DONOR'S TAX (Sec.

98 - 104, NIRC) C
TANG HO vs. CA, 97 Phil. 890

G.R. No. L-5949 November 19, 1955

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,
vs. THE BOARD OF TAX APPEALS and THE COLLECTOR OF INTERNAL REVENUE

FACTS: Li SengGiap (who died during the pendency of this appeal) and his wife Tang Ho and their thirteen children
appear to be the stockholder of two close family corporations named Li SengGiap& Sons, Inc. and Li SengGiap& Co.
The examiners of the Bureau of Internal Revenue found that each of Li SengGiap's 13 children had a total investment
therein of approximately P63,195.00, in shares issued to them by their father Li SengGiap The Collector of Internal
Revenue regarded these transfers as undeclared gifts made in the respective years, and assessed against Li SengGiap
and his children donor's and donee's taxes in the total amount of P76,995.31, including penalties, surcharges, interests,
and compromise fee due to the delayed payment of the taxes. The petitioners paid the sum of P53,434.50, representing
the amount of the basic taxes, and put up a surety bond to guarantee payment of the balance demanded. And on June
25, 1951, they requested the Collector of Internal Revenue for a revision of their tax assessments, alleging that the
children's stockholding in the two family corporations were purchased by them with savings from the aforesaid cash
donations received from their parents.

Claiming the benefit of gift tax exemptions (under section 110 and 112 of the Internal Revenue Code) at the rate of
P2000 a year for each donation, plus P10,000 for each gift propter nuptias made by either parent, and appellants'
aggregate tax liability, according to their returns, would only be P4,599.94 for the year 1949, and P228,28 for the year
1950, or a total of P4,838.22 The Collector refused to revise his original assessments.

ISSUES:
(1) Whether or not the dates and amounts of the donations taxable against petitioners were as found by the Collector
of Internal Revenue from the books of the corporations Li SengGiap& Sons, Inc. and Li SengGiap& Co., or as set forth
in petitioners' gift tax returns;
(2) Whether or not the donations made by petitioner Li SengGiap to his children from the conjugal property should be
taxed against the husband alone, or against husband and wife; and
(3) Whether or not petitioners should be allowed the tax deduction claimed by them.

RULING:
(1) The CIR is affirmed. The filing of the gift tax returns only after assessments and part payment of the taxes demanded
by the Collector, and the lack of corroboration of the alleged donations in cash, amply justify the Tax Board's distrust
of the veracity of the appellants' belated tax returns "on or before the first of March following the close of the calendar
year" when the gifts were made Any other view would leave the collection of taxes at the mercy of explanations
concocted ex post facto by evading taxpayers, drafted to suit any facts disclosed upon investigation, and safe from
contradiction because the passing years have erased all trace of the truth.
(2) No. under the old Civil Code, to be a donation by both spouses, taxable to both, the wife must expressly join the
husband in making the gift; 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.
(3) No. only one exemption or deduction (from their father) can be claimed for every such gift, and not two, as claimed
by appellants herein.