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G.R. No. 210987 November 24, 2014 following: that the transaction cannot attract donor’s tax (c.

1) In the case of cash sale, the selling price shall be the
liability since there was no donative intent and,ergo, no consideration per deed of sale.
THE PHILIPPINE AMERICAN LIFE AND GENERAL taxable donation, citing BIR Ruling [DA-(DT-065) 715-09]
INSURANCE COMPANY, Petitioner, vs. THE SECRETARY OF dated November 27, 2009; that the shares were sold at their xxxx
FINANCE and THE COMMISSIONER OF INTERNAL actual fair market value and at arm’s length; that as long as
REVENUE, Respondents. the transaction conducted is at arm’s length––such that a
(c.1.4) In case the fair market value of the shares of stock
bona fide business arrangement of the dealings is done inthe
sold, bartered, or exchanged is greater than the amount of
ordinary course of business––a sale for less than an adequate
DECISION money and/or fair market value of the property received, the
consideration is not subject to donor’s tax; and that donor’s
excess of the fair market value of the shares of stock sold,
tax does not apply to saleof shares sold in an open bidding
VELASCO, JR., J.: bartered or exchanged overthe amount of money and the fair
market value of the property, if any, received as consideration
shall be deemed a gift subject to the donor’stax under Section
Nature of the Case On January 4, 2012, however, respondent Commissioner on 100 of the Tax Code, as amended.
Internal Revenue (Commissioner) denied Philamlife’s request
Before the Court is a Petition for Review on Certiorari under through BIR Ruling No. 015-12. As determined by the
Rule 45 of the Rules of Court assailing and seeking the Commissioner, the selling price of the shares thus sold was
reversal of the Resolutions of the Court of Appeals (CA) in CA- lower than their book value based on the financial statements
G.R. SP No. 127984, dated May 23, 20131 and January 21, of PhilamCare as of the end of 2008. 6 As such, the (c.2) Definition of ‘fair market value’of Shares of Stock. – For
2014, which dismissed outright the petitioner's appeal from Commisioner held, donor’s tax became imposable on the purposes of this Section, ‘fair market value’ of the share of
the Secretary of Finance's review of BIR Ruling No. 015-12 2 for price difference pursuant to Sec. 100 of the National Internal stock sold shall be:
lack of jurisdiction. Revenue Code (NIRC), viz:
The Facts SEC. 100. Transfer for Less Than Adequate and full
Consideration.- Where property, other than real property (c.2.2) In the case of shares of stock not listed and traded in
referred to in Section 24(D), is transferred for less than an the local stock exchanges, the book value of the shares of
Petitioner The Philippine American Life and General Insurance
adequate and full consideration in money or money’s worth, stock as shown in the financial statements duly certified by an
Company (Philamlife) used to own 498,590 Class A shares in
then the amount by which the fair market value of the independent certified public accountant nearest to the date of
Philam Care Health Systems, Inc. (PhilamCare), representing
property exceeded the value of the consideration shall, for the sale shall be the fair market value.
49.89% of the latter's outstanding capital stock. In 2009,
purpose of the tax imposed by this Chapter, be deemed a gift,
petitioner, in a bid to divest itself of its interests in the health
and shall be included in computing the amount of gifts made
maintenance organization industry, offered to sell its In view of the foregoing, the Commissioner ruled that the
during the calendar year.
shareholdings in PhilamCare through competitive bidding. difference between the book value and the selling price in the
Thus, on September 24, 2009, petitioner's Class A shares sales transaction is taxable donation subject to a 30% donor’s
were sold for USD 2,190,000, or PhP 104,259,330 based on The afore-quoted provision, the Commissioner added, is tax under Section 99(B) of the NIRC. 7Respondent
the prevailing exchange rate at the time of the sale, to STI implemented by Revenue Regulation 6-2008 (RR 6-2008), Commissioner likewise held that BIR Ruling [DA-(DT-065) 715-
Investments, Inc., who emerged as the highest bidder.3 which provides: 09], on which petitioner anchored its claim, has already been
revoked by Revenue Memorandum Circular (RMC) No. 25-
After the sale was completed and the necessary documentary SEC. 7. SALE, BARTER OR EXCHANGE OF SHARES OF STOCK 2011.
stamp and capital gains taxes were paid, Philamlife filed an NOT TRADED THROUGH A LOCAL STOCK EXCHANGE
application for a certificate authorizing registration/tax PURSUANT TO SECS. 24(C), 25(A)(3), 25(B), 27(D)(2), 28(A)(7) Aggrieved, petitioner requested respondent Secretary of
clearance with the Bureau of Internal Revenue (BIR) Large (c), 28(B)(5)(c) OF THE TAX CODE, AS AMENDED. — Finance (Secretary) to review BIR Ruling No. 015-12, but to no
Taxpayers Service Division to facilitate the transfer of the avail. For on November 26, 2012, respondent Secretary
shares. Months later, petitioner was informed that it needed x x x x affirmed the Commissioner’s assailed ruling in its entirety.9
to secure a BIR ruling in connection with its application due to
potential donor’s tax liability. In compliance, petitioner, on Ruling of the Court of Appeals
(c) Determination of Amount and Recognition of Gain or Loss –
January 4, 2012, requested a ruling4 to confirm that the sale
was not subject to donor’s tax, pointing out, in its request, the

taxation LAW cases: GIFT tax Page 1 of 9

as amended. 4 of the case to the CA via a petition for review under Rule 43. not the CA. Petitioner postulates that there is a need to the Sale of Shares. 11 as internal revenue taxes. DISMISSED for lack of jurisdiction. Department Order No. as what was elevated to the CA. which are appealable to the jurisdiction of the CTA. earlier position. a gap in the law when the NIRC. as couched. Power of the Commissioner to Interpret Tax Laws A. petitioner The Honorable Secretary of Finance gravely erred in failing to Insisting on the propriety of the interposed CA petition. rulings or issued BIR Ruling No. find that in the absence of any of the grounds mentioned in Philamlife. the Petition for Review dated January 9. finding that the application of Section 7(c. 7(a)(1) of Republic Act No. fees or other charges. It added that 2. taxation LAW cases: GIFT tax Page 2 of 9 ." which is under the Commissioner relating to those rendered under the first 1. in its value and for fair and full consideration in money or on appeal with the CTA. from those rendered under the second The Sale of Shares were sold at their fair market paragraph of Sec. or a rule or circulars – such as RMC 25-11 – cannot be given retroactive to interpret tax laws. The imposed in relation thereto. dismissing the CA Petition.2) of RR 06-08 in subject to review by the Secretary of Finance.7 of RA 1125. 4 of the NIRC.12 as circularized by RMC No. and RA 1125. while conceding that respondent Commissioner Camacho14 wherein the Court ruled that where what is Section 246 of the Tax Code. exclusive and original jurisdiction of the Commissioner. the appellate court altersthe meaning and scope of Section 100 of the Tax Code. as amended. the CA issued the assailed Resolution subject to review by the Secretary of Finance under Sec. or other matters arising under outright dismissal. submits. the only decisions of the It is superfluous for the BIR to require an express adverted sale of shares in PhilamCare attracts Secretary appealable to the CTA are those rendered in provision for the exemption of the sale of the Sale customs cases elevated to him automatically under Section donor’s tax. 2014 Resolution. under the first. refunds of to Sec. the Assailed Ruling and RMC 25-11 is void insofar as it In disposing of the CA petition. This distinction. amended. issues in both procedure and substance: therefore beyond the ambit of Section 100 of the Tax does not find application in the case at bar since it only Code. can be categorized as "other matters arising under the NIRC differentiate the rulings promulgated by the respondent or other laws administered by the BIR. which are subject to review Philamlife eventually sought reconsideration but the CA. – The power to interpret the provisions of this Code and other tax laws shall be under the The Honorable Secretary of Finance gravely erred in not SO ORDERED. pursuant The power to decide disputed assessments. Whether or not the price difference in petitioner’s under RA 1125. Petitioner’s contentions of the Secretary in its exercise of its power of review under Sec. the instant recourse. penalties B. which has jurisdiction over the issues raised. 4 of the NIRC. and to Decide Tax Cases. 2013. rules and regulations. This gap. The Honorable Secretary of Finance gravely erred in finding postulate that BIR Ruling No. Whether or not the CA erred in dismissing the CA second paragraph and does not encompass rulings from the Petition for lack of jurisdiction. so the CA held. 4 of the NIRC are appealable to. to wit: assigning the following errors:10 WHEREFORE. equally assailed January 21. the regular application to the prejudice of Philamlife.13 Code does not explicitly subject the transaction to donor’s tax. thus. is predicated on the this Code orother laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner. as amended. petitioner argues. failed to supply where the rulings C. was remedied by British American Tobacco v. the petition raises the following transaction without any donative intent and is Philamlife further averred that Sec. governs appeals from the Commissioner’s rulings under the 1. and Secretary of Finance in the exercise of his power of review 3. is readily made apparent by 2. maintained its money’s worth. a. argued nonetheless that such ruling is regulation issued by the administrative agency. ratiocinated that it is the Court of Tax Appeals (CTA). Procedural Arguments There is. 015-12 in accordance with her authority assailed is the validity or constitutionality of a law. 1125 (RA 1125). thusly: the NIRC. petitioner elevated On May 23. 7-02. courts have jurisdiction to pass upon the same. Hence. 40-A- Issues 02. paragraph of Sec. 2013 is SECTION 4.2. The sale of the Sale Shares is a bona fide business Stripped to the essentials. Shares from donor’s tax since Section 100 of the Tax 2315 of the Tariff and Customs Code. Secretary of Finance. Consequently. 015-12 was issued in the exercise of the Commissioner’s power to interpret the NIRC subject to the exclusive appellate jurisdiction of the Court of that Section 100 of the Tax Code is applicable tothe sale of and other tax laws.Not contented with the adverse results. requesting for its review Tax Appeals.

wherein it was held that her action in the exercise of such power is appealable that: directly to the CTA.g. Decisions of the Commissioner of Internal Revenue in cases arguments by claiming that even assuming arguendo that the involving disputed assessments. 4 of the NIRC. Petitioners: The ruling of the Commissioner is taxes. had from the adverse ruling of the Secretary of Finance in its the appeal. nonetheless. alter. means the power of the Chief Executive to subject to review by the Secretary of Finance. according to petitioner. As made apparent by the rules. members of the Cabinet and heads of line agencies. respecting the CTA’s jurisdiction over the controversy. modify. and offices. 1. in any way. as amended. Philamlife. the Department of 43. which even Congress cannot limit. and that of the Secretary to the CA via Rule other laws administered by the Bureau of Internal Revenue. albeit inthe CA petition. respondents cite the It is axiomatic that laws should be given a reasonable President’s power of review emanating from his power of 3. and that of the Secretary to the Office of enough to include appeals from the Secretary’s review under under the same provision. Jurisdiction. most recently in Elma v. Respondents’ contentions indicated below have been advanced by the parties and by herein provided: the CA as the proper remedy open for assailing respondents’ Before the CA. This is in stark contrast to the OP’s specific mention the NIRC. addresses of appellate jurisdiction that can decide the issues raised the seeming gap in the law asit vests the CTA. 4 of the The nature and extent of the President’s constitutionally interpretation of statutes if todo so would lead to unjust or NIRC––the power to interpret tax laws. be taken done in the performance of their duties and to substitute the exercise of its power of review under Sec. and should not. however. in fact. CA: The ruling of the Commissioner is subject to interpretation which does not defeat the very purpose for control as enshrined under Sec. 7(a)(1) of RA 1125. there can be no other court We find that Sec. However. there is no provision in law that expressly In their Comment on the instant petition.17 Courts should not follow the letter Constitution. appeals questioning the decisions of the Secretary of The petition is unmeritorious. merely as recognition that matters calling for technical knowledge should be handled by the agency or quasi-judicial Admittedly.The CTA shall exercise: Rule 43 petition for review. specialized quasi-judicial agency mandated to adjudicate tax. 43 petition. 7. Preliminarily. to interpret the provisions of this Code and other tax laws is prejudiced by his adverse rulings. bureaus. The issue that Weimply from the purpose of RA 1125 and its amendatory review. This. Sec. it bears stressing that there is no dispute that against narrowly interpreting a statute as to defeat the what is involved herein is the respondent Commissioner’s purpose of the legislator. of the legislature or would otherwise yield conclusions Section 17. 17 of Article VII of the review by the CTA.In sum. 4 of the BIR. or nevertheless. was granted power of control have beendefined in a plethora of absurd results.19 16 recognized by the appellate court itself. fees or other charges. 4 of other matters arising under the National Internal Revenue or the Secretary of Finance’s ruling to the Office of the President the NIRC. now arises is this––where does one seek immediate recourse laws that the CTA is the proper forum with which to institute e. to leave undetermined the mode of appeal from the 4 of the NIRC readily provides that the Commissioner’s power Secretary of Finance would be an injustice to taxpayers x x x This power of control. provides where exactly the ruling of the Secretary of Finance body with specialization over the controversy. if not conflicting. so respondents pointed out. but erroneously held cases. positions as a. which involves the tax treatment of the The Court’s Ruling impliedly. or set aside what a subordinate. and rejected the literal exercise of power under the first paragraph of Sec. He shall ensure many cases involving the construction of statutes. and assessment cases. As the respondents asseverate that the CA did not err in its holding under the adverted NIRC provision is appealable to. which they were passed. let alone withdraw.The President shall have control of all the inconsistent with the purpose of the act. as b. 18 This Court has. in executive departments. respondents countered petitioner’s procedural rulings: 1. Jacobi. Rule 43 of the Rules of Court whose 2.committed a fatal error when it failed to appeal subject to review by the Secretary under Sec. the President before appealing to the CA via a Rule Sec. nullify. 1. three different. matters" arising under the NIRC or other laws administered by Finance in the exercise of its power of review under Sec. (emphasis supplied) Finance is not among the agencies and quasi-judicial bodies enumerated under Sec. To recapitulate. 4? as a derogation of the power of the Office of President but judgment of the former for that of the latter. sufficient review. (OP). refunds of internal revenue CTA does not have jurisdiction over the case. As stated: the NIRC are not within the CTA’s limited special jurisdiction Reviews by the Secretary of Finance pursuant to Sec.. As correctly pointed out by petitioner. cautioned that the laws be faithfully executed. which reads: of a statute when to do so would depart from the true intent We now resolve. with jurisdiction over the CA petition as "other taxation LAW cases: GIFT tax Page 3 of 9 . To remedy this situation. penalties in relation thereto. Exclusive appellate jurisdiction to review by appeal. Respondents: The ruling of the Commissioner is Even though the provision suggests that it only covers rulings decisions and rulings are appealable through a petition for 15 subject to review by the Secretary under Sec. We hold that it is. Indeed. customs. are appealable to the CA via a NIRC are appealable to the CTA Sec. 4 of the and. 4 of of the Commissioner. and To further reinforce their argument.. This is not.

nextinvites attention The appellate power of the CTA includes certiorari them. viz: Petitioner is quick to point out. of their gross income. No. and to determine whether or not there has file the suit with the CTA because he was not adversely revenue memorandum circulars are actually rulings or been a grave abuse of discretion amounting to lack or excess affected by a decision or ruling of the Collector of Internal opinions of the CIR on the tax treatment of motor vehicles of jurisdiction on the part of any branch or instrumentality of Revenue. presidential decree.. At most it duties and taxes under the Customs and Tariff Codeand other Auctioneers. because in our opinion its resolve tax disputes in general. the assailed revenue regulations and and enforceable. The issuance of RMO No. international or executive 245 of the Tax Code "to make rulings or opinions in connection Appeals may consider. in CIR v. [10] agency in the performance of its quasi legislative function. wherein this Court has expounded on the asked for a reconsideration of both RMO No. filed a motion to jurisdiction extended only to a review of the decisions of the where the constitutionality of a law or rule is challenged. and if what is assailed are rulings or his assessment on the return of a tax payer! 22 lending investor’s tax on pawnshops based on their gross opinions of the Commissioner on tax treatments. Inc. No. The RTC denied Commissioner of Customs. Subsequently. implementing the Tax Code on the taxability of pawnshops. appear to bear no between administrative officers or agencies.2) Code. His opinion. to wit: was the City of Cebu that had been adversely affected in the relevant tax laws of the Philippines. The problem with investigate and assess the lending investor’s tax due from the above postulates. Jr. including the regional trial courts.." In reversing the CA. 1125 creating the Court of Tax Appeals did of RR 06-08 and RMC 25-11. such the validity of the acts of the political departments.23 12 of R. xxxx by an administrative agency contravenes the law or the 43-91 are actually rulings or opinions of the Commissioner constitution is within the jurisdiction of the regular courts. pursuant to Section 116 of National Internal Revenue Code x x x. including ruling on the classification of articles of sales This is within the scope of judicial power."The Court held that under R. 7227 which provides that "exportation or We share the view that the assessor had no personality to removal of goods from the territory of the [SSEZ] to the other Vis-a-vis British American Tobacco. or regulation inthe courts. In an attempt to divest the CTA pawn tickets to documentary stamp tax.21 As held: sold at public auction within the SSEZ to implement Section the Government. as amended) which states that "[d]ealers in securities The respective teachings in British American Tobacco and Asia Appeals was not created to decide mere conflicts of opinion shall pay a tax equivalent to six (6%) per centum of their International Auctioneers. 15-91 was an offshoot of the to the ruling in Ursal v. such enumeration excludes all others agreement. Imagine an gross income. 1125 is a complete law by itself and Indeed. 15-91 imposing 5% have jurisdiction." x x x Republic Act No. 43-91 subjecting Republic Act No. however. is that they failed to take into taxation LAW cases: GIFT tax Page 4 of 9 . the Constitution vests the power of judicial review or They were issued pursuant to the CIR’s power under Section expressly enumerates the matters which the Court of Tax the power to declare a law.A. dissolving the Writ of 3065). 1158 (The National Internal Revenue material damage upon him or his office. v. (Lopez & Sons vs. as amended. or a rule or regulation issued by the administrative prohibition with the CA which dismissed the petition "for lack The Court of Tax Appeals. Gaz. seeking to prohibit petitioner CIR from implementing the decision of the Collector ofCustoms.shares of stocks sold. laws. Defining such special court’s jurisdiction.2. as provided bythe statute — and Where what is assailed is the validity or constitutionality of a the motion. 43-91. dismiss on the ground of lack of jurisdiction. at first blush. Respondent therein. And the Court of Tax Code. Parayno. The the dismissal of the case before the trial court. 53 Off. Inline with this idea we recently approved said court’s then filed a petition for prohibition with the RTC of San Mateo. disputes. this does not include cases revenue orders. law.. Lest the ruling in Ursalbe (An Act Creating the Court of Tax Appeals). it bears to stress what resort to the Court of Tax Appeals.A. 15-91 and RMC necessarily limited its authority to those matters enumerated limited jurisdiction of the CTA in the following wise: No. it must be rulings of the CIR are appealable to the CTA. but the same was denied by petitioner CIR. petitioner then cites British Josefina Leal. order. Petitioner. that the grounds "lending investors" as defined in Section 157(u) of the Tax raised in its CA petition included the nullity of Section 7(c. Leal." They were issued sense that it could not thereafter collect higher realty taxes pursuant to the power of the CIR under Section 4 of the from the abovementioned property owners.24 (emphasis added) true had been overruled. The rulings of the Board of parts of the Philippine territory shall be subject to customs appears to be a contrasting ruling in Asia International Assessment Appeals did not "adversely affect" him. treaty. however. 11 of RA 1125. 1125 authority of the courts to determine inan appropriate action Petitioner’s contention is untenable. but the overruling inflicted no Presidential Decree No. 850. or lower Revenue Memorandum Order (RMO) No. owner and operator of Josefina’s Pawnshop. Lending investors shall pay a tax equivalent to conflict––that when the validity or constitutionality of an income tax examiner resorting to the Court of Tax Appeals five (5%) per cent. through the OSG. Petitioner filed a petition for certiorari and not to decisions of the Collector of Customs. it is Similarly. instruction. order rejecting an appeal to it by Lopez & Sons from the While the above statute confers on the CTA jurisdiction to Rizal. which includes the and similar purposes. though. 100 Phil. but worse as a precedent." the CIR issued administrative rule or regulation is assailed. the regular courts whenever the Collector of Internal Revenue modifies. Expressio unius est exclusio alterius. Preliminary Injunction issued by the trial court and ordering regular courts have jurisdiction to pass upon the same. not grant it blanket authority to decide any and all tax jurisdiction over the controversy. ordinance. the CIR issued RMC No. jurisdiction income and requiring all investigating units of the BIR to over the controversy is lodged with the CTA. The CIR. the Act American Tobacco. as was required under Sec. the of basis. Judicial taken out of context. power includes the duty of the courts of justice to settle actual noted that the primary reason for the dismissal of the said controversies involving rights which are legally demandable case was that the petitioner therein lacked the personality to In the case at bar. Court of Tax Appeals 20 to argue against CIR’s finding that the pawnshop business is akin to that of granting the CTA jurisdiction by implication. 15-91 and RMC No. with the implementation of the provisions of internal revenue by implication. the Supreme determination of whether a specific rule or set of rules issued Court held that "[t]he questioned RMO No. Leal therein.

Grecia-Cuerdo. To discretion amounting to lack or excess of jurisdiction on the difference in price is considered a donation by fiction of law. (C. As the revenue regulation or revenue memorandum circular on 100 of the NIRC. of the 1987 Constitution provides. the Petition involves an issue on the taxability of the Guided by the doctrinal teaching in resolving the case at bar. it can petition’s outright dismissal. the certiorari in cases within its appellate jurisdiction. the power to issue. while there is no express grant applicability of Sec.2) of RR 06- of RA 9282. follows that the CTA. Section 5 (1). 129 (BP 129) long as it is within its appellate jurisdiction. exempt the sales of stock transaction from donor's tax since Petitioner’s above submission is specious. Sec. and which case law should be Petitioner's substantive arguments are unavailing. the be fairly interpreted that the power of the CTA includes that of value 25 of the consideration shall be deemed a Court en banc has ruled that the CTA now has the power of determining whether or not there has been grave abuse of gift. the power to issue a writ of certiorari. from Ursal in that in spite of there being no express grant in by an administrative agency contravenes the law or the law. must be expressly conferred by the Constitution or by law and Petitioner avers that there is now a trend wherein both the cannot be implied from the mere existence of appellate Indeed. however. Itmust be observed. 100. Thus. To illustrate this point. Republic Act No. if not indispensable. 7 to Regional Trial Courts. one hand. 100 of court. if that be the case. involved. does not of jurisdiction on the part of any branch or instrumentality of the Government. absence of donative intent. Section 1.7 (c.2. to rule on xxxx prohibition and mandamus. the CTA is deemed granted with powers of certiorari by constitution is within the jurisdiction of the regular courts. It. and to determine whether or not there has agency it should be filed. Camacho. Moreover.2. certiorari involves the exercise of original jurisdiction which in these cases. Clearly. Article VIII but likewise questioned the validity of Sec. by constitutional the NIRC but merely sets the parameters for determining the taxation LAW cases: GIFT tax Page 5 of 9 . also in the exercise of its original rule not only on the propriety of an assessment or tax Petitioner essentially questions the CIR’s ruling that jurisdiction. 100 of the NIRC categorically states that the amount by which the fair market value of the property exceeded the On the strength of the above constitutional provisions. includes the duty of the courts of justice to settle actual petitioner submits that taxpayers are now at a quandary on The price difference is subject to donor's tax controversies involving rights which are legally demandable what mode of appeal should be taken. in the British American Tobacco to the effect that it is now within the exercise of its original jurisdiction. whether or not in aid of its appellate jurisdiction. Sec. thus. There is no perceivable assessment or taxability of the transaction or subject Sandiganbayan. mere prayer for the declaration of a tax measure’s jurisdiction of courts or tribunals over petitions for certiorari among others. it can now gives the appellate court. With respect to the Court of the validity of a particular administrative ruleor regulation so Appeals. Section 21 of BP 129. and other Evidently. elucidate: part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax Moreover.consideration one crucial point––a taxpayer can raise both The prevailing doctrine is that the authority to issue writs of mandate. in order for any appellate court to effectively exercise CTA and the CA disclaim jurisdiction over tax cases: on the jurisdiction.2.2) of RR 06-08 does not alter Sec. Thus. nonetheless. The been a grave abuse of discretion amounting to lack or excess followed. to issue writs of certiorari. transaction rather than a direct attack on the constitutionality the fact that the CA petition not only contested the of Sec. City of Manilacan be considered as a departure determination of whether a specific rule or set of rules issued ancillary writs and processes in aid of its appellate jurisdiction. Article VIII of the 1987 implication. to which court or and enforceable. but also on the validity of Petitioner’s sale of shares is a taxable donation under Sec. thusly: Admittedly.2. 100 of the NIRC. even if there is no actual donation. a writ of certiorari. in primary issue is not the tax measure’s validity but the exercising quasijudicial powers. injunctions. and on the other hand. petitioner cites the assailed special criminal court has exclusive original jurisdiction over not total. courts as may be established by law and that judicial power As a result of the seemingly conflicting pronouncements. contrary to petitioner's arguments. certiorari. In transferring exclusive unconstitutionality or invalidity before the CTA can result in a on the ground that there is no law which expressly gives these jurisdiction over appealed tax cases to the CTA. the Supreme Court has ruled that the prohibition.2. is provided under it was used by the CIR as bases for its unfavourable opinion. x x x this Court has ruled against the its appellate jurisdiction. (emphasis added) Resolution. 8249 now provides that the reason why the transfer should only be considered as partial.1âwphi1 Thus. 7(c. it must have the authority to issue. in British American Tobacco vs. a writ of treatment of a certain transaction. The foregoing notwithstanding. City of Manila diametrically opposes the CTA.) of RR 06-08 and RMC 25-11. The validity of Sec. with respect to the CTA. it can In the recent case of City of Manila v. Constitution grants power to the Supreme Court. not In the same manner. is vested with jurisdiction to issue writs of certiorari issues simultaneously. through its power of certiorari. Sec. petitions for the issuance of the writs of mandamus. 7 of such power. that x x x reasonably be assumed that the law intended to transfer also will likewise dismiss the same petition should it find that the these rulings pertain not to regular courts but to tribunals such power as is deemed necessary. Sec. which the said assessment is based. power of the CTA. habeas corpus. 100 of the NIRC over the sales transaction the instant Petition properly pertains to the CTA under Sec. With respect tothe aid of such appellate jurisdiction. Hence. the CA tribunals such power. that judicial 08 and RMC 25-11 does not divest the CTA of its jurisdiction power shall be vested in one Supreme Court and in such lower over the controversy. certiorari. Section 9 (1) of Batas Pambansa Blg.2) and RMC 25-11 is merely questioned incidentally since in the exercise of their original jurisdiction. among others. 7 (c.

and that.R. Jose C. Regala and Cruz squarely fall under the definition of donation or gift.661. tangible having been issued after the sale. This is a petition for review on certiorari under Rule 45 of the was enacted. In letters dated April 21. Avelino V. AVELINO V. the contributions are voluntary transfers of property in the form of money from private respondents to During the 1987 national elections.nét petitioners. without considerations therefor. Manuel G. Such issuance was MANUEL G. Cruz and Court of Tax Appeals."fair market value" of a sale of stocks. ordering the Commissioner of Internal Revenue by one to another without any consideration or compensation (Commissioner) to withdraw his letters dated April 21. 120721 February 23. A donor’s or gift tax is Commissioner to desist from collecting donor’s taxes from the imposed on the transfer of property by gift. and whether the property Rules of Civil Procedure. 2005 political contributions in the Philippines are considered taxable gift rather than taxable income.: NIRC. petitioner is mistaken in stating that RMC 25-11.26 Instead. resident. assessed.66 for their contributions. contributed P882. As aforestated. Sec. (ACCRA) law firm. tangible or intangible. they are were to be used. collected. or gift tax. SP No.11ªvvphi1. it merely called for the strict application of Pursuant to the above-quoted provisions of law. laws and to promulgate rules and regulations for their COMMISSIONER OF INTERNAL REVENUE and COURT OF or non-resident. with the CTA. 1994. vs. 1988 assessing donor’s taxes and to desist from collecting donor’s taxes from petitioners. 2013 and January 21. Regala. In the instant case. petitioners filed a petition for review of the contributions.032. APPEALS. and whether the property is real or personal.R. 100. Angara does not affect the character 1988. respondents. (b) The tax shall apply whether the transfer is in trust or otherwise. petitioners questioned the assessment through a letter of the fund transfers as donation or gift. Concepcion. 1988. 620. retroactively in contravention to Sec. provides: political contribution is indubitably not intended by the giver taxation LAW cases: GIFT tax Page 6 of 9 . which was already in force the moment the NIRC property by gift. SP No. 28 Phil. Hence. The Internal Revenue v.3 The appellate Court ordered the petitioners to pay donor’s tax amounting to P263. 91. the petition is hereby DISMISSED. There was thereby no to the BIR. campaign funds of Sen. ABELLO. CONCEPCION. reasoning as follows: G. because a The National Internal Revenue Code." dated May 23. The claim for exemption was denied for the purpose for which they were intended. – For internal revenue purposes. petitioners. the Bureau of Internal Revenue (BIR) assessed each of the The fact that the contributions were given to be used as petitioners P263. a tax. Imposition of Tax. computed as implementation. TEODORO D. 1988. 250). Santos vs.nét had complete and absolute power to dispose of the contributions.J. 246 of the AZCUNA. and August 4. Concepcion. Sen. provided in Section 92. Angara by the Commissioner. as amended.R. who are Sen. SO ORDERED. (a) There shall be levied. the CTA ordered the Section 91 of the Tax Code is very clear. On August 2. and paid upon the transfer by any person.2 The Bureau of Internal Revenue issued Ruling No. For as long as the contributions were used not liable for donor’s tax. therefore. Appeals (CTA). 1988. J. assailing the decision of the Court of is real or personal. made pursuant to the Commissioner's power to interpret tax REGALA. contributions are not considered gifts under the National There was simply an indication of the purpose for which they Internal Revenue Code (NIRC). the transfer of Sec. which reads: CTA decision on April 20. was being applied or intangible. 1988 therefor (28 C. Robledo. they partners in the Angara. then running for As correctly pointed out by the Solicitor General: the Senate. 127984 Teodoro D. of the property by gift. the Court of Appeals reversed and set aside the 20.31 each to the campaign funds of Senator Edgardo Angara. JOSE C. CRUZ.032. Abello. entitled "Comissioner of WHEREFORE. No. They claimed that political or electoral retention of control over the disposition of the contributions. whether the transfer is in trust or otherwise. which was decided on October 7.66 Political Contributions. Angara. 1991 in favor of the petitioners. petitioners. This is so. He was fully entitled to the economic benefits On September 12. is subject to donor’s Appeals in CA –G. 344 on July On appeal. Resolutions of the Court of Appeals in CA-G. 27134. Abello. D E C I S I O N indirect. whether the gift is direct or Lastly. whether the gift is direct or indirect. 2014 are hereby which reversed and set aside the decision of the Court of Tax A gift is generally defined as a voluntary transfer of property AFFIRMED. each.1awphi1.

7 THE PHILIPPINES GIFT TAX LAW WAS ADOPTED IN 1939? In the light of the above BIR Ruling. the taxability of political contributions TAXABLE? However. The patrimony of the four petitioners were reduced by P882.31 each. thereby First. Petitioners thereupon filed the instant petition on July 26. (before May 7.31 to the campaign funds of Senator Edgardo above-quoted BIR ruling. collected and intent to repay another what is his due. On the GIFTS SUBJECT TO DONORS TAX? other hand. But more importantly he receives financial WHEN IT FAILED TO CONSIDER THE DEFINITION OF and whether the property is real or personal. their deficiency shall be supplied by the when it adopted the said gift tax law. All three political contributions are taxable gifts.S. and not to employ or buy. Abello 8 . of the property by gift. the late Manuel G. an act of liberality whereby a person disposes gratuitously BY THE PETITIONERS TO THE EFFECT THAT POLITICAL when enacting the provision being construed. an unsettled issue. In Rizal Commercial Banking WHEN IT FAILED TO CONSIDER IN ITS DECISION THE PURPOSE BEHIND THE ENACTMENT OF OUR GIFT TAX Corporation v. (cited in National Internal Revenue Code NOT APPLYING AMERICAN JURISPRUDENCE ON THE the donee. Senator Petitioners filed a motion for reconsideration. Donation has the following elements: (a) the reduction of the political contributions in the Philippines are subject to the 6. which the Court 8. tangible advantages gratuitously. in the absence of an express exempting provision of law. assessed. the recipient-donee does not regard himself as (B) The tax shall apply whether the transfer is in trust exchanging his services or his product for the money 3. OMNIBUS ELECTION CODE IN DETERMINING When the U. (5206. computed to give and to bolster the morals. p. DID THE HONORABLE COURT OF APPEALS ERR IN patrimony of the donor. DID THE HONORABLE COURT OF APPEALS ERR IN In matters which are governed by the Code of Commerce and consider or treat political contributions as non-taxable gifts NOT CONSIDERING THE ADMINISTRATIVE PRACTICE special laws. admittedly. 1991 ed. Edgardo donation. There was intent to do an act of liberality LIBERALLY IN FAVOR OF THE TAXPAYER AND STRICLTY or animus donandi was present since each of the petitioners AGAINST THE GOVERNMENT IN ACCORDANCE WITH gave their contributions without any consideration. His purpose is IN DETERMINING WHETHER OR NOT THE nonresident. DID THE HONORABLE COURT OF APPEALS ERR Section 91 of the NIRC is clear and unambiguous. . 290). without any material consideration. there is no doubt that RULING ISSUED BY THE RESPONDENT ONLY AFTER Angara. GROUND THAT THIS WAS NOT KNOWN AT THE TIME or animus donandi. Angara are taxable gifts. APPLICABLE PRINCIPLES OF STATUTORY 1995. Petitioners. hence. each comprise the gift subject to tax was made concrete by the RESOLVING THE CASE MAINLY ON THE BASIS OF A gave P882. (c) the intent to do an act of liberality Annotated by Hector S. who accepts it. the rule that the Philippines need not necessarily adopt the POLITICAL CONTRIBUTIONS TO DONORS TAX? present rule or construction in the United States on the matter. Fifth and Sixth Issues leaving no room for construction. 1974). of a thing or right in favor of another. the winning chance of the PETITIONERS’ POLITICAL CONTRIBUTIONS WERE as provided in Section 92 candidate and/or his party. Hence.5 WHEN IT DID NOT CONSTRUE THE GIFT TAX LAW by P3. The vagueness of the law as to what 7. Cruz.530. but bestowed only NOT CONSIDERING THE INTENTION OF THE GIVERS paid upon the transfer by any person. p. Regala and Avelino V. AN "ELECTORAL CONTRIBUTION" UNDER THE or intangible.4 THE ASSESSMENTS HAD ALREADY BEEN MADE? elements of a donation are present. DID THE HONORABLE COURT OF APPEALS ERR or otherwise.661. DID THE HONORABLE COURT OF APPEALS ERR IN (A) There shall be levied. a tax. Teodoro D. . statutes of different states relating to the Thus. reference may be made to the definition of a donation 5. states: was. DID THE HONORABLE COURT OF APPEALS ERR IN Concepcion. DID THE HONORABLE COURT OF APPEALS ERR IN in the Civil Code. gift tax law was adopted in the Philippines WHETHER OR NOT POLITICAL CONTRIBUTIONS ARE The NIRC does not define transfer of property by gift. it cannot be presumed that the Philippine Congress then had intended to 4.645. it is clear that the political The present case falls squarely within the definition of a contributions of the private respondents to Sen. 546. contributed. CONTRIBUTIONS ARE NOT TAXABLE GIFTS? Sutherland. Moreover. DID THE HONORABLE COURT OF APPEALS ERR Edgardo Angara’s patrimony correspondingly increased of Appeals denied in its resolution of June 16. whether the gift is direct or indirect. Article 18 of the Civil Code. Raised are the following issues: CONSTRUCTION?6 Taken together with the Civil Code definition of donation. Statutory Construction.661. 1. Intermediate Appellate Court 10 the Court LAW? Section 91 of the National Internal Revenue Code (NIRC) enunciated: reads: taxation LAW cases: GIFT tax Page 7 of 9 . resident or because of motives of philanthropy or charity. Generally. (b) the increase in the patrimony of donor’s gift tax. Jose C.249 .. Article 725 of said Code defines donation as: same class of persons or things or having the same purposes NOT CONSIDERING THE AMERICAN JURISPRUDENCE are not considered to be in pari materia because it cannot be RELIED UPON BY THE COURT OF TAX APPEALS AND justifiably presumed that the legislature had them in mind . well-settled is OF CLOSE TO HALF A CENTURY OF NOT SUBJECTING provisions of this Code. 1995.or contributor as a return of value or made because of any 2. and.) Accordingly. de Leon.

Petitioners attempt to place the meanings. donative intent is a supporting candidates who. As discussed above. Court of First is important to look into the intention of the giver to donor. Luzon results of the elections but shall not include services rendered subject political contributions to donor’s tax. whether or not Petitioners raise the fact that since 1939 when the first Tax see to it that its mandate is obeyed (Chartered Bank legally enforceable. advance or deposit of money or anything of value. This Court reiterates that new interpretation of the law. convinced that since the purpose of the contribution was to valuable material consideration so as to remove political It is immaterial whether or not the Court of Appeals based its help elect a candidate. Section 91 (now Section 98) of consideration evinces animus donandi. .. . in the perception of the giver. the money value of which can be assessed statute. This Court is not candidate to whom they contribute. especially when the old according to its true intent. of being understood in more than one way. De Garcia. any doubt or ambiguity. in which case. Municipality of Naga. made for the purpose of influencing the Code was enacted. 803. Ople. gives a part of ones patrimony to another without Petitioners question the fact that the Court of Appeals consideration. It cannot be perceived except by the would influence the shaping of government policies that material and tangible acts which manifest its presence. Petitioners’ the desire of the giver to influence the result of an election by Mining Co. As has been our consistent ruling. 708 [1968]) The term "contribution" includes a gift. up to 1988 the BIR never attempted to Employees Association v. Collector of Internal Revenue. It is a well-entrenched rule that donative intent is not negated by the presence of other intentions. cannot be considered as a material (Cebu Portland Cement Co. the Court is called upon to exercise barrier of mutual exclusivity between donative intent and the This Court holds that the BIR is not precluded from making a one of its judicial functions. 52 Phil. subscription. there is no room for construction or Petitioners maintain that the definition of an "electoral interpretation. Benguet Consolidated determine if a political contribution is a gift. Pineda. 807. Fourth Issue Where the law is clear and unambiguous. . without compensation by individuals volunteering a portion or Development Bank of the Philippines. it must be taken to loan. . 724). while the consideration for a political contribution is Instance of Tayabas. 98 Phil. Second. . First of all. law speaks in clear and categorical language. in no way amounts to a donor’s tax. including the giver himself. In unambiguous. petitioners argue that it saying that the consideration for a gift is the liberality of the or error on the part of its agents (Pineda v. interpretation was flawed. and that the Government is never estopped by mistake is an essential element of a donation. v. the purpose for which the sums of money were given. as a public servant. donative intent is presumed present when one of the electorate. Senator Angara decision on the BIR ruling because it is not pivotal in deciding Petitioners’ contribution of money without any material was under no obligation to benefit the petitioners. an appreciable period of time. all of their time in behalf of a candidate or political party. v. This would promote the general welfare and economic well-being Seventh Issue being the case. The fact that their performance of his duties as a legislator is his obligation as an the NIRC as supplemented by the definition of a donation purpose for donating was to aid in the election of the donee elected public servant of the Filipino people and not a found in Article 725 of the Civil Code. It is a familiar principle of law that prolonged practice by shall also include the use of facilities voluntarily donated by the government agency charged with the execution of a Only when the law is ambiguous or of doubtful meaning may other persons. 138 SCRA 273 [1985].11 Section 94(a) of the said Code defines electoral for a senatorial seat. petitioners again claim that statute is ambiguous if it is admissible of two or more possible donative intent is not present. A the results of the election. for the Court is to apply the law. is clear and does not negate the presence of donative intent.13 argument is not tenable. donative intent is not negated when Petitioners’ attempt is strained. donation. 88- the person donating has other intentions. namely BIR Ruling No. Since animus donandi or the intention to do an act of liberality Petitioners would distinguish a gift from a political donation by 676). . there is no appreciate how a political contribution differs from a taxable which was to fund the campaign of Senator Angara in his bid occasion for interpretation. promise or agreement to contribute.12 or of referring to two or more things at the same time. 711. Inc. there was no donative intent. consideration for the political contributions he received. . It . motives or purposes somehow in the future benefit from the election of the 344. acquiesced in and relied upon by all concerned over the court interpret or construe its true based on the rates prevailing in the area. The proper this case. Quijano v. 35 SCRA 270 [1970]). entitled to great weight and the highest or more meanings. there is only room for application gift.l^vvphi1. . 90 Phil. is an authoritative intent. which is to interpret the law purpose of political contributions. he may even be called to enact laws taxation LAW cases: GIFT tax Page 8 of 9 .It bears stressing that the first and fundamental duty of the Third Issue that are contrary to the interests of his benefactors. and needs no further elucidation. fact. which was issued after the petitioners were assessed for which do not contradict donative intent. They argue that: Surety Ambiguity is a condition of admitting two interpretation thereof. 30 SCRA 111 [1969]. where the contribution" under the Omnibus Election Code is essential to In fine. creature of the mind. contributions from the purview of a donation. Since the purpose of an electoral contribution is to influence respect. This Court does not need to delve into this issue. erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute (PLDT v. motives or purposes which do not contradict Second Issue donative intent. The fact that petitioners will decision is based on a BIR ruling. When the law is clear and free from benefit of the greater good. or a mean exactly what it says and the court has no choice but to contract. v. 24 SCRA contribution as follows: consideration so as to negate a donation.

does not benefit reported to the Commission on Elections. political contributions herein made are subject to the payment SO ORDERED. 1991. however. This all the more shows that the construction since the law is clear and unambiguous. are not subject to No costs. 7166 provides no retroactive effect on this point. of gift taxes. providing in AFFIRMED. duly This rule of construction. 7166 on November 25. Congress approved Decision and Resolution of the Court of Appeals are Petitioners next contend that tax laws are construed liberally Republic Act No. since the same were made prior to the exempting legislation. in favor of the taxpayer and strictly against the government. and Republic Act No. as stated. taxation LAW cases: GIFT tax Page 9 of 9 . the petition is DENIED and the assailed the donations involved in this case.Eighth Issue Finally. Section 13 thereof that political/electoral contributions. this Court takes note of the fact that subsequent to WHEREFORE. petitioners because. there is here no room for the payment of any gift tax.