UNIVERSITY OF SAN JOSE-RECOLETOS
Paran, CPA
College of Commerce
Department of Accountancy and Finance
NAME: ____________________________
QUIZ NO. 1 – GENERAL PRINCIPLES OF TAXATION
Write the letter of your chosen answer (IN CAPITALS) beside the number. Strictly no erasures please.
1. The process by which the State raises income to
defray the expenses of the government is called
a. Subsidy
b. Tariff
c. Taxation
d. Tribute
2. One of the characteristics of taxes is that they
are:
a. Criminal in nature
b. Penal in nature
c. Political in nature
d. Generally prospective in application
3. In case of conflict between tax laws and generally
accepted accounting principles (GAAP):
a. Both tax laws and GAAP should be
enforced
b. GAAP shall prevail over tax laws
c. The issue will be decided by the
Supreme Court
d. Tax laws shall prevail over GAAP
4. Statement I. In case of ambiguity, tax laws should
be interpreted in favor of the BIR
Statement II. In case of deductions and tax
exemptions, doubts shall be resolved strictly
against the taxpayer
a. False, false
b. True, true
c. False, true
d. True, false
5. All of the following, except one, are sources of tax
laws-
a. legislation, tax treaties and tax
ordinances
b. judicial decisions
c. opinions of eminent authors of tax
reference books
d. administrative rules and regulations
6. The following have the inherent or delegated
power of taxation, except:
a. The Governor of the Province of Cebu
b. The President of the Philippines
c. The Congress of the Philippines
d. The City Council of the City of Manila
Mr. Allan Leo T.
Tax 1 – Income Taxation
7:30 – 9:00 TTH
Course and Year: _________________
December 12, 2019
7. The following are primary and secondary
purposes of the power of taxation. Which one
option pertains to the primary purpose?
a. Protection of local industries against
foreign competition through imposition of
high customs duties on imported goods
b. Reduction of inequalities in wealth and
income by imposing progressively higher
tax rates
c. To secure revenue for the support of the
government
d. Strengthening of anemic enterprises by
giving tax exemptions
8. Which is the best answer? A tax reform enacted
by the State at any given time underscores the
fact that:
a. Taxation is an inherent power of the
State
b. Taxation is a power that is very broad
c. The state can and should adopt a
progressive system of taxation
d. Taxation is for public purpose
9. All of the following correctly describes the three
basic principles of a sound tax system, except:
a. It should be capable of being effectively
enforced
b. It must be progressive
c. Sources of revenue must be sufficient to
meet government expenditures and other
public needs
d. It should be exercised to promote public
welfare
10. The requirement of equality or theoretical justice
is complied with if the tax is
a. Progressive
b. Regressive
c. Ad valorem
d. Specific
11. The president of the Philippines and the prime
minister of Japan entered into an executive
agreement in respect of loan facility to the
Philippines from Japan whereby it was stipulated
that interest on loans granted by private
Japanese financial institution in the Philippines
shall not be subject to Philippine income taxes.
What basic characteristic of taxation has been
violated by this agreement?
LAST NAME: __________________ TAX 1 QUIZ NO. 1 – General Principles of Taxation
a. Inherent limitation
b. Legislative in character
c. Administrative feasibility
d. Theoretical justice
12. These are restrictions on the exercise of the
power of taxation other than those found in the
Constitution or implied from its provisions.
a. Inherent Limitations
b. Constitutional Limitations
c. Natural Limitations
d. All of the above
13. The following are inherent limitations on the
power of taxation, except
a. Prohibition against double taxation
b. International comity
c. Legislative in character
d. Territoriality
14. The City Council passed an ordinance imposing
an occupation tax on an air-conditioning
technician. Conde is the only person with such
occupation in the city. He challenged the validity
of the ordinance as being discriminatory since he
is the only one adversely affected
a. The contention of conde is tenable
b. The ordinance is unconstitutional
because Conde is denied of his right to
equal protection of the law
c. The constitution of Conde is not justified
because the rule on a uniformity is not
violated considering that the ordinance
would also be imposed on air-
conditioning technician who may come
within the jurisdiction of the city
d. The issue on validity or invalidity of the
ordinance should be set a side
15. The following characteristics of a tax law is
violative of the due process clause in the
Constitution, except:
a. Arbitrary
b. Excessive
c. Proportionate
d. Discriminatory
16. All subjects or objects that are similarly situated
are treated alike as to the burden that may be
imposed and the benefits that may result
a. Uniformity
b. Equitable
c. Proportional
d. Progressive
17. Treating persons who are similarly situated in the
same manner
a. Uniformity of taxation
b. Due process of law
c. Non-delegation of legislative power
d. Equality of taxation
18. The lung center of the Philippines, a charitable
institution, is erected in the middle of a twelve
hectare lot
I. A big space at its ground floor is being
leased ton private parties, for canteen
and small store spaces and to medical or
professional practitioners who use the
same as their private clinics for their
patients whom they charge for their
professional service
II. The rest of the portions of the building
are used for its patients whether paying
or non paying
III. Almost one-half of the entire area of the
lot on the left side of the building is
vacant and idle
IV. A big portion on the right side is being
leased for commercial purposes to a
private enterprise known as the Orchids
& Garden Center
Which of the portion is subject to real
property tax?
a. I only
b. I and II
c. II and IV
d. I, III and IV
19. Statement 1- The constitutional exemption on
income taxes, property taxes and customs duties
is allowed on non-stock, nonprofit educational
institution only
Statement 2-A building being leased by its owner
to a private educational institution for use as
classroom is exempt from property tax
Statement 3- Income of a non-stock, nonprofit
educational institution run by the Archdiocese is
exempt from tax provided that the incomes are
actually, directly and exclusively used for
educational purposes
Which of the above statements are correct
a. Statement 1 only
b. Statement 1 and 3
c. Statement 2 only
d. All of them
20. Which statement is wrong? Tax laws
a. must originate from the House of
representative and on which same bill the
Senate may propose amendments
b. may originate from the Senate and on
which same bill the House of
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LAST NAME: __________________ TAX 1 QUIZ NO. 1 – General Principles of Taxation
Representatives may propose
amendments
c. may have the House version and Senate
version approved separately
d. may be recommended by the President
to Congress
21. Congressman V of the 2nd district of Nueva Ecija
and Senator R sponsored a bill in the House of
Representative and the senate, respectively,
increasing the personal exemptions of individual
taxpayers as well as granting tax exemption to
minimum wage earners. Which of the following
statement is not incorrect?
a. The Senate bill should be discussed
ahead of the House bill
b. The Senate and House bills maybe
discussed at the same time in both
chambers
c. The House bill should be discussed
ahead of the Senate bill
d. No priority, each bill can be discussed
ahead of the other
22. No law granting any tax exemption shall be
passed without the concurrence of
a. Majority of all members of the Congress
b. 2/3 vote of all members of the Congress
c. ¾ vote of all members of the Congress
d. Unanimous vote of all members of the
Congress
23. The veto of the president may be overridden by
the vote of
a. Majority of all members of the Congress
b. 2/3 vote of all members of the Congress
c. ¾ vote of all members of the Congress
d. Unanimous vote of all members of the
Congress
24. Which of the following statements is incorrect
with respect to the power of the president
a. Congress may authorize the President to
fix within specified limits tariff rates,
import and export quotes, tonnage and
wharfage dues, and other duties or
imports within the framework of the
national development program of the
government
b. The president can veto any particular
item in a revenue or tariff bill, but the veto
shall not affect the items to which he
does not object.
c. The power of taxation can be delegated
to the president of the Philippines
d. The president of the Philippines is
empowered to grant tax exemption on
certain class of taxpayers
25. Which of the following statements is incorrect?
a. No person shall be imprisoned for non-
payment of debt or non-payment of taxes
b. The passage of laws granting tax
exemptions required the concurrence by
a majority of all the members of congress
c. The supreme court’s jurisdiction over tax
cases cannot be impaired
d. The revenues and assets of non-stock,
nonprofit educational institutions and
donations for educational purposes are
exempted from taxes and duties
26. A fundamental rule in taxation is that the property
of one country may not be taxed by another
country.
a. International law
b. International comity
c. Reciprocity
d. International inhibition
27. This deals with the provisions of the law which
determines the person or property to be taxed,
the sum or sums to be raised, the rate thereof,
and the time and manner of levying receiving and
collecting of taxes
a. Collection
b. Payment
c. Enforced contribution
d. Levy
28. This constituted of the provisions of law which
prescribe the manner of enforcing the obligation
on the part of those taxed to pay the demand
thus created
a. Collection
b. Proportionate in character
c. Enforced contribution
d. Levy
29. The place or authority that has the right to
impose and collect taxes
a. Territoriality
b. international comity
c. situs of taxation
d. transformation
30. The following are not part of the characteristics of
a tax, except?
a. A tax is pecuniary burden and the law
may not allow payment in kind
b. It is dependent upon the will or
contractual assent, express or implies of
the person taxed
c. It is levied by the state by virtue of its
sovereignty
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LAST NAME: __________________ TAX 1 QUIZ NO. 1 – General Principles of Taxation
d. It is collected for public and private
purposes
31. The following are characteristics of a tax, except:
a. Unlimited as to amount
b. Regular in payment
c. Proportionate in character
d. Payable in money
32. A tax that is imposed upon a person who is
directly bound to pay it
a. direct tax
b. Indirect tax
c. excise tax
d. poll tax
33. I. A tax that is imposed solely to raise revenue for
government expenditures
II. A tax levied for particular or specific purpose
irrespective of whether revenue is actually raised
or not
a. Revenue tax, specific tax
b. Revenue tax, regulatory tax
c. Ad valorem tax, regulatory tax
d. Ad valorem tax, specific tax
34. When refund of a tax supposedly due to the
taxpayer has already been barred by prescription,
and the said taxpayer is assessed with a tax at
present, the two taxes may be set-off with each
other. This doctrine is called
a. Set-off doctrine
b. Doctrine of reciprocity
c. Tax sparing doctrine
d. Equitable recoupment
35. Police power as distinguished from taxation
a. Just compensation is received by the
owner of the property
b. Maybe exercised by private individuals
c. Superior to the non-impairment clause of
the constitution
d. Property is taken by the government for
public purpose
36. A law was passed declaring Manny Pacquiao as
exempt from all Philippine taxes.
Q1: Is he exempt from customs duties on the
importation of goods?
Q2: Is he exempt from parking fees on the
parking areas owned by the government
Q3: Is he exempt from mayor’s permit fees?
Which of the above questions is/are answerable
by No?
a. Q2 only
b. Q1 and Q2
c. Q2 and Q3
d. Q1, Q2 and Q3
37. After having been informed that some massage
parlors are being used as fronts for prostitution,
the Sangguniang Panglunsod ng Manila passed
a tax ordinance subjecting massage parlors
within its jurisdiction to such burdensome taxes
that leave them no other alternative but to stop
operating. The passage of the ordinance is a
valid exercise of
a. Taxation
b. Eminent domain and Taxation
c. Police power and Eminent domain
d. Police power and Taxation
38. The following factors affect the determination of
the situs of taxation, except:
a. Residence of the taxpayer
b. Citizenship of the taxpayer
c. Source of the income
d. Nature of the taxpayer
39. As a rule, for taxes on intangible personal
(movable) properties, the situs is:
a. The place where the intangible personal
property is located
b. The place where the intangible personal
property is exercised
c. The citizenship of the person using the
intangible personal property
d. The residence of the person owning the
intangible personal property
40. Statement 1: The Congress can enact tax laws
even in the absence of a constitutional provision
granting said body the power to tax
Statement 2: A tax may be validly imposed in the
exercise of police power and not the power to tax
a. True, True
b. False, False
c. True, False
d. False, True
41. Which of the following may not raise money for
the government
a. Power of taxation
b. Power of eminent domain
c. Police power
d. Privatization of government’s capital
assets
42. The following entities have the authority to
exercise the power of eminent domain, except:
a. The Congress
b. Department of Public Works and
Highways
c. City of Mandaue
d. Bank of the Philippine Islands
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LAST NAME: __________________ TAX 1 QUIZ NO. 1 – General Principles of Taxation
43. Which power is the “most pervasive, least
limitable and most demanding among the three
inherent powers?
a. Power of taxation
b. Power of eminent domain
c. Police power
d. Power of love
44. Tax as distinguished from license fee
a. Non-payment does not necessarily
render the business illegal
b. A regulatory measure
c. Imposed in the exercise of the police
power
d. Limited to cover cost of regulation
45. The following differences between tax and debt
are TRUE, except?
a. Tax arises from law but debt arises from
private contracts
b. Taxes may be set-off but debt cannot
c. Debt can be payable in kind (dacion en
pago) but tax cannot
d. Nonpayment of tax may lead to
imprisonment but non-payment of debt
does not necessarily lead to
imprisonment.
46. This charge is a demand of ownership
a. License fee
b. Tax
c. Toll
d. Franchise
47. The following are characteristics of a special
assessment, except
a. it has special application only to a
particular time and place
b. it is levied only on land
c. maybe levied on business
d. based wholly on benefits
48. Which of the following is not an element of direct
duplicate taxation which is violative of the equal
protection and uniformity clauses in the
constitution
a. same property is taxed twice
b. same taxing authority
c. same purpose
d. same amount
49. Which of the following statements is correct
a. Tax laws can never have a retroactive
effect
b. The government cannot tax its agencies
and instrumentalities
c. A taxpayer's suit can be filed by any
taxpayer in any instance against the
government
d. In the Philippines, there may be double
taxation
50. I. Transfer of the tax burden by one on whom the
tax is assessed to another
II. The reduction in the selling price of income-
producing property by an amount equal to the
capitalized value of future taxes that may be paid
by the purchaser
III. The method by which the manufacturer or
producer upon whom the tax is imposed pays the
tax and strives to recover such expense through
lower production cost without sacrificing the
quality of his product
a. Shifting, Capitalization, Transformation
b. Capitalization, Shifting, Transformation
c. Shifting, Transformation, Capitalization
d. Transformation, Capitalization, Shifting
51. Statement I. Tax evasion is also known as tax
dodging
Statement II. Tax avoidance is also known as tax
minimization
a. True, false
b. True, true
c. False, true
d. False, false
52. Statement I. A BIR ruling issued by the
Commissioner of Internal Revenue and granting
a tax exemption would create a perpetual
exemption in favor of the taxpayer
Statement II. A tax exemption may be withdrawn
anytime at the pleasure of the taxing authority
a. True, false
b. True, true
c. False, true
d. False, false
53. Barbaran Municipality has an ordinance which
requires that all stores, restaurants, and other
establishments selling liquor should pay a fixed
annual fee of P20,000. Subsequently, the
municipal board proposed an ordinance imposing
a sales tax equivalent to 5% of the amount paid
for the purchase or consumption of liquor in
stores, restaurants, and other establishments.
The municipal mayor refused to sign the
ordinance on the ground that it would constitute
double taxation. Is the refusal of the mayor
justified?
a. No. The refusal of the mayor is
unjustified because direct double taxation
is allowed in our jurisdiction.
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LAST NAME: __________________ TAX 1 QUIZ NO. 1 – General Principles of Taxation
b. No. The refusal of the mayor is not
justified because the impositions are of
different nature and character.
c. No. The refusal of the mayor is
unjustified because it is not within his
power.
d. No. The refusal of the mayor is not
justified because double taxation will
generate more revenues
54. Direct double taxation in its general sense means
taxing the same subject twice during the same
taxing period. In this sense, double taxation
a. violates substantive due process.
b. does not violate substantive due process.
c. violates the right to equal protection.
d. does not violate the right to equal
protection.
55. The power to tax is the power to destroy. Is this
always so?
a. No. The Executive Branch may decide
not to enforce a tax law which it believes
to be confiscatory.
b. Yes. The tax collectors should enforce a
tax law even if it results to the destruction
of the property rights of a taxpayer.
c. Yes. Tax laws should always be enforced
because without taxes the very existence
of the State is endangered.
d. No. The Supreme Court may nullify a tax
law, hence, property rights are not
affected.
56. 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.
In this world, nothing can be said to be certain, except death and taxes
-Benjamin Franklin
God bless!
d. Yes, since the leased portion is not
actually, directly, and exclusively used for
educational purposes.
57. Money collected from taxation shall not be paid to
any religious dignitary EXCEPT when
a. the religious dignitary is assigned to the
Philippine Army.
b. it is paid by a local government unit.
c. the payment is passed in audit by the
COA.
d. it is part of a lawmaker’s pork barrel.
58. Which among the following concepts of taxation
is the basis for the situs of income taxation?
a. Lifeblood doctrine of taxation
b. Symbiotic relation in taxation
c. Compensatory purpose of taxation
d. Sumptuary purpose of taxation
59. Which theory in taxation states that without taxes,
a government would be paralyzed for lack of
power to activate and operate it, resulting in its
destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine
60. 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.
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