Gift Tax Assessment

July 31, 1989 BIR RULING NO. 159-89 92 (b) 000-00 159-89 1st Indorsement July 17, 1989 Returned to the Regional Director, Revenue Region No. 4-B-1, Quezon City, the within docket bearing on the internal revenue tax case of the Spouses Gumersindo Resurreccion Alba and Virginia T. Ildefonso, c/o 48 South Maya Drive, Philam Homes, Quezon City, involving the amount of P28,194.33 representing deficiency donor's tax, inclusive of interest, for the year 1987. Records of this case disclosed that on April 23, 1987, the aforesaid spouses (donors) both of whom are American citizens residing at the City of San Francisco, California, U.S.A., made and executed a Deed of Donation in favor of the Spouses Lucio R. Ildefonso and Alajandra Tagle Ildefonso where they donated their real property covered by TCT No. 257118; that said Donees are the parents of Donor, Virginia; that based on an investigation conducted on the Donor's Tax Return which they filed, donors paid the sum of P3,254.63 as gift tax; that a re-investigation conducted by that Office considered the donees as strangers, resulting in the issuance by that Office of Assessment Notice No. RO4B-GA-30-23617-87/87 dated January 15, 1988 against the taxpayers involving the amount of P28,194.33 as deficiency donor's tax inclusive of interest thereon for the year 1987; and that on February 19, 1988, taxpayers thru Mr. Lucio T. Ildefonso, Jr. returned the said Assessment Notice No. RO 4B-GA-30-23617-87/87 on the ground that the assessment issued against them by that Office has no legal basis. cd Then Section 102(b) [now Section 92(b)] of the Tax Code provides, viz: "SEC. 102(b). Tax Payable by Donor if Donee is a Stranger . When the donee or beneficiary is a stranger, the tax payable by the donor shall be either the amount computed in accordance with the preceding paragraph (a) or twenty percent (20%) of the net gifts, whichever is higher. For the purpose of this tax, a stranger is a person who is not a: (i) Brother, sister (whether by whole or half blood), spouse, ancestor, and lineal descendant, or (ii) A relative by consanguinity in the collateral line with the fourth degree of relationship." Under the above-quoted provision, it is clear that, for donor's tax purposes, a relative by affinity like the herein donees, who are the parents-in-law of the donor, Mr. Alba, are not included in the enumeration of those not considered as strangers. "Expressio unius est exclusio alterius." Accordingly, the donor's gift tax payable by the donor on the donation in question is that provided in the above-quoted provision. In view thereof, the herein gift tax assessment should be, as it is hereby sustained. cdt Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner