UNIVERSITY OF MAKATI

School of Law

ATTY. ANTHONY DY

TAXATION LAW I

Course Credits : 3 units

Course Description :
This course introduces the general principles of taxation and statutory provisions
on income taxation including pertinent revenue regulations. The main topics that
will be covered include: the general principles of taxation, sources of revenue
and its sub-topics,
determining income from employment, income from business, and income from property,
deductions from business and property income, capital gains and
losses, other income and deductions, computation of taxable income and tax
administration.
Course Objectives :
At the end of the course, the students are expected to:
Explain the sources, nature and purpose of taxation.

Apply the basic principles and policies of Philippine Income Tax Law.

Describe the general structure of the Philippine Income Taxation system.

 Explain and contrast the manner in which different entities are taxed.

SYLLABUS

A. General Principles
1. Concept, Nature, and Characteristics of Taxation and Taxes
CASES:
a. Commissioner of Internal Revenue vs. Cebu Portland Cement Company (December
15, 1987)
b. Commissioner of Internal Revenue vs. Algue (February 17, 1988)
c. C.N. Hodges vs. Municipal Board of the City of Iloilo (January 31, 1963)
2. Classifications and Distinctions
CASES:
a. Association of Customs Brokers, Inc. vs. Municipal Board (May 22, 1953)
b. Esso Standard Eastern, Inc. vs. Commissioner of Internal Revenue (July 7, 1989)
c. Progressive Development Corporation vs. Quezon City (April 24, 1989)
d. PAL vs. Edu (August 15, 1988)
e. Villegas vs. Hiu Chiong Tsai Pao Ho (November 10, 1978)
f. Compania General de Tabacos de Filipinas vs. City of Manila (June 29, 1963)
g. American Mail Lines vs. City of Basilan (May 31, 1961)
h. Osmeña vs. Orbos (March 31, 1993)
i. Republic of the Philippines vs. Bacolod-Murcia Milling Co. (July 9, 1966)
j. Victorias Milling Co., Inc. vs. Municipality of Victorias (December 27, 1968)
k. Lutz vs. Araneta (December 22, 1955)
l. PCGG vs. Cojuangco (December 14, 2001)
3. Certain Doctrines in Taxation
Power to Tax includes the Power to Destroy
a. Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd. (May 26, 1995)
b. Reyes vs. Almanzor (April 26, 1991)
c. Commissioner of Internal Revenue vs. Algue (February 17, 1988)
Set-off / Compensation
a. Philex Mining Corp. vs. Commissioner of Internal Revenue (August 25, 1998)
b. Francia vs. Intermediate Appellate Court (June 28, 1988)
c. Commissioner of Internal Revenue vs. Itogon-Suyoc Mines, Inc. (July 29, 1969)
d. Domingo vs. Garlitos (June 29, 1963)
e. Republic of the Philippines vs. Mambulao Lumber Company (February 28, 1962)
Taxpayer Suit
a. Anti-Graft League of the Philippines vs. San Juan (August 1, 1996)
b. Joya vs. Presidential Commission on Good Government (August 24, 1993)
c. Lozada vs. COMELEC (January 27, 1983)
4. Limitations on the Power of Taxation
CASES:
a. Pascual vs. Secretary of Public Works (December 29, 1960)
b. Osmeña vs. Orbos (March 31, 1993)
c. Pepsi-Cola Bottling Company vs. Municipality of Tanauan (February 27, 1976)
d. Social Security System vs. City of Bacolod (July 21, 1982)
e. Sea-Land Services, Inc. vs. Court of Appeals (April 30, 2001)
f. Commissioner of Internal Revenue vs. Mitsubishi Metal Corporation (January 22,
1990)
g. 31st Infantry Post Exchange vs. Posadas (September 4, 1930)
h. Commissioner of Internal Revenue vs. Marubeni Corporation (December 18, 2001)
i. Reagan vs. Commissioner of Internal Revenue (December 27, 1969)
j. Tiu vs. Court of Appeals (January 20, 1999)
k. John Hay Peoples Alternative Coalition vs. BCDA (October 24, 2003)
l. Coconut Oil Refiners Association Inc. vs. BCDA (July 29, 2005)
m. Province of Abra vs. Hernando (August 31, 1981)
n. Tolentino vs. Secretary of Finance (October 30, 1995)
o. Abakada Guro Party List vs. Ermita (September 1, 2005)
p. Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance
Secretary (November 10, 1994)
q. Commissioner of Internal Revenue vs. Court of Appeals (August 29, 1996)
r. Commissioner of Internal Revenue vs. Lingayen Gulf Electric Power Co., Inc. (August
4, 1988)
s. Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan (June 30,
1988)
t. Sison vs. Ancheta (July 25, 1984)
u. Villegas vs. Hiu Chiong Tsai Pao Ho (November 10, 1978)
v. Villanueva vs. City of Iloilo (December 28, 1968)
w. Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. City of Butuan (August 28, 1968)
x. Ormoc Sugar Company, Inc. vs. Treasurer of Ormoc City (February 17, 1968)
y. Lutz vs. Araneta (December 22, 1955)
z. Association of Customs Brokers, Inc. vs. Municipal Board (May 22, 1953)
aa. Eastern Theatrical Co., Inc. vs. Alfonso (May 31, 1949)
bb. Philippine Trust Company vs. Yatco (January 23, 1940)
cc. Churchill vs. Concepcion (September 22, 1916)
dd. Meralco vs. Province of Laguna (May 5, 1999)
ee. Province of Misamis Oriental vs. Cagayan Electric Power and Light Company, Inc.
(January 12, 1990)
ff. Cagayan Electric Power & light o., Inc. vs. Commissioner of Internal Revenue
(September 25, 1985)
gg. Lealda vs. Commissioner of Internal Revenue (April 30, 1963)
hh. Casanovas vs. Hord (March 22, 1907)
ii. American Bible Society vs. City of Manila (April 30, 1957)
jj. Abra Valley College vs. Aquino (June 15, 1988)
kk. Commissioner of Internal Revenue vs. Bishop of the Missionary District of the
Philippines (August 14, 1965)
ll. Lladoc vs. Commissioner of Internal Revenue (June 16, 1965)
mm. Herrera vs. Quezon City Board of Assessment Appeals (September 30, 1961)
nn. Bishop of Nueva Segovia vs. Provincial Board of Ilocos Norte (December 31, 1927)
oo. Commissioner of Internal Revenue vs. Court of Appeals and YMCA (October 14,
1998)
pp. Lung Center of the Philippines vs. Quezon City (June 29, 2004)
5. Situs of Taxation and Double Taxation
CASES:
a. Republic Bank vs. Court of Tax Appeals (September 2, 1992)
b. Procter & Gamble Philippine Manufacturing Corp. vs. Municipality of Jagna
(December 28, 1979)
c. Pepsi-Cola Bottling Company vs. Municipality of Tanauan (February 27, 1976)
d. Villanueva vs. City of Iloilo (December 28, 1968)
e. Victorias Milling Co., Inc. vs. Municipality of Victorias (December 27, 1968)
f. Compania General de Tabacos de Filipinas vs. City of Manila (June 29, 1963)
g. Province of Bulacan vs. Court of Appeals (November 27, 1998)
6. Forms of Escape from Taxation
CASES:
a. Delpher Trades Corp. vs. Intermediate Appellate Court (January 26, 1988)
b. Heng Tong Textiles Co., Inc. vs. Commissioner of Internal Revenue (August 26, 1968)
c. Commissioner of Internal Revenue vs. Toda (September 14, 2004)
7. Exemption from Taxation
CASES:
a. Davao Gulf Lumber Corp. vs. Commissioner of Internal Revenue (July 23, 1998)
b. Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue (August 17,
1967)
c. Commissioner of Internal Revenue vs. Court of Appeals and Ateneo de Manila
University (April 18, 1997)
d. Caltex Philippines, Inc. vs. Commission on Audit (May 8, 1992)
e. Luzon Stevedoring Corp. vs. Court of Tax Appeals (July 29, 1988)
f. National Development Company vs. Commissioner of Internal Revenue (June 30,
1987)
g. Manila Electric Company vs. Vera (October 22, 1975)
h. Maceda vs. Macaraig (May 31, 1991 and June 8, 1993 – Motion for Reconsideration)
i. Commissioner of Internal Revenue vs. Gotamco & Sons, Inc. (February 27, 1987)
j. Commissioner of Internal Revenue vs. Court of Appeals and YMCA (October 14, 1998)
k. Nitafan vs. Commissioner of Internal Revenue (July 23, 1987)
l. Province of Abra vs. Hernando (August 31, 1981)
m. Commissioner of Internal Revenue vs. Mitsubishi Metal Corporation (January 22,
1990)
n. Commissioner of Internal Revenue vs. Gotamco & Sons, Inc. (February 27, 1987)
o. 31st Infantry Post Exchange vs. Posadas (September 4, 1930)
p. PLDT vs. City of Davao (Aug.22,2001)
q. Sea-Land Services, Inc. vs. Court of Appeals (April 30, 2001)
r. Meralco vs. Province of Laguna (May 5, 1999)
s. Tiu vs. Court of Appeals (January 20, 1999)
t. Mactan Cebu International Airport Authority vs. Marcos (September 11, 1996)
u. Commissioner of Internal Revenue vs. Robertson (August 12, 1986)
v. Basco vs. PAGCOR (May 14, 1991)
w. Republic of the Philippines vs. Intermediate Appellate Court (April 26, 1991)
x. Commissioner of Internal Revenue vs. Court of Appeals (January 20, 1995)
8. Nature, Construction, Application, and Sources of Tax Laws
CASES:
a. Hilado vs. Commissioner of Internal Revenue (October 31, 1956)
b. Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance
Secretary (November 10, 1994)
c. Commissioner of Internal Revenue vs. Court of Appeals (February 6, 1997)
d. Commissioner of Internal Revenue vs. Lingayen Gulf Electric Power Co., Inc. (August
4, 1988)
e. ABS-CBN Broadcasting Corp. vs. Court of Tax Appeals (October 12, 1981)
f. Philippine Bank of Communications vs. Commissioner of Internal Revenue (January
28, 1999)
B. Real Property Taxation
1. General Provisions (Section 197-200, R.A. 7160 - Local Government Code)
2. Appraisal and Assessment Of Real Property (Section 201-225)
3. Imposition of Real Property Tax (Section 232-234)
a. Cases
Davao Sawmill Co. vs. Castillo, G.R. No. 40411, August 7, 1935
City of Baguio vs. Busuego, G.R. No. L-29772, September 18, 1980
Reyes et al. vs. Almanzor, G.R. Nos. 49839-46, April 26, 1991
Pecson vs. Court of Appeals, G.R. No. 105360, Ma 25, 1993
Mathay, Jr. vs. Macalingcag, G.R. No. 97618, December 16, 1993
Patalinhug vs. Court of Appeals, G.R. No. 104786, January 27, 1994
Ty, et al. vs. Trampe, G.R. No. 117577, December 1, 1995
Mactan Cebu International Airport Authority vs. Marcos, G.R. No. 120082, September
11, 1996
Sesbreño vs. Central Board of Assessment Appeals, G.R. No. 106588, March 24, 1997
Lopez vs. City of Manila, G.R. No. 127139, February 19, 1999
Cagayan Robina Sugar Milling Co. vs. Court of Appeals, G.R. No. 122451, October 12,
2000
Light Rail Transit Authority vs. Central Board of Assessment Appeals, G.R. No. 127316,
October 12, 2000
4. Special Levies on Real Property (Section 235-243, 245)
a. Cases
LRT vs. Manila 342 SCRA 692
Cebu City vs. Mactan 261 SCRA 667
C. Local Taxation
1. General Provisions (Sections 128-133)
2. Cases:
a. Bulacan vs. Court of Appeals, 229 SCRA 42
b. Palma vs. Malangas, 413 SCRA 572
c. Pililia vs. Petron 198 SCRA 82
d. First Holding Co. vs. Batangas City, 300 SCRA 661
e. Butuan vs. LTO, 322 SCRA 805
3. Specific Provisions on the Taxing and Other Revenue Raising Powers of Local
Government Units
a. Provinces (Sec. 134-141)
b. Municipalities (Sec. 142-150)
c. Cities (Sec. 151)
d. Barangays (Sec. 152)
e. Common Revenue-Raising Powers (Sec. 153-155)
f. Community Tax (Sec. 156-164)
4. Cases:
Misamis vs. Cagayan de Oro 181 SCRA 38
Reyes vs. San Pablo City 305 SCRA 353
Meralco vs. Laguna 306 SCRA 750
PLDT vs. Davao City 363 SCRA 522
5. Local Finance Circular No. 001-2002, April 25, 2002
D. Tariff and Custom Laws
1. Applicable Laws
a. Presidential Decree 1464 – A Decree to Consolidate all the Tariff and Custom Laws of
the Philippines
b. Republic Act No. 9135
c. Republic Act No. 7651
d. Republic Act No. 7650
e. Republic Act No. 8751
f. Republic Act No. 8752
2. Import Tariffs (Sections100-101, 105)
3. Bases of Assessment of Duty (Sec. 201)
4. Special Duties
a. Anti-Dumping Duty (Sec. 301)
b. Counterveiling Duty (Sec. 302)
c. Marking Duty (Sec. 303)
d. Discrimination by Foreign Countries (Sec. 304)
5. Flexible Tariffs (Sec. 401)
6. Importation in General (Sec. 1201-1207, 1210-1211)
7. Entry at Customhouse (Sec. 1301-1302)
8. Liquidation of Duties (Sec. 1601-1604)
9. Abatements and Refunds (Sec. 1708)
10. Abandonment of Imported Articles (1801-1802)
11. Administrative and Judicial Proceedings
a. Search, Seizure, and Arrest (Sec. 2201-2212)
b. Administrative Proceedings (Sec. 2308-09, 2312-16)
c. Judicial Proceedings (Sec. 2401-2402)
d. Surcharges, Fines, and Forfeiture (Sec. 2530-36)
CASES:
a. Jao vs. Court of Appeals, 249 SCRA 45
b. Transglobe International vs. Court of Appeals, GR. NO. 126634, JAN. 25, 1999
c. Acting Commissioner of Customs vs. Court of Appeals, GR NO. L-62636, APRIL 27,
1984
2. Miscellaneous Provisions (Sec. 3301, 3502, 3513, 3601, 3611)
3. Statutory Offenses of Officials and Employees (Section 3604)
4. Failure to Keep Importation Records and Give Full Access to Custom Officers (Section
3610)
5. Failure to Pay Correct Duties and Taxes on Imported Goods (Sec. 3611)
6. CMO 10-2006 - SPECIAL RULES PRESCRIBING THE EXERCISE AND CONDUCT
OF EXAMINATION, SEARCHES AND SEIZURES PURSUANT TO THE PROVISIONS
OF SECTION 2536 OF THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES,
AS WELL AS THE CUSTODY OF AND RESPONSIBILITY OVER THE ARTICLES OR
GOODS SEIZED AS INCIDENT THERETO
B. Remedies
1. Real Property Taxation
a. Assessment Appeals (Sec. 226-231, LGC)
b. Collection of Real Property Tax (Sec. 246-270, LGC)
2. Local Taxation
a. Collection of Taxes (Sec. 165-171, LGC)
b. Civil Remedies for Collection of Revenues (Sec. 172-185, LGC)
c. Miscellaneous Provisions (Sec. 186-193,LGC)
d. Taxpayer’s Remedies (Sec. 194-196, LGC)
3. National Internal Revenue
a. Remedies in General (Sec. 202-204, NIRC)
b. Civil Remedies for Collection of Taxes (Sec. 205-227, NIRC)
c. Protesting an Assessment, Refund, etc. (Sec. 228-231, NIRC)
CASES:
a. St. Stephen’s Association and St. Stephen’s Girls School vs. Collector of Internal
Revenue, G.R. No. L-11238, August 21, 1958
b. Advertising Associates vs. Court of Appeals and Commissioner of Internal Revenue,
G.R. No. L-59758, December 26, 1984
c. Commissioner of Internal Revenue vs. Isabela Cultural Corporation, G.R. No. 135210,
July 11, 2001
d. Surigao Electric Co. and Arturo Lumanlan vs. Municipality of Surigao, G.R. No. L-
22766, August 30, 1968
e. Yabes vs. Flojo, G.R. No. L-46954 July 20, 1982
f. Commissioner of Internal Revenue vs. Algue, G.R. No. L-28896 February 17, 1988
g. Commissioner of Internal Revenue vs. Union Shipping Corporation, and the CTA,
G.R. No. L-66160 May 21, 1990
2. Revenue Regulations No. 12-99 – Implementing the Provisions of the National
Internal Revenue Code of 1997, Governing the Rules of Assessment of National Internal
Revenue Taxes, Civil Penalties and Interest and the Extrajudicial Settlement of a
Taxpayer’s Criminal Violation of the Code through Payment of Suggested Compromise
Penalty.
B. Court of Tax Appeals
1. Republic Act No. 1125 as amended by R.A. No. 3457, and further amended by R.A.
9282
2. Republic Act No. 9505
I. COURSE POLICIES:
1. Students must come to class on time, prepared and participate actively
in the discussions; all requirements must be submitted on time. Late
submission will receive deductions.
2. No text messaging or entertaining of phone calls during class hours
unless call is emergency. Using of headphones during class hour is
also prohibited. Please be courteous, turn off your cell phone while
inside the classroom.
3. Students with 3 consecutive absences will automatically be dropped
from the class roll.
4. Students who wished to drop the course must do so officially and not
just stop coming to class.
5. Academic dishonesty: Any form of cheating or plagiarism in this
course will result in zero on the exam, assignment or project. Allowing
others access to your work potentially involves you in cheating.
Working with others to produce very similar reports is plagiarism
regardless of intent.
6. Problems encountered with the subject must be discussed to the
instructor. Such consultation may be made in person during
designated time and at designated place.

II. Grading System:

Midterms 30%

Finals 30%

Class Standing 40%