Casimiro Lladoc vs Commisioner of Internal Revenue and the court of tax appeals (1965) gr l-

19201
February 15, 2013 markerwins Tax Law

Facts: In 1957, the MB Estate Inc. of Bacolod City donated P10,000 in cash to the parish priest of

Victorias, Negros Occidental; the amount spent for the construction of a new Catholic Church in the

locality, as intended. In1958, MB Estate filed the donors gift tax return. In 1960, the Commissioner issued

an assessment for donees gift tax against the parish. The priest lodged a protest to the assessment and

requested the withdrawal thereof.

Issue: Whether or not the imposition of gift tax is valid despite the fact that the Constitution provides an

exemptions and that Fr. Lladoc was not the Parish priest at the time of donation.

Held: the imposition of the gift tax was valid. Section 22(3) Article VI of the Constitution contemplates

exemption only from payment of taxes assessed on such properties as Property

taxes contra distinguished from Excise taxes. The imposition of the gift tax on the property used for

religious purpose is not a violation of the Constitution. A gift tax is not a property by way of gift inter vivos,

the imposition of which on property used exclusively for religious purposes, does not constitute an

impairment of the Constitution. As well observed by the learned respondent Court, the phrase "exempt

from taxation," as employed in the Constitution (supra) should not be interpreted to mean exemption from

all kinds of taxes. And there being no clear, positive or express grant of such privilege by law, in favor of

petitioner, the exemption herein must be denied.

The phrase exempt from taxation should not be interpreted to mean exemption from all kinds of taxes.

The exemption is only from the payment of taxes assessed on such properties as property taxes as

contradistinguished from excise taxes. A donees gift tax is not a property tax but an excise tax imposed

on the transfer of property by way of gift inter vivos. It does not rest upon general ownership, but an

excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties.

The imposition of such excise tax on property used for religious purpose do not constitute an impairment

of the Constitution.

The tax exemption of the parish, thus, does not extend to excise taxes.
Pirovano v. CIR (14 SCRA 232)
Sec. 32[B] of the NIRC provides that Gifts, bequests and devises are exempted from gross
income liable to tax. Instead, such donations are subject to estate or gift taxes. However, if
the amount is received on account of services rendered, whether constituting a demandable
debt or not (such as remuneratory donations under Civil Law), the donation is considered
taxable income.

Facts: De la Rama Steamship Co. insured the life of Enrico Pirovano who was then its
President and General Manager. The company initially designated itself as the beneficiary of
the policies but, after Pirovanos death, it renounced all its rights, title and interest therein,
in favor of Pirovanos heirs.

The CIR subjected the donation to gift tax. Pirovanos heirs contended that the grant was
not subject to such donees tax because it was not a simple donation, as it was made for a
full and adequate compensation for the valuable services by the late Priovano (i.e. that it
was remuneratory).

Issue: WON the donation is remuneratory and therefore not subject to donees tax, but
rather taxable as part of gross income.

Held: No. the donation is not remuneratory. There is nothing on record to show that when
the late Enrico Pirovano rendered services as President and General Manager of the De la
Rama Steamship Co. and was largely responsible for the rapid and very successful
development of the activities of the company", he was not fully compensated for such
services. The fact that his services contributed in a large measure to the success of the
company did not give rise to a recoverable debt, and the conveyances made by the company
to his heirs remain a gift or a donation. The companys gratitude was the true consideration
for the donation, and not the services themselves.
G.R. No. L-5949 November 19, 1955

TANG HO, et al. vs. BOARD OF TAX APPEALS and THE COLLECTOR OF INTERNAL REVENUE

REYES, J.B.L., J.:

Petitioners appear to be the stockholder of two close family corporations on which BIR made an
examination of the books of the two corporation and found that each of Li Seng Giap's 13 children had a
total investment therein in shares issued to them by their father Li Seng Giap. CIR regarded these
transfers as undeclared gifts made in the respective years, and assessed against Li Seng Giap and his
children donor's and donee's taxes. The petitioners paid the basic taxes, and put up a surety bond to
guarantee payment of the balance demanded. And, they requested the Collector of Internal Revenue for
a revision of their tax assessments, and submitted donor's and donee's gift tax returns showing that each
child received by way of gift inter vivos, every year; that each of the eight children who married during the
period, were given dowry or gift propter nuptias; that the unmarried children received money, also by way
of gifts inter vivos. Appellants admit that these gifts were not reported; but contend that as the cash
donated came from the conjugal funds, they constituted individual donations by each of the spouses Li
Seng Giap and Tang Ho. They further alleged that the children's stockholding in the two family
corporations were purchased by them with savings from the cash donations received from their parents.

Thus they claimed the benefit of gift tax exemptions.

(3) Whether a donation of community property by the father alone equivalent in law to a donation
of one-half of its value by the father and one-half by the mother?

Appellants herein are therefore in error when they contend that it is enough that the property donated
should belong to the conjugal partnership in order that the donation be considered and taxed as a
donation of both husband and wife, even if the husband should appear as the sole donor. There is no
blinking the fact that, under the old Civil Code, to be a donation by both spouses, taxable to both,
the wife must expressly join the husband in making the gift; her participation therein cannot be
implied.

(b) That under the old Civil Code, a donation by the husband alone does not become in law a
donation by both spouses merely because it involves property of the conjugal partnership;

(c) That such a donation of property belonging to the conjugal partnership, made during its
existence, by the husband alone in favor of the common children, is taxable to him exclusively as
sole donor.

Wherefore, the decision appealed from is affirmed with costs to the appellants. So ordered.
Abello v. CIRG.R. No. 120721February 23, 2005Topics:

gift not defined in the Tax Code Civil Code definition on donation applies; election contributions are
subject to gift tax they are not exempt even if such transfers are with intentions, motives or purpose

Facts:

During the 1987 national elections, petitioners, who are partners in the Angara, Abello, Concepcion,
Regala and Cruz (ACCRA) law firm, each contributed to the campaign funds of Senator Edgardo Angara,
then running for the Senate. BIR assessed each of the petitioners for their contributions. Petitioners
questioned the assessment to the BIR, claiming that political or electoral contributions are not
considered gifts under the NIRC so they are not liable for donors tax. The claim for exemption was
denied by the Commissioner. The CTA ruled in favor of the petitioners, but such ruling was overturned
by the CA, thus this petition for review.

Issue:

Whether or not electoral contributions are subject to donors tax.

Held:

Yes, they are.

The NIRC does not define transfer of property by gift. However, Article 18 of the Civil Code, states: In
matters which are governed by the Code of Commerce and special laws, their deficiency shall be
supplied by the provisions of this Code. Thus, reference may be made to the definition of a donation in
the Civil Code. Article 725 of said Code defines donation as: . . . an act of liberality whereby a person
disposes gratuitously of a thing or right in favor of another, who accepts it. Donation has the following
elements: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the
donee; and, (c) the intent to do an act of liberality or animus donandi. The present case falls squarely
within the definition of a donation. Petitioners each gave to the campaign funds of Senator Edgardo
Angara, without any material consideration. All three elements of a donation are present.

Donative intent is presumed present when one gives a part of ones patrimony to another without
consideration. Also, donative intent is not negated when the person donating has other intentions,
motives or purposes which do not contradict donative intent.