MARCOS II vs.

CA
273 SCRA 47
GR No. 120880, June 5, 1997
Torres, Jr., J.

"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:

Ferdinand R Marcos II sought for the reversal of the ruling of the Court of Appeals to grant CIR's
petition to levy the properties of the late President Marcos Sr. 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: Whether or not summary tax remedies are affected by the probate proceedings?

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.