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CASES IN DONOR'S TAX since the purpose of the contribution was to help elect a candidate, there

was no donative intent. Petitioners contribution of money without any


Abello v. CIR material consideration evinces animus donandi.
G.R. No. 120721
February 23, 2005 Petitioners claim that since the purpose of electoral contributions is to
influence the results of the elections, donative intent is not present. They
claim that the purpose of electoral contributions is brought on by the
Topics: gift not defined in the Tax Code Civil Code definition on desire of the giver to influence the result of an election by supporting
donation applies; election contributions are subject to gift tax they are candidates who would influence the shaping of government policies that
not exempt even if such transfers are with intentions, motives or purpose would promote the general welfare and economic well-being of the
electorate, including the giver himself. Petitioners attempt to place the
Facts: During the 1987 national elections, petitioners, who are partners
barrier of mutual exclusivity between donative intent and the purpose of
in the Angara, Abello, Concepcion, Regala and Cruz (ACCRA) law firm,
political contributions. This Court reiterates that donative intent is not
contributed P882,661.31 each to the campaign funds of Senator
negated by the presence of other intentions, motives or purposes which
Edgardo Angara, then running for the Senate. BIR assessed each of the
do not contradict donative intent. Petitioners attempt is strained. The fact
petitioners P263,032.66 for their contributions. Petitioners questioned the
that petitioners will somehow in the future benefit from the election of the
assessment to the BIR, claiming that political or electoral contributions
candidate to whom they contribute, in no way amounts to a valuable
are not considered gifts under the NIRC so they are not liable for donors
material consideration so as to remove political contributions from the
tax. The claim for exemption was denied by the Commissioner. The CTA
purview of a donation. Senator Angara was under no obligation to benefit
ruled in favor of the petitioners, but such ruling was overturned by the
the petitioners. The proper performance of his duties as a legislator is his
CA, thus this petition for review.
obligation as an elected public servant of the Filipino people and not a
consideration for the political contributions he received. In fact, as a
Issue: Whether or not electoral contributions are subject to donors tax.
public servant, he may even be called to enact laws that are contrary to
the interests of his benefactors, for the benefit of the greater good.
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
Metro Pacific Corporation vs. CIR
governed by the Code of Commerce and special laws, their deficiency CTA Case No. 8318, June 11 2014
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 DOCTRINE:
Code defines donation as: . . . an act of liberality whereby a person
disposes gratuitously of a thing or right in favor of another, who accepts In case where property is transferred for less than an adequate and full
it. consideration in money or money's worth, then the amount by which the
fair market value (FMV) of the property exceeded the value of the
consideration shall be deemed a gift, and shall be included in computing
Donation has the following elements: (a) the reduction of the patrimony the amount of gifts made during the calendar year.
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. FACTS:

Petitioner MPC sold to Colmbus Holdings, Inc. (CHI) 2,597,197 common


The present case falls squarely within the definition of a donation.
shares in Bonifacio Land Corporation (BLC).
Petitioners each gave P882,661.31 to the campaign funds of Senator
Edgardo Angara, without any material consideration. All three elements Further, petitioner, through Atty. Tagao, requested respondent for
of a donation are present. The patrimony of the four petitioners were "confirmation that the sale of Bonifacio Land Corporation (BLC) shares of
reduced by P882,661.31 each. Senator Angaras patrimony stocks owned by MPC to Columbus Holdings, Inc. (CHI) is not subject to
correspondingly increased by P3,530,645.24. There was intent to do an donor's tax as provided in Section 100 of the Internal Revenue Code] as
act of liberality or animus donandi was present since each of the it is an ordinary business transaction negotiated in good faith by
unrelated parties for legitimate business purposes.
petitioners gave their contributions without any consideration. Taken
together with the Civil Code definition of donation, Section 91 of the Petitioner, as seller, filed CGT Return with the BIR LTS-Regular and the
NIRC is clear and unambiguous, thereby leaving no room for DST. The said CGT return showed that there was no tax due or paid for
construction. the transaction.

Since animus donandi or the intention to do an act of liberality is an The CIR confirmed that the sales transaction over the BLC shares
between petitioner as seller and CHI as buyer is not subject to donor's
essential element of a donation, petitioners argue that it is important to
tax because it is an ordinary commercial transaction negotiated in
look into the intention of the giver to determine if a political contribution is good faith between unrelated parties and motivated by legitimate
a gift. Petitioners argument is not tenable. First of all, donative intent is a business reasons.
creature of the mind. It cannot be perceived except by the material and
tangible acts which manifest its presence. This being the case, donative Later, petitioner received a Notice for Informal Conference (Notice) from
intent is presumed present when one gives a part of ones patrimony to respondent BIR LTS-Regular, informing petitioner that the subject
another without consideration. Second, donative intent is not negated transaction is actually subject to donor's tax.
when the person donating has other intentions, motives or purposes
In response, petitioner wrote respondent requesting for the re-evaluation
which do not contradict donative intent. This Court is not convinced that
of the factual information presented by petitioner and for the cancellation
of the tax assessment shown in the Notice, which was received by
respondent through the BIR LTS-Regular.
Petitioner received BIR LTSRegular a Final Assessment Notice (FAN),
details of discrepancy and Audit Result/ Assessment Notice, reiterating
its demand for payment of deficiency donor's tax.

Petitioner filed its formal protest, however, the same was denied by the
respondent.

Thus, the petitioner filed the instant Petition for review.

ISSUE:

Whether or not MPC is liable for the deficiency donor's tax assessment.

HELD:

YES. Petitioners claim for donors tax exemption has no legal basis.

Section 100 of the 1997 NIRC, as amended, is clear that in case where
property is transferred for less than an adequate and full consideration in
money or money's worth, then the amount by which the fair market value
(FMV) of the property exceeded the value of the consideration shall be
deemed a gift, and shall be included in computing the amount of gifts
made during the calendar year. It is thus, important to determine the "fair
market value" (FMV) of the property sold or transferred, and whether it
exceeded the value of the consideration.

Petitioner alleges, on the assumption that the subject shares were sold
for less than their "fair market value", that the subject transaction was an
ordinary business transaction negotiated in good faith by unrelated
parties for legitimate purposes operate to exclude the subject transaction
from the coverage of Section 100 of the NIRC, the same being a transfer
which is bona fide, at arm's length.

After a careful reading of the bases cited by petitioner, the court find that
the alleged exemption/exception from the donor's tax under the said
provision of law was not clearly established therein.