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26. What is the prescriptive period for the
collection of taxes:
Abellon, Caryl Mae B.
SUGGESTED ANSWER:
(a) with prior assessment?
Section 222 (c) of the Tax Code provides
that “Any internal revenue tax which has
been assessed within the period of
limitation as prescribed in paragraph (a)
hereof may be collected by distraint or levy
or by a proceeding in court within five (5)
years following the assessment of the tax."
(b) without prior assessment?
The prescriptive period for the collection of
taxes without prior assessment depends if
the no tax return was filed or it was filed
falsely, fraudulently or not.
If the return filed was not false or
fraudulent, the collection should be made
within three (3) years from the date of
filing of return or date return is due,
whichever is later.
On the other hand, if no return was filed, or
it was filed falsely or fraudulently, the
collection should be made within ten (10)
years after the discovery of the falsity,
fraud or omission to file a return.
(c) if no return was filed or the return was
false or fraudulent?
Section 222 (a) of the Tax Code states that
“In the case of a false or fraudulent return
with intent to evade tax or of failure to file
a return, the tax may be assessed, or a
proceeding in court for the collection of
such tax may be filed without assessment,
at any time within ten (10) years after
the discovery of the falsity, fraud or
omission: Provided, That in a fraud
assessment which has become final and
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executory, the fact of fraud shall be
judicially taken cognizance of in the civil or
criminal action for the collection thereof.”
27. What are the two kinds of distraint of
personal property?
Alipayo, Queen Anne A.
SUGGESTED ANSWER:
The following are the two kinds of distraint
of personal property:
a. Actual distraint – Under Sec. 207 of
the NIRC, it is resorted to when at the
time required for payment, a person
fails to pay his delinquent tax
obligation. The Commissioner or his
duly authorized representative, if the
amount involved is in excess of One
million pesos (P1,000,000), or the
Revenue District Officer, if the amount
involved is One million pesos
(P1,000,000) or less, shall seize and
distraint any goods, chattels or effects,
and the personal property, including
stocks and other securities, debts,
credits, bank accounts, and interests in
and rights to personal property of such
persons, in sufficient quantity to satisfy
the tax, or charge, together with any
increment thereto incident to
delinquency, and the expenses of the
distraint and the cost of the subsequent
sale. Distraint consists in the actual
seizure and taking possession of
personal property of the taxpayer; and
b. Constructive distraint – A preventive
remedy which aims at forestalling a
possible dissipation of the taxpayer’s
assets when delinquency sets in. No
actual tax delinquency of the taxpayer
is necessary before the same is
resorted to by government. Under Sec.
206 of the NIRC, to safeguard the
interest of the Government, the
Commissioner may place under
constructive distraint the property of
any taxpayer: i) when he is retiring
from any business subject to tax; ii)
when he is intending to leave the

Philippines; iii) when he is intending to
remove his property therefrom or to
hide or conceal his property; or iv)
when he is intending to perform any act
tending to obstruct the proceedings for
collecting the tax due or which may be
due from him.
28. What is the remedy of the taxpayer
once the BIR Commissioner issues the
warrant of distraint? (AMER)
Amer, Sittie Farhannah H.
SUGGESTED ANSWER:
the taxpayer may request that the
warrant be lifted. the commissioner
may, in his discretion, allow the lifting
of the… (Sec 207)
A taxpayer must file an appeal with the
CTA (Court of Tax Appeal) within 30 days
from receipt of a Warrant of distraint and or
levy.
29. May the taxpayer recover his property
prior to consummation of the sale?
Bacalso, Hannah M.
SUGGESTED ANSWER:
Yes. Under SEC. 210. Release of Distrained
Property Upon Payment Prior to Sale. - If at
any time prior to the consummation of the
sale all proper charges are paid to the
officer conducting the sale, the goods or
effects distrained shall be restored to the
owner.  covering the property distrained and
30. How is constructive distraint effected?
Capute, Charlene C.
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SUGGESTED ANSWER:
Section 206, 2nd paragraph of the NIRC
provides that the constructive distraint of
personal property shall be effected by
requiring the taxpayer or any person
having possession or control of such
property to sign a receipt covering the
property distrained and obligate
himself to preserve the same intact
and unaltered and not to dispose of the
same in any manner whatever, without the
express authority of the Commission.
31. When may property of the taxpayer be
placed in constructive distraint? (Tax
Remedies, No. 31)
Castro, Aivy Mae R.
SUGGESTED ANSWER:
As provided under Section 206 of the
National Internal Revenue Code of the
Philippines, a property of the delinquent
taxpayer or any taxpayer may be placed in
constructive distraint when:
1. Retiring from any business subject to
tax;or
2. Intending to leave the Philippines; or
3. To remove or conceal his property; or
4. 4. To perform any act tending to
obstruct the proceedings for collecting the
tax due or which may be due from him.
The constructive distraint of personal
property shall be affected by requiring the
taxpayer or any person having possession
or control of such property to sign a receipt
obligate himself to preserve the same intact
and unaltered and not to dispose of the
same ;in any manner whatever, without
the express authority of the Commissioner.
If the taxpayer or any person in possession
and control of the property refuses or fails

to sign the receipt, the revenue officer shall
prepare a list of the property and leave a
copy of such list in the premises where the
property distrained is located, in the
presence of two (2) witnessed.
32. When is further distraint or levy
resorted to by the BIR? (see Sec. 217, Tax
Code)
De Asis, Quejarra R.
SUGGESTED ANSWER:
According to Sec.217 of the NIRC, The
remedy by distraint of personal property
and levy on realty may be repeated if
necessary until the full amount due,
including all expenses, is collected.
33. What is a tax lien?
Derecho, April C.
SUGGESTED ANSWER:
It is a legal claim or charge on property,
personal or real, established by law as a
sort of security for the payment of tax
obligations (HSBC v. Rafferty, 39 Phil.
145).
Tax in itself is not a lien even upon the
property against which it is assessed,
unless expressly made so by statute.
34. What is the difference between seizure
under forfeiture and a seizure to enforce a
tax lien?
Elesterio, Dessa Marie V.
SUGGESTED ANSWER:
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Under Sec. 2205, Seizure under
forfeiture is when Customs Official,
Fisheries Commission or Philippine Coast
Guard makes a seizure of any vessel,
aircraft, cargo, animal or any movable
property when the same is subject to
forfeiture or liable for any fine under the
Tariff and Customs Law.
all the proceeds are turned
over to tone cir
While under Sec. 1508, Seizure to
enforce a tax lien is when an importer
has an outstanding and demandable
account with the Bureau of Customs, the
collector shall hold the delivery of the
article. Upon notice, collector may sell such
importation or a portion of it to satisfy the
obligation. The importer may settle his
obligation anytime before the sale.
all the proceeds shall be
returned to the owner of the property
35. When may taxes be refunded or
credited?
Jaen, John Paul I.
SUGGESTED ANSWER:
1. Taxes erroneously or illegally
assessed or collected.
2. Penalties imposed without
authorities.
3. Value of internal revenue stamps
when they are returned in good
condition by the purchaser.
4. Unused stamps that have been
rendered unfit for use
(Commissioner may redeem,
change or refund their value
upon proof of destruction)
5. Any sum alleged to have
been excessively or in any
manner wrongfully collected.

The taxpayer must file a written claim for
refund stating a categorical demand for
reimbursement before the Commissioner
within TWO years from date of payment.
(Sec. 229, NIRC)
36. In a claim for refund of unutilized input
VAT, does the two-year prescriptive period
include both administrative and judicial
claims? (see cir v mindanao II geothermal
partnership GR NO. 191498, January 15,
2014)
Malinao, Deborah H.
SUGGESTED ANSWER:
no. only administrative claim for
refund
No. The judicial claim need not be filed
within the two – year prescriptive period.
The phrase "within two (2) years x x x
apply for the issuance of a tax credit
certificate or refund" refers to applications
for refund/credit filed with the CIR and not
to appeals made to the CTA. This is
apparent in the first paragraph of
subsection (D) of the same provision, which
states that the CIR has "90 days from the
submission of complete documents in
support of the application filed in
accordance with Subsections (A) and (B)"
within which to decide on the claim.
In fact, applying the two-year period to
judicial claims would render nugatory
Section 112 (D) of the NIRC, which already
provides for a specific period within which a
taxpayer should appeal the decision or
inaction of the CIR. The second paragraph
of Section 112 (D) of the NIRC envisions
two scenarios: (1) when a decision is
issued by the CIR before the lapse of the
90-day period; and (2) when no decision is
made after the 90-day period. In both
instances, the taxpayer has 30 days within
which to file an appeal with the CTA. The
120-day period is crucial in filing an appeal
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with the CTA. It is only the administrative
claim that must be filed within the two-year
prescriptive period; the judicial claim need
not fall within the two-year prescriptive
period.
What is the proper reckoning date for the
two-year prescriptive period? (See CIR vs.
Mindanao II Geothermal Partnership, GR No.
191498, January 15, 2014)
SUGGESTED ANSWER:
Reckoning point for the two (2) – year
prescriptive period:
1. Zero – rated or effectively zero rated
sales: after the close of the taxable
quarter when the sales were made.
(Sec. 112 (A), NIRC)
2. Cessation of business or VAT status:
from date of cancellation (Sec. 112
(B), NIRC)
37. State the rule on claims for refund of
erroneously or illegally assessed or
collected taxes under Sec. 229 of the Tax
Code.
OÑAS, Arlene E
SUGGESTED ANSWER:
Section 229 of the Tax Code provides that,
no suit or proceeding shall be maintained in
any court for the recovery of any national
internal revenue tax hereafter alleged to
have been erroneously or illegally assessed
or collected, or of any penalty claimed to
have been collected without authority, of
any sum alleged to have been excessively
or in any manner wrongfully collected
without authority, or of any sum alleged to
have been excessively or in any manner
wrongfully collected, until a claim for refund
or credit has been duly filed with the
Commissioner; but such suit or proceeding
may be maintained, whether or not such

tax, penalty, or sum has been paid under
protest or duress.
In any case, no such suit or proceeding
shall be filed after the expiration of two (2)
years from the date of payment of the tax
or penalty regardless of any supervening
cause that may arise after payment:
Provided, however, That the Commissioner
may, even without a written claim therefor,
refund or credit any tax, where on the face
of the return upon which payment was
made, such payment appears clearly to
have been erroneously paid.
38. What are the taxpayer’s remedies if his
claim for refund (of erroneously or illegally
assessed or collected tax) is denied or is
not acted upon by the Commissioner?
Papas, Keziah Cyra B.
SUGGESTED ANSWER:
SITUATION 1: The commissioner denies
claim for refund — the taxpayer may appeal
to the CTA within 30 days from the receipt
of the comm’s decision
SITUATION 2: The commissioner does not
act — file judicial claim within 30 days
The taxpayer, in filing his judicial claim, can
do so in two ways: 1) file the judicial claim
within thirty days after the Commissioner
of Internal Revenue denies the claim within
the 120-day period, or 2) file the judicial
claim within 30 days from the expiration of
the 120 day period if the Commissioner
does not act within the 120-day period.
Therefore, in case the Commissioner has
not taken action, the taxpayer may appeal
to the CTA within 30 days after the lapse of
120 days from the submission of the
complete documents. On the other hand, in
case of CTA’s denial, the taxpayer may
appeal the full or partial denial of the claim
to the Court of Tax Appeal within 30 days
from the receipt of said denial, otherwise
the decision shall become final.
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39. If the Commissioner of Internal Revenue
grants the refund, within what period must
it be claimed by the taxpayer?
Papelleras, Jannica, G.
SUGGESTED ANSWER:
within 5 years from the date such warrant
or check was mailed or delivered, otherwise
it shall be forfeited in favor of the
government and the amount thereof shall
revert to the general fund
40. In a claim for refund of unutilized input
VAT, within what period should the
Commissioner act on the claim?
Paquera, Elvira V.
SUGGESTED ANSWER:
In proper cases, the Commissioner of
Internal Revenue shall grant refund for
creditable input taxes within ninety (90)
days from the date of submission of the
official receipts or invoices and other
documents in support of the application
filed in accordance with subsections (A) and
(B) hereof. Provided, that, should the
Commissioner find that the grant of refund
is not proper , the Commissioner must
state in writing the legal and factual basis
for the denial.
However, all claims for refund/tax credit
certificate filed prior to January 1,2018
shall still be governed by the one hundred
twenty (120)-day processing period.
(Regulation 13-2018).
41. Under the R.A. 10963 – TRAIN Law,
what is the liability of a BIR officer who
failed to act upon, within the statutory
period, a valid application for refund of
input VAT?

Regala, Mary Licel, I.
SUGGESTED ANSWER:
Section 4.112-1 (d) paragraph 5 provides
that:
In case of full or partial denial of the claim
for tax refund, the taxpayer affected may,
within thirty (30) days from the receipt of
the decision denying the claim, appeal the
decision with the Court of Tax Appeals:
Provided, however, that failure on the part
of any official, agent, or employee of the
BIR to act on the application within the
ninety (90)- day period shall be
punishable under Section 269 of the Tax
Code, as amended.
42. Who is the proper party to ask for a
refund of an indirect tax? (See Exxon
Mobil Petroleum v. CIR, GR No. 180909,
January 26, 2011)
Reyes, Sarah Patricia P.
SUGGESTED ANSWER:
The proper party to question, or seek a
refund of, an indirect tax is the statutory
taxpayer, the person on whom the tax is
imposed by law and who paid the same
even if he shifts the burden thereof to
another. Section 130 (A) (2) of the NIRC
provides that "[u]nless otherwise
specifically allowed, the return shall be filed
and the excise tax paid by the
manufacturer or producer before removal
of domestic products from place of
production."
Here, the sellers of the petroleum products
or Jet A-1 fuel subject to excise tax are
Petron and Caltex, while Exxon was the
buyer to whom the burden of paying excise
tax was shifted. [68] While the impact or
burden of taxation falls on Exxon, as the
tax is shifted to it as part of the purchase
price, the persons statutorily liable to pay
the tax are Petron and Caltex. [69] As
Exxon is not the taxpayer primarily liable to
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pay, and not exempted from paying, excise
tax, it is not the proper party to claim for
the refund of excise taxes paid.
As petitioner is not the statutory taxpayer,
it is not entitled to claim a refund of excise
taxes paid. (Exxon Mobil Petroleum v. CIR,
GR No. 180909, January 26, 2011)
Is there an exception to the general rule?
(see PAL v. CIR, GR No. 198759, July 1,
2013) (Tax Remedies, No. 42)
SUGGESTED ANSWER:
Accordingly, in cases involving excise tax
exemptions on petroleum products under
Section 135 of the NIRC, it is the statutory
taxpayer who is entitled to claim a tax
refund and not the party who merely bears
its economic burden. However, this rule
does not apply to instances where the law
clearly grants the party to which the
economic burden of tax is shifted an
exemption from both direct and indirect
taxes. In which case, the latter must be
allowed to claim a tax refund even if it is
not considered as the statutory taxpayer. If
the law confers an exemption from both
direct and indirect tax, a claimant is
entitled to a refund even if it only bears the
economic burden of the applicable tax. On
the other hand, if the exemption conferred
by law applies to direct taxes, then the
statutory taxpayer is regarded as the
proper party to file the refund claim. (PAL
v. CIR, GR No. 198759, July 1, 2013)
43. What are the grounds for the
compromise of the payment of national
internal revenue taxes? What are the
limitations of the Commissioner’s power to
compromise?
Roa, Vanessa C.
SUGGESTED ANSWER:

Under RR No. 30-2002, the Commissioner
of Internal Revenue (CIR) may compromise
the payment of any internal revenue tax on
the following grounds:
Doubtful validity of the assessment;
Financial incapacity
Limitations of the CIR’s power to
compromise:
For cases of financial incapacity: a
minimum compromise rate equivalent to
10% of the basic assessed tax;
For other cases: a minimum compromise
rate of equivalent to 40% of the basic
assessed tax.
44. What are the grounds for the
abatement or cancellation of tax liabilities
and/or penalties?
Sagarino, Dapnee C.
SUGGESTED ANSWER:
Revenue Regulations No. 4-2012 dated
March 28,2012 (RR4-12) and entitled
“Amending Revenue Regulations No. 13-
2001, Regarding Abatement or Cancellation
of Internal Revenue Tax Liabilities” now
provides an updated list of instances of
abatement on the ground that the
imposition thereof is unjust and excessive.
Under RR 4-12. Section 2.6.1 of Revenue
Regulations No.13-2001 providing for
abatement or cancellation of penalties
and / or interest on the ground of one day
late filing and remittance due to failure to
beat the bank cut-off time has been
deleted. This in effect is saying that a one-
day late payment because the taxpayer
failed to catch up with the bank’s cut-off
time is not subject for cancellation of 25%
surcharge, 20% interest and compromise
penalties ranging from P200 to P25,000
depending on the amount of basic tax due.
Sec.2 of RR No.13-2001 shall now reads as
follows:
Section 2. Instances When The
Penalties and/or Interest imposed on the
Taxpayer May Be Abated Or Cancelled On
The Ground That The Imposition Thereof Is
Unjust or Excessive-
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X x x...
2.6 Late payment of the tax under
meritorious circumstamces such as those
provided hereunder:
2.6.1 Use of wrong tax form but correct
amount of tax was remitted;
2.6.2 Filing an amended return under
meritorious circumstances
provided,however, that abatement shall
cover only the penalties and not the
interest;
2.6.3 Surcharge erroneously imposed;
2.6.4 Late filing of return due to unresolved
issue on classification/valuation of real
property (for capital gains tax cases,etc)
2.6.5 Offsetting of taxes of the same kind,
i.e overpayment in one quarter/month is
offset against underpayment in another
quarter/month;
2.6.6 Autonatic offsetting of overpayment
of one kind of withholding tax against the
underpayment in another kind;
2.6.7 Late remittance of withholding tax on
compensation of expatriates for services
rendered in the Philippines pending the
issuance of Securities and Exchance
Commission of the License to the Philippine
branch office or subsidiary. Provided,
however, that the abtement shall only
cover the surcharge and the compromise
penalty and not the interest;
2.6.8 Wrong use of Tac Credit Certificates
(TCC) where Tax Debit Memo was not
properly appliedfor; and
2.6.9 Such other instances which the
Commissioner may deem analogous to the
enumeration above.
The above instances are normally subject
to penalties and interest, but with the
above regulations, the same could be
abated or cancelled upon coordination with
the Revenue District office of location or
with the Office of the Commissioner of
Internal Revenue. Upon abatement, the
taxpayer will no longer be held liable for
the penalties and/or interest.
45. What are the cases that may be the
subject matter of a compromise
settlement?

Salubre, Paulynn C.
SUGGESTED ANSWER:
These are the following cases subject to
compromise agreement:
Delinquent accounts
Cases under administrative protest after
issuance of the Final Assessment Notice to
the taxpayer which are still pending in the
RO, RDO, Legal Service, Large Taxpayer
Service, Collection Service, Enforcement
Service, and other office in the National
Office
Cases covered by pre-assessment notices
but taxpayer is not agreeable to the finding
of the audit office as confirmed by the
review office
Civil tax cases disputed before the courts
Criminal violations, except:
Those already filed in courts; and
Those involving criminal tax fraud.
46. May the Commissioner compromise
cases of criminal violations?
Samson, Frances C.
SUGGESTED ANSWER:
Generally, YES but it admits of exceptions
Revenue Regulation 30-2002 provides for
specific instances where tax liability in the
Philippines could be compromised based on
certain conditions and requirements, to wit:
1. Delinquent accounts;
2. Cases under administrative protest after
issuance of the Final Assessment Notice
to the taxpayer which are still pending
in the Regional Offices, Revenue District
Offices, Legal Service, Large Taxpayer
Service, Collection Service, Enforcement
Service and other offices int the
National Office;
3. Civil tax cases being disputed before
the courts;
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4. Collection cases filed in courts;
5. Criminal violations, except:
• Those already filed in court
• Those involving criminal tax fraud
47. Are there tax returns which are false
but not fraudulent? [See Aznar v. CTA
(1974)]
Sesante, Monyeen Marie T.
SUGGESTED ANSWER:
YES. There must be a distinction between
false return and fraudulent returns. Fraud
contemplated by law is actual and not
constructive
Yes. We believe that the proper and
reasonable interpretation of said provision
(Section 332 of the NIRC) should be that in
the three different cases of (1) false return,
(2) fraudulent return with intent to evade
tax, (3) failure to file a return, the tax may
be assessed, or a proceeding in court for
the collection of such tax may be begun
without assessment, at any time within ten
years after the discovery of the (1) falsity,
(2) fraud, (3) omission. Our stand that the
law should be interpreted to mean a
separation of the three different situations
of false return, fraudulent return with intent
to evade tax, and failure to file a return is
strengthened immeasurably by the last
portion of the provision which segregates
the situations into three different classes,
namely "falsity", "fraud" and "omission".
That there is a difference between "false
return" and "fraudulent return" cannot be
denied. While the first merely implies
deviation from the truth, whether
intentional or not, the second implies
intentional or deceitful entry with intent to
evade the taxes due. (Aznar vs. CTA, GR
No. L-20569, August 23, 1974)
48. Under the “Irrevocability Rule”, does
the exercise of the option to carry-over
the excess income tax credit prohibit a
claim for refund in the subsequent taxable
years for the unused portion of the excess

tax credits carried over? (See Asiaworld
Properties Philippines Corporation v. CIR,
GR NO. 171766, July 29, 2010)
Sunico, Mary Claire Therese L.
SUGGESTED ANSWER:
Yes, under Section 76 of the NIRC of 1997,
the application of the option to carry-over
the excess creditable tax is not limited only
to the immediately following taxable year
but extends to the next succeeding taxable
years. The clear intent in the amendment
under Section 76 is to make the option,
once exercised, irrevocable for the
"succeeding taxable years."
Thus, once the taxpayer opts to carry-over
the excess income tax against the taxes
due for the succeeding taxable years, such
option is irrevocable for the whole amount
of the excess income tax, thus, prohibiting
the taxpayer from applying for a refund for
that same excess income tax in the next
succeeding taxable years. The unutilized
excess tax credits will remain in the
taxpayer's account and will be carried over
and applied against the taxpayer's income
tax liabilities in the succeeding taxable
years until fully utilized
49. Is a motion for reconsideration from the
decision of a CTA Division mandatory prior
to elevating the case to the CTA en banc?
(See CIR vs. Marina Sales, Inc., GR No.
183868, November 22, 2010)
Tan, Vivian B.
SUGGESTED ANSWER:
Yes. A motion for reconsideration from
the decision of a CTA Division is mandatory
before the CTA En Banc can take
cognizance of the case.
As ruled in CIR v. Marina Sales Inc.,
the supreme court ruled that before the
CTA En Banc can take cognizance of a
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petition for review, respondent must
satisfactorily comply with the mandatory
provision of Rule 8, Sec. 1 of the Revised
Rules of the Court of Tax Appeals requiring
among other that the petition for review of
a decision or resolution of the Court in
division must be preceded by the filing of a
timely motion for reconsideration or new
trial with the division.
The word “must” clearly indicates the
mandatory – not merely directory – nature
of a requirement.
50. Does the Secretary of Justice have
jurisdiction to review the Commissioner of
Internal Revenue’s decision on disputed
assessments? (See CIR v. Sec. of Justice
and PAGCOR, GR No. 177387, November
9, 2016)
Valladores, Ara Joy C.
SUGGESTED ANSWER:
The Secretary of Justice has no
jurisdiction to review the disputed
assessments.
It is the Court of Tax Appeals (CTA), not
the Secretary of Justice, that has the
exclusive appellate jurisdiction,
pursuant to Section 7(1) of Republic Act
No. 1125 (R.A. No. 1125), which grants the
CTA the exclusive appellate jurisdiction to
review, among others, the decisions of the
Commissioner of Internal Revenue "in
cases involving disputed assessments,
refunds of internal revenue taxes, fees or
other charges, penalties imposed in relation
thereto, or other matters arising under the
National Internal Revenue Code (NIRC) or
other law or part of law administered by
the Bureau of Internal Revenue. (CIR v.
Sec. of Justice and PAGCOR, GR No.
177387, November 9, 2016) (Tax
Remedies, No. 50)

51. Under Sec. 4 of the Tax Code, the
power to interpret tax laws shall be under
the exclusive and original jurisdiction of
the Commissioner of Internal Revenue,
subject to review by the Secretary of
Finance. Where should the decision of the
Secretary of Finance, in the exercise of his
power of review, be appealed? (see
Philippine American Life and General
Insurance Company vs. Secretary of
Finance, GR No. 210987, November 24,
2014)
Zamora, Jerianne Andre Q.
SUGGESTED ANSWER:
The court in its ruling in the case of
Philippine American Life and General
Insurance Company vs. Secretary of
Finance said that under Sec. 7(a)(1) of RA
1125, as amended, addresses the seeming
gap in the law as it vests the Court of Tax
Appeals, albeit impliedly, with jurisdiction
over the CA petition as “other matters”
arising under the NIRC or other laws
administered by the BIR.
Also in the case of City of Manila v. Grecia-
Cuerdo, the Court en banc has ruled that
the CTA now has the power of certiorari in
cases within its appellate jurisdiction.
Thus, the power to decide disputed
assessments, refunds of internal revenue
taxes, fees or other charges, penalties
imposed in relation thereto, or other
matters arising under this Code or other
laws or portions thereof administered by
the Bureau of Internal Revenue is vested in
the Commissioner, subject to the exclusive
appellate jurisdiction of the Court of Tax
Appeals.
52. Does the Court of Tax Appeals (CTA)
have jurisdiction over a special civil action
for certiorari assailing an interlocutory
order issued by the Regional Trial Court
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(RTC) in a local tax case? (See The City of
Manila vs. Hon. Caridad H. Grecia-Cuerdo,
GR No. 175723, February 4, 2014)
Acaylar, Franz Lawrence Q.
SUGGESTED ANSWER:
Yes. The prevailing doctrine is that the
authority to issue writs of certiorari involves
the exercise of original jurisdiction which
must be expressly conferred by the
Constitution or by law and cannot be
implied from the mere existence of
appellate jurisdiction.
While under RA 1125 as amended by RA
9282 (Jurisdiction of the CTA), there is no
express grant of such power, Section 1, of
Art VIII of the 1987 Constitution provides,
nonetheless, that judicial power shall be
vested in one Supreme Court and in such
lower courts as may be established by law
and that judicial power includes the duty of
the courts of justice to settle actual
controversies involving rights which are
legally demandable and enforceable, and to
determine whether or not there has been a
grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any
branch or instrumentality of the
Government.
A grant of appellate jurisdiction implies that
there is included in it the power necessary
to exercise it effectively, to make all orders
that will preserve the subject of the action,
and to give effect to the final determination
of the appeal. The court, in aid of its
appellate jurisdiction, has the authority to
control all auxiliary and incidental matters
necessary to the efficient and proper
exercise of that jurisdiction. (City of Manila
vs. Grecia-Cuerdo, G.R. No. 175723,
February 4, 2014)
53. Are campaign contributions considered
taxable income of the candidate to whom
they were given? (See R.R. No. 7-2011 and
RMC No. 30-2016)

Alo, Reyniere M.
SUGGESTED ANSWER:
No, as a general rule, campaign
contributions are not included in the
taxable income of the candidate to whom
they were given, the reason being that
such contributions were given not for the
personal expenditure/enrichment of the
concerned candidate, but for the purpose of
utilizing such contributions for his/her
campaign. Thus, to be considered as
exempt from income tax, these campaign
contributions must have been utilized to
cover a candidate's expenditures for his/her
electoral campaign.
54. If the CTA Division denies the
taxpayer’s motion for reconsideration on a
disputed assessment, can the taxpayer
directly appeal to the Supreme Court by
filing a petition for review on certiorari
under Rule 45?
BASAÑEZ, James Marvin C.
SUGGESTED ANSWER:
No. The taxpayer cannot directly file a
petition for review on certiorari, under Rule
45, a decision of the CTA Division to the
Supreme Court.
Section 18 of R.A. 1125 provides for the
manner in which an appeal from the
decision of the CTA to the Supreme Court is
made, to wit:
Section 18. Appeal to the Supreme Court. -
No judicial proceeding against the
Government involving matters arising
under the National Internal Revenue Code,
the Customs Law or the Assessment Law
shall be maintained, except as herein
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provided, until and unless an appeal has
been previously filed with the Court of Tax
Appeals and disposed of in accordance with
the provisions of this Act.
The enactment however of R.A. No. 9282
on April 2004 elevated the rank of the CTA
to the level of a collegiate court, making it
a co-equal body of the CA. The appeal of a
CTA decision under Section 18 of R.A. No.
1125 was amended by R.A. No. 9282,
which reads as follows:
SEC. 18. Appeal to the Court of Tax
Appeals En Banc. - No civil proceeding
involving matter arising under the National
Internal Revenue Code, the Tariff and
Customs Code or the Local Government
Code shall be maintained, except as herein
provided, until and unless an appeal has
been previously filed with the CTA and
disposed of in accordance with the
provisions of this Act. A party adversely
affected by a resolution of a Division of the
CTA on a motion for reconsideration or new
trial, may file a petition for review with the
CTA en banc.
Does the Supreme Court have jurisdiction
over the case? (See Duty Free Philippines v.
CIR, GR NO. 197228, October 8, 2014)
SUGGESTED ANSWER:
No. The Supreme Court does not have
jurisdiction over the case.
Section 18 of R.A. No. 9282, as amended,
states that “a party adversely affected by a
resolution of a Division of the CTA on a
motion for reconsideration or new trial,
may file a petition for review with the CTA
en banc.” Furthermore, Section 2, Rule 4 of
the Revised Rules of the CTA reiterates the
exclusive appellate jurisdiction of the CTA
en banc relative to the review of the court
division’s decisions or resolutions on motion
for reconsideration or new trial in cases
arising from administrative agencies such
as the BIR. Lastly, Section 19 of R.A. No.

9282 provides, “a party adversely affected
by a decision or ruling of the CTA en banc
may file with the Supreme Court a verified
petition for review on ceriorari pursuant to
Rule 45.
Clearly, the Supreme Court is without
jurisdiction to review decisions rendered by
a division of the CTA. The exclusive
appellate jurisdiction over which is vested
in the CTA en banc.
55. Is the 20% discount on the purchase of
medicines by persons with disability
(PWDs) an exercise by the government of
its police power or an exercise of its power
of eminent domain? (See Drugstores
Association of the Philippines v. National
Council on Disability Affairs, GR No.
194561, September 14, 2016) (
Belarmino, Alphonse Louie E.
SUGGESTED ANSWER:
It is a legitimate exercise of police power
In the case of Drugstores Association of the
Philippines, Inc. and Northern Luzon Drug
Corporation v. National Council on Disability
Affairs states that police power is the power
of the state to promote public welfare by
restraining and regulating the use of liberty
and property. In the exercise of this power,
property rights of private individuals are
subjected to restrains and burdens in order
to secure the general comfort, health, and
prosperity. It must show that it is for the
interest of the public generally and the
means employed are reasonably necessary
for the accomplishment of the purpose and
not unduly oppressive.
In this case, the 20% discount is supported
by a valid object or purpose, which the
discount is a privilege that the PWDs are
entitled enjoyed by the general public to
which these citizens belong. The means
employed is reasonable and related to its
accomplishment.
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56. What is tax amnesty?
Cuenca, Joben Vernan C.
SUGGESTED ANSWER:
Tax amnesty is an immunity from all
criminal and civil obligation arising from
non-payment of taxes. It is a general
pardon given to all taxpayers. It applies
only to past tax periods, hence of
retroactive application. (People v
Castarieda GR no. L-46881, 1988)
What is the constitutional requirement for
the enactment of a law granting tax
exemption to taxpayers?
SUGGESTED ANSWER:
SECTION 28. (1) The rule of taxation shall
be uniform and equitable. The Congress
shall evolve a progressive system of
taxation.
(4) No law granting any tax exemption
shall be passed without the concurrence of
a majority of all the Members of the
Congress.
Note that in granting tax exemptions, an
absolute majority vote of the members of
Congress is required, while in cases of
withdrawal of such tax exemption, a
relative majority vote is sufficient.
Tax amnesties, tax condonations, and tax
refunds are in the nature of tax
exemptions. Such being the case, a law
granting tax amnesties, tax condonations,
and tax refunds requires the vote of an
absolute majority of the Members of
Congress.
57. What are BIR Rulings?
Esparagoza, Keneth Jorge A.
SUGGESTED ANSWER:

These are Official positions of the CIR to
queries raised by taxpayers and other
stakeholders relative to clarification and
interpretation of tax laws.
What are the two types of BIR Rulings?
SUGGESTED ANSWER:
BIR Rulings are opinions and
interpretations issued by the BIR
Commissioner or his duly authorised
representative in connection with the
implementation of tax laws in response
to a specific request for ruling filed by
a taxpayer with the BIR. The two types
of BIR Rulings are: (a) Rulings of First
Impression; and (b) Rulings with
Established Precedents
58. Discuss the doctrine of non-retroactivity
of ruling under Sec. 246 of the Tax Code.
Are there exceptions to the rule?
Jurado, Ralph E.
SUGGESTED ANSWER:
Rulings, circulars, rules and regulations
promulgated by the Commissioner on
Internal Revenue should have no
retroactive effect application if applying the
would prejudice the taxpayers (CIR v. CA,
G.R. No. 117982)
However, Sec. 246 of the tax code provides
for several exceptions, they are as follows:
1) A taxpayer deliberately misstates or
omits material facts from his return
or any document required by the
BIR.
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2) Where subsequent facts gathered by
the BIR are materially different from
which the ruling is based.
3) Where the taxpayer acted in bad
faith.
59. How much is the informer’s reward?
Manubag Celedonio Jr. S.
SUGGESTED ANSWER:
Under Section 282 of the National Internal
Revenue Code (NIRC), allows a person who
"voluntarily" shares information on possible
irregularities to get "10% of the revenues,
surcharges or fees recovered and/or fine or
penalty imposed and collected or One
Million Pesos (P1,000,000) per case,
whichever is lower.
What are the conditions to qualify for the
informer’s reward under Sec. 282 of the Tax
Code?
SUGGESTED ANSWER:
Under Section 282 of the National Internal
revenue Code (NIRC) the following
conditions must be complied with:
a)should not be a BIR employee,
b)a person related to the sixth degree of
consanguinity to any bureau official, or
c)a previous official who discovered the
anomaly "during [his/her] incumbency."
60. A taxpayer is a non-stock, non-profit
educational institution.
Maruhom, Datu Esma Mikee P.
a. Is the rental income from the
cafeteria subject to income
tax?

SUGGESTED ANSWER:
No, the rental income is not subject
to income tax if such revenue has
been actually, directly, and
exclusively used for educational
purposes.
Section 4(3), Article XIV of the 1987
Constitution provides:
(3) All revenues and
assets of non-stock, non-
profit educational
institutions used actually,
directly, and exclusively
for educational purposes
shall be exempt from
taxes and duties. Upon the
dissolution or cessation of
the corporate existence of
such institutions, their
assets shall be disposed of
in the manner provided by
law.
Proprietary educational
institutions, including
those cooperatively
owned, may likewise be
entitled to such
exemptions subject to the
limitations provided by law
including restrictions on
dividends and provisions
for reinvestment.
The exemption from the payment of
income tax is not on the use of the
building as a school canteen, but on
the use of the rental income
actually, directly, and exclusively for
educational purposes. The
Constitution does not require that
the revenues and income must have
also been sourced from educational
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activities or activities related to the
purposes of an educational
institution. The phrase all revenues
is unqualified by any reference to
the source of revenues.
Hence, the rental income is tax
exempt if such revenue is used
solely for educational purposes.
b. Is the portion of the school
building utilized as school
canteen subject to real
property tax, even if the
related rental income is used
for educational purposes?
SUGGESTED ANSWER:
Yes, the portion of the school
building used as school canteen is
subject to real property tax.
Section 4(3), Article XIV of the 1987
Constitution provides:
(3) All revenues and
assets of non-stock, non-
profit educational
institutions used actually,
directly, and exclusively
for educational purposes
shall be exempt from
taxes and duties. Upon the
dissolution or cessation of
the corporate existence of
such institutions, their
assets shall be disposed of
in the manner provided by
law.
Proprietary educational
institutions, including
those cooperatively

owned, may likewise be
entitled to such
exemptions subject to the
limitations provided by law
including restrictions on
dividends and provisions
for reinvestment.
In order to be exempt from payment
of property tax, the use of such
asset or property must be actually,
directly, and exclusively for
educational purposes. In the case
given, the portion of the school
building used as a school canteen is
considered not actually, directly,
and exclusively used for educational
purposes. The commercial use of the
property is also not incidental to and
reasonably necessary for the
accomplishment of the main
purpose of a university, which is to
educate its students.
Therefore, the school building used
as school canteen is not within the
tax exemption contemplated by the
provision.
C. If the school utilized a portion of its
revenue for commercial purposes, does it
remove such item from the tax exemption
coverage under the Constitution? (see
Commissioner of Internal Revenue vs. De
La Salle University, Inc., G.R. No. 196596,
November 9, 2016)
SUGGESTED ANSWER:
Yes, the portion of the income used for
commercial purposes is not tax-exempt.
The Constitution provides that revenues
actually, directly and exclusively used for
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educational purposes by non-stock, non-
profit educational institutions are exempted
from taxation. Should income be used for
purposes other than the furtherance of the
educational objectives of the institution,
such income or revenue is not covered by
the exemption and may be subjected to
income tax. To avail of the exemption, the
taxpayer must factually prove that it used
actually, directly and exclusively for
educational purposes the revenues or
income sought to be exempted.
Hence, incomes of non-stock, non-profit
educational institutions are not
automatically exempt from taxation since
there must be a showing that the incomes
are used actually, directly, and exclusively
for educational purposes.
7. Gains and Losses from Disposition of
Property
Neri, Tauniño Jillandro G.
d. State the rule on capital gain or losses
on individuals. What do you understand by
the “holding period rule” in relation to
capital gains/loss?
SUGGESTED ANSWER:
Capital gains include the gain derived from
the sale or exchange of an asset not
connected with the trade or business. On
the other hand, capital loss is the loss that
may be sustained from the sale or
exchange of an asset not connected with
the trade or business. Capital loss may not
exceed capital gains when used as a
deduction to income. Holding period
available. The percentages of gain or loss
to be taken into account shall be the ff.:
100% - if the capital assets have been held
for 12 months or less; and 50% - if the
capital asset has been held for more than
12 months Non-deductibility of Net Capital

losses. Capital losses are allowed only up to
the extent of the capital gains; hence, the
net capital loss is not deductible.
Holding period rule (long term capital gain
vis-à-vis short term capital gain)
Where the taxpayer held the capital asset
sold for more than 12 months, the gain
derived therefrom is taxable only to the
extent of 50%. Consequently, if the
taxpayer held the capital asset sold for a
year or less, the whole gain shall be
taxable. The same also applies to capital
loss. It is a form of tax avoidance since the
taxpayer can exploit it in order to reduce
his tax due (NIRC, Sec. 39 [B]).
NOTE: Holding period does not find
application in the case of disposition of:
1. shares of stock; and
2. real property considered as capital asset,
whether the seller is an individual, trust,
estate or a private corporation.
Only individual taxpayers can avail of the
holding period rule. It is not allowed to
corporations.
e. What are the rules on capital gains or
losses for corporations?
SUGGESTED ANSWER:
No holding period is allowed in corporation.
Capital gains and losses are taxable to the
extent of 100% non-deductibility of Net
Capital losses XPN: If any domestic bank or
trust company, a substantial part of whose
business is the receipt of deposits, sells any
bond, debenture, note or certificate or
other evidence of indebtedness issued by
any corporation (including one issued by a
government or political subdivision) NCLCO
not allowed
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f. State the rule on gain/loss from short
sales.
SUGGESTED ANSWER:
Gains or Losses From Short Sales, Etc. -
For purposes of this Title – 
(1) Gains or losses from short sales of
property shall be considered as gains or
losses from sales or exchanges of capital
assets; and (2) Gains or losses attributable
to the failure to exercise privileges or
options to buy or sell property shall be
considered as capital gains or losses.
g. What are wash sales? What is the
treatment on loss on wash sales?
Ouano, Jansen Ynrik V.
SUGGESTED ANSWER:
Under the tax code a Wash sale occurs
when there is a sale or other disposition of
shares of stock or securities where it
appears that within a period beginning
thirty (30) days before the date of such
sale or disposition and ending thirty (30)
days after such date, the taxpayer has
acquired by purchase or by exchange upon
which the entire amount of gain or loss was
recognized by law, or has entered into a
contact or option so to acquire,
substantially identical stock or securities.
Sec. 38 of National Internal Revenue code
provides that In the case of any loss
claimed to have been sustained from any
sale or other disposition of shares of stock
or securities where it appears that within a
period beginning thirty (30) days before the
date of such sale or disposition and ending
thirty (30) days after such date (referred as
the 61 day period), the taxpayer has
acquired (by purchase or by exchange upon
which the entire amount of gain or loss was

recognized by law), or has entered into a
contact or option so to acquire,
substantially identical stock or securities,
then no deduction for the loss shall be
allowed unless the claim is made by a
dealer in stock or securities and with
respect to a transaction made in the
ordinary course of the business of such
dealer.  built or acquired: Provided, further, That
What are substantially identical shares?
Identical Shares are two stocks that are
linked together in such a way that any
change in the price of one will be reflected
in the price of another, they’re likely to be
treated as substantially identical securities
for purposes of the wash sale rule.
h. Is sale of principal residence subject to
6% capital gains tax? Is there an exception?
Yes. Generally, the sale of principal
residence is subject to 6% capital gains
tax.
Sec 24 D par 1 of the NIRC, provides that a
final tax of six percent (6%) based on the
gross selling price or current fair market
value as determined in accordance with
Section 6(E) of this Code, whichever is
higher, is hereby imposed upon capital
gains presumed to have been realized from
the sale, exchange, or other disposition of
real property located in the Philippines,
classified as capital assets, including pacto
de retro sales and other forms of
conditional sales, by individuals, including
estates and trusts.
However such provision is subject to an
exception. Under Sec 24 D par 2 it
provides that capital gains presumed to
have been realized from the sale or
disposition of their principal residence by
natural persons, the proceeds of which is
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fully utilized in acquiring or constructing a
new principal residence within eighteen
(18) calendar months from the date of sale
or disposition, shall be exempt from the
capital gains tax imposed, Provided, That
the historical cost or adjusted basis of the
real property sold or disposed shall be
carried over to the new principal residence
the Commissioner shall have been duly
notified by the taxpayer within thirty (30)
days from the date of sale or disposition
through a prescribed return of his intention
to avail of the tax exemption herein
mentioned: Provided, still further, That the
said tax exemption can only be availed of
once every ten (10) years: Provided,
finally, that if there is no full utilization of
the proceeds of sale or disposition, the
portion of the gain presumed to have been
realized from the sale or disposition shall
be subject to capital gains tax. For this
purpose, the gross selling price or fair
market value at the time of sale, whichever
is higher, shall be multiplied by a fraction
which the unutilized amount bears to the
gross selling price in order to determine the
taxable portion and the tax prescribed
under paragraph (1) of this Subsection
shall be imposed thereon.
i. What are tax-free exchanges? State the
rules on tax-free exchanges of
property.
Tax-free exchanges refer to those instances
enumerated in Section 40(C)(2) of the
National Internal Revenue Code (NIRC) that
are not subject to Income Tax, Capital
Gains Tax, Documentary Stamp Tax and/or
Value-added Tax, as the case may be. To
wit:
No gain or loss shall be recognized if in
pursuance of a plan of merger or
consolidation -

(a) A corporation, which is a party to a
merger or consolidation, exchanges
property solely for stock in a corporation,
which is a party to the merger or
consolidation; or
(b) A shareholder exchanges stock in a
corporation, which is a party to the merger
or consolidation, solely for the stock of
another corporation also a party to the
merger or consolidation; or
(c) A security holder of a corporation, which
is a party to the merger or consolidation,
exchanges his securities in such
corporation, solely for stock or securities in
such corporation, a party to the merger or
consolidation.
No gain or loss shall also be recognized if
property is transferred to a corporation by
a person in exchange for stock or unit of
participation in such a corporation of which
as a result of such exchange said person,
alone or together with others, not
exceeding four (4) persons, gains control of
said corporation: Provided, That stocks
issued for services shall not be considered
as issued in return for property.
In general, there are two kinds of tax-free
exchange: (1) transfer to a controlled
corporation; and, (2) merger or
consolidation.
In the first instance, no gain or loss shall be
recognized if property is transferred to a
corporation by a person in exchange for
stock or unit of participation in such
corporation of which as a result of such
exchange said person, alone or together
with others, not exceeding four persons,
gains control of said corporation.
In the second instance, no gain or loss shall
be recognized if in pursuance of a plan of
merger or consolidation --- (a) a
corporation, which is a party to a merger or
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consolidation, exchanges property solely for
stock in a corporation, which is a party to
the merger or consolidation; or, (b) a
shareholder exchanges stock in a
corporation, which is a party to the merger
or consolidation, solely for the stock of
another corporation also a party to the
merger or consolidation; or, (c) a security
holder of a corporation, which is a party to
the merger or consolidation, exchanges his
securities in such corporation, solely for
stock or securities in another corporation, a
party to the merger or consolidation.
8. Taxation of Individuals
Cuizon, Razel V.
a. Discuss the classification of taxpayers.
SUGGESTED ANSWER:
A. Individuals:
1. Citizens of the Philippines:
     a. Residents of the Philippines [Secs. 23
(A) and 24 (A)]
        i. Filipinos residing in the Philippines
        ii. Filipinos living abroad but without
intention of residing there permanently.
[Sec. 22 (E)]
     b. Not Residents of the Philippines [Secs.
23 (B) and 24 (A)]
        i. One has intention to reside
permanently abroad
c. OFW and Seaman [Sec. 23 (C) and 24
(A)]
2. Aliens (Taxable WITHIN only)
     a. Residents of the Philippines

     b. Not Residents of the Philippines [Secs.
22 (G); 23 (D); 25 (A) and (B)
        i. Non-resident alien engaged engaged
in trade and business in the Philippines
ii. Non- resident alien engaged in trade or
business in the Philippines
     c. Aliens employed by multinational
companies, offshore banking units and
petroleum contractors and subcontractors.
3. Estates and Trusts
b. Who are considered citizens of the
Philippines?
SUGGESTED ANSWER:
As provided under Section 1, Article IV of
the 1987 Constitution, the following are
citizens of the Philippines:
[1] Those who are citizens of the
Philippines at the time of the adoption of
this Constitution;
[2] Those whose fathers or mothers are
citizens of the Philippines;
[3] Those born before January 17, 1973, of
Filipino mothers, who elect Philippine
citizenship upon reaching the age of
majority; and
[4] Those who are naturalized in
accordance with law.
Section 2. Natural-born citizens are those
who are citizens of the Philippines from
birth without having to perform any act to
acquire or perfect their Philippine
citizenship. Those who elect Philippine
citizenship in accordance with paragraph
(3), Section 1 hereof shall be deemed
natural-born citizens.
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Section 3. Philippine citizenship may be lost
or reacquired in the manner provided by
law.
Section 4. Citizens of the Philippines who
marry aliens shall retain their citizenship,
unless by their act or omission, they are
deemed, under the law, to have renounced
it.
Section 5. Dual allegiance of citizens is
inimical to the national interest and shall be
dealt with by law.
c. How do we tax aliens?
Bariquit, Joymee L.
SUGGESSTED ANSWER:
An alien employee in the Philippines may
be taxed as follows:
Non-resident Alien – A non-resident alien in
the Philippines is one who is not a citizen of
the Philippines and who is not a resident of
the Philippines but deriving income as
employee in the Philippines. He is classified
either as a non-resident alien 1. Not
engaed in trade or business, or 2. Engaged
in trade or business.
A non-resident alien in the Philippines not
engaged in trade or business in the
Philippines is subject to 25% withholding
tax on gross compensation. On the other
hand, as non-resident alien engaged in
trade or business in the Philippines is taxed
at 5-32% of compensation income.
As to a Resident alien, he or she is taxable
at 5-32% income tax rates in like manner
as a Filipino citizen using the withholding
tax table on compensation.
d. Distinguish NRAETB from NRANEBT.
SUGGESSTED ANSWER:

The determining factor is the aggregate
length of presence in the Philippines. Under
25(A)(1) of the Philippine Tax Code, a non-
resident alien who stayed an aggregate
period of more than 180 days during any
calendar year shall be deemed a non-
resident alien doing business in the
Philippines. In BIR Ruling No. 056-05, the
BIR ruled that “any calendar year” covers
all the months in the calendar year covered
by the period of assignment of the alien in
the Philippines.
e. What is taxable income?
SUGGESSTED ANSWER:
Taxable income is the amount of income
used to calculate how much tax an
individual or as a company owes to the
government in a given tax year.
f. What are the (revised) schedular tax
rates?
Roncesballes, Vhal N.
SUGGESSTED ANSWER:
Taxable income subject to graduated rates
of 5%-32% refers to those items of
income, other than passive income and
capital gains, which are subject to final tax
Under RA 10963, Section 24 of NIRC is
amended with Rates of Tax on Taxable
Income of Individuals. - The tax shall be
computed in accordance with and at the
rates established in the following schedule:
"(a) Tax Schedule Effective January 1,
2018 until December 31, 2022:
"Not over ₱250,000 0%
"Over ₱250,000 but not over ₱400,000
20% of the excess over ₱250,000
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"Over ₱400,000 but not over ₱800,000
₱30,000 + 25% of the excess over
₱400,000
"Over ₱800,000 but not over ₱2,000,000
₱130,000 + 30% of the excess over
₱800,000
"Over ₱2,000,000 but not over ₱5,000,000
₱490,000 + 32% of the excess over
₱2,000,000
"Over ₱8,000,000
₱2,410,000 + 35% of the excess over
₱8,000,000
"Tax Schedule Effective January 1, 2023
and onwards:
"Not over ₱250,000 0%
"Over ₱250,000 but not over ₱400,000
15% of the excess over ₱250,000
"Over ₱400,000 but not over ₱800,000
₱22,500 + 20% of the excess over
₱400,000
"Over ₱800,000 but not over ₱2,000,000
₱102,500 + 25% of the excess over
₱800,000
"Over ₱2,000,000 but not over ₱8,000,000
₱402,500 + 30% of the excess over
₱2,000,000
"Over ₱8,000,000
₱2,202,500 + 35% of the excess over
₱8,000,000
g. Who are entitled to the Optional
Standard Deduction, and how shall it be
computed?
SUGGESSTED ANSWER:
Under Revenue Regulation 16-08, Sec. 4:
 TAX 2 Weekday Class 2019-
2020

1. Individuals, except non-resident For individual taxpayers, the computation

aliens of the OSD is based on 40% of the Gross
Sales/Gross receipts, while for a
Under accrual basis- not exceeding corporation, it is computed based on 40%
40% based on gross sales, or of its Gross Income.

Under cash basis- not exceeding
40% based on gross receipts
2. Corporation: not exceeding 40%
based on gross income of domestic
corporation and resident foreign
corporation
h. What are the requisites/conditions that
must be complied with before an individual
taxpayer can qualify under the substituted
filing of income tax return?
SUGGESSTED ANSWER:
• Employees who satisfies
all of the following
conditions:

1. Receiving
Can a taxpayer avail both itemized
purely
deductions and optional standard deduction
compensation
(OSD) at the same time?
income
SUGGESSTED ANSWER: regardless of
amount

2. Working for
No, the taxpayer can only avail of one
only one
method of deduction.
employer in
Under Revenue Regulation 16-08, section 7 the Philippines
the taxpayer is not allowed to use a hybrid for the
method of claiming his/her deduction for calendar year.
one taxable year.
3. Tax has been
Such election to avail of the OSD when withheld
made by the qualified taxpayer is correctly by
irrevocable for the year in which the return the employer
is made. However he can change to (tax due
itemized deduction in the succeeding years. equals tax
withheld).

How do you distinguish the computation of 4. The employee’s

optional standard deduction for individuals spouse also
and corporations? complies with
all three (3)
Tan, Rolan Vincent S.
conditions
SUGGESSTED ANSWER: stated above.

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 TAX 2 Weekday Class 2019-
2020

5. The employer laws. Also, Foreign corporations, meaning a

files the annual corporation which is not domestic.
information
return (BIR c. How do we tax domestic corporations?
Form No.
SUGGESSTED ANSWER:
1604-CF).
A domestic corporation is taxable on all its
6. The employer income from sources within and without the
issues BIR Philippines.
Form No. 2316
to each d. When is an income subject to final tax?
employee.
SUGGESSTED ANSWER:

Final income subject to final withholding

9. Taxation of Corporation taxes of varying rates corresponding tax
required upon their payment of such
Ong Oh, Jose IV B. income.

a. What comprises “corporation” for tax e. Discuss the concept of minimum

purposes? corporate income tax (MCIT).

SUGGESSTED ANSWER: Parcon, Junfe S.

The term ‘corporation’ shall include SUGGESSTED ANSWER:

partnerships, no matter how created or
Minimum Corporate Income Tax (MCIT) is
organized, joint-stock companies, joint
2% of gross income for domestic
accounts (cuentas en participacion,
corporation/resident foreign corporation.
associations, or insurance companies, but
MCIT is in the nature of tax credit, not an
does not include general professional
allowable deduction. Its purpose is to
partnerships and a joint venture or
prevent the corporations from escaping
consortium formed for the purpose of
being taxed by including frivolous expenses
undertaking construction projects or
in their statement of income. If the
engaging in petroleum, coal, geothermal
corporation’s regular income is higher than
and other energy operations pursuant to an
the MCIT, then the corporation does not
operating or consortium agreement under a
pay the MCIT.
service contract with the Government.
f. Discuss the concept of improperly
accumulated earnings tax (IAET).

B. What is the classification of corporation SUGGESSTED ANSWER:

for tax purposes?
SUGGESSTED ANSWER:
Domestic corporation, meaning created or
organized in the Philippines or under its
Income tax of 10% is imposed on
corporation with improperly accumulated
earnings. IAET is imposed on corporations
in order to discourage the practice of
accumulating earnings and profits in order
to avoid the payment of income tax on the

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 TAX 2 Weekday Class 2019-
2020

part of the shareholders. It is only exempted from paying income tax and is
applicable to domestic corporation. no longer required to avail of the 8%.

What corporations are exempt from IAET?
SUGGESSTED ANSWER:
IEAT does not apply to publicly-held
corporations, banks, non-bank financial
intermediaries and insurance companies.
10. Other amendments under TRAIN Law
a. Optional 8% income tax:
• For purely self-employed and/or
professionals, when can they avail of
the optional 8% income tax on gross
sales or gross receipts?
SUGGESTED ANSWER:
§ Who are not qualified to avail of the
optional 8% income tax?
SUGGESTED ANSWER:
The option to be taxed at 8% income tax
rate is not available to a VAT-registered
taxpayer, regardless of the amount of gross
sales/ receipts, and to a taxpayer who is
subject to Other Percentage Taxes under
Title V of the Tax Code, as amended,
except those subject under Section 116 of
the same Title. Likewise, partners of a
General Professional Partnership (GPP) by
virtue of their distributive share from GPP
which is already net of cost and expenses
cannot avail of the 8% income tax rate
option.

Purely self-employed and/or professionals
can avail of the optional 8% income tax on
gross sales or gross receipts if their gross
sales or gross receipts and other non-
operating income do not exceed the VAT
threshold of P3 million.
§ If gross sales or receipts for the year
exceed P3.0 million, can the individual still
avail of the 8% income tax?
SUGGESTED ANSWER:
No. If the gross sales or receipts and other
non-operating income for the year
exceeded the P3 million threshold, the
graduated income tax rates for individuals
will apply.
§ For individuals earning purely
compensation income, are they entitled to
avail of the optional 8% income tax?
SUGGESTED ANSWER:
b. What is the final tax rate on interest on
foreign currency deposit?
SUGGESTED ANSWER:
Under the TRAIN Law, the rate of final tax
on interest income received by resident
individual taxpayer under the expanded
foreign currency deposit system increased
from 7.5% to 15% final tax.
c. What is the applicable capital gains tax
rate on sale of shares not traded through
the stock exchange?
SUGGESTED ANSWER:
Under the TRAIN Law, the final tax rate for
net capital gains tax on the sale, barter,
exchange or other disposition of shares of
stock in a domestic corporation not traded
through the stock exchange is increased
from the 5/10% CGT to a flat rate of 15%
CGT.

d. What is the revised rate for stock

If the gross sales or gross receipts does not
transaction tax?
exceed P250,000, the taxpayer is

23 | Page

SUGGESTED ANSWER:
There shall be levied, assessed and
collected on every sale, barter, exchange or
other disposition of shares of stock listed
and traded through the local stock
exchange other than the sale by a dealer in
securities, a tax at the rate of six-tenths of
one percent (6⁄10 of 1%) of the gross selling
price or gross value in money of the shares
of stock sold, bartered, exchanged or
otherwise disposed which shall be paid by
the seller or transferor.
e. If an individual’s taxable income is
subject to zero percent, is he still required
to file an income tax return? Cite legal
basis.
SUGGESTED ANSWER:
Under the TRAIN Law, individual taxpayers
whose taxable income is subject to zero
percent under the new graduated tax table
or does not exceed P250,000 shall not be
required to file an income tax return.
f. Can individual taxpayers still claim
“premium on health and hospitalization
insurance” as deduction from gross income?
SUGGESTED ANSWER:
Individual premiums would still be
considered a fringe benefit which is subject
to tax.
g. Are estates and trusts still entitled to
claim personal exemption of P50,000?
SUGGESTED ANSWER:
The exemption for estates and trusts is
already removed under TRAIN Law.
h. Is PCSO exempt from corporate income
tax?
SUGGESTED ANSWER:
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TAX 2 Weekday Class 2019-
2020
Under the TRAIN Law, PCSO is no longer
exempt from paying corporate income tax.
i. How much is the general interest on
unpaid amount of tax? Cite legal basis.
SUGGESTED ANSWER:
General interest on unpaid amount of tax is
changed to 12% at double the rate of legal
interest rate for loans or forbearance of an
express stipulation as set by the Bangko
Sentral ng Pilipinas (BSP). Prevailing BSP
set legal interest is 6%.
j. Can deficiency and delinquency
interests be imposed simultaneously?
SUGGESTED ANSWER:
No. Deficiency and delinquency interests
shall in no case be imposed simultaneously.
k. How much is the threshold amount for
the mandatory issuance of receipts or
invoices on sale of merchandise or service
rendered?
SUGGESTED ANSWER:
Under the TRAIN Law, it is expressly
provided that the issuance of the receipt or
invoice shall be made at the point of sale.
The threshold amount is increased to
P100.00
l. If an individual taxpayer (involved in
business or profession) elects to register at
8% gross income tax, will he still be allowed
to avail of the optional VAT registration?
SUGGESTED ANSWER:
No. If an individual taxpayer elects to
register at 8% gross income tax, such
election shall be irrevocable and no
amendment of the option shall be made
during the taxable year, except if exceeded
the P3 million threshold.

§ If the individual’s gross receipts for the
year exceed the VAT threshold, is the
taxpayer allowed to avail of the 8% income
tax?
SUGGESTED ANSWER:
No. The individual taxpayer shall be subject
to the graduated income tax rate.
m. Discuss the revised penalties (fines and
imprisonment) for attempt to evade or
defeat tax under Section 254 of the Tax
Code, as amended.
SUGGESTED ANSWER:
Any person who willfully attempts in any
manner to evade or defeat any tax imposed
under this Code or the payment thereof
shall, in addition to other penalties
provided by law, upon conviction thereof,
be punished with a fine of not less than
Five hundred thousand pesos (₱500,000)
but not more than Ten million pesos
(₱10,000,000), and imprisonment of not
less than six (6) years but not more than
ten (10) years: Provided, That the
conviction or acquittal obtained under this
Section shall not be a bar to the filing of a
civil suit for the collection of taxes.”
n. Discuss the revised penalties for failure
or refusal to issue receipts or invoices
under Section 264 of the Tax Code, as
amended.
SUGGESTED ANSWER:
Section 264 of the Tax Code provides that
Failure or refusal to Issue Receipts or Sales
or Commercial Invoices, Violations related
to the Printing of such Receipts or Invoices
and Other Violations include;
(a) Any person who, being required under
Section 237 to issue receipts or sales or
commercial invoices, fails or refuses to
issue such receipts of invoices, issues
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TAX 2 Weekday Class 2019-
2020
receipts or invoices that do not truly reflect
and/or contain all the information required
to be shown therein, or uses multiple or
double receipts or invoices, shall, upon
conviction for each act or omission, be
punished by a fine of not less than One
thousand pesos (P1,000) but not more than
Fifty thousand pesos (P50,000) and suffer
imprisonment of not less than two (2)
years but not more than four (4) years.
(b) Any person who commits any of the
acts enumerated hereunder shall be
penalized with a fine of not less than Five
hundred thousand pesos (₱500,000) but
not more than Ten million pesos
(₱10,000,000), and imprisonment of not
less than six (6) years but not more than
ten (10) years:
(1)  Printing of receipts or sales or
commercial invoices without authority from
the Bureau of Internal Revenue; or
(2)  Printing of double or multiple sets of
invoices or receipts; or
(3)  Printing of unnumbered receipts or
sales or commercial invoices, not bearing
the name, business style, Taxpayer
Identification Number, and business
address of the person or entity.
(4) Printing of other fraudulent receipts or
sales or commercial invoices.”
o. What is “sales suppression device”?
Discuss the penalties if a taxpayer is found
liable for using sales suppression device.
SUGGESTED ANSWER:
Purchase, Use, Possession, Sale or Offer to
Sell, Installment, Transfer, Update,
Upgrade, Keeping or Maintaining of Sales
Suppression Devices.— Any person who
shall purchase, use, possess, sell or offer to
 TAX 2 Weekday Class 2019-
2020

sell, install, transfer, update, upgrade,
keep, or maintain any software or device
designed for, or is capable of: (a)
suppressing the creation of electronic
records of sale transactions that a taxpayer
is required to keep under existing tax laws
and/or regulations; or (b) modifying,
hiding, or deleting electronic records of
sales transactions and providing a ready
means of access to them, shall be punished
by a fine of not less than Five hundred
thousand pesos (₱500,000) but not more
than Ten million pesos (₱10,000,000), and
suffer imprisonment of not less than two
(2) years but not more than four (4)
years: Provided, That a cumulative
suppression of electronic sales record in
excess of the amount of Fifty million pesos
(₱50,000,000) shall be considered as
economic sabotage and shall be punished
in the maximum penalty provided for under
this provision.”
§ When is the violation considered
economic sabotage?
SUGGESTED ANSWER:
A cumulative suppression of electronic sales
record in excess of the amount of Fifty
million pesos (₱50,000,000) shall be
considered as economic sabotage and shall
be punished in the maximum penalty
provided for under the law.
determine the fair market value af real
properties located in each zone or area,
subject to automatic adjustment once
every three (3) years through rules and
regulations issued by the Secretary of
Finance based on the current Philippine
valuation standards: Provided, That no
adjustment in zonal valuation shall be valid
unless published in a newspaper of general
circulation in the province, city or
municipality concerned, or in the absence
thereof, shall be posted in the provincial
capitol, city or municipal hall and in two (2)
other conspicuous public places
therein: Provided, further, That the basis of
any valuation, including the records of
consultations done, shall be public records
open to the inquiry of any taxpayer. For
purposes of computing any internal
revenue tax, the value of the property shall
be, whichever is the higher of:
“(1) the fair market value as determined by
the Commissioner; or
“(2) the fair market value as shown in the
schedule of values of the Provincial and City
Assessors.”

p. Discuss the new rules on the authority

of the Commissioner of Internal Revenue to
prescribe zonal values, based on the
amendments introduced by the TRAIN Law.

SUGGESTED ANSWER:

The Commissioner is hereby -authorized to

divide the Philippines into different zones or
areas and shall, upon mandatory
consultation with competent appraisers
both from the private and public sectors,
and with prior notice to affected taxpayers,

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