4TH ANNUAL REGIONAL CONVENTION NFJPIA CUP-MASTER IN BLT

MASTER IN BUSINESS LAWS AND TAXATION

EASY ROUND
E1. If there is a concurrence of two or more creditors and/or two or more debtors in one and the same
obligation, the obligation is presumed to be
a) Individual and collective
b) Solidary
c) Joint and several
d) Joint
Answer: D. Joint

E2. Statement 1: P in writing appoints A as his agent to sell his specific parcel of land for P10,000. A sold
it to X orally. The contract between A and X is valid.
Statement 2: P orally appoints A as his agent to sell his specific land for P10,000. The contract between A
and X is valid.
a) Statement 1-True; Statement 2-False
b) Statement 1 – True; Statement 2-True
c) Statement 1 – False; Statement 2 – True
d) Statement 1 – False; Statement 2 – False

Answer: A - Statement 1-True; Statement 2-False

Statement 1 is true because the appointment was in writing, and all essential elements of a contract of
sale are present.
Statement 2 is false, the sale is void because this is a sale of a parcel of land thru an agent, and the
authority of the agent must be in writing. The sale to X is void and inexistent.

E3. The common characteristic of transfer taxes is the transfer of property:

a) Is onerous
b) Takes effect during the lifetime of the transferor.
c) Takes effect upon the death of the transferor.
d) Is gratuitous.
Answer: D – Is gratuitous.

E4. Which is incorrect?

a) Collection of taxes is an administrative act
b) There can be no tax if there is no law providing for said tax
c) No person can be imprisoned for non payment
d) A tax imposed outside the situs of taxation is void
Answer: C – No person can be imprisoned for non payment

E5. A, B and C are solidary debtors of X in the amount of P9,000. Subsequently, X renounced the share of
‘A’. ‘A’ accepted the renunciation of his share. On due date, B paid X P6,000. B demanded reimbursement
from C but C is insolvent. In this case:
a) B may demand the payment of 3,000 from A.
b) B may not demand any payment from A because the share of A had already been renounced or
condoned.
c) B may demand P1,500 from A representing A’s share in C’s insolvency.
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d) B may demand from A P4,500 so that their sharing in the total debt is equal.

Answer: C - B may demand P1,500 from A representing A’s share in C’s insolvency.

E6. Which obligation is not valid?

a) I promise to give you P100,000 on December 31, 2012.
b) I promise to give you P100,000 if I go to Quezon City this weekend.
c) I promise to give you P100,000 if your patient dies.
d) I promise to give you P100,000 if you pass the May 2013 CPA Board Examination

Answer: B - I promise to give you P100,000 if I go to Quezon City this weekend.

E7. All of the following are allowed as deductions from the gross estate of a non-resident alien, but are
prorated between Philippine gross estate and the total or world gross estate, except:
a) Funeral expenses
b) Claims against the estate
c) Unpaid taxes
d) Transfer for public purpose

D – Transfer for public purpose

The value of the net estate of a decedent who is a non-resident alien in the Philippines shall be
determined by deducting from the value of that part of his gross estate which at the time of his death is
situated in the Philippines the following items of deductions:
 Expenses, losses, indebtedness and taxes – xxx
Philippines gross estate
X Expenses, losses, indebtedness and taxes
World gross estate
 Property previously taxes;
 Transfer for public use;
 Net share of the surviving spouse in the conjugal property or community property.

E8. Which of the following is an example of “emptiospei”?

a) Sale of puppies of a specific dog expected to give birth on June 2011
b) Sale of mango fruits which will be harvested from a particular grove
c) Sale of a lottery ticket
d) Sale of sugar which will be produced from a particular field
Answer: C – Sale of a lottery ticket

E9. The following are common to the inherent power of taxation, power of eminent domain and police
power, except for which of the following?
a) They are necessary attributes of sovereignty.
b) They interfere with private rights and property
c) They affect all persons or the public.
d) They are legislative in implementation.

Answer: C – They affect all persons or the public.

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E10. Three of the following are not authorized to issue no par value shares of stocks. Which is the
exception?
a. Insurance companies. c. Public utilities.
b. Educational institutions d. Trust companies.
Answer: B – Educational institutions

AVERAGE ROUND
A1. True or False.
I. Denied input VAT refund can be claimed as deductible expense for income tax purposes.
II. A company with the intention of claiming input VAT refund must simultaneously file the said
claim with the BIR and petion with CTA to avoid dismissal of the case because of the lapsing of
the 2 year period provided under Section 112 of the tax code, as amended.
Answer: True; False

A2. Boy Bonafe resided in Bacoor, Cavite while his place of work is in Sampaloc, Manila. He files his
income tax return for 2006 income on September 10, 2007 in Quezon City because the Revenue District
Officer in the place is his college friend. The amount of tax due is P100,000. How much will be the total
penalty (surcharge and interest) on delinquency?
Answer: P58,091.33 (50,000 + 8,091.33)
April 15-August 15 ( P 100,000 x 20% x 4/12) P6,666.67
Aug.15-Sept. 10 (P 100,000x20% x 26/365) 1,424.66
Interest on delinquency 8,091.33

A3. For filing false and fraudulent return, a surcharge is imposed. Which of the following is correct?
a) 50% administrative penalty
b) 50% criminal penalty
c) 25% plus 50%
d) 25% criminal penalty
Answer: A – 50% administrative penalty

A4. For purposes of availing of a family home deduction to the extent allowable, a person may constitute:
a) As many gamily homes as possible.
b) Only one family home.
c) One family home for each spouse.
d) One family for each child.
Answer: B – Only one family home.

A5. Who shall claim the deduction for premiums paid during the taxable year for health and/or
hospitalization insurance?
a) The husband always
b) The wife always
c) The spouse claiming the additional exemption for dependents
d) The spouse who has the higher income
Answer: C – The spouse claiming the additional exemption for dependents

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A6. Aliw Service Corporation registered with BIR in 2004 and has the following data for the year 2011:
 Gross receipts P1,000,000
 Discounts given 100,000
 Returns and allowances 150,000
 Salaries of personnel directly involved in the supply of services 300,000
 Fees of consultants directly involved in the supply of services 50,000
 Rental of equipment directly used in the supply of services 70,000
 Operating expenses 420,000
How much is the income tax due and payable?
Answer: P6,600
Gross receipts 1,000,000 RCIT -
Less: Dicsounts (100,000) MCTI (330,000 x 2%) 6,600
Returns and allowance (150,000) (250,000)
Net receipts 750,000 Tax due and payable (higher) 6,600
Less: Cost of services
Salaries of personnel (300,000)
Fees of consultants (50,000)
Rental of equipment (70,000) (420,000)
Gross income 330,000
Less: Operating expenses (420,000)
Net operating loss (90,000)

A7. An overseas contract worker is allowed an additional exemption

a) Only when his qualified minor dependent children actually live with him abroad
b) When he and his wife have income from common property situated in the Philippines that provide
chief support to his minor dependent children
c) When he has qualified dependent children in the Philippines whom he provides chief support with on
a regular basis from his income wholly earned outside the Philippines
d) When he has no income from Philippine sources, and he has not waived his right over the additional
exemption for his dependent children
Answer: B - When he and his wife have income from common property situated in the Philippines
that provide chief support to his minor dependent children

A8. How much is the deductible Pag-ibig membership contribution for someone whose monthly salary is
P 4,000?
Answer: P80 (4,000 x 2%)

A9. A Vat-registered taxpayer engaged in the supply of services has the following data taken from its
books for the month of January 2011:
 Accounts receivable, January 1, 2011 560,000
 Sales on account for the month of January 1,000,000
 Cash sales for the month of January 300,000
 Accounts receivable, January 31, 2011 784,000
How much is the output tax for the month of January 2011 using 12% VAT rate?

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Answer: P132,000
Cash sales 300,000
Collections from receivables (500,000+1,000,000 - 700,000) 800,000
Gross receipts 1,100,000
Tax rate 12%
Output tax 132,000

A10. A company engaged in hauling sold a hauling truck in installment on July 1, 2011. The following
data were presented in connection with the sale:
 Cost of truck, January 2009 P950,000
 Accumulated depreciation, July 1, 2011 350,000
 Terms of sale:
Down payment, July 1, 2011 225,000
Installment due, July 1, 2012 225,000
Installment due, July 1, 2013 450,000
How much is the taxable income in 2011?
Answer: P75,000
Selling price 900,000
Book value (950,000-350,000) (600,000)
Gain 300,000

2011 - 300,000/900,000 x 225,000 75,000

Initial payment/selling price = 225,000/900,000 = 25%

When the property sold is an ordinary asset, the basis is the book value of the property sold,

DIFFICULT ROUND
D1. One of the following is not an intangible personal property situated in the Philippines.
a) Shares, obligations or bonds issued by any corporation or sociedad anonima organized or constituted
in the Philippines in accordance with its laws
b) Shares, obligations or bonds issued by any foreign corporation 85% of the business of which is
located in the Philippines
c) Shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds
have acquired business situs in the Philippines
d) Shares, obligations or bonds issued by a non-resident foreign corporation.

Answer: D – Share, obligations or bonds issued by a non-resident foreign corporation

The shares, obligations or bonds in letter d are not classified as intangible within the Philippines because
there is no mention that the issuing foreign corporation’s business is 85% located in the Philippines. The
same shares, obligations or bonds have not also acquired business situs in the Philippines.

D2. A remedy in equity by means of which a written instrument is made so as to express or conform to
the real intention of the parties when some error or mistake has been committed.
Answer: Reformation

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D3. The books of account are required to be audited and examined yearly by an independent CPA if the
gross quarterly sales, earnings, receipts or output exceed ______________________.
Answer: P150,000

D4. Bank Ket has the following income (loss):

March 2012: Interest income with maturity of less than five (5) years P50,000
Rentals 50,000
Net trading loss (10,000)
April 2012: Interest income with maturity of less than five (5) years P100,000
Rentals 50,000
Net trading gain 20,000
How much is the gross receipts tax for the month of April 2012?
Answer: P9,200
Interest income (100,000 x 5%) 5,000
Rentals (50,000 x 7%) 3,500
Net trading gains (20,000-10,000) x 7% 700
Gross receipts tax 9,200

D5. Babes Corp. imported an article from Japan. The invoice value of the imported article was ¥1,000,000
(¥1 = 0.35). the following were incurred in connection with the importation:
 Insurance P15,000
 Freight 10,000
 Postage 5,000
 Wharfage dues 7,000
 Arrastre charges 8,000
 Brokerage fees 25,000
 Facilitation fee 3,000
The imported article was subject to P50,000 customs duties and to P30,000 excise tax. After the release
from the Bureau of Customs, Babes Corp. paid P5,000, net of VAT, for trucking to a warehouse in Quezon
City. It also paid warehousing rent of P10,000, net of VAT. How much was the VAT on importation using
12% VAT RATE?
Answer: P60,000
[(1,000,000 x 0.35) +50,000 + 30,000 +15,000 + 10,000 + 5,000 + 7,000 + 8,000 + 25,000] 12% =
P60,000

D6. _________________ is a sale of securities where substantially identical securities are acquired or
purchased within a 61-day period beginning 30 days before the sale and ending 30 days after the sale.
Answer: Wash Sale

D7. The following are the data of City Appliances Marketing Co. for the last quarter of 2011:
 Sales up to December 15, total invoice value P319,200
 Purchases for November up to December 15, net of input taxes 215,000
Additional information: On December 16, 2011, the City Appliances Marketing Co. retires from its
business. The inventory valued at P190,000 is taken and transferred to New City Appliances Co. There is
a deferred input tax of P3,500 for the third quarter. How much is the total value-added tax due from the

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City Appliances Marketing Co. for its operations in the last quarter and its retirement from business using
12% VAT rate?
Answer: P27,700
Actual sales (319,200 x 12/112) 34,200
Deemed sales (190,000 x 12%) 22,800
Output taxes 57,000
Input taxes:
On purchases (P215,000 x 12%) (25,800)
Carried from previous quarter (deferred input tax) (3,500)
Value-added tax due 27,700

D8. Which of the following shall be subject to garnishment and not distraint?
a) Stocks and other securities
b) Debts and credits
c) Bank account
d) None of the choices

Answer: C – Bank account

Section 208. Procedures for Distraint and Garnishment – the officer serving the warrant of distraint shall
make or cause to be made an distrained, a copy of which, signed by himself, shall be left either with
owner or person from whose possession such goods, chattels, or effects or other personal property were
taken, or at the dwelling or place of business of such person and with someone of suitable age and
discretion, to which list shall be added a statement of the sum demanded and not of the time.

BANK ACCOUNTS shall be garnished by serving a warrant of garnishment upon the taxpayer and upon
the president, manager, treasurer or other responsible officer of the bank. Upon receipt of the warrant
garnishment, the bank shall turn over to the Commissioner so much of the bank accounts as may be
sufficient to satisfy the claim of the Government.

D9. In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, any
internal revenue tax which has been assessed within the ten (10) year period may be collected by
distraint or levy or by a proceeding in court within how many years following the assessment of the tax?
Answer: Five (5) years

D10. A non-resident alien decedent who is unmarried, left the following properties:
 Car, Manila P500,000
 Car, USA 600,000
 Shares of stock, USA 600,000
 Share of stock, Manila 400,000
 House and lot, USA 800,000
 Bank deposit, PNB-Manila 100,000
The administrator claimed the following deductions:
 Actual funeral expenses 40,000
 Judicial expenses 30,000
 Claims against the estate 20,000
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 Transfer for public use 10,000

How much was the total deductions form Philippine gross estate in connection with Philippine estate tax?
Answer:P40,000
Funeral expense:
Actual 40,000
Limit (1,000,000 x 5%) 50,000
Allowed (lower) 40,000
Judicial expenses 30,000
Claims against the estate 20,000
Total expenses, losses, indebtedness, taxes, etc 90,000

Deductible expenses, losses, indebtedness, taxes, etc

(1,000,000/3,000,000 x P90,000) 30,000
Transfer for public use 10,000
Total deductions from Philippine gross estate 40,000

CLINCHER QUESTIONS
C1. When the donor has no legal residence in the Philippines, the donor’s tax return shall be filed with
the:
a) Authorized agent bank
b) Revenue District Officer where the donor is domiciled.
c) Revenue Collection Officer where the done is domiciled.
d) Officer of the Commissioner.
Answer: D – Officer of the Commissioner

C2. Which of the following shall be considered livestock for VAT-exempt transactions purposes?
a) Cows
b) Bulls and calves
c) Sheep
d) Race horses
Answer: D - Race horses

C3. If the total quarterly sales amounted to P2,000,000 and the total quarterly purchases amounted to
P1,500,000, what summary list/s shall be submitted?
a) Summary list of sales and summary list of purchases
b) Summary of sales only
c) Summary of purchases only
d) None of the choices
Answer: C – Summary of purchases only

C4. Agence France Press, a news service, has used communication facilities to send its news to its head
office in Paris, France. During the current month, it paid a total of P500,000 for its overseas
communications originating from the Philippines. How much is the overseas communications tax due?
Answer: None
The overseas communications shall not apply to:
Xx
Xx
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Xx
(4) News services – amounts paid for messages from any newspaper, press association, radio or
television newspaper, broadcasting, agency, or newsticker service or to a bona fide correspondent which
messages deal exclusively with the collection of news item for, or the dissemination of news item
through, public, press, radio or television broadcasting or a newsticker service furnishing a general news
service similar to that of the public press.

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