Business Law & Taxation

Philippine School of Business Administration 826 R. Papa St. Sampaloc, Manila Business Law & Taxation August 11, 2007

CPA REVIEW

First Pre-Board Examination Saturday 10:00am–12:00nn

Choose the letter of your choice in the answer sheet provided. 1.

Two persons became debtor & creditor of each other: a. Confusion c. Remission b. Abbreviated payment d. Novation

2.

A, B, C, and D, owes E, F, G and H P40,000. How much E can collect from A if there is no agreement if their obligation is joint or solidary? a. P2,500 c. P40,000 b. P10,000 d. P5,000

3.

In the preceding number, if A, B, C and D are joint debtors while E, F, G and H are solidary creditors, how much can E collect from A? a. P2,500 c. P40,000 b. P10,000 d. P5,000

4.

The principle by which contracting parties may stipulate any legal or lawful conditions: a. Autonomy of contracts c. Relativity of Contracts b. Mutuality of contracts d. Freedom to stipulate

5.

Here, defense of a good father of a family is not a proper defense: a. Culpa Contractual c. Culpa aquiline delicto b. Culpa Aquiliana d. Culpa Criminal

6.

1st Statement: When a fortuitous event concurs with a person’s negligence resulting to a loss, he is still exempt from liability. 2nd Statement: The creditor has a right to the fruits of the thing from the time ownership is transferred. a. Both statements are correct. c. Only the first is correct. b. Both statements are false. d. Only the second is correct.

7.

A obliged himself to deliver to his dog, his cow, his carabao, his elephant or his crocodile. The first two were lost due to fortuitous event and the last three lost due to A’s fault. What is A’s obligation? a. Creditor, B may convert to cash any of them plus damages b. Debtor A may convert to cash the value of the last one lost plus damages c. A may rescind the contract plus damages d. Creditor, B may convert to cash any of the last three plus damages

8.

A obliged himself to deliver to B his cellphone or as a substitute he may deliver his cute kitten. After substitution was made, the former was lost due to A’s fault a. A is liable and must pay damages b. A will simply deliver his cute kitten plus damages for the loss of the cellphone c. The loss has no effect to the obligation, obligation to deliver the latter will subsist d. Obligation was extinguished

9.

A and B solidarily owe C P50,000; they issued a promissory note in favor of C. C endorsed it to D, D endorsed it to E then endorsed it back to A who is also E’s creditor in the amount of P50,000. a. The obligation is partially extinguished by merger b. The obligation is extinguished and A cannot recover any amount from B c. The obligation is extinguished but A can recover the share of B which is P25,000 d. The obligation is partially extinguished by compensation

10.

Rose obliged herself to give Jack 1 dozen of eggs on January 15, 2006. When the date arrived, Rose failed to deliver despite repeated demands from Jack. Jack’s remedy is: a. Compel Rose to deliver eggs plus damages b. Compel Rose to pay the amount of the eggs c. Rescind the contract d. Ask a 3rd person to deliver the eggs to him but chargeable to Rose

11.

Mary obliged herself to give to Crisse her BMW car on October 10, 2005 but she failed to deliver on that date. On the following day, a lightning completely destroyed the car. a. Mary is still liable for she is in default already b. Mary is no longer liable there being no demand , there is no delay and the thing is lost due to fortuitous event c. Crisse can demand for a substitute d. Mary is still liable even if she is in default

12.

One is an incorrect distinction between solidarity and indivisibility. a. Solidarity refers to the legal tie whereas indivisibility refers to prestation b. Plurality of subject is indispensable in solidarity unlike in indivisibility c. In case of breach, solidarity character of obligation remains, but the indivisible character of the obligation is terminated d. Solidarity refers to the parties of the obligation and the prestation whereas indivisibility refers to the vinculum juris

13.

I will pay you P10,000 if I decide to go to USA tonight is what kind of condition a. Casual c. Potestative resolutory b. Potestative suspensive d. Mixed

14.

Here, consignation alone is enough to produce payment except: a. If the creditor is unknown b. Creditor is incapacitated c. Creditor is reluctant to issue receipt d. Two or more persons claim to be creditors

15.

Which of the following is correct? a. An action for rescission of contract prescribes in five (5) years counted from the execution of the contract b. An action to declare contract void is not subject to prescription c. An action for annulment of contract is imprescriptible d. An action to enforce judicially a natural obligation prescribes in 4 years

16.

The following contracts should observe Statute of Frauds, except: a. Lease of real property longer than one year b. Representation as to the credit of a third person c. Lease of personal property longer than one year d. Guaranty

17.

S makes an offer to B on January 12, 2006. B makes known his acceptance in a letter sent on January 2, and received by S on January 10. Meantime, on January 5, S becomes insane. a. The contract is unenforceable b. The contract is not binding because there is no meeting of minds c. There is already a meeting of minds, the contract is perfected d. The contract is voidable because one party is insane.

18.

Which of the following can be considered as feature of a void contract? a. Subject to ratification b. They exist c. Action or defense for nullity is subject to prescription d. Defense cannot be waived

19.

In three of the following defective contracts, ratification cleanses the defects. Which is the exception? a. Contracts entered into by a person who has been given no authority b. Sale of a piece of land thru an agent the authority is oral c. Sale of immovable property or interest orally entered into d. Both parties are incapable of giving consent

20.

S, a minor, owns a specific property valued P 50,000. B, capacitated, by means of fraud induced S to sell his property to him (B) for P 10,000 which S did so. The contract is in writing. a. The contract is void b. The contract is rescissible because the ward suffered lesion by more than ¼ of the value c. The contract remains unenforeceable because it falls under the Statute of Frauds d. The contract is binding from the start

21.

Type of defective contract that creates no rights and impose no obligation, but are susceptible of ratification. a. Void contracts b. Rescissible contracts c. Unenforceable contracts d. Voidable contracts

22.

The guardian of an insane person sells a house and lot belonging to the latter valued at P100,000 to B, buyer for P74,000. The contract is: a. Rescissible c. Voidable b. Unenforceable d. Valid

23.

Example No. 1: W 16 years old sold his house valued at P1M for P50,000 or a lesion by more than one-fourth of the value of the said house. Example No. 2: G, guardian of W, sold W’s house valued at P50,000 for P37,500 or a lesion of one-fourth of the value. a. Voidable; Rescissible b. Rescissible; voidable c. No. 1 is rescissible; while No.2 is unenforceable d. Voidable; valid perfectly

24.

Which of the following contracts cannot be ratified? a. Those whose cause or object did not exist at the time of the transaction b. Unauthorized contracts c. Those where both parties are incapable of giving consent d. Those that fail to comply with the Statute of Fraud

25.

On October 4, 2005, A is indebted to B for P50,000 for a 20-day period. A proposed to B that X will pay A’s debt and that A will be free from all liabilities. B and X agree to the proposal. On October 25, 2005, X became insolvent. At the time of delegation, X was already insolvent but this was not known to A. The insolvency is not public knowledge. So B sues A on the ground that it was A who made then proposal that A guaranteed X’s solvency. Decide. a. A is liable because he is presumed to have guaranteed X’s solvency. b. A is not liable because he does not know the insolvency of X at the time of delegation and neither was the insolvency of public knowledge. c. A is liable because he did not exercise due diligence in determining the insolvency of X. d. A is liable because X agree to the proposal to make himself solidarity liable for the obligation.

26.

When the thing deteriorates pending the fulfillment of the suspensive condition without the fault of the debtor, the impairment is: a. To borne by the party who caused the deterioration b. To be borne partly by the debtor and partly by the creditor c. To be borne by the debtor d. To be borne by creditor

27.

X enters into a contract with Y whereby X sold his land orally to Y. The land has been delivered and the money has been paid. Decide. a. The contract fully enforceable. b. The contract is unenforeceable c.The contract is not valid because the contract is not made in public instrument d. The contract is not valid because it is not in writing as required by the Statute of Fraud

28.

On September 1, 2005, A entered into a contract with B whereby A sells to B 5,000 sacks of sugar to be delivered on the 15th and to be paid in full on the 30 th. There was no agreement for rescission based on prepayment. A did not deliver on the 15th but on the 30th, he was willing and offering to deliver but B did not make payment on said date and so A did not like it and refused to make delivery. Which is incorrect? a. A cannot rescind the contract for nonpayment of the price b. A cannot refuse to deliver the goods c. B is not entitled to recover damages d. A can rescind the contract for nonpayment of the price since B is at fault

29.

A has a daughter, B; X has a son, Y. A, B, X and Y agree together that Y will marry B. The agreement is oral. If B later on refuses to marry Y who spent for the necessary wedding preparations, X and Y decided to bring an action against A and B, will the action prosper? Decide. a. Between Y and B, the action will prosper because the agreement is made orally. b. In case of A and X, the action will prosper because the agreement which was made orally in enforceable as it is based in the consideration of marriage. c. As to A and X, the action will not prosper because the agreement is not enforceable as it was not they who mutually promised to marry each other. d. The action of X and Y against A and B will prosper because the agreement is based on the consideration of marriage other than mutual promise to marry.

30.

D1, D2 and D3 borrowed from C P300,000 as a security, he mortgaged their undivided agricultural land to C, Subsequently, D1 paid C P100,000. Is the mortgage on D1’s share of the land extinguished? a. No, because mortgages are considered indivisible, payment in part shall not extinguish the obligation secured by the mortgage. b. No. because the obligation is solidary, payment in part shall not extinguish the obligation secured by the mortgage. c. Yes, the obligation of the debtors is joint, D1 is answerable only for P100,000. d. Yes, because the obligation of D1 on the debt is only P100,000.

31.

B called up S by telephone, to sell his parcel of land. The land was purchased by X, but S did not forward the money to B. Now B wants to recover the parcel of land. a. B cannot recover because the sale is valid b. B can recover because the sale between S and X is void, therefore there is no sale c. B can recover only if B can return the money paid by X to S d. Answer not given

32.

D pledged his ring to C for P100,000. D failed to pay his obligation on time. C sold it at public auction for P8,000. a. C can recover the deficiency even without stipulation b. C cannot recover the deficiency even there is stipulation c. C cannot recover the deficiency d. C can recover the deficiency

33.

Which is not a characteristic of contract of sale? a. Onerous c. Consensual b. Innominate d. Commutative

34.

Mr. Ong leased to Mr. Santos a 5 KVA generator for two years at a lease rental fee of P2,000 per month and signed an option in favor of Mr. Santos to buy the generator at the end of the term of the lease at P60,000. All rental fees are paid to be considered as partial payment of the sale. After 12 months, Mr. Santos was able to pay the rental fees for nine months and was in arrear for the three months rental fees. Mr. Ong terminated the lease contract and repossessed the generator. The consequence of the transaction is: a. Mr. Ong can collect the rental fees for the three months which are in arrears. b. Mr. Ong can collect the rental fees for the unexpired 12 months of the lease contract. c. When Mr. Ong took possession of the generator, he has no further action against Mr. Santos. d. Mr. Ong, in terminating the lease and repossessing the generator, is obliged to refund the nine months rental fees paid by Mr. Santos.

35.

When the period is “ on or before date”, the debtor has the benefit of the period. This benefit is lost and the obligation becomes demandable when: a. The debtor attempts to abscond. b. After contracting the obligation, the creditor suspects the debtor becoming insolvent. c. The guarantee given by the debtor is not acceptable to the creditor. d. Demand by the creditor could be useless.

36.

In the following cases, the sale should be considered an equitable mortgage, except: a. b. c. d.

If the vendee still keeps a substantial portion of the purchase price. When seller paid the capital gains tax on the property sold. When the price is unusually low. When seller keeps the possession of the property.

37.

S sold his car to B payable in ten (10) equal monthly installments and with a mortgage constituted on the same property (car). For B’s failure to pay a month’s installment, which statement is correct? a. S may foreclose the mortgage on B’s car but he no longer has the right to recover the balance should it (the car) be sold for an amount lower than what he claims from B. b. S may seek the cancellation of the sale made to B. c.S may seek the cancellation of the same and later on foreclose the mortgage should he find it impossible to collect from B. d. S may seek fulfilment of the obligation of B to pay the amount due.

38.

Which statement is correct about extinguishments of obligation? a. Confusion or merger rights may occur in the person of a guarantor. b. Agency wherein novation is effected must be in writing and thru a Special Power of Attorney. c. Prescription is a primary mode of extinguishing an obligation. d. Condonation is generally gratuitous.

39.

S sold to B a specific car for P20,000 payable in four equal installments. S delivered the car to B but required to mortgage it back to S to answer for the unpaid installments. B paid the 1 st installment, but the last three he failed to pay. S foreclosed the mortgaged property and sold it at public auction for P13,000. a. S can recover from B the balance of P2,000. b. S can recover from B & balance of P2,000 if there is stipulation to that effect. c. S cannot recover the deficiency any more even if there is stipulation to that effect. d. None of the above.

40.

When it is stipulated that the repurchase of the property sold could be made at any time, the repurchase shall be exercised a. Within four years from the date of the contract b. Within ten years from the date of the contract c. After ten years from the date of the contract d. None of them.

41.

S sold to B a parcel of land for a lump sum of P50,000 the contract states that the area is 500 square meters. Subsequently, it was ascertained that the area included within the boundaries is really 550 square meters. a. S to deliver 550 sq. meters and B to pay same amount. b. S or B can rescind the We because there is no meeting of minds. c. S is bound to deliver 500 square meters and B to pay P55,000. d. S is bound to deliver 500 square meters and B to pay P50,000.

42.

Statement No. 1: If the property is sold for nonpayment of taxes due and not made known to the vendee before the sale, the vendor is still liable for warranty against hidden defects. Statement No. 2: In the eviction, if seller is at fault, he must reimburse to the buyer the purchase price of the thing sold. a. Both are true c. No. 1 is true; No. 2 is false b. Both are false d. No. 1 is false; No. 2 is true

43.

A, B and C are co-owners of an undivided parcel of land. B sold his 1/3 interest to C absolutely. Which is correct? a. A may exercise his right of redemption on the interest sold by B to C. b. A cannot exercise the right of redemption because the sale was made in favor of a coowner. c. The sale made by B to C is void because it was not made in favor of a stranger. d. A may redeem only ½ of the interest sold by B to C.

44.

Which of the statements is not true? a. In sale or return ownership is transferred to the buyer upon delivery b. Warranty against hidden defects is an accidental element of a contract of sale c. In sale the obligation of the buyer is not only the payment of the price d. In dacion en pago, an obligation is extinguished while in contract of sale, obligation arise.

45.

A land was sold to different vendees, the ownership shall be transferred to the person a. Who have first taken possession in good faith. b. Who presents the oldest title in good faith. c. Who in good faith recorded it in the Registry of Property d. Who have paid in good faith the purchase price in full

46.

S sold car for P300,000 to B. Despite his knowledge of this defect, S obtained a waiver from B of the latter’s right under the warranty against hidden defects. Subsequently, the car was wrecked due to the recklessness of B who only the discovered the defects when the FMV of the car was P250, 000. Choose the best answer. a. The liability of S remains to be P300,000 because of breach of warranty against hidden defect. b. S is not liable anymore because the car got loss due to recklessness of B c. The waiver is void because S knew the defect d. S is still liable to reimburse B P50,000 plus damages and he must pay damages.

47.

Here the owner of the property became the lessee thereof so no physical delivery is still required. a. Traditio longa manu c. Traditio constitutum possessorium b. Traditio brevi manu d. Traditio clarium

48.

In redemption, which will not be paid by the buyer- a retro? a. Price of the thing sold. b. Useful expenses. c. Necessary expenses. d. Expenses of the sale if paid by the seller.

49.

Which is not a constitutional limitation? a. Due process of law in taxation b. Uniformity of taxation c. Double taxation d. Equality in Taxation

50.

Which is incorrect? a. Collection of taxes is an administrative act. b. There can be no tax if there is no law providing for the said tax. c. No person can be imprisoned for non-payment of capitation tax. d. A tax is a form of administrative revenue.

51.

All are essential characteristics of a tax except: a. Payment of the tax is mandatory. b. It is generally payable in money. c. It is generally unlimited in amount. d. It is proportionate in character.

52.

First Statement: Estate tax is an excise, direct and proportionate tax. Second Statement: Our tax are civil, prospective and penal in nature. a. True; True c. True; False b. False; False d. False; True

53.

Who is the taxpayer in estate tax? a. The heirs or successors b. The deceased person’s estate c. The heir’s legal representative d. The executor or administrator of the estate

54.

All are considered legal mode of escape from taxation except: a. Shifting b. Transformation c. Capitalization d. Tax dodging

55.

One of the following is not subject to 0-15% first donor’s tax rates: a. A donation to the illegitimate child of the donor’s niece b. A donation to the only brother of his paternal uncle c. A donation to the only sister of his maternal aunt d. A donation to the grandson of his father’s brother

56.

Boboy sold his residential land in Manila for P500,000. Its fair market value was P800,000, with historical cost P100,000 only. Later Boboy died within the year of transfer due to accident. What is the tax liability of Boboy? a. Basic Income Tax b. Capital Gains Tax c. Donor’s tax d. Estate tax

57.

All are incorrect except one: a. b. c. d.

Claims against insolvent person must be notarised to be deductible Losses must occur before decedent’s death to be deductible Allowable deduction for funeral expenses can never be more than the actual expenses Onerous revocable transfers are includible in the gross estate

58. Mr. and Mrs. Reyes gave the following gifts out of their conjugal property. March 15, 2000 - Land valued at P200,000, mortgaged for P50,000 and P20,000 of which was assumed by the donee, brother of Mr. Reyes on account of his brother’s marriage held last February 14, 2000.The donor’s tax due on the gift is: a. P27,000 c. P1,600 b. P54,000 d. P 0 59. In addition to the above problem, if on April 15, 2000, Mr. and Mrs. Reyes donated a car in USA worth P395,000 to their daughter (he paid P15,000 donor’s tax) but the car is exclusive property of Mr. Reyes, and a conjugal car in the Philippines worth P300,000 to the son of Mr. Reyes by first marriage on account of marriage last April 25, 1999. The donor’s tax due for Mr. and Mrs. Reyes shall be: a. P21,500; P45,000 c. P22,100; P42,000 b. P7,912: P45,000 d. P8,600; P42,000 60. Mr. and Mrs. Cruz gave the following conjugal donations: Date Donee 7/15/05 Son on account of marriage on 8/20/04 P100,000 with mortgage of P20,000 assumed by the donee. 8/15/05 Daughter on account of marriage 8/1/04 P160,000 10/22/05 Niece of Mrs. Cruz on account of marriage 11/20/05 P60,000 11/22/05 Granddaughter on account of marriage 12/22/05 P140,000. The combined donor’s tax payable by Mr. and Mrs. Cruz on 8/15/05 is: a. P200 c. None b. P400 d. P600 61. The tax payable by Mr. Cruz only on 11/22/05 is: a. P9,000 c. P7,600 b. P1,400 d. P9,600 62. Below are characteristics of a sound taxation system EXCEPT: a. Administrative feasibility and compliance b. Fiscal Adequacy c. Theoretical Justice or Equality d. Uniformity of Taxation 63. One of the following is NOT inherent limitation: a. Taxes must be for public purpose b. Equality in Taxation c. Territoriality rule d. Rule on double taxation 64. Three of the following are exempt or excluded from the donor’s tax. Which is the exception? a. P150,000 donation to nonprofit school b. Donation of condominium in Hong Kong to a Filipina by a British nation not residing in the Philippines c. P10,000 cash given by a resident alien donor to his legitimate son who is getting married in the Philippines d. P20,000 cash given by a nonresident alien donor to his legitimate son who is getting married in the Philippines to a Filipina. 65. John sold his car in Manila to Sam. Its cost is P500,000 and has a fair market value of P400,000 at the same time of sale. It was sold for P200,000. For donor’s tax purposes, which of the following statements is correct? a. There is taxable gift of P300,000 b. There is taxable gift of P200,000 c. The transfer is for insufficient consideration, hence, not subject to gift tax. d. The transfer is subject to capital gains tax

66. Which of the following is not a scheme of shifting the incidence of taxation? a. The manufacturer transfer the tax to the customer by adding the tax to the selling price of the goods sold b. The tax forms part of the purchase price c. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination on abroad, so that the title passes abroad instead of in the Philippines d. The manufacturer transfer the sales tax to the distributor, then in turn to the wholesaler, in turn to the retailer and finally to the consumer 67. In case of conflict between the tax code and generally accepted accounting principles (GAAP): a. Both tax codes and GAAP shall be enforced b. GAAP shall prevail over tax code c. Tax code shall prevail over GAAP d. The issue shall be resolved by the courts 68. Which of the following statements is not correct? a. Taxes may be imposed to raise revenues or to regulate certain activities within the state b. The state can have the power of taxation even if the Constitution does not expressly give it the power to tax c. For the exercise of the power of taxation, the state can tax anything at any time d. The provisions of taxation in the Philippines Constitution are grants of power not limitations on taxing powers 69. Mr. Tuna, head of the family died on January 15, 2005, leaving the following properties and obligations: House and lot in Makati, F. Home P 1,500,000 Personal Properties 1,500,000 Farm lot, USA 825,000 Claim against an insolvent debtor 225,000 Transfer in contemplation of death (gratuitous) 1,500,000 Transfer passing special power of appointment 75,000 Deduction Claimed: Funeral Expenses 575,000 Judicial Expenses 67,500 Death benefits from employer 300,000 Unpaid mortgage on the farm lot 75,000 Medical expenses (included in the funeral expense incurred within the 1 year period with receipts) 225,000 The farm lot was inherited 4 years ago by the decedent before his death with a value then P575,000 and a mortgage indebtedness of P150,000. The total deduction from the gross estate is: a. P3,092,500 b. P3,363,398 c. P867,500 d. P1,867,500 70. Mr. Kukuruku, non-resident Japanese, died leaving the following: Exclusive properties, Philippines Conjugal properties, Philippines Conjugal properties, Abroad Deductions claimed: Funeral expenses Judicial expenses Unpaid expenses Losses: occurring 3 mos. After death due to fire Donation mortis causa to Makati City Hall Family Home (inc. above) Standard deduction The taxable net estate is: a. P216,500 b. P816,500 c. P516,500 71.

P

560,000 420,000 1,820,000 100,000 100,500 150,500 120,000 180,000 1,000,000 1,000,000

d. P916,500

The following are transactions and acquisitions exempt firm transfer tax except: a. Transmission from the first heir or donee in favor of another beneficiary in accordance with the desire of the predecessor. b. Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommisary; c. The merger of usufruct in the owner if the naked title; d. All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions.

72. In determining the net estate of a decedent, which of the following rule is correct? a. Real estate abroad is not included in the gross estate of a decedent who is a resident alien; b. Vanishing deduction must be subject to limitations; c. Shares of stocks being intangible property shall be included in the decedent’s gross estate wherever situated; d. Funeral expenses are deductible to the extent of 5 % of the total gross estate but not exceeding P100,000. 73. Y, a Filipino resident, died on November 5, 2002 and his estate incurred losses due to: 1st. Loss: From fire on February 2, 2002 of improvement on his property not compensated by insurance. 2nd Loss: From flood on February 25, 2003 of household furniture also not compensated by insurance. a. 1st loss is not deductible and 2nd loss is deductible; b. Both losses are not deductible; c. Both losses are deductible from gross estate; d. 1st loss is deductible and 2nd loss is not. 74. A CPA Certificate is required when: a. Gross estate exceeds P50,000 b. Gross estate is P50,000 or more c. Gross estate exceeds P2,000,000 d. Gross estate is P2,000,000 or more 75. Extension for payment of estate tax with judicial settlement is: a. 6 months c. 5 years b. 90 days d. 2 years 76. The period for filing the donor’s tax return a. Within 6 months from the date of donation b. Within 30 days from the date of donation c. Within 3 months from the date of donation d. Within 1 month from donation 77. The period for filing the estate tax return a. Within 6 months from the date of death b. Within 3 months from the date of death c. Within 90 days from the date of death d. Within 120 days from the date of death 78. Which of the following proceeds of life insurance policy is not includible in the gross estate a. Beneficiary is the estate, irrevocable b. Beneficiary is the administrator, revocable c. Beneficiary is the executor, irrevocable d. Correct answer is not given 79. Sarah inherited a residential lot in 1996 valued at P200,000 at that time. On November 30,2006 she sold it for P400,000 when its fair market value was P800,000 Sarah is subject to: a. VAT b. Donor’s Tax c. OPT d. Income Tax (CGT) 80. Which of the following is correct about estate tax? a. Courts may allow the distribution of the estate to the heirs in the interest of justice and equity before estate tax is paid. b. A resident alien decedent’s suits of taxation is within the Philippines only just like in income tax. c. Estate is a taxpayer created by the death of a person. d. The payment of estate tax is a personal obligation of the heirs.

Donor’s Tax Table If the net gifts is: Over ----------------P 100,000 200,000 500,000 1,000,000 3,000,000 5,000,000 10,000,000

But not over ------------------P 100,000 200,000 500,000 1,000,000 3,000,000 5,000,000 10,000,000 —

The tax shall be

Plus

Of excess over

-----------Exempt 0 2,000 14,000 44,000 204,000 404,000 1,004,000

-----------— 2% 4% 6% 8% 10% 12% 15%

---------------— P 100,000 200,000 500,000 1,000,000 3,000,000 5,000,000 10,000,000

-END“If you lose your confidence you will lose nothing more” d.