FORECAST IN
TAXATION LAW
ATTY. RAEGAN L. CAPUNO
Topic/Question Distribution Through the Years
2019 2018 2017 2016 2015 2014 2013 AVERAGE
General Principles 5% 13% 7% 3% 7%
Income Tax 53% 35% 22% 33% 45% 36% 19% 35%
Estate Tax 6% 5% 8% 4% 8% 7% 6%
Donor's Tax 5% 8% 5% 5% 3% 4% 7% 5%
VAT 13% 10% 17% 10% 14% 16% 7% 12%
Remedies/Jurisdiction 15% 13% 26% 25% 9% 10% 22% 17%
Local Tax 5% 15% 3% 5% 6% 14% 11% 8%
Real Property Tax 3% 13% 5% 10% 6% 4% 7%
Tariff and Customs 3% 9% 6% 1% 7% 5%
Outside the Syllabus 4% 4%
TOTAL 100% 100% 100% 100% 100% 100% 80%
GENERAL PRINCIPLES
Principles of
Sound Tax System
Fiscal Adequacy
Administrative Feasibility
Theoretical Justice
Double Taxation
Double taxation means taxing the same property twice when it should be
taxed only once; that is, "taxing the same person twice by the same
jurisdiction for the same thing."
It is obnoxious when the taxpayer is taxed twice, when it should be but once.
Otherwise described as "direct duplicate taxation," the two taxes must be
imposed on the same subject matter, for the same purpose, by the same
taxing authority, within the same jurisdiction, during the same taxing period;
and the taxes must be of the same kind or character.
Bar Exam 2015
Question No. VI.
Differentiate between double taxation in the strict sense and in
a broad sense and give an example of each. (4%)
Bar Exam 2015 –Suggested Answer
In strict sense, double taxation is referred to as direct duplicate taxation which means taxing
twice, by the same taxing authority, within the same jurisdiction or taxing district, for the
same purpose, in the same year or taxing period and some of the property in the territory.
In broad sense, double taxation is referred to as indirect double taxation. It is taxation other
than direct duplicate taxation. It extends to all cases in which there is a burden of two or
more impositions.
1. The end to be achieved, i.e. payment of less than that
known by the taxpayer to be legally due, or paying no
tax when it is shown that tax is due;
Elements of 2. An accompanying state of mind which is described as
being “evil”, “in bad faith”, “willful”, or “deliberate” and
Tax Evasion not “accidental”; and
3. A course of action (or failure of action) which is
unlawful.
INCOME TAXATION
a. Income Tax
National b. Estate Tax
c. Donor's Taxes
Internal d. Value-Added Tax
e. Other Percentage Taxes
Revenue f. Excise Taxes
g. Documentary Stamp Taxes; and
Taxes h. Such other taxes as are or hereafter
may be imposed and collected by
the BIR.
Distinction Between Capital and Income
Vicente Madrigal v. James Rafferty (G.R. No. L-12287, August 7, 1918)
• Capital is a fund; income is a flow.
• A fund of property existing at an instant of time is called capital. A flow of services rendered by that
capital by the payment of money from it or any other benefit rendered by a fund of capital in relation to
such fund through a period of time is called an income.
• Capital is wealth, while income is the service of wealth.
• The fact is that property is a tree, income is the fruit; labor is a tree, income the fruit.
• Capital is a tree, income the fruit.
Association of Non-Profit Clubs, Inc. (ANPC) vs. Bureau of Internal
Revenue
G.R. No. 228539, June 26, 2019
Purely Compensation Income Earner
NIRC TRAIN
Gross compensation income Pxxx Gross compensation income Pxxx
Less: Mandatory Contributions xxx Less: Mandatory Contributions xxx
Non-Taxable Income xxx xxx Non-Taxable Income xxx xxx
Taxable Compensation Income xxx Taxable Compensation Income xxx
Less: Basic personal exemption xxx
Additional exemption xxx Income tax due Pxxx
Health insurance premiums xxx xxx Less: Tax withheld from compensation xxx
Taxable compensation income Pxxx Income tax payable Pxxx
Income tax due [ Sec.24 (A) ] Pxxx *First P250,000 taxable income is exempt.
Less: Tax withheld from compensation xxx
Income tax payable Pxxx
Self-Employed Individual and/or
Professionals under TRAIN Law
Gross Sales/Receipts and Other Non-Operating Income
• Does not exceed P3,000,000.00
• Exceeds P3,000,000.00
Self-Employed Individual and/or
Professionals under TRAIN Law
Gross Sales/Receipts and Other Non-
Operating Income
DOES NOT EXCEED P3,000,000
8% tax on gross sales/receipts Graduated Income Tax Rates
and other non-operating income
IN EXCESS OF P250,000 (0%-35%)
Business Tax
(3% Percentage Tax)
Self-Employed Individual and/or
Professionals under TRAIN Law
Gross Sales/Receipts and Other Non-
Operating Income
EXCEEDS P3,000,000
Graduated Income Tax Rates
(0%-35%)
Business Tax
(12% VAT)
Taxpayers who cannot avail of the
8% income tax rate
1. A VAT-registered taxpayer, regardless of the amount of gross sales/receipts and other non-
operating income;
2. Non-VAT taxpayers whose gross sales/receipts and other non-operating income exceeded the
P3,000,000.00 VAT threshold;
3. A taxpayer who is subject to Other Percentage Taxes under Title V of the Tax Code, as
amended, except those subject under Section 116 of the same Title;
4. A partner of a General Professional Partnership (GPP) by virtue of their distributive share
from GPP which is already net of cost and expenses; and
5. Individual enjoying income tax exemption such as those registered under the Barangay Micro
Business Enterprises (BMBEs), etc., since taxpayers are not allowed to avail of double or
multiple tax exemptions under different laws, unless specifically provided by law.
MIXED INCOME EARNER
Income from Business or Practice of
Compensation Income
Profession
It depends:
Graduated Income Tax Rate 1. Gross Sales/Receipts and Other Non-
(0%-35%) Operating Income do not exceed
P3,000,000.00, or
2. Gross Sales/Receipts and Other Non-
Operating Income exceed P3,000,000.00
Mixed Income Earner
Gross Sales/Receipts and Other Non-
Operating Income
DOES NOT EXCEED P3,000,000
8% tax on gross sales/receipts Graduated Income Tax Rates
and other non-operating
income (0%-35%)
Business Tax
(3% Percentage Tax)
Mixed Income Earner
Gross Sales/Receipts and Other Non-
Operating Income
EXCEEDS P3,000,000
Graduated Income Tax Rates
(0%-35%)
Business Tax
(12% VAT)
GAINS ON DEALINGS OF PROPERTY
Capital Gains Tax on Foreclosure Sale
In cases where the right of redemption of the mortgagor exists, the certificate of title
of the mortgagor will not be cancelled yet even if the property has already been
subjected to foreclosure sale. The cancellation of the title and issuance of a new title
depends on whether the mortgagor will exercise his right to redeem the property
mortgaged within one year from the issuance of the certificate of sale.
Rules
1. Mortgagor exercises right of redemption No capital gains tax
2. Mortgagor did not exercise right of redemption Subject to capital gains
tax
TAX ON EDUCATIONAL INSTITUTIONS
Tax of Minimum Wage Earners
Section 24(A) of the NIRC, as amended.
Irrevocability Rules
Section 76 of the NIRC, as amended.
Cases:
University Physicians Services Inc. - Management, Inc. vs. Commissioner Of
Internal Revenue, G.R. No. 205955, March 7, 2018
ESTATE TAX
ESTATE TAX ADMINISTRATION
Particulars NIRC TRAIN LAW
Required if gross value of estate
exceeds P20,000
Notice of Death REMOVED
Within 2 months after decedents
death
Required if gross value of estate
Filing of Estate Tax Return No more threshold
exceeds P200,000
Gross value of estate exceeds Gross Value of Estate exceeds
Certification by a CPA
P2,000,000 P5,000,000
Time of Filing of Estate Tax Within 6 months from Within 1 year from decedent’s
Return decedent’s death death
DONOR’S TAX
Transfers and Transactions Constituting Donation
1. Campaign Contributions
2. Cancellation of Indebtedness
3. Renunciation of Inheritance
4. Renunciation of the Surviving Spouse of the Share in the Conjugal
Partnership or Absolute Community
5. Transfer for Less Than Adequate and Full Consideration
VALUE-ADDED TAX
What is Cross-Border Doctrine or Destination Principle?
Refund of Input Tax
Section 112 of the NIRC, as amended.
• San Roque Power Doctrine
• Enhanced VAT Refund System
• BIR Ruling No. 489-03
TAX REMEDIES
Letter of Authority
Section 13 of the NIRC, as amended.
Cases:
Commissioner of Internal Revenue v. Sony Philippines, Inc., 649 Phil. 519,
529-530 (2010)
Medicard Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No.
222743, April 5, 2017
Stages of Assessment and Taxpayer’s Remedies
Appeal to
FDDA
eLA PAN FAN/FLD (180 days to decide)
CTA Division
(30 days)
Audit Protest
(30 days)
Appeal to
CTA, En Banc
Agree?
Notice of
Discrepanc
y No Reconsideration
Yes
Supreme
Court
Reply
No (15 days)
Agree?
Submit Additional
Reinvestigation Documents
(60 days)
Pay the
Yes taxes
Right to Due Process of the Taxpayer
Commissioner of Internal Revenue vs. Avon Products
Manufacturing, Inc.
G.R. Nos. 201398-99, October 03, 2018
Commissioner of Internal Revenue vs. V.Y. Domingo Jewellers, Inc.
G.R. No. 221780, March 25, 2019
LOCAL TAXATION
Common Limitations on the Taxing Power of the LGUs
Section 133(E), in relation to Section 187 of the LGC
Palma Development Corporation v. Municipality of Malangas, Zamboanga
Del Sur (G.R. No. 152492, October 16, 2003)
Possible Question:
In 2020, Lipa City approved an ordinance levying customs duties and fees on goods
coming into the territorial jurisdiction of the city. Said city ordinance was duly published
on January 15, 2020 with effectivity date on February 1, 2020.
a. Is there a ground for opposing said ordinance?
b. What is the proper procedural remedy and applicable time periods for
challenging the ordinance?
Constitutionality and Legality of the Tax Ordinance
Section 187 of the LGC
Leila De Lima v. City of Manila (G.R. No. 222886, October 17, 2018)
Possible Question:
What is the remedy in the event of adverse decision or inaction of the Secretary of
Justice in the petition challenging the validity or constitutionality of the local tax
ordinance?
Taxpayer’s Remedies in Local Tax Assessment
Section195 of the LGC
China Banking Corporation v. City Treasurer of Manila (G.R. No. 204117,
July 1, 2015)
Possible Question:
What is the remedy in the event of adverse decision or inaction of the local treasurer in
the protest to the assessment of local tax?
TAXPAYER’S REMEDIES
Notice of Assessment by the Local Treasurer MTC RTC
File a written protest within 60 days from the receipt
Court Tax Appeals, In Division
of Notice of Assessment.
Local Treasurer has 60 days to decide from date of
Court of Tax Appeals, En Banc.
receipt of the protest.
In case of denial or lapse of the 60-day period, appeal Supreme Court
to the court of competent jurisdiction within 30 days
from receipt or lapse of the period.
REAL PROPERTY TAXATION
Real Property Tax Exemption
Section 234 of the LGC
Mactan Cebu International Airport Authority v. Hon. Ferdinand J. Marcos
(G.R. No. 120082, September 11, 1996)
Possible Question:
Lipa City owns a parcel of land which it leased to ABC Company, a privet
company. ABC Company constructed a public market thereon and leased the
stalls to vendors and small storeowners. The City Assessor of Lipa then issued a
notice of assessment against ABC Company for the payment of real property
taxes on the land and on the public market building.
Is the assessment of City Assessor correct?
Thank you!
