PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

(2020 2021 (18))

Yes. The assessment is valid.

The law states, internal revenue taxes shall be assessed within 3 years after the last day prescribed by law
for filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun
after the expiration of such period. However, in the case of failure to file a return the tax may be assessed at any time
within 10 years after the discovery of the omission.

In the case at bar, a corporation received a letter of authority from the Bureau of Internal Revenue for 2015,
which is also the corporation’s taxable year. Consequently, in January 2020, the Bureau of Internal Revenue issued a
final assessment for deficiency taxes for 2015 based on the same letter of authority.

Accordingly, the Bureau of Internal Revenue has until 2025 to issue a final assessment on the said
corporation because of the latter’s failure to file the return.

Hence, the assessment is valid.

(2019 (A1))
No. The deficiency tax assessment and warrant of distraint and/or levy issued against KLM are not valid.

The law states, when the Commissioner of Internal Revenue or his duly authorized representative finds that
proper taxes should be assessed, he shall first notify the taxpayer of his findings or Preliminary Assessment Notice.
Further, the tax payers shall be informed in writing of the law and the facts on which the assessment is made.
Otherwise, the assessment shall be void.

In the case at bar, the Bureau of Internal Revenue sent KLM Corp. a Final Assessment Notice without any
preliminary assessment notice.

Hence, the deficiency tax and warrant of distraint and/or levy issued against KLMM are not valid because
preliminary assessment notice is not only a procedural but substantive requirement and the absence of which is
the denial of the right to due process of the taxpayer.

(2019 (B14))
Yes. The City Assessor is correct in including the land in its assessment of RPT.

The law states, real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration, to a taxable person.

In the case at bar, City R owns a piece of land which it leased to a leasing business corporation V Corp.
Accordingly, the leasing of the property to V Corp. would render the same subject to real property tax.

Hence, the City Assessor is correct in including the land in its assessment of RPT.

(2019 (B18) (a))

No. The contention of T Corp. regarding the prescription of the assessment is not meritorious.

The law states, Internal revenue taxes for corporation shall be assessed within 3 years after the filing of the
Final Adjustment Return which is on or before 15th day of April.

In the case at bar, for 2012, T Corp. filed its Income Tax Return on April 15, 2013. Consequently, T Corp.
received a Final Assessment Notice on April 11, 2016.

Hence, the contention of T Corp. regarding the prescription of the assessment is not meritorious because
the BIR has until April 15, 2016 to assess the proper tax.

By: Caffeinated Wisdom

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PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

(2019 (B18) (b))

Yes. The CIR’s motion to dismiss should be granted.

The law states, the Final Assessment Notice may be protested administratively by filing a request for
reconsideration or reinvestigation within 30 days from receipt of the assessment in such form and manner as may be
prescribed by implementing rules and regulations.

In the case at bar, T Corp received the FAN on April 11, 2016. Consequently, T Corp filed a protest on
June 25, 2016.

Hence, the CIR’s motion to dismiss should be granted because the protest was filed beyond the 30 day
period.

(2019 (B19) (a))

No. The BIR’s contention is not meritorious.

The law states, no suit or proceeding shall be maintained in any court for the recovery of any national internal
revenue tax alleged to have been erroneously or illegally assessed or collected until a claim for refund or credit has
been duly filed with the Commissioner of Internal Revenue. However, in any case, no suit or proceeding shall be
filed after the expiration of 2 years from the date of payment of the tax or penalty regardless of any supervening
cause that may arise after payment.

In the case at bar, W Corp filed with the BIR a claim for refund for erroneously withheld and collected final
withholding income tax on May 3, 2013. Consequently, a week after, and without waiting for any decision from the
Commissioner of Internal Revenue, W Corp. filed a Petition for Review before the Court of Tax Appeals to make
sure that the petition was filed within the 2 year period for claiming refunds.

Hence, the BIR’s contention is not meritorious because if the taxpayer must wait for the final resolution of its
administrative claim for refund it would be tantamount to the taxpayer’s forfeiture of his right to seek judicial
recourse should the 2 year prescriptive period expire without the appropriate judicial claim being filed.

(2019 (B19) (b))

No. The answer will not be the same,

The law states, in proper cases, no credit or refund of taxes or penalties shall be allowed unless the taxpayer
files in writing with the Commissioner of Internal Revenue a claim for credit or refund within 2 years after the
payment of the tax or penalty, provided:
1) that in proper cases, the Commissioner of Internal Revenue shall grant a refund for taxes or penalties within
90 days from the date of complete submission of the documents in support of the application filed, and
2) that in case of full or partial denial of the claim for tax refund, the taxpayer affected may, within 30 days
from the receipt the decision denying the claim, appeal the decision with the Court of Tax Appeals.

In the case at bar, W Corp filed with the BIR a claim for refund for excess and/or unutilized input VAT for the
second quarter of 2011, and for which the return was timely filed on July 25, 2011.

Hence, the answer is not the same because the observance of the 90 + 30 period is mandatory and jurisdictional
and prior to such period, the Court of Tax Appeals has no competence to entertain such appeal.

(2019 (B20) (a))

Yes. The City was correct in dismissing ABC Inc.’s protest.

The law states, no protest shall be entertained unless the taxpayer first pays the Real Property Tax, which shall
be annotated on the tax receipts the words “paid under protest”.

In the case bar, believing that the assessment was erroneous, ABC, Inc. filed a protest with the City Treasurer
without paying the contested RPT.
By: Caffeinated Wisdom
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PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

Hence, The City was correct in dismissing ABC Inc.’s protest because payment first of RPT is mandatory prior
to the filing of the protest.

(2019 (B20) (b))

If ABC, Inc. decides to appeal the dismissal, the appeal should be filed with the Local Board Assessment
Appeals.

The law states, any owner or person having legal interest in the property who is not satisfied with action of
the provincial, city or municipal assessor in the assessment of his property may, within 60 days from the date of
receipt of the written notice of assessment, appeal to the Local Board Assessment Appeals of the provincial, or city
by filing a petition under oath in the form prescribed for the purpose together with copies of tax declarations and
such affidavits or documents submitted in support of the appeal.

In view of the foregoing, if ABC, Inc. decides to appeal the dismissal, the appeal should be filed with the
Local Board Assessment Appeals within 60 days from the date of receipt of the written notice of assessment.

(2018 (12))
No. The contention of the celebrity is not tenable.

The law states, in the case of a false or fraudulent return with intent to evade tax, a proceeding in court for
collection of such tax may be filed without assessment, at any time within 10 years after the discovery of the falsity,
fraud or omission.

In the case at bar, the BIR Commissioner filed with the DOJ a tax evasion case against a celebrity.
However, the celebrity questioned the proceeding before the DOJ on the ground that she was denied due process
since the BIR never issued any PAN or a FAN.

Hence, the contention of the celebrity is not tenable because a tax evasion case is an exemption to the
preliminary assessment notice or final assessment notice.

(2018 (14))
No. The Petition for Certiorari will not prosper.

Under the rules, when any tribunal, board or officer exercising judicial or quasi – judicial functions has
acted without or in excess of its or his jurisdiction or with grave abused of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified Petition for Certiorari in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or
officer, and granting such incidental reliefs as law and justice may require.

In the case at bar, the City of Kabankalan filed a Petititon for Certiorari with the Court of Appeals, after the
denial of its complaint in the RTC entitled Recovery of Illegally and/or Erroneously – Collected Local Business
Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction with the RTC of Negros Occidental.

Accordingly, the power of the Court of Tax Appeals includes that of determining whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an
interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court.

Hence, the Petition for Certiorari will not prosper because the Court of Tax Appeals, by constitutional
mandate, is vested with jurisdiction to issue writs of certiorari in these cases.

(2018 (15) (a))

No. The Kidapawan assessor is not correct in assessing back taxes and interest.

By: Caffeinated Wisdom

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PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

The law states, all assessments or reassessments made after the 1 st day of January of any year shall take
effect on the 1st day of January of the succeeding year, provided that the reassessment of real property due to a major
change in its actual use shall be made within 90 days from the date of any such cause or causes occurred, and shall
take effect at the beginning of the quarter next following the reassessment.

In the case at bar, Kidapawan Assesor reclassified the property of Kerwin as commercial with an
assessment level of 50% effective January 2017, and assessed Kerwin back taxes and interest.

Hence, the Kidapawan assessor is not correct in assessing back taxes and interest because reassessment of
the said property has no retroactive effect.

(2018 (15) (b))

Yes. Kerwin is correct that only 2/3 of the property should be considered commercial.

The law states, real property shall be classified, valued and assessed on the basis of its actual use regardless
of where located, whoever owns its, and whoever uses it.

In the case at bar, Kerwin claims that only 2/3 of the building was used for commercial purposes, and thus,
the property should have been classified as partly commercial and partly residential.

Hence, Kerwin is correct that only 2/3 of the property should be considered partly commercial and partly
residential because the basis of real property tax assessments is the actual use of the property.

(2018 (15) (c))

Yes. Kerwin is required to pay the assessment taxes first with the City Assessor within 30 days from the
payment of the tax.

The law states, no protest shall be entertained unless the taxpayer first pays the tax. The protest in writing
must be filed within 30 days from payment of the tax to the provincial, city treasurer or municipal treasurer.

Hence, Kerwin is required to pay the assessment taxes first with the City Assessor within 30 days from the
payment of the tax.

(2018 (16))
No. Kurt is not correct in resisting the trial court’s requirement to pay the taxes first.

The law states, in any action involving the ownership or possession of, or succession to, real property, the
court may, motu propio or upon representation of the provincial, city, or municipal treasurer or his deputy, award
such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with
interest due on the property and all other costs that may have accrued, subject to the final outcome of the action.

In the case at bar, Kurt objected to the ruling of the trial court in an action for ejection on the ground that
delinquent realty taxes were never raised as an issue in the ejectment case.

Hence, Kurt is not correct in resisting the trial court’s requirement to pay the taxes first because real
property tax is superior to all liens, charges or encumbrances in favour of any person, irrespective of the owner or
possessor thereof.

(2018 (17) (a))

KKI is partly liable for real property taxes on the land.

The law states, charitable institutions, churches and personages or convents appurtenant thereto, mosques,
non – profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for
religious, charitable, or educational purposes shall be exempt from taxation.

By: Caffeinated Wisdom

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PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

In the case at bar Kilusan Krus, Inc. (KKI), a non – stock, non – profit religious organization, decided to
leased the ½ portion of their real property.

Hence, KKI is partly liable for real property taxes on the land because the determinative of tax exemption is
the actual use of the property, and not ownership.

(2018 (18) (a))

Yes. KII’s contention that Kalookan City can only collect local business taxes based on sales consummated
in the principal office is meritorious.

The law states, manufacturers, exporters, distributors, and other businesses, maintaining or operating
branch or sales outlet shall record the sale in the branch or sales outlet making the sale or transaction, and the tax
thereon shall accrue shall be paid to the city where such branch or sale outlet is located. However, in cases where
there is no such branch or sales outlet in the city where the sale or transaction is made, the sale shall be duly
recorded in the principal office and the taxes shall accrue and shall be paid to such city.

In the case at bar, KII is a domestic corporation engaged in the business of manufacturing, importing,
exporting, and distributing toys both locally and abroad. Thus, KII contended that Kalookan City may tax only the
sales consummated by its principal office but not the sale consummated by its branch offices located outside
Kalookan City.

Hence, KII’s contention meritorious because local business taxes shall only accrue where the sale is
consummated.

(2018 (18) (b))

No. Kalookan City is not correct in saying that Atty. Kabuyao’s PTR issued in Aklan cannot be used in
Kalookan.

The law states, every person legally authorized to practice his profession shall pay the professional tax to
the province where he practices his profession, or he maintain his principal office in case he practices his profession
in several places, provided, that such person who has paid the corresponding professional tax shall be entitled to
practice his profession in any part of the Philippine without being subject to any other national or local tax, license,
or fee for the practice of profession.

Hence, Kalookan City is not correct in saying that Atty. Kabuyao’s PTR issued in Aklan cannot be used in
Kalookan because upon the issuance of the PTR Atty. Kabuyao could practice his legal profession in any part of the
Philippines.

(2018 (19) (a))

Yes. The imposition of the 50% surcharge is proper.

The law states, in case of a false or fraudulent return is wilfully made, the penalty to be imposed shall be
50% of the tax or of the deficiency tax, in case, any payment has been made on the basis of such return before the
discovery of the falsity or fraud, provided, that a failure to report sales, receipts or income in an amount exceeding
30% of that declared return and a claim of deductions in an amount exceeding 30% of actual deductions, shall
render the taxpayer liable for substantial under – declaration of sales, receipts or income or for overstatement of
deductions.

In the case at bar, the BIR assessed Kosco, Inc. deficiency income and value – added tax, plus 50%
surcharge after determining that it had under – declared its sales by an amount exceeding 30% of that declared in its
income tax and VAT returns.

Hence, the imposition of the 50% surcharge is proper because the substantially under – declaration of sales
is a prima facie evidence of a false or fraudulent return.

(2018 (19) (b))

By: Caffeinated Wisdom
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PART II (BAR ANSWERS FOR TAXATION – REMEDIAL LAW)

No. Kosco cannot enter into a compromise with the BIR for reduction of the amount of surcharge to be
paid.

The law states, the Commission or Internal Revenue may compromise the payment of any internal revenue
tax, when a reasonable doubt as to the validity of the claim against the taxpayer exists, or the final position of the
taxpayer demonstrates a clear inability to pay the assessed tax.

Hence, Kosco cannot enter into a compromise with the BIR for reduction of the amount of surcharge to be
paid because a surcharge is not an internal revenue tax but a penalty.

(2018 (20))
Yes. CTA can act on KKI’s appeal.

The law states, no credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing
with the Commissioner of Internal Revenue a claim for credit or refund within 2 years after the payment of the tax
or penalty, provided:
1) that in proper cases, the Commissioner of Internal Revenue shall grant a refund for taxes or penalties
within 90 days from the date of complete submission of the documents in support of the application filed; and
2) that in case of full or partial denial of the claim for tax refund, the taxpayer affected may, within 30 days
from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals.

In the case at bar, on October 10, 2010, KKI filed a claim for refund / credit of input VAT for the period of
January 1 to March 31, 2009 before the CIR. However, on February 1, 2011, KKI filed an appeal with Court of Tax
Appeals even though there is no ruling on its claim for refund/credit.

Hence, CTA can act on KKI’s appeal because the last day for the CIR to act on refund was on January 12,
2011, and last day for KKI to file on appeal was on February 13, 2011.

By: Caffeinated Wisdom

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