CHAPTER 1

Question 1

T/F
The three fundamental powers of the state may be exercised only by the government.

Answer 1

FALSE

Question 2

T/F
Taxation is a process or means by which the sovereign, through its law-making body, raises income to defray the expenses of the government.

Answer 2

TRUE

Question 3

T/F
Eminent domain may be exercised even by public service corporations and public entities.

Answer 3

TRUE

Question 4

T/F
Police power regulates both liberty and property.

Answer 4

TRUE

Question 5

T/F
Taxes are raised to cover the cost of governance.

Answer 5

TRUE

Question 6

T/F
Toll is one of the taxes collected by the government.

Answer 6

FALSE

Question 7

T/F
License fees are imposed in the exercise of police power.

Answer 7

TRUE

Question 8

T/F
License fees are imposed to raise revenue.

Answer 8

FALSE

Question 9

T/F
Tax is generally unlimited because it is based on the needs of the State.

Answer 9

TRUE

Question 10

T/F
The amount imposed in the exercise of police power depends on whether the activity is useful or not.

Answer 10

TRUE

Question 11

T/F
The distinction of a tax from permit or license fee is that a tax is one in which there is generally no limit on the amount that may be imposed.

Answer 11

TRUE

Question 12

T/F
Debt, as distinguished from tax, may be paid in kind.

Answer 12

TRUE

Question 13

T/F
Under the equal protection clause of the constitution, all persons subject to legislation shall be treated alike under dissimilar circumstances and conditions, both in the privileges conferred and liabilities imposed.

Answer 13

FALSE

Question 14

T/F
Tax laws are civil and penal in nature because there are penalties provided in the case of violation.

Answer 14

FALSE

Question 15

T/F
Special assessment is a tax.

Answer 15

FALSE

Question 16

T/F
Special assessment is imposed on persons, property and property rights.

Answer 16

FALSE

Question 17

T/F
The Philippine government may subject the land where embassies of foreign governments are located to real property taxes.

Answer 17

FALSE

Question 18

T/F
A revenue bill may originate from the Senate and on which same bill the House of Representatives may propose amendments.

Answer 18

FALSE

Question 19

T/F
A person may refuse to pay on the ground that he will not receive a benefit from the tax.

Answer 19

FALSE

Question 20

T/F
In the exercise of the power of taxation, the State can tax anything at any time.

Answer 20

TRUE

Question 21

T/F
In cases of deductions and exemptions, doubts shall be resolved liberally in favor of the government.

Answer 21

TRUE

Question 22

T/F
Levying of local government taxes should be exercise only by the legislative branch of the local government.

Answer 22

TRUE

Question 23

T/F
The taxing power of provinces, municipalities and cities precede from a constitutional grant.

Answer 23

TRUE

Question 24

T/F
No law granting any tax exemption shall be passed without the concurrence of 2/3 of all members of Congress.

Answer 24

FALSE

Question 25

T/F
There is no constitutional prohibition against double taxation in the Philippines. It is something not favored, but nevertheless permissible.

Answer 25

TRUE

Question 26

T/F
“Global system of income taxation” means separate graduated rates are imposed on different types of income.

Answer 26

FALSE

Question 27

T/F
One of the schemes of shifting the incidence of tax burden is by transferring the sales tax of a manufacturer to the distributor, then in turn to the wholesaler, to the retailer and finally to the consumer.

Answer 27

TRUE

Question 28

T/F
Transformation is a 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.

Answer 28

TRUE

Question 29

T/F
In case of ambiguity, tax laws shall be interpreted liberally in favor of the government.

Answer 29

FALSE

Question 30

T/F
Taxation is regressive when their rate goes up depending on the resources of the person affected.

Answer 30

FALSE

Question 31

Which of the following statements is incorrect?
a. Taxes are the revenues raised in the exercise of the police power of the State.
b. One of the special characteristics of tax is it is unlimited in amount.
c. The three fundamental powers of the State are Inherent in the State and may be exercised without the need of any constitutional grant.
d. All of the above

Answer 31

a. Taxes are the revenues raised in the exercise of the police power of the State.

Question 32

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?
a. It is so because the State has the supreme power to command and enforce obedience to its will from the people within its jurisdiction.
b. 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 tax power.
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 32

c. Both “a” and “b”

Question 33

Statement 1. The distinction of a tax from permit or license fee is that a tax is imposed for regulation. Statement 2: Non-payment of tax does not necessarily render a business
legal
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 33

b. Only statement 2 is correct

Question 34

The primary purpose of taxation is to raise revenue for the support of the government. However, taxation is often employed as a devise for regulation by means of which, certain effects or conditions envisioned by the government may be achieved such as:
a. Taxation may be used to provide incentive to greater production through grant of tax exemptions.
b. Taxation can strengthen weak enterprises by creating conditions conducive to their growth through grant of tax exemptions
c. Taxes may be increased in periods of prosperity to curb spending power and halt inflation or lowered in periods of slump to expand business and ward off depression.
d. All of the above

Answer 34

d. All of the above

Question 35

Which of the following statements is correct?
a. The purpose of taxation may also be “compensatory”, meaning, it
may be used to make up for the benefit received,
b. Taxes may be imposed for the equitable distribution of wealth
and income in society.
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 35

c. Both “a” and “b”

Question 36

Which theory in taxation states that without taxes, a government would be paralyzed for lack of power to activate and operate it, resulting in its destruction?
a. Power to destroy theory
b. Lifeblood theory
c. Sumptuary theory
d. Symbiotic doctrine

Answer 36

b. Lifeblood theory

Question 37

On theoretical basis of taxation, which of the following statements is true? 7
a People pay taxes which their government uses to expand its powers and territorial domination.
b. People demand from their government certain responsibilities and then provide this government with the means to carry them out.
c. State needs taxation to exist, while people must support taxation because they need the presence of the state.
d. “b” and “c”

Answer 37

c. State needs taxation to exist, while people must support taxation because they need the presence of the state.

Question 38

Incidence of taxation means
a. Shifting of tax
b. Refunds of tax
c. Payment of tax
d. Imposition of tax

Answer 38

c. Payment of tax

Question 39

The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as
a. Assessment
b. Levy
c. Payment
d. Collection

Answer 39

d. Collection

Question 40

Statement 1: Symbiotic relation is the reason why the government would impose taxes on the income of resident citizens derived from sources outside the Philippines.
Statement 2. Jurisdiction is the reason why citizens must provide support to the state so the latter could continue to give protection.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 40

d. Both statements are incorrect

Question 41

A law was passed by Congress which granted tax amnesty to those who have not paid income taxes for a certain year and at the same time providing for the refund of taxes to those who have already paid them. The law is:
a. Valid because there is a valid classification.
b. Not valid because those who did not pay their taxes are favored aver those who have paid their taxes.
c. Valid because it was Congress that passed the law and it did not improperly delegate the power to tax
d. Not valid because only the President with the approval of Congress may grant amnesty

Answer 41

a. Valid because there is a valid classification.

Question 42

Congress passed a new law imposing taxes on income earned out of particular activity that was not previously taxed. The law, however, taxed incomes already earned within the fiscal year when the law took effect is the law valid?
a. No, because the laws are intended to be prospective, not retroactive
b. No, the law is arbitrary in that it taxes income that has already been spent,
c. Yes, since the tax laws are the lifeblood of the government
d. Yes, tax laws are an exception; they can be given retroactive effect

Answer 42

d. Yes, tax laws are an exception; they can be given retroactive effect

Question 43

Due to an uncertainty whether or not a new tax law is applicable to printing companies, ABC Printers submitted a legal query to the BIR on that issue. The BIR issued a ruling that printing companies are not covered by the new law. Relying on this ruling, ABC Printers did not pay the said tax. Subsequently however, the BIR reversed the ruling and issued a new one stating that the tax covers printing companies. Could the BIR assess ABC Printers for back taxes corresponding to the years before the new ruling?
a. Yes, because taxation is the rule and exemption is the exception
b. Yes, because taxes are the lifeblood of the government
c. No, the BIR is not allowed to reverse its ruling
d. No, reversal of a ruling shall not be given a retroactive application if it will be prejudicial to the taxpayer

Answer 43

d. No, reversal of a ruling shall not be given a retroactive application if it will be prejudicial to the taxpayer

Question 44

The Constitution requires that all revenue bills shall originate “exclusively” from the House of Representatives. Assume that in 2014, Congressman Uro proposed an expansion of the coverage of the value added tax to be known as e-vat law. The proposed bill was approved by the House of Representatives later that year. However, the EVAT version of the Senate became the EVAT law
Which of the following statements will justify the enacted EVAT law?
I. The Constitution simply means that the initiative for filing revenue, tariff or tax bills must come from the House of Representatives on the theory that, elected as they are from the districts, the Members of the House can be expected to be more sensitive to the local needs and problems.
II. It is not the law but the revenue bill which is required by the Constitution to “originate exclusively in the House of Representatives because a bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole, and a distinct bill may be produced.
a. I only
b. Il only
c. Both I and II
d. Neither I nor II

Answer 44

c. Both I and II

Question 45

The Constitution requires that all revenue bills shall originate “exclusively” from the House of Representatives. Assume that in 2014, Congressman Uro proposed an expansion of the coverage of the value added tax to be known as e-vat law. The proposed bill was approved by the House of Representatives later that year. However, the EVAT version of the Senate became the EVAT law
Assuming Senator Bobadilla filed in the Senate a substitute-e-vat bill “in anticipation of its receipt of the bill from the House. The proposal is totally different from the version of the lower house. Which of the following statements will justify the filing of a substitute bill by Honorable Senator Bobadilla?
I. To insist that a revenue statute not only the bill which initiated the legislative process culminating in the enactment of the law must substantially be the same as the House bill would be to deny the Senate’s power not only to “concur with amendments” but also to “propose amendment.”
II. It would be to violate the coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate Given the power of the Senate to propose amendments, it can propose its own version even with respect to bills which are required by the Constitution to originate in the House.
III. Filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House is not prohibited under the Constitution, so long as the action by the Senate as a body is withheld pending receipt of the House bill.
a. I only
b. Il only
c. I, II and III
d. None of the above

Answer 45

c. I, II and III

Question 46

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

Answer 46

d. All of the choices`

Question 47

Statement 1. The aspects of taxation are shared by the legislative and executive branches of the government.
Statement 2: Taxes should be prospective and should not be given retroactive effect because they are burdens.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer 47

a. Only statement 1 is correct

Question 48

. The power of taxation is basically legislative in character. Which of the following is a legislative function?
A B C D
Fix with certainty the amount of tax Yes No Yes Yes
Identify who should collect the tax Yes Yes No Yes
Determine who should be subject to tax Yes Yes Yes No

Answer 48

A

Question 49

As to scope of legislative power to tax, which of the following is correct?
a. The power to tax is supreme, plenary, comprehensive and without any limit because the existence of the government is a necessity.
b. The discretion of Congress in imposing taxes extends to the mode, method and kind of tax, even if the constitution provides otherwise.
c. Congress has the right to levy a tax of any kind at any amount as it sees fit, even in the absence of any constitutional provision.
d. The sole arbiter of the purpose for which taxes shall be levied is Congress, provided the purpose is public and the courts may not review the levy of the tax to determine whether or not the purpose is public.

Answer 49

c. Congress has the right to levy a tax of any kind at any amount as it sees fit, even in the absence of any constitutional provision.

Question 50

The following are the aspects of taxation
I - Levy or imposition of the tax on persons, property or excises
II - Collection of takes already levied
III- Sufficiency of governments sources to satisfy its expenditure
a. I, II and III
b. I and II only
c. I and III only
d. Il and ill only

Answer 50

b. I and II only

Question 51

Statement 1: Inherent powers of the State exist independent of the constitution.
Statement 2: The taxing power of the local government units precede from a constitutional grant
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 51

d. Statements 1 and 2 are true

Question 52

The following are the characteristics of the State’s power to tax, except
a. The strongest of all inherent powers of the State
b. Involves power to destroy
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 52

d. Neither “a” nor “b”

Question 53

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.

Answer 53

b. The legislative branch of the local government only

Question 54

Where does 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

Answer 54

a. Constitutional grant

Question 55

Statement 1. Eminent domain may raise money for the government
Statement 2: Barrios, barangays, municipalities/cities and provinces may collect taxes from its inhabitants.
a. Statements 1 and 2 are false
b Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 55

a. Statements 1 and 2 are false

Question 56

The following are the nature of taxation, except
a. Inherent and sovereignty
b. Essentially a legislative function
c. Subject to inherent and constitutional limitation
d. Subject to the approval of the people

Answer 56

d. Subject to the approval of the people

Question 57

“The power to tax involves power to destroy means:
a. The power to tax is viewed as the power to destroy in the sense that a lawful tax cannot be defeated just because its exercise would be destructive or would bring about insolvency to taxpayer.
b. The principle implies that an imposition of lawful regulatory taxes would be destructive to the taxpayers and business establishments because the government can compel payment of tax and forfeiture of property through the exercise of police power.
c. Both “a” and “b”
d. Neither “a” nor “b”

Answer 57

c. Both “a” and “b”

Question 58

There can be no tax unless there is a law imposing the tax is consistent with the doctrine of
a. Uniformity in taxation
b. Due process of law
c. non-delegation of the power of tax
d. All of the above

Answer 58

c. non-delegation of the power of tax

Question 59

“The tax should be based on taxpayer’s ability to pay. In relation to this, which of the following is not correct?
a. No person shall be imprisoned for non-payment of tax
b. A graduated tax table is in consonance with this statement
c. As a theory of taxation, this is called “ability to pay theory”
d. As a basic principle of taxation, this is called “theoretical justice”

Answer 59

a. No person shall be imprisoned for non-payment of tax

Question 60

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

Answer 60

c. Both a and b

Question 61

Progressivity of taxation is also mandated in the Constitution. Statement 1: Our income tax system is one good example of such progressivity because it is built on the principle of the taxpayer’s ability to pay.
Statement 2. Taxation is progressive when their rate goes up depending on the resources of the person affected.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 61

d. Statements 1 and 2 are true

Question 62

One of the characteristics of our internal revenue laws is that they are:
a. Political in nature.
b. Penal in nature
c. Generally prospective in operation although the tax statute may nevertheless operate retrospectively provided it is clearly the legislative intent
d. Criminal in nature

Answer 62

c. Generally prospective in operation although the tax statute may nevertheless operate retrospectively provided it is clearly the

Question 63

Which of the following distinguishes tax 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

Answer 63

c. Imposed in the exercise of police power

Question 64

The least source of tax laws:
a. Statutes
b. Presidential decrees
c. Revenue regulations
d. Tax treaties or conventions

Answer 64

c. Revenue regulations

Question 65

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 the law that it implements by imposing a penalty when the law that authorize the revenue regulation does not impose a penalty.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 65

d. Statements 1 and 2 are true

Question 66

In every case of doubt, tax statutes are construed
a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the tax payer

Answer 66

c. Strictly against the government and liberally in favor of the taxpayer

Question 67

In every case of doubt, fax exemptions are construed
a. Strictly against the government and the taxpayer
b. Liberally in favor of the government and the taxpayer
c. Strictly against the government and liberally in favor of the taxpayer
d. Liberally in favor of the government and strictly against the taxpayer

Answer 67

d. Liberally in favor of the government and strictly against the taxpayer

Question 68

Which of the following statements is correct?
I. A tax cannot be imposed without clear and express words for that purpose.
II. The provisions of a taxing act are not to be extended by Implication.
III. If the law is repealed, taxes assessed before repeal of the law may no longer be collected
IV. Tax law is ex post facto in application.
a. Land II only
b. III and IV only
c. All of the above
d. None of the above

Answer 68

a. Land II only

Question 69

Which of the following factors are determinants to the “Situs” of taxation?
I. Nature, kind, or classification of the tax being imposed.
II. Subject matter of the tax (person, property, rights or activity)
IIL Citizenship of the taxpayer
IV. Residence of the taxpayer
V. Place of the excise, privilege, business or occupation
VI. Source of the income subject to tax
a. I and II coly
b. III, IV, V and VI only
c. III, IV and VI only
d. II, III, IV, V and VI

Answer 69

d. II, III, IV, V and VI

Question 70

Tax of a fix amount imposed among all persons residing within a specified territory without regards to their property or occupation they may be engage
a. Personal, poll or capitation tax
b. Property
c. Excise tax
d. Regressive

Answer 70

a. Personal, poll or capitation tax

Question 71

Tax of fixed proportion of the amount or value of the property with respect to which the tax assessed
a. Ad-valorem
c. Excise
b. Specific
d. Revenue

Answer 71

a. Ad-valorem

Question 72

Tax base on a fix percentage of the amount of property, income or other basis to be taxed
a. Progressive
b. Proportional
c. Regressive
d. Indirect

Answer 72

b. Proportional

Question 73

Which of the following is a characteristic of taxation which distinguishes it from police power and eminent domain?
a. For public purposes
b. Legislative in nature
c. Generally payable in money
d. Inferior to non-impairment clause in the Constitution

Answer 73

c. Generally payable in money

Question 74

The following are basic principles of sound tax system
I. It should be capable of being effectively enforced
IL It must be progressive
III. Sources of revenue must be sufficient to meet government
IV. expenditures and other public needs It should be exercised to promote public welfare
a. I and II only
b. Ill and IV only
c. I, II and III only
d. All of the above

Answer 74

c. I, II and III only

Question 75

The sources of revenue should be sufficient to meet the demands of
public expenditures. This refers to
a. Equality or theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of apportionment

Answer 75

c. Administrative feasibility

Question 76

The tax should be imposed proportionate to the taxpayer ability to pay
a. Equality or theoretical justice
b. Fiscal adequacy
c. administrative feasibility
d. Rule of apportionment

Answer 76

a. Equality or theoretical justice

Question 77

The tax law must be capable of convenient just and effective administration
a. Equality or theoretical justice
b. Fiscal adequacy
c. Administrative feasibility
d. Rule of apportionment

Answer 77

c. Administrative feasibility

Question 78

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 exercised by the State of its inherent power to tax.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 78

d. Statements 1 and 2 are true

Question 79

Equality in taxation” means:
I. Progressive system of taxation shall be applied.
II. The tax laws and their application must be fair, just, reasonable and proportionate to one’s ability to pay.
III. The tax laws shall give emphasis on direct rather than indirect taxes or on the ability-to-pay principle of taxation
a. I only
b. II only
c. III only
d. I, II and III

Answer 79

d. I, II and III

Question 80

Which of the following statements correctly described “Equal protection” clause of the Constitution regarding the government’s power to tax?
I. All persons subject to legislation shalt be treated alike under dissimilar 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.
IIL There is denial of equal protection of laws if there is discrimination in the implementation of tax laws
a. I and II only
b. I and III only
c. II and III only
d. I, II and III

Answer 80

c. II and III only

Question 81

Which of the following restrictions on the power of taxation recognizes that the country’s tax laws shall not be applied to the property of foreign government?
a. Taxation is inherently a legislative function
b. Exercise of taxation is subject to international comity
c. Due process of law
d. Equal protection of law

Answer 81

b. Exercise of taxation is subject to international comity

Question 82

This is an inherent limitation on the power of taxation,
a. The rule on taxation shall be uniform and equitable
b. No law impairing the obligations of contracts shall be enacted
c. Charitable institutions, churches, personages or convents appurtenant thereto, mosque and non-profits cemeteries and all kinds of lands, buildings and improvements actually, directly and exclusively used for religious or charitable purposes shall be exempt from taxation
d. The tax laws cannot apply to the property of foreign governments

Answer 82

d. The tax laws cannot apply to the property of foreign governments

Question 83

Exemption from tax is a privilege, which is being looked upon by law with disfavor because everyone should be sharing the burden of taxation. On account of this view, exemption from tax is construed strictly against the taxpayer, except in certain situation like
a. Exemption is granted to the impoverished sector in certain situation
b. Exemption relates to a public official
c. Exemption refers to a public property
d. All of the above

Answer 83

a. Exemption is granted to the impoverished sector in certain situation

Question 84

Tax exemption is made different from tax amnesty:
a. It is a privilege or freedom from tax burden;
b. It allows immunity from all criminal, civil and administrative liabilities arising from non-payment of taxes
c. Amount foregone by the government is substantial
d. It applies to all past, present and future tax obligations

Answer 84

a. It is a privilege or freedom from tax burden;

Question 85

Statement 1: Tax exemption applies only to government entities that exercise proprietary functions. Statement 2. All government entities regardless of their functions are exempted from taxes because it would be impractical for the government to be taxing itself
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 85

a. Statements 1 and 2 are false

Question 86

Which of the following statements correctly described the tax exemption of the government?
L The State cannot be taxed without its consent, otherwise, such derogation to its sovereignty.
IL Tax exemption applies only to government entities through which the government immediately and directly exercises governmental functions like the Department of Justice Department of Foreign Affairs, Philippine National Police, and the like.
IIL Government agencies performing governmental functions and exempt from tax unless expressly taxed, while those performing proprietary functions are subject to tax unless expressly exempted.
a. I only
b. II only
c. only
d. I, II and III

Answer 86

d. I, II and III

Question 87

Which of the following is to be regarded as tax minimization through legal means?
a. Not declaring all taxable income
b. Padding of expenses for deduction from income
c. Opting to transfer the property through sale rather than through donation where tax liability would be higher
d. All of the above

Answer 87

c. Opting to transfer the property through sale rather than through donation where tax liability would be higher

Question 88

Which of the following is correct?
a. Tax avoidance, or tax minimization, through legal means, is not punishable by law.
b. Deliberate reduction of taxable income that has been received is an example of tax avoidance.
c. Evasion of the tax takes place only when there are no proceeds on the part of the government
d. All of the above

Answer 88

a. Tax avoidance, or tax minimization, through legal means, is not punishable by law.

Question 89

Statement 1: An attempt to minimize one’s tax constitute fraud, taxpayer may diminish his liability by any means, which the law permits. Statement 2: To avoid is legal but to evade is illegal. The legal rights of a taxpayer to decrease the amount of what otherwise would be his taxes, altogether avoid them, by means which the law permits, cannot be doubted
a. Statements 1 and 2 are false
b. Statement t is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 89

c. Statement 1 is false but statement 2 is true

Question 90

Which of the following is an element of double taxation?
I. Same kind of tax
II. Same subject matter
III. Same taxable period
IV. Same taxing authority
a. I and II only
b. I, II and III only
c. All of the above
d. None of the above

Answer 90

c. All of the above

Question 91

Double taxation in its general sense means taxing the same subject twice during the same taxing period. In this sense, double taxation
a. Violates substantive due process.
b. Does not violate substantive due process.
c. Violates the right to equal protection.
d. Does not violate the right to equal protection

Answer 91

c. Violates the right to equal protection.

Question 92

Statement 1: There can be double taxation where the state merely Imposes tax on every separate and distinct business in which a person is engaged.
Statement 2. There is no objectionable double taxation if the tenements in the city are subjects to real estate tax while the business of leasing said property are also subject to real dealer’s tax.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

Answer 92

c. Statement 1 is false but statement 2 is true

Question 93

Ligaya Educational Foundation, Inc., a stock educational institution organized for profit, decided to lease for commercial use a 1,500 sq. m. portion of its school. The school actually, directly, and exclusively used the rents for the maintenance of its school buildings, including payment of janitorial services. Is the leased portion subject to real property tax?
a. Yes, since Ligaya is a stock and for-profit educational institution.
b. No, since the school actually, directly, and exclusively used the rents for educational purposes
c. No, but it may be subject to income taxation on the rents it receives
d. Yes, since the leased portion is not actually, directly, and exclusively used for educational purposes.

Answer 93

a. Yes, since Ligaya is a stock and for-profit educational institution.