BUSINESS LAW PRACTICE

COURSE OUTLINE
Academic Year 2018-19
2nd Semester
Module Two: The Corporation and Taxes
1. State Policy REPUBLIC ACT NO. 8424 §2 1, General Principles of Income Taxation,
NATIONAL INTERNAL REVENUE CODE §23 and compare with REPUBLIC ACT NO. 10963
§2
2. Important Basic Terms in General, NATIONAL INTERNAL REVENUE CODE §22 (except
as otherwise specified):
2.1. Taxable year
2.2. Fiscal year
2.3. Securities
2.4. Ordinary income
2.5. Gross Income: NATIONAL INTERNAL REVENUE CODE §27(A) & (E)(4)
2.6. Ordinary loss
2.7. Capital Assets: NATIONAL INTERNAL REVENUE CODE §39(A)(1)
2.8. Taxable Income: NATIONAL INTERNAL REVENUE CODE §31
2.9. Withholding agent
2.10. Differentiate between Capital Asset and an Ordinary Asset:
o Revenue Regulations No. 07-03 [December 27, 2002] Guidelines in Determining
Whether a Particular Real Property is a Capital Asset or an Ordinary Asset (see
also Civil Code Article 415)
ASSIGNMENT UP TO HERE ON MARCH 1, 2019
3. Corporations and Foreign Corporations
Terms under the NATIONAL INTERNAL REVENUE CODE §22:
3.1. Person
3.2. Corporation
3.3. Domestic
3.4. Foreign
3.5. Resident Foreign Corporation
3.6. Non-resident Foreign Corporation
3.7. Shareholder
3.8. Taxpayer
3.9. Regional or Area Headquarters
3.10. Regional Operating Headquarters
Compare with the following terms and concepts:
3.11. Philippine National: FOREIGN INVESTMENTS ACT OF 1991(RA 7042 as amended by
RA8179) §3 (a):
 Implementing Rules And Regulations of RA 7042 (as amended by RA 8179 July
9, 1996) Rule 1, §1 (b);
 SEC-OGC Opinion No. 18.10 dated June 4, 2018, (Re. Retail Trade)

1
Note: look up section 2 of REPUBLIC ACT NO. 8424 and not of the NATIONAL INTERNAL REVENUE
CODE.

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Ateneo de Manila Law School
2nd Semester, School Year 2018-19
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  Gamboa v.Finance Secretary Margarito Teves, 652 SCRA 690 (2011), .G.R. No.
176579, June 28, 2011 and en banc decision on October 9, 2012 in 682 SCRA
397 (2012)..
 Narra Nickel Mining and Development Corp. v. Redmont Consolidated Mines
Corp., 722 SCRA 382 (2014).2
 SEC Memorandum Circular No. 08-13 dated May 20, 2013
 SEC Memorandum Circular No. 17-18 dated November 27, 2018
 Roy v. Herbosa, G.R. No. 207246, November 22, 2016, and en banc resolution
dated April 18, 2017
 SEC OGC Opinion No. 16-19 dated August 11, 2016 (Re.: Application of Control
Test)
 Rappler Inc. et al v. SEC, CA-G>R. SP. No.154292, July 26, 2018
3.12. Corporation: REVISED CORPORATION CODE §2
3.13. Stock Corporation: REVISED CORPORATION CODE§§ 12, §13(h)
3.14. Foreign Corporation: REVISED CORPORATION CODE §140, Implementing Rules
And Regulations of RA 7042 (as amended by RA 8179 July 9, 1996) Rule 1, §1
(c) 1st par.
3.15. Branch Office: Implementing Rules And Regulations of RA 7042 (as amended by
RA 8179 July 9, 1996) Rule 1§1 (c) 2nd par.
3.16. Representative/Liaison Office: Implementing Rules And Regulations of RA 7042
as amended §1 (c) 3rd par. BIR RULING DA-393-03 November 4, 2003
(International Legal Advocates)
3.17. Multinational Company: REPUBLIC ACT 8756 §2 (1)
3.18. Regional or Area Headquarters: REPUBLIC ACT 8756 §2 (2), NATIONAL INTERNAL
REVENUE CODE §22 (DD)
3.19. Regional Operating Headquarters: REPUBLIC ACT 8756 §2 (3), §4, NATIONAL
INTERNAL REVENUE CODE §22 (EE); SEC-OGC Opinion 2018-11 dated June 5,
2017(Re.: Effect of Merger On an Existing License as ROHQ)
3.20. Regional Warehouse: RA8756 §7
3.21. Domestic Market Enterprise: FOREIGN INVESTMENTS ACT §3(f) Investment:
Foreign Investments Act §3(b), Implementing Rules And Regulations of RA 7042
(as amended by RA 8179 July 9, 1996) Rule 1 §1 (d)
3.22. Foreign Investment: Foreign Investments Act §3(c), Implementing Rules And
Regulations of RA 7042 (as amended by RA 8179 July 9, 1996) Rule 1 §1 (e);
3.23. Doing Business: Foreign Investments Act §3(d), Implementing Rules And
Regulations of RA 7042 (as amended by RA 8179 July 9, 1996) Rule 1 §1 (f)
 B. Van Zuiden Bros., Ltd. v. GTVL Manufacturing Industries, Inc., G.R. No. 147905, May
28, 2007; 523 SCRA 233 (2007)
 Agilent Technologies Singapore (Pte.) Ltd.. v. Integrated Silicon Technology Philippines
Corporation, 427 SCRA 593 (2004)
 Communication Materials and Design, Inc. v Court of Appeals, 260 SCRA 673 (1996)
 Top Weld Manufacturing Inc. v. ECED, S.A., 138 SCRA 118 (1985)
 SEC-OGC Opinion No. 21-14 dated August 5, 2014 (AP TRANS S.A.)
 SEC-OGC Opinion No. 01-14 dated February 21, 2014 addressed to Atty. Dennis A.
Quintero
 Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997);
https://apps.americanbar.org/litigation/litigationnews/top_stories/docs/zippo.pdf

2
Motion for Reconsideration denied with finality in a Resolution dated January 28, 2015.

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2nd Semester, School Year 2018-19
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  SEC-OGC Opinion No. 03-17 dated April 4, 2017 (Sony Computer Entertainment Hong
Kong)
 SEC-OGC Opinion No. 22-10 dated June 22, 2010 (Genibrain Co., Ltd.)
ASSIGNMENT UP TO HERE ON MARCH 15, 2019
3.24. Export Enterprise: FOREIGN INVESTMENTS ACT §3(e), Implementing Rules And
Regulations of RA 7042 (as amended by RA 8179 July 9, 1996) Rule 1 §1 (g)
3.25. Advanced Technology: Implementing Rules And Regulations of RA 7042 (as
amended by RA 8179 July 9, 1996) Rule 1§1 (o)
3.26. Paid-in Equity Capital: Implementing Rules And Regulations of RA 7042 (as
amended by RA 8179 July 9, 1996) Rule 1§1 (p)
3.27. Direct Employees: Implementing Rules And Regulations of RA 7042 (as
amended by RA 8179 July 9, 1996) Rule 1 §1 (z)
3.28. Former Natural Born Filipinos: Implementing Rules And Regulations of RA 7042
(as amended by RA 8179 July 9, 1996) Rule 1 §1 (x)
3.29. Foreign Investments Negative List: Foreign Investments Act §3(g) 11th Regular
Foreign Investment Negative List, Executive Order No. 65 Series of 2018
(October 29, 2018)
3.30. Applicable Laws to Foreign corporations: REVISED CORPORATION CODE §146
3.31. Doing Business without a license: REVISED CORPORATION CODE §150
 SEC-OGC Opinion No. 15-15 dated November 3, 2015 (Waterfront Philippines,
Inc.)
3.32. Export Enterprises: FOREIGN INVESTMENTS Act §6, 7 2nd par., SEC-OGC Opinion
O. 18-04 dated March 19, 2018 (Re. Foreign Equity Ownership, Travel and
Tours)
3.33. Foreign investment in a domestic market enterprise: FOREIGN INVESTMENTS ACT
§7, §8 as amended by Republic Act No. 8179 §3.
3.34. Rights of former natural born Filipinos: FOREIGN INVESTMENTS Act §10
3.35. Permanent Establishment: Look up the term in at least two tax treaties
4. Non-stock Corporations
4.1. Definition: REVISED CORPORATION CODE §86
4.2. Purposes: REVISED CORPORATION CODE §87
4.3. Funding Requirement: SEC Memorandum Circular NO. 08-06 “Revised
Guidelines on Foundations” (June 22, 2006)
4.4. Philippine Nationalilty: SEC Memorandum Circular No. 10-16 “Guidelines on the
Issuance of Certification on the Nationality of Non-Stock Corporations” (July 28,
2016); SEC-OGC Opinion No. 16-15 dated June 1, 2016 (RE: Nationality of Non-
Stock Corporation; Acquisition of Land by a Non-Stock Corporation)
4.5. Exemptions from Tax on Corporations in general: NATIONAL INTERNAL REVENUE
CODE §30
4.6. Non-stock non-profit corporation or organization: NATIONAL INTERNAL REVENUE
CODE §§30 (E) & (G); 34(H)(2)(c); BIR Ruling No. 217-12 (March 29, 2012; Ninoy
and Cory Aquino Foundation, Inc.)
4.7. Requirement on Utilization of Donations: NATIONAL INTERNAL REVENUE CODE
§34(H)(2)(c)(2) & meaning of utilization in the last two paragraphs
4.8. Exemption from Donor’s Tax: NATIONAL INTERNAL REVENUE CODE §101 (A)(3) and
(B)(2)
4.9. Benefit of registration: deduction and its limits: NATIONAL INTERNAL REVENUE
CODE §34(H);

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Business Law Practice Course Outline
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2nd Semester, School Year 2018-19
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 4.10. Requirement of Registration of Donee Institutions, REVENUE REGULATIONS NO.
13-98 (December 8, 1998), Executive Order No. 720 (April 11, 2008); Revenue
Regulation 02-03 §13 (C) (December 16, 2002); RMO 20-2013 sec 5; RMO 44-
2016
4.11. Inurement Prohibition: Revenue Memorandum Circular No. 051-14, June 6,
2014; BIR Ruling No. 718-18 (April 16, 2018, Asociación de Hacenderos De
Silay-Saravia, Incorporated)
4.12. Liability for VAT: BIR Ruling No. No. DA-034-07 (January 23, 2007, Ligaya ng
Panginoon Foundation)
4.13. Liability for Capital Gains Tax: BIR Revenue Memorandum Circular No. 7-2012
(February 23, 2012)
4.14. Revenue Memorandum Order No. 20-2013 (July 22, 2013) as amended by
Revenue Memorandum Order No. 28-2013 (October 29, 2013)
5. Local Business Taxes
5.1. Scope of Taxing Powers
5.1.1. Municipality: Local Government Code §142
5.1.2. City: LOCAL GOVERNMENT CODE §151
5.2. Business Taxes
5.2.1. Basic taxes: LOCAL GOVERNMENT CODE §143
5.2.2. Tax Rate in Metro Manila: LOCAL GOVERNMENT CODE §144
5.2.3. Payment: LOCAL GOVERNMENT CODE §146
5.2.4. Situs and Allocation: LOCAL GOVERNMENT CODE §150; Administrative Order
No. 270, Prescribing the Implementing Rules and Regulations of the Local
Government Code of 1991, Article 243:
o DOF-Bureau of Local Government Finance Opinion, January 6, 2016 (Kawasaki
Motors (Phils.) Corporation)
o DOF-Bureau of Local Government Finance Opinion, August 12, 2015 (Unilever)
o DOF-Bureau of Local Government Finance Opinion, March 4, 2011 (Manila
North Tollways Corporation)
o DOF-Bureau of Local Government Finance Opinion, March 7, 1994 (Colgate-
Palmolive Inc.)
o DOF-Bureau of Local Government Finance Opinion, February 26, 1993,
(Magnolia Corporation)
o DOF-Bureau of Local Government Finance Opinion, September 14, 1998 (Nestle
Philippines, Inc.)
5.2.5. Tax Period: LOCAL GOVERNMENT CODE §165
5.2.6. Accrual of Tax: LOCAL GOVERNMENT CODE §166
5.2.7. Time of Payment : LOCAL GOVERNMENT CODE § 167, § 168, § 169
5.2.8. Collection by the Treasurer: LOCAL GOVERNMENT CODE §170
5.2.9. Power to Examine Books of Account: LOCAL GOVERNMENT CODE §171
 Mobil Philippines, Inc. v. The City Treasurer of Makati and The Chief of the License
Division of the City of Makati, [G.R. No. 154092, July 14, 2005] 463 SCRA 379
(2005); See LOCAL GOVERNMENT CODE § 145
 City of Davao v. First Meridian Development, Inc., C.T.A. EB CASE NO. 1590.
December 18, 2017
5.3. The Barangay
5.3.1. Clearance: LOCAL GOVERNMENT CODE §152(c)
5.3.2. Billboards and Signages: Local Government Code §152 (d)(3)

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Business Law Practice Course Outline
Ateneo de Manila Law School
2nd Semester, School Year 2018-19
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 5.4. Community Tax
5.4.1. Who may levy: LOCAL GOVERNMENT CODE § 156
5.4.2. Liability of Corporations for the tax: LOCAL GOVERNMENT CODE §158
5.4.3. Time & Place of Payment: LOCAL GOVERNMENT CODE §§160; 161
5.4.4. Penalty for Non-payment: LOCAL GOVERNMENT CODE §161 last paragraph
5.4.5. Community Tax Certificate: LOCAL GOVERNMENT CODE §162
5.4.6. When CTC is necessary: LOCAL GOVERNMENT CODE §163
5.5. Exemption of export processing zone registered enterprises - Omnibus
Investment Code (E.O. 226 as amended) Article 78 (a)
6. Corporate Income Tax:
6.1. Gross Income: NATIONAL INTERNAL REVENUE CODE §27(A) & (E)(4)
6.2. Domestic Corporations: NATIONAL INTERNAL REVENUE CODE §27 as amended by
Republic Act No. 10963 §7 with respect §27(C) & (D)(1),(2) of the Code.
6.3. Foreign Corporations: NATIONAL INTERNAL REVENUE CODE §28
 ITAD Ruling No. 086-05 (August 26, 2005, AMKOR Technology Philippines)
6.4. Minimum Corporate Income Tax: §27(E) & §28(A)(2); Revenue Regulations No.
09-98 “Implementing Republic Act No. 8424, "An Act Amending the National
Internal Revenue Code, as Amended" Relative to the Imposition of the Minimum
Corporate Income Tax (MCIT) on Domestic Corporations and Resident Foreign
Corporations” (August 25, 1998) as amended by Revenue Regulations No. 12-
2007 (October 10, 2007), Revenue Memorandum Circular No. 24-2008 (March
18, 2008).
 The Manila Banking Corporation v. Commissioner of Internal Revenue [G.R. No.
168118. August 28, 2006.] 499 SCRA 782 (2006)
 BIR Ruling No. DA-445-05 (October 27, 2005, Global Brands Company, Inc.)
6.5. Regional or Area Headquarters and Regional Operating Headquarters: Republic
Act 8756 §6, NATIONAL INTERNAL REVENUE CODE §28 (6)
6.6. Special Provisions for Insurance Companies: NATIONAL INTERNAL REVENUE CODE
§37
6.7. Special Provisions for BOI and PEZA registered enterprises - Omnibus
Investment Code (E.O. 226 as amended) Article 39 (a), Republic Act 7916 § 24
ASSIGNMENT UP TO HERE ON MARCH 22, 2019
7. Capital Gains and Losses: NATIONAL INTERNAL REVENUE CODE §39
7.1. China Banking Corporation v. Court Of Appeals, Commissioner of Internal
Revenue & Court of Tax Appeals 336 SCRA 178 (2000)
7.2. BIR Ruling No. DA-049-07 (January 31, 2007, Arquitectonica International
Corporation)
8. Income from sources within the Philippines: NATIONAL INTERNAL REVENUE CODE §42
 BIR Ruling No. 345-11 (September 22, 2011, Socoin Ingeniera Y Construccion Industrial
SLU)
 BIR Ruling No. 39-07 (March 9, 2007, Latitude Broadband, Inc.)
 BIR Ruling No. DA-002-07 (January 5, 2007, International Hotel Licensing Company SA)

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2nd Semester, School Year 2018-19
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9. Allocation of Income and Deductions between two or more corporations
owned/controlled by the same interests: NATIONAL INTERNAL REVENUE CODE §50
9.1. Transfer Pricing and Interrelated Companies: Revenue Audit Memorandum
Order No. 1-98 “Audit Guidelines and Procedures in the Examination of
Interrelated Group of Companies” (July 7, 1998) all sections except §3.5
 BIR Ruling No. DA-667-06 (November 14, 2006, Koppers Wood Products Pty.
Ltd.-Philippine Branch)
 BIR Ruling No. DA-596-06 Marubeni Corporation)
9.2. Inter-Company Loans: Revenue Memorandum Order No. 63-99 “Determination
of Taxable Income on Inter-company Loans or Advances applying Section 50 of
the NIRC, as Amended” (July 19, 1999)
 BIR Ruling No. DA-096-06 (March 8, 2006, Marubeni Corporation)
 Lapanday Foods Corporation v. Commissioner of Internal Revenue, [C.T.A. EB
Case No. 367. (C.T.A. Case No. 7097) January 29, 2009.] compare with:
Commissioner of Internal Revenue v.Ongtenco [C.T.A. EB CASE NO. 995.
(C.T.A. Case No. 8190) January 30, 2015] and KEPCO Philippines Corporation
[C.T.A. EB CASE NO. 1155. (C.T.A. Case No. 8319) March 31, 2015.]
 Philippine National Oil Company v. Commissioner of Internal Revenue, [C.T.A.
EB Case No. 587 (C.T.A. Case No. 7930) June 2, 2011]

10. Allowable Deductions: NATIONAL INTERNAL REVENUE CODE §34 as amended by Republic
Act No. 10963 §11 with respect §34 ¶1 & (L) of the Code.
 Requisites for Deductibility: Commissioner of Internal Revenue v. Isabela Cultural
Corporation, [G.R. No. 172231. February 12, 2007.] 515 SCRA 556 (2007)
 Entertainment, Amusement and Recreational Expense: Revenue Regulations No.
10-2002 “Implementing the Provisions of Section 34(A)(1)(a)(iv) of the Tax Code of
1997, Authorizing the Imposition of a Ceiling on "Entertainment, Amusement and
Recreational Expenses" (July 10, 2002)
 Motor Vehicles & Similar Expenses: Revenue Regulations No. 12-2012 “Deductibility
of Depreciation Expenses as it Relates to Purchase of Vehicles and Other Expenses
Related Thereto, and Input Taxes Allowed Therefor” ( October 12, 2012) as clarified
by Revenue Memorandum Circular No. 002-2013 (December 28, 2012).
 NOLCO Revenue Regulations No. 14-01 “Implementing Section 34(D)(3) of the
National Internal Revenue Code of 1997 Relative to the Allowance of Net Operating
Loss Carry-Over (NOLCO) as a Deduction from Gross Income” (August 27, 2001),
as amended by Revenue Regulations No. 12-07 (October 10, 2007).
 Bad Debts; Requisites for Deductibility – Revenue Regulations No. 25-02 §2
(November 19, 2002, amending Revenue Regulations No. 5-99 §3)
 Fringe Benefits - Revenue Regulations No. 03-98 §2.33(D) in relation to the :
NATIONAL INTERNAL REVENUE CODE §33(A) as amended by Republic Act No. 10963
§10, see also Revenue Regulations No. 8-2018 §7
 Optional Standard Deduction - NATIONAL INTERNAL REVENUE CODE §34(L) as
amended by REPUBLIC ACT NO. 9504 §3, as further amended by Republic Act No.
10963 §11, Revenue Regulations No. 016-08 (November 26, 2008), Revenue
Regulations No. 8-2018 §8 (January 25, 2018)

11. Items Not Deductible: NATIONAL INTERNAL REVENUE CODE §36

ASSIGNMENT UP TO HERE ON APRIL 5, 2019

MODULE TWO
Business Law Practice Course Outline
Ateneo de Manila Law School
2nd Semester, School Year 2018-19
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12. Value Added Taxes:
12.1. VAT, the basics
 NATIONAL INTERNAL REVENUE CODE §§105, 106(A) 1st par., 108(A) 1st par.as
amended by Republic Act No. 10963 §31, §33 with respect §106(A) ¶1 & § 108 of the
Code
 Revenue Memorandum Circular No. 7-2006 (Publishing the Full Text of the
Memorandum from Executive Secretary Eduardo R. Ermita dated January 31, 2006
Approving the Recommendation of the Secretary of Finance to Increase the Value
Added Tax Rate from Ten Percent to Twelve Percent) dated January 31, 2006
 Revenue Memorandum Circular No. 035-12 (August 3, 2012)
 Revenue Regulations No. 16-05 §§4-105-1, 4.105-2， 4-105-3
12.2. On Goods and Properties:
12.2.1. In General
 NATIONAL INTERNAL REVENUE CODE §106(A) 1st par as amended by Republic
Act No. 10963 §31 with respect §106 ¶1 of the Code.
 Revenue Regulations No. 16-05 §§4.106-1, as amended by Revenue
Revenue Regulations No. 04-07 §1 (February 7, 2007)
12.2.2. Goods or Properties:
 NATIONAL INTERNAL REVENUE CODE §106(A)(1)
 Revenue Regulations No. 16-05 §4-106.2
12.2.3. Gross Selling Price:
 NATIONAL INTERNAL REVENUE CODE §106(A)(1) last paragraph, (D)
 Revenue Regulations No. 16-05 §4-106.4, as amended by Revenue
Revenue Regulations No. 04-07 §4 (February 7, 2007)
 Allowable Deductions:
 NATIONAL INTERNAL REVENUE CODE §106(D)
 Revenue Regulations No. 16-05 §4.106-9
12.2.4. On importations
 NATIONAL INTERNAL REVENUE CODE §107 as amended by Republic Act No.
10963 §32 with respect §107(A)
 Revenue Regulations No. 16-05 §4-107-1
12.2.5. Special Provisions Applicable to Sale of Goods and Properties
12.2.5.1. Deemed Sale Transactions:
 NATIONAL INTERNAL REVENUE CODE §106(B)
 Revenue Regulations No. 16-05 §4.106-7, as amended by Revenue
Regulations No. 04-07 §7 (February 7, 2007), §4-113-2, as amended by
Revenue Regulations No. 04-07 §20 (February 7, 2007)
12.2.5.2. Change or Cessation of VAT Status:
 Revenue Regulations No. 16-05 §4.106-8, as amended by Revenue
Regulations No. 10-2011 (July 7, 2011)
 NATIONAL INTERNAL REVENUE CODE §106(C)
12.3. On Services
12.3.1. In General

st
NATIONAL INTERNAL REVENUE CODE §108(A) 1 par. as amended by Republic Act
No. 10963 §33

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  Revenue Regulations No. 16-05 §§4.108-1, as amended by Revenue
Regulations No. 04-07 §9 (February 7, 2007)
12.3.2. Sale and Exchange of Services

nd
NATIONAL INTERNAL REVENUE CODE §108(A) 2 par. as amended by Republic Act
No. 10963 §33
 Revenue Regulations No. 16-05 §§4.108-2
12.3.3. Gross Receipts
 NATIONAL INTERNAL REVENUE CODE §108(A) last paragraph
 Revenue Regulations No. 16-05 §§4.108-4, as amended by Revenue
3
Regulations No. 04-07 §11 (February 7, 2007)
12.4. Exempt, Zero-rated and Effectively Zero-Rated Transactions
12.4.1. Basic Statutes and Regulations
12.4.1.1. Exempt Transactions:
 NATIONAL INTERNAL REVENUE CODE §109, §116 as amended by Republic Act
No. 10963 §34, §38,
 Revenue Regulations No. 16-05 §4.109-1(B)(1), 4-116, as amended by
Revenue Regulations No. 04-07 §14 (February 7, 2007), §as further
amended by Revenue Regulation No. 16-2011 (October 27, 2011) as further
amended by as amended by Revenue Regulation 13-2018 §2; Revenue
Memorandum Circular No. 055-14 (June 17, 2014)
 Special Rules on Sugar Revenue Regulation No. 8-2015 (May 22, 2015)
 For NATIONAL INTERNAL REVENUE CODE §109(BB) study together with
NATIONAL INTERNAL REVENUE CODE §24(A)(2)(b), §24(A)(2)(c)(2), §116. See
Revenue Regulation No. 8-2018 (February 15, 2018) §3(C) & (D) in relation
to NATIONAL INTERNAL REVENUE CODE §109 (BB) as amended by Republic Act
No. 10963 §34 and in relation to Revenue Regulation 13-2018 §2 covering
§4.109-1(B)(1) (bb), §4.109-2 and §4-116, see also Transitory Provisions of
Revenue Regulation 13-2018 §13 (sic)
12.4.1.2. Zero Rated Goods (persons) and Services:
 NATIONAL INTERNAL REVENUE CODE §106(A)(2)(a) and §108 (B) as amended
by Republic Act No. 10963 §31, §33
 Revenue Regulations No. 16-05 §§4.106-5, as amended by Revenue
Regulations No. 04-07 §5 (February 7, 2007), as amended by Revenue
Regulation 13-2018 §2.
 Revenue Regulations No. 16-05 §§4.108-5, as amended by Revenue
Regulations No. 04-07 §12 (February 7, 2007) as amended by Revenue
Regulation 13-2018 §2.
 Effects of Cost-sharing: BIR Ruling No. DA-053-08 (January 30, 2008;
BRANDERS.COM (Philippines), Inc.)
 Commissions deducted from invoice: BIR Ruling No. 048-11 (February 16,
2011, Grundfos Pumps (Philippines), Inc.)
 Hotel Services to Pilots/Cabin Crew: BIR Ruling Non 099-2011 (April 6,
2011, Delta Air Lines)
12.4.1.3. Effectively Zero-Rated Transactions:
 Revenue Regulations No. 16-05 §4-106.6, as amended by Revenue
Regulations No. 04-07 §6 (February 7, 2007)
3
See Revenue Memorandum Circular No. 016-13 (February 8, 2013) on advances

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2nd Semester, School Year 2018-19
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  Revenue Regulations No. 16-05 §§4.108-6, as amended by Revenue
Regulations No. 04-07 §13 (February 7, 2007)
 BIR Ruling No. DA-066-08 (February 1, 2008, Diamond Star Agro Products,
Inc.)
12.4.1.4. Certain Distinctions zero-rated and effectively zero rated & exempt
 Commissioner of Internal Revenue v. Seagate Technology (Philippines)
[G.R. No. 153866, February 11, 2005] 451 SCRA 132 (2005)
 Commissioner of Internal Revenue v. Cebu Toyo Corporation, 451 SCRA
447, 461 (2005)
 Pass-on exemption of Pagcor treated as automatically zero rated under
NATIONAL INTERNAL REVENUE CODE §108 (b)(3): Commissioner of Internal
Revenue v. Acesite (Philippines) Hotel Corporation, [G.R. No. 147295.
February 16, 2007.] 516 SCRA 93 (2007); PAGCOR v. BIR, [G.R. No.
172087. March 15, 2011.]
12.4.1.5. Destination Principle
 “Destination Principle” or “Cross Border Doctrine” VAT Ruling 005-99; VAT
Ruling No. 040-98
 Commissioner of Internal Revenue v. American Express International, Inc.
(Philippine Branch), [G.R. No. 152609. June 29, 2005], 462 SCRA 197
(2005)
 Commissioner of Internal Revenue, v. Burmeister and Wain Scandinavian
Contractor Mindanao, Inc., [G.R. No. 153205. January 22, 2007.] 512 SCRA
124 (2007);
 Commissioner of Internal Revenue v. Placer Dome Technical Sevices
(Phils.) Inc. 524 SCRA 271 (2007)
12.5. Tax Credits: Input/Output Tax
12.5.1. What is the nature of the input VAT?
 Look up again Abakada Guro Party List (Formerly AASJAS) Officers v. Exec.
Sec. Ermita, [G.R. No 168056, Sept. 1, 2005] 469 SCRA 14, 130 (2005)
 NATIONAL INTERNAL REVENUE CODE §110(A)
 Revenue Regulations No. 16-05 §4-110-1, §4-110-2
12.5.2. On Depreciable Goods
 NATIONAL INTERNAL REVENUE CODE §110(A)(2)(b) 2nd paragraph as amended
by Republic Act No. 10963 §35
 Revenue Regulations No. 16-05 §4-110-3, as amended by Revenue
Regulations No. 04-07 §16 (February 7, 2007), as further amended by
Revenue Regulation 13-2018 §2.
 Construction in Progress: BIR ruling No. DA-(VAT-007) 063-08 (July 18,
2008 First Gas Power Corporation)
12.5.3. Excess Output or Input VAT and Determination of Creditable Input VAT
 NATIONAL INTERNAL REVENUE CODE §110 (B) as amended by REPUBLIC ACT
NO. 9361 and §110(C)
 Revenue Regulations No. 16-05 §4-110-5, §4-110-6, and §4-110-7 as
amended by Revenue Regulations No. 02-07 (December 22, 2006), as
further amended by Revenue Regulations No. 04-07 §§18, 19 (February 7,
2007)

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 12.5.4. Transitional/Presumptive Input Tax Credits
 NATIONAL INTERNAL REVENUE CODE §111
 Revenue Regulations No. 16-05 §4-111-1
12.5.5. Apportioning of Input VAT in Mixed Transactions
 Revenue Regulations No. 16-05 §4-110-4, as amended by Revenue
Regulations No. 04-07 §17 (February 7, 2007)
 Commissioner of Internal Revenue v.Phil. Gold Processing & Refining
CorpC.T.A. EB CASE NO. 1460. December 7, 2017
12.5.6. Substantiation of Input Tax Credits, Invoicing
 NATIONAL INTERNAL REVENUE CODE §113(A) & (B)
 Revenue Regulations No. 16-05 §4-110-8, §4-113-1
12.5.7. Not Deductible as an expense
 Revenue Memorandum Circular No. 57-2013 (August 23, 2013)
12.5.8. Claims for Refund
 NATIONAL INTERNAL REVENUE CODE §112, §229 as amended by Republic Act
No. 10963 §36 with respect §112 (C) of the Code
 Revenue Regulations No. 16-05 §4-112-1, as amended by Revenue
Regulation 13-2018 §2.
 Revenue Regulations No. 1-2017 (January 3, 2017)
 Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, G.R, No.
172129, September 12, 2008, 565 SCRA 154 (2008)
 Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.
G.R. No. 184823, October 6, 2010; 632 SCRA 422 (2010)
12.5.9. Consequences
12.5.9.1. Issuing Erroneous VAT Invoice or VAT Receipt by a non-VAT OR
 NATIONAL INTERNAL REVENUE CODE §113 (D)
 Revenue Regulations No. 16-05 §4-113-4
12.5.9.2. BIR Authority to Print Receipt
 Intel Technology Philippines Inc. v. Commissioner of Internal Revenue [G.R.
No. 166732, April 27, 2007]; 522 SCRA 657 (2007)
12.5.9.3. Written Claim for Refund
 Commissioner of Internal Revenue v. Rosemarie Acosta [August 3, 2007,
G.R. No. 154068] ; 529 SCRA 177 (2007)
ASSIGNMENT UP TO HERE ON APRIL 12, 2019
13. Corporate Tax Management:
13.1. Registration Requirements, in general
 NATIONAL INTERNAL REVENUE CODE §236 as amended by Republic Act No. 10963
§72
13.2. Accounting Requirements for VAT
13.2.1. Registration Requirements
 Revenue Regulations No. 16-05 §9.236-1 to §9.236-6), as further amended by
Revenue Regulations No. 04-07 §§24 & 25 (February 7, 2007)
13.2.2. Subsidiary Journals
 NATIONAL INTERNAL REVENUE CODE §113(C)
 Revenue Regulations No. 16-05 §113-3

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 13.2.3. Returns
 NATIONAL INTERNAL REVENUE CODE §114 as amended by Republic Act No. 10963
§37
 Revenue Regulations No. 16-05 §4.114-1(A) & §4.114-2, as further amended by
Revenue Regulations No. 04-07 §22 (February 7, 2007) as further as amended
by Revenue Regulation 13-2018 §2,
13.3. Corporate Returns: NATIONAL INTERNAL REVENUE CODE §52, 75, 76, 77 as amended
by Republic Act No. 10963 §15 with respect §52 of the Code.
 Commissioner of Internal Revenue v. Mirant (Philippines) Operations,
Corporation [June 15, 2011, G.R. No. 171742]
13.4. Expanded Withholding Tax: NATIONAL INTERNAL REVENUE CODE §57(A) & (B); as
amended by Republic Act No. 10963 § 17, Revenue Regulations No. 2-98 § 2.57.2;
§2.57.4 as amended by Revenue Regulations No. 30-03 (November 12, 2003),
Revenue Regulations No. 12-01 (September 7, 2001), Revenue Regulations No. 03-
04 (March 1, 2004); Revenue Regulations 014-08 (November 26, 2008); and
Revenue Regulations No. 06-09 (June 3, 2009); Revenue Regulations No. 11-14
(December 5, 2014); Revenue Regulations 11-2018 §2; Revenue Regulation 14-
2018 §2;
13.4.1. Expanded Withholding Tax Returns & Payment: NATIONAL INTERNAL REVENUE
CODE §58; as amended by Republic Act No. 10963 §18,Revenue Regulations
No. 2-98 § 2.58 as amended by Revenue Regulations 11-2018 §5.
13.4.2. Requirements for Deductibility: Revenue Regulations No. 6-2018;
13.5. Inventories: NATIONAL INTERNAL REVENUE CODE §41
13.6. Power of Commissioner to suspend or temporary close business operations of the
taxpayer for failure to issue receipt: NATIONAL INTERNAL REVENUE CODE §115;
Revenue Regulations No. 16-05 §4.115-1
13.7. Preservation of Books of Accounts: NATIONAL INTERNAL REVENUE CODE §235 in
relation to §203; Revenue Regulations No. 17-2013 as amended by Revenue
Regulations No. 05-2014
13.8. On Royalties, Services and Lease of Properties: NATIONAL INTERNAL REVENUE CODE
§108 as amended by Republic Act No. 10963 §33
13.8.1. Treatment of Royalties in general for non-resident corporations:
 ITAD Ruling No. 78-04 (CTS Australia, August 4, 2004); ITAD Ruling No. 109-05
(Puratos SA, September 21, 2005)
 ITAD Ruling No. 024-09 (ACI Worldwide February 27, 2009)
13.8.2. Treatment of Royalties for PEZA enterprises enjoying the 5% gross income tax
incentive: BIR Ruling No. 014-12 (January 4, 2012, Swedish Match Philippines,
Inc.)
ASSIGNMENT UP TO HERE ON MAY 3, 2019

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