SAN BEDA COLLEGE - ALABANG SCHOOL OF LAW

CENTRALIZED BAR OPERATIONS 2022

ACADEMICS COMMITTEE

HANNAH KEZIAH T. MORALES

Chairperson for Academics

ANDREA JOSES P. TAN ADRIAN R. MACASAQUIT

Deputy Deputy

ELOISA FE C. BUÑO
Chairperson for Electronic Data Processing

SUBJECT HEADS

MARY GRACE B. DOMINGUEZ PAMELA A. PAEZ

Civil Law Legal and Judicial Ethics

DAVID GABRIEL V. PALLASIGUE BRIANT ALLEN S. ROSARIO

Criminal Law Mercantile Law

KARLA MARIE V. GABRIEL JOSHUA REED C. LOPEZ

Labor Law Political Law

JUSTINN ANTONIO ALON ALEXANDRE JANUS B. BIDO

Remedial Law Taxation Law

ASSISTANT HEADS

DAVE CHRISTIAN C. UMERAN MARIA ARIELLE SAMANTHA T. ALVAREZ

Civil Law Legal and Judicial Ethics

MAEIA MIKHAELA N. MAYUGA HANNAH MIKAELLA C. YAMIT

Criminal Law Mercantile Law

MIGUEL JULIO RAFAEL SORIANO III JESSICA LAURA C. SY

Labor Law Political Law

LANCE LIZOR A. PUNZALAN JAN EROS NIKE V. CABAUATAN

Remedial Law Taxation Law
 TAXATION LAW TEAM

ALEXANDRE JANUS B. BIDO

Subject Head

JAN EROS NIKE V. CABAUATAN

Assistant Head

SHAIRA ANNE BIDO

RUSSELL BINAGATAN
ANISAH CUENTO
CHRISTIAN ECHAVEZ
ANDREA DE GUZMAN
MARIA ARCE
PAOLA VENTURA
CRISTINA MIRANDA
KIM BATECAN
ANGELIKA KATIGBAK
MARIA ARCE
PATRICIA QUINITADCAN
ROSELLE CEREÑO
VERONICA VELASQUEZ
MUAMMAR CABUGATAN
TREB JERSEY BASCO
DAVID ANTHONY PADRES
 ADMINISTRATION

DR. ULPIANO P. SARMIENTO III

Dean

ATTY. CARLO D. BUSMENTE

Vice Dean

ATTY. MA. ELIZA YAMAMOTO-SANTOS

Prefect of Student Affairs

ATTY. ROBEN B. CADUGO JR.

Administrative Officer

ATTY. PAULINO Q. UNGOS III

Adviser

SAN BEDA COLLEGE - ALABANG SCHOOL OF LAW

CENTRALIZED BAR OPERATIONS 2022
EXECUTIVE COMMITTEE

KATHLEEN L. CAPULONG
Over-All-Chairperson

HANNAH KEZIAH T. MORALES ELOISA FE C. BUÑO

Chairperson for Academics Chairperson for Electronic Data Processing

LOUIE ANN S. SOMEROS ROZELLE DIANNE I. MATEO

Chairperson for Operations Chairperson for Secretariat

JOSEPH M. LIBROJO ROLEEN WENDEE N. GUINTO

Chairperson for Academic Operations Chairperson for Bar Matters

JULIUS ROBERT A. JUICO EDWARD JAYSON B. SANTILLAN

Chairperson for Communications Chairperson for Logistics

FEMME ANGELA C. ARMAMENTO JOSHUA REED C. LOPEZ

Chairperson for Finance Chairperson for Recruitment and Membership

ANNA MARIE N. OBESO

Chairperson for Bar Mentoring Program
 NOTICE

This work is the intellectual property of the SAN BEDA COLLEGE ALABANG
SCHOOL OF LAW and SAN BEDA COLLEGE ALABANG CENTRALIZED BAR
OPERATIONS 2022. It is intended solely for the use of the individuals to which
it is addressed – the Bedan community.

Publication, reproduction, dissemination, and distribution, or copying of the

document without the prior consent of the SAN BEDA COLLEGE ALABANG
SCHOOL OF LAW CENTRALIZED BAR OPERATIONS ACADEMICS COMMITTEE 2022
is strictly prohibited.

Copyright © 2022
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW
SAN BEDA COLLEGE ALABANG SCHOOL OF LAW CENTRALIZED BAR
OPERATIONS 2022
All Rights Reserved by the Authors.
 TAXATION LAW
NUAS FOR THE 2022 BAR EXAMINATIONS

GENERAL PRINCIPLES 1
THEORIES ON TAXATION, CONCEPTS OF TAXATION, TAXATION DISTINGUISHED FROM POLICE
POWER AND EMINENT DOMAIN 1
ESCAPE FROM TAXATION, TAX REFUND 1
KINDS OF TAXES 2
SITUS OF TAXATION 3
LOCAL TAXES AND RPT 3
LOCAL TAXATION 3
REAL PROPERTY TAXATION 4
TAX REMEDIES 5
POWER OF THE CIR AND NIRC TAX REMEDIES 5
JURISDICTION OF THE CTA 5
 d. FALSE. The law constitutes an
GENERAL PRINCIPLES infringement of religious freedom
which is not allowed under Art 3
Section 6 of the 1987 Constitution
THEORIES ON TAXATION, CONCEPTS OF (American Bible Society vs City of
TAXATION, TAXATION DISTINGUISHED Manila)
FROM POLICE POWER AND EMINENT
DOMAIN
───※ ·!· ※───

QUESTION. TRUE or FALSE. Answer TRUE if QUESTION. Explain the principles of a sound
the statement is true, or FALSE if the tax system. (3%)
statement is false. Explain your answer in
not more than two (2) sentences. (5%) SUGGESTED ANSWER:
a. A law that allows taxes to be paid The principles of a sound tax system are as
either in cash or in kind is valid. follows:
b. When the financial position of the (1) Fiscal Adequacy – The sources of
taxpayer demonstrates a clear revenue must be sufficient to meet
inability to pay the tax, the government expenditures and other
Commissioner of Internal Revenue public needs (Chavez v. Ongpin 186
may validly compromise the tax SCRA 331)
liability.
(2) Administrative Feasibility - The tax
c. The doctrine of equitable law must be capable of effective,
recoupment allows a taxpayer efficient, just and convenient
whose claim for refund has administration
prescribed to offset tax liabilities
(3) Theoretical justice or equality – The
with his claim of overpayment.
taxes must be based upon the ability
d. A law imposing a tax on income of of the citizens to pay
religious institutions derived from
the sale of religious articles is valid.
───※ ·!· ※───
e. A false return and a fraudulent
return are one and the same.
ESCAPE FROM TAXATION, TAX REFUND
SUGGESTED ANSWER:
a. TRUE. There is no constitutional or QUESTION. The BIR Commissioner, in his
inherent limitation which provides relentless enforcement of the Run After Tax
that taxes shall strictly be paid in cash Evaders (RATE) program, filed with the
b. TRUE. The NIRC provides that one of Department of Justice (DOJ) charges against
the grounds for compromise is a movie and television celebrity. The
financial incapacity of the taxpayer to Commissioner alleged that the celebrity
pay the tax liability. earned around Php 50 million in fees from
product endorsements in 2016 which she
c. TRUE. The doctrine allows offsetting
failed to report in her income tax and VAT
of a prescribed claim against a tax
returns for said year.
liability arising from the same
transaction (CIR vs UST)
The celebrity questioned the proceeding stockholders in the U.S. The Commissioner
before the DOJ on the ground that she was denied the claim.
denied due process since the BIR never
issued any Preliminary Assessment Notice On January 17, 1985, ABCD filed a petition
(PAN) or a Final Assessment Notice (FAN), with the Court of Tax Appeals (CTA)
both of which are required under Section reiterating its demand for refund.
228 of the NIRC whenever the Commissioner a. Does ABCD Corporation have the
finds that proper taxes should be assessed. legal personality to file the refund
on behalf of its non-resident
Is the celebrity’s contention tenable? stockholders? Why or why not? (3%)
b. Is the contention of ABCD
SUGGESTED ANSWER: Corporation correct? Why or why
No. The celebrity’s contention is not tenable. not?
Assessment is not necessary before the filing
of a criminal complaint for tax evasion. In
SUGGESTED ANSWER:
cases where fraudulent return is filed with the
a. YES. The ABCD Corporation has
intent to evade a tax, a proceeding in court
personality to file for refund in behalf
for the collection of the said tax may be filed
of its non-resident stockholders.
without assessment pursuant to Section 222 of
the NIRC as amended.
In CIR vs Procter and Gamble, the Supreme
───※ ·!· ※─── Court ruled that a withholding agent is
not only an agent of the government
but also an agent of the taxpayer in
KINDS OF TAXES reporting an income. It is properly
regarded to as the taxpayer under
QUESTION. ABCD Corporation (ABCD) is a Section 22 (N) of the NIRC.
domestic corporation with individual and
corporate shareholders who are residents of In this case, ABCD Corporation, a domestic
the United States. For the 2nd quarter of corporation, withholds the income tax
1983, these U.S.-based individual and due for dividends in behalf of its non-
corporate stockholders received cash resident stockholders, as a withholding
dividends from the corporation. The agent, it has the capacity to ask for
corresponding withholding tax on dividend any tax refund in behalf of the
income --- 30% for individual and 35% for stockholders who earned income.
corporate non-resident stockholders --- was
deducted at source and remitted to the BIR.
Thus, ABCD Corporation’s contention is
On May 15, 1984, ABCD filed with the correct.
Commissioner of Internal Revenue a formal
claim for refund, alleging that under the RP-
b. Yes, the contention of ABCD
US Tax Treaty, the deduction withheld at
Corporation is correct.
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 principle of international comity
the cash dividends given to its non-resident dictates that a tax treaty must prevail
over the local taxing statute.
 In this case, ABC, a domestic corporation, is
Thus, the RP-US Tax Treaty must be subject to income tax from their income from
applied thereby resulting in a claim for the use of the computer program from XYZ,
refund representing the difference regardless of the source of income. XYZ on the
between the amount actually withheld other hand, is a foreign corporation, and thus
and paid to the BIR and the amount is subject to income tax from the 5% royalty it
due and payable under the said treaty. receives from ABC Corporation, considering
that the said royalty has situs in the
Philippines as the same was earned from
───※ ·!· ※─── transactions within the Philippines.

Thus, ABC is subject to income tax from

SITUS OF TAXATION
income within and without the Philippines.
XYZ is subject to income tax for income within
QUESTION. ABC, a domestic corporation, the Philippines.
entered into a software license agreement
with XYZ, a non-resident foreign ───※ ·!· ※───
corporation based in the U.S. Under the
agreement which the parties forged in the
U.S., XYZ granted ABC the right to use a QUESTION. Patrick is a successful
computer system program and to avail of businessman in the United States and he is
technical know-how relative to such a sole proprietor of a supermarket which
program. In consideration for such rights, has a gross sales of $10 million and an
ABC agreed to pay 5% of the revenues it annual income of $3 million. He went to the
receives from customers who will use and Philippines on a visit and, in a party, he saw
apply the program in the Philippines. Atty. Agaton who boasts of being a tax
expert. Patrick asks Atty. Agaton: if he
Discuss the tax implication of the (Patrick) decides to reacquire his Philippine
transaction. citizenship under RA 9225, establish
residence in this country, and open a
SUGGESTED ANSWER: supermarket in Makati City, will the BIR tax
ABC, is subject to income tax for the income him on the income he earns from his U.S.
generated from the transaction, regardless if business? If you were Atty. Agaton, what
the income is with or without the Philippines. advice will you give Patrick?
AS for XYZ, the payment it receives from ABC
Corporation, particularly 5% of the revenues SUGGESTED ANSWER:
from transactions of ABC within the I will advise Patrick that his status for
Philippines, is also subject to income tax. purposes of income tax would be a resident
citizen once he reacquires his Philippine
Section 23 of the NIRC provides that a citizenship. A resident citizen is taxable on his
domestic corporation is subject to income tax income derived from sources within and
for sources within and without the Philippines without the Philippines. Therefore, Patrick’s
while a foreign corporation is subject to income that may be derived from his business
income tax from sources within the abroad will be subject to Philippine Income
Philippines. tax (section 23, NIRC)

───※ ·!· ※───

 QUESTION. The City of Manila enacted
Ordinance No. 55-66 which imposes a
LOCAL TAXES AND RPT
municipal occupation tax on persons
practicing various professions in the city.
LOCAL TAXATION Among those subjected to the occupation
tax were lawyers. Atty. Mariano Batas, who
has a law office in Manila, pays the
QUESTION. The Sangguniang Bayan of the ordinance-imposed occupation tax under
Municipality of Sampaloc, Quezon, passed protest. He goes to court to assail the
an ordinance imposing a storage fee of ten validity of the ordinance for being
centavos (P0.10) for every 100 kilos of discriminatory. Decide with reasons.
copra deposited in any bodega within the
Municipality's jurisdiction. The Metropolitan SUGGESTED ANSWER:
Manufacturing Corporation (MMC), with The ordinance is valid. Jurisprudence provides
principal office in Makati, is engaged in the that an occupational tax for professionals is
manufacture of soap, edible oil, margarine, valid and not discriminatory provided it
and other coconut oil-based products. It has applies to all professionals exercising within
a warehouse in Sampaloc, Quezon, used as the territory of the LGU who made such
storage space for the copra purchased in ordinance.
Sampaloc and nearby towns before the same
is shipped to Makati. MMC goes to court to In this case, the City of Manila enacted
challenge the validity of the ordinance, Ordinance No. 55-66, an occupational tax that
demanding the refund of the storage fees it applies to those exercising a profession within
paid under protest. the said City. The same is not discriminatory
as it applies to all professionals. Thus,
Is the ordinance valid? Explain your answer. Ordinance No. 55-66 is valid and is not
discriminatory.
SUGGESTED ANSWER:
YES. The ordinance is valid.
───※ ·!· ※───
Section 147 of the LGC provides that
municipality may impose a reasonable storage QUESTION. Ferremaro, Inc., a manufacturer
fee as a regulatory measure. Furthermore, of handcrafted shoes, maintains its principal
under the “general welfare clause”, the LGU office in Cubao, Quezon City. It has
can enact ordinances for the betterment of branches/sales offices in Cebu and Davao.
the general welfare, in the exercise of its Its factory is located in Marikina City where
police power. most of its workers live. Its principal office
in Quezon City is also a sales office.
In this case, the Municipality of Quezon passed
an ordinance which imposes a 10 centavos Sales of finished products for calendar year
storage fee, such is valid as it is allowed under 2009 in the amount of P10 million were
Section 147 of the LGC and the general made at the following locations:
welfare clause. Thus, the ordinance is valid. a. Cebu branch 25%
b. Davao branch 15%
───※ ·!· ※─── c. Quezon City branch 60%
Total 100%
Where should the applicable local taxes on Assessor correct in classifying the Center as
the shoes be paid? Explain "commercial?" Explain.

SUGGESTED ANSWER: SUGGESTED ANSWER:

25% of the total sales or 2.5 Million should be No. The City Assessor is not correct in
taxed in Cebu. 15% of the total sales should classifying the Medical Arts Center as
be taxed in Davao. As regards to the remaining commercial. The Medical Arts Center is an
60% it shall be allocated as follows integral part of the hospital and should be
a. 30% of the total sales or 1.8 million is classified for assessment purposes as special.
taxable in Quezon City where its As a tertiary hospital, St Michael’s is required
principal office is located by law to have a pool of physicians who
b. 70% of the total sales of 4.2 million is comprise the required medical department in
taxable in Marikina where the factory various medical fields. (City Assessor or Cebu
is located (Section 150 LGC) City vs Association of Benevola de Cebu)

───※ ·!· ※───

───※ ·!· ※───
TAX REMEDIES

REAL PROPERTY TAXATION

POWER OF THE CIR AND NIRC TAX
QUESTION. The Philippine-British REMEDIES
Association, Inc. (Association) is a non-
stock, non-profit organization which owns QUESTION. In 2010, pursuant to a Letter of
the St. Michael's Hospital (Hospital). Sec. Authority (LA) issued by the Regional
216 in relation to Sec. 215 of the LGC Director, Mr. Abcede was assessed
classifies all lands, buildings and other deficiency income taxes by the BIR for the
improvements thereon actually, directly, year 2009. He paid the deficiency. In 2011,
and exclusively used for hospitals as Mr. Abcede received another LA for the
"special." A special classification prescribes same year 2009, this time from the National
a lower assessment than a commercial Investigation Division, on the ground that
classification. Mr. Abcede's 2009 return was fraudulent.

Within the premises of the Hospital, the Mr. Abcede contested the LA on the ground
Association constructed the St. Michael's that he can only be investigated once in a
Medical Arts Center (Center) which will taxable year. Decide.
house medical practitioners who will lease
the spaces therein for their clinics at SUGGESTED ANSWER:
prescribed rental rates. The doctors who The contention of Mr. Abcede holds no water.
treat the patients confined in the Hospital The rule that a taxpayer may be subjected to
are accredited by the Association. examination and inspection by an internal
revenue officer only once in a taxable year
The City Assessor classified the Center as admits of exception, particularly, if there is
"commercial" instead of "special" on the fraud, irregularity or mistake as determined
ground that the Hospital owner gets income by the Commission. In the instant case, the
from the lease of its spaces to doctors who investigation is legally justified in light of the
also entertain out-patients. Is the City
finding that Mr. Abcede’s 2009 return was d. TRUE (CIR vs Manila Mining Corp, 468
fraudulent. SCRA 571)
e. FALSE (Sec. 3(b) (2), Rule 4, 2005
───※ ·!· ※─── Revised Rules of Court of Tax Appeals)

JURISDICTION OF THE CTA ───※ ·!· ※───

QUESTION. True or False. QUESTION. Globesmart Services, Inc.

a. In civil cases involving the collection received a final assessment notice with
of internal revenue taxes, formal letter of demand from the BIR for
prescription is construed strictly deficiency income tax, value-added tax and
against the government and liberally withholding tax for the taxable year 2016
in favor of the taxpayer. (1%) amounting to P48 million. Globesmart
Services, Inc. filed a protest against the
b. In criminal cases involving tax
assessment, but the Commissioner of
offenses punishable under the
Internal Revenue denied the protest.
National Internal Revenue Code
Hence, Globesmart Services, Inc. filed a
(NIRC), prescription is construed
petition for review in the CTA with an
strictly against the government.
urgent motion to suspend the collection of
(1%)
tax.
c. In criminal cases where the Court of
Tax Appeals (CTA) has exclusive After hearing, the CTA Division issued a
original jurisdiction, the right to file resolution granting the motion to suspend
a separate civil action for the but required Globesmart Services, Inc. to
recovery of taxes may be reserved. post a surety bond equivalent to the
(1%) deficiency assessment within 15 days from
d. Proceedings before the CTA in the notice of the resolution. Globesmart
exercise of its exclusive original Services, Inc. moved for the partial
jurisdiction are in the nature of trial reconsideration of the resolution and for
de novo. (1%) the reduction of the bond to an amount it
e. Judgments, resolutions or orders of could obtain. The CTA Division issued
the Regional Trial Court in the another resolution reducing the amount of
exercise of its original jurisdiction the surety bond to Jl24 million.
involving criminal offenses arising
from violations of the NIRC are The latter amount was still more than the
appealable to the CTA, which shall net worth of Globesmart Services, Inc. as
hear the cases en banc. reported in its audited financial statements.
a. May the collection of taxes be
suspended? Explain your answer.
SUGGESTED ANSWER:
a. TRUE (CIR vs BF Goodrich Phils 303 b. Is the CTA Division justified in
SCRA 546) requiring Globesmart Services, Inc.
to post a surety bond as a condition
b. FALSE (Lim vs CA 190 SCRA 616) for the suspension of the deficiency
c. FALSE (Sec 11, Rule 9, 2005 Revised tax collection? Explain your answer.
Rules of the Court of Tax Appeals)
SUGGESTED ANSWER:
f. Yes, the collection of taxes may be
suspended.

RA 1125 as amended by RA 9282 provided

that when in the opinion of the Court
of Tax Appeals, the collection of taxes
may jeopardize the interest of the
government and/or the taxpayer, the
CTA at any stage of the proceedings
may suspend the collection and
require the taxpayer either to deposit
the amount claimed of or to file a
surety bond for not more than double
the amount with the Court.

g. No. The CTA Division is not justified. It

has been held that the CTA should first
conduct a preliminary hearing for the
proper determination of the necessity
of a surety bond or the reduction
thereof (Pacquiao v. CTA). This is
necessary to give the taxpayer an
opportunity to prove its inability to
raise such amount. In this case, the
CTA failed to consider that the amount
of the surety bond is more than the net
worth of Globesmart Services resulting
in violation of the due process clause
and the equal protection clause under
the Constitution.

───※ ·!· ※───