Amendments in Consti

8/13/2019 Amendments in Consti

1/13

Akbayan vs comelec

fACTS:Petitioner Akbayan Youth seek to direct the Commission on Elections (COMELEC) toconduct a special registration before May 2001 General Elections for new voters ages 18to 21. According to petitioners, around four million youth failed to register on or beforethe December 27, 2000 deadline set by the respondent COMELEC under Republic ActNo. 8189.

A request to conduct a two-day additional registration of new voters on February 17 and18, 2001 was passed but it was denied by the COMELEC. Section 8 of Republic ActNo. 8189 explicitly provides that no registration shall be conducted during the periodstarting one hundred twenty (120) days before a regular election and thattheCommission has no more time left to accomplish all pre-election activities.

ISSUE:Whether or not the Court can compel respondent COMELEC, to conduct a

special registration of new voters during the period between the COMELECs imposedDecember 27, 2000 deadline and the May 14, 2001 general elections.

HELD:The Supreme Court could not compel Comelec to conduct a specialregistration of newvoters. The right to suffrage is not absolute and must be exercised within the properbounds and framework of the Constitution. Petitioners failed to register, thus missedtheir chance. However, court took judicial notice of the fact that the President issueda proclamation calling Congress to a Special Session to allow the conduct ofspecial registration for new voters and that bills had been filed in Congress to amendRepublic Act No. 8189.Read full textEmail ThisBlogThis!Share to TwitterShare to FacebookLabels:1987 Constitution,Akbayan Youth vs. Comelec,case digest,constitutional law,G.R. No.147066,March 26 2001,Political Law,Republic Act No. 8189,suffrage

AKBAYAN-YOUTH v. COMELECFacts:Petitioners in this case represent the youth sector and

they seek to seek to direct COMELEC to conduct a specialregistration before the May 14, 2001

General Elections, of new voters ages 18 to 21. According to them, around fourmillion youth

failed to register on or before the December 27, 2000 deadline set by the respondent

COMELEC. However,the COMELEC issued Resolution No. 3584 disapproving the request for

additional registration of voters on the groundthat Section 8 of R.A. 8189 explicitly providesthat no registration shall be conducted during the period starting onehundred twenty (120)

days before a regular election and that the Commission has no more time left to accomplish

allpre-election activities.Aggrieved by the denial, petitioners filed before the SC the instant

which seeks to set aside and nullify Resolution and/or to declare

Section 8 of R. A. 8189 unconstitutional insofar as said provision effectivelycauses the

disenfranchisement of petitioners and others similarly situated. Likewise, petitioners pray for
http://sc.judiciary.gov.ph/jurisprudence/2001/mar2001/147066.htmhttp://sc.judiciary.gov.ph/jurisprudence/2001/mar2001/147066.htmhttp://sc.judiciary.gov.ph/jurisprudence/2001/mar2001/147066.htmhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=emailhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=twitterhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=twitterhttp://whateverjuan.blogspot.com/search/label/1987%20Constitutionhttp://whateverjuan.blogspot.com/search/label/1987%20Constitutionhttp://whateverjuan.blogspot.com/search/label/1987%20Constitutionhttp://whateverjuan.blogspot.com/search/label/Akbayan%20Youth%20vs.%20Comelechttp://whateverjuan.blogspot.com/search/label/Akbayan%20Youth%20vs.%20Comelechttp://whateverjuan.blogspot.com/search/label/Akbayan%20Youth%20vs.%20Comelechttp://whateverjuan.blogspot.com/search/label/case%20digesthttp://whateverjuan.blogspot.com/search/label/case%20digesthttp://whateverjuan.blogspot.com/search/label/constitutional%20lawhttp://whateverjuan.blogspot.com/search/label/constitutional%20lawhttp://whateverjuan.blogspot.com/search/label/constitutional%20lawhttp://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/March%2026%202001http://whateverjuan.blogspot.com/search/label/March%2026%202001http://whateverjuan.blogspot.com/search/label/March%2026%202001http://whateverjuan.blogspot.com/search/label/Political%20Lawhttp://whateverjuan.blogspot.com/search/label/Political%20Lawhttp://whateverjuan.blogspot.com/search/label/Republic%20Act%20No.%20%208189http://whateverjuan.blogspot.com/search/label/Republic%20Act%20No.%20%208189http://whateverjuan.blogspot.com/search/label/Republic%20Act%20No.%20%208189http://whateverjuan.blogspot.com/search/label/suffragehttp://whateverjuan.blogspot.com/search/label/suffragehttp://whateverjuan.blogspot.com/search/label/suffragehttp://whateverjuan.blogspot.com/search/label/suffragehttp://whateverjuan.blogspot.com/search/label/Republic%20Act%20No.%20%208189http://whateverjuan.blogspot.com/search/label/Political%20Lawhttp://whateverjuan.blogspot.com/search/label/March%2026%202001http://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/G.R.%20No.%20147066http://whateverjuan.blogspot.com/search/label/constitutional%20lawhttp://whateverjuan.blogspot.com/search/label/case%20digesthttp://whateverjuan.blogspot.com/search/label/Akbayan%20Youth%20vs.%20Comelechttp://whateverjuan.blogspot.com/search/label/1987%20Constitutionhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=twitterhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=twitterhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=emailhttp://www.blogger.com/share-post.g?blogID=4417439532435901799&postID=5421682705894981862&target=emailhttp://sc.judiciary.gov.ph/jurisprudence/2001/mar2001/147066.htm


2/13

the issuance of a writ of mandamus directing respondent COMELEC to conduct a special

registration of new voters and to admit forregistration petitioners and other similarly situated

young Filipinos to qualify them to vote in the May 14, 2001 GeneralElections.Issues:1.

Whether or not respondent COMELEC committed grave abuse of discretion in issuing COMELEC

Resolution2.

Whether or not the SC can compel respondent COMELEC to conduct a special registration of

new voters duringthe period between the imposed December 27, 2000 deadline

and the May 14, 2001 generalelections.Held:1.

NoThe right of suffrage invoked by petitioners is not at all absolute. The exercise of the right of

suffrage, as in theenjoyment of all other rights is subject to existing substantive and procedural

requirements embodied in ourConstitution, statute books and other repositories of law. As to

the procedural limitation, the right of a citizen tovote is necessarily conditioned upon certain

procedural requirements he must undergo: among others, the processof registration.

Specifically, a citizen in order to be qualified to exercise his right to vote, in addition to the

minimumrequirements set by the fundamental charter, is obliged by law to register, at present,

under the provisions of Republic Act No. 8189, otherwise known as the Registration

Act of Section 8, of the R.A. 8189,explicitly provides that

No registration shall, however, be conducted during the period starting one hundred

twenty (120) days before a regular election and ninety (90) days before a special

The 100-day prohibitive periodserves a vital role in protecting the integrity of the registration

process. Without the prohibitive periods, theCOMELEC would be deprived of any time to

evaluate the evidence on the application. If we compromise on thesesafety nets, we may very

well end up with a list full of flying voters, overflowing with unqualified

registrants,populated with shadows and ghostsLikewise, petitioners invoke the so called

standby

powers or

residual

powers of the COMELEC, as provided under the relevant provisions of Sec. 28 of RA 8436

Designation of Other Dates for Certain Pre-election Acts.

The act of registration is concededly, by its very nature, a pre-election act. Under Section 3(a)

of R.A. 8189, (a) Registration refers to the act of accomplishing and filing of a sworn application

for registration by a qualified voter

before the election officer of the city or municipality wherein he resides and including thesame

in the book of registered voters upon approval by the Election Registration Board. It bears

emphasis that

the provisions of Section 29 of R.A. 8436 invoked by herein petitioners and Section 8 of R.A.

8189 volunteered by respondent COMELEC, far from contradicting each other. SC hold that

Section 8 of R.A. 8189 applies in the present case, for the purpose of upholding the assailed

COMELEC Resolution and denying the instant petitions,considering that the aforesaid law


3/13

explicitly provides that no registration shall be conducted during the periodstarting one

hundred twenty (120) days before a regular election. The provisions of Section 28, R.A.

8436would come into play in cases where the pre-election acts are susceptible of performance

within the available period prior to election day.The

stand-by power

of the respondent COMELEC under Section 28 of R.A.8436, presupposes the possibility of itsbeing exercised or availed of, and not otherwise.Moreover, the petitioners in the instant case

are not without fault or blame. They admit in their petition

that theyfailed to register, for whatever reason, within the period of registration and came to

this Court and invoked its protective mantle not realizing, so to speak, the speck in their

eyes. Impurisminibus nemo accedat curiam. Letno one come to court with unclean hands.

Well-entrenched is the rule in our jurisdiction that the law aids thevigilant and not those

who slumber on their rights. V igilantis sed non dor mientibus jura in re subveniunt.

2.

NO

SC believes that petitioners failed to establish, to the satisfaction of this Court, that they are

entitled to theissuance of this extraordinary writ so as to effectively compel respondent

COMELEC to conduct a specialregistration of voters

Gloria vs ca

GLORIA V. COURT OF APPEALS

FACTS

Abad, Bandigas, Somebang and Margallo, private respondents, are public school

teachers. Some time in September and October 1990, during the teachers strikes, they

did not report for work. For this reason they were administratively charged with 1)

grave misconduct; 2) gross violation of Civil Service Rules; 3) gross neglect of duty; 4)

refusal to perform official duty; 5) gross insubordination; 6) conduct prejudicial to the

best interest of service and; 7) AWOL. They were placed under preventive suspension.

Investigation ended before the lapse of the 90 day period. Margallo was dismissed from

the service. The three others were suspended for 6 months. On appeal to the CA, the

court mitigated the punishment to reprimand only. Hence their reinstatement. Now the

reinstated teachers are asking for back wages during the period of their suspension and

pending appeal (before the CA exonerated them).


4/13

ISSUE

Whether the teachers are entitled to backwages for the period pending their appeal if

they are subsequently exonerated.

HELD

YES, they are entitled to full pay pending their appeal. To justify the award of back

wages, the respondent must be exonerated from the charges and his suspension be

unjust. Preventive suspension pending appeal is actually punitive, and it is actually

considered illegal if the respondent is exonerated and the administrative decision

finding him guilty is reversed. Hence he should be reinstated with full pay for the period

of the suspension. Section 47 (4) of theCivil Service Decree states that the respondent

shall be considered as under preventive suspension during the pendency of the appealin the event he wins.On the other hand if his conviction is affirmed the period of his

suspension becomes part of the final penalty of suspension or dismissal. In the case at

bar the respondents won in their appeal, therefore the period of suspension pending

their appeal would be considered as part of the preventive suspension, entitling them to

full pay because they were eventually exonerated and their suspension was unjustified.

They are still entitled to back salaries even if they were still reprimanded.

Even if the DECS Secretary is analter ego of the president, he cannot invoke the Presidents

immunity from suit in a case filed against him because the questioned acts are not the actsof the

President but merely those of a department secretary. Moreover, presidential decisions may be

questioned before the courts where there is grave abuse of discretion or that the President acted

without or in excess of jurisdiction.

Indefinite reassignment is definitely violative of the security of tenure.

Facts:

Private respondent Dr. Bienvenido Icasiano was appointed Schools

DivisionSuperintendent of Quezon City in 1989. Upon recommendation of DECS

Secretary Ricardo T. Gloria, Icasiano was reassigned as Superintendent of the


5/13

Marikina Institute of Science and Technology (MIST) to fill up the vacuumcreated by the

retirement of its Superintendent in 1994.

Icasiano filed a TRO and preliminary mandatory injuction enjoining the implementation of

his reassignment. The Court of Appeals granted the petition holding that the indefinite

reassignment is violative of Icasianos right to security of tenure.

The DECS Secretary argued that the filing of the case is improper because the same attacks

an act of the President, in violation of the doctrine of presidential immunity from suit.

Issues:

1. Whether or not the filing of the case violates the presidential immunity from suit.

2. Whether or not private respondent's reassignment is violative of his security of tenure.

Held:

1. Petitioners contention is untenable for the simple reason that the petition is directed

against petitioners and not against the President. The questioned acts are those of

petitioners and not of the President. Furthermore, presidential decisions may be questioned

before the courts where there is grave abuse of discretion or that the President acted

without or in excess of jurisdiction.

2. After a careful study, the Court upholds the finding of the respondent court that the

reassignment of petitioner to MIST "appears to be indefinite". The same can be inferred

from the Memorandum of Secretary Gloria for President Fidel V. Ramos to the effect that

the reassignment of private respondent will "best fit his qualifications and experience" being

"an expert in vocational and technical education." It can thus be gleaned that subject

reassignment is more than temporary as the private respondent has been described as fit

for the (reassigned) job, being an expert in the field. Besides, there is nothing in the said

Memorandum to show that the reassignment of private respondent is temporary or would

only last until a permanent replacement is found as no period is specified or fixed; which

fact evinces an intention on the part of petitioners to reassignprivate respondent with no

definite period or duration. Such feature of the reassignment in question is definitely

violative of the security of tenure of theprivate respondent. As held in Bentain vs. Court of

Appeals (209 SCRA 644):


6/13

"Security of tenure is a fundamental and constitutionally guaranteed feature of our civil

service. The mantle of its protection extends not only to employees removed without cause

but also to cases of unconsented transfers which are tantamount to illegal removals

(Department of Education, Culture and Sports vs.Court of Appeals, 183 SCRA 555; Ibanez

vs. COMELEC, 19 SCRA 1002; Brillantes vs. Guevarra, 27 SCRA 138).

While a temporary transfer or assignment of personnel is permissible even without the

employees prior consent, it cannot be done when the transfer is a preliminary step toward

his removal, or is a scheme to lure him away from his permanent position, or designed to

indirectly terminate his service, or force his resignation. Such a transfer would in effect

circumvent the provision which safeguards the tenure of office of those who are in the Civil

Service (Sta. Maria vs. Lopez, 31 SCRA 651; Garcia vs. Lejano, 109 Phil. 116)."

Having found the reassignment of private respondent to the MIST to be violative of his

security of tenure, the order for his reassignment to the MIST cannot becountenanced.(Ricardo T. Gloria vs. Court of Appeals, G.R. No. 119903. August 15, 2000)

Munoz vs hord

Issue: consumption limited or broad meaning

Statute:word is used in statute which provides that except as herein specifically exempted,

there shall be paid by each merchant and manufacturer a tax at the rate of 2/3 of 1% on gross

value of money in all goods, wasre and merchandise sold, bartered, or exchanged for domestic

consumption

Held

Considering the purpose of the law, which is to tax all merchants except those expressly

exempted, it is reasonable and fair to conclude that legislature used in commercial use and not

in limited sense of total destruction of thing sold.

Nestle Philippines Inc. vs. Court of Appeals

1991

FACTS:San Miguel Corporation and Nestle S.A. are the two major stockholders of Neslte.Nestle increased its

authorized capital stock and was approved by SEC. Thereafter,some unissued stocks were sold to San Miguel

and Nestle. Nestle filed a complaintwith the SEC, seeking to exempt the firm from the registration requirement

of Section4 of the Revised Securities Act and from payment of the fee referred to in Section

6(c). The provision states that a corporation may be exempted from the requirement of registratio


7/13

n if its issues additional capital stock among its own stockholdersexclusively. Nestle argued that issuance of

additional capital stock means issuance of increased authorized capital stock. SEC held that for purposes of

granting a general orparticular exemption from the registration requirements, a request for exemption anda fee

equivalent to 0.1% of issued value or securities or stocks are required.

ISSUE:Whether or not Nestle is entitled to exemption

.RULING:Nestle is not exempted from the fee provided for in Section 6 (c) of the RevisedSecurities Act.Section

6(a) (4) permits greater opportunity for the SEC to implement the statutory objective of protecting the investing

public by requiring proposed issuers of capitalstock to inform such public of the true financial conditions and

prospects of thecorporation. When capital stock is issued in the course of and in compliance with

therequirements of increasing its authorized capital stock under Section 38 of theCorporation Code, the SEC as a

matter of course examines the financial condition of the corporation. Under the ruling issued by the SEC, an

issuance of previously authorized but still unissued capital stock may, in a particular instance, be held to bean

exempt transaction by the SEC under Section 6(b) so long as the SEC finds thatthe requirements of registration

under the Revised Securities Act are "not necessary inthe public interest and for the protection of the investors"

by reason,

inter alia,

of thesmall amount of stock that is proposed to be issued or because the potential buyersare very limited in

number and are in a position to protect themselves. Theconstruction of a statute by the executive officers of the

government is entitled to greatrespect and should be accorded great weight by the courts.

Wala jud koy makit.an ramos

Kani na lang pull takes

UNITED STATES TAX COURT

RAMOS V. COMMISSIONER OF INTERNALREVENUE

38 T.C. 824 (T.C. 1962)824

EXPENSE VS. CAPITAL EXPENDITURE

PAYMENT BY LIFETENANT TO SETTLE LITIGATION ATTACKING HIS TITLE TOLIFE ESTATE SEC. 212(2), I.R.C. 1954. A payment by onegranted right to trust income for life in settlement of litigation in which
https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/


8/13

his right or title was attacked is not an ordinary and necessary expenseand not deductible under section 212(2), I.R.C. 1954.

OPINION.The Commissioner determined a deficiency of $9,753.19 in income taxof the petitioners for 1954. The facts have been presented by astipulation which is adopted as the findings of fact.The petitioners, husband and wife, filed their joint return with thedirector of internal revenue for the Lower Manhattan District of NewYork.

The only issue for decision is whether $20,000 paid by Arturo in 1954 toPauline V. Hoving is deductible under section 212(2), I.R.C. 1954, as an

ordinary and necessary expense for the conservation or maintenance ofproperty held for the production of income or whether *821 it was acapital expenditure for the defense or perfection of title or to obtainundisputed title to a life estate in certain trust property and/or for thefurther purpose of defending or perfecting title to the remainder interestin that property for his children.

Henry H. Rogers executed a trust instrument on November 5, 1927, incontemplation of his daughter Millicent's marriage to A. H. P. Ramos.

The marriage took place as agreed on November 7, 1927. The netincome of the trust was payable to Millicent for life and at her death thetrust was to be divided into equal shares, one to be held in trust for andthe income paid for life to each surviving child of the aforesaidmarriage. Thereafter the corpus was to be paid to that child's issue perstirpes; or in default of issue to his brothers or sisters or their issue; andin case of default of such beneficiaries, to the grantor or those entitledunder his will. The petitioner, Arturo, is one of the two children of themarriage which ended in divorce on December 12, 1935. Arturo wasborn on November 14, 1928, and his brother, Paul, was born onFebruary 18, 1931. Henry H. Rogers died on July 25, 1935. He left byhis will a part of his residuary estate in trust for his second wife, Pauline,for life. She survived him and by remarriage became Pauline V. Hoving.She was not Millicent's mother. Millicent died on January 1, 1953.


9/13

The trustee of the Henry H. Rogers trust of 1927 filed a petition in theSupreme Court of New York in December 1953 for settlement of itsaccount as trustee, for construction of the trust indenture and of Roger'swill, and for instruction as to the disposition of the trust assets. It had not

paid any trust income to Arturo or Paul up to that time. Pauline filed ananswer in that proceeding in which she asserted that the continuance ofthe 1927 trust for Arturo and Paul after the death of Millicentcontravened section 11 of the New York Personal Property Law, in thatthose beneficiaries were not in being when the trust was created. Shetherefore claimed that the corpus of the trust belonged, as a resultingtrust, to the residuary estate of Rogers, in which she had an interest.Pauline also argued that the New York rule against perpetuities was

violated and the contingent remainder interests failed.Answers filed in the proceeding included one by Arturo and one onbehalf of his infant son, Arturo III. Arturo claimed that the trusts for himand his brother were valid. The proceeding was settled on November 29,1954, by a stipulation including the following:

2. The respondent, Pauline V. Hoving, hereby withdraws her answer tothe petition in this proceeding and consents that an order be enteredherein construing the secondary trusts established under said trust

indenture as valid trusts and that the Trustee thereof shall administer thesame as provided by the terms of said trust indenture.

3. The respondent, Pauline V. Hoving, assigns and transfers to therespondents, Arturo Henry Peralta Ramos and Paul Jaime Peralta Ramosany and all *822 interest or claim in and to any part of the trust fundestablished under the aforesaid trust indenture dated November 5, 1927.

4. In consideration of the foregoing provisions and upon the entry of an

order embodying all of the terms and provisions of this stipulation, therespondents Arturo Henry Peralta Ramos and Paul Jaime Peralta Ramosshall pay, from their own funds, the sum of $40,000 to the respondent,Pauline V. Hoving.

The court entered an order dated December 6, 1954, in accordance withthe stipulation. Arturo and Paul each paid Pauline $20,000 in November


10/13

1954 and Pauline assigned to them equally all right, title, and interestwhich she had or might acquire in the 1927 trust. The trustee set upseparate equal trusts for the lives of Arturo and Paul. Arturo has receivedsince then the income of the trust set up for his benefit. He received no

income from the trust during 1954 but for the years 1955 through 1961,he received income from the trust which varied from $13,647.72 in 1955to $18,031.71 in 1961. The portion thereof representing tax-exemptinterest varied from a low of 32.85 percent in 1956 to a high of 50.21percent in 1960.

Section 212(2) of the Internal Revenue Code of 1954, upon which thepetitioners place their reliance, is as follows:

SEC. 212. EXPENSES FOR PRODUCTION OF INCOME.In the case of an individual, there shall be allowed as a deduction all theordinary and necessary expenses paid or incurred during the taxable year

* * * * * * *

(2) for the management, conservation, or maintenance of property heldfor the production of income; or

The petitioners argue that "The payment of $20,000 by petitioner toPauline V. Hoving in 1954 was deductible as an expense paid for theconservation or maintenance of property held for the production ofincome within the provisions of section 212(2) Internal Revenue Code."The Commissioner argues that "Petitioner's 1954 expenditure of $20,000for the purpose of obtaining undisputed title as a life tenant of asecondary trust and for the further purpose of defending and protectingtitle to the corpus of that trust for the future benefit of his children as

remaindermen therein represents a nondeductible capital expenditure."The following relating to the provisions of section 212 (1) and (2) isfrom Judge Raum's opinion inRobert L. Wilson,37 T.C. 230:

These provisions had their origin in a 1942 amendment to the 1939Code.[fn1]Prior thereto the only comparable provisions were found in
https://casetext.com/search?q=37+T.C.+230https://casetext.com/search?q=37+T.C.+230https://casetext.com/search?q=37+T.C.+230https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/#num[fn1]https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/#num[fn1]https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/#num[fn1]https://casetext.com/search?q=37+T.C.+230


11/13

section 23(a)(1) which allowed deductions for ordinary and necessaryexpenses "in carrying on any trade or business." By the 1942amendment the deductions previously allowed only with respect tocarrying on a trade or business were extended to certain nonbusiness

situations. In form, the old deduction for business expenses wascontinued in section 23(a)(1)(A) of the 1939 Code and the newdeduction for nonbusiness expenses was incorporated in the newprovisions of section *823 23(a)(2). And it is section 23(a)(2) of the1939Code from which section 212of the 1954 Code, here involved, wasderived.

But, while the new provisions extended the deduction to certainnonbusiness situations, not theretofore covered by the revenue laws, the

same limitations and qualifications applicable to the deductibility ofbusiness expenses were likewise applicable to the new deduction fornonbusiness expenses. This much is now clear beyond serious question.SeeLykes v. United States,343 U.S. 118, 122;Bowers v.Lumpkin,140F.2d 927, 928 (C.A. 4). "A deduction under this section is subject,except for the requirement of being incurred in connection with a tradeor business, to all the restrictions and limitations that apply in the case ofthe deduction under section 23(a)(1)(A) of an expense paid or incurred

in carrying on any trade or business." H. Rept. No. 2333, 77th Cong., 2dSess., p. 75; S. Rept. No. 1631, 77th Cong., 2d Sess., p. 88. And one ofthe restrictions and limitations upon the deductibility of expenses is thatexpenditures which are capital in nature are not deductible A capitalexpenditure is not regarded as a charge against current income and is notdeductible as an "ordinary and necessary expense," whether it is made inthe course of business or whether it is made in relation to thenonbusiness situations specified in section 23(a)(2) of the1939 Code

and section 212of the 1954 Code.Bowers v.Lumpkin, supra at 928-929;Louisiana Land Exploration Co.,7 T.C. 507, 515, affirmed161F.2d 842(C.A. 5); Safety Tube Corporation,8 T.C. 757, 762-764,affirmed168 F.2d 787(C.A. 6). The mere fact that the new provisionsrefer to expenses for the "management, conservation, or maintenance ofproperty held for the production of income" does not dispense with the
https://casetext.com/search?q=1939+Code%20from%20which%20section+212https://casetext.com/search?q=1939+Code%20from%20which%20section+212https://casetext.com/search?q=1939+Code%20from%20which%20section+212https://casetext.com/search?q=1939+Code%20from%20which%20section+212https://casetext.com/search?q=343+U.S.+118https://casetext.com/search?q=343+U.S.+118https://casetext.com/search?q=343+U.S.+118https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=7+T.C.+507https://casetext.com/search?q=7+T.C.+507https://casetext.com/search?q=7+T.C.+507https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=8+T.C.+757https://casetext.com/search?q=8+T.C.+757https://casetext.com/search?q=8+T.C.+757https://casetext.com/search?q=168+F.2d+787https://casetext.com/search?q=168+F.2d+787https://casetext.com/search?q=168+F.2d+787https://casetext.com/search?q=8+T.C.+757https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=161+F.2d+842https://casetext.com/search?q=7+T.C.+507https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=1939+Code%20and%20section+212https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=140+F.2d+927https://casetext.com/search?q=343+U.S.+118https://casetext.com/search?q=1939+Code%20from%20which%20section+212https://casetext.com/search?q=1939+Code%20from%20which%20section+212


12/13

limitation that the deduction is not allowable in the case of capitalexpenditures. Those new provisions merely define the area in whichnonbusiness expenses may be deducted provided that they otherwisesatisfy the conditions for deductibility, one of those conditions being that

the expenditure must not be capital in nature.

The Court there held thatAllen v. Selig,200 F.2d 487, wasdistinguishable and the attorney fee "paid as an incident to establishingpetitioner's dower right in specific items of property" and that paid as"part of her cost in obtaining the property unencumbered" were bothcapital expenditures not deductible under section 212 as ordinary andnecessary expenses chargeable against the income of a single year.

The United States Court of Appeals for the Fifth CircuitinBrown v.Commissioner,215 F.2d 697, affirming19 T.C. 87on thispoint, also distinguished its earlier case ofAllen v. Selig, among others,and said:

Of course when property is held for the production of income, anyexpenditure which relates to the perfection or defense of the taxpayer'stitle to the property can, in one sense, be said to have been anexpenditure for theconservation of the property. On the other hand, it

seems equally as sound to say that any such expenditure is moreproperly an element in the cost of acquiring or preserving the legal rightto the income produced by the property, and therefore must beconsidered a capital expenditure. * * *

Arturo contended in the court proceeding pertaining to his trust that hehad a valuable property right under the 1927 trust indenture, the right toreceive the income from one-half of the trust corpus during his life.Pauline contended that he had no such right because the trust provisions

upon which it was based were invalid under the New York law. Thiswas a real contest involving the title or right to valuable *824propertyand the life income therefrom. Arturo was trying to defend, protect, and,perhaps, perfect his right to the trust income for the rest of his life. Thatright would not have been his if Pauline had won the litigation. Hecontends that he was the owner of an equitable interest and the
https://casetext.com/search?q=200+F.2d+487https://casetext.com/search?q=200+F.2d+487https://casetext.com/search?q=200+F.2d+487https://casetext.com/search?q=215+F.2d+697https://casetext.com/search?q=215+F.2d+697https://casetext.com/search?q=215+F.2d+697https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=215+F.2d+697https://casetext.com/search?q=200+F.2d+487


13/13

expenditure was made to conserve "property held for the production ofincome." He thus must take the position that he was holding title or rightto valuable property of some kind and, obviously, he was trying todefend, protect, or improve his claim of right or title thereto. He claimed

an equitable interest in the corpus of the trust, the right to receive for hislife the income from that corpus. That whole property right was at stakein the litigation. No mere allocation of income was involved. Theproceeding was, for present purposes, like a will contest in which a lifeestate in a testamentary trust might be lost. Cf.E. W. Brown, Jr.,19 T.C.87.

An expenditure like this one is not an ordinary expense of 1 year but isof a capital nature, not deductible under section 212(2). The expenditure

was paid for the successful defense, protection, and removal of doubtfrom Arturo's right or title to his equitable interest in the trust corpus.Pauline, in consideration of the two $20,000 payments, conceded thevalidity of the trusts and "assigns and transfers to [Arturo and Paul] * * *any and all interest or claim in and to any part of the trust fundestablished under the aforesaid trust indenture dated November 5, 1927."Cf.Ida Wolf Schick,22 B.T.A. 1067;Samuel Cohen,24 T.C. 957;Robert

L. Wilson, supra; Edwin M. Klein,31 B.T.A. 910,affd.84 F.2d 310.

The Commissioner did not err in disallowing the deduction. The partieshave stipulated that the petitioners are entitled to a certain otherdeduction for 1954.

Decision will be entered under Rule 50 .

[fn1] See section 121(a) of the Revenue Act of 1942, ch. 619,56 Stat.819.

CITING DOCUMENTS

Add
https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=22+B.T.A.+1067https://casetext.com/search?q=22+B.T.A.+1067https://casetext.com/search?q=22+B.T.A.+1067https://casetext.com/search?q=24+T.C.+957https://casetext.com/search?q=24+T.C.+957https://casetext.com/search?q=24+T.C.+957https://casetext.com/search?q=31+B.T.A.+910https://casetext.com/search?q=31+B.T.A.+910https://casetext.com/search?q=31+B.T.A.+910https://casetext.com/search?q=84+F.2d+310https://casetext.com/search?q=84+F.2d+310https://casetext.com/search?q=84+F.2d+310https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/#ref[fn1]https://casetext.com/search?q=56+Stat.+819https://casetext.com/search?q=56+Stat.+819https://casetext.com/search?q=56+Stat.+819https://casetext.com/search?q=56+Stat.+819https://casetext.com/search?q=56+Stat.+819https://casetext.com/search?q=56+Stat.+819https://casetext.com/case/ramos-v-commissioner-of-internal-revenue/#ref[fn1]https://casetext.com/search?q=84+F.2d+310https://casetext.com/search?q=31+B.T.A.+910https://casetext.com/search?q=24+T.C.+957https://casetext.com/search?q=22+B.T.A.+1067https://casetext.com/search?q=19+T.C.+87https://casetext.com/search?q=19+T.C.+87

Amendments in Consti

Documents

Transcript of Amendments in Consti