CASE DIGESTS IN TAXATION

Commissioner of lnternal Revenue vs. Algue, Inc

No. L-28896
February 17, 1988

Facts:

Issue:
Whether or not the CIR correctly disallowed the P75,000 deduction claimed by Algue.

Ruling:
The Supreme Court, speaking through Justice Cruz, ruled that, NO, the CIR did not correctly
disallow the P75,000 deduction claimed by Algue, because the burden to prove validity of the
claimed deduction, successfully discharged;

In this case, the payment of the fees was necessary and reasonable. Algue was able to prove
that the promotional fees were payment for inducing investors and prominent businessman to
venture in an experimental enterprise and involve themselves in a new business requiring
millions of pesos.

Therefore, CIR correctly disallowed the P75,000 deduction claimed by Algue.

Nota Bene:
Taxes are the lifeblood of the government and so should be collected without unnecessary
hindrance. However, it’s collection should be made in accordance with law.

Taxes are what we pay for civilized society. Without taxes, the government would be paralyzed
for lack of the motive power to activate and operate it.