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 2nd 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