THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE

COMPANY, petitioner, vs. THE SECRETARY OF FINANCE AND THE

COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 210987
November 24, 2014
Justice Velasco, Jr.
THE PHILIPPINE AMERICAN LIFE v. CIR (2014)
DOCTRINE: The absence of donative intent, if that be the case, does not exempt the
sales of stock transaction from donor's tax since Sec. 100 of the NIRC categorically
states that the amount by which the fair market value of the property exceeded the
value of the consideration shall be deemed a gift. Thus, even if there is no actual
donation, the difference in price is considered a donation by fiction of law.
Facts: On September 24, 2009 Petitioner PHILAM LIFE sold its share of
stock in PHILAM CARE to STI INVESTMENTS INC. The amount
of the sale was less than the book value of the shares of stock.
Respondent, Commissioner of Internal Revenue claims that the sale
by PHILAMLIFE of its shares of stock is subject to Donor’s Tax
because the said amount of the said sale was less than the book value
or market value of the shares. Respondent cited Section 100 of the
NIRC. Petitioner argued that the sale cannot be the subject of
Donor’s Tax because there was no donative intent on its part.
Issue: So the issue that surfaced in this case is:
WHETHER OR NOT THE SALE MADE BY PHILAMLIFE IS
SUBJECT TO THE DONOR’S TAX.
The SC Held The Supreme Court Held that: Yes. The sale is subject to Donor’s
that: Tax.
The SC J. The Supreme Court speaking through Justice Velasco Jr. discussed
that:
The absence of donative intent, if that be the case, does not exempt
the sales of stock transaction from donor's tax
The FF. Laws The following sections are the basis.
are the basis.
We have Section 100 of the NIRC and Sec. 7 (c.2.2) of RR 06-08
It Was It was concluded that:
Concluded
Sec. 100 of the NIRC categorically states that the amount by which
the fair market value of the property exceeded the value of the
consideration shall be deemed a gift. Thus, even if there is no actual
donation, the difference in price is considered a donation by fiction
of law.
 Section 100 of the NIRC applies even though there is no donative
intent on the part of the seller. As long as the sale’s amount is less
than the book value or market value of the shares of stock, the
balance therein is considered a donation by fiction of law. Thus,
Donor’s Tax is imposable.
therefore And therefore
Petitioner sold its shares of stock to STI INVESTMENT less than
book value or market value of the shares. Notwithstanding the fact
that there was no donative intent on the part of the Petitioner seller,
the Donor’s Tax is imposable because the balance in the sale is
considered as a donation by fiction of law.
 SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, petitioners,
vs.
COURT OF APPEALS and MERCEDES DANLAG y PILAPIL, respondents.

G.R. No. 111904

October 5, 2000

QUISUMBING, J.:

SPS GESTOPA v. CA (2000)

Facts: On March 4, 1965, Spouses Diego and Catalina Danlag executed two
out of three deeds of donation mortis causa and another one on
October 13, 1966, in favor of private respondent Mercedes Danlag-
Pilapil.

The first deed pertained to parcels 1 & 2 with Tax Declaration Nos.
11345 and 11347, respectively. The second deed pertained to parcel
3, with TD No. 018613. The last deed pertained to parcel 4 with TD
No. 016821. All deeds contained the reservation of the rights of the
donors (1) to amend, cancel or revoke the donation during their
lifetime, and (2) to sell, mortgage, or encumber the properties
donated during the donors' lifetime, if deemed necessary.

Respondent accepted the donation. Later on, Spouses Danlag

revoked the donation and after revocation, sold the said parcels of
land to Petitioners Agripino and Isabel Gestopa. Respondent then
filed an action for quieting of title and reiterated that the revocation
was invalid and without legal basis. The spouses claimed that the
donation was actually a DONATION MORTIS CAUSA, therefore
the revocation was valid.
Issue: So the issue that surfaced in this case is:
Whether the revocation of the donation was valid.
The SC Held The Supreme Court Held that: No. A valid donation, once accepted,
that: becomes irrevocable, except on account of officiousness, failure by
the done to comply with the charges imposed in the donation, or
ingratitude.
The SC J. The Supreme Court speaking through Justice QUISUMBING state
that:
the donation executed by the spouses Danlag were DONATION
INTERVIVOS. It is evidenced by the fact that in the deed it is stated
therein that the spouses upon transferring the parcels of land to
Respondent donee, they the spouses shall enjoy a lifetime usufruct,
and that the donee cannot dispose of the lands without their consent.
The SC stated that there was no need for such condition if the
spouses intended the donation as MORTIS CAUSA. The donation
being INTERVIVOS, an acceptance of such is irrevocable except
only for reasons of ingratitude on the part of the donee, officiousness,
or failure of the donee to comply with the charges of the donation.
None of the exception was mentioned by the Spouses.
The FF. Laws We have Article 765 and 769 of the New Civil Code for the
are the basis. revocation and reduction of donations
It Was It was concluded that:
Concluded
the revocation of the donation made by the spouses Danlag was
without legal basis, because such donation was INTERVIVOS and
was already accepted by the Donee, and none of the exceptions were
mentioned by the spouses.
therefore And therefore
The supposed revocation had no legal effect.
 TANG HO, WILLIAM LEE, HENRI LEE, SOFIA LEE TEEHANKEE,
THOMAS LEE, ANTHONY LEE, JULIA LEE KAW, CHARLES LEE,
VALERIANA LEE YU, VICTOR LEE, SILVINO LEE, MARY LEE, JOHN
LEE, and PETER LEE, for themselves and as heirs of LI SENG GIAP,
deceased, petitioners,
vs.
THE BOARD OF TAX APPEALS and THE COLLECTOR OF INTERNAL
REVENUE, respondents.

G.R. No. L-5949

November 19, 1955

REYES, J.B.L., J.:
Tang Ho v. THE BOARD OF TAX APPEALS (1955)
Facts:
P complaint R Petitioner LI SENG GIAP issued shares from the family owned
corporation named LI SENG GIAP and SONS INC and LI SENG
GIAP and CO. to his 13 children. The Respondent BIR claimed that
the said transfer of share was an undeclared gift by LI SENG GIAP
to his 13 children. It assessed that LI SENG GIAP and the 13
children were liable for Donor’s and Donee’s Tax. The reasoning
behind the BIR’s contention was that the 13 children appeared to be
incapable of acquiring such shares, and that they were instead given
by their father sum of money in order to acquire such shares.
Therefore, the respondent concluded that the transfer was an
undeclared gift. Petitioners also contended that for the sake of
argument, the transfer was an undeclared gift, the donor’s tax should
be imposed both on the mother and father because the shares
transferred form part of the conjugal property of the spouses.
Issue: So the issue that surfaced in this case is:
WHETHER OR NOT THE TRANSFER OF SHARES WERE
UNDECLARED GIFTS, AND WHETHER OR NOT THE
DONOR’S TAX IS IMPOSABLE BOTH ON THE SPOUSES
TANG HO AND LI SENG GIAP.
The SC Held The Supreme Court Held that: Yes. the transfer of shares were
that: undeclared gifts by LI SENG GIAP to his 13 children.
The SC J. The Supreme Court speaking through Justice JBL REYES relied on
the evidence on record:
The 13 children were incapable of acquiring such shares during the
time the shares were transferred, and they were given by LI SENG
GIAP sums of money in order to purchase such shares. The facts
therein lead to the conclusion that the transfer were undeclared gifts.
With regards the issue of whether or not the Donor’s tax is imposable
on both the husband and the wife, the SC cited the Civil Code, the
code stated that for the wife to be liable to Donor’s tax, she must
expressly join the husband in making such gift. The fact that the gift
formed part of the conjugal property does necessarily conclude that
the wife is also liable for Donor’s Tax. her participation therein
cannot be implied. . The consequence of the husband's legal power to
donate community property is that, where made by the husband
alone, the donation is taxable as his own exclusive act.
It Was It was concluded that:
Concluded
The transfer made by LI SENG GIAP is an undeclared gift based on
the evidence. Pertaining to the Donor’s Tax, it is only imposable
upon the husband LI SENG GIAP, because the wife, TANG HO, did
not expressly join in making the gift.

therefore And therefore

Taxable only to the husband Li Seng Giap
 FINLEY J. GIBBS, as Trustee for JOHNSON KELLEY GIBBS, ALLISON
DEFRANCE GIBBS,
CANDACE GIBBS, DOUGLAS FLETCHER GIBBS, and REGINALD
KELLEY GIBBS, plaintiff-petitioner;
ALLISON J. GIBBS and ESTHER K. GIBBS, intervenors-petitioners,
vs. COLLECTOR OF INTERNAL REVENUE and COURT of TAX
APPEALS, Respondents.

G.R. No. L-14166 April 28, 1962

CONCEPCION, J.:cha

Gibbs vs. Collector of Internal Revenue (1962)

Facts: The spouses Allison Gibbs and Esther Gibbs executed 5 Deed of Sale
and Declaration of Trust wherein they transferred in trust 53,000
shares of stock of the Lepanto Consolidated Mining Co. in favor of
their 5 children. According to the trust agreement, is that the trustee
shall pay out of the property and/ or the gross income of the trust
estate all income, estate, gift, succession or inheritance taxes, if any,
payable to the VENDOR, TRUSTEE, or BENEFICIARY by reason
of the trust.

Issue: So the issue that surfaced in this case is:

WHETHER OR NOT THE AGREEMENT IN THE TRUST IS
VALID?
The SC Held The Supreme Court Ruled in the Negative
that:
The SC J. The Supreme Court speaking through Justice Concepcion discussed
that:
The payment of taxes such as income, estate, gift, succession or
inheritance taxes is determined by law. The government may not be
bound by an agreement between the trustors, trustees, and the
beneficiaries because the government is not a party to such
 agreement or contract.

MARIA CARLA PIROVANO, etc., et al., petitioners-appellants,

vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent-appellee.

G.R. No. L-19865

July 31, 1965

REYES, J.B.L., J.:

Pirovano vs. Commissioner of Internal Revenue (1965)

Facts: Sometime in the early part of 1941 De la Rama Steamship Co.
insured the life of said Enrico Pirovano, who was then its President
and General Manager until the time of his death, with various
Philippine and American insurance companies for a total sum of one
million pesos, designating itself as the beneficiary of the policies,
obtained by it.

When Enrico Pirovano died, the DE LARAMA STEAMSHIP CO.

collected the proceeds of the insurance and opted to give it to the 4
children of Enrico. The Respondent, CIR, imposed a DONEE’S TAX
upon the Petitioner and the 4 children. Petitioner argued that they are
not liable to pay the DONEE’S TAX for the reason that the payment
made by the DE LARAMA STEAMSHIP was not actually a
donation, but a remuneration for Enrico’s past services to
DELARAMA.
Issue: So the issue that surfaced in this case is:
WHETHER OR NOT PETITIONER AND HER 4 CHILDREN IS
LIABLE FOR DONEE’S TAX?
The SC Held The Supreme Court Held that: Yes. The PETITIONER AND HER 4
that: CHILDREN IS LIABLE FOR DONEE’S TAX
The SC J. The Supreme Court speaking through Justice JBL Reyes stated that:
the transfer of the proceed of the insurance by DELARAMA
STEAMSHIP to petitioner and her 4 children was in the nature
donation, and not that of remuneration for Enrico’s services. The
rationale was that in the resolution released by the DELARAMA,
It Was It was concluded that:
Concluded
the renunciation of the proceeds of the insurance to the Petitioner and
her 4 children was “out of gratitude” for Enrico’s services to the
company, and also there was no existing debt in favor of Enrico from
DELARAMA,

therefore And therefore

the SC also concluded that the renunciation of the proceed was a
donation, making Petitioner and her 4 children liable to DONEE’S
TAX.