IX. Karlito, a Filipino businessman, is engaged in the business of metal fabrication and repair of LPG cylinder tanks. He conducts business under the name and style of "Karlito's Enterprises," a single proprietorship. Started only five (5) years ago, the business has grown so enormously that Karlito decided to incorporate it by transferring all the assets of the business, particularly the inventory of goods on hand, machineries and equipment, supplies, parts, raw materials, office furniture and furnishings, delivery trucks and other vehicles, buildings, and tools to the new corporation, Karlito's Enterprises, Inc., in exchange for 100% of the capital stock of the new corporation, the stock subscription to which shall be deemed fully paid in the form of the assets transferred to the corporation by Karlito. As a result, Karlito's Enterprises, the sole proprietorship, ceased to do business and applied for cancellation of its BIR Certificate of Registration. The BIR, however, assessed Karlito VAT on account of the cessation of business based on the current market price of the assets transferred to Karlito's Enterprises, Inc.