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{"PAFT

CPA Review Sclrool of the Philippines


Saturday, luly 27r20l3
FIRST PRE.BOARI} EXAMINATION
l0rfi)AM to l2:fi)Noon
Business Law end Taxation
rtrsfrtxtuts0hoose the BEST answer for each of the foltouuing items, Mark only one answer for each item on the Special
Answer Sheet provided. Strictly no erasure allowed.

obliged to give a brand n.* f,snrlla Altis valued at Php lM to C. C demands delivery
fr:om A and B but they failed to deliver tlre car Lrecause their money is not enough as A only had Php 50,000
vftile B only had Php 500,000. As a result, C can
$le!gmggg!- Ask from either A or B the delivery of the car plus darnages
SJatemegl,a * Ask from A the detrivery of the *ar plur damages
fiEtemen! 3 - Ask from B the delivery of the car without damages
a. All statements are correct
b. All statements are wrong
c" Only two statements are correct
11" Only one statement is correct

1. A and B are solidarily

2.

M, a minor owrs a specific ring valued at Php 1i10,00G. G, the guardian of M, by means of fraud induced B,
a minor to buy the ring for Php 75,000, which E did so and G effected delivery to B. The contract is not in
writing. Which is correct?
a. The contract is unenforoeable because M an<I B are hoth incapacitated to give consent
b. The contast is rescissible because M sufer':d a lesion of % of the value ofthe ring
c. The contract is voidable but G cannot ask for annulment of the contact
d. The contract is voidable but B can only ask ttrr ann.ulment within 4years from discovery of the fraud

3.

S sold to B her watch for Php 10,000. B will priy sr,1/{};i days after delivery. S eff[ected delivery on June 22,
2013. If today is June 30, 2013 and B has not eflected liaynent yet, is B in delay?
&. Yes, in reciprocal obligations, if one of the pa,ties lttfilts his obligation, delay by the other begins
b. No, unless S makes a demand No (LEGAL) delay if no demand. Ordinary delay lang.
t
Yes, because it was stipulated that B wiii pav rvrthin Tdays
d. No, the obligation of B'is with a period hence, S strould fust go to the court for the court to fix the

period

4. Whioh of the following statements is not corre*t',)

a.

b.

The vendor is 6ound to deliver thre thing sold anrJ its accessions and accessories in the condition in
rvhich they were upon the perfection uf the contract
Al1 the fruits of the thing sold shall pertain to thr vendor from the day on which the contract was
perfec'ted

c. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if
d.
A

5,

no period for the payment has been fixed in the contract


The vendor is bound to transfer the or.rynership of'and delirer, as well as warrant the thing which is
the object of sale

A take or leave it contract as the entries are aLready in the instrument and the parties to the conffact either
accept or reject is

&.
C

Contract of adhesion

b. Auta

oontract

c. Consensual

contract

d. Real contract

6. An agreement

where the pledgor or mortgagor will execute a contract transferring ownership of the property
pledged or mortgaged ta the pledgee or mortgag,ee. in case of default, such execr$ion of the contract will
result to
o. Dacion en pago
&. Pactumcornmissorium
d. Tender ofpaynent
b. Payment by cession

Dacion en pago is NOT pactum Commisorium.


Sa Pactum kasi, automatic. i.e without need of foreclosure proceedings (?)

7. When the fulfillment

of the valid suslrensive ccondition depends upon th* sole will of the debtor
is valid but thc condition is disregarded
Both the condition and obligation will be void
Both the condition and obligation will be valid
The obligation shall be void but the condition is valid

&. The obligation

b.
c.
d.
D

8.

An agricultural land is owned by A and D pro-indiviso. D sells his % partto R, who is the owner of the
adjoining laod. When A learned of the sale, trr tried to redeem the portion sold by D by reimbursing R with
the purchase price and expenses. Which is not *orrect?
a. A can compel R to perrrit redemption
b. A co-owner of a thing rnay exercise the right of redemption in case the shares of the other coowners or any one of them are sold to a third person
c. The sale to R is valid but A can elect to e:rercise his right of redemption
d. The saleto R is valid and as adjoining lanC owner he is the one entitled to redemption

9. A and B obliged themselves to deliver

.{,c

C valued at P200,000. If C demands the delivery


from A and B, and it is only B who is willing to deiiver, which of the following is the right of C?
a". To ask {iom B the delivery ofthe car because the objeot is indivisible
b. To ask for total rescission because of their iailure to deliver what is incumbent upon them
c. To ask from A the monetary consideration of P100,000 plus damages
d. To ask the payment of darnages from either A or B, but between A and B, A is the one liable for
a particuiar t:ar

damages

M, a minor, owns a specific ririg valued at Php 50,000. Later, G instructed M to sell the
ring for Php 55,000 promising to give to M Php 5,000 for his efforts. M sold the ring to B for Php 60,000.
Whieh ofthe following is correct?
a. B can recover the Php 5,000 because tlre price shr:uld have been Php 55,000 only
b. G is entitled to the Php 60,000 selling prioe because M should gnve er.erything to the priucipal
c. M will grve to G Php 50,000 and the exc,ass wiil helong to M
d. The contract is voidable because M is a minu

10. G, the guardian of

11. On July 4,

12.

2Al3,A,

B, a $rovie ao'ress met at the lobby of Manila Hotel. A informed


B that she is producing a movie, the filming of rrfur;tr nould start on September 1,2013 and that she was
offering B the lead role for a fee of P4,000,000. B accepted the offer and shook hands \Mith A to seal their
agreement and A gave B a check for P200 a-s iilitial payment. On September 1, 2013, A called B for the
shooting of the movie but B refuses to honor the agieer::ent saying that it was not enforceable, not being in
vriting. Which is correet?
a. A can enforce the contract against B because it was mutually agreed upon
b. A can require B to shoot the mcrris .'cr:ause B had accepted benefits under the contract
c. B may-iust return the payment beeause the agreement was made orally
d. E is not bound under her agreemerrt rx'jth A beoause the oontract involves an obligation to do
a movie producer, and

A,the husband of B, uses tbrce and violence to get E's consent, to a confract where B sold and delivered her
necklace to A and suffered a lesion of more vhur',1,\ r-rf tl,r value of the property. Which is correct?
a. B can ask for rescission because r,hil s*ftrered lesion of rnore than Y+ of the value of the

b.
c.
d.

property
Tlre contract of sale is voidable'l:ecause the consent of B is vitiated
The contract of sale is withouX aeftst ircnce A acquires good title over the necklace
The contract of sale is void because husband and wife cannot sell property to each other

A seltrs to B a Sony.Colored TV for P12,000 pa3,able ir twe!.ve equal rnonthly installments beginning May 5,
2010 and every 5* day of each month thereaf;er. 'fhe contract provides that upon failure to pay any
installment due, the whole balance beeornes dr.rs *nd denaandable. To secure the obligation, a chattel
mortgage over the TV set was exeouted. When B de'firulted on the 7m and 8th installments A sued B for the
Remedy payment
____________________
of the whole balance of P6,000. The TV set rvas levied and subsequently sold at a public sale for
,/
P5,000.
Can
A still recover the deficiency of Pi,OCI0 tiE*m B?
(1)
a. Yes, if there was stipulation to that effect c. No, any stipulation allowing recovery is void
b. Yes, even though there was no stipulation d. No, if there was no stipulation to that effect
B

13.

REMEDIES

(1) Exact fullfillment. Property is attached and subsequently sold. Entitled to deficiency.
(2) Cancel sale. Return car. Return a portion of amount paid (Max 90%. 50% (yr1-5) + 5% every yr thereafter)
(3) Foreclosure. Not entitled to deficieny.

which of the fbilowing *hligations is specif1; pertbrmaxce not avaiiable?


a. Obligation to repair the roof of the house of a client c. Obligation to give a specific thiog
d. Obligation to give a generic thing
b. Obligatiori to give support

14. In

15.

16. $tatement

A, with force an,C irrt-i;yrittation succeedeci in having carnal irnowledge of'8, a minor. Later, with anger in her
eyes, B threatened to gttr; A if A wiltr not many her. The marriage is
a" Valid, L,ecause the ttreat of B was founded upon a legal act
b. Voidabtre, because the consent of A was secured through intimidation
c. Unenforceable, because both were gur.lty of intirnidating each other
d. Void, because B is a minor

In novation by way of delegacion, there is revival of the original debtolls obligation if the
and also known
at the time of tielegacion if such. insolvency is known to the public XXX
F new debtor is insolvent _________________
"or" lang dapat.
to the original debtor,
olligation if the
debtor's
the
original
of
is
revivai
there
exprornission,
nay
of
b-v
2
In
novation
$tatepe;t XXX "or"
F new debtor is insolvent ___________________
at the tiure of eipromision if such insolvency is known to the original debtor and

I-

also known to the public


a. Both statenliltrH a1e true
b. Both soternents ara false

17.A was obliged to pay R PIM on December 31,2A14. A paid B o1 Deymber 31, 20tr3 aware that the
obligation iinot y"i due anci dernandable. How much may A recover from B on March 31'-201,5?
o. PIM plus legal interest for one year
a. Not'td*g

b.

Oniy Statement I is true


d. Only Statennent 2 is true
o.

18.

Leg*l ii.terest for one year and three months d. Legal iaterest for one year

A is indebted to B in r1e amount of P50,000, with C as guarantor. On due date, A tendered payment to B but
B refused. Because of'B's refusal A deposited the amount in court. After the approval of the consignation,
Which is correct?
The obligation of A to B is revived if B consents to the withdrawal of the money
The obligation of C to B is revived if B consents to the withdrawal of the money
The obfiation of A to B is extinguishe,l if the refusd of B to accept the tender of payment is
unjustifiable
The obligation of A to B remains and C Ls ri.ot released as guarantor

A- withdrarvs the money.

a.
b.

c.
d.
A

19.

B's option on July 30,2012. On July 27,2012,


A is obliged to give his only horsc or his only eow to B, at _______
the horse died due to fa"ult of "4,. \{'hich of the folklwing is correct?
&. The obfigation tenlains to be altemative
b. A is Uable tor damages for the death of tre horse
c. A is not iiai:lc for damages because the cow is still alive
d. A is liairle lbr the value of the horse plus damages

If on Dr's (A) option, ok lang na


namatay yung horse by A's fault.
If Cr's (B) option, obl
not extinguished.

desiring to buy ,1 r.,{}:'rain prope4,, hired an expefi to ascertain its tnre value. But the expert's opinion
tgrned outto be rvr<ilg u.nd B, the truyer, was therefore misled. Ir{ay B ask for the annulment of the contract?
a. Y.es, becausd.) the opinion was made by an expert
b. No, a mere elttlression of an opinion does not sigmfu fraud
c. No, because A's own expert committed the error
d. Yes, A has relied on the expert's special know'ledge

20.L

> 1/4 dapat.


21. Which of the following contract is rescissible?
of % of
lesion
suffer
represent
they
a. Those which are entered into by guardians whenever the wards
the value ofthe object ofthe contraef
more than Yn of the
principal, if the latter suffers lesion of _______
b. Those executed in representation of, a XXXXXXX
absentees
value of the object of the conhact
Those where one of the parties is incapable of giving consent to a contract Voidable.
d. Those undertaken rn lrarld of creditorx when ti" tuu"r cannot in any other uranner collect the claims

c.

due them

22.D

foreed. C to sign a promissory note where


P60,000" Blhich is correct?

a.
b.

c.

d.
C

23.

C prornised to pay D F100,00C where the laurfrrl amount is

The contract is rescissible be,cause there is i*sron


The contract is uruerxfcr{xfibie
D cannot demand payment &om C because the contl'act is voirlable
D can collect P100,000 from C because the contruct is valid.

A obliged himself to give his only cow to B. No date was stiputated f*r tlre delirerl of the cow. While still
in possession of A, the cow gave blrth to a catf" r*Jro is entitled to the calfl
a. A, because it was born before his oi{igation to deliverthe cow arises

b, A, because B has not yet paid the orice Yung payment ng price importante
o. B, because the calf was born after the prfection ofthe contract
d. B, if he will pay additional cost for the o"atf to be agreed upon by the panies

lang kung sale.

!\

24.

25. Stateme-nt I - [f the debt produces interest, pay$]enr. of the iriterest sheli nct be deeried t: have been made
until th pnncipal has been c,cvened.
Steteneat ? - The expfiNes of consignation';vhen properly made, shall be charged against the creditor
a. True, true
b. ?rue,lalse
e False, true
rtr. False, false

26. In peyment of l0 grams cf shabu, A made a prornissoq,r note wtiich reads "I
1;romise to pay B P10,000. Sgd.
A". B transferrec tl'lc nu,te to c, whc acted in good faith. wleich. is r:o,r,:et'i
a. C c.tn oollect from A
e. C can collect frorn eilher A or B
b. B can coliect f,rom A
d. C can collect from I3

B and C are joimt debtors of D, E, F and G,.!,rint creditors to the amount of ptr2,000. How much can E
and F collect from A aud B?
a. P500
b. P2,000
c, F3,000
i!. F.t,0G0

D 27. The debtor shali nct iose the right to rnake use of the period in one of rhe f'oilowing

cases

a. When he beeor*es insolvent


b. When he I'iolates any uadenaking in consideration of whiq:h &e creditor agreed to the period

c. When the debtor attmpts to abscond


d. wtren he does not give any guaranty or security tothe creditor

A Zt. p--il obliged to givo C a specific ring. The parties agreed that I) may give a speeific necklace as substitute.
Which of ahe tbllowing statement$ is true?

1 l{th. ring is lost through a fortuitous event before substirurion, tire otrligation i.s extiuguished
b. If the necklac,e is lost througli a fortuitous ey.,ent bcfore the rif;s"ii*r,t'uc,", t}n *bXrmtion is extinguished
c. If the neski.ace is iost tlrough clehtor's f'auit before subrrituiim, the cebt*r shall py damoges
d. If the ring is lost ttmough the debtor's fruit after substiturr,:rr. ttre oe'btor shall pay di'mages

D 29. Acontract $f saie xre,si$e$s,er, tiree ofthe foilowiqg characteristies. li/tiirlh is to* *.,.c*pti*n?
a. ReciprmJ, slnce *re parties are houn"d by theu'respective ohLga{.ions
b. Onerous, tli*ause the parties giv'c akaelst egluivatent *onsideration
c. Commutative, sincc there is an exuhange of vaiuable cor.sirlelation
d. Real, because the object of sale rrrust be delivered for tlrc pert'eeti*n of tbe contract

C 30. If by virtue of,

* ii;nl jtrdgment based on a right prior to the $ale, the vends is cleprived of the thing
purchase4 wtrich of the tbtluwing is correct?
a. The vendee should appeal the decision to make the venrlor liahlc,
b. The vendor :s *.r:r {iabte ifthe vendee tras nenounced the right t* waffelrry against eviction
e. The vendor shall answsr for the eviction *ven tliough nothing has been said on the object
d. The vendor may give another thing equal$ satisfaiorv

31. Which of the folh:",a';;lE statements is not eorrect?

a. -If A gives i..is ring to B but it is not clear whether A donated it or merely lent i! the contract should

b.

c.
d.

be interpret*d" *s commodatum rather than donation


If A selis his ,;ar to B but A has 4. cars and it cannot be detennined which car was sold, the contract

of sale is voit
A borrowed p100,000 from R which hears inierest at lTa/o pr year but there is doubt whether it is
payable in 2 or 3 years, the pedod of payment shall be interpreted atT yews
A Lngaged the services of Ii but the con&act did not indicate the amount of compensation to be paid,
the amount the.eof shall be the rate that is customarily paid in the place where the services wre
rendered

32. Apointed a gun and thrcatsned. to kill B if B will not sign a promissory note which reads "I promise to pay
A, P100,0001'. Out of fear, i3 signed the note. It furned out that two days earlier, A's obligation to B
amountlng to P100,000 became illue antl ts demarded palment. Now, A alleges compensation' Is A correct?
a. Yes, because tlre promissory note is valid Valid pa rin, although voidable.
b. No, becar*e t&e pronoi$sory note was s.igned only because there was intimidation
c. Yes,:pl,)r,rti,{r,J B vrill agree
d. No* u*cause A's obligation does not exist

33. When the sale of a Riei;e of land or ary interest therein is tfuough an agent, the authorit-v of the agent may be
c. Either in a public or private irutrurnent
a. In a pul,i.,'.;
d. Duly notarized
b. ln a pr,r r:tu

34. The vendor-de-reto ,lr,e,ll be entitled to redeem the otrject of sale within
c. Ten years if there is a period stipulated
a. Four years if no period is agrer-+cl
b Thirfy days frorrnotice of intention to rcpurchase d. The period agre-ed upon

35. The followtng contacts are qualified for refcrrmation' oxcept


c. Renumeratory contract
a. Onerous confi:act
d. Consensual confact
b. Gratuitous contract

36. Tax on income derived under the expanded foreign c$ffeilc) deposit system
a domestic eoil.roration nom a aepoiitory bank shall be subject to a'final
Statsment - If derived
income tax at tiru rate of 7 lf6 of such interest income

:.astrumerfi
lnstrument

upon

lil

El@.Ifrlerivedhyadepositorybankwith1oca1cornrneroia1banksha11besubjecttoafinal

incorne tex at the rate af fi?b of such interest income


to a final
Statement 3 - If derivr by branches of a foreign banks authorized by the BSP shatl be subject
;noorne t;rx at the rate of 10% of such interest income
from
Statguf,.ur*l - ]-r'deri,,rer.i by non-residents, whether individuals or corporations shail be exempt
;rx:ome tax
generally, 7.5% siya. except for non-resident
a. All l.i,a1'rmgnts are correct
b. Onlir 3 statements are correct depositors -> exempt.
c. Only t r;tatements are correst Special interbank interest 10%.
d. Only i statement is ccrrect

37.

insured try the company at the face arnount of Php4,000,000' B


is the
Cc,rporation pai6 the anngal life insurance premiurn amounting to Php 40,000' If the beneficiary
cor*pany itseif, w-hat is the to< treatment of php40,000 insurance premrum?
ArSyLi*_t The Php 40,$00 annual p.r*iuo is not included as part of the grCIss compensation income of

A, en employee of B Corporation is

Answer 2 - The Php 40,000 annual preinlurn is subject to fitnge benefit tar( if A is holding supervisory or
managerial posii"ic;n
a. Both answet's sr* correct
b. Both ansrvers are !.n"o119
Only Ansv,'rr 1 is correet
d. Cnlv Ans'.r,":;r 2 is corect

c.

Hindi siya FBT kasi yung company yung


beneficiary.

D 38. Using the above information, if the beneficiary is the wifb of A. rvhat is the tax fieafment of Php 40,000
insurance pren'lium? FB is NOT part of compensation. Na subject na ksi sya to diff tax.
Angwer I -"The PIry40,000 annual premiunn is inclu&d as part of the lross cornFnsation income of
Answer3 - The Fhp 40,000 annuai premiurn is a dedurctible expense of ts Corporation
a. Both answers are correct
b. Both answers are wrong
c. Only Answer I is correct
d. Only Answer 2 is correct

D 39. In the interpretation of taxation laws, which of the following is not correct?
a. Unless otherwise there is a clear indication of the legislative intention, hxation laws have

b.

c.
d.

prospective application
in th-e event the burden of,tax is not clearly indicated it shall not be presumed, sincrc ta:ration
Iarvs are resolved strictly rigainst tlre taxing authority
Ia"n exemptions favor &e t&qlaver, therefore the taxpayer has the burden of proof to
substantiate claims on Ax exemption
In case of doubt, taxation laurs shall be resolved in favor of the taxiilg authonty in view of
the lifeblood theory

A 40. A has 4,000 shares otl investnent in the common shares of $ellghtful Corporaiiorq costing P500,000.
During the current taxable year, he received from Delightfui Corporatioru 200 shares of Cheerful
Corporation with a par value of Pl00 ger share as dividends. At the date of dividend declaration, the fair
ntarket valur of Cheerful Corporation was P120 per share urd by the tim he received the dividend, the fair
market value was Pl80/share.
within Phil
If A is a ___________
resideni alinrq tJre dividend is
{1.
Subjcct to frnal tff( if Delightful Corynration is a dornestic coryoration
b. Exempt {iom income tax ifDelightful Corporation is a resident foreign corporation Subj. to NIT
Part of taxable income if Delightful Corp*oration is a domestic corporation 10% FT
d. A stock dividend property dividend.

C 41. Using the

if A is a domestic eorporation the dividesrd is


Sutlject to final tax if Cheerful Corporation is a fcrreign corpora'ion NIT
Subject to final ta.x if Delightful Coqporation is a dornestic cor;ruiation Exempt
ExcrnFl from income t'lx ifDelighlful Corporetion is a rlotne:flc c;orpe,etion
irrelevant
Exernpt fronn income tax if __________________
Chee.rful Corporafi;rn is. a dermestiu (:rltrmr;ition

abov'e far;tii,

a.
b.

r,

d.

within Phil

c.

iflA is a non-reside"rt f,areipr corF,oraf;on, the divrrlerc.t is


Exeiript trom income tax if Delightfii.l Corporation rs a iesl.lr;rrl fc.reigr corporation 25%
Subjeot t+ final tax if Delightful ia a tiomestic cerporarli,n
Exempt kom income tax if Cheerful Corprration is a $on-resic.1e$'' fi:reigrl corporation

d.

Subject to a creditable withholding tax af 15ok bes,acse there is a l596 tax deemed paid

B 42. Using the aixrve


o.

b.

f,acts,

FT

B 43. ABC. a domestid aorpnration had a net insonae frorn bu;iness operadons of I'200,S00 before considering a
capiAl gain qf P1,U0G,000 on a sale of iand to *e _______________
l*lalioral Gov*rur.xe,'nt.*f thr, Pililrppines (selling price of
P6M, FMV is P?i\v{ and cost of FSh,{). Using t}re best altsrnative availao,le to r:niiiilriizo taxes, how much is
the toAl tax liabilrtr t"or the year 20i0? This is an exercise of Eminent Domain. ABC is given an option to be
&" P420,Ue0 b. P360,000 c. F480,000 d. P120,0'J0 subjected to CGT (6% of higher of SP or FV
kasi land) or regular income yung Cap. Gain
subj to 30% tax.

B 44. Which of the following is part of gross inaome?


a. A received an inherirance sf shares of sto<lk 'vith a f,air markr,* =ralue cf P500,0$') (cost of Pa00,000)
b" A received a rei,mernsll$ pay of P500,000, <ira'm frorn the generni fi.urd sf tho employer when she
reached the age of 50yeas and after rendeFing 30 years or service, to the oomp&ny
reffenchment
c. A received -P500,000 frorn his employer v.fie.n le w&s sepe*a.t*d. fiom rrork due to a ____________
exclusion.
pro$am to.rminimize losses
d. A received F500,000 as cash sarrender vafue of his life isisura*ce
i

Bonus45.

Which ofthe following statemeni-si ir nert."j,)Ir.?t1?


a. A non-resident alien may inciucle a non-Fj"lipino who stays in the Philippines for tr83 days
b. A non-resident citizen is a Filipirc rvho stavs inside the Philippines for more than 180 day
c. Resident citizens include a Filipino overseas contract worker
d. A resident citizen whose income is purely from outside the Philippines is entitled to
additional exemption

46. This is not part ofta:rable income subject to soheJ"Lrlar rate if received by a resident citizen
a. Cash dividend from aresident foreign corfpration NIT
b. Cash dividend from a non-resident foreign corporation NIT
c. Interest income from lending activities NIT
d, Share in the distributable net income of a general co-partnership 10% FT

4T.Tbefollowing, except one are the basic principles nf a sound tax system. The exception is
Administrative Feasibility
a. It should be capable of being efiec'trvely enforced
b. It should consider the ta:<payers' abiliry to pa:v Theoretical Justice
U It is generatrly payable in money
e. The sources oirirenue must bL sufficient to meet govemment expenditures and other public
needs Fiscal Adequacy

48. This will nnt resdt to a taxable g{u$ or incoi,ie Sa tax, dalawa lang ang kinds ng asset. Ordinary or Capital.
treasury stock over its cost or other basis of acquisition
a. The sale by the corporation of its __________
b. The issuance by a corporation of lts bonds at a premium
c. The purchase and retirement by a coqporation of its bonds at a price less than the issue price or
face value
par or stated
<1. The sale by a corporation of its share of stock from the unissued stock over its
Incorporation
value

49. If an individual is on cash basis of accounting, pr:paiC i.i.';erest on an indebtedness is deductible


a. In the year that the interest is prepaid
b. In the year that the principal is patd
c. Up to the portion that expired corresponding to the accounting period
d. In the year the interest is incurred

50. One of the following phases of taxation cannot tre ,:leiegated, this is
a. Assessment b. Collection c Llistrarnt d. Imposition

51. __________________
Proceeds of life insurance to the extent of the amount receivable by the estate of the deceased, his executor
or administrator under policies taken out bv the deeeciont upon his own life shall be
the benefioiary designated is the estate, the executor or the
a. Part of the gross inconie
administrator and the designati*n is revocable

Not taxable sa NIT, pero sa estate tax pwedeng ma-tax.

if

if

the beneliciary designated is the estate, the executor or the


b. Part of gross income
administrator regardless of whether che ciesignation is revocable or irrevocable
c. Not part of gross incorne if the beneficiary is not the estate, the executor or the administrator
d. Not part of gross income whether tire beireficiary is the estate, the executor or administrator or
a third person regardless of whether the dcsignation is revocable or irrevocable

52. Which of the following statements is correct'i


a. The monetized value of unutilized vacati*n leave credits of, ten (10) days or rlor which were
paid to the employee during the year are not subject to income tax and to withholding tax
b. The salary olan employee on vacatirrr or orl sick leave, which are paid notwithstanding his
absence from work constitutes compousalian income
c. Any amount which is required by law to be deducted by the employer from the compensation of
an employee excluding the wittrhelel tnx is eonsidered as part of the employee's compensation and
is deemedto be paid to the employee as conlpnsation at the time the deduction is made
__ the
d. If living quarteri or meals are-furnishectr tei an employee for the convenience of the employer,
value thereof should be included as part ot conrpensation income

DC is always within the Phil.

53. A cash divideud of P100,000 received by a taxpa.ver irr 201 1 frorn a dcm*stic corporation whose income
from Philippine source is__
4Ao/o of its tota! income i"q Importante lang yung 40% kung FC.
a. Partly taxable if he is a resident citizen
b. Exempt from final tax if he is a rron r*sid*nt citizen
c. Partly taxable if he is a resident cirr.ren
d. Taxable in full if he is a non-resident citizen

C 54.

cash dividend of P100-000 received by a trrxpayer from a foreign coqporation whose income from
Philippine source is 50% of its total income is
a. Exempt frorn income tax if it is a domestic corporation
b. Exempt from income tax if it is a fbreigu corporation
c. Torable in full if he is a resident citizen
d. Ta:rable in &rll if he is a resident alieu

A 55. A domestic corporation


Excess

has the

MCm

following data for 2$l1:

2010

Pl5,0,10

lncome, net of 1% withholding

Deductions

91

W.

tax P 495,0CI0 P79D.g00

480,000 700,000
How rnuch is the income tax still due and payable in the second quarter?
a. P3,000 h, P8,000 c. PI3,000 d. p23,000

A 56. Which of the following statements is not correct?


a. If the taxpayer should have additional d'.:Fer,.clents during the taxable year, he can claim the
exemptions for zuch dependents in frrll f;rr ihe year
b. If the tatrpayer should die during the ta"Kahls year, his estate may claim the personal exemption as
if he died at the close of such year
c. If a qualified dependent should becc,,ni,e 21 yeir.rs old during the taxable year, the taxpayer may
claim the personal exemptioas as if the dependent became 21 years old at the close of the taxable
year

d. If a qualified dependent

should man1' cluring the taxable year, the taxpayer may claim the
personal exemptions as if the dependcnt ncam.ed at the close of the taxable year

C 57. Acting on the information given by A, the governrnent seized and confiscated smuggled goods with a fair
market value of P40M. A received his reward arnounting tcr

b.

P4M

b.

P3.6M

c'.

P900,000

d.

PlM

D 58. Which of the following is correct?


a. A Filipino wlro stayed in USA for more than 180 dal,s is a non-resident citizen
resident alien
b. Aa American who stayed in the Philippines fiir m,sre f-han 180 days is a non
resident alien who is engaged
in business in the Philippines
rl

d.

A Filipino who stayed in the Philippines for rm.ore than 180 days is a resident citizen
An American who stayed in the Philippines for a:l aegregate period of 183 days during the calendar
year is a non-resident alien engaged in busin*ss in tre philippines

D 59. A tax is invalid in all of the following, except


a.Theory oftaxation and its purpose are disregardud
b.Basis oftaxatian is not recognized
c.Inherent and constitutional limitslions are not observed
d.It results to double taxation

C 60. Why is tax credit allowed to be availed ofby certain

tax.payers?

a.To provide incentives, thus inducing these taxp*v*rs to report their incorne from abroad
b.tn compliance with commitnent to international agreernent
c.To provide relief from the burden of taxation
d.Because it will result to double taxation

61.

2011, A dornestic corporation declared and paid dividends to its stockholders as follows:
P 100,000 10%
a. To B, a resident citizen
100,000 10%
b. To C, a non-resident citir.en
100,000 10%
c. To D, a resident
*
100,000 20%
d. To E, a non-resident alien engaged in business
e. To F, a non-resident alien not engaged in business - Philippines 100,000 25%
100,000 exempt
t. T'o G, a domestio corporation
100,000 exempt
g. To H, a resident foreign corporation
100,000 15%
h. To I, a non-resident foreigr corporation
How much finat urx shall be withheld by the corporation?
d. P95,000
c. P85,000
b. P90,000
a. P80,000

alien

Fhilippines

62. The records of a domestic corporation whieh (;ont-{loced operation in 2004 show:
2010
200?
2!08
P14M
P12M
PIOM
Inume
Gross
Allowable'Seductions 9.5M
(P.2M)
PI"2M
Net Income (Loss) P.sM
The income tnx payahle for 2010 is
d. P95,000
r. P35,000
b, P275,000
a. P360,0Ct0

lry

63. Which of the following statements is nor correct?


a. Compensation income of imlividuals that do not exceed the statutory minimum wage is exempt
from the requirement of withholei-ing tax on oompensation
b. Compensation income of individuals that do not exceed tea thousand pesos per month is exempt
from the requireurent of withholding tax on compensation
c. Holiday pay, ove*ime pay, night shit differential py and hazard pay received by indMduals
shall be exempt from income tax
d. Minimgm wage eamfis whn are receiving only the statutory mintrnum wage are not subject to
withholdin g tax and ootisoquently to income tax

64. Whioh of the following stntements is correct?


paid to
which were
a. The monetized value r:f unutilized vacation leave credits of,ten (10) days or more anything
is excess is
the employee during the year are not subject to iucome tax and to withholding tax taxable
b. fhe saiary of an ernployie oo vacation or or sic[< leave, whic]r are paid notwithsta:rding his absence
from work, corrstitutes compensation income, except if not more ttran trO days.
c. Any amount u,hich is required by taw tet be cleducted" by the employer from the compensation of an
employe" excluding the withhelA t*, is sonsidered as part of the employee's compensation and is
deemed to be paid to the employee as oompensation at the time the deduction is made
d. If living quurl"rn or meals are-furnisheriio an employee for the convenience of the employer, the
value thereof should not be included as part of compensation income

65. On January 1, 2011, A leased his vacant lot for


the lessee will pay the following:
a. Rent ofP480,000 (for 2011 and20ft)
b. Secwity deposit of P240,000
c. Real prope(ytax at P20,000./year

of 12 years atP240,000 per year. It was agfeed that


Lessor: Income is cash basis but do not
include Security Deposit as income.
Lessee: Expense is accrual basis.

a period

The lease contract provides emon.g others 'that the lessee will construct a 3-storey building for parking
purposes at a cost of P3,60.0,000 wlilch shall belong to the lessor upon expiration or termination of the lease'
fni Uuit6og was compieteul on JuIy l, 2011, with an estimated useflri life of 15 years. A shall report for the
Rent
year 2}ll,using the sprearl-out method, a total iucome from lease of
a.P296,54'3

b. P573,087

o. P536,521

d. P333,087 Tax

66. Using the above data, the lessee in 2011 can deduct total expen$es amounting to
d. P573,043
c.
b.
a,.P

656,521

Rent
Tax
LHI
3600/11.5 * 1/2

P553,043
240
20
156
= 416

P4i6,5?1

LHI
3600*3.5/15
=840 BV on end of
lease term.
840/11.5 *1/2

40
20

36
=536

67. ABC had the following during the taxable year 2009:
a. Provision for bad
b.. Contributions during the year:
l. To the govemment fbr priong,activrry rn
2. To the cathclic ehurch for charitable
3. For public
c. Allowance forbad debts:

debts
use

1.

2.

P 30,000

eclucation
purposes

Beginning
Ending

50.0CIti

10,000
20,000

75,000
85,000

d. Accumulated depreciation on the rnachine

Beginning
2. Ending
t.

80,000
100,000

e. During the year, ABC sold a machine acquired two

year.s earlier.

accumulated depreciation of P30,000.


The net income before considering a to e inclusive, amounts to P200,000.
owned by A, single, her net taxable income is
a.
b.
c.

P60,000

P47,000

The machine had an

If ABC is a snle proprietorship,

P40,000

d. PI7,000

B 68. A, a caregiver, is under a three year employment oontract with a hospital in USA. His wife, B and a minor
child live in the Philippines. He earns P70,000 (corivurted) a month. For the annual income of P840,000, A
shall

py

incorne tax

a. For the entire amount it being ta".rable in the Phitripnines


b, Of nothing because as OFW, he is considered a nonresident citizen

c. For half the'full amount because the other half Bertarns to his wifc
d. For the % share of his wife because the wife is a resident eitizen

B/C 69. Using the above data, if A puts 30% of his earnings in a derllar cleposit account with a local bank, interest
income therein
a" Is taxable for the full amount at7.5o/o final .*'itl,hcrlding tax
b. Of P126,000 shall be taxed x 7.5a.4 final uritr&oldirig tax
c. Maybe exernpt'from income tax provided he presents y:roof nf noruesidency to the bank
d. Of P840,000 shall be taxed at7.So/s final withholding ta.i

D 70. The following data on net ineome , bad debt, write off and recovery show:

2012

gase C
(P20,000)

50,000

P 50,000

off
P 80,S00 P 40,000
deduction 5().8(!0 _5AJ)00 50-zu
write-ofr
P 30,tX)0 {P10,000} (P70,000)

Net income (lcss) before unite


Less: Bad debts'*niuen offand claimed as
Net income (locs) efter
2013
Subsequent

essq.A esegs

recovery

The taxable recovery is


Case

Ca,qe C
&
$3gg 3
a P50,00$ P50"000 P50,000
b.P50,000P0P0
c. P50,000 P40"000 P20,000
d. P50,000 P40,000 P 0

50,0CI0