G.R. L-15290 - May 31, 1963: Cases Nos. L-15290 and L-15280

MARIANO ZAMORA, v.
CIR and CTA a new Tiki-Tiki plant, and to observe hotel management
G.R. L-15290 | May 31, 1963 in modern hotels.
Finding of the CTA

CIR v. MARIANO ZAMORA
The CTA, however, found that for said trip Mrs. Zamora
G.R. L-15280 | May 31, 1963
obtained only the sum of P5,000.00 from the Central Bank
and that in her application for dollar allocation, she stated
ESPERANZA A. ZAMORA, as Special Administratrix of that she was going abroad on a combined medical and
Estate of FELICIDAD ZAMORA v. CIR and CTA business trip, which facts were not denied by Mariano
G.R. L-15289 | May 31, 1963 Zamora.
CIR v. ZAMORA No evidence had been submitted as to where Mariano had

G.R. L-15281 | May 31, 1963 obtained the amount in excess of P5,000.00 given to his wife
which she spent abroad. No explanation had been made
*This is a consolidation of four cases. either that the statement contained in Mrs. Zamora's
application for dollar allocation that she was going abroad on
FACTS: a combined medical and business trip was not correct. The
Cases Nos. L-15290 and L-15280 alleged expenses were not supported by receipts. Mrs.
As to the topic on business expenses, these are the only facts that are relevant: Zamora could not even remember how much money she had
when she left abroad in 1951, and how the alleged amount of
Mariano Zamora, owner of the Bay View Hotel and Farmacia P20,957.00 was spent.
Zamora, Manila, filed his income tax returns for the years
1951 and 1952. ISSUE:
Whether or not the CTA erred in disallowing the P10,478.50
The CIR found that he failed to file his return of the capital incurred by Mariano’s wife for the promotion of the Bay View
gains derived from the sale of certain real properties and Hotel and Farmacia Zamora, in the absence of receipts
claimed deductions which were not allowable. proving the same. – NO.
The collector required him to pay the sums of P43,758.50 and RULING:
P7,625.00, as deficiency income tax for the years 1951 and Section 30, of the Tax Code, provides that in computing net
1952, respectively (C.T.A. Case No. 234, now L-15290). income, there shall be allowed as deductions all the ordinary
and necessary expenses paid or incurred during the taxable
On appeal by Zamora, the CTA on December 29, 1958, year, in carrying on any trade or business.
modified the decision appealed from and ordered him to pay
the reduced total sum of P30,258.00 (P22,980.00 and Since promotion expenses constitute one of the
P7,278.00, as deficiency income tax for the years 1951 and deductions in conducting a business, same must testify
1952, respectively), within thirty (30) days from the date the these requirements.
decision becomes final, plus the corresponding surcharges
and interest in case of delinquency, pursuant to Section Rule: Claim for the deduction of promotion expenses or
51(e), Int. Revenue Code. entertainment expenses must also be substantiated or
supported by record showing in detail the amount and
Having failed to obtain a reconsideration of the decision, nature of the expenses incurred (N.H. Van Socklan, Jr. v.
Mariano Zamora appealed (L-15290), alleging that the Court Comm. of Int. Rev.; 33 BTA 544).
of Tax Appeals erred:
Considering, as heretofore stated, that the application of Mrs.
(1) In disallowing P10,478.50, as promotion expenses Zamora for dollar allocation shows that she went abroad on a
incurred by his wife for the promotion of the Bay combined medical and business trip, not all of her
View Hotel and Farmacia Zamora (which is ½ of expenses came under the category of ordinary and
P20,957.00, supposed business expenses): necessary expenses; part thereof constituted her personal
expenses.
xxx
There having been no means by which to ascertain which
Wherefore, the parties respectfully pray that the foregoing expense was incurred by her in connection with the business
stipulation of facts be admitted and approved by this of Mariano Zamora and which was incurred for her personal
Honorable Court, without prejudice to the parties adducing benefit, the Collector and the CTA in their decisions,
other evidence to prove their case not covered by this considered 50% of the said amount of P20,957.00 as
stipulation of facts. business expenses and the other 50%, as her personal
expenses.
Mariano Zamora’s contention:
 that the CTA erred in disallowing P10,478.50 as The Court holds that said allocation is very fair to Mariano
promotion expenses incurred by his wife for the Zamora, there having been no receipt whatsoever
promotion of the Bay View Hotel and Farmacia Zamora. submitted to explain the alleged business expenses or proof
 that the whole amount of P20,957.00 as promotion of the connection which said expenses had to the business or
expenses in his 1951 income tax returns should be the reasonableness of the said amount of P20,957.00.
allowed and not merely one-half of it or P10,478.50 on
the ground that while not all the itemized expenses are While in situations like the present, absolute certainty is
supported by receipts, the absence of some supporting usually not possible, the CTA should make as close an
receipts has been sufficiently and satisfactorily approximation as it can, bearing heavily, if it chooses,
established. upon the taxpayer whose inexactness is of his own making.
 the said amount of P20,957.00 was spent by Mrs.
Esperanza A. Zamora (wife of Mariano), during her travel In the case of Visayan Cebu Terminal Co., Inc. v. Collector of
to Japan and the United States to purchase machinery for Int. Rev., G.R. L-12798, May 30, 1960, it was declared:
 that representation expenses fall under the
category of business expenses which are
allowable deductions from gross income, if they
meet the conditions prescribed by law, particularly
Section 30 (a) [1], of the Tax Code;
 that to be deductible, said business expenses
must be ordinary and necessary expenses paid
or incurred in carrying on any trade or business;
 that those expenses must also meet the further
test of reasonableness in amount;
 that when some of the representation expenses
claimed by the taxpayer were evidenced by vouchers
or chits, but others were without vouchers or chits,
documents or supporting papers;
 that there is no more than oral proof to the effect
that payments have been made for representation
expenses allegedly made by the taxpayer and about
the general nature of such alleged expenses;
 that accordingly, it is not possible to determine the
actual amount covered by supporting papers and the
amount without supporting papers, the court
should determine from all available data, the
amount properly deductible as representation
expenses.
In view hereof, the Court is of the opinion that the CTA did
not commit error in allowing merely one-half or P10,478.50
as promotion expenses of Mrs. Zamora, claimed in Mariano
Zamora's 1951 income tax returns.

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MARIANO ZAMORA, v.

Finding of the CTA

CIR v. ZAMORA No evidence had been submitted as to where Mariano had

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