FINAL EXAMINATIONS TAXATION LAW

Instructions: Answer the following questions briefly and concisely.

Give reasons for your answer.
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Question no. 1: (2.5 % each)

a) What is the nature of the power of taxation. State its inherent limitations.

b) Are constitutional provisions relating to taxation grant of the power to tax?

Explain.

Question no. 2: (2.5%)

MX, Inc. had excess income tax payments for the year 2012 of in the amount of
Php1.0 M. When it filed its income tax return in April 2013, MX Inc. signified its
intention to apply said amount as a tax credit to its future income tax liabilities, by
checking the box “tax credit” at the bottom portion of the income tax return. For the
years 2013, 2014 and 2015, it again had excess income tax payments and again chose to
apply it as a tax credit. MX Inc. chose to apply said excess tax payments for the years
2013 and 2014 as a tax credit to its future tax liabilities. When MX Inc. finally realized
that since it has so may tax over payments, tax credit would not be feasible and advisable.
Hence, on January 15, 2016, it filed a claim for refund of the excess income tax payments
for the years 2012, 2013, 2014 and 2015 with the Bureau of Internal Revenue. It you
were the BIR, will you approve the claim for refund? Support your answer.

Question no. 3: (2.5% each)

Are the following transactions subject to value-added tax? If your answer is yes,
State the relevant authority for your answer.

a) Sale of gold to the Bangko Sentral ng Pilipinas;

b) Services rendered by an employee-doctor to co- employees.
c) Concert of Celine Dion at Araneta Coliseum.
d) Goods consigned on June 15, 2017 and returned to consignor-
owner on August 15, 2017.

Question no. 4: (2.5%)

What are the transactions deemed sale under the Vat law?

Question No. 5: (2.5%)

Charmie purchase a 300-square meter subdivision lot located in Malolos,

Bulacan. At the time of her father’s death, the property was valued at Php600,000.00.
She constructed a two-storey residential house and lot with a swimming pool on the said
lot. The local assessor conducted an ocular inspection. In view of the development and
conversion of Malolos into a city, the value of lot increased to Php1.0 Million and the
improvements made by Charmie was valued at P2.0 Million.

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 Is the increase in the value of the lot taxable income? Justify your answer.

Question no. 6: (2.5% each)

State what kind of association or organization was formed in and whether such is
taxable or not? Explain your answer in not more than 2 sentences.

a) Dane and Espie are best friends. They met Fely, a real estate broker, from
whom Dane and Espie purchased a rest house worth P3.5M. They contributed and
equally shared in the payment of the purchase price. Fely executed the Deed of Sale in
the name Dane and Espie.

b) Gene, Honey and Ira are the surviving heirs of their deceased father, who left a
6-door apartment building. After paying the estate tax due, the title of the property was
registered in their names. They decided not to divide the said property and agreed tp
equally share in the rentals from the 6-door apartment net of all taxes due and the
expenses for the maintenance thereof.

c) Josie, Billy, Larry agreed to operate the sports complex located in Malolos,
Bulacan. Billy will manage the complex; while Lucky and Bong will provide the capital
for the operation of the said complex. They agreed to equally share in the profit, and
since they trust each other, their agreement was only verbal.

d) Manny, a law practitioner and Perry, a retired judge and put up a law
partnership and registered the same with the Securities & Exchange Commission. They
hired Oscar, a law graduate, as the firm’s manager.

e) A parcel of land located in Manila is registered in the name of Santi, Terese,

Joy and Beth.

Question no. 7: (2.5% each)

Distinguish the following:

a. direct versus indirect tax

b. global system versus scheduler system
c. tax amnesty versus tax abatement

Question no. 8: (2.5% each)

a. What is an assessment notice?

b. What are the requisites of a valid assessment notice? Explain.

Question no. 9: (2.5% each)

Carlos and Marie, husband and wife, Filipino citizens and the registered owners
of a condominium unit located in Makati City. After the recent wedding of their only son,
Lito, they donated the said condominium unit with a fair market value of P4.0 Million to
the spouses Lito and Sarah.

a) What is the tax treatment of the said condominium unit as far as Lito and Sarah
are concerned.? Explain.

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 b) What is the tax liability of the spouses Carlos and Marie with respect to the
donation of said condominium unit? Discuss with reasons.

Question no. 10: (2.5% each)

a) The Constitution provides that: “Congress shall evolve a

progressive system of taxation.”

What is your understanding of “progressive system of taxation”?

b) What is the rationale of this inherent limitation in the exercise of the power to
tax?

“The government, its political subdivisions, government entities and

instrumentalities are exempt from taxation.”

c) Do barangays have exclusive taxing power under the Local Government Code
of 1991? Explain your answer.

Question no. 11: (5%)

Yanyan owns and operates a restaurant name ”YanYan Foodams”.She serves

breakfast and thus opens her restaurant everyday at 6:00 in the morning. She makes it a
point that her customers while waiting for their ordered breakfast to be served or while
having their chats with their companions would have something to read or keep them
busy such that 3 kinds of newspapers at 3 sets each are available. She collected all these
old newspapers, empty bottles of soy sauce, tomato sauce, patis, and other emply bottles
and packages. She has a regular “junk shop operator” who regularly buys the same
empty bottles and old newspapers. Is the transaction between Yanyan and the junk shop
operator subject to value added tax? Explain with reasons.

Question no. 12: (5%)

What is the remedy of the taxpayer if he wants to protest or contest the validity of
a tax ordinance? State the procedure and the statute of limitations.

Question no. 13: (2.5%)

a) Define Importation. When does it begin and when does it end?

b) Are forfeiture proceedings of illegally imported goods criminal in nature?

Explain.

Question no. 14: (4%)

What is “tax benefit rule”? Is it the same as “beneficial user principle? Explain
and give example.

Question no. 15: (2.5% each)

a. What does the gross estate of a decedent include?

b. When is there a valid waiver of the statute of limitations in the enforcement and
collection of internal revenue taxes? State the requisites.

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Question no. 16: (3% each)

On May 15, 2016 Tonette received an assessment notice of unpaid real estate tax
on her commercial lot and building located in Quezon City for the years 2010 to 2014 in
the amount of Php420,000.00. Tonette went to the Quezon City Treasurer’s Office and
manifested that she does not agree to the said assessment because based on her records,
the amount due should only be Php240,000.00 and offered to pay said amount

But the City Treasurer declined her payment and insisted that she should pay the
amount as assessed. Considering that her offer and tender of payment was not accepted
by the City Treasurer, Tonette filed a petition for mandamus before the Regional Trial
Court of Quezon City to compel the City Treasurer of Quezon City to accept her payment
of Php240,000.00 and the same time consigned said amount.

a) Will the petition for mandamus prosper? Reason out your answer.

b) If Tonette engaged you as her lawyer, what is the proper and best remedy that you
would take to protect her interest.

Question no. 17: (5% each)

Atty. Maine maintains his law office in ‘Quezon City but resides in Manila. Most
of her court appearances and clients are in Quezon City. She paid her professional tax for
2015 in Manila. May Quezon City, where she has her law office require him to pay his
professional tax for 2015? Why? Explain your answer.

Question no. 18: (2.5% each)

a) Discuss the composition of the Court of Tax Appeals. Are decisions of the
Court of Tax Appeals appealable to the Court of Appeals?

b) Does the Court of Tax Appeals have jurisdiction over the collection of
internal revenue cases?

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