8/16/2015

BarQuestions2006

TodayisSunday,August16,2015

BAREXAMINATION2006
TAXATIONLAW
10September2006

2P.M.5P.M.
INSTRUCTIONS

This questionnaire consists of fourteen (14) numbers contained in eight (8) pages. Read each question very
carefully. Answer legibly,clearly, and concisely. Start each number on a separate page an answer to a sub
question under the same number may be written continuously on the same page and immediately succeeding
pages until completed. Do not repeat the question. A mere "Yes" or "No" answer without any corresponding
discussionwillnotbegivenanycredit.
HANDINYOURNOTEBOOKWITHTHISQUESTIONNAIRE
GOODLUCK!!!

SignedANGELINAS.GUTIERREZ
Chairperson
20006BarExaminationCommittee
PLEASECHECKTHENUMBEROFPAGESINTHISSET
WARNING:NOTFORSALEORUNAUTHORIZEDUSE
TAXATIONLAW
I
1. Enumeratethe3stagesoraspectsoftaxation.Explaineach.5%
2. Distinguish"directtaxes"from"Indirecttaxes".Giveexamples.5%
II
Whatistaxpyramiding?Whatisitsbasisinlaw?5%
III
Whatpropertiesareexemptfromtherealpropertytax?5%
IV
RoyalMiningisaVATregistereddomesticminingentity.OneofitsproductsissilverbeingsoldtotheBangko
SentralngPilipinas.ItfiledaclaimwiththeBIRfortaxrefundonthegroundthatunderSection106oftheTax
Code,salesofpreciousmetalstotheBangkoSentralareconsideredexportsalessubjecttozeroratedVAT.
IsRoyalMining'sclaimmeritorious?Explain.5%
V
Vanishingdeductionisavailedofbytaxpayersto:
a. correcthisaccountingrecordstoreflecttheactualdeductionsmad
b. reducehisgrossincome
c. reducehisoutputvalueaddedtaxliability
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d. reducehisgrossestate
Choosethecorrectanswer.Explain.5%
1. TheConstitutionprovides"charitableinstitutions,churches,parsonagesorconventsappurtenantthereto,
mosques, and non profit cemeteries and all lands, buildings, and improvements actually, directly and
exclusively used for religious, charitable or educational purposes shall be exempt from taxation." This
provision exempts charitable institutions and religious institutions from what kind of taxes? Choose the
bestanswer.Explain.5%
a. fromallkindsoftaxes,i.e.,income,VAT,customsduties,localtaxesandrealpropertytax
b. fromincometaxonly
c. fromvalueaddedtaxonly
d. fromrealpropertytaxonly
e. fromcapitalgainstaxonly
VI
Congressenactsalawgrantinggradeschoolandhighschoolstudentsa10%discountonallschoolprescribed
textbookspurchasedfromanybookstore.Thelawallowsbookstorestoclaiminfullthediscountasataxcredit.
1. Ifinataxableyearabookstorehasnotaxdueonwhichtoapplythetaxcredits,canthebookstoreclaim
fromtheBIRataxrefundinlieuoftaxcredit?Explain.2.5%
2. Can the BIR require the bookstores to deduct the amount of the discount from their gross income?
Explain.2.5%
3. If a bookstore closes its business due to losses without being able to recoup the discount, can it claim
reimbursementofthediscountfromthegovernmentonthegroundthatwithoutsuchreimbursement,the
lawconstitutestakingofprivatepropertyforpublicusewithoutjustcompensation?Explain.5%
VII
Congressenactsalawimposinga5%taxonthegrossreceiptsofcommoncarriers.Thelawdoesnotdefinethe
term"grossreceipts".ExpressTransport,Inc.,abuscompanyplyingtheManilaBaguioroute,hastimedeposits
withABCBank.In2005,ExpressTransportearnedP1Millioninterest,afterdeductingthe20%finalwithholding
taxfromitstimedepositswiththebank.TheBIRwantstocollecta5%grossreceiptstaxontheinterestincome
ofExpressTransportwithoutdeductingthe20%finalwithholdingtax.IstheBIRcorrect?Explain.5%
VIII
On June 1, 2003, Global Bank received a final notice of assessment from the BIR for deficiency documentary
stamptaxintheamountofP5Million.OnJune30,2003,GlobalBankfiledarequestforreconsiderationwiththe
CommissionerofInternalRevenue.TheCommissionerdeniedtherequestforreconsiderationonlyonMay30,
2006,atthesametimeservingonGlobalBankawarrantofdistrainttocollectthedeficiencytax.Ifyouwereits
counsel,whatwillbeyouradvicetothebank?Explain.5%
IX
The Commissioner of Internal Revenue issued an assessment for deficiency income tax for taxable year 2000
lastJuly31,2006intheamountofP10Millioninclusiveofsurchargeandinterests.Ifthedelinquenttaxpayeris
yourclient,whatstepswillyoutake?Whatisyourdefense?10%
X
TheCollectorofCustomsissuedanassessmentforunpaidcustomsdutiesandtaxesontheimportationofyour
client in the amount of P980,000.00. Where will you file your case to protect your client's right? Choose the
correctcourts/agencies,observingtheirproperhierarchy.5%
1. CourtofTaxAppeals
2. CollectorofCustoms
3. CommissionerofCustoms
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4. RegionalTrialCourt
5. MetropolitanTrialCourt
6. CourtofAppeals
7. SupremeCourt
XI
Charlie, a widower, has two sons by his previous marriage. Charlie lives with Jane who is legally married to
Mario.TheyhaveachildnamedJill.Thechildrenareallminorsandnotgainfullyemployed.
1. HowmuchpersonalexemptioncanCharlieclaim?Explain.2.5%
2. HowmuchadditionalexemptioncanCharlieclaim?Explain.2.5%
XII
Mr.AbrahamEugenio,apawnshopoperator,afterhavingbeenrequiredbytheRevenueDistrictOfficertopay
valueaddedtaxpursuanttoaRevenueMemorandumOrder(RMO)oftheCommission.erofInternalRevenue,
filedwiththeRegionalTrialCourtanactionquestioningthevalidityoftheRMO.
Ifyouwerethejudge,willyoudismissthecase?5%
XIII
GerrywasbeingprosecutedbytheBIRforfailuretopayhisincometaxliabilityforCalendarYear1999despite
severaldemandsbytheBIRin2002.TheInformationwasfiledwiththeRTConlylastJune2006.Gerryfileda
motiontoquashtheInformationonthegroundofprescription,theInformationhavingbeer.filedbeyondthe5
yearreglementaryperiod.
Ifyouwerethejudge,willyoudismisstheInformation?Why?5%
XIV
GoldandSilverCorporationgaveextra14thmonthbonustoallitsofficialsandemployeesinthetotalamountof
P75 Million. When it filed its corporate income tax return the following year, the corporation declared a net
operating loss. When the income tax return of the corporation was reviewed by the BIR the following year, it
disallowed as item of deduction the P75 Million bonus the corporation gave its officials and employees on the
groundofunreasonableness.Thecorporationclaimedthatthebonusisanordinaryandnecessaryexpensethat
shouldbeallowed.
IfyouweretheBIRCommissioner,howwillyouresolvetheissue?5%
XV
Lily'sFashion,Inc.isagarmentmanufacturerlocatedandregisteredasaSubicBayFreeportEnterpriseunder
Republic Act No. 7227 and a nonVAT taxpayer. As such, it is exempt from payment of all local and national
internal revenue taxes. During its operations, it purchased various supplies and materials necessary in the
conductofitsmanufacturingbusiness.ThesuppliersofthesegoodsshiftedtoLily'sFashion,Inc.the10%VAT
onthepurchaseditemsamountingtoPS00,000.00.Lily'sFashion,Inc.filedwiththeBIRaclaimforrefundfor
'theinputtaxshiftedtoitbythesuppliers.
IfyouweretheCommissionerofInternalRevenue,willyouallowtherefund?5%
XVI
Quezon City published on January 30, 2006 a list of delinquent real property taxpayers in 2 newspapers of
general circulation and posted this in the main lobby of the City Hall. The notice requires all owners of real
propertiesinthelisttopaytherealpropertytaxduewithin30daysfromthedateofpublication,otherwisethe
propertieslistedshallbesoldatpublicauction.
Joachin is one of those named in the list. He purchased a real property in 1996 but failed to register the
document of sale with the Register of Deeds and secure a new real property tax declaration in his name. He
allegedthattheauctionsaleofhispropertyisvoidforlackofdueprocessconsideringthattheCityTreasurerdid
notsendhimpersonalnotice.Forhispart,theCityTreasurermaintainsthatthepublicationandpostingofnotice
aresufficientcompliancewiththerequirementsofthelaw.
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1. Ifyouwerethejudge,howwillyouresolvethisissue?2.5%
2. AssumingJoachinisaregisteredowner,willyouranswerbethesame?2.5%
NOTHINGFOLLOWS.
TheLawphilProjectArellanoLawFoundation

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