Case Digest (G.R. No. 210987)
Facts:
The Philippine American Life and General Insurance Company v. The Secretary of Finance and the Commissioner of Internal Revenue, G.R. No. 210987, November 24, 2014, Supreme Court Third Division, Velasco Jr., J., writing for the Court.
Petitioner Philamlife owned 498,590 Class A shares (49.89%) of Philam Care Health Systems, Inc. In 2009 Philamlife sold those shares by competitive bidding to STI Investments, Inc.; the documented selling price was USD 2,190,000 (PhP 104,259,330 under the prevailing exchange rate). After payment of documentary stamp and capital gains taxes, Philamlife sought a certificate authorizing registration/tax clearance from the BIR Large Taxpayers Service Division to effect the transfer.
Because of possible donors tax implications, Philamlife sought a ruling from the Commissioner of Internal Revenue on January 4, 2012, asking confirmation that the sale was not subject to donors tax (arguing absence of donative intent, arms‑length sale at fair market value, and reliance on an earlier BIR ruling). On the same date the Commissioner issued BIR Ruling No. 015‑12, denying Philamlife’s request. The Commissioner found the selling price lower than the book value shown in Philam Care’s 2008 financial statements and held that, under Section 100 of the National Internal Revenue Code (NIRC) as implemented by Revenue Regulation (RR) 6‑2008, Sec. 7(c.1.4) and (c.2.2), the excess of fair market value (deemed to be book value for non‑listed shares) over consideration is a gift subject to donors tax. The Commissioner also noted that the BIR ruling Philamlife relied upon had been revoked by Revenue Memorandum Circular (RMC) No. 25‑2011.
Philamlife sought review from the Secretary of Finance, who on November 26, 2012 affirmed BIR Ruling No. 015‑12. Philamlife then filed a petition for review under Rule 43 with the Court of Appeals (CA) (CA‑G.R. SP No. 127984), arguing among other points that (a) RR 6‑2008 Sec. 7(c.2.2) and RMC 25‑11 were void insofar as they altered Sec. 100 of the NIRC; (b) the sale was for fair market value and without donative intent; and (c) RMC 25‑11 could not be applied retroactively under Sec. 246 NIRC. On May 23, 2013 the CA dismissed the petition for lack of jurisdiction, holding that the Court of Tax Appeals (CTA) has jurisdiction pursuant to ...(Pro-only)
Issues:
- Did the Court of Appeals err in dismissing Philamlife’s Rule 43 petition for lack of jurisdiction?
- Does the price difference between the book value and the selling price of the shares attract donors tax under Section 10...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)