Separate Opinion of Justice Bersamin in CIR vs.
Pilipinas on the ground that there was no reciprocity with Tangier, which was
Shell,
GR No. 188497 dated February 19, 2014
CIR vs. Campos Rueda (42 SCRA 23)
Facts:
This is an appeal interposed by herein respondent Antonio Campos
Rueda as administrator of the estate of the deceased Doña Maria de
la Estrella Soriano Vda de Cedeira, from the decision of the
petitioner, collector of internal revenue, assessing against and
demanding from the former the sum of Php161,874.95 as deficiency
estate and inheritance taxes, including interest therein and penalties,
on the transfer of intangible personal properties situated in the
Philippines and belonging to said Maria Cedeira. She is a spanish
national, by reason of her marriage to a spanish citizen and was a
resident of Tangier, Morocco from 1931 up to her death on January
2, 1955. At the time of her demise, she left among others, intangible
personal properties in the Philippines. On September 29, 1955,
respondent filed a provisional estate and inheritance tax return on all
the properties of Maria Cedeira. On the same date, petitioner,
pending investigation issued an assessment for estate and
inheritance tax in the respective amounts of Php111,592.48 and Php
157,791.48 or a total of Php369,383.96 which tax liabilities were
paid by respondent. On November 27, 1955, an amended return was
filed wherein intangible personal properties with the value of
Php396,308.90 were claimed as exempt from taxes. On November
23, 1955, petitioner issued another assessment for estate and
inheritance taxes in the amounts of Php 202,262.40 and
Php267,402.84 respectively or a total of Php469,665.24. In a letter
dated January 11, 1956, respondent denied the request for the
exemption on the ground that the law of Tangier is not reciprocal
with section 122 of the National Internal Revenue Code. Hence,
respondent demanded the payment of the sums of Php239,439.79
representing the deficiency estate and inheritance taxes including ad
valorem penalties, surcharges, interest and compromise penalties. In
a letter dated February 8, 1956, respondent requested for the
reconsideration of the decision denying the claim for the tax
exemption. However, the same was denied. The denial was premise
moreover a mere principality, not a foreign country.
Issue: Whether or not the intangible personal properties of Maria
Cedeira are exempt from estate and inheritance tax.
Held: Yes. The controlling legal provision as noted is a proviso in
section 122 of the NIRC. It reads thus:
that no tax shall be collected under this title in respect of intangible
personal properties if the decedent at the time of his death was a
resident of a foreign country which at the time of his death did not
impose a transfer tax or death tax of any character in respect of
intangible personal properties of the Philippines not residing in that
foreign country; or
if the laws of the foreign country of which the decedent was a
resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of
intangible personal properties owned by citizens of the Philippines
not residing in that foreign country.
This court commit itself to the doctrine that even a tiny principality,
hardly an international personality in the sense did fall under the
exempt category.
The expression “foreign country,” was used in the last proviso of
section 122 of NIRC refers to a government of that foreign power
which although not an international person in the sense of
international law does not impose transfer or death upon intangible
person properties of our citizens not residing therein whose law
allow a similar exemption from such taxes. It is therefore not
necessary that Tangier should have been recognized by our
government in order to entitle the respondent to the exemption
benefits of the proviso of said section 122 of our tax code.
CIR vs. Fisher (1 SCRA 93)
DOCTRINE:
“
Reciprocity must be total. If any of the two states collects or imposes
or does not exempt any transfer, death, legacy or succession tax of
any character, the reciprocity does not work.”
FACTS:
Walter G. Stevenson was born in the Philippines of British parents,
married in Manila to another British subject, Beatrice. He died in
1951 in California where he and his wife moved to. In his will, he
instituted Beatrice as his sole heiress to certain real and personal
properties, among which are 210,000 shares of stocks in Mindanao
Mother Lode Mines (Mines). Ian Murray Statt (Statt), the appointed
ancillary administrator of his estate filed an estate and inheritance
tax return. He made a preliminary return to secure the waiver of the
CIR on the inheritance of the Mines shares of stock.
In 1952, Beatrice assigned all her rights and interests in the estate
to the
spouses Fisher. Statt filed an amended estate and
inheritance tax return claiming ADDITIOANL EXEMPTIONS, one
of which is the estate and inheritance tax on the Mines’ shares of
stock pursuant to a reciprocity proviso in the NIRC, hence,
warranting a refund from what he initially paid. The collector denied
mthe claim. He then filed in the CFI of Manila for the said amount.
CFI ruled that (a) the ½ share of Beatrice should be deducted from
the net estate of Walter, (b) the intangible personal property
belonging to the estate of Walter is exempt from inheritance tax
pursuant to the reciprocity proviso in NIRC.
ISSUE/S:
Whether or not the estate can avail itself of the reciprocity proviso in
the
NIRC granting exemption from the payment of taxes for the Mines
shares of
stock.
RULING:
NO.
Reciprocity must be total. If any of the two states collects or imposes
or does not exempt any transfer, death, legacy or succession tax of
any character, the reciprocity does not work. In the Philippines, upon
the death of any citizen or resident, or non-resident with properties,
there are imposed upon his estate, both an estate and an
inheritance tax. But, under the laws of California, only inheritance
tax is imposed. Also, although the Federal Internal Revenue Code
imposes an estate tax, it does not grant exemption on the basis of
reciprocity. Thus, a Filipino citizen
shall always be at a disadvantage. This is not what the legislators
intended.
SPECIFICALLY:
Section122 of the NIRC provides that “No tax shall be collected
under this Title in respect of intangible personal property
(a) if the decedent at the time of his death was a resident of a
foreign country which at the time of his death did not impose a
transfer of tax mor death tax of any character in respect of
intangible personal property of citizens of the Philippines not residing
in that foreign
country, or
(b) if the laws of the foreign country of which the decedent was a
resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of
intangible personal property owned by citizens of the Philippines not
residing in that foreign country."
On the other hand, Section 13851 of the California Inheritance Tax
Law provides that intangible personal property is exempt from tax if
the decedent at the time of his death was a resident of a territory or
another State of the United States or of a foreign state or country
which then imposed a legacy, succession, or death tax in respect to
intangible personal property of its own
residents, but either:
Did not impose a legacy, succession, or death tax of any character in
respect to intangible personal property of residents of this State, or
Had in its laws a reciprocal provision under which
intangible personal property of a non-resident was exempt from
legacy, succession, or death taxes of every character if the Territory
or other State of the United States or foreign state or country in
which the nonresident resided allowed a similar exemption in respect
to intangible personal property of residents of the
Territory or State of the United States or foreign state or country of
residence of the decedent."
Dizon vs. CTA (GR No. 140944 dated April 30, 2008)
Ponente
Justice Nachura
Subject
Estate Taxation – Allowable Deductions, Date-of-
DeathValuation Principle
Facts
Jose P. Fernandez died in November 7, 1987. Thereafter, apetition
for the probate of his will was filed. The
probatecourt appointed Atty. Rafael Arsenio P. Dizon asadministrator
of the Estate of Jose Fernandez.An estate tax return was filed later
on which showed ZEROestate tax liability. BIR thereafter issued a
deficiency estatetax assessment, demanding payment of Php 66.97
millionas deficiency estate tax. This was subsequently reduced
byCTA to Php 37.42 million. The CA affirmed the CTA’s ruling,hence,
the instant petition. The petitioner claims that in as much as the
valid claims
of creditors against the Estate are in excess of the grossestate, no
estate tax was due. On the other hand,respondents argue
that since the claims of the Estate’screditors have been condoned,
such claims may no longerbe deducted from the gross estate of the
decedent.
Issue
Whether the actual claims of creditors may be fully allowedas
deductions from the gross estate of Jose despite the factthat
the said claims were reduced or condoned throughcompromise
agreements entered into by the Estate with itscreditors
Decision
YES.
Ratio
Following the US Supreme Court’s ruling in Ithaca Trust
Co.v. United States , the Court held that post-death developments
are not material in determining the amount of deduction. This is
because estate tax is a tax imposed onthe act of transferring
property by will or intestacy and, because the act on which the tax
is levied occurs at adiscrete time, i.e., the instance of death, the net
value of
theproperty transferred should be ascertained, as nearly aspossible,
as of the that time. This is the date-of-death valuation rule. The
Court, in adopting the date-of-death valuation principle, explained
that:
• First.
There is no law, nor do we discern any legislative intent in our tax
laws, which disregards the date-of-death valuation principle
and particularlyprovides that post-
death developments must beconsidered in determining the net value
of theestate. It bears emphasis that tax burdens are not to be
imposed, nor presumed to be imposed, beyondwhat the statute
expressly and clearly imports, tax statutes being construed
strictissimi juris
against the government.
•Second
Such construction finds relevance andconsistency in our Rules on Sp
ecial Proceedings wherein the term "claims" required to be
presentedagainst a decedent's estate is generally construed tomean
debts or demands of a pecuniary nature whichcould have been
enforced against the deceased inhis lifetime, or liability contracted by
the deceasedbefore his death
Therefore, the claims existing at thetime of death are significant to,
and should be
madethe basis of, the determination of allowabledeductions.
Estate of Vda. De Gabriel vs. CIR (GR No. 155541 dated
January 27, 2004)
CIR v Pineda
GR No L-22734, September 15, 1967
FACTS:
BIR investigated the income tax liability of Anastacio Pineda’s estate
for the years 1945, 1946, 1947, and 1948 and it found that the
corresponding income tax return were not filed. This resulted to a
P760.28 deficiency income tax for 1945 and 1946 and real estate
dealer’s fixed tax for the 4thquarter of 1946 and for the whole year
1947. Manuel Pineda, eldest son of Anastacio, received the
assessment. He contested the same alleging that only a
proportionate part should be his liability. CTA ruled that Pineda is
liable only for taxes corresponding to his share in the estate. Hence,
the present petition.
ISSUE:
Whether the Government can require Manuel Pineda to pay the full
amount of the tax assessed
RULING:
Yes. As a holder of property belonging to the estate, Pineda is liable
for the tax up to the amount of the property in his possession. The
BIR is given the discretion to avail of the most expeditious way to
collect the tax. This is, of course, without prejudice to Pineda’s right
of contribution for his co-heirs. Put simply, the Supreme Court held
that the rule on solidarity applies to taxes because it is not an
ordinary contract. Two persons liable for payment of estate tax:
1. Executor or administrator;
2. Heirs up to the extent of their inheritance.
MARCOS II vs. CA
273 SCRA 47
GR No. 120880, June 5, 1997
"The approval of the court sitting in probate is not a mandatory
requirement in the collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at
anytime within 10 years after the omission."
FACTS: Bongbong Marcos sought for the reversal of the ruling of
the Court of Appeals to grant CIR's petition to levy the properties of
the late Pres. Marcos to cover the payment of his tax delinquencies
during the period of his exile in the US. The Marcos family was
assessed by the BIR after it failed to file estate tax returns. However
the assessment were not protested administratively by Mrs. Marcos
and the heirs of the late president so that they became final and
unappealable after the period for filing of opposition has prescribed.
Marcos contends that the properties could not be levied to cover the
tax dues because they are still pending probate with the court, and
settlement of tax deficiencies could not be had, unless there is an
order by the probate court or until the probate proceedings are
terminated.
Petitioner also pointed out that applying Memorandum Circular
No. 38-68, the BIR's Notices of Levy on the Marcos properties were
issued beyond the allowed period, and are therefore null and void.
ISSUE: Are the contentions of Bongbong Marcos correct?
HELD: No. The deficiency income tax assessments and estate tax
assessment are already final and unappealable -and-the subsequent
levy of real properties is a tax remedy resorted to by the
government, sanctioned by Section 213 and 218 of the National
Internal Revenue Code. This summary tax remedy is distinct and
separate from the other tax remedies (such as Judicial Civil actions
and Criminal actions), and is not affected or precluded by the
pendency of any other tax remedies instituted by the government.
The approval of the court, sitting in probate, or as a settlement
tribunal over the deceased's estate is not a mandatory requirement
in the collection of estate taxes. On the contrary, under Section 87 of
the NIRC, it is the probate or settlement court which is bidden not to
authorize the executor or judicial administrator of the decedent's
estate to deliver any distributive share to any party interested in the
estate, unless it is shown a Certification by the Commissioner of
Internal Revenue that the estate taxes have been paid. This
provision disproves the petitioner's contention that it is the probate
court which approves the assessment and collection of the estate
tax.
On the issue of prescription, the omission to file an estate tax
return, and the subsequent failure to contest or appeal the
assessment made by the BIR is fatal to the petitioner's cause, as
under Sec.223 of the NIRC, in case of failure to file a return, the tax
may be assessed at anytime within 10 years after the omission, and
any tax so assessed may be collected by levy upon real property
within 3 years (now 5 years) following the assessment of the tax.
Since the estate tax assessment had become final and unappealable
by the petitioner's default as regards protesting the validity of the
said assessment, there is no reason why the BIR cannot continue
with the collection of the said tax.

PNB vs. Santos, GR No. 208295 dated December 10, 2014