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Taxation
Prelim Examination
Prepared by: Atty. Lesly Ann J. Cataluna
I.

Definition of Legal terms (10 pts)


Instruction: Please briefly define each term. ( 2 pts each.)
1. Power of Eminent Domain
2. Person
3. Taxes
4. Gross Income
5. Taxation

II.

Enumeration: (25 pts)


1. Give only 3 sources of Revenue under the National Internal Revenue
Code? (3pts.)
2. Please give only 3 essential characteristics of taxes? (3pts)
3. Please enumerate the Theory and Basis of Taxation. (3pts)
4. What are the inherent limitations of Taxation? (5pts)
5. What are the Basic principles of a sound tax system? (3pts)
6. Please give 2 Non-revenue objectives of Taxation. (2pts)
7. What are the scope or aspects of taxation? (2pts)
8. What are the inherent powers of the State? (3 pts)
9. Please give 3 Constitutional limitations of Taxation. (3pts)

III.

Discussion: (25 pts)


Instruction: Please read the given facts of the case given and please answer
briefly with legal basis. Do not copy the questions.
1. Hally Parot and Chic Buy got married, they had 2 sons and 3 daughters.
Hally Parot claims that the Tax Code grants additional exemption to
individuals. May Hally Parot claim for the 5 children as his dependents? If
yes, what is the amount allowed by law for each dependent and the
maximum number of dependents? (5pts)
2. Who has the authority to levy and impose taxes? What law gives such
authority to levy? (3pts)
3. Please explain the Life Blood Theory of taxation. (2 pts)
4. Maria Labo , a Filipino citizen, is an OFW for almost 2 years, however, the
Bureau of Internal Revenue contends that they may collect taxes from his
income earned in Dubai. Maria Labo filed a protest that his income
abroad should not be subject to tax. Is Maria Labo correct? (3pts)
5. Chis Mo Sa is a Chinese citizen, she visited and stayed in the Philippines
for 3 months in the year 2014, however, she went back to China on
January 2015. But, during her stay in the Philippines, she fell in love with a
Filipino citizen, Mapag Ross. She returned in the Philippines on July 2015
until October 2015 to reunite with Mapag Ross. In the given case, is Chis
Mo Sa considered as a Non-resident alien engaged in trade or business?
(4pts)
6. Thec Calon, a Filipino citizen and resides in Forbes Park, won a boxing
match in the United States of America. He was taxed by the United States
of America. However, upon arrival in the International Airport of the
Philippines, the Bureau of Internal Revenue informed him that he has a
tax due for his boxing match abroad. Thec Calon contends that the
Philippines has no jurisdiction over his income abroad because the source
of his income is outside the Philippine Territory. Is he correct? (5 pts)

7. Tah Hor is a gambler. One night, he won in a gambling game in a nearby


Casino. He was so happy that he spent all his money to buy beer and
food for everybody. The next day, the Bureau of Internal Revenue
informed Tah Hor that he is liable to pay taxes for the income acquired
from gambling. Tah Hor complained that gambling is illegal and shall not
be subject to tax. Is Tah Hor correct?(3pts)
IV.

Multiple Choice: (40 pts)


Please write the correct answer in your answer sheet. (2pts each number.)
1. It is the respect accorded by nations to each other because they are
equals.
a. International Community
b. International Committee
c. International Comity
d. International Equality
2. The Bureau of Internal Revenue is considered as such:
a. It has the authority to levy taxes.
b. It has the authority to impose taxes.
c. It has the no authority at all.
d. It has the authority to collect taxes.
3. Under the Constitution, Congress may delegate its taxing power to the
President, what are the taxes that the President may levy?
a. Real property Taxes
b. Income Tax
c. Tariff rates such as customs and duties
d. Business Tax
4. In the case of Legally Separated spouses, who may claim for the
additional exemptions?
a. Both spouses may claim separately.
b. Either spouse may claim, depends on their agreement.
c. The spouse who has the legal custody of the child or children.
d. The spouse who has no work for such is necessary to her or his
survival.
5. Among the dependent as defined by the tax Code, what is true?
a. A dependent who is legitimate, illegitimate children has no right at all.
b. A dependent who is legitimate or illegitimate is considered by law as
dependents, except legally adopted children.
c. A dependent who is legitimate, illegitimate, or legally adopted may be
considered as dependents.
d. A dependent who is legitimate, illegitimate, or adopted may be
considered as dependents.
6. To be classified as a dependent regardless of age, what is the
requirement?
a. Such dependent is incapable of self-support because of Mental or
Physical defect.
b. Such dependent is not gainfully employed.
c. Such dependent is incapable of self-support because of Mental and
Physical defect.
d. Such dependent is unmarried.
7. It means all income derived from whatever source including but not limited
to compensation for services in whatever form paid, derived from conduct
of trade or business.
a. Income tax
b. Taxable Income
c. Gross Income
d. Tax rate

8. What are the deductions allowed by law that an individual who is


employed and earning purely compensation income ?
a. Personal exemption only
b. Additional exemption only
c. Premium Payments on Health and/or Hospitalization Insurance
d. All of the above
9. A corporation under the Tax Code includes:
a. Partnerships, no matter how created or organized
b. Partnerships, no matter how created or organized, and also include the
general professional partnerships
c. Partnerships, no matter how created or organized, and also include the
general partnerships and joint ventures or consortium
d. Partnerships, no matter how created or organized, but does not include
general professional partnerships and joint ventures or consortium.
10. A citizen of the Philippines who establishes to the satisfaction of the
Commissioner the fact of his Physical Presence abroad with a definite
intention to reside therein.
a. Non-resident citizen
b. Resident Citizen
c. Non-resident Alien engaged in trade or business
d. Non-resident Alien not engaged in trade or business
11. An individual whose residence is not within the Philippines and who is not
a citizen thereof.
a. Non-resident alien
b. Non-resident citizen
c. Resident Alien
d. None of the above
12. Tax imposed upon the performance of an act , the enjoyment of a privilege
or the engaging in an occupation
a. Excise tax
b. Income Tax
c. Real Property Tax
d. Community Tax
13. What is the Primary Purpose of Taxation?
a. To raise funds or revenue for the government
b. To mainly promote the general welfare
c. To mainly promote protectionism
d. To regulate inequality
14. It is base on the reciprocal duties of protection and support between state
and inhabitants.
a. Life Blood Theory
b. Necessity Theory
c. Benefits-protection Theory
d. None of the above
15. Tax imposed upon goods before they reach the customer who ultimately
pays for it, it is a tax which the taxpayer can shift to another.
a.Direct Tax
b. Indirect Tax
c. Property Tax
d. None of the above

16. What is the amount provided by law as a personal exemption.


a. P50,000 for each individual
b. P5000 for each individual
c. P500,000 for each individual
d. It depends on his monthly income
16. Partnerships formed by persons for the sole purpose of exercising their
common profession.
a. General Professional Partnership
b. General Partnership of Professionals
c. General Partners of Professionals
d. General Professional Partners
17.Tax exemption is granted to the institutions:
a. Non-stock, non-profit educational institutions
b. Non-stock but for profit educational institutions
c. Stock but non-profit educational institutions
d. All of the above
18. The Constitution provides that there is non-imprisonment of non payment
of:
a.
b.
c.
d.

Income Tax
Value added tax
Property tax
Poll Tax

19. Inherent power of the State that promotes public welfare through
regulations.
a. Police Power
b. Taxation
c. Power of Eminent Domain
d. None of the above
20. Among the given taxes, which is considered as an indirect tax?
a. Value Added Tax
b. Income Tax
c. Excise Tax
d. All of the above