New Era UniversityCollege of Law

Course Outline – Taxation 2

I Estate Tax

A) Chapter I, Title III, NIRC as amended by R.A. No. 9337B) P.D. No. 1457C) R.A. No. 8424D) Concept

1) De Luna vs. Abrigo, 181 SCRA 1502) Roman Catholic Archbishop of Manila vs. Court of Appeals, 198

SCRA 3003) Toyota vs. Kusop, 184 SCRA 355

E) Types of Donation1) Donation Mortis Causa

a) Cuevas vs. Cuevas, 98 Phil. 63b) Alejandro vs. Geraldez, 78 SCRA 245

2) Donation Inter Vivosa) Cuevas vs. Cuevasb) Ortiz vs. Court of Appeals, 97 Phil. 46c) Bonsato vs. Court of Appeals, 95 Phil. 481

3) Donations Mortis Causa and Inter Vivos, Distinguisheda) Reyes vs. Mosqueda, 187 SCRA 661b) National Tresurer of the Philippines vs. Meimban, 131

SCRA 264c) Alejandro vs. Geraldez

F) Types of Donation Mortis Causa1) Testate2) Intestate

G) Types of Gift Tax1) Estate Tax2) Donor’s Tax3) P.D. 69

H) Estate Tax 1) Nature and Object of Estate Tax

a) BIR Ruling No. 103-96, October 4, 19962) Incidence of Estate Tax

a) Section 3, R.R. 17-933) Transfers Covered by Estate Tax

a) Gratuitous Transfers Mortis Causab) Inter Vivos Transfers treated as testamentary disposition

Vidal De Roces vs. Posadas, 58 Phil. 108

Dizon vs. Posadas, 57 Phil. 465 R.A. 8424 amending Sec. 85 of NIRC

4) Transfers Not Covered by Estate Taxa) Inter Vivos Transfers Excludedb) Exemptions of certain acquisitions and transmissions from

Estate Taxc) Exemption to NRA for intangible personal properties

Collector vs. Campos Rueda, 42 SCRA 23d) Other Exemptions from Estate Tax under Special Laws

SSS, GSIS, U.S. Veterans, R.A.4917I) Gross Estate

1) Composition of Gross Estatea) Citizenb) Resident Alienc) Non-Resident Aliend) Items excluded

2) Valuation of Gross Estatea) Lorenzo vs. Posadas, 64 Phil. 353

3) Gross Estate as to Location, Sec. 104 as amendedJ) Allowable Deductions

1) Expensesa) R.A. No. 7499b) R.R. No. 02-03, December 16, 2002c) Funerald) Judicial

Vera vs. Navarro, 79 SCRA 408 Lorenzo vs. Posadas Sison vs. Teodoro, 100 Phil. 1055 Johannes vs. Imperial, 43 Phil. 597

e) Claims against the estate Haygood vs. Collector, 65 Phil. 520 Lorenzo vs. Posadas Government of the Philippines vs. Pamintuan, 55 Phil. 13

f) Claims of deceased against insolvent personsg) Unpaid indebtednessh) Losses

2) Vanishing Deduction3) Transfers for public use4) Family Home

a) Art. 151,153,154,156 and 161 of the Family Code5) Standard Deduction6) Medical Expenses

a) De Guzman vs. De Guzman, 83 SCRA 2567) Amount received by heirs under R.A. 49178) BIR Ruling No. 025-96, February23, 19969) Net Share of the surviving spouse in the community/conjugal properties

10) Computation of Estate TaxK) Administrative Matters

1) Notice of Death2) Filing of Return

a) Commissioner vs. Gonzales, 18 SCRA 7573) Place of Filing Return4) Payment of Estate Tax

a) Lorenzo vs. Posadasb) Commissioner vs. Gonzalesc) Collector vs. McGrath, 1 SCRA 638d) Vera vs. Navarro, 79 SCRA 248e) Pastor vs. Court of Tax Appeals, 123 SCRA 885f) Marcos vs. CA, June 5, 1997

5) Surcharges, Interest and Penaltiesa) Commissioner vs. Gutierrez, 71 SCRA 283b) Commissioner vs. Cu Unjieng, 66 SCRA 1

II Donor’s Tax

A) Chapter II, Title III, NIRCB) Gifts, in general

1) Art. 725 of the Civil Code2) Santos vs. Robledo, 28 Phil. 250

C) Taxable Gifts1) R.R. 17 – 932) BIR Ruling No. 018 – 87, January 26, 19873) BIR Ruling No. 344, July 20, 19884) Abello vs. Commissioner of Internal Revenue, February23, 2005

D) Imposition of the Donor’s Tax 1) Art. 734 of the Civil Code2) Classification of Taxpayer3) Properties included in the Net Gift4) Properties excluded in the Net Gift5) Donation Between Husband and Wife

a) Tang Ho vs. Board of Tax Appeals, 97 Phil. 8896) Rates of Donor’s Tax7) Computation

E) Exemption of certain gifts 1) P.D. 5072) Art. XIV, Sec. 4 (4) of the 1987 Constitution3) Other Special Laws

F) Returns and Payment of Donor’s Tax

III Value-Added Tax

A) Chapter I, Title IV, NIRC as amended by R.A. No. 9337

B) VAT, in general1) Revenue Memorandum Circular No. 29 – 2005, June 29, 20052) R.R. No. 16 - 2005, September 1, 20053) RMC No. 62 – 2005, October 18, 20054) RMC No. 61 – 2005, October 27, 20055) Alcantara vs. Ermita, G.R. No. 168056 September 1, 20056) Kapatiran, etc. vs. Tan, June 30, 1988

C) Coverage of the VAT SystemD) Input VAT vs. Output VATE) Taxpayers under the VAT System

1) Zero-Rated VAT Taxpayersa) Atlas Consolidated Mining Co. vs. Commissioner of Internal

Revenue, November 17, 1999b) Philippine Tobacco, etc vs. Commissioner, 28 SCRA 509c) Central Cooperative Exchange vs. Commissioner, 27 SCRA 63d) Commissioner of Internal Revenue vs. American Express

International Inc., June 29, 20052) 12% Rated VAT Taxpayers

a) On January 1, 2006 GMA raised the VAT rate from 10% to 12%b) Transactions deemed salec) Determination of VAT for Sale of Goods or Property d) VAT on Sale of Services and Use or Lease of Property, e) Changes under R.A. 9337

Alcantara vs. Ermita3) VAT Exempt Taxpayers

a) Commissioner of Internal Revenue vs. Cebu Toyo Corp., February 17, 2005

4) Tax Credit5) Compliance Requirements on the VAT

IV Percentage Tax, Excise Tax and Documentary Stamp TaxA) Title V, VI, and VII, NIRC as amended by R.A. No. 9337

1) R.A. No. 93342) R.A. No. 92433) R.A. No. 92244) R.A. No. 7660 as amended by R.A. 9238

V Administrative Remedies

A) Title VIII, NIRCB) Remedies of the Government

1) Assessmenta) R.R. No. 30 – 02, December 16, 2002b) R.R. No. 1-88, January 4, 1988c) CIR vs. Hantex Trading Co., Inc., March 31, 2005d) Cir vs. CA, 232 SCRA 655

e) Atlas Consolidated Mining and Development Corp vs. CA, March 10, 1995

f) Benguet vs. CIR, June 10, 19982) Distraint3) Levy

a) Cabrera vs. Provincial Treasurer of Tayabas, 75 Phil. 780b) Velayo vs. Ordoveza, 102 Phil. 385

4) Forfeiturea) Castro vs. Collector, 4 SCRA 1193

5) Judicial Actiona) Civil action vs. Criminal action

CIR vs. Pascor Realty, June 29, 1999 Ungab vs. CIR, May 30, 1980

b) Archer vs. Bellosillo, 20 SCRA 32c) CIR vs. Salud Hizon, December 13, 1999

6) Compromisesa) Art. 2037 and 2041 of the Civil Codeb) R.R. No. 8-2004c) R.R. No. 30 – 02, December 16, 2002d) Pampanga Sugar Development Corp. vs. Court of Industrial

Relations, 114 SCRA 7257) Abatement8) Tax Lien

a) Republic vs. Enriquez, 166 SCRA 608b) Republic vs. Hon. Peralta, et. al., 150 SCRA 37

9) Prescriptive Periodsa) Mambulao Lumber Co. vs. Republic of the Philippines, 132

SCRA 1b) Republic vs. Araneta, 2 SCRA 144c) Basilan Estates, Inc. vs. Commissioner, 21 SCRA 17d) Fernandez Hermanos, Inc. vs. Commissioner, 29 SCRA 562e) Commissioner vs. Ayala Securities Corp., November 21. 1980f) Bisaya Land Transportation Co., Inc. vs. Collector, 105 Phil.

1338g) Collector vs. Reyes, 104 Phil. 1061h) Aznar vs. Commissioner, 58 SCRA 519i) Philippine Journalist, Inc. vs. CIR, December 16, 2004j) Ungab vs. Cusi, 97 SCRA 877

10) R.A. No. 9335C) Remedies of Taxpayer

1) Remedy available to a taxpayer before payment of the taxa) Protest assessment

Tan Tiong Bio, et. al. vs. BIR, 100 Phil. 86 American Rubbe Co. vs. Collector, 25 SCRA 789 Medina vs. City of Baguio, 91 Phil. 854 Commissioner vs. Wander Philippines, Inc.

2) Remedy available to a taxpayer after payment of the taxa) Claim Tax Refund

RMC No. 7 – 85, April 1, 1985 Commissioner vs. Concepcion, 22 SCRA 1058 Republic vs. Plan, 84 SCRA 688 Victorias Milling Co. vs. Central Bank, 13 SCRA 479 Dayrit vs. Cruz, September 26, 1988 Elegado vs. CA, 173 SCRA 285 Basa vs. Republic, 138 SCRRA 34 Atlas Consolidated Mining and Development Corp vs. CA CIR vs. Bank of the Philippine Islands, September 23, 2003 CIR vs. Isabela Cultural Corp., July 11, 2001 Commissioner vs. Union Shipping Corp., 185 SCRA 547 Citytrust Finance corp. vs. CTA, March 14, 1994 ACCRA Investment vs. CTA, December 20, 1991 CIR vs. Philam, May 29, 1995

D) Compliance Requirements, Offenses and Penalties, and Crimes and Forfeitures under the NIRC as amended

1) Title IX and X NIRC as amended by R.A. No. 9337E) Court of Tax Appeals

1) R.A. 1125 as amended by R.A. 92822) Powers of the CTA3) Jurisdiction of the CTA4) Issues cognizable by the CTA

a) Caltex vs. CIR, 14 SCRA 5965) Rules of Procedure

VI Local Taxation

A) Section 5, Article X, 1987 Philippine ConstitutionB) R.A. No. 7160, Book II, Title I, II and IIIC) Power to Create Sources of Revenues

1) Manila Electric Co. vs. Province of Laguna, May 5, 1999D) Fundamental PrinciplesE) Local Taxing Authority

1) Villegas vs. Hiu Chiong Tsai, 86 SCRA 2702) Napocor vs. City of Cabanatuan, April 9, 20033) Napocor vs. Rosario, April 28, 20044) Bagatsing vs. Ramirez, 74 SCRA 3065) Principle of Preemption or Exclusionary Doctrine6) Limitations on the Local Taxing Power7) Other Impositions that the LGU may Levy

a) Provincesb) Municipalitiesc) Citiesd) Barangays

8) Situs of Local Taxation9) Community Tax

F) Tax Remedies1) Remedies for collection of tax

a) Civil remediesb) Judicial Actionc) Antonio Talusan et. al. vs. Hermenildo Tayag et. al., April 4,

20012) Remedy of the taxpayer

a) Meralco vs. Barlis, May 18, 20013) Prescriptive Periods

G) Real Property Taxation1) Properties liable under Real Property Tax

a) Manila Electric co. vs. Board of Assessment Appeals, 10 SCRA 68

b) Caltex, Philippines, Inc. vs. Central Board of Assessment Appeals, 114 SCRA 296

c) Province of Nueva Ecija vs. Imperial Mining, November 19, 1982

2) Properties Exempt from Real Estate Taxa) Light Rail Transit Authority vs. CBAA, October 12, 2000

3) Assessment of Real Property Tax4) Remedies

VII Tariff and Customs Code

A) P.D. 1464 as amended by R.A. No. 9135B) Tariff vs. Custom Duties

1) Garcia vs. Executive Secretary, July 3, 1992C) Bureau of Customs

1) Duties, powers and jurisdiction2) R.V. Marzan Freight, Inc. vs. CA, March 4, 2004

D) Tariff Commission1) Functions

E) Flexible Tariff Clause1) Sec. 28, Art. VI of the 1987 Philippine constitution2) Sec. 401, TCC

F) Articles subject to Custom Duties1) Viduya vs. Bediago, 73 SCRA 5532) Filipino Metals Corp. et. al. vs. Secretary of DTI, et. al., July 15, 20053) Merchandise

a) Bastilda vs. Acting Commissioner, 35 SCRA 4484) Dutiable Goods5) Prohibited Importations

b) Auyong Hian vs. CTA, 59 SCRA 1106) Conditionally-free Importations

7) Tax Exemption of Returning Diplomats, P.D. 922 and R.A.41038) R.R. No. 5 – 87, September 1, 1987

G) Classification of Custom Duties1) Special Customs Duties

F) Basis of Dutiable Value1) Nestle Philippines, Inc. vs. CA, March 18, 2002

H) Drawback, concept and useI) Other Customs fees, dues or charges payableJ) Requirements of Importation

1) Liability of Importer of Goodsa) Mendoza vs. David

2) Government importations3) Port of Entry

a) Rigor vs. Rosales, 117 SCRA 7804) Import Entry5) Cargo Manifest6) Abandonment7) Smuggling8) Other Fraudulent Practices9) R.A. No. 8800

a) Southern Cross Cement Corp. vs. Philippine Cement Manufacturer’s Corp, July 8, 2004

K) Remedies under the TCC1) Remedies of the Government

a) Doctrine of Hot Pursuitb) Pacis vs. Pamaran, 56 SCRA 16c) Auyong Hian vs. CTAd) Yaokasin vs. The Commissioner of Customs, December 22, 1989e) Acting Commissioner of Customs vs. CTA, 129 SCRA 70f) Viduya vs. Berdiagog) Acting Commisioner of Customs vs. Andrulis, April 27, 1984h) Llamado vs. Commissioner of Customs, 122 SCRA 118

2) Remedies of the Taxpayera) Transglobe International, Inc. vs. CA, January 25, 1999

Prepared by:

Atty. Leigh Vhon G. Santos

ADDITIONAL CASES:

REMEDIES1) PAGCOR V. BIR (3.15.2011)2) COMM CIR V. SM (2.26.2010)3) KEPCO PHIL CORP V. CIR (12.14.2009)4) CIR V. IRONCON BUILDERS (2.8.2010)5) AT&T V. CIR (8.3.2010)6) KEPCO PHIL CORP V. CIR GR#1818587) AVON V. CIR (5.13.2003)8) CIR V. SONY PHIL INC (11.17.2003)9) CIR V. KUDOS (5.5.2010)10) FISHWEALTH CANNING V. CIR (1.21.2010)

REAL PROPERTY1) GSIS V. CITY TREASURER/ MANILA (12.23.2009)2) NPC V. MUNICIPALITY OF NAVOTAS (3.10.2010)

NOTES:

Grading System:Digest 20% (Notebook: Submit Deadline- Midterm and Finals)Recit 30%Exam 50% (MCQ and Problems-50:50)

Estate (Death)Gross(Less) Deduction RCNET NRC

RADonor’s (Lifetime) NRA

Gross Donation(Less) DeductionNET