I.
Q: Jose Cernan, Filipino citizen, married to Maria Ceman, died in a vehicular accident in NLEX on July 10, 2007. The
spouses owned, among others, a 100-hectare agricultural land in Sta. Rosa, Laguna with current fair market value
of P20 million, which was the subject matter of a Joint Venture Agreement about to be implemented with Star
Land Corporation (SLC), a well-known real estate development company. He bought the said real property for P2
million fifty years ago. On January 5, 2008, the administrator of the estate and SLC jointly announced their big
plans to start conversion and development of the agricultural lands in Sta. Rosa, Laguna, into first-class residential
and commercial centers. As a result, the prices of real properties in the locality have doubled.
The Administrator of the Estate of Jose Cernan filed the estate tax return on January 9,2008, by including in the
gross estate the real property at P2 million. After 9 months, the BIR issued deficiency estate tax assessment, by
valuing the real property at P40 million.
II.
Q: Cliff Robertson, an American citizen, was a permanent resident of the Philippines. He died in Miami, Florida. He
left 10, 000 shares of Meralco, a condominium unit at the Twin Towers Building at Pasig. Metro Manila and a
house and lot in Los Angeles, California.
III.
Q: A, aged 90 years and suffering from incurable cancer, on August 1, 2001 wrote a will and, on the same day,
made several inter-vivos gifts to his children. Ten days later, he died. In your opinion, are the intervivos gifts
considered transfers in contemplation of death for purposes of determining properties to be included in his gross
estate? Explain your answer. (2001 Bar)
IV.
Q: Antonia Santos, 30 years old, gainfully employed, is the sister of Eduardo Santos. She died in an airplane crash.
Edgardo is a lawyer and he negotiated with the airline company and insurance company and they were able to
agree to a total settlement of P10 Million. This is what Antonia would have earned as somebody who was gainfully
employed. Edgardo was her only heir.
V.
In 1999, Xavier purchased from his friend, Yuri, a painting for P500,000.00. The fair market value (FMV) of the
painting at the time of the purchase was P1 million. Yuri paid all the corresponding taxes on the transaction. In
2001, Xavier died. In his last will and testament, Xavier bequeathed the painting, already worth P1.5 million, to his
only son, Zandro. The will also granted Zandro the power to appoint his wife, Wilma, as successor to the painting in
the event of Zandro’s death. Zandro died in 2007, and Wilma succeeded to the property.
VI.
Q: While driving his car to Baguio last month, Pedro Asuncion, together with his wife Assunta, and only son, Jaime,
met an accident that caused the instantaneous death of Jaime. The following day, Assunta also died in the hospital.
The spouses and their son had the following assets and liabilities at the time of death:
Assunta Jaime
Exclusive Conjugal Exclusive
Cash P 10,000,000 P 1,200,000500,000
Land P 5,000,000 2,000,000
Residential house 4,000,000
Mortgage payable 2,500,000
Funeral expenses 300,000
VII.
Q: State the Conditions for allowing the following as deductions from the gross estate of a citizen or resident alien
for the purpose of imposing estate tax:
VIII.
Q: Mr. Felix de la Cruz, a bachelor resident citizen suffered from a heart attack while on a business trip to the USA.
He died intestate on June 15, 2013 in New York City, xxx xxx where shall the return be filed and estate tax be paid?
(2000 Bar)
IX.
Q: Remedios, a resident citizen, died on November 10, 2006. She died leaving three condominium units in Quezon
City valued at P5 Million each. Rodolfo was her only heir. He reported her death on December 5, 2006 and filed the
estate tax return on March 30,2007. Because he needed to sell one unit of the condominium to pay for the estate
tax, he asked the Commissioner of Internal Revenue to give him one year to pay the estate tax due. The
Commissioner approved the request for extension of time provided that the estate tax be computed on the basis
of the value of the property at the time of payment of the tax.
a. Does the Commissioner of Internal Revenue have the power to extend the payment of estate tax? If
so, what are the requirements to allow such extension? (2007 Bar)
X.
Q: Is the approval of the court, sitting as probate or estate settlement court, required in the enforcement and
collection of estate tax? Explain. (2005 Bar)
XI.
Q: X dies in year 2000 leaving a bank deposit of P2, 000,000.00 under joint account with his associates in a law
office. Learning of X’s death from the newspapers, the Commissioner of Internal Revenue wrote to every bank in
the country asking them to disclose to him the amount of deposits that might be outstanding in his name or jointly
with others at the date of his death. May the bank holding the deposit refuse to comply on the ground of the
Secrecy of Bank Deposit Law? Explain. (2003 Bar)
DONOR’S TAX
I.
Q: The employees of Travellers, Inc. staged a strike. X, a non-union member joined the strike and volunteered to
picket the company premises from 8:00 A.M. to 12:00 P.M., Monday to Friday. Six months into the strike, X ran out
of money and asked financial aid from the union since he has no other source of income and needed financial
assistance in order to live. The union gave him P1, 000.00 a month to take care of his food requirements plus
P500.00 to take care of his monthly rent. When X filed his return, he excluded these benefits from his gross
income. The exclusion was denied by the BIR Decide. (1993 Bar)
II.
Q: A, an individual, sold to B, his brother-inlaw, his lot with a market value of P1, 000.000 for P600.000. A’s cost in
the lot is P100, 000. B is financially capable of buying the lot. A also owns X Co., which has a fast growing business.
A sold some of his shares of stock in X Co. to his key executives in X Co. These executives are not related to A. The
selling is P3, 000.000, which is the book value of the shares sold but with a market value of P5,000,000. A’s cost in
the shares sold is P1 , 000, 000. The purpose of A in selling the shares is to enable his key executives to acquire a
propriety interest in the business and have a personal stake in its business.
III.
Q: In the settlement of the estate of Mr. Barbera who died intestate, his wife renounced her inheritance and her
share of the conjugal property in favor of their children. The BIR determined that there was a taxable gift and thus
assessed Mrs. Barbera as a donor.
IV.
Q: Your bachelor client, a Filipino residing in Quezon City, wants to give his sister a gift of Php200, 000.00. He seeks
your advice, for purposes of reducing if not eliminating the donor’s tax on the gift, on whether it is better for him
to give all of the Php200, 000.00 on Christmas 2001 or to give Php100, 000.00 on Christmas 2001 and the other
Php100,000.00 on January 1, 2002. Please explain your advice. (2001 Bar)
V.
Q: On December 06, 2001, LVN Corporation donated a piece of vacant lot situated in Mandaluyong City to an
accredited and duty registered non-stock, non-profit educational institution to be used by the latter in building a
sports complex for students.
a. May the donor claim in full as deduction from its gross income for the taxable year 2001 the amount
of the donated lot equivalent to its fair market value/zonal value at the time of the donation? Explain
your answer.
b. B. In order that donations to non-stock, non-profit educationalinstitution may be exempt from the
donor’s gift tax, what conditions must be met by the donee? (2002 Bar)
VALUE-ADDED TAX
I.
Q: In June 2013, DDD Corp., a domestic corporation engaged in the business of leasing real properties in the
Philippines, entered into a lease agreement of a residential house and lot with EEE, Inc., a non-resident foreign
corporation. The residential house and lot will be used by officials of EEE, Inc. during their visit to the Philippines.
The lease agreement was signed by representatives from DDD Corp. and EEE, Inc. in Singapore.
DDD Corp. did not subject the said lease to VAT believing that it was not a domestic service contract. Was DDD
Corp. correct? Explain. (2015 Bar)
II.
Q: What are the characteristics of the Value-Added Tax? (1996)
III.
Q: MasarapKumain, 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 selling price of the delivery van was way below its acquisition cost.
IV.
Q: Pursuant to Sec. 11 of the "Host Agreement" between the United Nations and the Philippine government, it was
provided that the World Health Organization (WHO), "its assets, income and other properties shall be: a) exempt
from all direct and indirect taxes." Precision Construction Corporation (PCC) was hired to construct the WHO
Medical Center in Manila. Upon completion of the building, the BIR assessed a 12% VAT on the gross receipts of
PCC derived from the construction of the WHO building. The BIR contends that the 12% VAT is not a direct nor an
indirect tax on the WHO but a tax that is primarily due from the contractor and is therefore not covered by the
Host Agreement. The WHO argues that the VAT is deemed an indirect tax as PCC can shift the tax burden to it. Is
the BIR correct? Explain. (2016 Bar)
V.
Q: MMM, Inc., a domestic telecommunications company, handles incoming telecommunications services for non-
resident foreign companies by relaying international calls within the Philippines. To broaden the coverage of its
telecommunications services throughout the country, MMM, Inc. entered into various interconnection agreements
with local carriers. The non-resident foreign corporations pay MMM, Inc. in US dollars inwardly remitted through
Philippine banks, in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas.
MMM, Inc. filed its Quarterly VAT Returns for 2000. Subsequently, MMM, Inc. timely filed with the BIR an
administrative claim for the refund of the amount of P6,321,486.50, representing excess input VAT attributable to
its effectively zero-rated sales in 2000. The BIR ruled to deny the claim for refund of MMM, Inc. because the VAT
official receipts submitted by MMM, Inc. to substantiate said claim did not bear the words "zero-rated" as required
under Section 4.108-1 of Revenue Regulations (RR) No. 7-95. On appeal, the CTA division and the CT A en bane
affirmed the BIR ruling.
MMM, Inc. appealed to the Supreme Court arguing that the NIRC itself did not provide for such a requirement. RR
No. 7-95 should not prevail over a taxpayer's substantive right to claim tax refund or credit. (2015)
VI.
Q: State whether the following transactions are: a) VAT exempt; b) subject to VAT at 12%; or c) subject to VAT at
0%:
xxx xxx xxx
c. Services rendered by Jake’s Construction Company, a contractor to the World Health Organization in
the renovation of its offices in Manila. (1998 Bar)
d.
VII.
Q: State whether the following transactions are: a) VAT Exempt; b) subject to VAT at 10%; or c) subject to VAT at
0%:
VIII.
Sale of certain Real Estate (1996, 2009)
Q: Melissa inherited from her father a 300-square-meter lot. At the time of her father’s death on March 14, 1995,
the property was valued at P720, 000.00. On February 28, 1996, to defray the cost of the medical expenses of her
sick son, she sold the lot for P600, 000.00, on cash basis. The prevailing market value of the property at the time of
the sale was P3, 000.00 per square meter.
IX.
Q: Give at least three (3) real estate transactions which are not subject to the Value-Added Tax. (1996 Bar)
X.
Lease of residential unit (1998, 2008, 2009)
Q: Emiliano Paupahan is engaged in the business of leasing out several residential apartment units he owns. The
monthly rental for each unit ranges from P8, 000.00 to P10, 000.00. His gross rental income for one year is P1,
650,000.00. He consults you on whether it is necessary for him to register as a VAT taxpayer. What legal advice will
you give him, and why? (2009 Bar)
XI.
Q: Greenhills Condominium Corporation incorporated in 2001 is a non-stock, non-profit association of unit owners
in Greenhills Tower, San Juan City. To be able to reduce the association dues being collected from the unit owners,
the Board of Directors of the corporation agreed to lease part of the ground floor of the condominium building to
DEF Savings Bank for P120,000 a month or P1.44 million for the year, starting January 2007.
XII.
Refund or tax credit of excess input tax (2014, 2015, 2016)
Q: Amor Powers, Inc. (API) is a domestic corporation registered with the BIR as a value-added taxpayer. API
incurred excess input VAT in the amount of P500,000,000.00 on August 3, 2008. Hence, it filed with the BIR an
administrative claim for the refund or credit of these input taxes on August 15, 2010. Without waiting for the CIR
to act on its claim, API filed a Petition for Review with the CTA on September 15, 2010 before the lapse of two
years after the close of the taxable quarter concerned.
In its Comment on the Petition, the CIR argues that API's Petition should be dismissed as it was filed before the
lapse of the 120-day period given to the CIR by Sec. 112(D) of the NIRC, which became effective on January 1,
1998. For the CIR, the 120-day period is mandatory and jurisdictional so that any suit filed before its expiration is
premature and, therefore, dismissible.
API, on the other hand, invokes BIR Ruling No. DA-489-03 issued by the CIR on December 10, 2003 in answer to a
query posed by the Department of Finance regarding the propriety of the actions taken by Lazi Bay Resources
Development, Inc., which filed an administrative claim for refund with the CIR and, before the lapse of the 120-day
period from its filing, filed a judicial claim with the CTA. BIR Ruling No. DA-489-03 stated that the taxpayer-claimant
need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA.
XIII.
Q: For calendar year 2011, FFF, Inc., a VAT-registered corporation, reported unutilized excess input VAT in the
amount of Pl ,000,000.00 attributable to its zero-rated sales. Hoping to impress his boss, Mr. G, the accountant of
FFF, Inc., filed with the Bureau of Internal Revenue (BIR) on January 31, 2013 a claim for tax refund/credit of the
Pl,000,000.00 unutilized excess input VAT of FFF, Inc. for 2011. Not having received any communication from the
BIR, Mr. G filed a Petition for Review with the CTA on March 15, 2013, praying for the tax refund/credit of the
Pl,000,000.00 unutilized excess input VAT of FFF, Inc. for 2011. (2015)
TAX REMEDIES under NIRC
I.
Q: Describe separately the procedures on the legal remedies under the Tax Code available to an aggrieved
taxpayer both at the administrative and judicial levels. (Bar)
II.
Q:After examining the books and records of EDS Corporation, the 2004 final assessment notice, showing basic tax
of P1,000,000., deficiency interest of P400,000, and due date for payment of April 30, 2007 but without the
demand letter, was mailed and released by the BIR on April 15, 2007. The registered letter, containing the tax
assessment, was received by the EDS Corporation on April 25, 2007.
III.
Q: Mr. Sebastian is a Filipino seaman employed by a Norwegian company which is engaged exclusively in
international shipping. He and his wife, who manages their business, filed a joint income tax return for 1997 on
March 15, 1998. After an audit of the return, the BIR issued on April 20, 2001 a deficiency income tax assessment
for the sum of P250, 000.00, inclusive of interest and penalty. For failure of Mr. and Mrs. Sebastian to pay the tax
within the period stated in the notice of assessment, the BIR issued on August 19, 2001 warrants of distraint and
levy to enforce collection of the tax.
IV.
Q: Distinguish a false return from a fraudulent return. (1996 Bar)
V.
Q: Mr. Castro inherited from his father, who died on June 10, 1994, several pieces of real property in Metro
Manila. The estate tax return was filed and the estate tax due in the amount of P250, 000.00 was paid on
December 06, 1994. The Tax Fraud Division of the BIR investigated the case on the basis of confidential information
given by Mr. Santos on January 06, 1998 that the return filed by Mr. Castro was fraudulent and that he failed to
declare all properties left by his father with intent to evade payment of the correct tax. As a result, a deficiency
estate tax assessment for P1, 250, 000.00, inclusive of 50% surcharge for fraud, interest and penalty, was issued
against him on January 10, 2001. Mr. Castro protested the assessment on the ground of prescription.
VI.
Q: Mr. Tiaga has been a law-abiding citizen diligently paying his income taxes. On May 5, 2014, he was surprised to
receive an assessment notice from the Bureau of Internal Revenue (BIR) informing him of a deficiency tax
assessment as a result of a mathematical error in the computation of his income tax, as appearing on the face of
his income tax return for the year 2011, which he filed on April 15, 2012. Mr. Tiaga believes that there was no such
error in the computation of his income tax for the year 2011.
VII.
Q: A final assessment notice was issued by the BIR on June 13, 2000, and received by the taxpayer on June 15,
2000. The taxpayer protested the assessment on July 31, 2000. The protest was initially given due course, but was
eventually denied by the Commissioner of Internal Revenue in a decision dated June 15, 2005. The taxpayer then
filed a petition for review with the Court of Tax Appeals (CTA), but the CTA dismissed the same.
Assume that the CTA’s decision dismissing the petition for review has become final. May the Commissioner legally
enforce collection of the delinquent tax? Explain. (2009 Bar)
Taxpayer’s Remedies
VIII.
Q: What are the differences between a request for reconsideration and a request for reinvestigation? (2012 Bar)
IX.
Q: A final assessment notice was issued by the BIR on June 13, 2000, and received by the taxpayer on June 15,
2000. The taxpayer protested the assessment on July 31, 2000. The protest was initially given due course, but was
eventually denied by the Commissioner of Internal Revenue in adecision dated June 15, 2005. The taxpayer then
filed a petition for review with the Court of Tax Appeals (CTA), but the CTA dismissed the same.
X.
Q:
a. A taxpayer received, on 15 January 1996, an assessment for an internal revenue tax deficiency. On 10
February 1996, the taxpayer forthwith filed a petition for review with the Court of Tax Appeals. Could the
Tax Court entertain the petition?
b. Under the above factual setting, the taxpayer, instead of questioning the assessment he received on 15
January 1996, paid on 01 March 1996 the "deficiency tax" assessed. The taxpayer requested a refund
from the Commissioner by submitting a written claim on 01 March 1997. It was denied. The taxpayer, on
15 March 1997, filed a petition for review with the Court of Appeals. Could the petition still be
entertained? (1997 Bar)
XI.
Q: In the examination conducted by the revenue officials against the corporate taxpayer in 2010, the BIR issued a
final assessment notice and demand letter which states: “It is requested that the above deficiency tax be paid
immediately upon receipt hereof, inclusive of penalties incident to delinquency. This is our final decision based on
investigation. If you disagree, you may appeal this final decision within 30 days from receipt hereof, otherwise said
deficiency tax assessment shall become final, executory and demandable.” The assessment was immediately
appealed by the taxpayer to the Court of Tax Appeals, without filing its protest against the assessment and without
a denial thereof by the BIR. If you were the judge, would you deny the petition for review filed by the taxpayer and
consider the case as prematurely filed? Explain you answer. (2012 Bar)
XII.
Q: 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 CTA by filing a petition for review within 30
days after the expiration of the 180-day period as mandated by the provisions of the last paragraph of Section 228
of the 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. (2014 Bar)
Compromise
XIII.
Q: Under what conditions may the Commissioner of Internal Revenue be authorized to:
a. Compromise the payment of any internal revenue tax? (2000 Bar)
XIV.
Q: State and discuss briefly whether the following cases may be compromised or may not be compromised:
a) Delinquent accounts;
b) b. Cases under administrative protest, after issuance of the final assessment notice to the taxpayer, which
are still pending;
c) c. Criminal tax fraud cases;
d) d. Criminal violations already filed in court;
e) e. Cases where final reports of reinvestigation or reconsideration have been issued resulting in the
reduction of the original assessment agreed to by the taxpayer when he signed the required agreement
form. (2005 Bar)
Abatement of taxes
XV.
Q: Under what conditions may the Commissioner of Internal Revenue be authorized to:
a. Xxx
b. Abate or cancel a tax liability (2000 Bar)
Recovery of tax illegally collected
XVI.
Q: State the conditions required by the Tax Code before the Commissioner of Internal Revenue could authorize the
refund or credit of taxes erroneously or illegally received. (2005 Bar)
XVII.
Q: In its final adjustment return for the 2010 taxable year, ABC Corp. had excess tax credits arising from its
overwithholding of income payments. It opted to carry over the excess tax credits to the following year.
Subsequently, ABC Corp. changed its mind and applied for a refund of the excess tax credits.
XVIII.
Q: DEF Corporation is a wholly owned subsidiary of DEF, Inc., California, USA. Starting December 15, 2004. DEF
Corporation paid annual royalties to DEF, Inc., for the use of the latter's software, for which the former, as
withholding agent of the government, withheld and remitted to the BIR the 15% final tax based on the gross
royalty payments. The withholding tax return was filed and the tax remitted to the BIR on January 10 of the
following year. On April 10, 2007, DEF Corporation filed a written claim for tax credit with the BIR, arising from
erroneously paid income taxes covering the years 2004 and 2005. The following day, DEF Corporation filed a
petition for review with the Court of Tax Appeals involving the tax credit claim for 2004 and 2005.
a. As a BIR lawyer handling the case, would you raise the defense of prescription in your answer to the claim
for tax credit? Explain. (2008 Bar)
XIX.
Q: ABCD Corporation (ABCD) is a domestic corporation with individual and corporate shareholders who are
residents of the United States. For the 2nd quarter of 1983, these U.S.-based individual and corporate stockholders
received cash dividends from the corporation. The corresponding withholding tax on dividend income — 30% for
individual and 35% for corporate non-resident stockholders — was deducted at source and remitted to the BIR.
On May 15,1984, ABCD filed with the Commissioner of Internal Revenue a formal claim for refund, alleging that
under the RP-US Tax Treaty, the deduction withheld at source as tax on dividends earned was fixed at 25% of said
income. Thus, ABCD asserted that it overpaid the withholding tax due on the cash dividends given to its non-
resident stockholders in the U.S. the Commissioner denied the claim.
On January 17, 1985, ABCD filed a petition with the Court of Tax Appeals (CTA) reiterating its demand for refund.
a. Does ABCD Corporation have the legal personality to file the refund on behalf of its non-resident
stockholders? Why or why not? (2009 Bar)
XX.
Q: May the courts enjoin the collection of revenue taxes? Explain your answer. (2001 Bar)
