TAXATION LAW REVIEW

FINAL EXAM

Name: Brigette Florenda L. Domingo

Student Number 2020010196

I.
1. B
2. C
3. B
4. C
5. A
6. A
7. B
8. B
9. A
10. B

II.

Yes, the Assessor is correct.

According to jurisprudence, political subdivisions include the provinces,

municipalities, or cities. Thus, the LGC provides that property owned by said
entities shall be exempt from real property taxation. However, also pursuant
to the Local Government Code, although the general rule is that property
owned by the Republic of the Philippines or any of its political subdivisions is
exempt from payment of real property tax, such exemption shall be
withdrawn when the beneficial use of the property has been leased to private
persons, for consideration or otherwise.

Here, it is apparent that Lipa City is a political subdivision generally exempt

from payment of real property taxes. However, upon leasing its property to
ABC Company, a private company, the subject property is already removed
from the exemption on real property tax in line with the foregoing provision
on the LGC.

III.

No, only the CTA CASE No 11326 should be denied. The other CTA CASE
No. 11346 should be upheld.

The National Internal Revenue Code states that in cases of claiming for
refund or tax credit, the same must be filed within 2 years from the time the
right of action accrues. Such remedy is initiated by writing a claim for refund
with the Commissioner or his duly authorized representative within 30 days
from the receipt of the notice of assessment. In which case, in case of
creditable withholding taxes, the Commissioner has 120 days from receipt of
the protest within which to act. In line with this, the NIRC gives the taxpayer
the option to either await the decision of the Commissioner before appealing
before the CTA, or forego the same by directly proceeding with the CTA
within 30 days after the expiration of the 120 days within which the
Commissioner is to act upon the protest. Thus, the latter remedy allows the
taxpayer to elevate the case before the CTA in Division in order for the 2-year
period within which to file a judicial remedy not to lapse.

Here, CTA CASE No. 11346 was filed within the 30 day period within which
to appeal the same to the CTA. There is no need here to wait for the
expiration of the 120-day period because the Commissioner already made a
decision on June 24, 2005 which was within the 120-day period. On the
otherhand, CTA Case No. 11326 should be denied because when Malaya filed
an petition for review to the CTA, it did not wait for the expiration of the 120-
day period, in the absence of the decision thereon by the Commissioner.
Thus, the latter case is the only one which must be denied.

IV.

No.

Under jurisprudence, when the BIR reiterates the assessment contained in

previous pre-assessment notices even after having been opposed by the
taxpayer, the same is deemed a denial of its challenge or protest. Hence, the
taxpayer should file a protest for reinvestigation or reconsideration before the
Commissioner before elevating the case to the CTA. Doing otherwise would
result in the dismissal of the petition for non-exhaustion of administrative
remedies as provided under case laws.

Case law also requires that the FLD/FAN must state the facts and the law,
rules, regulations or jurisprudence upon which the assessment is based.
Otherwise, it shall be considered null and void.

Here, the Collection letter VC received on Aug 10, 2011 was within the 3-year
period within which the BIR may assess and collect deficiency taxes because
the PAN was issued on Sept 9, 2009 and since the PCL constituted a denial,
the taxpayer’s remedy is to file an administrative protest before the
Commissioner first, prior to appealing the same to the CTA. The reason is
because prior to the filing of the protest with the Commissioner, the claim is
premature and the CTA has no jurisdiction to entertain the same. Also, the
assessment is void because the PCL received merely informed VC of its tax
liabilities without elaborating the same.

Thus, the CTA is correct in dismissing the case because of non-exhaustion of

administrative remedies.

V.
a. Yes. Under the LGC, if an assessment was issued, even if the claim is for
refund or tax credit, the assessment must necessarily first be
administratively protest either in the form of a letter-protest or letter-claim
for refund with the Treasurer within 60 days from the receipt of the notice
of assessment.

The assessment was received by the corporation on May 15, 2019. Since
the corporation filed the protest was filed on June 30, 2019 only, it is
within the 60-day time frame. Hence, the same was filed on time.

b. Yes, but the same should have been filed with the MTC of Batangas.
Jurisprudence provides that the issuance of the collector of a letter of
collection demanding payment of taxes and deficiencies is in the form of a
denial. Hence, the LGC states that in case of denial of the protest, the
taxpayer must elevate the same to the regular courts depending on the
amount involved. Moreover, BP 129 has already been amended increasing
the threshold of the MTC into less than 2M.

Hence, although the claim was filed on time with the court, the same was
not filed in the proper court because the amount involved is only 1.5M.
Thus, the same should have been elevated before the MTC of Batangas,
not the RTC thereof.

VI.

No, the BIR may assess only the fees Here We Go received for its services

The NIRC provides that VAT shall be levied on the sellers of products or
services, although the tax burden is shifted on the consumers. This is because
the tax incident, pursuant to case law, is still on the seller. Thus, taxes on
profit remittances should be levied on the actual principals or sellers and not
on its agents.

Here, Here We Go is engaged in tourist services thus it may be assessed by

the BIR with VAT thereon. However, the BIR cannot assess Here We Go on
VAT for the fees it remitted to the hotels or inns. Thus, it must be the hotels or
inns which must be liable therefor.
 VII.
YES.

Under the NIRC, the period to claim for refund must be within 2 years from
the time the cause of action accrues. Prior to this, there must first be an
administrative protest for said claim to be filed with the Commissioner
within 60 days from the notice of assessment. The Commissioner then has 120
days to act upon such protest. Afterwards, the same may be appealed before
the CTA within 30 days from the expiration of the 120-day period.

Here, P&G directly elevated the case before the CTA even prior to the
expiration of the 120 day period within which the Commissioner may decide
the same. The protest was filed on Aug 21, 2007 and the appeal to the CTA
was filed on Sept 27, 2007. P&G has until December 21 2007 or the expiration
of 120 days until it may bring an appeal to the CTA. Thus, the CTA is correct.

VIII.
Should the CTA grant the appeal before it, the only basis to justify the same
is that the BIR has committed grave abuse of discretion amounting to lack or
excess of jurisdiction.

Jurisprudence provides that Certiorari is the remedy resorted to in the

absence of any other plain, speedy or adequate remedy. In such case, the
petition should be filed within 90 days from the time the government injury
was made or cause. The Constitution gives the CTA the power to act upon
such petitions and to accordingly issue a writ of certiorari under the
expanded judicial power of said Constitution.

Hence, since only 3 months has elapsed since the filing of the administrative
protest Masagan no longer waited for the expiration of the 180-day period
required under the NIRC, the CTA may only grant it if the ground on which
the appeal is to be based is grave abuse of discretion amounting to lack or
excess of jurisdiction.

IX.
1. It depends. The NIRC provides that lease of residential units are subject
to VAT where the gross receipts from rentals exceed PHP15,000 per
month per unit provided that the aggregate annual gross receipts exceed
PHP3,000,000.00. Otherwise, the gross receipts shall be subject to 3%
percentage tax.
 2. Yes, there are 3 exceptions to the general rule under the NIRC that the
period to assess must be within 3 years from the deadline of filing a
return or from its actual filing. These are: (1) extraordinary period of
assessment or collection on the grounds of a false or fraudulent return or
failure to file a return which may be assessed within 10 years; (2) waiver
of statute of limitations which according extend the period to assess and
collect; and (3) the assessment of substantially amended returns.
3. It depends upon its actual use. If the property being used by the private
educational institution is actually, directly and exclusively used for
educational purposes, the property may be exempt from real property
tax.
4. Under the LGC, the residual taxing power of political subdivisions
means that provinces, cities or municipalities may levy taxes, fees or
charges not otherwise provided under the LGC or the NIRC so long as
they are not unjust, excessive, oppressive, confiscatory or contrary to a
declared national policy.

X.

The Company’s contention is erroneous.

The LGC provides for the rule on sales allocation. In case of principal offices, their sales
shall accrue to the locality where it is situated. The same principle applies for branches
or sales outlets. However, when the principal office has factories, offices, projects, plants
or plantations, the sales of the principal office shall be allocated in the following
manner: 30% shall accrue to the city or municipality where the principal office is
located; and 70% shall accrue to the locality where the factory is located. Such allocation
is notwithstanding any sales recorded in the branch offices or sales outlets of the
principal office. Thus, the factories still have a 70% share in the sales.

Here, although the sales made in the outlets accrue to the localities within which they
were made, the factory still has shares on the sales subject to the LBT, contrary to the
Company’s position.