Name: EULOGIO F. ECLEO JR. Prof: PRICILLA P. BADOC, D.M.

FINANCIAL MANAGEMENT

Student Activity 1. Pretest

Read the situation presented in each building and jot down the type of ownership & business
operation described below

The automotive shop built by three students offers car wash & major
overhauling of vehicles. These students had contributed their savings to
offer services at a range of a maximum of P500.00 per service & P100.00
as the minimum.

Type of Ownership: ___Partnership_____

Type of Operation: ____Service Oriented_____

__________________________

2. Juan, Pedro, Pablo & Boboy sold 500 stocks at 10 pesos each, so that
they could put up a capital for an Electronic Hardware Store and a shop
on the side that offers repair of appliances. Boboy owns 250 stocks, thus
his voting capacity is greater than the others.

Type of Ownership: ___Partnership____________

Type of Operation: ___Trading & Service Oriented____

__________________________

3. Marty is an only child of the Santos family. Having a large amount

of inheritance, he decided to open up a factory which creates post
lamps powered by solar energy. Being a new innovation, the business
earned millions.

Type of Ownership: ___Sole Proprietorship______

Student’s Activity 2:

1. Identify 5 businesses in Guiuan as to MSME in terms of number of employees.

2. From your identified businesses in # 1, what role or importance do each play in the
economic development of Guiuan
3. Business assets comprise of properties owned by the enterprise, which may comprise of
the following: building, land, cash, inventories (items for sale). Which of the businesses
identified in #1 could qualify as small & large.

Answers:

1. Five identified businesses in Guiuan;

a. Soledad Inn
b. Andoks
c. Prince Hypermarket
d. Watson
e. PNB Bank

2. It plays a major role in Guiuan’s economic development and growth through their
contribution in terms of employment opportunities and rural development of Guiuan.

3.
a. A. Soledad Inn - Micro
b. Andoks - Micro
c. Prince Hypermarket - Small
d. Watson - Micro
e. PNB Bank – Micro

Student’s Activity 3:

1. Identify businesses in Guiuan that were issued with authority to operate by the CDA
a. Sea Shells Products – Daiz Corp.
b. Cassava Chips – Residents of Gahoy
c. Sweet Delicacies – Odivilas Sweet Delicasies
2. Identify 10 products/services in Guiuan produced by corporations. Name their respective
producer-corporation
a. Chromite - Techiron Resources, INC.

3. Identify 10 sole- proprietorship businesses with their owners in Guiuan, E. Samar

a. Calicoan Villa – Mila Ramilo
b. Danz Graphic – Dandy Odita
c. LilyGene Enterprises – Lily Gene Yu
d. Hotel La Maria – Rogelio Odevilas
e. Soledad’s Inn – Pedro Macabocsit
 f. Guiuan Lending – Gorgonio Cabacaba
g. Rural Bank of Guiuan – Annaliz Kwan
h. Immaculate Conception Hospital – Dr. Letecia Perez
i. Guiuan Coastal Trading
j. Guiuan Copra and General Merchandise

Student Activity 4

1. Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. 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 __________ (1%) (2013 Bar
Question)
(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

2. 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? (1%) (2013
Bar Question)

(A) It should grant permission to make 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.

3. Money collected from taxation shall not be paid to any religious dignitary EXCEPT when:
(2011 Bar Question)
(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 S

4. A law that allows taxes to be paid either in cash or in kind is valid. True or False?

False

5. Briefly explain the following doctrines: lifeblood doctrine; necessity theory; benefits received
principle; and doctrine of symbiotic relationship. (5%) (2016 BAR)

The following doctrines, explained:

 a. Lifeblood Doctrine – Without revenue raised from taxation, the government will not survive,
resulting in detriment to society. Without taxes, the government would be paralyzed for lack of
motive power to activate and operate it. (CIR v. Algue, Inc., G.R. No. L-28896, February 17,
1988, 158 SCRA 9)
b. Necessity Theory – The exercise of the power to tax emanates from necessity, because
without taxes, government cannot fulfill its mandate of promoting the general welfare and well
being of the people. (CIR v. Bank of Philippine Islads, G.R. No. 134062, April 17, 2007, 521
SCRA 373)
c. Benefits received principle – Taxpayers receive benefits from taxes through the protection
the State affords to them. For the protection they get arises their obligation to support the
government through payment of taxes. (CIR v. Algue, Inc., G.R. No. L-28896, February 17,
1988, 158 SCRA 9)
d. Doctrine of symbiotic relationship - Taxation arises because of reciprocal relation of
protection and support between the State and taxpayers. The State gives protection and for it to
continue giving protection, it must be supported by the taxpayers in the form of taxes. (CIR v.
Algue, Inc., G.R. No. L-28896, February 17, 1988, 158 SCRA 9)

6. Which statement below expresses the lifeblood theory? (2012 BAR)

a) The assessed taxes 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 exaction 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 revenues.

7. 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? (2011 Bar
Question)
(A) That she is entitled to the return of the 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 filing the case in behalf of a substantial number of taxpayers.
(D) That text messages are an important part of the lives of the people she represents.

8. Real property taxes should not disregard increases in the value of real property occurring over
a long period of time. To do otherwise would violate the canon of a sound tax system referred
to as: (2011 Bar Question)
(A) theoretical justice.
(B) fiscal adequacy.
(C) administrative feasibility.
(D) symbiotic relationship.

9. Explain the principles of a sound tax system. (2015 Bar Question)

a. Fiscal adequacy which means that the sources of revenue should be sufficient to meet the
demands of public expenditures;
b. Equality or theoretical justice which means that the tax burden should be proportionate to the
taxpayer’s ability to pay (this is the so-called ability to pay principle); and
c. Administrative feasibility which means that the tax law should be capable of convenience, just
and effective administration.

9. Which theory in taxation states that without taxes, a government would be paralyzed for lack
of power to activate and operate it, resulting in its destruction? (2011 Bar Question)
(A) Power to destroy theory
(B) Lifeblood theory
(C) Sumptuary theory
(D) Symbiotic doctrine

10. The power to tax is the power to destroy. Is this always so? (2011 Bar Question)
(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. 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.