I

On March 27, 2012, the Bureau of Internal Revenue (BIR) issued a notice of assessment against
Blue Water Industries Inc. (BWI), a domestic corporation, informing the latter of its alleged
deficiency corporate income tax for the year 2009. On April 20, 2012, BWI filed a letter protest
before the BIR contesting said assessment and demanding that the same be cancelled or set aside.

However, on May 19, 2013, that is, after more than a year from the filing of the letter protest,
the BIR informed BWI that the latter’s letter protest was denied on the ground that the assessment
had already become final, executory and demandable. The BIR reasoned that its failure to decide
the case within 180 days from filing of the letter protest should have prompted BWI to seek
recourse before the Court of Tax Appeals (CTA) by filing a petition for review within thirty (30)
days after the expiration of the 180-day period as mandated by the provisions of the last
paragraph of Section 228 of the National Internal Revenue Code (NIRC). Accordingly, BWI’s
failure to file a petition for review before the CTA rendered the assessment final, executory and
demandable.

Is the contention of the BIR correct? Explain.

II

BIR issued an Estate Tax Assessment Notice demanding payment of the deficiency estate tax
against Jose Fernandez’s estate. The administrator claims that in as much as the valid claims of
creditors against the estate are in excess of the gross estate, no estate tax was due.

May the actual claims of the creditors be fully allowed as deductions from the gross estate of
Jose despite the fact that the claims were reduced or condoned through compromise agreements
entered into by the estate with its creditors?

III

AAA died on 03 July 2018 leaving his sole heir, BBB, with the following properties: (1) cash in
a reputable bank amounting to Php70 Million; (2) real properties with a total zonal value of
Php10 Million; and (3) jewelries valued at Php2 Million.

BBB plans to migrate in Spain but he does not have sufficient money to do so. Thus, he engaged
CCC, a broker, to look for a prospective buyer of the real properties left by AAA. BBB, however,
was informed by CCC that he cannot transfer the title over the real properties of AAA without a
Certificate Authorizing Registration (“CAR”) from the Bureau of Internal Revenue. The broker,
further added, that estate tax should be settled first before CAR may be issued.

Considering the foregoing, what legal advice can you give to BBB so that can raise the money
that he needs?

IV

Miguel, a citizen and resident of Mexico, donated US$1,000.00 worth of stocks in Barack Motors
Corporation, a Mexican company, to his legitimate son, Miguelito, who is residing in the
Philippines and about to be married to a Filipino girlfriend. Mexico does not impose any transfer
tax of whatever nature on all gratuitous transfers of property.

Is Miguel entitled to the rule of reciprocity in order to be exempt from the Philippine donor’s
tax? Why or why not?

Masarap Kumain, Inc. (MKI) is a Value-Added Tax (VAT)-registered company which has been
engaged in the catering business for the past 10 years. It has invested a substantial portion of its
capital on flat wares, table linens, plates, chairs, catering equipment, and delivery vans. MKI
sold its first delivery van, already 10 years old and idle, to Magpapala Gravel and Sand Corp.
(MGSC), a corporation engaged in the business of buying and selling gravel and sand. The

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selling price of the delivery van was way below its acquisition cost. Is the sale of the delivery
van by MKI to MGSC subject to VAT?

VI

A Co. is the wholly owned subsidiary of B Co., a non-resident German company. A Co. has a
trademark licensing agreement with B Co. On Feb. 10, 1995, A Co. remitted to B Co. royalties
of P 10,000,000, which A Co. subjected to a withholding tax of 25% or P2,500,000. Upon advice
of counsel, A Co. realized that the proper withholding tax rate is 10%. On March 20, 1996, A
Co. filed a claim for refund of P2,500.000 with the BIR. The BIR denied the claim on Nov. 15,
1996. On Nov. 28, 1996, A Co. filed a petition for review with the CTA. The BIR attacked the
capacity of A Co., as agent, to bring the refund case. Decide the issue.

VII

BATAS Law is a general professional partnership operating in the City of Valenzuela. It

regularly pays value-added tax on its services. All its lawyers have individually paid the required
professional tax for the year 2017. However, as a condition for the renewal of its business permit
for the year 2017, the City Treasurer of Valenzuela assessed BAT AS Law for the payment of
percentage business tax on its gross receipts for the year 2016 in accordance with the Revenue
Tax Code of Valenzuela.

Is BATAS Law liable to pay the assessed percentage business tax? Explain your answer.

VIII

On May 15, 2009, La Manga Trading Corporation received a deficiency business tax assessment
of P1,500,000.00 from the Pasay City Treasurer. On June 30, 2009, the corporation contested
the assessment by filing a written protest with the City Treasurer. On October 10, 2009, the
corporation received a collection letter from the City Treasurer, drawing it to file on October 25,
2009 an appeal against the assessment before the Pasay Regional Trial Court (RTC).

a. Was the protest of the corporation filed on time? Explain.

b. Was the appeal with the Pasay RTC filed on time? Explain.

IX

Under Article 415 of the Civil Code, in order for machinery and equipment to be considered
real property, the pieces must be placed by the owner of the land and, in addition, must tend to
directly meet the needs of the industry or works carried on by the owner. Oil companies install
underground tanks in the gasoline stations located on land leased by the oil companies from the
owners of the land where the gasoline stations [are] located. Are those underground tanks, which
were not placed there by the owner of the land but which were instead placed there by the lessee
of the land, considered real property for purposes of real property taxation under the local
Government Code? Explain.

On May 15, 2013, CCC, Inc. received the Final Decision on Disputed Assessment issued by the
Commissioner of Internal Revenue (CIR) dismissing the protest of CCC, Inc. and affirming the
assessment against said corporation. On June 10, 2013, CCC, Inc. filed a Petition for Review
with the Court of Tax Appeals (CTA) in division. On July 31, 2015, CCC, Inc. received a copy
of the Decision dated July 22, 2015 of the CT A division dismissing its Petition. CCC, Inc.
immediately filed a Petition for Review with the CT A en banc on August 6, 2015. Is the
immediate appeal by CCC, Inc. to the CTA en banc of the adverse Decision of the CTA division
the proper remedy?

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