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2015 TAXATION LAW BAR Q and A by Bumbo S.



Explain the principles of a sound tax system. (3%)


The following are the principles of a sound tax system: (FAT)

1. Fiscal Adequacy - The sources of tax revenue should coincide with, and approximate the
needs of, government expenditures.
2. Administrative Feasibility - Tax laws should be capable of convenient, just and effective
3. Theoretical Justice - The tax burden should be in proportion to the taxpayers ability to pay.


Mr. A, a citizen and resident of the Philippines, is a professional boxer. In a professional

boxing match held in 2013, he won prize money in United States (US) dollars equivalent to

a) Is the prize money paid to and received by Mr. A in the US taxable in the Philippines? Why?

Yes, the prize money is taxable under the NIRC with a final tax rate of 20%.

As a resident citizen of the Philippines Mr. A is taxable for gross income earned within
and without the Philippines. This includes gross income derived from prizes and winnings as
such payment constitutes gain derived from labor. (Sec. 32(A))
b) May Mr. A's prize money qualify as an exclusion from his gross income? Why? (2%)

No, the prize money may not be excluded from Mr. As gross income.

Under the NIRC, to be exempt from income tax, prizes and awards granted to athletes in
local and international sports competitions and tournaments held in the Philippines and abroad must be
sanctioned by their national associations duly accredited by the Philippine Olympic committee.
(Sec. 32(B)(7)(d), R.A. 7549 sec. 2)
There being no indication that the boxing match was sanctioned by the required
national sports association, the winnings derived from the match may not be excluded.
c) The US already imposed and withheld income taxes from Mr. A's prize money. How may Mr. A
use or apply the income taxes he paid on his prize money to the US when he computes his
income tax liability in the Philippines for 2013? (4%)
Under the NIRC, Mr. A may apply the income taxes he paid to the US as a deduction
from his gross income within the taxable year of 2013, unless he signifies in his return the desire to claim
a tax credit for such foreign income taxes. (Sec. 34 (C)(1)(b) and (C)(3)(a))

III. Ms. C, a resident citizen, bought ready-to-wear goods from Ms. B, a nonresident citizen.
a) If the goods were produced from Ms. B's factory in the Philippines, is Ms. B's income from the sale
to Ms. C taxable in the Philippines? Explain. (2%)
Yes. As a nonresident citizen, Ms. B is taxable for income from sources within the
Philippines under the NIRC. With the factory of the goods being here in the Philippines, the income
derived from their sale is deemed as taxable income from sources within. (Sec. 42)
b) If Ms. B is an alien individual and the goods were produced in her factory in China, is Ms. B's income
from the sale of the goods to Ms. C taxable in the Philippines? Explain. (2%)
No. An alien whether a resident or nonresident, is taxable only on income derived from
sources within the Philippines (Sec. 22). Since the goods were produced in China, and there being no
indication that Ms. B is doing business in the Philippines, the income derived from the sale is considered
from a source without the Philippines, hence is not taxable here.

IV. Mr. E and Ms. F are both employees of AAA Corp. They got married on February 14, 2011. On
December 29, 2011, the couple gave birth to triplets. On June 25, 2013, they had twins. What were
the personal exemptions/deductions which Mr. E and Ms. F could claim in the following taxable years:
a) For 2010 (2%)
Under the law (R.A. 9504), Mr. E and Ms. F as income earning individuals are each
entitled to the basic personal exemption of Fifty thousand pesos (P50,000), regardless of their status.
b) For 2011 (3%)
Mr. E and Mrs. F are each entitled to the basic personal exemption of Fifty thousand
pesos (P50,000).
An additional exemption of Twenty-five thousand pesos (P25,000) for each of the
triplets who are all Qualified Dependent Children may also be claimed by the husband. Under the law
(R.A. 9504), where the husband and wife are both compensation income earners the husband is the
proper claimant of the additional exemptions EXCEPT if there is an express waiver by the husband in
favor of his wife, as embodied in the application for registration (BIR Form No. 1902) or in the Certificate
of Update of Exemption and of Employers and Employees Information (BIR Form No. 2305), whichever
is applicable.

c) For 2013 (2%)

For the taxable year of 2013, Mr. E and Mrs. F are entitled to the following personal
exemptions/deductions under the law (R.A. 9504):
1. Basic Personal Exemption of Fifty thousand pesos (P50,000) for each spouse.
2. Additional personal exemption of Twenty-five thousand pesos (P25,000) for each of their
Qualified Dependent Children which shall not exceed 4 dependents, to be claimed by Mr. E,
except if he makes an express waiver in favor of his wife.

V. BBB, Inc., a domestic corporation, enjoyed a particularly profitable year in 2014. In June 2015, its
Board of Directors approved the distribution of cash dividends to its stockholders. BBB, Inc. has
individual and corporate stockholders. What is the tax treatment of the cash dividends received from
BBB, Inc. by the following stockholders:
a) A resident citizen (1%)
ANSWER: The cash dividends shall be taxed with a Final Withholding Tax Rate of 10%.
b) Non-resident alien engaged in trade or business (1%)
ANSWER: The cash dividends shall be taxed with a Final Withholding Tax Rate of 20%.
c) Non-resident alien not engaged in trade or business (1%)
ANSWER: The cash dividends shall be taxed with a Final Withholding Tax Rate of 25%.
d) Domestic corporation (1%)
ANSWER: Dividends received by domestic corporations from other domestic corporations are exempt
from tax.
e) Non-resident foreign corporation (1%)
ANSWER: The cash dividends shall be taxed with a Final Withholding Tax Rate of 30%.
(NOTE: The FWT shall be 15% if the country in which the nonresident foreign corporation is domiciled
allows a tax credit for taxes deemed paid in the Philippines equivalent to at least 15%)

VI. Differentiate between double taxation in the strict sense and in a broad sense and give an example
of each. (4%)
There is double taxation in the strict sense or direct duplicate taxation when the
following elements concur:

the same property must be taxed twice;

for the same purpose;
by the same taxing authority;
within the same jurisdiction;
during the same taxing period; and
with the same character of tax.

While there is double taxation in the broad sense or indirect duplicate taxation if any of
the elements for direct duplicate taxation is absent.
An example of double taxation in the strict sense include the collection of the City of
Manila of the same local business tax twice based on two different sections of the Revenue Code of
Manila, which the Supreme Court has deemed obnoxious. (Nursery Care Corp. vs. Acevedo, G.R. No.
180651, July 30, 2014)
As for double taxation in the broad sense, an example would be a tax upon the same
property imposed by two different states.

VII. On May 15, 2013, CCC, Inc. received the Final Decision on Disputed Assessment issued by the
Commissioner of Internal Revenue (CIR) dismissing the protest of CCC, Inc. and affirming the
assessment against said corporation. On June 10, 2013, CCC, Inc. filed a Petition for Review with the
Court of Tax Appeals (CTA) in division. On July 31, 2015, CCC, Inc. received a copy of the Decision
dated July 22, 2015 of the CTA division dismissing its Petition. CCC, Inc. immediately filed a Petition for
Review with the CTA en banc on August 6, 2015. ls the immediate appeal by CCC, Inc. to the CTA en
banc of the adverse Decision of the CTA division the proper remedy? (3%)

No. The proper remedy under the law is to first file a motion for reconsideration of the
decision before the same Division of the CTA within fifteen (15) days from notice thereof. (Sec. 11, RA
1125 as amended by RA 9282 [2004])

VIII. 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. (3%)

DDD Corp. is incorrect since the leased property is in the Philippines.

Under the NIRC, the lease of properties shall be subject to the 12% Value Added Tax
imposed irrespective of the place where the contract of lease was executed if the property is leased or
used in the Philippines. (Sec. 108 (A) as amended by R.A. 9337)

IX. For calendar year 2011, FFF, Inc., a VAT-registered corporation, reported unutilized excess input
VAT in the amount of P 1,000,000.00 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 P 1,000,000.00 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 P 1,000,000.00 unutilized excess input VAT
of FFF, Inc. for 2011.
a) Did the CTA acquire jurisdiction over the Petition of FFF, Inc.? (2%)

No, since 120 days have not yet lapsed from January 31, 2013.

The CTA did not acquire jurisdiction since the taxpayer may only resort to a Judicial
claim in case of inaction of the BIR within 30 days after the expiration of 120 days from the date
of submission of complete documents in support of the application for tax refund/credit, which
periods are mandatory under the law. (R.A. 8424)

b) Discuss the proper procedure and applicable time periods for administrative and judicial claims for
refund/credit of unutilized excess input VAT. (4%)
The proper procedure for claiming a tax credit or refund of unutilized excess input VAT
are as follows:
First, the taxpayer must file an Administrative claim with an application for the issuance
of a tax credit certificate or refund of creditable input tax be filed with the Commissioner of Internal
Revenue (CIR) within 2 years after the close of the taxable quarter when the sale was made. The CIR
shall then grant the tax credit/refund within 120 days from the date of submission of complete
documents in support of the application.
Next, in case of denial of the application or the expiry of the 120-day period, whichever
comes first, the taxpayer may resort to a Judicial Claim by filing an appeal to the CTA within 30 days
from the receipt of the denial or inaction.

X. Indicate whether each of the following individuals is required or not required to file an income tax
a) Filipino citizen residing outside the Philippines on his income from sources outside the Philippines.
(1 %)

No, since a non-resident citizen is NOT taxable on his income without the Philippines.

b) Resident alien on income derived from sources within the Philippines. (1%)

Yes, since a resident alien is taxable on income within the Philippines.

c) Resident citizen earning purely compensation income from two employers within the Philippines,
whose income taxes have been correctly withheld. (1 %)
Yes, since only an individual earning purely compensation income with one employer is
exempted from the filing of an income tax return.
d) Resident citizen who falls under the classification of minimum wage earners. (1%)
No, since Minimum Wage Earners who have no other returnable income are NOT
taxable under the NIRC.
e) An individual whose sole income has been subjected to final withholding tax. (1%)
No, since substituted tax filing applies to an individual whose sole income has been
subjected to final withholding tax.

XI. What are de minimis benefits and how are these taxed? Give three (3) examples of de minimis
benefits. (4%)

De minimis benefits are privileges of relatively small value given by the employer to his
employees and are exempt from income tax as well as withholding tax on compensation income of both
managerial and rank and file employees.
Examples of de minimis benefits include:
1. Monetized unused vacation leave credits of private employees not exceeding ten
(10) days during the year
2. Laundry allowance not exceeding P300 per month
3. Uniform and Clothing allowance not exceeding P5,000 per annum (RR 8-2012)

XII. Mr. H decided to sell the house and lot wherein he and his family have lived for the past 10 years,
hoping to buy and move to a new house and lot closer to his children's school. Concerned about the
capital gains tax that will be due on the sale of their house, Mr. H approaches you as a friend for
advice if it is possible for the sale of their house to be exempted from capital gains tax and the
conditions they must comply with to avail themselves of said exemption. How will you respond? (4%)

I would advise Mr. H that it is possible to sell the house and have it exempted from
capital gains tax provided he complies with the following conditions:
1. The sale is of the old principal residence;
2. The sale is done by natural persons who are residents taxable under Sec. 24 of the
3. The proceeds of which is fully utilized in (a)acquiring or (b) constructing a new
principal residence within eighteen (18) months from date of sale or disposition;
4. The Commissioner is notified within thirty (30) days from the date of sale or
disposition through a prescribed return of his intention to avail the tax exemption;
5. The exemption may only be availed of only once every ten years; and
6. The historical cost or adjusted basis of his old principal residence is be carried over
to the cost basis of his new principal residence. (Sec. 24 (D)(2) NIRC)

XIII. GGG, Inc. offered to sell through competitive bidding its shares in HHH Corp., equivalent to 40%
of the total outstanding capital stock of the latter. JJJ, Inc. acquired the said shares in HHH Corp. as
the highest bidder. Before it could secure a certificate authorizing registration/tax clearance for the
transfer of the shares of stock to JJJ, Inc., GGG, Inc. had to request a ruling from the BIR confirming
that its sale of the said shares was at fair market value and was thus not subject to donor's tax. In BIR
Ruling No. 012-14, the CIR held that the selling price for the shares of stock of HHH Corp. was lower
than their book value, so the difference between the selling price and the book value of said shares
was a taxable donation. GGG, Inc. requested the Secretary of Finance to review BIR Ruling No. 012-14,
but the Secretary affirmed said ruling. GGG, Inc. filed with the Court of Appeals a Petition for Review
under Rule 43 of the Revised Rules of Court. The Court of Appeals, however, dismissed the Petition for
lack of jurisdiction declaring that it is the CTA which has jurisdiction over the issues raised. Before
which Court should GGG, Inc. seek recourse from the adverse ruling of the Secretary of Finance in the
exercise of the latter's power of review? (3%)

In a similar case, the Supreme Court held that the CTA through its power of certiorari,
has the power to rule on the validity of a particular administrative rule or regulation so long as it is
within its appellate jurisdiction. Hence, it can now rule not only on the propriety of an assessment or tax
treatment of a certain transaction, but also on the validity of the revenue regulation or revenue
memorandum circular on which the said assessment is based. (PhilAm LIFE vs. Secretary of Finance, G.R.
No. 210987, November 24, 2014)

XIV. KKK Corp. secured its Certificate of Incorporation from the Securities and Exchange Commission
on June 3, 2013. It commenced business operations on August 12, 2013. In April 2014, Ms. J, an
employee of KKK Corp. in charge of preparing the annual income tax return of the corporation for
2013, got confused on whether she should prepare payment for the regular corporate income tax or
the minimum corporate income tax.
a) As Ms. J's supervisor, what will be your advice? (2%)
My advice to Ms. J would be for her to prepare payment for the regular corporate
income tax since only one taxable year has elapsed since August 12, 2013. The minimum corporate
income tax (MCIT) can only apply on the fourth taxable year from when the corporation commenced its
business operations and when the corporation has zero or negative income or when MCIT is greater
than the regular tax rate, as provided under the NIRC. (Sec.27(E)(1))

b) What are the distinctions between regular corporate income tax and minimum corporate income
tax? (3%)
The distinctions between Regular Corporate Income Tax (RCIT) and Minimum Corporate
Income Tax (MCIT) are as follows:
Tax Base: The tax base for RCIT is Taxable Income, which is Gross Income less Allowable
Deductions, while the tax base for MCIT is Gross Income, which is Gross Sales less Cost of Goods
Tax Rate: RCIT is computed at 30% of Taxable Income, while MCIT is computed at 2% of Gross
When to apply: RCIT is applied from the first taxable year of the corporation onwards, while
MCIT is applied alternatively to RCIT on the fourth taxable year onwards when the corporation
has zero or negative taxable income or when MCIT is greater than RCIT. (Sec. 27(E) NIRC)

XV. In 2012, Dr. K decided to return to his hometown to start his own practice. At the end of 2012, Dr.
K found that he earned gross professional income in the amount of P 1,000,000.00; while he incurred
expenses amounting to P560,000.00 constituting mostly of his office space rent, utilities, and
miscellaneous expenses related to his medical practice. However, to Dr. K's dismay, only P320,000.00
of his expenses were duly covered by receipts. What are the options available for Dr. K so he could
maximize the deductions from his gross income? (3%)

Dr. K may avail of the following options to maximize the deductions from his gross

Optional Standard Deduction (OSD): In lieu of itemized deductions, he may elect a standard
deduction in an amount not exceeding 40% of his gross professional income by signifying in his return
his intention to elect the OSD, as provided under the NIRC. (Sec. 34(L))
The Cohan Rule: This relief will apply if he can show that the expenses are usual and it is
necessary in his trade to incur similar kinds of expenditures, though not itemized. In such a situation, the
deduction of the expenses incurred might be allowed even if there are no receipts or vouchers, as long
as he can prove through credible evidence, such as check payments or bank withdrawals, the amount of
disbursements. (Gancayco v. Collector, G.R. No. L-13325, April 20, 1961)

XVI. LLL is a government instrumentality created by Executive Order to be primarily responsible for
integrating and directing all reclamation projects for the National Government. It was not organized
as a stock or a non-stock corporation, nor was it intended to operate commercially and compete in
the private market. By virtue of its mandate, LLL reclaimed several portions of the foreshore and
offshore areas of the Manila Bay, some of which were within the territorial jurisdiction of Q City.
Certificates of title to the reclaimed properties in Q City were issued in the name of LLL in 2008. In
2014, Q City issued Warrants of Levy on said reclaimed properties of LLL based on the assessment for
delinquent property taxes for the years 2010 to 2013.
a. Are the reclaimed properties registered in the name of LLL subject to real property tax? (4%)

The reclaimed properties are not subject to real property tax.

Under the Local Government Code, real property owned by the Republic of the
Philippines or any of its political subdivisions are exempted from payment of the real property tax.
Further, this exemption should be read in relation to another provision under the same code which
prohibits local governments from imposing taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities. (Sections 234(a) and 133(o))
Here, the subject reclaimed public lands form part of the public domain. The fact that
alienable lands of the public domain were transferred to LLL which is a government instrumentality did
not automatically make such lands private. The real properties remain owned by the National
Government and continue to be exempt from real estate tax. (Republic vs. Paranaque, G.R. No 191109,
July 18, 2012)

b. Will your answer be the same in (a) if from 2010 to the present time, LLL is leasing portions of the
reclaimed properties for the establishment and use of popular fastfood restaurants J Burgers, G Pizza,
and K Chicken? (2%)
No, my answer will not be the same since under the Local Government Code, real
property owned by the Republic of the Philippines or any of its political subdivisions are exempted from
the payment of real property tax, EXCEPT when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person. (Sec. 234)
By leasing portions of the reclaimed properties to several commercial establishments,
LLL thereby granted beneficial use of the same to private taxable entities which make the real properties

XVII. Mr. L owned several parcels of land and he donated a parcel each to his two children. Mr. L
acquired both parcels of land in 1975 for P 200,000.00. At the time of donation, the fair market value
of the two parcels of land, as determined by the CIR, was P 2,300,000.00; while the fair market value
of the same properties as shown in the schedule of values prepared by the City Assessors was
P2,500,000.00. What is the proper valuation of Mr. L's gifts to his children for purposes of computing
donor's tax? (3%)
The proper valuation for the donated real properties is the higher value of
P2,500,000.00, based on the schedule of values prepared by the City Assessors.
Under the NIRC, the valuation of gifts made in real property shall be appraised at the
fair market value as determined by the Commissioner, or the schedule of values prepared by the
Provincial and City Assessors, whichever is higher. (Sec. 102, 88(B))

XVIII. Under the Tariff and Customs Code, as amended:

a. When does importation begin and when is it deemed terminated? (2%)
As provided under the Tariff and Customs Code, the importation of goods BEGIN when
the carrying vessel/aircraft enters the Philippine jurisdiction with an intention to unload its cargoes. It
ENDS when there is already payment of duties/taxes/other charges and issuance of the permit to
withdraw. (Sec. 1202)
b. In what case/s is the decision of the Collector automatically reviewed by the Commissioner of
Customs? In what instance/s is the decision of the Commissioner automatically appealed to the
Secretary of Finance? (4%)
Under the Tariff and Customs Code, where a decision of the Collector of Customs in
seizure and protest cases is adverse to the government it shall automatically be reviewed by the
Commissioner of Customs which, if affirmed, shall automatically be elevated for final review by the
Secretary of Finance. (Sec. 2315)

XIX. In 2014, M City approved an ordinance levying customs duties and fees on goods coming into the
territorial jurisdiction of the city. Said city ordinance was duly published on February 15, 2014 with
effectivity date on March 1, 2014.
a. Is there a ground for opposing said ordinance? (2%)
Yes, since the ordinance goes beyond the common limitations on the taxing powers of
local government units.
Under the Local Government Code, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to the levy of customs duties. (Sec. 133(d))
b. What is the proper procedural remedy and applicable time periods for challenging the ordinance?
Any question on the constitutionality or legality of a tax ordinance may be raised on
appeal within 30 days from effectivity to the Secretary of Justice who shall render a decision within 60
days from the date of receipt of the appeal.
Within 30 days after receipt of the decision or the lapse of the sixty-day period without
the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings
with a court of competent jurisdiction. (Sec. 187, LGC)

XX. After filing an Information for violation of Section 254 of the National Internal Revenue Code
(Attempt to Evade or Defeat Tax) with the CTA, the Public Prosecutor manifested that the People is
reserving the right to file the corresponding civil action for the recovery of the civil liability for taxes.
As counsel for the accused, comment on the People's manifestation. (3%)
The manifestation reserving the right to file the corresponding civil action separately is
Under the expanded jurisdiction of the CTA, the criminal action and the corresponding
civil action for the recovery of civil liability for taxes and penalties shall at all times be
simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the
filing of the criminal action being deemed to necessarily carry with it the filing of the civil action,
and no right to reserve the filling of such civil action separately from the criminal action will be
recognized. (R.A. 9282 Sec. 7)

XXI. 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 CTA
en banc 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.
a. Rule on the appeal of MMM, Inc. (3%)

The petition MMM, Inc. is bereft of merit.

In a similar case, the Supreme Court held that the NIRC explicitly grants the Secretary of
Finance the authority to promulgate the necessary rules and regulations for the effective enforcement
of the provisions of the tax code. Such rules and regulations deserve to be given weight and respect by
the courts in view of the rulemaking authority given to those who formulate them and their specific
expertise in their respective fields.
Consequently, the invoicing requirements under Revenue Regulations No. 7-95 must be
observed by all VAT-registered taxpayers and the failure of MMM Inc. to print the word zero-rated on
its invoices or receipts is fatal to its claim for tax refund or tax credit of input VAT on zero-rated sales.
(Eastern Telecommunications vs. CIR, G.R. No. 168856, August 29, 2012)

b. Will your answer in (a) be any different if MMM, Inc. was claiming refund of excess input VAT
attributable to its effectively zero-rated sales in 2012? (2%)
My disposition of the case will remain the same particularly since the provisions of
Revenue Regulation No. 7-95 are already integrated in the NIRC (Sec. 113) enumerating the invoicing
requirements of VAT-registered persons when the tax code was amended.

XXII. 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:
a. Claims against the estate (2%)

For claims against the Estate to be deductible the following conditions must concur:

(a) The liability represents a personal obligation of the deceased existing at the time of his death
(b) The liability was contracted in good faith and for adequate and full consideration in money
or moneys worth;
(c) The claim must be a debt or claim which is valid in law and enforceable in court;
(d) The indebtedness must not have been condoned by the creditor or the action to collect from
the decedent must not have prescribed. (Sec 6(A)(3) of RR 2-2003)
b. Medical expenses (2%)

For medical expenses to be deductible the following conditions must concur:

(a) They must have been incurred within one year prior to the death
(b) They are duly substantiated by receipts
(c) They must not exceed P500,000 (Sec (86) (A)(6) NIRC)