1. Yes.

“Each local government unit shall have the power to create its own sources of revenues and
to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.” (Article 10, Section 5 of the 1987 Constitution).
Sec 133 of the LGC – Common limitations on the taxing power of LGC
Relate with Sec 143 (h) of the LGC – “Tax on Businesses: (h) On any business, not otherwise
specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax:
Provided, That on any business subject to the excise, value-added or percentage tax under the
National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of
gross sales or receipts of the preceding calendar year. The sanggunian concerned may prescribe a
schedule of graduated tax rates but in no case to exceed the rates prescribed herein.”
2. Yes, it will amount to indirect double taxation. Under the law, direct double taxation exists if the
following requisites exist:
 Both taxes are imposed on the same property or subject matter;
 For the same purpose;
 Imposed by the same taxing authority;
 Within the same jurisdiction;
 During the same taxing period;
 Covering the same kind or character of tax.
If there is an element lacking, only indirect double taxation exists. The Constitution only prohibits
direct double taxation.
 Taxpayer classification Taxable income
Resident citizen Worldwide income
Non-resident citizen Philippine sourced income
Resident alien
Non-resident alien

Substituted filing requisites:

 Employee receives purely compensation income (regardless of amount) during the taxable
year;
 Employee receives income from a single employer in the Philippines during the taxable year;
 The amount of tax due from the employee at the end of the year equals the amount of tax
withheld by the employer;
 If married, the employee’s spouse also complies with all three aforementioned conditions, or
otherwise receives no income;
 The employer files BIR Form 1604CF; and
 Employee has BIR Form 2316 or Certificate of Final Tax Withheld At Source (BIR Form
2306) issued by his employer.

1. (Resident citizens) Taxable; Not required (if compliant with the substituted filing)
2. (Resident alien) Taxable; Not required (if compliant with the substituted filing)
3. (Non-resident citizen) Taxable only on the Philippine sourced income; Not required (if compliant
with the substituted filing)
- Sec 22 (E)(3): “Most of the time” – At least 183 days abroad
4. (Non-resident citizen) No Philippine sourced income; Not required
- Sec 22 (E)(2): Reside abroad for employment on a permanent basis
5. (Non-resident citizen) Taxable only on the Philippine sourced income; Not required (if compliant
with the substituted filing)
- Sec 22 (E)(4): Previously a non-resident citizen who arrives in the Philippines
1. Exempt. Sec 32 (B)(6)(a): Retirement benefits received under RA No. 7641 (Retirement Pay Law,
Art. 287 of the Labor Code); or those received by officials and employees of private firms, whether
individual or corporate, under a reasonable private benefit plan maintained by the employer,
provided the following requisites are present:
 The retiree has been in the service of the same employer for at least 10 years;
 The retiree is not less than 50 years of age;
 Exemption is availed of only once.
Considered as within 10 years due to the fact that “employees may be moved around within the
controlled group without loss of seniority rights or break in the tenure”.

2. Donor’s tax. Not in consideration of services rendered but by reason of gratuity.

1. Yes.
Sec 101 (a) (3) – Exempt from donor’s tax: Gifts in favor of an educational and/or charitable,
religious, cultural or social welfare corporation, institution, accredited nongovernment
organization, trust or philanthropic organization or research institution or
 organization: Provided, however, That not more than thirty percent (30%) of said gifts shall be
used by such donee for administration purposes.

For the purpose of the exemption, a 'non-profit educational and/or charitable corporation,
institution, accredited nongovernment organization, trust or philanthropic organization and/or
research institution or organization' is a school, college or university and/or charitable
corporation, accredited nongovernment organization, trust or philanthropic organization and/or
research institution or organization, incorporated as a nonstock entity, paying no dividends,
governed by trustees who receive no compensation, and devoting all its income, whether students'
fees or gifts, donation, subsidies or other forms of philanthropy, to the accomplishment and
promotion of the purposes enumerated in its Articles of Incorporation.

2. None. Sec 34 (H)(1)- Contributions or gifts actually paid or made within the taxable year to, or for
the use of the Government of the Philippines or any of its agencies or any political subdivision
thereof exclusively for public purposes, or to accredited domestic corporation or associations
organized and operated exclusively for religious, charitable, scientific, youth and sports
development, cultural or educational purposes or for the rehabilitation of veterans, or to social
welfare institutions, or to non-government organizations, in accordance with rules and
regulations promulgated by the Secretary of finance, upon recommendation of the Commissioner,
no part of the net income of which inures to the benefit of any private stockholder or individual in
an amount not in excess of ten percent (10%) in the case of an individual, and five percent (%) in
the case of a corporation, of the taxpayer's taxable income derived from trade, business or
profession as computed without the benefit of this and the following subparagraphs.

Here, the donee is not qualified and thus, no deduction from gross income is allowed.

No. Foreign shares are not within the purview of Sec 24(C) or CGT.
Sec 24(C) - Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange - The provisions
of Section 39(B) notwithstanding, a final tax at the rates prescribed below is hereby imposed upon the net
capital gains realized during the taxable year from the sale, barter, exchange or other disposition of shares
of stock in a domestic corporation, except shares sold, or disposed of through the stock exchange.
But the shares are considered capital assets, as defined under Sec 39(A) - "capital assets" means property
held by the taxpayer (whether or not connected with his trade or business), but does not include stock in
trade of the taxpayer or other property of a kind which would properly be included in the inventory of the
taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to
customers in the ordinary course of his trade or business, or property used in the trade or business, of a
character which is subject to the allowance for depreciation provided in Subsection (F) of Section 34; or
real property used in trade or business of the taxpayer.

Thus, must be taxed based on the holding period as provided in Sec 39(B) - Percentage Taken Into
Account. - In the case of a taxpayer, other than a corporation, only the following percentages of the gain or
loss recognized upon the sale or exchange of a capital asset shall be taken into account in computing net
capital gain, net capital loss, and net income: (1) One hundred percent (100%) if the capital asset has been
held for not more than twelve (12) months; and (2) Fifty percent (50%) if the capital asset has been held
for more than twelve (12) months.

1. No. Sec 29 (A) – IAET covers only domestic corporations.

Branch is considered a resident foreign corporation, thus, not subject to IAET
2. No. Sec 28 (A)(5) – BPRT is imposed only on actual remittance. Here, no remittance was made.
Thus, not subject to BPRT.
1. Yes. Sec 90 (A) - …the gross value of the estate exceeds Two hundred thousand pesos (P200,000),
or regardless of the gross value of the estate, where the said estate consists of registered or
registrable property…
Gross estate includes registrable properties.
2. Sec 86: Deductions from gross estate:
 Expenses, losses, indebtedness, and taxes (ELIT):
a. Actual Funeral expenses - The amount deductible shall be the actual funeral expenses or
5% of the gross estate, whichever is lower, and must not exceed P200,000.
b. Judicial expenses for testamentary or intestate proceedings
c. Claims against the estate
d. Claims against insolvent persons included in the gross estate
e. Unpaid mortgages or indebtedness upon the property
f. Losses incurred during the settlement of the estate – Requisites: a) It should arise from
fire, storm, shipwreck, or other casualty, robbery, theft or embezzlement; b) Not
compensated by insurance or otherwise; c) Not claimed as deduction in an income tax
return of the taxable estate; d) Incurred during the settlement of the estate; and e)
Occurred before the last day for the payment of the estate tax (last day to pay: six
months after the decedent’s death) (Sec. 6(A)[5], R.R. 2-03)
g. Unpaid taxes
 Property previously taxed
 Transfers for public use
 The Family home
 Standard deduction (1 Million)
 Medical expenses - All medical expenses (cost of medicines, hospital bills, doctor’s fees, etc.)
incurred (whether paid or unpaid) with one (1) year before the death of the decedent shall be
allowed as a deduction provided: a) that the same are duly substantiated with official
receipts for services rendered by the decedent’s attending physicians, invoices, statements of
account duly certified by the hospital, and such other documents in support thereof; and b)
the total amount thereof, whether paid or unpaid, does not exceed Five Hundred Thousand
Pesos (P500,000).
 Amount received by heirs under R.A. No. 4917 (Retirement Benefits of Employees of Private
Firms)
 Net share of the surviving spouse in the conjugal property
- As to the claims:
 a) Funeral expenses: limited up to Php 200,000 only
b) Medical expenses: actual amount can be claimed (Php 100,000)
c) Loss: total amount

Donation to Kanlan City Water District.

1. Sec 99 (B): Donation to strangers – Subject to 30% of the net gifts
2. Sec 101 (A)(2): Exempt gifts – Gifts made to or for the use of the National Government or any
entity created by any of its agencies which is not conducted for profit, or to any political
subdivision of the said Government
3. Sec 99 (B): Donation to strangers – Subject to 30% of the net gifts
- Strangers: a person who is not a: (1) Brother, sister (whether by whole or half-blood), spouse,
ancestor and lineal descendant; or (2) Relative by consanguinity in the collateral line within
the fourth degree of relationship.

1. Not subject to VAT. Sec 106 (C) - Changes in or Cessation of Status of a VAT-registered Person. -
The tax imposed in Subsection (A) of this Section shall also apply to goods disposed of or existing
as of a certain date if under circumstances to be prescribed in rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the Commissioner, the status
of a person as a VAT-registered person changes or is terminated.

However, Sec 40(C)(2) transactions are covered by the exceptions laid down in RR 2-98.

2. No, not subject to income tax. Sec 40 (C)(2) - No gain or loss shall be recognized if in pursuance
of a plan of merger or consolidation: (a) A corporation, which is a party to a merger or
consolidation, exchanges property solely for stock in a corporation, which is a party to the merger
or consolidation; or (b) A shareholder exchanges stock in a corporation, which is a party to the
 merger or consolidation, solely for the stock of another corporation also a party to the merger or
consolidation; or (c) A security holder of a corporation, which is a party to the merger or
consolidation, exchanges his securities in such corporation, solely for stock or securities in such
corporation, a party to the merger or consolidation.
No gain or loss shall also be recognized if property is transferred to a corporation by a person in
exchange for stock or unit of participation in such a corporation of which as a result of such
exchange said person, alone or together with others, not exceeding four (4) persons, gains control
of said corporation: Provided, That stocks issued for services shall not be considered as issued in
return for property.

1. Yes. Incidental sale subject to VAT

2. Subject to RCIT because it is an ordinary asset.

1. No. It is engaged in leasing activities. It is subject to VAT if it reaches the VAT threshold. If not,
then not subject to VAT.
2. No. If VAT-registered, no need to qualify. Subject to VAT regardless of the gross annual revenue.

No. No need for PAN and FAN may be issued automatically.

Sec 222 (A) - In the case of a false or fraudulent return with intent to evade tax or of failure to file a return,
the tax may be assessed, or a proceeding in court for the collection of such tax may be filed without
assessment, at any time within ten (10) years after the discovery of the falsity, fraud or omission:
Provided, That in a fraud assessment which has become final and executory, the fact of fraud shall be
judicially taken cognizance of in the civil or criminal action for the collection thereof.

No. RTC has no jurisdiction. Sec 202 (j) - Exercise of exclusive original jurisdiction over forfeiture cases
under this Act

No. The jurisdiction is with the CTA and not with the CA.

1. Sec 222 of the LGC - Assessment of Property Subject to Back Taxes. - Real property declared for
the first time shall be assessed for taxes for the period during which it would have been liable but
in no case for more than ten (10) years prior to the date of initial assessment: Provided, however,
That such taxes shall be computed on the basis of the applicable schedule of values in force during
the corresponding period. If such taxes are paid on or before the end of the quarter following the
date the notice of assessment was received by the owner or his representative, no interest for
delinquency shall be imposed thereon; otherwise, such taxes shall be subject to an interest at the
rate of two percent (2%) per month or a fraction thereof from the date of the receipt of the
assessment until such taxes are fully paid.
2. No. Sec 198(B) of the LGC - Real property shall be classified for assessment purposes on the basis
of its actual use
3. Distinguish if assessment is erroneous or legal
Sec 26(B)(C)

1. Test is the use of the property.

2. ADE = exempt from income tax

1. Sec 150 of the LGC – Situs of Tax

2. Sec 139(B) of the LGC – Professional Tax
(b) Every person legally authorized to practice his profession shall pay the professional tax to the
province where he practices his profession or where he maintains his principal office in case he
practices his profession in several places: Provided, however, That such person who has paid the
 corresponding professional tax shall be entitled to practice his profession in any part of the
Philippines without being subjected to any other national or local tax, license, or fee for the
practice of such profession.

1. Yes. Prima facie evidence of underdeclaration (i.e., more than 30% of the sales).
2. Yes. Compromise based on 2 grounds: a) financial capacity; and b) assessment is of doubtful
validity.

Aichi case
120+30 days is mandatory and jurisdictional