TAXATION CASE DIGESTS

DEDUCTIONS FROM GROSS INCOME

A. INTEREST

CASE:  THE COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. CONSUELO L. VDA. DE PRIETO, respondent. G.R. No. L-13912   September 30, 1960

FACTS:

            Respondent Vda. de Prieto conveyed by way of gifts a real property to her children. The Commissioner of Internal Revenue appraised the property donated at P1,231,268.00, and assessed the total sum of P117,706.50 as donor's gift tax, interest and compromises due thereon. Of the total sum of P117,706.50 paid by respondent on April 29, 1954, the sum of P55,978.65 represents the total interest on account of deliquency. Said sum was claimed as deduction, among others, by respondent in her 1954 income tax return. Petitioner disallowed the claim and as a consequence of such disallowance assessed respondent for 1954 deficiency income tax due on the aforesaid P55,978.65, including interest 1957, surcharge and compromise for the late payment.

ISSUE:

            Whether or not interest paid for the late payment of tax is deductible from gross income.

HELD:

            YES. For interest to be deductible, it must be shown that: (1) there be an indebtedness, (2) there should be interest upon it, and (3) what is claimed as an interest deduction should have been paid or accrued within the year. In this case, the last two requirements are undisputed. The only question is if interest on account of late payments of taxes be considered as indebtedness.  Indebtedness has been defined as an unconditional and legally enforceable obligation for the payment of money. Within the meaning of that definition, it is apparent that a tax may be considered indebtedness.  Although taxes already due have not, strictly speaking, the same concept as debts, they are, however, obligations that may be considered as such. Where statute imposes a personal liability for a tax, the tax becomes, at least in a board sense, a debt. It follows that the interest paid by herein respondent for the late payment of her donor's tax is deductible from her gross income.

In conclusion, interest payment for delinquent taxes is not deductible as tax but the taxpayer is not precluded thereby from claiming said payment as deduction on account of interest.

SAMPLE JUDICIAL AFFIDAVIT

Below is a Judicial Affidavit I made as one of the requirements for Legal Counselling class. When I was on the process of doing this affidavit, I searched the net for some samples and I was disappointed because I did not find any. So to help law students, like me, I am posting this Judicial Affidavit. :)

SPECIAL PROCEEDINGS CASES

Spouses DARACAN, Petitioners vs. JUDGE NATIVIDAD, respondent.

A.M. No.RTJ-99-1447. September 27, 2000

FACTS:

Petitioners alleged that upon motion of the court-appointed guardian, the respondent Judge issued the subject writ of preliminary attachment against their properties even as they were not parties to the guardianship proceedings. Respondent judge pleaded that he thought all along that under Section 6, Rule 96 of the Revised Rules of Court, he could issue the questioned writ to protect and preserve the rights of the wards since the petitioners were indebted to them.

ISSUE:

May a judge in a guardianship proceedings issue a writ of preliminary attachment against debtors of the ward?

RULING:

            NO. Section 6, Rule 96 of the Revised Rules of Court under which the respondent judge issued the questioned writ of preliminary injunction provides that any person who is suspected of having embezzled, concealed or conveyed away any money, goods or interest or a written instrument, belonging to the ward or his estate may be cited by the court to appear for examination, touching such money, goods, interest or instrument and make such orders as will secure the estate against such embezzlement, concealment or conveyance.

In the leading case of Cui vs. Piccio, it was held that the purpose of the said rule is merely to elicit information or secure evidence from the person suspected of having embezzled, concealed or conveyed away any personal property of the ward. In such proceeding the court has no authority to determine the right of property or to order delivery thereof. If after the examination the court finds sufficient evidence showing ownership on the part of the ward, it is the duty of the guardian to bring the proper action.

Thus, the respondent judge exceeded his jurisdiction in issuing the writ. A guardianship court exercises but a limited jurisdiction that cannot extend to the determination of questions of ownership.  

DIWATA RAMOS LANDINGIN, Petitioner vs.

REPUBLIC OF THE PHILIPPINES, Respondent.

G.R. No. 164948             June 27, 2006

FACTS:

            Petitioner, a citizen and a resident of Guam, USA but of Filipino parentage, filed a petition for the adoption of three minors who are the children of her deceased brother.  The mother of said children went to Italy to work; but later on re-married and now has two children by her second marriage. Allegedly, the mother no longer communicated with her children nor provided them support. The trial court granted her petition for adoption; but, the Court of Appeals revoked such grant contending, among others, that the voluntary consent of the natural parent must be obtained.

ISSUE:

Is the consent of the biological parent required in a petition for adoption?

HELD:

            YES. Section 9(b) of Republic Act No. 8552, otherwise known as the Domestic Adoption Act of 1998 provides that the written consent of the biological parent(s) of the child, if known, or the legal guardian, or the proper government instrumentality which has legal custody of the child is necessary to the adoption after being properly counseled and informed of his/her right to give or withhold his/her approval of the adoption. Indeed, the natural right of a parent to his child requires that his consent must be obtained before his parental rights and duties may be terminated and re-established in adoptive parents.

In this case, petitioner failed to submit the written consent of Amelia Ramos to the adoption. It was even shown that the mother did not relinquished entirely her motherly obligations of rearing the children as she was consulted for serious personal problems and continued to send financial support to the children though in minimal amounts.

IN RE: PETITION FOR ADOPTION OF MICHELLE P. LIM and MICHAEL JUDE P. LIM,

 MONINA P. LIM, Petitioner.

G.R. Nos. 168992-93          May 21, 2009

FACTS:

            Petitioner, together with her first husband, registered Michelle and Michael making it appear as if they were their parents. Said children were entrusted to them and their biological parents were unknown. When petitioner’s first husband died, she remarried an American citizen.  Petitioner decided to adopt the children by availing of the amnesty given under RA 8552 to individuals who simulated child birth.  In 2002, she filed separate petitions for adoption of Michelle and Michael before the trial court.  Both children were already of legal age during such petition and gave their consent to the adoption. However, trial court ruled that since petitioner had remarried, petitioner should have filed the petition jointly with her new husband citing Section 7(c), Article III of RA 8552 and Article 185 of the Family Code.

ISSUE: 

Whether or not petitioner, who has remarried, can singly adopt

HELD:

NO.  At the time the petitions were filed, petitioner had already remarried.  According to Section 7, Article III of RA 8552, the husband and wife shall jointly adopt except in three instances which were not present in the case at bar.  In case spouses jointly adopts, they shall jointly exercise parental authority.  The use of the word “shall” signifies that joint adoption of husband and wife is mandatory.  This is in consonance with the concept of joint parental authority since the child to be adopted is elevated to the level of a legitimate child, it is but natural to require spouses to adopt jointly. 

            

FIRST OF THE MANY

Hello! 

This is nothing but a simple welcome to myself for creating this blog. Haha!

I'm working and studying (busy as hell) but I forced myself to make a blog because I just want to share a piece of my life to everyone.

This blog will focus on my journey as a law student, as a traveler (I hope), as a music enthusiast, as a believer of true love (haha)  and as a simple girl who thinks, well overthinks.

See you, loves.