Midterm Quiz No.

1 – Summer

I. Multiple choice. Each choice has an equal chance of being correct, choose the corresponding letter
you think is the best answer.

1. Tax as distinguished from license fee

a. Non-payment does not necessary render the business illegal.
b. A regulatory measure.
c. Imposed in the exercise of police power.
d. Limited to cover cost of regulation.

2. Value-added tax is an example of

a. Graduated tax
b. Progressive tax
c. Regressive tax
d. Proportional tax

3. Which statement refers to police power as distinguished from taxation?

a. It can only be imposed on specific property or properties.
b. The amount imposed depends on whether the activity is useful or not.
c. It involves the taking of property by the government.
d. The amount imposed has no limit.

4. I – Tax exemptions are strictly construed against the government.

II – When the tax law is not clear and there is doubt whether he is taxable or not, the doubt shall
be settled against the government.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

5. I – Tax imposed outside the situs of taxation is void.

II – International comity is an exception to the territoriality doctrine.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

6. Imposed based on the control and superiority of one country over another
a. Tithe
b. Tax
c. Tribute
 d. Toll

7. Taxes are
a. Retroactive
b. Prospective
c. Generally proportional
d. Personal to the taxpayer

8. I – Courts can review or inquire into the wisdom or advisability of a tax law.
II – Our constitution does not contain any provision granting tax exemption to the government.

a. True, true
b. False, false
c. False, true
d. True, false

9. I – To be exempt from taxation under the Constitution, land and buildings must be exclusively
and actually used for religious, educational, or charitable purposes, even if not directly.
II – Exemptions of non-profit schools are only limited to revenue and assets derived from strictly
school operations.

a. True, true
b. False, false
c. False, true
d. True, false

10. I – A taxpayer’s tax-exempt status justifies the non-keeping of books of accounts and other
accounting records.
II – The salaries of the Chief Justice and associate justice of the Supreme Court are tax-exempt.

a. True, true
b. False, false
c. False, true
d. True, false

11. The National Internal Revenue Code is also known as – TRAIN law is RA 10963
a. Republic Act 9337
b. Republic Act 8424
c. Presidential Decree 1158
d. Executive Order 464

12. Where does taxing power of the provinces, municipalities and cities precede from?
a. Constitutional grant
b. Legislative enactment
 c. Presidential or executive act
d. Local legislation

13. How will the local government units be able to exercise their taxing powers?
a. By local legislation
b. By authority conferred by the Congress
c. By the issuance of the Department of Finance
d. By the help of the Bureau of Internal Revenue

14. A tax is invalid, except

a. Theory of taxation and its purpose are disregarded.
b. Basis of taxation is not recognized.
c. Inherent and constitutional limitations are not observed.
d. It results to double taxation.

15. Taxation is an inherent power because

a. It is the lifeblood of the government.
b. Protection and benefit theory.
c. It co-exists with the existence of the state.
d. It is exercised for the general welfare of the people.

16. All are essential characteristics of a tax, except

a. It is an enforced contribution.
b. It is generally unlimited in amount.
c. It is generally payable in money.
d. It is a proportionate burden.

17. I – A tax may include the power to destroy. – Marshall doctrine

II – A tax may be imposed violating uniformity of taxation.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

18. I – A tax may be subjected to set-off or compensation.

II – A tax ordinarily includes interest.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

19. I – A tax bill may embrace more than one subject.

 II – Non-payment of a tax can result to criminal liability on the part of the taxpayer, not only civil
liability.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

20. I – Taxes may be used for sectarian purposes if allowed by an ordinance.

II – The President can refuse to implement a tax law if it appears to be unconstitutional.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

21. I – There can be double taxation in the Philippines.

II – Double taxation is illegal if it violates the uniformity of taxation.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

22. I – Taxation without representation is not tyranny.

II – In the exercise of taxation, the state can tax anything at anytime at any amount.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

23. I – Taxation power and power of eminent domain may be exercised simultaneously.
II – Taxation and police power may be exercised simultaneously.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

24. I – A license fee is a charge imposed under the police power of the state.
II – Penalty is imposed by the state only.

a. Only the first statement is correct.

 b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

25. I – One of the essential characteristics of a tax is it is unlimited in amount.

II – A tax is generally unlimited because it is based on the needs of the state.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

26. I – A person may refuse to pay a tax on the ground that he receives no benefit from it.
II – A taxpayer has a right to question illegal expenditures of public funds.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

27. I – The RDO is known as the alter ego of the BIR Commissioner.
II – The BIR Commissioner is directly under the President’s Office. – Department of Finance

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

28. I – A state has the power to tax even if not granted by the Constitution.
II – A state cannot exercise police power if not granted by the Constitution.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.

29. I – A tax is based on law while debt is based on contract.

II – A tax is also a custom’s duty.

a. Only the first statement is correct.

b. Only the second statement is correct.
c. Both statements are correct.
d. Both statements are incorrect.
30. Although the power of taxation is basically legislative in character, it is not the function of the
Congress to
a. Fix with certainty the amount of taxes.
b. Collect the tax levied under the law.
c. Identify who should collect the tax.
d. Determine who should be subject to tax.

31. The power to tax is the power to destroy. Is this always so?
a. No. The Supreme Court may nullify a tax law hence, property rights are not affected.
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 executive branch may decide not to enforce a tax law which it believes to be
confiscatory.

32. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or other matters arising under the Tax Code or
other laws is vested with
a. The Commissioner of Internal Revenue, subject to the exclusive appellate jurisdiction of the
Court of Tax Appeals.
b. The Secretary of Finance, subject to the review of Office of the President.
c. The Court of Tax Appeals, subject to the exclusive appellate jurisdiction of the Supreme
Court.
d. The Regular Courts, subject to the exclusive appellate jurisdiction of the Court of Tax
Appeals.

33. I – Internal revenue laws are civil in nature. They are not political and as such were continued in
force during the period of enemy occupation and in effect were actually enforced by the
occupation of the government, such tax laws being deemed to be laws of the occupied territory
and not of the occupying enemies.
II – Internal revenue laws are not penal in nature thus, the principle of ex post facto does not
apply to them. However, for violations of the internal revenue laws penalties may be provided.

a. True, false
b. True, true
c. False, true
d. False, false

34. I – The BIR is authorized to collect estate tax deficiency through the summary remedy of levying
upon and sale of real properties of a decedent, without the cognition and authority of the court.
II – The CIR may examine the bank records of the deceased in order to determine the latter’s
taxable net estate.
 a. True, false
b. True, true
c. False, true
d. False, false

35. Basis of taxation

a. Lifeblood theory
b. Necessity theory
c. Benefit-protection theory
d. Reciprocal theory

36. The President of the Philippines and the Prime Minister of Japan entered into an executive
agreement of a loan facility to the Philippines from Japan whereby it was stipulated that interest
loans granted by private Japanese financial institutions to private financial institutions in the
Philippines shall not be subject to Philippine income taxes. Is the tax exemption valid?
a. Yes, based on international comity. – entered into a treaty
b. Yes, based on an executive agreements and treaties.
c. No, it is a violation of essential characteristics of taxation.
d. No, based on the doctrine of territoriality.

37. In a loan agreement between the Bangko Sentral ng Pilipinas (as borrower) and private
international banks (as lenders), it is stipulated that all payments of interest by the Central Bank
to the lenders shall be made free and clear from all Philippine taxes which may be imposed
thereon. Is the stipulation valid?
a. Yes, based on international comity.
b. Yes, based on the doctrine of non-taxability of the government.
c. No, violative of the inherent limitations.
d. No, violative of the constitutional limitations.

38. The following reasons may be given by a taxpayer in refusing to pay his tax liability. Which is not
acceptable for legally refusing to pay the tax.
a. That he has been deprived of due process of law.
b. That there lacks territorial jurisdiction.
c. That he derived no benefit from the tax.
d. That the prescription period for the collection of tax has lapsed.

39. Which statement is wrong?

I. A tax is a demand of sovereignty.
II. A toll is a demand of ownership.
III. A special assessment is a tax.
IV. Customs duty is a tax.

a. III and IV
b. II, III and IV
 c. III only
d. IV only
40. This rule is not applicable on the construction of tax laws.
a. If the law is repealed, taxes assessed before repeal of the law may no longer be collected.
b. If the intent of the tax is not clear as to whether the taxpayer is covered by the tax
obligation, the law shall be construed against the government.
c. Where the intent to tax is clear and the taxpayer claims he is exempt from the tax
obligation, the tax shall be construed against the taxpayer.
d. Provisions intended for the security of the taxpayer or to insure equality or uniformity of
taxation are mandatory.