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ABELLO Vs CIR Case Digest

During the 1987 Philippine elections, petitioners Marlon Raquel and others contributed large sums of money to the campaign of a Senator without receiving any consideration in return. The Bureau of Internal Revenue assessed donors' tax on the contributions, claiming they were gifts under the tax code. Petitioners argued political contributions are not considered gifts. The Court of Tax Appeals and the Court of Appeals both ruled in favor of the BIR. The Supreme Court also held that the contributions were taxable gifts, as they met the definition of donations in the Civil Code and were given with donative intent. While the BIR had not previously taxed political gifts, the Court held the BIR could make new interpretations of the law and was not estopped from

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Marlon Raquel
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91 views1 page

ABELLO Vs CIR Case Digest

During the 1987 Philippine elections, petitioners Marlon Raquel and others contributed large sums of money to the campaign of a Senator without receiving any consideration in return. The Bureau of Internal Revenue assessed donors' tax on the contributions, claiming they were gifts under the tax code. Petitioners argued political contributions are not considered gifts. The Court of Tax Appeals and the Court of Appeals both ruled in favor of the BIR. The Supreme Court also held that the contributions were taxable gifts, as they met the definition of donations in the Civil Code and were given with donative intent. While the BIR had not previously taxed political gifts, the Court held the BIR could make new interpretations of the law and was not estopped from

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Marlon Raquel
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Taxation Law 2 February 15, 2020 Group 2: Marlon B.

Raquel

ABELLO vs. CIR


G.R. No. 120721
February 23, 2005

FACTS:

During the 1987 national elections, petitioners, who are partners in the ACCRA law firm,
contributed P882,661.31 each to the campaign funds of Senator Edgardo Angara, then running
for the Senate. The BIR then assessed each of the petitioners P263,032.66 for their contributions.
Petitioners questioned the assessment claiming that political or electoral contributions are not
considered gifts under NIRC therefore, not liable for donor’s tax. The claim for exemption was
denied by the Commissioner.

The BIR denied their motion. They then filed a petition with the CTA, which was granted.

On appeal, the CA again held in favor of the BIR.

ISSUE: Whether the contributions are liable for donor's tax.

RULING:

Yes. The NIRC does not define transfer of property by gift. However, the Civil Code, by reference,
considers such as donations. The present case falls squarely within the definition of a donation.
There was intent to do an act of liberality or animus donandi was present since each of the
petitioners gave their contributions without any consideration.

Taken together with the Civil Code definition of donation, Section 91 of the NIRC is clear and
unambiguous, thereby leaving no room for construction.

Petitioners’ contribution of money without any material consideration evinces animus donandi.
The fact that their purpose for donating was to aid in the election of the donee does not negate
the presence of donative intent.

Petitioners raise the fact that since 1939 when the first Tax Code was enacted, up to 1988 the BIR
never attempted to subject political contributions to donors tax.

This Court holds that the BIR is not precluded from making a new interpretation of the law,
especially when the old interpretation was flawed. It is a well-entrenched rule that

"erroneous application and enforcement of the law by public officers do not block subsequent
correct application of the statute" (PLDT v. Collector of Internal Revenue, 90 Phil. 676), "and
that the Government is never estopped by mistake or error on the part of its agents" (Pineda v.
Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. v.
Pineda, 98 Phil. 711, 724).

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