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B
e s Dean, Saint Louis University School of Law, Baguio City

l
Head of the Department of Commercial Laws and Taxation (SLU)

b
Bar Reviewer in Commercial Laws and Taxation, Albano Bar Review Center &

o
ChanRobles Internet Bar Review

1. RThe University of the West (UW) is a non-stock, non-profit educational

n theDuring
afollows:
institution. the year, it plans torconstruct a building which will be used as
2 to 4 floors will bea
B
Ch while
nd th classrooms, the 5 floor will be office spaces,
th

s for school supplies. UW plans to charge each

the first floor will be divided into five (5) spaces which will leased to canteen
e
l
concessionaires and bookstores/shops

b
tenant monthly lease rentals of Php50,000. UW shall use all collections solely for

o(b) real property tax; (c) income tax on the rentals; and (d)
educational purposes. UW inquires from you if it will be liable for the following: (a)
R
building permit fees;
n
value-added tax on leasing. Discuss.
a a r
Suggested h Answer: B
C e sbe as follows:
l
The implications of the given facts upon UW shall
b
(a) As to building permit feesUWo
R under Section (4)(3), Article XIV of the 1987
shall be liable. The tax exemption granted to non-

Constitution does not apply in n r and duties all

stock, non-profit educational institutions
a this case.non-profit a
The said exemption frees from taxes
B
h
revenues and assets of non-stock, educational institutions which are used
s the project and the
tax but a regulatory C
actually, directly and exclusively for educational purposes. The present imposition is not a
e
l The exaction is levied
fee, as it is paid to defray the cost of inspecting

o b
plans to ensure that they are conformable with safety standards.
under the police power of the State. UW, therefore, cannot claim exemption from such
imposition. (See: Angeles University Foundation v.R City of Angeles, G.R. No. 189999, 27 June
2012)
a n a r
h B 1987
(b) As to real property taxUW shall
Constitution provides that all lands, s
Cbuildings, and improvements, actually,e directly and
be liable. Section 28(3), Article VI of the

exclusively used for religious, charitable or educational purposes shall l

b be exempt from

oproperty is used for

taxation. Thus, for the tax exemption to apply, the property should be exclusively, or put in
another way, solely, used for exempt purposes. Here, a portion of the
R
forth by the Constitution should be subject to real property a ntax. However, with regard to
commercial purposes. Hence, the portion that does not comply with the requirement set
a r
h
the portion actually, directly and exclusively used for educational purposes, no real B
property tax should be imposed. C es
(Note: **This may no longer be part of the answer. ** Even if the income from the property b l
is used for educational purposes, still, the real property tax exemption will not
because what is meant by actual, direct and exclusive use of the property forR
o apply

anitself to the
charitable
purposes is the direct and immediate and actual application of the property

C h
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purposes for which the charitable institution is organized. It is not the use of the income
B
from the real property that is determinative of whether the property is used for tax-exempt
purposes.)
e s
b l
(c) As to income tax on the rentalsUW shall not be liable. Section (4)(3), Article XIV of

R o
the 1987 Constitution provides that all revenues and assets of non-stock, non-profit

an r
educational institutions which are used actually, directly and exclusively for educational
a
purposes shall be free from taxes and duties. It is the use, and not the source, of the income
B
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which is determinative of its exemption. The rentals collected by UW are used actually,
s
directly and exclusively for educational purposes. Thus, the said rentals should be free
e
from income tax.
b l
R o
(Note: **This may no longer be part of the answer. ** Notwithstanding the provisions of
Section 30 of the NIRC which apparently imposes income tax on income by tax-exempt

an a r
corporations sourced from their activities conducted for profit or from the use of their

B
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properties irrespective of the disposition of such income, still, UW should not be liable

e s
because as a non-stock, non-profit educational institution, its exemption is not simply
statutory but constitutional. An exemption provided by the Constitution cannot be

b l
modified, altered, increased or decreased by statutory provisions.)

o
R of all revenues and assets of non-stock, non-profit
(d) As to value-added tax on leasingUW should not be liable. The Constitution provides

educational institution whicha n

an omnibus exemption from taxation
are actually, directly and exclusively a r for educational
used
purposes. Value-added h tax is still a tax on the revenue; hence, B it is covered by the
constitutional exemption. s UWpurposes.
C This is specially true in this case esince was able to comply
l
with the requirement that the revenue be used solely for educational
b
(Note: This answer might be contrary to rulings o
R that the provisions of the Constitution
issued by the BIR, but between the

n r
Constitution and the rulings of the BIR, it is obvious
should prevail.)
a a
Bto the
2. Congress passed a law amendingh
C issued the implementing revenue s
certain provisions of the NIRC. Pursuant
e regulation
said law, the Secretary of Finance
thereof. Mike, a taxpayer aggrieved by the amendment and its implementing
b l rules,

Quezon City, seeking to prohibit and/or enjoin the enforcement R oof the said law and
filed a petition for prohibition and/or injunction before the Regional Trial Court of

its implementing rules. In his Petition, Mike advanced then argument that the said law r
a a
hdismiss the case due to lack of B
and its implementing rules are violative of certain provisions of the Constitution.

jurisdiction on the ground that the case shouldC have been filed before the Court of s
The Solicitor General, on the other hand, moved to

Tax Appeals. If you were the judge who will resolve the motion, would you grant it? le
b
Suggested Answer:
Ro
No, I will not grant the motion. While the Court of Tax Appeals (CTA) has the
a njurisdiction
h
to resolve tax disputes in general, where what is assailed is the validity or constitutionality
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B
of a law, or a rule or regulation issued by the administrative agency in the performance of
s
its quasi-legislative function, the regular courts and the not the CTA have jurisdiction to
e
b l
pass upon the same. ( British American Tobacco v. Camacho, et al. , G.R. No. 163583 dated
August 20, 2008).

R o
3. LL is a Filipino employed by MM Corporation, a domestic corporation. MM
n rduring the latters startup phase, to help the
Corporation has a subsidiary in Indonesia, known as SS Corporation. MM
aCorporation a
B For the year 2012, LL stayed in Indonesia
sent LL to SS Corporation
h
es theheamount
subsidiary during its takeoff operations.
C for a period of 8 months. Thereafter,
Corporation, LL regularlylreceived
returned to MM Corporation. While in SS

b amount equivalent to his salary in SS Corporation;

equivalent to his salaries in MM

R
but both payments were o
Corporation, and an additional
made by MM Corporation. Are the said amounts subject to
income tax?
a n a r
h
Suggested Answer: B
C
The salaries received by LL are not subject toe
s
b
non-resident citizen because he is a Filipino l whose work required him to be physically
Philippine income tax. LL is considered as a

present abroad most of the time during

R
resident citizen, he is taxable only
o
on
the taxable year (Sec. 22E, NIRC). As such non-
income derived from Philippine sources (Sec. 23,
NIRC). The salaries of LL fromn rwithout because
these are compensation fora a
being employed abroad are incomes from

h for service rendered is from B

services rendered outside the Philippines (Sec. 42, NIRC). In

C
determining whether compensation
s
e were
within our without, the

l
only question to address is where was the service rendered. Here, the service was rendered

b
in Indonesia. Thus, regardless of the fact that the payments made by a domestic

Ro
corporation, this will not, in itself result to the income being sourced from within the
Philippines.

a nY due to the latters negligence in driving

a r
B
4. In a suit for damages filed by X against
his motor vehicle, the court awarded
representing the amount spentC
h the following in favor of X: Php100,000
s
Php200,000 for moral and exemplary damages; Php150,000 representing l e three
by X for his hospitalization and medication;

injuries; Php30,000 lost profits, as X was not able to use his caro
months unearned salary as X was not able to report to his employment b due to his

R which he was leasing

anXs taxable income? r

to others; and Php600,000 representing the current replacement cost of the Xs car,
originally valued at Php500,000. Are these receipts part of
B a
Suggested Answer:
C h s
l e
The amount representing expenses for hospitalization and medication are not taxable
income because they are mere reimbursements of actual damages sustained byo
b
X. The
payments of moral and exemplary damages, as well as the three months unearned
are likewise excluded from taxation as they are considered as compensationn
R salary,
a
for a personal

h
injury, which, under Section 32(B)(4) of the NIRC, is non-taxable.

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The lost profits are taxable, since there is a gain/income on the part of X that is not
B
considered as part of compensation from personal injuries or sickness. Since the said

e s
payment is arising from profits, the same should be income taxable.

b l
The Php100,000 representing the difference between the current replacement cost of the

R o
car (Php600,000) and its original value (Php500,000) is taxable. In determining the gain or

an r
loss or for tax purposes, comparison must be had between the amount received as against
a
the cost (or adjusted basis). Here, X received Php600,000 for a car costing Php500,000. The
B
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difference, therefore, is a gain that is subject to income tax.

e s
b l
5. B Corporation had excessive quarterly corporate income tax payments for the
year 2011 in the amount of Php50M. For the year 2012, B Corporation had income

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tax liability of Php30M, for which the corporation did not pay any income tax
anymore, as it credited the amount from its 2011 overpayment. Since B Corporation

an a r
still has a remaining overpayment of Php20M, it filed in 2013 a claim for refund of

B
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the said overpayment. Were the actions taken by B Corporation proper?

Suggested Answer:
e s
b l
R o
The action of B Corporation in crediting the excessive quarterly payments for the year
2011 against the income tax liability for 2012 is proper, as this is expressly allowed by

an r
Section 76 of the NIRC. When a corporation has excessive quarterly payments, it may either
a
file a claim for refund or credit the overpayment against the income tax liabilities of the
B
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corporation of the succeeding quarters of the next taxable years. However, the availment of

e s
this crediting scheme is irrevocable, and, as a consequence, there will be no more right to

bl
file a claim for refund which will be entertained. Consequently, the action taken by B
Corporation in filing a claim for refund of Php20M is not proper. The recourse of B

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Corporation is to continue crediting the said amount against its income tax liabilities of the

an r
succeeding quarters until the same is exhausted.

a
B ago.
California, USA, which he bought h
6. ZZ, a Filipino residing in Manila, owns a residential condominium unit in
s
Cuse the said condominium unit, ZZ esold the same
for an amount of Php10M five years
Anticipating that he will no longer
for a consideration of Php20M. Discuss the income tax consequence
b l of the
transaction on ZZ.
R o
Suggested Answer:
a n a r
ZZ should declare as part of his gross income a capital h B
C
gain of Php5M. As a resident citizen,
s
is e
ZZ shall be liable for income tax on every income sourced from within or without the
Philippines. In this case, ZZ sold a real property classified as capital asset, but its locationl
outside the country. Hence, the transaction is not subject to the 6% capital gainsb

R
Consequently, any gain on the part of ZZ should be reported as part of the gross income. o tax.

a n
ZZs actual income is Php10M, derived by deducting the cost of Php10M from the selling
h
price of Php20M. However, since ZZ is an individual and the asset is a capital asset, the
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B50%apply.
holding period rule shall And considering that ZZ has held the asset for a long-term

e s
holding period, only of the gain, or the amount of Php5M, shall be recognized for
l
income tax purposes.
b
Ro spouses in their new life as married individuals, H and W decided to
7. Spouses H and W have a child named Q. Q will get married to R. To help the

n to Q and R an amount of Php1M.

would-be
adonate a rHow shall H and W be liable for donors tax?
h B
C Suggested Answer:
e s
When spouses make joint ldonations, their respective donors tax liabilities shall be
o b
separate determined. Thus, the amount they have donated shall be split. H and W shall be
R
each be liable for donors tax, using the schedular rates under Section 99 of the NIRC, based

a n donation made in favor of Q equivalent

each of them due to a gift on accounta
on their respective rto Php250,000, less Php10,000
h the relationship of the parties is ofB
deduction for of marriage. The schedular rate is

C made in favor of R, as the latter iseans in-law (and, therefore, for donors tax
applied because relatives. However, with respect to the
donation

rate based on their respective donations b

purposes considered as a stranger), H and W lshall be liable for donors tax using a 30% tax
R o of Php250,000, without any deduction allowed.

nbid in the amount of Php6M, whichawas r equivalent to

8. The residential house and lot of PP was extrajudicially foreclosed by Metrobank.
The bank submitted a winning a
the outstanding obligationh B
of PP. A perusal of the property, however, shows that the
lot is a 1,000 squareC meter lot with a zonal value of Php3,000
e shaspera tax
square meter and a
tax declaration fair market value of Php2,000. The house
market value of Php3.5M. What is the tax base of the b l declaration fair
capital gains tax, if any, and
when should the payment be made?
R o
Suggested Answer:
an a
B as
r
h s
Cis imposed on the selling price or fairemarket value
The basis of the 6% capital gains tax is Php6.5M. For sales of real property classified
capital asset, the 6% capital gains tax
whichever is higher. In this case, the selling price is the amount of the bid
b l of Metrobank,
BIR, or the amount appearing in the tax declaration of the property. R oThe lots zonal value is
which is Php6M. The fair market value is the higher amount between the zonal value of the

higher, yielding a total of Php3M. This amount, added to the n fair market value of the house r
which is Php3.5M, will result to Php6.5Man amount higher a than the selling price. B a
C h s
The capital gains tax should be paid within a period of 30 days from the lapse of the
l e
b
redemption period, if no redemption is effected. It is because it is only after the lapse of the

Ro
redemption period that transfer of ownership over the property shall be considered as
effective.

9. Xs claim for refund was denied by the Commissioner of Internal n

a Revenue on 1
h
September 2014. He intended to file his Petition before the Court of Tax Appeals on 1
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B
October 2014, but the said date was declared as a non-working holiday. X thus filed
his Petition on 2 s
e
October 2014, which is the next working day.

a. Was thel
o b Petition before the Court of Tax Appeals timely filed?

b. RAssume that 1 October 2014 is incidentally also the last day of the two-year
n forCode,
aRevenue
period
would your answer bea
r to Section 229 of the National Internal
X to file a case of refund pursuant

h B the same?

C Suggested Answer: e s
(a) Yes, the petition wasb
l
R o Sunday or Holiday, the same may be filed during the next
timely filed. It is well-settled that if the last day to file a Petition
for Review falls on a Saturday,
working day.
a n a r
(b) No, my
periodC
hanswer will be different. If 1 Octobers 2014 B mustis also the last day of the two-year

e
to file a case for refund, the filing of the Petition be done the working day prior
l Thus, if the taxpayer files the Petition after 1
to the holiday. This is because the two-year period is a prescriptive period, and not a mere
b
reglementary period, to file a claim for refund.

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October 2014, the same is already time-barred.

10. A Letter of Authority (LOA) n was issued to a team of BIR examiners

afor a r to audit the
taxpayer Sony Philippines
h the period 1997 and unverified
B prior years. It
C April 1, 1997 to March 31, 1998. s Deficiency taxes were
appears, however, that Sony was using the fiscal year, in that it reported its tax
e
liabilities for the period
discovered by the team of examiners covering the period
b l 01 January 1998 to 31
argued that the contested period is part of the R o
March 1998. This was contested by Sony as the same was not covered by the LOA. BIR
taxable year of Sony. Did the BIR act
properly in assessing Sony for taxes covering
a n the period 01 January 1998 to r
a
31
March 1998?
B
Suggested Answer: Ch e s
No. The function of a LOA is to notify the taxpayer of the subject of the b
l
fix the scope of the BIR examiners authority. The BIR team of examiners
R o went beyond the
examination, and to

January to March 1998 or using the fiscal year which endedn r

scope of its authority because the deficiency tax assessment was based on records from
a in March 31, 1998. The CIR
B a
the investigation to include the year 1998, it shouldC
h
knew which period should be covered by the investigation. If the CIR wanted to or intended
have done so by amending the LOA to s
include the said period, or by issuing another LOA. A LOA should cover a taxable period not e
exceeding one taxable year. b l
R o
andenying
11. The BIR, after conducting an audit investigation, issued a preliminary
assessment notice against T Corporation. T Corporation filed a letter-protest against
the preliminary assessment. The BIR, thereafter, wrote T Corporation

C h
letter-protest and stated that if the taxpayer disagrees with the findings of the BIR, it
the

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may exercise its right of appealing to the Court of Tax Appeals. Thus, T Corporation,
within thirty days from the receipt of the letter-denial, filed a Petition for Review
B
with the Court of Tax Appeals. The BIR moved to dismiss the case on the ground that

e s
there was yet no protest of the assessment itself, as what the BIR denied was only the
l
letter-protest regarding the preliminary assessment. Decide.
b
o
Suggested Answer:
RMotion to Dismiss must be denied. The taxpayer cannot be blamed for not filing a
n The language used and the tenorarof the letter of the BIR shows that it is the final
aprotest.
The

h decision of the CIR on the matter. ItB

C unequivocal language whetherehissaction is the obligation of the CIR to indicate in a clear and

l constitutes his final determination of the issue so

b that the denial is the final decision of the BIR, and if the
that the taxpayer will know whether or not to appeal the action. In this case, the statement

R o
of the BIR clearly indicates
taxpayer disagrees, it may appeal the final decision from receipt thereof. Thus, the CIR is
n r of administrative remedies.
estopped in claiming that he did not intend the letter to be a final decision. This case,
therefore, isa a
B 2010).
excepted from the requirement of exhaustion
h
(Allied Banking
C s
Corp. v. CIR, G.R. No. 175097, 05 February

l e
b located at Ortigas, it decided to sell the
12. X Leasing Corporation is engaged in leasing its buildings and other properties.

building. Is the sale subject to VAT? o

After several years of leasing its building

R
Suggested Answer:
an B a r
h
No. The sale, not being in the regular course of business, is not s
C e of business. In this case, the
subject to VAT. For sales to
be subject to VAT, the same must be done in the regular course
b
business of X is leasing and not selling. (Cf. CIR v. Magsaysay l Lines, Inc. , GR No. 146984, 28
July 2006).
R o
(Note: The answer above is different fromn r
amending Revenue Regulations 16-2005. a a
Section 14, Revenue Regulations 4-2007

h Bcourse
In the said regulations, the sale of a property

Cin business, is also subject to VAT. I submit,

intended for lease, or the sale of a property
s
even if not held for sale in the ordinary
e
that the said provision in the regulation is contrary to the provisions of thel
of business, but such property is used however,

b NIRC)
o in real estate
(Second Note: It would be different if X Corporation were engaged
R
businesses of the corporation. Thus, the sale will be subjecta
n
development because in such a case, the sale will be considered as one of the functions or
to VAT. ) a r
h B
13. X Corporation is engaged in selling goods. C Y Corporation, a real estate
es
developer, exchanged its real properties for shares of stocks of X Corporation,
resulting in Y Corporation gaining control of X Corporation. Discuss the incomebtax
l
and VAT consequences of the event.
Ro
Suggested Answer:
an
C h
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B
e s
As to income tax: there shall be no income tax consequence of the transaction as it qualifies

b l
as an income tax free exchange under Section 40(c) of the NIRC. The law states that no gain
or loss shall be recognized if property is transferred to a corporation by a person in

R o
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

an a r
control of said corporation. The factual situation in the problem falls squarely within the

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said provision of law.

e s
As to VAT consequence, the inventory of goods of X Corporation is NOT subject to VAT, but

b l
the exchange of real properties of Y Corporation for the shares of X Corporation shall be

R o
subject to VAT. The goods of X Corporation will not be considered sold, as they are still
owned by X Corporation, even if the control over X Corporation is now vested upon Y

an r
Corporation. However, the transfer of the real properties of Y Corporation to the
a
shareholders of X Corporation (in order for Y Corporation to get the said shares and
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eventually take control of X Corporation) is subject to VAT, as there was effective transfer
of ownership of the said real properties.
e s
b l
14. K died, survived by his wife and three children. The estate tax was paid by the

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heirs and the estate settled and distributed among them. Each of the heirs received

an r
Php4M. Later, the BIR found out that the estate tax was not correctly paid, thus, the

a
BIR issued deficiency estate taxes plus interest, surcharges and penalties totaling
B
Ch
Php5M. Since the three children were already out of the country, the BIR was
s
collecting the Php5M from K. Was the action taken by the BIR correct?
e
Suggested Answer:
bl
Ro
The BIR is correct in collecting the deficiency estate tax from K alone. The rule is that when

an ar
it comes to estate tax liabilities, all or some or any of the heirs may be held liable. However,

B
Ch
the said heir(s) may be liable only up to the extent of his distributive share in the estate. It

e s
is here where the BIR committed an error. The extent of the liability of K should not exceed
her distributive share in the estate, which is Php4M. She cannot be held liable for the entire
Php5M.
bl
R o
(Note: In the event K is made liable for the estate tax liability, her remedy is to run after

an r
her co-heirs for their respective share in such liability.)

B a
C h
15. After an audit investigation, Internal Revenue Authorities issued a notice of
s
informal conference to a taxpayer. The taxpayer questioned the basis for the
proposed assessment, but this notwithstanding, the BIR still proceeded to issue a
l e
pre-assessment notice, stating therein the same factual and legal basis for the an b
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impending assessment. The taxpayer again protested. Subsequently, a formal

an
assessment was issued against the taxpayer indicating therein the supposed tax,
surcharge, interest and compromise penalty due thereon. This time, however, the

C h
taxpayer was not provided with the written basis of the law and facts on which the
assessment is based. Revenue authorities justified its action by stating that the basis

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of the assessment was advised upon the taxpayer during the informal conference
B
and the pre-assessment stage. Is the assessment valid?

e s
l
Suggested Answer:
b
R o
The assessment is not valid. Section 228 of the NIRC clearly requires that an assessment
should contain the facts and the law upon which it is based; otherwise, it is void. Here, the

an r
assessment did not contain the factual and legal bases for the assessment. Applying,

Ba
therefore, the provisions of law, the assessment is void. The mere fact that the taxpayer

Ch s
was supposedly notified during the informal conference and pre-assessment stages of the
e
basis for the assessment does not cure the defect. The mandate of the law is clear. And in
l
b
this case, such was not complied with.

R o
16. The Municipality of Sta. Rosa enacted an ordinance which requires that all

an r
stores, restaurants, and other establishments selling liquor should pay a fixed
a
annual fee of Php10,000,00. Subsequently, the Sangguniang Bayan proposed an
B
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ordinance imposing an additional tax on all business engaged in selling liquor

e s
equivalent to 5% of the amount of gross sales of the store during the past year. The

b l
municipal mayor refused to sign the ordinance on the ground that it would
constitute double taxation, and that the ordinance is violative of Section 133 of the

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Local Government Code. The board, on the other hand, justified that there is no
double taxation as the subjects of the taxes are different, and that there is no

an a r
violation of Section 133 because the imposition is based not on current sales but on

B
C h
previous years gross sales. Is the refusal of the Mayor justified? Reason.
s
e
bl
Suggested Answer:

Ro
The refusal of the Mayor is justified, not on the ground of double taxation but based on
violation of Section 133 of the Local Government Code.

a nnullity of a tax law. What is violative aof rthe

Bbecome
Double taxation per se does not result in the
Constitution is direct duplicate taxation,
confiscatory. In this case, there is noC
hfor in that instance, the tax impositions
s
e
direct duplicate taxation because the impositions
of different nature and character. The fixed annual fee is in the naturelof a license fee
are

b
Ro
imposed through the exercise of police power while the 5% tax on purchase or
consumption is a local tax imposed through the exercise of taxing powers.

Notwithstanding the foregoing, the proposed ordinance is still

a ninvalid. Section 133 of the a r
h
Local Government Code provides, among others, that it is prohibited for local government
is a percentage tax, for the tax s
B
C
liability is directly based in proportion (or a particular percentage) to the tax base thereof.e
units to impose percentage taxes. The present imposition

b
The mere fact that it is based on the preceding calendar years sales will not change the fact l
that the imposition is still in the nature of a percentage tax.
R o
(Note: The above-stated answer is not conformable with the suggested answer n
a answer in
in the 2004

h
Bar Examination in Taxation. It must be pointed out, however, that the suggested

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B
the 2004 Bar Examination in Taxation did not consider the issue of violation of Section 133
s
of the Local Government Code and simply focused on the issue of double taxation.)
e
b l of Benguet enacted an Ordinance levying amusement taxes
17. The Province

Ro valid?
equivalent to 10% of the gross admission fees collected by resort operators. Is the
Ordinance
n Answer:
aSuggested a r
h B
No, it is not valid. The impositionsis in the nature of a percentage tax, which, under Section
C 133
l eCode, cannot be levied by local governments (including
bcannot be justified under the guise of an amusement tax under
of the Local Government

o
Provinces). The imposition

amusement tax onR

Section 140 of the Local Government Code. The said provision allows Provinces to levy an

a
boxing stadia andn other places of amusement. Resortsrare not classified in the same
the gross admission fees of theaters, cinemas, concert halls, circuses,
athat the subject of the tax is a place
h B
category of those subject to amusement tax, as it is clear
C
there may occasionally be visual engagement,e
where one seeks to enjoy by watching or viewing s a show or performance. In a resort, while

Corporation v. Province of Benguet, G.R. No.b l such is not the main purpose. (Pelizloy Realty
183137, 10 April 2013).

18. X Corporation is a non-stock, R onon-profit corporation which owns a hospital. X

exchange for a minimal a
n arts center which is used to house r its doctors in
fee. For real property tax purposes,athe hospital was
Corporation constructed a medical

classified as belongingh to special class with an assessmentB

C s level of 10%. On the
e assessor as commercial
with a higher assessment level. Was the classificationl
other hand, the medical arts center was classified by the

commercial proper?
o b of the medical arts center as

R
Suggested Answer:
a n a r
h been classified also as special. The factB
s
No. The medical arts center should have that the
medical arts center is exclusively for C the doctors of the hospital clearly
e
removes it from
being classified as commercial. The operation of the medical arts center
b lisis incidental
incidental to

the main function of the hospital should be classified in the sameo

the operation of the hospital; thus, it is but proper that the activity which to

hospital. (City Assessor of Cebu v. Association of Benevola De Cebu,R

manner as that of the

a n 8 June 2007).
a r
h
19. The Collector of Customs commenced seizure proceedings over the goods
of the goods subject of the s
B
C
seizure proceedings, filed a case before the Regional Trial Court (RTC) against the e
imported by J. K, who claims to be the lawful owner

Bureau of Customs for recovery of possession with prayer for the issuance of a writ
b l
of replevin. The trial court issued summons requiring the Collector to o file his
responsive pleading. What is the best action to be taken by the Collector? R

an
h
Suggested Answer:

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B
e s
b l
R o
n Collector should continue with theaseizure
aThe r and forfeiture proceedings. As to the case
h B move for the dismissal of the case, as the RTC has
s sitting in seizure and forfeiture proceedings, has
C no jurisdiction. The Collector ofeCustoms,
filed with the RTC, the Collector should

seizure and forfeiture ofb

l to hear and determine all questions touching on the
exclusive and primary jurisdiction

R
validity or regularity ofothe seizure and forfeiture proceedings conducted by the Bureau of
dutiable goods. The RTC has no jurisdiction to pass upon the

a n conducted by the Collector of Customs

forfeiture proceedings a r which is reviewable by the
Customs. Neither has the RTC review powers over actions concerning seizure and

h
Commissioner of Customs whose decision, in return, B is reviewable by the Court of Tax
C
Appeals.
e s
b l be issued if its effect is to recover possession
It is well-settled that a writ of replevin cannot

and forfeiture proceedings, are R

of goods which are already in custodia o legis. Here, the goods, being the subject of seizure

Collector. Hence, the goods aren r

within the ambit of the quasi-judicial powers of the

a already considered as in custodia legis.

B a
20. X imported certain h
C X complied with the requisites s
articles, which he believes to have been improperly assessed
by the Bureau of Customs.
l e for a valid protest. His

o
acting on such protest. Can X already file an appeal before b the Court of Tax Appeals?
protest has now been pending for almost two years, without the Collector of Customs

R
Suggested Answer:
a n a r
h B X
Even if the Collector did not act on Xs protest
to file directly an appeal to the Court s
Cof Tax Appeals. The CTAs jurisdictioneover customs
for almost two years, this will not authorize

protest matters is when there is an appeal from the decision of the l

b Commissioner of

o as no provision of
Customs. In the present case, there is yet no decision to appeal to the CTA. The principle of

R
inaction as an implied denial is not applicable to Customs protest cases,

an r
the Tariff and Customs Code authorizes the application of such.

B a
C h s
l e
b
Ro
an
C h
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