2023 UP BOC LMT - Commercial and Taxation Law
2023 UP BOC LMT - Commercial and Taxation Law
Answer: A limited partner is only liable to the Note: if it involves sale 2/3 OCS or Members;
extent of his contribution. of all or substantially or
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4. What are the subscribed and paid-up
Power Vote Requirement
requirements in:
all assets Majority Trustees for a. Authorized capital stock
nonstock corporations, b. Increase in capital stock
where there are no
members with voting Answer:
rights 1. Authorized capital stock - no
minimum capital stock required to be
Power to acquire own Existence of subscribed and paid-up [Sec 12]
shares [Sec. 40] Unrestricted Retained 2. Increase in capital stock
Earnings a. At least 25% subscribed; and
b. At least 25% of the subscribed
Power to invest Majority BOD or BOT; be paid-up.
corporate funds in 2/3 OCS or Members
another corporation or 5. What is a One Person Corporation?
business, or for any
other purpose [Sec. Answer: A corporation with a single
41] stockholder. Only a natural person, trust, or an
estate may form a One Person Corporation.
Power to declare Cash Dividends Banks and quasi-banks, pre-need, trust,
dividends [Sec. 42] Majority BOD insurance, public and publicly-listed
companies, and non-chartered government-
Stock Dividends owned and controlled corporations may not
Majority BOD; incorporate as One Person Corporations. A
2/3 OCS natural person who is licensed to exercise a
profession may not organize as a One Person
Power to enter into Majority BOD; Corporation for the purpose of exercising such
management contract Majority OCS; or profession except as otherwise provided under
[Sec. 43] Majority Members of special laws [Sec. 116, RCC].
both managing and the
managed corporation 6. When may a foreign corporation sue and
be sued in the Philippines?
Power to amend AOl Majority BOD or BOT;
[Sec. 15] 2/3 OCS or Members Answer:
Doing Business Cannot sue
3. What is a pre-emptive right? with No License
Answer: Preemptive right is the preferential Not Doing Can sue, even
right of shareholders to subscribe to all issues Business without license
or disposition of shares of any class in
Doing Business Can Sue
proportion to their present shareholdings [Sec
with License
38]. The purpose of preemptive right is to
enable the shareholder to retain his However, such corporation may be sued or
proportionate control in the corporation and to proceeded against before Philippine courts or
retain his equity in the surplus. administrative tribunals on any valid cause of
action recognized under Philippine laws. [Sec.
150]
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its political subdivisions and its 3. Provide when insurable interest exists in
instrumentalities, are hereby considered as of (1) life, (2) health, and (3) property.
an absolutely confidential nature [Sec. 2, R.A.
1405] Answer:
When Insurable Interest Required
Foreign currency deposits - All foreign currency Life/Health Property
deposits authorized under this Act, as Inception ✓ ✓
amended by Presidential Decree No. 1034, are Intervening
hereby declared as and considered of an Period
absolutely confidential nature [Sec. 8, R.A.
Occurrence ✓
6426]
of Loss
6. What is “voluntary” liquidation?
4. When may a contract of insurance be
rescinded?
Answer: Liquidation that is initiated by written
notice to the Monetary Board so that the
Answer: A contract of insurance may be
Monetary Board acquires the right to intervene.
rescinded in the following instances:
7. What is “involuntary” liquidation? a. Concealment - the failure to disclose
facts which the applicant, at the time of
application, knows or ought to know
Answer: Liquidation that is ordered by the
and are material to the insurance
Monetary Board due to grounds stated in Sec.
applied for [Carale].
30 of the New Central Bank Act.
b. Misrepresentation/Omission - false
representation which the insured states
III. INSURANCE LAW with knowledge that is untrue, intended
to deceive the insurer into accepting
1. What are the elements of an insurance risk.
contract? c. Breach of warranties - must be of a
material warranty.
Answer:
a. Cause 5. Define an Incontestability Clause.
b. Consideration
c. Risk of loss or damage Answer: The insurer cannot prove that the
d. Risk-distributing scheme policy is void ab initio or is rescindable by
e. Insurable interest reason of the fraudulent concealment or
f. A meeting of minds of the parties upon misrepresentation of the insured or his agent:
all the foregoing essentials a. After a policy of life insurance made
payable on the death of the insured
2. What are the characteristics/nature of an shall have been in force during the
insurance contract? lifetime of the insured for a period of
two (2) years from the date of its issue
Answer: An insurance contract is [CAVE- or of its last reinstatement [Sec. 48]
CCPU] b. The insurer’s right to rescind a contract
a. Consensual is not exercised previous to the
b. Aleatory commencement of an action on the
c. Voluntary contract [Sec. 48].
d. Executory and unilateral but
synallagmatic
e. Conditional
f. Contract of adhesion
g. Personal contract.
h. Uberrimae fides contract
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centum of whose capital is owned by such service which desires to engage a foreign
citizens. [Sec. 11, Art. XII, 1987 Const.] national for employment must obtain an
employment permit pursuant to the Labor Code
3. What are the guidelines on foreign of the Philippines.
employment in public services?
What is critical infrastructure?
Answer:
General Rule: A public service shall employ a Answer: Any public service which owns, uses,
foreign national only after the determination of or operates systems and assets, whether
non-availability of a Philippine National who is physical or virtual, so vital to the Republic of the
competent, able, and willing to perform the Philippines that the incapacity or destruction of
services for which the foreign national is such systems or assets would have a
desired. detrimental impact on national security,
including telecommunications and other such
Exception: Unless otherwise provided by law, vital services as may be declared by the
or by any international agreement, any foreign President of the Philippines. [Sec. 2(e), R.A.
national seeking admission to the Philippines No. 11659]s
for employment purposes and any public
Answer:
Copyright Trademark Patent
Purpose or To promote creativity Identifying the origin or “Bring[ing] new designs and
function and encourage creation ownership of goods and technologies into the public
of works [ABS-CBN v. services [Ang v. Teodoro, domain through disclosure”
Gozon, G.R. No. G.R. No. L-48226, December [Pearl & Dean v. Shoemart,
195956, March 11, 14, 1942]. G.R. No. 148222, August
2015]. 15, 2003].
Coverage Intellectual creations in Visible signs capable of 1. Inventions: Any technical
the literary and artistic distinguishing goods (i.e. solution of a problem in any
domain [Sec. 172, IP trademarks), services (i.e. field of human activity which
Code] service marks), and the is new, involves an inventive
enterprise itself (i.e. step, and is industrially
tradenames) [Kho v. Court of applicable [Sec. 21, IP
Appeals, G.R. No. 11578, Code; Kho v. Court of
March 19, 2002]. Appeals, G.R. No. 11578,
March 19, 2002].
2. Utility model [Sec. 109, IP
Code]
3. Industrial designs and
layout design [Sec. 112.1, IP
Code]
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Copyright Trademark Patent
Standard for Creation must be Capability of the mark to 1. Inventions
protection original, i.e. created by distinguish the goods and a. Novelty [Secs. 23-24, IP
creator’s own skill, services of an enterprise Code]
labor, and judgment [Kho v. Court of Appeals, b. Inventive step [Sec. 26, IP
[Ong Ching Kian Chuan G.R. No. 11578, March 19, Code]
v. CA, G.R. 130360, 2002; see Sec. 123.1 for c. Industrial applicability
August 15, 2021]. marks that cannot be [Sec. 27, IP Code]
registered].
2. Utility model [Sec. 109, IP
Code]
a. Novelty [Secs. 23-24, IP
Code]
b. Industrial applicability
[Sec. 27, IP Code]
Duration General rule: during the Certificate of registration Twenty (20) years from filing
life of the author and for shall remain in force for ten date of application [Sec. 54,
fifty (50) years after his (10) years, but this may be IP Code]. This cannot be
death [Sec. 213.1, IP renewed [Secs. 145 to 146, renewed.
Code]. IP Code]
Special cases:
Joint authorship: during
life of the last surviving
author and for fifty
years after his death
[Sec. 213.2, IP Code].
Anonymous or
pseudonymous works:
fifty (50) years from the
date on which the work
was first lawfully
published [Sec. 213.3,
IP Code].
Photographic works
and audio-visual works
produced analogous to
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Copyright Trademark Patent
photography or any
process for making
audio-visual
recordings: fifty (50)
years from publication
and, if unpublished, fifty
(50) from making [Secs.
213.5 to 213.6, IP
Code].
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Answer:
Income Capital
a. Ordinary Assets
Denotes a flow of Fund or property i. Stock in trade of the taxpayer/ other
wealth during a existing at one distinct property of a kind which would properly
definite period of point in time. be included in the inventory of the
time. taxpayer if on hand at the close of the
taxable year.
Service of wealth Wealth itself ii. Property held by the taxpayer primarily
for sale to customers in the ordinary
Subject to tax Return of capital is not course of his trade or business.
subject to tax iii. Property used in the trade or business
of a character which is subject to the
Fruit Tree allowance for depreciation, or
iv. Real property used in the trade or
business of the taxpayer, including
3. What are the requisites for income to be
property held for rent.
taxable?
b. Capital Assets - Property held by the
Answer:
taxpayer, whether or not connected with
1. There is INCOME, gain or profit
his trade or business which is not an
2. RECEIVED or REALIZED during the
ordinary asset.
taxable year
3. NOT EXEMPT from income tax by law or
treaty
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6. Differentiate Ordinary Income from corporation had control immediately before
Capital Gain. the acquisition; or
3. The acquisition by one corporation, in
Answer: exchange solely for all or a part of its voting
a. If the asset involved is classified as stock or in exchange solely for all or part of
ordinary, the entire amount of the gain the voting stock of a corporation which is in
from the transaction shall be included in the control of the acquiring corporation, of
computation of gross income [Sec 32(A)], substantially all of the properties of another
and the entire amount of the loss shall be corporation. In determining whether the
deductible from gross income. [Sec 34(D)]. exchange is solely for stock, the
b. If the asset involved is a capital asset, the assumption by the acquiring corporation of
rules on capital gains and losses apply in a liability of the others shall be disregarded;
the determination of the amount to be or
included in gross income. (See Capital 4. A recapitalization, which shall mean an
Gains and Losses). arrangement whereby the stock and bonds
of a corporation are readjusted as to
These rules do not apply to: amount, income, or priority or an
a. real property with a capital gains tax (final agreement of all stockholders and creditors
tax), or to change and increase or decrease the
b. shares of stock of a domestic corporation capitalization or debts of the corporation or
with a capital gains tax (final tax). both; or
5. A reincorporation, which shall mean the
7. What are Tax-Free Exchanges? formation of the same corporate business
with the same assets and the same
Answer: Tax-free exchanges refer to those stockholders surviving under a new
instances enumerated in Section 40(C)(2) of charter.
the NIRC of 1997, as amended, that are not
subject to Income Tax, Capital Gains Tax, 9. What are the requirements for exemption of
Documentary Stamp Tax and/or Value-added sale or disposition of principal residence from
Tax, as the case may be. capital gains tax of 6%?
xxx “provided, however, that if the taxpayer 6. What are the grounds for filing a claim for
elevates his protest to the CIR within 30-days tax refund or credit?
from date of receipt of the final decision of the
CIR’s duly authorized representative, the Answer:
latter’s decision shall not be considered final, a. Tax is erroneously or illegally assessed or
executory and demandable, in which case, the collected
protest shall be decided by the Commissioner.” i. Taxes are erroneously paid when a
[LRTA v CIR, G.R. No. 231238 (2022)] taxpayer pays under a mistake of fact,
as when he is not aware of an existing
3. What are the requisites of a valid exemption in his favor at the time that
assessment? payment is made.
ii. Taxes are illegally collected when
Answer: payments are made under duress.
1. The taxpayer shall be informed in writing of iii. Penalty is collected without authority
the law and the facts on which the b. Penalty is collected without authority c.
assessment is made; otherwise, the Sum collected is excessive or in any
assessment notice shall be rendered null manner wrongfully collected [Sec. 229,
and void. [Sec. 228, NIRC] NIRC]
2. Assessment contains not only a
computation of tax liabilities, but also a 7. What are the requisites for tax refund or
demand for payment within a prescribed tax credit?
period. [CIR v. Fitness by Design, Inc. G.R.
No. 215957 (2016)] Answer:
3. Assessment must be served on and a. There is a tax collected erroneously or
received by the taxpayer. [CIR v. Fitness by illegally, or a penalty collected without
Design, Inc. G.R. No. 215957 (2016)] authority, or a sum excessively or
wrongfully collected.
4. What is the prescriptive period for b. There must be a written claim for refund
assessment? filed by the taxpayer to the CIR [Vda. De
Aguinaldo v. CIR, G.R. No. L-19927
Answer: (1965)]
General Rule: Within 3 years after the last day
prescribed by law for the filing of the return or 8. When must a claim for refund be filed?
from the date of actual filing, whichever comes
later; provided, that a return filed before the last Answer:
day prescribed by law for filing shall be The claim for refund must be filed within 2
considered as filed on such last day [Sec. 203, years from the date of the payment of the tax
NIRC] regardless of any supervening cause [Sec.
229, NIRC]
Exception: Within 10 years after the discovery
of the falsity, fraud or omission in case of: (FFF) Two-year period when counted
1. False return General Rule: From the date the tax was paid
2. Fraudulent return with intent to evade tax; Exceptions:
or • If the tax is withheld at source – from the
3. Failure to file a return. [Sec. 222, NIRC] date it falls due at the end of the taxable
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year [Gibbs v. CIR, G.R. No. L17406
Sec. 229 Sec. 112
(1965)]
• If the income is paid on a quarterly basis Thus, the taxpayer
– from the time of filing the final may elevate his claim
adjustment return [CIR v. CA, G.R. No. to the CTA (a) within
117254 (1999)] 30 days from the full
• When the tax is paid in installments – or partial denial of the
from the date of final payment or the last claim, or (b) within 30
installment days after the lapse of
the 90-day waiting
9. Differentiate Refund of Unutilized Input period, in case of
VAT (Sec. 112, NIRC) and Refund of inaction by the CIR.
Erroneously or Illegally Collected Tax (Sec.
229, NIRC) [CIR v. San Roque Power Corporation, G.R.
No. 187485 (2013); Visayas Geothermal
Answer: Power Company v. CIR, G.R. No. 197525
(2014); Sec. 112, NIRC, as amended by
Sec. 229 Sec. 112 TRAIN Law]
Refers to a refund or Refers to a refund or
credit of tax credit of excess or III. LOCAL TAXATION
1. tax erroneously or unutilized input VAT
illegally assessed or attributable to zero-
collected, or rated sales
A. Local Government Taxation
2. penalty collected
without authority, or 1. What is the nature of the taxing power of
3. any sum LGUs?
excessively or
wrongfully collected Answer:
a. Not inherent - Municipal corporations,
The 2-year period The 2-year period being mere creatures of law, may exercise
shall be reckoned shall be reckoned the power to tax only if delegated to them
from the date of from the close of the by the national legislature or conferred to
payment of the tax taxable quarter when them by the Constitution. Sec. 5, Art. X of
or penalty. the sales were made. The 1987 Constitution directly grants LGUs
the power to tax.
Both the Only the b. Limited – The taxing power of LGUs is not
administrative claim administrative claim is absolute because it is subject to such
with the CIR and the required to be filed guidelines and limitations that Congress
appeal to the CTA within the 2-year may provide. [Sec. 5, Art. X, 1987
must be made within period. Constitution]
the 2-year period. c. Legislative in nature – The power to
impose taxes is vested solely in the
If the 2-year period is Sec. 112(C) of the legislative body (i.e., the Sanggunian) of
about to lapse and NIRC provides a each LGU.
the CIR has not 90day waiting period d. Territorial – It can only be exercised within
acted on the claim, for the CIR to decide the territorial jurisdiction of each LGU.
the taxpayer may on the application for
already appeal to the tax refund or credit.
CTA without waiting Compliance with the
for the decision of the 90-day waiting period
CIR. is mandatory and
jurisdictional.
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