1. Pirovano v. CIR, 14 SCRA 832, July 31, 1965_Digest
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PIROVANO v CIR FACTS: Enrico Pirovano as General Manager and President of De la Raa Steas!i" Co# $as given a life ins%rance &' t!e latter# T!e initial &ene(ciar' $as t!e co"an' &%t it later on reno%nced it rig!ts and ceded it in favor of Pirovano)s !eirs# *eca%se of t!is+ t!e CIR classi(ed s%c! transaction as a donation and s%&,ected it Donor)s Ta-# T!e !eir)s of Pirovano contended t!at t!e grant does not coe $it!in t!e "%rvie$ of Donor)s ta- &eca%se s%c! $as a re%nerator' donation given in consideration of Pirovano)s "ast services# ISS.E: /ON t!e donation $as a si"le donation or a re%nerator'0 And as s%c! is it s%&,ect to Donor)s Ta-0 1E2D: 3T!ere is not!ing on record to s!o$ t!at $!en t!e late Enrico Pirovano rendered services as President and General Manager of t!e De la Raa Steas!i" Co# !e $as not f%ll' co"ensated for s%c! services+ or t!at+ &eca%se t!e' $ere 4largel' res"onsi&le for t!e ra"id and ver' s%ccessf%l develo"ent of t!e activities of t!e co"an'4 5Res# of 6%l' 78+ 79 ;<# Pirovano e-"ected or $as "roised f%rt!er co"ensation over and in addition to !is reg%lar eol%ents as President and General Manager# T!e fact t!at !is services contri&%ted in a large eas%re to t!e s%ccess of t!e co"an' did not give rise to a recovera&le de&t+ and t!e conve'ances ade &' t!e co"an' to !is !eirs reain a gift or donation# T!is is e"!asi=ed &' t!e directors> Resol%tion of 6an%ar' ;+ 79 ?+ t!at 4 out of gratitude4 t!e co"an' decided to reno%nce in favor of Pirovano>s !eirs t!e "roceeds of t!e life ins%rance "olicies in @%estion# T!e tr%e consideration for donation $as+ t!erefore+ t!e co"an'>s gratit%de for !is services+ and not t!e services t!eselves# T!erefore+ t!e donation is a si"le one and %st &e s%&,ected to Donor)s ta-
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Digest taxation Pirovano
Transcript of 1. Pirovano v. CIR, 14 SCRA 832, July 31, 1965_Digest
PIROVANO v CIRFACTS:
Enrico Pirovano as General Manager and President of De la Rama Steamship Co. was given a life insurance by the latter. The initial beneficiary was the company but it later on renounced it rights and ceded it in favor of Pirovanos heirs.
Because of this, the CIR classified such transaction as a donation and subjected it Donors Tax. The heirs of Pirovano contended that the grant does not come within the purview of Donors tax because such was a remuneratory donation given in consideration of Pirovanos past services.
ISSUE:
WON the donation was a simple donation or a remuneratory? And as such is it subject to Donors Tax?
HELD:
There is nothing on record to show that when the late Enrico Pirovano rendered services as President and General Manager of the De la Rama Steamship Co. he was not fully compensated for such services, or that, because they were "largely responsible for the rapid and very successful development of the activities of the company" (Res. of July 10, 1946). Pirovano expected or was promised further compensation over and in addition to his regular emoluments as President and General Manager. The fact that his services contributed in a large measure to the success of the company did not give rise to a recoverable debt, and the conveyances made by the company to his heirs remain a gift or donation. This is emphasized by the directors' Resolution of January 6, 1947, that "out of gratitude" the company decided to renounce in favor of Pirovano's heirs the proceeds of the life insurance policies in question. The true consideration for the donation was, therefore, the company's gratitude for his services, and not the services themselves.
Therefore, the donation is a simple one and must be subjected to Donors tax
