QUIZZER

Tariff and Customs Code 

1. The BOC shall exercise the following duties and functions, except: 
a. Exercise of exclusive jurisdiction over forfeiture cases under the under the tariff
and customs laws.
b. Supervision and control over the imposition of excise taxes over imported goods.
c. Supervision and control over the handling of foreign mails arriving in the Philippines for
the purpose of collecting revenues and preventing the entry of contraband.
d. Supervision and control on all import and export cargoes, landed or stored in piers,
airports, terminal facilities, including container. 

 Answer: B 

2. Statement 1: Tariff duties and customs duties are synonymous.

Statement 2: Tariffs or customs duties are classified as regular tariffs or customs duties
and special tariffs or customs duties. 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

3. Which of the following is a regular customs duty?

a. Ad valorem customs duties
b. Specific customs duties
c. Mixed or compound customs duties
d. All of the above 

 Answer: D 

4. Which of the following statements on regular customs duties is correct?

a. These are taxes that are imposed or assessed upon merchandise from, or exported
to a foreign country for the purpose of raising revenue. 
b. They may also be imposed to serve as protective barriers which would prevent the
entry of merchandise that would compete with locally manufactured items. Thus,
they are also referred to as tariff barriers or protective tariffs.
c. High tariffs on exports may also serve to discourage the exportation of certain
articles, usually materials, in order to promote their manufacture into finished
products.
d. All of the above 

 Answer: D 
5. Which of the following is a special custom duty?
I. Anti-dumping duty 
II Countervailing duty
III. Marking duty 
IV. Discriminatory duty
a. I and II only  c. I, II and III only
b. II and IV only d. I, II, III and IV 

 Answer: D 
 
6. Consider the following statements:
I. The purpose of regular customs duties is to raise revenues to meet the needs of the
government.
II. The imposition of customs duties also assist in economic development.
III. Customs duties are sometimes imposed to protect local customers.
IV. Compound customs duties are computed only on the basis of units of measure such as
weight, measurement, quantity, etc. 

After considering the above statements, choose the correct answer from the following
choices:
a. All the above statements are correct.
b. Only statements I, III and IV are correct.
c. Only statements I, II and IV are correct.
d. Only statements I, II and III are correct. 

 Answer: D 

7. It is a special duty charged whenever any product, commodity or article of commerce is

granted directly or indirectly by the government in the country of origin or exportation, any kind
or form of specific subsidy upon the production, manufacture or exportation of such product,
commodity or article and importation of such subsidized product, commodity or article has cause
or threatens to cause material injury to a domestic industry or has materially retarded the
growth or prevents the establishment of a domestic industry. 
a. Anti-dumping duty  c. Marking duty
b. Countervailing duty  d. Discriminatory duty 

 Answer: B 

8. It is a special duty imposed in the event that a specific kind or class (any product, commodity,
or article of commerce) of foreign article is being imported into, sold or is likely to be sold in the
Philippines, at an export price less than its normal value in the ordinary course of trade for a like
product, commodity or article destined for consumption in the exporting country which is
causing or threatening to cause material injury to a domestic industry, or materially retarding the
establishment of a domestic industry producing similar product. 
 a. Anti-dumping duty  c. Marking duty
b. Countervailing duty  d. Discriminatory duty 

 Answer: A 

9. Which of the following statements is correct regarding Marking Duty? 

a. The marking of articles (or its containers) is a prerequisite for every article or container
of foreign origin which is imported into the Philippines in accordance with Section 303 of
the ТССР.
b. The marking shall be done in any official language of the Philippines and in a
conspicuous place as legibly; indelibly permanently as the nature of the article (or
container) may permit to indicate to an ultimate purchaser in the Philippines the
country of origin of the article.
c. In case of failure to mark an article or its container at the time of importation, unless
otherwise excepted from the government requirements of marking, there shall be
levied upon such article a marking duty of 5% ad valorem.
d. All of the above 

 Answer: D 
 
10. (2014 Bar Exam) Choose the correct answer.  
Smuggling 
a. does not extend to the entry of imported or exported articles by means of any false
or fraudulent invoice, statement or practices; the entry of goods at less than the true
weight or measure; or the filing of any false or fraudulent entry for the payment of
drawback or refund of duties.
b. is limited to the import of contraband or highly dutiable cargo beyond the reach of
customs authorities.
c. is committed by any person who shall fraudulently import or bring into the
Philippines, or assist in so doing, any article, contrary to law, or shall receive,
conceal, buy, sell or any manner facilitate the transportation, concealment or sale of
such article after importation, knowing the same to have been imported contrary to
law.
d. None of the above 

 Answer: C 

11. (Bar Exam) Under the Tariff and Customs Code, abandoned imported articles becomes the
property of the 
a. government whatever be the circumstances.
b. insurance company that covered the shipment.
c. shipping company in case the freight was not paid.
d. bank if the shipment is covered by a letter of credit. 
  Answer: A 
 
12. (Bar Exam) is an article previously exported from the Philippines subject to the payment of
customs duties? 
a. Yes, because all articles that are imported from any foreign country are subject to duty.
b. No, because there is no basis for imposing duties on articles previously
exported from the Philippines. 
c. Yes, because exemptions are strictly construed against the importer who is the
taxpayer. 
d. No, if it is covered by a certificate of identification and has not been improved in
value. 

 Answer: D 

13. A violation of the tariff and customs laws is the failure to 
a. pay the customs duties and taxes and to comply with the rules on customs
procedures.
b. pay the customs duties and taxes or to comply with the rules on customs
procedures.
c. pay the customs duties and taxes.
d. comply with the rules on customs procedures. 

 Answer: B 

14. (BAR Exam) Amaretto, Inc., imported 100 cases of Marula wine from South Africa. The
shipment was assessed duties and value-added taxes of P300,000 which Amaretto, Inc.
immediately paid. The Bureau of Customs did not, however, issue the release papers of the
shipment yet since the Food and Drug Administration (FDA) needed to test the suitability of the
wine for human consumption. Is the Bureau of Customs at fault for refusing to release the
shipment just as yet? 
a. Yes, because the importation was already terminated as a result of the payment
of the taxes due.
b. Yes, the Bureau of Customs is estopped from holding the release of the
shipment after receiving the payment.
c. No, if the amount paid as duties and value-added taxes due on the importation was
insufficient.
d. No, because the Bureau of Customs has not yet issued the legal permit for
withdrawal pending the FDA's findings.

 Answer: D 

15. Importation of goods is deemed terminated (2012 Bar Question):

a. When the customs duties are paid, even if the goods remain within the customs
premises;
 b. When the goods are released or withdrawn from the customs house upon
payment of the customs duties or with legal permit to withdraw;
c. When the goods enter Philippines territory and remain within the customs house
within thirty (30) days from date of entry;
d. When there is part payment of duties on the 

 Answer: B 

16. The Bureau of Customs shall exercise the following duties and functions, except 
a. Assessment and collection of customs revenues from imported goods and other
dues, fees, charges, fines and penalties under the tariff and customs code.
b. Simplification and harmonization of customs procedures to facilitate movement
of goods in international trade. 
c. Border control to prevent entry of smuggled goods.
d. Prosecute persons illegally importing goods. 

 Answer: D 

17. Which of the following statements is NOT a test of a valid ordinance?

a. It must not contravene the Constitution or any statute.
b. It must not be unfair or oppressive.
c. It must not be partial or discriminatory.
d. It may prohibit or regulate trade. 

 Answer: D 

BOI Registered Enterprises

18. Which of the following statements is correct?
a. New registered firms under the Board of Investments enjoys income tax holiday
for 6 years from commercial operations for 6 years from commercial operations
for pioneer firms and 4 years for non-pioneer firms.
b. The income tax holiday may be further extended not to exceed 8 years
(maximum ITH) upon meeting certain conditions.
c. For PEZA-registered enterprises, the income tax holiday is same with BOI-
registered companies in general.
d. All of the above 

 Answer: D 

19. Which of the following statements is incorrect?

a. BOI registered companies are subject to 5% gross income tax in lieu of national and
local taxes.
b. After Income Tax Holiday period, BOI registered companies are treated as ordinary
corporations. 
 c. BO1 registered companies are subject to zero rated (0%) vat.
d. None of the above 

 Answer: A 

foreign and local investors fiscal, providing or incentives, fiscal and non-fiscal, to preferred areas
of investments, pioneer or non-pioneer, export production as well as rehabilitation or expansion
of existing operation.
Statement 3: Non-fiscal incentives include, among others, employment of foreign nations,
simplification of customs procedure, unrestricted use of consigned equipment and multiple entry
visa.
a. Only statements 1 and 2 are correct
b. Only statements 1 and 3 are correct
c. All statements are correct
d. All statements are incorrect 

 Answer: C 

24. Which of the following is/are a non-fiscal incentive(s) granted to BOI registered enterprises?
I. Employment of foreign nationals
II. Simplification of customs procedure
III. Unrestricted use of consigned equipment and multiple entry visa 
a. I only c. II and III only
b. I and II only d. I, II and III 

 Answer: D 

25. Which of the following incentives is/are granted to BOI registered enterprises?

I. Tax Exemption
II. Tax Credits
III. Additional deductions from taxable income 
a. I only c. II and III only
b. I and II only d. I, II and III 

 Answer: D 

26. Which of the following tax incentives is/are granted to BOI registered enterprises?
I. Income Tax Holiday (ITH)
II.  Exemption from taxes and duties on imported spare parts 
III. Exemption wharfage dues and export tax, duty, impost and fees
IV. Tax exemption breeding stocks and genetic materials 
a. I and II only c. I, II and III only 
b. III and IV only d. I, II, III and IV
  Answer: D 

27. Which of the following incentives, in addition to tax exemptions, is/are granted to BOI
registered enterprises?
I. Tax credit on tax and duty portion of domestic breeding stocks and genetic
materials.
II. Tax credit on raw materials and supplies
III. Additional deductions for labor and expense (ADLE) 
a. I only c. II and III only
b. I and II only d. I, II and III 
 Answer: D 

28. Statement 1: BOI registered enterprises are subject to 5% gross income tax in lieu of
national and local taxes, except real property tax.
Statement 2: PEZA registered enterprises are subject to 5% gross income tax in lieu of
national and local taxes, except real property tax. 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: B 

29. Which of the following statements pertaining to Pioneer enterprises under EO 226 is

correct? 
a. Pioneer enterprises are registered enterprises engaged in the manufacture,
processing or production of commodities or raw materials that are not yet being
produced in the Philippines on a commercial scale.
b. Pioneer enterprises also involves the use of a design, formula, method, process or
system of production or transformation of any element, substance or raw material
into another raw materials or finished goods which is new and untried in the
Philippines.
c. Pioneer enterprises are also engaged in the pursuit of agricultural, forestry and mining
activities and/or services and energy sectors.
d. All of the above 

 Answer: D 

30. __________ refers to the most recent list of the thirty (30) poorest provinces of the
Philippines at the time of application determined by the National Economic Development
Authority (NEDA) 
a. Pioneer enterprises
b. Special Economic Zones (ecozones)
c. Investment Priorities Plan (IPP)
 d. Less developed areas (LDA) 

 Answer: D 

PEZA Registered Enterprises

31. _________ is a selected area with highly developed enterprises or which have the potential
to be developed into agro-industrial, industrial, tourist/recreational, commercial, banking,
investment, and financial centers. 
a. Pioneer enterprises
b. Special Economic Zone (ecozone)
c. Investment Priorities Plan (IPP)
d. Less developed areas (LDA) 

 Answer: B 

32. Incentives to enterprises locating in export processing zones 

a. Foreign merchandise, raw materials, equipment, spare parts, etc. brought into the zone
shall not be subject to customs and internal revenue laws and regulations nor to local
tax ordinances.
b. BOI-registered enterprise incentives.
c. Exemption from local taxes and licenses except real estate taxes.
d. All of the above 

 Answer: D 

33. Statement 1: The PEZA law specifically provides that the ecozone shall be managed and
operated by PEZA (not by any other government entity) as a separate custom territory. 
Statement 2: In keeping with the status of ecozone as separate custom territory, the
PEZA is conferred the power and function to operate administer, manage and develop
the ecozone, and to register, regulate and supervise the enterprises in ecozones. 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

34. ____________ are enterprises registered enterprises engaged in the manufacture, processing

or production of commodities or raw materials that are not yet being produced in the Philippines
on a commercial scale. 
a. Pioneer enterprises
b. Non-pioneer enterprises
c. Multi-national companies
d. Export-oriented enterprises 
. 
 Answer: A 

35. To encourage investments in desirable areas of activity, EO 226 provides incentives to the
following: 
A B C D
enterprises registered with True True True True
the BOI
enterprises locating in less False True True True
developed areas (LDAS)
MNCS establishing their True True True True
RHQs/ROHQs in the Philippines
MNCs establishing their False False False True
regional warehouses in the Philippines
enterprises locating in export True False Yes True
processing zones 

 Answer: C 

36. Statement 1: RA 7916 or the Special Economic Zone Act of 1995 (February 24, 1995)
provides the framework for the transformation, formation and monitoring of certain
designated areas in the country called special economic zones (ecozones) where
companies and industries establishing their operations therein are given incentives and
privileges.
Statement 2: Enterprises locating or operating within the ecozones shaIl register with
the Philippine Export Zone Authority (PEZA) and are entitled to similar in incentives
granted as provided for under PD 66 or those provided under EO 226 (Omnibus
Investment Code).
a. Only statement 1 is correct
b. Only statement 2 correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

37. Statement 1: For PEZA purposes, the 5% gross income tax is in lieu of all taxes, excluding
local taxes.
Statement 2: PEZA registered enterprises paying the 5% tax on gross income are not
liable for local business taxes and other charges normally due to the local government
unit.
a. Both statements are correct
b. Both statements are not correct
c. Only the first statement is correct
d. Only the second statement is correct 
  Answer: D 

38. Statement 1: PEZA income tax holiday incentives imply exemption from income tax.
Statement 2: PEZA income tax holiday would mean that an entity entitled to it enjoys
exemption from income tax only, unless expressly exempted from other taxes.
a. Both statements are correct
b. Both statements are not correct
c. Only the first statement is correct
d. Only the second statement is correct 

 Answer: B 

39. A PEZA registered enterprise has a registered and an unregistered activity. The MCIT shall
apply to:
a. Registered activity
b. Unregistered activity
c. Both activities 
d. Neither registered or unregistered activity
 
 Answer: B 

PWDs/Senior Citizens
40. Private entities that employ disabled persons who meet the required skills or qualifications,
either as regular employee, apprentice or learner shall be entitled to an additional deduction
from gross income equivalent to: 
a. 15% of the total amount paid as salaries and wages to PWDs.
b. 25% of the total amount paid as salaries and wages to PWDS
c. 50% of the total amount paid as salaries and wages to PWDs.
d. 100% of the total amount paid as salaries and wages to PWDs. 

 Answer: B 

41, Which of the following statements is not a requirement in order for private establishments
employing senior citizens to be entitled to additional deduction from their gross income
equivalent to fifteen percent (15%) of the total amount paid as salaries and wages to senior
citizens? 
a. The employment shall have to continue for a period of at least one (1) year.
b. The annual taxable income of the senior citizen does not exceed the poverty level as
determined by NEDA.
c. Both statements "a" and "b"
d. Neither "a" nor "b" 

 Answer: A 
42. Which of the following statements regarding discounts allowed to PWDs is incorrect? 
a. In case the seller provides promotional discounts, the PWD will have the option
to choose either the promotional discount or the PWD discount.
b. Only the PWD discount is exempted from vat.
c. In cases where the PWD is also a senior citizen (SC), the PWD shall also be entitled
to SC discount in order to maximize the discounts granted under Magna Carta for
PWDs and SCs.
d. None of the above. 

 Answer: C
. 
Use the following data for the next two (2) questions: 
Mabuhay Services Corporation (MSC) provides 20% discount to senior citizens. It recorded the
following during the year: 
Customers 
Senior
Regular Citizen Total
Receipts  P8,000,000 P1,000,000 P9,000,000
Cost of services  5,000,000
Other deductible  2,000,000
expenses 

43. The amount of gross receipts to be reported is

a. P1,000,000 c. P9,000,000
b. P1,250,000 d. P9,250,000 

 Answer: D 

44. The regular and special itemized deductions deductible from gross income of MSC is: 
a. P2,000,000 c. P5,250,000
b. P2,250,000 d. P7,000,000 

 Answer: B 

45. The taxable net income of MSC is:

a. P750,000 c. P1,750,000
b. P1,000,000 d. P2,000,000 

 Answer: D 

Solution: 
RECEIPTS:
Regular customers P8,000,0000 
 SC (PIM / 80%) 1,250,000
Total gross receipts P9,250,000 
Less: 
Cost of services (5,000,000) 
Other deductible expense
(P2M + SC discount of P250,00) (2,250,000)
Taxable Net Income  P2,000,000 
 
o The gross sales or receipts to be reported should be the undiscounted amount.
o The Senior citizen/PWD discount shall be reported as part of operating expenses.

46. Mabisa Drugs Incorporation had the following during the year: 
Customers 
Senior
Regular Citizen Total
Gross Sales  P8,000,000 P2,000,000 P10,000,000
Cost of Sales 5,000,000 1,000,000 6,000,000
Other deductible 2,000,000
expenses 

Mabisa adopts a policy of giving senior citizens 25% discount. As a result, it granted P500,000
total senior citizens' discount during the year. 

47.  The amount of gross sales to be reported is

a. P8,000,000 c. P9,600,000
b. P9,500,000 d. P10,000,000 

 Answer: D 

48.  The amount of other deductible expenses to be reported is

a. P400,000 c. P2,400,000
b. P500,000 d. P2,500,000 

 Answer: D 

49.  The taxable net income is:

a. P1,500,000 c. P1,800,000
b. P1,600,000 d. P2,000,000
 
 Answer: A
Solution: 
GROSS SALES P8,000,000
Regular customers 2,000,000
Senior Citizens (SC) P10,000,000 
 Total gross receipts
Less:
Cost of Sales – Regular (5,000,000)
Cost of Sales – SC (1,000,000) 
Other deductible expense
(P2M + SC discount of P500,00) (2,500,000)
Taxable Net Income P1,500,000 

50. Bobads Corporation employs both regular and senior employees and paid the following
compensation: 
Regular employees P800,000

Senior citizen employees:

With salary grade above poverty level 200,000
With salary grade below poverty level 100,000
 
The deductible compensation expense is: 
a. P1,100,000 c. P1,120,000
b. P1,115,000 d. P1,145,000 

 Answer: B 

Regular employees  P800,000 

Senior citizen employees: 200,000

With salary grade above poverty level 100,000 
With salary grade below poverty level
Additional deductible salary (100,000 x 15%) 15,000
Total Compensation Expense P1,115,000 

 Additional Compensation of 15% for those with salary grade of below poverty

level. 

51. Using the above information, except that 20% of the regular employees are persons with
disability receiving a total compensation of P160,000, the deductible compensation expense of
the corporation is 
a. P1,152,000 c. P1,178,000
b. P1,155,000 d. P1,192,000 

 Answer: B
  
Regular employees (P800,000 x 80%) P640,000
PWD employees (P800,000 x 20%) 160,000
Additional Compensation-PWD@ 25% 40,000 
 Senior citizen employees:
With salary grade above poverty level 200,000
With salary grade below poverty level 100,000 
Additional deductible salary (100,000 x 15%) 15,000
Total Compensation Expense P1,155,000 

o Additional deductible compensation of 25% for PWD employees. 

52. Statement 1: If a taxpayer, classified as PWD, is unable to make his own return, the
return may be made by his duly authorized agent or representative or by the guardian
or other person charged with the care of his person or property.
Statement 2: The principal (PWD) and his representative or guardian shall assume
the responsibility of making the return and incurring penalties provided for
erroneous, false, fraudulent returns.
Statement 3: The privilege in statement 1 and transfer of responsibility in
statement 2 is likewise available to a senior citizen taxpayer. 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Only statement 3 is incorrect
d. None of the statements is correct 

 Answer: C 

53. Statement 1: While the 20% senior citizen discount and vat exemption shall not
apply to "children's meals" as these are primarily prepared and intentionally
marketed for children, if the PWD is a child, the 20% PWD discount will be
applicable as long as it is for his personal consumption.
Statement 2: The 20% discount on purchase of food and drinks, beverages, dessert
and other consumable items served by establishments includes value meals and other
similar food counters, fast food, cooked food and short orders including take outs. 
a. Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true 

 Answer: D 

54. Statement 1: Any donation, bequest, subsidy or financial which may be made to

government agencies engaged rehabilitation
Statement 2: The 20% discount on purchase of food and drinks, beverages, dessert
and other consumable items served by establishments includes value meals and other
similar counters, fast food, cooked food and short orders including outs. 
a. Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false 
 c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true 

 Answer: D 

Local Taxation/Real Property Taxes

55. Taxing power of local government units shall NOT extend to the following taxes, except one: 
a. Income tax on banks and other financial institutions;
b. Taxes of any kind on the national government, its agencies and instrumentalities, and
local government units;
c. Taxes on agricultural and aquatic products when sold by the marginal farmers or
fishermen;
d. Excise taxes on articles enumerated under the National Internal Revenue Code 

 Answer: A 

56. Real property taxes should not disregard increases in the value of real property occurring
over a long period of time. To do otherwise would violate the canon of a sound tax system
referred to as 
a. theoretical justice.
b. fiscal adequacy.
c. administrative feasibility.
d. symbiotic relationship. 

 Answer: B 

57. A municipality may levy an annual ad valorem tax on real property such as land, building,
machinery, and other improvement only if 
a. the real property is within the Metropolitan Manila Area.
b. the real property is located in the municipality.
c. the DILG authorizes it to do so.
d. the power is delegated to it by the province. 

 Answer: A 

61. The appraisal, assessment, levy and collection of real property tax shall be guided by the
following principles. Which statement does NOT belong here? 
a. Real property shall be appraised at its current and fair market value;
b. Real property shall be classified for assessment purposes on the basis of its actual
use;
c. Real property shall be assessed on the basis of a uniform classification within each
local political subdivision;
d. The appraisal and assessment of real property shall be based on audited financial
statements of the owner 
  Answer: D 

62. (Bar Exam) After the province has constructed a barangay road, the Sangguniang
Panglalawigan may impose a special levy upon the lands specifically benefitted by the road up to
an amount not to exceed 
a. 60% of the actual cost of the road without giving any portion to the barangay.
b. 100% of the actual project cost without giving any portion to This the barangay. 
c. 100% of the actual project cost, keeping 60% for the province and giving 40% to
the barangay.
d. 60% of the actual cost, dividing the same between the province and the
barangay. 

 Answer: A 

63. What is the tax base for the imposition by the province of professional taxes? 
a. That which Congress determined.
b. The pertinent provision of the local Government Code. 
c. The reasonable classification made by the provincial sanggunian.
d. That which the Dept. of Interior and Local Government determined. 

 Answer: C 

64. Lualhati Educational Foundation, Inc., a stock educational institution organized for profit,
decided to lease for commercial use a 1,500 sq. m. portion of its school. The school actually,
directly, and exclusively used the rents for the maintenance of its school buildings, including
payment of janitorial services. Is the leased portion subject to real property tax? 
a. Yes, since Lualhati is a stock and for profit educational institution.
b. No, since the school actually, directly, and exclusively used the rents for
educational purposes.
c. No, but it may be subject to income taxation on the rents it receives.
d. Yes, since the leased portion is not actually, directly, and exclusively used for
educational purposes. 

 Answer: D 

65. The head priest of the religious sect Tres Personas Solo Dios, as the corporation sole, rented
out a 5,000 sq. m. lot registered in its name for use as school site of a school organized for profit.
The sect used the rentals for the support and upkeep of its priests. The rented lot is 
a. not exempt from real property taxes because the user is organized for profit.
b. exempt from real property taxes since it is actually, directly, and exclusively used for
religious purposes.
c. not exempt from real property taxes since it is the rents, not the land, that is used for
religious purposes.
 d. exempt from real property taxes since it is actually, directly, and exclusively used for
educational purposes. 

 Answer: D 

66. Apparently the law does not provide for the refund of real property taxes that have been
collected as a result of an erroneous or illegal assessment by the provincial or city assessor. What
should be done in such instance to avoid an injustice? 
a. Question the legality of the no-refund rule before the Supreme Court.
b. Enact a new ordinance amending the erroneous or illegal assessment to correct
the error. 
c. Subsequent adjustment in tax computation and the application of the excess
payment to future real property tax liabilities. 
d. Pass a new ordinance providing for the refund of real property taxes that have been
erroneously or illegally collected. 

 Answer: C 

67. (Bar Exam) Prior to the enactment of the Local Government Code, consumer's cooperatives
registered under the cooperative Development Act enjoyed exemption from all taxes imposed by
a local government. With the Local Government Code's withdrawal of exemptions, could these
cooperatives continue to enjoy such exemption? 
a. Yes, because the Local Government Code, a general law, could not amend a special law
such as the Cooperative Development Act.
b. No, Congress has not by the majority vote of all its members granted exemption
to consumers' cooperatives.
c. No, the exemption has been withdrawn to level the playing field for all
taxpayers and preserve the LGUS' financial position.
d. Yes, their exemption is specifically mentioned among those not withdrawn by the
Local Government Code. 

 Answer: D 

68. The following Resident Foreign Corporations are subject to preferential tax rates, except: 
a. Regional Operating Headquarters
b. International Carriers
c. Regional Area Headquarters
d. Offshore Banking Units 

 Answer: C

69. Which of the following entities may be subject to Minimum Corporate Income Tax? 
a. Philippine Carriers
b. International Carriers
 c. Regional Operating Headquarters
d. Regional or area headquarters 

 Answer: A 

BMBES 
70. A __________ is defined as any business enterprise engaged in production,
processing, or manufacturing products, including agro-processing, as well as trading
and services with total assets of not more than P3 million. Such assets shall include those arising
from loans but not the land on which the plant and equipment are located. 
a. Ecozones
b. RHQs/ROHQs of MNCs
c. PEZA registered entities
d. Barangay Micro Business Enterprises (BMBES) 

 Answer: D 

71. Statement 1: "Services" offered by BMBES shall exclude those rendered by any one, who
is duly licensed by the government after having passed a government licensure
examination, in connection with the exercise of one's profession such as those rendered
by accountants, lawyers, and doctors.
Statement 2: An enterprise can only qualify for registration as BMBE if it is not a branch,
subsidiary, division or office of a large scale enterprise and its policies and business
modus operandi are not determined by a large scale enterprise or by persons who are
not owners or employees of the enterprise (i.e., franchises). 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

72. Which of the following are the following incentives may be granted to BMBES? 
a. Income tax exemption from income arising from the operations der of the
enterprise.
b. Exemption from the coverage of the Minim Wage Law.
c. Technology transfer, production and management training, and marketing
assistance programs for BMBE beneficiaries.
d. All of the above 
. 
 Answer: D 
73. Statement 1: Any person, cooperative, or association owning an enterprise that fits the
description of a BMBE may register for the first time or renew its registration with the
Office of the Treasurer of the city or municipality where the business is located. 

Statement 2: For BMBEs, registration as a business entity or enterprise from the

appropriate government agency such as SEC, CDA, DTI as well as securing business
permit from city/municipality is still required.
Statement 3: Local government units (LGUS) are encourage to either reduce the amount
of local taxes, fees, and charges imposed or exempt BMBEs from local taxes, fees, and
charges. 

a. Only statements 1 and 2 are correct

b. Only statements 1 and 3 are correct
c. All statements are correct
d. All statements are incorrect 

 Answer: C 

74. Statement 1: The Office of the Treasurer of each city or municipality shall register the
BMBEs and issue a Certificate of Authority (effective for a period 2 years, renewable for
a period of 2 years for every renewal) to enable the BMBE to avail of the benefits under
the law. 

Statement 2: LGUs shall issue the Certificate of Authority promptly and free of charge.
However, to defray the administrative costs of registering and monitoring the BMBES,
the LGUs may charge a fee not exceeding One Thousand Pesos (P1,000.00). 
a. Only statement 1 is correct 
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

75. The BMBE purposes, the concerned officer shall cancel the registration of a BMBE for the
following cause, except:
a. When the BMBE transfers its place of business locality. 
b. When the value of its total assets as determined exceeds P3,000,000 
c. When the BMBE voluntarily surrenders its certificate to the issuing officer.
d. When it establishes warehouse outside the locality 

 Answer: D 

76. The __________ of each City or Municipality shall register BMBES and issue Certificate of
Authority to enable BMBE to avail of incentives under the BMBE Act
 a. Office of the Mayor
b. Office of the Treasurer
c. Office of the Barangay Chairman
d. BIR Revenue District Office 

 Answer: D 

77. One can register as a BMBE if it is a business entity or enterprise, whether operated as a sole
proprietorship or a corporation, partnership, cooperative or association, organized/incorporated
and existing under Philippine laws, engaged in, which activities are barangay-based and micro-
business in nature and scope, except
a. Production of products/commodities
b. Agro-processing
c. Trading and services
d. Professional services 

 Answer: D 

78. For BMBE purposes, the Certificate of Authority shall be affective for a period of __________
and renewable for the same period. The concerned officer shall indicate in the certificate the
date when the registration of the BMBE commences 
a. 1 year c. 3 years
b. 2 years d. 4 years 

 Answer: B 

Other Special Laws 

79. Dr. Albert Rebosa, a VAT registered ob-gvne specialists, owns a maternity-lying-in clinic.
During the Month his clinic received payment totaling P750,000, broken down as follows:
350.000 as Dr. Rebosa's professional fee; and P400.000 as payment for the use of his maternity
lying-in-clinic facilities. All amounts given are exclusive of the VAT. His output VAT for the month
is 
a. P90,000 c. P42,000
b. P48,000 d. P80,357 

 Answer: C
o Output Vat = P350,000 x 12% = P42,000 

80. Which of the following statements regarding RA 8525 is correct? 

a. "Adopt a School Program" or "Program" shall refer to a program which allows private
entities to assist a public school in a particular aspect of its educational program within
an agreed period.
 b. "Public school" shall refer to a government school, whether elementary,
secondary, post-secondary or tertiary, which enters into an Agreement with an
adopting private entity concerning assistance to public schools.
c. "Private entity" shall refer to an individual engaged in trade or business or engaged
in the practice of his profession or other business organizations, like a partnership,
corporation or cooperative, either resident or non-resident, who/which teams up with
the Department of Education (DepEd), or with the Commission on Higher Education
(CHED), or with the Technical Education and Skills Development Authority (TESDA),
towards providing much needed assistance and service to public schools.
d. All of the above 

 Answer: D 

81. A pre-qualified adopting private entity, which enters into an Agreement with a public school,
shall be entitled to the following tax incentives: 
a. Deduction from the gross income of the amount of contribution/donation that were
actually, directly and exclusively incurred for the Program in the preceding
paragraph, subject to limitations, conditions and rules set forth in Section 34(H)
of the Tax Code, plus an additional amount equivalent to fifty percent (50%) of
such contribution/donation.
b. Exemption of the Assistance made by the donor from payment of donor's tax.
c. Both "a" and "b"
d. Neither "a" nor "b" 

 Answer: C 

82. Statement 1: A duly registered and accredited Microfinance NGO under RA 10693
shall pay a two percent (2%) tax based on its gross receipts from microfinance
operations in lieu of all national taxes.
Statement 2: The preferential rate of two percent (2%) tax should only refer to lending
activities and insurance commission which are bundled and forming integral part of
the qualified lending activities if the Microfinance NGO.
Statement 3: All microfinance activities other than lending and insurance
commission which are bundled and forming integral part of the qualified lending
activities of the Microfinance NGO shall be subject to all applicable to taxes. 
a. Only statement 1 is correct
b. Only statement 1 and 2 are correct
c. Only statement 1 and 3 are correct
d. All statements are correct 

 Answer: D 
83. Statement 1: Microfinance NGOs are NGOs with the primary purpose of
implementing a microenterprise development strategy and providing
microfinance programs, products and services for the poor.
Statement 2: Microfinance NGOs are prohibited from directly engaging in the
insurance business. 
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect 

 Answer: C 

84. As provided by the Tax Code, the chief officials of the BIR shall be composed of: 
a. 1 Commissioner and 4 Deputy Commissioners
b. 1 Commissioner and 5 Deputy Commissioners
c. 1 Commissioner, 2 Assistant Commissioners and 2 Deputy Commissioners.
d. 1 Commissioner and 7 Deputy Commissioners. 

 Answer: A 

85. The following are agents and deputies for collection of National Internal Revenue taxes,
except: 
a. The commissioner of Customs and his subordinates with respect to the
collection of national Internal Revenue Taxes on imported goods.
b. The head of the appropriate, government office and his subordinates with respect
to the collection of energy tax.
c. Banks duly accredited by the commissioner with respect to receipts of payments
of internal revenue taxes authorized to be made thru banks.
d. City treasurer with regard to collection of real estate tax. 

 Answer: D