Problem 1 1 True or False

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

1. Taxation should be described as a power, as a process, or as a means. As a
power, taxation is a way of apportioning the cost of government among those
who are privileged to enjoy it benefits.
2. The State can enforce contributions upon its citizens in the form of taxes
even without a constitutional provision authorizing it.
3. Appropriation of taxes is considered valid if intended for the common good of
the people without identifying a particular person to be benefited from it.
4. Taxation is inseparable in the existence of a nation.
5. Taxation is considered as the lifeblood of the government and every
government unit must exercise this power.
6. The amount of taxes may be increased to curve spending power and
minimize inflation.
7. The Constitution is the source of the States taxing power.
8. Taxation is the governments legitimate means of interfering with the private
properties of its subjects.
9. The benefits from taxation have to be experienced to justify the legitimacy of
collection to taxes from the people.
10.Taxation is the primary source of government revenue. Hence, all government
funds come from taxes.
11.Sovereign equality dictates that a nation cannot impose taxes on the
property of another country.
12.The State can still exercise its taxing power over its citizen, even if he resides
outside the taxing States territory.
13.All government entities regardless of their functions are exempted from taxes
because it would be impractical for the government to be taxing itself.
14.Revenues derived from taxes cannot be used for the exclusive use of private
sectors.
15.Local tax ordinances must be uniformly and equally applied throughout the
country.

Problem 1 2 True or False

Write True if the statement is correct or False if the statement is incorrect.
1. The primary requisite of equity principle is that each taxpayer should be
required to contribute equal amounts in the form of taxes.
2. Tax assessment refers to fiscal policy of the government.
3. An aspect of tax payer that could be delegated to the President covers both
legislative and administrative discretion.
4. Eminent domain and police power can effectively by performed even without
taxation.
5. When the power to tax is delegated to the local government, only the
legislative branch of the local government can exercise the power.
6. All inherent powers presuppose equivalent compensation.
7. There is no imposition of amount in police power.
 8. Police power and eminent domain may defeat the constitutional rights of a
person.
9. Tax exemption applies only to government entities that exercised proprietary
functions.
10.Tax assessment is a process of taxation which involves the passage of tax
laws and ordinances through legislature.
11.Taxation, like eminent domain is limited by the Constitutional provision that
private property may not be taken without just compensation.
12.The exercise of police power is superior to the non-impairment clause of the
Constitution.
13.Taxation, like police power is restricted by the due process clause of
Constitution.
14.Dumping duty is the additional duty tax imposed on imported goods with
lower prices than their fair market values to protect local industries.
15.The doctrine of tax imprescriptibility state that taxes in general are not
cancellable.

Problem 1 3 True or False

Write True if the statement is correct or False if the statement is incorrect.
1. Taxes may be exercised to encourage economic growth by granting tax
exemptions.
2. Taxes may be used as a tool and weapon in international relations and to
protect trade relations.
3. Protection is the basic consideration that justifies tax situs.
4. The tax situs for occupation is the place where occupation is pursued even if
the criterion for nationality is given.
5. There is direct double taxation by taxing corporate income and corporate
stockholder[s dividends from the same corporation.
6. A nonresident alien is liable to pay transfer taxes for properties within and
outside the Philippines.
7. A tax may be levied for the support of religious activities as long as all
churches befit from it.
8. In general, bills need not to be signed by the President to become a law.
9. No law granting any tax exemption shall be passed without the concurrence
of two thirds of the members of the Congress.
10.The Constitution grants autonomous regions certain legislative powers which
shall include legislative power over taxation.
11.Taxes collected by the BIR are local taxes.
12.Real estate tax and income tax collected on the same real estate property is
not a form of double taxation.
13.A tax evader sidesteps the law, while the tax avoider breaks it.
14.All revenues and assets of non-stock, nonprofit educational institutions used
directly or indirectly for educational purposes shall be exempt from taxes and
duties.
Problem 1 4 True or False
Write True if the statement is correct or False if the statement is incorrect.
1. The power of Judicial Review in taxation is limited only to the interpretation
and application of tax laws.
2. Interpretations made by executive branch for the enforcement of tax laws are
generally respected by the Courts because they are conclusive.
3. Tax laws are given retroactive effect because the rule of ex post pacto law
is applicable for tax purposes.
4. In taxation, it is ones civil liability which gives rise to criminal liability.
5. No person shall be imprisoned for nonpayment of income tax.
6. Tax laws must be construed strictly against the government, and tax
exemptions must be construed strictly against the taxpayer.
7. As a rule, doubts as to imposition must be resolved liberally in favor of the
government and strictly against the taxpayer.
8. The Philippine tax laws are not political and penal in nature.
9. The doctrine of equitable recoupment is applicable to cases where the taxes
involved are totally unrelated.
10.When there is ambiguity of tax laws, the rules of statutory construction may
be used to search for the legislative intent.
11.Tax exemption is transferable and assignable.
12.Revenue regulations that are inconsistent with law have the effect and force
of law if they are useful and reasonable.
13.BIR Rulings are the best opinions regarding the interpretations of tax laws
and are considered sound law until changed by the Court.
14.The tax doctrine of Marshall Dictum explains that tax is a power to destroy.
15.Tax rulings of the Secretary of Finance are binding to the Courts because the
Department of Finance is the highest agency regarding tax administration

Problem 1 5 Multiple Choice

Encircle the letter that contains the best answer.
1. Which of the following statements is /are incorrect?
i. Taxation is a process.
ii. Enactment of tax laws is part of the taxation process.
iii. The Constitution expressly conferred the power of Taxation to the
President of the Philippines.
iv. Taxation requires voluntary contribution from inhabitants to support
the government.
Choices:
a. i, ii, iii and iv.
 b. i, ii and iii only.
c. i and ii only
d. i only

2. Which of the following is/ are natural qualities of Taxation Power?

i. An inherent power
ii. Essentially an executive function
iii. An absolute power
iv. Territorial in operation
Choices:
a. I and iv only
b. Ii and ii only
c. I and ii only
d. I only

3. Taxation co-exist with the four elements of the state which includes all,
except
a. Government
b. Property
c. Sovereignty
d. Territory

4. Which of the following statements is not correct?

a. The government automatically possesses the power to collect taxes from
its inhabitants.
b. The government can enforce contribution upon its citizen only when the
Constitution grants it.
c. Taxation power exists inseparably with the State.
d. The State has the supreme power to command and enforce contribution
from people within its jurisdiction.

5. Which of the following statements is not correct?

a. Only the national government exercises the inherent power of taxation.
b. The power to tax by the local government units is a delegated power
granted by the Constitution and other special laws.
c. National legislation is exercised by Congress.
d. Interpretation of Tax Laws is done by the Legislative branch of the
government.

6. Which of the following statements is not correct?

a. Collections from taxes are public money.
b. Appropriation of taxes for the common good of the people is valid.
c. Construction of private road from taxes is a valid appropriation.
d. Allocation of taxes for the benefit of greater portion of population is
considered for public purposes.

7. All of the following statements are correct except one.

a. Taxation power is an absolute power.
 b. Taxation power is the strongest of all inherent powers of the government.
c. Tax laws must not violate Constitutional restrictions.
d. Exercise of Taxation power is subject to restrictions.

8. One of the following is not among the basic justification for taxation.
a. Taxation is based on necessity.
b. Taxation is the lifeblood of the government.
c. Taxations is the bread and butter of the government.
d. Taxation is a voluntary contribution for the benefits received.

9. Which of the following could be an object of taxation?

i. Person
ii. Tangible property
iii. Intangible property
iv. Rights
Choices:
a. i and iii.
b. i, ii and iii.
c. i and iv.
d. i, ii, iii and iv.

10.These refer to the rules or orders having force of law issued by the executive
branch of the government to ensure uniform application of the tax law.
a. Revenue regulations
b. BIR rulings
c. Memorandum orders
d. Local tax ordinances

Problem 1 6 Multiple Choice

Encircle the letter that contains the best answer.
1. This refers to the process of taxation to determine the amount of tax based
on existing tax law.
a. Levying
b. Imposition
c. Assessment
d. Collection

2. All of the following are legislative aspect of taxation except

a. Selection of the object or subject of tax.
b. Fixing of tax rates.
c. Valuation of property for taxation.
d. Prescribing the general rules of taxation.

3. Which of the following is/ are elements of impact of taxation?

i. Levy
ii. Assessment
 iii. Collection
Choices:
a. i, ii and iii.
b. i and ii only.
c. ii and ii only.
d. Iii only.

4. All of the following are administrative functions of taxation except

a. Selection of object of tax
b. Valuation of property for taxation
c. Equalization of assessment
d. Collection of taxes

5. The statement that he who received more should give more is based on
this basic tax principle.
a. Fiscal adequacy
b. Theoretical justice
c. Administrative feasibility
d. Due process of law

6. To spread the burden of taxation, the corresponding estimated tax is

collected at once every payroll period so that at the end of taxable year, the
amount of tax withheld will be equal or approximate to the actual tax for the
year. This taxation system of collection at source is based on what tax
principle?
a. Fiscal adequacy
b. Theoretical justice
c. Administrative feasibility
d. Due process of law

7. All of the following are inherent restrictions on the exercise of taxation power,
except
a. Rule of uniformity
b. For public purpose
c. Territorial jurisdiction
d. International comity

8. Which of the following is not correct?

a. In the absence of specific tax provision, taxes in general are not
cancelable.
b. Prescriptive period for assessment and collection is applicable to
returnable taxes.
c. The law on prescription being a remedial measure should be interpreted
liberally in order to protect the taxpayer.
d. The prescriptive period should be the shorter between the required filing
date and the actual date of filing.

9. Which of the following statements is correct?

 a. Indirect double taxation is legal as long as there is no violation equal
protection and uniformity clauses of the Constitution.
b. Indirect double taxation violates the Constitutional provision of uniformity
and equal protection.
c. There is direct double taxation in taxing the income of corporation and
again subject the portion of that income declared as dividend to final tax.
d. Direct double taxation is prohibited by the Constitution.

10.Which of the following remedies against double taxation requires that treaty?
a. Tax exemption
b. Tax credit
c. Reciprocity
d. Deduction allowance
Problem 1 7 Multiple Choice
Encircle the letter that contains the best answer.
1. Which of the following tax escape is permissible under Tax Code?
a. Tax avoidance
b. Tax evasion
c. Tax dodging
d. Overstatement of expenses

2. Statement 1: Government units performing governmental functions are

exempt from tax unless expressly taxable.
Statement 2: Government owned or controlled corporations exercising
proprietary functions are expressly exempt.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.

3. Which of the following is an incorrect description of taxation?

a. Legislative and inherent for the existence of the government
b. Necessary and for public purposes
c. Supreme and an absolute power of the State
d. Supreme and an absolute power of the State

4. Which of the following is not true?

Taxation Power Police Power Eminent
Domain
a. Inherent to the existence Yes Yes
Yes
of the government
b. Not legislative in nature No No
No
c. Superior to the non- Yes Yes
No
Impairment clause
 d. Restricted by just No No
Yes
Compensation

5. Which of the following is a correct nature of restriction to exercise taxation

power?
Constitutional Limitation
Inherent Limitation
a. Territorial jurisdiction Yes Yes
b. International comity Yes No
c. Rule of uniformity and equity No
No
d. Due process of law Yes
No

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

a. It is restricted by Constitutional provision.
b. It is superior to the non-impairment clause of the constitution.
c. It involves the taking of property by the government.
d. The amount imposed has no limit.

7. Police power is distinguished from taxation power because

a. It involves taking of property.
b. The amount collected is limited to the cost of regulation.
c. It is an inherent power of the state.
d. The benefit derived is the protection given by the state.

8. The following restrictions are inherent on the exercise ot taxation power,

except
a. Rule of uniformity.
b. For public purposes.
c. Territorial jurisdiction.
d. International comity.

9. Which of the following statements is not correct?

a. The national and local government units exercise the inherent power to
tax.
b. Local government units could exercise the power of taxation through
legislated delegation.
c. National legislation is exercised by Congress.
d. Interpretation of Tax Laws is done by the judicial branch of the
government.

10.Tax affects the area or nation as a community rather than as individuals. This
is a specific explanation of
a. International comity.
b. Public purpose.
 c. Supreme Power.
d. Reciprocity.

Problem 1 8 Multiple Choice

Encircle the letter that contains the best answer.
1. It is achieved through the passage of tax law that defines the tax system of a
nation>
a. Tax legislation
b. Tax administration
c. Reciprocity
d. International inhibition.

2. 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

3. Which of the following statements is not correct?

a. Collections from taxes are public money.
b. Appropriation of taxes for the common good of the people is valid.
c. Construction of private road from taxes is a valid appropriation.
d. Allocation of taxes for the benefit of greater portion of population is
considered for public purposes.

4. A taxpayer gives the following reasons in refusing to pay a tax. Which of his
reasons is not acceptable for legally refusing to pay the tax?
a. That he has been deprived of due process of law.
b. That there is lack of territorial jurisdiction.
c. That he drives no benefit from the tax.
d. That the prescriptive period for the tax has elapsed.

5. The following are the constitutional limitations on the power of taxation,

except
a. Taxes are not subject to set-off or compensation.
b. Only Congress can exercise the power of taxation.
c. Non-impairment of the obligation of contracts.
d. The rule of taxation must be uniform.

6. Which of the following is/ are taxable only for income earned within the
Philippines?
i. Nonresident citizen
ii. Nonresident alien
iii. Resident citizen
iv. Resident alien
 Choices:
a. i, ii and iii only
b. i, ii and iv only
c. i, and iii only
d. iii and iv only

7. Which of the following are characteristics of taxes?

i. Voluntary contribution
ii. Imposed by legislative body
iii. Proportionate I n character
iv. Used for public purpose
Choices:
a. i, ii and iii only.
b. i, ii and iv only.
c. i, and iii only.
d. ii, iii and iv only

8. The following are business taxes except

a. Value-added tax
b. Other percentage tax
c. Excise tax
d. Custom duties.

9. All of the following are National taxes as to collecting authority except

a. Income tax
b. Real property tax
c. Estate tax
d. Value-added tax

10.Which of the following tax rates behaves in the same direction with the
taxable value?
a. Proportionate
b. Progressive
c. Regressive
d. Digressive

Problem 1 9 Multiple Choice

Encircle the letter that contains the best answer.
1. The US embassy donated vehicle to the Department of Foreign Affairs of the
Philippines. Which of the following statements is correct?
a. This transaction is exempted from payment of donors tax only.
b. This transaction is exempted only from payment of documentary stamp
tax.
c. This transaction is exempted from payment of both donors tax and
documentary stamp tax.
 d. This transaction is subject to both donors tax and documentary stamp
tax.

2. All of the following are not axe except

a. Surcharge.
b. Special assessment.
c. Custom duties.
d. License fee.

3. Which of the following could be an object of taxation?

I. Person
II. Tangible property
III. Intangible property
IV. Rights
Choices:
a. i and ii.
b. i, ii and iii.
c. i and iv.
d. i, ii, iii and iv.

4. Which of the following correctly descries the primary purpose of taxation?

Fiscal purpose Regulatory
purpose
a. To raise revenue Yes
Yes
b. To check inflation Yes
No
c. To discourage consumption of No
No
harmful products
d. To limit influx of foreign products No
Yes

5. All of the following statements are true, except

a. Double taxation is taxing twice the same taxpayer for the same purpose
covering the same period and taxed by the same authority.
b. Double taxation is prohibited by the Philippine Constitution.
c. Indirect double taxation is allowed as long as this does not violate the
equal protection and uniformity principles.
d. Doubts regarding double taxation must be resolved in favor of the
taxpayer.

6. One of the following situs of taxation is not true.

Located or Earned
Within Outside
 a. Taxable income of nonresident Yes No
Citizen
b. Taxable estate of resident alien Yes Yes
c. Taxable donation of resident citizen Yes Yes
d. Taxable sale Yes Yes

7. Statement 1: The City of Baguio claims that it can impose additional taxes on
banks under the Local Government Code (in addition to the percentage tax
on banks imposed in the NIRC).
Statement 2: such imposition is a direct double taxation.
a. Both statements are correct.
b. Only statement 1 is correct.
c. Only statement 2 is correct.
d. Both statements are incorrect.

8. One of the following is incorrect regarding tax exemption.

Expressed Exemption Implied
Exemption
a. 13th month pay of 30, 000 and below Yes No
b. Inter-corporate dividend Yes No
c. Non-taxability of government units No No
d. Separation pay due to sickness Yes No

9. Which of the following statements is not correct?

a. A tax bill must only be applicable and operative after becoming a tax law.
b. The effectivity of the tax law commences upon its approval.
c. The applicability of the tax law covers the present and future
transactions.
d. Tax law is ex post facto in application.

10.Which of the following is not correct?

a. In the absence of specific tax provision, taxes in general are not
cancelable.
b. Ad valorem taxes are imposed based on the standard of weight or
measurement.
c. Prescriptive period for assessment and collection is applicable to
returnable taxes.
d. The law on prescription being a remedial measure should be interpreted
liberally in order to protect the taxpayer.

Problem 1 10 Multiple Choice

Encircle the letter that contains the best answer.
1. Which of the following characteristics describes our internal revenue laws?
a. Political in nature
b. Penal in nature
 c. Retroactive in character
d. Generally prospective in operation although the tax statue may
nevertheless operate retrospectively provided it is clearly the legislative
intent.

2. Statement 1: When the primary consideration is the legislative intent, but

doubts exists in determining such intent, the doubts must be resolved strictly
against the taxing authority.
Statement 2: Tax exemptions are strictly construed against the taxpayer.
a. Only statement 1 is true.
b. Only statement 2 is true.
c. Both statements are true.
d. Both statements are false.

3. In case of deductions and exemptions in income tax returns, doubts shall be

resolved
a. Liberally in favor of the taxpayer.
b. Strictly against the government.
c. Strictly against the taxpayer.
d. With compromise.

4. In case of conflict between the tax laws and generally accepted principles
(GAAP) for preparation of tax returns,
a. GAAP shall prevail over tax law.
b. Tax laws shall prevail over GAAP.
c. The courts shall resolve the issue.
d. Both tax laws and GAAP.

5. Which of the following statement is not true?

a. If a taxpayer is acquitted in a criminal violation of the Tax Code, this
acquittal does not exonerate him from his civil liability to pay the taxes.
b. A convention for tax evasion is not a bar for collection of unpaid taxes.
c. A tax assessment is necessary to a criminal prosecution for willful
attempt to defeat and evade payment of taxes.
d. Criminal proceedings under the Tax code are now a mode of collection of
internal revenue taxes, fees or charges.

6. Statement 1: BIR rulings are the final interpretations of the Tax Code.
Statement 2: Supreme Court Decision shall prevail over the BIR Rulings.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.

7. All of the following statements are incorrect, except

a. General provision under Tax code prevails over BIR Regulations.
b. BIR Rulings prevails over Local Tax Ordinance on matters concerning
barangay taxes.
c. BIR Rulings are sound law until changed by court resolution.
 d. Tax Code could violate Constitutional provisions.

8. Which statement is wrong? A revenue bill:

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 a House version and a Senate version approved separately and
then consolidated, with both houses approving the consolidation version.
d. May be recommended by the President to Congress.

9. Which of the following statements is correct?

a. Revenue regulations have the force and effect of law and a memorandum
order of the Commissioner of Internal Revenue approved by the Secretary
of Finance, has the same force and effect as revenue regulations.
b. The revenue regulations in conflict with law are null and void.
c. The interpretations of the former Secretary of Finance do not necessarily
bind their successors.
d. All of the above.

10.Statement 1: The law on prescription being a remedial measure should be

interpreted liberally.
Statement 2: Doubts as to whether double taxation has been imposed should
be resolved in favor of the taxpayer.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are not correct.