FLORES, PRIMROSE MAGURA

TAXATION LAW REVIEW

I.
a. Yes, the 10% sales commission earned by Gore from ACI is subject to Philippine income
tax. Because ACI is a domestic corporation, which under the NIRC of 1997, Section 23 is
taxable on all income derived from sources within and without the Philippines. Even Gore
is an alien and non-resident in the Philippines, under the NIRC, Section 23, an alien
individual, whether a resident or not of the Philippines, is taxable only on income derived
from sources within the Philippines, therefore, since Gore earned income from source
which is from ACI earning and located within the Philippines, Gore’s income is subject to
Philippine Income tax.
b. Yes, the CIR is correct in assessing Gore for deficiency income tax though he is a non-
resident alien. Because under the law, a non-resident alien is taxable only on income
derived from sources within the Philippines, Section 23 of 1997 NIRC, this provision
indicates that Gore is under the taxing authority of the Philippines. The act of CIR in
assessing the deficiency tax of Gore, is in conformity to the due process, that this will
inform the tax payer of its tax obligation to the Government, couple with the demand for
its payment.
c. No. The income earned by Gore are from within the Philippines, because the ACI is located
in the Philippines, even it is a marketing activities in the US, what is controlling is that the
income is earned and sourced within the Philippines.
d. Yes. Because Gore as a non-resident alien is also considered engaged in trade or business
in the Philippines, under Section of 25 of NIRC, non-resident alien individual engaged in
trade or business in the Philippines shall be subject to an income tax in the same manner
as an individual citizen and a resident alien individual, on taxable income received from
all sources within the Philippines, therefore, Gore’s compensation is subject to Philippine
income tax.
e. Compensation income-are income derive by the taxpayer from his/her salary
Business income/income from practice profession-income derived or received from
business earning. Those from profession are earnings from services rendered by the
individual like, lawyers and doctors, based on their profession.
f. Yes. He is required to file an income tax return for the fiscal year covered by that taxable
income. Because under the law, resident citizens engaged in trade, business, or practice
of profession within and without the Philippines are required to file an income tax return
in the Philippines.
g. Define:
1. Situs of taxation-is the place where tax is imposed,
2. Territoriality-the taxation is limited on the place where the property is located
3. International comity-Art 2, Section 2 of the Constitution, the Philippines adheres
to the principle of generally-accepted tenets of international law, such as the
principles of sovereign equality among states and the equality of states.
4. Double taxation-the is imposed on taxpayer twice, on the same subject, same
taxing authority, same jurisdiction, same period.

II.
 a. The Constitution would show that Article XIV, Section 4 (3) does not require that the
revenues and income must have also been sourced from educational activities or activities
related to the purposes of an educational institution. The phrase all revenues is
unqualified by any reference to the source of revenues. Thus, so long as the revenues and
income are used actually, directly and exclusively for educational purposes, then said
revenues and income shall be exempt from taxes and duties.

b. DLSU can claim deductions such as, those facilities they can proved that are used by the
school actually, directly and exclusively for education purposes.

c. No. If they can prove that the restaurant/canteen and bookstore are actually, directly and
exclusively for the use of the school.

d. The arguments of the BIR has no merit because the last paragraph of Sectio 30 is
inconsistent with the supreme law that provides for the exemption of the non-stock non-
profit institution.

e. The last paragraph of Section 30 of the Tax Code without force and effect for being
contrary to the Constitution insofar as it subjects to tax the income and revenues of non-
stock, non-profit educational institutions used actually, directly and exclusively for
educational purpose. We make this declaration in the exercise of and consistent with our
duty to uphold the primacy of the Constitution.

f. When a non-stock, non-profit educational institution proves that it uses its revenues
actually, directly, and exclusively for educational purposes, it shall be exempted from
income tax and VAT. On the other hand, when it also shows that it uses its assets in the
form of real property for educational purposes, it shall be exempted from Real Property
Tax.

III.
a) Discuss with legal basis whether the current tax treatment as argued by Mr. Maloloyon
violates the
constitutional guarantees of equal protection and due process. (2.5%)
b) Explain the policy considerations and the inherent differences between compensation income
earners
and self-employed individuals that justify the disparity in their income tax treatment. (2.5%)
c) As a self-employed individual, what tax rate does Mr. Magboo have to use to compute for his
tax due
on his annual business income of P2,500,000.00 under the TRAIN law? Is he required to file his
own
income tax return? (5%)
d) As a compensation income, illustrate how to compute Mr. Maloloyon’s tax due on his annual
compensation income of P500,000.00? Is he required to file his own income tax return? (5%)
e) Assuming Mr. Magboo is a mixed income earner, would your answer to question c) be the
same. Why
or why not. Explain with legal basis. (2%)
f) Define and/or explain Equal Protection and Due Process clause within the context of taxation.
(2%)

In equal protection clause, it requires that all subjects or objects of taxation similarly situated are
to be treated alike both in privileges and liabilities. It is subject also to valid classification that, (1)
rest on substantial distinctions, (2) be germane to the purpose of the law, (3) not be limited to
existing conditions only, and (4) apply equally to all members of the same class.

Due process, that the taxation is not oppressive, arbitrary and contrary to the constitutional
limitations, it also pertains to the notice of hearing and right to be heard.

IV.
a. Article III, Section 10 of the Constitution provides that, no law impairing the obligation of
contracts shall be passed. Meaning if the contracts between the parties already gave a vested
rights to them, there must be no subsequent law that will impair those rights to their prejudice
especially if such contract between them is for consideration.
b. NO. because contract by virtue of franchise is subject to changes, and revocation.
c. NO. because the obligations between EEE and government is a franchise subject to revocation,
hence, there is no impairment.
d. The recognized exceptions are the following: if the prior contract is a franchise and when the
subsequent tax law is an implement of police power.

V.
a. Building permit fee for the renovation of the west wing of the church building-is not covered
of tax because this is for the building of the church. Under the law, religious institution is
exempt from tax if the property is actually use, directly and exclusively for religious
purposes, therefore such building permit fee is exempt.

b. Registration fees for the car of Reverend KBL, the anointed parish priest. The car is used when
he goes to the remote barrios to lead bible studies, and other related church functions-it is
subject of tax, the exemption is for real property only of the religious institution that under
the law, is actually, directly and exclusively use for religious purposes.

c. Real estate tax assessed on a portion of the church lot planted with various vegetable for use
of the priests who all reside in the seminary.-is exempt from tax, because it is for the use of
the church and incident thereto, for those who reside in the seminary, under the law, religious
institution is exempt from tax if the property is actually, directly and exclusively use for
religious purposes

d. What is meant by “Actual, Directly, and Exclusively use of the Property” as used in the
Constitution?-there is no any other use or purpose the property is intended but to the
religious purpose only.

e. What is the coverage of the exemption from taxation of religious, charitable entities under the
1987 Philippine Constitution? the exemption is for the real property actually, Directly, and
 Exclusively use for the religious purposes only, it does not cover the personal thing of the
priest, even their income revenue within their organization.

f. Does this exemption apply to educational institutions? Explain. No, there is a separate
constitutional provision for educational institutions.

VI.
a. Accrual accounting records revenue and expenses when those transactions occur and before
any money is received or paid out It doesn't account for either when the transactions that
create them occur, while cash basis accounting records revenue and expenses when actual
payments are received or disbursed.
b. –
c. NO, Because life insurance proceeds and gift received are not included in the gross income,
those are tax exempt under the law.
d. Exclusion from GI-are those expressly provided by law to be excluded from GI, while allowable
deductions are also expressly allowed but being deducted, the exclusion totally does not
appear in the computation.

VII.

a. Ordinary assets specifically exclude real property that is part of inventory, primarily held for sale
in a business, subject to depreciation allowances, or used in a trade or business while capital assets
refer to all real property held by a taxpayer, whether or not connected to a trade or business.
b. Ordinary assets: A, Capital Assets: Property B, C, D
c. All the gain, meaning the earnings or the difference from the capital is considered gain subject to
capital gains tax.
d. Capital gains tax, because it is a capital assets that is to be sold, earnings will be subject to capital
gains tax.
VIII.

a) Does the new tax law align with principles of a sound tax system? (2.5%)
NO. Because the 50 percent tax on income is very oppressive it is very high, confiscatory on
the part of blogger.

b) What are the potential consequences of this tax law on the social media industry in the
Philippines, including its impact on influencers, related businesses, and the overall digital
economy? (2.5%)-

c) What legal options are available to influencers to challenge the constitutionality or legality of
this tax law? (2.5%), that the new law violate the constitutional limitation of equal
protection clause, and due process, under art 3, section 1 of the constitution, No person
shall be deprived of life, liberty, or property without due process of law, nor shall any person
be denied the equal protection of the laws., such 50 percent tax amounts to deprivation of
life an property a violation of equal protection and due process, it is confiscatory on the part
of tax payer.

d) What are the constitutional requirements for a valid tax? (2.5%) , Art, 3, Section 1 for equal
protection and due process of law, Art VI, Section 28, for a uniform, equitable taxation, and
 progressive taxation, for Valid classification of taxation, (1) rest on substantial distinctions, (2) be
germane to the purpose of the law, (3) not be limited to existing conditions only, and (4) apply
equally to all members of the same class.
IX

a. May the MeTC issue an injunctive relief against the City Treasurer from collecting the local taxes?
NO. taxes is the lifeblood of the government, Marcus II vs CIR, the court ruled in this case that, the taxes
must be collected without unnecessary delay even the order of the court cannot hinder.

b. Is the power to tax inherent in local government? Why or why not? Explain briefly. (2.5%)
Yes, tax collection is inherent, it is an attribute of the government, even without express provision
under the law, taxes are needed by the government in its multifarious needs to exist.

c. While the Life Blood Doctrine underscores the importance of taxation, is it the most appropriate
legal basis for the City Treasurer’s actions in this specific case? Are there any other legal arguments,
supported by relevant laws and jurisprudence, that could be considered?

Yes, well settled jurisprudence, provides that even the court ruling cannot stop the tax collection,
the taxes must be collected without unnecessary delay even the order of the court cannot hinder.

X
What must I do to pass Taxation Law Review?

To read and read the taxation law, the NIRC, as well as to pray and never absent, listen to the
discussion of the professor and remember all those teachings.