Case Digest (G.R. No. 123206)
Facts:
Commissioner of Internal Revenue v. Court of Appeals, Court of Tax Appeals and Josefina P. Pajonar, as Administratrix of the Estate of Pedro P. Pajonar, G.R. No. 123206, March 22, 2000, Supreme Court En Banc, Gonzaga-Reyes, J., writing for the Court.Petitioner Commissioner of Internal Revenue (CIR) seeks review of the December 21, 1995 Decision of the Court of Appeals affirming the Court of Tax Appeals’ (CTA) grant of a partial estate tax refund to private respondent Josefina P. Pajonar, administratrix of the estate of Pedro P. Pajonar. The dispute concerns whether two particular items — a P60,753 notarial fee for an extrajudicial settlement and P50,000 in attorney’s fees incurred in guardianship proceedings — are deductible from the decedent’s gross estate under Section 79 of the 1977 National Internal Revenue Code (Tax Code).
Pedro Pajonar, an incapacitated wartime veteran, had his person and property placed under guardianship with the Philippine National Bank (PNB) as guardian (RTC Dumaguete, Special Proceedings No. 1254). He died on January 10, 1988. PNB filed an accounting of the guardianship assets on May 11, 1988 but did not file an estate tax return; it advised heirs to execute an extrajudicial settlement. After a Bureau of Internal Revenue (BIR) assessment, the estate paid P2,557 on April 5, 1988, and later paid P1,527,790.98 on December 19, 1988 following a second assessment. Josefina, appointed administratrix by the trial court on July 18, 1988 (Special Proceedings No. 2399), filed a protest with the BIR (January 11, 1989) and then filed a petition with the CTA (August 15, 1989; CTA Case No. 4381) claiming a refund of the larger estate tax payment, alleging among other things that certain administration expenses were deductible.
On May 6, 1993, the CTA ordered a refund of P252,585.59, allowing various deductions from the gross estate, including the notarial fee and the guardianship attorney’s fees. After the CIR’s motion for reconsideration, the CTA issued a June 7, 1994 Resolution reducing the refund to P76,502.43 (imposing deficiency interest and excluding compromise penalty) but reaffirming the allowability of the co...(Subscriber-Only)
Issues:
- Under Section 79 of the National Internal Revenue Code, may the notarial fee for an extrajudicial settlement (P60,753) and attorney’s fees incurred in the guardianship proceedings (P50,000) be allowed as deductions from the gross estate to determine...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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