Pirovano v. CIR Case Summary
Pirovano v. CIR Case Summary
Pirovano v. CIR Case Summary
CASE DIGESTS
PIROVANO v. CIR
July 31, 1965
Reyes, JBL, J.
Diway
SUMMARY:
Enrico Pirovano was the President and General Manager of
Dela Rama Steamship Co. During his lifetime, he made
significant contributions to the success of the corporation.
His life was then insured by the corporation which paid the
premiums and is the beneficiary under the insurance
policy. When Enrico Pirovano died, the corporation donated
the proceeds of the life insurance policy to his 4 minor
children. The CIR then assessed donor and donees tax
against the corporation and the Pirovano children. The
children contested the imposition of the donees tax
arguing that the donation was a remuneratory one, made
in consideration of the services rendered by their father.
According to the children, the remuneratory donation is not
a taxable gift.
The SC ruled in favor of the CIR and affirmed the
imposition of the donees tax. The consideration for the
donation was the company's gratitude for the services, and
not the services themselves.
DOCTRINE: (Note: the court did not discuss income tax or
exclusions at all! Ill just add the doctrine in the future once
I know it. Right now, there is nothing about exclusions from
income tax.)
FACTS:
Enrico Pirovano was the father of the herein petitionersappellants.
Sometime in the early part of 1941, De la Rama Steamship
Co. insured the life of its President and General Manager
until the time of his death.
SC: It is well to note, and it is not disputed, that petitionersdonees have failed to file any gift tax return and that they
also failed to pay the amount of the assessment made
against them.
Section 306, NIRC lays down the procedure to be followed in
those cases wherein a taxpayer entertains some doubt
about the correctness of a tax sought to be collected. Said
section provides that the tax, should first be paid and the
taxpayer should sue for its recovery afterwards. The
purpose of the law obviously is to prevent delay in the
collection of taxes, upon which the Government depends for
its existence.
Petitioners did not file in the lower court any motion for the
suspension of payment or collection of the amount of
assessment made against them.
Hence, the imposition of 1% interest monthly and 5%
surcharge is justified and legal.
DISPOSITIVE:
CTA Ruling is affirmed.
Donor's gift tax (P34k) was erroneously assessed and
collected
Donees' gift taxes (P243k) were correctly assessed
o 5% surcharge is proper
o 1% monthly interest on the deficiency donees'
gift taxes is due