[G.R. No. 120721. February 23, 2005]
MANUEL G. ABELLO, JOSE C. CONCEPCION, TEODORO D. REGALA, AVELINO V. CRUZ, petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS, respondents.
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. In letters dated April 21, 1988, the Bureau of Internal Revenue (BIR) assessed each of the petitioners P263,032.66 for their contributions. On August 2, 1988, petitioners questioned the assessment through a letter to the BIR. They claimed that political or electoral contributions are not considered gifts under the National Internal Revenue Code (NIRC), and that, therefore, they are not liable for donor's tax. The claim for exemption was denied by the Commissioner.
ISSUE:
Whether petitioners are liable for donor's tax
RULING:
A gift is generally defined as a voluntary transfer of property by one to another without any consideration or compensation therefor (28 C.J. 620; Santos vs. Robledo, 28 Phil. 250).
In the instant case, the contributions are voluntary transfers of property in the form of money from private respondents to Sen. Angara, without considerations therefor.
The fact that the contributions were given to be used as campaign funds of Sen. Angara does not affect the character of the fund transfers as donation or gift. There was thereby no retention of control over the disposition of the contributions. There was simply an indication of the purpose for which they were to be used. For as long as the contributions were used for the purpose for which they were intended, Sen. Angara had complete and absolute power to dispose of the contributions. He was fully entitled to the economic benefits of the contributions.
The Bureau of Internal Revenue issued Ruling No. 344 on July 20, 1988, which reads:
Political Contributions. – For internal revenue purposes, political contributions in the Philippines are considered taxable gift rather than taxable income. This is so, because a political contribution is indubitably not intended by the giver or contributor as a return of value or made because of any intent to repay another what is his due, but bestowed only because of motives of philanthropy or charity.
Accordingly, in the absence of an express exempting provision of law, political contributions in the Philippines are subject to the donor's gift tax.
Petitioners attempt to place the barrier of mutual exclusivity between donative intent and the purpose of political contributions (influence the results of the election). This Court reiterates that donative intent is not negated by the presence of other intentions, motives or purposes which do not contradict donative intent.
BUT NOW- NO LONGER TAXABLE
Congress approved Republic Act No. 7166 on November 25, 1991, providing in Section 13 thereof that political/electoral contributions, duly reported to the Commission on Elections, are not subject to the payment of any gift tax. This all the more shows that the political contributions herein made are subject to the payment of gift taxes, since the same were made prior to the exempting legislation, and Republic Act No. 7166 provides no retroactive effect on this point.
MANUEL G. ABELLO, JOSE C. CONCEPCION, TEODORO D. REGALA, AVELINO V. CRUZ, petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS, respondents.
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. In letters dated April 21, 1988, the Bureau of Internal Revenue (BIR) assessed each of the petitioners P263,032.66 for their contributions. On August 2, 1988, petitioners questioned the assessment through a letter to the BIR. They claimed that political or electoral contributions are not considered gifts under the National Internal Revenue Code (NIRC), and that, therefore, they are not liable for donor's tax. The claim for exemption was denied by the Commissioner.
ISSUE:
Whether petitioners are liable for donor's tax
RULING:
A gift is generally defined as a voluntary transfer of property by one to another without any consideration or compensation therefor (28 C.J. 620; Santos vs. Robledo, 28 Phil. 250).
In the instant case, the contributions are voluntary transfers of property in the form of money from private respondents to Sen. Angara, without considerations therefor.
The fact that the contributions were given to be used as campaign funds of Sen. Angara does not affect the character of the fund transfers as donation or gift. There was thereby no retention of control over the disposition of the contributions. There was simply an indication of the purpose for which they were to be used. For as long as the contributions were used for the purpose for which they were intended, Sen. Angara had complete and absolute power to dispose of the contributions. He was fully entitled to the economic benefits of the contributions.
The Bureau of Internal Revenue issued Ruling No. 344 on July 20, 1988, which reads:
Political Contributions. – For internal revenue purposes, political contributions in the Philippines are considered taxable gift rather than taxable income. This is so, because a political contribution is indubitably not intended by the giver or contributor as a return of value or made because of any intent to repay another what is his due, but bestowed only because of motives of philanthropy or charity.
Accordingly, in the absence of an express exempting provision of law, political contributions in the Philippines are subject to the donor's gift tax.
Petitioners attempt to place the barrier of mutual exclusivity between donative intent and the purpose of political contributions (influence the results of the election). This Court reiterates that donative intent is not negated by the presence of other intentions, motives or purposes which do not contradict donative intent.
BUT NOW- NO LONGER TAXABLE
Congress approved Republic Act No. 7166 on November 25, 1991, providing in Section 13 thereof that political/electoral contributions, duly reported to the Commission on Elections, are not subject to the payment of any gift tax. This all the more shows that the political contributions herein made are subject to the payment of gift taxes, since the same were made prior to the exempting legislation, and Republic Act No. 7166 provides no retroactive effect on this point.
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