POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
Sta. Mesa, Manila

FINAL EXAMINATIONS Saturday, December 10, 2022

TAXATION LAW REVIEW – RECAP 2 5:00 PM to 7:00 PM
Professor: Atty. Carmencita C. Dabu

INSTRUCTIONS:
1. Answer the questions briefly and concisely with legal reasons.
2. Answer sheets must be submitted not later than 5 PM,
December 15, 2022, Late submission will not be considered.
3. Should your answer sheet consist of more than one page, be sure to
write your name on every page of your answer sheet.
4. The format of your answer sheet should be: SHORT BOND PAPER;
FONT -14; SINGLE SPACE; LEAVE TWO SPACES BETWEEN YOUR
ANSWER; LEFT AND RIGHT MARGINS – ONE INCH EACH.

REMINDER: You are future lawyers and integrity is the most important
virtue of a lawyer. Integrity is honesty even when no one is looking
and despite everyone else is doing otherwise.
_______________________________________________________________

PART I: Write TRUE if the principle of law is correct; and FALSE, if

not correct. If FALSE, state the correct principle of law.
(2 pts each)

1. The Secretary of Finance issues rules and regulations implementing the

provisions of the Tax Code and other laws administered by the BIR.-
TrueSECTION 244. Authority of Secretary of Finance to Promulgate Rules and
Regulations. – The Secretary of Finance, upon recommendation of the
Commissioner, shall promulgate all needful rules and regulations for the effective
enforcement of the provisions of this Code.

2. The NIRC provides that no complaint, civil and criminal, can be filed
against a taxpayer without the approval of the CIR.-false

3. A preliminary assessment notice is required when the taxpayer fails to

pay the excise tax due on goods subject to excise tax.false= There are
however exceptions to the general rule that there must be a PAN issued by the
BIR before issuing a Formal Letter of Demand (FLD)/ Final Assessment Notice
(FAN). These instances are when:The excise tax due on excisable articles has
not been paid;

4. A tax ordinance takes effect after completion of its publication for three
(3) consecutive weeks in a newspaper of local circulation.- False Ordinance
shall take effect upon its approval, fifteen (15) days after its publication in a newspaper of
local circulation. he SC modified the CA decision by directing the Tubigon
municipal council to publish the tax ordinances for a period of three days in

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 a publication widely circulated within its jurisdiction or post them at the local
legislative hall and two other conspicuous places within the town. Tubigon
Case

5. When a warrant of distraint or levy is served even if it did not materialize,

the statute of limitations for the collection of taxes is suspended for 60
days only- truewhen the warrant of distraint or levy is duly served upon the taxpayer, his authorized
representative, or a member of his household with sufficient discretion, and no property could be located

6. A motion for reconsideration of the decision of the Commissioner on the

disputed assessment is required before filing a petition for review with
the Court of Tax Appeals.-FaLSE- If the taxpayer’s protest is denied, in whole
or in part, by the representative of the Commissioner of Internal Revenue (CIR), the
taxpayer may: (1) file a Petition for Review (PFR) with the CTA within 30 days from
the receipt of the denial (i.e., judicial appeal);

7. A tax lien is superior of all liens on the taxpayer’s property and

enforceable throughout the Philippines.-- TRUE Taxes and penalties assessed
against realty shall constitute a lien thereon, which shall be superior to all other liens, mortgages,
or incumbrances of any kind whatsoever; shall be inforceable against the property whether in the
possession of the delinquent or any subsequent owner, and can only be removed by the
payment of the tax and penalty.

8. The local treasurer of a local government unit has the authority to

compromise local taxes, fees and charges. false-false- sangguniN - In
case of a general failure of crops or substantial decrease in the price of
agricultural or agribased products, or calamity in any province, city, or
municipality, the Sanggunian concerned, by ordinance passed prior to
the first (1st) day of January of any year and upon recommendation of
the Local Disaster Coordinating Council, may condone or reduce, wholly
or partially, the taxes and interest thereon for the succeeding year or
years in the city or municipality affected by the calamity. the
Sanggunian Panlalawigan or Panlungsod, Presuidenmt and Secretary of
Finace

9. The CIR has the power to fix real property values.- TRUE While the CIR has
the authority to prescribe real property values and divide the Philippines into zones, the law is
clear that the same has to be done upon consultation with competent appraisers both from the
public and private sectors. It is undisputed that at the time of the sale of the subject properties

10. In indirect taxes, the liability on the tax can be shifted to the purchaser
or end-user.
-true
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PART II. Answer the following questions concisely and briefly.

Give legal reasons for your answer. (10 pts each)
---------------------

Question No. 1:

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 What are the requisites of a valid tax?

REQUISITES OF A VALID
TAX
(1) for a public purpose
(2) rule of taxation should be
uniform
(3) the person or property
taxed is within the
jurisdiction of the taxing
authority
(4) assessment and collection
is in consonance
with the due process clause
(5) The tax must not infringe
on the inherent
and constitutional limitations
of the power
of taxation
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Question No. 2:

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 Discuss the concept of “tax benefit principle”. When is this principle
applicable?
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Question No. 3:

Distinguish the following:

a. Tax amnesty versus tax abatement
b. Itemized deductions versus optional standard deduction.
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Question No. 4:

On 09 April 2019, BTS Corp. received a copy of the Formal Letter of

Demand/Final Assessment Notice (FLD/FAN) dated 17 March 2019
reminding the former of its internal revenue tax liabilities for the year 2009
in the total amount of Php2.3M (principal tax -Php1.5M; interests and other
charges – Php800,000.00). BTS Corp. received the said FLD/FAN on
April 30, 2019. On June 15, 2019, the CIR filed a case before the Court of
Tax Appeals to collect the said total tax liabilities assessed considering that
the said FAN had already become final and executory after 30 days from
receipt thereof by BTS Corp. as there was no timely protest made.

In its Answer, BTS Corp. argued that it did not receive any final
assessment notice. It only received a reminder letter from the CIR. Thus,
absence an assessment notice, the case filed has no basis and should be
dismissed. The CIR contended that BTS Corp. received FAN which
contained the computation of its tax liabilities, the facts and the law upon
which the assessment was based; and the same complied with the
requirements of a valid tax assessment.
If you were the Court of Tax Appeals, how will you rule on the
contentions of the parties?

. If the taxpayer denies having received an assessment from the BIR, it then
becomes incumbent upon the latter to prove by competent evidence that such notice
was indeed received by the addressee. The onus probandi has shifted to the BIR to
show by contrary evidence that GJM indeed received the assessment in the due
course of mail. It has been settled that while a mailed letter is deemed received by the
addressee in the course of mail, this is merely a disputable presumption subject to
contravention, the direct denial of which shifts the burden to the sender to prove that
the mailed letter was, in fact, received by the addressee.
While it is true that an assessment is made when the notice is sent within the
prescribed period, the release, mailing, or sending of the same must still be clearly
and satisfactorily proved. Mere notations made without the taxpayer's intervention,
notice or control, and without adequate supporting evidence cannot suffice. Otherwise,
the defenseless taxpayer would be unreasonably placed at the mercy of the revenue
offices.

2. The BIR failed to prove with competent evidence GJM's receipt of the
assessment, leads to no other conclusion but that no assessment was issued.
Consequently, the government's right to issue an assessment for the said period has
already prescribed. The assessment for deficiency DST is cancelled.

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Question No. 5:

Viral Corp. received FLD/FAN dated June 15, 2021 of its tax liabilities
for the taxable year 2011. Viral filed a timely protest to the said assessment
pleading prescription. In its Answer, the CIR claimed that its right to assess
had not yet prescribed because the 2011 income tax return filed by Viral
was false and fraudulent for its alleged intentional failure to reflect its true
sales. The CIR presented a tip from an insider as proof thereof. Has the
period of assessment prescribed?

The Statute of Limitations refers to the period during which the BIR can
assess and collect taxes. Under the Tax Code, the BIR has three (3) years to
conduct an assessment reckoned from the last day prescribed by law for the
filing of the return or from the day the return was filed, whichever is later. In case
of a false or fraudulent return with intent to evade tax or of failure to file a return,
the prescriptive period is extended to ten (10) years counted from the time the
falsity, fraud or omission is discovered. For the collection of taxes, Section 222 of
the Tax Code generally provides for a 5-year prescriptive period.

The law says if it is found that you underdeclare your revenue or

income by 30 percent, that is prima facie evidence of fraud. The thing is,
that “prima facie evidence” must be based on facts. It cannot be an
unverified informant’s accusation, and it cannot be merely based on the
BIR’s RELIEF (Reconciliation of Listings for Enforcement) or matching
system. If someone’s reported purchase from you does not appear to
match your sales declaration, that discrepancy is not yet prima facie
evidence. There could be a timing difference, or even mistakes that
create the discrepancy. Thus court decisions say that it is not
conclusive and still needs to be verified to have weight.
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Question No. 6:

NS sari-sari store located in Barangay T, Municipality X, was

assessed and paid the Barangay Treasurer the amount of P280.00
representing 1% of the gross sales of P28,000.00 for Calendar Year 2017
in accordance with the Barangay Tax Code. Subsequently, the same store
also filed application for business license with the Municipality of X for
which a municipal business tax and other regulatory fees was assessed for
the same store based on its capital investment of P15,000.00. Are the tax
assessments by Barangay T and Municipality X correct?

tax assessment of Barangay T is correct.The barangay may

impose a tax on stores or retailers with fixed business establishments
with annual gross sales or receipts of PhP50,000.00 or less in the
case of cities; and PhP30,000.00 or less, in the case of municipalities,
at a rate not exceeding 1% of gross sales or receipts.
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Question No. 7:

In its 2016 Income Tax Return, Danara Net Inc. (“Danara”) expressly
signified that it will claim as tax credit its creditable withholding tax (CWT)
of P1.2M for taxable year 2016 to be claimed as tax credit in taxable year
2017. However, due to its net-loss position in 2017, Danara was unable to
claim the P1.2M as tax credit. On April 12, 2019, the taxpayer filed with BIR
a written claim for the refund of the P1.2M unutilized CWT for taxable year
2017. Is the taxpayer entitled to a refund of the CWT?

Irrevocalbility principle
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Question No. 8:

Cite a constitutional provision and explain how it affects the exercise of the
power of taxation.

PROHIBITION AGAINST INFRINGEMENT OF

RELIGIOUS FREEDOM
No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof. The
free exercise and enjoyment of religious profession
and worship, without discrimination or preference,
shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
[Section 5, Article III, Constitution]
American Bible Society v. City of Manila
FACTS:
In the course of its ministry, the Philippine
agency of the American Bible Society has been
distributing
and selling bibles and/or gospel portions thereof
throughout the Philippines and translating the same
into several Philippine dialets. The acting City
Treasurer of Manila required the society to secure the
corresponding Mayor’s permit and municipal license
fees, together with compromise covering the period
from the 4th quarter of 1945 to the 2nd quarter of
1953. The society paid such under protest, and filed
suit questioning the legality of the ordinances under
which the fees are being collected.
HELD:

T
he payment of license fees for the
distribution and sale of bibles suppresses the
constitutional right of free exercise of religion.

A tax ordinance is considered violative of the

free exercise of religion when it becomes a

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prior restraint to the exercise thereof. In this
case, the business permit is a prior restraintØ to the exercise of one's religion since the
constitutional guaranty of the free exercise and enjoyment of religious profession and
worship carries with it the right to disseminate religious information.
Ø It is one thing to impose a tax on the income or property of a preacher, and
another to exact a tax for him for the privilege of delivering a sermon.
Ø The power to tax the exercise of a privilege is the power to control or
suppress its enjoyment

-------------- END--------------GOOD LUCK----------ATTY.CCDABU------

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