Question No.

1 a) May the Congress enact laws to raise revenues in the absence of a

constitutional provision granting said body the power to tax? Explain. b) May the
Congress abolish the power to tax of local governments?

Question No.

2 a) Differentiate between double taxation in the strict sense and in the broad
sense and give an example of each.

ANSWER:
Double taxation in the strict sense pertains to the direct double taxation. This means that the
taxpayer is taxed twice by the same taxing authority, within the same taxing jurisdiction, for the same
property and same purpose.
On the other hand, double taxation in broad sense pertains to indirect double taxation. This
extends to all cases in which there is a burden of two or more impositions. It is the double taxation other
than those covered by direct double taxation

b) A municipality, BB, has an ordinance which requires that all stores, restaurants,
and other establishments selling liquor should pay a fixed annual fee of P20,000.
Subsequently, the municipal board proposed an ordinance imposing a sales tax
equivalent to 5% of the amount paid for the purchase or consumption of liquor in
stores, restaurants and other establishments. The municipal mayor, CC, refused to
sign the ordinance on the ground that it would constitute double taxation. Is the
refusal of the mayor justified? Reason briefly.

Answer:
No. The impositions are of different nature and character. The fixed annual
fee is in the nature of a license fee imposed through the exercise of police power,
while the 5% tax on purchase or consumption is a local tax imposed through the
exercise of taxing powers. Both license fee and tax may be imposed on the same
business or occupation, or for selling the same article and this is not in violation of
the rule against double taxation (Compania General de Tabacos de Filipinas v. City
of Manila, G.R. No. L- 16619, June 29, 1963)

Question No.

3 a) Distinguish tax evasion from tax avoidance.

b) A law was passed granting tax exemption to certain industries and investments
for a period of five years. But three years later, the law was repealed. With the
repeal, the exemptions were considered revoked by the BIR, which assessed the
investing companies for unpaid taxes effective on the date of the repeal of the law.
NPC and KTR companies questioned the assessments on the ground that, having
made their investments in full reliance with the period of exemption granted by the
law, its repeal violated their constitutional right against the impairment of the
obligations and contracts. Is the contention of the companies tenable or not?
Reason briefly.