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
4. Which of the following has no power of taxation? (RPCPA)
a. provincies
b. cities
c. barangays
d. barrios
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 economically stability.
d. To raise revenue to defray the necessary expenses of the government.
9. Which is the best answer? A Tax reform at any given time underscores the 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.
17. Congress passed a sin tax law that increased the tax rates on cigarettes by 1000%. The law was thought to be sufficient to drive
many cigarette companies out of business, and was questioned in court by a cigarette company that would go out of business
because it would not be able to pay the increased tax. The cigarette company is ________.
a. wrong because taxes are the lifeblood of the government
b. wrong because the law recognizes that the power to tax is the power to destroy
c. correct because no government can deprive a person of his livelihood
d. correct because Congress in this case , exceeded its power to tax
18. Which statement below expresses the lifeblood theory?
a. The assessed tax must be enforced by the government
b. The underlying basis of taxation is government necessity, for without taxation, a government can neither exist nor endure.
c. Taxation is an arbitrary method of extraction by those who are in the seat of power
d. The power of taxation is an inherent power of the sovereign to impose burdens upon subjects and objects within its
jurisdiction for the purpose of raising revenue.
19. The power to tax is the power to destroy. Is this always so? (BEQ)
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. The 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.
22. The President of the Philippines and the Prime Minister of Japan entered into an executive agreement in respect of a 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
24. Which statement gives the correct answer? That a feasibility study needs or need to look into the 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.
25. 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 provision, taxation power falls to the Congress as part
of the general power of lawmaking (RPCPA)
a. False, False
b. False, True
c. True, True
d. True, False
27. 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 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 power of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers.
29. The City Council passed an ordinance imposing an occupation tax on an air-conditioning technician. Conde 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 Conde 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 uniformity 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.
33. Which of the following is violative of the uniformity rule in taxation?
a. Different tax rates on boarding stables for racehorses and boarding horses 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.
34. 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 patients whom they
charge for their professional services.
II. The rest of the portions of the building are used for its patients, whether paying or non-paying.
III. Almost one-half 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 the
Elliptical Orchids and Garden Center.
Which portion is subject to real property tax?
a. I only
b. I and II
c. III and IV
d. I, III and IV
35. Statement 1: The constitutional exemption of income taxes, property taxes and custom duties is allowed on non-stock, non-
profit educational institutions only.
Statement 2: A building leased by its owner to a private educational institution for use as classroom is exempt from property tax.
Statement 3: Income of a non-stock, non-profit educational institution run by the Archdiocese is exempt from tax provided that the
incomes are actually, directly and exclusively used for 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
36. Which of the following statements is 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 is 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 filing of returns and payment of taxes.
d. The power of taxation is shared by the legislative and executive departments of the government
37. Saint Anthony College (SAC) is a non-stock, non-profit educational institution. It owns a 5-hectare lot one half of which is 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 are answerable by a “Yes”.
a. Is SAC subject to real estate tax on the one-half portion to be rented out to a business establishment?
b. Will it be exempt from income tax on its rental to the marketing firm?
c. Will the increase tuition fees be subject to income tax if it results to a net income from school operations?
d. Will it be subject to custom duties on the importation of the computers?
38. The Bicol School of Business Arts, a proprietary educational institution which is offering primary, secondary and tertiary
education, is registered with and accredited by the Department of Education and the Commission on Higher Education (CHED).
Which of the following is exempt from tax? What kind of tax?
a. The importation of laboratory equipment’s – 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 fast-food chain –from real property tax.
d. The income from operation –from income tax.
39. 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 property 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 fast-food chain –from real property tax.
d. The income from operation—from income tax.
40. The head priest of the religious sect Tress Personas Solo Dios, as the corporation sole, rented out a 5,000 sq. m. lot registered in
its name for use as school site of a school organized for profit. The sect used the rentals for the support and upkeep of its priests.
The rented lot is (BEQ)
a. Not exempt from real property taxes because the user is organized for profit.
b. Exempt from real property taxes since it is actually, directly, and exclusively used for religious purposes.
c. Not exempt from real property taxes since it is actually, directly, and exclusively used for educational purposes.
d. Exempt from real property taxes since it is actually, directly, and exclusively used for educational purposes.
41. The Municipality of Monte Cristo has 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 the 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 person is held for sale to either member or non-member of the association.
42. Lualhati Educational Foundation, Inc., a tock educational institution organized for profit, decided to lease for commercial use a
1,500 sq. m. portion of its school. The school actually, directly, and exclusively used the rents for the maintenance of its school
building, including payment of janitorial services. Is the leased portion subject to real property tax? (BEQ)
a. Yes, since Lualhati is a stock and for profit educational institution.
b. No, since the school actually, directly, and exclusively used the rents for educational purposes.
c. No, but it may be subject to income taxation on the rents it receives.
d. Yes, since the leased portion is not actually, directly and exclusively used for educational purposes.
44. Which statement is wrong? Tax laws (RPCPA)
a. Must originate from the House of Representatives and on which the same bill the Senate may propose amendments.
b. May originate from the Senate and on which same bill the House of Representative may propose amendments.
c. May have a house version and Senate version approved separately
d. May be recommended by the President to Congress
45. Congressman Luis R. Villafuerte of the 3 rd district of Camarines Sur and Senator Juan Ponce Enrile sponsored a bill in the House of
Representatives and the Senate, respectively, increasing the personal exemptions of individual taxpayers as well as granting tax
exemption to minimum wage earners. Which of the following is correct?
a. The senate bill should be discussed ahead of the house bill.
b. The senate and house bills maybe discussed at the same time in both houses.
c. The house bill should be discussed ahead of the senate bill.
d. No priority; each bill can be discussed ahead of the other.
47. 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 quotes, 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 items 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 tax payers.
49. They restrict the exercise of the power of the taxation although they are not embodied in the Constitution
a. theoretical justice
b. legislative in Character
c. Inherent Limitations
d. Constitutional Limitations
50. 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 lawmaker’s pork barrel
51. 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 sugar industry
d. none of the above
52. 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 individuals
d. Scholarship to poor but deserving students
53. A fundamental rule in taxation is that “the property of one country may not be taxed by another country.” This is known as
(RPCPA)
a. International Law
b. International Comity
c. Reciprocity
d. International Inhibition
54. QUESTION 1: Can the state 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
55. Diplomatic officials such as heads of states and ambassadors are exempt from taxes and duties because of
a. International comity
b. reciprocity provisions
c. principle of territoriality
 d. exemption in the tax code
61. XYZ Corporation manufactures glass panels and is almost at the point of insolvency. It has no more cash and all it has are unsold
glass panels. It received an assessment from the BIR for deficiency income taxes. It wants to pay but due to lack of cash, it seeks
permission to pay in kind with glass panels. Should the BIR grant the requested permission?
a. It should grant permission to makes payment convenient to taxpayers
b. It should not grant permission because a tax is generally a pecuniary burden
c. It should grant permission; otherwise , XYZ Corporation would not be able to pay
d. It should not grant permission because the government does not have the storage facilities for glass panels.
64. An example of a property tax is
a. Additional community tax on 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
65. Which of the following is not an example of excise tax?
a. Transfer Tax
b. Sales Tax
c. Real property Tax
d. Income Tax
66. Sharon, a CPA has just obtained her CPA license. Before she can lawfully pursue her occupation, she should pay
a. Professional Tax (PTR)
b. Percentage Tax
c. CPA’s income Tax
d. Value-added Tax
70. Which of the following statements is not wrong?
a. Nonpayment of additional community tax is a 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 provision 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
71. 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
85. The following are similarities of the inherent power of taxation, eminent domain and police power except one
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
88. Which statement is WRONG?
a. The power of taxation maybe exercised by the government , its political subdivisions , and public utilities
b. Generally, there is no limit on the amount of tax that may be imposed
c. The money contributed as tax becomes part of the public funds
d. The power of tax is subject to certain constitutional limitations
90. After having been informed that some massage parlors are being used as fronts for prostitutions, the Sangguniang Panglungsod
of Manila passed a tax ordinance subjecting massage parlors whit in 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
91. Which of the following statement is correct?
a. Nonpayment of tax and debt is a ground for imprisonment
b. The power to tax may include the power to destroy
c. Provision in the Philippine Constitution on taxation are grant of power.
d. Lands and buildings being used actually , directly and exclusively for religious and charitable purposes by churches and
charitable institutions are exempt from income and property taxes
92. 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
93. 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 centers is a valid exercise a police power
Statement 2: Construction of a church building is exempt from the payment of building permit fees because the constitutions
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 statements
 d. Both statements
94. 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
101. Which of the following is not distinction or similarity of license fee from tax?
a. Imposed for regulation
b. Involves exercise of police power
c. Nonpayment makes the business illegal
d. Legal compensation or reward of an officer for services
106. Which of the following is not a characteristic of debt?
a. Generally arises from contract
b. Payable only in money
c. Assignable
d. Imprisonment is not a sanction for non-payment
109. 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 operation.
c. Persons engaged in leasing or selling real property are subject to real estate dealer’s tax and their sales are also subject to
10% VAT.
d. A tax of 1% is imposed for bank reserved deficiency while a penalty of 1/10 of 1% is also imposed as consequence of such
reserve deficiency.
113. 1st Statement: Our constitution does not prohibit double taxation.
2nd Statement: If double taxation occurs, the tax payer 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.
114. Double taxation in its general sense means taxing the same subject twice during the same taxing period. In this sense, double
taxation (BEQ)
a. violates substantive due process
b. Does not violates substantive due process
c. Violates the right to equal protection
d. does not violates the right to equal protection
115. Your client owns a row of apartments. He complains to you that he is being required to pay four ($) kinds of taxes on this line of
business lone. 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.
116. One of the following is a false statement about double taxation. Which is it?
a. There is no constitutional prohibition on double taxation.
a. direct duplicate taxation is a valid defense against a tax measure if it is violate of the equal protection clause
b. Absence of any of the elements of direct double taxation makes it indirect double taxation.
c. A 20% final withholding tax on interest income on bank deposits and a 5% gross receipts tax on banks is a direct duplicate
taxation.
117. Statement 1: An ordinance imposing a tax on the manufacture of soft drinks and another tax on sale of the soft drinks
constitute double taxation.
Statement 2: A criminal case for tax evasion may be filed against a taxpayer even without a prior assessment issued by the
Commissioner of Internal Revenue.
Which of the following statements is false?
a. Statement 1 only
b. Statement 2 only
c. Neither statements
d. Both statements
118. Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his gross sales to the BIR and the municipal license tax
based on the same gross sales to the city of Makati. He comes to you for advice because he thinks he is being subjected to double
taxation.
What advice will you give him? (BEQ)
a. Yes, there is double taxation and it is oppressive
b. The City of Makati does not have this power.
c. Yes, there is double taxation and it is illegal in the Philippines.
d. Double taxation is allowed where one tax is imposed by the national government and other by the local government.
120. Which of the following is not scheme of shifting of 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.
b. The purchaser asks for a discount or refuse to buy at regular price unless it is reduce 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 shipping destination abroad, so that the
titel passes abroad instead of the Philippines.
d. The manufacturer transfers the sales of tax to the distributor, then in turn the wholesaler to the retailer and finally to the
consumer,
124. Statement 1: The grant of a tax amnesty must be constituted against the tax payer and liberally in favor of the taxing authority.
Statement 2: A tax exemption is a personal privilege which can be assigned or transferred by the grantee unless disallowed in the
law granting tax exemption.
Which of the above statements is true?
a. Statement 1 only
b. Statement 2 only
c. Neither Statements
d. Both statements
125. Which of the following is NOT usually imposed when there is tax amnesty? (BEQ)
a. Civil, criminal and administrative penalties
b. Civil and Criminal Penalties
c. Civil and administrative penalties
d. Criminal and administrative penalties
126. Statement 1: A BIR Ruling issued by the 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
129. Which of the following statements constitute tax avoidance?
a. Deliberate failure of a taxpayer to pay the taxes due to the government.
a. Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes.
b. Punishable by law
c. May be contrary to the intent of the legislature but nevertheless do not violate the law.
131. In case of ambiguity, tax law shall be interpreted
a. Strictly against the taxpayers
b. Liberally against the Government
c. Liberally in favor of the taxpayers
d. liberally in favor of the government
132. In case of deductions and exemptions on income tax returns, doubts shall be resolved
a. Strictly against the taxpayer
b. Strictly against the government
c. Liberally in favor of the taxpayer
d. Liberally against the government
133. The following except one, are exceptions to the rule the tax exemptions must be strictly constructed against the
taxpayer
a. Where the statute granting as exemption provides the 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 for public property
135. 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?
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
137. Which of the following is not considered as a step in making a revenue regulation effective?
a. Recommendation by the Commissioner of Internal Revenue to the Secretary of Finance
b. Approval by the Secretary of Finance
c. Legislation by Congress
d. Publication in the newspaper of general circulations
138. Statement 1: In case of conflict between a revenue regulation and the provisions of National Internal 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 statements are correct
c. Statement 1 is wrong, Statement 2 is correct
d. Both statements are wrong
147. 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 taxpayer’s suit?
a. That she is entitled to the return of 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 filling the case in behalf of a substantial number of taxpayer
d. That text messages are an important part of the lives of the people she represents.