Philippines Business Law & Taxation Questions and Answers

 Business Law & Taxation Questions and Answers as follows:

1.    Which of the following individuals shall not be subject to the income tax under Section 24 (A)?

D	a.	Individual citizen of the Philippines residing therein;
	b.	Individual citizen of the Philippines who residing outside the Philippines including overseas contract workers;
	c.	Individual alien who is a resident of the Philippines;
	d.	Individual alien who is not a resident of the Philippines.

2.    Which of the following income is not from a related trade, business or activity of a domestic proprietary educational institution? 

A	a.	Income from rent of available office spaces in one of the school buildings
	b.	Income from the hospital where medical graduates are trained for residency
	c.	Income from the canteen situated within the school campus
	d.	Income from bookstore situated within the school campus

3.    How much is the annual community tax for individuals?

D	a.	P 25	c.	P 10
	b.	P 20	d.	P 5

4.    Under this system there is a merger of all the properties of the husband and the wife owned by them at the time of the celebration of the marriage, or those acquired thereafter.

B	a.	Conjugal partnership of gains
	b.	Absolute community of properties
	c.	Complete separation of properties
	d.	None of the choices

5.    Which is not an essential characteristic of tax?

A	a.	Limited as to amount
	b.	Proportionate in character
	c.	Payable in money
	d.	Regular payment

                 

6.    A contract of sale is not a

D	a.	Principal contract	c.	Consensual contract
	b.	Nominate contract	d.	Real contract

7.    “I promise to pay P or his order the sum of P 10,000.00 30 days after the death of X.” This is an instrument payable:

A	a.	At a determinable future time
	b.	On Demand
	c.	Upon the fulfillment of a condition
	d.	At an indefinite time, hence, non-negotiable

8.    A corporation acquires juridical personality

C	a.	Upon the filing of the articles of incorporation
	b.	Upon the filing of the by-laws
	c.	Upon the issuance of the certificate of incorporation
	d.	Within 30 days from receipt of notice of the issuance of the certificate of incorporation

9.    It is the right of the mortgagor to redeem the property that was mortgaged after it was sold.

B	a.	Equity of redemption	c.	Right of subrogation
	b.	Right of redemption	d.	Right of pre-emption

10.  A with violence in her eyes intimidated her husband B to sell his exclusive property to her. The contract of sale is

B	a.	Rescissible	c.	Unenforceable
	b.	Voidable	d.	Void

  

11.    Which of the above will be subject to a 25% civil penalty of the tax or of the deficiency tax?

D	a.	Willful neglect to file the return within the period prescribed by the Tax Code or rules and regulations
	b.	A false or fraudulent return is willfully made
	c.	A person who is not VAT-registered issues an invoice or  receipt showing his TIN, followed by the word "VAT"
	d.	Failure to file any return and pay the tax due thereon as required under the provisions of the Tax Code or rules and regulations on the date prescribed

12.    Which of the following statements is INCORRECT?

D	a.	The amount of “de minimis” benefits conforming to the ceiling prescribed in the Tax Code shall not be considered in determining the P30,000 ceiling of “other benefits” included in the exempt 13th  month and other benefits;
	b.	If the employer pays more than the ceiling prescribed for “de minimis” benefits, the excess shall be taxable to the employee receiving the benefits only if such excess is beyond the P30,000 ceiling.
	c.	Any amount given by the employer as benefits to its employees, whether classified as de minimis or fringe benefits, shall constitute as deduction upon such employer;
	d.	Representation and transportation allowance which are fixed in amounts and regularly received by the employees as part of their monthly compensation shall be treated as taxable fringe benefits if received by managerial and supervisory employees.

13.    Penalties and/or interest imposed on the taxpayer may be abated or cancelled on the ground     that the imposition thereof is unjust and excessive, except when:

A	a.	The taxpayer is declared insolvent or bankrupt.
	b.	The filing of the return or payment of the tax is made at the wrong venue.
	c.	The taxpayer’s mistake in payment of his tax is due to erroneous written official advice of a revenue officer.
	d.	The assessment is brought about or a result of the taxpayer’s non-compliance with the law due to a difficult interpretation of the said law.

14.    The actual residential home of the decedent and his family at the time of his death, as               certified by the Barangay Captain of the locality where the family home is situated, has a fair   market value of P3,000,000. The family home is part of the common property of the spouses.   How much is the family home deduction?

B	a.	P1,500,000	c.	P750,000
	b.	P1,000,000	d.	P500,000

15.    A negotiable instrument that is not dated will be considered dated as at the time of

D	a.	Acceptance	c.	Last endorsement
	b.	First endorsement	d.	Issuance

16.    A delinquent stockholder is not entitled to the following rights, except the right:

C	a.	To be voted
	b.	To vote or be represented in the meetings of stockholders
	c.	To dividends
	d.	He is not entitled to all the rights of a stockholder

17.    Three of the following partnership contracts are void.  Which one is not?

C	a.	A universal partnership of present property between husband and wife
	b.	A universal partnership of profits between a man and a woman living together as husband and wife without the benefit of marriage
	c.	A particular partnership between husband and wife
	d.	A universal partnership between a private individual and a public officer

18.    The following are modes of extinguishing an agency, except:

D	a.	Death, civil interdiction, insanity or insolvency of the principal or agent
	b.	Accomplishment of the purpose of the agency
	c.	Expiration of the period for which the agency was constituted
	d.	Continued losses on the part of the principal or agent

20.  Three of the following instances will render an offer ineffective before acceptance is          conveyed.  Which one will not?

D	a.	Civil interdiction of either party	c.	Insanity of either party
	b.	Insolvency of either party	d.	Intoxication of either party

      21.   The taxpayer's 2003 percentage tax return is required to be filed through the authorized agent              bank under the jurisdiction of RDO East Makati.  Without prior authorization from the                        Commissioner, the taxpayer files the return and pays the tax through an authorized agent                      bank under the jurisdiction of RDO Davao City on June 30, 2004.  The tax due per return is                P100,000.

 How much is the total amount due on June 30, 2004

A	a.	P 154,155.25	c.	P 25,000.00
	b.	P 129,155.25	d.	None of the choices

22.    Which of the following shall not be subject to income tax?

I-	Pedro Reyes, an official of Corporation X, asked for an “early retirement” because he was emigrating to Australia.  He was paid P2,000,000 as a separation pay in recognition of his valuable services to the corporation.
II-	Juan Cruz, another official of the same company was separated for occupying a redundant position. He was given P500,000 as separation pay.
III-	Jose Bautista was separated due to his failing eyesight.  He was given P500,000 as separation pay.

All the three (3) were not qualified to retire under the BIR-approved pension plan of the corporation.

D	a.	I, II and III	c.	I only
	b.	I and II	d.	II and III only

23.    This refers to the control number issued by authorized agent bank (AAB) to the taxpayer and  BIR to acknowledge that the taxpayer's account has been successfully debited electronically    in payment of his tax liability.

C	a.	Filing Reference Number
	b.	Acknowledgment Number
	c.	Confirmation Number
	d.	Taxpayer's Information Number

24.    A taxpayer paid excessive tax on April 15, 2000. On December 20, 2001, she filed a written claim for refund. Her claim was denied by the BIR and she received the denial on March 15, 2002.  She filed a motion for reconsideration with the BIR on March 31, 2002.  On April 10, 2002, she received the final denial of the BIR.  What will be the taxpayer’s remedy?

C	a.	File another motion for reconsideration with the BIR within 30 days after the receipt of the final denial
	b.	File an appeal with the Court of Tax Appeals on or before May 10, 2002
	c.	File an appeal with the Court of Tax Appeals on or before April 15, 2002
	d.	The taxpayer has no more remedy against the final denial

25.    A VAT subject real estate dealer sold a residential lot on January 15, 2014.  The following information was made available on the terms of the sale:

Gross selling price	P   3,000,000
Initial payments on January 15, 2014	750,000
Balance to be paid in equal installment,     installments starting February 15, 2014	2,250,000

              

The zonal value of the residual lot was P3,500,000.

How much was the output tax on January 15, 2014 using 12% VAT rate?

C	a.	P 420,000	c.	P 105,000
	b.	P 360,000	d.	None of the choices

26.    Payment made to a third person is valid to extinguish the obligation of the debtor to the creditor in the following cases, except:

A	a.	After payment to the creditor, the third person acquires the creditor’s right.
	b.	When the creditor ratifies the payment to the third person.
	c.	When through the creditor’s conduct, the debtor was led to believe that the third person had authority to receive payment.
	d.	When the third person is subrogated to the rights of the creditor.

27.    N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued at P 60,000. The obligation was not fulfilled through the fault of J. Thereupon, S filed an action in court against N and the court awarded P 72,000 to S representing the value of the motorcycle plus damages. Which of the following situation is valid?

D	a.	If N pays S the P 72,000, N can collect R and J P 24,000 each
	b.	S has to collect P 24,000 each from N, R and J to satisfy the court’s award of P 72,000
	c.	N can refuse to pay the penalty because it should be charged against J, the guilty party
	d.	If S succeeds in collecting the P 72,000 from N, N in turn can collect from R P 20,000 and from J P 32,000

28.    P authorized A, a minor, to sell his car for P 1,000,000 in cash. A sold the said car to X on installment at a lesser price of P 900,000. P is now repudiating the contact with X on the ground that he is not bound to since X contracted with a minor who exceeded his authority. Decide.

A	a.	P is liable under the contract because it is enough that the principal is capacitated since he is the one entering into the contract.
	b.	P is not liable for the sale on installments since it is unenforceable because his agent acted beyond his powers.
	c.	P is not liable because the agent is a minor with whom X contracted
	d.	P is liable provided the sale is in cash for P 1,000,000.

29.    A gets a loan of P 1,000,000 from B which becomes due on October 1, 2008 and mortgaged his house as security for the debt. On June 30, 2008, the mortgaged house completely destroyed the fire through the fault of C. A week later, B demanded payment from A. Is B’s demand valid?

C	a.	No, the destruction of the house was not thru the fault of A.
	b.	No, the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and creditor
	c.	Yes, the debt becomes demandable unless A can give another security equally satisfactory
	d.	Yes, the debt becomes demandable even if A can give another security equally satisfactory

30.  One of the following characteristics of dacion en pago is also a characteristic of a contract of sale.  Which is it?

D	a.	There is a pre-existing credit
	b.	Obligations are extinguished
	c.	There is less freedom in fixing the price
	d.	Ownership of the object transferred to the other party

31.    An obligation where various prestations are due but the performance of all of them is              required in order to extinguish the obligation is known as:

C	a.	Alternative obligation	c.	Conjunctive obligation
	b.	Facultative obligation	d.	Simple obligation

32.    It is an affirmation of fact or any promise by the seller relating to the thing which has a          natural tendency to induce the buyer to purchase the same, relying on such promise or              affirmation.

C	a.	Condition	c.	Warranty
	b.	False representation	d.	Seller’s talk

33.    Which of the following contacts is rescissible?

C	a.	Contracts entered into during a hypnotic spell
	b.	Contracts entered into in a state of drunkenness
	c.	Contracts entered into to defraud creditors when the latter cannot collect the claims due them
	d.	Contracts where both parties are incapable of giving consent

34.    Which among the following contracts is void?

D	a.	A contract of barter between S, insane, and B, 17 years old
	b.	A contract of sale where B, the buyer, twisted the arm of S, the seller, so that S would sign the deed of sale
	c.	A contract of sale where B, the buyer, aimed a gun at the wife of S, so that S would sign the deed of sale
	d.	A contract for the sale of a cow which is suffering from a contagious disease

35.    Who among the following is the holder of a negotiable instrument originally payable to             order?

B	a.	The original payee who has negotiated the instrument
	b.	The endorsee who is in possession of the instrument
	c.	The possessor of the instrument to whom the instrument was delivered without any endorsement
	d.	The endorsee who has negotiated the instrument

36.    An instrument payable to bearer may be negotiated through any of the following means,          except:

D	a.	Special endorsement plus delivery
	b.	Mere delivery
	c.	Blank endorsement plus delivery
	d.	No delivery is required as long as there is an endorsement, whether blank or special

37.    One of the following is not a characteristic of contract of partnership.

A	a.	Real, in that the partners must deliver their contributions in order for the partnership contract to be perfected
	b.	Principal, because it can stand by itself
	c.	Preparatory, because it a means by which other contracts will be entered into
	d.	Onerous, because the parties contribute money, property, industry to the common fund

38.    Recording in the Registry of Property in the appropriate book is required for the validity of the contract of:

A	a.	Chattel mortgage	c.	Conventional pledge
	b.	Real mortgage	d.	Antichresis

39.    A, B, C and D, joint debtors, are obliged to give V, W, X, Y and Z, solidary creditors, P 20,000.00

C	a.	V may collect from B P 20,000	c.	V may collect from B P 5,000
	b.	V may collect from B P 4,000	d.	V may collect from B P 1,000

40.  The following are modes of extinguishing an agency, except:

D	a.	Death, civil interdiction, insanity or insolvency of the principal or agent
	b.	Accomplishment of the purpose of the agency
	c.	Expiration of the period for which the agency was constituted
	d.	Continued losses on the part of the principal or agent

Policies, Guidelines and Procedures in the Issuance of Importer's Clearance Certificate and Customs Broker's Clearance Certificate Relative to Accreditation as Importer/Customs Broker

The bureau just recently issued Revenue Memorandum Order No. 33-2014 amending Policies, Guidelines and Procedures in the Issuance of Importer's Clearance Certificate and Customs Broker's Clearance Certificate Relative to Accreditation as Importer/Custom Broker.

In Section II - Policy Amendments - A. Amendments on Documentary Requirements stated as follows:

1. Certified true copy of business Name registration shall not be required from a customs broker who has no trade name when he/she registered with the BIR.

2. Applicants which are BOI/PEZA-registered entities or those located at Freeport or special economic zones enjoying tax incentives shall be required to submit their respective Certificates of Registration issued by the concerned Investment Promotions Agencies (IPAs), in addition to the regular requirements.

3. Applicants for ICC or BCC which are newly-registered with the BIR or one which was never accredited by the BOC as either importer or broker shall be required to submit printer's delivery receipt and proof of filing tax returns through the BIR's electronic filing and payment system for at least two consecutive months. Proof of single importation done shall no longer be required from applicant who are considered new importers/customs brokers.

While the Other Policy Amendments are stated in Section II. B of the RMO as follows:

1. Individual applicants with severe medical condition shall be allowed to be represented by his/her appointed "attorney-in-fact", supported by a duly notarized "Special Power of Attorney" and a medical certificate issued by the attending physician under oath, endorsed by any government physician.

2. Authorized officer of the non-individual applicant shall mean any of the officers listed in the Corporation's latest General Information Sheet (GIS) filed with the Securities and Exchange Commission (SEC). However, in the event the board authorized any person other than those officers indicated in the GIS, that person shall be required to execute a sworn statement that he/she shall likewise be jointly or severally liable or responsible in the problems shall arise with the filed application.

Moreover, under Section III stated the Revised Procedures in the Issuance of Provisional ICC/BCC of the following:

1. All importers and customs brokers which are in the list provided by BOC as of February, 2014 and were able to file their applications on or before July 31, 2014 shall be qualified to be issued Provisional ICC/BCC-

     a. If tax verification compliance has not yet been completed, the following minimum criteria must      be satisfied:

          1. Registered with the BIR (with Certiticate of Registration);

          2. Absence of delinquent account;

          3. Absence of any pending criminal case; and

          4. Not tagged as a "Cannot be Located (CBL)" taxpayer.

     b. If tax verification compliance has been completed, but applicant (except BOI/PEZA registered        entities or freeport or special economic zone locators) has been found to have failed in the any of         the following criteria:

          1. Regular eFPS user - provided, applicant was able to enroll in the eFPS facility; or

          2. With Certificate of Good Standing - provided, proof of application with the SEC has been               submitted; or

          3. Absence of unresolved discrepancy arising from the matching of third party information                  against taxpayer's tax declaration (Letter Notice arising from RELIEF/TRS - provided that the            case has not yet been reported as delinquent account; or

          4. Absence of outstanding tax liabilities - provided, such tax liabilities are covered by an                     application for abatement or compromise settlement which is pending review by the Bureau.

However, in the case the application for compromise settlement or abatement of penalties was not favorably acted upon by the concerned offices within the validity of the Provisional ICC/BCC, the same shall be considered as a valid ground for the eventual denial of the application for the issuance of a Regular ICC/BCC.

2. The list of qualified importers and customs brokers shall be posted in the BIR website and shall likewise be sent to the Bureau of Customs (BOC) through email to the BOC's Accounts Management Office. The said list shall serve as the BOC's reference in processing their respective accreditations, lieu of the physical copy of the certificate itself.

The concerned importers/brokers that were issued Provisional ICC/BCC shall likewise be sent notifications by the Accounts Receivable Monitoring Division (ARMD) through their respective email accounts. However, qualified importers/brokers may secure the copy of the certificate itself from the ARMD.

It shall be the responsibility of the importers/brokers issued Provisional ICC/BCC to initiate the verification from the concerned offices if they satisfied the criteria provided under RMO 10-2014, as amended, to ensure the issuance of a regular ICC/BCC before the expiration of the six-month validity period thereof, more specifically the following:

a. Outstanding Tax Liabilities covered by an application for abatement of penalties or compromise settlement - concerned taxpayers should actively follow-up with the concerned offices the decision on such application;

b. Open stop-filer cases - concerned taxpayers are advised to comply with the filing of the requisite tax returns and the update of their registration information if the same is causing the creation of invalid "stop-filer" cases;

c. Certificate of Good Standing - must be secured with the SEC;

d. Use of the eFPS in the filing of requisite tax returns - concerned taxpayers are advised to the use regularly the eFPS once enrollment with the system has been done;

e. Uploading of Summary Lists of Sales and Purchases (SLSP) - concerned taxpayers must ensure that these are periodically submitted to the district office where they are registered and the same are successfully uploaded in the database as certified by Audit Information, Tax exemption and Incentives Division (AITEID).

f. Uploading of Alphalist of Employees and Other Income Payees - concerned taxpayers must secure proofs of successful uploading of the electronically submitted data to the data warehouse. The certifications can be secured from the Miscellaneous Operations Monitoring Division (MOMD) and the concerned Revenue Data Center (RDC).

Complete documents on their compliance must be submitted to the ARMD at least thirty (30) days prior to the expiry date of the said Provisional ICC/BCC. In the event that the herein requirements have not been complied with by the concerned importer/broker and their respective Provisional ICC/BCC have expired, new application for ICC/BCC must be filed by the concerned importer/broker with the ARMD.

Once the full verification of their tax compliance has been completed by the ARMD based on the certified replies of concerned offices on the ARMD's request for verification, the regular ICC/BCC or denial letter on the expiry date of the Provisional ICC/BCC shall be deemed denial of their application for ICC/BCC.

3. The issuance of Provisional ICC/BCC is not applicable to applicants who are not in the list provided by BOC as of February, 2014. It shall likewise not apply to applicants included in the list but failed to file the application on or before July 31, 2014.