General Principles and Concepts

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Problem 1-1
True or False
Write True if the statement is correct or False if the statement is
incorrect.
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Eminent domain and police power can effectively be

performed even without taxation. F ( government needs
revenue to carry out all its functions)
Taxes may be imposed to encourage economic growth by
granting tax exemptions. T
Taxation is a way of apportioning the cost of government
among those who are privileged to enjoy its benefits. T
The state can enforce contributions upon its citizens in the
form of taxes even without a provision in the Constitution
authorizing it. T (this is an inherent power of the state)
The police power of the government may be exercised
through taxation.
When the power to tax is delegated to the local
government, only the legislative branch of the local
government can exercise the power.
The power of taxation can be exercised without limitation
because its scope is unlimited. F ( it has inherent and
constitutional limitations)
The power of taxation is absolute because it is the
strongest of all powers of the government. F ( subject to
inherent and constitutional limitations
Taxation presupposes an equivalent compensation. T
There is no imposition of amount in police power. F
Police power and eminent domain may defeat the
constitutional rights of a person.
Tax exemption applies only to government entities that
exercise proprietary functions. F ( government functions)
All government entities regardless of their functions are
exempted from taxes because it would be impractical for
the government to be taxing itself. F
The state can still exercise its taxing powers over its citizen
outside its territory. T (privity of relationship)

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Problem 1-3 True or False

Write True if the statement is correct or False if the statement is
incorrect.
1

Problem 1-2 True or False

Write True if the statement is correct or False if the statement is
incorrect.

No law granting any tax exemption shall be passed without

the concurrence of two thirds of the members of the
congress. F (only majority is required)
Churches are exempt from payment of income taxes. F
(exempt from real property taxes only)
A tax may be levied for the support of religious activities as
long as all churches benefit from it. F
A bill not signed by the President can still become law. T
(2/3 of members of the house is required)
No person shall be imprisoned for nonpayment of income
tax.
Taxation is considered as the lifeblood of the government
and every government unit must exercise this power.
The amount of taxes may be increased to curve spending
power and minimize inflation. T ( to decrease money
supply and consequently minimize inflation and spending
power)
Benefits from taxation have to be experienced to justify the
legitimacy of collection of taxes from the people. F
Taxes may be used as a tool and weapon in international
relations and protect trade relations. T
The power of legislative review in taxation is limited only to
the interpretation and application of tax laws. F ( judicial)
The rule of ex post facto law is applicable for tax
purposes. F
Real estate tax and income tax collected on the same real
estate property is double taxation. F (different nature)
A tax evader sidesteps the law, while the tax avoider
breaks it. F ( reverse)
Tax exemption is transferable and assignable. F ( it is
personal in nature)
Taxation is the governments legitimate means of
interfering with the private properties of its subjects.T

The doctrine of equitable recoupment is applicable to cases

where the taxes involved are totally unrelated.
Protection is the basic consideration that justifies tax situs.
T

The tax situs for occupation is the place where occupation

is pursued even if the criterion for nationality is given.
4 There is no direct double taxation by taxing corporate
income and corporate stockholders dividends from the
same corporation. T (different objects)
5 Tax laws are given retroactive effects. F
6 In the imposition of taxes, public purpose is presumed. T
7 Taxes are obligations created by law.
8 Taxes collected by the BIR are local taxes. F
9 Nonpayment of license fee makes the business illegal. T
10 In taxation, it is ones civil liability to pay taxes which gives
rise to criminal liability. T
11 Tax laws must be construed strictly against the
government, and tax exemptions must be construed
strictly against the taxpayer. T

12 As a rule doubts must be resolved liberally in favor of the

government and strictly against the taxpayer. F
13 The Philippine tax laws are not political and penal in
nature. T
14 When there is ambiguity of tax laws, the rules of statutory
construction may be used to search for the legislative
intent. However, when the meaning of the law is clear, the
statute must be enforced as written. T
15 Revenue regulations that are inconsistent with law have
the effect and force of law if they are useful and
reasonable. F