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BICOL COLLEGE

COLLEGE OF LAW
Daraga Albay

OUTLINE IN TAXATION LAW 2

I. Transfer Taxes (Revenue Regulation No. 2-2003)


A. Modes of Property Transfer
1. Gratuitous Transfer
a. Fact of Death
- Subject to Estate tax
b. Donation
- Subject to Donors Tax
2. Onerous Transfer
a. Normal Course of Business (Sale or Exchange)
- Subject to Business Tax (VAT/ Percentage Taxes & Excise taxes)
b. Casual Transfer
- Capital gains tax
B. Nature of Transfer Taxes

II. Estate Tax


A. Definition
B. Nature/Basis/ Accrual/law applicable
C. Justification for Imposition
1. Redistribution of wealth theory
2. Benefit-received theory
3. Privilege or state partnership theory
4. Ability to pay theory
D. Classification of Decedent
1. Citizen
2.Resident Alien
3. Non-resident alien
E. Gross Estate
1. Rules in the valuation of gross estate
a. General Rule
b. Real properties
c. Personal properties
d. stocks, bonds & other securities
2. Additions to the gross estate
3. Exemptions from Estate tax
F. Deductions from Gross Estate
1. From estate of citizens and Resident alien decedents
2. From non-resident alien decedents

G. Net Taxable estate and Estate tax


H. Tax Credit for Foreign Estate tax
I. Administrative provisions
1. Procedures for settlement of Estate tax
2. Safeguards for the Payment of Estate tax

III. Donors Tax (Revenue Regulations No. 2-2003)


A. Definition of Donation
B. Nature of Donation
C. Kinds of Donation
1. Donation Mortis Causa
2. Donation Inter-Vivos
D. Donor’s Tax
1. Definition
2. Nature
3.Purposes
F. Classification of Donor
1. Citizen or Resident Alien
2. Non-resident Alien
G. Gross Gift
1. Valuation
2. Of Citizen and resident alien donors
3. Of non-resident alien donors
4. Exemptions from Gift Tax/Deductions from Gross Gift
H. net Gift and Donors Tax
I. tax Credit for Donors taxes paid to a Foreign Country
J. Filing and payment of Donors Tax
CASES:
1. CIR vs. CA et.alGR No. 123206, March 22, 2000
2. Rafael Arsenio s. Dizon vs. CTA, et.al.GR No. 140944, April 30, 2008
3. Sps. Alvaro Pastor Jr. and Ma. Elena De Pastor vs. CA et.al.GR No. L-56340,
June 24, 1983
4. Ferdinand Marcos II vs. CA et.alGR No. 120880, June 5, 1997
5. Estate of the late Juliana Diaz Vda de Gabriel GR No. 155541,
January 27, 2004
6. CIR vs. Azucena T. Reyes; GR No. 159694 January 27, 2006
7. Lydia Sumipat et.al. vs. Brigido Banga;GR No. 155810, August 13, 2004
8. Manuel Abello et.al vs. CIR et.al.;GR No. 120721, February 23, 2005
9. Sps. Agripino Gestopa vs. CA et.al.;GR No. 111904 October 5, 2000
10.The Estate of Hilario M. Ruiz vs. CA et.al;GR No. 118671, January 29, 1996

IV. BUSINESS TAX


A.Nature and Concept
B. Classifications under the Tax Code
1. Value-Added tax
2. Percentage tax
3. Excise Tax

V. VALUE ADDED TAX (Revenue Regulation No. 16-2005)


A.Definition/nature/characteristics
B. Evolution of Present VAT System
C. How the VAT System Works
D. VAT v. percentage tax
E. Basic Formula
F. Elements of VAT system
1. Input VAT
2. Output VAT
G. VAT Taxable persons
1. Persons subject to VAT
2. Persons becoming liable to VAT
3. VAT Exempt persons
H. VAT Transactions
1. Regular VAT taxable transactions (12% effective February 1, 2006)
a. Sale or exchange of services
b. sale of goods or properties
c. Importation
d. Deemed-Sale transactions

2.Zero-rated transactions (0%)


a. Definition
b. Sales subject to Zero Percent Rate
*Export Sales
* Foreign Currency Denominated Sale
c. Services performed in the Philippines subject to zero-rate
d. Effectively Zero rated transactions
* effectively zero rated sales
* effectively zero rated services
3. VAT exempt Transactions
a. Coverage
b. Reasons for Exemptions
c. Effects on Exempt Transactions

I.VAT requirements
1. Registration/Grounds for cancellation/invoicing’
2. Filing and payment of VAT returns
3. Effect of Collecting VAT by a Non-VAT person
4. Treatment of Businesses with VAT taxable and Non-VAT taxable
transactions
5. Transactions with government agencies
6. Procedures for claiming refunds or tax credits

VI. PERCENTAGE TAXES


A. Concept and nature
B. Businesses Subject to percentage tax
1. Carriers and Keepers of garages
2. Franchise
3. Overseas dispatch or message from the Phil.
4. Bank and non-bank financial intermediaries
5. Life insurance companies
6. Amusement places
7. Sale of shares of stocks in a local stock exchange
8. Small business with annual sales of P1,500,000 ( now 1,919,500) and below
C. Withholding of percentage tax
VII. EXCISE TAX
A.Definition
B. Classifications
C. Purposes
D. Goods subject to Excise tax
E. Filing of Return and payment of tax

LOCAL TAXATION

I.Local taxation
a. Nature of the Local taxing power
b. Fundamental principles governing local taxation
CASES:
1. City Government of Quezon City v. Bayantel GR No. 162015, March 6, 2006
2. Mactan Cebu International Airport Authority v. Marcos September 11, 1996
3. City of San Pablo Laguna v. reyes March 25, 1999

II. Common limitation in the exercise of local taxing power and the principle of pre-
emption/exclusionary rule
CASES:
1. Batangas Power Corporation v. Batangas City;GR No. 152675 April 28, 2004
2. First Philippine Industrial Corporation vs. CA G.R. No. 125948 December 29, 1998
3. Petron Corporation v. Tiangco G.R. No. 158881, April 16, 2008
III. Specific taxing powers of Local Government Units
1. Provinces
2. Municipalities
3. Cities
4. Barangays
5. Common revenue raising powers
6. Community Tax
IV. Remedies in Local Taxation
A.Remedies available to the Government
1. Administrative
* tax lien
*assessment by local treasurer
* Distraint/levy
2. Judicial
3. Others
* Accrual of the tax
* time of payment
* surcharges, interest and penalties

B. Remedies Available to the taxpayer


1. Administrative
* appeal to the Secretary of Justice
* protest of the assessment
* Claim for refund
*Remedies from denial of the protest
2. Judicial

V. Grant of Tax Exemption by LGUs


REAL PROPERTY TAXATION
A.Governing law
B. Nature of Real Property taxes
C. Fundamental principles
D. Properties covered and Those which are exempted
E. Liability for real property taxes
F. Grant of Tax Exemption
G. Procedures in real property taxation
H. Remedies
1. Government
2. Taxpayer
CASES:
1. MIAA v. Paranaque GR No. 155650 July 20, 2006;
2. Lung Center of the Philippines v. Quezon City June 29, 2004
3. Meralco v. Barlis February 2, 2002
4. Reyes vs. Court of Appeals 1999
5. Systems Plus Computer College v. Caloocan City GR No. 146382, August 7, 2003
6. NHA vs. Iloilo City GR No. 1772267 August 20, 2008

TARIFF & CUSTOMS LAWS

A.Meaning & Scope of Tariff and Customs Laws


B. Governing Laws
C. Agency tasked with enforcement of Tariff & Custom Laws
D. What may be the subject of custom duties
E. Concept & Relevance of Importation
F. Classification of Goods for Importation purposes
G. Kinds of Customs Duties
H. Valuation of Goods
1. Home Consumption Value (HCV)
2. Transaction Value
I. Flexible Tariff
J. seizure and Forfeiture cases
CASES:
1. Mison v. Natividad GR No. 82526, September 11, 1992
2. Nestle Philippines v. Court of Appeals G.R. No. 134114, July 6, 2001
3. Provident Tree Farms v. Batario G.R. No. 92285, March 28, 1994