TAXATION REVIEW

Assignment
I.
A domestic corporation failed to withhold and remit the tax on
income received from Philippine sources by a nonresident foreign
corporation. In addition to the civil penalties provided for under the
Tax Code, a compromise penalty was imposed for violation of the
withholding tax provisions. May the Commissioner of Internal
Revenue legally enforce the collection of compromise penalty?
Reasons. (5%)
II.
Mr. Ryan Guzman, a pawnshop operator, after having been
required by the Revenue District Officer to pay value added tax
pursuant to a Revenue Memorandum Order (RMO) of the
Commissioner of Internal Revenue, filed with the Regional Trial Court
an action questioning the validity of the RMO. If you were the judge,
will you dismiss the case? Reasons.(5%)
III. Mr. Lopez inherited from his father, who died on June 10, 2004,
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, 2004. The Tax Fraud Division of the BIR
investigated the case on the basis of confidential information given
by Mr. Santos on January 06, 2008 that the return filed by Mr. Lopez
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, 2011. Mr. Lopez protested the assessment on
the ground of prescription.
A.
Decide Mr. Lopez' protest. (5%)
B.
What legal requirement/s must Mr. Santos comply with so that
he can claim his reward? Explain. (5%)
IV. Give the remedies available to local government units to
enforce the collection of taxes, fees, and charges? (5%)
V.
On June 16, 2007, the Bureau of Internal Revenue (BIR) issued
against the Estate of Jose de la Cruz a notice of deficiency estate tax
assessment, inclusive of surcharge, interest and compromise
penalty. The Executor of the Estate of Jose de la Cruz (Executor) filed
a timely protest against the assessment and requested for waiver of
the surcharge, interest and penalty. The protest was denied by the
Commissioner of Internal Revenue (Commissioner) with finality on

September 13, 2007. Consequently, the Executor was made to pay

the deficiency assessment on October 10, 2007. The following day,
the Executor filed a Petition with the Court of Tax Appeals (CTA)
praying for the refund of the surcharge, interest and compromise
penalty. The CTA took cognizance of the case and ordered the
Commissioner to make a refund. The Commissioner filed a Petition
for Review with the Court of Appeals assailing the jurisdiction of the
CTA and the Order to make refund to the Estate on the ground that
no claim for refund was filed with the BIR.
A. Is the stand of the Commissioner correct? Reason. (5%)
B. Why is the filing of an administrative claim with the BIR
necessary? (5%)
VI. Raymond Reyes disputed a deficiency tax assessment and
upon receipt of an adverse decision by the Commissioner of Internal
Revenue, filed an appeal with the Court of Tax Appeals. While the
appeal is pending, the BIR served a warrant of levy on the real
properties of RR to enforce the collection of the disputed tax.
Granting arguendo that the BIR can legally levy on the properties,
what could RR do to stop the process? Explain briefly. (5%)
VII. Businessman Yang filed an income tax return for 2013 showing
business net income of P350,000.00 on which he paid an income tax
of P61,000.00. After filing the return he realized that he forgot to
include an item of business income in 2013 for P50.000.00. Being an
honest taxpayer, he included this income in his return for 2014 and
paid the corresponding income tax thereon. In the examination of
his 2013 return the BIR examiner found that Stephen Yang failed to
report this item of P50.000.00 and assessed him a deficiency
income tax on this item, plus a 50% fraud surcharge.
1) Is the examiner correct? Explain.(5%)
2) If you were the lawyer of Yang, what would you have advised your
client before he included in his 2014 return the amount of
P50.000.00 as 2013 income to avoid the fraud surcharge? Explain.
(5%)
3) Considering that Yang had already been assessed a deficiency
income tax for 2013 for his failure to report the P50.000.00 income,
what would you advise him to do to avoid the penalties for tax
delinquency? Explain. (5%)
4) What would you advise Yang to do with regard to the income tax
he paid for the P50.000.00 in his 2014 return? In case your remedy
fails, what is your other recourse? Explain. (5%)

VIII. (a) A taxpayer received, on 15 January 2006 an assessment

for an internal revenue tax deficiency. On 10 February 2006, the
taxpayer forthwith filed a petition for review with the Court of Tax
Appeals. Could the Tax Court entertain the petition? Reasons. (5%)
(b) Under the above factual setting, the taxpayer, instead of
questioning the assessment he received on 15 January 2006 paid on
01 March 2006 the "deficiency tax" assessed. The taxpayer
requested a refund from the Commissioner by submitting a written
claim on 01 March 2007. It was denied. The taxpayer, on 15 March
2007, filed a petition for review with the Court of Appeals. Could the
petition still be entertained? Reasons. (5%)
IX. On March 12, 2011, Karl paid his taxes. Ten months later, he
realized that he had overpaid and so he immediately filed a claim
for refund with the Commissioner of Internal Revenue. On February
27, 2013, he received the decision of the Commissioner denying
Kar's claim for refund. On March 24, 2013, Karl filed an appeal with
the Court of Tax Appeals. Was his appeal filed on time or not?
Reason. (5%)
X.
XCEL Corporation filed its quarterly income tax return for the
first quarter of 2005 and paid an income tax of P500.000.00 on May
15, 2005. In the subsequent quarters, XCEL suffered losses so that
on April 15, 2006 it declared a net loss of P1,000,000.00 in its
annual income tax return. After failing to get a refund, XCEL filed on
March 1, 2008 a case with the Court of Tax Appeals to recover the
P500.000.00 in taxes paid on May 15, 2005. Is the action to recover
the taxes filed timely? Reasons. (5%)
XI. CFB Corporation, a domestic corporation engaged in food
processing and other allied activities, received a letter from the BIR
assessing it for delinquency income taxes. CFB filed a letter of
protest. One month after, a warrant of distraint and levy was served
on CFB Corporation. If you were the lawyer engaged by CFB
Corporation to contest the assessment made by the BIR, what steps
will you take to protect your client? (5%)
XII. A taxpayer received a tax deficiency assessment of P1.2
Million from the BIR demanding payment within 10 days, otherwise,
it would collect through summary remedies. The taxpayer requested
for a reconsideration stating the grounds therefor. Instead of
resolving the request for reconsideration, the BIR sent a Final Notice
before Seizure to the taxpayer. May this action of the Commissioner

of Internal Revenue be deemed a denial of the request for

reconsideration of the taxpayer to entitle him to appeal to the Court
of Tax Appeals? Decide with reasons. (5%)
XIII. Congress enacts a law granting grade school and high school
students a 10% discount on all school-prescribed textbooks
purchased from any bookstore. The law allows bookstores to claim
in full the discount as a tax credit.
1.
If in a taxable year a bookstore has no tax due on which to
apply the tax credits, can the bookstore claim from the BIR a tax
refund in lieu of tax credit? Explain. (2.5%)
2.
Can the BIR require the bookstores to deduct the amount of
the discount from their gross income? Explain. (2.5%)
3.
If a bookstore closes its business due to losses without being
able to recoup the discount, can it claim reimbursement of the
discount from the government on the ground that without such
reimbursement, the law constitutes taking of private property for
public use without just compensation? Explain. (5%)