I.
Transfer Taxes
A. Estate Tax
3. Deductions
Sec. 86, Tax Code
Dizon v. CIR Fernandez died.
SC Justice Artenio Dizon and Atty Rafael Dizon
were appointed as Special and Assistant
Special Administrator, respectively.
Dizon requested the probate court's authority to
sell several properties forming part of the
Estate, for the purpose of paying its creditors.
They presented documentary evidence which
included petition for probate, claims against the
estate of Manila Banking Corp., Equitable
Bank, and Banque de la Endochine.
BIR Tax assessment: deficiency estate tax of
P66,973,985.40
The petitioner claims that in as much as the
valid claims of creditors against the Estate are
in excess of the gross estate, no estate tax
was due; that the lack of a formal offer of
evidence (identification of signatures the course
of the direct examination of the witness) is fatal
to BIR's cause.
That BIR failed to consider that although the
actual payments made to the Estate creditors
were lower than their respective claims, such
were compromise agreements reached long
after the Estate's liability had been settled.
CA and CTA determined deficiency tax in the
amount of P37,419,493.71 plus 20% interest
from the due date of its payment until full
Whether or not the CA erred in affirming the
CTA in the latter's determination of the
deficiency estate tax imposed against the
Estate.
Deficiency tax nullified.
Claims against the estate, as allowable
deductions from the gross estate under Section
79 of the Tax Code, are basically a
reproduction of the deductions allowed under
Section 89 (a) (1) (C) and (E) of
Commonwealth Act No. 466 (CA 466),
otherwise known as the National Internal
Revenue Code of 1939, and which was the first
codification of Philippine tax laws.
The date-of-death valuation rule applies:
1. There is no law, nor do we discern any
legislative intent in our tax laws, which
disregards the date-of-death valuation
principle and particularly provides that post-
death developments must be considered in
determining the net value of the estate. It
bears emphasis that tax burdens are not to
be imposed, nor presumed to be imposed,
beyond what the statute expressly and
clearly imports, tax statutes being
construed strictissimi juris against the
government. Any doubt on whether a
person, article or activity is taxable is
generally resolved against taxation.
2. Such construction finds relevance and
consistency in our Rules on Special
 payment.
4.Exemptions
Sec. 87, Tax Code
5. Administrative Requirements
Sec. 89- 97, Tax Code
Government of the Philippines v. Pamintuan Florentino Pamintuan filed an income tax return
for the year 1919 and paid an amount on the
basis of said return.
Florentino died in 1925. Intestate proceedings
instituted. The court appointed commissioners
for the appraisal of value of the property of
Fflorentino.
The court then ordered the delivery to the heirs
of their respective shares of the inheritance
after paying the corresponding inheritance
taxes which were duly paid.
During the pendency of the intestate
proceedings, the administrator Jose Ramirez
filed income tax returns for the estate of the
deceased corresponding to the years 1925 and
1926. The intestate proceedings were then
closed in 1926.
In 1927, subsequent to the distribution of
Florentinos estate, the government discovered
that Florentino had not paid P462 as
additional income for 1919 on account of the
sale of his house, from which he realized an
income of P11,000.00 which was not included
Proceedings wherein the term "claims"
required to be presented against a
decedent's estate is generally construed to
mean debts or demands of a pecuniary
nature which could have been enforced
against the deceased in his lifetime, or
liability contracted by the deceased before
his death. Therefore, the claims existing at
the time of death are significant to, and
should be made the basis of, the
determination of allowable deductions.
The administration proceedings of the late
Florentino Pamintuan having been closed, and
his estate distributed among his heirs, the
defendants herein, the latter are responsible for
the payment of the income tax here in question
in proportion to the share of each in said estate,
in accordance with section 731 of the Code of
Civil Procedure.
ESTATE; LIABILITY OF HEIRS AND
DISTRIBUTEES. Heirs are not required to
respond with their own property for the debts of their
deceased ancestors. But even after the partition of
an estate, heirs and distributees are liable
individually for the payment of all lawful outstanding
claims against the estate in proportion to the amount
or value of the property they have respectively
received from the estate. The hereditary property
consists only of that part which remains after the
settlement of all lawful claims against the estate, for
the settlement of which the entire estate is first
liable. The heirs cannot, by any act of their own or
by agreement among themselves, reduce the
creditors' security for the payment of their claims.
For the reasons stated, we are of opinion
and so hold that claims for income taxes need
not be filed with the committee on claims and
 in his income tax return filed in 1919.
The government demanded payment of the
income tax but the heirs refused to pay. The
lower court ruled that the government was
barred from collecting the income tax due to its
failure to file its claim with the committee on
claims and appraisals.
CIR v. Pineda
BIR investigated the income tax liability of
Anastacio Pinedas estate for the years 1945,
1946, 1947, and 1948. It was found that the
corresponding income tax returns were not
filed.
This resulted to a P760.28 deficiency income
tax for 1945 and 1946 and real estate dealers
fixed tax for the 4th quarter of 1946 and for the
whole year 1947.
Manuel Pineda, eldest son (of 15 children) of
Anastacio, received the assessment. He
contested the same alleging that only a
proportionate part should be his liability.
CTA ruled that Pineda is liable only for taxes
corresponding to his share in the estate.
appraisals appointed in the course of testate
proceedings and may be collected even after
the distribution of the decedent's estate among
his heirs, who shall be liable therefor in
proportion to their share in the inheritance.
Whether the Government can require Manuel
Pineda to pay the full amount of the tax
assessed
Yes. As a holder of property belonging to the
estate, Pineda is liable for the tax up to the
amount of the property in his possession.
Pineda is liable for he tax up to the amount of
the property in his possession. The reason is
that the Government has a lien on the
P2,500.00 received by him from the estate as
his share in the inheritance, for unpaid income
taxes4a for which said estate is liable.
By virtue of such lien, the Government has the
right to subject the property in Pineda's
possession, i.e., the P2,500.00, to satisfy the
income tax assessment in the sum of P760.28.
After such payment, Pineda will have a right of
contribution from his co-heirs,5 to achieve an
adjustment of the proper share of each heir in
the distributable estate.
The BIR is given the discretion to avail of the
most expeditious way to collect the tax. This is,
of course, without prejudice to Pinedas right of
contribution for his co-heirs.
Ways of collecting tax:
1. by going after all the heirs and collecting
from each one of them the amount of
the tax proportionate to the inheritance
received

CIR v. Gonzales In 1948, Matias Yusay died leaving behind two
heirs, namely, Jose Yusay and Lilia Yusay
Gonzales. Jose was appointed as
administrator. He filed an estate and
inheritance tax return in 1949.
The Bureau of Internal Revenue (BIR)
conducted a tax audit and the BIR found that
there was an under-declaration in the return
filed. In 1953 however, a project of partition
between the two heirs was submitted to the
BIR. The estate was to be divided as follows:
1/3 for Gonzales and 2/3 for Jose.
The BIR then conducted another investigation
in July 1957 with the same result there was
an under-declaration. In February 1958, the
Commissioner of Internal Revenue issued a
final assessment notice (FAN) against the
entire estate.
In November 1959, Gonzales questioned the
validity of the FAN issued in 1958. She averred
that it was issued way beyond the prescriptive
period of 5 years (under the old tax code). And
that she should not be adjudged as liable for
the whole tax since she administers only 1/3 of
the estate. And that the other 2/3 is now
administered by his deceased brothers widow,
Florencia Yusay.
2. adjustment of the shares of each heir in
the distributed estate as lessened by
the tax.
3. subjecting said property of the estate
which is in the hands of an heir or
transferee to the payment of the tax
due, the estate
CIRs right to asses already prescribed?
NO. It was found that Jose filed a return which
was so defective that the CIR cannot make a
correct computation on the taxes due. When a
tax return is so defective, it is as if there is no
return filed, hence, it is considered that the
taxpayer omitted to file a return. As such, the
five year prescriptive period to make an
assessment is extended to 10 years. And the
counting of the prescriptive period shall run
from the discovery of the omission (or fraud or
falsity in appropriate cases).
In the case at bar, the omission was deemed to
be discovered in the re-investigation conducted
in July 1957. Hence, the FAN issued in
February 1958 was well within the ten year
prescriptive period. Gonzales was adjudged to
pay the deficiency tax in the FAN, without
prejudice to her right to ask reimbursement
from Joses estate (Jose already died).
Gonzales liable for the entire inheritance tax?
At any rate, estate and inheritance taxes are
satisfied from the estate and are to be paid by
the executor or administrator.
1. Where there are two or more executors,
all of them are severally liable for the
payment of the estate tax.
2. The inheritance tax, although charged
against the account of each beneficiary,
should be paid by the executor or
administrator.
 3. Failure to pay the estate and inheritance
taxes before distribution of the estate
would subject the executor or
administrator to criminal liability under
Section 107(c) of the Tax Code.

It is immaterial therefore that Lilia Yusay

Gonzales administers only one-third of the
estate and will receive as her share only said
portion, for her right to the estate comes after
taxes. As an administratrix, she is liable for the
entire estate tax. As an heir, she is liable for the
entire inheritance tax although her liability
would not exceed the amount of her share
in the estate. The entire inheritance tax which
amounts to P39,178.12 excluding penalties is
obviously much less than her distributive share.

2.Exemptions
RA 7166, Section 13
Sec. 13. Authorized Expenses of Candidates and Political Parties. - The agreement amount that a candidate or registered political party may spend
for election campaign shall be as follows:

For candidates. - Ten pesos (P10.00) for President and Vice-President; and for other candidates Three Pesos (P3.00) for every voter currently
registered in the constituency where he filed his certificate of candidacy: Provided, That a candidate without any political party and without support
from any political party may be allowed to spend Five Pesos (P5.00) for every such voter; and
For political parties. - Five pesos (P5.00) for every voter currently registered in the constituency or constituencies where it has official candidates.
Any provision of law to the contrary notwithstanding any contribution in cash or in kind to any candidate or political party or coalition of parties for
campaign purposes, duly reported to the Commission shall not be subject to the payment of any gift tax.
RA 9500, Sec. 25
SEC. 25. Tax Exemptions. - The provisions of any general or special law to the contrary notwithstanding:

(a) All revenues and assets of the University of the Philippines used for educational purposes or in support thereof shall be exempt from all taxes
and duties;

(b) Gifts and donations of real and personal properties of all kinds shall be exempt from the donor's tax and the same shall be considered as
allowable deductions from the gross income of the donor, in accordance with the provisions of the National Internal Revenue Code of 1997, as
amended: Provided, That the allowable deductions shall be equivalent to 150 percent of the value of such donation. Valuation of assistance other
than money shall be based on the acquisition cost of the property. Such valuation shall take into consideration the depreciated value of property in
case said property has been used;

(c) Importation of economic, technical, vocational, scientific, philosophical, historical and cultural books, supplies and materials duly certified by the
Board, including scientific and educational computer and software equipment, shall be exempt from customs duties;

(d) The University shall only pay 0% value-added tax for all transactions subject to this tax; and

(e) All academic awards shall be exempt from taxes.

RA 9521, Sec. 3
Section 3. The National Book Development Trust Fund. - A National Book Development Trust Fund, hereafter referred to as the Fund, is hereby
established exclusively for the support and promotion of Filipino authorship especially in science and technology and in subject areas wherein
locally authored books are either few or nonexistent. The Fund shall be subject to the following;

(a) The contribution to the Fund shall be sourced from the following:

(1) The amount of Fifty million pesos (P50,000,000.00) shall be alloted in the annual General Appropriation Act (GAA) for the next five (5) years
starting from the enactment of this law;

(2) The amount of Fifty million pesos (P50,000,000.00) shall be taken from the Philippine Amusement and Gaming Corporation (PAGCOR) fund at
Five million pesos (P5,000,000.00) per month for ten (10) months;

(3) Another amount of Fifty million pesos (P50,000,000.00) shall be taken from the Philippine Charity Sweepstakes Office (PCSO) at Five million
pesos (P5,000,000.00) per month for ten (10) months;

(b) Only the interest drawn from the Fund from sources cited in Section 3 (a1), (a2) and (a3) shall be awarded as grants to promote Filipino
authorship and to support the completion of local manuscripts or research works for publication;

(c) The grants can be awarded only after one (1) year from the organization of the Fund, and the grants shall be awarded equitably among the
regions.

(d) Government corporations are hereby authorized to give grants to the Fund at their discretion;

(e) The private portion of the Fund shall be raised from donations and other conveyances including funds, materials, property and services, by
gratuitous title;

(f) Contributions to the Fund shall be exempt from the donor's tax and the same shall be considered as allowable deductions from the gross income
of the donor, in accordance with the provisions of the National Internal Revenue Code of 1997, as amended: Provided, That the allowable
deductions shall be equivalent to one hundred fifty percent (150%) of the value of such donation;

(g) The National Book Development Board(NBDB) shall be the administrator of the Fund;
(h) For the sound and judicious management of the Fund, the NBDB shall appoint a government financial institution, with sound track record on
fund management, as portfolio manager of the Fund, subject to guidelines promulgated by the NBDB; and

(i) The NBDB shall prepare the implementing guidelines and decision-making mechanisms, subject to the following:

(1) No part of the seed capital of the Fun, including earnings thereof, shall be used to underwrite overhead expenses for the administration; and

(2) There shall be an external auditor to perform an annual audit of the Fund's performance.
RA 10165, Sec. 3-5
Section 3. Definition of Terms. For purposes of this Act, the following terms are defined:

(a) Agency refers to any child-caring or child-placing institution licensed and accredited by the Department of Social Welfare and Development
(DSWD) to implement the foster care program.

(b) Child refers to a person below eighteen (18) years of age, or one who is over eighteen (18) but is unable to fully take care of or protect oneself
from abuse, neglect, cruelty, exploitation or discrimination because of a physical or mental disability or condition.

(c) Child Case Study Report refers to a written report prepared by a social worker containing all the necessary information about a child.

(d) Child with Special Needs refers to a child with developmental or physical disability.

(e) Family refers to the parents or brothers and sisters, whether of the full or half-blood, of the child.

(f) Foster Care refers to the provision of planned temporary substitute parental care to a child by a foster parent.

(g) Foster Child refers to a child placed under foster care.

(h) Foster Family Care License refers to the document issued by the DSWD authorizing the foster parent to provide foster care.

(i) Foster Parent refers to a person, duly licensed by the DSWD, to provide foster care.

(j) Foster Placement Authority (FPA) refers to the document issued by the DSWD authorizing the placement of a particular child with the foster
parent.

(k) Home Study Report refers to a written report prepared by a social worker containing the necessary information on a prospective parent or family
member.

(l) Matching refers to the judicious pairing of a child with foster parent and family members based on the capacity and commitment of the foster
parent to meet the individual needs of the particular child and the capacity of the child to benefit from the placement.

(m) Parent refers to the biological or adoptive parent or legal guardian of a child.
(n) Placement refers to the physical transfer of the child with the foster parent.

(o) Relatives refer to the relatives of a child, other than family members, within the fourth degree of consanguinity or affinity.

(p) Social Worker refers to the registered and licensed social worker of the DSWD, local government unit (LGU) or agency.

ARTICLE II
ELIGIBILITY

Section 4. Who May Be Placed Under Foster Care. The following may be placed in foster care:

(a) A child who is abandoned, surrendered, neglected, dependent or orphaned;

(b) A child who is a victim of sexual, physical, or any other form of abuse or exploitation;

(c) A child with special needs;

(d) A child whose family members are temporarily or permanently unable or unwilling to provide the child with adequate care;

(e) A child awaiting adoptive placement and who would have to be prepared for family life;

(f) A child who needs long-term care and close family ties but who cannot be placed for domestic adoption;

(g) A child whose adoption has been disrupted;

(h) A child who is under socially difficult circumstances such as, but not limited to, a street child, a child in armed conflict or a victim of child labor or
trafficking;

(i) A child who committed a minor offense but is released on recognizance, or who is in custody supervision or whose case is dismissed; and

(j) A child who is in need of special protection as assessed by a social worker, an agency or the DSWD.

Provided, That in the case of (b), (c), (f), (h), (i), and (j), the child must have no family willing and capable of caring and providing for him.

Section 5. Who May Be a Foster Parent. An applicant who meets all of the following qualifications may be a foster parent:

(a) Must be of legal age;

(b) Must be at least sixteen (16) years older than the child unless the foster parent is a relative;

(c) Must have a genuine interest, capacity and commitment in parenting and is able to provide a familial atmosphere for the child;
(d) Must have a healthy and harmonious relationship with each family member living with him or her;

(e) Must be of good moral character;

(f) Must be physically and mentally capable and emotionally mature;

(g) Must have sufficient resources to be able to provide for the familys needs;

(h) Must be willing to further hone or be trained on knowledge, attitudes and skills in caring for a child; and

(i) Must not already have the maximum number of children under his foster care at the time of application or award, as may be provided in the
implementing rules and regulations (IRR) of this Act.

Provided, That in determining who is the best suited foster parent, the relatives of the child shall be given priority, so long as they meet the above
qualifications: Provided, further, That an alien possessing the above qualifications and who has resided in the Philippines for at least twelve (12)
continuous months and maintains such residence until the termination of placement by the DSWD or expiration of the foster family license, may
qualify as a foster parent.
Sec. 22-24
Section 22. Assistance and Incentives to Foster Parent.

(a) Support Care Services. The DSWD, the social service units of LGUs and agencies shall provide support care services to include, but not
limited to, counseling, visits, training on child care and development, respite care, skills training and livelihood assistance.

(b) Additional Exemption for Dependents. For purposes of claiming the Twenty-five thousand pesos (PhP 25,000.00) additional exemption for
foster parents for each dependent not exceeding four (4) as provided for by Republic Act No. 9504, the definition of the term "dependent" under
Section 35(B) of the National Internal Revenue Code (NIRC) of 1997 shall be amended to include "foster child": Provided, That all other conditions
provided for under the aforesaid section of the NIRC of 1997 must be complied with: Provided, further. That this additional exemption shall be
allowed only if the period of foster care is at least a continuous period of one (1) taxable year.

For purposes of this section, only one (1) foster parent can treat the foster child as a dependent for a particular taxable year. As such, no other
parent or foster parent can claim the said child as a dependent for that period.

Section 23. Incentives to Agencies. Agencies shall be entitled to the following tax incentives:

(a) Exemption from Income Tax. Agencies shall be exempt from income tax on the income derived by it as such organization pursuant to Section
30 of the NIRC of 1997, as implemented by Revenue Regulation (RR) No. 13-98; and

(b) Qualification as a Donee Institution. Agencies can also apply for qualification as a donee institution.

Section 24. Incentives to Donors. Donors of an agency shall be entitled to the following:

(a) Allowable Deductions. Donors shall be granted allowable deductions from its gross income to the extent of the amount donated to agencies in
accordance with Section 34(H) of the NIRC of 1997; and

(b) Exemption from Donors Tax. Donors shall be exempted from donors tax under Section 101 of the NIRC of 1997: Provided, That not more
than thirty percent (30%) of the amount of donations shall be spent for administrative expenses.