CHAPTER 26

INHERENT POWERS OF THE STATE

More powerful than the will to win is the courage to begin - anonymous

Multiple choice: Choose the best possible answer

1. It is the act of laying a tax, i.e. the process or means by which the sovereign, through its
law making body, raises income to defray the necessary expenses of government.

a. Taxation
b. Power of eminent domain
c. Police power
d. None of the choices

Answer: A

2. It is the power of state or those to whom the power has been delegated to take private
property for public use upon paying the owners a just compensation to be ascertained
according to law.
a. Taxation
b. Power of eminent domain
c. Police power
d. None of the choices

Answer: B

3. It is 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 general welfare of the people.

a. Taxation
b. Power of eminent domain
c. Police power
d. None of the choices

Answer: C

4. (phil. CPA) Which statement refers to police power as distinguished from taxation?
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

5. (Phil. CPA) Which of the following may not raise money for the government?
a. Power of taxation
b. Police power
c. Power of eminent domain
d. Privatization of government’s capital assets

Answer: C

Distinction among the inherent powers as to amount of imposition

Taxation No limit

Police power Limited to the cost of the license and the necessary expenses
of police surveillance and regulation

Power of eminent domain No imposition, the owners is paid the fair market value of his
property

6. In this power of state , the person who is parting with his money or property is presumed
to receive a benefit.

a. taxation
b. police power
c. eminent domain
d. forfeiture power

answer: A

7. (Phil.CPA) Police power as distinguished from eminent domain.

a. Just compensation is received by the owner of the property

b. May be exercised by private individuals
c. Superior to impairment clause of the constitution
d. Property is taken by the government for public purposes

Answer : C
 Article III Section 10 No law impairing the obligation of contracts shall be
passed .Distinction among the three inherent powers as to relationship to the non-
impairment of obligations clause of the constitution

Taxation Inferior to the clause

Police power Superior to the clause

Power of eminent domain Inferior to the clause

8. (Phil.CPA) The following are the common to the inherent power of taxation, power of
eminent domain and police power, except for which of the following?
a. They are necessary attributes to sovereignty
b. They interfere with private rights and property
c. They are affect all persons or the public
d. They are legislative in implementation

Answer: C
Similarities among the three inherent powers:
1) They are inherent in the state
2) They exist independently of the constitution
3) They constitute the three methods by which the state
interferes with private rights and property
4) They are legislative in nature and character;
5) Each presupposes an equivalent compensation

9. The basic principle of taxation , where taxes must be based on the taxpayer’s ability to
pay is called :
a. Equality in taxation
b. Ability to pay theory
c. Theoretical justice
d. Equity taxation

Answer: C
 Basic principles of a Sound Tax System (Canons of Taxation)
(a) Fiscal Adequacy – This means that the sources of revenue should be
sufficient to meet demands of public expenditures.
(b) Equality or Theoretical Justice- This means that the tax burden
should be proportionate to the Taxpayers ability to pay.(ability to
pay principle )
(c) Administrative Feasibility –This means that the laws should be
capable of convenient, just and effective administration.

10. Under this basic principle of sound tax system, the government should not incur a deficit.
a. Theoretical Justice
b. Administrative Feasibility
c. Fiscal Adequacy
d. Debt Restructuring

Answer: C

11. What basic principle of sound tax system is met when Congress evolves a progressive
system of taxation as mandated in the Constitution?

a. Fiscal Adequacy
b. Theoretical Justice
c. Administrative Feasibility
d. Balanced Budget

Answer: B

12. Which of the following is not a basic principle of a sound taxation system?
a. It should be capable of being effectively enforced
b. It must be a progressive tax
c. It must be sufficient to meet government expenditures and other public needs
d. It should be exercised to promote public welfare

Answer: D

13. Which one of the following is not a characteristic of the States power to tax?
a. It is inherent in sovereignty
b. It is legislative in character
 c. It is based on the ability to pay
d. It is subject to constitutional and inherent limitations

Answer: C

Characteristics (or nature) of the State’s Power to Tax

a. It is inherent in sovereignty, hence, it may be exercised although
not expressly granted by the constitution
b. It is legislative in character, hence, only the legislature can impose
taxes (high prerogative of sovereignty).
c. It is subject to constitutional and inherent limitations, hence, it is
not an absolute power that can be exercised by the legislature
anyway it pleases.

14. (Phil.CPA) Statement 1: 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.

Statement 2: Taxation is essentially a legislative function. Even in the absence of any

constitutional provision, taxation power falls on Congress as part of the general power of
law-making.

a. Both statements are false

b. Only statement 1 is false
c. Both statements are true
d. Only statement 1 is true

Answer:C

15. (Phil.CPA)Which of the following statements is not correct?

a. Taxes may be imposed to raise revenue or to provide incentives or disincentives
for 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. For the provisions of taxation in the Philippine constitution are the grants of
power and not limitations on the taxing power.

Answer: D
16. Which is the best answer? a Tax reform at any given time underscores the fact that :
a. Taxation is an inherent power of the state
b. Taxation is essentially a legislative power
c. The state can and should adopt progressive taxation
d. Taxation is a power that is very broad

Answer: D

17. That the legislative body can impose a tax at any amount underscores the legal truism
that taxation is:
a. An inherent power of the state
b. Very broad as a power of the state
c. Essentially a legislative power
d. For public purpose

Answer: B

18. The government’s ability to serve the people depends on taxation. Since taxes are
collected, for their benefit, taxes may be imposed even in the absence of constitutional
grants and collection of taxes cannot be stopped.
a. Government is a necessity theory
b. Benefits received theory
c. Ability to pay
d. Lifeblood theory

Answer: D

Taxes are the lifeblood of the government and their prompt and
certain availability are imperious (expecting obedience) need.
Upon taxation depends the government’s ability to serve the
people for whose benefit taxes are collected.

19. One of the following is not a manifestation of lifeblood theory.

a. Imposition of tax even in the absence of constitutional grant
b. Right to select objects and subjects of taxation
c. No injunction to enjoin tax collection
d. Equal protection of law

Answer: D
 Manifestation of LIFEBLOOD THEORY
a) Imposition of tax even in the absence of constitutional grant
b) Right to select objects of taxation
c) No injunction to enjoin (or stop ) tax collection

20. The power of taxation proceeds upon what theory?

a. Government is a necessity theory
b. Benefits received theory
c. Ability to pay
d. Severance test

Answer: A
The power of taxation proceeds upon the theory that the existence of the
government is a necessity that it cannot continue without means to pay its
expenses and that for his means it has a right to compel all its citizens and
property within its limits to contribute.

21. That taxation is based on the principle of reciprocal duties of protection and support
between the State and its inhabitants.
a. Government is a necessity theory
b. Benefits received theory
c. Ability to pay
d. Lifeblood theory

Answer: B
The basis of taxation is the reciprocal duties of protection and support between
the State and its inhabitants. The state collects taxes from the subjects of
taxation in order that it may be able to perform the functions of government.
The citizens on the other hand, pay taxes in order that they may be secured in
the enjoyment of the benefits of organized society ( benefits received theory )

22. First Statement: In the exercise of the power of taxation, the State can tax anything, at
any time, and any amount.

Second statement: Taxes may be imposed not only to raise revenue, but also to provide
incentives and disincentives to certain activities within the state.
a. Both the statements are correct
 b. Both statements are incorrect
c. The first statement is correct, the second is incorrect
d. The first statement is incorrect, the second is correct

Answer: A

23. ( adapted ) Among the nature of taxation is that it is an inherent power being an
attribute of sovereignty. Which among the following is not among its manifestation as
such inherent power?
a. Courts cannot issue an injunction to enjoin the collection of taxes
b. There should be no improper delegation of the power to tax
c. Taxes may be imposed even without a constitutional grant
d. The state has the right to select the subjects and objects of taxation.

Answer : B

24. (adapted ) first statement : Symbiotic relation is the reason why the government could
impose taxes on the income of the resident citizens derived from sources outside the
Philippines.

Second statement: Jurisdiction is the reason why citizens must provide support to the
state so the latter could continue to give protection.
a. Both statements are correct
b. Both statements are incorrect
c. Only the first statements is correct
d. Only the second statement is correct

Answer: B
The first statement refers to jurisdiction while the second statement refers to
symbiotic relationship ( reciprocal duties )

25. ( Adapted) The city of Masbate passed an ordinance imposing a license fee on all motor
vehicles entering the city between the hours of 9:00 a.m. and 5 :00 p.m. Owners of
motor vehicles assailed the validity of the law. Is the law valid?
a. Yes, because it was issued as a source of revenue.
b. Yes, because it is a legitimate exercise of police power.
c. No, because it discriminates against those who are not able to pay the license fee,
particularly, low-salaried employees, and is therefore, class legislation.
d. No, because it is not imposed by any other municipality.

Answer: B
26. (adapted ) which of the following is not one of the canons of a sound tax sytem?
a. Quantifiability
b. Equality
c. Certainty
d. Convenience

Answer: A

27. ( phil. CPA) 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 tax laws. What
basic characteristics of taxation have been violated by this agreement?
a. Inherent limitation
b. Theoretical justice
c. Legislative in character
d. Administrative feasibility

Answer: C