BAR EXAMINATION 2006

TAXATION LAW
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1. Enumerate the 3 stages or aspects of taxation. Explain each. 5%
2. Distinguish "direct taxes" from "Indirect taxes". Gie examples. 5%
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!hat is tax p"ramiding# !hat is its $asis in la%# 5%
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!hat properties are exempt from the real propert" tax# 5%
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'o"al (ining is a &)* -registered domestic mining entit". +ne of its products is siler $eing sold to the Bangko Sentral ng Pilipinas.
It filed a claim %ith the ,I' for tax refund on the ground that under -ection 1./ of the *ax 0ode1 sales of precious metals to the
Bangko Sentral are considered export sales su$2ect to 3ero-rated &)*.
Is 'o"al (ining4s claim meritorious# Explain. 5%
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&anishing deduction is aailed of $" taxpa"ers to5
a. correct his accounting records to reflect the actual deductions mad
$. reduce his gross income
c. reduce his output alue-added tax lia$ilit"
d. reduce his gross estate
0hoose the correct ans%er. Explain. 5%
1. *he 0onstitution proides "charita$le institutions1 churches1 parsonages or conents appurtenant thereto1 mos6ues1 and
non- profit cemeteries and all lands1 $uildings1 and improements actuall"1 directl" and exclusiel" used for religious1
charita$le or educational purposes shall $e exempt from taxation." *his proision exempts charita$le institutions and
religious institutions from %hat 7ind of taxes# 0hoose the $est ans%er. Explain. 5%
a. from all 7inds of taxes1 i.e.1 income1 &)*1 customs duties1 local taxes and real propert" tax
$. from income tax onl"
c. from alue-added tax onl"
d. from real propert" tax onl"
e. from capital gains tax onl"
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0ongress enacts a la% granting grade school and high school students a 1.% discount on all school-prescri$ed text$oo7s purchased
from an" $oo7store. *he la% allo%s $oo7stores to claim in full the discount as a tax credit.
1. If in a taxa$le "ear a $oo7store has no tax due on %hich to appl" the tax credits1 can the $oo7store claim from the ,I' a
tax refund in lieu of tax credit# Explain. 2.5%
2. 0an the ,I' re6uire the $oo7stores to deduct the amount of the discount from their gross income# Explain. 2.5%
3. If a $oo7store closes its $usiness due to losses %ithout $eing a$le to recoup the discount1 can it claim reim$ursement of
the discount from the goernment on the ground that %ithout such reim$ursement1 the la% constitutes ta7ing of priate
propert" for pu$lic use %ithout 2ust compensation# Explain. 5%
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0ongress enacts a la% imposing a 5% tax on the gross receipts of common carriers. *he la% does not define the term "gross
receipts". Express *ransport1 Inc.1 a $us compan" pl"ing the (anila- ,aguio route1 has time deposits %ith ),0 ,an7. In 2..51
Express *ransport earned P1 (illion interest1 after deducting the 2.% final %ithholding tax from its time deposits %ith the $an7. *he
,I' %ants to collect a 5% gross receipts tax on the interest income of Express *ransport %ithout deducting the 2.% final %ithholding
tax. Is the ,I' correct# Explain. 5%
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+n 8une 11 2..31 Glo$al ,an7 receied a final notice of assessment from the ,I' for deficienc" documentar" stamp tax in the
amount of P5 (illion. +n 8une 3.1 2..31 Glo$al ,an7 filed a re6uest for reconsideration %ith the 0ommissioner of Internal 'eenue.
*he 0ommissioner denied the re6uest for reconsideration onl" on (a" 3.1 2../1 at the same time sering on Glo$al ,an7 a %arrant
of distraint to collect the deficienc" tax. If "ou %ere its counsel1 %hat %ill $e "our adice to the $an7# Explain. 5%
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*he 0ommissioner of Internal 'eenue issued an assessment for deficienc" income tax for taxa$le "ear 2... last 8ul" 311 2../ in
the amount of :1. (illion inclusie of surcharge and interests. If the delin6uent taxpa"er is "our client1 %hat steps %ill "ou ta7e#
!hat is "our defense# 1.%
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*he 0ollector of 0ustoms issued an assessment for unpaid customs duties and taxes on the importation of "our client in the amount
of :;<.1....... !here %ill "ou file "our case to protect "our client4s right# 0hoose the correct courts=agencies1 o$sering their
proper hierarch". 5%
1. 0ourt of *ax )ppeals
2. 0ollector of 0ustoms
3. 0ommissioner of 0ustoms
>. 'egional *rial 0ourt
5. (etropolitan *rial 0ourt
/. 0ourt of )ppeals
?. -upreme 0ourt
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0harlie1 a %ido%er1 has t%o sons $" his preious marriage. 0harlie lies %ith 8ane %ho is legall" married to (ario. *he" hae a child
named 8ill. *he children are all minors and not gainfull" emplo"ed.
1. @o% much personal exemption can 0harlie claim# Explain. 2.5%
2. @o% much additional exemption can 0harlie claim# Explain. 2.5%
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(r. )$raham Eugenio1 a pa%nshop operator1 after haing $een re6uired $" the 'eenue District +fficer to pa" alue added tax
pursuant to a 'eenue (emorandum +rder A'(+B of the 0ommission.er of Internal 'eenue1 filed %ith the 'egional *rial 0ourt an
action 6uestioning the alidit" of the '(+.
If "ou %ere the 2udge1 %ill "ou dismiss the case# 5%
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Gerr" %as $eing prosecuted $" the ,I' for failure to pa" his income tax lia$ilit" for 0alendar Cear 1;;; despite seeral demands $"
the ,I' in 2..2. *he Information %as filed %ith the '*0 onl" last 8une 2../. Gerr" filed a motion to 6uash the Information on the
ground of prescription1 the Information haing $eer. filed $e"ond the 5-"ear reglementar" period.
If "ou %ere the 2udge1 %ill "ou dismiss the Information# !h"# 5%
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Gold and -iler 0orporation gae extra 1>th month $onus to all its officials and emplo"ees in the total amount of :?5 (illion. !hen it
filed its corporate income tax return the follo%ing "ear1 the corporation declared a net operating loss. !hen the income tax return of
the corporation %as reie%ed $" the ,I' the follo%ing "ear1 it disallo%ed as item of deduction the :?5 (illion $onus the corporation
gae its officials and emplo"ees on the ground of unreasona$leness. *he corporation claimed that the $onus is an ordinar" and
necessar" expense that should $e allo%ed.
If "ou %ere the ,I' 0ommissioner1 ho% %ill "ou resole the issue# 5%
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Dil"4s Eashion1 Inc. is a garment manufacturer located and registered as a -u$ic ,a" Ereeport Enterprise under 'epu$lic )ct Fo.
?22? and a non-&)* taxpa"er. )s such1 it is exempt from pa"ment of all local and national internal reenue taxes. During its
operations1 it purchased arious supplies and materials necessar" in the conduct of its manufacturing $usiness. *he suppliers of
these goods shifted to Dil"4s Eashion1 Inc. the 1.% &)* on the purchased items amounting to :-..1....... Dil"4s Eashion1 Inc. filed
%ith the ,I' a claim for refund for 4the input tax shifted to it $" the suppliers.
If "ou %ere the 0ommissioner of Internal 'eenue1 %ill "ou allo% the refund# 5%
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Gue3on 0it" pu$lished on 8anuar" 3.1 2../ a list of delin6uent real propert" taxpa"ers in 2 ne%spapers of general circulation and
posted this in the main lo$$" of the 0it" @all. *he notice re6uires all o%ners of real properties in the list to pa" the real propert" tax
due %ithin 3. da"s from the date of pu$lication1 other%ise the properties listed shall $e sold at pu$lic auction.
8oachin is one of those named in the list. @e purchased a real propert" in 1;;/ $ut failed to register the document of sale %ith the
'egister of Deeds and secure a ne% real propert" tax declaration in his name. @e alleged that the auction sale of his propert" is oid
for lac7 of due process considering that the 0it" *reasurer did not send him personal notice. Eor his part1 the 0it" *reasurer
maintains that the pu$lication and posting of notice are sufficient compliance %ith the re6uirements of the la%.
1. If "ou %ere the 2udge1 ho% %ill "ou resole this issue# 2.5%
2. )ssuming 8oachin is a registered o%ner1 %ill "our ans%er $e the same# 2.5%
NOTHING FOLLOWS.