2006 BAR EXAMINATION
IN TAXATION LAW
BAR EXAMINATION 2006
TAXATION LAW
10 September 2006 2
P.M. - 5 P.M.
INSTRUCTIONS
This questionnaire consists of fourteen (14) numbers contained in eight
(8) pages. Read each question very carefully. Answer legibly, clearly,
and concisely. Start each number on a separate page; an answer to a
sub-question under the same number may be written continuously on the
same page and immediately succeeding pages until completed. Do not
repeat the question. A mere "Yes" or "No" answer without any
corresponding discussion will not be given any credit.
HAND IN YOUR NOTEBOOK WITH THIS
QUESTIONNAIRE
GOOD LUCK!!!
(Sgd.) ANGELINA S. GUTIERREZ
Chairperson
2006 Bar Examination Committee
PLEASE CHECK THE NUMBER OF PAGES IN
THIS SET
WARNING: NOT FOR SALE OR UNAUTHORIZED
USE
chanroblesvirtualawlibrary
TAXATION LAW
- I -
1. Enumerate the 3 stages or aspects of taxation.
Explain each. 5%
2. Distinguish "direct taxes" from "Indirect taxes". Give
examples. 5%
- II -
What is tax pyramiding? What is its basis in law? 5%
- III -
What properties are exempt from the real property tax? 5%
- IV -
Royal Mining is a VAT -registered domestic mining entity. One of its
products is silver being sold to the Bangko Sentral ng Pilipinas. It
filed a claim with the BIR for tax refund on the ground that under
Section 106 of the Tax Code, sales of precious metals to the Bangko
Sentral are considered export sales subject to zero-rated VAT.
Is Royal Mining's claim meritorious? Explain. 5%
- V -
Vanishing deduction is availed of by taxpayers to:cralaw:red
1. correct his accounting records to reflect the
actual deductions mad
2. reduce his gross income
3. reduce his output value-added tax liability
4. reduce his gross estate
Choose the correct answer. Explain. 5%
1. The Constitution provides "charitable institutions, churches,
parsonages or convents appurtenant thereto, mosques, and non- profit
cemeteries and all lands, buildings, and improvements actually,
directly and exclusively used for religious, charitable or educational
purposes shall be exempt from taxation." This provision exempts
charitable institutions and religious institutions from what kind of
taxes? Choose the best answer. Explain. 5%
1. from all kinds of
taxes, i.e., income, VAT, customs duties, local taxes and real property
tax
2. from income tax only
3. from value-added
tax only
4. from real property
tax only
5. from capital gains
tax only
- VI -
Congress enacts a law granting grade school and high school students a
10% discount on all school-prescribed textbooks purchased from any
bookstore. The law allows bookstores to claim in full the discount as a
tax credit.
1. If in a taxable year a bookstore has no tax due on
which to apply the tax credits, can the bookstore claim from the BIR a
tax refund in lieu of tax credit? Explain. 2.5%
2. Can the BIR require the bookstores to deduct the amount
of the discount from their gross income? Explain. 2.5%
3. If a bookstore closes its business due to losses
without being able to recoup the discount, can it claim reimbursement
of the discount from the government on the ground that without such
reimbursement, the law constitutes taking of private property for
public use without just compensation? Explain. 5%
- VII -
Congress enacts a law imposing a 5% tax on the gross receipts of common
carriers. The law does not define the term "gross receipts". Express
Transport, Inc., a bus company plying the Manila- Baguio route, has
time deposits with ABC Bank. In 2005, Express Transport earned P1
Million interest, after deducting the 20% final withholding tax from
its time deposits with the bank. The BIR wants to collect a 5% gross
receipts tax on the interest income of Express Transport without
deducting the 20% final withholding tax. Is the BIR correct? Explain. 5%
- VIII -
On June 1, 2003, Global Bank received a final notice of assessment from
the BIR for deficiency documentary stamp tax in the amount of P5
Million. On June 30, 2003, Global Bank filed a request for
reconsideration with the Commissioner of Internal Revenue. The
Commissioner denied the request for reconsideration only on May 30,
2006, at the same time serving on Global Bank a warrant of distraint to
collect the deficiency tax. If you were its counsel, what will be your
advice to the bank? Explain. 5%
- IX -
The Commissioner of Internal Revenue issued an assessment for
deficiency income tax for taxable year 2000 last July 31, 2006 in the
amount of P10 Million inclusive of surcharge and interests. If the
delinquent taxpayer is your client, what steps will you take? What is
your defense? 10%
- X -
The Collector of Customs issued an assessment for unpaid customs duties
and taxes on the importation of your client in the amount of
P980,000.00. Where will you file your case to protect your client's
right? Choose the correct courts/agencies, observing their proper
hierarchy. 5%
1. Court of Tax Appeals
2. Collector of Customs
3. Commissioner of Customs
4. Regional Trial Court
5. Metropolitan Trial Court
6. Court of Appeals
7. Supreme Court
- XI -
Charlie, a widower, has two sons by his previous marriage. Charlie
lives with Jane who is legally married to Mario. They have a child
named Jill. The children are all minors and not gainfully employed.
1. How much personal exemption can Charlie claim? Explain.
2.5%
2. How much additional exemption can Charlie claim?
Explain. 2.5%
- XII -
Mr. Abraham Eugenio, a pawnshop operator, after having been required by
the Revenue District Officer to pay value added tax pursuant to a
Revenue Memorandum Order (RMO) of the Commission.er of Internal
Revenue, filed with the Regional Trial Court an action questioning the
validity of the RMO.
If you were the judge, will you dismiss the case? 5%
- XIII -
Gerry was being prosecuted by the BIR for failure to pay his income tax
liability for Calendar Year 1999 despite several demands by the BIR in
2002. The Information was filed with the RTC only last June 2006. Gerry
filed a motion to quash the Information on the ground of prescription,
the Information having beer. filed beyond the 5-year reglementary
period.
If you were the judge, will you dismiss the Information? Why? 5%
- XIV -
Gold and Silver Corporation gave extra 14th month bonus to all its
officials and employees in the total amount of P75 Million. When it
filed its corporate income tax return the following year, the
corporation declared a net operating loss. When the income tax return
of the corporation was reviewed by the BIR the following year, it
disallowed as item of deduction the P75 Million bonus the corporation
gave its officials and employees on the ground of unreasonableness. The
corporation claimed that the bonus is an ordinary and necessary expense
that should be allowed.
If you were the BIR Commissioner, how will you resolve the issue? 5%
- XV -
Lily's Fashion, Inc. is a garment manufacturer located and registered
as a Subic Bay Freeport Enterprise under Republic Act No. 7227 and a
non-VAT taxpayer. As such, it is exempt from payment of all local and
national internal revenue taxes. During its operations, it purchased
various supplies and materials necessary in the conduct of its
manufacturing business. The suppliers of these goods shifted to Lily's
Fashion, Inc. the 10% VAT on the purchased items amounting to
PS00,000.00. Lily's Fashion, Inc. filed with the BIR a claim for refund
for 'the input tax shifted to it by the suppliers.
If you were the Commissioner of Internal Revenue, will you allow the
refund? 5%
- XVI -
Quezon City published on January 30, 2006 a list of delinquent real
property taxpayers in 2 newspapers of general circulation and posted
this in the main lobby of the City Hall. The notice requires all owners
of real properties in the list to pay the real property tax due within
30 days from the date of publication, otherwise the properties listed
shall be sold at public auction.
Joachin is one of those named in the list. He purchased a real property
in 1996 but failed to register the document of sale with the Register
of Deeds and secure a new real property tax declaration in his name. He
alleged that the auction sale of his property is void for lack of due
process considering that the City Treasurer did not send him personal
notice. For his part, the City Treasurer maintains that the publication
and posting of notice are sufficient compliance with the requirements
of the law.
1. If you were the judge, how will you resolve this
issue? 2.5%
2. Assuming Joachin is a registered owner, will your
answer be the same? 2.5%
NOTHING FOLLOWS.
Back to
Main Index
|