NEIL B.
BORJA
2013-78416
TAXATION 1 TAKE HOME EXAM
Chapter 1 Review Questions
1. Taxation the power by which the
sovereign raises revenue to defray the
expenses of government. It is a way of
apportioning the cost of government among
those who in some measure are privileged to
enjoy its benefits and must bear its burden. (51
Am. Jur. 34)
2. Taxes are the lifeblood of the government
without which the government may not endure.
Taxation is indispensable and inevitable price
for civilized society. (cf. Valley Trading Co. v
CFI, L-49529)
3.
a. Lifeblood Theory The existence of the
government cannot endure without the means
to pay for it. This gives the government the
right to compel its citizens and property within
its territory to be exacted taxes.
b. Benefit-Protection Theory -
4.
a. Revenue taxes are raised to promote the
general welfare and protection of its citizens.
b. Regulatory Taxes may be levied with a
regulatory purpose to provide means for the
rehabilitation and stabilization of a threatened
industry which is affected with public interest as
to be within the police power of the State.
c. Promotion of General Welfare Taxes may
be used as an implement of the Police Power
to promote the general welfare of the people.
d. Reduction of social inequality Taxation that
is progressive prevents the undue
concentration of wealth in the hands of a few
individuals.
e. Encourage economic growth by granting
incentives and exemptions The power to tax
and exempt are inherent in the State and local
governments.
f. Protectionism to protect local industries
from foreign competition.
5. Taxation involves taking of property which is
generally money for the support of government.
Eminent Domain involves the taking of property
for public use and the person must be duly
compensated. Police Power, on the other
hand, involves the regulation of the property for
the purpose of general welfare and is not duly
compensable.
6. The power to tax is considered the strongest
of the three because in the absence of
constitutional restrictions, it is unlimited,
plenary, comprehensive and supreme.
7. The three inherent powers may pertain to
property and the due exercise of it by the
government.
8. Taxation involves taking of property which is
generally money for the support of government.
Eminent Domain involves the taking of property
for public use and the person must be duly
compensated. Police Power, on the other
hand, involves the regulation of the property for
the purpose of general welfare and is not duly
compensable.
9.
a. Taxation is for a public purpose the
proceeds of the tax must used (i) for the
support of the State or (ii) for some
recognized objects of government or
directly to promote the welfare of the
community.
b. Taxation is inherently legislative
Taxation being an inherent power of the
State follows that it is also legislative in
character and a legislative prerogative.
c. Taxation is territorial Taxation may
be exercised only within the territorial
jurisdiction of the taxing authority.
 d. Taxation is subject to international
comity Under international comity, a
state must recognize the generally
accepted principles of international law,
among which are the principles of
sovereign equality among states and of
their freedom from suit without their
consent, that limit the authority of a
government to effectively impose taxes
on a sovereign state, etc.
10. Because the Filipino citizen living abroad is
still afforded by the State of its protection,
therefore the said citizen should share the
burden of supporting the government.
11. The Power to tax is inherent in sovereignty,
therefore the same need not be enshrined in
the constitution or be clothed with constitutional
authority for it to be exercised by a sovereign
state. Instead, the constitutional provisions are
there to regulate and define rather than to grant
the power emanating therefrom.
12.The due process of law may be invoked to
invalidate a revenue measure. It is enshrined in
the Constitution that no person shall be
deprived of life, liberty or property without due
process of law. If the tax measure is arbitrary
or that it not being constitutional, the due
process clause may be raised.
13. Under Sec. 5 Art. III of the 1987
Constitution, The free exercise of religious
profession and worship, without discrimination
or PREFERENCE, shall forever be allowed.
That state allows that free exercise of religion
but is barred from appropriating public money
to it lest it become tantamount to state
sponsorship of a preferred religion which is
unconstitutional.
14. The three stages of Taxation are:
a. Levy this refers to the enactment of
law by Congress imposing a tax.
B, Assessment and collection this is the act
of administration and implementation of the tax
law by the executive department through the
administrative agencies.
C. Payment this is the act of compliance by
the taxpayer, including such options, schemes
or remedies as may be legally available to him.
15.
a. Valuation
b. Collection
16. The principle of a Sound Tax System
involves:
a. Fiscal Adequacy The sources of tax
revenue should coincide with, and
approximate the needs of government
expenditures.
b. Theoretical Justice The tax system
should be fair to the average taxpayer
and based upon his liability to pay.
c. Administrative Feasibility That tax
system should be capable of being
properly and efficiently administered by
the government and enforced with the
least inconvenience to the taxpayer.
17.
a. Prospectivity of Tax Laws Taxes may
be imposed retroactively by law but,
unless so expressed by such law, these
taxes must only be imposed
prospectively.
b. Imprescriptibility of Taxes Unless
otherwise provided by the tax law itself,
taxes are imprescriptible.
c. Double Taxation it means taxing for
the same tax period the same thing or
activity twice, when it should be taxed
but once, for the same purpose and with
the same kind of character tax.
d. Power to Tax involves power to destroy
the power to tax must be exercised
with caution to minimize injury to the
proprietary rights of the taxpayer.
e. Escape from Taxation Tax avoidance
and Tax evasion are the two most
common ways used by taxpayers in
escaping taxation. Tax avoidance is a
tax saving device sanctioned by law
while tax evasion is a scheme used
outside of those lawful means.
f. Doctrine of Equitable Recoupment a
claim for refund barred by prescription
may be allowed to offset unsettled tax
liabilities should be pertinent only to
taxes arising from the same
transactionon which an overpayment is
made and underpayment is due.
g. Set-off Taxes where the taxes and the
taxpayers claim are fully liquidated, due
and demandable, legal compensation
under Art 1279 can take place by
operation of law and both debts are
extinguished to the concurrent amount.
h. Taxpayer suit it is only when an act
complained of, which may include a
legislative enactment, directly involves
the illegal disbursement of public funds
derived from taxation that he taxpayer
suit may be allowed.
i. Compromises As a general principle,
tax compromises may be entered into
and be binding when a subject matter
thereof is not expressly prohibited from
being compromised and the public
official entering into it is authorized by
law.
18.
a. It is a forced charge, imposition or
contribution. It operates ad invitum.
b. It is assessed in accordance with
some reasonable rules of
apportionment which means that
comfortably with the constitutional
mandate for Congress to evolve a
progressive tax system, taxes must
be based on taxpayers ability to pay.
c. It is a pecuniary burden payable in
money but backpay certificates may
be used in payment of tax.
d. It is imposed by the State on
persons, property, or exercises
within its jurisdiction, in accordance
with the principle of territoriality
e. It is levied by the legislative body of
the State.
f. It is levied for a public purpose
g. It is personal to the taxpayer.
19.
a. According to Subject Matter or Object
i. Personal, capitation or poll taxes
taxes of fixed amounts upon residents or
persons of a certain class without regard
to their property or business.
ii. Property taxes taxes assessed on
things or property of a certain class
iii. Excise or license taxes taxes on
privilege, occupation or business not
falling within the classification of poll
taxes or property taxes
b. According to Burden or Incidence:
i. Direct taxes taxes which are
demanded from persons who are
primarily burdened to pay them
ii. Indirect taxes taxes levied upon
transactions or activities before the
articles subject matter thereof reach the
consumers to whom the burden of the
tax may ultimately be charged.
c. According to Determination of Amount
(Tax Rates):
i. Specific Taxes taxes imposed per
head, unit or number
ii. Ad valorem taxes taxes based upon
the value of the articles subject to tax
d. According to Purpose:
i. General or fiscal taxes imposed for
the general purposes of government
ii. Special, Regulatory or Sumptuary
Taxes imposed for a particular legitimate
object of government.
e. According to Scope or Authority
Imposing the Tax:
i. National
ii. Municipal or local
f. According to Graduation
i. Progressive tax rate increases as
the tax base increases
ii. Regressive - tax rate decreases as
the tax base increases
iii. Mixed partly progressive and
regressive
iv. Proportionate tax rates are fixed on
a flat tax base

20.
Tax based on law, taxpayer may be
imprisoned
Debt based on contract or judgment,
no imprisonment for failure to pay debt

Tax enforced proportional

contributions from persons and property
Toll A sum of money for the use of
something, a consideration which is paid
for the use of a property which is of a
public nature

Tax imposed for revenue purposes

License imposed for regulatory
purposes

Tax Enforced proportional

contributions from persons or property
Penalty Sanctions imposed as a
punishment for violation of a law or acts
deemed injurious

21. The Philippine tax laws is a mixture Problem 1-1

of progressive and regressive tax laws.
1. FALSE
22. As a rule, taxing statues must be
applied prospectively, except by express 2. FALSE
provision of law. The mere fact that a tax
law is retroactive does not make it 3. FALSE
invalid or against due process.
4. FALSE
23. The sources of Philippine Tax laws
are the Constitution, the international 5. TRUE
comity, local and municipal legislation.
6. TRUE

7. FALSE

8. TRUE

9. FALSE
10. FALSE 11. FALSE

11. TRUE 12. TRUE

12. TRUE 13. FALSE

13. TRUE 14. FALSE

14. TRUE 15. TRUE

15. TRUE 16. TRUE

16. FALSE

Problem 1-3

Problem 1-2 1. TRUE

1. FALSE 2. TRUE

2. FALSE 3. FALSE

3. FALSE 4. TRUE

4. FALSE 5. FALSE

5. FALSE 6. FALSE

6. TRUE 7. FALSE

7. TRUE 8. FALSE

8. TRUE 9. TRUE

9. FALSE 10. FALSE

10. FALSE 11. TRUE

12. TRUE 13. TRUE

13. TRUE 14. FALSE

14. TRUE 15. TRUE

15. TRUE

16. FALSE

Problem 1-5

Problem 1-4 1. B

1. FALSE 2. B

2. FALSE 3. B

3. TRUE 4. C

4. TRUE 5. A

5. FALSE 6. D

6. TRUE 7. C

7. FALSE 8. A

8. FALSE 9. D

9. TRUE 10. D

10. FALSE 11. A

11. TRUE

12. FALSE
 Problem 1-7

Problem 1-6 1. D

1. B 2. C

2. A 3. A

3. C 4. A

4. D 5. B

5. A 6. A

6. A 7. C

7. B 8. C

8. C 9. B

9. A 10. D

10. D 11. C

11. C 12. B
 Problem 1-9

Problem 1-8 1. C

1. C 2. A

2. B 3. D

3. C 4. D

4. C 5. B

5. D 6. B

6. D 7. B

7. D 8. C

8. D 9. D

9. B 10. B

10. B
Problem 1-10

1. D

2. C

3. C

4. B

5. C

6. B

7. C

8. D

9. D

10. D