MCQ in Taxation

During the proceedings before the CTA, an issue regarding the constitutionality of the tax measure was brought before the attention of the court. The tax magistrate is divided on whether the such issue could be properly ruled on? decide. a. CTA can decide on the constitutionality of a tax measure as an off-shot of the case under litigation; b. CTA can decide on the constitutionality as a tax court c. CTA has no jurisdiction over constitutionality of a law, including tax laws; d. The CTA should transfer the issue to the regular court. The supreme court of China finally sentenced to death 3 filipinos for illegal possession of dangerous drugs in China. The vice-president of the Philippines was sent to China, together with a catholic priest and relatives of the convicted 3 filipinos. All of their expenses were paid from the public fund. Is the disbursement of public fund proper ? a. Matsokoy Singh, an Indian national, engaged in 5-6 operations and married to a Japanese citizen Suki Moto with 4 children has been residing in Davao City for the past 10 years. As tax consultant, is he required to report his income derived from India ? a. yes. all person who derived income from whatever source within or without is liable to pay tax ; b. yes. being a resident alien, he similar to a resident Filipino taxpayer who is obliged to report all his income from whatever source within or without; c. no. being a resident alien, he is only required to report income derived from the Philippines; d. no. because its operation is illegal. In filing his ITR, should he be entitled to personal exemption and additional exemption for the 4 children ? a. no. because he is an alien; b. no. because of absence of reciprocity clause; c. yes. due to processual presumption; d. yes. Adidas Corporation, a resident foreign corporation, is asking whether the taxes paid in their homeland be considered as a deduction (expenses) in filing CITR in Manila ?

a. yes. taxes paid are considered expenses of the taxpayer; b. yes. taxes paid in their homeland should be treated as tax credit; c. no. taxes paid in their homeland does no inure to the benefit of the Philippine government; d. no. due to absence of reciprocity clause; e. yes. due to the doctrine of processual presumption. A Filipino domestic corporation had a branch in Hongkong. As far as the Philippine taxation is concerned, Such taxes paid to the Hongkong government is to be treated as : a. tax refund b. expenses c. tax credit d. tax allowance A foreign corporation had an isolated transaction in Davao City. As its tax consultant, what proper tax it should file ? a. remittance of final withholding tax; b. CITR c. remittance of Sales tax d. remittance of VAT For purposes of taxation, how will the P100,000.00 tax refund received by Makoy Corporation be treated or payment of the debt that was previously written-off and considered as bad debt ? a. as subsidy b. as income c. as tax allowance d. as tax credit Tax refund shall be included in the gross income of the taxable period of its receipt to the extent of income tax benefit of such deduction. This is known as : a. tax deduction rule b. tax benefit rule c. tax refund rule d. tax collection rule Out of his commission income unknown to his wife, Carlo purchased a car worth P1M as a gift to his wife on February 14, 2011. Is this an activity subject to tax ? a. yes. such activity partakes of a donation. Hence, subject to a donor’s tax; b. yes. such activity partakes of a donation intervivos. Hence, subject to donor’s tax c. no. such activity is not subject to a donor’s tax because the “gift” was taken from the community property and will form part of the community property; d. no. such activity is exempt from tax because husband and wife is prohibited to make donation to each other. After finishing his farms works, Mang Teban would go for fishing. He is the most lucky one because every time he goes fishing, his catch would be no less than P2,000.00. ½ of which is sold to the market while the other half is for their consumption. He goes fishing twice a week. Due to “ingit”, his neighbor reported him to the BIR for not paying the corresponding tax derived from fishing. The newly hired BIR personnel fresh from the

its building was sold and the proceeds was used to buy a building in Gensan City. what possible action(s) you may institute in behalf of Aling Osang ? a. is there income taxes that may be collected from the corporation ? a. Egypt. Decide whether he is liable to pay income tax ? a. As PAO lawyer. b. such importation is subject to import tax or duties. motion to dismiss due to lack of cause of action. a. ______________________________________ b. Juan purchases ammunitions from Mubarak gun factory in Cairo. c. no. the withholding is proper. As an expert tax lawyer of the BIR. Therefore no withholding tax collected. c. Mubarak Gun Factory or Juan must pay the equivalent sales tax. b. Matibay Realty Corporation decided to transfer its business from Davao City to Gensan City. b. d. yes. A month ago. in form of dividend tax. worth $1M. d. she received a summon from the MTC requiring her to answer within 15 days for collection of taxes filed by the BIR. the corporation decided not to distribute a dividend to its stockholder despite of it accumulated unrestricted retained earning worth more than the capitalization of the corporation. yes . motion o dismiss due to failure to observe the barangay conciliation as a condition precedent for filling action in court. withholding tax d. Hence. c. yes. the withholding is improper. The management ask your opinion on what kind of tax be filed regarding such sale ? a. the withholding is proper. such importation is not subject to sales tax. Instead. capital gains tax b. the withholding is improper. because no dividend was declared. the corporation just extends a loan to the stockholders equal to the amount of their supposed dividends. for every sale of an item is subject to a sales tax. because there was no distribution of the dividends. ______________________________________ Aling Osang sells vegetables at the bangketa for her daily needs. sales tax c. The shipment arrives in Manila but withheld because of non-payment of the sales tax ? Decide. no. motion to dismiss due estoppel. tax credit . motion to dismiss due to lack of jurisdiction. To avoid paying the corresponding income tax. d.school send him a notice to pay the corresponding income tax within 30 days. in form of improper accumulation of retained earnings. no.

Upon retrun to the Philippines. . d.On the contrary. yes. no. no. yes. no. both parties can not escape from taxation arising from exchange of properties. yes. the parties are both exempt from taxation considering that no income was derived from the exchange of properties. no. the Filipino congressmen flocked to the restaurant for the pansit paying an exorbitant tax of HK$1. no. yes. b. whatever tax payable to the BIR is subject to the deduction of the HK$1. b. b. tax credit is already abolished. During the end of session. no. does the power granted absolute ? a. yes. the sale is not subject to Philippine taxation because was consummated outside the Philippine jurisdiction. the management executess deed exchange of its building with a building of equal value in Gensan City. c. both parties must pay its respective tax on this transaction.00. Hongkong. Would there be a tax payable that may arise from this transaction ? a. d. New Territory. d. no such power is absolute. specializing in cooked pansit. they ask your opinion as to whether the said tax be allowed as a deduction or tax credit in their ITR ? a. such power should not collide with the taxes imposed by the national government. the HK$1.000. c.00 is a legitimate expense and therefore deductible to their ITR taxes. China Airline sold air fare tickets at its office in Hongkong for Manila-Hongkong-Manila flight. no tax liabilities arise from the exchange of properties. the Philippine government can not imposed tax on the sale because China Airline is a foreign corporation. The LGC grants the local government the power to raise revenue. Kowloon St. b. because the local government may impose tax on all matters within the commerce of men.000. Tong Ah Eatery is a licensed Hongkong restaurant located at 1234. China Airline is liable to pay the so called “Gross Philippine billing” of 2. yes. From your point of view. c. tax credit could only be availed of by the merchants. because the local government may impose tax on whatever matter within its jurisdiction.5% based on the gross value of the fare.. yes. c.000.00 as tax for a bowl of pansit. Is the sale subject to Philippine taxation ? a. no.

the Philippines may cancel its landing rights. Only the Manila – Hongkong trip is subject to “GPB”. The whole trip from Manila then back to Manila are subject to “GPB”. c. petroleum tax b. such activity is the usual activities of the PAL. b. China Airline is liable to pay tax to the Philippine government. yes. On the other. The JAL airline is asking your advise whether the whole or a particular portion of the trip is subject to “GPB”? a. Only the Manila – Hongkong trip is subject to “GPB”. no. yes. no. d. . On the other hand. storage tax c. yes. Otherwise. In both cases justify your answer : _______________________________________________________________ Caltex Gasolines were stored in a storage tanks located within the jurisdiction Municipality of Kalipay. as Gross Philippine billing. Juan purchased a JAL ticket for his around the world trip from Manila – Hongkong – USA – Germany – London – Spain –Manila. d. house and lot and a car as jackpot prize offered by the Willing-Willie show. if the contract of carriage was subject to a connecting flight from Hongkong USA thru Cathay Airline. such activity is considered as a sale of a domestic corporation. a. the activity should be counted upon the sale of China Airline. Yes. b. then thru American Airline from USA – Germany – London – Spain – Manila. the carriage of passenger was transferred to PAL. subject to the regular sales tax. due to unavailability of China Airlines plane. The JAL airline is asking your opinion whether the whole or a particular portion of the trip is subject to “GPB” ? c. hence. percentage tax d. The whole trip from Manila then back to Manila are subject to “GPB”. sales tax Ben won the P1M.d. Ben is asking your opinion whether such winning is subject to income tax ? a. The municipal council is inquiring what possible tax ordinance may be enacted to raise revenues. Would such sale be subject to Philippine taxation ? a.

Hence. being an improvement over the land. c. yes. the MCIT is applicable to him for having losses after the 3 year operations. export tax d. what possible taxes it should pay ? (choose any 2 taxes) a. Is now asking whether such gasoline tank is subject to real property tax ? a. yes. . no. In case of doubt. under any and all of the above-situation. manufacturer’s tax If Mark Trading is located inside an export Free Port Zone . c. In what possible situation that the government may assess the corporate taxpayer thru MCIT ? a. sales tax b. when the corporate taxpayer has reported no income. whenever the tax due is lesser than the tax due based on MCIT d. MCIT is applicable only to taxpayer juridical person. b. c. export tax d. percentage tax c. b. prolong labor disputes. b. The power to impose MCIT may be suspended by the Secretary of finance due to : a. force majeure b. In order to recover the capital. inquiring whether the MCIT is applicable to him considering that is his first time that happened to his business within the 10 years operations ? a. no. percentage tax c. d. When it load handicraft in Manila for Japan crates of bamboo lamp shades. export tax d. manufacturer tax Juan Sari-sari store incurred losses due to debt. percentage tax c. Mark Trading sold it to the local consumers at a discounted price just enough to recover its cost. the handicraft reach arrived in damage conditions which was rejected by the Japanese importer and returned to the exporter. c. being part of the equipment of the gasoline business. any or all of the above Caltex gasoline station is being tax for its gasoline tank buried underneath its premises. yes. d. manufacturer tax Unfortunately. yes.Mark Trading is engaged in export-export business. the MCIT is applicable to him. being used for the business as an storage of gasoline. no. legitimate business reversal. sales tax b. What possible taxes that may be imposed upon it for purposes of exportation ? a. MCIT is not applicable to him being a sole proprietary business. sales tax b. Would such sale be subject to what tax ? a. the doubt must be resolve in favor of the government. or negative Zero income.

sale of government properties owned under its proprietary function is subject to taxation. government properties are exempted from taxation. Would your answer be the same if the gasoline tank was constructed above the surface of the land ? e. g. b. was added to the selling price due to increase of its valuation.00 added considered income on the part of the government and therefore subject to tax ? a.00 peso per sq.000. being hidden and not visible to the eyes of the government.000. yes. yes. government properties owned under its proprietary function is subject to taxation. government properties are exempted from taxation due to “actas jure imperi principle”. sale of government properties are exempted from taxation due to “actas jure imperi principle”. Pres. h. d. no. being hidden and not visible to the eyes of the government. c. no.000. the GRP declared and sold its Roppongi property to the Ayala Group of Manila. May the properties of the state used for public purpose be subject to tax or revenue receive by the BIR subject to tax ? . The lands expropriated from various owners are now being sold to its former owners when the plan of expansion of its airport was abandoned and transferred to Mactan Island. being used for the business as an storage of gasoline. sale of government properties is considered as an ordinary sale subject to tax. Due to the acute financial needs. g. yes. the P1. yes. yes. f. A P1. no. m. no. f. government properties is considered as an ordinary property subject to tax. being part of the equipment of the gasoline business. where the former Philippine embassy is located. Is the P1. Noy is asking whether the Malacanang property be subject to real property tax ? e.00 is considered a flow of wealth and subject to taxation. no. Is the sale subject to capital gains tax ? a. being an improvement over the land.d. h. sale of government properties are exempted from taxation.

No. as a Pilipino. yes.a. yes. no. income derived by OFW from abroad is exempt fro Philippine taxation. except the return of the capital. the $1M was sent direct to the ATM bank account of Manny in Gensan Bank which could be withdrawn anytime. because it is just taking money from one pocket and placing it in another pocket c. being a property by a Pilipino located abroad. the government is exempt from taxation based on the “acta jure imperii principle which is exercise only by sovereign state. Tax exemption must be interpreted under the concept of “strictissimi juris”. d. he is obliged to pay the corresponding tax in support to the Philippine government. Supposing a treaty was executed between the state of California and the GRP agreeing that each country may may impose tax on the properties of their respective citizens’ property located in either country. it is considered as an income subject to tax because under the doctrine of constructive receipt. c. the property is beyond the territorial jurisdiction of the Philippine sovereignty. whenever such law is enacted. no. b. it is considered as flow of wealth and therefore subject to tax. as a general rule. b. such law is violative to the principle of double taxation . Yes. therefore beyond the situs of taxation . yes. such amount is now under the control of Manny which could eb withdrawn at anytime. No. would it be violative or not to the Philippine law regarding double taxation because the same property would now be taxed under the law of California and GRP ? a. no. no. should the $1M be considered income of Manny and therefore subject to income tax ? a. the “income” was derived outside the Philippines. In the recent boxing bout of Manny against Marquez. Would it by then be proper to enact a law for the GRP to tax the house and lot of Congressman Manny ? a. d. Congressman Manny owns a house and lot in California. c. USA. Yes. because there is no specific law which provides that the revenue received by the government is exempt from taxation. all flow of wealth is subject to tax. he received a $1M share from the television’s pay per view contract with the US network. Hence. yes. . He is asking whether the Philippine government may imposed a real property tax on it : a. the property is located beyond the situs or jurisdiction of taxation. d. b.

In case of transfer of funds (salary) from Max to his wife and assigned it to Bruno for purposes of safe keeping. wife c. All flow of wealth is subject. yes. Max b. no body is liable The authorities imposes tax on this situation due to : a. Against whom the tax may be imposed ? a. All flow of wealth is subject. The earner is an OFW and the income was derived from employment abroad. no one is liable In cases of assignment of funds (salary in this case) to mislead the taxing authority. MTC is free from any CITR liabilities due to absence of income. no. d. All income derived from whatever source within and without is taxable. Wife and Bruno d. Maharlika Trading corporation (MTC) suffered a setback when its importer-customers cancelled its order due to economic crises. yes. The money is being deposited direct to the ATM account of his wife in Davao City. if there is any ? a. MTC is liable to pay the 2% MCIT as it tax liability. b. c. Max and Bruno c. All income derived from whatever source within and without is taxable. the money deposited at the ATM account of the wife was assigned to Bruno as payment for the interest of the loan obtained by Max. Decide whether it is exempt from payment of CITR due to losses : a. the Taxpayer MTC reported a negative 0 income. c. b.00. other than the return of the of the capital. it is not taxable because the same is unknown to the government. MTC is liable. . Hence.Max resigned as a Pilot of the PAF. g. doctrine of constructive receipt d. no. absorption method b. shifting of burden of taxation On its 5th year business operations. h. a. Max and his wife b. no. yes. other than the return of the of the capital. it is not taxable because the same is unknown to the government. Decide whether the income is taxable. asssignment of income doctrine c. Bruno d. He was granted a tourist passport by the DFA and proceded to Afghanistan working with the underground group of Abdullah where he was paid a monthly salary of $100. yes. Is bruno liable to pay income tax ? e. However. is taxable. no. f. d. Who would be liable to pay the tax involved. is taxable.000. MTC is exempted from paying CITR due to losses. The earner is an OFW and the income was derived from employment abroad.

00 is subject to income tax ? a.000. no. decent to determine his gross estate b. Decide on whether the motion to dismiss the criminal action. yes. the payment of the tax will not extinguish the criminal liability. Different tax rates are applied for each types of income The taxpayer may not avail the taxable period when: a. . The BIR is asking your opinion whether such worth P1. applied for a compromise for reason of financial incapacity The management decided to give a uniform to its employees worth P1. Max was sued for tax evasion. it is considered as fringe benefit which is considered tax exempt. the payment of the tax will not extinguish the criminal liability. remove his property d. the payment of the tax extinguish the criminal liability .00 every year. leave the Philippines c. the payment of the tax extinguish the criminal liability .000. d. retiring from business b. Decide whether the motion to dismiss his real property should be granted : c. b. hide/conceal his property e. all income derioved is taxable.Global system/approach or Unitary system/approach – where a single tax is imposed on all income received or earned by a person irrespective of the activities which produced the income. obstruct the collection of tax proceedings the bIR may look into the bank deposit of a person without violating the law on secrecy of bank deposit (RA 1405) a. a. b. Schedular system – income items are categorized into a schedules according to types of activity which produced them. Decide. Having paid the amount. He filed a motion to dismiss the criminal action including the release of his properties.

no. yes.00 as reported in the estate tax return. no. wanted to examine the bank account of the decedent. The City government is asking your opinion whether the Tira brothers could be liable for operating business without the necessary business permit ? a. c. where should the appeal be instituted ? a. mayor’s office In the event that the re-assessment is not favorable to the taxpayer. assessor’s office c. c. CTA d. The assessment of the real property of Max located at Tagum City was so exorbitant that he wanted to question the same. court. b. b. d. assessor’s office c. the ordinance is a valid exercise of police power. d. unless a consent or waiver of the decedent. c. Any person is required to have a business permit. court. no need because the government does not grant permit to illegal business. the operation becomes illegal and subject to closure order . yes. b. in line with the estate tax return. . The Tira-Tira carnapper group headed by Tira brothers wee arrested and recovered from them various vehicles worth P1B allegedly carnapped since 2005. yes. yes. court. local assessment board d. d. the ordinance partakes of unlawful taking of property without due process of law. mayor’s office. in view of the bank secrecy law. b. b.Johnny died leaving behind an estate worth P100. Otherwise. May the bank be ordered to submit the bank records of the decedent ? a. Hence. SC 1. local assessment board d. c. 2. in view of the examination of the estate tax return. where should it be appealed ? a. Any person engaged in business must secure first business permit before starting its operations. illegal transactions/activities does not requires a business permit. the ordinance is an exercise of power of eminent domain without payment of just compensation. What is your comment on this ? a. But the BIR believes that it worth more than that amount.000. In the event that the appealed decision is unfavorable. b. the ordinance is a form of taxation. Ordinance # 1234 provides for a 10% of the total privately owned memorial park as allocation for the indigents burial space free of charge. provincial board of assessment. no. Where should the issue be brought for re-assessment ? a.

d. Decide on the merit of the ordinance ? a. they are liable to pay income tax based on their income. Hence. m. they are not liable to pay the income tax. is the foreclosure valid ? a. Streets and sidewalks are properties owned by the state intended for public use. Davao City. the difference of taxes lies on the status of the taxing authorities. 6. yes. the foreclosure is invalid. 3. Paying P1. And foreclosure is a mode of collecting the unpaid taxes. Since 2000 up to the present. The objective is to raise revenue pursuant the local government code. It is a recognized mode of collecting delinquent taxes. the ordinance is invalid. . 5. the ordinance is valid. considering the huge amount involved in the transaction which the BIR computed at 40% tax liabilities.2. the ordinance is invalid. 4. no. the carnapped vehicles does not belong to them. m. c. d. c. b. b. to inform the taxpayer. it is erroneous to impose real property on the 500 sq. b. As counsel of the government. meters lot located at Davao City.00 per sq. criminals are exempt from reporting and paying taxes. Since there was no record of payment of real property tax since 2000. no. d./month. As counsel of Max. Hence. yes. is there a need of publication before any tax measure be implemented as required under the civil code ? a. the City government initiated a foreclosure proceedings which eventually lead to auction sale.1 On the other hand. Properties which are directly. From your opinion. any person who derive income from whatever source is liable to pay the corresponding income tax. It undergo the legal process. c. they ask your opinion whether the Tira brothers could be liable for tax evasion due to failure to report their income ? a. the foreclosure is valid. the difference of taxes lies on the financial needs of the taxing authorities. Therefore. b. the foreclosure is valid. Being use directly. Don Pepot owns 5 hectares of agricultural land in IGACOS and in Calinan. actually and exclusive by the religious group is exempt from real property tax.000. the difference of taxes imposed was due to different taxing authorities. ordinance is an ultra-vires act of the local government.00 yearly real property tax. . Max owns a 500 sq. the said property was rented by the Mahabagin Religious group for their venue of their daily prayers. e. d. The City council passed an ordinance allowing the city sidewalks for rent at the rate of P100. It is within the delegated power of the local government to raise revenue. yes. He was surprised why the real property tax imposed by IGACOS is different from the real property tax imposed by Davao City. actually and exclusively used for religious purposes are exempt from the real property tax. c. the ordinance is valid. the difference of taxes lies on the different ordinance of each taxing authorities. Streets is beyond the commerce of men. the power to impose tax carries with it the power to impose collection. the difference of taxes imposed was due to location of the property. resolve the issue : a. the foreclosure is invalid.

d. senate inquiry c. no. yes. no. the imposition is valid. Obligation to pay the just compensation arise from a contract while obligation to pay real property tax arise from law. yes. The owner of store ask your opinion whether the check could be used to pay his quarterly real property tax ? a. no need for publication any way the taxpayer can not object. c. compensation can not be applied. Hence. because of absence of the basis for the amount of the tax to be collected. c. the imposition is invalid. The imposition of such tax should emanate from the Sanguniang in for of an ordinance. The power to enact tax measure is lodge with it the congress. 9. The power to tax is considered as power to destroy. the local government is empowered to raise revenue. invalid for being an encroachment of power. b. yes. yes. b. what is to be taxed or how much is the tax is a prerogative of the state. The mayor is empowered under its residual power as the local chief executive d. The mayor has no authority. Being contained in an executive order and likewise. no.2 The 1 peso tax imposed is : a. because it is an inherent power of the state. because the obligation towards the funding of the check arise from a contractual obligation. As preparation for the coming araw ng Dabaw. because it refers to same fund of the government. the imposition is in valid. yes. Issues arise as to whether taxes may be collected even without tax measures ? a. imposition of taxes without any tax measure amounts to oppression.b. Therefore. except when : a. pursuant to the civil code which provides that laws shall take effect after 15 days of it complexion of its publication in an OG. 7. including office supplies who issued a post date cheque payable 6 months thereafter. valid for being intended for public welfare (araw ng dabaw) 10. d. no. the Mayor issued an executive order that a 1 peso tax be imposed on sale of every liter of gasoline. b. instead of paying his real property tax to the City. Decide the validity of such imposition ? a. existence of “matuwid na landas” d. the imposition is invalid. c. The City government of Davao expropriated the land of taxpayer Juan worth P100. both liabilities will form part of the public fund. While the obligation of the taxpayer arising from law. he consulted you whether the real property tax could be off-sited (compensation) with his claim arising from the expropriation ? a. compensation can not take place. d. c. presence of truth commission b. 9. no. . invalid for being an ultra-vires act of the Office of the Mayor. because of the life blood theory.000. the over all committee purchase from Hapay store various items. valid for being an act of a paren patriae. b.00. kayo ang boss ko. b. 8.1 Due to insufficiency of the budget for the araw ng dabaw celebration. 9. e. there is a court.

because it now amounts to tyrannism. yes. in the absence of the agreement. the state is not barred by prescription. taxes is an obligation of the taxpayer which is imprescriptible. properties rights to be subject of taxation : . Juan had filed a claim for tax refund amounting to P10.000. Would it result to unconstitutionality of the NIRC ? a. revenue 13. it is impliedly imprescriptible. yes. d. c. it is subject to prescription. because the taxes collected redounded to the benefits of the people. absence of prescription would result to absolute power to destroy. both liabilities will form part of the public fund. no. b. Decide on the petition : a. no. The law is exhorbitant. taxes d. yes. business permit c. 16. compensation can not take place. license b. The court has no authority to enjoined collecting of taxes. This is a form of : a. no. the petition should be denied. Imposed by the state in line with its police power to regulate : a.000. Supposing the NIRC failed to provide for its prescription to collect taxes. Obligation to pay the just compensation arise from a contract while obligation to pay real property tax arise from law. no. yes. b. c. 15. d. 14. both obligations (government and taxpayer) arise from the same law. d. the petition should be denied. c. b.1 In the absence of the prescriptive period to collect. no. claim fro tax refund is subject to a suspensive condition while obligation to pay is subject to a resolutory condition. because it is an inherent power of the state to collect taxes.2 Do you agree to the proposition that collection of taxes is imprescriptible ? a. no. yes. The maximum period to collect is ten years from date of discovery of such tax fraud. Refers to the act of the legislature in choosing the persons. the government’s right to collect of taxes is subject to prescription just like all other laws. the petition should be granted. no. Therefore. d. 14. the petition should be granted. the provisions of civil code can not supplement. b. no. he ask you whether the tax refund be off-sited with his tax due P10. b. loan 14. Taxpayer has the right to express their grievance in a legal way. yes. Due to the recent “Typhoon Ondoy” the Department of Agriculture grants the farmers free seedlings. c. the law comes in. revenue e. Comes April 15. Taxpayer Juan filed an injunction to prohibits the imposition of real property tax which had increased by 300%. subsidy d. taxes does not arise from contract.11. d.00 which was approved but unreleased due to absence of public fund. c. The court can not prohibit the collection of taxes being the life blood of the government. may the law on prescription provided under the civil law be applied ? a. yes. therefore. compensation c. 12. taxes b.00 ? a. yes. because it is a law itself.

This would run afoul of the very intendment of the law. 17. 18. What is the approach adopted for purposes of individual taxpayer ? a. taxation of those earnings would result in a diminution of accumulated income and reduce whatever the trust beneficiaries would receive out of the trust fund. d. c. Sec. modular approach b.The tax imposed by this Title shall not apply to employee’s trust which forms part of a pension. sectorial approach d. All income derived from whatever source. . b.2 What is the approach adopted in corporate tax ? a. b. The income derived shall be subject to taxation. 60(b) of the NIRC provides that . global approach d. a. Tax-exemption is to be enjoyed by the income of the pension trust. within and without the Philippine is liable to pay its income tax . Out of the fund contributed. yes. the foundation was able to accumulate a huge income when it purchase a lot and later sold it at a profit. combination of sectorial & schedular approach. payment 17. schedular approach 18. Cooperatives transacting business with both members and non-members shall not be subject to tax on their transactions to members. Decide. taxes are the lifeblood of the government. combination of modular and global approach. b. stock bonus or profitsharing plan of an employer for the benefit of some or all of his employees if contributions are made to the trust by such employer. The income derived is exempt from any form of taxation. The Cooperative bank consulted you as its in-house counsel expert in taxation for having reviewed at the Vinta Legis Review Center as to whether the interest paid to the savings/time deposit to its members /nonmembers depositors is subject to withholding final tax of 20% to be remitted to the BIR. combination of schedular & global approach. This exemption extends to members of cooperatives. assessment d. Under the life blood theory. global approach c. modular approach b. no. The BIR wanted to imposed a tax on the huge income accumulated. sectorial approach c. schedular approach 17. levying b. within and without. Otherwise. d. Although the tax exemption only mentions cooperatives. The income derived shall be subject to tax. every person who derives income. this should be construed to include the members. yes. c. Tax being the life and the blood of the government. or both for the purpose of distributing to such employees the earnings and principal of the fund accumulated by the trust in accordance with such plan. combination of modular & sectorial approach. c.a. collection c. d. 1 What is the approach adopted under the 1997 NIRC for purposes of taxation ? a. a. no. 1 The employees of the Maruri logging company organized a foundation which will administer their employee’s trust fund. or employees. the State’s power to tax must give way to foster the creation and growth of cooperatives. shall be subject to income tax.

the Solicitor General is asking your opinion whether it is proper to tax the American Embassy in Manila because there was no treaty or agreement that exempted it from realty tax ? a. Pagcor is now liable to pay its corporate income tax. 22. The American government exempt the building of the Philippine consular office located in California from realty tax. they are subject to tax as a property owned by the government in its proprietary capacity.the Philippine government should exempt the American government from realty tax as a sign of goodwill. yes. The prior exemption as a GOCC was already withdrawn. due to the recent strike of the fish which made them to migrate to Japan. b. its legal counsel is asking your opinion whether the Pagcor. However. like tax. b. Whether the Magsaysay park and the Peoples park are subject to realty tax ? a. the EO is valid. 23. It is issued to meet any exigencies. It is a presidential prerogative to issue such. d. the EO is valid. Therefore. Hence. Justify what ever is your chosen answer : _______________________________________________________________________________ 21.any imposition of realty tax falls within the jurisdiction of the Philippines as a sovereign state . there is no violation whenever the American Embassy is subjected to a realty tax. they are exempt from taxation being owned by the national government under the theory that there can be no tax against the taxing authority. d. they are subject to tax because they are listed as an exempt from taxation. c. he issued an executive order # 4321 imposing a 20% EVAT which is valid until the new EVAT law is submitted to him for approval. Hence. Pres. The city council is confused whether the abandoned parcel of land be subject to realty tax ? a. it is not subject to realty tax. c. as a GOCC is liable to file its income tax ? a. c. the EO is invalid. The Pagcor reported a P1B income derived from casino operation. Any natural or juridical person who derives income from whatever source is liable to pay its income tax. Pagcor is exempt from paying its corporate income being a GOCC. we should adhere to the principle of international comity among nations. a. they are exempt from taxation because they are owned by the city government in its proprietary capacity. The president commits an act of intrusion into the function of the legislative body because the constitution provides that tax measure must originate from the . b. b. The city government purchased a parcel of land intended as a fish port. Noynoy feels uncomfortable due to the very slow deliberation in the legislative body for the amendment of the EVAT law to make it 20%. 20. Pagcor is exempt from paying its corporate income tax as an incentive. c. b. yes. it is subject to realty tax. the plan was abandoned. The power to chose or select properties to be subject to tax exclusively lies to the legislative body. Hence.19. Pagcor is liable to pay its corporate income tax. the government should not imposed any realty tax because the American government had exempted the Philippines from realty tax in America. d.

the EO is valid. 26. c. c. would such grant of relief goods proper ? a. like tax. if the victims of the typhoon happens to be the member of religious organization. the EO is invalid. the withdrawal of tax exemption is untenable. 24.legislative body. As counsel of the affected investors. such as : a. The members are entitled to protection by the government. d. (USA) extend its factory in Subic Bay Export Processing Zone. equal protection clause c. all of them mentioned. The granting of such tax exemption is similar to a privilege which could be withdrawn at anytime. b. The constitution provides that no law shall be passed impairing the obligations of contract. the granting of such relief goods is tantamount to supporting the church which is not allowed.1 On the other hand. Proper. Proper. improper. a. the granting of such relief is proper. The withdrawal happens in the repealing of the law. Hence. Davao del Norte was devastated by the recent typhoon. what is your comment “ a. It creates an atmosphere of uncertainty on the part of the investors and possible lost of trust on the government. the congress is prohibited to enact irrepealable laws. d. Because the constitution provides that no public funds shall be allotted to any religious group. there is no irregularity in granting such relief goods. d. a. RA 000 was repeal by RA 111 by shortening the period of exemptions to 5 years because the government realized that they are losing in terms of revenues. c. 25. Residents finds shelter inside the church. 26. . the withdrawal of the exemption is improper. 23. b. 2 years later. the EO is an ultra vires act of the office of the President. The relief goods is not intended to propagate any religious activities but for the benefits of its members as a Filipino citizen. improper due to the establishment clause under the constitution. The goods is intended for the needs of the residents being a victim of the typhoon. d. b. Pursuant to RA 000 which grants 10 years tax exemption for foreign investors from filing their CITR. Decide on the legality of such grant of relief . Adidas Corp. the EO is valid. It is a presidential prerogative to issue such. It is an aid to the needy and an exercise of police power particulary for the general welfare of the people. c. rule of uniformity d. the municipal government sent relief goods to the residents which was received by the parish priest. On the other hand. The president commits an act of intrusion into the function of the legislative body because the constitution provides that tax measure must originate from the legislative body. due process of law b. The power to tax is plenary but not absolute because the constitution provides for its safeguards from possible abuses that the taxing authority may imposed. The president issued an EO increasing the tariff rate. the EO is an ultra vires act of the office of the President. the granting of relief goods violates the constitutional separation of church and the state. b.1. The municipality of Tarangtang. Comment on the said EO. It is issued to meet any exigencies. d.

government orphanage or leprosarium. It represent an income. c.2 Due to such calamity. d.26. the P10. The primary purpose of the hospital is to render charity to the needy. The St. convent area. no. the P2.00 entrance fee is subject to taxation. However. d. b.00 entrance fee is subject to tax ? a.00 entrance fee is subject to taxation. it would amount to unjust enrichment of the part of the government. the P2. b. 27. all income derived from whatever source is taxable. d. the hospital ceases to be a charitable one.1 Aside from the entrance fee. yes. It ceased to be a charitable one. is the P2. Does the hospital ceases to be a charitable one ? a. b.00 entrance fee is collected. 2.00 in case they want to urinate in its comfort room. no. they are entitled to compensation.00 fee collected subject to tax ? a. Would they be entitled to receive compensation from the public fund ? a. c. Any income derived is subject to taxation. the P10. Otherwise. a church was built with a mini zoo. 27. penal institutions. On the church area. Billionaire Bill Gates pays the hospital $1M for a successful operation. No one should unjustly enriched himself at the expense of another. visitors of the zoo have to pay P2. the P10. b.00 entrance fee collected is exempt from taxation being operated by tax exempt entity. due to separation of church and the state. any income derived from whatever source is subject to tax. Mary religious congregation rented the same and divided it into 5 areas as church area. Decide whether the P10. d.00 entrance fee collected is exempt from taxation being operated by tax exempt entity.00 entrance fee collected is exempt from taxation for being minimal in nature. . the receipt of the $1M convert the hospital into a paying hospital. A charitable hospital was constructed where poor patients were being treated medically free of charged. public money may be use to pay religious people when they served at the armed forces. medical school area and for lease area. b. c. the hospital remains as a charitable hospital. due to absence of law granting tax exemption. charitable hospital area.2 Within the hospital area. yes. Strickly speaking. the P10. After the mass. It represent an income. the P2.00 entrance fee collected is exempt from taxation for being minimal in nature. Is the $1M received subject to income tax ? a.00 entrance fee is subject to tax. For accepting the $1M issues were raised : 1. The occasional receipt of payment is only incidental to its operation. c. Don Pepot owns a 5 hectares land located within the vicinity of Davao City. the hospital remains as a charitable hospital which is its primary objective. public fund may be used to pay the salaries of the doctor-priests for service rendered. on one occasion. 27. the doctor-priests were commissioned by the City Government to render service for the health of the residents staying inside the church. yes. devotees goes to the mini zoo where a P10.

it may be treated as a donation. no. the occasional payment made by the patient does not convert a charitable hospital into a paying one. Due to establishment clause of the constitution. 3. no need to have business permit. no need to have business permit. it is considered separate building and no longer directly. d. b. for every business activities. If ever patients would insist to “pay” as a sign of their gratitude. 5. a business permit is needed for purposes of regulation . It is intended for the health of the public and it is within the police power of the state (City Government) to provide. 4. b. Decide whether the said clinic is subject to pay realty tax ? yes. The business permit of the hospital extends to the botica as a one unit operation rule. the subsidy is proper. b. d. yes. d. The hospital staffs decided to open a botica inside the hospital where medicines were procure for the patients. no need to have a business permit. it is a charitable clinic. no. yes. a. It operates within the premises of the hospital. c. yes. actually and exclusively used for charitable purposes. b. Due to such MOA. all real property is subject to realty tax unless exempted by an ordinance/law. the subsidy is unlawful. 6. Decide whether such subsidy is proper ? the subsidy is improper. It deals on medicines and not as treatment to the patients. a. d. the extension is considered as an “appurtenant” of the hospital and therefore. It is not an aid to the congregation but intended for the public to be administer by the congregation. c. for every business activities. d. no. . it is not the intention of the hospital to charge hospital bill. a. It operates within the premises of the hospital. c. enjoys the same exemption. the botica must have its own business permit. a business permit is needed for purposes of regulation. c.c. The City government ask your opinion whether the botica be required to have a separate business permit from the hospital ? yes. The business permit of the hospital extends to the carenderia uner the one unit operation rule. Mary Congregation executes a MOA that qualified poor families residing in Davao City be given a priority for all their medical needs and for which the City Council provided the Congregation a monthly subsidy of P1M. Due to increase of patients availing the free hospitalization. no. no need to have a business permit. the City government and the St. the congregation constructed an extension clinic in Calinan. the carenderia must have its own business permit. the subsidy is proper. a. It deals on foods and not as treatment to the patients. to exclusively serve the natives residing in the hinterlands of Paquibato. ask you opinion whether a separate business permit be required ? yes. Davao City. No public shall be disbursed in favor of any religious organization. The management of the hospital opens a carenderia adjacent to the hospital building where patients watchers take their meals for a fee.

no. c. 2. no. taxes are the life and blood of the nation. no. leasing a property for a fee is no longer within the ambit of religious acivities.000. it is used for the improvement of the hospital. botica or carenderia itself.000. Max was sued for tax evasion. In the for lease area. since the hospital is exempt from income tax. To propagate their religion. no. May the bank be ordered to submit the bank records of the decedent ? . c. 2. a. yes. it is considered as fringe benefit which is considered tax exempt. The BIR is asking your opinion whether such worth P1. 7. b. yes. MCQ on Taxation of _______________________ 1. yes. wanted to examine the bank account of the decedent. botica and carenderia be subjected to income tax ? yes. the payment of the tax will not extinguish the civil liability. b. all revenue derived from whatever source is taxable. if ever there is an accumulated income. yes. d. d. the payment of the tax extinguish the criminal liability . Johnny died leaving behind an estate worth P100.00 as reported in the estate tax return. Hence. yes. d. The city council is asking whether it is proper to subject such activities of selling to a business permit ? a. Having paid the amount. 8. b. b.000. b. all activities related thereto. taxable.00 every year. they decided to sell its religious pamphlets in order to cover the cost of printing and the allowances of those selling them.yes. the payment of the tax will not extinguish the criminal liability.1 Decide whether the motion to dismiss his real property should be granted : c. the congregation constructed a building which Jolibee and Mcdo rented. Decide on whether the motion to dismiss the criminal action. all income derieved is taxable. to require them to have a business permit is tantamount to curtailment of their religious freedom. no. Therefore. such activities is exempt from any form of taxation as an exercise of freedom of religion. for purposes of regulation. any person who derives income from whatever source is liable to pay income tax. also enjoys tax exemption under the “one operation rule”. Hence. c. the suppose allowances of those selling the pamphlets is considered as an income. He filed a motion to dismiss the criminal action including the release of his properties. because the property subject of lease enjoys realty tax exemption. the payment of the tax extinguish the civil liability . The management decided to give a uniform to its employees worth P1.00 is subject to income tax ? a. all income derived from whatever source is taxable. But the BIR believes that it worth more than that amount. Is the rental subject to income tax ? a. because the lessor enjoys tax exemption.a. 9.no. d. no. 3. Would the “income” derived from the activities of the hospital.

what possible tax he should pay whenever he sold a real property ? a. Susan c. business tax d. provincial board of assessment. if he is engage in real estate business. where should the appeal be instituted ? a. in line with the estate tax return. capital gains tax c. sales tax b. capital gains tax c. yes. Unfortunately. Susan had an illegitimate child who was entrusted to her Lola for all the child’s needs. business tax d. local assessment board d. b. sales tax b.1 When the re-assessment is not favorable to the taxpayer. what possible tax he should pay : a.1 on the other hand.2 In the event that the appealed decision is unfavorable. in view of the bank secrecy law. The assessment of the real property of Max located at Tagum City was so exorbitant that he wanted to question the same. percentage tax 6. Where should the issue be brought for re-assessment ? a. court. (2) the submission and acceptance of the documents and . c. where should it be appealed ? a. court. the illegitimate father d. c. no. Who can claim the child as her or her dependent ? a. assessor’s office c. (1) the documents filed at the customs house. no. BOC GR#178759 August 11. in view of the examination of the estate tax return. court. CTA d. 2008 Taxation Facts : Chevron is engaged in importation of petroleum products which is immediately unloaded directly to its tanks upon arrival of the vessel. none of them Chevron vs. 4. mayor’s office 4. assessor’s office c. b. the total import duties were not paid within the 30 days from the entry.a. local assessment board d. 4. the Lola b. unless a consent or waiver of the decedent. Max sold his land. yes. b. d. percentage tax 5. SC 5. mayor’s office. b. Issue : what is meant by entry ? Held : The term “entry” in Tariff and customs law has a triple meaning.

with subsequent delivery. be final and conclusive upon all parties. resulting in the damage to another. Issue : what would be the effect if there is a failure to pay the customs duties within the nonextendible period of 30 days from entry ? Held : When the importer fails to file the entry within the said period. or by which an undue and unconscionable advantage is taken of another. due to the presence of fraud. their prompt and availability is an imperative need. the prescriptive period of the finality of liquidation under Section 1603 was inapplicable: Section 1603. Hence. Issue : whether an injunction before the court be allowed to stop the implementation of the collection of customs duties ? NO Held : Taxes are the lifeblood of the nation. such entry and passage free of duty or settlements of duties will. he “shall be deemed to have renounced all . – When articles have been entered and passed free of duty or final adjustments of duties made. and concealment involving a breach of legal or equitable duty. Concept of fraud Fraud comprises anything calculated to deceive. Tariff and customs duties enables the government to carry out the functions for the welfare of its constituents. trust or confidence justly reposed. unless the liquidation of the import entry was merely tentative. Issue : when is there an entry ? Held : The operative act that constitutes “entry” of the imported articles at the port of entry is the filing and acceptance of the “specified entry form” together with the other documents required by law and regulations. from the date of the final payment of duties. Note : These duties and taxes must be paid in full before the BOC can allow the release of the imported articles from its custody. Finality of Liquidation. including all acts. after the expiration of one (1) year. Hence. in the absence of fraud or protest or compliance audit pursuant to the provisions of this Code. omissions. and they must be collected without unnecessary hindrance.(3) the procedure of passing goods through the customs house.

An imported article is deemed abandoned under any of the following circumstances: a. Abandonment of Imported Articles. Section 1802 of the TCC provides: Sec. as amended by RA 7651. or b. Abandonment.An abandoned article shall ipso facto be deemed the property of the Government and shall be disposed of in accordance with the provisions of this Code. importer. Issue : whether RA 7651 is arbitrary and confiscatory law ? . When the owner. there was no need for any affirmative act on the part of the government with respect to the abandoned imported articles since the law itself provides that the abandoned articles shall ipso facto be deemed the property of the government. When the owner. . fails to file an entry within thirty (30) days.” Thus. consignee or interested party after due notice. Kinds and Effect of. importer. . consignee of the imported article expressly signifies in writing to the Collector of Customs his intention to abandon. which shall not be extendible.his interests and property rights” to the importations and these shall be considered impliedly abandoned in favor of the government: Guiding principle An Abandoned Article Shall Ipso Facto be Deemed the Property of the Government. Ownership over the abandoned importation was transferred to the government by operation of law under Section 1802 of the TCC. Issue : when is there an abandonment ? Held : Section 1801. the legislature removed the need for abandonment proceedings and for a declaration that the imported articles have been abandoned before ownership thereof can be transferred to the government. Issue : whether there is a need for an abandonment proceedings be conducted before the BOC ? NO Held : By using the term “ipso facto” in Section 1802 as amended by RA 7651. from the date of discharge of the last package from the vessel or aircraft Note to the examinee It is enough that the importer fails to file the required import entries within the reglementary period. 1802.” or “by the fact itself. Explanation The term “ipso facto” is defined as “by the very act itself” or “by mere act.

. There is a legal presumption of validity of these laws and rules. Accordingly. harsh and confiscatory to deprive importers of their property rights just because of their failure to timely file the IEIRD. Issue : Since there is an abandonment. the legal presumption of its validity stands. The question of constitutionality must be raised at the earliest opportunity. the abandoned shipments were deemed the property of the government. orders. Held : We have ruled time and again that : 1. In effect. petitioner is challenging the constitutionality of Sections 1801 and 1802 by contending that said provisions are violative of substantive and procedural due process. When Chevron withdraw the petroleum from is tank.Held : Petitioner claims it is arbitrary. Collateral attack on a presumably valid law is not allowed. or such other rules with the force of law cannot be attacked collaterally. Unless a law or rule is annulled in a direct proceeding. The constitutionality or validity of laws. it became liable for the total dutiable value of the shipments of imported crude oil. Law is deemed valid unless declared null and void by a competent court. it appropriated for itself properties which already belonged to the government. Issue : whether there was abandoment when chevron failed to pay the import duties within the 30 days from entry ? Held : Petitioner’s failure to file the required entries within a non-extendible period of 30 days from date of discharge of the last package from the carrying vessel constituted implied abandonment of its oil importations. is as if buying from the government the petroleum ? YES Held : When Chevron withdrew the oil shipments for consumption. This means that from the precise moment that the nonextendible 30 day period lapsed.

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