I.

Heeding the pronouncement of the President that the worsening traffic

condition in the metropolis was a sign of economic progress, the Congress
enacted Republic Act No. 10701 (RA 10701), also known as An Act
Imposing a Transport Tax on the Purchase of Private Vehicles.

Under RA 10701, buyers of private vehicles are required to pay a transport tax
equivalent to 5°/o of the total purchase price per vehicle purchased. RA 10701
provides that the Land Transportation Office (LTO) shall not accept for
registration any new vehicles without proof of payment of the 5% transport tax.
RA 10701 further provides that existing owners of private vehicles shall be
required to pay a tax equivalent to 5% of the current fair market value of every
vehicle registered with the LTO. However, RA 10701 exempts owners of public
utility vehicles and the Government from the coverage of the 5% transport tax.

A group of private vehicle owners sue on the ground that the law is
unconstitutional for contravening the Equal Protection Clause of the
Constitution.

Rule on the constitutionality and validity of RA 10701. (5%)

II.

Quezon City published on January 30, 2006 a list of delinquent real property
taxpayers in 2 newspapers of general circulation and posted this in the main
lobby of the City Hall. The notice requires all owners of real properties in the
list to pay the real property tax due within 30 days from the date of
publication, otherwise the properties listed shall be sold at public auction.

Joachin is one of those named in the list. He purchased a real property in 1996
but failed to register the document of sale with the Register of Deeds and
secure a new real property tax declaration in his name. He alleged that the
auction sale of his property is void for lack of due process considering that the
City Treasurer did not send him personal notice. For his part, the City
Treasurer maintains that the publication and posting of notice are sufficient
compliance with the requirements of the law.

1. If you were the judge, how will you resolve this issue? 2.5%

2. Assuming Joachin is a registered owner, will your answer be the same?

2.5%

III.

Hopeful Corporation obtained a loan from Generous Bank and executed a

mortgage on its real property to secure the loan. When Hopeful Corporation
failed to pay the loan, Generous Bank extrajudicially foreclosed the mortgage
on the property and acquired the same as the highest bidder. A month after the
foreclosure, Hopeful Corporation exercised its right of redemption and was able
to redeem the property. Is Generous Bank liable to pay capital gains tax as a
result of the foreclosure sale? Explain. (4%)