9.

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

vs. THE COMMISSIONER OF INTERNAL REVENUE, respondentappellee.
G.R. No. L-19865

July 31, 1965

FACTS:
De la Rama Steamship Co. insured the life of Enrico Pirovano who was then
its President and General Manager. The company initially designated itself as
the beneficiary of the policies but, after Pirovanos death, it renounced all its
rights, title and interest therein, in favor of Pirovanos minor children.
Argument of CIR:
As an exercise of its power to collect tax, respondent Commissioner of
Internal Revenue assessed the amount of P60,869.67 as donees' gift tax
against each of the petitioners-appellants, or for the total sum of
P243,478.68; and, on April 23, 1955, a donor's gift tax in the total amount of
P34,371.76 was also assessed against De la Rama Steamship Co., which the
latter paid.
Argument of Petitioner-Appellant:
Petitioners-appellants
herein
contested
respondent
Commissioner's
assessment and imposition of the donees' gift taxes and donor's gift tax and
also made a claim for refund of the donor's gift tax so collected. Petitioners
contend that the grant was not a simple donation, but a remuneratory
donation. Petitioners further contend that the same was made not for an
insufficient or inadequate consideration but rather it a was made for a full
and adequate compensation for the valuable services rendered by the late
Enrico Pirovano to the De la Rama Steamship Co.; hence, the donation does
not constitute a taxable gift under the provisions of Section 108 of the
National Internal Revenue Code.
ISSUES:
WON the donation is remuneratory and therefore not subject to donees tax,
but rather taxable as part of gross income.

RULING:
No. the donation is not remuneratory. There is nothing on record to show that
when the late Enrico Pirovano rendered services as President and General
Manager of the De la Rama Steamship Co. and was largely responsible for
the rapid and very successful development of the activities of the company",
he was not fully compensated for such services. The fact that his services
contributed in a large measure to the success of the company did not give
rise to a recoverable debt, and the conveyances made by the company to his
heirs remain a gift or a donation. The companys gratitude was the true
consideration for the donation, and not the services themselves.
That the tax court regarded the conveyance as a simple donation, instead of
a remuneratory one as it was declared to be in our previous decision, is but
an innocuous error; whether remuneratory or simple, the conveyance
remained a gift, taxable under Chapter 2, Title III of the Internal Revenue
Code.

20.

MERALCO SECURITIES CORPORATION (now FIRST PHILIPPINE

HOLDINGS CORPORATION), petitioner,
vs.
HON. VICTORINO SAVELLANO and ASUNCION BARON VDA. DE
MANIAGO, et al., as heirs of the late Juan G.
Maniago, respondents.
G.R. No. L-36181 October 23, 1982
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
HON. VICTORINO SAVELLANO and ASUNCION BARON VDA. DE
MANIAGO, et al., as heirs of the late Juan G.
Maniago, respondents.
G.R. No. L-36748 October 23, 1982

FACTS:
Commissioner of Internal Revenue, after the late Juan Maniago submitted a
confidential denunciation against the Meralco Securities Corporation for tax

evasion for having paid only 25% of the dividends it received from the Manila
Electric Co., caused the investigation of the denunciation after which he
found and held that no deficiency corporate income tax was due from the
Meralco Securities Corporation on the dividends it received from the Manila
Electric Co.
Argument of CIR:
According to the CIR, there was no deficiency in the corporate income tax
paid by Meralco Securities Corporation since under the law then prevailing
(section 24[a] of the National Internal Revenue Code) "in the case of
dividends received by a domestic or foreign resident corporation liable to
(corporate income) tax under this Chapter, only twenty-five per centum
thereof shall be returnable for the purposes of the tax imposed under this
section." The Commissioner accordingly rejected Maniago's contention that
the Meralco from whom the dividends were received is "not a domestic
corporation liable to tax under this Chapter."
Argument of Respondent Informer:
Maniago filed a petition for mandamus, and subsequently an amended
petition for mandamus, in the Court of First Instance of Manila against the
Commissioner of Internal Revenue and the Meralco Securities Corporation to
compel the Commissioner to impose the alleged deficiency tax assessment
on the Meralco Securities Corporation and to award to him the corresponding
informer's reward under the provisions of R.A. 2338.
ISSUES:
WON the CIR can be compelled by mandamus to impose deficiency tax
assessment upon a confidential denunciation.
RULING:
No. The power to assess or not to assess tax deficiency against a taxpayer is
a discretionary function vested in the CIR. As such, the CIR may not be
compelled by mandamus. Mandamus only lies to enforce the performance of
a ministerial act or duty and not to control the performance of a discretionary
power. Especially so in this case where the CIR found that no tax deficiency is
due. It should be noted further that regular courts have no jurisdiction over
the subject matter of this case. Section 7 of Republic Act No. 1125 granted

the Court of Tax Appeals exclusive appellate jurisdiction to review by appeal,

among others, decisions of the Commissioner of Internal Revenue taxes,
fees, or other charges, penalties imposed in relation thereto, or other
matters arising under the National Internal Revenue Code or other law or
part of law administered by the Bureau of Internal Revenue.

34.

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
PHILIPPINE GLOBAL COMMUNICATION, INC., respondent.
G.R. No. 167146

October 31, 2006

FACTS:
Philippine
Global
Communication
is
a
corporation
engaged
in
telecommunications. Somewhere in 1992, CIR issued a Letter of Authority
authorizing the appropriate BIR officials to examine the books of account and
other accounting records of respondent, in connection with the investigation
of respondents 1990 income tax liability. Thereafter, respondent received an
assessment for deficiency income tax in the amount of P118,271,672.00
arising from deductions that were disallowed for failure to pay the
withholding tax and interest expenses that were likewise disallowed.
Respondent sent a formal protest letter and requested for the cancellation of
the tax assessment, which they alleged was invalid for lack of factual and
legal basis.
On 16 October 2002, more than eight years after the assessment was
presumably issued, respondent received from the CIR a Final Decision
denying the respondents protest.
Respondent filed a Petition for Review with the CTA. After due notice and
hearing, the CTA rendered a Decision in favor of respondent.
Argument of CIR:
CIR argues that the CTA committed a reversible error in declaring that the
right of the government to collect the deficiency income tax from respondent
for the year 1990 has prescribed. It further contends that the prescriptive
period was interrupted when respondent filed two letters of protest disputing
in detail the deficiency assessment in question and requesting the
cancellation of said assessment.

Argument of Respondent Taxpayer:

Respondent corporation argues that the protest letters filed by it cannot
constitute a request for reinvestigation, hence, they cannot toll the running
of the prescriptive period to collect the assessed deficiency income
tax. Thus, since more than three years had lapsed from the time the
assessment was issued in 1994, the CIRs right to collect the same has
prescribed in conformity with Section 269 of the National Internal Revenue
Code of 1977.
ISSUES:
Whether or not CIRs right to collect respondents alleged deficiency income
tax is barred by prescription under Section 269(c) of the Tax Code of 1977.

RULING:
The law prescribed a period of three years from the date the return was
actually filed or from the last date prescribed by law for the filing of such
return, whichever came later, within which the BIR may assess a national
internal revenue tax. However, the law increased the prescriptive period to
assess or to begin a court proceeding for the collection without an
assessment to ten years when a false or fraudulent return was filed with the
intent of evading the tax or when no return was filed at all. In such cases, the
ten-year period began to run only from the date of discovery by the BIR of
the falsity, fraud or omission.
If the BIR issued this assessment within the three-year period or the ten-year
period, whichever was applicable, the law provided another three years after
the assessment for the collection of the tax due thereon through the
administrative process of distraint and/or levy or through judicial
proceedings. The three-year period for collection of the assessed tax began
to run on the date the assessment notice had been released, mailed or sent
by the BIR.
The assessment, in this case, was presumably issued on 14 April 1994 since
the respondent did not dispute the CIRs claim. Therefore, the BIR had until
13 April 1997. However, as there was no Warrant of Distraint and/or Levy

served on the respondents nor any judicial proceedings initiated by the BIR,
the earliest attempt of the BIR to collect the tax due based on this
assessment was when it filed its Answer in CTA Case No. 6568 on 9 January
2003, which was several years beyond the three-year prescriptive period.
Thus, the CIR is now prescribed from collecting the assessed tax.

35.

COLLECTOR OF INTERNAL REVENUE, petitioner,

vs.
J.C. YUSECO and The COURT OF TAX APPEALS, respondents.
G.R. No. L-12518

October 28, 1961

FACTS:
Petitioner did not file income tax returns for the calendar years 1945 and
1946. This fact having come to the knowledge of revenue examiners, they
accordingly made income tax returns for petitioner upon which respondent
on August 20, 1948, assessed against and demanded from petitioner the
sums of P134.14 and P7,563.28 representing alleged income taxes and
corresponding surcharges for the years 1945 and 1946.
Petitioner wrote the respondent, requesting that he be informed as to how
the assessments were arrived at. In reply thereto, respondent furnished the
information sought and at the same time demanded the payment of the
aforesaid assessments. Thereafter, respondent issued a revised assessment
notice which reduced the original assessment for the 1946 income tax to
P2,447.30. Subsequently, respondent issued a warrant of distraint and levy
on the properties of petitioner, to effect collection of the said sum of
P2,447.80 as income tax for 1946. The distraint being still enforce, petitioner
on December 12, 1955 filed his petition for prohibition with the SC.
Argument of CIR:
The petitioner Collector of Internal Revenue assails the jurisdiction of the
respondent Court of Tax Appeals to take cognizance of the respondent
taxpayer's petition that seeks to enjoin him (the petitioner) from collecting
his income taxes due for the years 1945 and 1946 and surcharges by
summary distraint of and levy upon his personal and real properties, under
the provisions of sections 316 to 330 of the National Internal Revenue Code.
The petitioner's contention is that the respondent taxpayer cannot bring in

the respondent Court an independent special civil action for prohibition

without taking to said Court an appeal from the decision or ruling of the
Collector of Internal Revenue in the cases provided for in sections 7 and 11 of
Republic Act No. 1125.
Argument of Respondent Taxpayer:
Respondent sought the withdrawal and/or reconsideration of said warrant of
distraint. Respondent asked that he be informed of the action upon his
petition for reinvestigation. This request was reiterated in his letter of August
18, 1953 wherein he acknowledged receipt of the modified assessment for
the 1946 income tax. On September 1, 1953, CIR wrote respondent
demanding from the latter payment of the said sum of P2,447.30 as income
tax for the year 1946 plus penalties incident to delinquency, and reiterating
the demand for the unrevised income tax assessment for 1945 in the sum of
P134.14, but CIR did not take any further action thereafter to effect collection
of the assessment.
ISSUES:
WON the Court of Tax Appeals have the jurisdiction to declare null and void
the issuance of a warrant of distraint and levy by the CIR.
RULING:
Sections 7, 9 and 11 of Republic No. 1125, creating the Court of Tax Appeals
refer and limit only to appeals from decisions or rulings of the Collector of
Internal Revenue, Commissioner of Customs and Provincial or City Boards of
Assessment Appeals in the proper cases. Nowhere does the law expressly
vest in the Court of Tax Appeals original jurisdiction to issue writs of
prohibition and injunction independently of, and apart from, an appealed
case. The writ of prohibition or injunction that it may issue under the
provisions of section 11, Republic Act No. 1125, to suspend the collection of
taxes, is merely ancillary to and in furtherance of its appellate jurisdiction in
the cases mentioned in section 7 of the Act. The power to issue the writ
exists only in cases appealed to it.
Statements made during the proceedings indicate that the intention of
Congress was to vest the Court of Tax Appeals with jurisdiction to issue writs
of prohibition and injunction only in aid of its appellate jurisdiction in cases
appealed to it and not to clothe it with original jurisdiction to issue them.

Such intent is reflected on the second paragraph of section 11, Republic Act
No. 1125 quoted above. Taxes being the chief source of revenue for the
Government to keep it running must be paid immediately and without delay.
A taxpayer who feels aggrieved by the decision or ruling handed down by a
revenue officer and appeals from his decision or ruling to the Court of Tax
Appeals must pay the tax assessed, except that, if in the opinion of the Court
the collection would jeopardize the interest of the Government and/or the
taxpayer, it could suspend the collection and require the taxpayer either to
deposit the amount claimed or to file a surety bond for not more than double
the amount of the tax assessed.