TRUE OR FALSE

1. The three fundamental powers of the state may be exercise only by the
government. FALSE
2. Taxation is a process or means by which the sovereign, through its law-making
body raises income to defray the expenses of the government. TRUE
3. Eminent domain may be exercise even by the public service corporation and
public entities. TRUE
4. Police power regulates both liberty and property TRUE
5. Taxes are raised to cover the cost of governance. TRUE
6. Toll is one of the taxes collected by the government. FALSE
7. License fee is imposed in the exercise of police power. TRUE
8. License fee is imposed to raise revenue. FALSE
9. Tax is generally unlimited because it is based on the needs of the State TRUE
10. The amount imposed in the exercise of police power depends on whether the
activity is useful or not. TRUE
11. The distinction of the 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. TRUE
12. Debt, as distinguished from tax, may be paid in kind. TRUE
13. Under the equal protection clause of the constitution, all person subject to
legislation shall be treated alike under dissimilar circumstances and conditions,
both in the privileges conferred and liabilities imposed. FALSE
14. Tax laws are civil and penal in the nature because there is penalty provided in
case of violation. FALSE
15. Special assessment is a tax FALSE
16. Special assessment is imposed on persons, property and property rights.
FALSE
17. The Philippine government may subject the land where embassies of foreign
governments are located to real property taxes. FALSE
18. A revenue bill may originate from the Senate and on which same bill the
House of Representative may propose amendments. FALSE
19. A person may refuse to pay on the ground that he will not receive a benefit
from the tax. FALSE
20. In the exercise of the power of taxation, the State can tax anything at any
time. FALSE
21. In cases of deductions and exemptions, doubts shall be resolved liberally in
favor of the government TRUE
22. Levying of local government taxes should be exercise only by the legislative
branch of the local government. TRUE
23. The taxing power of provinces, municipalities and cities precede from a
constitutional grant. TRUE
24. Taxation is regressive when their rate goes up depending on the resources of
the person affected. FALSE
25. No law granting any tax exemption shall be passed without the concurrence of
2/3 of all members of the Congress. FALSE
26. There is no constitutional prohibition against double taxation in the
Philippines. It is something not favored, but nevertheless permissible. TRUE
27. “Global system of income taxation” means separate graduated rates are
imposed on the different types of income. FALSE
28. One of the schemes of shifting the incidence of the 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. TRUE
29. Transformation is 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. TRUE
30. In case of ambiguity, tax laws shall be interpreted liberally in favor of the
government FALSE
MULTIPLE CHOICE
Definition, Purpose, Theory and Basis
1. Which of the following statement 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 the 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
2. The State having sovereignty can enforce contribution (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 limitation upon
supremacy of tax power.
c. Both “a” and “b”
d. Neither “a” nor “b”
3. Statement 1: The distinction of 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 illegal.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
4. 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 condition 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 period of slump to expand business and ward off
depression.
d. All of the above
5. 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” and “b”
6. Which theory in taxation states that without taxes, a government would be a
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
7. On theoretical basis of taxation, which of the following statement is true?
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 means to carry them out.
c. State needs taxation to exist, while its people must support taxation because
they need the presence of the state.
d. “b” and “c”
8. Incidence of taxation means
a. Shifting of tax c. Payment of tax
b. Refunds of tax d. Imposition of tax
9. 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
10. Statement 1: Symbiotic relationship relation is the reason why the
government would impose taxes on the income of the resident citizens derived
from sources outsides 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
11. A law was passed by the 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 over 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 be
grant amnesty
12. 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 takes 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.
13. 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 new law. Relying
on the 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

14.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. I. 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. Which of the
following statements will justify the enacted EVAT law?
a. I only
b. II only
c. Both I and II
d. Neither I nor II
15. 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. “
Il. 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.
Filing in the Senate of a substitute bill in anticipation of its receipt of the billfrom
the House is not prohibited under the Constitution, so long as the action bythe
Senate as a body is withheld pending receipt of the House bill.
a. I only c. I, II and III
b. II only d. None of the above

16. Being legislative in nature, -the power to tax may not be delegated, except:
a. To local governments or political subdivisions
b. When 91lowed 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
17. 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

18. The power of taxation is 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 NO NO
19. 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
20. The following are aspects of taxation
I – Levy or imposition of the tax on persons, property or exercises
II – Collection of taxes already levied
III – Sufficiency of the government sources to satisfy its expenditure
a. I, II and III c. I and III only
b. I and II only d. II and III only

21. Which of the following is incorrect?

Legislative Administrative
a. Selecting the kind of tax Yes No
b. Fixing amount of tax Yes No
c. Prescribing rules of taxation. Yes No

22. DI KO NA NILAGAY PERO “D” SAGOT DUN

23. 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. Statement 1&2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 1 is true
d. Statement 1 and 2 are true
24. 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"

25 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 ·1egislative branch of the local government
can exercise the power.