Escolar Documentos
Profissional Documentos
Cultura Documentos
b. Schedular
scheduler system, the various types or items of income (compensation, business or
professional income) are classified accordingly and are accorded different tax
treatments, in accordance with schedules characterized by graduated tax rates. Since
these types of income are treated separately, the allowable deductions shall likewise
vary for each type of income.
c. Semi-schedular or semi-global
A system where the compensation, business or professional income, capital gain and
passive income not subject to final tax, and other income are added together to arrive
at the gross income, and after deducting the sum of allowable deductions from business
or professional income, capital gain and passive income not subject to final tax, and
other income, in the case of corporations, as well as personal and additional
exemptions, in the case of individual taxpayers, the taxable income is subjected to one
set of graduated tax rates; method of taxation under the law.
The schedular system is followed. Under Sec. 24 to 26 of the NIRC, the income of an individual taxpayer that
is subject to tax may be classified into compensation income, business income, professional income, passive
income, capital income derived from the sale of shares of stock, or capital gain derived from the sale of real
property. Therefore, different income classification would subject it to different tax treatment with
different tax rates.
Global system of taxation. Under Sec. 27 and 28 of the NIRC, the rules are uniform as far as domestic
corporations are concerned subject to certain exceptions. In case of resident and non resident foreign
corporations the rules applied are also uniform.
C. Definition of Income
The New Standard Dictionary, edition of 1915, defines an income as "the amount of
money coming to a person or corporation within a specified time whether as payment
or corporation within a specified time whether as payment for services, interest, or
profit from investment."
The New Standard Dictionary, edition of 1915, defines an income as "the amount of
money coming to a person or corporation within a specified time whether as payment
or corporation within a specified time whether as payment for services, interest, or
profit from investment."
Webster's International Dictionary defines an income as "the receipt, salary; especially,
the annual receipts of a private person or a corporation from property."
Bouvier, in his law dictionary, says that an "income" in the federal constitution and
income tax act, is used in its common or ordinary meaning and not in its technical, or
economic sense. (146 Northwestern Reporter, 812)
Mr. Black, in his law dictionary, says "An income is the return in money from one's
business, labor, or capital invested; gains, profit or private revenue." "An income tax is a
tax on the yearly profits arising from property , professions, trades, and offices."
The Supreme Court of the United States, in the case o Gray vs. Darlington (82 U.S., 653),
said in speaking of income that mere advance in value in no sense constitutes the
"income" specified in the revenue law as "income" of the owner for the year in which
the sale of the property was made. Such advance constitutes and can be treated merely
as an increase of capital. (In re Graham's Estate, 198 Pa., 216; Appeal of Braun, 105 Pa.,
414.)
SECTION 38. Bases of computation. Approved standard methods of accounting will be ordinarily
regarded as clearly reflecting income. A method of accounting will not, however, be regarded as clearly
reflecting income unless all items of gross income and all deductions are treated with reasonable
consistency. All items of gross income shall be included in the gross income for the taxable year in which
they are received by the taxpayer and deductions taken accordingly, unless in order clearly to reflect
income such amounts are to be properly accounted for as of a different period. For instance, in any case
in which it is necessary to use an inventory, no accounting in regard to purchases and sales will correctly
reflect income except an accrual method. A taxpayer is deemed to have received items of gross income
which have been credited to or set apart for him without restriction. On the other hand, appreciation in
value of property is not even an accrual of income to a taxpayer prior to the realization of such
appreciation through sale or conversion of the property. (For methods of accounting and determination
of accounting period, see Sections 166 to 169 of these regulations.)
Facts:
Petitioner is a domestic corporation engaged in business as a hotel and restaurant operator. It is a VAT
registered enterprise who appealed the decision of the CIR denying the petitioner's protest on the 1988
deficiency assessment issued for value-added tax percentage tax in the total sum of P12,211,987.53. It is
petitioner's analysis that the deficiency percentage tax assessment arose due to the imposition of the
tax on deposits made by its clients for the use of the hotel facilities. Petitioner contends that these
deposits, if not applied against hotel bills is not subject to percentage tax because these deposits
partake of the nature of a security deposit which cannot be classified as income.
Issue:
Held:
No.
This Court disagrees with the respondent in the assessment of the deficiency percentage tax, primarily
because the deposits made by petitioner's hotel clients should not be treated as part of its gross income.
Under the realization principle, revenue is generally recognized when both of the following conditions
are met: (a) the earning process is complete or virtually complete, and (b) an exchange has taken place.
This principle requires that revenue must be earned before it is recorded. Thus, the amounts received in
advance are not treated as revenue of the period in which they are received but as revenue of the
future period or periods in which they are earned. These amounts are carried as unearned revenue, that
is, liabilities to transfer goods or render services in the future until the earning process is complete.
(Compilation of Statements of Financial Accounting Standards No. 1-22, pp. 41-42). As explained by the
witness Ms. Fernando, its collection is in the nature of a security deposit to ensure that the other party
will perform his end of the contract. It is only upon the use of the reserved facilities or the default of the
reserving guest to cancel the reservation on time that the deposit is clearly convertible to revenues.
Since the deposits are payment for future services it cannot be treated as part of its gross income until
the earning process is complete.
From the above discussion, We find that the deficiency percentage tax assessment is erroneous and
should be therefore be cancelled.
Facts:
Luzon Hydro Corporation ("LHC") sought confirmation to the CIR of their opinion that the return by LHC
of liquidated damages to the contractor of its power station as a result of a compromise settlement is
deductible from gross income since the said amount was previously reported as taxable income when
received and that its return is not subject to any withholding tax.
It is represented that LHC entered into an agreement ("Turnkey Contract") with Transfield Philippines,
Inc. (the "Contractor") for the design, construction, installation, completion, testing and commissioning
of a power station (the "Project") on a turnkey basis. The target completion date of the project was set
on June 1, 2000 or such later date as may be agreed upon by the parties. Under the Turnkey Contract, if
the Contractor fails to comply with the target completion date, LHC may consider it in breach, in which
case the Contractor shall be liable to LHC for liquidated damages payable without need of demand. The
liquidated damages may be collected by drawing on the irrevocable and confirmed letters of credit
("LC") amounting to US$17.98 million that the Contractor put up as security for the performance of its
obligations pursuant to the Turnkey Contract.
It is also represented that due to the delay in the completion of the Project, LHC considered the
Contractor liable for breach of contract. Thus, LHC drew against the LC the amount of US$13.95 million
(P667,674,810) and US$4.03 million (P197,515,962) in 2000 and 2001, respectively. LHC reported the
amount of liquidated damages received as part of its taxable income in its income tax returns ("ITR") for
the years 2000 and 2001, respectively.
It is represented that before the issues could be finally settled, LHC and the Contractor decided in 2008
to enter into an out-of-court settlement (the "Settlement") to avoid a drawn out legal battle and avoid
further litigation expenses. As part of the Settlement, LHC agreed to return part of the liquidated
damages amounting to US$14 million.
Issue:
WON the return or repayment by LHC in 2008 of the liquidated damages in the amount of US$14.0
million, which was part of the sum previously reported as gross income of LHC in the years 2000 and
2001, is an allowable deduction from LHC's gross income for tax purposes in the year 2008, the year of
return or repayment.
Held:
The payment by LHC of the sum of US$14.0 million to the Contractor, which sum LHC previously
reported as part of its taxable income, is an allowable deduction from the gross income of LHC in 2008,
whether such payment is viewed as a return of previously reported income or as a settlement payment
under an out-of-court compromise.
Generally, the tax treatment of the return of previously-recognized income is dependent on the tax
treatment of the income previously reported. If the taxpayer received an income and reported the same
as part of taxable gross income, but later on was made to return the said income, the taxpayer is
allowed a deduction for the amount returned against the gross income. The deduction must be made at
the time of the return. This treatment follows the rationale behind allowing sales return as a deduction
from gross sales not only for income tax but also for value-added tax ("VAT") purposes.
This ruling followed the doctrine laid down in North American Oil Consolidated v. Burnet, 5(5) where the
US Supreme Court enunciated the so-called "claim-of-right" doctrine. This doctrine provides that if a
taxpayer receives earnings under a claim of right and without restriction as to its disposition, he has
received income even though one may claim he is not entitled to the money. Should it later appear that
the taxpayer was not entitled to keep the money, the taxpayer would be entitled to a deduction in the
year of repayment. Moreover, even if the return of US$14.0 million is viewed as an out-of-court
settlement rather than as a return of liquidated damages, it is still allowed as a deduction. A judgment
based on a compromise agreement is a judgment on the merits. 6(6) It is similar to a payment pursuant
to a judgment and has the effect and authority of res judicata. 7(7) Under Section 76 of the Income Tax
Regulations,"judgments or other binding judicial adjudication, on account of damages for patent
infringement, personal injuries, or other cause are deductible from gross income when the claim is so
adjudicated or paid, unless taken under other methods or accounting which clearly reflect the correct
deduction, less any amount of such damages as may have been compensated for by insurance or
otherwise. . . ."
Furthermore, in BIR Ruling No. DA-400-2004 dated July 22, 2004, the BIR held that a taxpayer may claim
as deductions from its gross income payments made under a court-approved compromise agreement
for the full and final settlement of the Arbitration Case and the Court Case which the parties filed against
each other. Thus, this Office held that: "Section 76 of Revenue Regulations (Rev. Regs.) No. 2, otherwise
known as the "Income Tax Regulations", provides that "judgments or other binding judicial adjudication,
on account of damages for patent infringement, personal injuries, or other cause are deductible from
gross income when the claim is so adjudicated or paid, unless taken under other methods of accounting
which clearly reflect the correct deduction, less any amount of such damages as may have been
compensated for by insurance or otherwise. . . ."
Moreover, pursuant to Section 171 of same Rev. Regs. No. 2 "the deductions and credits must be taken
for the taxable year in which "paid or accrued" or "paid or incurred", unless in order clearly to reflect the
income such deductions or credits should be taken as of a different period."
In LHC's case, the litigation which gave rise to the payment of US$14.0 million arose from the delay in
the construction of the Project, which is central to the business operations of LHC. Hence, there should
be no question that the settlement amount arose from LHC's business activities.
Facts:
The case is an appeal from respondent CIR's inaction/denial on MERALCO's claim for a tax refund or
credit of excess income tax payments for the taxable years 1994-1998 and 2000 in the total amount of
P5,796,342,792.71. The original claim for a tax refund or credit of excess income tax payments for the
taxable years 1994-1998 and 2000-2001 amounted to P7,107,534,282.00. Thereafter, respondent CIR
partly granted MERALCO's claim for the taxable year 2001 to the extent of P894,473,932.58. Hence, the
original claim in the sum of P7,107,534,282.00 less MERALCO's claim for the taxable year 2001 in the
amount of P1,071,546,018.00 is equal to the original amended claim for a tax refund or credit of excess
income tax payments for the taxable years 1994-1998 and 2000 amounted to P6,035,988,264.00.
MERALCO's claim for a tax refund or credit is due to the alleged overpayment of income taxes arising
from the Decision of the Supreme Court in the consolidated cases of Republic of the Philippines, et al.
vs. Manila Electric Company, G.R. No. 141314 and Lawyers Against Monopoly, etc. vs. Manila Electric
Company, G.R. No. 141369, which became final and executory on May 5, 2003, mandating MERALCO to
refund the amount equivalent to P0.167 per kilowatt-hour of over billed electric charges to its
customers for their electric consumption made from February 1994 up to December 2003.
On November 27, 2003, MERALCO filed a claim for tax refund or credit of excess income tax payments
with respondent CIR. ECISAD On May 4, 2005, due to inaction, MERALCO appealed to this Court and
filed a "Petition for Review (Ad Cautelam)" and principally anchored its claim for a tax refund or credit of
excess income tax payments under the principle of solutio indebiti within the prescriptive period of six
(6) years, pursuant to Art. 1145 of the New Civil Code or within two (2) years, as provided in Section 229
of the 1997 Tax Code.
CIR partially granted MERALCO's claim for a tax refund or credit for the taxable year 2001 to the extent
of P894,473,932.58 but denied the claim with respect to the taxable years 1994-1998 and 2000 due to
prescription.
Issue:
Held:
The all-events test requires the right to income or liability be fixed, and
the amount of such income or liability be determined with reasonable
accuracy. However, the test does not demand that the amount of
income or liability be known absolutely, only that a taxpayer has at his
disposal the information necessary to compute the amount with
reasonable accuracy. The all-events test is satisfied where computation
remains uncertain, if its basis is unchangeable; the test is satisfied
where a computation may be unknown, but is not as much as
unknowable, within the taxable year. The amount of liability does not
have to be determined exactly; it must be determined with "reasonable
accuracy." Accordingly, the term "reasonable accuracy" implies
something less than an exact or completely accurate amount
(CIR vs Isabela Cultural Corp, GR 172231)
1. Resident Citizen (RC) Citizens of the Philippines who are residing therein.
a. A citizen of the Philippines who establishes to the satisfaction of the CIR the fact of his
physical presence abroad with a definite intention to reside therein;
b. A citizen of the Philippines who leaves the Philippines during a taxable year to reside
abroad, either as an immigrant or for employment on a permanent basis;
c. A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time during
the taxable year;
d. A citizen who has been previously considered as NRC and who arrives in the Philippines at
any time during the taxable year in which he arrives in the Philippines with respect to his
income derived from sources abroad until the date of his arrival in the Philippines;
e. The taxpayer shall submit proof to the CIR to show his intention of leaving the Philippines
to reside permanently abroad or to return to and reside in the Philippines as the case may
be for purposes of this section. (Sec. 22 [E], NIRC)
3. Resident Alien (RA) An individual whose residence is within the Philippines but who is
not a citizen thereof. (Sec. 22 [F], NIRC)
Note: He is one who is actually present in the Philippines and not a mere transient or
sojourner. Residence does not mean mere physical presence, an alien is considered a
resident or non-resident depending on his intention with regard to the length and nature of
his stay.
4. Non-resident Alien (NRA) an individual whose residence is not within the Philippines
and who is not a citizen thereof. (Sec. 22 [G], NIRC)
i. Resident Citizens
Citizens of the Philippines who are residing therein.
a. Sec 23 NIRC
(C) An individual citizen of the Philippines who is working and
deriving income from abroad as an overseas contract worker is
taxable only on income derived from sources within the
Philippines: Provided, That a seaman who is a citizen of the
Philippines and who receives compensation for services
rendered abroad as a member of the complement of a vessel
engaged exclusively in international trade shall be treated as an
overseas contract worker;
A citizen of the Philippines who works and derives income from abroad
and whose employment thereat requires him to be physically present
abroad most of the time during the taxable year. [Section 22(E)(3)]
(B) Nonresident Alien Individual Not Engaged in Trade or Business Within the Philippines. - There shall
be levied, collected and paid for each taxable year upon the entire income received from all sources
within the Philippines by every nonresident alien individual not engaged in trade or business within the
Philippines as interest, cash and/or property dividends, rents, salaries, wages, premiums, annuities,
compensation, remuneration, emoluments, or other fixed or determinable annual or periodic or casual
gains, profits, and income, and capital gains, a tax equal to twenty-five percent (25%) of such income.
Capital gains realized by a nonresident alien individual not engaged in trade or business in the
Philippines from the sale of shares of stock in any domestic corporation and real property shall be
subject to the income tax prescribed under Subsections (C) and (D) of Section 24.
vi. Others
a. Sec. 22 (HH)
The term minimum wage earner shall refer to a worker in the
private sector paid the statutory minimum wage, or to an
employee in the public sector with compensation income of not
more than the statutory minimum wage in the non-agricultural
sector where he/she is assigned
(B) Exception. - The tax imposed by this Title shall not apply to
employee's trust which forms part of a pension, stock bonus or profit-
sharing plan of an employer for the benefit of some or all of his
employees (1) if contributions are made to the trust by such employer,
or employees, or both for the purpose of distributing to such employees
the earnings and principal of the fund accumulated by the trust in
accordance with such plan, and (2) if under the trust instrument it is
impossible, at any time prior to the satisfaction of all liabilities with
respect to employees under the trust, for any part of the corpus or
income to be (within the taxable year or thereafter) used for, or
diverted to, purposes other than for the exclusive benefit of his
employees: Provided, That any amount actually distributed to any
employee or distributee shall be taxable to him in the year in which so
distributed to the extent that it exceeds the amount contributed by
such employee or distributee.
(1) In General. - The tax shall be computed upon the taxable income of
the estate or trust and shall be paid by the fiduciary, except as provided
in Section 63 (relating to revocable trusts) and Section 64 (relating to
income for the benefit of the grantor).
(2) Consolidation of Income of Two or More Trusts. - Where, in the case
of two or more trusts, the creator of the trust in each instance is the
same person, and the beneficiary in each instance is the same, the
taxable income of all the trusts shall be consolidated and the tax
provided in this Section computed on such consolidated income, and
such proportion of said tax shall be assessed and collected from each
trustee which the taxable income of the trust administered by him
bears to the consolidated income of the several trusts.
Section 61. Taxable Income. - The taxable income of the estate or trust
shall be computed in the same manner and on the same basis as in the
case of an individual, except that:
Section 63. Revocable trusts. - Where at any time the power to revest in
the grantor title to any part of the corpus of the trust is vested (1) in the
grantor either alone or in conjunction with any person not having a
substantial adverse interest in the disposition of such part of the corpus
or the income therefrom, or (2) in any person not having a substantial
adverse interest in the disposition of such part of the corpus or the
income therefrom, the income of such part of the trust shall be included
in computing the taxable income of the grantor.
(A) Where any part of the income of a trust (1) is, or in the discretion of
the grantor or of any person not having a substantial adverse interest in
the disposition of such part of the income may be held or accumulated
for future distribution to the grantor, or (2) may, or in the discretion of
the grantor or of any person not having a substantial adverse interest in
the disposition of such part of the income, be distributed to the grantor,
or (3) is, or in the discretion of the grantor or of any person not having a
substantial adverse interest in the disposition of such part of the income
may be applied to the payment of premiums upon policies of insurance
on the life of the grantor, such part of the income of the trust shall be
included in computing the taxable income of the grantor.
(B) As used in this Section, the term 'in the discretion of the grantor'
means in the discretion of the grantor, either alone or in conjunction
with any person not having a substantial adverse interest in the
disposition of the part of the income in question.
(C) Alien Individual Employed by Regional or Area Headquarters and Regional Operating Headquarters of
Multinational Companies. - There shall be levied, collected and paid for each taxable year upon the gross
income received by every alien individual employed by regional or area headquarters and regional
operating headquarters established in the Philippines by multinational companies as salaries, wages,
annuities, compensation, remuneration and other emoluments, such as honoraria and allowances, from
such regional or area headquarters and regional operating headquarters, a tax equal to fifteen percent
(15%) of such gross income: Provided, however, That the same tax treatment shall apply to Filipinos
employed and occupying the same position as those of aliens employed by these multinational
companies. For purposes of this Chapter, the term 'multinational company' means a foreign firm or
entity engaged in international trade with affiliates or subsidiaries or branch offices in the Asia-Pacific
Region and other foreign markets.
SECTION 2.57.1. Income Payments Subject to Final Withholding Tax. The following forms of income
shall be subject to final withholding tax at the rates herein specified;
(D) Income Derived by Alien Individuals Employed by Regional or Area Headquarters and Regional
Operating Headquarters of Multinational Companies.
A final withholding tax equivalent to fifteen percent (15%) shall be withheld by the withholding agent
from the gross income received by every alien individual occupying managerial and technical positions in
regional or area headquarters and regional operating headquarters and representative offices
established in the Philippines by multinational companies as salaries, wages, annuities, compensation,
remuneration, and other emoluments, such as honoraria and allowances, except income which is
subject to the fringe benefits tax, from such regional or area headquarters and regional operating
headquarters. The same tax treatment shall apply to Filipinos employed and occupying the same as
those of alien employed by these multinational companies. The term "multinational company" means a
foreign firm or entity engaged in international trade with its affiliates or subsidiaries or branch offices in
the Asia Pacific Region and other foreign markets.
c. Kinds of Income
i. Income Subject to ordinary income tax
1. Business/Profession Income
Business Income gains or profits derived from rendering services,
selling merchandise, manufacturing products, farming and long-term
contracts.
Professional Income fees derived from engaging in an endeavor
requiring special training as professional as a means of livelihood, which
includes, but not limited to, the fees of CPAs, lawyers, engineers and the
like.
- Income earned from the practice of profession provided there is no
employer-employee relationship between him and his clients.
2. Compensation Income
- income derived from rendering of services under an employer-
employee relationship
- In general, the term "compensation" means all remuneration for
services performed by an employee for his employer under an
employer-employee relationship, unless specifically excluded by the
Code. Included only when the taxpayer is subject to Net Income Tax.
(a) On the taxable income defined in Section 31 of this Code, other than
income subject to tax under Subsections (B), (C) and (D) of this Section,
derived for each taxable year from all sources within and without the
Philippines be every individual citizen of the Philippines residing therein;
(b) On the taxable income defined in Section 31 of this Code, other than
income subject to tax under Subsections (B), (C) and (D) of this Section,
derived for each taxable year from all sources within the Philippines by
an individual citizen of the Philippines who is residing outside of the
Philippines including overseas contract workers referred to in
Subsection(C) of Section 23 hereof; and
(c) On the taxable income defined in Section 31 of this Code, other than
income subject to tax under Subsections (b), (C) and (D) of this Section,
derived for each taxable year from all sources within the Philippines by
an individual alien who is a resident of the Philippines.
The tax shall be computed in accordance with and at the rates
established in the following schedule:
Provided, That effective January 1, 1999, the top marginal rate shall be
thirty-three percent (33%) and effective January 1, 2000, the said rate
shall be thirty-two percent (32%).
For married individuals, the husband and wife, subject to the provision
of Section 51 (D) hereof, shall compute separately their individual
income tax based on their respective total taxable income: Provided,
That if any income cannot be definitely attributed to or identified as
income exclusively earned or realized by either of the spouses, the same
shall be divided equally between the spouses for the purpose of
determining their respective taxable income.
(1) Interests, Royalties, Prizes, and Other Winnings. - A final tax at the
rate of twenty percent (20%) is hereby imposed upon the amount of
interest from any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust funds and
similar arrangements; royalties, except on books, as well as other
literary works and musical compositions, which shall be imposed a final
tax of ten percent (10%); prizes (except prizes amounting to Ten
thousand pesos (P10,000) or less which shall be subject to tax under
Subsection (A) of Section 24; and other winnings (except Philippine
Charity Sweepstakes and Lotto winnings), derived from sources within
the Philippines: Provided, however, That interest income received by an
individual taxpayer (except a nonresident individual) from a depository
bank under the expanded foreign currency deposit system shall be
subject to a final income tax at the rate of seven and one-half percent (7
1/2%) of such interest income: Provided, further, That interest income
from long-term deposit or investment in the form of savings, common
or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates in such form
prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt from
the tax imposed under this Subsection: Provided, finally, That should the
holder of the certificate pre-terminate the deposit or investment before
the fifth (5th) year, a final tax shall be imposed on the entire income
and shall be deducted and withheld by the depository bank from the
proceeds of the long-term deposit or investment certificate based on
the remaining maturity thereof:
(2) Cash and/or Property Dividends - A final tax at the following rates
shall be imposed upon the cash and/or property dividends actually or
constructively received by an individual from a domestic corporation or
from a joint stock company, insurance or mutual fund companies and
regional operating headquarters of multinational companies, or on the
share of an individual in the distributable net income after tax of a
partnership (except a general professional partnership) of which he is a
partner, or on the share of an individual in the net income after tax of
an association, a joint account, or a joint venture or consortium taxable
as a corporation of which he is a member or co-venturer:
Provided, however, That the tax on dividends shall apply only on income
earned on or after January 1, 1998. Income forming part of retained
earnings as of December 31, 1997 shall not, even if declared or
distributed on or after January 1, 1998, be subject to this tax.
(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.
Three (3) years to less than four (4) years - 12%; and
(3) Capital Gains. - Capital gains realized from sale, barter or exchange
of shares of stock in domestic corporations not traded through the local
stock exchange, and real properties shall be subject to the tax
prescribed under Subsections (C) and (D) of Section 24.
Any income earned from all other sources within the Philippines by the
alien employees referred to under Subsections (C), (D) and (E) hereof
shall be subject to the pertinent income tax, as the case may be,
imposed under this Code.
d. Personal Exemptions
i. Section 35 of the NIRC
SEC. 35. Allowance of Personal Exemption for Individual Taxpayer. -
(A) In General. - For purposes of determining the tax provided in Section 24 (A)
of this Title, there shall be allowed a basic personal exemption as follows:
In the case of married individuals where only one of the spouses is deriving
gross income, only such spouse shall be allowed the personal exemption.
For purposes of this paragraph, the term 'head of family' means an unmarried
or legally separated man or woman with one or both parents, or with one or
more brothers or sisters, or with one or more legitimate, recognized natural or
legally adopted children living with and dependent upon him for their chief
support, where such brothers or sisters or children are not more than twenty-
one (21) years of age, unmarried and not gainfully employed or where such
children, brothers or sisters, regardless of age are incapable of self-support
because of mental or physical defect.
The additional exemption for dependent shall be claimed by only one of the
spouses in the case of married individuals.
If the taxpayer dies during the taxable year, his estate may still claim the
personal and additional exemptions for himself and his dependent(s) as if he
died at the close of such year.
c. Kinds of Corporations
i. Domestic
ii. Resident Foreign
iii. Non-Resident Foreign
Marubeni vs CIR, 76573 September 1989
iv. Others
1. Private Educational Institutions and Non-Profit Hospitals
a. Sec 27(B) NIRC
b. Sec. 34(A)(2) NIRC
2. International Carrier
a. Sec. 28(A)(3) NIRC
b. Sec 2 to 5 and 8 of rr 15-02 May 30, 2002
c. Sec. 1 of RA 10378 March 2013
i. Sec. 1 to 4 of RR 15-13 Sept 2013