I.

The law – WHAT LAW? provides that a Motion for Reconsideration does not toll the
prescriptive period for filing the action with the Court of Tax Appeals.

Here, the filing of the Motion for Reconsideration is fatal since the subsequent appeal to the CTA
was already filed out of time since 3 years had already elapsed from the receipt of the notice of
denial.

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 What is your legal basis for this?

II.

a)

Abet is not liable for income tax on the sale of the BPI Shares since it is already subject to the
Stock Transaction Tax.

He is liable for ½ of 1% if the value of the said shares.

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 What is your legal basis?
 Answer the call of the problem. How much?

b)

If Abet sold the shares directly to his friend, Abet would be liable for income tax for the capital
gains for the sales of shares of stock not traded through the stock exchange.

He would be liable for 5% of the first 100,000 and 10% for the succeeding amount of the sale.

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 What is your legal basis?
 Answer the call of the problem. How much?

III.

a)

The assessment was not proper.

The law provides that if the donor renounces in general terms his share in the estate, he shall not
be liable for Donor’s Tax.

Here, the renouncement of Cromwell although specific in appearance should still be considered
as couched in general terms since he renounced it to the other remaining co-heirs.

Therefore, Cromwell should not be liable for Donor’s Tax.

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 What is your legal basis?

B)

No, my answer would not be the same if he renounced his share in favour of Arky.

By specifically renouncing g to a specific heir, Cromwell should be deemed to have made a

donation.

Therefore, he should be liable for Donor’s Tax.

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 What is your legal basis?

IV.

a)

Yes, the action of Wilma in moving for an injunction was justified.

An exception to the rule that court’s -> courts have no authority to restrain the collection of
taxes is when the said collection will be prejudicial to the interests of the taxpayer.

Here, the basis of the collection was a jeopardy assessment. Hence, an injunction may be availed
of to restrain the tax collection while the court reviews the merits of the case.

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 What is your legal basis?

b)
Yes, the tax liabilities may still be compromised based on the fact that there has yet been a
propert assessment of her liabilities since there was only a jeopardy assessment.

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 What is your legal basis?

V.

Yes/No? Mario may not appeal to the CTA on either of the two options.

The protest to the PAN was improper since it is the FAN which should be protested.

Mario cannot go to the CTA immediately after the issuance of the FAN to the BIR first, before he
can go to the CTA for a remedy.

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 What is your legal basis?

VI.

a)

Iglesia ni Kristo is liable for the VAT on the purchase of materials to be used in the construction
since VAT is a tax on consumption or use and that the exemptions on VAT do not include the said
transaction by the group.

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 What is your legal basis?

B)

They cannot claim for exemption from Real Property Tax on the property since it is not being
used actually, directly, and exclusively for the purpose of the exercise of their faith.

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 What is your legal basis?

C)
It can claim exemption from the payment of Income Tax since income is realized from its function
as a religious institution.

It cannot claim for exemption from Donor’s Tax since the one liable for the said tax is the donor
and not the donee.

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 What is your legal basis?

D)

Iglesia ni Kristo cannot claim for exemption on the Tariff and Customs duties of the construction
materials since the importation of such goods are made subject to our customs laws and the
importer should pay for the said importation.

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 What is your legal basis?

VII.

The CTA has the jurisdiction over the certiorari petition.

The Court of Tax appeals has jurisdiction over tax cases. In the light of such jurisdiction, it also
has the jurisdiction over petitions for certiorari in relation to tax cases.

Hence, the proper court to resolve the certiorari petition is the CTA.

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 What is your legal basis?

VIII.

a)

X can be made liable for Permit Fees, Business Tax, Franchise Tax by the City of Davao.

Wharfage fees on the other hand may not be levied upon X by the City of Davao since the city
does not own the wharf.
Toll fees may be imposed since the road is constructed by the city an imposed equally to any
individual who may use the road.

Real property tax may not be imposed by the city since the said tax is already to be paid to the
national government.

b)

No, since the local government code does not favour the imposition of the “in lieu of all taxes”
regime.

Unless, the corporation is given a choice to pay a specific tax rate or the previous special tax
regime accorded to it.

c)

i.

The revenue ordinance is not valid.

It is unjust and discriminatory on the part of X since it is being singled out from all the other
GOCCs. The ordinance violates the equal protection clause of the Constitution.

ii.

X may question the validity of the ordinance to the Secretary of Justice.

iii.

X may enjoin its implementation by asking for a writ of injunction from the court.

iv.

If the ordinance would later on be declared as valid, X cannot be held liable for surcharge and
interest if he filed the case in good faith and there was no fraud on his part.

When the ordinance is silent as to the rate of the surcharge, the rate therein will be based on
what is stipulated in the law as to its limits.

v)

The City Government must issue the assessment for the taxes within the periods mandated by
law or after the filing of the returns by X.
The assessment was suspended when X questioned the validity and the injunction was issued
against.

IX.

a)

Dumping duty refers to taxing those items that are being imported or dumped to the Philippines
that have or will have a detrimental effect to the local industries concerned.

b)

Countervailing duties pertain to the imposition of taxes to imported items in relation to the taX
treatment that was accorded to it from the country of origin in order to protect local industries.

c)

Marking duties refer to the duty of marking imported goods which are left unmarked by the
exporter.

d)

Discriminatory duties is the act of imposing rates that are high to the imported goods from a
country which is also taxing our exports in their country at an unreasonable rate.

X.

Mr. Francisco derived income from the cancellation of his debt.

However it is not taxable since it is a gift which is an exclusion from income tax as provided in the
National Internal Revenue Code.

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XI.

a)

The share in the proceeds from Life Insurance is not taxable since it is an exclusion from Income
Tax under the NIRC.

b)
The 13th Month Salary is also not taxable since it is an exclusion from Income Tax under the NIRC.

c)

The P5,000 worth of stock dividends from PLDT is also not subject to Income Tax since stock
Dividends are not income since it is a mere capital.

d)

The free lodging within the warehouse premises is not taxable since it is for the benefit of the
employer.

e)

The free meal allowance is not taxable so long as it does not exceed the limits provided for meal
allowances or the P82,000 limit.

f)

The uniform allowance will still not be subject to income tax since it does not exceed the limit of
P82,000 even though it has exceeded the limit for uniform allowances.

XII.

The assessment was proper.

The property is subject to Real Property Tax since the beneficial use thereof is left to a private
individual.

The fact that it is the property of the municipality is of no weight since the beneficial use is given
to Llamado.

XIII.

Just compensation from an expropriation proceeding is taxable since income is being earned by
the seller from th sale.

The contention that capital gains tax is to be paid by the buyer not supported by our law since it
is the seller who should pay the capital gains tax from the sale of the property.

XIV.

No, the BIR is not correct.

Transfers in contemplation of death have no application when the transfer was supported by
valuable and sufficient consideration.

Here, the transfer was made through a valid sale.

Hence, the property should not form part of the estate for estate tax purposes.

XV.

Yes, the BIR Commissioner should provide the information to the IRS.

Tax treaties are binding on us and we are bound by the provisions therein.

Therefore, pursuant to the tax treaty, the information regarding the deposits of the US Citizen
should be given to the IRS.

XVI.

I will raise the ground that the tax imposition is invalid since it was not made through a tax
ordinance by the sanggunian.

The Local Government Code provides that a local tax imposition must be done through an
ordinance and not by a mere executive order.

Therefore, the imposition by the mayor is invalid.

XVII.

The malpractice insurance is the only item that is deductible since it is the only item that may be
claimed as a business expense and has a direct relation to the practice of his profession in relation
to expenses incurred in the course thereof.

The fees paid to the Supreme Court to take the exam and the fee for the bar review cannot be
said to be expenses related to his practice as a lawyer.

The money given to the judge is not deductible since it is in the form of a kickback that the law
does not allow as deductible expenses.

XVIII.

The Resident Alien decedent should pay the estate tax on the savings deposits in Land Bank.

For Estate Tax purposes, a resident alien is liable for estate tax for property that is located in the
Philippines.
Here, the deposits are found in Land Bank, a Philippine bank. Hence, the decedent is not exempt
from estate tax and should pay the said tax.