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COVERAGE

LAW ON TAXATION
2013 BAR EXAMINATIONS

9. General Principles of Taxation 1. 2. 3. 4. 5.


Definition and concept of taxation Nature of taxation Characteristics of taxation Power of taxation compared with other powers 1. Police power 2. Power of eminent domain Purpose of taxation 1. Revenue-raising 2. Non-revenue/special or regulatory Principles of sound tax system 1. Fiscal adequacy 2. Administrative feasibility 3. Theoretical justice Theory and basis of taxation 1. Lifeblood theory 2. Necessity theory 3. Benefits-protection theory (Symbiotic relationship) 4. Jurisdiction over subject and objects Doctrines in taxation 1. Prospectivity of tax laws 2. Imprescriptibility 3. Double taxation 1) Strict sense 2) Broad sense 3) Constitutionality of double taxation 4) Modes of eliminating double taxation 4. Escape from taxation 1) Shifting of tax burden (1) Ways of shifting the tax burden (2) Taxes that can be shifted (3) Meaning of impact and incidence of taxation 2) Tax avoidance 3) Tax evasion

6.

7.

8.

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Law on Taxation

(1) Exceptions 9. Scope and limitation of 5. Exemption from taxation taxation 1) Meaning of exemption from taxation 1. Inherent limitations 2) Nature of tax exemption 1) Public purpose 3) Kinds of tax exemption 2) Inherently legislative (1) Express (1) General rule (2) Implied (2) Exceptions (3) Contractual (1) Delegation to 4) Rationale/grounds for exemption local 5) Revocation of tax exemption governments 6. Compensation and set-off (2) Delegation to the President 7. Compromise (3) Delegation to 8. Tax amnesty administrativ 1) Definition e agencies 2) Distinguished from tax exemption 3) Territorial 9. Construction and interpretation of: (1) Situs of taxation 1) Tax laws (1) Meaning (1) General rule (2) Situs of (2) Exception income tax 2) Tax exemption and exclusion (1) From (1) General rule sources (2) Exception within the Philippine 3) Tax rules and regulations s (1) General rule only 4) Penal provisions of tax laws 5) Non-retroactive application to taxpayers

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Law on Taxation

charitable entities, and (2) From sources educational without the entities Philippines (5) Prohibition against (3) Income partly within taxation of non-stock, and partly without non-profit institutions the Philippines (6) Majority vote of Congress (3) Situs of property taxes for grant of tax (1) Taxes on real exemption property (7) Prohibition on use of tax (2) Taxes on personal levied for special property purpose (4) Situs of excise tax (8) Presidents veto power (1) Estate tax on appropriation, revenue, tariff bills (2) Donors tax (9) Non-impairment of (5) Situs of business tax jurisdiction of the (1) Sale of real Supreme Court property (10) Grant of power to the (2) Sale of personal local government units property to create its own sources (3) Value-Added Tax of revenue (VAT) (11) Flexible tariff clause 4) International comity (12) Exemption from real 5) Exemption of government property taxes entities, agencies, and instrumentalities (13) No appropriation or use of public money for 2. Constitutional limitations religious purposes 1) Provisions directly affecting 2) Provisions indirectly affecting taxation taxation (1) Prohibition against (1) Due process imprisonment for nonpayment of poll tax (2) Equal protection (2) Uniformity and equality of (3) Religious freedom taxation (4) Non-impairment of (3) Grant by Congress of obligations of contracts authority to the president10. Stages of taxation to impose tariff rates 1. Levy (4) Prohibition against 2. Assessment and collection taxation of 3. Payment religious,

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Law on Taxation

4. Refund 11. Definition, nature, and characteristics of taxes 12. Requisites of a valid tax 13. Tax as distinguished from other forms of exactions 1. Tariff 2. Toll 3. License fee 4. Special assessment 5. Debt 14. Kinds of taxes 1. As to object 1) Personal, capitation, or poll tax 2) Property tax 3) Privilege tax 2. As to burden or incidence 1) Direct 2) Indirect 3. As to tax rates 1) Specific 2) Ad valorem 3) Mixed 4. As to purposes 1) General or fiscal 2) Special, regulatory, or sumptuary 5. As to scope or authority to impose 1) National internal revenue taxes 2) Local real property tax, municipal tax 6. As to graduation 1) Progressive 2) Regressive 3) Proportionate
II. National Internal Revenue Code (NIRC) of 1997, as amended

1. Income taxation 1. Income tax systems 1) Global tax system 2) Schedular tax system 3) Semi-schedular or semi-global tax system 2. Features of the Philippine income tax law

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Law on Taxation

(61) Special class of 1) Direct tax 2) Progressive 3) Comprehensive 4) Semi-schedular or semi-global tax system 3. Criteria in imposing Philippine income tax 1) Citizenship principle 2) Residence principle 3) Source principle 4. Types of Philippine income tax 5. Taxable period 1) Calendar period 2) Fiscal period 3) Short period 6. Kinds of taxpayers 1) Individual taxpayers (9) Citizens (1) Resident citizens (2) Non-resident citizens (35) Aliens (1) Resident aliens (2) Non-resident aliens (1) Engaged in trade or business (2) Not engaged in trade or business
individual employees (1) Minimum wage earner 2) Corporations (9) Domestic corporations (35) Foreign corporations (1) Resident foreign corporations (2) Non-resident foreign corporations (61) Joint venture and consortium 3) Partnerships 4) General professional partnerships 5) Estates and trusts 6) Co-ownerships 7. Income taxation 1) Definition 2) Nature 3) General principles

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Law on Taxation 2) Concept of income from whatever source derived 8. Income 3) Gross income vis--vis net 1) Definition income vis--vis taxable income 2) Nature 4) Classification of income as to 3) When income is taxable source (1) Existence of income (1) Gross income and taxable income from sources within (2) Realization of income the Philippines (1) Tests of realization (2) Gross income and taxable (2) Actual vis--vis constructive income from sources without receipt the Philippines (3) Recognition of income (3) Income partly within or (4) Methods of accounting partly without the (1) Cash method vis--vis Philippines accrual method 5) Sources of income subject to tax (2) Installment payment vis--vis (1) Compensation income deferred payment vis--vis (2) Fringe benefits percentage completion (in (1) Special treatment of long-term contracts) fringe benefits 4) Tests in determining whether income (2) Definition is earned for tax purposes (3) Taxable and non-taxable (1) Realization test fringe benefits (2) Claim of right doctrine or (3) Professional income doctrine of ownership, (4) Income from business command, or control (5) Income from dealings in (3) Economic benefit test, doctrine property of proprietary interest (1) Types of properties (4) Severance test (1) Ordinary assets (5) All events test (2) Capital assets 9. Gross income (2) Types of gains from 1) Definition dealings in property

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Law on Taxation (3) Royalty income (4) Rental income (1) Ordinary income vis--vis capital (1) Lease of personal property gain (2) Lease of real property (2) Actual gain vis--vis presumed gain (3) Tax treatment of (3) Long term capital gain vis--vis short-term capital gain (1) Leasehold improvements by (4) Net capital gain, net capital loss lessee (5) Computation of the amount of gain (2) VAT added to or loss rental/paid by the (6) Income tax treatment of capital lessee loss (3) Advance rental/long (1) Capital loss limitation rule term lease (applicable to both (7) Annuities, proceeds from life corporations and individuals) insurance or other types of (2) Net loss carry-over rule insurance (applicable only to individuals) (8) Prizes and awards (7) Dealings in real property situated in (9) Pensions, retirement benefit, or the Philippines separation pay (8) Dealings in shares of stock of (10) Income from any source Philippine corporations whatever (1) Shares listed and traded in the (1) Forgiveness of indebtedness stock exchange (2) Recovery of accounts (2) Shares not listed and traded in previously written off when the stock exchange taxable/when not taxable (9) Sale of principal residence (3) Receipt of tax refunds or (6) Passive investment income credit (1) Interest income (4) Income from any source (2) Dividend income whatever (1) Cash dividend (5) Source rules in determining (2) Stock dividend income from within and without (3) Property dividend (1) Interests (4) Liquidating dividend

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Law on Taxation

descent (5) Amount received through (2) Dividends accident or health (3) Services insurance (4) Rentals (6) Income exempt under tax treaty (5) Royalties (7) Retirement benefits, (6) Sale of real property pensions, gratuities, etc. (7) Sale of personal property (8) Winnings, prizes, (8) Shares of stock of domestic corporation and awards, (6) Situs of income taxation (see page 2 including those in under inherent limitations, territorial) sports competition (7) Exclusions from gross income (6) Under special laws (1) Rationale for the exclusions (1) Personal Equity and (2) Taxpayers who may avail of the Retirement Account exclusions (8) Deductions from gross income (3) Exclusions distinguished from (1) General rules deductions and tax credit (1) Deductions must be paid (4) Under the Constitution or incurred in connection (1) Income derived by the government with or its political subdivisions from the the taxpayers trade, exercise of any essential business or profession governmental function (2) Deductions must (5) Under the Tax Code be supported by (1) Proceeds of life insurance policies adequate receipts (2) Return of premium paid or invoices (except (3) Amounts received under life standard insurance, endowment or deduction) annuity contracts (3) Additional requirement (4) Value of property acquired by relating to withholding gift, bequest, devise or (2) Return of capital (cost of sales or services)

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Law on Taxation

(11) Training expenses (1) Sale of inventory of goods by


manufacturers and dealers of properties (2) Sale of stock in trade by a real estate dealer and dealer in securities (3) Sale of services (3) Itemized deductions (1) Expenses (1) Requisites for deductibility (1) Nature: ordinary and necessary (2) Paid and incurred during taxable year (2) Salaries, wages and other forms of compensation for personal services actually rendered, including the grossed-up monetary value of the fringe benefit subjected to fringe benefit tax which tax should have been paid (3) Travelling/transportation expenses (4) Cost of materials (5) Rentals and/or other payments for use or possession of property (6) Repairs and maintenance (7) Expenses under lease agreements (8) Expenses for professionals (9) Entertainment/Representation expenses (10) Political campaign expenses

(2) Interest (1) Requisites

for deductibility (2) Non-deductible interest expense (3) Interest subject to special rules (1) Interest paid in advance (2) Interest periodically amortized (3) Interest expense incurred to acquire property for use in trade/business/p rofession (4) Reduction of interest expense/ interest arbitrage (3) Taxes (1) Requisites for deductibility (2) Non-deductible taxes (3) Treatments of surcharges/interests/fine s for delinquency (4) Treatment of special assessment (5) Tax credit vis--vis deduction

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Law on Taxation

(1) Individuals, except nonresident aliens (2) Corporations, except nonresident foreign corporations (3) Partnerships Personal and additional exemption (R.A. No. 9504, securities Minimum Wage Earner Law) (4) Wagering losses (1) Basic personal exemptions (5) Net Operating Loss Carry-Over (NOLCO) (2) Additional exemptions for taxpayer with dependents (5) Bad debts (3) Status-at-the-end-of-the(1) Requisites for deductibility year rule (2) Effect of recovery of bad debts (4) Exemptions claimed by (6) Depreciation non-resident aliens (1) Requisites for deductibility (6) Items not deductible (2) Methods of computing depreciation (1) General rules allowance (2) Personal, living or family (1) Straight-line method expenses (2) Declining-balance method (3) Amount paid for new (3) Sum-of-the-years-digit method buildings or for (7) Charitable and other contributions permanent (1) Requisites for deductibility improvements (2) Amount that may be deducted (capital (8) Contributions to pension trusts expenditures) (1) Requisites for deductibility (4) Amount expended in (9) Deductions under special laws restoring property (major repairs) (4) Optional standard deduction

(4) Losses (1) Requisites for deductibility (2) Other types of losses (1) Capital losses (2) Securities becoming worthless (5) (3) Losses on wash sales of stocks or

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Law on Taxation and other benefits not exempt (4) Directors fees (2) Non-monetary compensation (1) Fringe benefit not subject to tax (35) Exclusions (1) Fringe benefit subject to tax (2) De minimis benefits month pay and other benefits and payments specifically excluded from taxable compensation income (61) Deductions (1) Personal exemptions and additional exemptions (2) Health and hospitalization insurance (3) Taxation of compensation income of a minimum wage earner (1) Definition of statutory minimum wage (2) Definition of minimum wage earner (3) Income also subject to tax exemption: holiday pay, overtime pay, night shift differential, and hazard pay Taxation of business income/income from practice of profession

(5) Premiums paid on life


insurance policy covering life or any other officer or employee financially interested (6) Interest expense, bad debts, and losses from sales of property between related parties (7) Losses from sales or exchange or property (8) Non-deductible interest (9) Nondeductible taxes (10) Non-deductible losses (11) Losses from wash sales of stock or securities (7) Exempt corporations (1) Propriety educational institutions and hospitals (2) Government owned or controlled corporations (3) Others 10. Taxation of resident citizens, non-resident citizens, and resident aliens 1) General rule that resident citizens are taxable on income from all sources within and without the Philippines (9) Non-resident citizens 2) Taxation on compensation income (9) Inclusions (1) Monetary compensation (1) Regular salary/wage (2) Separation pay/retirement benefit not otherwise exempt (3) Bonuses, 13th month pay,

(3) 13th

3)

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Law on Taxation engaged in trade or business 12. Individual taxpayers exempt from 4) Taxation of passive income income tax (9) Passive income subject to final 1) Senior citizens tax 2) Minimum wage earners (1) Interest income 3) Exemptions granted under (9) Treatment of income international agreements from long-term deposits 13. Taxation of domestic corporations (2) Royalties 1) Tax payable (3) Dividends from domestic (1) Regular tax corporations (2) Minimum Corporate Income (4) Prizes and other winnings Tax (MCIT) (2) Passive income not subject to (1) Imposition of MCIT final tax (2) Carry forward of excess 5) Taxation of capital gains minimum tax (1) Income from sale of shares of (3) Relief from the MCIT stock of a Philippine corporation under certain conditions (1) Shares traded and listed in (4) Corporations exempt the stock exchange from the MCIT (2) Shares not listed and traded (5) Applicability of the MCIT in the stock exchange where a corporation is (2) Income from the sale of real governed both under property situated in the the regular tax system Philippines and a special income (3) Income from the sale, tax system exchange, or other 2) Allowable deductions disposition of other capital (1) Itemized deductions assets (2) Optional standard 11. Taxation of non-resident aliens engaged deduction in trade or business 3) Taxation of passive income 1) General rules (1) Passive income subject to 2) Cash and/or property dividends tax 3) Capital gains Exclude: non-resident aliens not

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Law on Taxation 1) General rule 2) With respect to their income from (1) Interest from deposits and sources within the Philippines yield or any other 3) Minimum Corporate Income Tax monetary benefit from 4) Tax on certain income deposit substitutes and (1) Interest from deposits from trust funds and and yield or any other similar arrangements and monetary benefit from royalties deposit substitutes, trust (2) Capital gains from the sale funds and similar of shares of stock not arrangements and traded in the stock royalties exchange (2) Income derived under the (3) Income derived under the expanded foreign currency expanded foreign currency deposit system deposit system (3) Capital gain from sale of (4) Inter-corporate dividends shares of stock not traded in (5) Capital gains realized from the stock exchange the sale, exchange, or (4) Inter-corporate dividends disposition of lands and/or Exclude: buildings (1) International carrier (2) Passive income not subject to (2) Offshore banking units tax (3) Branch profits 4) Taxation of capital gains remittances (1) Income from sale of shares of (4) Regional or stock area (2) Income from the sale of real headquarters property situated in the and regional Philippines operating (3) Income from the sale, headquarters exchange, or other of disposition of other capital multinational assets companies 5) Tax on proprietary educational 15. Taxation of non-resident foreign institutions and hospitals corporations 6) Tax on government1) General rule owned or controlled 2) Tax on certain income corporations, (1) Interest on foreign loans agencies or instrumentalities (2) Intercorporate dividends 14. Taxation of resident foreign corporations

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Law on Taxation

16. 17. 18. 19. 20.

gains from sale of shares of stock not traded in the stock exchange Exclude: (1) Non-resident cinematographic film owner, lessor or distributor (2) Non-resident owner or lessor of vessels chartered by Philippine nationals (3) Non-resident owner or lessor of aircraft B. machineries and other equipment Improperly accumulated earnings of corporations Exemption from tax on corporations Taxation of partnerships Taxation of general professional partnerships Withholding tax 1) Concept 2) Kinds (1) Withholding of final tax on certain incomes (2) Withholding of creditable tax at source

(3) Capital

3) Withholding of VAT 4) Filing of return and payment

5) 6)

7)

of taxes withheld (1) Return and payment in case of government employees (2) Statements and returns Final withholding tax at source Creditable withholding tax (1) Expanded withholding tax (2) Withholding tax on compensation Timing of withholding

Estate tax 1. Basic principles 2. Definition 3. Nature 4. Purpose or object 5. Time and transfer of properties 6. Classification of decedent 7. Gross estate vis--vis net estate 8. Determination of gross estate and net estate 9. Composition of gross estate 10. Items to be included in gross estate 11. Deductions from estate 12. Exclusions from estate

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Law on Taxation tax 14. Person liable 13. Tax credit for estate taxes paid in a 15. Tax basis foreign country 14. Exemption of certain acquisitions 4. Value-Added Tax (VAT) and transmissions 1. Concept 15. Filing of notice of death 2. Characteristics/Elements of a 16. Estate tax return VAT-Taxable transaction 3. Impact of tax 3. Donors tax 4. Incidence of tax 1. Basic principles 5. Tax credit method 2. Definition 6. Destination principle 3. Nature 7. Persons liable 4. Purpose or object 8. VAT on sale of goods or 5. Requisites of valid donation properties 6. Transfers which may be constituted 1) Requisites of taxability of as donation sale of goods or properties 1) Sale/exchange/transfer of 9. Zero-rated sales of goods or property for insufficient properties, and effectively zeroconsideration rated sales of goods or 2) Condonation/remission of debt properties 7. Transfer for less than adequate and 10. Transactions deemed sale full consideration 1) Transfer, use or consumption 8. Classification of donor not in the course of business 9. Determination of gross gift of goods/properties originally 10. Composition of gross gift intended for sale or use in 11. Valuation of gifts made in property the course of business 12. Tax credit for donors taxes paid in 2) Distribution or transfer to a foreign country shareholders, investors or 13. Exemptions of gifts from donors creditors

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Law on Taxation 14. Zero-rated sale of services 3) Consignment of goods if actual 15. VAT exempt transactions 1) VAT exempt transactions, in sale not made within 60 days general from date of consignment 2) Exempt transaction, 4) Retirement from or cessation of enumerated business with respect to inventories 16. Input tax and output tax, defined on hand 11. Change or cessation of status as VAT-17. Sources of input tax registered person 1) Purchase or importation of goods 1) Subject to VAT 2) Purchase of real properties for (1) Change of business activity which a VAT has actually been from VAT taxable status to paid VAT-exempt status 3) Purchase of services in which (2) Approval of request for VAT has actually been paid cancellation of a registration 4) Transactions deemed sale due to reversion to exempt 5) Presumptive input status 6) Transitional input (3) Approval of request for cancellation of registration due18. Persons who can avail of input tax credit to desire to revert to exempt 19. Determination of output/input tax; status after lapse of 3 VAT payable; excess input tax consecutive years credits 2) Not subject to VAT 1) Determination of output tax (1) Change of control of a 2) Determination of input tax corporation creditable (2) Change in the trade or corporate 3) Allocation of input tax on mixed name transactions (3) Merger or consolidation of 4) Determination of the output corporations tax and VAT payable and 12. VAT on importation of goods computation of VAT payable 1) Transfer of goods by tax exempt or excess tax credits persons 20. Substantiation of input tax credits 13. VAT on sale of service and use or lease 21. Refund or tax credit of excess input of properties tax 1) Requisites for taxability

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Law on Taxation requirements for tax administration and enforcement (1) Power of the Commission er to obtain information, and to summon/exa mine, and take testimony of persons (61) When assessment is made (1) Prescriptive period for assessment (1) False, fraudulent, and non-filing of returns (2) Suspension of running of statute of limitations (4) General provisions on additions to the tax (1) Civil penalties (2) Interest (3) Compromise penalties (5) Assessment process (1) Tax audit (2) Notice of informal conference (3) Issuance of preliminary assessment notice (4) Notice of informal conference (5) Issuance of preliminary assessment notice (6) Exceptions to issuance of preliminary assessment notice (7) Reply to preliminary assessment notice

1) Who may claim for refund/apply for


issuance of tax credit certificate to file claim/apply for issuance of tax credit certificate 3) Manner of giving refund 4) Destination principle or cross-border doctrine 22. Invoicing requirements 1) Invoicing requirements in general 2) Invoicing and recording deemed sale transactions 3) Consequences of issuing erroneous VAT invoice or VAT official receipt 23. Filing of return and payment 24. Withholdin

2) Period

g of final VAT on sales to

government E. Tax remedies the NIRC under

1. Taxpayers remedies 1) Assessment (9) Concept of assessment (1) Requisites for

valid assessment (2) Constructive methods of income determination (3) Inventory method for income determination (4) Jeopardy assessment (5) Tax delinquency and tax deficiency (2) Power of the Commissioner to make assessments and prescribe additional

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Law on Taxation

case of inaction by Commissioner within 180 (8) Issuance of formal letter of days from submission of demand and assessment documents notice/final assessment (3) Effect of failure to appeal notice 2) Collection (9) Disputed assessment (1) Requisites (10) Administrative decision on a (2) Prescriptive periods disputed assessment (3) Distraint of personal property 6) Protesting assessment including garnishment (1) Protest of assessment by (1) Summary remedy of taxpayer distraint of personal (1) Protested assessment property (2) When to file a protest (1) Purchase by the (3) Forms of protest government at sale (4) Content and validity of upon distraint protest (2) Report of sale to the (2) Submission of documents within Bureau of Internal 60 days from filing of protest Revenue (BIR) (3) Effect of failure to protest (3) Constructive distraint to protect the interest of (4) Period provided for the protest to the government be acted upon (4) Summary remedy of levy on (7) Rendition of decision by real property Commissioner (1) Advertisement and sale (1) Denial of protest (2) Redemption of property (1) Commissioners actions sold equivalent to denial of protest (3) Final deed of purchaser (1) Filing of criminal action against taxpayer (5) Forfeiture to government for want of bidder (2) Issuing a warrant of distraint and levy (1) Remedy of enforcement of forfeitures (2) Inaction by Commissioner (1) Action to contest (8) Remedies of taxpayer to action by forfeiture of chattel Commissioner (2) Resale of real estate taken (1) In case of denial of protest for taxes

(2) In

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Law on Taxation

(2) Necessity of proof for


claim or refund (3) Burden of proof for destroyed claim of refund (4) Disposition of funds (4) Nature of erroneously recovered in legal paid tax/illegally proceedings or obtained assessed collected from forfeiture (5) Tax refund vis--vis tax (6) Further distraint or levy credit (7) Tax lien (6) Essential requisites for claim of refund (8) Compromise (5) Who may claim/apply for tax (1) Authority of the refund/tax credit Commissioner to compromise and abate taxes (1) Taxpayer/withholding agents of non-resident (9) Civil and criminal actions foreign corporation (1) Suit to recover tax based on (6) Prescriptive period for false or fraudulent returns recovery of tax erroneously 3) Refund or illegally collected (1) Grounds and requisites for refund (7) Other consideration (2) Requirements for refund as laid affecting tax refunds down by cases 2. Government remedies (1) Necessity of written claim 1) Administrative remedies for refund (1) Tax lien (2) Claim containing a (2) Levy and sale of real categorical demand for property reimbursement (3) Forfeiture of real property (3) Filing of administrative to the government for want claim for refund and the of bidder suit/proceeding before the (4) Further distraint and levy CTA within 2 years from (5) Suspension of business date of payment operation regardless of any (6) Non-availability of supervening cause injunction to restrain (3) Legal basis of tax refunds collection of tax (4) Statutory basis for tax refund 2) Judicial remedies under the tax code 3. Statutory offenses and penalties (1) Scope of claims for refund 1) Civil penalties

(3) When property to be sold or

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Law on Taxation

(1) Surcharge (2) Interest (1) In general (2) Deficiency interest (3) Delinquency interest (4) Interest on extended payment 4. Compromise and abatement of taxes 1) Compromise 2) Abatement 7. Organization and Function of the Bureau of Internal Revenue 1. Rule-making authority of the Secretary of Finance 1) Authority of Secretary of Finance to promulgate rules and regulations 2) Specific provisions to be contained in rules and regulations 3) Non-retroactivity of rulings 2. Power of the Commissioner to suspend the business operation of a
taxpayer III. Local Government Code of 1991, as amended

1. Local government taxation 1. Fundamental principles 2. Nature and source of taxing power 1) Grant of local taxing power under the local government code 2) Authority to prescribe penalties for tax violations 3) Authority to grant local tax exemptions 4) Withdrawal of exemptions 5) Authority to adjust local tax rates 6) Residual taxing power of local governments 7) Authority to issue local tax ordinances 3. Local taxing authority 1) Power to create revenues exercised through Local Government Units 2) Procedure for approval and effectivity of tax ordinances 4. Scope of taxing power 5. Specific taxing power of Local Government Units 1) Taxing powers of provinces (1) Tax on transfer of real property ownership (2) Tax on business of printing and publication (3) Franchise tax (4) Tax on sand, gravel and other quarry services (5) Professional tax

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Law on Taxation fees or charges 5) Authority of treasurer in collection and inspection of books 8. Taxpayers remedies 1) Periods of assessment and collection of local taxes, fees or charges 2) Protest of assessment 3) Claim for refund of tax credit for erroneously or illegally collected tax, fee or charge 9. Civil remedies by the LGU for collection of revenues 1) Local governments lien for delinquent taxes, fees or charges 2) Civil remedies, in general (1) Administrative action (2) Judicial action

4) Penalties on unpaid taxes,

(6) Amusement tax (7) Tax on delivery truck/van 2) Taxing powers of cities 3) Taxing powers of municipalities (1) Tax on various types of

businesses (2) Ceiling on business tax impossible on municipalities within Metro Manila (3) Tax on retirement on business (4) Rules on payment of business tax (5) Fees and charges for regulation & licensing (6) Situs of tax collected 4) Taxing powers of barangays 5) Common revenue raising powers (1) Service fees and charges (2) Public utility charges (3) Toll fess or charges 2. Real property taxation 6) Community tax 1. Fundamental principles 6. Common limitations on the taxing 2. Nature of real property tax powers of LGUs 3. Imposition of real property tax 7. Collection of business tax 1) Power to levy real property 1) Tax period and manner of tax payment 2) Exemption from real property 2) Accrual of tax tax 3) Time of payment

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Law on Taxation

of time for collection of tax 4. Appraisal and assessment of real property 3) Periods within which to collect tax real property tax 1) Rule on appraisal of real property at fair 4) Special rules on payment market value (1) Payment of real property 2) Declaration of real property tax in installments 3) Listing of real property in assessment (2) Interests on unpaid real rolls property tax 4) Preparation of schedules of fair market (3) Condonation of real value property tax (1) Authority of assessor to take 5) Remedies of LGUs for evidence collection of real property tax (2) Amendment of schedule of fair (1) Issuance of notice of market value delinquency for real 5) Classes of real property property tax payment 6) Actual use of property as basis of (2) Local governments lien assessment (3) Remedies in general 7) Assessment of real property (4) Resale of real estate (1) Assessment levels taken for taxes, fees or (2) General revisions of assessments charges and property classification (5) Further levy until full (3) Date of effectivity of assessment or payment of amount due reassessment 6. Refund or credit of real property (4) Assessment of property subject to tax back taxes 1) Payment under protest (5) Notification of new or revised 2) Repayment of excessive assessment collections 8) Appraisal and assessment of machinery 7. Taxpayers remedies 5. Collection of real property tax 1) Contesting an assessment of 1) Date of accrual of real property tax and value of real property special levies (1) Appeal to the Local Board 2) Collection of tax of Assessment Appeals (1) Collecting authority (2) Appeal to the Central Board of Assessment (2) Duty of assessor to furnish local Appeals treasurer with assessment rolls

(3) Notice

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Law on Taxation

(3) Effect of payment of tax


b. Payment of real property under protest (1) File protest with local treasurer (2) Appeal to the Local Board of Assessment Appeals (3) Appeal to the Central Board of Assessment Appeals (4) Appeal to the CTA (5) Appeal to the Supreme Court IV. Tariff and Customs Code of 1978, as amended

1. Tariff and duties, defined 2. General rule: all imported articles are subject to duty. 1. Importation by the government taxable 3. Purpose for imposition 4. Flexible tariff clause 5. Requirements of importation 1. Beginning and ending of importation 2. Obligations of importer 1) Cargo manifest 2) Import entry 3) Declaration of correct weight or value 4) Liability for payment of duties 5) Liquidation of duties 6) Keeping of records 6. Importation in violation of tax credit certificate 1. Smuggling 2. Other fraudulent practices 7. Classification of goods 1. Taxable importation 2. Prohibited importation 3. Conditionally-free importation 8. Classification of duties 1. Ordinary/regular duties

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Law on Taxation

1) Ad valorem; methods of valuation (1) Transaction value (2) Transaction value of identical goods (3) Transaction value of similar goods (4) Deductive value (5) Computed value (6) Fallback value 2) Specific 2. Special duties 1) Dumping duties 2) Countervailing duties 3) Marking duties 4) Retaliatory/discriminatory duties 5) Safeguard 9. Remedies 1. Government 1) Administrative/extrajudicial (1) Search, seizure, forfeiture, arrest 2) Judicial (1) Rules on appeal including jurisdiction 2. Taxpayer 1) Protest 2) Abandonment 3) Abatement and refund
V. Judicial Remedies (R.A. No. 1125, as amended, and the Revised Rules of the Court of Tax Appeals)

1. Jurisdiction of the Court of Tax Appeals 1. Exclusive appellate jurisdiction over civil tax cases 1) Cases within the jurisdiction of the court en banc 2) Cases within the jurisdiction of the court in divisions 2. Criminal cases 1) Exclusive original jurisdiction 2) Exclusive appellate jurisdiction in criminal cases 2. Judicial procedures 1. Judicial action for collection of taxes 1) Internal revenue taxes

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Law on Taxation

2) Local taxes (1) Prescriptive period 2. Civil cases 1) Who may appeal, mode of appeal, effect of appeal (1) Suspension of collection of tax
a) Injunction not available to restrain collection (2) Taking of evidence (3) Motion for reconsideration or new trial 2) Appeal to the CTA, en banc 3) Petition for review on certiorari to the Supreme Court 3. Criminal cases 1) Institution and prosecution of criminal actions (1) Institution of civil action in criminal action 2) Appeal and period to appeal (1) Solicitor General as counsel for the people government officials sued in their official capacity 3) Petition for review on certiorari to the Supreme Court

and

C. Taxpayers suit impugning the validity of tax measures or acts of taxing authorities 1. Taxpayers suit, defined 2. Distinguished from citizens suit 3. Requisites for challenging the constitutionality of a tax measure or act of taxing authority 1) Concept of locus standi as applied in taxation 2) Doctrine of transcendental importance 3) Ripeness for judicial determination IMPORTANT NOTES: 1. This listing of covered topics is not intended and should not be used by the law schools as a course outline. This was drawn up for the limited purpose of ensuring that Bar candidates are guided on the coverage of the 2013 Bar Examinations. Listings whose subject matters run across several Bar Subjects shall be deemed to include only the subject matters specific to the given Bar Subject. For example, Impeachment is generally a topic under Political Law but is listed also under Legal and Judicial Ethics for the ethical components of this Bar Subject. Note that there may be specific identification of the covering Bar Subject where a topic may be common to several Bar Subjects. For example, Independent Civil Actions mentioned in the Civil Code shall be included as a topic in Remedial Law rather than in Civil Law. Note also that many special laws, rules or specific topics, otherwise covered by the different examinable Bar Subjects, have been omitted or are expressly excluded from the coverage of the 2013 Bar Examinations.

2013 Bar Examination Coverage 26

Law on Taxation

2. The appreciation of the fact situations in, and the answers to, some questions in
every Bar Subject may require the consideration of underlying ethical rules and values.

3.

All Supreme Court decisions - pertinent to a given Bar subject and its listed topics, and promulgated up to January 31, 2013 - are examinable materials within the coverage of the 2013 Bar Examinations.