TAX REVIEW TRANSFER TAXES- are those imposed upon the gratuitous disposition of private property.

-are those taxes levied on the transmission of property from the decedent to his heirs or from a donor to a donee. ESTATE TAXATION- is the tax levied on the transmission of the estate of the deceased to his lawful heirs. KINDS OF DEATH TAXES 1) Estate Tax- is a tax on the right of the deceased person to transmit his estate. -estate tax accrues only upon the death of the decedent or when succession takes place. It is based on the entire net estate . -not a direct tax on property nor capitation tax( not a tax on property or transferee) but an excise tax.. 2) Inheritance Tax- is the tax on the right of the heirs or beneficiaries to receive the estate of the deceased person. (According to Sababan , there is no inheritance tax in the Philippines) PURPOSE OF ESTATE TAX (BRA-P) 1)-BENEFIT RECEIVED THEORY-the government performs and renders services for the distribution of the estate of the decedent-(one of the purposes why the government collect estate tax) 2)-REDISTRIBUTION OF WEALTH THEORY- the estate tax is imposed to reduce the property received by the successor-why? , so that the wealth will be distributed equally in society. 3)-ABILITY TO PAY THEORY- the receipt of inheritance creates the ability to pay the ( inheritance tax) 4)-PRIVELEGE THEORY-inheritance is not a right but a privilege given by the state. TIME AND TRANSFER OF PROPERTY- at the time of death of the decedent CLASSIFICATION OF DECEDENT 1)-resident decedent 2)-non resident alien decedent GROSS ESTATE -total value of the property ( WON real/personal)-tangible/intangible belonging to the decedent at the time of death. In case non-resident alien decedent- only the property situated in the Phils. NET ESTATE- it means the gross estate less allowable deductions less of the net share of SS.

EXTENT OF INTEREST at the time of death(decedents interest) EXTENT OF TRANSFER-after death or before his death The right on the income of the property / possession/ enjoyment (heir) The right to designate the person who shall possess or enjoy the property or income(decedent)

CAPITAL OF SS- not included in the gross estate under estate tax ITEMS INCLUDED IN THE GROSS ESTATE RC/NRC/RA -REAL PROPERTY -TANGIBLE PERSONAL PROPERTY -INTANGIBLE PERSONAL PROPERTY w/in and w/o w/in and w/o w/in and w./o NRA w/in w/in w/in except if theres Reciprocity RECIPROCITY RULE-states that when a Filipino is not taxable in that foreign country ,the foreigner is likewise not taxable under Phil. Law.

DEDUCTIONS FROM GROSS ESTATE FM-JUCCUC 1)funeral expenses 2)medical expenses 3)judicial expenses 4)unpaid taxes 5)claims against insolvent person 6)claims against the decedent estate 7)unpaid mortgages indebtedness 8)casualty losses

FAST-N-TV 9)family home 10)amounts received by the heirs 11)standard deduction equivalent to 1 M 12)Transfer for public use 13)Net share of the SS 14)tax credit of estate tax paid to a foreign country 15) Vanishing deduction GEN.POWER OFAPPOINTMENT-decedent is the transferee or recipient of property. Transferred during lifetime. Ex: X has a parcel of land and he transferred the property to Y through a GPA. Thereafter, Y died w/ the property in his possession but it is still registered in the name of X. The property here is owned by Y already and it will form part of the GE of Y. REVOCABLE TRANSFER-decedent is the transferor. The decedent transfers by trust or enjoyment of the thing to another subject to his right to revoke / or w/o notifying the transferee. -transfer made by decedent during his lifetime but at the time of death, he may revoke ,alter , terminate it. -here the beneficiary may not transfer the property in revocable transfer until the death of decedent. COMPOSITION OF GROSS ESTATE DT2R P3 1)Decedents interest-at the time of decedent 2)Transfer in contemplation of death-the transfer is made at the thought of death.(no death ,no transfer) 2 kinds a)by trust in contemplation in possession or enjoyment at after death-(after the death) b)by trust or in contemplation w/c he has to retain for his life and does not end before his death.-during the lifetime 3)Transfer for insufficient consideration-these are transfer made in contemplation of death, revocable transfer and property passing through GPA What is the value included in GE?

ANS: the excess fair market value of the property at the time of death -also, the difference between fair market value and consideration Ex: A has a land valued at 1M . A sold it for only 500k. The remaining 500k is included in the GE of A . 4)Revocable Transfer 5)Property passing under the GPA 2 parties under GPA 1)Transferor or donor-the one who made the GPA 2)Transferee or done-the one given GPA Value to be included in the GE under GPA -a)will - b)by trust in contemplation in possession or enjoyment at after death-(after the death) c)by trust or in contemplation w/c he has to retain for his life and does not end before his death.-during the lifetime 6)Proceeds of Life Insurance -extent of proceeds is up to the amount receivable by the property of the deceased, executor, administrator. If Beneficiaries are estate, administrator , executor -WON rev. or irrev = included in GE If Beneficiaries other than estate, administrator, executor-if rev=included in GE If Beneficiaries other than estate, administrator, executor if irrev=excluded in GE 7)Prior Interest-applies to PRE-TTIR Either as , a)Proceeds of Insurance b)Transfer in contemplation of death c)revocable transfer VANISHING RATES 100%- w/in 1 year from death of the 2nd decedent 80%-more than 1 year but less than 2 years 60%-more than 2 years but less than 3 years 40%- more than 3 years but less than 4 years 20%-more than 4 years but less than 5 years VANISHING DEDUCTIONS computation Initial basis over the value of GE of 2nd decedent x the expenses, losses = 2nd deduction Initial deduction minus 2nd deduction = final basis Final deduction x vanishing deduction rates = vanishing deduction ESTATE TAX CREDIT is the net taxable estate of the resident decedent w/c includes the NTE wherever located. **The net taxable estate outside the Philippines is paying both foreign estate tax and Philippine estate tax. And the estate tax paid in the foreign country is deductible against the Philippine estate tax.

JOINT TENANCY- a form of ownership where 2 or more people share the title of an asset equally at the same time. There is an estate tax imposed in joint tenancy. The number of estate beneficiary is immaterial so long as the value of GE is more than 200k , estate tax is imposable. ***Estate taxation does not consider WON there is primary or contingent beneficiary ( the beneficiary next in line to the primary), so long as there is a taxable estate. Therefore, there is an estate tax if the primary beneficiary dies before collecting his share. **No transfer can be made if no estate tax paid by the heirs and no showing that the estate tax is paid on the property. DONORS TAX DONORS TAX is an excise tax on the privilege of the donor to give or to transfer the property by way of a gift inter vivos. It is not a property tax. -It is the tax on the voluntary transfer of property w/o consideration. DONATION VS GIFT Donation-an act of liberality whereby one person ( donor) disposes a thing or a right gratuitously for another who accepts it. Gift is a voluntary transfer of property from one person to another w/o consideration or compensation. What may be donated? Ans; a thing or a right may be donated. DONATION SUBJECT TO DONORS TAX CADD+ 1)capacity of the donor 2)acceptance by the donee 3)donative intent 4)delivery of the thing KINDS OF DONATION 1)DONATION MORTIS CAUSA- it takes effect upon the death of the donor. It partakes the nature of the testamentary disposition and is equivalent to a transfer in contemplation of death.( not subject to donors tax but subject to estate tax) -It is subject to estate tax because there is no ownership to the donee or no transfer of title. The donor retains ownership or title to the property. -The transfer is revocable by the donor at will during his lifetime. The transfer is VOID if the donor survives the done. 2) DONATION INTER VIVOS- it takes effect during the lifetime of the donor.( subject to donors tax) - Donation inter vivos of 100k or less are not subject to donors tax -likewise those declared exempt by special law and the Tax Code are not subject to donors tax.

JURIDICAL AND NATURAL PERSONS are subject to donors tax- RA 6610 NATURAL PERSONS- are the only persons subject to estate tax. FORMS OF DONATION 1)MOVABLE DONATION- may be made orally , may be made written. -However, oral donation requires simultaneous delivery of a thing or of the document representing the right donated. -if the value is more than 5k , acceptance shall be made in writing. If not, donation is VOID. 2)IMMOVABLE DONATION-must be in public instrument . -acceptance may be made in the same deed of donation or separate instrument and during the lifetime of the donor. TAX RATE of Donors Tax -30% if stranger and 2%-15% in favour of relatives. - if donee is not a stranger , scheduler tax rate is the basis Dowry exemption- deduction to a cash gift on account of marriage Gen. Rule: Any contribution in cash or in kind to any political candidate is not subject to donors tax Exception: the donor and done comply w/ the requirements of filing tax returns -Donations in kind to politicians are subject to 5% withholding tax. -political contributions are considered gifts therefore subject to donors tax. Of contributions to COMELEC. **Renunciation of inheritance is not subject to donors tax VALUATION Money-the amount is the valuation Personal Property-FMV of the gift Real Property-FMV as determined by CIR Shares of Stock-if listed in stock exchange- the average between the high quoted price and the low quoted price. -if not listed- the book value of the stock INTANGIBLE PROPERTIES -shares,obligations , bonds of any corporation, domestic or foreign. PROPERTIES INCLUDED IN DONORS 1) RC- w/in and w/o 2) NRA- w/in only real, intangible personal and tangible properties. Gen Rule: Gift is incomplete because of the donors reservation power. Exception: Gift is complete because 1) the donor renounces the power to reserve 2)there is a fulfilment of a condition of the donor to the donee or there is a happening of some event or contingency.

Gross gifts- real, personal, intangible, tangible or mixed. ITEMS DEEMED GIFT OR DONATION (DR-PT) - Property subjected to final capital gains tax (EXCEPT real property considered as capital assets) - Debt condoned or remitted - transfer made in trust - renunciation of the SS share of CPG or ACP (EXCEPT: general renunciation by the heir including SS is not subj. to donors tax, unless it is categorically done in favour of identified heirs) Note: Real Properties considered as capital assets are not subject to donors tax since they were subject to CGT. Except: Real property considered capital assets(Sec 24-d/ sec.100) Stranger is not a brother, sister, spouse, w/in the lineal -w/in the 4th degree of consanguinity in collateral line -adopted child is not a stranger-2%-15% -business organization is considered stranger -30% Exemptions from gift are not exclusion but deductions. So, they should be deducted from the gross gift. -GGEDDDEx: Dowry exemption=Php 10,000 (gifts made on account of marriage)b4 celebration or w/in 1 year -gifts made to national government -gifts made to non profit educational and charitable , religious institution -encumbrances donated if assumed by the donee in the deed of donation -donations made to entities under special law -donations made not to stranger of not more than 100k

NON-PROFITABLE EDUCATIONAL /CHARITABLE INSTITUTION- a non-stock entity w/o paying dividends governed by trustees w/o compensation. EXCISE TAX- an indirect tax imposed on the consumption of a specific list of goods or products . Indirect vs Direct Tax -The former refers to tax where the burden is transferred to another (VAT) and the latter is a tax where the burden is not transferred to another but directly to the taxable person ( Income Tax) Progressive Vs Regressive Tax -The former happens when the tax base increases the tax rate increases while the latter happens when the tax base decreases the tax rate increases. **Degressive Tax the increase in tax rate is not proportional to the increase of tax base.

DUTY TEST VS GENERAL WELFARE TEST The former is a test applied to determine the public purpose of the law WON appropriation or expenditure of public funds is in relation to the duty of the State whereas the latter is a test applied in order to determine the public purpose of a tax measure whether the law providing it directly promotes the welfare of the community in equal measures. SIMILARITIES OF THE 3 INHERENT POWERS OF THE STATE -WALE PIE1)Ways in w/c the State interferes w/ the private right and property of the people 2) Attributes of sovereignty and emanates from necessity 3) Legislative in nature 4)Exists independently of Constitution 5)Presuppose compensation 6)Inherent power of the State 7)Exercise by the LGUs DIFFERENCES OF THE 3 INHERENT POWERS OF THE STATE DEFINITION Power of Taxation is the taking of property to support the government, Eminent Domain is the taking of private property for public use for just compensation, and Police Power is the enactment of laws for the general welfare of the people. AS TO LIMITATIONS Power of Taxation has 3 limitations (CIC); constitutional limitation, Inherent restriction and contractual relations, Police Power has 2 limitations ( PR)- public interest and requirement of due process of law , and Eminent Domain has 2 limitations ( PJ)- public use and just compensation. AS TO PURPOSE Power of taxation s purpose is to collect revenue to support the government , Eminent Domain and Police Powers purposes are the taking of property for public use . AS TO BENEFITS With regard to Power of Taxation is the Benefit Received Theory , Police Power has no benefits since it restrains and regulates rights , The benefit in Eminent Domain is the payment of just compensation on the owner of the property AS TO THE PERSON AFFECTED Power of Taxation and Police Power share the same community of individuals as the person affected , with regard to Eminent Domain , the person affected is the owner of the property only. AS TO IMPAIRMENT OF OBLIGATIONS AND CONTRACTS under the Constitution Power of Taxation is inferior on Non-Impairment Contractual Clause whereas w/ regard to police Power and Eminent Domain are superior on Non-impairment clause under the Constitution.

AS TO EFFECT OF TRANSFER OF PROPERTY On Power of Taxation , the money paid becomes public funds, Police Power transfers no rights to property and on Eminent Domain , there is a right of transfer to property. AS TO AUTHORITY THAT EXERCISE THE POWER The power of taxation, police power and eminent domain are exercised by the Government. However, the only difference is w/ regard to Eminent Domain , it may be exercised not only by the government but also by private corporation and private individual. AS TO DELEGATION Power of Taxation does not need delegation since it is inherent , however, in terms of Police power and Eminent domain need due delegation before it can be exercised by LGU. When should public purpose of tax law exist? -TPU and TLE1) when tax proceeds is being used 2)when tax law is enacted Who determines public purpose of tax law? -CS1) Congress 2)Sanggunian of LGUs TaX Measure is for public use , when? -BBRRADS-P 1)Benefit received by majority of people 2)Building of roads 3)Respond to calamities 4)Realize governmental goals 5)Address public needs 6)Development of youth 7)Support of inventors 8)Promotion of science and technology What are the approaches of Tax Burden Distribution? -BA1)Benefit Approach- tax payment is imposed upon the benefits received by the taxpayer 2) Ability to Pay Approach- tax payment is based upon the ability to pay by taxpayer. CHARACTERISTICS OF A SOUND TAX SYSTEM -FAT1) Fiscal Adequacy sources of revenue must be adequate 2)Administrative Feasibility tax revenue is based upon convenient ,just and effective administration 3) Theoretical Justice tax law is based upon the ability to pay theory 3 STAGES OF TAXATION -LAP1)Levy or Imposition

2)Assessment or Collection 3)Payment of Tax Levy and Assessment are called impact of tax and Payment is the incidence of Tax. PURPOSE OF TAXATION -PSC1) Primary to raise revenue 2)Secondary ( RAP) -regulate the conduct of business -achieve economic ability -promote local industries 3) Compensatory (STRUCK-PP) -strengthen anemic enterprise -tools of intl. bargain -reduce inequalities -use as implement in the exercise of police power -check inflation -key instrument on social control -provides incentives -promotes science and inventions ELEMENTS OF TAX SYSTEM -PuTaTa1) Public Tax Consciousness- Voluntary compliance of tax obligations 2)Tax Structure- Tax rate, tax base , tax subject and other tax events in relation to revenue productivity and tax progressivity 3) Tax Administration involves assessment, collection and enforcement of taxes. What is the Power of Taxation - it is the attribute of sovereignty and emanates from necessity as a power- it refers to the inherent power of the State to demand enforced contribution for public purpose to support the government. as a process-it is a legislative act to raise income to defray the necessary expenses of the govt. STATE POLICIES UNDER RA 8424 -PPEC1)promote sustainable economic growth through rationalization under Philippine tax system 2)provide an equitable relief to taxpayer 3)ensure that the govt. provides the needs of the people 4)create a robust environment for business When is the power of taxation begins? -from the moment a State is born w/ the concurrence of TGPS (territory, government, population and sovereignty)

CHARACTERISTICS OF TAXATION -PENIST1)public purpose 2)exaction payable to money 3)not absolute because it is subject to CIC 4)inherently legislative 5)subjectt for international comity 6)territorial Also PINET 1)public purpose 2)international comity 3)non-delegation of power 4)exemption of government 5)territoriality UNDERLYING PRINCIPLES BEHIND POWER OF TAXATION -PBL1)Principle of Necessity the existence of government is a necessity and w/o the means of support it cannot continue. 2)Benefit Received Theory there is a reciprocal and mutual duty of support and protection between the government and the people 3) Lifeblood Doctrine- w/o money the government cannot deliver services to the people. FUNDAMENTAL PRINCIPLES OF TAXATION -JACUE1)Just 2)Ability to Pay 3)Convenient 4)Uniform and Equitable OBJECTS OF TAXATION-BITRAPPP1)businesses 2)interests 3)transactions 4)rights 5)acts 6)persons 7)support 8)survival SCOPE OF TAXATION -D-CUPS1) power to destroy 2)comprehensive 3)unlimited 4)plenary 5)supreme

What is a legislative act? A legislative act is an act to enact tax law by the law making body What is the Origination Rule? Origination Rule is that (ART) appropriation, revenue and tariff bills shall originate from the Lower House . The bill shall originate not a law , however the Senate may (ARMS), amend, revise, modify and substitute. Is the power of taxation absolute? No, it is subject to (CIC)- constitutional limitations, inherent restrictions and contractual limitations. When does the power of taxation include the power to destroy? -CPA1)when it involves (CONES), coverage,object, nature, extent and situs of taxation. 2)when it involves the power to grant exemptions or condonations 3)when it involves administrative and judicial remedies Among the 3 inherent powers of the State, What is the strongest? -The power of taxation because w/o this power the 2 other powers cannot be exercised, likewise , the government cannot exist w/o taxation. Who exercise the power of taxation? LLP1)Legislative Body 2)LGUs 3)President What is ecology of taxation? -It refers to the relationship between taxation and the community and environment on question of (PS3), on question of population, support, survival and sustenance. What is fluxion of taxation? -FECIt refers to the flow , evolution and changes of taxation. What is taxation and economic efficiency? -INCOME EFFECT- makes people economically efficient -SUBSTITUTION EFFECT-makes people economically inefficient May the police power be exercised through taxation? -Yes, because taxes are imposed for the promotion of the general welfare of the public.

CANONS OF TAX CCEP1)Convenient to pay

2)Certain and not arbitrary 3)Economical to collect 4)Proportionate to ones ability to pay ELEMENTS OF VALID TAX PLM5 1)Payable in money 2)Levied by the Legislature 3)must not violate CIC 4)must be uniform and equitable 5)must have jurisdiction over the object of taxation (the power imposing it) 6)must be for public purpose 7)must be proportionate in character BASIC USES OF TAX -Sinn 1)Serves as means to serve people 2)indispensable for states survival 3)necessary to preserve states sovereignty 4)needed to deliver the basic needs of citizenry CLASSIFICATION OF TAX AS TO PURPOSE 1) Fiscal- levied w/o specific purpose 2)Regulatory-intended to achieve economic goal AS TO SUBJECT MATTER PEP1)Personal (Poll or Capitation) 2)Excise 3)Property AS TO INCIDENCE 1)Direct (Income Tax)-burden cannot be shifted to another 2)Indirect (VAT)-allowed to transfer the burden to another Philippine Acetylene case- tax exemption is applicable only in direct tax and not to indirect tax. Gotamco case- if buyer is exempted on both taxes (indirect or direct), the remedy of seller is to file a tax refund from the government. Filpride Resources Inc Vs CIR the importer is entitled to tax credit certificate if the buyer is exempted on both taxes (indirect and direct). Cebu Portland Cement Co. Vs Collector the payor and not the consumer is entitled to tax refund. Silkair Case- Even if seller passed on to a tax exempt airline the burden of tax, the additional amount is not a tax but part of the price and the airline had to pay as purchaser.

If seller is VAT exempt and the purchaser is non-VAT, still the purchaser is VATABLE because the VAT is part of the price. AS TO AMOUNT1)Specific Tax No assessment is required because the subject of tax is listed to their general classification( Tax on gasoline ,petroleum , wire, LPG) -based on volume, weights, quantities of goods to be tax 2)Ad Valorem Tax- Assessment is necessary to determine the amount to be paid. (Tax on properties and automobile) -based on the value of the property subject to tax EXCISE TAX an indirect tax imposed upon consumption of goods or products. AS TO RATE MPD-RP 1)Mixed Tax- combination of progressive and regressive 2)Proportion / Flat Rate- single or unitary rate VAT 12% 3)Degressive Tax- the increase in tax rate is not proportionate to the increase of tax base 4)Regressive Tax- Tax rate increases, tax base decreases 5)Progressive Tax- Tx rate increases, tax base increases AS TO AUTHORITY 1)National 2)Local Internal Revenue Tax under NIRC only License Fees Not under NIRC, Tax Refund is not applicable to License Fee Why is it important to know WON national or local tax yan? DAK1) to apply the correct administrative rules 2)to determine the correct prescription 3)to know the applicable tax remedies Tax vs Revenue -The former is an amount to be imposed while the latter is an amount to be collected -The former is one of the kinds of revenues, whereas, the latter is a product of tax. (Mas malawak ang revenue sa tax)-Revenue includes, income, taxes, fees, charges, penalties, forfeitures. Tax Vs Tariff -The former focuses not only on importation and exportation goods but also on domestic products while The latter focuses only on exportation or importation of goods -Tax is broader in terms , it includes all kinds of imposition including custom duties. -Tax is imposed on different subjects and objects whereas custom duties are imposed on exported and imported goods only

Tax Vs License -purpose of tax is revenue , purpose of license is regulation -taxing power , police power -unlimited, with limits (based on necessity ) -BITRAPPP , BRPP -permanent, revocable -power to tax includes power to license, power to license does not include power to tax -self assessing, not self assessing -subject to CIC, not subject to CIC (why? Because it is an exercise of police power) -no exemption (exemption from tax does not include regulatory fees), exemption is not allowed from regulatory fees. -current data, quarters data ( preceding year) TEST to determine WON the imposition is tax or license IEA1)intent of imposition 2)effect 3)amount KINDS OF LICENSES 1) imposed to regulatory USEFUL OCCUPATION 2)imposed to regulatory NON-USEFUL OCCUPATION 3) for REVENUE only

Tax Vs Toll BID-demand of sovereignty, demand of proprietorship -imposed by government, imposed by government or private individual -based on governmental needs, determined by the cost of property Tax Vs Debt -based on law, based on contract -not assignable , assignable -with imprisonment for non-payment , no imprisonment for non-payment -payable in money, payable in money or in kind -not subject to set-off, subject to set-off -no interests except if delinquent, with interest when stipulated or when in default -prescription under NIRC , prescription under NCC or ROC Consequence if a tax is a debt -if the prescription is under NCC or ROC , then tax is a debt -if the case is filed before the CA and not the CTA Ex: If the government and the taxpayer entered into a valid compromise agreement, the tax due is considered a debt. So, it must be filed w/ the CA and not the CTA.

Special Assessment Tax- property tax levied on the property assessed and confined to improvements . Tax Vs Special Assessment -BITRAPPP, Land -may be made a personal liability of the person assessed, may not be made a personal liability of the person assessed. -based on necessity, based on benefits received -exemption from tax does not include exemption from special assessment, exemption is qualified -general application, exceptional in application -imposition on real property is tax, imposition on real property is assessment Tax Vs Subsidy -pecuniary imposition, pecuniary aid -collection of funds , grant of funds -tax, not a tax Tax Vs Penalty Pati-to raise revenue, to regulate the conduct (through punishment) -impose by govt, imposed by govt or private individual -arises from law, arises from law or contract -payable in money , payable in money or in kind Tax vs Franchise Tax -forced charge, imposition or contribution, there is a contractual assent to be covered by the imposition of franchise tax Tax vs Margin Fee -the purpose is to raise revenue, the purpose is to stabilize the currency Margin Fee- is not a tax, but a measure to curb the excessive demands upon our foreign reserves

Fee VS Charge -imposed by law or ordinance, imposed for payment of service or task -police power supports collection of fees, principle of equity supports collection of charges -legal charge for special privilege, pecuniary burden Delinquent Tax vs Deficiency Tax EACS-entire amount of tax liability, remaining amount of tax liability not yet settled -assessment is not necessary, assessment is mandatory -collection may be done in ordinary court, collection may be done judicially or administratively

-subject to 25% surcharge and 20% interest per annum and compromise penalty, not subject to surcharge but only interest and compromise penalty Gen Rule: Tax Delinquency of a corporation cannot be enforced against stockholders. Exception: If its appears that the corporate assets have passed into the hands of the stockholders , stockholders may be held liable for unpaid taxes of a dissolved corporation. *The burden of taxation cannot be transferred from one person to another by PRIVATE AGREEMENT. There is violation of due process of taxation, when? VVASTA1) Violative of the inherent restriction 2)violation of requisite of public purpose 3)applied retroactively 4)subject or object of taxation is outside the territorial jurisdiction of the taxing authority 5)taxpayer is not given an opportunity to be heard 6)amounts to confiscation of property

CONSTITUTIONAL LIMITATIONS OF TAX 1 INHERENT LIMITATIONS Penist 1)public purpose 2)inherently legislative in character 3)non-delegation of power 4)exemption of government 5)territorial in character 6)subject to international comity Inherent Power- it is a power w/c is an authority possessed w/o being given by another CONTRACTUAL LIMITATIONS- restrictions on the taxing power by previously existing contracts entered by government w/ another party Saf-Franchise tax -Service contract on petroleum -Agreement w/ ADB *Tax Exemptions granted under a contract are not assignable . Privileges under a contract are protected by the non-impairment clause under Consti. UNIFORMITY- all taxable articles of property of the same class shall be taxed at the same rate .-Churchill case.

Horizontal Equity vs Vertical Equity -those who are similarly situated in life should be taxed similarly, difference in tax treatment between well off and relatively less. CLASSIFICATION STATUTE -the power of the government to select subjects of taxation CLASS LEGISLATION- a law that discriminates against others. 5 Non-delegable powers of CIR -RICAA1) recommend revenue regulation to Sec of Finance 2)issue BIR rulings of first impression 3)cancel tax liability 4)accept or reject compromise proposal 5)assign or re-assign tax personnel where excisable goods are kept. KINDS OF TAXES -TTLCS1)tariff 2)toll 3)license 4)custom duties 5)special assessment KINDS OF REVENUES FFPICT 1)forfeiture 2)fee 3)penalty 4)income 5)charge 6)tax DOCTIRNE OF THE MOST FAVORED NATION CLAUSEA doctrine that establishes the principle of equality by international treatment that allows taxpayer to avail more liberal provisions in another tax treaty. International Treaty will prevail over a tax law DOCTRINE OF SOVEREIGN EQUALITYA doctrine that establishes that the property of a foreign government may not be subject to taxation by another State. TAX LAW-a law that provides assessment and collection of taxes to support the government. Tax law is a special law and prevails over NCC or ROC as general law.

4 BASIC TAX LAWS IN THE PHILS -LRT-N 1)local tax code (pd 231) 2)real property tax code (pd 464) 3)tariff and customs code of 1978 ( pd 1964) 4) nirc of 1997 ( ra 8424) SOURCES OF TAX SELAT-C-RJ1)statutes and PD 2)EO and BP 3)local ordinances 4)administrative issuance or BIR ruling 5)tax treaties or conventions 6)constitution 7)revenue regulations of DOF 8)judicial decisions NATURE OF TAX LAW PERN-C 1)civil in nature and character 2)political in nature when govt and people are concerned 3)not penal in nature since they dont define crimes 4) ex post facto law does not apply to taxation 5)remain effective during war Tax is construed clearly, expressly and unambiguously. Tax law is construed strictly against the government and liberally in favour of the taxpayer. Hornbook Doctrine- Tax cannot be imposed w/o clear and express words . PRINCIPLE IN PARI MATERIA-different statutes w/ same object should be construed in reference to each other. *CIR- has the original and exclusive power to interpret tax law but subject to review by Sec. of Finance. CIRs interpretation is not binding upon the court but given great weight. *Sec . of Justice has a power to interpret tax law but subject to review by the Courts of Justice. REVENUE BILLS- bills whose purpose is to raise money by taxation. TYPES OF REVENUE BILLS -RCBC-SL 1)Revenue regulation

2)circular 3)bir or administrative ruling 4)court decisions 5)statutes 6)legislative materials REVENUE REGULATIONS- issuances signed by the Sec. of Finance w/c define rules and regulations for effective enforcement of the provisions of NIRC. Requisites of Revenue Regulations -CRUP WN1) conform to legal provisions of law 2)reasonable 3)useful, practical and necessary for law enforcement 4)published in OG 5)within the authority 5)not contrary to law, constitution DIFFERENCE BETWEEN REVENUE REGULATIONS AND BIR RULINGS -whig-c -w/ publication , w/o publication -issued by Sec of Finance, issued by CIR -clarify or explain tax law, advisory service to taxpayer (not conclusive) -have a force and effect of law, do not have force and effect of law ( administrative opinions) -general application, specific application 2 classifications of BIR rulings 1) w/o established precedent- rulings of first impression( rulings, opinions, and interpretations of CIR w/ respect to the provisions of NIRC) 2)w/ established precedent- reiterations of previous rulings, opinions, and interpretations . Doctrine of Judicial Non- Interference - a doctrine w/c the courts cannot inquire into a taxing act or the advisability or expediency of a tax measure. Taxes are imprescriptible PRINCIPLE OF STRICTISSIMI JURIS -taxation is the rule and the exemption is the exception Rule 2: Tax exemptions must be strictly construed against taxpayer and liberally in favour of government.

When is tax exemption construed in favour of of the taxpayer? -WE3R-when the law provides for exemption -exemptions in favour of govt -exemptions in favour of traditional exemptees -exemptions in favour special classes of taxpayers -retirement laws DOCTRINE OF ESTOPPEL - a doctrine where the State is not stopped by neglect, errors or mistake of its agents in the performance of its governmental functions. POWERS OF BIR PIGSA2- E 1)provisions and distributions of forms, receipts and certificates to proper officials 2)issuance of receipts and clearances 3)giving effects and administering supervisory or police power conferred by NIRC 4)submit annual report to Congress 5)assessment and collection of taxes 6)assign of internal revenue officers 7)enforcement of fees, forfeitures, penalties and judgments decided by the Courts in its favour in all cases. POWERS OF CIR -I-DDDREAMM-PPPACCC-MO 1)interpret the provisions of NIRC (ORIGINAL AND EXCLUSIVE POWER OF CIR) 2) decide tax cases relative to DROP 3)delegate power to subordinate officer w/ rank equivalent to division chief 4)divide the Phils into revenue districts 5)refund/ credit IR taxes 6)examine tax returns / determine tax due 7)accredit tax agents 8)make assessment 9)make a return in behalf of taxpayer 10)prescribe real estate values 11)prescribe presumptive gross sales 12)prescribe additional procedural or documentary requirements for tax administration 13)administer oath and take testimony 14)change a tax period 15)compromise tax liability of taxpayer 16)conduct inventory/surveillance

17)make arrest and seizures 18)obtain information and to summon