Suggested Answers To Tax Mock Bar

TAXATION LAW MOCK BAR 2018
I.
The constitutionality of the tax law should be upheld.
The Supreme Court has held that the consolidation of tax bills originating from different
house of Congress conducted by a Bicameral Committee satisfies the constitutional requirement
that a bill should pass through and be approved by both house of Congress.
Here, the tax bills of both the House of Representatives and the Senate have been consoli-
dated by the Bicameral Committee and thereafter approved by the President.
Hence, the constitutionality of the tax law should be upheld.
II.
Mr. Mariano is not exempt from payment of taxes for the rental income he received from the
congregation.
Under the NIRC, income actually, directly or exclusively used for religious and charitable
purposes is exempt from payment of income tax.
Here, the rental income received by Mr. Mariano is not actually, directly or exclusively used
for religious and charitable purposes, but it is income received and used for Mr. Mariano’s own
purposes.
Hence, Mr. Mariano is not exempt from payment of taxes for rental income he received.
III.
Yes, the gifts are subject to tax.
The Supreme Court has held that income received from illegal sources are subject to tax.
Here, the income received were from jueteng proceeds, an illegal source.
Hence, the gifts are subject to tax.
IV.
(a)
Yes, Wilma is justified in filing the motion or petition before the CTA.
In a case involving similar facts, the Supreme Court has held that a suit for injuction may be
entertained by the court if the purpose is to question the validity of the tax imposed and if tax due
has been consignated with the court.
Here, Wilma is questioning the validity of the tax imposed and has consignated the assessed
amount of tax with the court.
Hence, Wilma is justified in filing the motion or petition before the CTA.
(b)
Yes, compromise of tax liabilities is still possible on the ground that the taxpayer has acted
in good faith.
In a case involving similar facts, the Supreme Court has held that the act of depositing as-
sessed tax with the court is an act of good faith on the part of the taxpayer entitling the latter to a
compromise of tax liabilities.
Hence, compromise of tax liabilities is still possible in this case.
V.
The taxpayer’s motion to dismiss should be granted. The CTA has jurisdiction in this case.
In a case involving similar facts, the Supreme Court has held that the remedy for the denial
by the RTC of an injunction suit in a local tax case is to appeal with the Court of Tax Appeals Divi-
sion.
Hence, taxpayer’s motion to dismiss should be granted.
VI.
(a) Dumping duties are those duties imposed on imported goods which were sold at a very
low price compared to goods with the same kind or quality produced by local manufacturers.
(b) Countervailing are those duties imposed for importation of goods which are the product
of excess production in other countries.
(c) Marking duties are those duties imposed for the imported goods which were not properly
marked with its place of origin and other labelling requirements.
(d) Discriminatory duties are those duties imposed to products of a foreign country that puts
Philippine products at a disadvantage.
VII.
Yes, Mr. Francisco derived income from the cancellation or condonation of his indebted-
ness.
Under the NIRC, money or property that flows into the wealth of the taxpayer is considered
income for purposes of taxation.
Here, the P50,000 loan that was condoned was money that flows in the wealth of the tax-
payer, Mr. Francisco.
Hence, he derived income from such condonation of indebtedness.
VIII.
All the properties form part of the gross estate of X.
Under the NIRC, all properties of a resident or non-resident citizen, whether within or out-
side the Philippines, shall form part of his gross estate.
Here, there is no showing that X is not a citizen of the Philippines.
Hence, all of his properties shall form part of his gross estate.
IX.
(a)
No, the P250,000 life insurance proceeds are not subject to income tax.
Under the NIRC, life insurance proceeds are not subject to income tax.
(b)
No, the P30,000 13th month salary is not subject to income tax.
Under the NIRC, 13th month salary is not subject to income tax.
(c)
Yes, P5,000 worth of stock dividends from his PLDT shares are subject to income tax.
Under the NIRC, passive income from dividends received from a domestic corporation is
subject to final withholding tax.
(d)
No, free lodging in the warehouse premises is not subject to income tax.
In a case involving similar facts, the Supreme Court has held that benefits granted to em-
ployees that inures to the benefit of the employer shall not be taxable income on the part of the em-
ployee.
Here, the employer benefits from the free lodging of Jose as this allows him to supervise
security personnel at night.
Hence, free lodging in the warehouse premises is not subject to income tax.
(e)
The free meal allowance is exempted from income tax only up to P1500. The remaining
amount is subject to income tax.
Under the NIRC, meal allowance of P1500 per month is not subject to income tax.
(f)
The uniform allowance is exempt from income tax only up to P
X.
XI.
XII.
XIII.
XIV.
XV.
XVI.
(a)
Yes, Makati City may require Mr. Fermin to pay his professional tax as a lawyer.
In a case involving similar facts, the Supreme Court has held that a professional may be
taxed by the local government unit where his principal office is located. Furthermore, the taxpayer
may be imposed taxes for all kinds of profession he practices.
Hence, Makati City may require Mr. Fermin to pay his professional tax as a lawyer.
(b)
No, Quezon City may not require Mr. Fermin to pay his professional tax as CPA and lawyer.
Under Tax laws, a professional may be taxed for his practice of profession by the local gov-
ernment unit where his principal office is located.
Here, Mr. Fermin’s principal office is in Makati City, not in Quezon City.
Hence, Quezon City may not require him to pay professional tax.
XVII.
Under Customs law, technical smuggling is a type of illegal importation where goods are
declared but there are misrepresentations as to their quantity, kind or character or there is an under-
valuation of their price.
On the other hand, outright smuggling is actual or physical illegal importation where the
goods enter Philippine territory without the necessary documents to validate its entry. Thus, goods
are not at all declared.

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TAXATION LAW MOCK BAR 2018

The constitutionality of the tax law should be upheld.

Hence, the constitutionality of the tax law should be upheld.

Yes, the gifts are subject to tax.

Hence, the gifts are subject to tax.

Hence, compromise of tax liabilities is still possible in this case.

Hence, taxpayer’s motion to dismiss should be granted.

Hence, he derived income from such condonation of indebtedness.

All the properties form part of the gross estate of X.

Here, there is no showing that X is not a citizen of the Philippines.

The uniform allowance is exempt from income tax only up to P

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