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Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.

com

A Compilation of the

Questions and Suggested Answers

In the

PHILIPPINE BAR EXAMINATIONS 2007-2013

In

TAXATION LAW
Compiled and Arranged By:

Baratbate-Ladot, Delight

Salise, Hector Christopher “Jay-Arh” Jr. M.

(University of San Jose-Recoletos School of Law)

ANSWERS TO BAR EXAMINATION QUESTIONS by the
UP LAW COMPLEX (2007-2013)

&

PHILIPPINE ASSOCIATION OF LAW SCHOOLS (2008)

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
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Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

FOREWORD
This work is a compilation of the ANSWERS TO BAR
EXAMINATION QUESTIONS by the UP LAW COMPLEX ,
Philippine Association of Law Schools from 2007-2010 and local
law students and lawyers‟ forum sites from 2011-2013 and not an
original creation or formulation of the author.

The authors were inspired by the work of Silliman University‟s
College of Law and its students of producing a very good
material to everyone involved in the legal field particularly the
students and the reviewees for free. Hence, this work is a
freeware.

Everyone is free to distribute and mass produce copies of this
work, however, the author accepts no liability for the content of
this reviewer, or for the consequences of the usage, abuse, or
any actions taken by the user on the basis of the information
given.

The answers (views or opinions) presented in this reviewer are
solely those of the authors in the given references and do not
necessarily represent those of the authors of this work.

The Authors.

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
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Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

TABLE OF CONTENTS
(Titles are based on Silliman’s Compilation [Arranged by Topic])

General Principles

BIR Rulings; “Rulings of First Impression” (2007).........................................................................10

Power of Taxation: Equal Protection of the Law; Rational Basis Test (2010)....................11

Power of Taxation: Limitations: Inherent Limitations (2009).................................................. 11

Power of Taxation: Limitations: Tax Treaties (2009)....................................................................12

Principle of Administrative Feasibility (2009)................................................................................. 12

Set-off; “Doctrine of Equitable Recoupment” (2009)....................................................................12

Tax Avoidance; Exchange of Real Property and Shares of Stock (2008)..............................13

Taxes considered as NIRC Taxes (2007)..............................................................................................14

Income Taxation

Basic: Closed and Complete Transaction (2012).............................................................................14

Charitable Institutions: Income from Profit-Driven Activities (2013).................................. 14

Corporate Income Tax: Accumulated Profits; “Immediacy Test” (2010).............................15

Corporate Income Tax: Accumulated Profits; Capitalization Rules (2010).........................15

Corporate Income Tax: Carry-Over Option is Irrevocable (2012)...........................................15

Corporate Income Tax: Carry-Over Option is Irrevocable (2013)...........................................16

Corporate Income Tax: Joint Venture (2007)..................................................................................17

Corporate Income Tax: Sale of Real Property by a Real Estate Broker (2008)……..… 17

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 3 of 125

...................................... Irrevocability of Election (2009)........................................ Exclusions & Inclusions Deductions: “All-events Test” (2009).........................................25 Deductions: “All Events Test” (2010).............”-Leroy Satchel Paige Page 4 of 125 .................22 Partnership: Income Tax (2013)........................24 Deductions..24 Personal Income Tax: Personal Exemptions of a Non-resident Alien (2010)........................................................................................................24 Trust: Income from Trust (2009)............................................................................................................18 Final Withholding Tax: Royalties Paid to Non-Resident Corporation (2010)...........................................................27 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do...................................23 Personal Income Tax: Payment by Installment (2010)..................................18 Final Withholding Tax: Informer’s Reward (2010).......22 Personal Income Tax: Accounting Period (2010)..........................18 Foreign Corporate Tax: Local Agent for a Foreign Airline (2009).........................................................................26 Deductions: Optional Standard Deduction (2010)..............................26 Deductions: Non-deductible......................................................................Taxation Law Q&As (2007-2013) hectorchristopher@yahoo....................................................................................... Branch Remittances (2012)........................................... Casualty Loss (2010)..................com Corporate Income Tax: Who is a Contractor (2013)..................................................................................19 Foreign Corporate Tax: “Single Entity Concept”.27 Deductions: Optional Standard Deductions...............23 Personal Income Tax: Passive Income (Rental Income).................... Situs of Taxation (2008).............................................26 Deductions: Non-deductible........................ Situs of Taxation (2007)................................................23 Personal Income Tax: Passive Income (Interest Income)................................................................................................................ Maintenance of Goodwill (2009).....................25 Deductions: Claimed by a Partner (2013)......................................... Exemptions. 25 Deductions: Income Tax Withheld by US Government (2010)...21 Fringe Benefit Tax: De Minimis Benefits (2007)...................................................................20 Foreign Corporate Tax: Situs of Taxation (2012)...com dbaratbateladot@gmail....................................................................................

.........................................................................................................................37 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.................................. 31 Capital Gains Tax Exemption of Family Home.....................................................29 Exemptions: Income Abroad by Non-Resident Filipino (2010)...27 Deductions: Vanishing Deductions (2008)............................... Bequests and Devises (2008)...........................................................................................................................”-Leroy Satchel Paige Page 5 of 125 ....................................................................................................com dbaratbateladot@gmail.............................................................35 Sale of Shares of Stock Not Traded in the Local Stock Exchange (2008)......................................................................................................29 Exemptions: Pensions from Foreign Government Agencies and other Institutions (2007).............................................29 Exemptions: Personal & Additional Exemptions (2012)......................... Period to File Return (2012)..........................com Deductions: Premiums for Health Insurance (2010).......................................................................................Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.......................................28 Exemptions: Gains from Redemption of Shares of Stock in Mutual Fund Company (2010)...........................................................32 Exchange of Real Property by an Individual and Domestic Corporation (2008)............................33 Nature of Real Properties: Capital or Ordinary Asset (2008)...................................................................................................................33 Fair Market Value (2007).........................................................................................................30 Exemptions: Proceeds from Accident Insurance (2007)..............34 Purchase of Condominium (2007).........................................36 Tax Rate...............................................................29 Exemptions: Income from Religious Activities (2009)..................................35 Sale of a Capital Asset (2010)........................ Conditions (2013)...............................................................28 Exemptions: Gifts...................31 Exemptions: Proceeds from Life Insurance (2007).................................................................27 Deductions: Premiums for Life Insurance (2007)............................

..............................................39 Donor’s Tax: Exemptions...46 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. 45 Estate Tax: Exemptions.........................................................com dbaratbateladot@gmail........................................................................................................................ Basis of Computation (2007).......41 Estate Tax: CIR’s Power to Extend Payment..............................42 Estate Tax: Composition of Gross Estate (2008)..............................................43 Estate Tax: Deductions Allowed to Estate of a Resident or Citizen (2008)...41 Estate Tax: Basis of Computation (2007)..........................................................45 Estate Tax: Period for Filing and Payment (2010).................................................................. Transmission from the First Heir.................................46 Estate Tax: Vanishing Deductions (2009).................................... 40 Estate Tax (2007)............................................................................................................ Legatee or Donee in favor of another beneficiary (2009)................................................................................................43 Estate Tax: Composition of Gross Estate (2009)..... 39 Donor’s Tax: “Reciprocity Rule” (2009)......................................................................................................................45 Estate Tax................................................................................................................................................................................38 Donor’s Tax: Donation to Relatives (2008)....com Other Percentage Taxes Sale of Shares of Stock Traded through the Local Stock Exchange (2008)................44 Estate Tax: Deductions Allowed to Estate of a Resident or Citizen (2008)...............................................Taxation Law Q&As (2007-2013) hectorchristopher@yahoo............................ Properties used by Religious Institutions (2007)..............41 Estate Tax: Basis of Computation (2008).............................................................................................39 Donor’s Tax: Dowry Exclusion (2009)............................... 40 Donor’s Tax: Renunciation of Shares (2013)...................................... Exemptions................................................................................”-Leroy Satchel Paige Page 6 of 125 ................... Transfer with Sufficient Consideration (2013).........................................................37 Estate & Donor’s Taxes Donor’s Tax: Capital or Ordinary Asset (2012).................................40 Donor’s Tax: Renunciation of Shares (2010)......

........com dbaratbateladot@gmail.........55 CTA: Jurisdiction........... Fraudulent Return (2009)................Taxation Law Q&As (2007-2013) hectorchristopher@yahoo....................................................................................54 BIR: Failure to File Return....53 BIR: False Return v.......49 VAT: Zero-rated....................... Tax Evasion...............................................52 BIR: Criminal Prosecution...................................................................................................................................................................52 BIR: Compromise...................51 BIR: Assessment....... Requisites (2008).........................................................51 BIR: Assessment........54 BIR: Failure to File Return................................ 48 VAT: Rates (2010)................................................. Criminal Actions in RTC (2010)............................................ Power to Review Compromise Agreements (2010)... Services Rendered to Business Outside the Country (2013)................................................................................................................................................................................55 CTA: Jurisdiction of the CTA (2010).....................................................................50 Remedies in Internal Revenue Taxes BIR: Assessment........................ Residential Units for Lease (2009)..... Services Rendered to Business Outside the Country (2012)........ Bribery (2013)..............................55 CTA: Jurisdiction of the CTA (2010)........................................... Collection Without Assessment (2012)……...............49 VAT: Zero-rated.........com Business Taxes VAT: Exempted Transactions.....................................”-Leroy Satchel Paige Page 7 of 125 .................................................................................................... Appeals from Decisions of the Collector of Customs (2010).........................53 BIR: Criminal Prosecution................................................. Importation and Use within SBMA (2008)................................... Financial Incapacity (2009).................49 VAT: Sale of a Capital Asset (2010). Sale of Real Properties (2008)....54 BIR: Prescription: Construction in Criminal Cases (2010)............................47 VAT: Exempted Transactions.......................................................48 VAT: Liable for VAT (2008)............56 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.................................................... Duty to Pay Tax despite Acquittal (2012)..................55 CTA: Jurisdiction............................... Exemption to Examine Once a Year (2013)....................

.61 Taxpayer: Protest........................ Withholding Agent as a Proper Party (2009)..................... 58 Taxpayer: Claim for Tax Credit..................................................... Limitation (2010)...............”-Leroy Satchel Paige Page 8 of 125 ...........................................................com CTA: Proceedings in the CTA (2010).......com dbaratbateladot@gmail.........................................................66 Local Taxation...........................................63 Local Taxation: Business Tax on Contractors (2010).................. 67 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do...................................................67 Local Taxation................................56 CTA: Suspension of the Collection of NIR Taxes (2010)...........65 Local Taxation: Legality/Constitutionality.61 Taxpayer: Prescription............................. Effect of Prescription to File Protest (2009).57 Taxpayer: Claim for Refund................................56 Customs: Prescription Period to Assess (2013)........................ Tax Rate (2007)......... Remedies Against BIR’s Inaction to a Protest (2009)................................................................ Prescription (2008)...62 Taxpayer: Request for Reconsideration vs...66 Local Taxation: Retiring Business (2010)......................... Taxing Power... Legislative Franchise (2008)............ Tenor of Finality of Assessment (2012)...... Regulatory Measures (2009).................. Construction in Civil Cases (2010).... Situs of Taxation (2010)....... 58 Taxpayer: Claim for Tax Credit................................59 Taxpayer: Petition for Review....................... Request for Reinvestigation (2012).....................................................................................................................................................................57 Taxpayer: Claim for Refund............... Carry-Over Option is Irrevocable (2013)........ Principal Office and Branches..........................62 Local & Real Property Taxes Local Taxation: Business Tax: Taxable Period...................... Prescription..... Professional/Occupation Taxes (2009)..................................60 Taxpayer: Prescription................................... 64 Local Taxation: Legality/Constitutionality................... Payment in Installment (2008)........ Effect of Waiver of Statute of Limitations (2010)... Substantiation Requirement (2009)...........Taxation Law Q&As (2007-2013) hectorchristopher@yahoo..............65 Local Taxation: Legality/Constitutionality...61 Taxpayer....61 Taxpayer: Protest against Final Assessment Notice (2010)....................................................................................................... Off-Setting (2007).........................57 Taxpayer: Claim for Refund........................64 Local Taxation: Legality/Constitutionality........................

..........….....69 Real Property Taxation: Liable for Payment......................70 Customs: Forfeiture Proceeding......com dbaratbateladot@gmail..................124 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do...................... 72 MULTIPLE CHOICE QUESTIONS 2013 Taxation Law Exam MCQ (October 13...........................................68 Real Property Taxation.. 2009)........ Issuance of Warrant of Search and Seizure (2009)...………………………………..73 2012 Taxation Law Exam MCQ (October 14.................101 2010 Taxation Law Exam MCQ (September 12...... Period (2012).............. Nature (2007)..........……………………………….....……………………………………….................... Liable for Payment.…………………………………... 2012).............................................. Religious Activities (2010).................com Local Taxation: Taxing Power......................... 2013).. 71 Other Related Matters BIR: Bank Deposits Secrecy Violation (2012) .....123 2009 Taxation Law Exam MCQ (September 13........................... Importation and Use within SBMA (2008) ..67 Real Property Taxation: Beneficial Use of the Property (2013)......70 Tariff And Customs Duties Customs: Exempted Transactions.............…...... Period to File Protest and Appeal (2010)........................................... 69 Remedies in Local Taxes Taxpayer: Local Tax................. 2011)...............................……... 71 Customs: Jurisdiction..... Nature (2008)................. 2010)…............Taxation Law Q&As (2007-2013) hectorchristopher@yahoo....……………………………………....................”-Leroy Satchel Paige Page 9 of 125 ............……...........78 2011 Taxation Law Exam MCQ (November 13...68 Real Property Tax: Exemption............................... Taxpayer (2009).......................

Commissioner of Internal Revenue. “Rulings of First are merely advisory – sort of an Impression” (2007) information service to the taxpayer. (Section 246. Internal Revenue (BIR) ruling in June 2005 that exempts from tax the importation of ࿿࿿࿿Èì⻚࿿࿿࿿࿿࿿࿿࿿࿿࿿É遲猠࿿࿿࿿࿿࿿࿿࿿࿿࿿Ê some of its raw materials. Court of Appeals et. was able to secure a Bureau of Lukban). “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.com General Principles have held that they do not prevent an entire change of front at any time and BIR Rulings. which means that all their valid must not be against the law and it importations done before the issuance of must be issued only by the the second ruling could be subject to tax. XYZ Corporation. NIRC. an export-oriented Philippines. (10%) (Philippine Bank of Communications v. 149 citing Quiazon and company. Subsequently. the BIR issued another ruling which in effect would subject to tax such SUGGESTED ANSWER: kind of importation. 302 SCRA 241 [1999]. CIR v. which means the Í萀礫࿿࿿࿿࿿࿿࿿࿿࿿࿿Î彌ྨྨ࿿࿿࿿࿿࿿࿿࿿࿿࿿ Ï釰滎࿿࿿࿿࿿࿿࿿࿿࿿࿿ interpretations made by the Commissioner Ð혀俄࿿࿿࿿࿿࿿࿿࿿࿿࿿Ñ䈐寽࿿࿿࿿࿿࿿࿿࿿࿿189 of Internal Revenue is one without What is required to make a BIR ruling established precedents. considering the principle that tax BIR rulings are administrative opinions issued by the Commissioner of Internal exemptions should be interpreted Revenue interpretative of a provision of strictly against the taxpayer? a tax law. A BIR ruling cannot be given They are the best guess of the moment retroactive effect if its retroactive and incidentally often contain such well. (A) What are BIR rulings? NIRC). Al. The ruling is of 頖徲࿿࿿࿿࿿࿿࿿࿿࿿࿿Ë㋬㳧࿿࿿࿿࿿࿿࿿࿿࿿࿿Ì㷲⋱࿿࿿࿿࿿࿿࿿࿿࿿࿿ first impression. CIR. XYZ Corporation is concerned that said ruling may have a A BIR ruling of first impression to be retroactive effect.com dbaratbateladot@gmail. Section 7. (Aban. or first impression a valid one? however.”-Leroy Satchel Paige . application is prejudicial to the considered and sound law. 267 SCRA 557 [1997]). but the courts taxpayer. p. SUGGESTED ANSWER: ALTERNATIVE ANSWER: No.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. SUGGESTED ANSWER: 23 Does a BIR ruling have a retroactive effect. Law of Basic Taxation in the IV.

Page 10 of 125 .

Jur. sovereign state and its 2009). Under international comity. (ABS-CBN Broadcasting Co. However.” Under the rational basis sovereign equality among states and test. G.R. it is sufficient that the legislative of their freedom from suit without classification is rationally related to their consent.Taxation may be exercised only within the SUGGESTED ANSWER: territorial jurisdiction. property. the kind of tax to be imposed and the method of (IIc) What is the "rational basis" test? collection (1 Cooley 176-184). provide a rational basis for the among which are the principles of classification.”-Leroy Satchel Paige Page 11 of 125 . v. Explain briefly. the taxing authority (61 Am. (2%) 2 Taxation is territorial. instrumentalities. the legislature has the full discretion as to the persons.com ANOTHER ALTERNATIVE ANSWER: Power of Taxation: Limitations: Inherent Limitations (2009) The general rule is that a BIR ruling does ᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀ not have a retroactive effect if giving it a ᜀĀᜀĀᜀ0 Enumerate the four (4) retroactive application is prejudicial to inherent limitations on taxation. 88). – The upon which the ruling is based. 08 SCRA 142 [1981]. government or to directly promote the welfare of the community.com dbaratbateladot@gmail. a challenge if there is any reasonably state must recognize the generally- conceivable state of facts that could accepted tenets of international law. No. Sec 246. the taxing gauge the constitutionality of an assailed authority may determine the “place law in the face of an equal protection of taxation” or “tax situs”. IT can the Law. April 5.. occupation or business to be axed provided these are all within the Power of Taxation: Equal Protection of State’s territorial jurisdiction. 163583. (4%) the taxpayer. Explain each item briefly. or (3) the proceeds of the tax must be used (a) for the support of the State or (b) for taxpayer acted in bad faith. Rational Basis Test (2010) also finally determine the amount or rate of tax.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. It has been held that “in areas 3 Taxation is subject to international of social and economic policy. challenge. Within The “rational basis test” is applied to the territorial jurisdiction. CTA & 1 Taxation is inherently legislative-Only CIR. a subsequent some recognized objective of the ruling can have a retroactive application. NIRC). if the first ruling is tainted with either of the following: (1) SUGGESTED ANSWER: misstatement or omission of materials The inherent limitations on the power to facts. Camacho effectively impose taxes in a and Parayno. that limits that achieving some legitimate State interest authority of a government to (British American Tobacco v. as well as in its “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. (2) the facts gathered by the BIR tax are: are materially different from the facts 0 Taxation is for public purpose. – This is a limitation which is statutory classification that neither founded on reciprocity designed to proceeds along suspect lines nor maintain harmonious and productive infringes constitutional rights must be relationships among the various upheld against equal protection state. a comity.

com dbaratbateladot@gmail. a law allowing payment of taxes in kind. the CTA should apply the a taxpayer whose claim for refund has treaty provision so that the claim for prescribed to offset tax liabilities with his refund representing the difference claim of overpayment. 1984. There is no law which requires with the Court of Tax Appeals (CTA) payment of taxes in cash only. CIR. (5%) between the amount actually withheld and paid to the BIR and the amount due and payable under the treaty.com property held. Explain your answer in consonant with the principle of not more than two (2) sentences. However. international comity.”-Leroy Satchel Paige Page 12 of 125 . SUGGESTED ANSWER: Set-off. SUGGESTED ANSWER: On January 17. Thus. (5%) non-resident stockholders in the U.was 35%. CTA Case No. The provision of a treaty must take Recoupment” (2009) precedence over and above the provisions of the local taxing statute I(C ) True or False. The its case. Explain your answer in at source as tax on dividends earned was not more than two (2) sentences. hence.30% for individual and 35% for based on a higher rate of 30% and corporate non-resident stockholders --. although valid. and corresponding withholding tax on dividend 2 Its payment with the BIR of a tax income --. reiterating its demand for refund. 1985. 1988). will violate the correct? Why or why not? (3%) principle of administrative feasibility. deducted at source and remitted to the BIR. these U. ABCD filed a petition True. The Commissioner denied the claim. Power of Taxation: Limitations: Tax ANOTHER SUGGESTED ANSWER: Treaties (2009) The contention of ABCD Corporation X(B) ABCD Corporation (ABCD) is a that it overpaid the withholding tax is domestic corporation with individual and correct provided it can establish: corporate shareholders who are residents of 0 The existence of RP-US Tax Treaty the United States. may pose problems of Is the contention of ABCD Corporation valuation. the deduction withheld I(A) True or False.S. 3887. and activities (Hawaiian-Philippine Company v. alleging that under the RP-US Tax Treaty. corporate stockholders received cash 1 The said tax treaty is applicable to dividends from the corporation. undertaken in that capacity. May 31.S. Tax treaties are accepted limitations to the power of The doctrine of equitable recoupment allows taxation.-based individual and 25%. Thus.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. respectively. should be granted “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. ABCD asserted that it overpaid the withholding A law that allows taxes to be paid either in tax due on the cash dividends given to its cash or in kind is valid. On May 15. “Doctrine of Equitable Yes. fixed at 25% of said income. ABCD filed with the Principle of Administrative Feasibility Commissioner of Internal Revenue a formal (2009) claim for refund. For the 2 nd quarter of imposing a lower rate of tax of 1983.

expressed its desire to scheme (Sec. was it tax avoidance that Maria Suerte had purchased a lot in Makati City in 1980 at a resorted to? Explain. stating that she committed tax evasion. the RDO wrote a letter to allowed in our jurisdiction (CIR v. The sale of buy the Makati property at its fair market the shares of stocks of domestic value of P300 million. UST. Suerte’s sale of Office and a Certificate Authorizing her property to MAS Corporation was an Registration was issued by the Revenue intermediary transaction aimed more at District Officer (RDO) where the property reducing Suerte’s tax liabilities than for was located. the RDO’s contention. and property). In October 2007. The doctrine finds (35% on P299 million gain from sale of real no application to cases where the taxes involved are totally unrelated. owned 99% by Maria property for the shares of stocks is Suerte. is tenable. 104 Phil 1062 (1958)) Maria Suerte. Maria Suerte. In view of the tax advice. Maria Suerte exchanged her Makati property for shares of stocks of MAS ALTERNATIVE ANSWER: Corporation..000 (Sec. The doctrine arose from common law allowing offsetting of a prescribed capital gains tax of P29.000 underpayment is due. After evaluating the capital gains although it seems equitable. EIP Corporation. 40 [C2 b] NIRC). a tax lawyer.650. subject to a final tax of 5% on the first payable equally in twenty four (24) monthly P100. a domestic SUGGESTED ANSWER: corporation engaged in manufacturing No.000 and 10% on the amount in consecutive instalments. (6%) price of P1 million. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. a considered as a legitimate tax avoidance real estate developer. Exchange of Real Property and Shares of Stock (2008) Is the contention of the RDO tenable? Or V. a Filipino citizen. she sold her MAS Corporation’s legitimate business entire stockholdings in MAS Corporation to purposes (CIR v.com SUGGESTED ANSWER: EIP Corporation for P300 million.000 (P100. instead of arising from the same transaction on which an overpayment is made and the corporate income tax of P104. that Maria tax-free exchange of property for shares of Suerte committed tax evasion and not stock. was secured from the BIR National tax avoidance. Maria Suerte paid only the True.000 claim for refund against a tax liability x 5% plus P298. 24[C] NIRC). Subsequently. Upon the advice of excess of P100.900. and (b) balance.”-Leroy Satchel Paige Page 13 of 125 . Said property has been leased to MAS Corporation. payable as follows: (a) corporation.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000 x 10%). it is not tax payment. Norton Harrison Co. A BIR ruling.com dbaratbateladot@gmail. Tax Avoidance. confirming the Yes. The exchange of the real state paper products. which is a capital asset. is P60 million down payment.895.

Ayala? Explain your answer. Charitable Institutions: Income Tax for Profit-Driven Activities (2013) 5888 A group of philanthropists organized a non-stock. the land. Said sale was Income Taxation merely a tax ploy. 0 Mr. Tax 5 Documentary stamp taxes. Castillo is not liable for income 3 Other percentage taxes.R. tax in 2011 because no income is 4 Excise taxes. Toda’s Estate. 14 September 2004). In 2011. 1918). fees and charges are property at P10 Million. L-12287. 684.R. He purchased a parcel of land in Taxes considered as NIRC Taxes (2007) Makati City in 1970 at a consideration of P1 Million. a sham and without business purpose and economic Basic: Closed and Completed substance (CIR v. No. August 7. Jose Castillo is a resident Filipino citizen. non-profit hospital for charitable purposes to provide medical services to the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. SUGGESTED ANSWER: 2 Value-added tax. No. (3%) 0 Income tax. Mr. 691 [1964]). Mr.com 120 Phil. is very much Revenue Code (NIRC)? (5%) interested in the property and he offered to SUGGESTED ANSWER: buy the same for P20 Million. and liability for income tax attaches only if Such other taxes as are or hereafter may there is a gain realized resulting from a be imposed and collected by the Bureau closed and complete transaction of Internal Revenue. G. The Assessor of Makati City re-assessed in 2011 the The following taxes. realized by him during that year. Antonio Revenue Taxes under the National Internal Ayala. another Filipino citizen. considered to be National Internal Revenue Taxes under the National 23 Is Mr.com dbaratbateladot@gmail. which 5888 What kind of taxes. G. No. fees and charges remained undeveloped and idle had a fair are considered as National Internal market value of P20 Million. NIRC) (Madrigal v. Castillo liable for income tax in Internal Revenue Code: 2011 based on the offer to buy by Mr.”-Leroy Satchel Paige Page 14 of 125 .Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. (Section 21. Transaction (2012) 147188. 1 Estate and donor’s taxes. Rafferty.

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

poor. The hospital also accepted paying SUGGESTED ANSWER:
patients although none of its income
accrued to any private individual; all The “immediacy test” is applied to
income were plowed back for the hospital's determine whether the accumulation of
use and not more than 30% of its funds after tax profits by a domestic or
were used for administrative purposes. resident foreign corporation is really for
the reasonable needs of the business.
Is the hospital subject to tax on its income? Under this test, the reasonable needs of
If it is, at what rate? (6%) the business are construed to mean the
immediate needs of the business,
including reasonably anticipated needs.
SUGGESTED ANSWER:
The corporation should be able to prove
an immediate need for the accumulation
Yes. Although a non-stock non-profit of earnings and profits, or the direct
hospital organized for charitable correlation of anticipated needs to such
purposes, is generally exempt from accumulation of profits to justify the
income tax, it becomes taxable on said accumulation (Sec 3, RR No. 2-
income derived from activities 2001; Mertens, Law of Federal Income
conducted for profit. Services rendered Taxation, Vol. 7, Chapter 39, p. 103,
to paying patients are considered cited in Manila Wine Merchants, Inc. v.
activities conducted for profit which are CIR, G.R. No. L-26145, Feb. 20, 1984)
subject to income tax, regardless of the
disposition of said income. The hospital
is subject to income tax of 10% of its net
income derived from the paying patients
considering that the income earned Corporate Income Tax: Accumulated
appears to be derived solely from Profits; Capitalization Rules (2010)
hospital-related activities (CIR v. St.
Luke’s Medical Center, Inc., G.R. Nos. (Xf) The capitalization rules may be resorted
195909 & 195960, Sept 26, 2012). to by the BIR in order to compel corporate
taxpayers to declare dividends to their
ANOTHER SUGGESTED ANSWER: stockholders regularly.

No. The hospital is organized exclusively SUGGESTED ANSWER:
for charitable purposes and since no part True. (Sec 244, NIRC; Rev. Reg. No. 2-
of its income inures to the benefit of any 2001 implementing Sec 29, NIRC)
private individual, it should not lose its
exempt character by simply admitting
paying patients. The revenues derived Corporate Income Tax: Carry-Over
from paying patients are necessary to Option is Irrevocable (2012)
maintain “its head above the waters”
and allow it to sustain its charitable IX. On April 16, 2012, the corporation filed
activities (YMCA v. CA & CIR, 298 SCRA
83, 91 [Oct 14, 1998, G.R. NO. 124043). its annual corporate income tax return for
2011 showing an overpayment of income
tax of P1 Million, which is to be carried over
Corporate Income Tax: Accumulated
Profits; “Immediacy Test” (2010) to the succeeding year(s). On May 15, 2012,
the corporation sought advice from you and
(IIb) What is the "immediacy test"? Explain
briefly. (2%) said that it contemplates to file an amended
return for 2011, which shows that instead

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of carryover of the excess income tax succeeding years, considering that there is
payment, the same shall be considered as a no prescriptive period provided for in the
claim for tax refund and the small box income tax law with respect to carry over of
shown as “refund” in the return will be excess income tax payments? Explain your
filled up. Within the year, the corporation answer. (5%)
will file the formal request for refund for the
excess payment. SUGGESTED ANSWERS:

0 Will you recommend to the corporation Yes. The carry-over of excess income tax
such a course of action and justify that the payments is no longer limited to the
amended return is the latest official act of succeeding taxable year. Unutilized
the corporation as to how it may treat such excess income tax payments may now be
overpayment of tax or should you consider carried over to the succeeding taxable
the option granted to taxpayers as years until fully utilized. In addition, the
irrevocable, once previously exercised by it? option to carry-over excess income tax
Explain your answer. (5%) payments is now irrevocable. Hence,
unutilized excess income tax payments
SUGGESTED ANSWERS: may no longer be refunded (Belle Corp. v.
CIR, G.R. No. 181298, January 10,
Once the option to carry-over and apply 2011).
the excess quarterly income tax against
income tax against income tax due for Corporate Income Tax: Carry-Over
Option is Irrevocable (2013)
the taxable quarters of the succeeding
taxable years has been made such option (I)In its final adjustment return for the 2010
taxable year, ABC Corp. had excess tax
shall be considered IRREVOCABLE for credits arising from its over-withholding of
the taxable year period and no income payments. It opted to carry over the
excess tax credits to the following year.
application for tax refund or issuance of Subsequently, ABC Corp. changed its mind
tax credit certificate shall be allowed and applied for a refund of the excess tax
credits.
therefore (Section 76, NIRC).
Will the claim for refund prosper? (6%)
0 Should the petition for review filed with
SUGGESTED ANSWER:
the CTA on the basis of the amended tax
return be denied by the BIR and the CTA, No. The claim for refund will not
prosper. While the law gives the taxpayer
could the corporation still carry over such
an option to whether carry-over or claim
excess payment of income tax in the as refund the excess tax credits shown

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on its final adjustment return, once the 0 Are the allocation and distribution of the
option to carry-over has been made,
saleable lots to Weber and Prime subject to
such option shall be considered
irrevocable for that taxable period and income tax and to expanded withholding
no application for cash refund or
tax? Explain briefly.
issuance of a tax credit certificate shall
be allowed. (Sec 76, NIRC; CIR v. PL
Management International Phils., Inc., SUGGESTED ANSWER:
April 4, 2011, 647 SCRA 72 (2011) G.R.
No. 160949). No. The allocation and distribution of
the saleable lots to Weber and Prime is a
Corporate Income Tax: Joint Venture
(2007) mere return of their capital contribution.
The income tax and the expanded
withholding tax is not due on a capital
IX. Weber Realty Company which owns a
transaction because no income is
three-hectare land in Antipolo entered into
realized from it. (BIR Ruling No. DA-192-
a Joint Venture Agreement (JVA) with
2001, October 17, 2011).
Prime Development Company for the
development of said parcel of land. Weber
0 Is the sale by Weber or Prime of their
Realty as owner of the land contributed the
respective shares in the saleable lots to
land to the Joint Venture and Prime
third parties subject to income tax and to
Development agreed to develop the same
expanded withholding tax? Explain briefly.
into a residential subdivision and construct
residential houses thereon. They agreed SUGGESTED ANSWER:
that they would divide the lots between
Yes. The sale by Weber and Prime of
them. (10%)
their respective shares to third parties is

5888 Does the JVA entered into by and a closed and completed transaction

between Weber and Prime create a separate resulting in the realization of income,

taxable entity? Explain briefly. subject to income tax and to the
expanded withholding tax. (BIR Ruling
SUGGESTED ANSWER: DA-228-2006).

The JVA entered into between Weber and
Prime does not create a separate taxable Corporate Income Tax: Sale of Real
Property by a Real Estate Broker (2008)
entity. The joint venture is formed for
the purpose of undertaking construction I. In January 1970, Juan Gonzales bought
projects; hence, is not considered as a one hectare of agricultural land in Laguna
corporation for income tax purposes. for P100,000. This property has a current
(Section 22 (B), NIRC). fair market value of P10 million in view of

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Page 17 of 125

To be property located in Batangas.com dbaratbateladot@gmail. and foreign exchange gains from apply the program in the Philippines. XYZ granted ABC the right to use a Contractor (2013) computer system program and to avail of (III)ABC Corporation is registered as a technical know-how relative to such holding company and has an office in the City of Makati. interests on its bank receives from customers who will use and deposits.. Juan Gonzales whether or not the performance of the agreed to exchange his agricultural lot in service calls for the exercise or use of the physical or mental faculties of such Laguna for a one-half hectare residential contractor or its employees. a mere holding engaged in the purchase and sale of real company cannot be assessed by the City property.S.com the construction of a concrete road consists essentially in the sale of all kinds of services for a fee. operations. (Sec 282. corporation based in the U. what is the tax base and rate? Explain (3%) Final Withholding Tax: Royalties Paid to Non-Resident Corporation (2010) SUGGESTED ANSWER: Yes. The City of Makati assessed ABC Corporation as a contractor or one that sells services for a Discuss the tax implication of the fee. regardless of traversing the property. with a fair considered as a contractor. NIRC) exchange property? If so. Alpha must pay corporate income (XVIII) ABC.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. a domestic corporation and not from deriving purely passive income. a domestic corporation. It invested in another company ABC agreed to pay 5% of the revenues it and its earnings are limited to dividends from this investment.S. Is the City of Makati correct? (6%) transaction. Accordingly. the corporation cannot be considered as a contractor because it does not render services for others for a fee. tax at the rate of 35% of the residential entered into a software license agreement property’s fair market value of P10 with XYZ. the corporation must derive income from market value of P10 million. It has no actual business program. (5%) SUGGESTED ANSWER: No. Alpha Corporation acquired the of Makati as a contractor (Sec 131 (h). 27[A] NIRC). In consideration for such rights. A contractor is one whose activity . Final Withholding Tax: Informer’s ⠀512⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀ ⤀ ĀᜀĀᜀĀᜀĀᜀ Reward (2010) ĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā (Xg) Informer‟s reward is subject to a final ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ withholding tax of 10%. LGC). its foreign currency account. ĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀ Is Alpha Corporation subject to income tax on the SUGGESTED ANSWER: True. property in 2007 for P9 million. owned by doing active business of selling services Alpha Corporation. Under the agreement which the parties forged in the Corporate Income Tax: Who is a U. a non-resident foreign million (Sec.

”-Leroy Satchel Paige Page 18 of 125 .“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

organized under the Philippine income tax (CIR v.S. is business in the Philippines through its subject to a 30% final withholding tax. thus. corporation.com dbaratbateladot@gmail. (Sec 28(B) of landing rights. However. NIRC). finding that that an answer based on the provisions of KIA's airline ticket sales constituted income the New tax Code shall be given full credit. enabling application or enjoyment of any through its agent PAL. it is expected that the bar candidates 1997 amounted to P2. (4%) The amount payable under the agreement is in the nature of royalty. income derived within.156.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.968. The total sales of (RA 8424) which took effect on January 1. The income of KIA “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. it is the sale of tickets in Foreign Airline (2009) the Philippines which is the activity that produced the income. local sales agent. hence. Accordingly.”-Leroy Satchel Paige Page 19 of 125 . it is respectfully requested 35% on its taxable income. The royalties paid to the non-resident subject to 35% tax based on its taxable U. Internal Revenue Code of 1997) then in effect and the prevailing jurisprudence on KIA sells airplane tickets through PAL. The transacting of the program in the Philippines. KIA’s income (VII) Kenya International Airlines (KIA) is a being derived from within is subject to foreign corporation. 149 business in the Philippines.968. an answer framed in his wise should also be considered as a correct answer. activity or service that produced the income. The intellectual property and supply of revenue it derived in 1997 from sales of technical know-how as a means of airplane tickets in the Philippines. KIA’s position is not tenable.00 should be considered as income derived exclusively from sources ALTERNATIVE ANSWER: outside the Philippines since KIA only serviced passengers outside Philippine Yes. The firm is problem is 1997. Its commercial SCRA 395. In the Foreign Corporate Tax.com SUGGESTED ANSWER: Is the position of KIA tenable? Reasons. airline tickets transacted by PAL for KIA in 1998. Philippine Airlines (PAL). a Philippine provision of the old Tax Code (National corporation. British laws of Kenya. corporation which is taxable only on income from within. Local Agent for a instant case. airplanes do not operate within Philippine territory. The source of an income is the property. NIRC).156. derived from sources within the Philippines.00. makes KIA a resident unless a lower tax rate is prescribed foreign corporation despite the absence under an existing tax treaty. the suggested represented in the Philippines by its general answer above follows the applicable agent. or service passengers embarking Note: The taxable year involved in the from Philippine airports. equivalent to 5% of the income pursuant to Sec 25(a)(1) of the revenues derived by ABC for the use of Tax Code of 1997. income from within the Philippines. SUGGESTED ANSWER: The term royalty is broad enough to include compensation for the use of an No. with the adoption of these tickets are serviced by KIA airplanes the National Internal Revenue Code of 1997 outside the Philippines. viz: KIA filed a protest on the ground that the P2. It is not licensed to do Overseas Airways Corporation. KIA is a non-resident foreign territory. and the matter. KIA deficiency income taxes at the rate of For this reason. it is taxable on (1). is considered as such property or right (Sec 42(4). (1987)). The have lost track of the change in the tax law Commissioner of Internal Revenue assessed which transpired more than a decade ago.

Hence. 0 Is the bank correct in excluding the net The origination of the flight is determinative of the sources of income income of its Shanghai Branch in the of the international carrier. to 0 Should the Shanghai Branch of Anchor take advantage of the presence of many bank remit profit to its Head Office in the Filipino workers in that area and its Philippines in 2011. no flight will originate from the Philippines because KIA is not licensed to do business here. Branch Remittances (2012) summed up for income tax purposes following the “single entity” concept and I. the income is from without. is the branch liable to booming economy. The income of the foreign branch Foreign Corporate Tax: “Single Entity and that of the Home Office will be Concept”. and branches of Foreign Corporation in the since the loan and other business Philippines to their Home Office abroad. If the flight computation of its annual corporate income originated from the Philippines to a foreign destination. It is the outbound branch profits that is “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. the income is an tax for 2010? Explain your answer. if it originated in a foreign country to any destination. because the Shanghai Branch is treated as a foreign No. China. During the year. set up in 2010 a branch office in Shanghai City. Compensation for services is an income from within if the sources are performed in the Philippines (Sec 42(A)(3). these from the sale of transportation services.com dbaratbateladot@gmail. which was will all be included in the gross income organized in 2000 and existing under the of the domestic corporation in the laws of the Philippines and owned by the Sy annual Philippine income tax return. Anchor Banking Corporation. incomes are not taxable in the Philippines. NIRC). (5%) Branch in the annual Philippine income tax return filed with the BIR. NIRC).”-Leroy Satchel Paige Page 20 of 125 . (5%) income from within. which showed a SUGGESTED ANSWER: net taxable income of P30 Million. A Domestic Corporation is taxable on is not taxable in the Philippines (Sec 28(A)(3).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the income No. NIRC). The branch profit remittance tax is corporation and is taxed only on income imposed only on remittances by from sources within the Philippines. In the case at SUGGESTED ANSWER: bar. all income derived from sources within and without the Philippines (Section 23.com as an international air carrier is derived transactions were done in Shanghai. the the 15% branch profit remittance tax bank management decided not to include imposed under Section 28 (A)(5) of the Tax the P20 Million net income of the Shanghai Code? Explain your answer. Family of Makati City.

not taxable to a foreign Corporation. Marubeni Corporation.] through a Philippine bank as follows: P10 Million in 2010 and P20 Million in 2011. CIR v. Assume that the project was offshore portion of the contract (design and 40% complete in 2010 and 100% complete supply) is not taxable in the Philippines in 2011. FC is not liable to Philippine income based foreign corporation engaged in tax. that the installation part of the project may G. December 18. a domestic corporation. while the installation PCC. the the project which are services performed design and supply contracts were done in within. The question might be Million in 2010 and P40 Million in 2011 too technical for students and expected new and FC paid PCC in foreign currency entrants to tax practice to discern. and installation - [Note: if the examinee answered that the P30 Million). The project with a business profits earned by it pursuant to total cost of P100 Million was completed in our treaty with Singapore are exempt 2011 at the following cost components: from income tax. Global Oil petroleum products. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. how much revenue shall be reported by it in 2010 and in 2011? Explain Foreign Corporate Tax: Situs of Taxation your answer (5%) (2012) SUGGESTED ANSWER: 0 Foster Corporation (FC) is a Singapore- No. the same is sub-contracted to Singapore by FC. be sub-contracted to a local construction Also. machinery and equipment . With respect to the installation of company. (design . 2001).com dbaratbateladot@gmail. corporation in the Philippines (Section supply machinery and equipment.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com subject to the tax not the inbound profits (Section 28(A)(5). Singapore are income from without. NIRC). In supply contracts having been all done in 2010. based on the certificates issued by while the onshore portion (installation) is the architects and engineers working on the taxable invoking the source rules. GOC paid FC as follows: P60 be given full credit. establishment in the Philippines. Since FC works were sub-contracted by FC with has no branch or permanent Philippine Construction Corporation (PCC). NIRC.R. a domestic corporation. awarded an anti-pollution project to Foster hence. it should project. whereby FC shall design. The revenues from the design and construction and installation projects.P50 Million. P20 Million. No.”-Leroy Satchel Paige Page 21 of 125 . 137377. 0 Is FC liable to Philippine income tax. provided 42. and if so. Pursuant to the contract.

000. (Section 33. a law partnership in the Philippines and a VAT-registered for the supervisors and managers.com Fringe Benefit Tax: De Minimis Benefits NIRC as implemented by RR No. During an audit of relatively small value intended to investigation made by the Bureau of promote the health. its employees (rank and file. taxpayer. contending that the sack of rice is considered as Partnership: Income Tax (2013) additional compensation for the rank and file employees and additional fringe benefit (VII) XYZ Law Offices.com dbaratbateladot@gmail. This is a benefit valued at P800 per sack. SUGGESTED ANSWER: What are the tax implications of the payment to XYZ Law Offices in terms of There is no legal basis for the VAT and income taxes? (7%) assessment. (Section amount equivalent to the one sack of rice 2.”-Leroy Satchel Paige Page 22 of 125 . received by all the employees.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the BIR assessed contentment and efficiency of the the company for failure to withhold the employee which will not constitute corresponding withholding tax on the taxable income of the recipient.000 for NIRC. From its total gross income derived from the fringe benefits tax. but every month should be considered as part the e-mail came from California where of the compensation of the rank and file Gainsburg has an office. goodwill.78. Gainsburg has no office in the Philippines and does no subject to tax. supervisors not subject to tax as part of and managers) one sack of rice every month compensation income. a corporation organized under the laws of Delaware. the considering that the value per sack does compensation for services is part of the not exceed P1. likewise.1 (A)(3) of RR No. Nutrition Chippy Corporation gives all the rank and file employees is. The one sack of rice per month given to VIII. hence exempted gross income of the law partnership. 2-98). Internal Revenue (BIR). it has to compute its “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.(5%) deposited the converted amount in the XYZ Law Offices account. the employer should be the one XYZ Law Offices rendered its opinion on the assessed pursuant to Section 33 (a) of the query and billed Gainsburg US$1. managers. Is there a legal basis for the the opinion. within and without. For the supervisors and business in the Philippines. Gainsburg remitted its payment through Citibank which converted assessment made by the BIR? Explain your the remitted US$1 . 10- (2007) 2000). the value of the one sack of rice Gainsburg Corporation.000 to pesos and answer. The one sack of rice given SUGGESTED ANSWER: to the supervisors and managers are considered de minimis fringe benefits For income tax purposes. received a query by e-mail from Therefore.

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

net income in the same manner as a SUGGESTED ANSWER:
corporation. The net income of the
partnership whether distributed or not
will be declared by the partners as part The interest income of Renato, who is a
of their gross income who are to pay the
non-resident, is exempt from income tax
income tax thereon in their individual
capacity. (Sec 26, NIRC) under Sec. 27(D3)(2) NIRC. Any bank
interest of non-residents from an
Personal Income Tax: Accounting Period
(2010) expanded foreign currency deposit
system is exempt from income tax (Sec.
(Xe) True or False. An individual taxpayer
can adopt either the calendar or fiscal 24[B1] NIRC). An expanded foreign
period for purposes of filing his income tax currency deposit refers to any bank
return. (1%)
authorized by the Central Bank to
SUGGESTED ANSWER: transact business in local and acceptable
foreign currencies.
False. (Sec 43, NIRC)
Judy Garcia, who is a resident of the
Philippines, is liable for 7.5% final
Personal Income Tax: Passive Income;
income tax on interest income (Sec.
(Interest Income); Situs of Taxation
24[B1] NIRC).
(2007)

XV. In 2007, spouses Renato and Judy 0 Is the bank correct in withholding the

Garcia opened peso and dollar deposits at 20% final tax on the entire interest income?

the Philippine branch of the Hong Kong Explain. (4%)

Bank in Manila. Renato is an overseas
worker in Hong Kong while Judy lives and SUGGESTED ANSWER:

works in Manila. During the year, the bank No, The bank should withhold only 7.5%

paid interest income of P10,000 on the peso on the final interest income of the wife.

deposit and US$1,000 on the dollar deposit. The husband is exempt.

The bank withheld final income tax
equivalent to 20% of the entire interest
income and remitted the same to the BIR. Personal Income Tax: Passive Income;
(Rental Income); Situs of Taxation (2008)
̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀ
0 Will Z, a non-resident citizen, be liable
ᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ⌀̀ȀĀȀ⸀Ā
to pay income tax on the P45,000 monthly
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Are the interest
rental income? Reason briefly.
incomes on the bank deposits of spouses
Renato and Judy Garcia subject to income
tax? Explain. (4%)

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Page 23 of 125

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SUGGESTED ANSWER: instrument Santino, Johnny's 10-year old
son, as the sole beneficiary. The trustee is
Yes. The rental income from property instructed to distribute the yearly rentals
amounting to P720,000.00. The trustee
located in the Philippines is considered consults you if she has to pay the annual
as income derived from within. Z, a non- income tax on the rentals received from the
commercial apartment.
resident citizen is taxable on income
derived from sources within the a. What advice will you give the
trustee? Explain. (3%)
Philippines. (Section 42 in relation to
Section 23, NIRC). SUGGESTED ANSWER:

I will advise the trustee that she has
Personal Income Tax: Payment by nothing to pay in annual income taxes
Instalment (2010) because the trust’s taxable income is
zero. This is so because the amount of
(Xd) True or False. The Tax Code allows an income to be distributed annually to the
individual taxpayer to pay in two equal beneficiary is a deduction from the gross
instalments, the first instalment to be paid income of the trust but must be reported
at the time the return is filed, and the as income of the beneficiary (Sec 61(A),
second on or before July 15 of the same NIRC).
year, if his tax due exceeds P2,000. (1%)
0 Will your advice be the same if the
SUGGESTED ANSWER: trustee is directed to accumulate the
rental income and distribute the
True. (Sec 56 (A)(2), NIRC) same only when the beneficiary
reaches the age of majority? Why or
Personal Income Tax: Personal why not? (3%)
Exemptions of a Non-resident Alien
(2010) SUGGESTED ANSWER:

(Xh) A non-resident alien who stays in the No. The trustee has to pay the income
Philippines for less than 180 days during tax in the trust’s net income determined
the calendar year shall be entitled to
personal exemption not to exceed the annually is the income is required to be
amount allowed to citizens of the accumulated. Once a taxable trust is
Philippines by the country of which he is
subject or citizen. established, its net income is either
taxable to the trust, represented by the
SUGGESTED ANSWER:
False. (Sec 25 (A)(1) in relation to Sec 35, trustee, or to the beneficiary depending
NIRC) on the provision for distribution of
income following the one-layer taxation
scheme (Sec 61 (A), NIRC).
Trust: Income from Trust (2009)

(XIX) Johnny transferred a valuable 10-door
commercial apartment to a designated
trustee, Miriam, naming in the trust

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 24 of 125

2-2010).com dbaratbateladot@gmail. expense was determined only in 2008. 16-2008. such as purchase of law books. It Isabela Cultural Corporation. Gambino. The share of a partner in the net income Deductions: “All Events Test” (2010) of the GPP must be reported by him as part of his gross income from practice of (IIa) What is the "all events test"? Explain profession and he is allowed to claim briefly. to warrant the inclusion of the income or expense in the gross income or deductions during the taxable year. requires (1) the fixing of a right to the income or liability to pay. because the exact amount of the accordance with its articles of partnership. Gambino is a partner in a general corporation duly paid.”-Leroy Satchel Paige Page 25 of 125 . (2%) further deductions which are reasonable. The expense is deductible in the year depreciation. Deductions: “All-events Test” (2009) G.com Deductions. 172231. car insurance and car No. Gambino. The BIR is wrong in disallowing the claimed in 2007 and not in 2008 (CIR v. the realization of income and expense by an accrual-basis taxpayer. test is considered met if the liability is fixed. Isabela Cultural Corporation. in return. 515 SCRA appears that the general professional 556 (2007)). 12. Atty. Feb.R.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. entertainment expenses. The BIR disallowed the it complies with the all-events test. For the legal Deductions. 0 Corporation claimed this expense as a and distributes the net income to the deduction from gross income in its 2008 partners. The deductions. partnership (GPP) claimed itemized deductions from its gross revenues in arriving at its distributable net income. ordinary and necessary in the practice of SUGGESTED ANSWER: profession and were not claimed by the partnership in computing its net income The “all events test” is a test applied in (Sec 26. No. professional partnership. and (2) the availability of reasonably accurate Exclusions & Inclusions determination of such income or liability. The (IV) Atty. Is YYY's claim of deduction proper? Reasons. (4%) In filing his own income tax return. deductions claimed by Atty. Hence the deduction should have been No. Claimed by a Partner (2013) services rendered in 2007. the law firm billed the corporation only in 2008. The partnership computes its gross revenues. and the amount of such liability to pay is already fixed in 2007 when the Was the BIR correct? (6%) services were rendered. (CIR v. including Atty. Gambino claimed deductions that the SUGGESTED ANSWER: partnership did not claim. and the amount of such liability is determinable with SUGGESTED ANSWER: reasonable accuracy in the same year. Exemptions. 2007) (XII) YYY Corporation engaged the services of the Manananggol Law Firm in 2006 to defend the corporation's title over a property used in the business. claims deductions allowed under the Tax Code. The test “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. NIRC. RR No.

S.S. as deduction from his gross income expense. of casualty loss has no legal basis (Sec U. 16- SUGGESTED ANSWER: 2008. depreciation. In its income tax return.com dbaratbateladot@gmail.S. full time for Nu Skin Products. Sec 34 (A) as implemented by RR No. He receives reasonable and necessary. He regularly uses his own car to distributable net income. One fine day a group of militants seized his the purchase of law books can be car.A. Is MFC correct? Explain. not exceeding 1% of gross income shall be allowed. they are allowed as Explain the legal basis of your tax advice. a resident Filipino allowed under Sec 34(M) referring only to citizen. Consonant maximize his visits even to far flung areas.com ALTERNATIVE ANSWER: in the Philippines. Taxpayers earning compensation income Deductions: Income Tax Withheld by US arising from personal services under an Government (2010) employee-employer relationship are not allowed to claim deduction except that (XVII) In 2009. (Sec 26. withholding tax with respect to a non-resident alien like Caruso. The partner Loss (2010) can further claim deductions from his share in the net income of the (XVI) A is a travelling salesman working partnership provided these are ordinary. RR No. The BIR is wrong in disallowing the deductions because if the partnership Deductions: Non-deductible. Casualty claims itemized deductions. Insofar as entertainment car was completely destroyed after a expenses are concerned only an amount grenade hit it. duly a monthly salary plus 3% commission on substantiated and not yet claimed by the his sales in a Southern province where he partnership in computing its is based. The dividend remitted to Caruso is 34. the amount of income tax withheld in claiming it as an ordinary business U. MFC included the advertising Caruso has the option either to claim expense as deduction from gross income. For the car insurance and car A wants to file a claim for casualty loss. NIRC). 0 What will be your advice to Caruso Maintenance of Goodwill (2009) in order to lessen the impact of possible double taxation on the 0 Masarap Food Corporation (MFC) same income? (3%) incurred substantial advertising expenses in order to protect its brand franchise for SUGGESTED ANSWER: one of its line products.”-Leroy Satchel Paige Page 26 of 125 . NIRC). Caruso. 2-2010. deductions but only to the extent that (3%) the car is used in the practice of profession.S. He was notified the following day by considered as a capital outlay.400 health and/or hospitalization U. 10-2002). received dividend income from a the P2. perforce the claim of Filipino restaurants in the West Coast. (3%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.-based corporation which owns a chain insurance premium.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Deductions: Non-deductible. hence not the police that the marines and the deductible outright but subject to militants had a bloody encounter and his depreciation. A is not entitled to claim a casualty loss because all of his income partake the nature of compensation income. or to claim it as a tax credit (Sec 34 (C )(1)(b). NIRC. with the requirements of deductibility. RR No. subject to U.

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

SUGGESTED ANSWER: year for which the return is made (Sec
34(L), NIRC).
No. The protection of taxpayer’s brand
franchise is analogous to the
maintenance of goodwill or title to one’s Deductions: Premiums for Health
property which is in the nature of a Insurance (2010)
capital expenditure. An advertising
expense as, of such nature does not (Xc) True or False. Premium payment for
qualify as an ordinary business expense, health insurance of an individual who is an
because the benefit to be enjoyed by the employee in an amount of P2,500 per year
taxpayer goes beyond one taxable year may be deducted from gross income if his
(CIR v. General Foods Inc., 401 SCRA gross salary per year is not more than
545 (2003)). P250,000. (1%)

SUGGESTED ANSWER:

Deductions; Optional Standard False. (Sec 34 (M), NIRC)
Deduction (2010)

(Xb) True or False. A corporation can claim
the optional standard deduction equivalent
to 40% of its gross sales or receipts, as the Deductions: Premiums for Life Insurance
case may be. (1%) (2007)

SUGGESTED ANSWER:
X. Noel Santos is a very bright computer
False. (Sec 34 (L), NIRC, as amended by
RA No. 9504) science graduate. He was hired by Hewlett
Packard. To entice him to accept the offer of
Deductions; Optional Standard
Deductions; Irrevocability of Election employment, he was offered the
(2009) arrangement that part of his compensation
would be an insurance policy with a face
(XVI) Ernesto, a Filipino citizen and a
practicing lawyer, filed his income tax value of P20 Million. The parents of Noel
return for 2007 claiming optional standard
are made the beneficiaries of the insurance
deductions. Realizing that he has enough
documents to substantiate his profession- policy. (10%)
connected expenses, he now plans to file an
amended income tax return for 2007, in
0 Can the company deduct from its gross
order to claim itemized deductions, since no
audit has been commenced by the BIR on income the amount of the premium?
the return he previously filed. Will Ernesto
Reason briefly.
be allowed to amend his return? Why or
why not? (4%)
SUGGESTED ANSWER:
SUGGESTED ANSWER:
Yes. The premiums paid are ordinary and
No. Since Ernesto has elected to claim
necessary business expenses of the
optional standard deduction, said
company. They are allowed as a
election is irrevocable for the taxable

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 27 of 125

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail.com

deduction from gross income so long as SUGGESTED ANSWER:
the employer is not a direct or indirect
beneficiary under the policy of No. In order to claim a vanishing
insurance. (Section 36 (A)(4), NIRC). deduction, Sec. 86(A2) NIRC requires
Since the parents of the employee were that the estate tax of the property from
made the beneficiaries, the prohibition Jaime to Assunta has already been paid.
for their deduction does not exist. However, in this case, it is unlikely that
the estate tax has been paid because of
the difference of only one day between

Deductions: Vanishing Deductions (2008) the respective times of death.

VI. While driving his car to Baguio last ALTERNATIVE ANSWER:
month, Pedro Asuncion, together with his
wife Assunta, and only son, Jaime, met an
Yes. Provided that the estate tax of the
accident that caused that instantaneous
property of Jaime was paid before
death of Jaime. The following day, Assunta
Assunta died, as provided for in Sec.
also died in the hospital. The spouses and
86(A2) NIRC. Vanishing deduction equal
their son had the following assets and
to 100% is applicable to Assunta’s estate
liabilities at the time of death:
as regards ½ of the cash she inherited
from her son Jaime. Assunta died within
Properties Assunta Jaime one (1) year after receiving her share of
Jaime’s estate.
Exclusive Conjugal Exclusive

Cash P 10M P 1.2M
Cars P 2M P 500K Exemptions: Gains from Redemption of
Land P 5M P 2M Shares of Stock in Mutual Fund
Company (2010)
Residential P 4M
house
(Xa) True or False. Gains realized by the
investor upon redemption of shares of stock
Mortgage P 2.5M in a mutual fund company are exempt from
payable income tax. (1%)

Funeral P 300K
SUGGESTED ANSWER:
expenses
True. (Sec 32 (B)(7)(h), NIRC)

̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Is vanishing deduction
applicable to the Estate of Assunta
Asuncion? Explain (4%)

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 28 of 125

United States for more than 10 years.-based corporation which owns a chain VI. both Filipino citizens.com Exemptions: Gifts. After the recent wedding of Exemptions: Income from Religious Activities (2009) their son. Explain your answer in not more than two (2) sentences. owners of a residential house and lot in Quezon City.com dbaratbateladot@gmail. Every time he comes back to the Philippines. NIRC). amounting to US$1. for Philippine income tax purposes. 385 (1957)).000 a month. Spouses Jose San Pedro and Clara Philippine income tax. City of Manila. the spouses donated said real property to them. The law classifies the donated religious activities. 101 Phil. (4%) False.S.S. The dividend remitted to Caruso is subject to U. Exemptions: Income Abroad by Non- Resident Filipino (2010) Exemptions: Pensions from Foreign Government Agencies and other (XVII) In 2009. as a balikbayan. there is no San Pedro. Bequests and Devises SUGGESTED ANSWER: (2008) No. Would your answer in A be the same if Caruso became a U.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. and therefore exempt from income infringement of religious freedom which is not allowed under the fundamental tax (Sec. hence.S. Mario. The income from abroad of a non- resident citizen is exempt from the XIV. are the international double taxation on said income (Sec 23. While in the Philippines. a resident Filipino Institutions (2007) citizen. He regularly receives a pension in 2008 and had become from his former employer in the United 5888 non-resident Filipino citizen? Explain the difference in treatment States. he “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.S. He is U. the real property has a fair market value of P2 million. law (American Bible Society v. withholding tax with respect retired and he came back to the Philippines to a non-resident alien like Caruso. Caruso. A law imposing a tax on income of religious institutions derived from the sale of religious articles is valid. (5%) 0 Are Mario and Maria subject to income tax for the value of the real property SUGGESTED ANSWER: donated to them? Explain.”-Leroy Satchel Paige Page 29 of 125 . 32[B3] NIRC). At the I (D) True or False. The imposition of a tax on income of a religious institution property as an exclusion from income from sale of religious articles is an tax. Congress can pass a law taxing income of religious institutions from its property or activities used for profit but SUGGESTED ANSWER: not for their income from exercise of No. with his pension (3%) pay from his former employer. Z is a Filipino immigrant living in the of Filipino restaurants in the West Coast.A. time of donation. received dividend income from a U. to Maria. immigrant month. he stays here for about a a.

com purchased three condominium units in during their marriage a residential house Makati which he is renting out for P15. spouses have only one (1) minor child.000 for one minor child) subject to the Philippine income tax. (Section 32 (B)(6)(c). Accordingly.000 & NIRC). 0 Is Mrs.00. he was immediately brought to the hospital because of a heart The pension is not taxable. is an income from Yes. agencies and other institutions.000 pension become is the President of PG Corporation and he taxable because he is now residing in the receives P50. The Philippines? Reason briefly.000 without being in the nature of (Rental Income P300. Spouses Pablo Gonzales and Teresita Gonzales. Mr. With no liabilities. the pension is not P25. acquired “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. The law attack and he was pronounced dead on provides that pensions received by June 30.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.00 salary per month. Teresita Gonzales required to file income tax return for 2010? IF so.S.000.000 & Salary compensation for past services rendered P300. (5%) only on income derived from the Philippine sources. both resident citizens.000). NIRC).000 and lot located in Makati City. (Section 23. which is a month each.com dbaratbateladot@gmail. private or public. Income to be declared: P600. SUGGESTED ANSWER: His pension from U. how Exemptions: Personal & Additional much income must she declare for the Exemptions (2012) year? How much personal exemption is she entitle to? Explain your answer. income tax return for 2010? IF so.”-Leroy Satchel Paige Page 30 of 125 . Pablo Gonzales 0 Does the US$1.000 (Basic of P50. (5%) V. (Section 42.000. Personal and Additional outside the Philippines. are excluded from gross 0 Is Mr. NIRC). the resident or nonresident citizens of the estate of the late Pablo Gonzales was settled Philippines from foreign governments extra-judicially in early 2011. Exemption P75. Pablo Gonzales required to file income. how much income must he declare for the year? ALTERNATIVE ANSWER: How much personal and additional Z is still considered as a nonresident exemption is he entitled to? Explain your Filipino citizen who is subject to tax answer.(5%) being leased to a tenant for a monthly rental of P100. 2010. In SUGGESTED ANSWER: late June 2010.

the loss of life. is the sister of Eduardo Santos. (5%) compensation for personal injuries and for damages sustained on a account of SUGGESTED ANSWER: such injuries.000 representing his interest in heir. Edgardo as his income. hence. is not considered as an Exemptions: Proceeds from Accident income but a mere return of capital. Antonia Santos. NIRC).com SUGGESTED ANSWER: were able to agree to a total settlement of P10 Million. Rafferty 38 Phil. She died in an airplane crash. (Section No. because the estate is not under judicial settlement. is compensatory in nature.000) earned after death is not included in the SUGGESTED ANSWER: return of the parent pursuant to Section The P10M should not be reported by 51(E) of the Tax Code. This is what Antonia would Yes. The share of the minor Reason briefly. how much income must it amount received from the accident declare for the year? How much personal insurance covering the passengers of the exemption is it entitled to? Explain your airline company and is in the nature of answer. Edgardo was her only P300. The income of the properties ALTERNATIVE ANSWER: is taxable to the heirs in their individual capacity in accordance with their No. gainfully capital. Insurance (2007) Income is any wealth which flows to the taxpayer other than a mere return of VII.000 have earned as somebody who was share for January to June 2010 & gainfully employed. It has acquired no tax personality 32(B)(4).”-Leroy Satchel Paige Page 31 of 125 .000 (P300. [1918]). (10%) the income from the properties 0 Should Edgardo report the P10 Million comprising the estate for the period July as his income being Antonia‟s only heir? to December).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail. The P10M having been received for respective interest in the inheritance. The amount received in a settlement agreement with ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᔀĀĀȀȀȀ⠀ Ȁ Ā⤀ ĀᜀĀᜀĀᜀĀᜀĀᜀ the airline company and insurance ĀᜀĀᜀ3 Is the Estate of the late Pablo company is an amount received from the Gonzales required to file income tax return accident insurance company is an for 2010? If so. 30 years old. which is excluded from the gross income of the recipient. 414 employed. Rental Income P600. (Madrigal v. Edgardo is a lawyer and he negotiated with the Airline Company and insurance company and they “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. child in the rental income (P300.

.

The SUGGESTED ANSWER: current fair market value is the higher between the zonal No. However. The total zonal value of the Packard. He seeks your advice on how much income tax he would pay if he sells science graduate.000 and the fair market value per the tax declaration is P2. arrangement that part of his compensation What material considerations will you take would be an insurance policy with a face into account in computing the income tax? value of P20 Million. The parents of Noel Please explain the legal relevance of each of these considerations.000.”-Leroy Satchel Paige Page 32 of 125 . he was offered the He intends to sell it for P6. Mr.000. policies paid to the heirs of beneficiaries 1 The gross selling price of the upon the death of the insured are not property.000. (Sec 24 (D)(1).com Exemptions: Life Insurance (2007) residence. Conditions comply with the following conditions: (2013) 0 He must utilize the proceeds (XI) In 2000. The proceeds of life insurance value and the fair market value per tax declaration. It is now year 2013 and he is thinking of selling the property to buy a X. final capital gains tax.500. NIRC). 2 Determination of the tax base included as part of the gross income of which is the higher between the recipient. since the property to be sold is a principal residence and the purpose is Capital Gain Tax to buy a new one. nothing flows to Noel’s parents other The income tax is computed as 6% of than a mere return of capital. the gross selling price and the current fair market of the There is no income realized because property. Belen that the sale can be exempt from 6% capital gains tax if he is willing to Exemption of Family Home. 0 The current fair market value of the property to be sold. the capital the tax base which is in the nature of a being the life of the insured. To entice him to accept the offer of property isP5. (Section 32 (B)(1). (10%) SUGGESTED ANSWER: 0 Will the proceeds of the insurance form Since the planned sale involves a real property classified as a capital asset. He was hired by Hewlett the property. employment.000. (7%) are made the beneficiaries of the insurance policy. Noel Santos is a very bright computer new one. He used the principal residence within 18 property as his and his family's principal “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.com dbaratbateladot@gmail. Belen bought a residential of sale acquiring a new house and lot for P1. NIRC). the part of the income of the parents of Noel material considerations to take into and be subject to income tax? Reason account to compute the income tax are: briefly.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000. I will advise Mr.000.

com months from the date of SUGGESTED ANSWER: disposition.”-Leroy Satchel Paige Page 33 of 125 . If he complies with the utilization V. Juan Gonzales a recomputation of the taxes due by using agreed to exchange his agricultural lot in the fair market value appearing in a nearby Laguna for a one-half hectare residential bank‟s valuation list which is practically property located in Batangas. The RDO market value of P10 million.com dbaratbateladot@gmail. Accordingly. refused to (2008) issue the Certificate Authorizing Registration for the reason that based on I. Juan must pay final income tax of b. He should notify the Commissioner of his intention 6% of the gross selling price or the fair to avail of the exemption market value. owned by also wanted to assess a donor‟s tax on the Alpha Corporation. the RDO wanted to make traversing the property. 24[D1]. what is 0 Does the RDO have the authority or discretion to unilaterally use the fair the tax base and rate? Explain (3%) market value as the basis for determining “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Alpha Corporation acquired the value appearing in a nearby bank‟s valuation property in 2007 for P9 million. with a fair double the existing zonal value. and with a zonal valuation of P1. Yes. 13-99). the deposit will be property has been classified as residential applied against the capital gains tax due.000. Bulacan to XYZ Corporation. The capital gains tax was Exchange of Real Property by an paid based on the zonal value. list. In January 1970. c. The otherwise. (Sec 24 (D)(2). The Revenue Individual and Domestic Corporation District Officer (RDO).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Malolos. ABC Corporation sold a real property in requirement he will be entitled to get back his deposit. (10%) 0 Is Juan Gonzales subject to income tax on the exchange of property? If so. a domestic corporation difference between the selling price based engaged in the purchase and sale of real on the zonal value and the fair market property. He should open an escrow account with a bank and deposit the 6% capital gains Fair Market Value (2007) tax due on the sale. however. within 30 days from date of sale. whichever is higher (Sec. Juan Gonzales bought his ocular inspection the property should one hectare of agricultural land in Laguna have a higher zonal valuation determined for P100. This property has a current by the Commissioner of Internal Revenue fair market value of P10 million in view of because the area is already a commercial the construction of a concrete road area.000 per NIRC) square meter. NIRC. and RR No.

A deemed gift subject to tax arises only if a tax is No. because the use of a fair Laguna for a one-half hectare residential market value other than that prescribed property located in Batangas. the The fair market value as determined by seller cannot avoid any tax by selling his the Commissioner (referred to as zonal property below its fair market value. The RDO has no authority to use a avoided as a result of selling a property fair market value other than that at a price lower than its fair market prescribed in the Tax Code. property subject to the 6% capital gains The use of the fair market value tax.com dbaratbateladot@gmail.”-Leroy Satchel Paige Page 34 of 125 . value). NIRC). or (2) the fair market value as This means that the deemed gift shown in the schedule of values of the provision provided for under the Tax provincial and city assessors (FMV per Code will not apply to a sale of real tax declaration). engaged in the purchase and sale of real “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. therefore. Ordinary Asset (2008) 0 Should the difference in the supposed I. Alpha Corporation. The difference in the supposed traversing the property. NIRC). In a sale subject to the 6% capital market value prescribed for the gains tax. shall be. (Section 6(E). owned by computing any internal revenue tax. The fair value. for P100. Juan Gonzales taxable value cannot be legally subject to agreed to exchange his agricultural lot in the donor’s tax. and therefore. NIRC).This property has a current SUGGESTED ANSWER: fair market value of P10 million in view of the construction of a concrete road No. because the sale is not for SUGGESTED ANSWER: an insufficient consideration. Capital or taxes. whichever is the higher of: (1) whichever is higher. is not allowed for purposes of computing internal revenue Nature of Real Properties.000. appearing in a nearby bank’s valuation list. with a fair by the Tax Code is not allowed for market value of P10 million. In January 1970. (Section 100. the tax is always based on the computation of any internal revenue tax gross selling price or fair market value.com the capital gains tax and not the zonal ALTERNATIVE ANSWER: value as determined by the Commissioner The difference in value is not subject to of Internal Revenue? Reason briefly. Juan Gonzales bought taxable value be legally subject to donor‟s tax? one hectare of agricultural land in Laguna Reason briefly. donor’s tax. a domestic corporation (Section 6(E).

NIRC). and RR No. 7-2003). pay from his former employer. tax.com property.(5%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. (Section 24-28 and 196. If these properties. (Section 24(D). Every time he comes back to the Philippines. Purchase of Condominium (2007) ALTERNATIVE ANSWER: VI. the purchase of the three United States for more than 10 years. He is condominium units is subject to the retired and he came back to the Philippines following taxes: as a balikbayan.com dbaratbateladot@gmail. 24[D1].”-Leroy Satchel Paige Page 35 of 125 . purchased three condominium units in 1 Documentary stamp tax (Section Makati which he is renting out for P15.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.capital asset or ordinary Yes. 0 held for sale to customers in the NIRC). he NIRC).000 a month. corporations who hold them as capital is an ordinary asset because it is either assets. he stays here for about a 0 Capital gains tax. (3%) capital gains tax imposed on the sale of real property and the documentary SUGGESTED ANSWER: stamp tax on conveyance of real With regard to the Laguna property. otherwise. with his pension income tax (Section 24-28. a month each.000 196. if these units are acquired a capital asset because it is agricultural from individual unit owners or domestic land. He regularly receives a pension capital assets by the seller from his former employer in the United (Section 24(D) and 27(D)(5). to the imposition of the regular income 39[A1]2 NIRC. the regular While in the Philippines. The purchase will be subject to the asset? Explain. if held as month. States. 27(D)(5) and 196. NIRC). 0 What is the nature of the real SUGGESTED ANSWER: properties exchanged for tax purposes . amounting to US$1. value added tax and documentary stamp tax. however were ordinary course of business or (2) real acquired from dealers and/or lessors of property used in the trade of business of real property the purchase will give rise a realtor like Alpha Corp (Secs. it is property. condominium units subject to any tax? Reason briefly. Alpha Corporation acquired the 0 Is his purchase of the three property in 2007 for P9 million. Z is a Filipino immigrant living in the Yes. in contrast. The Batangas property. NIRC).

bought shares of stock of a documentary stamp tax. not taxes but merely part of the purchase price if. citizen residing The purchase is only subject to the in Makati City. The capital gains tax is due on the sale if a real [Note: Value-added tax and documentary property classified as a capital asset (Sec 24(d)(1). It is requested that full credit be given even if these two taxes are not mentioned in the answer. 0 If John McDonald directly sold the shares to his best friend.00. to defray the cost of the medical expenses of her sick son.com dbaratbateladot@gmail. other than the documentary Exchange at the price of P2 million. 300-square-meter lot. NIRC).00.000. stamp taxes are outside the coverage of the BAR Examination. on cash basis. and 10% for any amount in excess of Is Melissa liable to pay capital gains tax on P100. a tax that is imposed indifferently on the parties to a domestic corporation whose shares are transaction (Section 173 and 196.000.”-Leroy Satchel Paige Page 36 of 125 .00 per 5% on first P100. why not? (4%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. the economic incidence can be shifted to him. If not. citizen residing in Sale of a Capital Asset (2010) Makati.LGC).000.] Sale of Shares of Stock Not Traded in the Local Stock Exchange (2008) ANOTHER ALTERNATIVE ANSWER: X. at a gain of P200. is he 0 (A) Melissa inherited from her father a liable for Philippine income tax? If so. a U.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. NIRC).000. are the legal liabilities of the Yesterday.00) and fair market value of real estate developers or lessors the real property (P900. On February 28.00) or a tax of real property. square meter. in the amount if P54. John McDonald. stamp tax. these taxes are a gain of P200. and Yes. listed and traded in the Philippine Stock Other taxes that may be due on the transaction. Local transfer tax (Section SUGGESTED ANSWER: 135.000.S.00.000 net capital gain (Sec. by the nature of the tax.S.000. how much and why? NIRC). To the purchaser. the what is the tax base and rate? (3%) property was valued at P720. He is liable for a final income tax of prevailing market value of the property at the time of the sale was P3.000. The capital gains tax is 6% of the 0 Value-added tax if acquired from higher value between the selling price (P600. he sold the shares of stock seller which cannot be considered as a tax on the purchase but a tax on the through his favorite Makati stockbroker at sale.24[C] the transaction? If so. The Yes. 1995. 1996. who is another U. At the time of her father's death on March 14.com iii. she sold SUGGESTED ANSWER: the lot for P600.000 net capital gain.000.

how much is Sale of Shares of Stock Traded through the income tax due on the transaction and the Local Stock Exchange (2008) when must the tax return be filed and the X. Antonio market value (FMV). NIRC).276. He purchased a parcel of land in P1.276. Castillo agree to sell the land to Mr. The GSP is P20 Ayala. another Filipino citizen. The tax P1 Million. He should file the return within income tax on the sale of his shares 30 days from date of the sale (date of through his stockbroker? Is he liable for notarization) and shall pay the tax as he any other tax? (3%) files the return (Section 24(D). the land.74 which is computed as 6% Makati City in 1970 at a consideration of of the Gross Selling Price (GSP). following the doctrine of buy the same for P20 Million.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Yesterday.”-Leroy Satchel Paige Page 37 of 125 . Other Percentage Taxes subject to the condition as stated in the Deed of Sale that the buyer shall assume the capital gains tax thereon. The Assessor constructive receipt of income or a total of Makati City re-assessed in 2011 the of P21.com Tax Rate. Selling Price of the Property which is P20 Million plus the CGT assumed by the 0 Is John McDonald subject to Philippine buyer.000.com dbaratbateladot@gmail. a U. John McDonald.S. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. In 2011. higher than the FMV of P20 Million. citizen residing tax be paid by the taxpayer? Explain your in Makati City. Ayala in 2012 for P20 Million. bought shares of stock of a answer.74. which amount is property at P10 Million. which base of the 6% capital gains tax (CGT) is remained undeveloped and idle had a fair the higher between the GSP and the fair market value of P20 Million. is very much Million plus the CGT to be assumed by interested in the property and he offered to the buyer.595.595. Jose Castillo is a resident Filipino The income tax due on the transaction is citizen. (5%) domestic corporation whose shares are listed and traded in the Philippine Stock SUGGESTED ANSWER: Exchange at the price of P2 million. he sold the shares of stock He shall be liable to pay the 6% capital through his favorite Makati stockbroker at gains tax (CGT) based on the Gross a gain of P200. Mr. Period to File Return (2012) ANOTHER SUGGESTED ANSWER: 0 Mr. 0 Should Mr.

”-Leroy Satchel Paige Page 38 of 125 . capital asset or ordinary asset? Explain your answer. 7717. or property new car worth P2 Million and he traded in held by the taxpayer primarily for sale to his old car with a market value of customers in the ordinary course of his P800.com dbaratbateladot@gmail. now incorporated in Sec. Mr. P700.00. The old the trade or business. in 0 What is the nature of the old car – lieu of any kind of income tax. (5%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. was donated by him and trade or business of the taxpayer registered in the name of his son.000. but is not stock in trade of the company in the country and in 2010. to pay income tax on the gain from (2%) the sale of his old car? Explain your answer. of a character car. Aguirre? Explain your answer. With more responsibilities comes inventory of the taxpayer if on hand at higher pay. a resident citizen.00. corresponding donor‟s tax thereon was duly paid by the father.2 Million to the car company. R. ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀ ᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀Ā 0 How much is the cost basis of the old ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Is Mr.A.com SUGGESTED ANSWER: SUGGESTED ANSWERS: No.000. Pedro Aguirre. he taxpayer or other property of a kind was promoted to Vice-President of the which would properly be included in the company. NIRC). Aguirre liable car to Mr. or property used in P1. It is property held by the taxpayer (whether IV. The (Section 39. he decided to buy a the close of the taxable year. which was bought three (3) years ago which is subject to the allowance for by the father of Mr. is or not connected with his trade or working for a large real estate development business). (3%) Estate & Donor’s Taxes SUGGESTED ANSWERS: Donor’s Tax: Capital or Ordinary Asset (2012) The old car is a capital asset. The basis of the property in 127 of the NIRC. In 2011. and paid the difference of trade or business. NIRC) stock exchange is subject to a percentage tax on the sales of shares. or real property used in of P700. Pedro Aguirre at a price depreciation. provides that the sale the hands of the donee is the carry-over of shares of stock traded in the local basis (Section 40 (B)(3).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000.

The Congregation of the Mary Immaculate If so. in favor of the the gift? Explain. Capital gain is P100. the real property has a Donor’s Tax: Exemptions. Gifts in favor of an educational of the gift (Sec. NIRC) to be married to a Filipino girlfriend. Religious Institutions (2007) 0 Are Jose and Clara subject to donor‟s tax? XI.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. At the time of donation.”-Leroy Satchel Paige Page 39 of 125 . organization. or cultural P890. both Filipino citizens.000. NIRC). donated said real property to them. a citizen and resident of Mexico. Yes. a non-resident alien. After the recent wedding of applies only to a donor who is either a citizen or resident of the Philippines their son. because the value of the gift (5%) exceeds P10. Mexico does not impose any transfer tax of whatever nature on all gratuitous transfers of property. accredited non-government 2-15%. SUGGESTED ANSWER: However. how much is the taxable gift of each donated a land and a dormitory building spouse and what rate shall be applied to located along España St.com SUGGESTED ANSWERS: Donor’s Tax: Dowry Exclusion (2009) XV Miguel. social shall be liable for a taxable gift worth welfare corporation. trust or philanthropic organization or research institution or “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Donor’s Tax: Donation to Relatives 0 Is Miguel entitled to claim a dowry (2008) exclusion? Why or why not? (3%) XIV.com dbaratbateladot@gmail. Each spouse and/or charitable. Donations for fair market value of P2 million. a group of nuns operating a free clinic and high school SUGGESTED ANSWER: teaching basic spiritual values. Mario.000 each at the progressive rate of institution.000. Spouses Jose San Pedro and Clara SUGGESTED ANSWER: San Pedro. the holding period of the asset (Section who is residing in the Philippines and about 39. to his legitimate son. a Mexican company.00 worth of stocks in amount of the taxable gain is subject to Barack Motors Corporation. religious. Is the donation subject to donor‟s tax? Reason briefly. 101 [A1] NIRC).99[B] NIRC). the spouses (Sec 101(A)(1). are the Miguel. Miguelito. Yes. they are each entitled to a deduction of P100. (4%) Sisters of the Holy Cross.000 (Sec. since the donee is a relative. to Maria. is not owners of a residential house and lot in allowed any dowry exclusion.000 for the net value No. The dowry Quezon City. The donated US$1.

hence. who is residing in the Philippines being the case. his wife donated is a property not situated in the renounced her inheritance and her share of Philippines. Such Miguelito. Mexico does not impose any general renunciation in favor of the transfer tax of whatever nature on all other co-heirs.00 worth of compulsory heir renounced his share in stocks in Barack Motors Corporation. DA Why or why not? (3%) (DT-039) 396-09. the heir renouncing his gratuitous transfers of property. NIRC). the law on accretion Donor’s Tax: “Reciprocity Rule” (2009) applies and the property waived is considered to pass through the other co- heirs by inheritance. that. In both cases. when the Mexico. not more than 30% of the gifts are used for SUGGESTED ANSWER: administration purposes. If it is not a girlfriend. The donation is not subject to the Philippine donor’s tax because the donor (IX) In the settlement of the estate of Mr. donated US$1.”-Leroy Satchel Paige Page 40 of 125 . This is designed to (7%) reciprocate the exemption from donor’s tax granted by a foreign country to Filipinos who are not residing thereat. 2-2003). one of the compulsory heirs. The BIR determined that there by a non-resident alien is an intangible was a taxable gift and thus assessed Mrs.5%) donor’s tax. he did not donate the Mexican company. The BIR is correct that there was taxable Donor’s Tax: Renunciation of Shares gift only insofar as the renunciation of the (2010) share of the wife in the conjugal property is concerned. SUGGESTED ANSWER: (Sec 104.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. provided.000. This is a transfer if property (XV)(d) If X. 2009). (RR Mo. (Section 101 (A)(3). Undoubtedly. The rule of reciprocity the conjugal property in favor of their applies only if the property transferred children. is there any tax and this qualifies as a taxable gift. right is considered to have made a donation and the renunciation is subject 0 Is Miguel entitled to the rule of to donor’s tax. a citizen and resident of implication. SUGGESTED ANSWER: Donor’s Tax: Renunciation of Shares (2013) No. a the inheritance. NIRC). personal property situated in the Barbera as a donor. the renunciation is not and about to be married to a Filipino subject to the donor’s tax. The donation If the renunciation is a general being in the nature of a real property renunciation such that the share of the complies with the utilization heir who waives his right to the inheritance goes to the other co-heirs in requirement. however. to his legitimate son. accordance with their respective interest in the inheritance. dated July 23. is non-resident alien and the property Barbera who died intestate. it has no tax (XV) Miguel. reciprocity in order to be exempt the renunciation has no tax implication from the Philippine donor's tax? to the other co-heirs (BIR Ruling No. property which did not become his.com dbaratbateladot@gmail. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. without consideration which takes effect renounces his share in the inheritance in during the lifetime of the transferor/wife favor of the other co-heirs.com organization are exempt from the implication of X‟s renunciation? What about the other co-heirs? (2. Was the BIR correct? Philippines.

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. This is what Antonia would Internal Revenue to give him one year to have earned as somebody who was pay the estate tax due. he asked the Commissioner of P10 Million. Rodolfo was her only employed. (Section 88. over its disposition.(10%) provided that the estate tax be computed on the basis of the value of the property at 0 Is the P10 Million subject to estate tax? the time of payment of the tax. The P10M is not a property existing as of No.com But the renunciation of the wife‟s share it the Law and Jurisprudence. is the sister of Eduardo Santos. 2007. Because he needed to sell Company and insurance company and they one unit of the condominium to pay for the were able to agree to a total settlement of estate tax. hence. (Definition of Estate Tax p. Vitug. Compendium of Tax “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Third Revised inheritance during the settlement of the Edition). Edgardo is a 2006 and filed the estate tax return on lawyer and he negotiated with the Airline March 30. NIRC). the estate tax cannot be imposed thereon. (BIR Ruling DA No. Edgardo was her only approved the request for extension of time heir. Since the privilege No other valuation date is allowed by to transmit the property is not exercised law. 0 Does the condition that the basis of the SUGGESTED ANSWER: estate tax will be the value at the time of No. Remedios. 333-07) XII. gainfully at P5 Million each. by the decedent. 184. She died leaving three Estate Tax (2007) condominium units in Quezon City valued VII. estate is not a taxable gift considering that the property is automatically transferred to the other heirs by operation of law due to Estate Tax: Basis of Computation (2007) her repudiation of her inheritance. 2006. The Commissioner gainfully employed. it comprising the estate of a decedent is cannot be said that she exercised control the fair market as of the time of death. (10%) Reason briefly. She died in an airplane crash.com dbaratbateladot@gmail. died on November 10. 30 years old. The valuation of properties the time of decedent’s death.”-Leroy Satchel Paige Page 41 of 125 . heir. controlling the disposition of her SUGGESTED ANSWER: properties to take effect upon her death. a resident citizen. The estate tax is a tax on the the payment have legal basis? Reason privilege enjoyed by an individual in briefly. He reported her death on December 5. Antonia Santos.

the administrator of the estate and November 10. among others. the value should have been P20 P20 million. He bought the said real property Payment (2007) for P2 million fifty years ago. Rodolfo was her only agricultural lands in Sta.com dbaratbateladot@gmail. As a result. a well-known real estate development Estate Tax: CIR’s Power to Extend company. Remedios. She died leaving three SLC jointly announced their big plans to condominium units in Quezon City valued start conversion and development of the at P5 Million each. 2008. 88[A] NIRC). died on 2008. a 100-hectare agricultural land in Sta. implemented with Star Land Corporation (SLC). 88[A] Venture Agreement about to be NIRC). After approved the request for extension of time 9 months. one unit of the condominium to pay for the The Administrator of the Estate of Jose estate tax. he asked the Commissioner of Cernan filed the estate tax return on Internal Revenue to give him one year to January 9. by including in the gross pay the estate tax due. a resident citizen. 2006. The BIR is not correct. Filipino to use for estate tax purposes? Explain (3%) citizen. For purposes of computing the estate Laguna with current fair market value of tax. died in a vehicular accident in NLEX on July 10. the prices of real March 30. 2007. Rosa. which was the subject matter million because that was the value of the of a Joint property at the time of death (Sec. He reported her death on December 5. into first-class residential and commercial 2006 and filed the estate tax return on centers. what is the correct value ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Jose Cernan. married to Maria Cernan. the time of payment of the tax. . by valuing the real on the basis of the value of the property at property at P40 million. On January 5. Because he needed to sell properties in the locality have doubled. The property valuation should be fixed at P20 million. ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀Ā ᜀĀᜀĀᜀĀᜀ ĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā 0 If you disagree. heir. Rosa. XII. the BIR issued deficiency estate provided that the estate tax be computed tax assessment.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. (10%) 43(A) Is the BIR correct in valuing the real property at P40 million? Explain (3%) 0 Does the Commissioner of Internal Revenue have the power to extend the SUGGESTED ANSWER: No. The Commissioner estate the real property at P2 million. SUGGESTED ANSWER: 2007. Laguna. The spouses owned.com Estate Tax: Basis of Computation (2008) which was the value at the time of the death of Jose Cernan (Sec.

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige Page 42 of 125 .

”-Leroy Satchel Paige Page 43 of 125 . The will also granted Zandro the power to appoint his wife. In 2001. (2. NIRC). and Wilma succeeded to the finding that the payment on the due property. Estate Tax: Composition of Gross Estate (2009) NIRC). Xavier bequeathed allowed are: (1) a request for extension the painting. Yuri. XIII (A) In 1999. as successor to the painting in the months from death.5%) extension of time to pay the estate tax if SUGGESTED ANSWER: the payment on the due date would All the properties and interests impose undue hardship upon the estate enumerated in the problem should be or any of the heirs. NIRC). to must be filed before the expiration of the his only son. be of the heirs.com payment of estate tax? If so.00.000. The Commissioner may allow an decedent? Explain. existing as of the time of death and to be “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Zandro. what are the Estate Tax: Composition of Gross Estate (2008) requirements to allow such extension? (XV(a)) What are the properties and SUGGESTED ANSWER: interests that should be included in the computation of the gross estate of the Yes. The Commissioner may also has thereon at the time of his death (Sec 85. The extension. The composition of a gross any case. (3%) for a period of not exceeding 5 years if SUGGESTED ANSWER: the estate is settled judicially or 2 years if settled extra judicially. a painting for P500.com dbaratbateladot@gmail. tangible or intangible. (Section 91 (B). original period to pay which is within 6 Wilma. require the posting of a bond to secure the payment of the tax. Xavier died.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.5-million. Xavier purchased from his ALTERNATIVE ANSWER: friend. (Section 91(B). (3) the extension must be subject to estate tax? Explain. will not exceed two years if the estate of a decedent who is a citizen of estate is not under judicial settlement of the Philippines includes all properties. The composition of the gross double the amount of tax to secure the estate pertains to properties owned and payment thereof. The requirements to be complied Yuri paid all the corresponding taxes on the with so that an extension may be transaction. wherever situated five years if it is under judicial and to the extent of the interest that he settlement. The fair market value (FMV) of the painting at the time of the purchase was P1-million. Zandro died in 2007. and (4) the Yes. In his last will and testament. date of the estate tax would impose undue hardship upon the estate or any Should the painting be included in the gross estate of Xavier in 2001 and thus. already worth P1. (2) there must be a event of Zandro's death. The transmission of the property from Xavier to Zandro is subject to the Commissioner may require the posting estate tax because this is a property of a bond in an amount not exceeding within Xavier’s control to dispose upon his death. in included in the gross estate if the decedent. Yes.

000. or a assets of total allowable deduction of P10. (5) family home Claims against a equivalent to its fair market value (not to exceed P1 million) of P800. (4) Claims against the appliances 1. 000. and cousin who has 0 standard deduction of P1 million. although included in the in ABC Corp.000.000.000 professional fees.000.000.000. NIRC). Likewise.500. (3) medical expenses not to furniture and exceed P500. the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.700. NIRC). You oblige: Car which is 0 What is the net taxable estate of the being used by decedent? Explain.000 the estate 300.000 The claim against the cousin amounting Shares of stock to P100. Specifically.5%) his brother in Cavite 500.com dbaratbateladot@gmail.000 deduction because the debtor is not yet declared insolvent.000 and P3. they request inherited from you to explain and discuss with them the his father following questions. single but head of the family. The expenses and charges on the estate are as follows: Estate Tax: Deductions Allowed to Estate of a Resident or Citizen (2008) Funeral Expenses P 250.000 200.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000 estate of P300. and resident of Pasig City.300.000 which is the maximum allowed Household by law. (2) legal fees amounting to P500.00.000 (family home) in Claims against Pasig P 800. From the gross estate of estate as P7 million the following deductions are irrevocable allowed: (1) funeral expenses of P beneficiary 1. USA 1.000 100. He estate 500. a gross estate.000 Legal fees for the (XV) Don Sebastian.000 approach you and seek your assistance in Agricultural land the settlement of his estate for which they in Naic. 2009. settlement of the died intestate on November 15. (2.000. Cavite have agreed to the above-stated which he 2.”-Leroy Satchel Paige Page 44 of 125 . cannot be claimed as a domestic 100.000 SUGGESTED ANSWER: Proceeds of life insurance where The net taxable extent of the decedent is he named his P3.00 (Sec 86. liabilities of P100.com transferred by the owner by death (Sec enterprise 85.000 Vacation house and lot in The compulsory heirs of Don Sebastian Florida.000.000 left the following properties and interests: Medical expenses of last House and lot illness 600. Filipino.000.

While driving his car to Baguio last is no estate tax liability. Exemptions. Jaime. Assunta 0 Mr.000. Yuri.2M Cars P 2M P 500K SUGGESTED ANSWER: Land P 5M P 2M No. Xavier purchased from his No. Pedro Asuncion. 75 years old and suffering from an incurable disease. month. Transmission from the First Heir. He died one year later. these properties should not form part of the decedent’s gross estate. Is the BIR correct? (7%) Cash P 10M P 1. Therefore. met an Sufficient Consideration (2013) accident that caused that instantaneous death of Jaime.”-Leroy Satchel Paige Page 45 of 125 . Since the house and lot expenses were sold for valuable and sufficient consideration. 86 [A5] “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.000 (Sec. Legatee or Donee in SUGGESTED ANSWER: favor of another beneficiary (2009) XIII (B) In 1999.com dbaratbateladot@gmail. to exceed 5% sufficient factual basis (Sec 86. the result of a Resident or Citizen (2008) is a negative net estate. together with his Estate Tax: Exemptions. By availing of the standard friend. and medical expenses not more than Estate Tax: Deductions Allowed to Estate P500. funeral expenses not exceeding vanishing deduction for want of P200. Mortgage P 2. there VI. 86[A1a] NIRC). 0 Is the Estate of Jaime Asuncion liable for estate tax? Explain. Agustin. Agustin's estate.com inherited property cannot give rise to a NIRC). Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. (4%) Estate Tax. there is no transfer in contemplation of death for estate tax purposes.00. Properties Assunta Jaime the BIR argued that the house and lot were transferred in contemplation of death and should therefore form part of the gross Exclusive Conjugal Exclusive estate for estate tax purposes. liabilities at the time of death: In the settlement of Mr. the transfer must be either without consideration or for insufficient Funeral P 300K consideration. of the gross estate (Sec. 86[A6] NIRC). The house and lot were not Residential P 4M transferred in contemplation of death house therefore. decided to sell also died in the hospital. Transfer with wife Assunta. and only son. The following day.5M To qualify as a transfer in contemplation payable of death. NIRC). The fair market value (FMV) of the painting deduction of P1 million (Sec. (Sec 85 (B).000 and in no case. a painting for P500. NIRC). The spouses and for valuable and sufficient consideration a their son had the following assets and house and lot to his son.

hence. Zandro the power to appoint his wife.5-million. Commissioner may require the executor. already worth P1. as successor to the painting in the event of Zandro's death. to subject to estate tax (Sec 85(D). or the beneficiary to ALTERNATIVE ANSWER: furnish a bond in an amount not more than double the amount of estate tax No. The will also granted Zandro the power to appoint his wife.com at the time of the purchase was P1-million. In 2001. Zandro died in 2007. The filing of the return and payment of Should the painting be included in the the tax is within 6 months from date of gross estate of Zandro in 2007 and thus. This being so. Xavier bequeathed (XV)(c)When is the due date for filing and the painting. The grantee of the power XIII (C) In 1999. Zandro. The his death will not apply. or administrator. The No. be death following the pay-as-you-file subject to estate tax? Explain. under what conditions or requirements? Wilma. Yuri. In his painting should not be included in the last will and testament. already worth P1. Estate Tax: Period for Filing and Yuri paid all the corresponding taxes on the Payment (2010) transaction. a painting for P500.5%) event of Zandro's death. Wilma. Zandro. has no control over friend.5-million. NIRC). The property passes from Zandro to due (Sec 91. and Wilma succeeded to the SUGGESTED ANSWER: property. In 2001.00. to payment of the applicable tax return and his only son. the transaction. payment of the estate tax may also be legatee or donee in favor of another extended when the Commissioner finds beneficiary. hence. The period to file return is extendible for a maximum of 30 days SUGGESTED ANSWER: under meritorious cases as maybe determined by the Commissioner. The period control over the disposition of the of extension to pay shall not exceed 5 property at the time of his death. Xavier died.com dbaratbateladot@gmail. Wilma by virtue of the special power of appointment granted by Xavier. NIRC). NIRC). or shall not exceed 2 years if privilege of transmitting properties upon settled extrajudicially. in accordance with the that the payment of the tax on the due desire of the predecessor is an exempt date would impose undue hardship on transfer (Sec 87. The will also granted tax? Are these dates extendible? If so. Xavier purchased from his to appoint. and Wilma succeeded to the property. Zandro has no the estate or any of the heirs. power that the property will go to a Yuri paid all the corresponding taxes on the specific person. his only son. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Zandro. Zandro died in 2007. it is not the painting.000. The transmission from the first heir. In his last will and testament. Xavier died. The law includes as part of the gross estate of Estate Tax: Vanishing Deductions (2009) the decedent a property passing under general (not special) power of appointment. Xavier bequeathed gross estate of Zandro. (3%) concept. as successor to the painting in the (2. years if the estate is settled through the the estate tax which imposed the courts.”-Leroy Satchel Paige Page 46 of 125 .Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the disposition of the property because The fair market value (FMV) of the painting it is the desire of the grantor of the at the time of the purchase was P1-million.

The donation took place within 5 years (1999 to 2001) from the death of SUGGESTED ANSWER: Xavier. Custom duties for motor Bay. the property previously taxed is not includable in his gross importing used vehicles that are “stored.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the present decedent died more than 5 years from the death of the Base Area enjoy an exemption from previous decedent. (4%) portion acquired by gifts (Sec 100. In December 2007.com dbaratbateladot@gmail. first No. No.R. 107[A] NIRC). 0 If they are taxable. JKL Corporation is a domestic customs duties and VAT? To whom must corporation engaged in the importation and the duties and VAT be paid? Explain. VAT must be paid to the Bureau of Internal Revenue. NIRC). 20 February Business Taxes 2006). (3%) sale of motor vehicles in the Philippines and is duly registered with the Subic Bay SUGGESTED ANSWER: Metropolitan Authority (SBMA). it imported several second. Zandro’s estate will not be entitled to claim because. duties and taxes be paid? What are the Importation and Use within SBMA (2008) bases for and purposes of computing IV. Duties must be paid to the Bureau of Customs. It sold these motor vehicles in April vehicles are based on the value being 2008. and that a vanishing customs duties and VAT. estate and second. 164171. there is a vanishing deduction. Southwing Heavy Industries. VAT is also based on the value being used by the Bureau for motor vehicles (Sec. hence. even if it is used or traded” within the Subic Naval includable.com May a vanishing deduction be allowed in ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ࿿ ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀ either or both of the estates? Explain. Executive Secretary v. . customs duties. 7096. when must the VAT: Exempted Transactions. release of the vehicle from Customs’ which it stores in a warehouse in Subic custody.A. However. because domestic corporations and foremost. provided they deduction is already claimed by the previous estate involving the same are registered with the SBMA (R. G. property. Duties and taxes must be paid upon hand motor vehicles from Japan and Korea. (3%) ĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā SUGGESTED ANSWER: ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Are the importations of motor vehicles from abroad subject to Vanishing deduction shall be allowed to the estate of Xavier but only to the customs duties and value added taxes? extent of ½ of the property which is the Explain. to persons residing in the customs used by the Bureau for assessing territory.

“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige Page 47 of 125 .

5 million.5 million (RR No. Directors of the corporation agreed to lease part of the ground floor of the condominium ALTERNATIVE ANSWER: building to DEF Savings Bank for P120.00.000. 16-2005).000.000 a month beginning January XII.00. is it liable for another kind of business tax? (4%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. NIRC). the Board of exceed P1.650.”-Leroy Satchel Paige Page 48 of 125 . His gross rental income for under Sec. The monthly rental for each unit ranges from P8. non- profit association of unit owners in SUGGESTED ANSWER: Greenhills Tower. liability for business of leasing out several residential VAT arises only if the annual gross apartment units he owns. What legal of trade or business of the taxpayer. San Juan City. Although the gross receipts will starting January 2007. 16-2005).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. non-profit association course of trade or business of the liable for value added tax in 2007? If your association (RR No. because the gross receipts will collected from the unit owners. the lease one year is P1. SUGGESTED ANSWER: Residential Units for Lease (2009) (XIV) Emiliano Paupahan is engaged in the No.000 a month or P1. The Association is liable for the business His transactions of leasing residential units for an amount not exceeding tax of 3% of the gross receipt if the gross P10. and why? (4%) lease of the ground floor to the bank is a SUGGESTED ANSWER: casual transaction. the lease of the ground floor is not part of the ordinary 0 Is the non-stock.com VAT: Exempted Transactions.5 million per annum (Sec.00 per unit per month are receipts of the taxpayer do not exceed exempt from VAT irrespective of the aggregate amount of rentals received P1.com dbaratbateladot@gmail. He consults you on whether it is necessary for him to must be pursuant to the ordinary course register as a VAT taxpayer. The advice will you give him. (3%) incorporated in 2001 is a non-stock.44 million for the year. 106(A1a) NIRC. Secondly. answer is in the negative. 0 Will the association be liable for value VAT: Liable for VAT (2008) added tax in 2008 if it increases the rental to P150. 116 NIRC).00 receipts exceed P1. I will advise Emiliano that he is not required to register as a VAT taxpayer.5 million. 16-2005. Under RR No. Greenhills Condominium Corporation 2008? Explain. No.000. to P10.000. To be able to reduce the association dues being Yes. annually (Sec 109 (1)(Q). exceed P1.

1995.com VAT: Rates (2010) is no longer one of the exempt transactions (Sec 109. the course of trade or business is not subject to VAT (Sec 105 and 109. 1996. on cash basis. This is a sale of agricultural non- food product in its original state which based foreign corporation engaged in “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. effectively zero- rated (Sec 108 (B)(3). SUGGESTED ANSWER: (XIb) Call Center operated by a domestic No. NIRC). why not? (4%) construction company. as (XI) Are the following transactions subject amended by RA 9337). ADB is exempt from direct and indirect taxes under a Is Melissa liable to pay Value Added Tax special law.00. Melissa is not liable to pay the VAT in acceptable foreign currency duly because she is not in the real estate accounted for by the Bangko Sentral ng business. VAT: Sale of a Capital Asset (2010) (XIa) Construction by XYZ Construction Co.000. The real property sold. 0 (B) Melissa inherited from her father a of concrete barriers for the Asian 300-square-meter lot. A sale of real property not in Pilipinas (Sec 108 (B)(2). thereby making the sale of (VAT) on the sale of the property? If so.000. NIRC. she sold the lot for P600. its sale SUGGESTED ANSWER: is not subject to VAT (Sec 39 and 106.(1)(P).00 per square meter. is not subject exclusively the reservations of a hotel chain to VAT. Services Rendered to SUGGESTED ANSWER: Business Outside the Country (2012 The sale of orchids is subject to VAT at 0 Foster Corporation (FC) is a Singapore- 12%. NIRC).Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. On gates along ADB Avenue in Mandaluyong February 28. (XIc) Sale of orchids by a flower shop which raises its flowers in Tagaytay. The SUGGESTED ANSWER: prevailing market value of the property at the time of the sale was P3. being in the enterprise in Makati that handles nature of a capital asset. to defray the cost of the City.com dbaratbateladot@gmail. The transaction is subject to VAT at the rate of zero percent (0%).”-Leroy Satchel Paige Page 49 of 125 .000. hence. (3%) VAT: Zero-rated. Zero-rated sale of services includes services rendered to ALTERNATIVE ANSWER: a person engaged in business outside the Philippines and the consideration is paid No. what is the applicable rate for each transaction? State the relevant authority/ies for your answer. the prevent car bombs from ramming the ADB property was valued at P720. NIRC). Pilipinas. (3%) medical expenses of her sick son. NIRC). At the time of her Development Bank in Ortigas Center to father's death on March 14. The the real property sold is held primarily services are paid for in US$ and duly for sale to customers or held for lease in accounted for with the Bangko Sentral ng the ordinary course of trade or business. The transaction is subject to VAT at the rate of zero percent (0%). (3%) A real property classified as a capital asset does not include a real property held for sale or for lease.00. how services to it by a VAT-registered much and why? If not. to VAT? If yes. The sale is subject to VAT only if which are all located in North America.

which adopted the percentage the remitted US$1 . Global Oil petroleum products. PCC is liable to the VAT as seller of Corporation. the sale of supply machinery and equipment. query and billed Gainsburg US$1. NIRC) 2011 at the following cost components: (design . Gainsburg has no Million in 2010 and P40 Million in 2011 office in the Philippines and does no and FC paid PCC in foreign currency business in the Philippines. P20 Million.com dbaratbateladot@gmail. through a Philippine bank as follows: P10 XYZ Law Offices rendered its opinion on the Million in 2010 and P20 Million in 2011.com construction and installation projects. The project with a banking system are zero-rated sales of total cost of P100 Million was completed in services (Section 108(B)(2). Pursuant to the contract.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. received a query by e-mail from Gainsburg Corporation. but project. and expenses. the outside the Philippines or to non- design and supply contracts were done in resident person not engaged in business Singapore by FC.000 for the opinion. machinery and VAT: Zero-rated. Services rendered to a be sub-contracted to a local construction person engaged in business conducted company. services for a fee. However. Assume that the project was (VII) XYZ Law Offices. and installation . GOC paid FC as follows: P60 the e-mail came from California where Gainsburg has an office.000 to pesos and deposited the converted amount in the XYZ of completion method of reporting income Law Offices account. liable to value added tax in 2010 and in 2011. What are the tax implications of the payment to XYZ Law Offices in terms of (5%) VAT and income taxes? (7%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. provided services to FC is subject to VAT at zero that the installation part of the project may percent rate. a law partnership in 40% complete in 2010 and 100% complete the Philippines and a VAT-registered in 2011. the Country (2013) P30 Million).P50 Million. Explain your answer. a corporation the architects and engineers working on the organized under the laws of Delaware. Services Rendered to Persons Conducting Business Outside equipment . whereby FC shall design. Gainsburg remitted its payment through Citibank which converted 0 Is PCC. awarded an anti-pollution project to Foster Yes. In SUGGESTED ANSWER: 2010. while the installation who is outside the Philippines when the works were sub-contracted by FC with services are performed paid in foreign Philippine Construction Corporation (PCC). currency inwardly remitted through the a domestic corporation.”-Leroy Satchel Paige Page 50 of 125 . based on the certificates issued by taxpayer.

Revenue Taxes The registered letter. (Sec 108 (B)(2). In the instant For VAT purposes. In 2011. 2007. 2007. Requisites (2008) Philippines.com SUGGESTED ANSWER: effect that for income tax purposes.000. Exemption to Examine Once a Year (2013) 0 What is an assessment notice? What are ̀̀⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀ the requisites of a valid assessment? ᜀĀᜀĀᜀĀᜀȀ̀Ȁ Ȁ̀Ȁ ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Āᜀ Explain. NIRC) the zero-rated sale. 12- 99). NIRC) notice. irregularity or mistakes as determined by the Commissioner. He paid the deficiency.com dbaratbateladot@gmail. showing basic tax of P1. Mr. this and income tax in the Philippines.000.000. Mr. Abcede is not tenable. an that he can only be investigated once in a assessment notice must be accompanied taxable year. engaged in business outside the BIR: Assessment. (3%) ĀᜀĀᜀĀᜀĀᜀĀᜀ0 In 2010. While the general rule is to the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Abcede was assessed deficiency SUGGESTED ANSWER: income taxes by the BIR for the year 2009. 2007. plus interests. but without the Remedies in Internal demand letter.”-Leroy Satchel Paige Page 51 of 125 . on the ground that Mr. Abcede’s 2009 return was entitled to claim as refund or tax credit fraudulent. which services are paid for in foreign currency inwardly remitted VII. The services were rendered to a nonresident person. the transaction is a case. penalties or Mr. However. unpaid taxes. After examining the books and records of through the banking system. Abcede's prepared by the BIR of the alleged 2009 return was fraudulent. pursuant to a Letter of Authority (LA) issued by the Regional Director. if any. Abcede contested the LA on the ground surcharges. thereby making the sale of services subject to EDS Corporation. the 2004 final assessment tax at zero-rate. deficiency interest of P400. The contention of Mr. containing the tax assessment. Abcede received another LA for the same year 2009. will not apply if there is fraud. the examination certificate the input taxes attributable to is legally justified. and due date for payment of April 30. a taxpayer must be subject to examination The payment to XYZ Law Offices by and inspection by the internal revenue Gainsburg Corporation is subject to VAT officers only once in a taxable year. was mailed and released by the BIR on April 15. was received by the EDS Corporation on April 25. (Sec 235. Decide. BIR: Assessment. An assessment notice is a computation this time from the National Investigation Division. accordingly. what triggered the second zero-rated sale of services where the examination is the findings by the BIR output tax is zero percent and XYZ is that Mr. (7%) by a demand letter from the BIR in order SUGGESTED ANSWER: to result in valid assessment (RR No.

75 million deficiency income tax. Manalo for deficiency income tax computed as follows: P5 million (P20 million less P15 BIR. owns a vacation house and 42[A5] NIRC). no income tax return was instead of the fixed rate of 35% which filed by him for 2006. another to protect his interest? Explain.”-Leroy Satchel Paige Page 52 of 125 . 0 If you were hired by Manalo as his tax On January 10. which he acquired in 2000 for P15 million. Sale of Real Properties assessment of 35% is incorrectly (2008) imposed. (3%) Filipino citizen residing in Quezon City.2 million 0 As tax lawyer of EDS Corporation. he sold said real consultant. 2006. The correct rate is based on the 5-32% tax scale which is applicable XI.2 million representing 6% capital gains I would advise him to demand the tax. a Filipino citizen residing to individuals (Sec. in Makati City.2 million against the net income tax. 24[D1] NIRC).A. Compromise. lot in San Francisco. Pedro Manalo. California. which is subject to deductions.75 million. On February 9. what advice would you give him property to Juan Mayaman. 2006.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.S. Manalo consulted a real estate not more than two (2) sentences. what capital gains tax should be credited from legal defense(s) would you raise against the the P1. (3%) I would raise the defense that there is no SUGGESTED ANSWER: valid assessment because EDS Corporation did not receive a demand The BIR officer correctly disallowed the letter from the BIR. (3%) 0 Is the BIR officer‟s tax assessment SUGGESTED ANSWER: correct? Explain. However. After the tax audit applies only to domestic corporations conducted in 2007. for P20 million. Explain your answer in credit. U.com broker who said that the P1.com dbaratbateladot@gmail. credit of the final tax of P1. the BIR: Assessment. Manalo SUGGESTED ANSWER: filed the capital gains tax return and paid P1. Since Manalo did not derive any application of the 5-32% tax scale ordinary income. assessment? Explain. (5%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. without the capital gains tax paid being allowed as tax I(B) True or False. the BIR officer assessed (Sec. Financial Incapacity (2009) million) x 35% = P1.24[D1] and Sec.

(Sec (XII) You are the retained tax counsel of 204. his acquittal could not deficiency taxes which are legally due operate to discharge him from the duty must be fully paid to exonerate the taxpayer from further liabilities. not a mere consequence of the felonious acts charged in the information. but he will get 50% of the savings arising from 0 The acquittal of the taxpayer in a the reduced assessment. Tax Evasion. since that duty is imposed by unwarranted reduction of the proposed statute prior to and independent of any assessment into half and the payment thereof will not close the case but can be attempt on the taxpayer to evade re-opened anytime within ten years from payment. True. Financial incapacity is a ground Bribery (2013) allowed by law in order that the Commissioner of Internal Revenue may validly compromise a tax liability. a middle BIR: Criminal Prosecution.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.”-Leroy Satchel Paige Page 53 of 125 . L-12174. Explain the following statements: significantly reducing the assessment.e. giving your advice? Explain the relevance of each of these considerations. The obligation to pay the tax is discovery so as to collect the correct amount of taxes from ABC Corp. tax. The BIR insider's proposal is to settle the matter by X. (9%) (3%) SUGGESTED ANSWER: SUGGESTED ANSWERS: I will advise my client not to accept the settlement proposal but instead pay the In taxation. I will tell my client that a proposed assessment covering the criminal case. Duty to Pay rank BIR official) on the tax matter they Tax despite Acquittal (2012) have referred to you for handling. While he may be acquitted on On the tax aspect. nor is a The act of deliberately paying an amount of tax that is less than what is known by mere civil liability derived from crime my client to be legally due through a that would be wiped out by the cause of action that is unlawful is considered as tax evasion. the taxpayer becomes entire amount of tax that is legally due to the government. the Commissioner of Internal Revenue may validly compromise the tax liability. 1962). NIRC) ABC Corp. The to pay tax. demonstrates a clear inability to pay the Collector of Internal Revenue. SUGGESTED ANSWER: BIR: Criminal Prosecution.. April 26. I will advise declaration that the criminal my client that conniving with a BIR “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Your client informed you that they have been directly approached with a proposal by a BIR insider (i. criminal action under the Tax Code does What tax.com dbaratbateladot@gmail. criminally liable because of a civil liability. criminal and ethical not necessarily result in exoneration of said considerations will you take into account in taxpayer from his civil liability to pay taxes.com When the financial position of the taxpayer acts charged did not exist (Castro v.

I will remind my client that SUGGESTED ANSWER: taxpayers owe honesty to government just as government owes fairness to taxpayers. NIRC). agreeing to the liability by the CTA should be automatic settlement scheme being proposed by the BIR insider is agreeing to the and no assessment notice from the BIR is perpetration of a dishonest act. the CTA shall not (2009) only impose the criminal penalty but must likewise order the payment of the I(E) True or False. Explain your answer in not more than two (2) sentences.com dbaratbateladot@gmail. an Information for failure to file income tax “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. which recognizes that false return and a fraudulent return. Yes.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the imposition of the civil On ethical grounds. GR NO. 68252. Tokyo Shipping Co. 58 SCRA BIR: Failure to File Return. Insofar as the BIR officer is concerned he will also beyond reasonable doubt for violation of be a principal to direct bribery and to Section 255 of the Tax Code (for failure for the criminal violation penalized under Section 269 of the Tax Code. Likewise.com insider to reduce the proposed BIR: Failure to File Return. The first merely implies a deviation from the the civil liability of a taxpayer maybe truth or fact whether intentional or not. the payment to be made to the (X) Explain the following statements: BIR official of 50% of the savings constitutes direct bribery punishable 0 Should the accused be found guilty under the Revised Penal Code. fair dealing on both sides is of paramount importance. If the failure to file tax return or to Ltd. (CIR v. There is a different between a an assessment. L-20569. a proceeding in court for the collection of SUGGESTED ANSWER: the tax may be filed without the need of False. NIRC). Actions in RTC (2010) (VI) Based on the Affidavit of the Commissioner of Internal Revenue (CIR). civil liability (Section 205(b). file tax return or to supply correct information). No. Aug 23. Fraudulent Return proven during trial. Criminal 519 (1974)). it is well-recognized that A false return and a fraudulent return are one and the same. correct tax due (Aznar v. G. 1974. Commissioner. (5%) in the case of failure to file a return. 1996) supply correct information resulted to unpaid taxes the amount of which is BIR: False Return v. May 26. Since necessary? (2%) taxation is symbiotic relationship. Collection assessment for a fee us unlawful which Without Assessment (2012) can expose the officers of the corporation to criminal liability.R. As a matter of fact.”-Leroy Satchel Paige Page 54 of 125 . established without the need of an whereas the second is intentional and deceitful with the aim of evading the assessment (Section 222(a)..

jurisdiction. G. The tax SUGGESTED ANSWER: can be collected by filing a criminal action with the RTC because a criminal False. 11. Rule 9. (1%) As a rule. CTA: Jurisdiction. In the case of failure to file a return. (1%) of the tax may be filed without an assessment (Sec 222 (a).R. the Commissioner is empowered to prepare a return on the basis if his own knowledge. resolutions or orders of the Regional Trial Court in the exercise of its SUGGESTED ANSWER: original jurisdiction involving criminal offenses arising from violations of the NIRC No.com return under Section 255 of the National CTA: Jurisdiction of the CTA (2010) Internal Revenue Code (NIRC) was filed by the Department of Justice (DOJ) with the (Ic) In criminal cases where the Court of Manila Regional Trial Court (RTC) against Tax Appeals (CTA) has exclusive original XX. (Lim v. Besides. 48134-37. (Sec. are appealable to the CTA. (Sec. therefore. decision of the Collector of Customs appealable to the Court of Tax Appeals? Explain. 15 days from receipt of notice of the prescription is construed strictly against written decision. 18. which shall hear a proceeding in court for the collection the cases en banc. 3(b)(2). (2010) which shall be prima facie correct and sufficient for legal purposes (Sec 6 (B). 1990) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. a Manila resident. as amended) by the CIR. the issuance of a formal deficiency decisions of the Collector of Customs in tax assessment.”-Leroy Satchel Paige .Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 205. (5%) BIR: Prescription. decisions of the Collector of SUGGESTED ANSWER: Customs are not appealable to the Court False. No. Rule 4. (4%) (Ie) Judgments. NIRC).com dbaratbateladot@gmail. (1%) ĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᜀȀȀ⠀⤀Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 moved to quash the SUGGESTED ANSWER: Information on the ground that the RTC has no jurisdiction in view of the absence of False. Oct. NIRC). (VIII) What is the rule on appeal from NIRC. the right to file a separate civil action for the recovery of taxes may be ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ࿿ȀȀ ⠀⤀ Ā ᜀĀᜀĀᜀĀᜀ reserved. Court of Appeals. Construction in SUGGESTED ANSWER: Criminal Cases (2010) Decisions of the Collector of Customs in (Ib) True or False. is not protest and seizure cases? When is the required. the government. In criminal cases protest and seizure cases are appealable involving tax offenses punishable under the to the Commissioner of Customs within National Internal Revenue Code (NIRC). (Sec. 2005 Revised action is a mode of collecting the tax Rules of the Court of Tax Appeals) liability. Appeals from and upon such information as he can Decisions of the Collector of Customs obtain from testimony or otherwise. 2005 Rules of a formal deficiency tax assessment issued the Court of Tax Appeals. Is a prior assessment necessary before an Information for violation of Section 255 of CTA: Jurisdiction of the CTA (2010) the NIRC could be filed in court? Explain.

Page 55 of 125 .

does not decide a of CTA). however. the inaction may be considered as an (Note: It is respectfully requested that if the adverse decision by the Collector of examinee gives any one of the two reasons Customs and the aggrieved taxpayer may presented above. not the with the CTA.com dbaratbateladot@gmail. 82018. may correct such 1 in the opinion of the Court the abuse if the matter is appealed to it. 2005. and compromise. Manila Mining Corp. 31. Court of Appeals. No. internal revenue taxes if the following 0 If the Commissioner abuses his conditions are met: discretion by not following the 0 the case is pending appeal parameters set by law.”-Leroy Satchel Paige Page 56 of 125 . for either of two reasons (1) in instances in which the Commissioner of (VII) What are the conditions that must be Internal Revenue is vested with complied with before the Court of Tax authority to compromise. G. 87 Phil. such authority Appeals may suspend the collection of should be exercised in accordance with national internal revenue taxes? (3%) the Commissioner’s discretion. (5%) SUGGESTED ANSWER: CTA: Suspension of the Collection of NIR Taxes (2010) No. If the Collector of April 26. G. (Id) Proceedings before the CTA in the exercise of its exclusive original jurisdiction are in the nature of trial de novo. the answer should be appeal to the CTA even without the given full credit. that a compromise is surety bond for not more than considered as other matters arising double the amount of the tax under the NIRC which vests the CTA (Sec 11. 109976.R.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. No. the CTA. Inc. March 16.R. RA 1125. the Court of Appeals is devoid of any power of review a compromise settlement forged by the Commissioner (PNOC v. It must be noted being collected or to file a however. Aug. In collection will jeopardize the case of arbitrary or capricious exercise interest of the Government by the Commissioner of the power to and/or the taxpayer. power to review compromise agreements No. RA 9282 on jurisdiction Customs. 1989). 153204. CTA: Proceedings in the CTA (2010) Planters Products.com of Tax Appeals. SUGGESTED ANSWER: to compel him to exercise such discretion one way or another (Koppel The CTA may suspend the collection of Phils. protest for a long period of time. of the CTA is appealable to the Supreme Court. 2005) forged by the Commissioner of Internal Revenue and a taxpayer? Explain. (CIR v. Inc. as a general rule. (1%) CTA: Jurisdiction. Savellano. Power to Review Compromise Agreements (2010) SUGGESTED ANSWER: 0 Does the Court of Appeals have the True. and since the decision by RA 9282).) Collector’s and Commissioner’s actual decision (Commissioner of Customs v. the compromise can be 2 the taxpayer is willing to attacked and reversed through the deposit in Court the amount judicial process.. v. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. G. 351 (1950).R. CIR. and courts have no power. as amended with jurisdiction.

CIR v.R. The imported April 4. 647 SCRA 72 (2011) G. ABC Corp. are the only real and direct evidence Subsequently. (VI) On October 15. had excess tax summary are submitted to the CTA and credits arising from its over-withholding of adduced in evidence.. TCC. (Sec 203. Will the claim for refund prosper? (6%) imported 1.. Be and the receipts. VAT can only be made by the BIR (not by BOC). 2009. 160949). investigated and an option to whether carry-over or claim assessed ABC Corp.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. PL lost its right to assess deficiency Management International Phils. 2011. steel ingots in 2005 have been entered No. as amended by RA VAT with the Court of Tax Appeals (CTA). (ITI) date of final payment of duties and taxes filed a claim for refund for unutilized input (Sec 1603. It opted to carry over the receipts must be presented because they excess tax credits to the following year. ITI automatically cured when these are credited offered in evidence only the summary against the output tax due upon sale by the prepared by the CPA. Can the CTA grant ITI's claim for refund within three (3) years from the last day based only on the CPA's summary? prescribed by law for filing of the VAT Explain. an assessment for deficiency case for decision. ABC Corp. the Bureau of Customs. the course of the trial. customs duties and VAT. NIRC. SUGGESTED ANSWER: Taxpayer: Claim for Refund.”-Leroy Satchel Paige Page 57 of 125 . The claim for refund will not citing provisions of the Tariff and Customs prosper. 2005. liquidation of the importation final and Substantiation Requirement (2009) conclusive upon all parties after the expiration of three (3) years from the (IV) International Technologies. Carry-Over Option is Irrevocable (2013) No. Is the Bureau of Customs correct? (7%) such option shall be considered irrevocable for that taxable period and SUGGESTED ANSWER: no application for cash refund or issuance of a tax credit certificate shall No. Inc.000 kilos of steel ingots and paid customs duties and VAT to the Bureau SUGGESTED ANSWER: of Customs on the importation. Inc. ABC Corp. While the law gives the taxpayer Code on post-audit. (Sec 76.com dbaratbateladot@gmail. for deficiency customs as refund the excess tax credits shown duties and VAT. changed its mind that would enable the Court to “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. once the option to carry-over has been made. the underpayment will be voluminous invoices and receipts of ITI. The summary prepared by the CPA does not prove anything unless the (I)In its final adjustment return for the 2010 documents which were the basis of the taxable year. NIRC)]. and then submitted the that as it may. VAT being an internal revenue tax. (4%) return. On February 17. The Bureau of Customs (BOC) has be allowed. The invoices and income payments. No. ITI engaged the services of an independent Certified Public [Note: Insofar as VAT on importation is Accountant (CPA) who examined the concerned. without the invoices imported when the VAT return is filed. In 9135). on its final adjustment return.com Customs: Prescription Period to Assess and applied for a refund of the excess tax (2013) credits. and the customs duties thereon had been paid by thereby making the Taxpayer: Claim for Refund.

1984.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. of TCC against a potential tax liability is On January 17. the Bureau of Internal Revenue dividends from the corporation. alleging that under the Explain your answer briefly? (5%) RP-US Tax Treaty. ABCD filed with the BIR to withhold the issuance of the TCC? Commissioner of Internal Revenue a formal claim for refund. ABCD filed a petition not allowed. no yet fully-liquidated. Thus. There is no valid justification to Hence. ABCD is also an agent of the beneficial owner of the dividends with withhold the TCC. 1985. Off-Setting (2007) Agent as a Proper Party (2009) XIII. A withholding agent is not only an ALTERNATIVE ANSWER: agent of the Government but is also an agent of the taxpayer/income earner. Yes. Upon execution of the corporate shareholders who are residents of judgment and when trying to get the Tax the United States.S.”-Leroy Satchel Paige Page 58 of 125 . The requirement.. SUGGESTED ANSWER: CIR. 294 SCRA 687 [1998]). such authority may reasonably be held to include the for deficiency taxes must be settled “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. ABC Corporation won a tax refund X(A) ABCD Corporation (ABCD) is a domestic corporation with individual and case for P150 Million. the deduction withheld at source as tax on dividends earned was SUGGESTED ANSWER: fixed at 25% of said income. these U. The withhold the TCC. audit by the BIR and it has a potential tax liability. For the 2 nd quarter of 1983. Offsetting the amount Commissioner denied the claim. The corresponding withholding tax on dividend (BIR) refused to issue the TCC on the basis income --. While the amount of the TCC has been determined.30% for individual and 35% for of the fact that the corporation is under corporate non-resident stockholders --. (1991)).com determine with particular certainty the authority to file a claim for refund and basis of the refund (CIR v. the Does ABCD Corporation have the legal amount of deficiency tax is yet to be personality to file the refund on behalf of its non-resident stockholders? Why or why determined through the completion of not? (3%) the audit. Withholding Taxpayer: Tax Credit. ABCD asserted that it overpaid the withholding tax due on the cash dividends given to its The BIR has no valid justification to non-resident stockholders in the U.-based individual and Credit Certificates (TCC) representing the corporate stockholders received cash refund.S. (Philex Mining Corporation v. 204 (1992)).com dbaratbateladot@gmail. Taxpayer: Claim for Refund. 207 SCRA 549 claim (CIR v. SCRA 377. that respect to the actual payment of the tax the claim for refund/TCC and liability to the Government. Rio Tuba to bring an action for recovery of such Nickel Mining Corp. Is there a valid justification for the On May 15.was deducted at source and remitted to the BIR. because both obligations are with the Court of Tax Appeals (CTA) reiterating its demand for refund. Procter & Gamble.

(3%) arising from erroneously paid income taxes covering the years 2004 and 2005. will not apply since would you raise the defense of the determination of the entitlement to prescription in your answer to the the refund was already removed from the claim for tax credit? Explain. DEF Corporation filed a proper party to file such claim for tax written claim for tax credit with the BIR. 29 May 1995.com dbaratbateladot@gmail. G. CTA. 66838. Corporation paid annual royalties to DEF. No. 0 DEF Corporation is a wholly owned 0 January 1999).R. Prescription (2008) CIR v. Under Sec. multiplicity of suits.R. However. Procter & Gamble. CIR v. claim has not yet prescribed since its Starting December 15. The SUGGESTED ANSWER: following day. royalty payments.. USA. for which 10.com under one proceeding to avoid 0 As a BIR lawyer handling the case. No. The defense of prescription is allowed. Citytrust Banking available as against the 2004 tax credit. On that DEF Corporation is not the April 10. (CIR v. credit? Explain. California. To reopen the claim for refund in order to give way to the introduction of SUGGESTED ANSWER: evidence of a deficiency assessment will lead to an endless litigation. The withholding tax return was filed and the tax remitted to the 0 Can the BIR lawyer raise the defense BIR on January 10 of the following year. the prescriptive period is 2 years reckoned from the filing of the annual return (CIR v. the Court “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. The filing of the Petition for the former. PhilAm Life. DEF prescriptive period ends on January 11.”-Leroy Satchel Paige Page 59 of 125 . 2007. 229 NIRC. TMX Taxpayer: Claim for Tax Credit. the BIR cannot raise the defense Appeals involving the tax credit claim for that DEF Corporation is not the proper 2004 and 2005. 57[A] BIR the 15% final tax based on the gross NIRC). Inc. which is not Yes.. DEF Corporation filed a petition for review with the Court of Tax No. 15 January 1992. as withholding agent of the Review with the Tax Appeals on the government. 83736. G. In CIR v. 105208. 2004.R. (4%) BIR.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. G. for the use the latter‟s software. 02 December 1991. withheld and remitted to the 2005 Claim is premature (Sec. G. party. 117254. Sales.R. No. the 2005 subsidiary of DEF. 2007. 2008 while the claim was filed on April Inc. No. Corporation. 499 SCRA 477 [2006]).

CIR and CTA. Although there was no judge. decision it is the final decision of the respondent within thirty (30) days from receipt hereof. L-22074. remedies. it cannot the case as prematurely filed? Explain your be denied that the word “appeal” under answer. otherwise said deficiency tax assessment in a clear and unequivocal language. The statement VIII. If you tenor of the demand letter indicate that disagree you may appeal this time. claiming that the filing of the Petition for Review is premature because the Taxpayer: Petition for Review. would you deny the petition for direct reference for the taxpayer to bring review filed by the taxpayer and consider the matter directly to the CTA.”-Leroy Satchel Paige Page 60 of 125 . The BIR is estopped from No. on the matter. February 5. G. the BIR issued a final conclude that only a final judicial ruling assessment notice and demand letter which in his favor would be accepted by the states: “It is requested that the above BIR. v. No. (5%) prevailing tax laws refers to the filing of a Petition for Review with the CTA (Allied Bank vs.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. The case is an exception to be paid by the taxpayer (See also the rule on exhaustion of administrative Philippine Guaranty Co.” The assessment was assessment constitutes his final immediately appealed by the taxpayer to determination thereon in order for the the Court of Tax Appeals. The Petition for Review should not event that the final income tax cannot be denied. The taxpayer cannot be blamed for deficiency tax be paid immediately upon not filing a protest against the Formal receipt hereof. If you were the court accrues. without filing its taxpayer concerned to determine when protest against the assessment and without his or her right to appeal to the tax a denial thereof by the BIR. 175097. Tenor of taxpayer failed to exhaust all Finality of Assessment (2012) administrative remedies. 30 April 1965).com dbaratbateladot@gmail. This is our final Notices since the language used and the decision based on investigation. shall become final. executory and whether his action on a disputed demandable. 2010). In the examination conducted by the of the BIR in its Final Assessment Notice revenue officials against the corporate and Demand Letter led the taxpayer to taxpayer in 2010.R. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. CIR. inclusive of penalties Letter of Demand with Assessment incident to delinquency.com ruled that a final withholding agent is a SUGGESTED ANSWER: proper party “with sufficient legal interest” because it will be liable in the NO. The CIR should indicate.

2010. No. 16. v. Taxpayer: Protest against Final hence the CTA does not acquire Assessment Notice (2010) jurisdiction over the matter (CIR v. Effect of (IId) What is the effect of the execution by a Prescription to File Protest (2009) taxpayer of a "waiver of the statute of limitations" on his defense of prescription? (XVII) A final assessment notice was issued (2%) by the BIR on June 13. (4%) (FAN) with letter of demand on April 30. The protest was initially given The waiver of the statute of limitation due course. 2010 issued by the dismissing the petition for review Commissioner of Internal Revenue (CIR) for has become final. BIR that the period to assess and collect taxes due is extended to a date certain. 1999.R. The SUGGESTED ANSWER: taxpayer protested the assessment on July 31. 24. The protest was filed out of time I (a) True or False. Assume that the CTA's decision (PAN) dated March 1. Continental. ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀ If prescription has already set in at the ĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ time of execution of the waiver or if the ᴀȀȀ⠀⤀Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Is the CTA said waiver is invalid. (4%) Journalists Inc. and received by the taxpayer on June 15. No. The taxpayer prescription. 2000. but the CTA writing between the taxpayer and the dismissed the same. 2000. (CIR v. Inc. (1%) can no longer enforce collection of the tax liability against the taxpayer (CIR v. G. the Commissioner taxpayer.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. In civil cases involving and. 2000. 162852. Once the right to the government and liberally in favor of the collect has prescribed. 104171. G. therefore. Effect of Waiver 162852.. Dec. The CIR collection of the delinquent tax? thereupon issued a final assessment notice Explain. (IV) On March 10. 2010. SUGGESTED ANSWER: (2000)).”-Leroy Satchel Paige Page 61 of 125 . running of the prescriptive period for the prescription is construed strictly against collection of the tax. Inc. BF Goodrich. True. Prescription. the taxpayer can correct in dismissing the petition for still raise prescription as defense (Phil. received a preliminary assessment notice b. It failed to protest the PAN. (2000)). did not suspend the the collection of internal revenue taxes. The waiver of the statute of then filed a petition for review with the limitation is merely an agreement in Court of Tax Appeals (CTA). Feb. CIR. Dec.com Taxpayer: Prescription. but was eventually denied by executed by a taxpayer is not a waiver of the Commissioner of Internal Revenue in a the right to invoke the defense of decision dated June 15.) of Statute of Limitations (2010) Taxpayer: Prescription. Phil. Phils. G. 2004.. May the deficiency income tax for its taxable year Commissioner legally enforce 2008. Atlas Mining and Development Corp.com dbaratbateladot@gmail. 2005. 16. Construction in SUGGESTED ANSWER: Civil Cases (2010) No.R. CIR.R. review? Explain your answer. The FAN was received by the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. No. Taxpayer. Journalists. 2004) SUGGESTED ANSWER: Yes. Inc. Atlas Mining and Development Corp. The protest was filed out of time. v..

or 0 Await the final decision of the The CIR denied the protest on the ground Commissioner on the disputed that the assessment had already become assessment and appeal such final and executory. Remedies Against BIR’s Inaction to a Protest (2009) requested the advice of a lawyer on whether or not it should file a request for (XVIII) A taxpayer received an assessment reconsideration or a request for notice from the BIR on February 3. What can be protested by the Taxpayer: Request for Reconsideration taxpayer is the final assessment notice vs. (4%) for reinvestigation? (5%) SUGGESTED ANSWER: The remedy of a taxpayer is to avail of SUGGESTED ANSWER: either of two options: Request for Reconsideration – plea for 0 File a petition for review with evaluation of assessment on the basis of the CTA within 30 days after “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. CIR. 522 SCRA 144 (2007)). The following day. because it yet received notice of a decision by the has the same consequences or implications. The BIR issued in 2010 a final receipt thereof. it filed its period from submission of all protest against it. 2009. Commissioner on his protest.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the taxpayer. apprehensive because he had not or a request for reinvestigation. The lawyer said it does not form of a request for reinvestigation. Is the CIR correct? Explain. within 30 days after receipt of a copy of such decision. matter whether the protest filed against the against the assessment and submitted all relevant documents in support of the assessment is a request for reconsideration protest. in the reinvestigation. 2010. the assessment did not assessment notice and demand letter become final and executory (Sec 228. following the expiration of the 180-day which or on May 25. he filed a protest. against X Corporation covering deficiency income tax for the year 2008 in the amount of P10 Million. Since the FAN was timely protested (within 30 days from VI. X Corporation earlier Taxpayer: Protest. On September 11. The issuance of preliminary assessment notice (PAN) does not give rise to the right of the taxpayer to protest. 2010. (5%) These options are mutually exclusive such that resort to one bars the SUGGESTED ANSWER: application of the other (RCBC v.”-Leroy Satchel Paige Page 62 of 125 . relevant documents. RR No.com dbaratbateladot@gmail. Request for Reinvestigation (2012) (FAN) or that assessment issued following the PAN. 2009. 0 What are the differences between a What remedy or remedies are available to request for reconsideration and a request the taxpayer? Explain. NIRC. No. the corporation having final decision to the CTA failed to protest the PAN. 12-99).com corporation on May 10. sought your advice.

Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. (5%) taxes shall be computed based on calendar year.000. provided there is a valid tax 2006 P5. Yes. (3%) Cubao. the taxable period for Local Taxation: Business Tax: Taxable the payment of business taxes is the Period. does not impose such surcharge and/or 2007 P10. ordinance enacted for that purpose that January 1. to engage in trading of school in installments without surcharge and supplies. 165 of the Local Government Code.com existing records without need of July 1. XIII. it paid its 2% discovered evidence which are to be business tax for fiscal year ending June 30. (3%) Request for Reinvestigation. Quezon City. 2007 to June 30. presentation of additional evidence. the Quezon City Treasurer to collect. 2007 to December 31.000. Since MNO Corporation adopted fiscal year Request for Reinvestigation – plea for re. MNO Corporation was organized on 0 May the deficiency business tax be paid July 1. assessed the corporation for deficiency business tax for 2007 based on gross sales 0 Do you agree with the advice of the of P25 million alleging that local business lawyer? Explain your answer. 2006 to December 31. with principal place of business in interest? Explain. It 2007 15. Its books of accounts and income statement showing gross sales SUGGESTED ANSWER: as follows: July 1.000.com dbaratbateladot@gmail.000. ending June 30 as its taxable year for evaluation on the basis of newly income tax purposes.”-Leroy Satchel Paige Page 63 of 125 .000. Payment in Instalment (2008) calendar year. Under Sec.000. SUGGESTED ANSWER: No. does not suspend the period to collect the deficiency tax. in view of the aforesaid difference 0 Is the position of the city treasurer between Request for Reconsideration & tenable? Explain. time. 2006. SUGGESTED ANSWER: Local & Real Property Taxes Yes. introduced for examination for the first 2007 based on gross sales of P15 million. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. It suspends the prescriptive period However.

The tax is 50% of 1% of the gross annual receipts of the preceding Local Taxation: Business Tax on Contractors (2010) calendar year based on the incoming receipts. within the province. when the gross receipts amount to P2 million or more. by the province of Zamboanga del Norte. 1992. ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ∀ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀ LGC). Smart SUGGESTED ANSWER: and Globe liable to pay franchise taxes? The business tax on contractors is a Reason briefly. within its (IIe) What is the basis for the computation of business tax on contractors under the territorial jurisdiction. The tax exemption privileges on franchises granted before the passage of PLDT‟s legislative franchise was granted the Local Government Code are sometime before 1992. However. Local Government Code). Their . Legislative Franchise (2007) the rate of 50% of 1% based on the gross annual receipts during the preceding year within the province. There is no ordinance authorizing passed an ordinance in 1997 that imposes the instalment payment of business a local franchise tax on all taxes without interest and surcharges telecommunication companies operation (See Sec. Its franchise effectively repealed by the latter law. pay only 5% franchise tax in lieu of all taxes. 192. (Section 137. (10%) graduated annual fixed tax based on the gross receipts for the preceding calendar SUGGESTED ANSWER: year. The Local as a percentage tax at the rate of 50% of Government Code explicitly authorizes 1% (Sec 143 (e). provincial governments. notwithstanding any law or other special law. The legislative franchises of Smart and Globe Telecoms were granted in 1998.com dbaratbateladot@gmail. provides that PLDT will only pay 3% franchise tax in lieu of all taxes. ᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀȀ⠀⤀Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 The Local PLDT is liable to the franchise tax levied Government Code took effect on January 1. LGC). legislative franchises state that they will Local Government Code). the business tax on contractors is imposed The ordinance is valid. ALTERNATIVE ANSWER: The Province of Zamboanga del Norte No.com interest on any taxes not paid (Sec. or receipts realized. to impose a Local Taxation: Legality/ tax on business enjoying a franchise at Constitutionality. Local Government Code? (2%) Is the ordinance valid? Are PLDT. 192.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.

”-Leroy Satchel Paige Page 64 of 125 .“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

uniformity is required only within the latest will of the legislature to grant tax geographical limits of the taxing exemption must be respected. The legislative with the rule of equality and uniformity franchises of Smart and Globe were in taxation. who has a Local Taxation. ALTERNATIVE ANSWER: Smart and Globe. Constitutionality. authority. used as storage space for the copra subjects of taxation and impose the purchased in Sampaloc and nearby towns same tax on those belonging to the same before the same is shipped to Makati. MMC class. Congress class shall be taxed at the same rate within the territorial jurisdiction of the is deemed to have been aware of the taxing authority or local government provisions of the earlier law.”-Leroy Satchel Paige Page 65 of 125 . and other coconut oil-based is not discriminatory because the City products. long after the Local objects of taxation belonging to the same Government Code took effect. 95 Phil. In fine. passed an ordinance imposing a storage fee of ten SUGGESTED ANSWER: centavos (P0. Mariano Batas. various professions in the city. the the same political subdivision. The by the ordinance is in the nature of a Metropolitan Manufacturing Corporation professional tax which is authorized by (MMC).com dbaratbateladot@gmail.com (PLDT v. al. v. The authority given by law to goes to court to challenge the validity of the cities is to impose a professional tax ordinance. Legality/ law office in Manila. The ordinance oil. the Professional or Occupation Taxes (2009) imposition of the occupation tax to persons exercising various professionals (VIII) The City of Manila enacted Ordinance in the city is well within the authority of No. of their profession requiring government “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. City of Davao. He (2009) goes to court to assail the validity of the ordinance for being discriminatory. is law to be imposed by cities (Sec 151 in engaged in the manufacture of soap. demanding the refund of the only on persons engaged in the practice storage fees it paid under protest. Decide (VI) The Sanggunian Bayan of the with reasons. Council has the power to select the Quezon. when it unit and not necessarily in comparison with other units although belonging to granted the exemption.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. occupation tax. (3%) Municipality of Sampaloc. however. Constitutionality. margarine. Regulatory Measures imposed occupation tax under protest. The ordinance is not discriminatory because it complies provincial ordinance. Equality and uniformity in local taxation means that all subjects or granted in 1998. 55-66 which imposes a municipal the City of Manila (Punsalan et. 363 SCRA 522 examination and lawyers are included within that class of professionals. It has a warehouse in Sampaloc. In case at bar. Atty. Accordingly. Among those subjected to the occupation tax were lawyers. LGC). The tax imposed Municipality's jurisdiction.10) for every 100 kilos of copra deposited in any bodega within the The ordinance is valid. edible relation o Sec 139. are not liable to the franchise tax imposed under the The ordinance is valid. [2001]). Quezon. It is not for the Court to judge what particular cities or municipalities should be empowered to impose Local Taxation. 46 (1954)). pays the ordinance. occupation tax on persons practicing City of Manila. with principal office in Makati.

when ignited. Inc.” A warehouse used for keeping or storing Local Taxation. Province of Sales of finished products for calendar year Bohol. In the case at bar. Local (Sec 147. Its principal office in Quezon City is also a sales office. It has put out the fire. The municipality is authorized to imposed is authorized by Sec. 143 (H) of impose reasonable fees and charges as a the Local Government Code. Principal Office and copra is an establishment likely to Branches. imposing a 5% tax on gross receipts on rentals of space in privately- Where should the applicable local taxes on owned public markets. BAT Corporation the shoes be paid? Explain. tax the municipality can be the proper imposed by Manila is invalid for subject of regulation pursuant to the police power granted to municipalities exceeding the amount allowed by law. reasonable branches/sales offices in Cebu and Davao. the storage of copra in any warehouse within Government Code). but not SUGGESTED ANSWER: because it is income tax. under the Revised Administrative Code of the “general welfare clause.com Is the ordinance valid? Explain your SUGGESTED ANSWER: answer.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. LGC). 94 SCRA 894 (1979)). However.5 million Corporation? Explain (5%) shall be taxed in Davao. It is. Tax Rate (2008) ii) Davao branch 15% iii) Quezon City branch 60% VIII. maintains its principal and the use of chemicals is necessary to office in Cubao. (Procter & Gamble Philippine Manufacturing Corporation v. The City of Manila enacted an Total 100% ordinance. is (XII) Ferremaro. a manufacturer of difficult to put under control by water handcrafted shoes. Twenty five percent (25%) of total sales or P2. Quezon City. Therefore. which cannot be imposed by the city government. Situs of Taxation (2010) endanger the public safety or likely to gave rise to conflagration because the oil content of the copra. regulatory measure in an amount commensurate with the cost of the maximum rate that can be imposed regulations. The tax Yes. (4%) BAT Corporation is correct in questioning the ordinance.”-Leroy Satchel Paige Page 66 of 125 .com dbaratbateladot@gmail. thus.5 million shall be taxed in Cebu Do you agree with the position of BAT and 15% of total sales or P1. SUGGESTED ANSWER: stating that the tax is an income tax. For the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. 151. 2009 in the amount of P10 million were made at the following locations: Local Taxation: Legality/ i) Cebu branch 25% Constitutionality. Municipality of Jagna. that the Municipality impose storage Its factory is located in Marikina City where fees for its own surveillance and lookout most of its workers live.. inspection and licensing by the city is only 3% (Sec. (3%) questioned the validity of the ordinance.

”-Leroy Satchel Paige Page 67 of 125 .com remaining 60% sales amounting to P6 in Makati which is also the company‟s million which are recorded in the principal office. Manila cannot legally levy the 2% the sales recorded in the principal office Gross Receipts Tax on the shipping line. Sept 27. LGC). Local Taxation: Taxing Power. 30% thereof or P1. a limitation on the exercise of taxing powers by local government units (Sec 133 (j). LGC). land or water is located (Sec. Limitation (2010) (2007) 0 What is the nature of the taxing (XIII) XYZ Shipping Corporation is a branch of an international shipping line with power of the provinces.8 million is taxable in Quezon City where The City of Manila enacted an ordinance the principal office is located and 70% or levying a 2% tax on gross receipts of P4. the difference shall be paid before Mun. This is the “rule on preemption or taxed in their gross sales or gross exclusionary rule” which applies unless by receipts in the current year and not in express provision of law. (3%) shall record the sale in the branch or sales outlet making the sale and pay the tax in the city or municipality where the SUGGESTED ANSWER: branch or outlet is located.. of Victorias. LGC). Since the gross receipts of an under the Local Government Code? (2%) international shipping company is subject to tax under the Internal SUGGESTED ANSWER: Revenue Code. LGC). retired (Sec 145. Local Taxation: Retiring Business (2010) ALTERNATIVE ANSWER: (IIf) How are retiring businesses taxed No. Inc. where the factory is located. Taxing Power. v. voyages between Manila and the West Coast municipalities and cities? How of the U. year.S. maintains one factory. If the tax paid in the the power to tax that field already covered current year is less than the tax due on by the taxing power of the National gross sales or receipts of the current government (Victorias Milling Co. L-2113. the power to tax is impliedly withheld from local government Retiring businesses under the LGC are units. Inc. All the bills of lading and invoices are issued by the branch office powers? (5%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Can the City Government of Manila legally Under the law. manufacturers impose said levy on the corporation? maintaining a branch or sales outlet Explain. principal office.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. albeit will the local government units it does not have a branch or sales office in be able to exercise their taxing Manila.com dbaratbateladot@gmail. Nature Local Taxation. Since Ferremaro. No. the business is considered officially Sec 133. 1968. shall be allocated and 30% of said sales because taxes on the gross receipts of are taxable in the place where the transportation contractors and principal office is located while 70% is passengers or freight by hire and taxable in the place where the factory is common carriers by air. The company‟s vessels load and unload cargoes at the Port of Manila.2 million is taxable in Marikina City shipping lines using the Port of Manila. 150. LGUs are given the preceding year.

261 SCRA 667 Real Property Tax. and SUGGESTED ANSWER: 132. granted to a taxable person. an assessment against A for non-payment The local government units are of real property taxes. City of Cabanatuan. (3%) and collection of the taxes imposed in the said ordinances. A group of Tibetan monks approached A and offered to lease the power to tax by levying taxes. LGC) (Mactan Cebu International Airport Authority v. Article IV.com SUGGESTED ANSWER: Assessor assessed Mr. No. The Municipal beneficial use of the property (City of “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. directly and the Property (2013) exclusively used for religious purposes is exempt from the real property tax (Sec (VIII) Mr. (Section 129. the assessment is proper. a valid delegation of the power by the although owned by the municipality. A Real Property Taxation: Beneficial Use of property that is actually. collect all these taxes. is not exempt from real property tax Congress. (Sec 234 (a). Marcos. The property is exempt from real property tax by virtue of the beneficial use thereof by the Tibetan monks for their religious rituals and ceremonies. Mr.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Amado objected to the assessment. NPC v. (XIV) A inherited a two-storey building in Makati from his father. 401 SCRA 259 [2003]). The test of exemption and built a warehouse on the property for from the tax is not ownership but his business operations. them the authority to create their own Was the assessment proper? (5%) sources of revenue. A accepted the rental of P1 million for the of local autonomy. Phil. Amado leased a piece of land 234. owned by the Municipality of Pinagsabitan Constitution). but pursuant to a direct because the beneficial use has been authority conferred by the Constitution. contending that he should not municipalities and cities is directly be asked to pay realty taxes on the land conferred by the Constitution by giving since it is municipal property. Amado for real property taxes on the land and the The taxing power of the provinces. Sec 28(3). a real estate broker The local government units exercise the in the „60s. authorized to pass tax ordinances (levy) Is the assessor justified in assessing A‟s and to pursue actions for the assessment deficiency real property taxes? Explain. warehouse. and to assess and whole year. the City Assessor issued which will exclusively accrue to them. Local Government Code). Religious Activities (2010) [1996]. The land. LGC.”-Leroy Satchel Paige Page 68 of 125 .com dbaratbateladot@gmail. fees and building in order to use it as a venue for charges consistent with the basic policy their Buddhist rituals and ceremonies. The local SUGGESTED ANSWER: government units do not exercise the power to tax as an inherent power or by Yes. Exemption. fees and charges The following year.

manage and maintain the power barges for the [Note: The question is misleading. In 2011. The liability for the electricity to Southern Tagalog provinces. RPC should be held liable SUGGESTED ANSWER: therefor. Period (2012) the fuel of RPC into electricity. does not fall within the purview of the (IX) Republic Power Corporation (RPC) is a exempting provision of Sec 234(c) of RA government-owned and controlled 7160. 516 at the port of Batangas City. Taxpayer (2009) electric power. is very much from the Assessor of Batangas City. 234 [c] of R. Castillo liable for real government-owned and controlled property tax on the land beginning 2011 or corporation. machinery. (4%) Mr. another Filipino citizen. Mr. The Province of Batangas.A. a 0 When is Mr. fittings.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. is the actual. This belies the claim 1980). P1 Million. in citizen. effect on the first day of January of the The owner of the power barges is JEC succeeding year (Section 221. manage and maintain the Real Property Taxation: Liable for power barges for the purpose of converting Payment. and that JEC shall operate. which is required to operate. shall be for the Makati City in 1970 at a consideration of account of RPC. He purchased a parcel of land in respect of the power barges. Castillo shall be liable to the real property tax based on the re-assessment SUGGESTED ANSWER: beginning 2012. which remained undeveloped and idle had a fair In 2007. Mr. into electricity.com Baguio v. the contention of JEC is not correct. generation and transmission of Payment. Likewise. Antonio real property taxes on the power barges Ayala.LGC). Furthermore. JEC received an assessment of market value of P20 Million. in accordance with the terms of the lease agreement. In 2005. hence.”-Leroy Satchel Paige Page 69 of 125 . all of which JEC shall supply at its own cost. JEC interested in the property and he offered to sought reconsideration of the assessment buy the same for P20 Million. payment of the real estate taxes is RPC entered into an agreement with Jethro determined by law and not by the Energy Corporation (JEC). that RPC. Busuego. L-29772. purpose of converting the fuel of RPC Castillo is liable to the real property tax on “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. directly and exclusively used by RPC. the land. even assuming beginning 2012? Explain your answer. The Assessor on the ground that the power barges are of Makati City re-assessed in 2011 the exempt from real estate taxes under Section property at P10 Million. Sept 18. a government-owned and controlled corporation engaged in the Real Property Taxation: Liable for supply. (2%) that the power barges are subject to real property tax. All re-assessments made after the first day of any year shall take No. The contract also stipulates that all real estate taxes and 0 Mr. rates and other charges. 7160 as they are actually. v.com dbaratbateladot@gmail. provides that JEC shall own the power barges and the fixtures. Is the contention of JEC correct? Explain your answer. and equipment therein. for the lease of agreement of the parties (FELS Energy JEC's power barges which shall be berthed Inc. Jose Castillo is a resident Filipino assessments. direct and exclusive user of the barge. in order to provide devoid of merit. should be liable to the real property generation and transmission of electric taxes consonant with the contract is power. the argument that RPC corporation engaged in the supply. The contract SCRA 186 (2007)).

0 Are the importations of motor vehicles (IXa) Was the protest of the corporation from abroad subject to customs duties and filed on time? Explain. On June 30. When an assessment is protested. Base Area enjoy an exemption from customs duties and VAT. the treasurer 0 If they are taxable. No. otherwise the assessment becomes conclusive and unappeallable. Period to File Tariff And Customs Duties Protest and Appeal (2010) Customs: Exempted Transactions. 2009. 2008. (3%) comes first.00 from the corporation engaged in the importation and Pasay City Treasurer. The appeal was not filed on time. LGC). G. La Manga Trading Corporation received a deficiency business IV. 2009.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.R. In Treasurer. JKL Corporation is a domestic tax assessment of P1.com the property when he became the owner and unappeallable. 164171. On October 10. The No. December 2007. the corporation which it stores in a warehouse in Subic received a collection letter from the City Bay. because domestic corporations taxpayer has the right to protest an importing used vehicles that are “stored. sale of motor vehicles in the Philippines and the corporation contested the assessment is duly registered with the Subic Bay by filing a written protest with the City Metropolitan Authority (SBMA). the taxpayer re-assessment of the property. LGC). (3%) Executive Secretary v.000. provided they (IXb) Was the appeal with the Pasay RTC are registered with the SBMA (R. it imported several second- hand motor vehicles from Japan and Korea. 20 February SUGGESTED ANSWER: 2006). Since no decision on thereof although his liability increases upon the protest was made.A. filed on time? Explain.500. (4%) SUGGESTED ANSWER: SUGGESTED ANSWER: The protest was filed on time. to persons residing in the customs 2009 an appeal against the assessment territory.com dbaratbateladot@gmail. before the Pasay Regional Trial Court (RTC). drawing it to file on October 25. assessment within 60 days from receipt used or traded” within the Subic Naval thereof (Sec 195. It sold these motor vehicles in April Treasurer. The duties and taxes is paid? What are the taxpayer has 30 days from receipt of the bases for and purposes of computing denial of the protest or from the lapse of customs duties and VAT? To whom must the 60-day period to decide whichever the duties and VAT be paid? Explain. Since no decision becomes conclusive “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. when must the has 60 days within which to decide. Importation and Use within SBMA (2008) (IX) On May 15. Southwing Heavy Industries.] should have appealed to the RTC within 30 days from the lapse of the period to decide the protest (Sec 195. (3%) value added taxes? Explain.”-Leroy Satchel Paige Page 70 of 125 . 7096. 2009. Remedies in Local Taxes Taxpayer: Local Tax.

com dbaratbateladot@gmail. Philippines a luxury car worth US$100. Navarro. et al. The car.R. is his primary and exclusive jurisdiction and precludes the ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ̀ȀȀ ȀȀ ⠀ ⤀ Ā ᜀĀᜀĀ judge of regular courts form taking ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ⠀Ȁ̀Ȁ ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ cognizance of the subject matter. the Collector of Customs a criminal complaint for usurpation of discovered the underdeclaration and he judicial functions on the ground that only a initiated forfeiture proceedings of the judge may issue a warrant of search and imported car. No. seizure. No. Issuance of value being used by the Bureau for motor Warrant of Search and Seizure (2009) vehicles (Sec. VAT 0 Jessie brought into the Philippines a must be paid to the Bureau of Internal foreign-made luxury car. SUGGESTED ANSWER: No. (4%) favor of the government? Explain. William Antonio imported into the agents to a government impounding facility. was seized and brought by government IX. merit. Duties must be paid to the Bureau of Customs. See also seizure and detention by the Collector of Feeder International v. CA.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. as when there is underpayment of taxes and duties.000. 77 SCRA 264 (1977)). CFI of custody. G. Under-declaration of value is a The criminal complaint is bereft of ground for forfeiture (See Sec. a forfeiture proceeding under tariff and customs laws in not penal in nature. (3%) functions (Commissioner v. 0 May the Collector of Customs a. Resolve with reasons Jessie's declare the imported car forfeited in criminal complaint. (2008) then parked inside a pay parking garage. Aggrieved. Due to the discrepancy. US$20. the Bureau of Customs instituted seizure proceedings and issued a Customs: Forfeiture Proceeding. declared only for request for the withdrawal of the warrant.com SUGGESTED ANSWER: separate from the criminal liability that might be imposed against the indicted Duties and taxes must be paid upon importer or possessor and both kinds of release of the vehicle from Customs’ penalties may be imposed (Peo. The penalty in seizure cases is distinct and “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. used by the Bureau for assessing customs duties. Nature warrant of seizure and detention.. law. 17 November vehicles are based on the value being 1980). The Collector of Customs denied Jessie's This car was. Customs for goods released contrary to 94262. v. (3%) SUGGESTED ANSWER: SUGGESTED ANSWER: Yes. Jessie filed against the Collector Subsequently. VAT is also based on the Customs: Jurisdiction. ĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 Are Accordingly. and paid less than Revenue. 1206. The issuance of a warrant of Tariff and Customs Code. the actual taxes and duties due. 0 Would your answer be the same if the main purpose of which is to enforce the luxury car was seized while the administrative fines or forfeiture incident to unlawful importation of goods or their deliberate possession.000 and corresponding customs duties and taxes were paid thereon.”-Leroy Satchel Paige . Custom duties for motor Rizal. what was done by the forfeiture proceedings of goods Collector could not be a basis of a illegally imported criminal in prosecution for the usurpation of judicial nature? Explain. 107[A] NIRC). 31 May 1991). L-41686. however.

Page 71 of 125 .

1405 (Bank Secrecy Law) or under other general or special SUGGESTED ANSWER: laws. without related information held by financial violating the relevant bank secrecy laws? institutions of a specific taxpayer Explain your answer. Garnishment is an administrative to pay the tax assessed. regarding the deposits of a US Citizen residing in the Philippines. bank deposits of an a signatory or party of (Section 3. RA individual taxpayer may not be disclosed 10021). (5%) In case a taxpayer files an application to compromise the payment of his tax SUGGESTED ANSWER: liabilities on his claim that his financial position demonstrates a clear inability No. tax delinquency of said taxpayer is settled with the BIR? Explain your answer. who is under examination by the officials of Other Related Matters the US IRS. pursuant to the US. The Commissioner Commissioner of Internal Revenue. his application remedy allowed by law to enforce a tax shall not be considered unless and until liability. cannot be seized by officers of taxpayer (Section 6. As a general rule. (A) May the bank deposits – peso and Yes. TCC.”-Leroy Satchel Paige Page 72 of 125 . Revenue to get the information from a bank in the Philippines. Should the BIR Commissioner agree to obtain such information from the bank and provide the same to the IRS? Explain your answer. by a commercial bank to the Commissioner. Pacis v.com parked inside the garage of Jessie's he waives in writing his privilege under residence? Why or why not? (4%) Republic Act No. the 0 Is the bank secrecy law in the Commissioner is authorized to inquire Philippines violated when the BIR issues a into the bank deposits of: (1) a decedent Warrant of Garnishment directed against a to determine his gross estate. As exceptions. the Bureau of Customs exercising police authority without a search warrant 0 In 2011 the Commissioner of the US issued by a judge of a competent court Internal Revenue Service (IRS) requested in (Sec 2209. 56 writing the Commissioner of Internal SCRA 16 (1974)). and such waiver shall constitute the authority of the Commissioner to No. Bank accounts shall be “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. The Commissioner should agree to foreign currency – of an individual taxpayer the request pursuant to the principle of be disclosed by a commercial bank to the international comity.Philippine Tax Treaty and other existing laws. Pamaran. NIRC).com dbaratbateladot@gmail. The luxury car being in a dwelling inquire into the bank deposits of the house. in of Internal Revenue has the authority to connection with a tax investigation being inquire into bank deposit accounts and conducted by revenue officials.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. and (2) domestic bank requiring it not to allow any any taxpayer who has filed an withdrawal from any existing bank deposit application for compromise of his tax of the delinquent taxpayer mentioned in the liability by reason of financial incapacity Warrant and to freeze the same until the to pay his tax liability. (5%) BIR: Bank Deposits Secrecy Violation (2012) SUGGESTED ANSWER: VII. (5%) subject of a request for the supply of tax information from a foreign tax authority SUGGESTED ANSWER: pursuant to an international convention or agreement to which the Philippines is No.

What tax consequence follows? (1%) 2 Yes. does garnishment. 2002 out of business. 57767. ABC Corp. the Upon receipt of the warrant of tax exemption of MGC Corp. should deduct a final this is illegal m the Philippines. Nov. The law was thought to be 0 Section 39. 3 Double taxation is allowed 1 The stockholders should where one tax is imposed by the declare their gain from their national government and the investment and pay income tax at other by the local government. 2003 3 ABC Corp. 3 The dividends are exempt if paid before the end of MGC Corp. 25. secured The cigarette company is __________ (1%) an income tax holiday for 5 years as a 0 wrong because taxes are the pioneer industry.'s fiscal year. manager.com garnished by serving a warrant of its stockholders. the bank shall turn over to not extend to its stockholders. 0 The dividends are taxable. the Commissioner so much of the bank 1 The dividends are tax exempt accounts as may be sufficient to satisfy because of MGC Corp. MCQ (October 13.. tax. the ordinary rates. upon the president.'s retained earnings. all of whom are garnishment upon the taxpayer and individuals. treasurer Are the dividends taxable? (1%) or other responsible officer of the bank. Nov.'s income tax the claim of the Government (Section holiday. declared and paid cash dividends to “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige Page 73 of 125 . He comes to you for advice because he thinks he is being subjected to double taxation.R.com dbaratbateladot@gmail. sufficient to drive many cigarette companies 11. IV. MGC Corp. dividends were declared and paid to the 1 The City of Makati does not have stockholders. Jan. BIR Ruling 39-02.R. MULTIPLE CHOICE SUGGESTED ANSWER: 0 Sunio v. Congress passed a sin tax law that increased the tax rates on cigarettes by SUGGESTED ANSWER: 1. should withhold a 10% creditable tax. No. NLRC.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. SUGGESTED ANSWER: 2 The dividends are exempt from 0 CIR v. 208. ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 MGC Corp. Solidbank Corp. tax of 10% from the dividends. No. NIRC). this power. Alas sells shoes in Makati through a retail store. 1984 QUESTIONS (MCQ) 0 Mr. On the fourth year of the lifeblood of the government tax holiday.000%. and was questioned in court by a cigarette company that would go ̀Ȁ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ̀ȀȀ ȀȀ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀ out of business because it would not be ᜀĀᜀĀᜀĀᜀĀᜀ⸀ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā able to pay the increased tax. there is double taxation and I. He pays the VAT on his gross sales to the BIR and the municipal license tax based on the same gross sales to the 2013 Taxation Law Exam City of Makati. 148191. 31. there is double taxation and 0 ABC Corp. was dissolved and liquidating it is oppressive. G. G. 2013) What advice will you give him? (1%) 0 Yes. 2 The dividends are taxable if they exceed 50% of MGC Corp.

Is the person. is the power to destroy 1 No.000 2 correct because Congress. It wants to pay but due to Commissioner lack of cash. SUGGESTED ANSWER: 2 The assessment is valid but Mr. the class. It received an SUGGESTED ANSWER: assessment from the BIR for deficiency 0 Section 228. these facts? (1%) 3 It should not grant permission 0 No.000 via a telegraphic transfer through permission? (1%) the Bank of PI. 0 It is unconstitutional because it without any explanation of the factual and clearly discriminates against this legal bases for the assessment.com 0 wrong because the law 0 Yes.I. At that time.000 were can deprive a person of his credited to her. The municipality of San Isidro passed Maryland. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. He installation manager in the municipality. G. the funds in excess of$1. 3 The assessment is invalid VIII. Alvarez has no way to panels and is almost at the point of determine if the computation is insolvency. received a deficiency tax assessment from thus. taxpayers. there was only one V. VI. v. case. Mr. but Helen because a tax is generally a refused. 78953 ᜀĀᜀĀᜀĀᜀĀᜀ㐀 ȀȀ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 McCulloch v. It has no more cash and all it erroneous. exceeded its power to tax SUGGESTED ANSWER: SUGGESTED ANSWER: (B)Javier v. The bank demanded the return of the 1 It should not grant permission mistakenly credited excess. investigated Helen.R. it seeks permission to pay in kind with glass panels.”-Leroy Satchel Paige Page 74 of 125 . law requires a statement of the 3 It is constitutional because the facts and the law upon which the power to tax is the power to destroy. XYZ Corporation would that Helen earned taxable income under not be able to pay.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Mr. Azucena Reyes v. income taxes. all that legal basis. only he would be liable for the tax. The BIR entered the picture and pecuniary burden. applies to all persons in that 1 The assessment is invalid. Mr. Commissioner. (C)Shell Co. No. Platon sent his sister Helen Should the BIR grant the requested $1 . XYZ Corporation manufactures glass because Mr. NIRC. livelihood 2 No. Is the BIR containing only the computation of the law constitutional? (1%) the deficiency tax and the penalties. Alvarez is in the retail business. she had no income because because the government does not she had no right to the mistakenly credited funds. income is income recognizes that the power to tax regardless of the source. The bank's remittance clerk 0 It should grant permission to made a mistake and credited Helen with make payment convenient to $1. VII. has are unsold glass panels. it was not her fault that the 1 correct because no government funds in excess of $1. Would the BIR be correct if it determines otherwise.000 which she promptly withdrew. 2 It should grant permission. of P. Alvarez has to know is the 2 It is constitutional as it amount of the tax. assessment valid? (1%) 1 It is unconstitutional for lack of 0 The assessment is valid. assessment is based. 94 Phil 387 Alvarez can still contest it. 199 SCRA ̀̀⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ̀̀̀ Ȁ̀Ȁ ⠀⤀ĀᜀĀᜀĀᜀĀ 824. 4 Wheat 316 (1819) an ordinance imposing a tax on installation managers.S.com dbaratbateladot@gmail. 17 U. Vaño. in this were in effect donated to her. In 2010.000.

the considered the taxable sale.”-Leroy Satchel Paige . 2010). May 5. The government must waive the statute of limitations. No. B. (C)Koppel Philippines Inc.com dbaratbateladot@gmail. 77 3 The waiver is valid. acceptance. The plan is improper. PRT Corp. 0 The waiver is valid because the C. 178087. (1%) give the BIR more time to complete its A. IX. XII. Taxpayer A was required by the BIR to paying any sales tax on this subsequent sign and submit a waiver of the statute of sale. Andy received the live in a smaller house. Eight (8) days later (or on president declared that because they are January11. The plan is a legitimate exercise investigation. he and his wife could very well comment or file a protest. Kudos Metal Corp. and lot with a swimming pool in an upscale G. selling its assembled cars to Gonmad at a SUGGESTED ANSWER: low price so it would pay a lower tax on the (A)Section 33. there and did not demand free Gonmad Motors. NIRC. before he could childless. suspension of the prescriptive SUGGESTED ANSWER: period. limitations on the assessment period. v. Inc. and of housing. so that the second sale will be 1 The waiver is invalid.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. it reasoned out that the company president 2010 a preliminary assessment notice (PAN) must maintain a certain image and be able from the BIR. 3-98 first sale. Yatco. sales of cars were 1 There was a taxable fringe subject to a sales tax but the tax applied benefit because the house was very only to the original or the first sale.R. The BIR accepted the waiver of tax planning and merely takes but failed to indicate the date of its advantage of a loophole in the law. Prior to the VAT law. SUGGESTED ANSWER: X. purchased a residential house (C)Commissioner v. having been Phil 496 accepted by the BIR. The plan is legal because the What is the legal status of the waiver? (1%) government collects taxes anyway. (1%) ̀̀⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ㨀 ȀȀ⠀⤀Āᜀ 0 The FAN is invalid. final assessment notice (FAN). the veil date of acceptance is immaterial and of corporate fiction can be pierced unimportant.. (Gonmad). 2010 subdivision and required the company president to stay there without paying rent. Gonmad would then sell the cars to the public at a higher price without XI. second and subsequent sales were not 2 There was no taxable fringe subject to tax. was necessary for its business. The company file a protest. to Characterize the arrangement. stating that he had fifteen to entertain guests at the house to promote 0 days from its receipt to comment or to the company's business. (Deltoid) hit on the idea president was only required to stay of setting up a wholly-owned subsidiary. the date Gonmad's separate juridical of acceptance is crucial in personality and Deltoid's taxable counting the start of the period of sale to it. Taxpayer Andy received on January 3. the luxurious. benefit because the company Deltoid Motors. RR No.com have the storage facilities for glass convenience of the employer and panels. taxpayer cannot be required to D. Was there a taxable fringe benefit? (1%) Decide on the validity of the FAN. respect 2 The waiver is invalid. Inc. SUGGESTED ANSWER: 0 There was a taxable fringe (B)Characteristics of Taxes benefit since the stay at the house was for free. Andy was ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀ not given the chance to respond ᜀĀᜀĀᜀĀᜀ̀̀̀ Ȁ̀Ȁ ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 There was no taxable fringe benefit since it was for the “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

Page 75 of 125 .

It owns electric concentrates should be taxed at 7% duty poles which it also rents out to other rate. Pheleco is a power generation and the concentrates. Pheleco without filing a motion for reconsideration. the fee is reconsideration is a useless based on rental income and is exercise. should await the protest to the PAN 3 The CIR is correct.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ䀀ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀ 1 The appeal should be given due ĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0 course since a motion for The ordinance is void. the amount 2 The FAN is valid. 12-99 SUGGESTED ANSWER: (D)Spouse Evono v. imports orange and lemon Finance. Department of XIII. Taguig passed an MSI's position. Aleta sued Boboy for breach of promise to marry. (1%) 0 The appeal should be dismissed ̀Ȁ⠀⤀Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀ for having been filed out of time. concentrates as raw materials for the fruit June 4. RA 7160 XVI. Rule 8. an LGU may impose a tax on income. the BOC distribution company operating mainly changed its position and held that the from the City of Taguig. 1% of annual co-purchasers in the Deed of Absolute Sale. (1%) process rights. The ordinance is valid. Boboy lost the case and duly paid . 2 The CIR is correct.000 ᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ2 and included their two (2) minor children as The ordinance is void. financial 1 The FAN is valid since it was capacity is not a requirement for a issued before the right to assess valid sale. 705. 1 The CIR is wrong.000.com dbaratbateladot@gmail. RR No. CTA EB Case No. ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀ XIV. SUGGESTED ANSWER: (B)Section 129. a donation 0 The FAN is invalid for being must be express. (1%) the ground that it imposes an income tax (A) The appeal should be which local government units (LGUs) are dismissed because a motion for prohibited from imposing. 0 The CIR is wrong. The spouses Jun and Elvira Sandoval ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ䀀ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ purchased a piece of land for P5. ĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ1 SUGGESTED ANSWER: The ordinance is valid as a (A)RA 9282.. 2012 drinks it sells locally. The Commissioner of ordinance imposing a fee equivalent to 1% Customs appealed to the CTA en bane of the annual rental for these poles. in violation of his due Rule on the CIR's action. MSI disagreed with the ruling and companies that use poles such as telephone questioned it in the CTA which upheld and cable companies. al. premature. MSI Corp. there was because protest to the PAN is not animus donandi since the mandatory.com to the PAN. Rule on the validity of the ordinance. The Bureau of Customs (BOC) imposed a 1% duty rate on XV. Revised Rules of the legitimate exercise of police CTA power to regulate electric poles. prescribed. rental is excessive and oppressive. children had no financial capacity SUGGESTED ANSWER: to be co-purchasers. et. reconsideration is mandatory. The Commissioner of Internal Revenue ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀ (CIR) ruled that there was an implied ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ䀀ȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ donation and assessed donors' taxes ᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ3 against the spouses. questioned 'the legality of the ordinance on Resolve the appeal. NIRC. (A)Section 228. therefore a tax on income. 2 The appeal should be upheld to ̀̀⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀Ā ᜀ be fair to the government which ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ䀀 ȀȀ ⠀ ⤀ Ā ᜀĀᜀĀᜀĀᜀ needs taxes. Subsequently. There is no involved is huge and ultimately ends legal requirement that the FAN up with the children.

the court's award that included.”-Leroy Satchel Paige Page 76 of 125 .000 as moral damages for the mental anguish Aleta suffered. Pl00. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. among Did Aleta earn a taxable income? (1%) others.

Z made an importation which he submit to the BIR a summary list of their declared at the Bureau of Customs (BOC) sales and purchases during the year. 2 She had no taxable income XIX. A.000. tax. (1%) 0 Mr. June 4. the container vans contained buyer and the amount. Mr. 2 Mr. consult his accountant. Mr. interpose in an assessment against it smuggling. NIRC 0 The BIR. by the BIR? (1%) “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. A is not guilty of fraud as 0 The property will form part of he simply followed the advice of Mr.000. the customs area. He sought the opinion of his lawyer who advised him to report the commission XVII. Z only made a Which of the following defenses may XYZ misdeclaration. No. A's petition against the BIR lived. Mayuga's gross estate because it (A)CIR v. commission in the succeeding year. assessment. purchased from XYZ Corp. 1 Mr. goods 0 Mr.com dbaratbateladot@gmail. the BIR discovered that in 2004 ABC Characterize Mr. Z's action. the court ruled against Mr. In the Deed of Donation. in usufruct over the property for as long as he Mr. Mr. Pl. Z did not commit smuggling P100. he 1 The property will not fom1 part deliberately did not report the of Mr. (1%) Corp.com (A) She had a taxable income of 0 Mr. but did not commit Corp. CA. Rieta v.”-Leroy Satchel Paige Page 77 of 125 . as "Used Truck Replacement Parts". A's lawyer should pay the tax 2 The property will form part of for giving the wrong advice. NIRC year. Mr. 436 SCRA 273 she made a profit.R. 2 Mr. did not 1 Mr.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. TCCP. through the Commissioner. instituted a system requiring taxpayers to XVIII. lists. Based on these 15 units of Porsche and Ferrari cars. A guilty of fraud? (1%) taxation perspective. The Mayuga expressly reserved for himself the lawyer's advice turned out to be wrong. commission he earned should be declared SUGGESTED ANSWER: for the current year or for the succeeding (D)Section 32 (B)(4). Mr. A was preparing his income tax since moral damages are return and had some doubt on whether a compensatory. Mayuga's gross estate when his lawyer. worthP5. He heeded his house and lot to his son and duly paid the lawyer's advice and reported the donor's tax. 119322. XYZ Corp. is no longer his. Z committed smuggling. 3 The property will not form part of SUGGESTED ANSWER: Mr.000. Upon indicating the name of the seller or the investigation.000. (A)Section 3601. 1996 SUGGESTED ANSWER: (A)Section 85(B). Mayuga's gross estate when commission in the current year he dies because he paid the donor's when he should have done so. Mayuga donated his residential in the succeeding year. People 1 She had taxable income since of the Philippines. Mayuga's gross estate because 3 Mr. Describe the donated property from the Is Mr. A is guilty for failing to he died soon after the donation. 0 She had no taxable income SUGGESTED ANSWER: because it was a donation. A is guilty of fraud. he dies.000 since income is income because the shipment has not left from whatever source. G. Z did not commit smuggling declare these for income tax purposes as its because he submitted his shipment reported gross sales for 2004was only to BOC examination.

Bank A is subjected to the 5% gross receipts tax on its interest income on loan transactions to customers. ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀ ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀЀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ ᜀĀᜀĀᜀ䜀ĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ1The third party information is inadmissible as hearsay evidence. 2 There is no double taxation because the income tax is on the interest income of Bank A on its deposits with Bank B . while the second tax is business tax. while the gross receipts tax is on the interest Income received by ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀ ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀЀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ ᜀĀᜀĀᜀ䜀ĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0The BIR has no authority to obtain third party information to assess taxpayers. 2012) 0 Bank A deposited money with Bank B which earns interest that is subjected to the 20% final withholding tax.com (passive income). 1 There is no double taxation because the first tax is income tax. (D) None of the above. Which statement below INCORRECTLY describes the transaction? 0 There is double taxation because two taxes . ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀȀ⠀⤀ĀᜀĀᜀ ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀЀȀȀȀ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ ᜀĀᜀĀᜀ䜀ĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ2The system of requiring taxpayers to submit third party information is illegal for violating the right to privacy. NIRC 2012 Taxation Law Exam MCQ (October 14.income tax and gross receipts tax are imposed on the interest incomes described above. and double taxation is prohibited under the 1987 Constitution. At the same time.com dbaratbateladot@gmail. SUGGESTED ANSWER: (D)Sections 5 and 6.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.

the GRT is neither deducted Tax] is the passive income generated in nor withheld. Second. operate within the same Philippine SUGGESTED ANSWER: jurisdiction for the same purpose of 0 There is no double taxation if the law raising revenues. the taxing periods they imposes two different taxes on the same affect are different. On the matter of the FWT [Final Withholding other hand. (active income). The subject quarter in which it is earned. while same taxing authority . “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. subject matter of the GRT [Gross Receipts Tax] is the privilege of engaging Bank A from loans to its debtor-customers in the business of banking. while the (Commissioner of Internal Revenue vs. the and withheld as soon as the income is taxes herein are imposed on two earned. First. and is paid after every calendar different subject matters.”-Leroy Satchel Paige Page 78 of 125 . but is paid only after every the form of interest on deposits and taxable quarter in which it is earned. although both taxes are national in 0 Income tax on interest income of scope because they are imposed by the deposits of Bank A is a direct tax.the national GRT on interest income on loan transaction government under the Tax Code . The FWT is deducted income. business or property.and is an indirect tax. yield on deposit substitutes.

2003). No. 1 The underlying basis of taxation is 0 Which of the following statements is government necessity. people. government due notice thereof may be fairly cannot fulfil its mandate of promoting presumed (Commissioner of Internal the general welfare and well-being of the Revenue vs.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. without taxes. 149110 April 9. statutes levying taxes 2 Taxation is an arbitrary method of are construed strictly against the exaction by those who are in the seat of government. 0 In case of doubt. the taxpayer. power.com dbaratbateladot@gmail. 1 The construction of a statute made by 3 The power of taxation is an inherent his predecessors is not binding upon the power of the sovereign to impose burdens successor. revenues”. No. 2009). ̀Ȁ⠀⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀȀȀ⠀⤀ĀĀȀȀ⠀Ā⤀ĀᜀĀᜀ ĀᜀĀᜀĀᜀĀᜀĀᜀȀȀȀ⠀⤀ĀĀȀȀ⠀Ā⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ (4) Which statement is WRONG? ᜀĀĀĀĀȀȀȀ⠀Ā⤀ĀᜀĀᜀĀᜀĀᜀĀ0 Which statement below expresses the lifeblood theory? . if 0 Taxes are the lifeblood of the said reversal will be prejudicial to the government.R.R.R. 147375 dated June 26. government can neither exist nor 3 A memorandum circular promulgated endure. No. 0 The assessed taxes must be enforced by 2006) the government. promote public interest and common SUGGESTED ANSWER: good. a government can neither exist nor endure. (National Power Corporation vs. 180066 dated July 8. the exercise of taxing power violations of certain rules needed not be derives its source from the very published in a newspaper of general existence of the state whose social circulation or official gazette because it contract with its citizens obliges it to has the force and effect of law. A principal attribute of by the CIR that imposes penalty for sovereignty. for without taxes.com BPI. if thereafter he becomes satisfied upon subjects and objects “within its that a different construction should be jurisdiction for the purpose of raising given. City of Cabanatuan. G. G. G. Philippine Airlines. The theory behind the exercise of 0 A revenue memorandum circular the power to tax emanates from shall not begin to be operative until after necessity. for without NOT correct? taxation. 2 The reversal of a ruling shall not SUGGESTED ANSWER: generally be given retroactive application.

”-Leroy Satchel Paige Page 79 of 125 .“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

system. taxable only on income derived from SUGGESTED ANSWER: within the Philippines] 0 General Principles of Taxation “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. global tax system. Philippines.com dbaratbateladot@gmail. and all allowable taxpayer. NIRC 0 All taxable incomes. home located in Fort Bonifacio. United Kingdom. its 0 Income from the performance of service is political subdivisions. constitutional limitations. regardless of the 0 For income tax purposes. if: 1 Generally. there is no limit on the amount of tax that may be imposed. 0 The Philippines adopted the semi-global SUGGESTED ANSWER: tax system.com 0 The power of taxation may be exercised by the government. part of the public funds. 1 All incomes subject to final 0 Filipino citizen residing in Makati City. 1 The contract calling for the performance 3 The power of tax is subject to certain of service is signed in the Philippines. which means that: 0 Section 42. who is a: taxable income. 0 The payment of compensation for the 2 The money contributed as tax becomes service is made in the Philippines. 2 All taxable incomes are subject to final SUGGESTED ANSWER: withholding taxes under the schedular tax 0 Section 23 in relation to Section 42. 2 The service is actually performed in SUGGESTED ANSWER: the Philippines.”-Leroy Satchel Paige Page 80 of 125 . withholding taxes are liable to income 1 Non-resident Filipino citizen working tax under the schedular tax system. are added together to the service income is important for the arrive at gross income. 3 Domestic corporation. and public treated as income from within the utilities. and residing in London. 5888 Inherent Powers of the State 3 The recipient of service income is a resident of the Philippines. the source of nature of income. NIRC 3 All taxable incomes from sources within [NOTE: C is also a correct answer and without the Philippines are liable to considering that resident aliens are also income tax. while all ordinary income as well as 2 Japanese citizen who is married to a income not subject to final withholding Filipina citizen and residing in their family taxes are liable to income tax under’ the. Taguig City.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.

00 (selling price of Philippines that does business in another P900.000.00 and cost is P800.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com 23 Interest income of a domestic in 2010 and derived a gain of P1 Million commercial bank derived from a peso loan therefrom. 5891 Exempt from income tax.00). The country. Philippines that engages business in special 2 Ordinary income tax at the graduated economic zone. NIRC ̀̀⠀⤀ĀȀ̀ ̀Ȁ ⠀Ā⤀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀĀЀȀȀ⠀ Ȁ Ā⤀ Ā ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ㌀ ȀȀ ⠀ ⤀ĀĀȀȀ ⠀ Ā ⤀ Ā ᜀĀᜀĀᜀĀᜀ 0 During the audit conducted by the BIR ĀᜀĀᜀĀᜀĀĀĀĀĀȀȀ⠀Ā⤀ĀᜀĀᜀĀᜀĀᜀĀ0 Sectio n 22(H). based on net capital gain. who is a real estate dealer. SUGGESTED ANSWER: SUGGESTED ANSWER: 0 Section 24. sale is subject to income tax as follows: 1 Organized under the laws of a foreign country that sets up a regional headquarter 0 6% capital gains tax on the gain. whichever is tax. Makati City. in the Philippines doing product promotion 1 6% capital gains tax on the gross selling and information dissemination. country that engages in business in 3 30% income tax on net taxable income.com dbaratbateladot@gmail. whichever is 2 Organized under the laws of the higher.5% final withholding price or fair market value. NIRC ()0 A resident foreign corporation is one that is: 0 An individual. NIRC official.000. Philippines. it was found that the rental income claimed by the corporation was not 0 A dealer in securities sold unlisted shares of stocks of a domestic corporation “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. The gain is: to a domestic corporation in 2010 is: 5888 Taxable at 30% regular corporate income tax based on net taxable income. 0 Subject to the 30% income tax based 5889 Taxable at 5%/10% capital gains tax on its net taxable income. price or fair market value. rates of 5% to 32% of net taxable 3 Organized under the laws of a foreign income. higher 3 Subject to 10% final withholding tax.000.”-Leroy Satchel Paige Page 81 of 125 . sold a residential lot in Quezon City 0 Organized under the laws of the at a gain of P100. 1 Subject to the 20% final withholding 5890 Taxable at ½ of 1% stock tax. transaction tax based on the gross selling 2 Subject to the 7. SUGGESTED ANSWER: SUGGESTED ANSWER: 5888 Section 27(A) ()0 Section 22(U) in relation to Section 27.

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corporation during the audit. provided that the 5% Љ2304 Cash method. (A) Section 127.com subjected to expanded withholding tax. 6145 That is composed of individuals who 1 The sale is subject to income tax exercise a common profession. 6147 That derives professional income 3 The sale is both exempt from the stock and rental income from property owned by transaction tax and income tax.com dbaratbateladot@gmail. Љ2306 Instalment sale method. NIRC Accordingly. expanded withholding tax is paid by the Љ2305 Accrual method. Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.e. NIRC [Note:The question is unfair because it gives an initial impression that the . ĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀ SUGGESTED ANSWER: ĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄ ऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄᤀ ĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄ ऀऀሄᤀऀऀ 0 Section 34(K). of the corporation due to non. 6144 That is registered as such with the 0 The sale is exempt from income tax Securities and Exchange Commission and but subject to the ½ of 1% stock the Bureau of Internal Revenue. transaction tax.. it. NIRC ᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀ Ą Section 127. than a year to finish) is: 769Is deductible from the gross income of the corporation. it takes more income tax by the corporation. NIRC 0 A resident Filipino citizen (not a dealer in securities) sold shares of stocks of a tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt domestic corporation that are listed and traded in the Philippine Stock Exchange. despite non-withholding of construction contract (i. SUGGESTED ANSWER: withholding of tax. 770Is not deductible from gross income Љ2307 Percentage of completion method. Which statement above does NOT SUGGESTED ANSWER: properly refer to a GGP? SUGGESTED ANSWER: 0 Section 26. if it can be shown that ĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄ the lessor has correctly reported the rental ऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄ ऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀ income in his tax return. computed at the graduated income tax 6146 That exclusively derives income rates of 5% to 32% on net taxable Income. ऀऀሄᔀऀऀĄऀऀĄऀऀIĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀ ĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀሄᔀऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀĄऀऀ 771Is deductible. from the practice of the common 2 The sale is subject to the stock profession. transaction tax and income tax. the claimed rental expense: 0 The appropriate method of accounting 768Is deductible from the gross income of for a contractor on his long-term the corporation.

examiner is asking the statement which best characterizes a GPP but the real question is found after the enumeration .

”-Leroy Satchel Paige Page 82 of 125 .“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

whereby an expense is determined exactly. where the full amount of the test is satisfied where a computation consideration is paid in full by the buyer may be unknown. is satisfied where computation remains 1 A person who uses the instalment sales uncertain.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 2 Is deductible only for a period of five years from date of purchase. 0 A person who uses the completed 0 The interest expense of a domestic method. The all-events test requires the right to 3 Is deductible only if the taxpayer uses income or liability be fixed.”-Leroy Satchel Paige Page 83 of 125 . The 2 A person who uses the accrual amount of liability does not have to be method. been met. This test requires: (1) fixing of 1 Is deductible from the gross income a right to income or liability to pay. whereby the construction project corporation on a bank loan in connection has been completed during the year the with the purchase of a production contract was signed. amount of such income or liability be SUGGESTED ANSWER: determined with reasonable accuracy. only that a taxpayer has at his disposal the information 0 A person who uses the cash method necessary to compute the amount with where all sales have been fully paid by the reasonable accuracy.com dbaratbateladot@gmail. equipment: SUGGESTED ANSWER: 0 The accrual of income and expense is 0 Is not deductible from gross income of permitted when the all-events test has the borrower corporation. within the taxable year. unknowable.] with reasonable accuracy. it must be deductible for the taxable year in which determined with “reasonable accuracy. and of the borrower-corporation during the 0 the availability of the reasonable year or it may be capitalized as part of accurate determination of such income cost of the equipment. and the the cash method of accounting. determined the fact of the liability and “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.” all the events had occurred which (Commissioner of Internal Revenue vs. or liability. method. NIRC However. The all-events test buyers thereof. 0 Section 34(B)(3). if its basis is unchangeable. the test does not demand that the amount of income or liability be (17) The “all events test” refers to: known absolutely.com of the choices which might not be the amount thereof could be determined noticed by the examinee. but is not as much thereof within the year of sale.

”-Leroy Satchel Paige Page 84 of 125 .R. except real Which statement is correct? A non-stock. who is to be married during the year. in lieu Retirement benefits received from the GSIS. G. abroad.two Mandated to pay the 30% regular corporate (2) donations are made by Mr. 2007) (B) Section 30. program of the corporate employer. final tax on gross income earned. No. whichever is higher. Spouses Antonio to members of the family.com Isabela Cultural Corporation. property tax. ABS Corporation is exempt from the 30% Separation pay received by a retiring corporate income tax on net income. Antonio to Roberto and Josefina. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. non-profit charitable association that sells SUGGESTED ANSWER: its idle agricultural property is: Sections 23 & 24. expanded withholding tax rate on the The four (4) donations are made by the transaction and remit the same to the BIR. RA 7916 Not required to file an income tax return. and Mrs. and two Required to withhold the applicable (2) donations are made by Mrs. Mr. provided the sales proceeds are market value of P10 million to their son. SUGGESTED ANSWER: 172231 February 12. Melencio income tax on the gain from sale.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail. or accredited retirement plan. employee under a voluntary retirement provided it pays value added tax. Section 32(B)(6) ABS Corporation is exempt from all national and local taxes. NIRC All the items below are excluded from gross ABS Corporation is a PEZA-registered income. Which Required to pay the 6% capital gains tax statement below is INCORRECT? on the gross selling price or fair market value. ABS Corporation is subject to the 30% SUGGESTED ANSWER: corporate income tax on net income. same year to Josefina Angeles. of all national and local taxes. Which statement is NOT correct? debentures and indebtedness. Melencio nor pay income tax one the transaction to Antonio donated a house and lot with a fair the BIR. Antonio. There are four (4) donations made . Value of property received by a person as ABS Corporation is subject to the 5% donation or inheritance. SSS. In May 2010. invested in another real estate during the Roberto. except: export enterprise which manufactures cameras and sells all its finished products Gain from sale of long-term bonds.

16 Million On January 10. Vicente Tagle. USA. Hospital. bought 10. a retiree. Mr. view of a car accident in 2010. Cash 5%/10% capital gains tax on the capital in BPI Makati . Funeral value of the shares over the expenses paid . NIRC. NIRC.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Car in Quezon gain from sale of P40 per share (P50 City . Maria Reyes.000. RR No.com dbaratbateladot@gmail.”-Leroy Satchel Paige Page 85 of 125 . book value (P60 per share). single- mother. Section 24(C) in relation to Section 100. 14 Million.com hence. the said shares had a from the gross gift as donation proper book value per share of P60 per share.US$10. In 2010.000 CDA shares that are Two (2) donations made by the spouses unlisted in the local stock exchange for P10 to Roberto are entitled to deduction per share.00. leaving personal and real 5/%10% capital gains tax on the capital properties with market values as follows: gain of P50 per share. gain from sale of P40 per share (P50 selling died on January 20.US $5. Vicente SUGGESTED ANSWER: Tagle had to sell his CDA shares but he Section 101. 2011 in a California price less P10 cost). SUGGESTED ANSWER: 13 Million.000. Tang Ho v. arrived at by House and Lot in Quezon City. US corporation listed in NY tax on the excess of the fair market Stock Exchange . Shares of stocks of Apple selling price less P10 cost) plus donor’s Corporation.P10 million. Mr.P1 million. while two (2) In 2006. deducting the cost (P10 per share) from the Cash in bank in California . Assume consideration. resident Filipino citizen.00. 5%/10% capital gains tax on the capital Jose Francisco. In nuptias. Court of could sell the same only for P50 per share.000.US$5. 2011. donated cash in the amount “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. other donations are made to strangers. Mr. 6-2008 15 Million. NIRC Two (2) donations are made by the spouses to members of the family. subject to the graduated donor‟s tax SUGGESTED ANSWER: rates (2%-15%). His gross Graduated income tax rates of 5% to 32% estate for the Philippine estate tax purposes on the net taxable income from the sale of shall be: the shares. (B) Section 85.00.P4 million. P2 million. Appeals The sale is subject to tax as follows: While he was traveling with friends. conversion rate of US$1=Php50. Citibank in New York .

8 million and cash of P100. gross selling price of P2. SUGGESTED ANSWER: SUGGESTED ANSWER: Section 85 & 86. Maria Reyes is exempt from donor‟s tax in Taxable at 12% VAT output tax on the 2011 because the donee is minor.00. because the net estate is zero.000.00. Which official in the same corporation for a statement is correct? consideration of P2.00. gross selling price. regardless of the P100.5 because net estate is P1.00.000. single.00.000. NIRC Jose Ramos. Is exempt from VAT.00 to her daughter Cristina.”-Leroy Satchel Paige Page 86 of 125 . despite the fact that it because net estate is P1. Maria Reyes is exempt from donor’s tax Exempt from VAT because the property in 2011 because gross gift is sold is a capital asset.000.5 Million.000.650.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. NIRC SUGGESTED ANSWER: Section 106.000. provided that his total His estate will be subject to estate tax importation of flowers does not exceed P1.5 million. she donated official of a domestic corporation to another another P50.5 million.00. do not exceed P2. person. Funeral Is liable for VAT.000.com of P50.com dbaratbateladot@gmail. did not register as a VAT person and its His estate will be subject to estate tax total annual sales of flowers do not because net estate is P800. 2011.000.5 million in 2011 is: Maria Reyes is subject to donor‟s tax in Exempt from VAT because the gross sales 2011 because gross gift is P100. leaving a residential An importer of flowers from abroad in 2011: house and lot with a market value of P1. a person engaged in real estate business. Maria Reyes is exempt from donor‟s tax in Exempt from VAT because the seller is not 2011 only to the extent of P50.000. exceed P1. His estate will be subject to estate tax Is liable for VAT. NIRC “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Is exempt from VAT. if it registers as a VAT expenses paid amounted to P250. because the goods are His estate will be exempt from estate tax treated as agricultural products.00.00. 2011. SUGGESTED ANSWER: Which statement above is INCORRECT? Section 99(A).00 to Cristina. and Sale of residential house and lot by an on December 20.700. Million. NIRC Section 107.000. died of a heart attack on October 10.

During the year Title VI (Other Percentage Taxes). February 26. SM Prime Holdings Inc. P10 Million. No.. and from gross selling price from sale of SUGGESTED ANSWER: unclaimed properties. P8 Million. VAT. 12% VAT. G. NIRC Not as a lending investor. October 13. 2010 performed in 2010. No. 12% VAT. Tambunting Inc.com dbaratbateladot@gmail.com amusement tax on admissions under the A VAT . Of the contract price of MBM Corporation is both exempt from the P10 Million.2 Million. G. only P8 Million plus VAT 12% VAT and 20% amusement tax on thereon was received from the customer in admissions.R. Million. v.cost of services. It receipts tax. but exempt “ from the 20% How much is the taxable gross receipts of amusement tax on admissions. services for his customer in 2010 and billed MBM Corporation is both liable for the 12% him P11. As a lending investor liable to the 12% VAT P11. broken down as follows: VAT and 20% amusement tax on P10 Million . 172394. Section 108. SUGGESTED ANSWER: MBM Corporation is exempt from the RR No. it received a total gross receipts of As exempt from 12% VAT and 5% gross P20 Million from the operation of movies. plus P1. did not register as a VAT person.registered contractor performed Local Government Code.”-Leroy Satchel Paige Page 87 of 125 . the contractor for 2010. business tax purposes: P8 Million plus VAT received from the customer in 2010. 2010.R. for the customer in 2010. the total cost of services on its gross receipts from interest income performed plus 12% VAT. 2010. but liable to the 5% gross receipts tax imposed on a MBM Corporation is the owner-operator of non-bank financial intermediary under movie houses in Cavite. for VAT purposes? SUGGESTED ANSWER: CIR v. 10-2004. the total cost of services 183505. H.2 admissions. Which As liable to the 12% VAT and 5% gross statement below is correct? receipts tax. but liable for the 20% CIR. the amount received from A pawnshop shall now be treated. 2010 “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.2 Million.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. and the balance of P4 Million plus MBM Corporation is liable for the 12% VAT was received by the contractor in 2011.

2 Million.00 per unit per month. VAT system: Sales of a book store during the year amounted to P10 Million.00 per (C) Section 106. Sales of chicken by a restaurant owner who Lessor leases two (2) residential houses and did not register as a VAT person and whose lots at P50. the rest are Lessor leases commercial stalls at exempt from value added tax. SUGGESTED ANSWER: The other percentage tax (e. the Greenhills Commercial Center to VAT- The documentary stamp tax paid by the registered sellers of cell phones. in determining the registered as a VAT person in January tax base on sale of taxable goods under the 2011. but gross annual sales is P1. NIRC register as a VAT person and whose gross annual sales is P5 Million. A lessor of real property is exempt from The excise tax paid by the taxpayer value added tax in one of the transactions before withdrawal of the goods from the below. gross Section 108. it did not register The professional tax paid by the as a VAT person with the BIR. lessor‟s taxpayer is included in the gross selling gross rental during the year amounted to P12 price or gross receipts. his gross rental income during the year amounted to P2 Million.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. there is no Gross receipts of a CPA during the year cascading because the tax itself is not again amounted to P1 Million.g. before practicing his profession. RR No. Million.. NIRC receipts tax) paid by the taxpayer is included in gross selling price.com dbaratbateladot@gmail.000.000. Except for one transaction. professional is included in gross receipts. Lessor leases residential apartment units SUGGESTED ANSWER: to individual tenants for P10.com Under the VAT system. NIRC.00 per month per unit. However. Sales of copra by a copra dealer to a SUGGESTED ANSWER: coconut oil manufacturer who did not Section 109 (Q). Which one is P10. he registered as a VAT person. 16-2005 month per unit. Which one is it? place of production or from customs custody is included in the gross selling Lessor leases commercial stalls located in price. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.000. the CPA being taxed.00 per stall per month and VAT taxable? residential units at P15.”-Leroy Satchel Paige Page 88 of 125 .000.

2 Million. SUGGESTED ANSWER: Importation of books worth P5 Million and Section 121. but exempt international shipping worth P20 Million. NIRC VAT component. Input tax is available to a VAT . NIRC [Note: d) may also be a correct choice Sale of vegetables by a farmer in Baguio because only importation of books is City to a vegetable dealer. The bank is subject to the tax VAT? as follows: Importation of fuels by a person engaged in 12% VAT on the rental income.registered person. sale to hotels in Makati City. exempt from VAT. Importation of raw.] demand letters.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. The importation of Sale of vegetables by a vegetable dealer in school supplies is not exempt.com dbaratbateladot@gmail.com IBP Bank extended loans to debtors during [Note: This is not absolutely true because a the year. The seller issues a VAT invoice or official SUGGESTED ANSWER: receipt. which separately indicates the Section 109. provided that: dealer to a restaurant in Manila.] Baguio City to another vegetable dealer in Quezon City. SUGGESTED ANSWER: Which transaction below is subject to VAT? Sections 107 & 109. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. original state which will be exempt from When the debtors failed to pay the unpaid VAT under Section 109(A). 7% gross receipts tax on the rental refrigerated Kobe beef from Japan by a beef income. but exempt from VAT. receipts tax.registered Sale of vegetables by the QC vegetable buyer. Sale of vegetables by the restaurant The seller is a VAT . operator to its customers. with real properties of the debtors restaurant may sell the vegetables in their being used as collateral to secure the loans. dealer for sale to hotels in Makati City with Liable to both the 12% VAT and 7% gross a fair market value of P1.”-Leroy Satchel Paige Page 89 of 125 . the bank foreclosed the same and entered into contracts of lease Which importation in 2011 is subject to with tenants. NIRC school supplies worth P1. unprocessed. from the 7% gross receipts tax. Importation of wines by a wine dealer Exempt from both the 12% VAT and 7% with a fair market value of P2 Million for gross receipts tax. irrespective of principal and interests after several who is the seller.2 Million.

Corp.5 A VAT .registered from VAT. if: “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. January 31. are made to customers outside the Subject to VAT.registered person whose sales are Exempt from VAT. v. 12% VAT. NIRC Kepco Phils. but the sale is covered by a VAT person and who leases luxury vehicles to its invoice or receipt issued by VAT-registered hotel customers is: person. NIRC made to embassies of foreign governments and United Nations agencies located in the Which statement is correct? A bar review Philippines without the BIR approval of the center owned and operated by lawyers is: application for zero-rating. CIR. input tax is not available as a credit against the output tax of the buyer of taxable goods or services during the quarter. G. A VAT . educational center. provided that its made to clients in the Philippines. annual gross receipts do not exceed P1. or receipts.com The goods or service is subject to or exempt A hotel operator that is a VAT . Any person who has excess input tax Exempt from VAT. regardless of its gross Philippines and who issued VAT invoices’ receipts during the year. 2011 For 2012.”-Leroy Satchel Paige Page 90 of 125 . regardless of its gross arising from local purchases of taxable receipts during the year because it is an goods and services. The name and TIN of the buyer is not stated Subject to the 3% common carriers tax and or shown in the VAT invoice or receipt. Claim for tax creditor refund of excess Exempt from both the 3% common carriers input tax is available only to: tax and 12% VAT. NIRC only. No. 179961. SUGGESTED ANSWER: A VAT . if it is duly accredited by SALES” imprinted on the sales invoices TESDA.registered person whose sales are Section 108.registered person whose sales Million in 2011. or receipts with the words “ZERO RATED Subject to VAT.R. SUGGESTED ANSWER: SUGGESTED ANSWER: Section 109 (V). Subject to the 12% VAT only. SUGGESTED ANSWER: Subject to the 3% common carriers tax Section 113(B).com dbaratbateladot@gmail.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.

when his gross seller shows the Taxpayer Identification sales or receipts for the year 2011 exceed Number plus the word “VAT” or “VAT P1. VAT for his taxable transactions.com (C) Sections 105 & 109.5 Million.exempt Section 113. regardless The VAT invoice or receipt is issued in the of his gross sales or receipts. NIRC and her gross sales during the year is P1.6 Million.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.registered person will be subject to VAT component therein. except: and her gross sales during the year is P2. or receipt. NIRC transaction is liable to the 12% VAT as a penalty for the wrong issuance thereof: The public market vendor below. When the taxpayer files a fraudulent She sells live fish. name of the VAT-registered buyer and his A person engaged in trade or business TIN is shown i said invoice.5 Million.”-Leroy Satchel Paige Page 91 of 125 . who is not Once a doctor of medicine exercises his a VAT . processed NOT inquire into the bank deposits of a coconut oils. selling taxable goods or services must The VAT invoice or receipt issued by the register as a VAT person. shrimps. A person who issued a VAT.registered person is liable to VAT in profession during the year. and cut flowers in her stall taxpayer. NIRC The VAT invoice or receipt of the seller is registered with the BIR. The Commissioner of Internal Revenue may She sells canned goods. SUGGESTED ANSWER: She sells vegetables and fruits in her stall Section 236(G)(1)(b). gross sales during the year is P2 Million. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. her gross sales during the year is P5 When the taxpayer offers to compromise Million. Which statement is FALSE under the VAT The VAT invoice or receipt of the seller law? does not separately indicate the gross selling price or gross receipts and the A VAT.registered SUGGESTED ANSWER: invoice or receipt for a VAT . and crabs and return. if: register as a VAT person and to issue VAT receipts for professional fees She sells raw chicken and meats and her received.com dbaratbateladot@gmail. the assessed tax based on erroneous SUGGESTED ANSWER: assessment. registered person”. he needs to 2010.

File a petition for review with the Court of SUGGESTED ANSWER: Tax Appeals within thirty(30) days from Section 203. 2011. NIRC. Which the assessed tax based on financial statement is correct? incapacity to pay and he authorizes the Commissioner in writing to look into his The assessment notice is void because it bank records. G. What is the taxpayer received. BPI v. The assessment notice is valid even if a taxpayer does not agree thereto. NIRC July 15 of the year. Upon receipt of the ruling. demand letter covering the calendar year “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. October 17.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com When the taxpayer offers to compromise 2007 with the QC Post Office.”-Leroy Satchel Paige Page 92 of 125 . value added tax. NIRC the tax return. When the taxpayer did not file his income The assessment notice is void because it tax return for the year. receipt thereof. When the finding for any deficiency tax On April 15. CIR. The assessment notice is void if the The Commissioner of Internal Revenue taxpayer can show that the same was issued a BIR ruling to the effect that the received only after one(1) month from date transaction is liable to income tax and of mailing. was mailed beyond the prescriptive period. was not received by the taxpayer within the SUGGESTED ANSWER: three-year period from the date of filing of Section 6(F).com dbaratbateladot@gmail. one of the following cases: File an appeal to the Secretary of Justice within thirty(30) days from receipt thereof. 139736. When a taxpayer does not pay the 2010 SUGGESTED ANSWER: deficiency income tax liability on or before Section 4. the same after the his proper remedy? three-year period from the date of filing of the tax return. A Preliminary Assessment Notice (PAN) is File an appeal to the Secretary of NOT required to be issued by the BIR before Finance within thirty(30) days from issuing a Final Assessment Notice (FAN) in receipt thereof.R. No. the Commissioner of is the result mathematical error in the Internal Revenue mailed by registered mail computation of the tax as appearing on the final assessment notice and the the face of the return. 2005 File a motion for reconsideration with the Commissioner of Internal Revenue.

It is thus clear that the reinvestigation against the assessment on question did not provide for the April 30. If no denial of the protest was amount due for the year. 2011.00 or more. when is the last When the amount of discrepancy shown in day for the filing of its appeal to the CTA? the Letter Notice is not paid within thirty (30) days from date of receipt. The decision was received on July 30.00 or more. Million or more. Hence. the appeal to the Court of Tax Appeals must be Using the same facts in the immediately filed by a taxpayer: preceding number. between the value added tax paid and the 2011.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 2011. February 28. 2012.000. If the amount of basic tax assessed is P1 December 30.000.000. the Commissioner. NIRC (nearest answer but decisions on disputed assessments are not a correct answer) appealable to the CTA (in Division) [Note: The period to appeal is within 30 irrespective of the amount (Section 3.com dbaratbateladot@gmail. 2011. When a protest against the deficiency SUGGESTED ANSWER: income tax assessment was denied by the Section 228. 2012. Additional documentary CORRECT answer. days from receipt of the final decision by RA 9282). 2011. 2011. received by the taxpayer. All the Section 228. 2011. SUGGESTED ANSWER: December 30. 2011 so the last day The taxpayer received an assessment notice to perfect an appeal with the CTA is on April 15. If the amount of basic tax assessed is August 30. NIRC January 30. it should be evidence in support of its treated as a bonus question. 2011 and filed its request for August 29. NIRC BIR Regional Director of Quezon City. SUGGESTED ANSWER: SUGGESTED ANSWER: All the choices are correct. but assuming that the final decision on the disputed assessment If the amount of basic tax assessed is was received by the taxpayer on July 30. November 30. 2011. P500. September 30. 2011.”-Leroy Satchel Paige Page 93 of 125 . when is the last day for filing of the If the amount of basic tax assessed is appeal to the CTA.00 or more. Section 228. 2012. P300.] “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. January 30. P100.com When a discrepancy has been determined protest was submitted by it on June 30.

the remedy of the Compromise of a tax liability is still taxpayer is to appeal the inaction of the available even after the court decision has CIR to CTA within 30 days. Forging Company of Asia. Aichi become final and executory.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Court of Appeals.R. RA 9282 after the expiration of the 120-day period. if after the 120-day period the even during appeal. SUGGESTED ANSWER: 184823.com from the date of submission of complete Which court has jurisdiction to determine if documents. filing the administrative claim with the BIR. Regional Trial Courts. refund/credit. Inc.”-Leroy Satchel Paige Page 94 of 125 .. or the failure on the part of the Commissioner to act on the application within 120 days “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. G. (CIR v. provided that prior CIR fails to act on the application for tax leave of court is obtained. from receipt of the decision of the CIR. the taxpayer’s recourse is to file an Compromise of a tax liability is available appeal before the CTA within 30 days only before trial at the CTA. October 6. No. an appeal must be filed with the warrant of distraint and levy issued by the CTA: the BIR is valid and to rule if the waiver of the Statute of Limitations was validly Within thirty (30) days after filing the effected? administrative claim with the BIR. administrative claim with the BIR.com dbaratbateladot@gmail. CIR. Within thirty (30) days from the receipt SUGGESTED ANSWER: of the decision denying the claim or Section 7. Within one hundred twenty (120) days after Court of Tax Appeals. Compromise of a tax liability is available However. 2010) RR 30-2002 The submission of the required documents In case of full or partial denial of the written within sixty (60) days from the filing of the claim for refund or excess input tax directly protest is available only where: attributable to zero-rated sales. Within sixty (60) days after filing the City Courts. Which statement below on compromise of SUGGESTED ANSWER: tax liability is correct? Section 112(C) NIRC of 1997 Compromise of a tax liability is available In case of full or partial denial by the only at the administrative level.

including all expenses. RCBC v. 2005 be not known at the time. G. The taxpayer previously filed a request May be repeated. of a deficiency tax assessment by distraint The taxpayer previously filed a request for and levy: reconsideration with the BIR official. NIRC “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. BPI v. Five (5) years from the date of issuance of If a warrant of levy is served upon the the final assessment notice.com dbaratbateladot@gmail. SUGGESTED ANSWER: If the taxpayer files a request for Section 217. NIRC reconsideration with the Asst. CIR Automatically covers the bank deposits of a delinquent taxpayer. (B) Section 223. BIR official. NIRC. NIRC. first by distraint SUGGESTED ANSWER: and then by levy. if necessary. Five (5) years from the commission of Commissioner. and if the same 17. No. from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. to file a protest with the BIR official.R.com The taxpayer previously filed a Motion for Which statement is correct? The collection Reconsideration with the BIR official. The taxpayer previously filed an extension is collected. SUGGESTED ANSWER: Section 281. Ten (10) years from the date of discovery of If the taxpayer changes his address in the the commission of fraud or non-filing of tax Philippines that is communicated to the return. until the for reinvestigation with the BIR official.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Commissioner. October the violation of the law. The prescriptive period for the collection of May be done only once during the taxable the deficiency tax assessment will be tolled: year. The prescriptive period to file a criminal If the taxpayer files a request for action is: reinvestigation that is approved by the Commissioner of Internal Revenue. taxpayer‟s real property in Manila Three (3) years from the filing of the annual SUGGESTED ANSWER: tax return.”-Leroy Satchel Paige Page 95 of 125 . full amount due. Must be done successively. Section 228. 139736.

with deliberate refusal or avoidance to SUGGESTED ANSWER: verify the contents of his tax return and to or (D) Republic vs. does X Corporation lose the information will have the following claimed amount? consequence: X Corporation may not get the refund The CTA will automatically exempt the because the decision to carryover in 2008 accused from any civil liability. 006. No. was irrevocable for that year. action for the failure to file income tax Can the refund be allowed or not. Collector of Internal Revenue. inquire on its authenticity constitutes: July 1.”-Leroy Satchel Paige Page 96 of 125 . L-12174. Criminal Case No. In filing its 2009 CTA E. it signified its v. The accused‟s mere reliance on the provided that a computation of the tax representations made by his accountant. Simple negligence.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 196340 intention (by checking the small box “refund” at the bottom of the return) to get a The acquittal of the accused in the criminal refund of the overpaid amount in 2008. Gross negligence.com The CTA will impose civil or tax liability. 1967. and it may The CTA will still hold the taxpayer liable not change that decision in succeeding for deficiency income tax liability in all years. Wilful blindness. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. but the amount being claimed as The CTA will impose civil or tax liability refund may be utilized in succeeding only if there was a final assessment years until fully exhausted because there notice issued by the BIR against the is no prescriptive period for carryover of accused in accordance with the excess income tax payments.R. L-22356. payment for the year 2008. and if return and failure to supply correct disallowed. cases. April 26. G. liability is presented during the trial. which was presented that it will no longer carryover during the trial. 1962). 2009. (Castro v. People corporate income tax return.B. which it chose SUGGESTED ANSWER: to carryover in 2009. provided assessments. prescribed procedures for issuing X Corporation may get the refund. X Corporation had excess income tax Excusable negligence. Kintanar. since preponderance of evidence is X Corporation may not get the refund in merely required for tax cases. Patanao.com dbaratbateladot@gmail.

1994) 2011) Taxing power of local government units (61) Which statement is correct? shall NOT extend to the following taxes. G. unutilized excess income tax payments (Magtajas v. its agencies and Legislative acts passed by the municipal instrumentalities.com such amount or utilize the same against its Section 2227.R. Which of the following statements is NOT a SUGGESTED ANSWER: test of a valid ordinance? Section 76. CIR. RA 7160 SUGGESTED ANSWER: “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. government. (Belle Corp. January 10. July v.. 20. Corporation. excess income tax payments may now be It must not be partial or discriminatory. succeeding taxable year. No.”-Leroy Satchel Paige Page 97 of 125 . Taxes on agricultural and aquatic products Legislative acts passed by the municipal when sold by the marginal farmers or council in the exercise of its lawmaking fishermen. Unutilized It must not be unfair or oppressive.com dbaratbateladot@gmail. 111097. prohibit but may regulate trade. authority are denominated as resolutions Taxes of any kind on the national and ordinances. Hence. except one: Legislative acts passed by the municipal Income tax on banks and other financial council in the exercise of its lawmaking institutions. Both ordinances and resolutions are SUGGESTED ANSWER: solemn and formal acts.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Inc. Revised Administrative income tax liability in the future. In addition. Pryce Properties may no longer be refunded. in lieu of refund. G. and local government council in the exercise of its lawmaking units.R. authority are denominated as Excise taxes on articles enumerated under ordinances. 181298. years until fully utilized. Section 186. the SUGGESTED ANSWER: option to carryover excess income tax To be valid. NIRC The carryover of excess income tax It must not contravene the Constitution or payments is no longer limited to the any statute. an ordinance must not payments is now irrevocable. authority are denominated as resolutions. carried over to the succeeding taxable It may prohibit or regulate trade. the National Internal Revenue Code. No. Code of 1917 X Corporation may file instead a claim of tax credit.

For purposes of real property taxes. Real property shall be classified for April 2. 2009 assessment purposes on the basis of its actual use. MIAA vs. No.”-Leroy Satchel Paige Page 98 of 125 . assessment. corporation. RA 7160 The prescriptive periods to assess taxes in The Manila International Airport Authority the National Internal Revenue Code and the (MIAA) is exempt from real property tax. Local Government Code are the same.R.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. the tax Real property shall be assessed on the rates are applied on: basis of a uniform classification within each local political subdivision. RA 7160 the Philippines and the beneficial use of such property has not been granted to a The appraisal. financial statements of the owner. Reproduction values. Local taxes may be assessed within ten MIAA is a government instrumentality (10) years from discovery of the vested with corporate powers and underpayment of tax which does not performing essential public services. 163072. The appraisal and assessment of real Fair market value. constitute fraud. Which statement below is NOT correct? Local taxes shall be assessed within five (5) years from the date they became due.com Which statement on prescriptive periods is SUGGESTED ANSWER: true? (D) Section 198. collection of real property tax shall be MIAA is a government-owned or guided by the following principles. Real property shall be appraised at its SUGGESTED ANSWER: current and fair market value. MIAA is not a taxable entity because the SUGGESTED ANSWER: real property is owned by the Republic of (B) Section 194. property shall be based on audited Assessed values. G.com dbaratbateladot@gmail. City of Pasay. Zonal values. Which controlled corporation because it is statement does NOT belong here? required to meet the test of economic viability. MIAA is not a government-owned or Action for the collection of local taxes may controlled corporation because it is not be instituted after the expiration of the organized as a stock or non-stock period to assess and to collect the tax. levy and private entity.

com dbaratbateladot@gmail. Ra 7160 To file a claim for refund in the Court of Tax Appeals if he has paid the tax. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Section 226. the remedy of the property improvements.com SUGGESTED ANSWER: To file an appeal with the Provincial (C) Section 233. Davao. SUGGESTED ANSWER: The City Government of Manila may NOT Section 200. except for municipalities within special education fund at 1% of the the Metropolitan Manila area. paying the assessed tax under protest. However. within thirty Importation of goods is deemed terminated: (30) days from date of payment. can no Additional ad valorem tax on idle lands at a longer be a correct choice. with the power to impose real property Additional levy on real property for the taxes. does NOT have the power to impose real To file an appeal with the Provincial Board property tax: of Assessment Appeals within sixty (60) days from receipt of the assessment and Bacoor. CORRECT answer.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.”-Leroy Satchel Paige Page 99 of 125 . Since the rate not exceeding 5% of the assessed question did not provide for the value. RA 7160 Board of Assessment Appeals within sixty (60) days from receipt of the One of the local government units below assessment. RA 7160 Malabon. Bacoor is already a city hence. Cavite. owner is: SUGGESTED ANSWER: Section 240. SUGGESTED ANSWER: Tarlac Province. it should be treated as Special levy on lands within its territory a bonus.RA 7160 impose: [Note: The answer above is premised on the belief that Bacoor is a municipality Basic real property tax at 2% of the and the LGC does not vest municipalities assessed value of real property.] specially benefited by public works projects or improvements funded by it at Where the real property tax assessment is 80% of the actual cost of the projects or erroneous. To file an appeal with the Provincial Board of Assessment Appeals within thirty (30) days from receipt of the assessment. Metro Manila. City. assessed value of real property.

and remain within the customs house within thirty (30) days from date of entry. The total landed cost.com When the customs duties are paid.com dbaratbateladot@gmail. When the goods are released or The transaction value. The Regional Trial Court. SUGGESTED ANSWER: Section 2308. amended by RA 7650. withdrawn from the customs house upon SUGGESTED ANSWER: payment of the customs duties or with Section 201. premises. When the goods enter Philippine territory 1996.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the goods remain within the customs The total value. Tariff and Customs Code contained in the government surveyor‟s report‟ The number. weight and nature of A protest against an assessment issued by packages indicated in the customs entry the Collector of Customs for unpaid declaration and supporting documents customs duties on imported goods shall be differ from that in the manifest. The imported articles shall in any case be When there is part payment of duties on subject to the regular physical examination the imported goods located in the customs when: area. Tariff and Customs Code. as The Collector of Customs. legal permit to withdraw. The shipment is covered by alert/hold orders The Commissioner of Customs. Tariff and Customs Code Which cases are appealable to the CTA? The dutiable value of an imported article Decisions of the Secretary of Finance in subject to an ad valorem rate of duty under cases involving liability for customs duties. as amended by RA 8181 dated March 28. SUGGESTED ANSWER: The Court of Tax Appeals. Tariff and Customs Code. filed with: The container is not leaking or damaged. 1401. Sec. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. even if The home consumption value.”-Leroy Satchel Paige Page 100 of 125 . detention or release of property affected. SUGGESTED ANSWER: The importer disagrees with the findings as Section 1202. existing law shall be: seizure. issued pursuant to an existing order.

constitutionally guaranteed right to freedom of communication. what may she allege that cases involving liability for customs duties.”-Leroy Satchel Paige Page 101 of 125 . taxpayer fails to include the income in his income tax return. affected. the taxes collected from her in case seizure. income has been actually received in the power is delegated to it by the money or its equivalent. detention or release of property the court nullifies the tax measure. That tax money is being extracted SUGGESTED ANSWER: and spent in violation of the Section 7. detention or messages. Taxable income is recognized when the the real property is located in the municipality. Decisions of the BIR Commissioner in cases That she is entitled to the return of involving liability for customs duties. A municipality may levy an annual ad valorem tax on real property such as land. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. the real property is within the There is no taxable income until such Metropolitan Manila Area. detention or release of property file a taxpayer‟s suit? affected.com dbaratbateladot@gmail. the DILG authorizes it to do so. income is recognized. and other part of the lives of the people she improvement only if represents. 2011 Taxation Law Exam That she is filing the case in behalf MCQ (November 13. province. Aside from claiming that the law release of property affected.com Decisions of the Commissioner of Anne Lapada. 2011) of a substantial number of taxpayers. wants to Customs in cases involving liability for impugn the validity of a tax on text customs duties. machinery. adversely affects her since she sends Decisions of the Collector of Customs in messages by text. would strengthen her claim to the right to seizure.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. That text messages are an important building. RA 9282. a student activist. seizure.

either papers of the shipment yet since the Food actually or constructively. operate it. a Philippine corporation. if the amount paid as duties and value-added taxes due on the It shall report the P200. resulting in its destruction? Amaretto.000 Yes.. and 10% tax on the remaining P100. Which theory in taxation states that without taxes. deducting its cost of acquisition as an expense. The shipment was assessed duties and value. sold through the local stock exchange 10. because the importation was PLDT shares that it bought 2 years ago. immediately paid.000 which Amaretto.000. How shall it pay tax on the transaction? Yes.00.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000. issue the release Symbiotic doctrine “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.00. Lifeblood theory added taxes of P300. and Drug Administration (FDA) needed to test the suitability of the wine for human transaction that is the source of the consumption.. Inc.000. payment. No.00 of the P200.00 pending the FDA's findings.com income has been received. Is the Bureau of Customs at income is consummated.com dbaratbateladot@gmail.00 in its importation was insufficient.”-Leroy Satchel Paige Page 102 of 125 . because the Bureau of Customs has not yet issued the It shall pay 5% tax on the first legal permit for withdrawal P100.000. a government would be It shall pay a tax of one-half of paralyzed for lack of power to activate and 1% of the P2 million gross sales. the Bureau of Customs is estopped from holding the release of It shall declare a P2 million gross the shipment after receiving the income in its income tax return. imported 100 cases of Power to destroy theory Marula wine from South Africa.000. Inc. Inc. The Bureau of Sumptuary theory Customs did not. No. fault for refusing to release the shipment just as yet? Keyrand. however. corporate income tax return adjusted by the holding period. realized a net gain of P200. already terminated as a result of the Keyrand sold the shares for P2 million and payment of the taxes due.

it had already expired by 5 years by the spouses donating May 20.com dbaratbateladot@gmail.000. Then.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. and another Double taxation in its general sense means P100.000.000. filed violates substantive due process. 2011. in taxing the same subject twice during the 2013. the value of the property in 2011 then each should donate Yes.00 equally for 2012.00 in 2012. taxation Mia. a compensation income earner. it already expired by May 20. P100. (C) The spouses should each the 3 year period expired on April donate a P110. Helena should donate the same taxing period.00. Since the 3-year prescriptive P100. Spread the donation over a period of hence. Can P420.000. 2011. 2008.00 portion of the value of the property in 2011.000.”-Leroy Satchel Paige Page 103 of 125 . The 3 year prescriptive period The spouses should first donate in started to run on April 15. The prescriptive period started to run on March 30. 2008. In this sense. 2011 a portion of the property hence. 2008. P100. 2011. Her return The parcel of land has a zonal valuation of is not a false and fraudulent return. Yes. What is the most efficient Mia raise the defense of prescription? mode of donating the property? No.00 each in 2012.00 each year from 2011 to 2015. the P400. 2011. On May 20.000. envelope shows April 10. 2011. 2008. 2014 and 2015. The 3 year prescriptive period started to run on April 15. 2008. The spouses should each donate a 2011.com The spouses Helena and Federico wanted to and letter of demand covering the taxable donate a parcel of land to their son Dondon year 2007 but the postmark on the who is getting married in December. process.000. her income tax return for the taxable year does not violate substantive due 2007 on March 30. 2011. Mia received an assessment notice “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.00 portion of 10.000.00 then spread April 10. period started to run on March 30.00. No. 2013. double remaining P20. it has not yet expired on valued at P20.000. hence.

”-Leroy Satchel Paige Page 104 of 125 . The withholding 60% of its gross income from the of the tax has the effect of Philippines. a Chinese billionaire and a Canadian resident. income tax return. Tong's gross estate for Philippine from its power plant. property Guidant Resources Corporation. a final settlement of the tax Royalties from the use in Brazil of liability on the income.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. and taxes. a credit from the recipient's income tax liability. from sources within the Philippines? P5 billion. transfers for public use.com dbaratbateladot@gmail. has a 50 and the share of his surviving spouse in MW electric power plant in San Jose. Gains from the sale to an Ilocos Norte power plant of generators P100 billion. deposits in a Philippine bank under the Expanded Foreign Currency does not violate the right to equal Deposit System.losses. Tong Siok. which among the estate tax purposes is following is considered as part of its income P20 billion. indebtedness. their conjugal partnership amounted to P15 Batangas. corporation registered in Norway. generator sets designed in the Philippines by its engineers. a previously taxed. For Philippine estate tax purposes the allowable a deduction in the recipient's deductionsforexpenses. P85 billion. died and left assets in consummating the transaction China valued at P80 billion and in the resulting in an income. Dividends from a two-year old The payor of passive income subject to final Norwegian subsidiary with tax is required to withhold the tax from the operations in Zambia but derives payment due the recipient. Philippines assets valued at P20 billion. Aside from Guidant's income billion.com violates the right to equal Interests earned on its dollar protection. bought from the United States. protection.

net income derived from its exports to Kim.com dbaratbateladot@gmail.‟s net profit before tax was Anktryd's gain of P5 million shall be P35 million while its operating expenses subject to the holding period. Which of the following is the foreign corporation not engaged applicable tax treatment? in trade or business in the Anktryd shall be subject to a tax of Philippines. The tax should have been loss of P6 million for selling another parcel computed on the basis of gross of land in its inventory. May Spratz be laws of the Virgin Islands. In 2010. Inc. Its products are imported and sold at a mark-up by its exclusive Yes. it incurred a No. was P31 million. transactions it had in its real estate No. The BIR amounts are reasonable for compiled a record of all the imports of Kim operations in relation to what it from Aplets and imposed a tax on Aplets usually needed annually. its net profit before tax was P40 million and its operating Anktryd's P6 million loss could not expenses was P38 million. Inc. Is the BIR correct? “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Inc. In the same year. Aplets is a non-resident foreign 2009 for P7 million as part of its inventory corporation engaged in trade or of real properties. Aplets is doing business in the Anktryd could deduct its P6 Philippines through its exclusive million loss from its P5 million distributor Kim's Trading. These were the only revenues and not net income. Inc..Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 6% of P12 million. it sold the land business in the Philippines.com Anktryd. In 2009. for P12 million which was its zonal valuation. In the on its retained profits for 2009 and 2010? Philippines. In 2010. Yes.”-Leroy Satchel Paige Page 105 of 125 . bought a parcel of land in Yes. It has extensive subject to the improperly accumulated tax operations in Southeast Asia. It did not declare be deducted from its P5 million gain. Spratz. And it has no proposed capital expenditures for 2011 and Aplets Corporation is registered under the the immediate future. since the accumulated distributor. dividends for 2009 and 2010. Aplets is a non-resident business. gain. Kim's Trading.

000. that the taxpayer's 2009 and 2010 net profit before tax exceeded its Passive income includes income derived paid-up capital. exempt from income taxation.000. immediate needs of the business. to effect the exaction of what is due from the taxpayer is known as included in the income tax return.000. a bank.com Yes. her gross income Although the power of taxation is basically for 2010 is legislative in character.000. assessment. received P250. from her spinster aunt.00 as income from her beauty parlor and levy. (D) P600. insurance company.00. determine who should be subject to No.00.00. P350. For tax purposes. She spent collection. P150. taxes. Juliet Ulbod earned P500.000. collect the tax levied under the law. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige Page 106 of 125 . since the accumulation is identify who should collect the not reasonably necessary for the tax. This No.00.00 as Christmas gift payment.com dbaratbateladot@gmail. or an usually subject to a final tax.000. it is NOT the function of Congress to P750. from an activity in which the earner does not have any substantial participation. In 2010. because the taxpayer is not type of income is shown to be a publicly-listed corporation.00 for the operation of her beauty parlor. because there is no showing the tax. fix with certainty the amount of P500. The actual effort exerted by the government taxable only if earned by a citizen.000.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. She had no other receipts for the year.

”-Leroy Satchel Paige Page 107 of 125 . for the use of the barangay. recently.com Exempted from donor‟s taxation are gifts made gross income was derived solely from Philippine sources. corporation.A. authorizes the change. progressivity finds application is the to a school which is a stock income tax on individuals. An example of a tax where the concept of in consideration of marriage.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. shares of stock in PLDT. He should pay his Philippine income taxes A corporation may change its taxable year on to calendar or fiscal year in filing its annual income tax return. migrated to the amusement tax on boxing United States some six years ago and got a exhibitions. it should change its accounting the gains derived from the sale in period two years prior to changing the New York Stock Exchange of its taxable year. value-added tax on certain articles. excise tax on petroleum products. permanent resident status or green card. dividends received from a two year old foreign corporation whose “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. a Filipino citizen. U. of jewelry he it seeks prior BIR approval of its purchased in the Philippines. to a for-profit government corporation.com dbaratbateladot@gmail.S. Federico. a its constitution and by-laws Philippine corporation. proposed change in accounting period. provided the gains derived from the sale in California. the proceeds he received from a Philippine insurance company as it simultaneously seeks BIR the sole beneficiary of life insurance approval of its new accounting taken by his father who died period.

September 30? Exempt from income taxation if it (A) Within 25 days from is actually. 30 Exempt from income taxation in the Within 30 days from September same manner as government-owned 30 and controlled corporations. a sole proprietor.”-Leroy Satchel Paige Page 108 of 125 . the BIR issued a ruling Which among the following reduces the that Clemen's vodka imports were not gross estate (not the net estate) of a citizen subject to increased excise tax based on his of the Philippines for purposes of estate claim that his net retail price was only P200 taxation? per 750 milliliter bottle. When should Ka Pedring file the subject to 10% tax on its net taxable VAT quarterly return for his gross sales or income as if it is a proprietary receipts for the period of June 1 to educational institution. Does the retroactive Ka Pedring Matibag. June. and Transfers for public use July 2011. buys application of the revocation violate and sells "kumot at kulambo" both of “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.com What is the rule on the taxability of income which are subject to value-added tax. This ruling was applied to his imports for May. the BIR revoked its ruling and assessed him for Property previously taxed deficiency taxes respecting his May. September. Since that a government educational institution he is using the calendar year as his taxable derives from its school operations? Such year. June.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail. directly. In January 2011. and September 30 exclusively used for educational purposes. his taxable quarters end on the last income is day of March. and December. In September 2011. Within 45 days from September 30 subject to the ordinary income tax rates with respect to incomes Within 15 days from September derived from educational activities. June and July 2011 vodka imports because it Standard deduction of P1 million discovered that his net retail price for the Capital of the surviving spouse vodka was P250 per bottle from January to September 2011.

”-Leroy Satchel Paige Page 109 of 125 . because he acted in bad faith the one liable. a widower. Esperanza received a preliminary assessment notice from the BIR No. he refused to pay collection. it made its ruling. he left his estate of P100 60 days. He named his 15 days. On July 31. Yes. an assessment that has become claiming that he did not benefit from the final. when he claimed a lower net retail price than what he actually used. As a result of the the subject of the assessment is an resignation. died in May. 30 days. through payment of the estate tax. 2011.com dbaratbateladot@gmail. since the presumption is that All the four children. who may be held liable for the income tax.000. 2011 should Esperanza respond to the notice? Yes. payment of the estate tax? the amount of the tax involved Don Epitacio since the tax became does not exceed P100. How many days from July 31. since he could avail of remedies demanding that she pays P180.00. and demandable where estate. assessment. 2011.com Clemen's right to due process as a The eldest child who would be taxpayer? reimbursed by the others. When the BIR The BIR could not avail itself of the remedy sent a demand letter to Don Epitacio for the of levy and distraint to implement. Don Fortunato. executory. The person designated by the will as No.00 available for disputing the deficiency income taxes on her 2009 income. Don Epitacio. In his will. due prior to his resignation. he resigned as administrator. million to his four children. compadre. he not being an heir. Forthwith. to be the administrator of the estate. since he had already acquired a vested right in the favorable BIR 180 days.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the tax to be the BIR ascertained the facts before divided equally among them. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. ruling.

Consultancy fees received for (D) the earning process is designing a computer program complete or virtually complete and installing the same in the and an exchange has taken place. a French citizen BIR. alien. (33) Which among the following circumstances negates the prima facie Interests from his deposits in a local presumption of correctness of a BIR bank of foreign currency earned assessment? abroad converted to Philippine pesos.com the corporate taxpayer has no other it is recognized as revenue under uncollected tax liability. Shanghai facility of a Chinese firm. Gains derived from the sale of his Proof that the assessment is condominium unit located in The utterly without foundation. the taxpayer is an individual compensation income earner. The BIR did not include a formal Income is considered realized for tax letter of demand to pay the alleged purposes when deficiency. accounting standards even if the law does not do so. American corporation which derived 60% of its annual gross receipts No preliminary assessment notice from Philippine sources for the past was issued prior to the assessment 7 years. permanently residing in the Philippines. notice. and capricious.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Taguig City to another resident arbitrary. The BIR assessment was seasonably protested within 30 days from Dividends received from an receipt. Fort. received several items during the taxable the taxpayer has been paid and has year. Which among the following is NOT received in cash or near cash the subject to Philippine income taxation? taxable income. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.com dbaratbateladot@gmail.”-Leroy Satchel Paige Page 110 of 125 . the taxpayer retires from the business without approval from the Alain Descartes.

On April 15.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com On March 30. 2005 Miguel Foods. Which among the following taxpayers is required to use only the calendar year for It may no longer appeal since there tax purposes? is no BIR decision from which it could appeal. What remedy. 2005. Spanflex still has not elevated the No. It seasonably collect.”-Leroy Satchel Paige Page 111 of 125 . assessment reducing the amount of the tax Business partnership engaged in demanded. Yes. the BIR action violated if it could prove that its failure to the Bank Deposit Secrecy Law. the BIR issued a final projects. anything anymore. Partnership exclusively for the received a notice of assessment and a letter design of government of demand on its April 15. Foods then filed a request for reinvestigation together with the requisite Joint-stock company formed for the supporting documents on April 25. Since Miguel Foods was energy operations under a service satisfied with the reduction. Miguel as practice of civil engineering. Was participacion) engaged in the trading the BIR action proper? of mineral ores. protest. Without the taxpayer‟s prior It may file a motion to admit appeal authority. The BIR has 5 years from the act on the protest. received a notice of filing of the protest within which to assessment from the BIR. appeal was due to the negligence of counsel. Inc. 2010 the BIR garnished the corporation's bank Joint account (cuentas en deposits to answer for the tax liability. it did not do contract with the government. The BIR has 5 years from the Spanflex Int‟l Inc. can Spanflex take? No. if any. 2005. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. filed a protest with all the necessary supporting documents but the BIR failed to Yes.com dbaratbateladot@gmail. Thirty days from the issuance of the final assessment lapse of 180 days from the filing of its within which to collect. 2002 final infrastructure projects considered adjustment return from the BIR. purpose of undertaking construction On June 2. The taxpayer did not apply for a matter to the CTA. compromise.

or mixed) is the gain or loss her 2010 gain. a bracelet for P250. deduct her 2009 loss only from personal.00. His estate P250.com dbaratbateladot@gmail. Tonette. who is fond of of the BIR on his protest and jewelries.00. July 31. Tonette may deduct his 2009 loss only from her 2009 professional sixty days from the time he died on income. loss from both her 2010 professional income and her gain. Its right to appeal to the CTA CPA. 2011. bought a diamond ring for appeal it to the CTA within 30 P750.000.000.5 million in six months from filing of the notice September 2010. She used the P1. property. and a brooch for decision. (B) Tonette may carry over and Income from dealings in property (real. implications arising from the above transactions? six months from the time he died on July 31. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Tonette sold her has prescribed. her 2009 loss from her 2010 professional income as well as from from cash and gratuitous receipts of her gain.000. Tonette had no other of death.25 million to tax return should be filed within buy a solo diamond ring in November 2009 which she sold for P1. 2011. diamond ring.25 million incurring a loss of Gerardo died on July 31.00. bracelet. P500. Which sixty days from the appointment of among the following describes the tax an administrator. 2011.000. and necklace for only P1. a days from receipt of such necklace for P500.000. In October 2009.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.00. transaction in jewelry in 2010.00.”-Leroy Satchel Paige Page 112 of 125 . Tonette may not deduct her 2009 from sale and lease of property. only from the sale of property. Tonette derives income from the exercise of her profession as a licensed None. derived Tonette may carry over and deduct only from the cash sales of property.com It may wait for the final decision In March 2009.

if they are not reported to the Commission on Elections.”-Leroy Satchel Paige Page 113 of 125 . “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Which among the be claimed as additional exemptions for following may the BIR require to enable it to income tax purposes. The court awarded enter into a compromise with Anion. with Dondon directed paid taxes before 2009. transfers it for the use of a local Two children. claim additional exemptions when he files his income tax return? Anion must immediately deposit the P500. Inc.com Anion. all qualified to compromise to the BIR. Its corporation. Assuming that only Dondon is gainfully employed while Helena Anion must waive its right to the is not. asset position shows that it could pay only Dondon and Helena were legally separated. Political campaign contributions are NOT leases the real property to a deductible from gross income business establishment. P500. government is exempt from real property taxation unless the national government Three children. to provide full financial support for them as well.00 with the BIR. government unit. The court awarded the 6th child to Anion must promise to pay its Dondon's father with Dondon also providing deficiency when financially able. full financial support. for how many children could Dondon secrecy of its bank deposits. Real property owned by the national Five children. received a notice of assessment gratuitously allows its use for and a letter from the BIR demanding the educational purposes by a school payment of P3 million pesos in deficiency established for profit.? custody of two of the children to Dondon Anion must show it has faithfully and three to Helena. Inc.com dbaratbateladot@gmail. income taxes for the taxable year 2008.000. Six children.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. The financial statements of the company show sells the property to a that it has been suffering financial reverses government-owned non-profit from the year 2009 up to the present.000.00 which it offered as a They had six minor children.

The Executive Branch may BIR's power to garnish the taxpayer's bank decide not to enforce a tax law deposits which it believes to be confiscatory. enforce a tax law even if it results to the destruction of the property is suspended given that the CTA can rights of a taxpayer. The power to tax is the power to destroy. but not for other taxes. since they do not help earn the income from which they are to be fiscal adequacy. government depends on tax revenues. hence. Tax laws should always be enforced because without taxes the is not suspended because only final very existence of the State is decisions of the BIR are subject to endangered. the No.com dbaratbateladot@gmail. appeal. To do otherwise would violate the election because of possible canon of a sound tax system referred to as corruption. reverse BIR decisions when prejudicial to the taxpayer. No.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Yes. since such amounts are not symbiotic relationship. Is this always so? When a BIR decision affirming an assessment is appealed to the CTA. The Supreme Court may is not suspended since the nullify a tax law.”-Leroy Satchel Paige Page 114 of 125 . deducted. The tax collectors should such decision. Jeopardy assessment is a valid ground to compromise a tax liability Real property taxes should not disregard increases in the value of real property involving deficiency income taxes occurring over a long period of only. property continued existence of rights are not affected. is suspended to await the finality of Yes. administrative feasibility. theoretical justice. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.com if the candidate supported wins the time. considered as income of the candidate to whom given.

refund of income tax overpayment? if the compromise amount does not Within 30 days from receipt of the exceed 10% of the basic tax. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.. only when there is an approval of the National Evaluation Board.”-Leroy Satchel Paige Page 115 of 125 . payment.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. the Sangguniang Philex Mining Corporation. not operating in the Philippines. may be subject to Philippine income taxation on Within 2 years from payment of the income taxes sought to be refunded.com dbaratbateladot@gmail. gains it derived from sale in After the province has constructed a Australia of shares of stock of barangay road. Deposit System. barangay. 100% of the actual project cost. a corporation 2 years from payment of income registered and holding office in Australia. interests derived from its dollar 100% of the actual project cost deposits in a Philippine bank under without giving any portion to the the Expanded Foreign Currency barangay. Within 30 days from receipt of the denial which must not exceed Zygomite Minerals. a Panglalawigan may impose a special levy Philippine corporation. gains it derived from sale in Australia of an ore crusher it bought Within 30 days from receipt of the from the Philippines with the denial or within two years from proceeds converted to pesos. upon the lands specifically benefitted by the road up to an amount not to exceed dividends earned from investment in a foreign corporation that derived 60% of the actual cost of the road 40% of its gross income from without giving any portion to the Philippine sources. Inc. As a general rule.com (B) because of doubt as to the Appeals a denial of his application for validity of the assessment. tax. within what period must keeping 60% for the province and a taxpayer elevate to the Court of Tax giving 40% to the barangay. Commissioner‟s denial of his application for refund.

Celia association for billiards does not gave no other gift during the calendar year. What is the donor's tax implication on Celia‟s donation? No.com dbaratbateladot@gmail. in consideration of marriage.000. Sports Confederation of the Philippines comply with the rules on customs does not recognize the event.00 donation. sanction the event. pay the customs duties and taxes Levox Corporation wanted to donate P5 or to comply with the rules on million as prize money for the world customs procedures.000. Is Levox subject to the donor's tax on its donation? “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.00 portion of the and to comply with the rules on donation is exempt under the rate customs procedures. consideration of marriage.00 of total Levox donation is exempt being a donation donations for the calendar year. A violation of the tariff and customs laws is Celia shall pay a 30% donor's tax the failure to on the P110. Celia donated P110.000.000. through the association. but only that part that exceeds A P10. pay the customs duties and taxes The P100. dividing the No.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.000. Yes. it was held procedures. because it is donated as prize for an international The P100.00 portion of the competition under the billiards donation is exempt since given in association. so long as the donated money same between the province and the goes directly to the winners and not barangay.00 portion of the the first P100.com 60% of the actual cost.000. under the auspices of the International Professional Billiards Association. Inc. professional billiard championship to be held in the Philippines.”-Leroy Satchel Paige Page 116 of 125 . schedule for donor's tax.00 to her friend Yes. since the national sports Victoria who was getting married. Since the Billiard pay the customs duties and taxes.

In 2010. shall be used solely for paying the salaries. of Interior and pesos to the school. A non-stock. wages. suspended for 180 days from the The pertinent provision of the local expiration of the period to protest.com What is the effect on the tax liability of a No. the province of professional taxes? The taxpayer's liability remains That which Congress determined. since he did not obtain the The BIR could already enforce the requisite NGO certification before he collection of the taxpayer's liability if made the donation. and exclusively used for assessment for deficiency taxes? educational purposes.com dbaratbateladot@gmail. taxpayer who does not protest an directly. because the donation is to be to the CTA since the assessment is a wholly used for administration final decision of the Commissioner purposes. resulting in failure to made by the provincial recruit well-trained administrative sanggunian. since the donation is actually. because the donation does not exceed 10% of his taxable income The taxpayer's liability becomes for 2010. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. and benefits of administrative There is prima facie evidence of a false or personnel. non-profit school always had The reasonable classification cash flow problems. Government Code. personnel to effectively manage the school. Is he subject to donor's taxes? tax return was amended after a notice of assessment was issued. fixed and subject to collection as the assessment becomes final and What is the tax base for the imposition by collectible. on the matter. provided the money Local Government determined. The taxpayer may appeal his liability Yes. it could secure authority from the CTA. Don Leon donated P100 million That which the Dept. The donation represents less fraudulent return where the than 10% of Don Leon's taxable income for the year. No.”-Leroy Satchel Paige Page 117 of 125 . Yes.

considered part of gross income if the Regional Trial Court issues a if it is so stated in the life insurance writ of preliminary injunction to endowment policy. 30% the actual deductions.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Philippines. because there is no basis for year is known as imposing duties on articles previously exported from the net operating loss. if there was a failure to pay the The proceeds received under a life deficiency tax within 60 days from insurance endowment contract is NOT BIR demand.com dbaratbateladot@gmail. Yes. enjoin the BIR.com tax return was filed beyond the No action shall be taken by the BIR on the reglementary period. is the taxpayer. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. taxpayer‟s disputed issues until the taxpayer has paid the deficiency taxes taxpayer changed his address without notifying the BIR. because exemptions are strictly construed against the importer who net deductible loss. where payment is made as a Is an article previously exported from the result of the death of the insured. issues in the assessment notice. NOLCO.”-Leroy Satchel Paige Page 118 of 125 . Philippines subject to the payment of customs duties? where the beneficiary was not the one who took out the endowment Yes. The excess of allowable deductions over gross income of the business in a taxable No. imported from any foreign country are subject to duty. ordinary loss. if the price for the endowment policy attributable to the undisputed was not fully paid. because all articles that are contract. when the assessment was issued against a false and fraudulent deductions claimed exceed by return.

period 1990 up to 2011 may still be collected within 10 years from March 2011.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Yes. the local tax granted exemption to consumers' assessor discovered Ka Tato‟s change of use of cooperatives. he used the land for a poultry feed processing plant No. their exemption is collected within five years from specifically mentioned among when they fell due. In 1990. a general law.com No.”-Leroy Satchel Paige Page 119 of 125 . “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. could not Ka Tato owns a parcel of land in San Jose. Congress has not by the but continued to declare the property as majority vote of all its members agricultural.com dbaratbateladot@gmail. those not withdrawn by the Local No. of identification and has not been abandoned imported articles becomes the improved in value. shipment. amend a special law such as the Batangas declared for real property Cooperative Development Act. if it is covered by a certificate Under the Tariff and Customs Code. Has the for all taxpayers and preserve the action prescribed? LGUs' financial position. The deficiency taxes for the Government Code. as agricultural. the deficiency taxes may be Yes. No. registered under the Cooperative Development Act enjoyed exemption from insurance company that covered the all taxes imposed by a local government. could these cooperatives freight was not paid. the exemption has been who demanded payment of deficiency real withdrawn to level the playing field property taxes from 1990 to 2011. In March 2011. property of the Prior to the enactment of the Local government whatever be the Government Code. consumer's cooperatives circumstances. because the Local Government Code. his land and informed the local treasurer No. With the Local Government Code‟s withdrawal shipping company in case the of exemptions. continue to enjoy such exemption? bank if the shipment is covered by a letter of credit. taxation.

directly. business in the Philippines. including payment of Pierre de Savigny. a Frenchman. He returned to the Philippines on November 6. and exclusively 2005. since the school actually. a stock educational institution organized for Yes.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. 2010 and stayed until April No. and a non-resident alien not engaged in exclusively used for educational trade or business in the Philippines. portion of its school. For the year 2010. 2011 when he returned to France. The taxes for the period 1990 up to school actually. gross income of P3 million from his No. taxation on the rents it receives. More than 5 years had lapsed profit. since the leased portion is not actually. collected as a result of an erroneous or a resident alien not engaged in trade illegal assessment by the provincial or city or business in the Philippines.com Yes. since Lualhati is a stock and Southeast Asia from August 1 to November for profit educational institution. More than 10 years had lapsed a resident alien engaged in trade or for the period 1990 up to 2000. a non-resident alien engaged in Apparently the law does not provide for the trade or business in the refund of real property taxes that have been Philippines. 2010. Inc. What should be done in such instance to avoid an injustice? “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. 5. purposes. m. Is the leased portion the Philippines on January 1. Lualhati Educational Foundation. He went on a tour of Yes. and exclusively used the earned during his stay in the Philippines a rents for educational purposes. assessor.”-Leroy Satchel Paige Page 120 of 125 .com dbaratbateladot@gmail. but it may be subject to income investments in the country. used the rents for the maintenance of its school buildings.. 2010 and subject to real property tax? continued to live and engage in business in the Philippines. arrived in janitorial services. decided to lease for commercial use a for the collection of the deficiency 1. directly.500 sq. He directly. Pierre‟s taxable status is that of Yes. hence the right to collect the deficiency taxes has prescribed. 15.

when Subsequent adjustment in tax the religious dignitary is assigned computation and the application to the Philippine Army. accounts and other records to substantiate the claimed deductions. partly manufactured in the discriminating country but carried Immediately conduct an by vessels of another country. Discriminatory duties may NOT be imposed What should the BIR do when the upon articles prescriptive period for the assessment of a tax deficiency is about to prescribe but the wholly manufactured in the taxpayer has not yet complied with the BIR discriminating country but carried requirements for the production of books of by vessels of another country. it is paid by a local government unit.”-Leroy Satchel Paige Page 121 of 125 . not manufactured in the discriminatingcountryand Issue a jeopardy assessment coupled with a letter of demand. illegally collected.com Question the legality of the no. Pass a new ordinance providing for the payment is passed in audit by the refund of real property taxes the COA.com dbaratbateladot@gmail.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. Call the taxpayer to a conference to explain the delay. Issue a notice of constructive refund rule before the Supreme distraint to protect government Court. Enact a new ordinance amending Money collected from taxation shall not be the erroneous or illegal assessment paid to any religious dignitary EXCEPT to correct the error. that have been erroneously or it is part of a lawmaker‟s pork barrel. exemptions or not manufactured in the credits? discriminating country but carried by vessels of such country. of the excess payment to future real property tax liabilities. investigation of the taxpayer's activities. interest. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.

and filed the proper VAT returns. or 180 days from submission of the protest but the BIR Symbiotic relation in taxation Commissioner has not yet decided his Compensatory purpose of taxation protest. establishments. “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige Page 122 of 125 . it August 1." the BIR temporarily closed business August 31. taxation is the basis for the situs of income taxation? The taxpayer seasonably filed his protest together with all the supporting documents. 2011. criminal.com carried by vessels of another Which among the following concepts of country. should not be temporarily closed since it has a valid and existing VAT registration. including New Dynasty Corporation that failed to comply with VAT August 30. 2011. Civil and criminal penalties the taxpayer deliberately filed a false and fraudulent return with Civil and administrative penalties deliberate intention to evade taxes. Criminal and administrative the taxpayer used falsified penalties documents to support its application for refund of taxes. Desirous of an early resolution of his protested assessment. 2011. 2011.com dbaratbateladot@gmail. and administrative filing its income tax returns for the penalties past 4 years. the taxpayer Sumptuary purpose of taxation should file his appeal to the Court of Tax Appeals not later than In "Operation Kandado. The contention may be Which of the following are NOT usually rejected if the BIR investigation reveals that imposed when there is a tax amnesty? the taxpayer has not been regularly Civil. regulations. Lifeblood doctrine of taxation It is already July 31.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. faithfully issued VAT receipts. 2011. New Dynasty contends that it August 15.

Inc.000.com dbaratbateladot@gmail. and exclusively used Mirador. directly. a domestic corporation.000.500. It may claim as refund the amount of P500.000..000. is actually.00. Income Tax Return for its taxable year 2009 reflecting a taxable loss and an income tax exempt from real property taxes overpayment for the current year 2009 in since it is actually. not the land. In its 2009 Return. 2009.500. or “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. total income tax overpayment of P1. total income tax overpayment of that is used for religious purposes.00 reflected in its income tax return for its taxable year 2009. In the rented out a 5. The rented lot is against its income tax liabilities in not exempt from real property taxes subsequent years. Inc. it filed its Annual profit. and the amount of P500.00 representing its income tax overpayment for its taxable year 2009. P1. because the user is organized for On April 15.00 Choose which of the following statements is exempt from real property taxes since it correct. may claim as refund the for educational purposes. The sect used the indicated its choice to carry-over the rentals for the support and upkeep of its overpayment as an automatic tax credit priests. MCQ (September 12. 2010.000.com there was an understatement of 2010 Taxation Law Exam taxable sales or receipts by 30% or more for the taxable quarter. directly. as the corporation sole.000. m.00 and its income exclusively used for religious tax overpayment for the prior year 2008 of purposes. lot registered in Return.000 sq.”-Leroy Satchel Paige Page 123 of 125 . 2010) Mirador. filed The head priest of the religious sect Tres its Annual Income Tax Return for its Personas Solo Dios.00 and organized for profit.000.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo. taxable year 2008 on April 15. P1.000. it reflected an income tax its name for use as school site of a school overpayment of P1. the corporation not exempt from real property taxes indicated its option to claim for refund the since it is the rents.

while “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. Raffy will declare his own (XI) Raffy and Wena. G. (2%) a.”-Leroy Satchel Paige Page 124 of 125 . Explain the basis of your answer. Raffy will declare as his income the salaries of both spouses. equally divided between them. the coffee shop. from the coffee shop shall be CIR v.R. will declare hers. It may claim as refund the amount All the income will be declared by of P500. spouses. compensation income and Wena said option is considered irrevocable will declare hers. 178490. 2009). DO NOT EXPLAIN YOUR ANSWER.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.com dbaratbateladot@gmail. they jointly manage a the coffee shop shall be equally coffee shop at the ground floor of their divided between them. The income and no application for cash refund shall be allowed for it (Sec 76. following is the correct way to prepare and the tax is computed on the their income tax return? Write the letter aggregate taxable income of the only. The coffee shop is registered in the file one income tax return to cover name of both spouses.com c. and Raffy will declare the SUGGESTED ANSWER: income from the coffee shop. Bank of Philippine Island. Wena will declare the combined (5%) compensation income of the spouses. husband and wife. compensation income and Wena are both employed by XXX Corporation. Since the taxpayer has opted be filed by the spouses. No amount may be claimed as Wena will declare the income from refund. Raffy will house. The income from After office hours. NIRC. Each spouse shall be taxed separately on their corresponding taxable income to 2009 Taxation Law Exam be covered by one consolidated MCQ (September 13.000 representing its income Raffy alone. No. 2009) return for the spouses. b. July 7. because only one tax overpayment for its taxable year consolidated return is required to 2009. to carry-over the P1 million overpaid Raffy will declare his own income tax for taxable year 2008. B. Which of the all the income of both spouses.

”-Leroy Satchel Paige Page 125 of 125 .com dbaratbateladot@gmail.com References:  Answers to Bar Examination Questions by the UP LAW COMPLEX (2007.net “Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do. 2009. 2010) PHILIPPINE ASSOCIATION OF LAW SCHOOLS (2008) UP LAW Review lawphil.Taxation Law Q&As (2007-2013) hectorchristopher@yahoo.