Technological Institute of the Philippines-Manila

BSA Review for Qualifying Examinations 2018

TAXATION

1. Taxation as distinguished from police power and power of eminent domain.

A. Property is taken to promote the general welfare.
B. Maybe exercised only by the government.
C. Operates upon the whole citizenry.
D. There is generally no limit as to the amount that may be imposed.

2. The following are constitutional limitations, except

A. No imprisonment for non-payment of poll tax.
B. Non-impairment of the obligation of contracts.
C. Rule of uniformity and equity in taxation.
D. Exemption from income tax of charitable institutions, cemeteries, churches, personage or
convents appurtenant thereto, as well as all lands, buildings and improvements actually,
directly and exclusively used for religious, charitable and educational purposes.

3. Which of the following statements is correct?

A. The President is authorized to increase or decrease national internal revenue tax rates.
B. One of the nature of taxation is the reciprocal duties of protection and support between the state and
subjects thereof.
C. Every sovereign government has the inherent power to tax.
D. Income tax in an indirect tax.

4. A tax must be imposed for public purpose. Which of the following is not a public purpose?
A. National defense
B. Public education
C. Improvement of the sugar and coconut industries.
D. Improvement of a subdivision road.

5. Which is not an essential characteristic of a tax?

A. It is unlimited as to amount. C. It is proportionate in character.
B. It is payable in money. D. It is an enforced contribution.

6. Special assessment is an enforced proportional contribution from owners of land especially

benefited by public improvement. Which one of the following is not considered as one of its
characteristics?
A. It is levied on land.
B. It is based on the government’s need of money to support its legitimate objectives.
C. It is not a personal liability of the persons assessed.
D. It is based solely on the benefit derived by the owners of the land.

7. It is the privilege of not being imposed a financial obligation to which others are subject.
A. Tax incentive C. Tax amnesty
B. Tax exemption D. Tax credit

8. As to scope of the legislative power to tax, which is not correct?

A. Where there are no constitutional restrictions, and provided the subjects are within the territorial
jurisdiction of the state, Congress has unlimited discretion as to the persons, property or occupations
to be taxed.
B. In the absence of any constitutional prohibition, Congress has the right to levy a tax of any amount it
sees fit.
C. The discretion of Congress in imposing taxes extends to the mode, method or kind of tax, unless
restricted by the constitution.
D. The sole arbiter of the purpose or 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.

9. Which of the following is a nature of taxation?

A. The power is granted by legislative action.
B. It is essentially an administrative function.
C. It is generally payable in money.
D. Without it the state can continue to exist.

10. Which of the following is not a determinant of the place of taxation?

 A. Source of the income
B. Citizenship of the taxpayer
C. Residence of the taxpayer
D. Amount of tax to be imposed

11. This is an inherent limitation on the power of taxation.

A. Rule on uniformity and equity in taxation.
B. Due process of law and equal protection of the laws.
C. Non-impairment of the jurisdiction of the Supreme Court in tax cases.
D. Tax must be for the public purpose.

12. This is a constitutional limitation on the power of taxation.

A. Tax laws must be applied within the territorial jurisdiction of the state.
B. Exemption of government agencies and instrumentalities from taxation.
C. No appropriation of public money for religious purposes.
D. Power to tax cannot be delegated to private persons or entities.

13. The power to acquire private property upon payment of just compensation for public purpose
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall

14. The power to regulate liberty and property to promote the general welfare.
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall

15. The power to demand proportionate contributions from persons and property to defray the
expenses of the government.
A. Power of taxation C. Power of imminent domain
B. Police power D. Power of recall

16. Basic Principles of a sound tax system, except

A. Fiscal adequacy C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity

17. The tax imposed should be proportionate to the taxpayer’s ability to pay.
A. Fiscal adequacy C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity

18. The sources of revenue as a whole, should be sufficient to meet the demands of public expenditures.
A. Fiscal adequacy C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity

19. The tax laws must be capable of convenient, just and effective administration.
A. Fiscal adequacy C. Administrative feasibility
B. Equality or theoretical justice D. Intellectual sensitivity

20. Persons or things belonging to the same class shall be taxed at the same rate.
A Simplicity in taxation C. Equality in taxation
B. Reciprocity in taxation D. Uniformity in taxation

21. The tax should be proportional to the relative value of the property to be taxed.
A Simplicity in taxation C. Equality in taxation
B. Reciprocity in taxation D. Uniformity in taxation

22. The following are the nature of taxation, except

A. Inherent in sovereignty
B. Essentially legislative in character
C. Subject to inherent and constitutional limitation
D. Subject to approval by the people.

23. 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 taxpayer.

24. In every case of doubt, tax 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.

25. In case of conflict between the Tax Code and the Philippine Accounting Standards (PAS).
A. PAS shall prevail over the Tax Code.
B. Tax Code shall prevail over PAS.
C. PAS and Tax Code shall be both disregarded.
D. The taxpayer may choose between the PAS or the Tax Code.

26. Which of the following statements is not correct?

A. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation.
B. Income tax liabilities shall be paid by the inhabitants even if foreign invaders occupy our country.
C. Taxes may be imposed retroactively by law, but unless so expressed by such law, these taxes must
only be imposed prospectively.
D. Tax laws are either political or penal in nature.

27. Which of the following is not a constitutional limitation on the Power of Taxation?
A. No person shall be deprived of life , liberty or property without due process of law.
B. No person shall be denied the equal protection of the law.
C. No person shall be imprisoned for debt or non-payment of tax.
D. No law granting any tax exemption shall be passed without the concurrence of a majority of all the
members of Congress.
28. Which one of the following is not a characteristic or element of a tax?
A. It is an enforced contribution. C. It is based on the ability to pay.
B. It is legislative in character. D. It is payable in money or in kind.

29. Tax as distinguished from license fees:

A. Limited to cover cost of regulation.
B. A regulatory measure.
C. Non-payment does not necessarily render the business illegal.
D. Imposed in the exercise of police power.

30. The power of taxation is exercised by

A. The President C. Bureau of Internal Revenue
B. The Supreme Court D. Congress

31. One of the characteristics of internal revenue laws is that they are:
A. Criminal in nature C. Political in nature
B. Penal in nature D. Generally prospective in application.

32. Which of the following is not a scheme of shifting the incidence of taxation?
A. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the
goods sold;
B. The purchaser asks for a discount or refuse to buy at regular prices unless it is reduced
by the amount equal to the tax he will pay;
C. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination
abroad, so that the title passes abroad instead of in the Philippines;
D. The manufacturer transfers the sales tax to the distributor, then in turn to the wholesaler, in turn to
the retailer and finally to the consumer.

33. Which of the following statements is not correct?

A. Taxes may be imposed to raise revenues 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. For the exercise of the power of taxation, the state can tax anything at any time.
D. The provisions of taxation in the Philippine Constitution are grants of power and not
limitations on taxing powers.

34. Income tax is generally regarded as

A. an excise tax C. a property tax
B. a tax on persons D. tax on profits

35. Which of the following is not acceptable for legally refusing to pay the tax?
A. That the right of the state to collect the tax has prescribed.
B. That there is no jurisdiction to collect the tax.
C. That the tax law was declared as unconstitutional.
 D. That there is no benefit derived from the tax.

36. It is important to know the source of income for income tax purposes, i.e. from within or
without the Philippines because
A. The Philippines imposes income tax on income from sources within and without of a non-resident
citizen.
B. Some individual taxpayers are citizens while others are aliens.
C. Separate graduated rates are imposed on different types of income.
D. Some taxpayers are taxed on their worldwide income while others are taxable only upon
income from sources within the Phils.

37. Congress can impose a tax at any amount and at anytime shows that
A. Taxation is an inherent power of the state.
B. Taxation is essentially a legislative power.
C. Taxation is a very broad power of the state.
D. Taxation is based on taxpayers’ ability to pay.

38. The National Internal Revenue Code of 1988 is

A. RA 9337 C. RA 9504
B. CA 466 D. RA 8424
39. Which of the following statements is not correct?
A. An individual citizens of the Philippines who is working and deriving income from abroad as an
overseas contract worker is taxable on income from sources within and without the Philippines.
B. A seaman who is a citizen of the Philippines and who receives compensation for services rendered
abroad as a member of the complement of vessel engaged exclusively in international trade shall
be treated as a resident citizen.
C. A non- resident citizen who is not engaged in business in the Philippines is treated as non-resident
alien who is not engaged in business in the Philippines
D. An alien individual, whether a resident or not of the Philippines, is taxable only on income
derived from sources in the Philippines

40. A resident citizen is taxable on all income derived from sources

A. Within the Philippines only
B. Without the Philippines only
C. Partly within and partly without
D. Within and without the Philippines

41. This is not part of the gross estate of the decedent

A. Conjugal property
B. Community property
C. Share of the surviving spouse
D. Exclusive property of the surviving spouse

42. This is not part of the conjugal property

A. Those acquired by onerous title during the marriage at the expense of the common fund
B. Those acquired by industry or work of either of them
C. The fruits, rents or interests received or due during the marriage coming from the conjugal
property or from the exclusive properties of the spouses
D. Those acquired during the marriage by gratuitous title

43. Under the absolute community of property, jewelry for personal and exclusive, the wife shall belong to
the
A. Wife C. Husband and wife
B. Husband D. Children

44. One of the following is incorrect:

a. Taxes to be deductible must accrue before the decedent’s death.
b. Losses must occur also before the decedent’s death to be deductible.
c. Medical Expenses must be incurred within 1 year prior to the decedent’s death.
d. Transfer for public purposes order to be deducted must be mortis causa in character.

45. Which statement is false about vanishing deduction:

a. It pertains to a property presently found in the gross estate.
b. The property must be previously subjected to a transfer tax or income tax.
c. The property was received by the decedent within 5 years prior to his death.
d. The property must be located in the Philippines.
46. A donation inter vivos but due to thought of death is;
a. Subject to donor’s tax
b. Subject to estate tax if for inadequate consideration
c. Subject to estate tax a bonafide transfer
d. Subject to inheritance tax

47. The amount of funeral expense that may be deducted from the gross estate is
A. 5% of the gross estate or P200, 000 whichever is lower
B. Actual funeral expense of P20, 000 whichever is lower
C. 5% of the gross estate or the actual funeral expenses whichever is lower
D. 5% of the gross estate or the actual funeral expenses of P200, 000 whichever is the lowest

48. One of the following is not an activity subject to VAT

A. Sale in retail of goods by a dealer.
B. Sale of bamboo poles by a dealer.
C. Sublease or real property in the course of business.
D. Importation of ordinary feeds for poultry chicken.

49. Which statement is correct?

A. Zero rated sales is exempt from the VAT.
B. A person whose sales of receipts do not exceed P250,000 is exempt from VAT and OPT.
C. A person who issues a VAT invoice on a VAT exempt transaction is nevertheless subject
to VAT on said transaction.
D. Entities which are exempt from income tax are also exempt from VAT.

50. One of the following is subject to common carrier’s tax

A. Owners of banca
B. Owners of animal-drawn two wheeled vehicles
C. Common carriers by land for transport of goods or cargoes
D. Common carriers by land for transport of passengers

51. The franchise tax of grantees of radio and television broadcasting whose annual gross receipts of the
preceding year do not exceed P10,000,000 shall be
A. 2% of the gross receipts C. 4% of the gross receipts
B. 3% of the gross receipts D. 5% of the gross receipts

52. Franchise grantees of city gas and water utilities are subject to franchise tax of
A. 2% C. 4%
B. 3% D. 5%

53. Amounts received for overseas dispatch, message or conversations originating from the Philippines are
subject to
A. 3% franchise tax C. 2% franchise tax
B. 10% overseas communication tax D. 10% VAT

54. When the donee or beneficiary is stranger, the tax payable by the donor shall be:
a. 30% of the gross gifts
b. 30% of the net gifts
c. Based on the graduated rates with the first P100,000 net gift exempt.
d. Based on the graduated rates with the first P100,000 net gift exempt or 30% of the net gifts
whichever is higher.

55. For donor’s tax purposes, one of the following is a stranger:

a. Brother or sister c. Uncle
b. Spouse d. Son-in-law

56. One of the following is a relative by consanguinity in the collateral line in the third degree of relationship.
a. Daughter of the donor’s nephew c. Niece of the donor
b. First cousin of the donor d. Second cousin of the donor

57. Three of the following are exempt or excluded from the donor’s tax. Which is the exception?
a. P200,000 cash given by a non-resident alien donor to his legitimate son who is getting
married in the Philippines to a Filipina.
b. P10,000 cash given by a resident alien donor to his legitimate son who is getting married in the
Philippines.
c. Donation of a condominium in Hongkong to a Filipina by a British national not residing in the
Philippines.
 d. P150,000 donation to a non-profit school.

58. The estate should be valued at the time

A. The heirs are ascertained
B. The estate tax is paid
C. The estate is ready for distribution to the heirs
D. Of death of the decedent

59. Medical expenses, to be deductible, must be incurred by the decedent within

A. One year prior to his death.
B. One year after his death
C. Two years prior to his death.
D. Three years prior to his death.

60. The donation of an immovable property shall be made

A. In writing C. Either A or B
B. In a public instrument D. Orally

A decedent left the following properties:

Land in Italy (with P1M unpaid mortgage) P2,000,000
Land in Davao City, Phil. (zonal value 750,000)
500,000
Franchise in USA 100,000
Receivable from debtor in Phil. 50,000
Receivable from debtor in USA 100,000
Bank deposit in Phil. 20,000
Bank deposit in USA 80,000
Shares of stocks of PLDT, Phil. 75,000
Shares of stock of ABC, foreign corporation 125,000
75% of the business in the Phil.
Other personal properties 300,000

61. If the decedent is a non-resident citizen his gross estate is:

a. P3,650,00 c. P2,500,000
b. P3,600,000 d. P2,650,000

Mr. Porontong made the following gifts to his relatives:

Phils. USA UK Italy
Gross gift P750,00 P500,00 P250,00 P500,00
0 0 0 0
Deductio 250,000 200,000 150,000 150,000
ns
Tax paid — 25,000 12,000 10,000

62. The gift tax due after credit is:

a. P 35,600 c. P 33,520
b. P 25,600 d. P 39,000

63. In 2014, Maynard made the following gifts:

1. On June 1, 2014, P150,000 to Karen, his daughter, on account of her marriage celebrated on May 1,
2010.
2. On July 10, 2014, a parcel of land worth, P180,000 to his father, subject to the condition that the
father would assume the mortgage indebtedness of Maynard in the amount of P40,000.
3. On September 30, 2014, P150,000 dowry to his daughter Gina, on account of her scheduled
marriage on October 25, 2015, and another wedding gift worth P20,000 on November 23, 2014.

How much is the total net gifts?

a. P500,000 c. P430,000
b. P450,000 d. P300,000

64. KAPUSO is a radio-tv broadcasting franchise grantee. During the preceding year, its gross receipts did
not exceed P10,000,000. During the first quarter of the current year, it has the following data:

Gross receipts, sale of airtime P 2,000,000

 Gross receipts, use of radio station’s communication facilities 500,000
Business expenses 700,000

The franchise tax due for the quarter is:

a. P 60,000 c. P 75,000
b. P 40,000 d. P 39,000

65. APOL GANGNAM a horseracing enthusiast and owner of winning horse has the following winnings
during a particular race day:
Total winnings P 10,000

Cost of winning tickets 500

Price received as owner of winning horse 50,000

The tax on winning is:

a. P 1,000 c. P 950
b. P 400 d. P5,950

66. Marishka, a trader, made the following sales of goods during the month of July 2012, exclusive of VAT:
Cash sales P 200,000
Open account sales 100,000
Installment sales 100,000
Note: Receipt from installment
sales is P40, 000
Consignment made: (net of
VAT)
June 15, 2012 100,000
April 15, 2012 100,000
March 15, 2012 100,000

Output tax is:

a. P60,000 c. P72,000
b. P40,800 d. P64,800

67. J. Shaggy VAT-registered, made the following purchases during the month of January, 200A:
Goods for sale, inclusive of VAT P
246,400
Supplies, exclusive of VAT 20,000
Office air conditioners, total
invoice amount 56,000
Home appliances for residence,
gross of VAT 17,920
Office machine, 8 years useful 2,000,000
life, net of VAT

Repair of store amounted to P20,000 evidenced by ordinary receipt of contractor

Creditable Input taxes are:

a. P38,800 c. P37,440
b. P34,800 d. P35,520

68. Mr. WALANG MASAMANG SUMUBOK had the following information during the year:
Philippines Abroad
Gross Compensation Income P348,000.00 P249,000.00
Business Income 945,000.00 672,500.00
Business Expense 715,200.00 524,700.00
Interest on Bank Deposit 12,000.00 5,000.00
Prizes win in raffle draws 15,000.00 7,000.00
Royalty Income from Inventions 65,000.00 40,000.00
Dividend Income from a Domestic Corporation 4,500.00 -

If Mr. Sumubok is a resident citizen, how much is the taxable net income?
a. P528,600.00 b. P953,600.00 c. P976,600.00 d.
P978,600.00

69. Z, married, had the following data for the taxable year:
Gross income, Philippines P400,000
Gross income, China 300,000
Expenses, Philippines 200,000
Expenses, China 150,000
If the taxpayer is a resident citizen, married, his taxable income is
A. P309, 000 B. P318, 000 C. 350, 000 D. P300,000

70. AB partnership with A and B as partners had a net professional income amounting to P500,000. Its other
income included bank interest income of P8,000, net of final withholding tax and it received dividend income
from a domestic corporation of P10, 000. A is single and has compensation income of P200, 000. The net
taxable income of A who shares profit and loss equally with B is
A.P364, 000 C. P400,000
B.P440, 000 D. P 444, 000
Part 1

GENERAL PRINCIPLES

MUTIPLE CHOICE: Choose the correct answer.

1. The process by which the sovereign raises income to defray the expenses of the government is
called[RPCPA]
a. subsidy
b. tariff
c. taxation
d. tribute

Answer: C

2. One of the characteristics of internal revenue tax is that they are [RPCPA]
a. Criminal in nature
b. Penal in nature
c. Political in nature
d. Generally prospective in application

Answer: D

3. In case of conflict between tax laws and generally accepted accounting principles (GAAP)[RPCPA]
a. Both tax laws and GAAP shall be enforced.
b. GAAP shall prevail over tax laws.
c. Tax laws shall prevail over GAAP.
d. The issue shall be resolved by the court.

Answer: C

4. Which of the following has no power of taxation? [RPCPA}

a. Provinces
b. Cities
c. Barangays
d. Barrios

Answer: D

5. “Schedular system of income taxation” means [RPCPA]

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.

Answer: B

6. Which of the following statements is true?

a. Opinions of legal luminaries are sources of tax laws.
b. The Constitution grants exemption from all kinds of taxes to religious and charitable
organizations.
c. Because the power to tax is unlimited, comprehensive, plenary and supreme, the power to tax
can reach over into any jurisdiction to seize upon person or property.
d. The “benefit-protection theory “is the source of the “doctrine of symbiotic relationship.”

Answer: D

7. One of the following is a primary purpose of taxation

 a. Protection of local institute against foreign competition through imposition of high customs duties
on imported goods;
b. Reduction of inequalities in wealth and income by imposing progressively higher tax rates;
c. To secure revenue for the support of the government.
d. Strengthening of anemic enterprises by giving tax exemptions.

Answer: C

8. Which of the following is not a secondary purpose of taxation?

a. To serve as key instrument of social control.
b. To effect a more equitable distribution of wealth among people.
c. To achieve social and economic stability.
d. To raise revenue to defray the necessary expenses of the government.

Answer: D

9. Which is the best answer? A tax reform at any given time underscores that fact that [RPCPA]
a. Taxation is an inherent power of the state.
b. Taxation is essentially a legislative power.
c. Taxation is a power that is very broad.
d. The state can and should adopt progressive taxation.

Answer: C

10. The legislative body can impose a tax at any amount underscores the legal truism that taxation is
[RPCPA]
a. An inherent power of the tax.
b. A very broad power of the state.
c. Essentially a legislative power.
d. For public purposes.

Answer: B

11. All of the following, except one, are basic principles of the sound tax system
a. Fiscal adequacy
b. Theoretical justice
c. Administrative feasibility
d. Inherent in sovereignty

Answer: D

12. Under this basic principle of sound tax system, the government should not in incur a deficit [RPCPA]
a. Theoretical justice
b. Administrative feasibility
c. Fiscal adequacy
d. None of the above

Answer: C

13. The following, except one, one are basic principles of a sound tax system.
a. It should be capable of being effectively enforced.
b. It must be progressive.
c. Sources of revenue must be sufficient to meet government expenditures and other public needs.
d. It should be exercised to promote public welfare.

Answer: D

14. Which of the following is not one of the canons of a sound tax system?
a. Quantifiability
b. Equality
c. Certainty
d. Convenience

Answer: A
15. The requirement of equality or theoretical justice is complied with if the tax is
a. Progressive
b. Regressive
c. Ad valorem
d. Specific

Answer: A

16. The power of taxation can only be exercised by the lawmaking body
a. Subject to constitutional and inherent limitations
b. Equality or theoretical justice
c. Legislative in character
d. Inherent in sovereignty

Answer: C

17. The President of the Philippines and the Prime Minister of Japan entered into an executive
agreement in respect of loan facility to the Philippines from Japan whereby it was stipulated that
interest on loans granted by private Japanese financial institutions in the Philippines shall not be
subject to Philippine income taxes. What basic characteristic of taxation has been violated by this
agreement?
a. Inherent limitation
b. Theoretical justice
c. Legislative in character
d. Administrative feasibility

Answer: C

18. Which statement gives the correct answer? That a feasibility study needs or need to look into taxes
of different political subdivisions of government which may be alternative sites of the business
because [RPCPA]
a. Provinces, cities and municipalities must have uniform taxes between and among themselves.
b. The local taxes of a political subdivision need not be uniform with the local taxes of another
political subdivision.
c. Businesses that are subject to national taxes are exempted from local business taxes.
d. Local business taxes may be credited against national business taxes.

Answer: B

19. The power of taxation is inherent in sovereignty being essential to the existence of every
government. Hence, even if not mentioned in the Constitution, the state can still exercise the power.
It is essentially a legislative function. Even in the absence of any constitutional provisions, taxation
power falls to Congress as part of the general power of lawmaking. [RPCPA]
a. False, False
b. False, True
c. True, True
d. True, False

Answer: C

20. Those restrictions on the exercise of the power of taxation that one found in the constitution or
implied from its provisions?
a. Theoretical justice
b. Legislative in character
c. Inherent limitations
d. Constitutional limitations

Answer: D

21. Which of the following statements is not correct? [RPCPA]

a. Taxes may be imposed to raise revenue or to provide disincentives to certain activities within
state.
 b. The state can have the power of taxation even if the constitution does not expressly give it the
power to tax.
c. For the exercise of the power of taxation, the state can tax anything at any time.
d. The power of taxation in the Philippines Constitution are grants of power and no limitations on
taxing power.

Answer: D

22. One of the following is not inherent limitations on the exercise of the power of taxation –
a. International comity
b. Double taxation
c. Non-delegation of the legislative power to tax
d. Territoriality

Answer: B

23. The City Council passed an ordinance imposing an occupation tax on air conditioning technician.
Code is the only person with such occupation in the city. He challenged the validity of the ordinance
as being discriminatory since he is the only one adversely affected.
a. The contention of code is tenable
b. The ordinance is unconstitutional because Conde is denied of his right to equal protection of the
law
c. The contention of Conde is not justified because the rule on c. uniformity is not violated is not
violated considering that the ordinance would also be imposed on all air conditioning technician
who may come within the jurisdiction of the city
d. The issue on validity or invalidity of the ordinance should be set aside

Answer: C

24. Treating the persons who are similarity situated in the same manner-
a. Uniformity of taxation;
b. Equality of taxation
c. Due process of law
d. Non-delegation of legislative power

Answer: B

25. All subject or object that are situated are treated alike as to the burden that may be the benefits that
may result
a. equitable c. uniformity
b. Proportional d. progressive

Answer: C

26. A tax law is not violative of the due process when it is

a. Arbitrary c. excessive
b. Discriminatory d. proportionate

Answer: D

27. Which of the following is violative of the uniformity rule in taxation?

a. Different tax rates on boarding stables for racehorses and boarding houses that are not for
racing;
b. Wholesale dealers in oil are subject to occupation tax while wholesale dealers in other articles
such as sugar, bacon , coal, iron and other things are not so subject;
c. A road users’ tax imposed on all motor vehicles registered and operating in the City of Manila but
does not subject vehicles not registered therein but also operating temporarily in said city;
d. A tax of P2 per square meter or fraction thereof is imposed on every billboard or sign anywhere
in the country.

Answer: C

28. The Lung Center of the Philippines’, a charitable institution, is erected in the middle of a twelve
hectare lot:
 I. A big space at its ground floor is being leased to private parties, for canteen and small store
spaces, and to medical or professional practitioners who use the same as their private clinics
for their patient whom they charge for their professional services.
II. The rest of the portions of the building are used for its patient, whether paying or non-paying.
III. Almost one of the entire area of the lot on the left side of the building is vacant and idle.
IV. A big portion on the right side is being leased for commercial purposes to a private enterprise
known as Elliptical Orchids & Garden Center.

Which portion is subject to real property tax?

a. I only
b. I and II
c. III and IV
d. I, II and Iv

Answer: D

29. Statement 1: The constitutional exemption on income taxes, property taxes and customs duties is
allowed on non-stock, non-profit educational institutions only.
Statement 2: A building being leased by its owner to a private educational institution for use as
classrooms is exempt from property tax.
Statement 3: Income of a non-stock, non-profit educational institutions run by the Archdiocese is
exempt from tax provided that the incomes are actually, directly and exclusively used educational
purposes.

Which of the above statements are correct?

a. Statement 1 only
b. Statement 1 & 2
c. Statement 2 only
d. All of them

Answer: D

30. Which of the following statements is not correct? [RPCPA]

a. An inherent limitation of taxation may be disregarded by the application of a constitutional
limitation.
b. The property of an educational institution operated by a religious order to exempt from property
tax, but its income is subject to income tax.
c. The prohibition of delegation by the state of the power of taxation will still allow the Bureau of
Internal Revenue to modify the rules on time for filling of returns and payment of taxes.
d. The power of taxation is shared by the legislative and executive departments of government.

Answer: B

31. Saint Anthony College (SAC) is non-stock, non-profit educational institutions. It owns a 5 hectare lot
one-half of which being used as its school campus while the other half is vacant. To cope with the
increasing operating costs and to upgrade its facilities. SAC plans to do the following effective
January 1, 2006: (1) rent out to a marketing firm the vacant portion of the lot; (2) increase tuition fees
by 10% in accordance with government regulations; and (3) import 20 sets of computers for use in
its computer courses. Which of the following questions is answerable by “Yes.”?
a. Is SAC subject to real estate tax on the one-half portion to be rented out to a business
establishment?
b. Will be exempt from income tax on its rental to the marketing firm?
c. Will the increase in tuition fees be subject to income tax if it results to a net income from school
operations?
d. Will it be subject to customs duties on the importation of the computers?

Answer: A

32. The Bicol School of Business and Arts. A proprietary educational institution which is offering primary,
secondary and tertiary education is registered with and accredited by the Department of Education
(DepEd) and the Commission on Higher Education (CHED).
 Which of the following is exempt from tax? What king of tax?

a. The importation of laboratory equipments- from custom duties.

b. The school building being rented by the school – from real property tax.
c. A portion of the school building being leased to a fastfood chain – from real property tax.
d. The income from operation – from income tax.

Answer: B

33. Assuming that the school in the preceding number is a non-stock non-profit educational institution.
Which of the following is subject to tax? What kind of tax?
a. The school building owned by the school – from real estate tax.
b. The school building being rented by the school – from real property tax.
c. A portion of the school building being leased to a fastfood chain – from real property tax.
d. The income from operation – from income tax.

Answer: C

34. The Municipality of Monte Cristo has a ten (10) hectare cemetery consisting of four (4) different
cemeteries which are owned by different entities. Which of the following is subject to real estate tax?
a. Cementerio Municipal del Monte Cristo – a government cemetery owned by the municipality
which was established for the purpose of using it as a burial ground of the paupers in Monte
Cristo.
b. Monte Cristo Catholic Cemetery – owned by the Catholic Church payments are remitted to the
Catholic Church and for the improvement of the cemetery.
c. Happy Trip Memorial Park – owned by a corporation where dividends are distributed to the
shareholders at end of the year.
d. Quita-Quita Memorial Park – owned by an association consisting one hundred (100) different
families; each family owns several square meters of lot; not a single portion held for sale to
either member or non-member of the association.

Answer: C

35. All appropriation, revenue or tariffs bills, bills authorizing increase of the public debt, bills of local
application, and the private bills shall originate exclusively in the [RPCPA]
a. Office of the President
b. House of the Representatives
c. Senate
d. Supreme Court

Answer: B

36. Which statement is wrong? Tax laws [RPCPA]

a. Must originate from the House of Representative and on which same bill the senate may purpose
amendments.
b. May originate from the Senate and on which same bill the House of Representative may purpose
amendments.
c. May have a House version and Senate version approved separately.
d. May have recommended by the President to Congress.

Answer: B

37. Congressman Luis R. Villafuerte of the 2 nd district of Camarines Sur and Senator Juan Pone Enrile
sponsored to bill in the House of Representatives and the Senate, respectively, increasing the
personal exemptions of individuals taxpayers as well as granting tax exemption to minimum wage
earners. Which of the following is correct?
a. The senate bill should be discussed a head of the house bill.
b. The senate and the house bills maybe discussed at the same time in both houses.
c. The houses bill should be discussed ahead of the senate bill.
d. No priority; each bill can be discussed ahead of the other.

Answer: C
38. No law granting any tax exemption shall be passed without the concurrence of [RPCPA] –
a. Majority of all members of the Congress.
b. 2/3 vote of all members of the Congress.
c. ¾ vote of all members of the Congress.
d. Unanimous vote of all members of the Congress.

Answer: A

39. Which of the following statements is incorrect with respect to the power of the president?
a. Congress may authorize the President to fix within specified limits tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the government.
b. The President can veto any particular item in a revenue or tariff bill, but the veto shall not affect
the items or item to which he does not object.
c. The power of taxation can be delegated to the President of the Philippines.
d. The President of the Philippines is empowered to grant tax exemption on certain class of
taxpayers.

Answer: D

40. Which of the following statements is incorrect?

a. No persons shall be imprisoned for non-payment of debt or non-payment of taxes.
b. The passage of laws granting tax exemptions requires the concurrence by a majority of all the
members of Congress.
c. The Supreme Court’s jurisdiction over tax cases cannot be impaired.
d. The revenues and assets of non-stock, non-profit educational institutions and donations for
educational purposes are exempted from taxes and duties.

Answer: A

41. They restrict the exercise of the power of taxation although they are not embodied in the Constitution
a. Theoretical justice
b. Legislative in character
c. Inherent limitations
d. Constitutional limitations

Answer: C

42. A tax must be imposed for public purpose. Which of the following is not a public purpose? [RPCPA]
a. National defense
b. Public education
c. Improvement of sugar industry
d. None of the above

Answer: D

43. Which of the following activities is not a public purpose?

a. Construction of bridges
b. Payment of Christmas bonuses of government officials and employees.
c. Opening of road on a tract of land owned by a private individual.
d. Scholarship to poor but deserving students.

Answer: C

44. A fundamental rule in taxation is that “the property of one country may not be taxed by another
country.” This known as [RPCPA}
a. International law
b. International comity
c. Reciprocity
d. International inhibition

Answer: B

45. QUESTION 1: Can estate tax the Armed Forces of the Philippines?
 QUESTION 2: Are government-owned and controlled corporations subject to tax?
a. Yes, No
b. Yes, Yes
c. No, Yes
d. No, No

Answer: B

46. Diplomatic officials such as heads of states and ambassadors are exempt from taxes and duties
because of
a. International comity
b. Reciprocity provisions
c. Principles of territoriality
d. Exemption in tax code

Answer: A

47. Deals with the provisions of the law which determines the person or property to be taxed, the sum or
sums to be raised, the rate thereof, and the time and manner of levying, receiving and collecting of
taxes
a. Collection
b. Payment
c. Enforced contribution
d. Levy

Answer: D

48. Constituted of the provisions of law which prescribes the manner of enforcing the obligation on the
part of those taxed to pay the demand thus created
a. Collection
b. Proportionate in character
c. Enforced contribution
d. Levy

Answer: A

49. The amount required is dictated by the need of the government in [RPCPA] –
a. License fee
b. Tax
c. Toll
d. Tariff

Answer: B

50. One of the characteristics of a tax is

a. A tax is a pecuniary burden and the law may not allow payment in kind.
b. It is dependent upon the will or contractual assent, express or implied of the person taxed.
c. It is levied by the state by virtue of its sovereignty.
d. It is collected for public and private purposes.

Answer: C

51. One of the characteristics of a tax is that [RPCPA]

a. It is generally based on contract.
b. It is generally payable in money.
c. It is generally assignable.
d. Optional

Answer: B

52. Which is not an essential characteristic of tax? [RPCPA]

a. Unlimited as to amount
b. Payable in money
c. Proportionate in character
 d. Regular in payment

Answer: D

53. No person shall be imprisoned for non-payment of {RPCPA}

a. Property tax
b. Excise tax
c. Poll tax
d. Income tax

Answer: C

54. An example of a property tax is

a. Additional community tax an income of real properties
b. Real estate tax on real properties
c. Estate tax on inherited personal as well as real properties
d. Donor’s tax on donation of property

Answer: B

55. Which of the following is not an example of excise tax?

a. Transfer tax
b. Sales tax
c. Real property tax
d. Income tax

Answer: C

56. Sharon, a CPA has just obtained her CPA license. Before she can lawfully pursue her occupation,
she should pay [RPCPA]
a. Privilege tax (PTR)
b. Percentage tax
c. CPA’s Income tax
d. Value-added tax

Answer: A

57. A tax that is imposed upon a person who is directly bound to pay it-
a. Direct tax
b. Indirect tax
c. Excise tax
d. Poll tax

Answer: A

58. One is not a direct tax [RPCPA]

a. Immigration tax
b. Transfer tax
c. Income tax
d. Contractor’s tax

Answer: D

59. The basic community tax of P5.00 of an individual is a (an)

a. Property tax
b. Direct tax
c. National tax
d. Ad-valorem tax

Answer: B

60. Which of the following statements is not wrong?

a. Non-payment of additional community tax is ground for imprisonment.
b. In case of conflict between a tax law and a revenue regulation, the latter shall prevail.
 c. A revenue regulation can expand the provisions of law by imposing a penalty even if the law that
it implements does not impose a penalty.
d. Revenue bills shall originate exclusively from the Senate.

Answer: A

61. Statement 1: The value-added tax is a property tax.

Statement 2: The estate tax is a direct tax. [RPCPA]
a. The two statements are correct.
b. The two statements are wrong.
c. Statement 1 is correct, Statement 2 is wrong.
d. Statement 1 is wrong, Statement 2 is correct.

Answer: D

62. Forms part of the purchase price of the commodity or service and passed on to customers
a. Direct tax
b. Indirect tax
c. Excise tax
d. Poll tax

Answer: B

63. A tax on business is [RPCPA]

a. Direct tax
b. Indirect tax
c. Property tax
d. None of the above

Answer: B

64. Fermin is a mining operator. His mining lands are not covered by any lease contract. The tax Fermin
has to pay based on the actual value of the gross output or mineral products extracted is [RPCPA]
a. Mining tax
b. Royalties
c. Rental
d. Ad valorem tax

Answer: D

65. Tax that is imposed solely to raise revenue for government expenditures
a. Revenue tax
b. Regulatory tax
c. Specific tax
d. Ad valorem tax

Answer: A

66. Tax levied for particular or specific purpose irrespective of whether revenue is actually raise or not
a. Revenue tax
b. Regulatory tax
c. Specific tax
d. Ad valorem tax

Answer: B

67. Tax imposed by the national government and is effective within the entire jurisdiction thereof
a. National tax
b. Local tax
c. Proportional tax
d. General tax

Answer: A
68. Taxes imposed by a political subdivisions of the state and is effective only within the territorial
boundaries thereof
a. National tax
b. Local tax
c. Progressive tax
d. Regressive tax

Answer: B

69. Which of the following taxes is proportional?

a. Value-added tax
b. Income tax
c. Estate tax
d. Donor’s tax

Answer: A

70. The following are kinds of taxes as to graduation. Which one is not? [RPCPA]
a. Digressive
b. Uniform
c. Regressive
d. Progressive

Answer: B

71. The power of the state of those to whom the power has been delegated to take private property for
public use upon paying to the owner a just compensation
a. Power of eminent domain
b. Police power
c. Power of taxation
d. People power

Answer: A

72. There can be classification of the subject matter being required to shoulder the burden. Which is the
exception? [RPCPA]
a. Tax
b. License fee
c. Toll
d. Eminent domain

Answer: D

73. The power of the state to enact such laws in relation to persons and property as may promote public
health, public morals, public safety and the general welfare of the people
a. Power of eminent domain
b. Police power
c. Power of taxation
d. People power

Answer: B

74. The following are the similarities of the inherent power of taxation, eminent domain and police power
except one [RPCPA]
a. Are necessary attributes of sovereignty
b. Interferes with private rights and property
c. Affect all persons or the public.
d. Are legislative in their implementation.

Answer: C

75. Which statement refers to police power as distinguished from taxation? [RPCPA]
a. It can only be imposed on specific property or properties.
b. The amount imposed depends on whether the activity is useful or not.
 c. It involves the taking of property by the government.
d. The amount imposed has no limit.

Answer: B

76. Police power as distinguished from taxation

a. Just compensation is received by the owner of the property.
b. Maybe exercised by private individuals.
c. Superior to the non-impairment clause of the constitution.
d. Property is taken by the government for public purpose.

Answer: C

77. Mr. No Nuli is exempt from all taxes.

Q1: Is he exempt from customs duties on the importation of goods?
Q2: Is he exempt from parking fees on the parking areas owned by the government?
Q3: Is he exempt from Mayor’s permit fees?

Which of the above questions is/are answerable by “No”?

a. Q2 only
b. Q1 and Q2
c. Q2 and Q3
d. Q1, Q2 and Q3

Answer: C

78. After having been informed that some massage parlors are being used in fronts for prostitution, the
Sangguniang Panglungsod 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. Eminent domain
c. Police power
d. Police power and power of taxation

Answer: D

79. Which of the following statements is correct?

a. Non-payment of tax and debt is aground for imprisonment.
b. The power to tax may include the power to destroy.
c. Provisions in the Philippine Constitution on taxation are grants of power.
d. Lands and buildings being used actually, directly and exclusively for religious and charitable
purpose by churches and charitable institutions are exempt from income and property taxes.

Answer: B

80. The following statements are correct. Which is the exception?

a. The rule of taxation shall be uniform and equitable.
b. Taxation may be used to implement the police power of the state.
c. Police power is superior to the non-impairment clause of the constitution.
d. The salary of the justices of the Supreme Court are exempt from income tax.

Answer: D

81. Statement 1: An Executive order passed by the President of the Philippines directing the
Commission on Higher Education (CHED) to regulate the operation of review center is a valid
exercise of police power.
Statement 2: Construction of a church building is exempt from the payment of building permit fees
because the cco9nstitution provides that churches are exempt from property taxes.
Which of the above statements is true?
a. Statement 1 only
b. Statement 2 only
c. Neither statement
 d. Both statement

Answer: C

82. Statement 1: The Congress can enact tax laws even in the absence of a constitutional provision
granting said body the power to tax.
Statement 2: A tax may be validly imposed in the exercise of police power and not the power to tax.
a. False. False
b. False, True
c. True, True
d. True, False

Answer: C

83. Which of the following may not raise money for the government [RPCPA]
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets

Answer: C

84. In this power of the state , the person who is parting with his money or property is presumed to
receive a benefit [RPCPA]
a. Taxation
b. Police power
c. Eminent domain
d. Forfeiture power

Answer: A

85. Which of the following inherent powers of the government is inferior to the non-impairment clause of
the constitution?
a. Taxation
b. Police power
c. Eminent domain
d. None

Answer: A

86. Tax as distinguished from license fee [RPCPA]

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: A

87. The distinction of a tax from permit or license fee is that a tax is [RPCPA]
a. Imposed for regulation.
b. One which involves exercise or police power.
c. One in which there is generally no limit on the amount that may be imposed.
d. Answer not given.

Answer: C

88. Which of the following term describes this statement “that the state has complete discretion on the
amount to be imposed after distinguished between a useful and non-useful activity?” [RPCPA]
a. Tax
b. License fee
c. Toll
d. Customs duty

Answer: B
89. Which of the following is not a distinction or similarity of license fee from tax? [RPCPA]
a. Imposed for regulation
b. Involves exercise of police power.
c. Non payment makes the business illegal.
d. Legal compensation or reward of an officer for services.

Answer: D

90. All of the following, except one, are characteristics of a toll

a. Demand of proprietorship.
b. Compensation for the use of another’s property.
c. Maybe imposed by private individuals.
d. Levied for the support of the government.

Answer: D

91. This is a demand of ownership [RPCPA]

a. License fee
b. Tax
c. Toll
d. Franchise

Answer: C

92. One of the following is not characteristics of a special assessment

a. It has special application only to a particular time and place.
b. It is levied only on land.
c. May be levied on business.
d. Based wholly on benefits.

Answer: C

93. Which statement is wrong? [RPCPA]

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.

Answer: C

94. Which of the following is a not characteristic of debt?

a. Generally arises from contract.
b. Payable only in money.
c. Assignable
d. Imprisonment is not a sanction for non-payment.

Answer: B

95. All funds or income derived by the government from any other source
a. Tax
b. Custom duty
c. Revenue
d. Ordinary income

Answer: C

96. It comprises all kinds of funds including taxes [RPCPA]

a. License tax
b. Income
c. Customs duty
d. Revenue

Answer: D
 97. Which of the following constitute objectionable double taxation? [RPCPA]
a. A license fee and a tax imposed on the same business or occupation for selling the same
articles.
b. A tax imposed both on the occupation of fishing and on fishpond operations.
c. Persons engaged in leasing or selling real property are subject to real estate dealers tax and
their sales are also subject to 10% VAT.
d. A tax of 1% is imposed for bank reserve deficiency while a penalty of 1/10 of 1% is also imposed
as a consequence of such reserve deficiency.

Answer: D

98. Which of the following is not an element of direct duplicate taxation which is violative of the equal
protection and uniformity clauses in the constitution?
a. Same property is taxed twice;
b. Same taxing authority;
c. Same amount;
d. Same purposes;

Answer: C

99. Which of the following statements is correct?

a. Tax laws can never have a retroactive effect.
b. The government cannot tax its agencies and instrumentalities.
c. A taxpayer’s suit can be filed by any taxpayer in any instance against the government.
d. In the Philippines, there may be double taxation.

Answer: D

100. The following constitute double taxation except one [RPCPA}

a. Both taxes 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.

Answer: A

101. 1st Statement: Our constitution does not prohibited double taxation.
2nd Statement: If double taxation occurs, the taxpayer may seek relief under the uniformity clause or
the equal protection guarantee(RPCPA)
a. 1st statement is correct, 2nd statement is wrong.
b. 1st statement is wrong,2nd statement is correct
c. Both Statements are wrong.
d. Both Statements are correct.

Answer: D

102. Your client owns a row of apartments. He complains to you that he is being required to pay
four (4) kinds of taxes in this line of business alone .From the list given by your client, which of the
following taxes has been wrongly imposed on him?
a. Real estate tax on the land and building.
b. Value-added tax on the gross receipts from rent.
c. Community tax based on the assessed value of the apartment house.
d. Income tax on income from rent.

Answer: C

103. 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
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.

Answer: D

104 . Statement 1: An ordinance imposing a tax on the manufacture of softdrinks and another tax
on the sale of the softdrinks constitute double taxation.
Statement 2: A criminal case for tax evasion maybe filed against a taxpayer even without prior
assessment issued by the Commissioner of Internal revenue.
Which of the following statement is false?
a. Statement 1 only
b. Statement 2 only
c. Neither statements
d. Both statements

Answer: D

105. Transfer of the tax burden by one on whom the tax is assessed to another.
a. shifting
b. Capitalization
c. Transformation
d. Tax exemption

Answer: A

106. Which of the following is not a scheme of shifting the incidence of tax burden? (RPCPA)
a. The manufacturer transfers the tax to the consumer by adding the tax to the selling price of the
goods sold.
b. The purchasers ask for a discount or refuse to buy at regular price unless it is reduced by an amount
equal to the tax he will pay.
c. Changing the terms of the sale like FOB shipping point in the Philippines to FOB destination abroad,
so that the title passes abroad instead of in the Philippines.
d. The manufacturer transfer the sales tax to the distributor, then in turn to the wholesaler, to the retailer
and finally to the consumer.

Answer: C

107. The reduction in the selling price of income-producing properly by an amount equal to the capitalized
value of future taxes that may be paid by the purchaser.
a. Shifting
b. Capitalization
c. Transformation
d. Tax exemption

Answer: B

108. The 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.
a. Shifting
b. Capitalization
c. Transformation
d. Tax exemption

Answer: C
109. The grant of immunity to particular persons or corporation or to persons or corporation of a particular
class from a tax which persons and corporations generally within the same taxing district are obliged to
pay.
a. Tax exemption
b. Tax evasion
c. Tax avoidance
d. Tax amnesty

Answer: A

110. Statement 1: The grant of a tax amnesty must be construed against the taxpayer and liberally in
favor of the taxing authority.
Statement 2: A tax exemption may be withdrawn anytime at the pleasure of the taxing authority.
Which of the above statements is true?
a. Statement 1 only
b. Statement 2 only
c. Neither statement
d. Both statement

Answer: C
111. Statement 1: A BIR Ruling issued by a Commissioner of Internal Revenue which grants tax
exemption would create a perpetual exemption in favor of the taxpayer.
Statement 2: A tax exemption may be withdrawn anytime at the pleasure of the taxing authority
Which of the above statements is true?
a. Statement 1 only
b. Statement 1 and 2
c. Statement 2 only
d. Neither of them

Answer: C

112. It is also known as tax dodging

a. Tax exemption
b. Tax evasion
c. Tax avoidance
d. Transformation

Answer: B

113. It is otherwise known as tax minimization.

a. Tax exemption
b. Tax evasion
c. Tax avoidance
d. Transformation

Answer: C

114. Which of the following statements constitute tax avoidance?

a. Deliberate failure of a taxpayer to pay the taxes due to the government.
b. Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes.
c. Punishable by law.
d. Maybe contrary to the intent of the legislature but nevertheless do not violate the law.

Answer: D

115. Which of the following facts pertain/s to tax avoidance?

a. After studying his tax problems, Alliante decided to withdraw his bank deposits and to buy tax
exempt securities.
 b. Who wishes to avoid the payment of taxes assessable on the transactions made it appear on the
deed of sale that the selling price was only P 200,000 although it was actually P 300,000.
c. Refraining from engaging in activities subject to tax.
d. Clavillians Insurance Corporation sold its office building to Eva for P 100 million who, in turn, sold the
same property to Royal Match, Inc. for P200 million .These two transactions were evidenced by
Deeds of Absolute Sale notarized on the same day by the same notary public.

a. A only
b. A and C
c. A and D
d. A,C and D

Answer: B

116. In case of ambiguity, tax laws shall be interpreted.

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

Answer: C

117. In cases of deductions and exemptions on income tax returns, doubts shall be resolved ( RPCPA).
a. Strictly against the taxpayer.
b. Strictly against the government.
c. Liberally in favor of the taxpayer.
d. Liberally against the government

Answer: A

118. The following, except one, are exemptions to the rule that tax exemptions must be strictly construed
against the taxpayer.
a. Where the statute granting the exemption provides for liberal interpretation thereof.
b. If the taxpayer does not fall within the purview of the exception by clear legislative intent.
c. In case of special taxes relating to special cases and affecting only special classes of persons.
d. If exemptions refer to public property.

Answer: B

119. A franchise can be amended by (RPCPA).

a. An amendment of special law, which granted the franchise.
b. An amendment of a law of general application.
c. An amendment of a revenue regulation.
d. An amendment of tax laws.

Answer: B

120. Some franchise holders who are paying the franchise tax are being required by an amendatory law
to pay the value-added tax, while others remain subject to franchise tax. Which of the following
constitutional provisions makes the law unconstitutional? (RPCPA)
a. No law shall be passed impairing the obligation of contract.
b. The rule of taxation shall be uniform.
c. No person shall be deprived of property without due process of law.
d. None of the above

Answer: D

121. S1: The point on which a tax is originally imposed is impact of taxation.
S2: As a rule, taxes are subject to set-off or compensation.
 1st Statement 2nd Statement
a. True True
b. False True
c. False False
d. True False
Answer: D

122. Which of the following is not considered as a step in making a revenue regulations effective?
a. Recommendation by the Commissioner of Internal Revenue to the Secretary of Finance.
b. Approval by the Secretary of Finance
c. Legislations by Congress.
d. Publication in a newspaper of general circulation.

Answer: C

123. Statement 1: In case of conflict between a revenue regulation and the provisions of the National
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. Statement 1 is correct: Statement 2 is wrong.
b. Both Statement are correct
c. Statement 1 is wrong: Statement 2 is correct
d. Both statements are wrong.

Answer: A

124. All of the following, except one, are sources of tax laws-
a. Legistations, tax treaties and tax ordinance.
b. Judicial decisions
c. Opinions of authors
d. Administrative rules and regulations.

Answer: C

125. The least source of our tax laws is-

a. Statues
b. Court decisions
c. Constitutions
d. BIR rulings

Answer: D

126. 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 set-off with each other.
This doctrine is called.
a. Set-off doctrine
b. Doctrine of reciprocity
c. Tax sparing doctrine
d. Equitable recoupment

Answer: D

127. Statement 1: The doctrine of equitable recoupment is applicable in the Philippines.

Statement 2: Where taxes and the claim of the taxpayer are fully liquidated, due and
demandable,set-off or legal compensation may take place by operation of law.
a. Statement 1 is correct: Statement 2 is wrong.
b. Both Statement are correct
c. Statement 1 is wrong : Statement 2 is correct
d. Both statement are wrong
 Answer: C

128. The place or authority that has the right to impose and collect taxes -
a. Territoriality
b. International comity
c. Situs of taxation
d. Transformation

Answer: C

129. Domicile or residence of the owners is not the situs of taxation in

a. income tax
b. community tax
c. estate tax
d. business tax

Answer: D

130. Which of the following is not correct with respect to a respect to a taxpayer’s suit?
a. It must pertain to illegal disbursement of public funds.
b. It pertains to the passage of a seemingly unconstitutional measure.
c. The funds sought to be disbursed must have been raised through taxation.
d. It must not refer to an enactment of a tax law.

Answer: B