TAXATION 1 I. MULTIPLE CHOICE QUESTIONS ( TWO POINTS EACH) DIRECTIONS: Choose the letter of the CORRECT answer.

Strictly NO ERASURES allowed.

1. The following are inherent limitations of taxation EXCEPT: A. Territoriality B. Principle of Comity C. Uniformity and Equitability of Taxation D. Non-Delegation of Taxing power 2. Mobilia Sequuntur personam, referring to the situs of taxation of movables, is best illustrated by the tax imposed uponA. Tangible Personal Property B. Bonds issued by a foreign corporation eighty percent of the business is in the Philippines C. Shares of a non-resident alien in a Philippine corporation D. Machineries attached to a real property 3. In 2011, Congress enacted a tax measure: 1) imposing a uniform 70% income tax on the gross income of all persons earning an amount in excess of the minimum wage in the Philippines. 2) The imposition is viewed to drastically reduce the States budget deficit, until its total non-existence, which by studies show could be achieved within ten years therefrom. 3) Due to the large amount that could be involved, tax measure requires that the tax be paid in cash directly with the BIR main office in Quezon City only annually. Which basic principle/s of a sound tax system may NOT be satisfied by the said imposition? A. Administrative Feasibility B. Fiscal adequacy C. Theoretical Justice and Fiscal adequacy D. Administrative feasibility and theoretical justice 4. Which is NOT an indirect tax? A. Donors Tax B. Percentage Tax C. Excise Tax on excisable articles D. VAT 5. A tax exemption was granted certain industries and investments for a period of five years. Three years later, the exemption was withdrawn by the government without the conformity of the investing companies concerned. Thus, the BIR assessed the investing companies for unpaid taxes, effective on the date of withdrawal of the exemption. Which of the following may justify

the government for such unilateral withdrawal without violating the right against the impairment of the obligation of contracts? That such exemption was grantedA. By mutual agreement of the government and the investing companies B. On condition that a reciprocal service shall be performed by taxpayers C. By Congress through the enactment of an exempting statute D. To the investing companies upon a valuable consideration Which among the following exercises the power of taxation through an express grant of the 1987 Constitution? A. The President, by fixing tariff rates, import and export quotas, tonnage and wharfage dues and other duties and imposts, within the framework of the national development program B. Administrative agencies, subject to completeness and sufficient standard tests C. LGUs, by creating its own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively to them D. The Bureau of Internal Revenue, in tax assessments and collections Anne Lapada, a student activist, wants to impugn the validity of a tax on text messages. Aside from claiming that the law adversely affects her since she sends messages by text, what may she allege that would strengthen her claim to the right to file a taxpayers suit? A. That she is entitled to the return of the taxes collected from her in case the court nullifies the tax measure. B. That tax money is being extracted and spent in violation of the constitutionally guaranteed right to freedom of communication. C. That she is filing the case in behalf of a substantial number of taxpayers. D. That text messages are an important part of the lives of the people she represents. 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 The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as

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A. assessment. B. levy. C. payment. D. collection. 10. What is the rule on the taxability of income that a government educational institution derives from its school operations? Such income is A. subject to 10% tax on its net taxable income as if it is a proprietary educational institution. B. Exempt from income taxation if it is actually, directly, and exclusively used for educational purposes. C. subject to the ordinary income tax rates with respect to incomes derived from educational activities. 11. . Real property taxes should not disregard increases in the value of real property occurring over a long period of time. To do otherwise would violate the canon of a sound tax system referred to as A. theoretical justice. B. fiscal adequacy. C. administrative feasibility. D. symbiotic relationship. 12. . The power to tax is the power to destroy. Is this always so? A. No. The Executive Branch may decide not to enforce a tax law which it believes to be confiscatory. B. Yes. The tax collectors should enforce a tax law even if it results to the destruction of the property rights of a taxpayer. C. Yes. Tax laws should always be enforced because without taxes the very existence of the State is endangered. D. No. The Supreme Court may nullify a tax law, hence, property rights are not affected. 13. Money collected from taxation shall not be paid to any religious dignitary EXCEPT when A. the religious dignitary is assigned to the Philippine Army. B. it is paid by a local government unit. C. the payment is passed in audit by the COA. D. it is part of a lawmakers pork barrel. 14. An annual tax of Php 500.00 was imposed upon all residents of the Philippines, who are above 21 years of age, with a gross annual income of Php 250.00, whether or not they send their children to public schools, for the purpose of raising funds in order to improve public school buildings. This tax: A. Violates the equal protection clause B. Is confiscatory C. Is levied for a public purpose

D. Contradicts the inherent limitations 15. 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. II. ESSAY: DIRECTIONS: Read each question very carefully. Answer legibly, clearly, and concisely. Start each number on a separate page; an answer to a sub-question under the same number may be written continuously on the same page and immediately succeeding pages until completed. Do not repeat the question. A mere "Yes" or "No" answer without any corresponding discussion will not be given any credit. 1. Enumerate the inherent limitations on taxation. Explain each item briefly. 2. Discuss the No injunction rule in tax collection. Is this rule absolute?

3. The Apostolic Prefect is a corporation sole, of religious character, organized under the Philippine laws, and with residence in Baguio City. The City government imposed a special assessment against the properties within its territorial jurisdiction, including those of the Apostolic Prefect, which benefits from its drainage and sewerage system. The Apostolic Prefect contends that being a religious entity, its properties should be exempt from paying the special assessment. Is it exempt?

4. The City of Butuan enacted Ordinance 110 imposing a tax of P0.10 per case of 24 bottles of soft drinks or carbonated drinks upon dealers engaged in selling soft drinks or carbonated drinks. Under the Ordinance tax was imposed upon an agent or consignee of any person, association, partnership, company or corporation engaged in selling soft drinks or carbonated drinks, with agent or consignee being particularly defined on the inserted provision Section 3-A. In effect, local merchants engaged in the sale of soft drinks, etc. are not subject to the tax unless they are agents or consignees of another dealer who must be one engaged in business outside the City. Pepsi-Cola Bottling Co. filed suit to recover sums paid by it to the city pursuant to the

Ordinance, which it claims to be null and void for being discriminatory. Is the ordinance violative of the equal protection clause of the constitution?

5. Philex Mining Corporation wants to set off its claims for VAT input credit/refund for the excise taxes due from it. Can it validly do so?

6. Lutz assailed the constitutionality of Sec. 2 and 3 which provided for an increase of the existing tax on the manufacture of sugar alleging such tax as unconstitutional and void for not being levied for public purpose but for the aid and support of the sugar industry exclusively. Is the tax levy a valid exercise of state power? 7. Can the Congress