MANUEL G. ABELLO, JOSE C. CONCEPCION, TEODORO D.

REGALA, AVELINO
V. CRUZ v. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS.
G.R. No. 120721. February 23, 2005 (DONOR'S TAX)
 
 
FACTS:
During the 1987 national elections, petitioners, who are partners in the ACCRA legal firm, each
gave P882,661.31 to Senator Edgardo Angara's campaign fund, who was then running for
Senate. The petitioners' contributions were then assessed by the BIR at P263,032.66 each.
Petitioners disputed the assessment, saying that political or electoral contributions are not gifts
under the NIRC and hence are not subject to the donors tax. The Commissioner rejected the
exemption request. Their motion was refused by the BIR. After that, they submitted a plea to the
CTA, which was granted. On appeal, the CA ruled in favor of the BIR once more.
 
ISSUE: 
Whether the contributions are liable for donor's tax.
 
RULING:
The NIRC does not define a gift as a transfer of property. Donations, on the other hand, are taken
into account by the Civil Code by reference. The current situation fits the definition of a
contribution well. Since each of the petitioners contributed their contributions without any
consideration, there was a purpose to commit an act of generosity or animus donandi. Section 91
of the NIRC is straightforward and unequivocal when combined with the Civil Code concept of
donation, leaving no opportunity for interpretation. An immaterial donation of money by the
petitioners demonstrates animus donandi. The fact that they donated to help with the election of
the donee does not rule out the possibility of donative intent. Petitioners point out that the BIR
never attempted to tax political contributions from 1939 until 1988, when the first Tax Code was
enacted. The Court determines that the BIR is not precluded from making a new interpretation of
the law, especially when the old interpretation was flawed.
 
PHILAM LIFE AND GENERAL INSURANCE COMPANY vs. SOF and CIR G.R. No.
210987 (DONOR'S TAX)
 
FACTS:
Philamlife used to own 498,590 Class A shares in Philam Care Health Systems, Inc.
(PhilamCare), accounting for 49.89 percent of the latter's outstanding capital stock. Philamlife
offered to sell its PhilamCare shares through competitive bidding in 2009. As a result, on
September 24, 2009, petitioner's Class A shares were sold to STI Investments, the highest bidder,
for USD 2, 190,000, or PhP 104,259,330. To assist the transfer of the shares, Philamlife
submitted an application with the Bureau of Internal Revenue (BIR) for a certificate permitting
registration/tax clearance. Months later, petitioner was advised that due to a potential donor's tax
burden, it needed to get a BIR judgement in connection with its application.
 
ISSUE: 
Whether or not the subject transaction is a taxable donation
 
RULING: 
Donor's tax applies to the difference between the selling price and the book value.  If that is the
case, the sale of stock does not exempt the transaction from donor's tax because Sec. 100 of the
NIRC expressly stipulates that the amount by which the fair market value of the property
exceeds the value of the consideration is constituted a gift. As a result, even if there is no actual
donation, the price difference is treated as a donation by legal fiction.
 
CIR vs Toshiba Information Equipment (Phil.) G.R. No. 150154, 9 August 2005 (VAT)
 
FACTS:
Toshiba filed their VAT forms for the first and second quarters of taxableyear 1996, reporting
input VAT in the amounts of P13,118,542.00 and P5,128,761.94, respectively, for a total of
P18,247,303.94, with the PEZA as an ECOZONE ExportEnterprise and the BIR as a VAT
taxpayer and withholding agency. Toshiba claimed that the said input VAT came from purchases
of capital goods and services that went unutilized because it had not yet engaged in any business
activity or transaction for which it might be liable for output VAT.Toshiba filed tax credit/refund
applications with the Department of Finance. Toshiba filed a Petition for Review with the CTA
to extend the two-year prescriptive term for judicially claiming a tax credit/refund. The CTA
ordered CIR to refund, or in the alternative, give a tax credit certificate to Toshiba in the sum of
P16,188,045.44. CA APPROVED. 
 
ISSUE: 
Whether or not Toshiba is entitled to the tax credit/refund of its input VAT on its purchases of
capital goods and services.
 
RULING:
An ECOZONE enterprise is a VAT-exempt entity. Sales of goods, properties, and services by
persons from the Customs Territory to ECOZONE enterprises shall be subject to VAT at zero
percent (0%). It would seem that CIR failed to differentiate between VAT-exempt transactions
from VAT-exempt entities. An exempt transaction, on the one hand, involves goods or services
which, by their nature, are specifically listed in and expressly exempted from the VAT under the
Tax Code, without regard to the tax status - VAT-exempt or not - of the party to the transaction.
An exempt party, on the other hand, is a person or entity granted VAT exemption under the Tax
Code, a special law or an international agreement to which the Philippines is a signatory, and by
virtue of which its taxable transactions become exempt from VAT. CIR, bases its argument on
VAT-exempt transactions. Since suchtransactions are not subject to VAT, the sellers cannot pass
on any outputVAT to the purchasers of goods, properties, or services, and they may notclaim tax
credit/refund of the input VAT they had paid thereon.This cannot apply to transactions of
Toshiba because although thetransactions covered by special laws may be exempt from VAT,
thosefalling under Presidential Decree No. 66 (EPZA) are not.