Just a check list.

TAXATION Tips - Atty. Lim:

1. Direct injury suit /test - no longer applicable

* he must show that he has sustained a direct injury as a result of that action, and it is not sufficient that
he has a general interest common to all members of the public.

* the person who impugns the validity of a statute must have “a personal and substantial interest in the
case such that he has sustained, or will sustain direct injury as a result.”

( https://lawphilreviewer.wordpress.com/tag/pre-bar-quizzer-in-political-law-part-i-constitution-of-
government-61-70/ )

2. Fee Doctrine of Usage - charitable exemption

* The exemption in favor of property used exclusively for charitable ore ducational purposes is not
limited to property actually "indispensable", but extends to facilities which are "incidental to and
reasonably necessary for" the accomplishment of said purpose.

* The true test is usage, and not ownership. (actually, directly, and exclusively ( primarily and not soley) )

(Vitug)

3. Who exercise power of taxation

* The power of taxation is essentially a legislative function, and which the central legislative body cannit
delegate either to the exevitive or judicial department of the goverent without infringing upon the
theory of separation of powers. ( Mamalateo)

4. Double taxation

* It means an indirect duplicate taxation. The same property must be taxed twice when it should be
taxed but once, both taxes must be imposed on the same property or subject matter, for the same
purppse, by the same State, Government or taxing authority, within the same jurisdiction or taxing
district, during the same taxing period, and they must be the same kind or character of tax. (Mamalateo)

5. Franchise

6. Doctrine of Estoppel does not apply in Taxation Except: there is negligence on the part of govt.

* The error made by a tax official in the assessment of his tax liabilities does not have the effect of
relieving the taxpayer from the obligation to pay the full amount of his tax liability, for taxes are fixed by
law and the government is never stopped to collect the legitimate taxes because of errors committed by
its agents. ( Commissioner vs. Atlas Consolidated Mining Co., 102 SCRA 246 )

* Like other principles, the principle of estoppel also admits of exceptions in the inyerest of justice and
fair play.

7. Tax amnesty and tax exemption

Not qualified

A. Withholding agent

B. Govt. Employees violating AMLA

C. Govt. Employees - graft and corruption

D. Cases decided with finality

E. Schedule of payment already approved.

8. Validity of Revenue Regulation

* A revenue regulation, the issuance of which is authorized by statute, has the force and effect of law.

* Revenue regulations that revoke, modify, or reverse a ruling or circular shall have no retroactive
application of it will be prejudicial to the taxpayer. ( Sec.246, NIRC)

9. Sound tax system

10. Business Taxes

11. Income Taxation Fwt and IT does not imposed together

* Under the final withholding tax system, the amount of income tax withheld by the withholding agent is
constituted as a full and final payment of the income tax due from the payee on the said income.

* The income subjected to final withholding tax is no longer reported in the income tax return of the
individual taxpayer or corporate taxpayer, but the final withholding tax deducted is not deductible from
the ordinary income tax or regular corporate income tax of the taxpayer.

* The finality of the withholding tax is limited only to the payee's income tax liability on the particulat
income.

Doctrines :

1. Doctrine of Constructive Receipt income - taxable income . not necessarily physically on your pocket

* Under the cash method, income is realized upon actual or constructive receipt of cash or its
equivalent.
* Constructive receipt closely refers to availability of the income to the taxpayer but, by his own and
exclusive choosing, he prefers not to actually receive the income.

* Examples:

i. Rental payments refused by the lessor, where the lessee tendered payment and the latter made
judicial deposit of the rental due.

ii. Matured interest coupons which are due and payable but nit yet collected by the taxpayer.

iii. Share in the profits of a partner in a taxable and exempt partnerships is regarded as received by him
although not yet distributed.

iv. Interest credited on savings bank deposit is imcome to the depositor when credited.

2. Doctrine of Command Control and Ownership - money entrusted to someone else . taxable to holder -
if allowed to be used . if not allowed , not taxable

2. Donation to unborn

3. Conversion Theory / doctrine of Involuntary conversion

* Equittable conversion is a doctrine of the law of real property under which a purchaser of real
property becomes the equitable owner of title to the property at the time he/she signs a contract
binding him/her to purchase the land at a later date. The seller retains legal title of the property prior to
the date of conveyance, but this land interest is considered personal property (a right to the payment of
money, rather than a right to the property. (Wikipedia)

4. Subjects of capital gains tax - take note of foreclosure of mortgages ( dito nya sinabi na papaputol sya
ulo Pag di lumabas at naka usap na nya examiner)

* " it is necessary that the petitioners should have profited, materially or otherwise, from the
foreclosure sale where the properties were redeemed within the specified period under Act No. 3135. It
appearing that Petitioners did not earn any income from the sale of the foreclosed properties, hence,
they should not be made liable to pay the capital gains tax "

* In foreclosure sales of mortgaged properties, the creditor-bank is the statutory seller, representing the
owner-mortgagor of the property, so that said bank becomes liable for the capital gains tax due on such
foreclosure sale based on the bid price in the auction sale. However, said bank could get reimbursement
or recovery of the capital gains tax payment, if the right of redemption is exercised by the debtor-
mortgagor or when the property is sold to any party whatsoever.

* "In case the mortgagor exercises his right of redemption within one ( 1) year from the issuance of the
certificate of sale, no capital gains tax shall be imposed because no capital gains has been derived by the
mortgagor and no sale or transfer of real property was realized (Section 3, Revenue Regulations 4-99).

5. Doctrine of Proprietary interest- corp. Using shares of stocks

6. Recapture rule - equitable tax benefit rule Tax refund Tax credit Indv. Tax payer Corp. Tax payer

Inside ecozone Doctrine of twin

Prescription period - only for invalid payment