FACTS: Bongbong Marcos sought for the reversal of the ruling of the Issue: Is the formal assessment notice is valid?
Court of Appeals to grant CIR's petition to levy the properties of the
late Pres. Marcos to cover the payment of his tax delinquencies Ruling: No. The NIRC of 1997 was already in effect when the final
during the period of his exile in the US. The Marcos family was assessment notice was issued. Under Section 228 of the NIRC,
assessed by the BIR after it failed to file estate tax returns. However taxpayers shall be informed in writing of the law and the facts on
the assessment were not protested administratively by Mrs. Marcos which the assessment is made: otherwise, the assessment shall be
and the heirs of the late president so that they became final and void. In the case at bar, the final assessment notice merely stated the
unappealable after the period for filing of opposition has prescribed. amount of liability to be shouldered by the estate and the law upon
Marcos contends that the properties could not be levied to cover the which such liability is based. However, the estate was not informed
tax dues because they are still pending probate with the court, and in writing of the facts on which the assessment of estate taxes had
settlement of tax deficiencies could not be had, unless there is an been made. The estate was merely informed of the findings of the
order by the probate court or until the probate proceedings are CIR. Section 228 of the NIRC being remedial in nature can be applied
terminated. retroactively even though the tax investigation was conducted prior
to the laws passage. Consequently, the invalid final assessment
notice cannot be a basis of a compromise, any proceeding
ISSUE: are summary tax remedies affected by the probate
emanating from the invalid final assessment notice is void including
proceedings?
the issuance of the warrant of distraint and/or levy.
RULING: No. The deficiency income tax assessments and estate tax
assessment are already final and unappealable -and-the subsequent
4. Estate of Juliana Diez vda De Gabriel v.CIR
levy of real properties is a tax remedy resorted to by the
Facts:
government, sanctioned by Section 213 and 218 of the National
Juliana Gabriel entered into a contract of agency with the Philippine
Internal Revenue Code. This summary tax remedy is distinct and
Trust Company (PhilTrust) for the latter to manager her business
separate from the other tax remedies (such as Judicial Civil actions
affairs. In April 1979, Gabriel died. Two days after her death,
and Criminal actions), and is not affected or precluded by the
PhilTrust filed the income tax return (ITR) of Gabriel. PhilTrust
pendency of any other tax remedies instituted by the government.
however did not mention therein that Gabriel already died. PhilTrust
The approval of the court, sitting in probate, or as a settlement
petitioned to be appointed as administrator of her estate but the
tribunal over the deceased's estate is not a mandatory requirement
probate court assigned an heir instead. Meanwhile, the Bureau of
in the collection of estate taxes. On the contrary, under Section 87 of
Internal Revenue (BIR) found that Gabriel has a tax deficiency in the
the NIRC, it is the probate or settlement court which is bidden not to
amount of P318k. Eventually in November 1982, a final assessment
notice (FAN) addressed to Gabriel was sent via registered mail to ssue: whether or not the notarial fee paid for the extrajudicial
PhilTrust. At this point, the BIR was still uninformed about Gabriels settlement in the amount of P60,753 and the attorney's fees in the
death. PhilTrust did not answer the FAN and so a warrant of distraint guardianship proceedings in the amount of P50,000 may be allowed
and levy was issued against the property of Gabriel. The as deductions from the gross estate of decedent in order to arrive at
administrator of the estate protested the warrant on the ground that the value of the net estate.
there was an invalid service of assessment. The Commissioner of
Internal Revenue (CIR) maintained that there was a valid service Held: Yes. As to the deductibility of the amount spent for
because a) PhilTrust was the agent of Gabriel, and b) the tax code (of notarization of the deed of extra-judicial settlement of
1977) does not require that the assessment be actually received by estate- Explained the SC, administration expenses, as an allowable
the taxpayer; that all it requires is that the assessment be released, deduction from the gross estate of the decedent for purposes of
mailed, and sent to the taxpayer at the address stated in the ITR arriving at the value of the net estate, have been construed by the
filed. federal and state courts of the United States [which the law on
allowable deductions from gross estate was copied!] to include all
ISSUE: Whether or not there was a valid service? expenses "essential to the collection of the assets, payment of debts
or the distribution of the property to the persons entitled to it."
HELD: No. PhilTrust was no longer the agent of Gabriel when the FAN
was issued in 1982. The contract of agency ceased when Gabriel died In other words, the expenses must be essential to the proper
in 1979. Since the agency was extinguished, the estate of Gabriel settlement of the estate. Expenditures incurred for the individual
cannot be bound by the mistakes and omission of PhilTrust i.e., benefit of the heirs, devisees or legatees are not deductible. This
failure to notify BIR of Gabriels death and failure to file an answer distinction has been carried over to our jurisdiction. Thus, in Lorenzo
for the FAN issued. v.Posadas the Court construed the phrase "judicial expenses of the
Anent the second argument of the CIR, although there is really no testamentary or intestate proceedings" as not including the
statutory requirement that the FAN should be actually received by compensation paid to a trustee of the decedent's estate when it
the taxpayer, the same should be sent to the taxpayer. In this case, it appeared that such trustee was appointed for the purpose of
was sent to PhilTrust. Also, although there is no specific requirement managing the decedent's real estate for the benefit of the
that the taxpayer should receive the notice within the prescriptive testamentary heir. In another case, the Court disallowed the
period (so long as the FAN was made within such period), due premiums paid on the bond filed by the administrator as an expense
process requires at the very least that such notice actually be of administration since the giving of a bond is in the nature of a
received. An assessment contains not only a computation of tax qualification for the office, and not necessary in the settlement of
liabilities, but also a demand for payment within a prescribed period. the estate. Neither may attorney's fees incident to litigation incurred
It also signals the time when penalties and interests begin to accrue by the heirs in asserting their respective rights be claimed as a
against the taxpayer. To enable the taxpayer to determine his deduction from the gross estate.
remedies thereon, due process requires that it must be served on
and received by the taxpayer. In this case, it is clear that the extrajudicial settlement was for the
purpose of payment of taxes and the distribution of the estate to the
5. CIR vs. CA and Pajunar; Estate Tax heirs. The execution of the extrajudicial settlement necessitated the
G.R. No. 123206 March 22, 2000 notarization of the same. It follows then that the notarial fee of
P60,753.00 was incurred primarily to settle the estate of the
Facts: deceased Pedro Pajonar. Said amount should then be considered an
Private respondent Josefina Pajonar was the guardian of the person administration expenses actually and necessarily incurred in the
of decedent Pedro Pajonar. The collection of the assets of the estate, payment of debts and
property of the decedent was put by the RTC- Dumaguete, under the distribution of the remainder among those entitled thereto. Thus,
guardianship of the Philippine National Bank via special proceeding, the notarial fee of P60,753 incurred for the Extrajudicial Settlement
wherein 50, 000 was spent therein for payment of attorney's should be allowed as a deduction from the gross estate.
fees. When the decedent died, instead of filing a estate tax return,
PNB advised Josefina to extra-judicially settle the estate of his Deductible expenses of administration of the estate may include
brother. The decedent's estate was extra-judicially settled and the executor's or administrator's fees, attorney's fees, court fees and
heirs paid an amount of 60, 753 for the notarization of the deed of charges, appraiser's fees, clerk hire, costs of preserving and
extra-judicial settlement of estate. The private paid the estate tax, distributing the estate and storing or maintaining it, brokerage fees
however, they were subsequently assessed of deficiency taxes or commissions for selling or disposing of the estate, and the like.
because the amount paid in the special proceeding [50, 000] and the Deductible attorney's fees are those incurred by the executor or
notarization fee [60, 753] cannot be claimed as a deduction to the administrator in the settlement of the estate or in defending or
decedent's estate. Private respondent paid the said taxes under prosecuting claims against or due the estate.
protest. While the case is under review by the BIR, she filed a claim
for refund in the CTA which was granted. As to the deductibility of attorney's fees in the Special proceedings-
I As a rule attorney's fees in order to be deductible from the gross
estate must be essential to the collection of assets, payment of debts document. In cases where the acceptance is made in a separate
or the distribution of the property to the persons entitled to it. The instrument, it is mandated that the donor should be notified thereof
services for which the fees are charged must relate to the proper in an authentic form, to be noted in both instruments. Not all the
settlement of the estate. [34 Am. Jur. 2d 767.] In this case, the elements of a donation of an immovable property are present in the
guardianship proceeding was necessary for the distribution of the instant case. The transfer of the property by virtue of the Deed of
property of the late Pedro Pajonar to his rightful heirs. It is Quitclaim executed by Helen resulted in the reduction of her
noteworthy to point that PNB was appointed the guardian over the patrimony as donor and the consequent increase in the patrimony of
assets of the deceased. Necessarily the assets of the deceased David as donee. However, Helen's intention to perform an act of
formed part of his gross estate. Accordingly, all expenses incurred in liberality in favor of David was not sufficiently established. The
relation to the estate of the deceased will be deductible for estate language of the deed of quitclaim is clear that Helen merely
tax purposes provided these are necessary and ordinary expenses contemplated a waiver of her rights, title and interest over the lands
for administration of the settlement of the estate. Hence the in favor of David, and not a donation. The element of animus
attorney's fees of 50, 000 is deductible from the gross estate of the donandi therefore was missing. Likewise, the two (2) deeds of
decedent. quitclaim executed by Helen may have been in the nature of a public
document but they lack the essential element of acceptance in the
proper form required by law to make the donation valid. Moreover,
B. DONORS TAX it is mandated that if an acceptance is made in a separate public
writing the notice of the acceptance must be noted not only in the
6. Republic vs Guzman (2000) document containing the acceptance but also in the deed of
donation. These requisites, definitely prescribed by law, have not
FACTS: David Rey Guzman, a natural-born American citizen, is the been complied with, and no proof of compliance appears in the
son of the spouses Simeon Guzman, a naturalized American citizen, record.
and Helen Meyers Guzman, an American citizen. In 1968 Simeon
died. Helen and David executed a Deed of Extrajudicial Settlement of
the Estate of Simeon Guzman dividing and adjudicating to
themselves all the property belonging to the estate of Simeon. The
document of extrajudicial settlement was registered in the Office of 7. ACCRA vs. CIR (DUNGOG)
the Register of Deeds. The taxes due thereon were paid through FACTS: During the 1987 national elections, petitioners, who are
their attorneys-in-fact, and the parcels of land were accordingly partners in the Angara, Abello, Concepcion, Regala and Cruz (ACCRA)
registered in the name of Helen and David in undivided equal shares. law firm, contributed P882,661.31 each to the campaign funds of
In 1981 Helen executed a Quitclaim Deed assigning, transferring and Senator Angara, then running for the Senate. In letters dated April
conveying to her son David her undivided one-half interest on all the 21, 1988, the BIR assessed each of the petitioners P263,032.66 for
parcels of land. Since the document appeared not to have been their contributions. Petitioners questioned the assessment claiming
registered, upon advice of Atty. Lolita G. Abela, Helen executed that political or electoral contributions are not considered gifts
another document, a Deed of Quitclaim, on 9 August 1989 under the NIRC, and that, therefore, they are not liable for donors
confirming the earlier deed of quitclaim as well as modifying the tax. The claim for exemption was denied by the Commissioner.
document to encompass all her other property in the Philippines. On CTA - allowed the exemption
1989 David executed a Special Power of Attorney where he CA - ordered the petitioners to pay donors tax
acknowledged that he became the owner of the parcels of land ISSUE: WON political or electoral contributions are subject to doners
subject of the Deed of Quitclaim executed by Helen. On 1 February tax?
1990 Atty. Lolita G. Abela, upon instruction of Helen, paid donor's HELD: Yes. Section 91 of the National Internal Revenue Code (NIRC)
taxes to facilitate the registry of the parcels of land in the name of reads:
David. The Government filed before the Regional Trial Court a (A) There shall be levied, assessed, collected and paid upon the
Petition for Escheat praying that one-half (1/2) of David's interest in transfer by any person, resident or nonresident, of the
each of the subject parcels of land be forfeited in its favor property by gift, a tax, computed as provided in Section
contending that David's ownership of the one-half (1/2) of the estate 92
of Simeon Guzman was defective. (B) The tax shall apply whether the transfer is in trust or
ISSUE: Is the transfer of the subject parcels land to the ownership of otherwise, whether the gift is direct or indirect, and
David a donation? whether the property is real or personal, tangible or
RULING: NO. There are three (3) essential elements of a donation: intangible.
(a) the reduction of the patrimony of the donor; (b) the increase in The NIRC does not define transfer of property by gift. However,
the patrimony of the donee; and, (c) the intent to do an act of Article 18 of the Civil Code, states:
liberality or animus donandi. When applied to a donation of an In matters which are governed by the Code of Commerce and special
immovable property, the law further requires that the donation be laws, their deficiency shall be supplied by the provisions of this Code.
made in a public document and that there should be an acceptance Thus, reference may be made to the definition of a donation in the
thereof made in the same deed of donation or in a separate public Civil Code. Article 725 of said Code defines donation as:
. . . an act of liberality whereby a person disposes gratuitously of a fide business purpose, like in this case when it had to sell for less
thing or right in favor of another, who accepts it. since the Parity agreement was soon to expire. The agreement that
Donation has the following elements: (a) the reduction of the B.F. Goodrich would be able to lease the lot could also be part of the
patrimony of the donor; (b) the increase in the patrimony of the compensation.
donee; and, (c) the intent to do an act of liberality or animus Definition of donors taxa tax on the privilege of transmitting ones
donandi. property or property rights to another or others without adequate
The present case falls squarely within the definition of a and full valuable consideration.
donation. Petitioners, the late Manuel G. Abello, Jose C. Concepcion, It is different from capital gains tax which is a tax on the gain from
Teodoro D. Regala and Avelino V. Cruz, each gave P882,661.31 to the the sale of the taxpayers property forming part of capital assets.
campaign funds of Senator Edgardo Angara, without any material
consideration. All three elements of a donation are present. The
patrimony of the four petitioners were reduced by P882,661.31 V. EXCISE TAXES
each. Senator Edgardo Angaras patrimony correspondingly increased
by P3,530,645.24[9]. There was intent to do an act of liberality 1. CHEVRON VS. CIR (R-U, Glenna)
or animus donandi was present since each of the petitioners gave
their contributions without any consideration. Taken together with Facts:
the Civil Code definition of donation, Section 91 of the NIRC is clear Chevron sold and delivered petroleum products to Clark
and unambiguous, thereby leaving no room for construction. Development Corporation (CDC) in the period from August 2007 to
December 2007. Chevron did not pass on to CDC the excise taxes
8. CIR vs. B.F. Goodrich, G.R. No. 104171. February 24, 1999 paid on the importation of petroleum products sold to CDC in
Facts: B.F. Goodrich was an American tire company operating here in taxable year 2007; hence, on 2009, it filed an administrative claim for
the Philippines. As a requirement for doing business here, the tax refund or issuance of tax credit certificate. Considering that
Central Bank of the Philippines required it to develop a rubber responded CIR did not act on the administrative claim for tax refund
plantation. In effect, B.F. Goodrich bought parcels of land from the or tax credit, Chevron elevated its claim to the CTA by petition for
Philippine government. (During that time it was still allowed for review. The CTA First Division denied Chevrons judicial claim for tax
foreign corporations to own parcels of land under the Parity refund or tax credit.
Amendment to the 1935 Constitution.) After a decade, the justice
secretary rendered an opinion that when the Parity Agreement Chevron appealed to the CTA En Banc, which affirmed the ruling of
expires on 1974, the rights of Americans over public agricultural the CTA First Division, stating that there was nothing in Sec. 135(c) of
lands would be lost, so it sold the land to Siltown Realty Philippines the NIRC that explicitly exempted Chevron as the seller of the
for only P500,000 even though the value was beyond P2 million. imported petroleum products from the payment of the excise taxes;
Siltown realty then leased the land to B.F. Goodrich for 25 years, and holding that because it did not fall under any of the categories
renewable for another 25 years. The BIR assessed B.F. Goodrich for exempted from paying excise tax, Chevron was not entitled to the
deficiency income tax for the year 1974. It paid the deficiency. BIR tax refund or tax credit.
then examined Siltown and it found out about the sale of the land.
The BIR then assessed B.F. Goodrich for deficiency donors tax on In addition, CTA En Banc noted that Considering that an excise tax is
October 10, 1980. Another assessment was made on March 16, in the nature of an indirect tax where the tax burden can be shifted,
1981 increasing the deficiency donors tax due. Sec.135(c) of the NIRC, as amended, should be construed as
Issue: May the BIR still assess a taxpayer even after the latter has prohibiting the shifting of the burden of the excise tax to tax-exempt
already paid the tax due, on the ground that the previous entities who buys petroleum products from the manufacturer/seller
assessment was based on a false return? by incorporating the excise tax component as an added cost in the
Ruling: No. Under Section 331 of the NIRC internal revenue taxes price fixed by the manufacturer or seller.
shall be assessed within five years from the filing of the return.
Under Section 332: Exceptions as to period of limitation of Also, based on jurisprudence, the Supreme Court held that the
assessment and collection of taxes. -- (a) In the case of a false or exemption from excise tax payment on petroleum based products
fraudulent return with intent to evade a tax or of a failure to file a under Sec.135(a) of the NIRC as amended, is conferred on
return, the tax may be assessed, or a proceeding in court for the international carriers who purchased the same for their use or
collection of such tax may be begun without assessment, at any time consumption outside the Philippines. The oil companies which sold
within ten years after the discovery of the falsity, fraud, or omission. petroleum products to international carriers are not entitled to a
In this case, since it involves income in 1974, the return is to be filed refund of excise taxes previously paid on the petroleum sold. Thus,
on April 15, 1975 which was made by B.F. Goodrich. So it did not fail Chevron is not entitled.
to file a return. The assessments on 1980 and 1981 were also clearly
beyond the 5 year limit. The BIR then argued that they filed a Hence, Chevron filed the MR.
fraudulent return with intent to evade tax when they sold the
property for a price lower than its declared market value. However, it
is not proof of falsity because it could have been done for a bona
Issue: Whether or not Chevron was entitled to the tax refund or the to the States policy of "protecting gasoline dealers and distributors
tax credit for the excise taxes paid on the importation of petroleum from unfair and onerous trade conditions," and places them at a
products that it had sold to the CDC in 2007. competitive disadvantage.
3.Sy Po vs CTA