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    Plaridel Surety & Ins Co v. CIR 21 SCRA 1187

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    Kyle Dionisio
    Plaridel Surety provided a performance bond for a contractor to supply logs to a company. The contractor failed to deliver the logs. Plaridel Surety claimed the amount paid to the company as a tax deductible loss. The CIR disallowed the deduction. The court agreed, finding that Plaridel Surety had not yet exhausted remedies to minimize its loss, such as pursuing claims against assets mortgaged by the contractor and another party to indemnify Plaridel Surety. Tax deductions for losses are only allowed when the loss is actual and sustained, not when compensation may still be received.

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    Plaridel Surety & Ins Co v. CIR 21 SCRA 1187

    Uploaded by

    Kyle Dionisio
    95 views1 page
    Plaridel Surety provided a performance bond for a contractor to supply logs to a company. The contractor failed to deliver the logs. Plaridel Surety claimed the amount paid to the company as a tax deductible loss. The CIR disallowed the deduction. The court agreed, finding that Plaridel Surety had not yet exhausted remedies to minimize its loss, such as pursuing claims against assets mortgaged by the contractor and another party to indemnify Plaridel Surety. Tax deductions for losses are only allowed when the loss is actual and sustained, not when compensation may still be received.

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    3. Plaridel Surety & Ins Co v. CIR 21 SCRA 1187

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    Plaridel Surety provided a performance bond for a contractor to supply logs to a company. The contractor failed to deliver the logs. Plaridel Surety claimed the amount paid to the company as a tax deductible loss. The CIR disallowed the deduction. The court agreed, finding that Plaridel Surety had not yet exhausted remedies to minimize its loss, such as pursuing claims against assets mortgaged by the contractor and another party to indemnify Plaridel Surety. Tax deductions for losses are only allowed when the loss is actual and sustained, not when compensation may still be received.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    95 views1 page

    Plaridel Surety & Ins Co v. CIR 21 SCRA 1187

    Uploaded by

    Kyle Dionisio
    Plaridel Surety provided a performance bond for a contractor to supply logs to a company. The contractor failed to deliver the logs. Plaridel Surety claimed the amount paid to the company as a tax deductible loss. The CIR disallowed the deduction. The court agreed, finding that Plaridel Surety had not yet exhausted remedies to minimize its loss, such as pursuing claims against assets mortgaged by the contractor and another party to indemnify Plaridel Surety. Tax deductions for losses are only allowed when the loss is actual and sustained, not when compensation may still be received.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Plaridel Surety & Ins Co v.

    CIR 21 SCRA 1187

    FACTS:
     Petitioner Plaridel Surety is a domestic corporation engaged in the bonding business.
     Petitioner surety and Constancio San Jose (principal), solidarily executed a performance
    bond in favor of the PL Galang Machinery to secure the performance of San Jose
    contractual obligation to produce and supply logs. To afford itself adequate protection
    against loss or damages on the performance, petitioner required San Jose and Ramon
    Cuervo to execute an indemnity agreement obligating themselves, solidarity to
    indemnify petitioner for whatever liability it may incur by reason of said performance
    bond. San Jose constituted a chattel mortgage on logging machineries and other
    movables in petitioners favor while Ramon Cuervo executed a real estate mortgage.
     San Jose failed to deliver the logs to Galang Machinery and sued on the performance
    bond. The lower court directed San Jose and Cuervo to reimburse petitioner for
    whatever amount it would pay Galang Machinery.
     Petitioner in his income tax claimed that the amount P44,490 as deductible losses from
    its gross income.
     CIR disallowed the claimed deductions and assessed against petitioner the sum P8,898,
    plus interest, as deficiency income tax for the year 1957.

    ISSUE: Whether petitioner can claim P44,490 as a deductible loss from its gross income.

    HELD: NO

    Petitioner was duly compensated for otherwise than by insurance- thru the mortgage in
    its favor executed by San Jose and Cuervo and it had not yet exhausted all its available
    remedies, especially as against Cuervo to minimize its loss.

    LOSS is deductible only in the taxable year it actually happens or is sustained. However,
    if it is compensable by insurance or otherwise deductions for the loss suffered is postponed to a
    subsequent year, with, to be precise, is that year in which it appears that no compensation at
    all can be had, on that there is a remaining or net loss.

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