petitioners maintained that this Agreement was an assault on the sovereign powers of the Philippines
because it meant that Congress could not pass legislation that would be good for national interest and
general welfare if such legislation would not conform to the WTO Agreement.
ISSUE
Whether the provisions of the WTO Agreement and its annexes limit, restrict, or impair the exercise of
legislative power by Congress.
HELD
While sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it
is however subject to limitations and restrictions voluntarily agreed to by the Philippines as a member of
the family of nations. One of the oldest and most fundamental rules in international law is pacta sunt
servanda 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 xxx. A state which has
contracted valid international obligations is bound to make in its legislation such modifications as may be
necessary to ensure the fulfillment of the obligations undertaken.
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary
act, nations may surrender some aspects of their state power in exchange for greater benefits granted by
or derived from a convention or pact. After all, states, like individuals live with coequals, and in pursuit of
mutuality covenanted objectives and benefits, they also commonly agree to limit the exercise of their
otherwise absolute rights.
The sovereignty of a state therefore cannot in fact and in reality be considered absolute. Certain
restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family
of nations and (2) limitations imposed by treaty stipulations.
SC En Banc Text
I.
THE FACTS
Petitioners Senators Taada, et al. questioned the constitutionality of the concurrence by the Philippine
Senate of the Presidents ratification of the international Agreement establishing the World Trade
Organization (WTO). They argued that the WTO Agreement violates the mandate of the 1987
Constitution to develop a self-reliant and independent national economy effectively controlled by
Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino
labor, domestic materials and locally produced goods. Further, they contended that the national
treatment and parity provisions of the WTO Agreement place nationals and products of member
countries on the same footing as Filipinos and local products, in contravention of the Filipino First
policy of our Constitution, and render meaningless the phrase effectively controlled by Filipinos.
II.
THE ISSUE
Does the 1987 Constitution prohibit our country from participating in worldwide trade liberalization and
economic globalization and from integrating into a global economy that is liberalized, deregulated and
privatized?
III. THE RULING
[The Court DISMISSED the petition. It sustained the concurrence of the Philippine Senate of the Presidents
ratification of the Agreement establishing the WTO.]
NO, the 1987 Constitution DOES NOT prohibit our country from participating in worldwide trade
liberalization and economic globalization and from integrating into a global economy that is
liberalized, deregulated and privatized.
There are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine
concurrence in the WTO Agreement.
[W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises,
at the same time, it recognizes the need for business exchange with the rest of the world on the bases of
equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and
trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist
policy. It did not shut out foreign investments, goods and services in the development of the Philippine
economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and
investments into the country, it does not prohibit them either.In fact, it allows an exchange on the basis of
equality
is unfair.
and
xxx
reciprocity,
xxx
frowning
only
on
foreign
competition
that
xxx
[T]he constitutional policy of a self-reliant and independent national economy does not necessarily rule
out the entry of foreign investments, goods and services. It contemplates neither economic seclusion
nor mendicancy in the international community. As explained by Constitutional Commissioner Bernardo
Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence
on external assistance for even its most basic needs. It does not mean autarky or economic seclusion; rather,
it means avoiding mendicancy in the international community. Independence refers to the freedom from
undue foreign control of the national economy, especially in such strategic industries as in the
development of natural resources and public utilities.
The WTO reliance on most favored nation, national treatment, and trade without discrimination
cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to
all WTO members. Aside from envisioning a trade policy based on equality and reciprocity, the
fundamental law encourages industries that are competitive in both domestic and foreign markets,
thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of
the gradual development of robust industries that can compete with the best in the foreign markets.
Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete
internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong
have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy
of laissez faire.
xxx
xxx
xxx
It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an
independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced goods. But it is equally true that such principles
while serving as judicial and legislative guides are not in themselves sources of causes of action.
Moreover, there are other equally fundamental constitutional principles relied upon by the Senate which
mandate the pursuit of a trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity and the promotion of industries
which are competitive in both domestic and foreign markets, thereby justifying its acceptance of said
treaty. So too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is
balanced by the adoption of the generally accepted principles of international law as part of the law of the
land and the adherence of the Constitution to the policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the
WTO Agreement thereby making it a part of the law of the land is a legitimate exercise of its sovereign
duty and power. We find no patent and gross arbitrariness or despotism by reason of passion or
personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some of its
members, may even agree with petitioners that it is more advantageous to the national interest to strike
down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the
Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own
judicial power and duty. Ineludibly, what the Senate did was a valid exercise of its authority. As to whether
such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a
matter between the elected policy makers and the people. As to whether the nation should join the
worldwide march toward trade liberalization and economic globalization is a matter that our people
should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of
membership, should this be the political desire of a member.
4 SCRA 1 (Aytona v. Castillo et al., G.R. No. L-19313, January 19, 1962)
On December 29, 1961, Outgoing President Carlos Garcia appointed petitioner Dominador Aytona as ad
interim Governor of the Central Bank. Aytona took the corresponding oath. On the same day, at noon,
President-elect Diosdado Macapagal assumed office; and on the next day, he issued administrative order
no. 2 recalling, withdrawing, and cancelling all ad interim appointments made by former President Garcia.
There were all-in all, 350 midnight or last minute appointments made by the former President Garcia. On
January 1, President Macapagal appointed Andres Castillo as ad interim Governor of the Central Bank.
Aytona instituted a case (quo warranto) against Castillo, contending that he was validly appointed, thus
the subsequent appointment to Castillo by the new President, should be considered void.
ISSUE:
Whether or not the 350 midnight appointments of former President Garcia were valid.
RULING:
No. After the proclamation of the election of President Macapagal, previous President Garcia
administration was no more than a care-taker administration. He was duty bound to prepare for the
orderly transfer of authority the incoming President, and he should not do acts which he ought to know,
would embarrass or obstruct the policies of his successor. It was not for him to use powers as incumbent
President to continue the political warfare that had ended or to avail himself of presidential prerogatives
to serve partisan purposes. The filling up vacancies in important positions, if few, and so spaced to afford
some assurance of deliberate action and careful consideration of the need for the appointment and the
appointee's qualifications may undoubtedly be permitted. But the issuance of 350 appointments in one
night and planned induction of almost all of them a few hours before the inauguration of the new
President may, with some reason, be regarded by the latter as an abuse Presidential prerogatives, the
steps taken being apparently a mere partisan effort to fill all vacant positions irrespective of fitness and
other conditions, and thereby deprive the new administration of an opportunity to make the
corresponding appointments.
82 SCRA 30 (Peralta vs. COMELEC, G.R. No. L-47771 March 11, 1978)
SHORT
Facts:
Section 4 of the 1978 Election Code provides that the election period shall be fixed by the Commission on
Elections in accordance with Section 6, Article XII[C] of the Constitution. The period of campaign shall not
be more than forty-five days immediately preceding the election, excluding the day before and the day of
the election. Petitioners questioned the constitutionality of the 45-day campaign period because: (a) it
was decreed by the President and not by the Commission on Elections as provided by Section 6 of Article
XII-C and (b) the period should cover at least ninety days (90). They argue that Section 6 of Article XII-C of
the Constitution provides that the election period shall commence ninety days before the day of election
and shall end thirty days thereafter.
Issue: Whether or not the 45-day period is unconstitutional
Held:
The 45-day campaign period is constitutional. Although the campaign period prescribed in the1978
Election Code for the election of the representatives to the interim Batasang Pambansa is less than 90
days and was decreed by the President and not by the Commission on Elections as provided by Section 6
of Article XII-C of the Constitution, the same does not violate the Constitution, because under
Amendment 1, the manner of election of members of the interim Batasang Pambansa shall be prescribed
and regulated by law, and the incumbent President under Amendment No. 5, shall continue to exercise
legislative power until martial law shall have been lifted. Moreover, the election for members in the
interim Batasang Pambansa is an election in a state of emergency requiring special rules, and only the
incumbent President has the authority and means of obtaining information on the peace and order
condition of the country within which an electoral campaign may be adequately conducted in all regions
of the nation. But even assuming that it should be the Commission on Elections that should fix the period
of campaign, the constitutional mandate is complied with by the fact that the Commission has adopted
and is enforcing the period fixed in Section 4, Article 1, of the 1978 Election Code.
148 SCRA 659 (Ynot vs. IAC, G.R. No. 74457, March 20, 1987)
FACTS:
There had been an existing law which prohibited the slaughtering of carabaos (EO 626). To strengthen the
law, Marcos issued EO 626-A which not only banned the movement of carabaos from inter-provinces but
as well as the movement of carabeef. On 13 Jan 1984, Ynot was caught transporting 6 carabaos from
Masbate to Iloilo. He was then charged in violation of EO 626-A. Ynot averred EO 626-A as
unconstitutional for it violated his right to be heard or his right to due process. He said that the authority
provided by EO 626-A to outrightly confiscate carabaos even without being heard is unconstitutional. The
lower court ruled against Ynot ruling that the EO is a valid exercise of police power in order to promote
general
welfare
so
as
to
curb
down
the
indiscriminate
slaughter
of
carabaos.
ISSUE:
Did EO 626-A violate the due process clause?
HELD:
Yes. The SC ruled that the EO is not valid as it indeed violates due process. EO 626-A created a
presumption based on the judgment of the executive. The movement of carabaos from one area to the
other does not mean a subsequent slaughter of the same would ensue. Ynot should be given to defend
himself and explain why the carabaos are being transferred before they can be confiscated. The SC found
that the challenged measure is an invalid exercise of the police power because the method employed to
conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly
oppressive. Due process is violated because the owner of the property confiscated is denied the right to
be heard in his defense and is immediately condemned and punished. The conferment on the
administrative authorities of the power to adjudge the guilt of the supposed offender is a clear
encroachment on judicial functions and militates against the doctrine of separation of powers. There is,
finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted
unlimited discretion in the distribution of the properties arbitrarily taken.
15 SCRA 569 (Pelaez vs. Auditor-General, G.R. No. L-23825, December 24, 1965)
FACTS:
From September 4, 1964 to October 29, 1964 the President of the Philippines issued executive orders to
create thirty-three municipalities pursuant to Section 69 of the Revised Administrative Code. Public funds
thereby stood to be disbursed in the implementation of said executive orders.
Suing as a private citizen and taxpayer, Vice President Emmanuel Pelaez filed a petition for prohibition
with preliminary injunction against the Auditor General. It seeks to restrain from the respondent or any
person acting in his behalf, from passing in audit any expenditure of public funds in implementation of
the executive orders aforementioned.
ISSUE:
Whether the executive orders are null and void, upon the ground that the President does not have the
authority to create municipalities as this power has been vested in the legislative department.
RULING:
Section 10(1) of Article VII of the fundamental law ordains:
The President shall have control of all the executive departments, bureaus or offices, exercise
general supervision over all local governments as may be provided by law, and take care that the
laws be faithfully executed.
The power of control under this provision implies the right of the President to interfere in the exercise of
such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of
the national government, as well as to act in lieu of such officers. This power is denied by the Constitution
to the Executive, insofar as local governments are concerned. Such control does not include the authority
to either abolish an executive department or bureau, or to create a new one. Section 68 of the Revised
Administrative Code does not merely fail to comply with the constitutional mandate above quoted, it also
gives the President more power than what was vested in him by the Constitution.
The Executive Orders in question are hereby declared null and void ab initio and the respondent
permanently restrained from passing in audit any expenditure of public funds in implementation of said
Executive Orders or any disbursement by the municipalities referred to.
ECON
Due Process
History of Due Process
Origin traceable to the Magna Carta in England which was wrung by the barons from Prince John in 1215.
The thrust of the Magna Carta was centered mainly on the procedural aspect of due process.
Concept of Due Process as enshrined in the Magna Carta says no man shall be taken or imprisoned or
disseized or outlawed, or in any manner destroyed; nor shall we go upon him, nor send upon him, but by
the lawful judgment of his peers or by the law of the land
It is centered more on the implementation of the law which has something to do with the procedural
aspect of the law. Concept was then exported to the US. Due process thus assumed another facet. It has
now two aspects: the SUBSTANTIVE and the PROCEDURAL.
What is due process?
No particular definition on what due process is in the constitution.
Is this a result of oversight or inadvertence in the part of the framers of the constitution? NO
Or is this rather omission intentional? YES
Framers deemed it prudent not to define the term due process otherwise there will be a tendency that the
courts will be bound to that definition. (read page 100 of cruz)
Can only describe, no exact definition.
Justice Fernando described due process as responsiveness to the supremacy of reason, obedience to
the dictates of justice.
Justice Frankfurter said it is the embodiment of the sporting idea of fair play.
Section 1 Article 3 of the 1987 Constitution

No person shall be deprived of life, liberty or property without due process of law.
PERSON
Definition of person as used in the Sec. 1 Art. 3
Refers to natural persons like human beings including both citizen and alien. It includes not only property
rights but as well as their right to life and liberty.
Does it include juridical persons (corporations and partnerships)? YES, they are covered by the protection
but only insofar as their property is concerned (property rights).
DEPRIVATION
What does it mean?
To deprive is to take away forcibly, to prevent from possessing, enjoying or using something. As
applied to due process, deprivation connotes denial of the right to life, liberty or property.
How about if there is no taking of a property or a right? In that there is already an imposition of a
prohibition in the exercise of ones right. There is only a prohibition in respect to the enjoyment of the
thing owned by a person. Wouldnt it amount to deprivation within the purview of Sec. 1 Art 3 of the 1987
constitution? YES
Deprivation does not only mean actual dispossession in that it would also include imposition of
order or prohibition in the exercise of ones right.
What is prohibited is deprivation of life, liberty or property without due process of law.
If a person commits a crime and upon trial he was found guilty as charged then the court may
deprive him of his liberty by sentencing him to suffer imprisonment. Is this allowed? YES
Even if there was deprivation, what is important is that there is observance of due process.
If ones property is taken for public use then upon payment of just compensation and for public
purpose then the deprivation is deemed allowed.
LIFE
Not only refers to our physical or animal existence but also refers to our enjoyment of god-given
faculties than can make his life worth living.
Ex. You have talent to sing government cannot deprive you that.
LIBERTY
It means freedom. What is protected in Sec. 1 Article 3 is our freedom to do what is right.
Ex. Although you have the freedom of speech, you cant insult or tell someone that he has a face that only
his mother can love. You cannot use it to the detriment or prejudice of the rights of others.
PROPERTY
Sec. 1 Art. 3 also protects our property rights.
Property refers to anything that is capable of ownership and be the subject of contract. It may be real
properties like lands and buildings or personal property like laptops and cellphones, it may be an
intangible property which cannot be perceived by our senses.
What about public office? Is this protected by Sec. 1 Art. 3? Would it count in the purview of property as
used in the law? NO
Similarly, a license or a franchise cannot be considered as property as used in the law because these may
be revoked by the state in the exercise of its police power.
Due process has two aspects: SUBSTANTIVE DUE PROCESS & PROCEDURAL DUE PROCESS
SUBSTANTIVE DUE PROCESS
This has something to do with the intrinsic validity of a law.
Focal point of the inquiry is not on the enforcement of the law but on the intrinsic validity thereof.
Inquirys central point is the existence or absence of a valid governmental purpose such that if
congress would enact a law then we can attack the same that it does not comply with the substantial
aspect of due process if such law does not have a lawful subject.
Ex. A law prohibiting a person from sleeping in his private room.
PROCEDURAL DUE PROCESS
It has something to do with the manner by which the law is enforced.
It is expressed in the immortal cry of Themistocles to Eurybiades: Strike, but hear me first!
In one case, Daniel Webster said that the justice that procedural due process guarantees is the
one which hears before it condemns, which proceeds upon inquiry and renders judgement only after trial.
Twin Requirement of Procedural due process
1. Notice
2. Hearing
Essential Elements of Procedural Due Process. Neither of these elements can be eliminated
without running afoul of the constitutional guaranty.
(case of Ynot vs.IAC)

Requirement of procedural due process in judicial proceedings:
1. There must be an impartial court or tribunal clothed with judicial power to hear and
determine the matter before it.
In our legal system, the jurisdiction of the courts is defined by law such that not all cases can be heard by
the municipal trial court.
If the judge is bias or he or his immediate family has pecuniary interest or has some relation by fourth
degree consanguinity or affinity to any of the parties, he must inhibit himself from the case (137 of the
rules of court). (refer to cruz)
If also the judge happens to be the guardian, trustee or executor of an estate and the case is pending in
his sala, he must inhibit himself.
What is your recourse if you already perceived that the judge is already biased? Then the situation is not
covered by the provision under rule 137. You cant see anything that can inhibit the judge (not related or
no pecuniary interest etc.) so what should you do to move for inhibition? Pangita bikil with the judge so
you have reason for inhibition
2. Jurisdiction must be lawfully acquired over the person of the defendant and over the
property which is the subject matter of the proceeding.
If it is a civil case, how can the court validly acquire jurisdiction over the person of the defendant where
the action is an action in persona (collection of a sack of money), personal action?
An Action in persona means that it only affects the private rights of the parties, it does not affect
the right of the public or the whole world then jurisdiction is acquired by the court upon service of
summons upon the person of the defendant. Or even without the formal summons but the defendant
voluntarily submits himself to the jurisdiction of the court by filing an answer. But if the defendant filed a
motion to dismiss because the court has no jurisdiction over me, then he is not said to have submitted
himself to the jurisdiction of the court. With regards to the plaintiff, when it files the complaint he validly
subjects himself to the jurisdiction of the court.
If the civil case is an action quasi in rem or something which affects the property or the right of the
general public, then jurisdiction may be acquired by the court through publication of the complaint in the
newspaper of general circulation.
Ex. Nullity of marriage... summons may be had through publication in the newspaper of general
circulation.
Ex. Actions involving property rights, parcel of land. Summons through publication.
What if the case is a penal case? How can the court acquire jurisdiction over the person of the accused?
The court acquires jurisdiction as soon as the accused is placed under arrest (upon the arrest of
the person)
3. The defendant must be given an opportunity to be heard.
What is required is only an opportunity to be heard. It is enough that the court affords someone a
chance to be heard such that the person goes away with the chance given, then it amount to have waived
the chance to be heard.
In civil cases, after service of summons, the defendant did not file an answer, then the court may declare
the defendant in default and can now render judgement by default. Actual hearing is not necessary.
Trial type hearing is not always necessary or required. In criminal cases this is always required but in
labor cases, it is not a requirement. It may be decided on the basis of the position papers of both parties (
ejectment cases also.)
Are there instances where the requisite of notice and hearing is validly dispensed with without violation of
due process?
EXCEPTION
Cancellation of passport of a person sought for the commission of a crime
Preventive suspension of a civil servant facing administrative charges

Distraint of properties for tax delinquency
Padlocking or restaurants found to be insanitary or of theatres showing obscene movies
Abatement of nuisance per se (represents immediate danger to the welfare of the community
When administrative agencies are exercising their quasi-legislative functions

(see reviewer, 9)
What if the case involves a case with a public official and that during the pendency of the case, that
person is place under preventive suspension for 30 days? Is the preventive suspension violative of
procedural due process? NO. It is an exception to the rule.
Similarly the issuance of temporary restraining order is valid.
If it appears in the complaint that a grave or irreparable damage will be suffered by the applicant
before the matter could be heard on notice, the court may issue such without prior hearing a TRO.
Also the cancellation of the issuance of passport who is sought in the commission on offense may be had
even without the opportunity to controvert the charges.
Also, issuance of warrant of arrest is valid.
Also, attachment of property for tax delinquency is valid.
Closure of restaurants which was found unsanitary is valid.
4. Judgment must be rendered upon lawful hearing.

No Decision shall be rendered by any court without expressing therein clearly and distinctly the
facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be refused
due course or denied without stating the legal basis thereof.
Means that the decision should mention or particularize the facts obtaining in a given case,
the evidence presented as well as the law relied upon by the court in coming up with a particular
decision.
What about the minute resolution issued by the supreme court? YES it is valid because.
If you pass petition for certiorari, the SC will send out a 1 page resolution called minute
resolution.
How about the publication requirement, is it required for procedural due process? YES
How about appeal in a given case, is this part of procedural due process or within the constitution?
It depends, as a rule, appeal is not a constitutional right. It is only a statutory right. Meaning
you can only file an appeal if there is a law or a rule allowing you to pursue the remedy of an appeal.
Conversely, where the law does not allow you to file an appeal, then you cannot invoke denial of due
process.
It is not an integral part of procedural due process.
Ex. Collection suit where the amount is less than 100K, court renders judgement and makes them
pay...(administrative circular 8-8-7 of SC) cannot apply remedy of appeal for defendant.
The Congress shall have the power to define, prescribe, and apportion the jurisdiction of the
various courts but may not deprive the SC of its jurisdiction over cases enumerated in section 5 thereof.
Appeal may be afforded by congress through enactment of law, conversely can also pass a law denying a
person appeal. But it should not deprive SC of its appellate jurisdiction over the cases enumerated in
section 5 article 8.
(refer to Sec. 5 Art. 8 for the cases)
____________________________________________
Why is publication required? To give notice to the public of the existence of such law.
APPEAL
The right to appeal is not essential to the right to a hearing. Except when guaranteed by the
Constitution, appeal may be allowed or denied by the legislature in its discretion.
EXCEPTION
SECTION 5(2) ARTICLE 8 OF THE 1987 CONSTITUTION
1.
All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.
2.
All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in
relation thereto.
3.
All cases in which the jurisdiction of any lower court is in issue.
4.
5.
All criminal cases in which the penalty imposed is reclusion perpetua or higher.
All cases in which only an error or question of law is involved.
Preliminary investigation
Is this an integral part of procedural due process? It depends... If penalty imposable is
imprisonment ranging from 4 yrs 2 months and 1 day.... this is a matter of right.
ADMINISTRATIVE DUE PROCESS
REQUISITES:
1.
The right to hearing, which includes the right to present ones case and submit evidence in
support thereof.
2.
3.
The tribunal must consider the evidence presented

The decision must have something to support itself.
4.
The evidence must be substantial.
5.
The decision must be rendered on the evidence presented at the hearing, or at least contained in
6.
the record and disclosed to the parties affected.

The tribunal or body or any of its judges must act on its or his own independent consideration of
the law and facts of the controversy and not simply accept the views of a subordinate in arriving
at a decision.
7.
The board or body should, in all controversial questions, render its decision in such a manner that
the parties to the proceeding can know the various issues involved, and the reason for the
decision rendered.
EQUAL PROTECTION
PERSONS PROTECTED
Includes or is available to all natural persons as well as juridical (partnerships or
corporation). Artificial persons are entitled to the protection only insofar as their property is concerned.
As to natural persons, it includes the citizens as well as the foreigners. Generally, foreigners are
accorded with the equal protection of the law in the same manner as the citizens.
Term equal protection like due process is not particularly defined in the constitution. The purpose
of the intentional ambiguity is to provide for more adjustability to the swiftly moving facts of our
changing society.
Equal protection of the law does not mean that laws should be given a universal application
or laws must be equally applied to all persons. If there is universal application of law, it would result to
inequality.
Ex. Distribution of matured magazines (FHM, Playboy, etc)
If there is a law prohibiting the distribution and sale of these magazines even to adult persons, it would be
unfair and would result to inequality.
Universal application is not required. Such that equal protection of the law is served when
there is already equality among equals. In other words, there is already observance of equality under
the law if persons or things belonging to the same class must be treated alike both as to the rights
conferred and the obligations or responsibilities imposed.
The equal protection of the law would permit a valid classification but peripheral or
superficial distinctions is not a valid ground or requirement in order to have a valid classification.
There is already valid observance of equal protection of the law if the distinction is based upon
substantial differences. And far more important is that substantive equality is not enough. Such that
even if the law appear on its face to be valid or fair, the same law will be declared as invalid if in the
application thereof, there is inequality. It is important that the law must be applied and enforced equally.
According to Cruz, the law may be invalidated if it is administered with an evil eye and uneven
hand, so as to unjustly benefit some and prejudice others.
Yick Wo v. Hopkins
Ordinance giving license to establishment of laundries in an American city was annulled by the
U.S. Supreme Court. SC said law is valid but not in the implementation. I allowed further classification.
Only Chinese is discriminated. (see also People vs. Vera: in the implementation thereof there is a valid
inequality)
Equal protection of the law does not mean universal application of the law. It simply means that
all persons or things must be treated right both as to the right conferred and responsibilities
imposed. But generally, superficial difference is not a valid ground for any classification such that there
yet not be a valid classification on the basis of once skin color or on the basis on the color of hair or
forehead.
There are instances where physical difference may be a valid ground for differentiation.
Ex. Women prohibited to be hired as porters.
Joining the armed forces with height requirement..
Beauty contest
Classification MUST, as an INDESPENSABLE requisite, NOT BE ARBITRARY. Equal protection of the law
allows classification provided that the requirements are met:
1. Must be based upon substantial distinctions
Ex. Differentiation bet. Men and women for purposes of prohibiting women from being employed as
porters, then it is valid.
Differentiate alien from citizen. Citizen has more solicitude for the national interest. Alien allegiance to
local state is merely transient.
(see Quinto vs. COMELEC, there is a valid differentiation between an elected public official and an
appointed public official. Appointed public officials are deemed ipso facto resign upon [meaning they
are considered resigned from their post the moment they file their CoCs.] SC said that appointed
officials are deemed ipso facto resign upon filing of their certificate of candidacy while elected officials
are not.) 1987 admin code, prohibition on appointed official may not engage on partisan activity
Lagman vs. Ochoa
SC said there is no substantial difference or distinction bet. Arroyo admin vis-a-vis past admin.
Arroyo admin may not be treated as a class on its own.
School alliance vs quisumbing
Stipulation giving higher salaries to foreign bases instructors and housing allowances. Not valid
classification bet. foreign and local teachers. Not better. Must be based on substantial distinction.
2. Must be germane to the purpose of the law
Must have some relevance to the purpose of the law or objective to be accomplished.
Ex. Women law percentage in bar exam whereas men have higher. Not germane to the law. No showing
men are more intelligent.
Dumlao v comelec
Law prohibiting official who retired from service, 65, from seeking elective post.
Sc: valid classification. Relevant of purpose of law that is geared towards having new blood in governance.
The youth can perform better than oldies in providing public service.
3.
Must not be limited to existing conditions only
Ormoc v municipal treasurer (violative)

Imposing tax on ormoc sugar. Invalid cause it was limited to present condition. Under ordinance, name
was specifically mentioned thereby if there is new sugar company, it will not be assessed by the ordinance
because there was a name (ormoc sugar inc.) There was violation because it was but limited to the present
condition. Would not apply to new companies.
Luz v araneta, held imposition for rehab of sugar industry. Imposed on all those engaged in sugar
industry.
4. Must apply equally to all members of the class

While it true that there is valid a classification bet. imported vis a vis local cigarettes, law still invalid if
between the same there is a distinction.
Ex. Higher tax rate on champion, lower tax rate on hope, invalid.
Law invalid because rule states that all persons or things belonging to the same class shall be treated
alike, must be equally applied.
Lagman v ochoa
Arroyo was singled out. Cannot be treated any differently to past admins.
Yecho v hopkins
Sc: law is valid but in the implementation it is invalid. I allowed further classification. Only Chinese is
discriminated.
Tata v doe
Validity of RA 8180 oil price law. Sec 5, amount equivalent to. Violative. Prejudicial to new players.
Where does equal protection originated?
National Taxes in the Philippines

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro
sales and other forms of conditional sale.
Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing
the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.
Examples of documentary stamp tax are those that are charged on bank promissory notes, deed of sale,
and deed of assignment on transfer of shares of corporate stock ownership.
Donors Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property
between two or more persons who are living at the time of the transfer. Donors tax is based on a
graduated schedule of tax rate.
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs
and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to
testamentary disposition. Estate tax is also based on a graduated schedule of tax rate.
Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on
a persons income, emoluments, profits and the like. Self-employed individuals and corporate taxpayers
pay quarterly income taxes from 1st quarter to 3rd quarter. And instead of filing quarterly income tax on
the fourth quarter, they file and pay their annual income tax return for the taxable year. Individual income
tax is based on graduated schedule of tax rate, while corporate income tax in based on a fixed rate
prescribe by the tax law or special law.
Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or
services in the course of trade or business whose gross annual sales or receipts do not exceed the amount
required to register as VAT-registered taxpayers. Percentage taxes are usually based on a fixed rate. They
are usually paid monthly by businesses or professionals. However, some special industries and
transactions pay percentage tax on a quarterly basis.
Value Added Tax is a business tax imposed and collected from the seller in the course of trade or
business on every sale of properties (real or personal) lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be passed on to the buyer, causing this to increase the
prices of most goods and services bought and paid by consumers. VAT returns are usually filed and paid
monthly and quarterly.
Excise Tax is a tax imposed on goods manufactured or produced in the Philippines for domestic sale or
consumption or any other disposition. It is also imposed on things that are imported.
Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation
income. This tax is what employers withheld in their employees compensation income and remit to the
government through the BIR or authorized accrediting agent.
Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and
is creditable against the income tax due of the payee for the taxable quarter year. Examples of the
expanded withholding taxes are those that are withheld on rental income and professional income.
Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not
creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes
the full and final payment of the Income Tax due from the payee on the said income. An example of final
withholding tax is the tax withheld by banks on the interest income earned on bank deposits.
Withholding Tax on Government Money Payments is the withholding tax withheld by government
offices and instrumentalities, including government-owned or -controlled corporations and local
government units, before making any payments to private individuals, corporations, partnerships and/or
associations.
Local Taxes in the Philippines

Tax on Transfer of Real Property Ownership tax imposed on the sale, donation, barter, or on any
other mode of transferring ownership or title of real property.
Tax on Business of Printing and Publication tax on the business of persons engaged in the printing
and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others
of similar nature.
Franchise Tax tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of
one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming
receipt, or realized, within its territorial jurisdiction.
Tax on Sand, Gravel and Other Quarry Resources tax imposed on ordinary stones, sand, gravel, earth,
and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted
from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its
territorial jurisdiction.
Professional Tax an annual professional tax on each person engaged in the exercise or practice of his
profession requiring government examination.
Amusement Tax tax collected from the proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement.
Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of,
Dealers, or Retailers in, Certain Products an annual fixed tax for every truck, van or any vehicle used
by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled
spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by
the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly, within the
province.
Tax on Business taxes imposed by cities, municipalities on businesses before they will be issued a
business license or permit to start operations based on the schedule of rates prescribed by the local
government code, as amended. Take note that the rates may vary among cities and municipalities. This is
usually what businesses pay to get their Business Mayors Permit.
Fees for Sealing and Licensing of Weights and Measures fees for the sealing and licensing of weights
and measures at such reasonable rates as shall be prescribed by the sangguniang bayan of the
municipality or city.
Fishery Rentals, Fees and Charges rentals, fees or charges imposed by the municipality/city to
grantees of fishery privileges in the municipal/city waters, e.g., fishery privileges to erect fish corrals,
oysters, mussels or other aquatic beds or bangus fry areas and others as mentioned in the local
government code, as amended.
Community Tax tax levied by cities or municipalities to every inhabitant of the Philippines eighteen (18)
years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30)
consecutive working days during any calendar year, or who is engaged in business or occupation, or who
owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who
is required by law to file an income tax return. Community tax is also imposed on every corporation no
matter how created or organized, whether domestic or resident foreign, engaged in or doing business in
the Philippines.
Taxes that may be levied by the barangays on stores or retailers with fixed business
establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos
(P50,000.00) or less, in the case of cities and Thirty thousand pesos (P30,000.00) or less, in the case of
municipalities, at a rate not exceeding one percent (1%) on such gross sales or receipts.
Service Fees or Charges fees or charges that may be collected by the barangays for services rendered
in connection with the regulations or the use of barangay-owned properties or service facilities, such as
palay, copra, or tobacco dryers.
Barangay Clearance a reasonable fee collected by barangays upon issuance of barangay clearance a
document required for many government transactions, such as when applying for business permit with
the city or municipality.
Classification of Taxpayers
Income of taxpayers, with distinction based on the amount of income subject to tax, or applicable tax
rates, or both are classified as follows:
A. Individuals:
1. Citizens of the Philippines:
a. Residents of the Philippines [Secs. 23 (A) and 24 (A)]
i. Filipinos residing in the Philippines
ii. Filipinos living abroad but without intention of residing there permanently. [Sec. 22 (E)]
b. Not Residents of the Philippines [Secs. 23 (B) and 24 (A)]
i. One has intention to reside permanently abroad
c. OFW and Seaman [Sec. 23 (C) and 24 (A)]
2. Aliens
a. Residents of the Philippines
b. Not Residents of the Philippines [Secs. 22 (G); 23 (D); 25 (A) and (B)
i. Non-resident alien engaged engaged in trade and business in the Philippines
ii. Non- resident alien engaged in trade or business in the Philippines
c. Aliens employed by multinational companies, offshore banking units and petroleum contractors and
subcontractors.
3. Estates and Trusts
B. Corporations:
1. Domestic Corporations (Sec. 27)

Domestic Corporations are liable to pay corporate income tax from sources within or without.
2. Foreign Corporations
a. Resident Corporations - foreign corporations engaged in trade or business in the Philippines;
b. Non- resident corporations - foreign corporations not engaged in business or trade in the
Philippines.
3. Partnerships
a. Taxable Partnership
b. Exempt Partnership
1. General Professional Partnership (GPP)
2. Joint Venture or Consortium undertaking construction activity, or engaged in petroleum
operations with operating contract with the government.
Tax Rates
Tax Rate
A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and
Practice of Profession
Amount of Net Taxable
Income
Over
Rate
But Not Over

P10,000
5%
P10,000
P30,000
P500 + 10% of the Excess over P10,000
P30,000
P70,000
P2,500 + 15% of the Excess over P30,000
P70,000
P140,000
P140,000
P250,000
P250,000
P500,000
P500,000
P125,000 + 32% of the Excess over P500,000 in 2000 and

onward
Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the
first installment to be paid at the time the return is filed and the second installment 15 of the same year at
on or before July the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office
(RDO) where the taxpayer is registered.
Tax Rate
Taxable Base
1. Domestic Corporations:
a. In General
30% (effective
Jan. 1, 2009)
Net taxable income from all sources
b. Minimum Corporate Income Tax*
2%
Gross Income
c. Improperly Accumulated Earnings
10%
Improperly Accumulated Taxable

Income
2. Proprietary Educational Institution
10%
Net taxable income provided that the

gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
3. Non-stock, Non-profit Hospitals
10%
Net taxable income provided that the

gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
a. In General
30%
2%
Gross Income
10%

Income
a. In General
30%
2%
Gross Income
10%

Income
a. In General
30%
2%
Gross Income
10%

Income
4. GOCC, Agencies &

Instrumentalities
5. National Gov't. & LGUs
6. Taxable Partnerships
7. Exempt Corporation
a. On Exempt Activities
0%
b. On Taxable Activities
30%
8. General Professional Partnerships
0%
9. Corporation covered by Special

Laws
Rate specified
under the
respective special
laws
10. International Carriers
2.5%
Gross Philippine Billings
11. Regional Operating Head
10%
Taxable Income
12. Offshore Banking Units (OBUs)
10%
Gross Taxable Income On Foreign

Currency Transaction
30%
On Taxable Income other than

Foreign Currency Transaction
10%
Gross Taxable Income On Foreign

Currency Transaction
30%
On Taxable Income other

Foreign Currency Transaction
13. Foreign Currency Deposit Units

(FCDU)
than
*Beginning on the 4th year immediately following the year in which such corporation commenced its
business operations, when the minimum corporate income tax is greater than the tax computed using the
normal income tax.
Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes
20%
2. Royalties (on books as well as literary & musical composition)
10%
- In general
20%
3. Prizes (P10,000 or less )
5%
- In excess of P10,000
20%
4. Winnings (except from PCSO and lotto)
20%
5. Interest Income of Foreign Currency Deposit
7.5%
6. Cash and Property Dividends

- To individuals from Domestic Corporations
10 %
- To Domestic Corporations from Another Domestic Corporations
0%
7. On capital gains presumed to have been realized from sale, exchange or

other disposition of real property (capital asset)
6%
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000
5%
- Any amount in excess of P100,000
10%
9. Interest Income from long-term deposit or investment in the form of

savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates
Upon pretermination before the fifth year , there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:
Holding Period
Exempt
- Four (4) years to less than five (5) years
5%
- Three (3) years to less than four (4) years
12%
- Less than three (3) years
20%
B. For Non-Resident Aliens Engaged in Trade or Business

1. Interest from currency deposits, trust funds and deposit substitutes
20%
2. Interest Income from long-term deposit or investment in the form of

savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificatesUpon
Exempt
pretermination before the fifth year, there should be imposed on the entire
income from the proceeds of the long-term deposit based on the remaining
maturity thereof:Holding Period:
-Four (4) years to less than five (5) years
5%
-Three (3) years to less than four (4) years
12%
-Less than three (3) years
20%
3. On capital gains presumed to have been realized from the sale, exchange
6%
or other disposition of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000
5%
10%
C) For Non-Resident Aliens Not Engaged in Trade or Business

1. On the gross amount of income derived from all sources within the
25%
Philippines
2. On capital gains presumed to have been realized from the exchange or
6%
other disposition of real property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000
5%
10%
D) On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or
Area Headquarters and Regional Operating Headquarters (ROH), Offshore Banking Units (OBUs),
Petroleum
Service
Contractor
and
Subcontractor
On the gross income in the Philippines of Aliens Employed by Regional

Headquarters (RHQ) or Area Headquarters and Regional Operating
Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service
Contractor and Subcontractor
15%
E) General Professional Partnerships

General Professional Partnerships
0%
F) Domestic Corporations
1) a. In General on net taxable income
b. Minimum Corporate Income Tax on gross income
30%
2%
c. Improperly Accumulated Earnings on improperly accumulated taxable

10%
income
2) Proprietary Educational Institution and Non-profit Hospitals
- In general (on net taxable income)
10%
10%
- If the gross income from unrelated trade, business or other activity

30%
exceeds 50% of the total gross income from all sources
4) GOCC, Agencies & Instrumentalities
a. In General - on net taxable income
30%
2%

10%
income
5) Taxable Partnerships
a. In General on net taxable income
30%
2%

10%
income
6) Exempt Corporation
a. On Exempt Activities
0%
b. On Taxable Activities
30%
8) Corporation covered by Special Laws
Rate specified
under the
respective special
laws
G) Resident Foreign Corporation
1) a. In General on net taxable income
30%
2%

10%
income
2) International Carriers on gross Philippine billings
2.50%
3) Regional Operating Headquarters on gross income
10%
4) Corporation Covered by Special Laws
Rate specified
under the
respective special
laws
5) Offshore Banking Units (OBUs) on gross income
10%
6) Foreign Currency Deposit Units (FCDU) on gross income
10%
Difference between Direct and Indirect Taxes

The difference between a direct and indirect tax is complicated because it truly depends on whether you
are asking from a "legal" or an "economic" perspective.
From an Economic Perspective
In economics,
A direct tax will refer to any levy that is both imposed and collected on a specific group of
people or organizations. An example of direct taxation would be income taxes that are collected
from the people who actually earn their income.
Indirect taxes are collected from someone or some organization other than the person or entity
that would normally be responsible for the taxes. A sales tax, for instance, would not be
considered a direct tax because the money is collected from merchants, not from the people who
actually pay the tax (the consumers).
In this economic context, the law may actually determine the person or entities from which the tax will be
collected, but has nothing to do with how that tax burden is distributed in the market. Who bears the
economic burden of the tax itself will be determined by market forces and can be calculated by
comparing the price of the goods after the tax has been imposed with the price of the goods prior to the
tax being in place.
For example, if the price of a gallon of gasoline was $2.50 without taxes and the government suddenly
imposed a $0.40 tax, the economic forces of supply and demand would ultimately decide how this new
burden is distributed between buyers and sellers. For instance, the price could increase to $2.75 per gallon
after the tax, with buyers absorbing $0.25 of the increase and sellers the remaining $0.15. The law may
have imposed the tax but the marketplace ultimately decided how it would be distributed.
From a Legal Perspective
In a legal sense, the meaning of direct and indirect taxes changes:
A direct tax, according to the U.S. Constitution, applies only to property and poll taxes. These
direct taxes are based on simple ownership or existence.
Indirect taxes are imposed upon a broad range of abstract ideas, including rights, privileges, and
activities.
In this sense, a tax on the sale of property would be considered an indirect tax while the tax actually owed
on the property would be direct.
To put this in perspective, an income tax is technically an indirect tax levied against people, corporations,
and other legal entities recognized by the legal system. There are a number of systems in existence to
help collect this income tax, from a simple flat tax to a more complex progressive system. This indirect tax
on individuals is typically based upon total income minus legally permitted deductions. For corporations
(for-profit corporations), the corporate income tax is based upon the net income or total revenue minus
all expenses.
Another Explanation
The basis of classifying taxes into direct and indirect taxes is who ultimately bears the burden of a tax.
(a) Direct tax:
When (i) liability to pay a tax and (ii) the burden of that tax falls on the same person, the tax is called a
direct tax.
A direct tax is the tax whose burden is borne by the person on whom it is imposed, i.e., its burden cannot
be shifted to others. For example, (i) Income tax is a direct tax because the person whose income is taxed
is liable to pay the tax directly to the government and bear the burden of the tax himself. Other examples
of direct tax are (ii) corporate taxIt is levied on profit of corporations and companies, (iii) Wealth taxIt
is imposed on property of individuals depending upon the value of property. (iv) Gift taxIt is paid to the
government by the recipient of gift depending on value of gift, (v) Estate dutyIt is charged from
successor of inherited property.
Similarly (vi) Expenditure tax and (vii) Fringe benefit tax (imposed by state govt.) are other examples of
direct taxes. It is difficult to avoid direct taxes as they are levied directly on income and property of
persons who pay directly to the government.
Merits of direct taxes:
(i)
Direct taxes help in reducing disparities in income and wealth of people,
(ii)
They are economical because cost of collection for government is relatively low,
(iii)
Social and economic Justice is achieved to some extent because direct taxes are based on
ability to pay.
Direct taxes are generally considered progressive taxes because they are based on the ability to pay. A
progressive tax is one the rate of which increases with rise in income and decreases with fall in income.
(b) Indirect tax:
When
(i)
liability to pay a tax is on one person and
(ii)
(ii) the burden of that tax falls on some other person, the tax is called an indirect tax.
NIRC 1997 and its amendments

R.A.
No.
TITLE
Date of Approval
Date of Effectivity
The National Internal Revenue Code of 1997 December 11, 1997
January 1, 1998
R.A.
An Act Imposing The Value-Added Tax on February 15, 2000
January 1, 2001
8761
Certain Services Beginning January 1, 2001,
R.A.
8424
Amending for the Purpose Section 5 of R.A.

No. 8424 and for Other Purposes.
R.A.
An Act To Further Defer The Imposition Of February 27, 2001
9010
The Value-Added Tax On Certain Services,
January 1, 2003
Amending For The Purpose Section 5 of R.A.

No. 8424, As Amended by R.A. No. 8761.
R.A.
An Act Rationalizing the Excise Tax on August 29, 2003
October 4, 2003 (published
9224
Automobiles, Amending for the Purpose the
on September 18, 2003)
National Internal Revenue Code of 1997,

and for Other Purposes.
R.A.
An Act Amending Certain Sections of the Lapsed into law on Feb. January 1, 2004
9238
National Internal Revenue Code of 1997, as 5,
2004
without
the
of
the
Amended, by Excluding Several Services signature
from the Coverage of the Value-added Tax President in accordance

and Re-imposing the Gross Receipts Tax on with Article VI, Section
Banks
and
Non-bank
Financial 27(1)
of
Intermediaries Performing Quasi-Banking Constitution.

Functions and Other Non-Bank Financial
Intermediaries Beginning January 1, 2004.
the
R.A.
An Act Rationalizing the Provisions on the February 17, 2004
9243
Documentary Stamp Tax of The National

Internal
Revenue
Code
of
1997,
March 20, 2004
as
Amended, and for Other Purposes.

by
the May 21, 2004
R.A.
An Act Restoring the Tax Exemption of Approved
9294
Offshore Banking Units (OBUs) and Foreign President on April 28,

Currency Deposit Units (FCDUs), Amending 2004
for the Purpose Section 27(D)(3) and
Section 28, Paragraphs (A)(4) and (A)(7)(b)
of the National Internal Revenue Code, as
Amended.
R.A.
An Act Increasing the Excise Tax Rates December 31, 2004
9334
Imposed on Alcohol and Tobacco Products,
January 1, 2005
Amending for the Purpose Sections 131,

141, 142, 143, 144, 145 and 288 of the
National Internal Revenue Code of 1997, as
Amended.
R.A.
An Act Amending Sections 27, 28, 34, 106, Approved on May 24, Its
effectivity
clause
9337
107, 108, 109, 110, 111, 112, 113, 114, 116, 2005.
provides that it shall take
117, 119, 121, 148, 151, 236, 237 and 288 of
effect July 1, 2005 but due
the National Internal Revenue Code of
to a TRO filed by some
1997, as Amended, and for Other Purposes.
taxpayers. The law finally

took effect November 1,
2005 when the TRO was
finally
lifted
by
the
Supreme Court
R.A.
An Act Amending Section 110(B) of the Approved on November December
9361
National Internal Revenue Code of 1997, as 21, 2006
13,
2006
(published on November
Amended, and for Other Purposes.
28, 2006)
R.A.
An Act Amending Sections 22, 24, 34, 35, 51 Approved on June 17, July 6, 2008
9504
and 79 of Republic Act No. 8424, As 2008 and took effect on

Amended, Otherwise Known as the National July 6, 2008.
Internal Revenue Code of 1997.
R.A.
Publishing the full text of Republic Act No. Approved February 23,
10001 10001 entitled "An Act Reducing Taxes on 2010

Life Insurance Policies, Amending for this
Sections 123 and 183 of the National
Internal
Revenue
Code
of
1997,
as
Amended."
R.A.
An
Act
to
Allow
the
Exchange
of Approved
March
8,
10021 Information By The Bureau of Internal 2010

Revenue On Tax Matters Pursuant to
Internationally-Agreed
Tax
Standards,
Amending Section 6(F), and 270 Of The

National
Internal
Revenue
Code,
As
Amended and For Other Purposes.

R.A.
An Act Granting Income Tax Exemption To Lapsed
into
law
on
10026 Local Water Districts by Amending Section March 11, 2010 without
27 (C) of the National Internal Revenue the
signature of the
Code of 1997 As Amended, and Adding President, in accordance

Section 289-A To The Code For the with Article VI, Section
Purposes.
27
(1)
Constitution.)
Full Text is provided by a separate PDF and DOCX file.
of
the
Brief Summary
The National Internal Revenue Code of 1997 (NIRC) is the basic law governing taxation by the national
government. In addition to providing the organization and functions of the Bureau of Internal Revenue,
the NIRC provides the imposition of the following taxes:
income tax;
estate tax;
donors tax;
value-added tax;
excise tax; and
Documentary stamp tax.
The NIRC also provides the remedies available to the government in case of non-payment of a tax as well
as the remedies available to a taxpayer who erroneously pays a tax or is being assessed a tax.
The NIRC was embodied in Republic Act No. 8424 (known as the Tax Reform Act of 1997), which
introduced comprehensive amendments to the National Internal Revenue Code of 1977 (as embodied in
Presidential Decree No. 1158). The NIRC became effective on January 1, 1998 (although the
implementation of certain provisions, such as those relating to the imposition of value-added tax on
certain services, were deferred to a later date).
Lands Covered by CARP
Section 3. Section 4 of Republic Act No. 6657, as amended, is hereby further amended to read as follows:
"SEC. 4. Scope. -The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable
for agriculture: Provided, That landholdings of landowners with a total area of five (5) hectares and below
shall not be covered for acquisition and distribution to qualified beneficiaries.
"More specifically, the following lands are covered by the CARP:
"(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture.
No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public domain;
"(b) All lands of the public domain in excess of the specific limits as determined by Congress in
the preceding paragraph;
"(c) All other lands owned by the Government devoted to or suitable for agriculture; and
"(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products
raised or that can be raised thereon.
"A comprehensive inventory system in consonance with the national land use plan shall be instituted by
the Department of Agrarian Reform (DAR), in accordance with the Local Government Code, for the
purpose of properly identifying and classifying farmlands within one (1) year from effectivity of this Act,
without prejudice to the implementation of the land acquisition and distribution."
Tax Shield
Investopedia
A reduction in taxable income for an individual or corporation achieved through claiming allowable
deductions such as mortgage interest, medical expenses, charitable donations, amortization and
depreciation. These deductions reduce taxpayers' taxable income for a given year or defer income taxes
into future years.
Tax shields vary from country to country, and their benefits will depend on the taxpayer's overall tax rate
and cash flows for the given tax year.
For example, because interest on debt is a tax-deductible expense, taking on debt can act as a tax shield.
Tax-efficient investing strategies are a cornerstone of investing for high-net-worth individuals and
corporations, whose annual tax bills can be very high. The ability to use a home mortgage as a tax shield
is a major benefit for many middle-class people whose homes are a major component of their net worth.
What are the allowable deductions from gross income according to BIR?
Except for taxpayers earning compensation income arising from personal services rendered under an
employer-employee relationships where the only deduction provided that the gross family income does
not exceed P250,000 per family is the premium payment on health and/or hospitalization insurance, a
taxpayer may opt to avail any of the following allowable deductions from gross income:
a. Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals and
gross income for corporations; or
b. Itemized Deductions which include the following:
Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion of Oil and Gas Wells and Mines
Charitable Contributions and Other Contributions
Research and Development
Pension Trusts
In addition, individuals who are either earning compensation income, engaged in business or deriving
income from the practice of profession*** are entitled to personal and additional exemptions as
follows:
***it answers the question whether PE is applicable only in Compensation or also business.
Personal Exemptions:
For single individual or married individual judicially decreed as legally separated with no qualified
dependents
P 50,000.00
For head of family
P 50,000.00
For each married individual
*P 50,000.00
Note: In case of married individuals where only one of the spouses is deriving gross income, only such
spouse will be allowed to claim the personal exemption.
Additional Exemptions:
For each qualified dependent, a P25,000 additional exemption can be claimed but only up to 4
qualified dependents
The additional exemption can be claimed by the following:
The husband who is deemed the head of the family unless he explicitly waives his right in favor
of his wife
The spouse who has custody of the child or children in case of legally separated spouses.
Provided, that the total amount of additional exemptions that may be claimed by both shall not
exceed the maximum additional exemptions allowed by the Tax Code.
The individuals considered as Head of the Family supporting a qualified dependent
The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be
claimed if:
Family gross income yearly should not be more than P 250,000
For married individuals, the spouse claiming the additional exemptions for the qualified
dependents shall be entitled to this deduction
Functions and Powers of BIR

1. Assessment and collection of all national internal revenue taxes, fees and charges.
2. Enforcement of all forfeitures, penalties, fines and execution of judgments in all cases decided in its
favor by the Court of Tax Appeals and the ordinary courts
3. Administer supervisory and police powers conferred by National Internal Revenue Code as amended by
R.A. 8424 or other laws.
(Extended?)
1. To interpret tax laws and decide tax cases;
2. To obtain information, and to summon, examine and take testimony of persons;
3. To make assessments and prescribe additional requirements for tax administration and enforcement;
4. To conduct inventory - taking, surveillance and to prescribe presumptive gross sales and receipts;
5. To terminate taxable period;
6. To prescribe real property values;
7. To inquire into bank deposit accounts;
8. To accredit and register tax agents;
9. To prescribe additional procedural or documentary requirements; and
10. To delegate power to subordinates. (Sec. 4 to 8, NIRC)
Functions and Power of Bureau of Customs

1. Prevent smuggling and other frauds
2. Control vessels/aircrafts doing foreign trade
3. Enforce tariff and customs laws
4. Control the handling of foreign mails for revenues and prevention purposes
5. Control import and export cargoes
6. Jurisdiction over forfeiture and seizure cases
(Extended?)
a. The assessment and collection of the lawful revenues from imported articles and all other dues, fees,
charges, fines and penalties accruing under the tariff and customs laws.
b. The prevention and suppression of smuggling and other frauds upon the customs.
c. The supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign
commerce.
d. The general supervision, control and regulation of vessels engaged in the carrying of passengers and
freight or in towage in coastwise trade and in the bays and rivers of the Philippines.
e. The prohibition and suppression of unnecessary noises, such as explosion of gasoline engines, the
excessive blowing of whistles or sirens, and other needless and disturbing sounds made by water craft in
the ports of the Philippines or in parts of rivers included in such ports.
f. The exclusion, if the conditions of traffic should at any time so require, of vessels of more than one
hundred and fifty tons from entering, berthing or mooring in the Pasig River.
g. The admeasurement, registration, documenting and licensing of vessels built or owned in the
Philippines, the recording of sales, transfers and encumbrances of such vessels, and the performance of all
the duties pertaining to marine registry.
h. The inspection of Philippine vessels, and supervision over the safety and sanitation of such vessels.
i. The enforcement of the lawful quarantine regulations for vessels entering Philippine ports.
j. The enforcement of the tariff and customs laws and all other laws, rules and regulations relating to the
tariff and customs administration.
k. The licensing of marine officers who have qualified in the examination required by law to be carried on
Philippine vessels, the determination of the qualifications of pilots, the regulation of this service, and the
fixing of the fees which they may charge.
l. The supervision and control over the handling of foreign mails arriving in the Philippines, for the
purpose of the collection of the lawful duty on dutiable articles thus imported and the prevention of
smuggling through the medium of such mails.
Powers and Functions of the Court of Tax Appeals
The CTA shall exercise jurisdiction as follows:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period
of action, in which case the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided
or resolved by them in the exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or
other money charges, seizure, detention or release of property affected, fines, forfeitures or other
penalties in relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate
jurisdiction over cases involving the assessment and taxation of real property originally decided
by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review
from decisions of the Commissioner of Customs which are adverse to the Government under
Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties under Section 301 and 302,
respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein provided:
1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National
Internal Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of
Internal Revenue or the Bureau of Customs: Provided, however, That offenses or felonies
mentioned in this paragraph where the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no
specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA shall
be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the recovery of civil liability for taxes and
penalties shall at all times be simultaneously instituted with, and jointly determined in the same
proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with it
the filing of the civil action, and no right to reserve the filling of such civil action separately from
the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in
the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective
jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments
for taxes, fees, charges and penalties: Provided, however, That collection cases where the principal
amount of taxes and fees, exclusive of charges and penalties, claimed is less than One million
pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court, Metropolitan Trial Court
and Regional Trial Court.
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax
collection cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in
the Exercise of their appellate jurisdiction over tax collection cases originally decided by the
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their
respective jurisdiction.
The Court shall have the power to administer oaths, receive evidence, and summon witnesses by
subpoena duces tecum, subject in all respects to the same restrictions and qualifications as
applied in judicial proceedings of a similar nature. The Court shall, in accordance with Rule
seventy-one of the Rules of Court, have the power to punish for contempt for the same causes,
under the same procedure and with the same penalties provided therein.
Who May Appeal; Mode of Appeal; Effect of Appeal. Any party adversely affected by a decision, ruling or
inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of
Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of
Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days
after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as
referred to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a procedure analogous to that provided for
under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of
the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed
by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with respect to
decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in the
exercise of its appellate jurisdiction appeal shall be made by filing a petition for review under a procedure
analogous to that provided for under rule 43 of the 1997 Rules of Civil Procedure with the CTA, which
shall hear the case en banc.
All other cases involving rulings, orders or decisions filed with the CTA as provided for in Section 7 shall
be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the CTA
may file a motion for reconsideration of new trial before the same Division of the CTA within fifteen (15)
days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in regular
Courts on matters of prosecution and appeal shall likewise apply.
No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the
Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the
Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be
shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction
of his tax liability as provided by existing law: Provided, however, That when in the opinion of the Court
the collection by the aforementioned government agencies may jeopardize the interest of the
Government and/or the taxpayer the Court any stage of the proceeding may suspend the said collection
and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than
double the amount with the Court.
In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act, the Government
may directly file the said cases with the CTA covering amounts within its exclusive and original jurisdiction.
Appeal to the Court of Tax Appeals En Banc. No civil proceeding involving matter arising under the
National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be
maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA
and disposed of in accordance with the provisions of this Act.
A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new
trial, may file a petition for review with the CTA en banc.
Tax Evasion vs. Tax Avoidance
Tax Evasion is an illegal practice where a person, organization or corporation intentionally avoids paying
his/her/its true tax liability. Those caught evading taxes are generally subject to criminal charges and
substantial penalties.
Typically, tax evasion schemes involve an individual or corporation misrepresenting their income to the
BIR. Misrepresentation may take the form either of underreporting income, inflating deductions, or hiding
money and its interest altogether in offshore accounts.
Individuals involved in illegal enterprises often engage in tax evasion because reporting their true
personal incomes would serve as an admission of guilt and could result in criminal charges. Individuals
who try to report these earnings as coming from a legitimate source can face money laundering charges.
On the other hand, Tax Avoidance is the use of legal methods to modify an individual's financial situation
in order to lower the amount of income tax owed. This is generally accomplished by claiming the
permissible deductions and credits. This practice differs from tax evasion, which is illegal.
Remedies Available to Government in Dealing with Delinquent Taxpayers

(Sections 205-227 of NIRC)
1. ADMINISTRATIVE
a. Distraint of personal property;
b. Levy of personal property
c. Enforcement of forfeiture of property
d. Enforcement of tax lien

e. Requiring the filing of bonds
f. Requiring proof of filing income tax returns
g. Deportation of aliens
h. Inspection of books of accounts.
2. JUDICIAL
a. ordinary civil action
b. criminal action
DISTRAINT- seizure by the government of personal property, tangible or intangible, to enforce the
payment of taxes to be followed by its public sale if the taxes are not voluntarily paid.
Kinds of Distraint
a. Actual- there is taking of possession of the personal property out of the taxpayer into that of the
government;
b. Constructive- the owner is merely prohibited from disposing of his property.
LEVY- A summary administrative remedy, seizure of real property to enforce payment of taxes.
A written notice of levy, containing a description of the property upon which levy is made, the name of
the taxpayer and the amounts of the tax and penalty due from them is served upon the taxpayer.
FORFEITURE- a divestiture of property without compensation, in consequence of a default or offense. In
case of chattels and removal of fixtures of any sort, forfeiture is enforced by seizure and sale or
destruction of the specific forfeited property. The forfeiture of real property is enforced by a judgment of
condemnation and sale in a legal action or proceeding, civil or criminal, as the case may require.
TAX LIEN- a legal claim or charge on property either real or personal established by law as a security in
default of the payment of taxes. The tax, together with interest, penalties and cost that may accrue in
addition thereto is a lien upon all property and rights to property belonging to the taxpayer. The lien
however, shall not be valid against any mortgagee, purchaser or judgment creditor until legal notice of
such liens should be filed by the Commissioner of internal revenue in the Office of the Register of Deeds
of the province or city where the property of the taxpayer is located. The lien attaches when the taxpayer
neglects or refuses to pay the tax after demand, but relates back from the time when assessment was
made by the Commissioner.
REQUIRING THE FILING OF BONDS- Filing of performance bond to secure the payment of taxes or
compliance with certain provisions of tax laws and regulations. This may be required by the BIR for the
issuance of a tax clearance.
REQUIRING PROOF OF FILING INCOME TAX RETURNS. Before a license to engage in trade or
business or occupation or to practice a profession can be issued to a person, partnership, association or
corporation, he must submit to the officer issuing such license or permit, proof that he has filed his
income tax return during the preceding year and that income taxes due have been paid thereon.
DEPORTATION OF ALIENS- any alien who
1. Knowingly and fraudulently evades the payment of any internal revenue tax or
2. Willfully refuses to pay such tax and its accessory penalties after the decision on the tax liability
rendered by the Commissioner of Internal Revenue, or the CTA or any competent judicial tribunal shall
have become final and executor, is subject to deportation. The penalty of deportation is not a bar to any
proceeding taken by the government to enforce collection of tax delinquency.
Remedies Available to Taxpayers

BEFORE PAYMENT
administrative protest
request for reconsideration
request for reinvestigation
judicial protest
AFTER PAYMENT
claim for tax refund
claim for tax credit
1. Administrative Protest (Protest against Assessment)

WHEN: within 30 days from receipt of final assessment notice (FAN)
WHERE: BIR
HOW: written protest, stating facts, applicable law, rules and regulations or jurisprudence o which his
protest is based; if only portions of FAN are disputed, must pay the deficiency tax on undisputed portion
PROCEDURE:
protest against pre-assessment notice (PAN) within 15 days from receipt
protest against FAN within 30 days from receipt
submit relevant documents within 60 days from filing of protest
CIR has 180 days to decide. In case of denial or lapse of 180-day period, taxpayer has 30 days to bring his
protest to the CTA en division
WHEN PAN IS NOT REQUIRED:
Finding for any deficiency tax is the result of mathematical error in computation of tax as
appearing on face of return
A discrepancy has been determined between the tax withheld and the amount actually remitted
taxpayer who opted to claim a refund or credit of excess creditable withholding tax for at taxable
period was determined to have carried over and automatically applied the same amount claimed
against the estimated tax liabilities for the taxable quarter/s for the succeeding taxable year/s
Excise tax due on excisable articles have not been paid
Article locally purchased or imported by an exempt person
2. Request for Reconsideration a plea for re-evaluation of an assessment on the basis of EXISTING
RECORDS without need of additional evidence (question of law or fact or both)
3. Request for Reinvestigation a plea for reinvestigation of an assessment on the basis of NEWLYDISCOVERED EVIDENCE that a taxpayer intends to present in the reinvestigation (question of law or fact
or both)
- in either case, the request must be accompanied by a WAIVER of the statute of limitations in favor of the
government
4. Judicial Protest
PROCEDURE
within 30 days from denial of protest by CIR or from lapse of 180-day period, appeal to CTA
division
if CTA division denies, motion for reconsideration within 15 days from receipt
within 15 days from denial of motion, appeal to CTA en banc
appeal to SC within 15 days by petition for review (Rule 45)
5. Refund/Credit
-
based on the legal principle of quasi-contract or solutio indebiti
in the nature of an exemption, which cannot be allowed unless granted in the most explicit and
categorical language
strictly construed against the claimant (proof of claim must be established)
partial payment of a tax cannot be the basis for a tax refund
interest on taxes refunded may not be paid by the Government to the taxpayer, UNLESS: (a) the
CIR acted with patent arbitrariness (inexcusable or obstinate disregard for legal provision); and (b)
in the case of income taxes withheld on the wages of employees, which must be refunded within
3 mos. from April 15
Tax Refund vs. Tax Credit

R: takes place when there is actually a reimbursement of the tax
C: the Government issues a tax certificate or tax credit memo covering the amount determined to be
reimbursable, which can be applied after proper verification against any sum that may be due and
collectible from the taxpayer
Requisites for Recovery

-
there was an actual collection and receipt by the Government of the tax sought to be recovered
(factual proof)
legal basis for the granting of refund or credit, including verification of compliance with the
statutory requirements relative to the filing of claims within the reglementary 2-yr period
in case of corporations, must signify whether to avail of tax refund or tax credit in the corporate
income tax return
Q: Are income tax returns actionable documents which must be specifically denied by the Government,
otherwise it would constitute an admission to the allegation that payment has in fact already been made
and therefore the taxpayer no longer has to submit proof of claim of refund?
A: Income tax returns are not actionable documents because the action is not based on the income tax
returns but on the entitlement of the taxpayer to tax refund. Therefore, his claim for refund must be
supported by proof.
NOTA BENE: If proof of claim for refund is established, the BIR should refund without any unreasonable
delay
Q: Is tax deficiency assessment a bar to tax refund or credit claim?
A: Yes. The deficiency assessment creates a doubt as to the truth and accuracy of the return. Said return
cannot therefore be the basis of refund or credit.
Statutory Requirements for Refund/Credit Claims
-
written claim for refund or tax credit must be filed by the taxpayer with the CIR
the claim must be a categorical demand for reimbursement
both administrative and judicial claims for refund/credit must be filed within 2 years from date of
payment regardless of any supervening cause (in case of corporations, the 2-year period is
counted from the date final adjusted return was filed at end of taxable year)
Q: Suppose A filed his claim for tax refund with the BIR within the 2-yr reglementary period but it is only
after two years have lapsed before BIR rendered a decision and it is one of denial. A now files an appeal of
the BIRs decision with the CTA within the 30-day period to appeal. Will As action prosper?
A: No, As action will not prosper. Although A filed his claim for refund with the BIR within the 2-yr
prescriptive period, he failed to file the same within the same period with the CTA. The rule is that the
taxpayer need wait for the action of CIR on his claim for refund before he can take his claim to the CTA.
The 2-yr period must be complied with in both the BIR and CTA, regardless of any supervening cause.
WHEN 2-YR PRESCRIPTIVE PERIOD SUSPENDED
-
there is a pending litigation between the two parties
the CIR in that litigated case agreed to abide by the decision of the SC
WHY WRITTEN CLAIM IS NECESSARY:

-
to afford CIR an opportunity to correct action of subordinates
to notify Government that taxes sought to be refunded are under question and that, therefore,
such notice should be borne in mind in estimating the revenue available for expenditure
GR: Government is not liable for interest on tax refund, UNLESS:

-
CIR acted with patent arbitrariness
In the case of income taxes withheld on wages of employees, which must be refunded within 3
months from April 15
PRINCIPLE OF EQUITABLE RECOUPMENT allows a taxpayer whose claim for a refund has been barred
due to prescription (lapse of more than 2yrs counted from date of payment) to recover said tax by setting
off the prescribed refund against a tax that may be due and collectible from him; NOT ALLOWED in the
Philippines because it puts a premium on the taxpayers neglect to enforce or assert his rights under the
law.

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CONSTI

Taada, et al., v. Angara, et al., G.R. No. 118295, May 2, 1997

Section 1 Article 3 of the 1987 Constitution

(case of Ynot vs.IAC)

Cancellation of passport of a person sought for the commission of a crime

Preventive suspension of a civil servant facing administrative charges

Padlocking or restaurants found to be insanitary or of theatres showing obscene movies

When administrative agencies are exercising their quasi-legislative functions

4. Judgment must be rendered upon lawful hearing.

All cases in which the jurisdiction of any lower court is in issue.

The tribunal must consider the evidence presented

The evidence must be substantial.

the record and disclosed to the parties affected.

Must not be limited to existing conditions only

Ormoc v municipal treasurer (violative)

4. Must apply equally to all members of the class

National Taxes in the Philippines

Local Taxes in the Philippines

1. Domestic Corporations (Sec. 27)

But Not Over

P500 + 10% of the Excess over P10,000

P2,500 + 15% of the Excess over P30,000

P8,500 + 20% of the Excess over P70,000

P22,500 + 25% of the Excess over P140,000

P50,000 + 30% of the Excess over P250,000

P125,000 + 32% of the Excess over P500,000 in 2000 and

Net taxable income from all sources

b. Minimum Corporate Income Tax*

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

2. Proprietary Educational Institution

Net taxable income provided that the

3. Non-stock, Non-profit Hospitals

Net taxable income provided that the

Net taxable income from all sources

b. Minimum Corporate Income Tax*

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

Net taxable income from all sources

b. Minimum Corporate Income Tax*

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

Net taxable income from all sources

b. Minimum Corporate Income Tax*

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

4. GOCC, Agencies &

5. National Gov't. & LGUs

8. General Professional Partnerships

9. Corporation covered by Special

Net taxable income from all sources

10. International Carriers

Gross Philippine Billings

11. Regional Operating Head

12. Offshore Banking Units (OBUs)

Gross Taxable Income On Foreign

On Taxable Income other than

Gross Taxable Income On Foreign

On Taxable Income other

13. Foreign Currency Deposit Units

2. Royalties (on books as well as literary & musical composition)

3. Prizes (P10,000 or less )