Choose the letter of the correct answer
Inherent Powers of the State
1. The State having sovereignty can enforce contributions (tax) upon its citizens even without a
specific provision in the Constitution authorizing it. Which of the following will justify the
foregoing statement?
Statement 1 It is so because the State has the supreme power to command and enforce
obedience to its will from the people within its jurisdiction.
Statement 2 Any provision in the Constitution regarding taxation does not create rights for the
sovereignty to have the power to tax but it merely constitutes limitations upon the supremacy of
lax power.
a. Only statement is correct
b. Only statement 2 is correct
C Both statements are correct
d Both statements are incorrect
2. The following statements correctly described the power of the State to tax, except
a. It is a power inherent in every sovereign state to impose a charge or burden upon
persons, properties or rights to raise revenues for the use and support of the
government and to enable it to discharge its functions.
b. The State can exercise the power of taxation only if it is expressly mentioned in the
Constitution
c. It passes a legislative undertaking through the enactment of laws by the Congress which
will be implemented by the Executive Branch of the government through its Bureau of
Internal Revenue to raise revenue for the inhabitants in order to pay the necessary
expenses of the government.
d. It is a way of collecting and apportioning the cost of government among those who are
privileged to enjoy its benefits
3 Which statement is wrong?
a The power of taxation may be exercised by the government, its political subdivisions and
public utilities.
b Generally, there is no limit on the amount of tax that may be imposed.
C The money contributed as tax becomes part of public funds
d The power to tax is subject to inherent and constitutional limitations
4. They exist independent of the constitution being fundamental power of the state, except
a Power of taxation
b. Police power
c Power of eminent domain
d. Power of recall
5. Statement 1. The constitution is the source of the State's taxing power
Statement 2 The police power of the government may be exercised through taxation
a. Only statement is correct
b. Only statement 2 is correct
c. Both statements are correct
d Both statements are incorrect
6 Statement 1. The Constitution cannot take away the inherent powers of the State but may only
prescribe its limitations.
Statement 2 No laws are necessary to confer the inherent powers of the State upon any
government exercising sovereignty
a Only statement 1 is correct
B. Only statement 2 is correct
C. Both statements are correct
d Both statements are incorrect
7. The power to demand proportionate contribution from persons and property to defray the
necessary expenses of the government.
a Power of taxation
b Power of eminent domain
c Police power
d. Power of recall
8 The power to regulate liberty and property to promote the general welfare
a Power of taxation
b. Police power
c Power of eminent domain
d Power of recall
9. The power to acquire private property upon payment of just compensation for public purpose
a Power of taxation
b Power of eminent domain
C. police power
d. Power of recall
10. Which of the following requires public improvement?
I Taxation
II. Police Power
III. Eminent domain
a.
b.
c.
d.
I only
I and Ill only
Ill only
II and III only
11 The strongest of all inherent powers of the government is
a Power of taxation
b. Police power
c Power of eminent domain
d Power of recall
12 The following are the similarities among the Fundamental Powers of the State except
a They can be abolished by the Constitution
b They constitute the three methods by which the State interferes with private property rights
C Each presupposes an equivalent compensation to the inhabitants
d The emergence of the State carries with it these fundamental powers
13. The following statement correctly states the differences among the inherent powers of the
state, except?
à The property taken under eminent domain and taxation are preserved but that of police power
is destroyed
b. Eminent domain does not require constitutional grant but taxation being formidable does in
order to limit its exercise by the legislature
C Police power and taxation is exercised only by the government but eminent domain may be
exercised by private entities
d Police power regulates both property and liberty while eminent domain and taxation affects
only property rights
14 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. in the exercise of the power of laxation, the State can tax anything at any time.
D. The power of taxation in the Philippine Constitution are grants of power and not limitations on
taxing powers.
15 The following are the differences between the Power of Taxation and the Power of Eminent
Domain, except
Power of Taxation
a.
b.
c.
d.
Power of Eminent Domain
Enforced proportionate contribution
Government has no obligation to pay
It operates in a community
Attribute of sovereignty
Property to be taken is for public use
Govt is a debtor of the property taken
it operates on an individual
Fundamental power
16. 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 citizens 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 the people
within its jurisdiction
17. Statement 1 The power to tax is supreme, plenary, comprehensive and without any limit
because the existence of the government is a necessity
Statement 2: The discretion of Congress in imposing taxes extends to the mode, method and
kind of tax, even if the constitution provides otherwise.
A, Only statement 1 is correct
b Only statement 2 is correct
C. Both statements are correct
d Both statements are incorrect
18. How broad is the power of the legislature to impose taxes?
Answer 1. The legislature has limited discretion as to the persons, property or occupations to be
laxed, where there are no constitutional restrictions provided the property is within the territorial
jurisdiction of the state.
Answer 2. The legislature has the right to finally determine the amount or rate of tax, in the
absence of any constitutional prohibitions and it may levy a tax of any amount as ii sees fit
a. Answers 1 & 2 are false
b. Answer 1 is true but answer 2 s false
C Answer 1 is false but answer 2 is true
d Answers 1 and 2 are true
19 Which of the following statements is correct?
I.
II.
III.
a.
b.
c.
d.
Taxes are pecuniary in nature
it co-exists with the existence of the State
imposed on persons and property beyond the territorial jurisdiction of the State
I only
II only
I and II only
I, II and III
20. Which of the following statements is correct?
I.
II.
III.
A tax cannot be imposed without clear and express words for that purpose
The provisions of a taxing act are not to be extended by implication
If the law is repealed, taxes assessed before repeal of the law may no longer be
collected
a I and II only
b Il and ill only
c All of the above
d. None of the above
21. Statement 1 The amount of money raised for the government in the exercise of its power to
tax and police power is based on the needs of the government
Statement 2 The amount of money raised for the government in the exercise of its power of
eminent domain is based on the cost of processing the transfer of property from private entities
and/or individuals to the government
a.
b.
c.
d.
Only statement 1 is correct
Only statement 2 is correct
Both statements are correct
Both statements are incorrect
22. Which of the following statements is true?
a. The power of taxation and eminent domain are both exercisable only by the
government and its political subdivisions.
b. In police power, the property taken is preserved for public use
C. The power of eminent domain is created by the constitution
d The exercise of the power of eminent domain and police power can be expressly delegated to
the local government units by the law making body
23. Statement 1. People pay taxes which their government uses to expand its powers and
territorial domination.
Statement 2. People demand from their government certain responsibilities and then provide the
government with the means to carry them out.
a. only statement 1 is correct
b. Only statement 2 is correct
C Both statements are correct
d. Both statements are incorrect
24. Statement 1. Taxation and Police Power may be exercised simultaneously.
Statement 2. In the exercise of taxation, the State can tax anything at any time and at any
amount.
a Only statement 1 is correct
b. Only statement 2 is correct
c. C Both statements are correct
d Both statements are incorrect
25. Statement 1. The power of taxation must first be expressly granted, either by law or by the
Constitution, before the State may validly exercise it.
Statement 2. The Philippine government may subject the land where embassies of foreign
governments are located to real property taxes.
a.
b.
c.
d.
Only statement 1 is correct
Only statement 2 is correct
both statements are correct
Both statements are incorrect
26. Statement 1. Since taxation presupposes an equivalent form of compensation, there should
be a direct and proximate advantage received by any taxpayer before he could be required to
pay tax .
Statement 2. Compensation under police power is the intangible feeling of contribution to the
general welfare of the people.
a Only statement 1 is correct
B. Only statement 2 is correct
C . Both statements are correct
D. Both statements are incorrect
27. Which of the inherent powers may be exercised even by public utility companies?
a. Taxation
b. Police Power
C Eminent domain
D. A and C
28. Which of the following may not raise money for the government?
a. Power of taxation
b. b Police power
C Power of eminent domain
d Privatization of government's capital assets
29. Which of the following entities, in some circumstances, may exercise the power of eminent
domain?
I.
II.
III.
IV.
Electric cooperatives
Lending cooperatives
Water cooperatives
Telecommunication companies
a. I and ill only
B. I, II and ill only
C. I, III and IV only
d. All of the above
30. Statement 1. Police power and the power of taxation are exercised primarily by the
legislature but not eminent domain.
Statement 2. Taxation and eminent domain interfere with private rights and property but not with
police power.
a Only statement 1 is correct
B. Only statement 2 is correct
C . Both statements are correct
D. Both statements are incorrect
31. The existence of the government is a necessity and that the state has the right to compel all
individuals and property within its limits to contribute.
a Basis of taxation
B. situs of Taxation
c. Scope of taxation
d. Theory of taxation
32. The reciprocal duties of support and protection between the people and the government.
a Basis of taxation
b. Situs of taxation
c. Scope of taxation
d. Theory of taxation
33. Which statements below express the lifeblood theory?
a. The assessed taxes must be enforced by the government.
b The underlying basis of taxation is government necessity, for without taxation, a government
can't either exist nor endure.
C. Taxation is an arbitrary method of exaction by those who are in the seat of power.
d. The power of taxation is an inherent power of the sovereign to impose burdens upon subjects
and objects within its jurisdiction for the purpose of raising revenues.
34. The principal purpose of taxation is
a. To encourage the growth of home industries through the proper use of tax incentives.
b To implement the police power of the State.
C To reduce excessive inequalities of wealth
D. To raise revenue for governmental needs.
35. After having been informed that most of the massage parlors in the city are being used as
fronts for prostitution, the Sanguniang Panlungsod of 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
a. Taxation
b. Police power
c. eminent domain
d. Police power and power of taxation
36. Statement 1. A provision on taxation in the Philippine Constitution is a grant of power.
Statement 2. The power to tax includes the power to destroy.
Statement 3. Sumptuary purpose of taxation is to raise funds for the government.
Statement 1, 2, 3, respectively are
a. True, True, True
b. True, True, false
c. False, True, True
d. False, True, False
37. Statement 1. Income tax collected from the taxpayers is the main source of revenue of the
local government.
Statement 2. Taxes collected are the main source of revenue of the government.
a.
b.
c.
d.
True, true
True , False
False, true
False, false
38. A tax must be imposed for a public purpose. Which of the following is not a public purpose?
a.
b.
c.
d.
National defense
Public education
Improvement of sugar industry
None of the choices
39. The levying and imposition of tax and the collection of tax are processes which constitute
the taxation system
a. Basis of taxation
b. Aspects of taxation
c Nature of taxation
d Theory of taxation
40. The following are the aspects of taxation
I.
Levying or imposition of the tax on persons, property or excises
II.
Collection of taxes already levied
II Sufficiency of government’s sources to satisfy its expenditure
a. I, II and III
b. I and II only
c. I and III only
d. II and III only
41. The official action of an officer authorized by law in ascertaining the amount of tax due under
the law from a taxpayer is
a Assessment
b Delinquency
c. Deficiency
d. Distraint
42. Taxation is exercised both by the legislative and executive branch of the government.
Which of the following is not the function of the Congress?
a. Selecting the kind of tax
b. Fixing amount of tax
c. Prescribing rules of taxation
d. Assessment of tax liability
43. Fixing the tax rate to be imposed is best described as a (an)
a. Tax administration aspect
b. Tax legislative function
c. Aspect of taxation which could be delegated
d. Function that could be exercised by the executive branch.
44. All of the following are legislative aspect of taxation except
a. Selection of the object or subject of tax
b. valuation of property for taxation
c. fixing of tax rates
d. prescribing the general rules of taxation
45. All of the following are administrative functions of taxation except
a. Selection of object of tax
b. Equalization of assessment
C Valuation of property for taxation
d Collection of taxes
47. The Commissioner of Internal Revenue is granted certain powers under the Tax Code.
Which of the following is not a power granted to the Commissioner under the Code?
a Interpret tax laws and decide tax cases
b issue summons and subpoena
c Enact tax laws and make amendments
d Make assessment and prescribe additional requirements
48 Which of the following statements is correct?
a. The BIR Commissioner has the power to interpret the provision of the Tax Code without
a need of review by the DOF Secretary
b. The BIR has the authority to prescribe additional procedural/documentary requirements
for taxpayers
c. The BIR shall have commissioners and a deputy commissioner
d. The BIR Commissioner can delegate the power to abate tax liabilities
49. Where does the taxing power of the provinces, municipalities and cities precede from?
a Constitutional grant
B. legislative enactment
C Presidential decree or Executive act
d Local legislation
50. How will the local government units be able to exercise their taxing powers?
a By local legislation
b By authority conferred by Congress
c By the issuance of the Department of Finance
d. By the help of the Bureau of Internal Revenue
51. When the power to tax is delegated to the local government
a. Only the local executive can exercise the power.
b. Only the legislative branch of the local government can exercise the power
c. The local executive and the legislative branch of the local government can exercise the
power,
d Neither the local executive nor the legislative branch of the local government can exercise the
power
52. Levying of local government taxes may be exercised by
a The local executive only
b The legislative branch of the local government only
C. The local executive and the legislative branch of the local government unit
d Neither the local executive nor the legislative branch of the local government can exercise the
power
53. Which of the following statements is not correct?
a. Only the national government exercises the inherent power of taxation.
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 Legislative branch of government
Enactment of Tax Laws
54. The legislative body enacts laws to raise revenues in the absence of a constitutional
provision granting said body the power to tax. Which of the following statements will justify the
enactment of such law?
I.
The legislative body may enact tax laws even in the absence of a constitutional provision
because the power to tax is inherent in the government and not merely a constitutional
grant.
II.
The power of taxation is an essential and inherent attribute of sovereignty belonging as a
matter of night to every independent government without being expressly granted by the
people
a. I only
b. ll only
c Both I and II
d. Neither I nor II
55. The Congress enacted a new law, known as Expanded Value Added Tax Law. An
association of taxpayers questions the constitutionality of this law on the ground that it did not
originate exclusively in the House of Representatives as required by the Constitution, because it
is in fact the result of the consolidation of two distinct bills, one from the House of
Representatives and the other from the Senate. Is the VAT law unconstitutional?
a. Yes, because 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.
B. Yes, because the Senate has no authority to propose or concur any amendments with the
revenue or tax bill proposed by the House of Representatives.
C. No, because all appropriation, revenue or tariff bills, or bills authorizing increase of public
debt, bills of local application, and private bills shall be initiated by the Senate.
D. No. because it is not the law but the revenue bill which is required by the Constitution to
originate exclusively in the House of Representatives and insisting otherwise would violate the
coequality of legislative power of the two houses of Congress and in fact would make the House
superior to the Senate.
56.
57.
58. The Congress, after much public hearing and consultations with various sectors of society,
came to the conclusion that will be good for the country to have only one system of taxation by
centralizing the imposition and collection of all taxes in the national government. Accordingly,
passed law that would abolish the taxing power of all local government units. Would such a law
be valid under the present Constitution?
I.
Yes the centralizing the imposition and collection of all taxes in the national
government would not contravene the Constitution as long as a new law is enacted for the
common good of the people.
II.
No, because under the present Constitution, each local government unit shall have the
power to create their own sources of revenue and to levy taxes, fees and charges
subject to such guidelines and limitations as Congress may provide consistent with the
basic policy of local autonomy.
III.
a.
b.
c.
d.
No. It is clear that Congress can only give the guidelines and limitations on the exercise
by the local governments of the power to tax but what was granted by the fundamental
law cannot be withdrawn by Congress
I only
II and III only
I, II and III
None of the above
59. The city council passed a tax ordinance imposing an occupation tax on profession or
occupation of an industrial engineer. GJ is the only person with such an occupation in the city.
Which of the following is correct?
A. GJ can successfully challenge the validity of the ordinance being discriminatory since he
is the only one adversely affected.
B. The ordinance violates the constitutional rule of equality in taxation.
C. The ordinance is a "class legislation” since it does not subject to occupation tax the other
industrial engineers.
D. The ordinance is a valid exercise of the council's power to enact tax ordinance to raise
revenue under the Local Government Code.
60. Which of the following is incorrect?
a. Taxes may be imposed retroactively by law, but unless so expressed by such, these
taxes must only be imposed prospectively.
b. Tax laws are neither political nor penal in nature.
c. The 'ex post facto rule is not applicable in taxation
d. None of the above
61. On January 1, 2017 the Congress enacted a law increasing the corporate income tax from
30% to 40% The law provides retroactive effect starting January 1, 2010. The Philippine
Chamber of Commerce questions the validity of the law. Is the law Constitutional?
a. No, because the retroactive effect of the law constitutes deprivation of right to property of
corporation without due process of law
b. No, because the 40% income tax rate is violation of due process of law for being
excessive and unreasonable.
c. Yes, because the power of taxation is an inherent power of a sovereign State and it is
based on the lifeblood doctrine and necessity theory.
d. Yes because the power of taxation is an essentially legislative power within the exclusive
prerogative of the Congress that its wisdom is beyond the reach of the Supreme Court.
62. The 30% corporate income tax is increased to 35% by the Congress for the purpose of
raising revenue to be used for a national road expansion project near Bonifacio Global City, a
private corporation. Is the exercise of the taxing power unconstitutional?
a. Yes because taxing power must be exercised exclusively for public purpose without any
incidental benefit to any private entity.
b. No, because it is exercised directly for public purpose and the benefit to a private entity
is only incidental.
c. Yes, because the increase in tax rate constitutes deprivation of right to property of
corporation without due process of law for being excessive and unreasonable.
d. No, because the constitution does not expressly state that the power of taxation must be
used only for public purpose, thus, it may be used to benefit a private entity.
Characteristics/Elements of Tax
63. One of the following is not a characteristic or an element of tax
a.
b.
c.
d.
It is levied by the legislature
It is payable in money or in kind
It is proportionate in character
It is an enforced contribution
64. Being legislative in nature, the power to tax may not be delegated except
a. To local governments or political subdivisions
b. When allowed by the Constitution
c. When delegation relates merely to administrative implementation that may call for
some degree of discretionary powers under a set of sufficient standards expressed by law or
implied from the policy and purpose of the Act.
d. All of the choices
Sound Tax System
65. All of the following except one, are basic principles of a sound taxation system
a.
b.
c.
d.
Fiscal adequacy
Administrative feasibility
Theoretical justice
Inherent in sovereignty
66. Under this basic principle of a sound taxation system, the government should not incur a
deficit
a. Administrative feasibility
b. Theoretical justice
c. fiscal adequacy
d. None of the above
67. The basic principle of a sound taxation system, where. "Taxes must be based on the
taxpayer's ability to pay" is called:
a.
b.
c.
d.
Equality in taxation
Theoretical justice
Ability to pay theory
Equity in taxation
68. The tax law must be capable of convenient, just and effective administration
a. Theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of apportionment
Double Taxation
69. 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
70. Which is not a double taxation?
a. A lessor of property pays a real estate tax and income tax on the same property.
b. Imposition of tax on the finished products and the raw materials used in the production of
the said finished products.
c. Imposition of tax on corporate income and shareholder's dividends from the same
corporation
d. All of the above.
71. One of the following is a 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.
72. Which of the following statements is correct?
a. Indirect double taxation violates the Constitutional provision of uniformity and equal
protection.
b. There is direct double taxation in taxing the income of the corporation and again subject
the portion of that income declared as dividend to final fax.
c. Indirect double taxation is legal as long as there is no violation of equal protection and
uniformity clauses of the Constitution.
d. All of the above
73. The usual mode(s) of avoiding occurrence of double taxation is/are:
a Reciprocal exemption, either by law or treaty
b. Tax credit of foreign taxes paid
C Deduction for foreign taxes paid
d. All of the above
Inherent and Constitutional Limitations
74. Statement 1. Inherent limitations are the natural restrictions to safeguard and ensure that
the power of taxation shall be exercised by the government only for the betterment of the people
whose interest should be served, enhanced and protected
Statement 2. Constitutional limitations are provisions of the fundamental law of the land that
restrict the supreme, plenary, unlimited and comprehensive exercise by the State of its inherent
power to tax.
a Only statement 1 is correct
B Only statement 2 is correct
C. Both statements are correct
d Both statements are incorrect
75. 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 purpose
c. Supreme and absolute power of the State
d. The strongest of all inherent powers of the State
76. Which limitation on the power of taxation inherently implied that the State's primary concern
is for the common good of the people?
a Equality in taxation
b. Equal protection of law
c Due process of law
d For public purposes
77. These are restrictions imposed by the Constitution
a Inherent limitations
b Constitutional limitations
C Basic principles of sound tax system
d. None of the choices
78. Which of the following is a constitutional limitation on the power of taxation?
I.
II.
III.
IV.
a.
b.
c.
d.
Territoriality of taxes
Public purpose
Legislative in character
Non-appropriation for religious purpose
Il only
IV only
II and IV only
III and IV only
79. “Equality in taxation" means
I.
II.
III.
Progressive system of taxation shall be applied
The tax laws and their application must be fair, just, reasonable and proportionate to
one's ability to pay
The tax laws shall give emphasis on direct rather than indirect taxes or on the ability-topay principle of taxation.
a l only
B II only
C. ill only
d. I, II, and III
80. Statement 1. Uniformity in the imposition and/or collection of taxes means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate This requirement
is complied with when the tax operates with the same force and effect in every place where the
subject of it is found
Statement 2. Uniformity rule is not violated when different articles are taxed at different amounts
provided that the rate is uniform on the same class everywhere with all people at all times.
a Only statement 1 is correct
b Only statement 2 is correct
C Both statements are correct
d Both statements are incorrect
81. Statement 1. A tax is deemed to have satisfied the uniformity rule when it operates with the
same force and effect in every place where the subject may be found.
Statement 2 The equal protection clause of the Constitution forbid classification based on real
and substantial differences having a reasonable relation to the subject of the particular
legislation
a. Only statement 1 is correct
b. Only statement 2 is correct
C. Both statements are correct
d Both statements are incorrect
82. Which of the following statements correctly describes the "Equal protection" clause of the
Constitution regarding the government's power to tax?
I.
All persons subject to legislation shall be treated alike under similar circumstances and
conditions, both in the privileges conferred and liabilities imposed.
II.
The purpose is to protect persons belonging to the same class against intentional and
arbitrary discrimination
III.
There is denial of equal protection of laws if there is discrimination in the implementation
of tax laws.
a I and II only
B l and lil only
C. II and ill only
d I, II and III
83. 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 Reciprocity
C international comity
D. International inhibition
84. May the Philippine government require tax withholding on the salaries of Filipino employees
working in the American Embassy in the Philippines?
a. No, because this will violate the rule on international comity.
b. No, because if the Philippine government would impose the requirement of tax
withholding on the salaries of Filipino employees working in the Philippine Embassy in
the Philippines, this would in effect require that the American government be constituted
as the withholding agent of the Philippine government insofar as the taxes on the
salaries of the Filipino employees are concerned.
c. Both a" and "b
d. None of the above
85. One of the following is not a Constitutional limitation on the power of taxation?
a Exemption from taxes of revenues and assets of educational institutions including grants,
endowments, donations and contributions
b Non-impairment of the jurisdiction of Supreme Court in tax cases
C Exemption of the government from taxes
d. Non-infringement of religious freedom and worship
86. This stems from the principle that we pay taxes for the protection and services provided by
the taxing authority which could not be provided outside the territorial boundaries of the taxing
state
a The tax imposed should be for public purpose
b There should be no improper delegation of the laxing power
C. The power to tax is limited to the territorial jurisdiction of the taxing government
d Exemption of government entities from taxation
87 Compliance with procedural requirements must be followed strictly to avoid collision between
the State's power to tax and the individual's recognized rights
a. Due process of law
b Equality in taxation
C Non-infringement of religious freedom
d Non-impairment of obligations and contracts
88. No person shall be imprisoned for non-payment of this
a. Property tax
b. Excise tax
c. Poll tax
d Income tax
89. This requires that all subjects or objects of taxation, similarly situated, are to be treated alike
or put on equal footing both in privileges and liabilities.
a Due process
b. Uniformity
c Progressive taxation:
d None of the choices
90. The following are the constitutional limitations on the power of taxation, except
a. Only Congress can exercise the power of taxation
b. Non-impairment of the obligation of contracts.
c Taxes are not subject to set-off or compensation
d. The rule of taxation shall be uniform.
Exemption from Taxation
91. No law granting any tax exemption shall be passed without the concurrence of a. Majority of all members of Congress
b. 2/3 vote of all members of Congress
c. ¾ vote of all members of Congress
d. Unanimous vote of all members of Congress
92. Mapagbigay School a non stock non-profit educational institution, bought from Pedro a
resident citizen, his residential house and lot Pedro would be using the proceeds of the sale to
buy his new residential house and lot. On the other hand, the school will use the parcel of land
to construct a new building for its dormitory for its medical students. Which of the following
statements regarding liability for the payment of capital gains tax is correct?
I.
II.
III.
a.
b.
c.
d.
Pedro is liable to capital gains tax. However, if what was sold was his principal
residence, he may apply for tax exemption provided that he complies with the
requirements laid down in the Tax Code.
Pedro is not liable to capital gains tax because the sale was made in favor of a nonstock, non-profit, educational institution and that the property will be used for
educationally-related functions.
Pedro is liable to capital gains tax because the tax is imposed on the seller, thus
notwithstanding any exemption enjoyed by the buyer, the tax shall still be imposed.
I only
II only
I and II only
I and III only
93. As an incentive for investors, a law was passed giving newly established companies in
certain economic zone exemption from all taxes, duties, fees, imposts and other charges for a
period of three years. ABC Corporation was organized and was granted such incentive, in the
course of business, ABC purchased mechanical equipment from XYZ Incorporated. The latter,
in its ordinary business dealings, is subject to VAT. XYZ Inc. claims, however, that since it sold
the equipment to ABC Corp. which is tax exempt, it should not be liable to pay the VAT. is this
claim tenable?
a. No Exemption from taxes is personal in nature and covers only taxes for which the
taxpayer-grantee is directly liable. VAT is a tax on the seller who is not exempt from
taxes. Since XYZ, inc. is directly liable for the VAT and no tax exemption privilege is
ever given to him, Its claim that the sale is tax exempt is not tenable.
b. Yes, exemption from tax should not be discriminatory in nature. A seller of goods or
service to tax exempt individuals or entities shall be accorded the same exemption
provided by law to a buyer
c. Yes, applying uniformity rule
d. None of the above
94. Juan Dela Cruz Memorial Hospital is a 100-bed domestic hospital organized for charitable
purposes. However, out of 100-bed capacity, 40 beds are allotted for paying patients while the
rest are intended for charity patients. The revenues generated from these paying patients,
however, are being used to improve the facilities of the hospital. Can said hospital claim
exemption from income tax as well as real property tax?
Answer 1. Yes the hospital can claim exemption from real property tax. As a general rule a
charitable institution does not lose its character as such and its exemption from taxes simply
because it derives income from paying patients, whether out-patient, or confined in the hospital,
or receives subsidies from the government, so long as the money received is devoted or used
altogether to the chantable object which it is intended to achieve, and no money inures to the
private benefit of the persons managing or operating the institution
Answer 2. The hospital is subject to 10% tax on its net income, subject to compliance with the
predominance test.
a.
b.
c.
d.
Only the first answer is correct
Only the second answer is correct
Both answers are correct
Both answers are incorrect
96. Saint Mary's University (SMU) is a non-stock non-profit educational institution registered
with the Securities and Exchange Commission (SEC) as a corporation. For the year ended
December 31, 2018 it reported rental income amounting to P150M from various tenants leasing
portions of the said corporation. The Bureau of Internal Revenue (BIR) assessed SMU P45M
deficiency income tax for rental income earned. Is the action of the BIR proper?
a. No because a proprietary educational institution shall be subject only to 10% preferential
corporate income tax,
b. No, because all revenues of non-stock, non-profit educational institutions shall be
exempt from taxes and duties as long as they are used actually, directly and exclusively
for educational purposes.
c. Yes because leasing of property is not actually, directly and exclusively related to
educational purposes.
d. Yes because taxes are the lifeblood of the government and tax exemptions are
construed strictly against the taxpayer and liberally in favor of the government.
96. Mike is the owner of a 5.000 sq m parcel of land located in New Manila Quezon City. He
leased the property for P500.000 a year to a religious congregation for a period of ten (10)
years. The religious congregation built on a 1,000 sq m portion a seminary and a chapel which it
used in connection with its religious activities. it also constructed a ten (10) story building on the
remaining 4,000 sq m which it rented out to various commercial establishments, the proceeds of
which go to the support of its various seminaries located throughout the Philippines. These
seminaries are organized as non-profit and non-stock educational institutions.
Which of the following is the correct tax implication of the foregoing data with respect to
payment of income tax?
a. The religious congregation is exempt from payment of income taxes on rental receipts
because the collections were used to support its various seminaries located throughout
the Philippines.
b. The religious congregation is exempt from payment of income taxes on rental receipts
provided not more than 30% of its receipts were used for administrative purposes.
c. The religious congregation is subject to income taxation. The constitutional tax
exemptions refer only to real property that are actually, directly and exclusively used for
religious, charitable or educational purposes and that the only constitutionally recognized
exemption from taxation of revenues are those earned by non-profit, non stock
educational institutions which are actually, directly and exclusively used for educational
purposes.
d. None of the above
97. The basis or test of exemption of real properties owned by religious or charitable entities
from real property taxes is
a.
b.
c.
d.
Use of the real property
Ownership of the real property
Location of the real property
Ownership or location real property at the option of the government
98. Government agencies performing governmental functions are exempt from tax unless
expressly taxed while those performing proprietary functions are subject to tax unless expressly
exempted refers to
a.
b.
c.
d.
The tax imposed should be for public purpose
There should be no improper delegation of the taxing power
The power to tax is limited to the territorial jurisdiction of the taxing government
Exemption of government entities from taxation
99. A taxpayer gives the following reasons for 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 the prescriptive period for the tax has lapsed
d. That he will derive no benefit from the tax
Situs Taxation
100. It literally means "place of taxation” the country that has the power and jurisdiction to levy
and collect the tax
a.
b.
c.
d.
Basis of taxation
Scope of taxation
Situs of taxation
Theory of taxation
101. 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
102. The least source of tax laws
a. Statutes
b. Revenue regulations
c. Tax treaties or conventions
d. Presidential decrees
103. Statement 1: A revenue regulation must not be contrary to the provision of the law that it
implements.
Statement 2. A revenue regulation cannot expand the provision of law that it implements by
imposing a penalty when the law that authorizes the revenue regulation does not impose a
penalty.
a.
b.
c.
d.
Only statement 1 is correct
Only statement 2 is correct
Both statements are correct
Both statements are incorrect
104. Which of the following is not a source of our tax laws?
I.
II.
Supreme Court Judicial Decisions
Opinion of authors
III.
IV.
V.
VI.
Bureau of Customs Memorandum Orders
SEC Regulations and Rulings
Administrative rules and regulations
Legislations, tax treaties and tax ordinances
a II, III and VI only
b. II and IV only
C.II and VI only
D. None of the above
105. 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 which are in conflict with law(s) are null and void.
c. The interpretations of the former Secretary of Finance do not necessarily bind their
successors.
d. All of the above
Types of Taxes
106. The Philippine income tax system has the following features, except
a. Comprehensive tax situs by using the nationality, residence, and source rules
b. the individual income tax system is mainly progressive in nature.
c. Indirect rather than direct system.
d. Semi-global and semi-schedular system.
107. Tax of a fixed amount imposed among all persons residing within a specified territory
without regard to their property or occupation they may be engaged
a.
b.
c.
d.
Personal, poll or capitation tax
Property tax
Excise tax
Regressive
108. Tax imposed on personal or real property in proportion to its value or some other
reasonable method of apportionment
a.
b.
c.
d.
Personal, poll or capitation tax
Property tax
Excise tax
Regressive
109. Which of the following is not an example of excise tax?
a Transfer tax
b Sales tax
c Real property tax
d income tax
110. Tax which is demanded from the persons whom the law intends or desires to pay it
a Direct
b. Indirect
c Excise
d. Income
111. Tax which is demanded from one person in the expectation and intention that he shall
indemnify himself at the expense of another
a Direct
B. Indirect
c. Excise
d Income
112. One is not a direct tax
a immigration tax
b Transfer tax
c Income tax
d Value-added tax
113. A tax on business is
a Direct tax
B. Indirect tax
c Property tax
d None of the choices
114. Tax which imposes a specific sum by the head or number or by some standards of weight
or measurement and which requires no assessment other than a listing or classification of the
objects to be taxed.
a.
b.
c.
d.
Excise
Ad-valorem
Specific
Revenue
115. Tax which is a fixed proportion of the amount or value of the property with respect to which
the tax is assessed
a.
b.
c.
d.
Ad-valorem
Specific
Excise
Revenue
116. Disregard same concept as other questions
117. JJ is a mining operator. The tax he has to pay is based on the actual value of the gross
output or mineral products extracted is
a.
b.
c.
d.
Mining tax
Royalties
Rental
Ad valorem tax
118. Tax levied for particular or specific purpose irrespective of whether revenue is actually
raised or not
a.
b.
c.
d.
Ad valorem tax
Revenue tax
Specific tax
Regulatory tax
119. Tax based on a fixed percentage of the amount of property, income or other basis to be
taxed
a Progressive
b Proportional
c. Regressive
d Indirect
120, Tax where the rate decreases as the tax base increases
a Progressive
b. Proportional
c. Regressive
d. Indirect
121. Tax where the rate increases as the tax base increases
a Progressive
b. Proportional
c Regressive
d. Indirect
122. A tax classified as a regressive tax
a. excise tax
b real estate tax
c value added tax
d none of the choices
123. Which of the following taxes is not always proportional?
a value added tax
b income tax
c estate tax
d donor's tax
124. Which of the following individual taxpayers is not covered by progressive tax?
a.
b.
c.
d.
resident citizen
resident alien engaged in trade
resident alien
nonresident alien not engaged in trade
Tax vs. Other Impositions
125. 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 police power.
d Limited to cover cost of regulation
126. The distinction of a tax from permit or license fee is that a tax is
a.
b.
c.
d.
Imposed for regulation
One which involves exercise of police power
One in which there is generally no limit on the amount that may be imposed
Answer not given.
127. 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?
a Tax
b. License Fee
c Toll
d. Customs duty
128. Toll as distinguished from tax
a Demand of sovereignty
b Imposed by government only
C Amount is based on the cost of construction of public improvement used
D. Paid for the support of the government
129. Which statement is wrong?
a A tax is a demand of sovereignty
b. A toll is a demand of ownership
C. a special assessment is a tax
d Customs duty is a tax.
130. Which of the following is not a characteristic of debt?
a.
b.
c.
d.
Generally arises from contracts.
Payable only in money
Assignable
imprisonment is not a sanction for non-payment
131. Debt as distinguished from tax
a Based on law
b. May be paid in kind
c Does not draw interest except when delinquent
d Generally not subject to set-off or compensation
132. "Schedular system of income taxation means
a. All types 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.
133. Under the Creditable Withholding Tax system, which of the following statements is
incorrect?
a. Taxes withheld on certain income payments are intended to equal or at least
approximate the tax due of the payee on said income.
b The recipient of the income is no longer required to file an income tax return as prescribed
under the Tax Code
C The payee is required to report the income and pay the difference between the tax withheld
and the tax due thereon
d Taxes withheld under this system are creditable in nature
134. Which of the following statements is correct?
a. Withholding tax liability may arise only when the agent has possession, custody or
control of the funds withheld
b. The withholding tax system was devised to provide the taxpayer a convenient manner to
meet his probable income tax liability and to ensure collection of the income tax which
could otherwise be lost or substantially reduced through failure to file the corresponding
returns
c. Withholding tax system is designed to improve the government's cash flow
d. all of the above.
135. Under the Final Withholding Tax system, which of the following statements is not correct?
a. Income tax withheld by the withholding agent is constituted as a full and final payment of
the income tax due from the payee on the said income:
b. The liability for payment of the tax rests primarily on the payee as a recipient of income
c. In case of failure to withhold the tax, the deficiency tax shall be collected from the
withholding agent.
d. The payee is no longer required to file an income tax return for the particular income
136. When the 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 setoff with each other. This doctrine is called
a.
b.
c.
d.
Set-off doctrine
doctrine of reciprocity
Tax sparing doctrine
Equitable recoupment
137. Rule of "No estoppel against the government” means
a. Rule of law that in the performance of its governmental functions, the state cannot be
estopped by the neglect of its agents and officers
b. The government is not estopped by the mistakes or errors of its agents, erroneous
application and enforcement of law by public officers do not block the subsequent
correct application of statutes.
c. Both a and b
d. Neither a or b
Interpretation of Ambiguities in Taxation
138. In case of ambiguity, tax laws imposing a tax shall be interpreted
a.
b.
c.
d.
Strictly against the taxpayer
Liberally in favor of the taxpayer
Liberally in favor of the government
None of the choices
139. Which of the following propositions may be untenable?
a. The court should construe a law granting tax exemption strictly against the taxpayer
b. The court should construe a law granting a municipal corporation the power to tax most
strictly
c. The Supreme Court has jurisdiction to review decisions of the Court of Tax Appeals
d. None of the above
140. Which of the following is incorrect? Where doubts exist in determining the intent of
legislature: the doubt must be
a. resolved strictly against the taxpayer and liberally in favor of the taxing authority.
b. The exemption contained in the tax statutes must be strictly construed against the one
claiming the exemption
c. Tax cannot be imposed without clear and express words for that purpose.
d. All of the above
141. In cases of deductions and exemptions, doubts shall be resolved
a.
b.
c.
d.
Strictly against the taxpayer
Strictly against the government
liberally in favor of the taxpayer
None of the choices
142. Statement 1 In case of conflict between a revenue regulation and provision of the National
Internal Revenue Code, the latter shall prevail.
Statement 2 The revocation of a revenue regulation cannot be made retroactive even if the
reason for its revocation is that it is erroneous or contrary to law
a.
b.
c.
d.
Statement 1 is correct. Statement 2 is wrong
Both statements are correct
Statement 1 is Wrong Statement 2 is correct
Both statements are wrong
143. Which of the following is correct regarding the purpose(s) of revenue regulations issued by
the Department of Finance through the Bureau of Internal Revenue?
a To properly enforce and execute the laws
b To clarify and explain the law
C To carry into effect the law's general provisions by providing details of administration and
procedure
d All of the above
144. The Secretary of Finance, upon recommendation of the Commissioner of Internal
Revenue, issued a Revenue Regulation using gross income as the tax base for corporations
doing business in the Philippines. The revenue regulation is:
a. Valid. Corporations are already taxable under our existing tax laws Hence the action of
the Secretary constitutes administrative action only which is within his powers
b. Valid if the tax is limited to gross income without deductions. Such action is not
tantamount to changing the amount of the tax as said amount ultimately depends on the
taxable base
c. Not valid because the action of the Secretary constitutes legislation which is exclusively
within the powers of the legislative branch of the government
d. None of the above
145. Which of the following is required for validity of rules and regulations?
I.
II.
a.
b.
c.
d.
They must not be contrary to law and the Constitution
They must be published in the Official Gazette or a newspaper of general circulation
Both land Il
I only
II only
Neither I nor II
Tax Avoidance vs Tax Evasion
Escape from Taxation and Other Topics
146. The use of illegal or fraudulent means to avoid or defeat the payment of tax
a.
b.
c.
d.
Avoidance
Exemption
Shifting
Evasion
147. The exploitation by the taxpayer of legally permissible alternative tax rates or methods of
assessing taxable property or income, in order to reduce tax liability it is otherwise known as tax
minimization
a.
b.
c.
d.
tax exemption
Tax evasion
Tax avoidance
Transformation
148. Statement I. Tax avoidance is a scheme used outside of those lawful means to escape tax
liability
Statement 2 Tax avoidance is a tax saving device within the means sanctioned by law and
when availed of, It usually subjects the taxpayer to further or additional civil or criminal liabilities.
a.
b.
c.
d.
Both statements are correct
Only statement 1 is correct
Only statement 2 is correct
Both statements are incorrect
149. Pedro's income from leasing his property reaches the maximum rate of tax under the law.
He donated one-half of his said property to a non-stock, non-profit educational institution whose
income and assets are actually, directly and exclusively used for educational purposes, and
therefore, qualified for tax exemption under Article XIV, Section 4 (3) of the Constitution and
section 30 (h) of the Tax Code. Having this transferred a portion of his said asset, Pedro
succeeded in paying a lesser tax on the rental income derived from his property under the lower
tax bracket. Pedro's action is considered also known as
a.
b.
c.
d.
Tax evasion
Tax avoidance
Shifting
None of the above
150. Transfer of the tax burden by one whom the tax is assessed to another
a.
b.
c.
d.
Shifting
Capitalization
Transformation
Tax exemption
151. Pedro sold a parcel of land classified as a capital asset to Juan. The parties agreed that
the capital gains tax shall be shouldered by Juan. Is this a form of Shifting? is the Stipulation
valid?
a.
b.
c.
d.
Shifting Stipulation
Yes
Yes
No
No
Yes
No
No
Yes
152. Which of the following statements is correct?
I.
II.
a.
b.
c.
d.
Shifting will result in increased prices
Tax evasion is also known as tax dodging
I only
II only
I and II
Neither I nor II
153. It is finding out means of improvement in production so as savings would compensate for
taxes paid by manufacturers or producers
a shifting
b capitalization
c transformation
d tax dodging
154. Which of the following statements regarding "Taxpayer's Suit” is incorrect?
a. It is one brought or filed by a taxpayer arguing the validity of a tax statute and its
enactment or the constitutionality of its alleged public purpose
b. It is a case where the act complained of directly involves the illegal disbursement of
public funds derived from taxation.
c. Taxpayers have "locus standi" to question the validity of tax measures or illegal
expenditures of public money
d. A taxpayer is relieved from the obligation of paying a tax because of his belief that it is
being misappropriated by certain officials
155. The Philippine income tax system has the following features except
a. Comprehensive tax situs by using the nationality, residence, and source rules
b. the individual income tax system is mainly progressive in nature
c. Indirect rather than direct system
d. Semi-global and semi-schedular system