San Sebastian College-Recoletos de Manila

College of Law
TAXATION LAW REVIEW
Atty. Raegan L. Capuno, CPA1

I. GENERAL PRINCIPLES OF TAXATION

1. Definition and Concept of Taxation
Commissioner of Internal Revenue vs. Allegre, Inc., et al., L-28896, Feb. 17, 1988
2. Nature of Taxation
3. Characteristics of Taxation
4. Power of Taxation compared with Police Power and Power of Eminent Domain
5. Purposes of Taxation
i. Revenue-Raising
ii. Non-revenue, Special or Regulatory
Caltex Phils. Inc. vs. COA, G.R. No. 92585, May 8, 1992
iii. Promotion of General Welfare
Lutz vs. Araneta, 98 Phil 148
Osmeňa vs. Orbos, G.R. No. 99886, Mar. 31, 1993
iv. Reduction of Social Inequity
v. Encourage Economic Growth
vi. Protectionism
Southern Cross Cement Corp. vs. Secretary of Finance, G.R. No. 158540,
July 8, 2004
6. Principles of Sound Tax System
i. Fiscal Adequacy
ii. Administrative Feasibility
iii. Theoretical Justice
7. Theory and Basis of Taxation
i. Lifeblood Theory
Collector of Internal Revenue vs. Goodrich International Rubber Co.,
September 6, 1965
ii. Necessity Theory
iii. Benefits-Protection Theory (Symbiotic Relationship)
iv. Favorable Business Climate Theory
Chamber of Real Estate and Builders’ Associations, Inc. vs. Romulo, G.R.
No. 160756, March 9, 2010
8. Doctrines in Taxation
i. Prospectivity of tax laws
ii. Imprescriptibility
iii. Double taxation
1. Strict and broad sense
2. Constitutionality of double taxation
City of Baguio v. De Leon, 25 SCRA 938
3. Modes of eliminating double taxation
iv. International double taxation
Commissioner of Internal Revenue vs. SC Johnson and Sons, Inc., 309
SCRA 87
v. Escape from taxation
1. Shifting of tax burden
1Tax Lawyer in Siguion Reyna, Montecillo and Ongsiako Law Offices, Top 12 in the 2015 Philippine Bar Examination, Pre-Bar
Reviewer in Taxation Law, Professor of Taxation Law at San Sebastian College-Recoletos College of Law, CPA Reviewer and
Lecturer in Management Advisory Services, Taxation and Regulatory Framework for Business Transactions, Lecturer in
Criminal Procedure for Criminologists Licensure Examination, Subject Matter Expert in Forensic Accounting and Business
Security Management, Professor of Accountancy and Finance, Registrar and former Chair of the BS Accountancy Program of
First Asia Institute of Technology and Humanities (FAITH), Former auditor at Isla Lipana & Co.

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 a. Ways of shifting the tax burden
b. Taxes that can be shifted
c. Meaning of impact and incidence of taxation
Commissioner of Internal Revenue vs. Philippine Long
Distance Telephone Company, G.R. No. 140230, December
15, 2005
2. Tax avoidance
3. Tax evasion
Commissioner of Internal Revenue vs. Estate of Benigno P. Toda,
G.R. No. 147188, September 14, 2004
4. Tax treaty
Deutsche Bank AG Manila Branch vs. Commissioner of Internal
Revenue, G.R. No. 188550, August 19, 2013
vi. Exemption from Taxation
1. Meaning of exemption from taxation
2. Nature of tax exemption
3. Kinds of tax exemption
4. Rationale/grounds for exemption
5. Revocation of tax exemption
Mactan Cebu International Airport Authority vs. Marcos, 261
SCRA 667
vii. Compensation and Set-off
Republic vs. Mambulao Lumber Co., 4 SCRA 622
Domingo vs. Garlitos, 8 SCRA 443
Francia vs. IAC, 162 SCRA 753
Caltex Phils. vs. COA, 208 SCRA 726
Philex Mining Corp. vs. CIR, 294 SCRA 687
viii. Equitable Recoupment
ix. Compromise
Article 2028, New Civil Code
x. Tax Amnesty
1. Definition
2. Distinguished from tax exemption
xi. Construction and Interpretation of:
1. Tax laws
a. General rule
b. Exception
2. Tax exemption and exclusion
a. General rule
b. Exception
3. Tax rules and regulations
a. General rule
b. Exception
Section 246, NIRC
4. Penal provisions of tax laws
5. Non-retroactive application to taxpayers
a. Exceptions
9. Scope and Limitation of Taxation
i. Inherent limitations
1. Public purpose
2. Inherently legislative
a. General rule
b. Exceptions
i. Delegation to local governments
Humberto Basco vs. PAGCOR, G.R. No. 91649,
May 14, 1991
ii. Delegation to the President

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 Garcia vs. Executive Secretary, et. al., G.R. No.
101273, July 3, 1992
iii. Delegation to administrative agencies
3. Territorial
a. Situs of taxation
Commissioner of Internal Revenue vs. Marubeni, G.R. No.
137377, Dec.18, 2001
b. Situs of income tax
i. From sources within the Philippines
ii. From sources without the Philippines
iii. Income partly within and partly without the
Philippines
Section 42, NIRC
c. Situs of property taxes
i. Taxes on real property
ii. Taxes on personal property
d. Situs of excise tax
i. Estate tax
ii. Donor’s tax
e. Situs of business tax
i. Sale of real property
ii. Sale of personal property
iii. Value-Added Tax
4. International comity
5. Exemption of government entities, agencies, and instrumentalities
ii. Constitutional limitations
1. Article III, Sec. 1
Sison vs. Ancheta, 130 SCRA 654
Villegas vs. Hiu Chiong Tsai Pai Ho, 86 SCRA 270
Province of Abra vs. Hernando, 107 SCRA 104
Ormoc Sugar Central vs. City Treasurer, 22 SCRA 603
Tiu vs. CA, 301 SCRA 178
2. Article III, Sec. 5
Tolentino vs Secretary of Finance, 235 SCRA 630
3. Article III, Sec. 10
Mactan Cebu International Airport Authority vs. Marcos, 261
SCRA 667
Cagayan Electric Power and Light Co. vs. Commissioner, L-
60126, September 25, 1985
4. Article III, Sec. 20
5. Article VI, Sec. 24
Tolentino vs. Secretary of Finance and Commissioner, G.R. No.
115455, August 25, 1994
6. Article VI, Sec. 28, 1st par.
Commissioner vs. Lingayen Gulf Electric, 164 SCRA 27
Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. City of Butuan,
24 SCRA 789 (1986)
J.M. Tuason & Co., Inc. vs. Land Tenure Administration, 31 SCRA
413 (1970)
PAL vs. Secretary of Finance, G.R. No. 115852, October 30, 1995
7. Article VI, Sec. 28, 2nd par.
8. Article VI, Sec. 28, 3rd par.
Herrera vs. Quezon City Board of Assessment Appeals, 3 SCRA
186
Lladoc vs Commissioner, 14 SCRA 292
Hospital de San Juan de Dios vs. Pasay City, 16 SCRA 226
Abra Valley College vs. Aquino, 52 SCRA 106

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 Province of Abra vs. Hernando, 107 SCRA 104
Commissioner vs. YMCA, 298 SCRA 83
Philippine Lung Center vs. Quezon City, 433 SCRA 119
9. Article VI, Sec. 28, 4th par.
John Hay Peoples Alternative Coalition, et al. vs. Lim, G.R. No.
119775, October 24, 2003
10. Article X, Sec. 5
11. Article X, Sec. 18, 20(2)
12. Article XIV, Sec. 4(3)(4)
Commissioner of Internal Revenue vs. De La Salle University, Inc.,
G.R. No. 196596, November 9, 2016
10. Stages of taxation
11. Definition, nature, and characteristics of taxes
12. Requisites of a valid tax
13. Tax as distinguished from other forms of exactions
i. Tariff, Toll, License fee, Special assessment, Debt
14. Kinds of taxes
i. As to object
ii. As to burden or incidence
iii. As to tax rates
iv. As to purposes
v. As to scope or authority to impose
vi. As to graduation

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