Taxation review

General principles

Arenas, Leonard A.
1. The process by which the sovereign 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
internal revenue is that they are:

a. Criminal in nature
b. Penal in nature
c. Political in nature
d. Generally prospective in
application
As a rule, revenue laws are prospective in operation, unless
the legislative intent that the statute operate retrospectively
is distinctly expressed or necessarily implied
 
Our tax laws are civil in nature and not criminal. It was also
held that our tax laws are not penal laws although there are
penalties provided for their violation
 
Political law is that branch or public law which deals with
the organization of operations of the government organs of
the state and defines the relations of the state with the
inhabitants of its territory. Thus, our tax laws are not
political.
3. In case of conflict between tax laws and GAAP

a. Both tax laws and GAAP shall be enforced

b. GAAP shall prevail over tax laws
c. Tax laws shall prevail over the GAAP
d. The issue shall be resolved by the court
4. Which of the following has no
power of taxation?

Provinces
Cities
Barangays
Barrios
 Provinces, cities and barangays
have no inherent power to tax.
However, taxing power has been
tied up to them by the local
autonomy, thus authorizing these
local government units ton exercise
the power, subject ton limitation set
by law
5. Scheduler system of taxation means

a. All type of income are added together to arrive at

gross income
b. Separate graduated rates are imposed on different
types of income
c. Capital gains are excluded in determining gross
income
d. Compensation income and business/professional
income are added together in arriving at gross
income
 A scheduler system of taxation is a system where
the income tax treatment varies and is made to
depend on the kind or category of taxable income of
the taxpayer. This is usually used in the income
taxation of individuals
 
6. Which of the following statements is true

a. Opinion s of legal luminaries are sources of tax

laws
b. The constitution grants exemption from all kinds
of taxes to religious and charitable organizations
c. Because the power to tax is unlimited,
comprehensive, plenary and supreme, the power to
tax can reach over into ant jurisdiction to seize upon
person or property
d. The benefits-protection theory is the source of
the doctrine of symbiotic relationship
Opinions of tax experts may be used as basis of tax legislation but
they are not, strictly speaking, sources of tax laws
 
Religious and charitable institutions may be exempt from property
and income tax but not on all taxes
 
Although the scope of taxation is that the power is unlimited,
comprehensive, plenary and supreme, the taxing authorities
should not go beyond the constitutional and inherent limitations
 
Under the benefits-protection theory, the citizen supports the state
by paying taxes that is demanded in order tat he may , by means
thereof, be secured in the enjoyment of the benefits of an
organized society
7. One of the following is a primary purpose of
taxation
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 of the following is not a secondary
purpose of taxation

a. To serve as key instrument of social control

b. To effect a more equitable distribution of wealth
among people
c. To achieve social and economic stability
d. To raise revenue to defray the necessary
expenses of the government
9. Which is the best answer? A tax reform at any
given time underscores the fact that

a. Taxation is an inherent power of the state

b. Taxation is essentially a legislative power
c. Taxation is power that is very broad
d. The state can and should adopt progressive
taxation
 The subject of taxation may be
persons, whether natural or
juridical, property, whether real or
personal, tangi8ble or intangible,
businesses, transactions, rights or
privileges
10. The legislative body can impose
a tax at any amount underscores the
legal truism that taxation is

a. An inherent power of the tax

b. A very broad power of the state
c. Essentially a legislative power
d. For public purposes
11. All of the following, except one, basic
principles of the sound tax system

Fiscal adequacy
Theoretical justice
Administrative feasibility
Inherent in sovereignty
 Inherent in sovereignty is not meant to make the
system sound. Thus, the soundness of the tax
system is not affected by the fact that the power of
taxation is inherent in sovereignty, or a mere
constitutional grant
13. The following except one, are basic principles
of a sound tax system

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
14. Which of the following is not one of the canons
of a sound tax system

Quantifiability
equality
certainty
convenience
equality is equivalent to theoretical justice, certainty
is equivalent to the fiscal adequacy, while
convenience is equivalent to the administrative
feasibility
15. the requirement of equality or theoretical justice
is complied with if the tax is

progressive
regressive
ad valorem
specific
16. the power of taxation can only be exercised by
the lawmaking body

a. subject to constitutional and inherent limitations

b. equality or theoretical justice
c. legislative in character
d. inherent in sovereignty
 the power of taxation is a legislative prerogative.
The legislative power includes the authority to
determine the nature, purpose, extent, coverage and
situs of the tax imposition, the granting of tax
exemptions or condonations, and to specify for the
administrative and judicial remedies
 
this power may, however, be delegated to the
president of the Philippines, to the local
governments and to administrative bodies
 
 
17. 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 inn the Philippines shall not
be subject to Philippine income taxes. What basic
characteristic of taxation has been violated by this
agreement

a. inherent limitation
b. theoretical justice
c. legislative in character
d. administrative feasibility
enactment of laws imposing taxes, being legislative
in character, can be exercised only by the
lawmaking body. This rule is also true to the
granting of tax exemption. What one cannot
impose, one cannot condone.
18. Which statement gives the correct answer? That a
feasibility study needs or need to look into the taxes of
different political subdivisions of government which may be
alternative sites of the business because
a. Provinces, cities and municipalities must have uniform
taxes between and among themselves
b. The local taxes of a political subdivision need not be
uniform with the local taxes of another political subdivision
c. Business that are subject to national taxes are exempted
from local business taxes
d. Local business taxes may be credited against national
business taxes
 The local taxes to be imposed by each local
government unit will depend on the tax ordinances
passed by each and every local legislative body
 
Moreover, municipalities are prohibited from
levying taxes that are specifically authorized to be
levied by provinces, vice versa
19. The power of taxation is inherent in sovereignty
being essential to the existence of every
government. Hence, even if not mentioned in the
constitution, the state can still exercise the power
 
It is essentially a legislative function . even in the
absence of any constitutional provision, taxation
power fails to congress as part of the general power
of lawmaking
 
True or false

answer: true, true

The power to tax can be exercised by the legislature
even without a previous constitutional authority, it
is not merely a constitutional grant
20. Those restrictions on the exercise of the power
of taxation that are found in the constitution or
implies from its provisions

Theoretical justice
Legislative in character
Inherent limitations
Constitutional limitations
21. Which of the following statements is not correct

a. Taxes may be imposed to raise revenue or to provide

disincentives to 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 anytime
d. The power of taxation in the Philippine constitution are
grants of power and not limitations on taxing powers
 22. One of the following is not an inherent
limitation on the exercise of the power of taxation

International comity
Double taxation
Non-delegation of the legislative power to tax
territoriality
It has been said that double taxation is considered
as a constitutional limitation because it violates the
equal protection clause of the constitution
23. 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
What the ordinance taxes is the occupation itself
and not the person. Hence, the number of persons
exercising the occupation is immaterial
24. Treating persons who are similarly situated in
the same manner

Uniformity of taxation
Equality of taxation
Due process of law
Non-delegation of legislative power
Uniformity of taxation requires that there should be
no direct duplicate taxation
 
Due process requires no arbitrariness or oppression
in the assessment and collection of taxes, must be
for a public purpose and imposed within the
territorial boundaries of the taxing authorities, then
as a general rule congress could not re-delegate the
delegated power
25. 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

Equitable
Proportional
Uniformity
Progressive
26. A tax law is not violative of the due process
clause when it is

Arbitrary
Discriminatory
Excessive
Proportionate
27.
28. 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 services
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?
I only
I and II
II and IV
I, III and IV
What is meant by actual, direct and exclusive use of
the property for the charitable purposes is the direct
and immediate actual application of the property
itself to the purposes for which the charitable
institution is organized. It is not the use of the
income from the real property that is determinative
whether the property is used for tax exempt
purposes.
29. Statement 1- the constitutional exemption on income taxes, property
taxes and customs duties is allowed on non stock, non profit 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, non profit 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

Statement 1 only
Statement 1&2
Statement 2 only
All of them
The test for exemption from property tax is use and
not ownership
30.. Which of the following statements id not correct?
a. An inherent limitation of taxation may be disregarded by
the application of a constitutional limitation
b. The property of an educational institution operated by a
religious order is exempt from property tax but its income is
subject to income tax
c. The prohibition of delegation by the state of the power of
taxation will still allow the BIR to modify the rules on time
for filing of returns and payment of taxes
d. The power of taxation is shared by the legislative and
executive departments of government
 
31.
32.
33.
34.
35. all appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, ills of local
application, and private bills shall originate
exclusively in

a. office of the president

b. house of representative
c. senate
d. supreme court
36. 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 representatives may propose
amendments
c. may have the house version and senate version
approved separately
d. may be recommended by the President ton
congress
 revenue or tariff bills shall originate exclusively in
the house of representative. The senate, is, however,
allowed much leeway to propose or concur with
amendments to the bills initiated by the house of
representatives
 37. 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 is correct
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 houses
c. the houses bill should be discussed ahead of the senate
bill
d. no priority, each bill can be discussed ahead of the other
 38. 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
 absolute majority of the entire membership of
congress is required to grant tax exemption because
a tax exemption results to a loss of revenue to the
government
 
39. 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
delegation of taxing power to the president is one of
the exceptions to the principle of non-delegation of
the legislative power to tax
 
the granting of tax exemption requires the passage
of a law which only the congress can make. If the
president is not empowered to enact tax law, then
he is not also empowered to grant tax exemption
40. 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, non profit
educational institutions and donations for
educational purposes are exempted from taxes and
duties
only the non payment of a poll tax is covered by the
prohibition. If other taxes are mnot paid, the
taxpayer can be imprisoned
 41. they restrict the exercise of the power of
taxation although they are not embodied in the
constitution

a. theoretical justice
b. legislative in character
c. inherent limitations
d. constitutional limitations
42. a tax must be imposed for public purpose.
Which of the following is not a public purpose

a. national defense
b. public education
c. improvement of sugar industry
d. none of the above
43. which of the following activities is not a public
purpose

a. construction of bridges
b. payment of Christmas bonuses of government
officials and employees
c. opening of road on a tract of land owned by a
private individual
d. scholarship tom poor but deserving students
the appropriation of public money to construct road
on a private land was held not to be a public
purpose. To be public, the road must be built on
p0uvblic property. A donation of the land to the
government after the construction does not cure the
defect.
44. a fundamental rule in taxation is that the
property of one country may not be taxed by
another country. This is known as

a. international law
b. international comity
c. reciprocity
d. international inhibition
 
45. Q1- can the state tax the AFP?
Q2- are GOCC subject to tax
 
Yes,no
Yes, yes
No, yes
No, no
Sovereignty being absolute and taxation is an act of
high sovereignty, the state if it is so minded could
tax itself including its instrumentalities such as the
AFP and GOCC
46. diplomatic officials such as heads of states and
ambassadors are exempt from taxes and duties
because of
 
International comity
Reciprocity provisions
Principle of territoriality
Exemption in the tax code
 47. 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
 
Collection
Payment
Enforced contribution
Levy
 
 48.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
 
Collection
Proportionate in character
Enforced contribution
Levy
 
49. the amount required is dictated by the needs of
the government in

a. license fee
tax
toll
tariff
 
50. one of the characteristics of a tax is
 
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
d. It is collected for public and private purposes
51. one of the characteristics of a tax is that

a. it is generally based on contract

it is generally payable in money
it is generally assignable
optional
a tax is an obligation which arise from law and not
from contract. It is not assignable and compulsory
in character
52. which is not an essential characteristics of tax
 
Unlimited as to amount
Payable in money
Proportionate in character
Regular in payment
53. no person shall be imprisoned for non-payment
of

a. property tax
excise tax
poll tax
income tax
 
 54. an example of a property tax is

a. additional community tax on income of real

properties
real estate tax on real properties
estate tax on inherited personal as well as real
properties
donor’s tax on donation of property
 
55. which of the following is not an example of
excise tax
 
Transfer tax
Sales tax
Real property tax
Income tax
.
56. Sharon, a CPA has just obtained her CPA
license. Before she can lawfully pursue her
occupation, she should pay
 
Privilege tax
Percentage tax
CPA’s income tax
VAT
Payment of percentage tax, income tax and VAT is
not a prerequisite for a CPA ton practice his/her
profession
57. a tax that is imposed upon a person who is
directly bound to pay it
 
direct tax
b. Indirect tax
c. excise tax
d. poll tax
58. one is not a direct tax
 
Immigration tax
Transfer tax
Income tax
Contractor’s tax
Contractor’s tax (now VAT) is a tax burden of
which can be shifted by the contractor to his
clienteles/customers
59. the basic community tax of 5.00 of an
individual is a (an)
 
Propert tax
Direct tax
National tax
Ad valorem tax
It is a direct tax because it is demanded from the
person for whom it is intended or desired to pay it
60. which of the following statements is not wrong
 
a. non payment of additional community tax is a
ground for imprisonment
b. in case of conflict between a tax law and a
revenue regulation, the latter shall prevail
c. a revenue regulation can expand the provision of
law by imposing a penalty even if the law that it
implements does not impose a penalty
d. revenue bills shall originate exclusively from the
senate
the additional community tax is not a poll tax. Hence, non
payment thereof may subject the taxpayer to an
imprisonment
 
a tax law is superior over a revenue regulation
 
it being inferior to a tax law, a revenue regulation cannot go
beyond the coverage of the legislation
.
All appropriation, revenue or tariff bills, bills authorizing
increase of public debt, bills of local application and private
bills shall originate exclusively in the House of
Representatives, but the senate may propose or concur with
amendments
61. statement 1: the VAT is a property tax
Statement 2: the estate tax isb a direct tax
 
True or false

answer:false, true
VAT is an excise tax
 62. forms part of the purchase price of the
commodity or service and passed on to customers
 
direct tax
indirect tax
excise tax
poll tax
63. a tax on business is
 
 
direct tax
indirect tax
property tax
none of the above
64. Fer is a mining operator. His mineral lands are
not covered by anyv lease contract. The tax fer has
to pay based on the actual value of the gross output
or mineral products extracted is
 
mining tax
royalties
rental
ad valorem
the ad valorem tax on minerals is payable by the
holder or occupant of mineral landsn not held under
lease. The tax is based on the actual market value of
the annual gross output of the minerals or mineral
products extracted from mineral lands
65. tax that is imposed solely ton raise revenue for
government expenditiures
 
revenue tax
regulatory tax
specific tax
ad valorem tax
 66. tax levied for particular or specific purpose
irrespective of whether revenue is actually raised or
not
 
revenue tax
regulatory tax
specific tax
ad valorem tax
67. tax imposed by the national government and is
effective within the entire jurisdiction thereof
 
national tax
local tax
porportioanl tax
general tax
 
68. taxes imposed by a political subdivision of the
satte and is effective onlyb within the territorial
boundaries thereof
 
national tax
local tax
progressive tax
regressive tax
69. which of the following taxes is porportioanl
 
VAT
Income tax
Excise tax
Donor’s tax
70. the following are kinds of taxes as to
graduation. Which one is not
 
Digressive
uniform
Regressive
Progressive
Uniform means that the same rate shall be imposed
on all taxable persons or property of the same class.
 
In digressive tax the rate is constant on the sum of
and above a certain fixed amount but diminishes
gradually on sums below it
 71. the power of the state or those to whom the
power has been delegated to take private property
for public use upon paying to the owner a just
compensation
 
Power of eminent domain
Police power
Power of taxation
People power
72. there can be classification of the subject matter
being requested ton shoulder the burden. Which is
the exception
 
Tax
License fee
Toll
Eminent domain
 73. the power of the state to enact such laws in
relation to persons and property as may promote
public health, public morals, public safety and the
general welfare of the people
 
Power of eminent domain
Police power
Power of taxation
People power
74. the following are similarities of the inherent
power of taxation, eminent domain and police
power except one
 
Are necessary attributes of sovereignty
Interferes with private rights and property
Affect all persons or the public
Are legislative in their implementation
75. which statement refers to police power as
distinguished from taxation
 
It can only be imposed on specific property or
properties
The amount imposed depends on whether the
activity is useful or not
It involves the taking of property by the
government
The amount imposed has no limit
Taxes may be imposed in any amount, while license
fees which is an exercise of police power may not
exceed the amount necessary to defray the cost of
inspection or regulation, except where the fess are
exacted for the purpose of regulating non-useful
business or occupations.
76. police power as distinguished from taxation
 
Just compensation is received by the owner of the
property
Maybe exercised by private individuals
Superior to the non-impairment clause of the
constitution
Property is taken by the government for public
purpose
The provision “No law impairing the obligation of
contracts shall be passed” is a constitutional
limitation on the exercise of the power of taxation.
Thus, taxation is inferior to the non-impairment
clause of the constitution

However, the exercise of police power can override

the non impairment clause
77. Mr. No Null is exempt from all 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?
 
Q2 only
Q1 and 2
Q2 and 3
Q1, 2 and 3
Customs duties are taxes, while parking fees and
mayor’s permit fees are not taxes; they are
regulatory fees
 
78. 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 onerous taxes that leave them
no other alternative but to stop operating. The
passage of the ordinance is a valid exercise of
 
Taxation
Eminent domain
Police power
Police power and power of taxation
The power to tax is a valid implement of the police
power of the state in discouraging and ultimately
prohibiting in effect certain things or enterprises
inimical to the public welfare
79.
80.
81. Statement 1: An executive order passed by the
President of the Philippines directing CHED to
regulate the operation of review centers is a valid
exercise of police power
 
Statement 2: construction of a church building is
exempt from the payment of building permit fees
because the constitution provides that churches are
exempt from property taxes
 
Which of the above statements is true?

Neither statements
 82. 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
 
True or false

true,true
83. which of the following may not raise money for
the government
 
Power of taxation
Police power
Power of eminent domain
Privatization of government’s capital assets
 
In eminent domain, the owner of
the property is paid just
compensation. Thus, no money
is raised by the government and
instead, there is disbursement of
government funds.
 
 84. in this power of the state, the person who is
parting with his money or property is presumed to
received a benefit
 
Taxation
Police power
Eminent domain
Forfeiture power
 The obligation of contract can be impaired by the
exercise of police power and eminent domain based
on the principle that the welfare of the state is
superior to any private contract
86. tax as distinguished from license fee
 
Non-payment does not necessarily render the
business illegal
A regulatory measure
Imposed in the exercise of the police power
Limited top cover cost of regulation
87. the distinction of a tax from permit or license
fee

 a. Imposed for regulation

b. one which involves exercise of police power
c. one in which there is generally no limit on the
amount that may be imposed
d. answer not given

 
 88. which of the following terms describes this
statement “that the state has complete discretion on
the amount to be imposed after distinguishing
between a useful and non useful activity
 
Tax
License fee
Toll
Customs duty
 90. all of the following, except one, are
characteristics of a toll
 
Demand of proprietorship
Compensation for the use of another’s property
Maybe imposed by private individuals
Levied for the support of the government
91. this is a demand of ownership

a. license fee
b. tax
c. toll
d. franchise
92. one of the following is not a characteristic of s
special assessment

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
 93.which statement is wrong

a. a tax is a demand of sovereignty

b. toll is a demand of ownership
c. a special assessment is a tax
d. customs duty is a tax
 
94. which of the following is not a characteristic of
debt
a. generally arises from contract
b. payable only in money
c. assignable
d. imprisonment is not a sanction for non payment
95. all funds or income derived by the government
from any other source

a. tax
b. customs duty
c. revenue
d. ordinary income
96. it comprises all kinds of funds including taxes

a. license fee
b. income
c. customs duty
d. revenue
revenue refers to all funds or income derived by the
government whether from tax or any other sources,
such as grants received from another government,
donation from non-government sources, loans,
commercial revenues, administrative revenues and
taxes
97. which of the following constitute objectionable
double taxation
a. a license fee and a tax imposed on the same
business or occupation for selling the same articles
b. a tax imposed both on the occupation of fishing
and on fishpond operation
c. persons engaged in leasing ors selling real
property are subject to real estate dealers tax and
their sales are also subject to 10% VAT
d. A tax of 1% is imposed for bank reserve
deficiency while a penalty of 1/10 of 1% is also
imposed as a consequence of such reserve
deficiency
 in option a there is no double taxation on the
imposition of license fee and tax because a fee is
not a tax. In option b and c the tax is imposed on
different subjects and objects and are for different
purposes

option d constitute direct duplicate taxation

 98. 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 amount
d. same purpose
 99. 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
 tax laws may be given retroactive effect if its
application is beneficial to the taxpayer
 
the constitution is silent on whether congress is
prohibited from taxing the properties of the
agencies of the government. Thus, nothing can
prevent congress from decreeing that even
instrumentalities or agencies of the government
performing governmental functions may be subject
to tax
a taxpayer’s suit must assail an illegal disbursement
of public funds which has been raised thru taxation
and not from other sources where there was that
absence of the requisite pecuniary or monetary
interest , such as from donations and contributions

double taxation is not forbidden by our constitution,

although obnoxious, and will not be allowed if it
results to a violation of the due process clause or
the equal protection clause of the constitution
100. the following constitute double taxation except
one
a. both taxes are imposed in the same amount
b. both taxes are levied for the same purpose
c. both taxes are imposed by the same taxing
authority
d. both taxes are imposed upon the same person
101. 1st statement: our constitution does not prohibit
double taxation
 
2nd statement: if double taxation occurs, the
taxpayer may seek relief under the uniformity
clause or the equal protection guarantee
 
True or false

true,true
Double taxation is not unconstitutional although
obnoxious that is why it should be avoided and
prevented whenever possible to avoid injustice or
unfairness 

Though not unconstitutional, the validity of the tax

law may be questioned if two taxes which are of the
same kind, nature and from the same taxing
authority make taxation inequitable, excessive,
oppressive and unreasonable or when the first
measure applies to all the members of a certain
class, while the second measure applies only to
limited members of the same class
102. your client owns a row of apartment. He
complains to you that he is being required to pay
four (4) kinds of taxes on this line of business
alone. From the list given by your client, which of
the following taxes has been wrongly imposed on
him
a. real estate tax on the land and building
b. VAT on the gross receipts from rent
c. community tax based on the assessed value of the
apartment houses
d. income tax on income fr0m rent
the various impositions constitute indirect duplicate
taxation. This is not prohibited by the constitution
because it is not violative of the equal protection
and uniformity in taxation. The reason is that theses
taxes are imposed for different purposes and by
different taxing authorities.
 
However, the community tax should be based on
the income from rent of the apartment and not on
the assessed value.
103. one of the following is false statement about
double taxation. Which is it?

a. there is no constitutional prohibition on double

taxation
b. direct duplicate taxation is a valid defense against
a tax measure if it is violative of the equal
protection clause
c. absence of any of the elements of direct double
taxation makes it indirect duplicate taxation
d. a 20% final withholding tax on interest income
on bank deposits and a 5% gross receipts tax on
banks is a direct duplicate taxation
although the interest on bank deposits and the gross
receipts are imposed by the same taxing authority
(national government) and operate within the same
jurisdiction for the same purpose, their taxing
periods are different
 
the final tax is deducted and withheld as soon as the
income earned, while the gross receipts tax is not
deducted nor withheld but paid on after every
taxable quarter in which it is earned
 104. statement 1: an ordinance imposing a tax on
the manufacture of softdrinks and another tax on
the sale of the softdrinks constitute double taxation
 
Statement 2: a criminal case for tax evasion maybe
filed against a taxpayer even without prior
assessment issued by the CIR
 
True or false

false,false
105. transfer of the tax burden by one on whom the
tax is assessed to another

a. shifting
b. capitalization
c. transformation
d. tax exemption
106. which of the following is not a scheme of shifting the
incidence of tax burden

a. the manufacturer transfers the tax to the consumer by

adding the tax to the selling price of the goods sold
b. the purchasers asks for a discount or refuse to buy at
regular price unless it is reduced by an amount equal to the
tax he will pay
c. changing the terms of the sale like FOB Shipping point in
the Philippines to FOB destination abroad, so that the title
passes abroad instead of in the Philippines
d. the manufacturer transfers the sales tax to the distributor,
then in turn to the wholesaler, to the retailer and finally to
the consumer
in option C there is no transfer of tax burden to the
buyer. There is merely a change in the place of
transfer of title from the Philippines to abroad
 107. 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

a. shifting
b. capitalization
c. transformation
d. tax exemption
 108. 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
b. capitalization
c. transformation
d. tax exemption
109. the grant of immunity to particular persons or
corporation or to persons or corporations of a
particular class from tax which persons and
corporations generally within the same taxing
district are obliged to pay

a. tax exemption
b. tax evasion
c. tax avoidance
d. tax amnesty
110. statement 1: the grant of a tax amnesty must be
construed against the taxpayer and liberally in favor
of the taxing authority
 
Statement 2: a tax exemption is a personal privilege
which can be assigned or transferred by the grantee
unless disallowed in the law granting tax exemption
 
Which of the above statements is true

false, false
111. statement 1: A BIR issued by a CIR which
grants tax exemption would create a perpetual
exemption in favor of the taxpayer
 
Statement 2: a tax exemption may be withdrawn
anytime at the pleasure of the taxing authority

false, true
The overruling of decisions is inherent in the
interpretation of laws. Thus, a CIR could reverse
the ruling of his predecessors. Moreover, erroneous
application of the law by public officer do not
preclude subsequent correct application of the
statute, and the government is never stopped by
mistakes or error on the part of its agents
 
Tax exemption is an act of liberality which could be
taken back by the government provided that such
revocation does not violate certain provisions of the
constitution such as the non impairment clause of
the constitution
112. it is also known as tax dodging

a. tax exemption
b. tax evasion
c. tax avoidance
d. transformation
 
113. it is otherwise known as tax minimization

a. tax exemption
b. tax evasion
c. tax avoidance
d. transformation
114. which o f the following statements constitute
tax avoidance

a. deliberate failure of a taxpayer to pay the taxes

due to the government
b. connotes fraud through the use of pretenses and
forbidden devices to lessen or defeat taxes
c. punishable by law
d. maybe contrary to the intent of the legislature but
nevertheless do not violate the law
115.
116. in case of ambiguity, tax laws shall be
interpreted

a. strictly against the taxpayer

b. liberally against the government
c. liberally in favor of the taxpayer
d. liberally in favor of the government
117. in cases of deductions and exemptions on
income tax returns, doubts shall be resolved

a. strictly against the taxpayer

b. strictly against the government
c. liberally in favor of the taxpayer
d. liberally against the government
118. the following except one, are exceptions to the
rule that tax exemptions must be strictly construed
against the taxpayer

a. where the statute granting the exemption

provides for liberal interpretation thereof
b. if the taxpayer does not fall within the purview of
the exception by clear legislative intent
c. in case of special taxes relating to special cases
and affecting only special classes of persons
d. if exemption a refer to public property
119. a franchise can be amended by

a. an amendment of special law, which granted the

franchise
b. an amendment of a law of general application
c. an amendment of a revenue regulation
d. an amendment of tax laws
a franchise can be amended by an amendment of a
law of general application when it is expressed in
the amendatory law. Amendment by implication is
not favored.
120. some franchise holders who are paying the
franchise tax are being required by an amendatory
law to pay the VAT, while others remain subject to
franchise tax. Which of the following constitutional
provisions makes the law unconstitutional

a. no law shall be passed impairing the obligation of

contract
b. the rule of taxation shall be uniform
c. no person shall be deprived of property without
due process of law
d. none of the above
 when the franchise is granted not for a valid
consideration, it is not a contract. Therefore, the
amendatory law does not impair the obligation of
contract
 
not all franchise holders belong to the same class.
The classification shall still depend on the kind of
franchise and on the nature and volume of the
business. Thus, the uniformity clause is not
violated.
121. S1: The point on which a tax is originally
imposed is impact of taxation
S2: as a rule, taxes are subject to set-off or
compensation
 
True or false

true,false
Taxes are not contractual obligation but arise out of
a duty to, and are the positive acts of government,
the making and enforcing of which the personal
consent of the individual taxpayer is not required.
Hence, it is not subject to set-off or compensation
 
122. which of the following is not considered as a
step in making a revenue regulation effective

a. recommendation by the CIR to the Secretary of

Finance
b. Approval by the Secretary of Finance
c. legislation by congress
d. publication in a newspaper of general circulation
 
 although revenue regulation have the force and
effect of law they are, strictly speaking not tax laws.
Hence, legislation by congress is no longer
necessary for its implementation
123.
124. all of the following, except one, are sources of
tax laws-

a. legislation, tax treaties and tax ordinances

b. judicial decisions
c. opinions of authors
d. administrative rules and regulations
opinions of authors of books on taxation may serve
as basis in the interpretation of ambiguous
provisions of, but they are not considered as
sources of tax laws.
125. the least source of our tax laws is

a. statutes
b. court decisions
c. constitution
d. BIR Rulings
126. 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
127. statement 1: the doctrine of equitable
recoupment is applicable in the Philippines
Statement 2: where taxes and the claim of the
taxpayer are fully liquidated, due and demandable,
set off or legal compensation may take place by
operation of law
 
True or false

false, true
As a general rule, taxes are not subject to set-off or
compensation
128. the place or authority that has the right to
impose and collect taxes

a. territoriality
b. international comity
c. situs of taxation
d, transformation
 
129. domicile or residence of the owner is not the
situs of taxation in

a. income tax
b. community tax
c. estate tax
d. business tax
End of Gen Prin