Donation to government and BIR inaction

BIR Ruling No. DA-026-08

22 January 2008

Facts:

Philippine Associated Smelting and Refining Corporation (PASAR) donated land to the Province of Batangas to be developed as a world class encampment site/training facility and youth camp. The land has not been used in operations and has been booked as non-current assets, hence classified as capital asset.

Issue:

Whether or not the donation of land by PASAR is exempt from the donor’s tax.

Ruling:

The donation is exempt from donor’s tax in accordance with Section 101(A)(2) of the Tax Code, which provides that gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision shall be exempt from tax.

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BIR inaction

Philam Plans Inc. vs. CIR

CTA EB Case 222

Facts:

Philam Plans (“Philam”) received a Final Assessment Notice (“FAN”) for alleged deficient taxes for the taxable year 1997. A protest was filed by Philam. Considering that the Commissioner of Internal Revenue (“CIR”) did not act on the protest, Philam, within 30 days from the lapse of the 180 day period of the BIR to act on the protest, filed a Petition for Review with the Court of Tax Appeals. Subsequently, the CIR denied Philam’s protest for lack of factual and legal bases.

Issue:

Whether or not the Commissioner of Internal Revenue lost its jurisdiction to decide on the FAN after the taxpayer files a Petition for Review with the Court of Tax Appeals.

Ruling:

Section 228 of the Tax Code states that if the protest is denied in whole or in part, or is not acted upon within 180 days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within 30 days from receipt of the said decision or from the lapse of the 180 day period.

In cases of inaction, the taxpayer has the following options: (1) he may appeal to the Court of Tax Appeals within 30 days from the lapse of the 180 day period or (2) he may wait until the CIR decides on his protest.

The CIR still has the authority to issue the final decision on the protest despite the filing of a Petition for Review with the Court of Tax Appeals. This does not mean, however, that such decision will prevail over the findings of the court because if it is offered or presented by the BIR, the said decision would still be subject to the court’s final evaluation of the facts and the laws involved.

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