K Discussion Questions (3 points each)

1. In your understanding, Define taxation.

- taxation is inherent to every sovereign state. It is a state power, that impose a
charge upon persons, properties or rights, to revenues, for the use and support of the
government to allocate its costs or burden to its subjects who are benefited by its
spending. Taxation is needed for every sovereign state for it is the lifeblood of the
Government to be able to perform their duty to its people.

2. In your understanding, discuss the Lifeblood Doctrine.

- the lifeblood doctrine of taxation is the very reason why Government can fully
fulfill their duty to its people, it is the source of their fund to give back to public what the
public paid for their benefits. Without taxation the Government will be paralyzed and will
not be able to serve the public.

3. Enumerate and explain the inherent powers of the State.

 Taxation power-  It is the power by which the State exacts enforced
proportional contribution from the people, property and exercise of a right
within its territory to raise revenue for the purpose of defraying the
necessary expenses of the government.
 Police power- is the power of promoting the public welfare by restraining
and regulating the use of both liberty and property of all the people.
 Eminent power- It is the power of the State to forcibly take private property
for public use upon payment of just compensation.

4. Describe the scope of the power of taxation.

- Taxation has unlimited area of application and only restricted by the inherent
and constitutional limitation. Comprehensive - It has a wide scope of coverage. It covers
all persons, properties, rights and transactions subject to taxation, unless expressly
exempted by laws within the sovereign.
5. Explain the stages of the exercise of taxation power.

- Levy–This refers to the enactment of a law by Congress imposing a tax

- Assessment and collection–This is the act of administration and
implementation of the tax law by the executive department through the administrative
agencies
- Payment–This is the act of compliance by the taxpayer including whatever
remedies are available to him under the law.
6. Explain the concept of Situs.
- Situs of taxation literally means place of taxation.  The general rule
is that the taxing power cannot go beyond the territorial limits of the taxing
authority.  The basic rule is that the state where the subject to be taxed has
a situs may rightfully levy and collect the tax; and the situs is necessarily in
the state which has jurisdiction or which exercises dominion over the subject
in question. 

7. Explain the double taxation, its elements and its types.

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8. What are the categories of escapes from taxation?

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9. What is tax amnesty?

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10. How does tax amnesty differ from condonation?

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Exercise Drills. (1 point each)

In the space provided for, indicate whether the statement relates to a Constitutional
Limitation © or inherent limitation (I). If not a limitation to the taxing power, indicate (N).
1 Non-impairment for non-payment of tax or debt
2 Non-delegation of the taxing power
3 Taxes must be for public use
4 Exemption of the property of religious institutions from income
tax
5 Exemption of the revenues and assets of non-profit non-stock
educational institution
6 Territoriality of taxation
7 Non-appropriation for religious purpose
8 The requirement of absolute majority in the passage of tax
exemption law
9 Non-assignment of taxes
10 Imprisonment for non-payment of poll tax
11 Exemption from property taxes of religious, educational and
charitable entities
12 Non-impairment of the jurisdiction of the Supreme Court to
review tax cases
13 Each local government shall have the power to create their own
sources of income
14 Imprescribility in taxation
15 Non-impairment of obligation and contracts
16 Guarantee of proportional system of taxation
17 International courtesy
18 Government income and properties are not object of taxation
19 The government is not subject to estoppel
20 Taxpayers under the same circumstance should be treated
equal both in terms of privileges and obligations

True or False (1 point each)

Write your answer before each number. Write “true” if the statement is correct
otherwise, write “false”.
______True______1. Taxes are the lifeblood of the government.
_______True____2. Taxation is a mode of apportionment of government costs to the
people.
_____________3. The reciprocal duty of support between the government and the
people underscores the basis of taxation.
_______True______4. There should be direct receipt of benefit before one could be
compelled to pay taxes.
______True_______5. The exercise of taxation power requires Constitutional grant.
________True_____6. Police power is the most superior power of the government.
_______True______7. Taxation is subject to inherent and Constitutional limitations.
_____________8. The point in which tax is levied is also called the incidence of
taxation.
_____________9. The three powers of the state are all legislative in nature.
_____________10. Persons subject to personal tax are taxed based on their residence.

Multiple Choice. Select the best answer that corresponds to the question. (2
points each)

1. The power to enforce proportional contribution from the people for the support of the
Government is
a. Police power
b. Taxation
c. Exploitation
d. Power of eminent domain

2. What is the basis of taxation?

a. Reciprocal duties of support and protection
b. Constitutionality
c. Public purpose
d. necessity
3. What is the theory of taxation?
a. Reciprocal duties of support and protection
b. Necessity
c. Constitutionality
d. Public purpose

4. Which of the following inappropriately describes the nature of taxation?

a. Inherent in sovereignty
b. Essentially a legislative in nature
c. Subject to inherent and constitutional limitation
d. Generally for public purpose
e.
5. The point in which tax is levied is also called
a. Impact of taxation
b. Situs of taxation
c. Incidence of taxation
d. assessment

6. Which of the powers of the State is most superior? Which is regarded as the most
important?
a. Taxation
b. Police power
c. Eminent domain
d. All the powers are equally superior

7. Which is regarded as the most important?

a. Taxation
b. Police power
c. Eminent domain
d. All powers are important
8. Double taxation is believed to violate which provision of the Constitution?
a. Equal protection guarantee
b. Progressive scheme of taxation
c. Uniformity rule
d. Either a or c

9. The following are inherent limitations of taxation, except

a. Territoriality of taxes
b. Legislative in character
c. For public purpose
d. Non-appropriation for religious purpose

10. What is the primary purpose of taxation?

a. To enforce contribution from its subject for public purpose
b. To raise revenue
c. To achieve economic and social stability
d. To regulate the conduct of business or profession

Case Study (20 points)

Fact check: Is it illegal for ABS-CBN to avail of tax perks?
QUESTION.
1. From the headline given above, do you believe ABS-CBN Corporation committed tax
evasion? Why or why not? Provide facts and research.
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Discussion Questions (3 points each)

1. Discuss the different income taxpayers of the Philippines.

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2. Differentiate Resident citizen and Resident alien.

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3. Differentiate Non-resident citizens and non-resident aliens.

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4. Discuss the length of stay theory.

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5. Differentiate a domestic corporation and a resident foreign corporation.

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Exercise Drills. (1 point each)

In the space provided, indicate whether the taxpayer is taxed within, taxed without, or
taxed within and without the Philippines.
 Resident Citizen
Non-resident alien engaged in trade or business in the
Philippines
Resident alien
Non-resident Citizen
Domestic partnership
Non-resident Foreign corporation
Resident Foreign corporation
Domestic corporation
Non-resident alien not engaged in trade or business in the
Philippines but with income from within the Philippines
Non-resident foreign partnership

True or False. Write your answer before each number. Write “true” if the statement is
correct otherwise, write “false”. (1 point each)
__________1. Resident citizens are taxed on their net income wherever situated.
__________2. Seamen are non-resident citizens for the reason that their works require
them to be physically present abroad most of the time.
__________3. Non-resident aliens not engaged in trade or business in the Philippines
but with income from within the Philippines are taxed based on their net income within
the Philippines.
__________4. Income taxpayers with P250,000 compensation income are taxed at P0
effective
January 1, 2018 but will be taxed starting January 1, 2023.
__________5. When a person stays for at least 183 days abroad, he will be considered
a non-resident alien.
__________6. Regardless of the accounting period used, the computation of the
income tax will cover the 12 months cycle.
__________7. The BIR implements the file and pay process.
__________8. For a corporation, year-end income tax returns will be filed and paid on
or before the 15th day of the fourth month following the close of the quarter.
__________9. Estimated income of individual taxpayers will be filed and paid on or
before the 15th day of the fourth month following the close of the quarter.
__________10. E-payment like the use of debit card and credit card are now available
for convenience of taxpayers.

Problem solving (5 points each)

Provide your answer on each of the problems. PROVIDE YOUR SOLUTION IN THE
BOX PROVIDED BELOW.
1. Mr. E., a resident citizen, had a gross compensation income of P3,000,000 in
2018. How much was the income tax?

2. Mr. F., is in business with the following data in year:

Gross sales P10,000,000
Business expenses 4,800,000
Net Income 5, 200,000
The income tax is?

3. Mr. G., a resident citizen, had a gross compensation of P200,000 in 2018.

How much was the income tax?
 4. Mr. H., is in business with the following data in a year:
Gross sales P1,500,000
Business expenses 600,000
Net Income 900,000
Income tax APPLYING CHOICE 1 or 8% of gross sales or receipts in excess
of P250,000 is?

5. From the preceding number, the income tax APPLYING CHOICE 2 or the
Regular income tax rates is?

Discussion Questions
1. Discuss Gross Income.
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2. Discuss why Salary is income and why it is subjected to income tax.

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3. Discuss why gift or inheritance is not subjected or is excluded from Gross income.
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4. Discuss minimum wage earners individuals.

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5. Differentiate Return of Capital and Return on Capital.

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Exercise Drills. (1 point each)

In the space provided, indicate whether the item is “EXCLUDED” or “INCLUDED” in the
gross income computation.

Proceeds received from insuring the crops

 Amount received from death of a person
Donation
Salary from employment
Interest income from investment
Return of capital invested
13th month pay
GSIS contribution
Union dues
Other benefits received exceeding P90,000

True or False. Write your answer before each number. Write “true” if the statement is
correct otherwise, write “false”. (1 point each)
__________1. Gross income is the capital you have invested which will be subjected to
income tax.
__________2. Amount received from major physical injury is taxable.
__________3. In a sale transaction, the gross selling price is subjected to income tax.
__________4. Compensation income is income derived from labor therefore it is not
taxable.
__________5. The minimum wage, holiday pay, overtime pay,night shift differential pay,
and hazard pay of a minimum wage earner is excluded from the computation of gross
income.
__________6. Prizes and awards granted to athletes in local and international
competitions and tournaments sanctioned by their national sports associations are
taxable.
__________7. For a service concern business, indirect costs are deducted from the
gross receipts to derive the gross income.
__________8. For livestock and farm products raised and sold, it is the gross selling
price that is included in the gross income.
__________9. For livestock and farm products purchased and sold, it is the profit from
the sale (after deducting costs) that is in the income.
__________10. The term “long term contracts” means building, installation, or
construction contracts covering a period in excess of one year and the computation of
taxable income is based on the percentage of completion of the project.
Problem solving (5 points each)
Provide your answer on each of the problems. PROVIDE YOUR SOLUTION IN THE
BOX
PROVIDED BELOW.

1. Kareen had the following data from her employment in the government in 2019:
Monthly salary P10,000
Taxes withheld 3,000
Overtime pay 4,000
Hazard pay 5,000
Pag Ibig fund contributions 1,700
Union dues 2,500
Philhealth contributions 1,000
GSIS premiums 2,000
Mid-year bonus 12,000
Christmas bonus 6,000
The taxable income is?

2. Applying the data from the preceding number, the non-taxable income is?
3. Mr. B is a building contractor. On June 1, 2018, he started constructing a
building which he finished in 2020. The contract price for the building was
P10,000,000. By the end of 2018, the building was thirty percent (30%)
completed at a cost of P2,080,000. By the end of 2019, it was ninety percent
(90%) completed with an additional cost of P3,000,000 in that year.the building
was completed in 2020, with an additional cost of P300,000 in that year. In each
of the years that the construction was done, income under percentage of
completion method would have been reported as follows:
2018 taxable gross income is?

4. 2019 taxable gross income is?

5. 2020 taxable gross income is?